Dollar Firms On Better Economic Data

EURGBP:
We have been focusing on the core G-7 currencies. It is always a worthwhile exercise to look at the various other crosses. Very often price action on a related cross will effect price action on the pair you are trading. In this case, the EUR has been weak against the USD and the GBP. Price action on the EURGBP cross has Thursday's close stopping at the 50 SMA as seen on the chart below. A close below the 50 SMA may cause further EUR weakness against the Greenback. You can use this type of quick analysis to help set up your potential EURUSD trade.

GBPJPY:
The GBP has been falling sharply against JPY. Notice the nice support and resistance trend lines that have been created during the Pound's falls. Additionally, the 200, 100, and 50 Moving Averages have crossed which suggest a bearish outlook for the GBP. However, 2 days ago the GBP broke through trend line resistance. The short term outlook seems to favor GBP strength, however, it is very common to see a break through of resistance in sharp slides like this. The pattern on the chart is called a pennant or flag. It represents a period of price correction before Sellers resume control and once again put pressure on prices causing them to fall further.

EURJPY:
There are many patterns and technicals to use when trading. Regardless of your preference or style we always suggest supporting your entries and exits with at least one other analysis. On the EURJPY there were several head shoulder patterns that took shape if you look at the 5 minute chart. One way to support your trade idea is to see if the pattern presents itself on larger time frames. Another intra chart check is to use another piece of technical analysis. Look on the Chart below. You have scenario one and two. You have the same pattern present itself. But here are some differences; 1) the head from the shoulder is more pronounced in scenario two 2) At the point you would enter the trade the 50 MA is rising, whereas in scenario 2 it is falling, in other words, moving the same direction as your trade 3) Lastly, the 100 day MA in scenario two almost looks like the neckline whereas in scenario one it is not really defined. Which one would you trade?