After last week’s flurry of central bank policy statements, we have a much calmer looking calendar ahead of us this week. The reduced levels of event risk should create a platform for some trends to develop. Here’s a technical snapshot of how the major pairs are shaping up.

EUR/USD

EUR/USD’s recovery continued last week following the Fed’s decision to maintain its ‘three hikes in 2017’ stance.

If we delve a bit deeper into last week’s price action you’ll see that the rally was equidistant to the previous week’s rally. This ‘harmonic’ price action means that the market has now completed an A,B,C,D pattern. In fact, if we include the rally from 1.0500 at the start of the month we could argue that the market has also completed a ‘three drives’ pattern.

These pattern completions only become significant when we view them in the context of market structure. In EUR/USD’s case we can see that these patterns are completing just before a key area of resistance. The resistance zone is defined by the highest close (1.0797) and highest high (1.0874).

We’ll be paying very close attention to how prices respond to the resistance zone if tested this week.  

EUR/USD Daily Candle Chart

GBP/USD

You’ll notice a running theme this week and it centres on prices pressing into key areas of resistance, cable is another example…

Last week’s hawkish tone from the BoE saw cable climb back towards previous support at 1.2400. It took the bears an entire month to break below 1.2400 in February and this memory is likely to impact price behaviour. 

Before we get too carried away it’s important to note that short-term momentum in this market is bullish and the pound is displaying decent levels of relative strength. With this in mind it would be wise to only short this market if we receive a clear price action sell signal.

GBP/USD Daily Candle Chart