USD weakens, let the price action do the talking

Friday gave up a huge reversal in the USD after London traders closed up for the week.  These kind of late day Friday moves are very telling for the next week’s direction in many cases.  Looking at the EURUSD, for example, since price broke down out of its daily range below 1.2725, I was shorting this pair last week.  But now with Friday’s higher close, we see a pretty large wick on the weekly candle.  The USD keeps losing steam.  Today looks like another close above the 1.2725 and inside that previous range is likely.  As long as this level continues to hold support, I must think range trading again back up to 1.3000.  If 1.3000 breaks to the upside, then I suspect more EUR buyers will come into the market.  Depending on how this range plays out, there is a potential for an inverse head and shoulders pattern emerging, which could be interesting if the neckline breaks to the upside.  Remember, the market loves to fake out these types of chart patterns so caution will need to be taken while using stop losses wisely.  But for now, play the range.  Equally interesting is USDJPY, I was watching 94.60 level to begin shorting again, however price remains strong to the upside near this level.  It is very interesting that the yen is not following the Dow movements, so I will continue to watch this pair to determine if trend is indeed changing to the upside?  The GBPJPY showed an inside weekly candle which already broke to the upside during Asia and London.  There is potential for further upside in these yens.  Keep your eye on the ball and your pips in the bank traders…