You will probably have noticed that if you look at the longer term daily charts for the GBP/USD, EUR/USD and USD/JPY pairs, they are all starting to look quite weak. The GBP/USD can't seem to break up towards 1.70, the EUR/USD struggles to stay above 1.40 for very long, and the USD/JPY seems to have given up on reaching the 100 level again.
However it should also be pointed out that all three of these pairs are still in bullish trends according to my old friend the Supertrend indicator. Therefore I personally am still looking for long positions on all three of these pairs on the 4 hour charts using my main 4 hour trading strategy (see right for details).
The pair that is most likely to turn negative is the USD/JPY because the Supertrend currently stands at 94.52 (with the current price being just 60 points higher at 95.12). Furthermore not only is the EMA (200) sloping downwards on the daily chart, but the price is currently trading below this level, which is not a good sign.
The GBP/USD and EUR/USD pairs are in much better shape because they are both well above their respective Supertrend levels (which currently stand at 1.5830 and 1.3680) and are both trading above their upward trending EMA (200), which are currently at roughly the same levels as the Supertrend.
However if either of these two levels are broken I think we could be looking at a big downwards move simply because of the fact that the price will be back below both the current Supertrend level and the EMA (200) which is such a significant indicator in the world of forex trading.
It's going to be interesting to see what happens in the next few weeks. As I say, I'm still looking for long positions on all three of these pairs, but these bullish trends have to come to an end at some point, particularly on the GBP/USD and EUR/USD pairs which have been in a strong upward trend for several months now.
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