Forex Analyst Picks & Strategies
July 2, 2015
My Picks: Short EUR/USD, Pending USDOLLAR
The medium-term picture at the moment in the FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP & AUD) couldn’t be less clear. There is some risk that a broader topping pattern is tracing out, but it would take a move under the May lows (and 200-day moving average) around 11,600 to confirm such a negative shift. There is also plenty of risk that the correction against the primary uptrend has already run its course and USD is set to head higher again, but traction above the June high (and 78.6% retracement of the April-May decline) is desperately needed to confirm such a resumption. In the near-term with the index content to hover around the 50-day moving average (currently 11,850) and the 11,900 50% retracement of the April - May decline there is little to do but wait and let things play out. The spike high from Monday at 11,922 and the mid-June low near 11,730 are more immediate pivots.
Still short EUR/USD. Strength over 1.1275 forces a re-think.
July 1, 2015
My Picks: Short GBPUSD
Market Condition: Breakout
Target 1: 1x Bar extension at 1.5536
Target 2: 2x Bar Extension 1.5410
GBPUSD 1Day Chart
(Created using Marketscope2.0 Charts)
The GBPUSD has been consolidating for the past 5 trading sessions. This has culminated in the formation of an inside bar pattern as depicted above. Support and resistance values for the pattern can be found for the pair using Monday’s daily bar as a reference. This would mark support at 1.5662, which has been broken in today’s trading session. In the even that bearish momentum continues, the next target for the GBPUSD will be found at 1.5536, which is a 1x extension of the reference bar.
In the event that the market fails to continue its move lower, traders will watch for prices to return inside of the markets previously defined range. If price moves back to 1.5725, the current breakout scenario would be considered invalidated. If prices continue to move higher traders can again use the reference bar for values of resistance, starting with the high at 1.5788.
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July 1, 2015
My Picks: USDCAD Bullish
Market Condition: Uptrend, Higher Highs & Higher Lows
Target 1: 1.2658 (M1 Pivot)
Target 2: 1.2823 (2015 High)
Invalidation: 1.2303 (Low of Bullish Engulfing Pattern)
SSI currently sits at -1.8738 ahead of a NFP Thursday. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the USDCAD may continue higher.
Yesterday’s bullish close above 1.2425 encourages the view towards targets near the 1.2565 June highs. This was a corrective high so a break above there would signal higher towards the 1.2835 year-to-date highs and potentially beyond.
Eyes should also be on USOIL. Currently, Oil appears to be in a triangle since the May 6th high. Recently, it failed at resistance near 61.27. Support nears 58. A break lower would favor a move down near 52 and like be bearish for CAD given the correlation.
Close-up view with multiple 2- & 3-bar candlesticks Bullish Reversals
June 30, 2015
My Picks: Short GBPJPY at 192.83
The British Pound turned lower against the Japanese Yen as expected, breaking support guiding the uptrend since mid-April. I have now entered short, initially targeting 190.91. A stop-loss will be activated on a daily close above 194.33. I will take profit on half of the position and move the stop to the breakeven level (192.83) once the first objective is met.
Near-term support is at 190.91, the 23.6% Fibonacci retracement, with a break below that on a daily closing basis exposing the 38.2% level at 187.85. Alternatively, a turn back above the 14.6% Fib at 192.80 opens the door for a challenge of 194.33 (range floor support-turned-resistance, trend line).
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June 24, 2015
My Picks: Short USDJPY
Failure at long term uptrend resistance indicates potential for an important top to form in USDJPY. Favor the downside as long as price is below 126. A break below 119.50 would set the stage for a drop to the mid 114.00s.
USDJPY is pushing against the month open price (124.10) for the 3rd time in the last 3 weeks. A push above would not negate longer term topping implications but it would weaken the short term dowtrend. Weakness below 123.37 is needed in order to re-instill confidence in near term downside potential.
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June 23, 2015
My Picks: Pending: EURUSD, EURJPY, GBPUSD, USDJPY, NZDJPY
Looking across the Dollar, Euro and Yen majors; there are plenty of pairs that look well positioned from a technical perspective. Yet, once again the fundamentals may act as a barrier for follow through. With uncertainty or the focus pushed forward, expectations could pump the break on what looks like otherwise clean technical setups.
For the Euro setups, there are good looking setups; but resolution on Greece - for better or worse - is necessary. EURUSD in particular is in a diminishing wedge below 1.1500, but needs a decisive outcome from the debt standoff to have a fighting chance for follow through. A clear fundamental outcome would be good for either direction, but I prefer a scenario where the deal falls through and it clear 1.1250. The same is true of EURJPY, which could easily clear 138 congestion floor if a Greek crisis proved contagious.
For a Euro long view scenario, one of the better positioned pairs is EURCAD which puts a listless Canadian Dollar against a theoretically motivated counterpart. Clearing a 16-month channel resistance around 1.40 would be the key technical move, but fundamentals are crucial here.
For the Yen crosses, a clear risk view is necessary and we are as lacking of conviction there as anywhere else. A USDJPY move towards 125 on a clear risk appetite drive could be an opportunity but it has a narrow window and dubious support. I'd prefer seeing risk aversion pull down equities and the Yen crosses. USDJPY below 122.50, 121.50 and then 120 are the key stages. I am also partial to NZDJPY given it broke a major neckline on a six-year rise and head-and-shoulder pattern. A staging from a retest at 85.50 or projection below 84 may prove viable levels to work with.
From the Dollar crosses, focus on rate forecasts is still strong but the wait-and-see mentality is not as magnetized to the future as it was last week leading into the FOMC decision. That may ease trend development on pairs that aren't 'distracted' by upcoming event risk. I'm watching GBPUSD as it turns from its 50% Fib of the July 2014 to April 2015 bear phase around 1.5900. Without something to hold it back, perhaps this pair finds follow through more readily.
June 22, 2015
My Picks: Long EUR/GBP
First of all, the March low to May high was an equal wave pattern where the (c) leg is equal in length to the (a) leg. Typically, that speaks to being corrective, but not in all scenarios.
The move from May 27 to June 9 is clearly a 5 wave move. In Elliott Wave Theory, that suggests the near term trend is pointed higher. The subsequent counter trend drop was a partial retracement of only 78.6% to .7126.
Therefore, the higher probability trade is for another 5 wave move higher that tests .74.
See notes in the chart below.
Click on the chart to see the market in motion since the pick was made.
Created using TradingView charts.
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June 16, 2015
My Picks: Keep risks tight on Australian Dollar
The Australian Dollar continues to hold below key resistance at $0.7800, but overall bearish momentum on the US Dollar suggests the pair may ultimately move above. We'll keep risks tight on our short position.
Indeed the US Dollar hangs on by a thread to key support levels across the board. The danger of a larger breakdown has grown, and we'll keep an especially close eye on the highly-anticipated US Federal Open Market Committee rate decision for next cues on direction.
See and comment on our original trade idea from last week via our charts.
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