Analyst Picks

James Stanley , Currency Strategist

James Stanley
My Picks:  GBP/JPY, USD/CHF, EUR/NZD
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

FX Setups for the Week of 6-18-2018

- DailyFX Quarterly Forecasts have been updated for Q2, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.

- For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

A Busy Week for Global Markets as End of Q2 Nears

It’s been a busy week across global markets, and given the nature of some of the drivers that we’ve seen, there’s the potential for more as we move towards the close of Q2 later this month. Perhaps the most interesting item was the way that the US Dollar reacted to the one-two combo of the Fed and the ECB on Wednesday and Thursday. While the Fed’s rate hike did little to inspire USD-bulls, the ECB’s announcement of stimulus exit not more than a day later seemed to do the trick. And with a fresh bout of potential political risk in Europe, the single currency may be heading for deeper losses as the European Central Bank did little to inspire strength at their rate decision this week.

Next week is light on the data front, but we do have two additional rate decisions out of major Central Banks with the Bank of England and the Swiss National Bank set for meetings on Thursday of next week.

This seems an opportune time to take a watchful stance on EUR/USD, allowing the pair to either establish support above 1.1500 or to drive down to a fresh 2018 low that can open the door for a re-test of the 1.1200 handle. Below, we look at a series of setups away from EUR/USD while looking to handle individual themes of Euro weakness and US Dollar strength with extreme caution. It’s important to note that these setups are designed for next week: With potential political risk in Europe, a gap through support/resistance can vastly alter the nature of the setup, and as such, awaiting next week’s open could allow the trader to more proficiently focus on each respective theme.

Bearish GBP/JPY on Hold Below 148.00

Given the reaction that was seen on Thursday and Friday across equity markets, the potential for risk aversion has started to show. This can make the short-side of GBP/JPY attractive ahead of next week’s BoE rate decision, as a combination of both GBP-weakness and JPY-strength are themes that could align fairly well with increased risk aversion across global markets. GBP/JPY slipped below a key Fibonacci level yesterday, and is currently finding a bit of support at the 23.6% retracement of the February-May sell-off.

This can open the door to two different methods of entry. Traders can look to get short on bearish breaks below last week’s low around 146.00, with stops above 147.03 and targets directed towards 145.00; or, alternatively, looking for a move back to this week’s resistance that runs from 147.70 up to 148.00.

GBP/JPY Eight-Hour Chart: Bearish Continuation Potential

GBP/JPY Eight-Hour Chart gbpjpy

Chart prepared by James Stanley

Bearish USD/CHF on Hold Below Fibonacci Resistance

There’s a rate decision in Switzerland next week, and Thursday’s Euro weakness helped the Swiss Franc pullback from a recent spate of gains against the US Dollar. USD/CHF was in a near-parabolic move higher as we traded into May, but over the past month started to display indications of turning-lower. Thursday led into a strong top-side pop in the pair, and prices are now showing a Doji on the daily chart of USD/CHF.

This opens the door for potential reversals, and this could be an attractive way of fading the US Dollar’s strength after the ECB-fueled bullish breakout. Breaks above 1.0065, which would be fresh yearly highs, nullify the bearish setup in the pair, and this would be approximately 100 pips off of current market prices. This could be justified with an initial target at .9850, at which point stops can be moved to break-even, with secondary targets cast down to .9765.

USD/CHF Daily Chart

usd/chf daily chart usdchf

Chart prepared by James Stanley

Bearish EUR/NZD on Hold Below 1.6850

It was a pretty rough week for the Euro, as EUR/USD sank by almost three big figures following the European Central Bank’s rate announcement. And there may be more yet, as another bout of political risk will populate the headlines this weekend as the European stalwart of Germany moves towards a scenario that may produce a round of snap elections. This would keep interest revolving around the short-side of the Euro, but the more debatable manner is one of an amenable counterpart. The US Dollar is going through its own themes at the moment as the Fed just shifted to a more-hawkish stance, and setting up EUR/USD could be a bit difficult after that recent outsized move. One pair that does hold continued attractiveness on the short-side of the Euro is EUR/NZD.

EUR/NZD set a fresh five-month low yesterday, bouncing just shy of the 2018 swing low set in the second week of January. Prices have moved back-up towards last week’s resistance, running from the approximate 1.6785-1.6842. Should prices remain below this zone after next week’s open, the door remains open for short-side setups in the pair. Stops can be investigated above 1.6850, along with initial targets at 1.6600. Stops can go to break-even after that initial target, along with a secondary target set to 1.6500, followed by a third set to 1.6355.

EUR/NZD Daily Chart: Bearish Continuation Potential After Bounce From Five-Month Lows

eur/nzd daily chart eurnzd

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

Read More  
David Song , Currency Analyst

David Song
My Picks:  Bearish EUR/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

EUR/USD snaps the range from earlier this week even as the European Central Bank (ECB) unveils a more detailed exit strategy, and euro-dollar stands at risk for further losses as the Governing Council remains in no rush to normalize monetary policy.

Even though the ECB plans to narrow the asset-purchase program to EUR15B/month starting in October, the recent comments suggest the central bank will resist calls to remove the zero interest rate policy (ZIRP) as ‘the current ample degree of monetary accommodation that will ensure the continued sustained convergence of inflation towards levels that are below, but close to, 2% over the medium term.’ It seems as though President Mario Draghi and Co. will refrain from implementing higher borrowing-costs ‘at least through the summer of 2019’ as the ECB struggles to achieve its one and only mandate for price stability, and the dovish outlook for monetary policy may continue to drag on EUR/USD especially as the Federal Open Market Committee (FOMC) appears to be on course to implement four rate-hikes this year,

The reaction to the ECB meeting has largely wiped out the advance from the May-low (1.1510), with the break of the recent range raising the risk for a further decline in EUR/USD especially as the Relative Strength Index (RSI) flashes a false signal and largely tracks the bearish formation from earlier this year. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

EUR/USD Rate Outlook Mired by ECB’s Zero Interest Rate Policy (ZIRP)

Failure to retain the monthly opening range raises the risk for a further decline in EUR/USD especially as the pair initiates a fresh series of lower highs & lows. Break of the May-low (1.1510) opens up 1.1390 (61.8% retracement), with the next region of interest coming in around 1.1210 (61.8% retracement) to 1.1220 (78.6% retracement).

For more in-depth analysis, check out the Q2 Forecast for the Euro

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

Read More  
Martin Essex, MSTA , Analyst and Editor

Martin Essex, MSTA
My Picks:  GBPUSD Rally Likely Near-Term
Expertise:  Economics and Technical Analysis
Average Time Frame of Trades:  Next Few Hours

GBPUSD technical analysis:

- GBPUSD remains under downward pressure.

- However, in the near-term, a rally is possible after a moving average crossover on the five-minute chart.

Check out the IG Client Sentiment data to help you trade profitably.

Near-term rally possible for GBPUSD

GBPUSD remains under downward pressure after the latest UK inflation data reinforced the view that the Bank of England will likely leave UK bank rate unchanged next week and the UK Government continues to struggle to push its Brexit legislation through the UK Parliament.

Medium-term, the technical outlook is poor too. However, in the near-term, some upside is possible after the 20-period moving average on the five-minute chart rose above the 100-period moving average. The 50-period moving average is close to climbing above it too, a move that would confirm a near-term upward trend.

GBPUSD Price Chart, Five-Minute Timeframe (June 12 – 13, 2018)

Latest GBPUSD price chart.

Chart by IG

Any such move would likely stall around the 1.3400/10 level, where resistance lies from two longer-term trendlines. Tuesday’s high at 1.3425 could also be difficult to overcome but a rise up to those levels cannot now be ruled out.

Meanwhile, to the downside, there is support at 1.3308, the low so far this session, and also just below that where trendline support lies. On the five-minute chart above, the pair is close to overbought levels on the 14-day relative strength index (RSI) but is not there yet, adding to the likelihood of a mini rally.

Longer term, GBPUSD May Fall Further After In-Line UK Inflation Data

Resources to help you trade the forex markets

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you: analytical and educational webinars hosted several times per day, trading guides to help you improve your trading performance, and one specifically for those who are new to forex. You can learn how to trade like an expert by reading our guide to the Traits of Successful Traders.

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

Read More  
Paul Robinson , Market Analyst

Paul Robinson
My Picks:  AUD/USD, Pending Short
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

For forecasts, trading ideas, and educational content, check out the DailyFX Trading Guides.

AUD/USD has been in the spotlight in recent webinars, as the pair continues to work on building a bear-flag formation spanning back over a month now. Recently, it was rejected at a cross-road of resistance in the 7650/75-area, helping further along the pattern.

Aussie is currently trying to make its way higher off the lower parallel, and may indeed rally in the very short-term. But look for any rise to be short-lived as renewed weakness sets in and an eventual break takes shape below the rising trend-line off the underside of the pattern.

In the event of a trigger, the first target will be the May low near 7400, but a lower-low towards 7300 and worse will be targeted. For now, it’s just a set-up on the radar, so we’ll update with more specific details when the time is right should we see this promising set-up go from scenario to reality.

Furthermore, updates will be provided on this idea and others in the trading/technical outlook webinars held on Wednesday and Friday.

Check out these 4 ideas that can help you today start Building Confidence in Trading.

AUD/USD Daily Chart (Bear-flag, awaiting trigger)

AUD/USD Daily Chart, bear-flag maturing...

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

Read More  
Daniel Dubrovsky , Junior Analyst

Daniel Dubrovsky
My Picks:  Pending Short NZD/CAD
Expertise:  Event-driven macro and classic technical analysis
Average Time Frame of Trades:  Average time held: A few days to a few weeks

NZD/CAD Trading Strategy: Pending Short Again

  • The fundamental landscape still favors CAD strength versus NZD
  • NZD/CAD recent uptrend may turn course on a technical warning
  • A push lower with confirmation paves the way for a short position

Build confidence in your own NZD/CAD strategy with the help of our free guide!

In April, I built the foundations for a short NZD/CAD trade setup, executed it and booked full profits when prices hit my target. Since then, the pair changed course in mid-May and appears to be heading back to the November 2016 descending resistance line on the weekly chart below. This was accompanied with a morning star bullish reversal pattern which received confirmation afterwards. With that said, I am still closely watching the pair for another opportunity to sell it down the road.

NZD/CAD weekly chart with morning star bullish reversal pattern

The Fundamental NZD/CAD Short Argument

Since I built the foundations for this setup, the fundamental landscape still has not changed dramatically but there have been some updates. As far as the New Zealand Dollar goes, it is still tied to a central bank that is in no rush to adjust monetary policy. In fact, in early May new RBNZ Governor Adrian Orr said that a rate cut is a ‘valid’ possibility.

Meanwhile, the Bank of Canada has other plans. At its interest rate decision on May 30, the central bank paved the way for the next hike by dropping the reference to being ‘cautious’ in regards to monetary policy setting. It replaced it with taking on a more ‘gradual’ approach that will be guided by incoming data. Speaking of, last week the Canadian Dollar rallied in the aftermath of a local jobs report that showed wage growth accelerated more than expected.

This may potentially bode well for headline and core inflation down the road and thus, warranting higher rates perhaps. What is also interesting (and remains a risk to this setup) is the BOC’s relatively hawkish shift despite ongoing negotiations around NAFTA given the weekend G7 leaders summit. There, US President Donald Trump added more uncertainty to the deal as he looks into auto import tariffs.

Technical Short Setup

Nevertheless, from an interest rate perspective, going short NZD/CAD could lead to more long-term setups down the road. For now, the pair remains supported by a near-term rising line from mid-May. Recently though, the emergence of a shooting star bearish reversal pattern does warrant attention. Until there is more confirmation that the pair is heading lower, it is best to stand aside to await a short setup. This is because such a pattern merely indicates indecision.

If the pair intends on heading higher, it faces key resistance levels ahead. The most immediate one is a combination of the early June highs which creates a horizontal channel. A break above that exposes the February 23 low at 0.92. This area has acted as support before and could become new resistance. On the other hand, a push lower will have NZD/CAD facing the 38.2% Fibonacci retracement at 0.9066.

With that in mind, opportunities to sell NZD/CAD will be sought after once there is confirmation of a reversal in the pair’s recent advance.

NZD/CAD daily chart with shooting star bearish reversal pattern

NZD/CAD Trading Resources:

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Read More  
James Stanley , Currency Strategist

James Stanley
My Picks:  EUR/USD, USD/JPY
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

- DailyFX Quarterly Forecasts have been updated for Q2, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.

- For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar at Support Ahead of FOMC

The next few days bring a series of drivers that help to produce a backdrop of heightened volatility across FX markets, and as we looked at earlier this morning, both the US Dollar and EUR/USD are testing key areas of support. Tomorrow brings a Federal Reserve rate decision with a strong probability of a hike; and then the following day brings an ECB rate decision in which many market participants are looking for some element of clarification for how exactly the European Central Bank might look to start tapering QE purchases. Not to be lost in the shuffle, a UK inflation report is set to be released tomorrow morning ahead of that FOMC rate decision, and this has very much been a push-point for the British Pound of recent.

Bullish EUR/USD After Bull Pennant Shows with Support at Prior Resistance

As we wrote this morning, EUR/USD has budged back-above a key area of support. The zone that runs from 1.1685-1.1736 is comprised of two long-term Fibonacci levels, and this area helped to hold support on numerous occasions in EUR/USD in the latter-third of last year. When prices in EUR/USD were selling off in May, this area acted as a mere speed bump; but after prices found support above 1.1500 two weeks ago, buyers were able to push prices back-above this key area on the chart.

On a shorter-term basis, price action has built into a wedge formation which, when taken with the prior topside move, makes for a bull pennant. This opens the door for topside setups, and traders can look at stops below the 1.1700 figure. This would open the door for initial targets at the 1.1900-handle, at which point stops can be adjusted to break-even. After that, traders can look for secondary targets at either 1.1950 or 1.2000, depending on how optimistic they are for a return of Euro-strength as we head towards the ECB rate decision on Thursday morning.

EUR/USD Hourly Chart: Bull Pennant, Support at Prior Resistance

eurusd eur/usd hourly chart

Chart prepared by James Stanley

Bullish USD/JPY After Fresh June Highs

USD/JPY is trading at a fresh June high, and this comes after another support test at the Fibonacci level residing at 109.19 last week. After FOMC and ECB rate decisions, we have the BoJ on tap; and the door appears to be wide-open for the bank to take a dovish few to markets. Inflation in Japan lags behind the rest of the world, and while the ECB has opened the door to stimulus-taper discussions, it appears as though that same prospect is far-off for the Bank of Japan.

This could be looked at as a continuation setup, looking for price to continue the recent pattern of higher-highs and higher-lows. Stops can be investigated below the 109.19 Fibonacci level, with initial targets just inside of the prior May high around 111.40. Stops can go to break-even at that first target, at which point a bullish breakout towards fresh 2018 highs becomes attractive, and that can target the area around 112.33.

USD/JPY Two-Hour Chart: Higher-Highs, Higher-Lows Open Door for Bullish Continuation

usdjpy usd/jpy hourly chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

Read More  
Nick Cawley , Analyst

Nick Cawley
My Picks:  Pending Long GBPNZD
Expertise:  Fundamental and Technical Analysis
Average Time Frame of Trades:  One week to One Month

Check out our New Trading Guides: they’re free and have been updated for the second quarter of 2018

While taking a long GBP position may look risky with the EU Withdrawal bill currently being voted on, a GBPNZD technical set-up looks a fair risk-reward trade if we can get in around support. Due to potential GBP volatility we will build in a buffer when trying to enter the trade and will keep a tight stop on any long position as a full break of support will probably be triggered by a breakdown in Brexit talks.

Sterling is currently under downward pressure over Brexit worries and more directly, internal fighting within the ruling UK Conservative Party. The Brexit amendment bills being voted on over the next two days – June 12/13 – should give some clarity to this situation aiding Sterling traders in their decision-making process. The Bank of England meets next week on Thursday and while there are no expectations of any change in UK monetary policy, any subsequent MPC chatter may increase expectations of an August rate hike. August expectations of a 0.25% BoE rate hike currently stand just below 50/50. In contrast the Reserve Bank of New Zealand is unlikely to raise rates for the next 12-18 months, according to Reuters data, and may well cut rates. At their last meeting the RBNZ stated that a number of risks are evenly balanced and ‘if any of these risks were to materialize, we may need to change the official rate to best ensure inflation hits our target and we contribute to maximum sustainable employment’.

GBP in the Spotlight as Brexit Tensions Flare up

GBP Faces a Challenging Week of Heavyweight Data; Brexit Vote

A look at the daily GBPNZD chart shows a solid support zone between the 38.2% Fibonacci retracement level at 1.8885 and a cluster of recent lows around 1.8910. A re-test of this area may open an opportunity for a short- to medium-term GBPNZD long with the 200-day moving average at 1.9220 and the 23.6% Fibonacci retracement at 1.9250 the initial upside target and the second target at 1.9450. The RSI indicator is also nearing its recent low level and may provide a secondary level of support.

The loss/reward settings in our trade set-up are 1.25 to 3.50 for our first target and 1.25 to 5.50 for our second target.

GBPNZD Daily Price Chart (June 2017 – June 12, 2018)

GBPNZD Pending Long - Support Levels are Key

Entry Point: 1.8900 – Support cluster.

Target 1: 1.9250 – 23.60% Fibonacci retracement.

Target 2: 1.9450 – January 25 and February 8 intermediate highs.

Stop-Loss: 1.8775.

You may like to look at our Free Trading Guides which include Building Confidence in Trading, the Number One Mistake Traders Make and Top Trading Lessons.

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

Read More  
Ilya Spivak , Sr. Currency Strategist

Ilya Spivak
My Picks:  Long USD/JPY
Expertise:  Global macro
Average Time Frame of Trades:  1-6 months

USD/JPY TRADING Strategy: NET SHORT at 110.09

  • Japanese Yen pullback expected to give way to down trend resumption
  • Trade war jitters may serve as Yen catalyst after key event risk passes
  • Waiting for opportunities to add to short position upon confirmation

Find out what other traders’ USD/JPY positions say about the on-coming price trend!

The US Dollar turned lower against the Japanese Yen as expected after prices broke below trend support guiding the upswing from late March. Prices declined to test support near the 108.00 figure, meeting the initial objective of a short trade from 110.09.

A subsequent recovery has brought them back toward the site of the breakout. A daily close above resistance in the 110.04-27 area would open the door for a test of trend resistance guiding the longer-term down move since January 2017. Its outer layer is now at 111.67.

US Dollar vs Japanese Yen daily price chart

Broadly speaking, recent gains appear corrective absent a confirmed breach of trend line resistance as well as the May 21 high at 111.40. The fundamental picture seems to reinforce the case for weakness, with risk aversion expected to drive the anti-risk Yen higher amid growing trade war concerns.

President Donald Trump deepened a rift between the US and its major allies at a G7 leaders’ summit in Quebec. He retroactively withdrew support for a joint post-conference communique and lobbed attacks at Canadian Prime Minister Justin Trudeau and EU officials via Twitter after leaving the gathering early.

The markets are yet to show a meaningful reaction to the emerging crisis. Traders’ attention seems to be diverted as Mr Trump sits down for a historic meeting with North Korean leader Kim Jong-un. Policy announcements from the Fed and ECB follow immediately thereafter, dominating the spotlight.

Once these have passed however, it ought to emerge that – even under the best of circumstances – the practical global growth implications of a breakthrough at the Trump/Kim meeting pale in comparison to a trade war between the world’s largest economies. That will probably re-energize the Yen’s advance.

With that in mind, opportunities to add to short exposure will be actively sought once near-term signs of topping appear and are subsequently confirmed, at least via a breakout on the four-hour chart. A stop-loss will be activated if the longer-term down move is invalided on a daily closing basis.

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

Read More  
Michael Boutros , Currency Strategist

Michael Boutros
My Picks:  Near-term Setups in AUD/USD, GBP/USD and USD/JPY
Expertise:  Techncial
Average Time Frame of Trades:  1-3 Days

Here's an update on USD crosses we’ll be tracking into the start of next week against the Australian Dollar, British Pound and Japanese Yen. Keep in mind it’s a big week of event risk with a host of central bank rate decisions and the North Korean Summit likely to fuel added market volatile. For a complete breakdown of these setups and more, review this week’s Strategy Webinar.

New to Forex? Get started with our Beginners Trading Guide!

AUD/USD 120min Price Chart

AUD/USD Price Chart - 240min Timeframe

In this week’s Australian Dollar Technical Outlook we noted that price was attempting, “the first major test of resistance on the heels of last month’s reversal and may limit the topside advances near-term. . . Initial support rests along the median-line with our near-term focus higher while above 7559 (both areas of interest for possible re-entry).”

AUD/USD has since (low registered at 7561). Aussie tested the lower median-line parallel of the pitchfork formation we’ve been tracking since the start of the week at 7559 (low register at 7561) before rebounding. IF there is more upside to go, look for a hold above this low. Ultimately a break below 7513 would be needed to mark resumption of the broader downtrend. Topside resistance levels unchanged.

Learn the traits of a successful trader in our Free eBook!

GBP/USD 120min Price Chart

GBP/USD Price Chart - 240min Timeframe

Our ‘Bottom line’ cited in this week’s GBP/USD Technical Outlook noted that, “IF the Pound has put in a low, look for support to hold at the weekly open at 1.3345 with our bullish invalidation level at 1.3302.” Sterling registered a low at 1.3353 before rebounding today. If recent price action is just a bear flag, look for topside advances to be capped by yearly open resistance at 1.3504- until then our levels / outlook remain unchanged heading into the start of the week.

See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!

USD/JPY240min Price Chart

USD/JPY Price Chart - 240min Timeframe

We highlighted this near-term resistance confluence at 110.14 in yesterday’s USD/JPY Technical Outlook and price has since pulled back below the figure. The break of the weekly opening-range lowsdid not fuel acceleration here and I’m hesitant to press this any harder. That said, look for a hold below yesterday’s high on intraday advances if this is going to work with a near-term support seen at 108.80/94.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or contact him at mboutros@dailyfx.com

Read More  
David Song , Currency Analyst

David Song
My Picks:  Bullish EUR/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

EUR/USD stands at risk of staging a larger rebound ahead of the Federal Reserve and European Central Bank (ECB) interest rate decisions as the pair breaks out of a narrow range. At the same time, the Relative Strength Index (RSI) highlights a key development as the oscillator snaps the bearish formation from earlier this year.

Image of Fed Fund Futures

Even though the Federal Open Market Committee (FOMC) is widely expected to deliver a 25bp rate-hike next week, the updated projects from Chairman Jerome Powell and Co. are likely to influence the near-term outlook for the U.S. dollar as the central bank appears to be on course to phase out the forward-guidance for monetary policy.

With that said, recent comments from Fed officials suggest the central bank will tolerate above-target price growth for the foreseeable future as ‘inflation on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term,’ and ongoing projections for a longer-run neutral Fed Funds rate of 2.75% to 3.00% is likely to drag on the greenback as it saps bets for four rate-hikes in 2018.

Meanwhile, a growing number of ECB officials may push to alter the monetary policy outlook as the quantitative easing (QE) program is set to expire in September, and the fresh comments from President Mario Draghi and Co. may heighten the appeal of the single currency if the central bank unveils a more detailed exit strategy. In contrast, more of the same from the Governing Council may produce headwinds for the euro, with EUR/USD at risk of exhibiting a more bearish behavior over the near-term as the central bank remains in no rush to conclude its easing-cycle. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

Image of EURUSD daily chart

EUR/USD stands at risk for a larger rebound as it initiates a fresh series of higher highs & lows, while the Relative Strength Index (RSI) breaks out of the bearish formation from earlier this year. A close above the 1.1790 (23.6% retracement) to 1.1810 (61.8% retracement) region opens the door for a move back towards 1.1940 (38.2% retracement) to 1.1970 (23.6% expansion), with the next region of interest coming in around 1.2060 (50% retracement).

For more in-depth analysis, check out the Q2 Forecast for the Euro

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

Read More  

Technical analysis news


by  

Gold Prices May Rise as US, China Trade Spat Sinks Bond Yields

Gold prices may turn higher as an escalating trade spat between the US and China sours market sentiment and weighs on yields, boosting the appeal of alternatives.
Continue Reading


by  

ETH/USD Price Analysis: Ethereum Rebounds from Multi-month Lows

Ether prices have rallied more than 15% off the monthly lows but the bulls aren’t in control just yet. Here are the targets & invalidation levels that matter for ETH/USD.
Continue Reading


by  

FOMC Preview: Fate of U.S. Dollar Hinges on Fed Forecasts

Fresh updates coming out of the FOMC may boost the appeal of the U.S. dollar if Fed officials show a greater willingness to deliver four rate-hikes in 2018.
Continue Reading


Advertisement

Real Time News