Analyst Picks

Paul Robinson , Market Analyst

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

Read the fundamental outlook for USD/CAD in our DailyFX Trading Guides.

USD/CAD is at serious risk of breaking the trend-line off the September low, as it continues to test the line repeatedly without any meaningful lift. The more it keeps hammering away at it the more likely it is to fail. The rising channel since the 11/10 low is taking on the shape of a ‘bear-flag’. Further adding weight on the top-side is the trend-line running down off the May swing-high. With the two trend-lines converging on one another a resolution is likely to occur soon. A 4-hr closing candle below the Sep trend-line puts the trade into motion.

Should a breakdown occur, a move above today’s high at 12837 will invalidate the trade and also constitute a break of the May trend-line as well. It is possible USD/CAD continues to hold onto the line and make another swing higher before breaking down, in which case the stop would have to be adjusted. However, if the trade is to trigger it seems unlikely the May line will be breached with any vigor.

On the downside, first up will be the 11/10 low at 12666, but looking for a lower-low into the 12590s as the next level of meaningful support followed by the 2012 trend-line which was broken and recaptured during September. In October we saw this t-line used as support, so despite it having little meaning the month prior is still viewed as a potential source of support. It lies just above 12500.

Check out these tips for Building Confidence in Trading.

USD/CAD: Daily

USD/CAD Tightrope Act at Risk

4-hr

USD/CAD Tightrope Act at Risk

Trade Parameters:

Trigger: 4-hr closing candle below September trend-line

Stop: Above today’s swing-high or most recent swing-high if another push higher develops first

Targets: 12590 & 2012 t-line ~12505 (Limits placed 15-20 pips above)

Join Paul live each week for chart set-ups. See the Webinar Calendar for details.

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

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Nick Cawley , Analyst

Nick Cawley
My Picks:  Bullish GBP/CAD
Expertise:  Fundamental and Technical analysis
Average Time Frame of Trades:  One-to-Four weeks

Check out our new Trading Guides: they’re free and have been updated for the fourth quarter of 2017

Canadian interest rates are unlikely to be hiked further, according to Bank of Canada deputy governor Carolyn Wilkins, putting the Loonie under further downside pressure. In a shift towards a new wait-and-see stance, the central bank official warned that even if inflation picked-up towards 2% - the middle of the bank’s 1%-3% range - economic growth must be monitored carefully before tightening monetary policy further. Speaking in New York, Wilkin’s added that another reason for caution in this case more of a 'wait and see' approach - is related to a desire to avoid having to reverse policy direction abruptly in the future," The Bank of Canada raised rates by 0.25% in July and September.

And with the prop of monetary further monetary tightening removed, and with NAFTA talks still ongoing, the Canadian Dollar may come under more downside pressure, especially against a currently strong Sterling buoyed by the belief that the current Brexit impasse is about to be broken.

The current chart set-up remains bullish for GBPCAD with the 23.6% Fibonacci retracement level at 1.68544 an ideal place to go long, if the market pulls back, leaving the November 1 high of 1.71685 the initial target.

Chart: GBPCAD Daily Timeframe (June 6 – November 20, 2017)

Bullish GBP/CAD as Canadian Rate Hikes Vanish

Chart by IG

And on the weekly chart, the 100-day ema at 1.72200 is a secondary upside target, with a close above their opening the May 8 high around 1.78500.

Chart: GBPCAD Weekly Timeframe (April 20, 2015 – November 20, 2017)

Bullish GBP/CAD as Canadian Rate Hikes Vanish

Chart by IG

Entry Point: 1.68500 (Just below the 23.6% Fibonacci retracement level)

Target 1: 1.71685 (November 1 high)

Target 2: 1.72200 (Current 100-day ema)

Stop-Loss: 1.67300 (August 3 high)

--- Written by Nick Cawley, Analyst

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

Follow Nick on Twitter @nickcawley1

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Ilya Spivak , Sr. Currency Strategist

Ilya Spivak
My Picks:  Short USD/JPY at 113.07
Expertise:  Global macro
Average Time Frame of Trades:  1 week - 6 months

To receive Ilya's analysis directly via email, please SIGN UP HERE

Talking Points:

  • Trading Strategy: Short USD/JPY at 113.07
  • US Dollar looks to have set a triple top below 115.00 figure vs. Japanese Yen
  • Short position activated, looking for an initial descent below the 112.00 mark

The US Dollar looks to have established a triple top below the 115.00 against the Yen, with the Japanese currency seemingly poised to launch a lasting offensive. The pair plunged against backdrop of broad-based risk aversion that offered a familiar boost to the perennially anti-risk JPY.

Near-term support is in the 111.72-90 area (September 25 close, 38.2% Fibonacci retracement), with a break below that on a daily closing basis opening the door for a challenge of the 50% level at 111.03. Alternatively, a push back above the 23.6% Fib at 112.99 sees the next upside barrier at 113.65, the 14.6% retracement.

An intraday bounce offered improved risk/reward parameters and a short USD/JPY trade has been triggered at 113.07, initially targeting 111.90. A stop-loss will be activated on a daily close above 113.65. Profit on half of the position will be booked and the stop moved to breakeven on meeting the first objective.

Just getting started trading USD/JPY? Check out our beginners’ guide!

USD/JPY Strategy: Triple Top Looks to Be Set Below 115.00 Figure
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David Song , Currency Analyst

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

The head-and-shoulders formation in EUR/USD appears to be unraveling, with the pair at risk of staging a larger recovery as Federal Reserve officials adopt a cautious tone ahead of the last policy meeting for 2017.

Even though the Federal Open Market Committee (FOMC) appears to be on course to further normalize monetary policy, recent comments from St. Louis Fed President James Bullard and Chicago Fed President Charles Evans raises the risk of seeing a dovish rate-hike in December as officials warn of a more adverse scenario where the central bank continues ‘to raise rates and inflation stays where it is or continues to go down further away from our target and inflation expectations fall.’

Fed Fund Futures

Keep in mind, Fed Fund Futures continue to show bets for the first 2018 rate-hike to come in June especially as Chair Janet Yellen’s term is set to expire in February. Only time will tell whether current Governor Jerome Powell will keep the FOMC on course to deliver three rate-hikes per year, but the fresh forecasts coming out of the Federal Reserve may foster a bearish outlook for the greenback should a growing number of Fed officials project a more shallow path for the benchmark interest rate. Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

EUR/USD Daily Chart

Near-term outlook for EUR/USD has perked up following the string of failed attempt to break/close below the 1.1580 (100% expansion) hurdle, with the pair at risk of extending the recent series of higher highs & lows as both price & the Relative Strength Index (RSI) threaten the bearish formations from September. With that said, opposed to a head-and-shoulders, the broader formation is starting to take the shape of a bull-flag, with a break/close above the 1.1810 (61.8% retracement) to 1.1860 (161.8% expansion) region opening up the next topside target around 1.1960 (38.2% retracement) followed by 1.2130 (50% retracement).

Varying market conditions require alternative strategies as trends change. Want a better understanding of the different approaches for trading? Download and review the FREE DailyFX Advance trading guide!

--- 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.

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Michael Boutros , Currency Strategist

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

USD/JPY 240min Chart

USD/JPY Price Chart - 240min Timeframe

Last week we noted that USDJPY was testing a critical near-term resistance zone at 114.30/50 with a favored break below parallel support extending off the September lows needed to shift the focus lower in the pair. A late-week break has USDJPY trading lower with the decline largely holding within this near-term descending channel formation. The focus remains lower while below the weekly open at 113.45 with near-term support targets eyed at 112.26 and the 38.2% retracement / channel support at 111.90.

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

USD/JPY IG Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-long USDJPY- the ratio stands at +1.08 (52.0% of traders are long) – Weak bearishreading
  • Long positions are 2.9% lower than yesterday and 0.3% lower from last week
  • Short positions are 3.9% lower than yesterday and 23.1% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias.

See how shifts in USD/JPY retail positioning are impacting trend- Click here to learn more about sentiment!

GBP/USD: The focus is on a pending breakout in sterling as the monthly opening-range continues to take shape just above a critical slope support barrier. The immediate range of interest is 1.3063-1.3221 with a topside breach favored. I highlighted this setup in today’s Scalp Report.

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

ETH/USD 240min

ETH/USD Price Chart - 240min Timeframe

Ethereum prices reversed off our initial resistance target today at 338. Interim support at 321 with the focus remains higher while above the November open at 304. A breach higher targets subsequent resistance objectives at 349/50 backed closely by 355 & the 61.8% extension at 362.

Join Michael on Fridays for his bi-weekly Webinar on the Foundations of Technical Analysis- Register for Free Here!

---Written by Michael Boutros, Currency Strategist with DailyFX

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

https://www.dailyfx.com/free_guide-tost.html?ref-author=Boutros

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