Analyst Picks

David Song , Currency Analyst

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

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EUR/USD struggles to hold its ground following the fresh updates coming out of the Federal Reserve as Chair Janet Yellen and Co. continue to project three rate-hikes for 2017.

It seems as though the Federal Open Market Committee (FOMC) will embark on a more aggressive approach in normalizing monetary policy as the quantitative tightening (QT) initiative is slated to start in October, while the benchmark interest rate is projected to reach a fresh threshold of 1.25% to 1.50% by the end of the year. Renewed expectations for a December rate-hike may prop up the greenback over the near-term, but central bank officials may continue to project a terminal Fed Funds rate close to 3.00% as ‘the Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.’

At the same time, the European Central Bank (ECB) appears to be on course to conclude its easing-cycle as board member Klaas Knot argues the ‘the main rationale for central bank asset purchases has disappeared,’ and the Governing Council may prepare European households and businesses for a less-accommodative stance as ‘the economic expansion, which accelerated more than expected in the first half of 2017, continues to be solid and broad-based across countries and sectors.’ In turn, fresh remarks from President Mario Draghi may limit the downside risk for the Euro exchange rate as the central bank alters the outlook for monetary policy.

EUR/USD Daily Chart

EUR/USD Daily Chart

DailyFX 3Q Forecasts Are Now Available

Downside targets are coming back on the radar for EUR/USD following the failed attempt to test the 1.2130 (50% retracement) hurdle, with both price and the Relative Strength Index (RSI) coming up against trendline support. Failure to preserve the bullish formations from earlier this year may open up the 1.1770 (100% expansion) zone, with the next region of interest coming n around 1.1670 (50% retracement),which lines up with the August-low (1.1662).

For More Updates, Join DailyFX Currency Analyst David Song for LIVE Analysis!

--- Written by David Song, Currency Analyst

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

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Nick Cawley , Analyst

Nick Cawley
My Picks:  Bullish GBP/JPY on Correction
Expertise:  Technical and Fundamental Analysis
Average Time Frame of Trades:  One Day to One Month

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GBP/JPY has made a quadruple-top over the last week around the 151.50 level and needs an additional impulse to push it higher. Having rallied from 139.35 just under one-month ago, with the uptrend accelerating from Monday September 11, the market is still trying to find a new equilibrium. Looking at the stochastic indicator, the pair are in overbought territory – understandably after the recent surge higher – and the first Fibonacci retracement level kicks in at 148.70, just ahead of the 148.10 May 11 high.

Chart: GBPJPY Daily Timeframe (May 7 - September 20, 2017)

Bullish GBP/JPY on Correction Lower

Chart by IG

And on the weekly chart, the 151.65 double bottom on April 4 and June 6 2016 also come into play, providing another level of resistance. The stochastic indicator also confirms the pair in overbought territory.

Chart: GBPJPY Weekly Timeframe (June 22, 2015 – September 20, 2017)

Bullish GBP/JPY on Correction Lower

Chart by IG

While we remain bullish GBPJPY on a longer term basis, we look for the market to correct back to the 148.10/148.70 level before it retests the current resistance at 151.50/151.65 before pushing ahead to test the June 6 2016 high of 157.85.

Entry Point: 148.10 (May 11, 2017 high)

Target 1: 151.65 (Cluster of April 4 – June 6, 2016 lows/September 2017 quadruple tops)

Target 2: 157.80 (Just below June 6, 2016 high)

Stop-Loss: 146.70 (September 13, 2017 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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Michael Boutros , Currency Strategist

Michael Boutros
My Picks:  Near-term Setups in EUR/USD, Bitcoin & Ethereum
Expertise:  Technical
Average Time Frame of Trades:  1-3 Days

Here's an update on the setup's I’m tracking into the start of the week. Find a detailed, in-depth review of both these setups and more in today’s Strategy Webinar.

EUR/USD Daily Chart

EUR/USD Price Chart- Daily Timeframe

Last week I noted that the ‘battle lines’ were drawn for the Euro as the pair set a clear monthly opening range just below long-term slope resistance. Heading into FOMC the focus will be on a break of this between 1.1850 & the yearly high-day close at 2035. From a trading standpoint, I’ll favor selling strength within this range with a break below the median-line needed to suggest a more significant near-term top is in play. Ultimately I’d be looking for long-entries near- 1.1680 – 1.17.

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BTC/USD Daily Chart

BTC/USD Price Chart- Daily Timeframe

We warned of a deeper correction in Bitcoin prices last week with the subsequent drop probing just below the 3023/33 confluence support zone before rebounding sharply. The subsequent rally is now approaching the underside of the median-line as resistance. Look for a reaction here with a close above 4213 needed to validate resumption of the broader uptrend targeting the upper parallel ~4600. From a trading standpoint look for a pullback here but prices should stabilize above the reversal day close at 3700 if we’re heading higher. Things are about to get interesting here.

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

BTC/USD IG Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-long Bitcoin (BTCUSD) - the ratio stands at +1.8 (64.2% of traders are long)- bearish reading
  • Long positions are 1.8% lower than yesterday and 11.5% lower from last week
  • Short positions are 23.9% higher than yesterday and 20.6% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin (USD) prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Bitcoin (USD) price trend may continue higher despite the fact traders remain net-long.

See how shifts in retail positioning are impacting trend.Learn how Sentiment can help your trading in this free guide!

ETHUSD:A similar scenario is playing out in Ethereum prices, which probed even deeper below support last week before recovering. The levels remain unchanged from last week’s update with key near-term support raised to 259.

Check out this week’s DailyFX Webinar Schedule

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

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

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Paul Robinson , Market Analyst

Paul Robinson
My Picks:  Bullish CADJPY
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Join Paul live for charts and trade set-ups each week, see the Webinar Calendar for details.

Since January 2016 CADJPY has been in the process of carving out major bottoming formation taking the shape of an inverse head-and-shoulders pattern. It’s indeed an impressively sized configuration with big upside potential. Given its size, a strong weekly close above the neckline was required as an official trigger. Barring a major reversal in the remaining hours of the week we will have such an event.

From a tactical standpoint: This set-up offers opportunity for both long and short-term minded traders. Those looking to establish a long-term holding, then the pattern has been given a green-flag with this week’s breakout bar, with a projected measured move target of roughly 10340. This target is derived by adding the depth of the pattern to the neckline. There are some obstacles along the way towards this target; 9326, 2007 trend-line, and 10118. The measured move target is an approximation based on symmetry and not an actual price level. With that said, the final destination may be a full reversal of the 2014-2016 decline, which clocks in at 10653.

For most of us, we aren’t interested in holding trades for the duration needed to see this one through to the end target. But operating with a top-down approach, we can use this pattern to shape trades on shorter-term time-frames (i.e. – daily, 4-hr). Whether that be through buying dips, breakouts, or other bullish patterns which may develop along the way. The bottom line is that traders can use the path of least resistance identified on the long-term time-frame to put the wind at their back when making shorter-term maneuvers.

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CADJPY: Weekly

CADJPY Macro-Pattern Breakout Points to Big Upside Potential

---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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James Stanley , Currency Strategist

James Stanley
My Picks:  Long AUD/USD, Short NZD/USD
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

- 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.

To receive James Stanley’s Analysis directly via email, please sign up here.

AUD/NZD has been on a rather brisk run of recent, and the pair is currently seeing some element of support at a trend-line that started around two months ago. And while this can open the door to topside setups in the cross-pair, this can also be utilized to take a hedged stance around the U.S. Dollar, looking to sell New Zealand Dollars and buy Australian Dollars against USD. The goal of such a strategy is optimized risk-reward ratios, so that even a 50/50 can lead to a profitable set of trades.

AUD/NZD Four-Hour: Bullish Trend-Line Inflection Holds the Lows

AUD/USD, NZD/USD Continue to Show Divergence

Chart prepared by James Stanley

Long AUD/USD for USD-Weakness Continuation

AUD/USD continues to flirt with the psychologically important .8000-level, and earlier this week brought upon a support inflection that highlights how markets may be getting more comfortable with .8000+ AUD/USD spot rates. Nonetheless, I want to give a little bit of room to this position so that another re-test around .8000 doesn’t wash me out. Just below current support is a confluent zone that runs from .7929-.7946, and this could be an ideal washout level as prices below this zone indicate that the bullish AUD/USD position is not ready for prime time.

A stop at .7915 gives some distance below this zone while taking on ~100 pips of risk, and this can open the door to a break-even stop inside of the prior high at .8100, with an initial profit target at .8160. Additional targets can be set to .8200 and .8250.

AUD/USD Hourly

AUD/USD, NZD/USD Continue to Show Divergence

Chart prepared by James Stanley

Short NZD/USD for USD-Strength Scenarios

While the U.S. Dollar has continued to show weakness, the New Zealand Dollar has been even weaker since late-July. The previous high-flying trend in NZD/USD continues to hit the skids, and we’re currently seeing resistance at an interesting zone in the pair. The price of .7335 is the 38.2% retracement of the pair’s 2009-2011 major move, and this level has shown numerous instance of support/resistance in the recent past.

This can open the door for a similar 100-pip stop as the above AUD/USD position at .7366, along with a break-even stop at .7200. The first target at .7150 can allow for a deeper break-even stop move, with additional profit targets set to .7100 and then the major psychological level of .7000.

NZD/USD Daily

AUD/USD, NZD/USD Continue to Show Divergence

Chart prepared by James Stanley

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

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Contact and follow James on Twitter: @JStanleyFX

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