Analyst Picks

Oliver Morrison , Analyst

My Picks:  Pending Long GBP/USD
Expertise:  Long-Term Technical Analysis
Average Time Frame of Trades:  Few Weeks to a Few Months

Position: Long GBP/USD

Entry: 1.2737

Initial Target: 1.3445 (+708-pips, September 6 high)

Stop: 1.2415 (-322-pips, trail below daily 13-EMA)

Reward/Risk Ratio: 708/333 = +2.20

GBPUSD looks to be forming a ‘triple bottom’ reversal pattern – a signal that the pair’s long prior downward trend is about to reverse, possibly reaching up to the previous reaction high.

Three bottoms can be better than one -- this pattern is relatively rare and is usually an extension to a double top. When it does occur it is usually formed at the end of a long trend. The triple bottom formation appears in the GBPUSD’s daily and weekly charts.

Chart 1: GBP/USD Weekly Timeframe (December 2015 to March 2017)

GBP/USD Forming Triple Bottom Reversal Pattern

Looking at the weekly chart, the triple bottom would be confirmed if the pair breaks the ‘base’ around 1.2737 – the high of November 28 last year. If that’s broken, it will signal a bullish move to the first swing target around 1.3352, the high of August 29. If that’s cleared, an eventual return to pre-Brexit vote levels wouldn’t be so far-fetched. A further break above the September 6 high of 1.3445 could ultimately instigate a return to pre-referendum levels above 1.4500.

Chart 2: GBP/USD Daily Timeframe (June 2016 to March 2017)

GBP/USD Forming Triple Bottom Reversal Pattern

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at oliver.morrison@ig.com

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Walker England , Forex Trading Instructor

My Picks:  EUR/USD Pending Breakout
Expertise:  Technical Analysis
Average Time Frame of Trades:  1Day-1Week

Market Condition: EUR/USD Pending Breakout

Target 1:2X ATR at 1.0957

Target 2:4X ATR at 1.1085

EUR/USD, Daily Chart & ATR

EUR/USD Prepares for a Bullish Breakout

(Created Using IG Charts)

The EUR/USD is again trending higher to conclude this week’s trading. With the pair quickly closing in on new yearly highs, traders may begin planning for the markets next breakout. Traders looking to join the trend may consider entries on a breakout above the standing 2017 high at 1.0829. Current daily ATR for the EUR/USD reads at 64 pips. This means breakout traders may initially look for a 2X ATR profit target at 1.0957. Also a 1X ATR stop loss may be considered at 1.0765 to create a 1:2 risk/reward ratio.

In the event that the EUR/USD fails to breakout higher, traders may consider deleting any pending orders to buy the market. In this bearish scenario, traders may first look for the EUR/USD to turn and drop beneath the current weekly low found at 1.0719.

--- Written by Walker, Analyst for DailyFX.com

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See Walker’s most recent articles at hisBio Page.

Contact and Follow Walker on Twitter @WEnglandFX.

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Jeremy Wagner, CEWA-M , Head Forex Trading Instructor

My Picks:  Short GBP/USD
Expertise:  Elliott Wave, Technical Analysis
Average Time Frame of Trades:  2 Days - 2 Weeks

GBP/USD appears to be putting the final additions on a bearish triangle pattern. Under the guidelines of the pattern, price may soon pivot lower towards new lows below 1.1900.

If correct, this triangle would be in the 4th wave position of a bearish impulse that began in 2014. Once this corrective sequence ends, then GBPUSD may pressure new lows.

GBP/USD Takes Shape of a Triangle Pattern

The risk to the pattern is set at the wave C high of 1.2706. A move above 1.2706 suggests the pattern cannot be counted as illustrated and some other pattern is developing.

In Elliott Wave triangles, many times wave E will penetrate the trend line connecting the ends of waves A & C. This trend line comes into play near 1.2635.

We also have some wave relationships appearing in the 1.2515-1.2625 price zone so there are a few obstacles standing in Cable’s way.

So long as prices are below 1.2706, downside wave relationships and targets exist near 1.1900.

Join Jeremy in his Monday US Opening Bell webinars to discuss this market.

Interested in learning more about Elliott Wave Theory? Watch these videos on trading with Elliott Wave.

Lastly, check out our longer-term forecast for US Dollar and GBP.

GBP/USD Takes Shape of a Triangle Pattern

Created using TradingView

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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Michael Boutros , Currency Strategist

My Picks:  Near-term Setups in AUD/USD, EUR/USD & DXY
Expertise:  Short-term Technicals
Average Time Frame of Trades:  1-3Days

AUDUSD 120min

AUD/USD 120min Chart

Earlier in the week we highlighted a key multi-month resistance range in AUDUSD at 7735/56. Aussie registered a high at 7749 before reversing sharply yesterday with the decline rebounding off near-term support at 7651/56. A newly identified pitchfork extending off the thighs keeps the immediate focus lower while below the median-line which converges on the 50% retracement at 7694 with a break lower targeting subsequent support objectives at 7620 & 7591. Broader bearish invalidation remains steady at 7735.

Near-term Setups in AUD/USD, EUR/USD & DXY
  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short AUDUSD- the ratio stands at -2.49 (28.6% of traders are long)- bullish reading
  • Long positions are 20.4% lower than yesterday and 10.4% lower from last week
  • Short positions are 21.1% lower than yesterday and 4.7% lower from last week
  • Note that the recent fall in open interest on a recovery in the SSI ratio off recent extremes as price comes off key resistance continues to highlight the risk for a pullback in in the pair despite the current SSI standing.

Why and how do we use the SSI in trading? View our free trading guide here

EURUSD: The focus is on a pullback from near-term confluence resistance at 1.0820/22 with our broader outlook still weighted to the topside while above the 1.07-handle. A breach above target a more significant resistance zone at the 2016 open at 1.0872. Levels remain unchanged from last week’s EURUSD update.

DXY: We warned about the risk for a turn in the dollar index heading into the Fed last week with the decline reversing today just ahead of confluence support at 99.43/53- a region defined by the 61.8% extension of the decline off the yearly high and the January 2016 high-day close. The immediate short-bias is at risk into this zone with our broader focus still weighted to the downside sub 100.39. A break lower targets subsequent support targets at the 99-handle & the 2016 open at 98.69.

Looking for trade ideas? Review DailyFX’s 2017 1Q Projections

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

Join Michael for Live Weekly Trading Webinars on Mondays on DailyFX at 13:30 GMT (8:30ET)

Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.

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David Song , Currency Analyst

My Picks:  Bullish AUD/JPY
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

AUD/JPY may face range-bound conditions going in Japan’s 2016 fiscal year-end as it struggles to break the monthly opening range, but the broader outlook remains constructive as the pair preserves the bullish formations carried over from earlier this year.

AUD/JPY Daily

AUD/JPY Daily Chart

The lack of momentum to test the 87.70 (61.8% expansion) hurdle may keep AUD/JPY within a narrow range especially as the Relative Strength Index (RSI) preserves the downward trend carried over from December. However, the aussie-yen exchange rate appears to be on the cusp of a larger move as the 50-Day SMA (86.42) continues to offer support, with price & the RSI approaching the approaching the apex of a near-term wedge/triangle formation.

With that said, the rebound from trendline support accompanied by the bullish engulfing (outside-day) candle keeps the topside targets in focus over the remainder of the month, with a break/close above 87.70 (61.8% expansion) opening up the next region of interest around 88.20 (38.2% expansion) followed by 88.60 (50% expansion).

With both the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ) showing little signs of moving away from their current policy stance, market sentiment may continue to influence AUD/JPY, with the global benchmark equity indices highlighting a similar behavior as they largely retain the range from earlier this month.

DailyFX SSI

Why and how do we use the SSI in trading? View free trading guide here

AUD/JPY SSI

At the same time, the DailyFX Speculate Sentiment Index (SSI) suggests retail traders are caught on the wrong side as the crowd remains net-short since March 10 when AUD/JPY traded near 86.43;price has moved 0.7% higher since then. Current data shows 43.3% of traders are net-long with the ratio of traders short to long at 1.31 to 1. The number of traders net-long is 13.6% higher than yesterday and 1.2% lower from last week, while the number of traders net-short is 20.3% higher than yesterday and 4.3% higher from last week. May see the SSI offer a contrarian signal as the recent build in net-short interest appears to be accompanied by a mild appreciation in AUD/JPY.

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

If you’re looking for trading ideas, check out our Trading Guides.

--- 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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