Analyst Picks

Paul Robinson , Currency Strategist

Paul Robinson
My Picks:  EURUSD (Bearish), GBPUSD (Breakout Pending)
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Struggling right now? That’s OK, it happens to the best. Check out this guide on how to get back on track – Building Confidence as a Trader.

EURUSD triggers bear-flag on 4-hr chart

On the top-side, the Euro looked like it might want to trade up to trend-line resistance before turning back lower, however; the bear-flag on the 4-hr was triggered this morning, undermining any bullish momentum the Euro had left.

This has the trading bias tilted in favor of shorts as long as we don’t see a recovery back inside the flag and above today’s high at 11304. With volatility as low as it is, rivaling depths not seen since 2014, the move lower might not be very big.

On trade down to the recent lows near 11180 we could see buyers step in again and keep the Euro supported. This doesn’t leave a lot of room for a swing-trade, but the trading bias for near-term bets between here and there favors sellers.

See what fundamental factors are in play for EURUSD in the Q2 Euro Forecast.

EURUSD 4-hr Chart (Bear-flag broke)

EURUSD 4-hr chart, bear-flag broke

EURUSD Daily Chart (watch support sub-11200)

EURUSD daily chart, watch support sub-11200

GBPUSD nearing wedge break

Last week, I highlighted GBPUSD as a set-up to pay attention to as it nears the apex of a wedge its been building. It is very near breaking. A close above the top-side trend-line will indicate a bullish bias and a break below 12904 will turn things bearish. In the event of a fake-break, we may have to turn the initial bias around if price begins to swing back through the other side of the pattern.

See what fundamental factors are in play for GBPUSD in the Q2 Pound Forecast.

GBPUSD Daily Chart (Wedge about to break)

GBPUSD daily chart, wedge about to break

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

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

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Michael Boutros , Technical Strategist

Michael Boutros
My Picks:  Near-term Trade Setups in USD/CAD and AUD/USD
Expertise:  Technical
Average Time Frame of Trades:  1-3 Days

Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD 240min Price Chart

USD/CAD Price Chart - US Dollar vs Canadian Dollar 240minute

In my most recent USD/CAD Price Outlook we noted that, “The Canadian Dollar largely remains within the confines of a broader consolidation pattern just below key resistance,” with our broader focus on a break of the, “1.3298-1.3437 range for guidance.” Price challenged the lower bounds of this zone today with a recovery taking Loonie back into monthly open resistance at 1.3345 – the weekly OR is set.

Today’s defense of support keeps the focus on a break of the broader consolidation pattern with the monthly opening-range still intact heading into US / Canada retail sales data tomorrow. A topside breach targets 1.3467 backed by the 78.6% retracement at 1.3537. A break lower exposes 1.3234/48- look for a bigger reaction there IF reached. Review my latest USD/CAD Weekly Price Outlook for a look at the longer-term technical trade levels.

USD/CAD Trader Sentiment

USD/CAD Trader Sentiment - US Dollar vs Canadian Dollar Positioning - Price Chart
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.33 (42.9% of traders are long) – weak bullish reading
  • Traders have remained net-short since April 10th; price is unchanged since then
  • Long positions are 8.4% higher than yesterday and 28.2% lower from last week
  • Short positions are22.3% lower than yesterday and 0.3% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Yet traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.

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

AUD/USD 240min Price Chart

AUD/USD Price Chart - Australian Dollar vs US Dollar 240minute

In our last Aussie Price Outlook, we noted that AUD/USD was, “trading into a near-term technical resistance confluence and while the immediate advance is vulnerable heading into the close of the week, a break of the monthly opening range does keep the broader focus higher in price while above the monthly open.” A brief stint above the 200-day moving average at ~7194 failed today with Aussie slipping back below the weekly open ahead of Australian employment data later tonight.

A break below April channel support would risk a larger set-back in Aussie with such a scenario targeting the monthly open at 7122 backed by the 61.8% retracement at 7111 and the highlighted confluence zone around ~7086- look for a bigger reaction there IF reached. Resistance stands at 7216/18 with a breach / close above 7233 needed to fuel the next leg higher in price targeting 7270/75. Review my latest AUD/USD Weekly Price Outlook for a look at the longer-term technical trade levels.

Find yourself getting trigger shy or missing opportunities? Learn how to build Confidence in Your Trading

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

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex

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James Stanley , Currency Strategist

James Stanley
My Picks:  EURUSD, GBPUSD, USDJPY, USDCAD
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

Forex Talking Points:

- DailyFX Quarterly Forecasts for Q2 have been recently released, 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.

- If you’d like more color around any of the setups below, join in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those sessions from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

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

EURUSD: Support Bounce Builds Bullish Channel – Bear Flag Potential

In the latter-portion of last week, matters didn’t look very positive for the Euro. EURUSD had started to re-test a key zone of support in the opening days of Q2, and a considerable amount of grind developed in this area last week. But, as looked at in FX Setups, this kept the door open for bullish strategies in EURUSD with the expectation for the multi-month range to hold, and both targets were met as buyers pushed-higher after the ECB/FOMC Minutes releases on Wednesday of this week.

At this point, that support bounce has built into a bullish channel, and given the prior bearish move, this could be called a bear flag formation. This would be a shorter-term observation in the midst of a longer-term range; and this sets a fairly interesting table for short-term strategies around EURUSD.

For next week, bullish short-term potential remains, looking for prices to hold higher-low support above the 1.1280-1.1300 area that exhibited resistance on Thursday. A hold of support here through the Monday open keeps the potential for prices to test deeper within the longer-term range formation, targeting 1.1400 and then 1.1448.

EURUSD Two-Hour Price Chart

eurusd eur/usd two hour price chart

For short-strategies, there are a few possible ways of moving forward. The first, and bigger-picture approach, would be looking for a break of range support around the 1.1175 level that was looked at last week. Alternatively, should buyers remain in-control long enough to allow for an inflection at range resistance, from 1.1448 up to 1.1500, the short-side theme can re-open for range continuation. And for traders with shorter-term approaches that do want to look for a bear flag break, a push below the 1.1250 level could re-open the door for support tests at 1.1212, followed by 1.1187, and perhaps even a bearish breakout below the 1.1175 level that’s currently marking the 21-month low in the pair.

EURUSD Eight-Hour Price Chart

eur/usd eurusd eight hour price chart

GBPUSD: Bearish Potential Below 1.3200

A similar setup had presented itself in GBPUSD last week, in which longer-term support was helping to hold the lows in the midst of a shorter-term case of digestion.

GBP/USD closed last week after yet another test of the 1.2962-1.3000 support zone. This marks the fourth separate iteration of support tests in this zone since mid-February, and that support has held up through some rather aggressive fundamental themes. But, also as seen in EURUSD above, bearish potential remained should that support give way, and in terms of the British Pound, this equated to a descending triangle formation when incorporating that horizontal support with a trend-line taken from lower-highs produced in March.

For next week, I want to look at bearish strategies in the pair and I’m even willing to accept a topside break of that bearish trend-line; instead focusing in on the confluent zone of Fibonacci resistance that previously held the April swing-highs. This takes place from 1.3181-1.3187; and a hold of resistance at-or-below this zone early next week keeps the door open for short-side strategies in the pair. Initial targets could be sought out at 1.3035, followed by the big zone of support that runs from 1.2962-1.3000; and if bears can pose a downside push, then the longer-term descending triangle will be filling-in, at which point additional short-side targets could be sought out around the 1.2900 zone.

GBPUSD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

USD/JPY Potential Bullish Breakout on Build of Inverse Head and Shoulders

I had focused-in on this one in the Thursday webinar as themes of Yen-weakness have re-appeared with prominence in the early days of Q2. USD/JPY had built into an inverse head-and-shoulders pattern, and as I shared there, traders would likely want to look at the resistance level around 112.00 before staging longer-term bullish strategies.

That area has come back into play as USD/JPY makes a push towards fresh 2019 highs. For next week, this theme can remain as attractive; but entry may remain as a challenge given that the breakout has already started to take place.

Traders can look for resistance a little higher at a key level on the chart of 112.34. This is the 76.4% retracement of the November, 2017 to March, 2018 major move; and this level has already functioned as support over a month in Q4, when it helped to set the swing-low just before the big bout of risk aversion showed up in the Yen. This Fibonacci study has also been usable through 2019 trade, with all of the 38.2, 50, and 61.8% retracements functioning as resistance-turned-support.

USD/JPY Daily Price Chart

us dollar usd daily price chart

A resistance test at this level can open the door for an element of higher-low support, and that could keep the door open for bullish trend continuation strategies. For higher-low support after a 112.34 test, traders can look to the 111.50 level that produced a short-term evening star earlier this week, extended up to last week’s swing-high at 111.81. A second possible area remains for support should a pullback drive through that first zone, and this runs from 111.13 up to 111.29. IF prices are unable to hold above the 110.86 area that marks this week’s swing low, the bullish near-term theme in USDJPY would be invalidated.

USD/JPY Two-Hour Price Chart

usdjpy usd/jpy two hour price chart

USDCAD: Bearish on Hold Below 1.3450

I had looked at the short-side of USD/CAD coming into this week, largely predicated on the basis of resistance holding at a big zone of long-term interest. That resistance has held through this week’s trade, keeping the door open for short-side strategies in the pair. This could fit especially well with themes or strategies based around USD-weakness, with the expectation that the longer-term ascending triangle in USD may take some time to fill-in.

In USD/CAD, a revisit to the resistance zone that runs from 1.3161-1.3185 opens the door for short-side swings, with target potential around 1.3300 followed by 1.3250.

USDCAD Four-Hour Price Chart

usdcad usd/cad four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts 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

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Paul Robinson , Currency Strategist

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

Struggling right now? That’s OK, it happens to the best. Check out this guide on how to get back on track – Building Confidence as a Trader.

GBPUSD pattern inside pattern could lead to big move

GBPUSD has been mired in a constant flow of ‘Brexit’ headlines and while this is to continue, a pair of chart patterns are beginning to become increasingly clear. A descending wedge is taking shape, with a clear set of bottom and top-side trend-lines to work with. This pattern is also a pattern inside a larger pattern.

Let’s start with the shorter-term descending wedge. These often lead to a negative outcome as a result of the lower highs associated with them showing increasing selling pressure, however; the coiled-up price action can result in a breakout to the top-side as well. Have to wait for the break.

With the general trend off the January low pointed higher and solid support via a trend-line and the 200-day in place, an upside breakout can’t be ruled out. Especially if the broader bottoming sequence since last year is to come to fruition…

Since August, GBPUSD has been in the process of carving out a potentially large bottoming sequence taking on the shape of an inverse head-and-shoulders pattern. The aforementioned wedge doesn’t need to lead to a neckline breakout but is viewed as the cleanest scenario if indeed an inverse H&S is to be confirmed.

In any event, a breakout above the neckline is required for validation and to kick off a much broader rally. Should it do so, the longer-term target will become the high from a year ago in the lower 14000s or so.

Moving back to the shorter-term set-up. Needed to trigger the wedge pattern is a strong daily close above the top-side trend-line or below the lower trend-line and the March low at 12960. A top-side breakout will have 13380 (approximately where the H&S neckline is) up to ~13700 targeted, while a downside break will bring into play 12770 and the lows from December/January.

See what fundamental factors besides ‘Brexit’ that could impact this chart set-up in the Q2 GBP Forecast.

GBPUSD Daily Chart (Wedge, Possible Inverse H&S)

GBPUSD daily chart, wedge, possible inverse H&S

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

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

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David Song , Currency Strategist

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

EUR/USD extends the rebound from earlier this month as the European Central Bank (ECB) sticks to the sidelines, and the exchange rate may stage a larger correction over the coming days amid the failed attempt to test the 2019-low (1.1176).

The ECB appears to be in no rush to alter the forward-guidance as the central bank pledges to keep euro-area interest rates ‘at their present levels at least through the end of 2019,’ and it seems as though the Governing Council will keep monetary policy on auto-pilot ahead of the second-half of the year as President Mario Draghi’s term is set to expire at the end of October.

Image of ecb interest rates

It remains to be seen if the ECB will attempt to buy more time at the next quarterly meeting on June 6 as the current ‘measures, including the new series of TLTROs that we announced in March, will help to safeguard favourable bank lending conditions and will continue to support access to financing, in particular for small and medium-sized enterprises,’ but the ECB may have little choice but to further support the monetary union as ‘the information that has become available since the last Governing Council meeting in early March confirms slower growth momentum extending into the current year.’

Until then, the wait-and-see approach for monetary policy may keep EUR/USD afloat as the ECB insists that ‘underlying inflation is expected to increase over the medium term,’ with the euro-dollar exchange rate at risk of staging a larger recovery in light of the failed attempt to test the 2019-low (1.1176).

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

EUR/USD Rate Daily Chart

Image of eurusd daily chart

Keep in mind, the broader outlook for EUR/USD remains clouded with mixed signals as the exchange rate appears to be stuck in a wedge/triangle formation, but the lack of momentum to test the 2019-low (1.1176) paired with the failed attempt to close below the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement) raises the risk for a larger correction.

Need a break/close back above the 1.1270 (50% expansion) to 1.1290 (61.8% expansion) region to open up the 1.1340 (38.2% expansion) hurdle, with the next area of interest coming in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion).

For more in-depth analysis, check out the 2Q 2019 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 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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Martin Essex, MSTA , Analyst and Editor

Martin Essex, MSTA
My Picks:  Bearish NZDUSD
Expertise:  Economics and Technical Analysis
Average Time Frame of Trades:  Next Few Days

NZDUSD price analysis and outlook:

  • The NZDUSD price looks to have broken to the downside from an ascending triangle chart pattern in place since early December last year.
  • Coupled with a bearish reading from IG Client Sentiment data, that suggests further losses for the pair.

NZDUSD price outlook bearish

The NZDUSD price has broken to the downside from an ascending triangle pattern on the daily chart, suggesting further losses to come. As the chart below shows, the pattern has been in place since early December 2018, with the breakout occurring late last month. In the last few sessions the price seems to have stabilized but further losses from here would be no surprise.

NZDUSD Price Chart, Daily Timeframe (December 3, 2018 – April 9, 2019)

Latest NZDUSD price chart.

Chart by IG (You can click on it for a larger image)

The key levels to watch out for now are the low at 0.6719 touched on April 5, with a drop below leading potentially to a fall to under 0.67, where the support line of the new downward channel checks in. To the upside, the April 2/3/4 highs at 0.68 should provide resistance. Beyond that there is further resistance at the 20-day moving average at 0.6815 and the 50 dma at 0.6823.

The 0.68 level is the key upside level to watch, not just because the early April highs were there but also because the resistance line of the new downward channel checks in there, as does the 100 dma.

IG client sentiment data bearish

Turning to sentiment, data from IG – DailyFX’s parent company – show a surge in the number of retail traders net-long NZDUSD. The figures show 69.9% of traders are net-long, with the ratio of traders long to short at 2.32 to 1. The number of traders net-long is 19.6% higher than yesterday and 107.7% higher than last week, while the number of traders net-short is 10.1% higher than yesterday and 22.4% lower than last week.

At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests the NZDUSD price 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 NZDUSD-bearish contrarian trading bias.

Latest NZDUSD sentiment data.

If you’d like to learn more about how to identify trends using trader sentiment data, listen in to my webinar tomorrow at 1130 GMT. You can sign up here

More 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:

--- 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

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Daniel Dubrovsky , Junior Analyst

Daniel Dubrovsky
My Picks:  Bullish AUD/NZD
Expertise:  Event-driven macro and classic technical analysis
Average Time Frame of Trades:  A few days to a few weeks

AUD/NZD Talking Points

  • Rosy Australian economic data may propel AUD/NZD higher
  • The dominant AUD/NZD downtrend was overturned recently
  • Technical analysis warns it may decline next, watch support

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

AUD/NZD Fundamental Outlook

The Australian Dollar could have more room to appreciate against its New Zealand counterpart in the aftermath of a more dovish RBNZ. In late March, the Reserve Bank of New Zealand hinted that a rate cut could be the more likely option going forward following a downgrade in their economic outlook. This has been the case with most major central banks recently, including the Fed and ECB.

Typically tending to behave as a risk-neutral pair, AUD/NZD tends to focus more on monetary policy bets from the RBA and RBNZ respectively. The former has not declared its bias towards easing, and markets are around ¾ confident of a rate cut by year-end when looking at overnight index swaps. At its most recent interest rate decision this month, the Reserve Bank of Australia did drop hints that it is closely watching the risks.

Until higher odds of a cut may be confirmed by the central bank, the focus for AUD/NZD will be on how domestic economic news flow crosses the wires. According to the Citi Surprise Index, data crossing the wires out of Australia are tending to be rosier than those from New Zealand as of late. As such, there may be a chance that the currency pair trades higher in the interim.

Here are key event risk to keep an eye out for ahead via the DailyFX Economic Calendar

AUD, NZD Event Risk This Week

AUD/NZD New Uptrend in Focus with Conflicting Technical Signals

AUD, NZD Event Risk Next Week

AUD/NZD New Uptrend in Focus with Conflicting Technical Signals

AUD/NZD Technical Analysis

On the daily AUD/NZD chart below, the climb above the falling trend line from August (noted beforehand) appears to have overturned the dominant downtrend. From the bottom in March, prices rose 2.7% at the time of this writing. Near-term resistance at 1.0544 was also cleared, opening the door to testing the next psychological barrier between 1.0639 and 1.0670.

AUD/NZD Daily Chart

AUD/NZD New Uptrend in Focus with Conflicting Technical Signals

Zooming in on the 4-hour chart below shows a rising support line that has guided the pair higher in the near-term (pink line). Negative RSI divergence does show that upside momentum is fading, hinting that a turn lower could be in store next. However, I would like to see a close under 1.0398 to confirm that AUD/NZD’s upside breakout might be a false one.

You may follow me on twitter @ddubrovskyFX for updates in the Australian and New Zealand Dollars. I will be closely watching this pair ahead.

AUD/NZD 4-Hour Chart

AUD/NZD New Uptrend in Focus with Conflicting Technical Signals

ChartsCreated in TradingView

FX Trading Resources

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

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

https://www.dailyfx.com/free_guide-tg.html?ref-author=Dubrovsky

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James Stanley , Currency Strategist

James Stanley
My Picks:  EURUSD, GBPUSD, AUDUSD, USDCAD
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

Forex Talking Points:

- DailyFX Quarterly Forecasts for Q2 have been recently released, 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.

- If you’d like more color around any of the setups below, join in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those sessions from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

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

FX Market Congestion Continues – Is a Break Nearing?

With the first week of Q2 almost in the books, the potential for a continuation of US Dollar strength remains as one of the more interesting themes across the FX landscape. To be sure, the dearth of volatility remains as a number of pairs continue with congestion or range formations. Much of this can be drawn back to the FX market’s two largest venues in EURUSD and the US Dollar; both of which are remain in non-directional patterns that go back to Q4 of last year.

Next week’s economic calendar brings a few items of interest that may help to break that impasse. On Thursday of next week, the European Central Bank speaks to markets following the March rate decision that saw an announcement of fresh stimulus. That led into a quick move of Euro-weakness around the announcement, which helped the US Dollar to rally up to a key point of chart resistance: But less than 24 hours after that stimulus announcement a very disappointing NFP report was released, and USD-weakness, and Euro-strength took over for the next week-and-a-half.

Below I look into four USD-related markets, with breakout potential in the two major pairs of EURUSD and GBPUSD to go along with range or mean-reversion potential in AUDUSD and USDCAD.

EURUSD Bullish on Hold Above 1.1187, Bearish on Breaks Below 1.1175

Surprisingly, the ECB’s announcement of another fresh round of TLTRO’s had a bullish impact on EURUSD for much of March. Sure, the initial reaction was a test-below a key zone that makes up the support side of a range that had been in-force for four months (five months, at this point); but that was soon followed by a bullish move in the pair that saw EURUSD rally all the way up to range resistance at 1.1448. It wasn’t until after the FOMC rate decision later in the month that Euro bears were able to re-gain control; and that theme has lasted through the first week of Q2.

This week saw a few different tests around that support zone; and as I remarked in the Thursday webinar, this appears to be a bear trap on a longer-term basis.

EURUSD price action has found higher-low support at the Fibonacci level of 1.1212, which is the 61.8% retracement of the ‘lifetime move’ in the pair. Just below that, at 1.1187 is the 61.8% retracement of the 2017-2018 major move, helping to mark the low-end of that range support. A hold above these levels through next week’s open keeps the door open for topside strategies, targeting an initial test of 1.1250 followed by secondary targets at the 1.1300 handle.

EURUSD Four-Hour Price Chart

eur/usd eurusd four hour price chart

Should bears begin to make headway on a break below support, particularly in the lead-up to the ECB rate decision on Thursday, and bearish breakouts can begin to get attractive again. The post-ECB and March swing-low came-in around 1.1175, and a down-side push below this price can begin to open the door for bearish strategies; with initial targets around the 1.1125 level.

EURUSD Weekly Price Chart

eurusd eur/usd weekly price chart

GBPUSD Re-Tests 1.3000: Break or Bounce

There’s a similar backdrop in GBPUSD at the moment and with Brexit remaining forceful in the headlines, markets are likely due for a continuation of volatility there.

Earlier this week I looked into a zone of confluent resistance in GBPUSD; and that held as prices pushed back down to the 1.3000 big figure. This is a zone of support that’s held the lows in the pair for six weeks now, and that support has held through a variety of bearish drivers on the Brexit-front. A hold of the support zone that runs from 1.2962-1.3000 can keep the door open for bullish strategies in the pair, looking for prices to move back towards 1.3087-1.3117, followed by a re-test of the 1.3181-1.3187 area that cauterized this week’s highs.

GBPUSD Four-Hour Price Chart

gbp/usd gbpusd four hour price chart

On a longer-term basis, as discussed yesterday, there may be brewing bearish trend potential brewing in GBPUSD. Late-March price action saw prices push below a key trend-line on the chart that had held the lows for almost all of Q1. That support trend-line came in as resistance this week around that confluent spot on the chart; and this may be signaling the oncoming of fresh trend potential in the pair.

If sellers are able to push below support, the door could soon open to bearish breakout potential, initially targeting the confluent area around the 1.2900 handle on the chart.

GBPUSD Daily Price Chart

gbpusd gbp/usd daily price chart

Bearish USDCAD on Hold Below 1.3470

On the mean-reversion side of the matter, USDCAD remains of interest as the pair trades very near an area of longer-term resistance. I had discussed USDCAD at length in this morning’s report entitled, USDCAD Re-Test 1.3400 as Canadian Jobs Data Disappoints; finishing the piece with a look at the weekly chart in USDCAD.

There are two longer-term Fibonacci levels sitting just above current prices that have helped to hold the highs inside of 1.3500 over the past month. At 1.3443 is the 23.6% retracement of the 2011-2016 major move; and at 1.3463 is the 61.8% retracement of the 2001-2007 major move. As discussed this morning, a hold of resistance at-or-below this area can keep the door open for short-side strategies, particularly for traders looking to bet against a bullish breakout in the US Dollar’s ascending triangle formation.

USDCAD Weekly Price Chart

usdcad usd/cad weekly price chart

AUDUSD Range Sets the Battle Lines

Also in the realm of mean reversion is the multi-month range that continues to hold in AUDUSD. Despite the US Dollar’s theatrics in the month of March, AUDUSD has remained fairly consistent. Support has held from around .7050-.7075 over the past few weeks; while resistance has continued to come-in around .7125-.7150. So, there hasn’t been a lot of stretch; but the consistency with which this has held can keep the door open for range continuation.

Outside of these boundaries are more pertinent support/resistance areas; with support around the .7000 big figure on the other side of the resistance zone that’s held from .7185-.7206. If the tighter range breaks, mean reversion could still be sought out at either of these respective zones, with bears holding on to short-side strategies until the .7206 level is taken out, while bulls focus-in on support defense of the .7000 psychological level until that’s taken-out.

AUDUSD Four-Hour Price Chart

audusd aud/usd four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts 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

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Nick Cawley , Analyst

Nick Cawley
My Picks:  EURGBP - Negative Bias Remains
Expertise:  Fundamental and Technical Analysis
Average Time Frame of Trades:  One Week to Several Weeks

The DailyFX Q2 2019 Forecasts are now available to download including our forecasts for GBP and EUR.

EURGBP - Negative Longer-Term Bias

EURGBP continues to struggle to make any headway despite a lack of any real progress in the fractious Brexit negotiations. Sterling remains under a cloud with little expected to happen until Brexit negotiations are complete, while the Euro is facing its own battles as its economy continues to slow and price pressures continue to ease. As a pair EURGBP have moved lower since the start of the year and touched 0.8472, a low last seen in My 2017. Subsequent rebounds have been short-lived and offered an opportunity to open fresh short-positions. The ECB are likely to keep monetary policy looser for longer to boost inflation and growth, while a successful Brexit resolution will see the Bank of England look at hiking interest rates at the end of the year if the UK jobs and wages market continue to grow.

The latest daily chart shows the downtrend from the January 2 high print at 0.9116 remains intact while a secondary trend lower from the March 21 swing-high at 0.8723 also remains in place. EURGBP currently trade around 0.85750 and if trend resistance is broken will run into further resistance at 0.8624, the 23.6% Fibonacci resistance, just ahead of the 5-day moving average at 0.8628. If these levels are broken and closed above, EURGBP may struggle to break through the 50% Fib level at 0.8718 and the March 21 high at 0.8723.

To the downside, support is seen between 0.8480 and 0.8503 before the multi-month low of 0.8472 comes into play. After here, a couple of old swing-lows made in December 2016 and April 2017 between 0.8300 and 0.8310 may come under threat.

While EURGBP looks set to trade with a negative bias going forward, a no deal Brexit would change the outlook against Sterling sharply and is a risk that traders should price in to any Sterling set-up.

EURGBP Daily Price Chart (October 2018 – April 5, 2019)

EURGBP: Short-Term Resistance Threatened, Bias Remains Negative

IG Client Sentiment Datashows how retail investors are positioned in a range of currencies and asset markets and how daily and weekly positional changes shift sentiment.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURGBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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Dimitri Zabelin , Junior Currency Analyst

Dimitri Zabelin
My Picks:  Bullish
Expertise:  Global Political Economy
Average Time Frame of Trades:  1-3 Weeks

USD/SEK TECHNICAL ANALYSIS

  • USD/SEK edging toward key resistance at 9.3110
  • Breach with follow through may result in bullish spike
  • US NFP data may cause short-term volatility ahead

See our free guide to learn how to use economic news in your trading strategy!

USD/SEK is approaching a key psychological barrier at 9.3110, which if broken and confirmed with follow-through could result in a price spike as traders’ confidence in the pair’s bullish momentum is solidified. Since breaking through the upward-sloping January 2019 support area, the pair appears to have now found a new incline guiding in from March. This support will be tested as the pair approaches the psychological milestone at 9.3110.

If March support holds and the pair climb through 9.3110, it will signal that its upward trajectory is stronger than the selling pressure associated with upcoming resistance. To receive updates on the Swedish Krona’s price action, you may follow me on Twitter at @ZabelinDimitri.

USD/SEK – Daily Chart

Chart Showing USDSEK

Short-term volatility from the upcoming US non-farm payroll data may rattle the chart formation and could cause violent swings in the pair in either direction, though it is unlikely to alter the broader uptrend the pair has seen since the start of 2018. The default for the pair appears to be bullish despite small retreats and congestions it has experienced along the way.

USDSEK – Daily Chart

USDSEK Chart

FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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