Analyst Picks

James Stanley , Currency Strategist

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

FX Setups for the Week of December 17, 2018

- DailyFX Quarterly Forecasts have been updated for Q4, and are available directly from the following link: DailyFX Trading Guides, Q4 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.

US Dollar Tests Fresh Yearly Highs Ahead of December FOMC Rate Decision

Next week brings a big event on Wednesday with the December FOMC rate decision. While a hike has been long-anticipated at this meeting, the big question is how aggressively the bank might look to mold policy into next year, and this will place emphasis on forward-looking projections. A hike next Wednesday would mark the fourth such move so far in 2018, and the US Dollar has shown considerable strength over the past nine months to illustrate that theme. This has amounted to a test of fresh yearly highs earlier this morning as that FOMC rate decision nears, and this keeps the door open on either side of the matter as a shift at the Fed could open the door for deeper pullback potential. Below, I look into two setups on each side of the US Dollar with eyes towards next week.

Bearish EUR/USD on Break-Below 1.1187

EUR/USD tested through short-term support this morning as taken from the symmetrical triangle that’s been building over the past month; but from a longer-term perspective, a bigger zone lurks just below price action that could further constrain down-side approaches. At 1.1212 is the 61.8% Fibonacci retracement of the 2000-2008 major move in EUR/USD, and just below that at 1.1187 is the 61.8% marker of the 2017-2018 bullish move. EUR/USD hasn’t tested below this level in 18 months, and sellers pulled up shy of a re-test at 1.1212 in November as worries around Italy were still heating up.

While not averse to short-side themes elsewhere on the chart, for a ‘big’ move of Euro weakness, I would first like to see this zone tested through before looking for targets around 1.1000 or lower. A bearish test-below 1.1187 can re-open the door for short-side strategies in the pair.

EUR/USD Daily Price Chart: Key Support and Resistance on Either Side of Triangle

eurusd eur/usd daily price chart

Chart prepared by James Stanley

Bearish USD/CHF on Hold Below Parity

On the short-side of the US Dollar, USD/CHF has recently become of interest. I looked into the pair for USD-weakness strategies last month as it appeared to be topping-out. Prices began to break-lower in mid-November, and that weakness ran all the way until a Fibonacci level could come into play to help cauterize the lows. This took place at .9902, which is the 61.8% retracement of the 2016-2018 major move in the pair; and that led to a support bounce that ran into the vaulted parity level. Parity held the highs for a little over a week as the calendar turned into December, and this level remains of interest for resistance in USD/CHF.

For next week I want to see USD/CHF hold below parity on Monday, at which point the prospect of short-side themes becomes attractive again. If that resistance remains respected, this can open the door for rather tight stops above the level, and targets re-directed towards the .9902 support, followed by .9850 and .9750.

USD/CHF Four-Hour Price Chart

usdchf usd/chf four hour price chart

Chart prepared by James Stanley

Bearish AUD/USD On Hold Below .7250

AUD/USD has had a very interesting Q4. The pair came into October in the midst of a nine-month sell-off, sticking below a bearish trend-line for much of the period. What happened in October wasn’t necessarily bullish as much as it was simply ‘less bearish,’ but as the US Dollar was ripping to fresh highs, AUD/USD started to show a respect of the lows with buyers holding support above the .7000 big figure. And as the door opened into November, the pair was ready to jump as a short-term theme of USD-weakness showed up. That bullish AUD/USD theme lasted into the first few days of December, but over the past week that’s started to come into further question as sellers continue to push towards fresh lows.

In yesterday’s webinar, I looked into a brewing bear flag formation. Prices had bounced from a key support zone in a rather consistent fashion, allowing for the build of a bullish channel near support. That bear flag unfolded this morning as the Dollar ran up to fresh yearly highs, and this amounted to a print of six-week lows in the pair. For next week, I want to look for resistance around that prior area of support that runs from .7185-.7205; and provided that prices remain below the .7250 level, the door can remain open for bearish strategies. The price of .7120 can be looked at as an initial target, at which point stops can be adjusted to break-even; and secondary targets can be cast down towards .7085. Optionally, a third scale on the lot can be left open, targeting a push down to .7050.

AUD/USD Two-Hour Price Chart

audusd aud/usd two hour price chart

Chart prepared by James Stanley

Bearish USD/JPY on Hold Below 114.60

Next week brings a couple of key drivers to the fray for USD/JPY, as the Wednesday FOMC rate decision is followed by a Bank of Japan rate decision later that night. And then Thursday brings Japanese inflation data for the month of November, helping to provide a few different drivers of interest that can keep USD/JPY on the move.

On the USD/JPY chart, the 115.00 level remains as an item of interest as sellers have continually come-in to offer resistance below this level over the past 21 months. The 2018 swing-high was in the opening day of Q4 around 114.50; but that led into another bearish run in the pair that pushed prices back-below 112.00. Since then, there have been multiple attempts to re-approach that high, each of which has failed, helping to build in lower-highs over the past two months to go along with almost a month of support around the 112.30 level. This opens the door for short-side plays, looking for prices to revert back towards that support area lurking around 112.30; with secondary targets set around 111.63.

USD/JPY Eight-Hour Price Chart

usdjpy usd/jpy eight 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 for Q4 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 , Market Analyst

Paul Robinson
My Picks:  EUR/USD - Pending Triangle Breakout
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Looking for forecasts, trade ideas, and educational content? Check out the DailyFX Trading Guides page.

EUR/USD triangle ready to break, ECB to do it?

The narrowing range (triangle) was a focus last week, thinking it would have broken by now. But so far we remain awaiting a resolution. Today’s ECB meeting could be the catalyst, or not. The last grain of sand may indeed be something else or nothing at all, just more selling than buying or vice versa.

At any rate, the developed triangle is running out of real estate. A top-side break is at risk of failing, with trend/tone working against it along with resistance levels immediately following any breakout which might develop.

A downside break has the trend/tone in its favor. And while there is support nearby via the November low at 11216 and the underside trend-line from November of last year, those levels are further from the apex than resistance is, and given the trend those levels are at greater risk of breaking than top-side levels are.

Triangles, like all chart patterns, need to be validated before full-risk should be put on. A top-side break isn’t that appealing while a downside break is, simply for the reasons mentioned above. While I personally don’t like the idea of buying a bullish break, at the very least it will keep from having on short exposure.

See how other traders are positioned in the Euro via the IG Client Sentiment page.

EUR/USD Daily Chart (Triangle and levels)

EUR/USD daily chart (Triangles and levels)

EUR/USD 4-hr Chart (Triangle near apex)

EUR/USD 4-hr chart (triangle near apex)

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held 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’s 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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Nick Cawley , Analyst

Nick Cawley
My Picks:  NZDCAD - Pending Short on Supportive Technicals
Expertise:  Fundamental and Technical analysis
Average Time Frame of Trades:  One week to several weeks

NZDCAD – Pending Short at 92.55 – Recent December highs.

Stop Loss – 93.80

Target 1 (50%) – 91.10 – 50% Fibonacci retracement.

Target 2 (50%) – 89.20 – 61.8% Fibonacci retracement.

The DailyFX Q4 Forecasts are available to download.

NZDCAD – Long-Term Down Trend Remains in Place

The recent oil bear market hit the Canadian dollar hard and against the New Zealand dollar sent it back to the bottom of the NZDCAD downtrend, started from the November 9, 2016 high at 99.28. Since then the chart has been dominated by lower highs and lower lows. The chart below shows the downtrend crossovers with the various Fibonacci retracement levels of the September 2015 – November 2016 rally where price action reversed. The current spot level – 91.48 - is nearing both the upper line of the downtrend around 93.00 and the 38.2% Fibonacci retracement level at 93.03 and is likely to provide a reversal point.

In addition, the RSI indicator – at the bottom of the chart – has just eased out of overbought territory. The previous times the RSI indicator showed either overbought or oversold levels, the price reversed back into the trend channel.

NZDCAD Daily Price Chart (August 2015 – December 13, 2018)

NZDCAD: Pending Short on Supportive Technicals

IG Client Sentiment Datashow how retail traders are positioned in a wide range of financial products and how this can help you when you trade.

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 NZDCAD – 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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Nick Cawley , Analyst

Nick Cawley
My Picks:  EURGBP *** Trade Complete ***
Expertise:  Fundamental and Technical Analysis
Average Time Frame of Trades:  One day to Two weeks

*** Trade Completed ***

Pending Long – 0.8835 --- Entered Trade on November 28.

Stop Loss – 0.8790

Target 1 (50%) – 0.8935 -- Hit Target December 4.

Target 2 (50%) – 0.8985 -- Hit Target December 10.

The DailyFX Q4EURand GBP Forecasts are available to download.

EURGBP – Solid Technical Support Nears

A battle of two of the current weaker currencies in the market has kept moves limited in the past few days as Brexit negotiations continueand fears that the Euro-Zone growth is weakening grow. Against other currencies, especially the USD, both GBP and EUR continue to struggle and are likely to remain weak as fundamental rule price action.

On a technical level, EURGBP is nearing a cluster of support levels that should hold unless something dramatic, and GBP positive, happens during current Brexit negotiations. On the charts, the 200-day moving average, currently at 0.8841 acts as first support with the 20- and 50-day moving averages at 0.8812 and 0.8814 close behind. To round off support levels, the 61.8% Fibonacci retracement level is fixed at 0.8803. This cluster of support should provide resilient in the current market and we would look to go long of a small break of the 200-day ma at 0.8835. We will keep a tight stop loss on this trade at 0.8790 and look for a short-time frame for the trade to play-out. Targets are set at 0.8935 (50%) and 0.8985 (50%).

It is worth noting that a break and close above 0.8940 breaks the sequence of lower highs started in late-August and would turn the chart slightly more bullish for the medium-term.

EURGBP Daily Price Chart (May – November 28, 2018)

EURGBP: Trade Completed

IG Client Sentiment Datashow that retail investors are 35.4% net-long EURGBP - a bullish contrarian trading bias – but when coupled with recent changes – traders are further net-long on a daily and weekly basis - this gives us a mixed EURGBP trading bias.

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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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 holds a narrow range after failing to test the 2018-low (1.1216), and the exchange rate may continue to consolidate ahead of the U.S. Non-Farm Payrolls (NFP) report as Federal Reserve officials strike a less-hawkish forward-guidance for monetary policy.

Even though the Federal Open Market Committee (FOMC) is widely expected to deliver a 25bp rate-hike later this month, recent comments from Fed Chairman Jerome Powell appear to be swaying the monetary policy outlook as the central bank head shows little interest in extended hiking-cycle.

Moreover, New York Fed President John Williams, a permanent voting-member on the FOMC, struck a similar tone as ‘there are risks on the horizon that we need to be very attentive to,’ and the committee may continue to change its tune in 2019 especially as Mr. Williams argues that ‘we’re well-positioned to adjust our path of interest rates if the economic data disappoint.’

Image of fed interest rate forecast

With that said, Chairman Powell & Co. may continue to project a longer-run interest rate of 2.75% to 3.00% at the last meeting for 2018, and the FOMC appears to be on track to conclude its hiking-cycle next year as the central bank shows a greater willingness to tolerate above-target inflation.

In turn, updates to the NFP report may do little to influence the monetary policy outlook as Average Hourly Earnings are expected to hold steady at 3.1% per annum in November, and signs of limited wage growth may produce headwinds for the greenback on the back of waning interest-rate expectations.

Nevertheless, the diverging paths for monetary policy fosters a long-term bearish outlook for EUR/USD as the European Central Bank (ECB) is on track to carry the zero-interest rate policy (ZIRP) into 2019, with the Euro susceptible to a dovish policy statement as the Governing Council remains in no rush to normalize monetary policy. 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

Near-term outlook for EUR/USD remains uneventful as it carves a narrowing range, with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator appears to be stuck in a wedge/triangle formation. In turn, the 1.1510 (38.2% expansion) region may keep EUR/USD capped over the coming days, with the first area of support coming in around the 1.1220 (78.6% retracement) area.

For more in-depth analysis, check out the Q4 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.

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Paul Robinson , Market Analyst

Paul Robinson
My Picks:  EUR/USD Triangle Breakout
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Looking for forecasts, trade ideas, and educational content? Check out the DailyFX Trading Guides page.

EUR/USD triangle nearing the apex…

In the most recent weekly Euro technical forecast this is what I had to say, “It may very well take the better part or all of next week before we get a resolution, so hanging tight may be the name of the game next week.”

Indeed, it’s been a ‘boring’ week so far for the Euro, but we are getting close to at least a little movement. With price where it is in proximity to the apex of the triangle we could see a breakout at any time now. Trend and general tone favor a downside break, but we can’t rule out an upside breakout.

Maybe down or maybe up, you say? That is the nature of these patterns, the contracting volatility doesn’t in of itself tell you which way the next move will be. It just tells you there is likely to be a move. Simply put, follow the break.

A downside break will have 11215 and the underside trend-line from November 2017 in focus, or worse towards 11119. The trend is down so support levels are at a greater threat to break than resistance levels. On break to the top-side resistance is rather close in several forms from the mid-11400s to the mid-11500s.

Because resistance is so close and the move would be developing against the trend, the better play here, in my view, is to wait and see if a breakout into resistance won’t stall and offer an opportunity to get short.

From a tactical standpoint, it’s been tough as of late and while this might not turn out to be a great swing-trade a breakout can help shape a directional bias for short-term maneuvers.

EUR/USD Daily Chart (Triangle, levels)

EUR/USD daily chart, triangle, levels

Struggling right now? It happens to the best. Check out these four core ideas to help boost your Confidence as a Trader.

EUR/USD 4-hr Chart (Triangle breakout nearing)

EUR/USD 4-hr chart, triangle near breakout

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held 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’s 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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Tyler Yell, CMT , Forex Trading Instructor

Tyler Yell, CMT
My Picks:  Bullish USD/CAD
Expertise:  Technical Analysis, Intermarket Analysis, Fixed Income, Derivatives
Average Time Frame of Trades:  2-10 Weeks

The BIG Idea: USDCAD took a trip to new highs on the year on Wednesday after the Bank of Canada dropped dovish comments that they see more room for non-inflationary growth and that the energy sector could be materially weaker than previously thought. At the same time, the US continues to show signs of overheating with the front-end of the US yield curve moving up aggressively relative to the belly and back-end this week that could see US Dollar strength continue.

  • Point to Establish Long Exposure: At market (C$1.3357 per USD)
  • Spot: C$1.3357 per USD
  • Target 1: C$1.3598 per USD (Minor Fibonacci expansion target,) > 1:1 Risk: Reward Ratio
  • Target 2: C$1.38206 per USD (Major Fibonacci confluence target,)1:5 Risk: Reward Ratio
  • Invalidation Level: C$1.3268 per USD (December opening range low,) 85 pip stop

Access Our Currency Forecasts for FREE here

Bullish USD/CAD Trade Structure:

Bullish USD/CAD on Deteriorating CA Fundamentals and Dovish BoC

The Big Picture on Shorting the Canadian Dollar:

Please add a description for the image.

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

USD/CAD has broken to new highs, but that does not mean it is time to sell. Quite the contrary, the spread between the US Treasury 2yr yield and the CA 2Yr Treasury yield is near the widest in a year, and the Bank of Canada showed their remains capacity in the economy for growth before inflation pushes them to hike further.

A Widening US/CA Yield Spread Aligns With Weaker CAD

Please add a description for the image.

Data source: Bloomberg

On Wednesday, the Loonie hit the lowest level of 2018. Why? The short answer is the central bank turned dovish after leaving interest rates unchanged, and in so doing they pared back optimism on the economic outlook.

Recently, I shared an article that showed the main Canadian Oil benchmark, Western Select Crude from Alberta had fallen alongside Canadian terms of trade throughout 2018.

Weakening Terms of Trade Highlights BoC's Materially Weaker Energy Sector Comment

Please add a description for the image.

Data source: Bloomberg

The chart shows a drop from peak to trough in WCS Crude of 76.7% though it has rebounded on an announced production cut to stabilize the market. At the same time, Canada's Terms of Trade shows a marked breakdown though it recovered alongside WCS.

The question appears to be whether or not the damage is done or if the ripple effects will still be felt. If ripples will continue to flow through the CA economy, there could be a slowing of the Bank of Canada to lift rates as was earlier hoped.

When looking to rate expectations, traders can see that the pricing in of a 25bp rate hike from the Bank of Canada is falling. As it falls, so does the hopes of CAD bulls.

Rate Hike Bets by the Bank of Canada for early 2019 Tumble

Please add a description for the image.

Data source: Bloomberg

The US Dollar continues to be the stronghold of Major Currencies. Among 16 currencies, all are down to the US Dollar year to date with the Japanese Yen the strongest relatively only down 0.45% with the Brazilian Real down -14.4%.

The Canadian Dollar is down -5.95% year to date with 0.6% coming on Wednesday, December 05 after the Bank of Canada turned dovish relative to expectations.

What is IG Client Sentiment Saying about the Canadian Dollar?

Please add a description for the image.

Source: IG Client Sentiment

Retail trader data shows 16.3% of traders are net-long with the ratio of traders short to long at 5.15 to 1.

Traders have remained net-short since Oct 09 when USDCAD traded near 1.28092; the price has moved 4.5% higher since then. The number of traders net-long is 45.7% lower than yesterday and 49.8% lower from last week, while the number of traders net-short is 48.2% higher than yesterday and 23.4% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDCAD-bullish contrarian trading bias(emphasis mine.)

FOREX TRADING RESOURCES TO SUPPORT YOUR STRATEGY

We hope you enjoy DailyFX’s new podcast: Trading Global Markets Decoded

DailyFX offers a surplus of helpful trading 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 feedhas 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 watch.

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 Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Talk markets on twitter @ForexYell

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Martin Essex, MSTA , Analyst and Editor

Martin Essex, MSTA
My Picks:  Prepare to go Long EURGBP
Expertise:  Technical & Fundamental Analysis
Average Time Frame of Trades:  Next Few Days

EURGBP price, news and analysis:

  • The EURGBP price has been trending lower since late August but has now risen above the resistance line joining the lower highs and, if it can hold on to its gains, should make further progress.
  • That is despite a senior EU legal adviser saying the UK has the right to withdraw its Brexit divorce petition, making no-Brexit possible if a proposed EU-UK deal is rejected by the UK Parliament.

Positive technical signal for EURGBP price

The EURGBP price has risen above a downward channel in place since late August, making a move higher likely. So far, the break is looking tentative so it might be wise to wait for it to be confirmed before going long the pair but, if it is confirmed, the advance could be strong.

EURGBP Price Chart, Four-Hour Timeframe (August 16 – December 4, 2018)

Latest EURGBP price chart.

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

As the four-hour chart above shows, the pair first broke above trendline resistance last Thursday, moved back below it and has now breached it again. That is clearly positive, especially as GBP is currently benefiting from a legal judgment that the UK can overturn its decision to exit the EU if it wishes to.

A confirmed break would bring 0.90 into view and, if that can be reached, the next target would be the high just under 0.91 touched on August 28. Meanwhile, the downside is protected by the 20-day moving average at 0.8859, the 50-dma at 0.8822, the 100-dma at 0.8881, the October 10 low at 0.8723 and the November 13 low at 0.8656.

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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Paul Robinson , Market Analyst

Paul Robinson
My Picks:  USD/JPY & USD/CAD
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Looking for forecasts, trade ideas, and educational content? Check out the DailyFX Trading Guides page.

USD/JPY short-term weakness, building a triangle

USD/JPY reversed yesterday on Fed Chair Powell’s reversal in hawkish tone after tagging the top-side trend-line which makes up a developing triangle formation since early October. The reversal is gaining traction thus far in today’s trade and should continue to do so in the very near-term.

However, at this time the downside looks limited as the triangle tightens up towards the apex. While this happening will mean that trading will worsen in terms of range expansion, with a little patience an explosive breakout could be in store just down the road.

Which way? That we will have to wait for. But the positioning of the triangle comes right at resistance from all the way back to May of last year, adding to the pattern's potential explosiveness. A bullish breakout will require clearance out of the triangle and above 11473 for USD/JPY to gain legs. A break breakdown will require the underside trend-line of the pattern to be broken.

Given the trend is higher since earlier in the year and the fact that the pattern is forming just below big resistance, a break to the top-side will hold more appeal, but in either case I’ll wait for confirmation before running with a trading bias.

USD/JPY Daily Chart (Near-term weakness, Triangle forming)

USD/JPY daily chart, triangle at resistance

These 4 tenets can help bolster your Confidence as a Trader.

USD/CAD rejection near June high has trend-line back in focus (again)

Yesterday’s reversal from near the June high could bring some pressure on USD/CAD soon. There is strong trend support (most visible on the 4-hr time-frame), which if broken should lead to decent downside follow-through. However, the trend-lines are to be trusted until broken.

But given the powerful rejection yesterday we may finally see USD/CAD not make good on the trend support it’s relied on for several weeks, and turn the trading bias in favor of shorts. Support to watch on a break arrives around 13180, 13127, 13050, the trend-line from February, and the 200-day which come in close to 13000.

USD/CAD Daily Chart (Rejection at June high)

USD/CAD daily chart, rejection at June high

USD/CAD 4-hr Chart (See if trend support can continue to hold)

USD/CAD 4-hr chart, see if trend support can continue to hold

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held 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’s 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

Read More  
Nick Cawley , Analyst

Nick Cawley
My Picks:  EURGBP - Pending Long as Support Nears
Expertise:  Fundamental and Technical Analysis
Average Time Frame of Trades:  One day to Two weeks

Pending Long – 0.8835

Stop Loss – 0.8790

Target 1 (50%) – 0.8935

Target 2 (50%) – 0.8985

The DailyFX Q4EURand GBP Forecasts are available to download.

EURGBP – Solid Technical Support Nears

A battle of two of the current weaker currencies in the market has kept moves limited in the past few days as Brexit negotiations continue and fears that the Euro-Zone growth is weakening grow. Against other currencies, especially the USD, both GBP and EUR continue to struggle and are likely to remain weak as fundamental rule price action.

On a technical level, EURGBP is nearing a cluster of support levels that should hold unless something dramatic, and GBP positive, happens during current Brexit negotiations. On the charts, the 200-day moving average, currently at 0.8841 acts as first support with the 20- and 50-day moving averages at 0.8812 and 0.8814 close behind. To round off support levels, the 61.8% Fibonacci retracement level is fixed at 0.8803. This cluster of support should provide resilient in the current market and we would look to go long of a small break of the 200-day ma at 0.8835. We will keep a tight stop loss on this trade at 0.8790 and look for a short-time frame for the trade to play-out. Targets are set at 0.8935 (50%) and 0.8985 (50%).

It is worth noting that a break and close above 0.8940 breaks the sequence of lower highs started in late-August and would turn the chart slightly more bullish for the medium-term.

EURGBP Daily Price Chart (May – November 28, 2018)

EURGBP: Pending Long as Support Nears - Tight Stop

IG Client Sentiment Datashow that retail investors are 35.4% net-long EURGBP - a bullish contrarian trading bias – but when coupled with recent changes – traders are further net-long on a daily and weekly basis - this gives us a mixed EURGBP trading bias.

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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