Analyst Picks

Jeremy Wagner, CEWA-M , Head Forex Trading Instructor

Jeremy Wagner, CEWA-M
My Picks:  Short EURUSD on Breakout
Expertise:  Elliott Wave Theory, Technical Analysis
Average Time Frame of Trades:  2 days to 2 weeks

EUR/USD has reached multi-year trend lines at 1.25, which also is significant according to Elliott Wave Theory. Our Elliott Wave analysis suggests a large trend lower begins from nearby levels.

The Elliott Wave pattern on EURUSD is ripe for a turn lower. We described previously how three ending waves meet a 10-year trend line through a cluster of price zones near 1.25-1.26. This price zone on EURUSD plus a mature Elliott Wave pattern hints a bearish turn is upon us.

In these scenarios, I like to implement breakout trades. In this case, a break down below the March 1 low of 1.2154 is significant for a couple of reasons.

Weekly EURUSD Elliott Wave Count

EURUSD Elliott Wave analysis weekly chart.

First, as mentioned above, we can count the minimum number of waves needed to complete the bullish three year Elliott Wave expanded flat pattern.

Secondly, a break to 1.2154 means EURUSD would have to break the upward sloping red support line that has contained prices for the past 15 months. This line was created by connecting the ends of waves 2 and 4 to form the upward sloping Elliott Wave channel. Therefore, a break below this support trend line confirms further the mood of the EURUSD market is changing and that the three-year flat pattern has likely ended.

Notice how RSI is diverging into the new price highs. That is common on fifth waves of Elliott Wave impulse waves.

EURUSD Trade Set Up

Entry: Short on a break at 1.2153

Stop Loss: above a recent swing high near 1.2360. Manually trail stop loss in future updates.

First Target: 1.1554 (Risk to reward ratio is 1 to 3)

Second Target: 1.09 to 1.12 (risk to reward ratio is 1 to 5)

Third Target: Open as EUR/USD could eventually drop to retest 1.04 lows

EURUSD Elliott Wave analysis intrady March 19.

Elliott Wave Theory FAQ

“I hear that a lot of traders struggle with profitability, why?”

Regardless of the style of analysis, many traders do lose money because they do not take the time to study the market and the effect of leverage. At DailyFX, we have studied millions of live trades and boiled our study down into a Traits of Successful Traders guide. You will find how leverage and human nature affects our trading so you can implement tactics like ones described in the trading idea above.

The trade scenario mentioned above does adhere to the Traits of Successful traders we researched in the guide.

Where can I learn more about Elliott Wave Theory and how to trade with it?

Elliott Wave Theory is a study of waveforms, patterns, and wave structure. The rules and guidelines are simple and can be found in these beginner and advanced Elliott Wave guides. The challenge with Elliott Wave principle is identifying and interpreting the waveforms in real time. As a result, I would suggest you follow the writing and webinars DailyFX has devoted to Elliott Wave Theory.

New to FX trading? We created this guide just for you.

---Written by Jeremy Wagner, CEWA-M

Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.

Communicate with Jeremy and have your shout below by posting in the comments area. Feel free to include your Elliott Wave count as well.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

Join Jeremy’s distribution list.

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Tyler Yell, CMT , Forex Trading Instructor

Tyler Yell, CMT
My Picks:  Bearish CAD/JPY On Momentum and Fundamental Divergence
Expertise:  Technical Analysis, Intermarket Analysis
Average Time Frame of Trades:  1-3 Weeks

Point to Establish Short Exposure: Retracement to 83.10/50 zone

Spot: 81.75

Initial Target/Point to bring a stop to break even:79.50 (1W Forward 2 Std. Dev. Bearish Target based on 1W Implied Vol)

Swing Target (If not holding trade :)78.42 JPY per CAD (78.6% Fib of 2016-2018 Range)

Invalidation Level: 85.30 (38.2% retracement of 2018 Range)

If you are looking to create your own trading ideas, you may enjoy our FREE Trading Guides

The Canadian dollar has been on the defensive lately especially after Bank of Canada chief Stephen Poloz appeared to have taken an April rate hike off the table. A key market that traders will look at to see how a rate hike is priced in is the Overnight Index Swap market, which shows different rate levels at different tenors based economic developments and central bank guidance.

A look at the falling probability of the hike can help you see how why the Canadian Dollar rate has recently weakened as the probability for a hike has fallen from ~70% to ~25% this week.

Falling Probability of a Bank of Canada Rate Hike Weakens CAD

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Data source: Bloomberg

On the other side of the spectrum is the stubbornly strong Japanese Yen. The Yen has risen as Treasury yields continue to fall on disappointing economic data. Most recently US Retail Sales disappointed and the reappointment of the White House Sr. Economic Advisor with a Trump loyalist, Larry Kudlow seems to heighten the potential of an aggressive trade stance that results in retaliation from key global trade players like Europe and China.

Japanese Yen Rate Forecast Available Here

Should such a retaliation take place, the Japanese Yen could see the further strengthening and the weak Canadian Dollar may be the path of least resistance for Yen gains.

A technical dashboard that I share on FX Closing Bell, Monday’s through Thursday shows CAD as rather weak per the RSI(3) to see short-term momentum. On the graph below, look to CADJPY for sentiment readings and standard deviations bullish and bearish targets. Given the analyst pick’s focus, we’ll be looking to the bearish, 1W 1SD Down and 1W 2SD Down targets to be hit in the coming weeks at 80.62 and 79.46 respectively.

Technical Dashboard Shows Persistently Weak CAD

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Data Source: Bloomberg

Here’s A Recent Breakdown Of The Canadian Dollar Rate Forecast

Technical Outlook Favors Bearish Conviction

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Chart Source: IG Charting Package, IG UK Price Feed. Created by Tyler Yell, CMT

The key pivot on the chart is the 61.8% at 81.25. A breakdown below this level would indicate a further wash out of CAD longs and a move into JPY longs.

The next zone to the downside is 79.42/80, which is the 78.6% retracement of the 2016-2018 and the 261.8% Fibonacci extension of the double-top from the September-January double top with a neckline in November.

The invalidation on the bearish breakdown continuing is the 38.2% retracement of the 2018 range at 85.22.

Access our popular free trading guides to enhance your trading strategy here.

New to FX trading? No worries, we created this guide just for you.

---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 t1rading 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.

Discuss this market with Tyler in the live webinar, FX Closing Bell, Weekdays Monday-Thursday at 3 pm ET.

Talk markets on twitter @ForexYell

Join Tyler’s distribution list.

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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 stands at risk of facing choppy prices ahead of the Federal Open Market Committee’s (FOMC) interest rate decision on March 21 as the pair holds the range from earlier this month.

Fed Fund Futures

With the FOMC widely expected to raise the benchmark interest rate to 1.50% to 1.75% next week, market participants are likely to pay increased attention to the fresh updates from Chairman Jerome Powell and Co. as the central bank pledges to further normalize monetary policy over the coming months.

In light of the mixed data prints coming out of the U.S. economy, Fed officials may continue to project the benchmark interest rate ending the year around 2.00% to 2.25%, with the longer-run forecast holding around 2.75% to 3.00%. More of the same from the central bank may do little to boost the appeal of the greenback as it undermines speculation for four Fed rate-hikes in 2018, and EUR/USD may exhibit a more bullish behavior over the coming months as the FOMC remains reluctant to implement a more aggressive hiking-cycle.

Keep in mind, the European Central Bank’s (ECB) wait-and-see approach for monetary policy may continue to produce near-term headwinds for the single-currency as President Mario Draghi and Co. remains in no rush to wind down the asset-purchase program, and the Governing Council may stick to the current script throughout the first-half of 2018 as the ECB needs ‘to see further evidence that inflation dynamics are moving in the right direction.’ Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

EUR/USD Daily Chart

Near-term outlook for EUR/USD remains clouded with mixed signals as the pair holds the monthly range, with the euro-dollar exchange rate at risk of giving back the recent series of higher highs & lows as the Relative Strength Index (RSI) fails to snap the bearish formation carried over from the previous month. In turn, a break/close below the 1.2320 (23.6% retracement) to 1.2370 (61.8% expansion) region raising the risk for a move back towards 1.2230 (50% retracement), with the next area of interest coming in around 1.2130 (50% retracement) , which sits just beneath the March-low (1.2155).

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

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

To be added to David's e-mail distribution list, please follow this link.

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James Stanley , Currency Strategist

James Stanley
My Picks:  Bearish EUR/JPY
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.

We’ve been following this pair over the past month as the prior bullish up-trend has broken down. Signs of turbulence began to show in early-February, just after the pair had perched up to a fresh two-year high of 137.50. This led to a quick move down to a key zone of prior support, with the price of 132.05 helping to elicit buyers. Through February, each drive into support penetrated a bit deeper until, eventually, prices slipped down to fresh five-month lows. In March, we saw a bit of support develop around the 130.00 psychological level, and price action has since bounced back to find resistance in that prior zone of support.

Short-side setups can investigate stops above the February 27th swing-high of 131.20, allowing for a stop of less than 90 pips with an initial target of ~130 pips; making for a better than one-to-1.44 risk reward ratio down to the initial target. Stops can be adjusted down to break-even at that first target, with a secondary target cast towards 128.50.

EUR/JPY Price Chart: Daily Time-Frame, Resistance at Prior Support

eurjpy price chart daily time frame

Chart prepared by James Stanley

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

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Contact and follow James on Twitter: @JStanleyFX

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Martin Essex, MSTA , Analyst and Editor

Martin Essex, MSTA
My Picks:  Near-term downside for USDCHF
Expertise:  Economics and technical analysis
Average Time Frame of Trades:  Next few days

USDCHF talking points:

- USDCHF will find it hard to make much more progress near-term and could easily slip back.

- However, it is currently in an uptrend and that should reassert itself once the pair has paused for breath.

Learn how to trade like an expert by reading our guide to the Traits of Successful Traders

Check out the top trading opportunities for 2018 on the DailyFX Trading Guides page

Resistance on the charts for USDCHF

USDCHF has been in an uptrend for almost a month but currently faces strong resistance that could cap the upside near-term before its climb resumes.

USDCHF Price Chart, Daily Timeframe (December 6, 2017 – March 12, 2018)

Updated USDCHF chart showing current uptrend

Chart by IG

Whether you are a new or an experienced trader, we have many resources at DailyFX available to help you. For a start, check out the IG Client Sentiment data.

As the chart above shows, USDCHF is approaching three major resistance levels:

  • At 0.9530 from the trendline joining the February 8, March 8 and March 9 highs.
  • At 0.9590 from the trendline joining the December 8, December 26, December 27 and January 10 highs.
  • And at 0.9628 from the 100-day moving average.

These are likely to prove tough to break through and failure could lead to a drop back to 0.9400, where both the 50-day moving average and the rising trendline joining the February 16 and March 7 lows provide support. However, that support line suggests that for almost a month now USDCHF has been trending higher and any setback would provide a good entry point for further gains.

To the upside, longer term, the highs close to 0.9845 touched on January 9 and January 10 would then be possible targets.

Resources to help you trade the forex markets

Whether you are a new or an experienced trader, we have manyresources available to help you: analytical and educational webinarshosted several times per day, trading guides to help you improve your trading performance, and one specifically for those who are new to forex.

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at or on Twitter @MartinSEssex

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