Support & Resistance

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Canadian Dollar Rate Forecast: BoC gets Bullish on Economy, Holds Rates

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Canadian Dollar Rate Forecast Key Takeaways:

  • USD/CAD Price Forecast: CAD remains in Bullish pattern vs. USD with scope to 1.24
  • Bank of Canada holds rates as traders price in ~44% chance of a hike at May 30 meeting
  • IG UK Client Sentiment Highlight: Retail long activity jumps, bias for downside emerges

The Canadian Dollar paused its gains as the Bank of Canada rate decision had something for everyone. The BoC held rates as expected, but their revised economic outlook showed that Governor Poloz sees room for more rate hikes down the road.

Overall, the Canadian Dollar remains within a bullish pattern against the US Dollar with a scope to trade through the February 14 low of 1.2491 toward the downside 1 Std. Deviation move of the 12-month trailing price toward 1.2461.

See the strength arising in Commodity FX in our most recent FX Overbought/ Oversold Report

BoC Set Up Scene For Future Rate Hikes

Stephen Poloz, head of the Bank of Canada said that the bank was not worried that a better-than-expected growth outlook would ignite inflation. Central bankers have been infamous for misinterpreting the building blocks for aggressive inflation and the Canadian central bank looks to be setting themselves up in a similar fashion.

In other words, they’re saying the scene is set for inflation, which typically causes central banks to raise rates that strengthen the currency, but they don’t see inflation getting out of hand. Some see this as a ‘Goldilocks’ or that the Canadian economy is sitting in the sweet spot of the business cycle thanks to growing demand without profit-margin erasing inflation.

Updated BoC Forecast for Potential Growth

Canadian Dollar Rate Forecast: BoC gets Bullish on Economy, Holds Rates

Source: Bank of Canada

The key comments from the Bank of Canada were as follows, “Higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed to keep inflation on target.”

Unlock our Q2 forecast to learn what will drive trends for the US Dollar

Technical Focus on the Canadian Dollar – USD/CAD Tests 200-DMA, Targets 1.24

On Wednesday, the Canadian Dollar consolidated gains within a bullish pattern (downtrend in USD/CAD.) The spot price moved to 1.2600 that aligns with the 200-DMA at 1.2622. Traders appear to see the caution BoC as offering better entry levels for CAD bulls whereas others see this as a setback for the Canadian Dollar that could pave the way for an eventual move on USD/CAD back toward 1.29/30. I remain firmly in the former camp in that anticipated CAD strength to remain.

The risk for the bulls is that the Overnight Index Swaps market pricing in of future hawkish BoC action is some of the more bullish in the world, and repricing of the OIS market could see CAD weaken further.

Resistance on the recent move lower can be found at the April 10 high at 1.2709 and lower at the 200-DMA at 1.2622 that was below Wednesday's snap-back high of 1.2635.

Continuation of the move lower would be confirmed on a breakdown below the April 17 low a 1.2528.

USD/CAD Daily Chart: Set for Breakdown Toward 1.2400/2250

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

Looking at the chart above, it is fair to say that we’re at a bit of juncture. In short, the price stall on the move lower took place at the 61.8% of the February-March range at 1.2584. At the same time, the lagging line per Ichimoku paused at the move into the cloud. However, an eventual breakdown through this level, if it takes place, would likely result in an eventual move to the February 16 low of 1.2450 followed by the February low of 1.2250.

Not familiar with Fibonacci analysis, check out this insightful article

Valuable Insight from IG Client Positioning for USD/CAD: Retail buying activity jumps, biased lower

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Data source: IG Client Positioning

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCAD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDCAD price trend may soon reverse higher despite the fact traders remain net-long.

---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

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USD/CHF: Fresh Three-Month Highs as Bulls Retain Control

Price action and Macro.

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Talking Points:

- USD/CHF has continued to strengthen through April, following a bullish break of a bearish trend-line that took place as we turned the page into Q1.

- At this stage there is a legitimate concern around the pair being overbought on a near-term basis, as RSI is in overbought territory on both daily and four-hour charts, and RSI divergence has been showing for some time on lower time frames.

- Are you looking to improve your trading approach? Check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

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

USD/CHF Rallies to Fresh Three-Month-Highs

In the first quarter of this year, USD/CHF was one of the most attractive pairs for playing continuation of USD-weakness. The Swiss Franc’s strength was synergistic with Dollar-weakness, and as each of those themes remained prominent through the first half of Q1, USD/CHF drove down to fresh two month lows.

But in the month of March, something began to shift, and the bearish response that had been so consistent in the pair began to wane. By the end of the month, we traded above a bearish trend-line, and then in early-April, we looked at using that trend-line for fresh support as the pair solidified above the .9500 psychological level. That theme has continued to run as a weak Swiss Franc is now being combined with a strong US Dollar, and prices in the pair are now trading at fresh three-month-highs.

USD/CHF Eight-Hour Chart: Fresh Three-Month Highs

usdchf eight hour chart

Chart prepared by James Stanley

A New Trend Emerges

Another newer trend-line has formed in the pair, taken from the late-March to mid-April lows. That trend-line is shown in blue on the four-hour chart below, and noteworthy here is how prices are well-elevated above this trend-line, denoting a currently overbought state in the pair.

USD/CHF Four-Hour Chart: A New Trend-Line Forms From March/April Lows

usdchf four hour chart

Chart prepared by James Stanley

Overbought Near-Term Urges Caution From Chasing

Both the daily and four-hour charts of USD/CHF are showing overbought RSI, and on shorter time frames, the indicator has been diverging for some time. This highlights the danger of chasing at this point as that trend is well priced-in, and a pullback could make bullish continuation strategies a bit more attractive.

On the below chart, we’re looking at three potential areas of interest, each of which are above that bullish trend-line looked at above.

USD/CHF Two-Hour Chart: Higher-Low Support Potential for Pullback Plays

usdchf two hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on FX pairs? Our DailyFX Forecasts for Q1 have a section for the more popular major currencies. We also offer a plethora of resources on our USD/CHF page, and traders can stay up with near-term positioning via our IG Client Sentiment Indicator.

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

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Contact and follow James on Twitter: @JStanleyFX


USD/CAD Jumps above 50-Day Moving Average as Oil Drops on OPEC News

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Canadian Dollar Rate Forecast Key Takeaways:

  • The ONE Thing: Technical picture shows a breakout to the upside may be in the works. The Canadian Dollar has been an underperformer when compared to the Australian Dollar and the recent drop for CAD to two-week lows may show there is more pain for CAD bulls and more upside for USD/CAD in the near-term.
  • The Canadian Dollar maintains a strong correlation to WTI crude oil, which has recently pulled back on news that OPEC and its allies are looking to increase oil production. At the same time, the US Dollar is strengthening due to the economic-stability concerns in the EU that are focused on Italian politics.
  • Crude oil hit a wall as OPEC, and its allies are said to increase production while US inventories further swelled by the most since February.

Two-Week Lows for CAD As Oil Breaks Down

The Canadian Dollar was not able to hold up against the broadly strong US Dollar making a favorable cocktail for USD/CAD bulls. Adding to the picture, OPEC announced that they’re likely to increase production in the second half of 2018, which took the price of highly correlated crude oil lower. The move in crude added up to four consecutive days lower and appears to be helping support USD/CAD higher.

From a broad perspective, JPY strength emerged this week on renewed trade tensions and among the commodity bloc, the Australian Dollar broadly rose after RBA chief, Philip Lowe sided with Xi Jinping in the trade negotiations between US & China.

Falling Crude Oil May Boost USD/CAD

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Data source: Bloomberg

Key Technical Levels for Canadian Dollar Rate to US Dollar:

  • Resistance: C$1.2998 May 8 High
  • Spot: C$1.2965
  • Support: C$1.2816 50-Day Moving Average

USD/CAD Daily Chart: Canadian Dollar Breaks Down (USD/CAD Higher) After Consolidation

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

USD/CAD looks to be heading higher on a hold above the 50-day moving average (1.2816), and the Ichimoku cloud. The Canadian Dollar rate had held up well against the strengthening US Dollar while Crude Oil was rising. Unfortunately for CAD bulls, news broke late in the week that OPEC and its allies, collectively known as OPEC+ is looking to increase their supply and roll-back production curbs in H2 2018.

Traders with a longer-term bullish view of USD/CAD given the move of US Dollar Index to 4-month highs on the EUR weakness should hold 1.2782, the May 21 pivot low as key support.

Bullish targets should focus on the March high at C$1.3125. From an essential technical analysis perspective, RSI(5) is showing bullish momentum through higher lows alongside price finding support at Ichimoku cloud with the lagging line also breaking higher.

Not familiar with Ichimoku? You’re not alone and in luck. I created a free guide for you here

More For Your Trading:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q2 have a section for each major currency, and we also offer an excess 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 popular and free IG Client Sentiment Indicator.

Forex Trading Resources

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’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 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


NZD/USD Technical Analysis: April/May Descent in Jeopardy?

Classic technical analysis, macro and economic themes

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NZD/USD Technical Analysis: Recent Descent at Risk?

  • The New Zealand Dollar stalled on the March 2009 line and is trying is push higher
  • A morning star bearish reversal pattern still needs confirmation on the weekly chart
  • NZD/USD faces 0.7059, 0.7123 and 0.7187 next. Below it is 0.6930 and the trend line

Just getting started trading the New Zealand Dollar? See our beginners’ guide for FX traders to learn how you can apply this in your strategy!

The New Zealand Dollar could be aiming higher against its US counterpart amidst warning signs on the monthly, weekly and daily charts. Starting the with the first one, on the immediate chart below, NZD/USD has now been tamed on multiple occasions in attempts to push lower since 2009. Connecting these instances together forms a rising trend line from March 2009. The most recent failed push was in May.

NZD/USD Monthly Chart

Zooming in, we take a look at the weekly chart. Something interesting has formed on the March 2009 line, a Morning Star. This is a bullish reversal patterns. While it warns that NZD/USD may be turning higher, confirmation will be needed as the pattern itself only indicates indecision. Another weekly close higher could be just that. If it is going to ascend, the dominant downtrend since mid-April/earl-May could be at risk.

NZD/USD Weekly Chart with Morning Star Bullish Reversal Pattern

Now let us take a look at the daily chart to see what prices have to overcome to get us that confirmation. We just had a close above the 23.6% Fibonacci retracement at 0.6979. From here, immediate resistance is the 38.2% level at 0.7059. A push above that exposes the 50% midpoint followed by the 61.8% retracement at 0.7187. The latter is also closely aligned with horizontal support that kept NZD/USD elevated for the first four months of 2018. It could come back to act as new resistance.

On the other hand, if the pair falls below immediate support, then the 14.6% minor level could be the next target at 0.6930. A break below that exposes the March 2009 line followed by the May 16 low at 0.6850 (also the current 2018 low).

If NZD/USD is indeed trying to climb in the days and even weeks ahead, the pair may eventually find itself retesting the July 2017 descending line. If it fails, then perhaps the rest of this year could just be NZD/USD consolidating between that and the March 2009 line.

NZD/USD Daily Chart

NZD/USD Trading Resources:

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

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


AUD/USD Technical Analysis: Down Trend Intact as Selloff Pauses

Fundamental analysis, economic and market themes

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AUD/USD Technical Strategy: NET SHORT AT 0.7547

  • Aussie Dollar down trend intact as prices find interim support sub-0.74
  • Near-term support just above 0.73, resistance at former May swing low
  • Looking for an actionable opportunity to add to existing short position

See our free guide to get help building confidence in your AUD/USD trading strategy!

The Australian Dollar seems to have found interim support below the 0.74 figure but the dominant trajectory still favors weakness against its US namesake. The trend is defined by a series of lower highs and lows set from double top resistance established in late January.

Australian Dollar vs US Dollar price chart - daily

A daily close below support in the 0.7315-35 area (50% Fibonacci expansion, inflection point) opens the door for a challenge of the 61.8% level at 0.7230. Alternatively, a move back above the May 9 low at 0.7413, now recast as resistance, paves the way for a retest of the 23.6% Fib at 0.7506.

The short AUD/USD trade activated at 0.7608 and then scaled up near 0.7530 remains active. An actionable opportunity to grow exposure further looks to be absent at this time but positioning will be actively monitored for any such openings. A stop-loss will be activated on a discretionary basis.

AUD/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter


Japanese Yen Technical Analysis: Key Retracement Holds USDJPY

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JAPANESE YEN TECHNICAL ANALYSIS TALKING POINTS:

  • The Japanese Yen has made back some ground against the US Dollar
  • However it remains in a quite well established range which has yet to break
  • GBP/JPY’s upside push looks more threatened

Find out what foreign exchange traders make of the Japanese Yen’s chances right now at the DailyFX Sentiment Page.

The Japanese Yen is tracking a little higher against the US Dollar, but in reality USD/JPY remains stuck in the broad trading range which has just about contained all the action since April 23.

I say just about because the pair did manage to poke above the range top of 110.23 in mid-May. Indeed it managed to stay there for a week or so. However as that period gets ever more distant, the more spurious that rise looks.

Japanese Yen Technical Analysis: Key Retracement Holds USDJPY

US Dollar to Japanese Yen, Daily Chart

For the moment at least it might be wise to trade as though this range were really all you have to play with. The downside is formed by 108.09, which was May 29’s intraday low. Interestingly it is also almost exactly where we can find the important 50% Fibonacci retracement of the rise from the lows of late March to the May’s highs.

Japanese Yen Technical Analysis: Key Retracement Holds USDJPY

US Dollar Vs Japanese Yen, Daily Chart, With Fibonacci Retracement Levels.

That point seems to be quite formidable support, and should hold if tested. One problem for US Dollar bulls might be that the daily chart could be forming rather a classic ‘head and shoulders’ formation. If so this would be bad news because it might suggest reversal of that climb, at least, is in the offing.

However, while that key support level holds it is possible that those bulls may yet be able to use it as a platform for some sort of comeback.

Meanwhile the UK Pound’s uptrend against the Japanese currency endures, but only just. That channel has been in place since late May and looks to be enduring a downside test around current levels, so watch the next couple of days’ closes with interest.

Japanese Yen Technical Analysis: Key Retracement Holds USDJPY

GBP Vs JPY, Daily Chart

Channel failure will put the recent lows back in uncomfortable focus for Sterling bulls. Moreover, even if the channel holds, those many consecutive red candles between May 18 and May 29 still look like a pretty fearsome obstacle.

RESOURCES FOR TRADERS:

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Price action and Macro.

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Talking Points:

- USD/CHF resisted off of a key area again this morning. Should USD-strength continue, a bullish move over this resistance level can open the door to breakout strategies in Swissy.

- While USD weakness continued well into this month, USD/CHF has been range-bound since July, deductively highlighting a relatively weak Swiss Franc that could become attractive for continuation should USD-strength continue to show.

- Want to see how USD has held up to the DailyFX Forecasts? Click here for full access.

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

The U.S. Dollar has had a rather rough 2017. In a down-trend that’s seen as much as -12.3% of the U.S. Dollar’s value erased, even while the Fed talks up additional rate hikes, few currencies have been able to keep pace with the Greenback’s declines. After coming into the year trading above the 1.0300 level, USD/CHF has seen as much as 925 pips taken-out as the pair has driven-lower.

But after running into support in mid-July around the .9433 level (the 2016 low), the declines have slowed as USD/CHF has built into a rather volatile range-bound pattern. Resistance has begun to build around the .9773 level, and we’ve seen multiple iterations of resistance show-up here; each rebuking USD/CHF’s upward advance.

USD/CHF Daily: Range-Bound Since Re-Test of 2016 Low

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

At this point, a top-side break of that well-worn resistance level could open the door to an attractive bullish breakout setup. Just above this area of resistance is another level of interest at .9813, as this is a prior swing-low point of support that also showed as a quick swing-high before the pair initially sank below .9770. This can be used in a couple of different ways. For traders looking at the more aggressive route of taking on bullish exposure on a break of .9775 (a few pips beyond the exact point of resistance), the level at .9813 can be utilized as an initial target and an opportunity to move the initial stop up to breakeven. Or, for those who want to approach USD/CHF a bit more conservatively, the .9813 level can be used to trigger the bullish breakout, with .9772 becoming an area to look to for stop placement in the effort of containing risk in the event that the breakout doesn’t continue-higher.

On the chart below, we’ve added five potential resistance levels above the .9813 inflection point, each of which has been derived from a prior price action swing and/or group of swings. Each of these can be used as potential targets should the bullish breakout continue if/when resistance is taken out.

USD/CHF Four-Hour: Potential Top-Side Resistance Levels Applied

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

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

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX


GBP/USD: Cable Attempts to Carve Out Support Ahead of BoE

Price action and Macro.

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Talking Points:

- It’s been a stark change-of-pace over the past two months as a previously strong bullish up-trend has turned around to erase more than 1,100 pips since mid-April. GBP/USD has been hit by a storm of slowing inflation, disappointing GDP, a dovish Bank of England and continually downbeat headlines around the ongoing Brexit discussions.

- This week brings a Bank of England rate decision followed by the Mansion House speech from BoE Governor, Mr. Mark Carney.

- Quarterly Forecasts have just been updated, and the Q2 forecast for GBP/USD is available from the DailyFX Trading Guides Page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Want to see how retail traders are currently trading GBP/USD? Click here for GBP/USD Sentiment.

A Stark Change-of-Pace the Past Two Months

It’s been a rough two months for the British Pound, and later this week brings a Bank of England rate decision that could prolong the pain or, potentially, start to change-the-pace. While there are few expectations for any actual changes at that meeting, the big question is whether the bank starts to lay the groundwork for a possible rate hike in August. After that rate decision, BoE Governor Mark Carney is due for his annual Mansion House speech, and this may actually turn out to be a more proactive driver for the Pound as the speech will be widely-watched for clues or hints around Mr. Carney’s expectations for the UK economy.

DailyFX Economic Calendar – High-Impact Items for GBP Week of June 18, 2018

DailyFX Economic Calendar GBP High-Impact Events Week of June 18, 2018

Chart prepared by James Stanley

Also of interest but not on the economic calendar is the continued development around Brexit. At this point, a battle continues within Parliament over what should happen if either a) no deal is reached with the EU or b) Parliament doesn’t approve the deal brokered between the two. This can continue to constrain price action in the British Pound as its yet another potential risk to the currency.

GBP/USD Digs in to Support

Just a couple of months ago the horizon appeared to be much brighter for the British Pound. We had a legitimate chance of getting a rate hike at the May ‘Super Thursday’ rate decision, and this even had the potential to turn into something more as the BoE may have been sitting at the forefront of a rising rate cycle. This was driven in large party by inflation, and that was largely in response to the drubbing that the currency took around the Brexit referendum.

But as we traded deeper into April, that backdrop for a rate hike deteriorated. Inflation continued to disappoint, and GDP even came-in below expectations. By the time we got to the actual rate decision, the door had been opened for an even more dovish BoE, and when the bank held rates while sharing a rather dovish forward-outlook, GBP sank down to the key support area round 1.3500.

GBP/USD Daily Chart: Past Two Months Represent Stark Change-of-Pace for Cable Price Action

gbpusd gbp/usd daily chart

Chart prepared by James Stanley

It was a week after that rate decision that Brexit dynamics began to come back into the equation, and when Scottish PM, Nicola Sturgeon, announced that Scotland may embark on another independence referendum, GBP/USD broke-below support and ran down to a fresh six-month low at 1.3203.

Prices spent the next two weeks moving-higher within a bullish channel; and when that channel was combined with the prior bearish trend, this took on the shape of a bear flag formation. That formation began to fill-in last week as USD strength started to show up, and prices have made another run down to the 1.32’s.

GBP/USD Eight-Hour Chart: Bearish Break Below Bullish Channel, Bears Get Shy at the Low

gbpusd gbp/usd eight hour chart

Chart prepared by James Stanley

At this stage, GBP/USD has shown little willingness to test below 1.3200; and while this doesn’t preclude the possibility of such, it does show how bears are likely going to need a bit more information before staging their plays. If we do get a downside break below the 1.3200 level, the door opens for a test of 1.3117, which is the 38.2% retracement of the ‘Brexit move’ in the pair, followed by a test of the 1.3000 psychological level.

GBP/USD Daily Chart: Bearish Potential Down to 1.3000

gbpusd gbp/usd daily chart

Chart prepared by James Stanley

Retail Sentiment Stretched to the Long Side

Supporting the bearish side of GBP/USD is the fact that retail traders are heavy net-long in the pair, currently showing a read of +2.82-to-1. This means that 73.8% of retail traders in GBP/USD are currently holding a net long position, and with this being a contrarian indicator, this keeps the door open for continued downside. This indicator swung to net-long on April 20th, just after the pair had started to turn, and retail traders have continued to buy as prices have continued to decline.

Click here for an updated, real-time look at GBP/USD Sentiment.

Retail Traders Remain Heavy Net-Long in GBP/USD

GBP/USD IG Client Sentiment As of June 18, 2018

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 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


Japanese Technical Analysis: USD/JPY Could Be Set To Bounce

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JAPANESE YEN TECHNICAL ANALYSIS TALKING POINTS:

  • The Japanese Yen has seen broad gains against its developed market peers
  • However, its overall downtrend remains in place in many cases
  • This week could see it reasserted

Find out what the #1 mistake that traders make is so that you never have to join them in it!

The Japanese Yen has caught a quite strong haven bid this week as trade tensions between China and the US bubble back to the surface of market concerns once again.

Technically speaking however, US/JPY has tested the bottom of a minor uptrend channel which has been in place since May 30. It has survived, just but in any case the broader, longer uptrend which has bounded trade all through the year’s second quarter remains very much in place.

Double Uptrend: US Dollar Vs Japanese Yen Daily Chart.

The Japanese Yen remains under considerable fundamental pressure from widely diverging interest-rate differentials with the US. The Federal Reserve has just raised interest rates once again and seems determined to continue the process for as long as the data allow. The Bank of Japan meanwhile has been forced to watch the modest inflation resurgence seen early this year collapse, taking with it any prospect that its own ultra-loose monetary policy can be unwound anytime soon.

This week’s official Japanese inflation numbers are likely to underscore that weakness and may put the Yen under renewed pressure, provided that no more bad news appears on market radar from the direction of global trade. Another bout of Yen weakness could see USD/JPY back up to its recent highs of 110.74 in quite short order. That said a return to late May’s peaks in the mid 111s seems unlikely unless some clear resolution to trade difficulties is seen- an unlikely short term prospect.

Reversals for the pair are likely to find support at this week’s 109.49 lows, with the broader channel base of 109.20 waiting below that.

The Japanese Yen’s haven bid has been pretty universal, with the Australian Dollar a particular target. AUD/JPY has been returned to the lows of late May which had not previously been seen since November, 2016.

Under Pressure: Australian Dollar Vs Japanese Yen Daily Chart.

The cross is now skirting 50% Fibonacci retracement of its long climb up from the lows of mid-2016 to the highs of September, 2017. That comes in at JPY81.40 and seems to be failing. A weekly close below that level would probably bring the next, 61.8% retracement into Aussie bear’s sights. That comes in some way below the market at JPY79.54.

Worryingly for Australian Dollar bulls the currency does not yet look notably oversold, judging by the cross’ Relative Strength Index, and it is likely that momentum to the downside has yet to dissipate.

RESOURCES FOR TRADERS

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Japanese Yen Technical Analysis: USD/JPY Uptrend Looks Solid

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JAPANESE YEN TECHNICAL ANALYSIS, TALKING POINTS:

  • USD/JPY’s slide stalled at key support
  • Bulls have built on that base
  • Similar patterns are evident in EUR/JPY and GBP/JPY

Find out what retail foreign exchange traders make of the Japanese Yen’s chances right now at the DailyFX Sentiment page.

The Japanese Yen is coming under renewed technical pressure against the US Dollar, the greenback having bounced quite convincingly from key support.

USD/JPY’s recent decline was arrested at the end of May when it reached 38.2% Fibonacci retracement of its rise up from the lows of March to the peaks of May 21. That came in at 108.80 and, although USD/JPY did get below this, it didn’t get far and that level broadly contained its fall.

US Dollar Vs Japanese Yen, Daily Chart.

US Dollar bulls now seem to have made that level a platform for a modest fightback, with an uptrend channel now well in place on the daily chart. The channel top is at 109.98 or so currently and seems to have survived another upside test.

However, the downside barrier remains comfortingly far off for bulls, at 109.04, nearly a full Yen below current levels.

US Dollar Vs Japanese Yen, Daily Chart.

Momentum indicators don’t look at all stretched and the pair’s simple moving averages don’t suggest anything untoward so it could be wise to play this channel for now. One risk might be that the most recent failure at the upside sets up instead a broad range trade which eventually would negate the channel, but it is too early to say whether or not this will be the case.

US Dollar Vs Japanese Yen, Daily Chart

Similar bounces are evident on the daily charts of many Japanese Yen crosses. They can certainly be seen in the cases of both EUR/JPY and GBP/JPY.

GBP/JPY bulls have built nicely on their bounce, which took place in late May in the 143.88 area.

UK Pound Vs Japanese Yen, Daily Chart

That said they still have much work ahead of them if they are going to fully make back all the ground they lost in the dramatic sequence of falls seen between May 18 and May 29. At present, it doesn’t seem as if they have that sort of vigor, although a rise above the long, falling candlestick of May 23 might suggest that they were acquiring it. The Pound would have to get above 148.85 and stay there to confirm this, however, and that remains some way off to the upside.

RESOURCES FOR TRADERS

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


S&P 500 and Dow Jones Charts Rolling Over, Could Be in For a Big Test

Price behavior analysis, short to intermediate-term trade set-ups.

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S&P 500/Dow Highlights:

  • S&P 500 has support just below, but break and a big test could be on its way
  • Dow Jones closes down for 8th consecutive day, has 200-day coming up

For longer-term trading ideas, forecasts, and a library of educational content, check out the DailyFX Trading Guides.

S&P 500 has support just below, but break and a big test could be on its way

Yesterday’s decline in the S&P 500 put it one step closer towards a very important test should it fail to hold above a pair of swing highs carved out last month around the 2742 mark. There is also trend-line support in the current vicinity depending on how you draw the line. In one instance it’s broken, but using a more conservative approach it has yet to break – we’ll give the final angle the benefit of the doubt to play it safe.

In any event, a break below the aforementioned May highs will have the trend-lines broken regardless of how one draws them. After a wobbly sequence of overlapping price action since the March low, a more sustainable down-move could soon come to roost.

This would have the very important February 2016 trend-line/200-day combination back in play once again. It’s held the market up on three prior occasions, but can it do it for a fourth time? A breakdown below this powerful bull-market threshold could spell big trouble for the market as the summer heats up.

A hold, though, right here can stave off those thoughts for another day and possibly etch out yet another higher low without having breached support levels. Things could start to get very interesting here, or perhaps price action simmers back down and we get a choppy summer trading environment.

Check out this guide for 4 ideas for Building Confidence in Trading

S&P 500 Daily Chart (Watch nearby support)

S&P 500 daily chart with support nearby and even bigger trend support below

Dow Jones closes down for 8th consecutive day, has 200-day coming up

The Dow posted its 8th consecutive down day yesterday, and according to Chief Strategist, John Kicklighter, that matches the longest streak since February 1984. The streak has the 200-day squarely in sight at 24254, which also matches up very closely to the low of the last pullback in late-May.

A bounce on first arrival seems likely, but should that be all it is proven to be, a seller’s bounce, a decline down into the mid-23000s would make for a very interesting big-picture test in conjunction with the S&P pressing down on its own major threshold.

Dow Daily Chart (200-day just below)

Dow Jones daily chart with 200-day MA just below

If you’d like to listen in on live technical analysis on global equity indices (and commodities), join me every Tuesday at 9 GMT time.

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


DAX Technical Analysis: Big Test of Support Underway

Price behavior analysis, short to intermediate-term trade set-ups.

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DAX Technical Highlights:

  • From near new multi-month highs to key support
  • Bounce-back may come here, if not then more selling to come
  • 1-year ‘head-and-shoulders’ pattern still on the table

For a broader fundamental and technical outlook on major markets, and to see how our Top Trading Opportunities for 2018 are performing, check out the DailyFX Trading Guides.

It was just three trading sessions ago that the DAX was on the verge of trying to climb to its best levels since early February. However, it failed to do so after nearing the May peak and making an intra-day breach past the trend-line running off the record high.

The three-day skid took out of all the choppy price action leading up to it now has significant support around the 12600/550-area in play. It’s an important area to hold given the amount of attention it’s received since February. First it was a spot of resistance, then recently it became support.

If the market is headed for a range-bound environment, at the least, then this is the spot for ‘would-be’ longs to look to enter, as the backstop for positions is just below. However, a break would be somewhat significant and turn a solid area of support into a new form of resistance, giving shorts the upper hand.

Is your confidence down due to a choppy trading environment? Check out this guide for 4 ideas on how to Build Confidence in Trading.

DAX Daily Chart (At solid support)

DAX daily chart at support

We’ve discussed this scenario before, and we’ll touch on it only briefly now (and again in the Q3 forecast), but a head-and-shoulders pattern could have just cemented the right shoulder. From here we would need the May high maintain and start seeing a downhill move beneath the neckline situated in the high-11700s. For now, it’s only a big-picture scenario, but one we could soon be discussing in detail given its ominous implications.

DAX Weekly Chart (H&S Pattern still in the cards)

DAX weekly chart, head-and-shoulders still in play

Back to the short-term picture, the DAX is sitting at support, and we must respect that for as long as it holds. Only a break at this juncture will strengthen a negative bias. For live weekly updates on the DAX and other indices, join me live on Tuesdays for ‘Indices and Commodities for the Active Trader’.

Forex & CFD Trader Resources

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


XAU/USD Technical Outlook: Gold Prices Search for Support

Short term trading and intraday technical levels

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Gold prices broke below the June opening range last week with the decline now eyeing support targets into fresh 2018 lows. Here are the levels that matter for XAU/USD heading into the close of the week.Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

Gold Daily Price Chart (XAU/USD)

Gold Daily Price Chart

Technical Outlook: In last week’s XAU/USD Technical Outlook, we noted that gold prices had stalled at, “1309 before turning just ahead of slope resistance. The 200-day moving average converges on former swing highs / lows at 1307 and a daily close above this level is needed to keep the focus higher.” Gold closed back below the yearly open at 1302 with prices plummeting nearly 2% the following day.

The decline validates a clear break of the monthly opening range keeps the focus on a late-month low in price. Subsequent support objectives are eyed at the 61.8% retracement of the July advance at 1266 backed by the median-line of the descending pitchfork formation (currently ~1256), 1251 and the 50% retracement of the broader 2016 advance at 1244.

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Gold 240min Price Chart (XAU/USD)

Gold Price Chart 240min

Notes: A closer look at price action highlights a price reversal off the upper 50-line early in the week with the decline approaching initial targets here at 1266. Note that this level also represents the measured target of the consolidation range break we’ve been tracking since last week. Look for interim resistance at the weekly open at 1279 with the risk lower sub-1285.

It’s worth noting that gold prices are working on a fourth day of consecutive losses- the last time we saw more than four was back September/October of 2016. In that instance, prices were in free-fall with gold dropping nearly 14% over the next three months. Implications suggest the risk for some recovery into the close of the week before resumption.

Why does the average trader lose? Avoid these Mistakes in your trading

Bottom line: The immediate focus is lower while below the weekly open but be on the lookout for a recovery heading into the lower support targets over the next few days. Ultimately a larger rebound would offer more favorable short-entries while within this formation. A breach above the weekly open would put us neutral, with a rally surpassing 1285 risking a move back up towards the upper parallel / 1298-1302.

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

Spot Gold IG Client Positioning

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +5.57 (84.8% of traders are long) –bearishreading
  • Long positions are3.9% higher than yesterday and 4.3% higher from last week
  • Short positions are 5.1% higher than yesterday and 22.6% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. However, traders are less net-long than yesterday but more net-long from last week andthe combination of current positioning and recent changes gives us a further mixed Spot Gold trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

---

Economic Calendar - latest economic developments and upcoming event risk

Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

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

https://www.dailyfx.com/free_guide-new-to-fx.html?ref-author=Boutros


Gold & Silver Price Forecast – Extended but at Risk of More Losses

Price behavior analysis, short to intermediate-term trade set-ups.

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Gold/Silver technical highlights:

  • Gold may bounce in near-term, but looking for 1240s/30s
  • Silver at trend-line support, a break brings ’03 trend-line into play

Traders are 5-1 long gold, check out the IG Client Sentiment page to see how this acts as a contrarian indicator.

Gold may bounce in near-term, but looking for 1240s/30s

At last, a one-way move in gold. Right before the break, we had been discussing the potential for a strong breakout, with the preferred direction down given the lack of support levels standing in the way. While gold is extended a bit in the short-term, there is still plenty of room to go lower before substantial support is met.

Looking lower, there is a minor form of support by way of a lower parallel extending from April, but not viewed as the type of support which could forge out a low. Instead, the trend-line from December 2015 and December low remain targeted. These are situated in the lower-1240s down to 1236.

From a tactical standpoint, risk of a bounce is rising, so fresh shorts run the risk of pain and don’t offer the best risk/reward profile at the moment. Awaiting a snapback and stalling momentum on a bounce looks like a prudent way to establish a position at this juncture. For existing shorts from good prices, the trend right now is your friend, but still manage with care – that is, tactics such as moving initial stops lower, trailing stops, etc.

Gold Daily Chart (More to go before hitting big support)

Gold daily chart, more room to go before hitting support

For longer-term trading ideas, forecasts, and a library of educational content, check out the DailyFX Trading Guides.

Silver at trend-line support, a break brings ’03 trend-line into play

Last week, we expressed our sentiment that it would be unsurprising to see silver fall apart from resistance as it did back in April. Indeed, silver fell apart on Friday. That’s been the life of a silver trader; chop, chop, make furious a move.

The downdraft has a trend-line from July in play (bottom of long-term wedge), which could give it some life or stall the downward move at the least. A break, though, would be considered important (wedge break) and have a 15-yr trend-line in focus along with the December low at 15.65.

Tactically, gold remains favored over silver at this time not only due to its technical posturing, but also given that its price action is far less erratic.

Silver Daily Chart (Trend-lines to watch)

Silver daily chart, trend-line support

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


ASX 200 Technical Analysis: Bulls Must Consolidate Their Gains

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ASX 200 TECHNICAL ANALYSIS TALKING POINTS:

  • The ASX 200 remains above 6000
  • This is not usually a comfortable level for the index
  • However its long-term uptrend looks very solid

Find out what the #1 mistake that traders make is so that you never have to join them in it!

The ASX 200 has put on a little bearish spurt in recent days.

Monday’s breah up through the 6114 level took the Sydney stock benchmark above the topmost boundary of a trading channel which, before that date, had contained trade since May 29. That upside channel was itself a continuation of the impressive climb seen since April 2.

ASX 200 Daily Chart

Monday’s intraday high of 6161took the ASX back to its highs for 2018. These were scaled previously back in early January, although the last significant peak took the index close back in early May.

The question now of course is how much further can the index push on? There will be understandable investor reticence this far above the psychologically crucial 6,000 point. After all, the index has spent very little time above that level since 2007. And it only managed a few months above it even then.

Bulls will probably need to consolidate their gains meaningfully in a band between current levels and that previous, May peak of 6150 to convince others that they are here for even the short-term, never mind any more lengthy period.

However, they may have a task on their hands. Reversals will lack obvious support until they hit the first Fibonacci retracement of the rise up from April’s lows. That doesn’t come in until 6032.7 and the problem may be that a fall that far back may be enough to convince the market that yet another probe above 6,000 is failing.

Below that point, second, 38.2% retracement support comes in at 5955.

It’s worth pointing out that the ASX remains very much in the center of the long-term uprend which has been in place since the financial crisis began to peter out in March 2009, as is clearly shown on its monthly chart.. Admittedly the index has failed to test the channel top since 2015 but, all the same, its most recent highs have surpassed the previous peaks made in that year.

Long Uptrend: ASX 200 Monthly Chart

It’s hard to avoid the conclusion that this index has more to give the bulls, as long as the broader market can be made more comfortable with the sight of it above 6,000.

RESOURCES FOR TRADERS

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Nikkei 225 Technical Analysis - Can A Double Top Be Avoided?

Financial markets, economics, journalism and fundamental analysis.

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Nikkei 225 Technical Analysis Talking Points:

  • The Nikkei 225 has been in thrall to trade-spat fundamentals this week
  • However the technical chart could be suggesting a rather bearish pattern
  • The next few days’ trade could be telling

Find out what retail investors make of the Nikkei 225’s prospects right now at the DailyFX Sentiment Page

The Nikkei 225 has endured a torrid week, with fundamentals perhaps leaning harder on this market than any technical factor.

Worries about a steady ratcheting up in the trade spat between the US and, most prominently, China have seen many indexes in retreat and the Tokyo stock benchmark offers a particularly hard-hit example.

However, the Nikkei’s falls this week have raised one possible technical specter, and it’s an especially frightening one for bulls. The index could be in the process of making a double top, as you can see on the chart below.

Nikkei 225 Technical Analysis - Can A Double Top Be Avoided?

The 21907 area now becomes especially interesting. If we are seeing that worrying double top formation then it becomes the crucial ‘pullback’ low. A fall though it could put the entire climb up from the lows of late March into question.

The situation bears close watching however, as this week’s lurch lower on those trade worries may mean that the Nikkei can erase this formation and get back on the upward track after all. For one thing, it is not obviously overbought. Indeed its Relative Strength Index is rather heading lower towards oversold territory and now stands at a hardly-concerning 52.

Should trade simmer down as the prime market mover then we might see a bounce back up to the 22820 level which preceded this week’s falls. If we do, then the double-top thesis would be in severe doubt and some continuation of the uptrend seen since May 29 can probably be expected.

The bulls’ task then would be to consolidate around that level, and prove they can remain durably at the highs hit so briefly in mid May.

Nikkei 225 Technical Analysis - Can A Double Top Be Avoided?

However, it’s then, arguably, that their real problems will begin. For, to make progress from there, they will have to rise back above the steep falls we saw from the year’s highs which occurred between late January and early February. This will take concerted effort but, while we hold above that pullback low, an attempt, at least probably shouldn’t be ruled out.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Crude Oil Price Forecast: Rift Within OPEC May Lead To Higher Prices

Position Trading based on technical set ups, Risk Management & Trader Psychology.

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Crude Oil Price Forecast Talking Points:

  • The ONE Thing: Positioning in Brent futures has fallen by ~40% from 2018 peak, but could see rebound that helps price remain near recent highs or potentially push beyond. Uncertainty remains surrounding the OPEC and Russia decision at the June 22 meeting on whether to raise production at the June 22-23 meeting in Vienna, but the positioning backdrop could favor limited downside.
  • WTI Crude Oil Technical Analysis Strategy: Crude has fallen deeply after losing nearly 12% from the May peak. Traders will appropriately look to the June 1 high of $67.27. A break higher in the front-month contract could be an indicator of another run toward the low-$70s for WTI. A break below the June 4 low of $64.18 would argue that positioning is set to contract further and helpt he price test the $58/60 zone.
  • Access our recent Crude Oil & Macro Fundamental Forecast here

Key Chart Levels For WTI Crude Oil:

  • Resistance: $67.24-68.61 per barrel – June opening range high, corrective high from May 30
  • Spot: $66.14/bbl
  • Support: $64.18 – June opening range low, lagging line Ichimoku cloud support

Crude Oil Market Update

Monday saw posiitive price action in crude oil on news of a disruption of oil getting to export desitinations in Nigeria, but the long-term trend will likely be dependent on what happens in the coming weeks.

Bearish developments in the form of OPEC and Russia relenting on their production curbs have hit the market over recent weeks. However, while the market has focused on Russia and Saudi set to discuss a boost in production, Iran and Venezuela are calling foul.

Recently, Iraq said that OPEC should resist urges to raise the global supplies of oil that would limit the price gains we’ve seen. Specifically, the supply curbs have shown up clearly via the futures curve where near-dated contracts were priced at a steep premium to longer-dated contracts on a perceived shortage. Despite the futures premium, Iraq, the second largest OPEC producer has argued that OPEC has not fully reached its stated goal.

June 22 is when OPEC and Russia will meet in Vienna to discuss where the state of the current campaign to curb production is heading. Based on recent news that Saudi has recently lifted production to the most since October, they may be already be setting the set to roll-back the production curbs. However, any signs that Saudi has shifted to favor the view of Iraq, Iran, & Venezuela to keep production curbs in play, there could be a sharp shift back into long positions that may lift prices further yet.

Positioning May Favor Further Crude Gains

Please add a description for the image.

Data source: CFTC, Bloomberg

The chart above should give hope to the bulls. In short, it shows that despite a reduction of long Brent futures positions by institutions by nearly 40%, Brent has only fallen ~8%.

At the same time, inflation measures seem to be holding firm, and a late-cycle global economy tends to be the environment where crude tends to outperform.

The drop in longs has come as the fears of new production from OPEC mega-producers align with jumps in US petroleum stockpiles that have resulted in a flattening of the WTI crude curve indicating tightness in the physical market is evaporating.

However, any positive fundamental surprise that brings back signs of tightness whether via demand or supply could show that higher crude prices appear sticky and fighting the uptrend may be a more difficult way to profit in this commodity when you could be joining the trend.

Daily NYMEX WTI –Unwind has reached identified support, next move important

Please add a description for the image.

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

Internal trendlines can be helpful in allowing traders to see support for a broader trend. The trendlineis drawn o the chart above shows crude bouncing off higher lows on a slope drawn from the Andrew’s Pitchfork channel.

Additionally, the price has found support via the daily Ichimoku cloud. While the price has pierced below the cloud, traders have found that bounces from breakdowns have developed around the cloud.

Should a bounce develop, traders should look to the highs of May 30 and June 1 at $67.24-68.61 per barrel. A break and close above there would indicator another run higher. However, a breakdown below the June 4 low of $64.17 would also take price below the internal trendline and favor a broader behavioral shift toward bearishness is at play.

Unlock our Q2 18 forecast to learn what will drive trends for Crude Oil in a volatile Q2

Recommended Reading: 4 Effective Trading Indicators Every Trader Should Know

More for You:

Are you looking for longer-term analysis on Crude Oil and other popular markets? Our DailyFX Forecasts for Q2 have a section for each primary currency, and we also offer an excess 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 popular and free IG Client Sentiment Indicator.

Forex Trading Resources

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’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 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.

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

Talk markets on twitter @ForexYell


CAC 40 Double Tops at Channel Line

Swing trading, chart patterns, breakouts, and Elliott wave

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Talking Points

  • CAC 40 carves a double top pattern
  • Elliott Wave pattern could not push beyond the mid-line of the Elliott Wave channel
  • Bears are activated on a move below channel support near 5200

The Elliott Wave pattern on CAC 40 is intriguing. CAC 40 appears to have finished the five wave impulse move at the Elliott Wave channel mid-line. This implies a weak market and is a bearish pattern.

This pattern suggests that a longer term correction is underway. The first battle of support emerges near 5,200 where the blue Elliott Wave support channel emerges as well as the bottom of the Ichimoku cloud.

Interested in learning more about Elliott Wave and Ichimoku? Grab the beginner and advanced Elliott Wave guide as well as the Ichimoku guide.

CAC 40 Elliott Wave and Ichimoku Pattern

CAC 40 Double Tops at Channel Line

Created using IG Charts

Any near term bulls would need to show themselves in CAC 40 near 5,200. If this level breaks, then the door is opened up to 4,900-5,000. We have two different levels appearing there.

First, the previous wave ‘iv’ extreme is near 5,000. Previous fourth waves tend to act like a magnet in corrective moves.

Secondly, the 38% retracement of the June 2016 (Brexit) low to the November 1, 2017 highs appears near 4,921.

Therefore, if 5,200 breaks, traders can look for further weakness down towards the 4,900-5,000 price zone.

Lower potential exists, but we will need to see the structure of how the correction develops to weigh the odds further.

Why do traders lose money? Find out in our Traits of Successful Traders Research.

---Written by Jeremy Wagner, CEWA-M

Jeremy is a Certified Elliott Wave analyst with a Master’s designation. This report is intended to help break down the patterns according to Elliott Wave theory.

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

Follow on twitter @JWagnerFXTrader .

Join Jeremy’s distribution list.

Other Elliott Wave forecasts by Jeremy:

GBP/USD Hanging Over the Edge of a Cliff

AUDUSD technical forecast hints at the market searching for a bottom.

Short term EURUSD Pattern Hints at Bounce to 1.17.

USD/CAD dives 200 pips, will it continue?

Gold price forecast points towards lower levels.

Crude oil prices reach highest level since July 2015.

NZDUSD Elliott Wave Analysis: Temporary Relief Rallies

USD/JPY : A Bird in the Hand is Better Than Two in the Bush


FTSE Technical Outlook: Lifting from Support Ahead of BoE

Price behavior analysis, short to intermediate-term trade set-ups.

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FTSE Technical Highlights:

  • FTSE decline held bottom of 7600/550 support zone
  • Support is support until it isn’t, but upside may be capped
  • BoE tomorrow, if a market-mover likely FTSE moves opposite GBP

For a broader fundamental and technical outlook on major markets, and to see how our Top Trading Opportunities for 2018 are performing, check out the DailyFX Trading Guides.

On the heels of more trade war news out of Washington the FTSE found sellers yesterday along with other global markets, but found support just under 7550 and ended the day relatively unscathed. By comparison, the Nikkei dropped nearly 2%, the DAX over 1%, and the S&P 500 by 40 bps.

The area from 7600 down to 7550 had a question mark on it as the market declined into that zone given its seemingly lost relevance since acting as major resistance from June to November. But by seeing yesterday’s decline halted and today’s lift it shows it’s remains a zone of importance – it stays on the board.

Where could we go from here? Unfortunately, as we discussed last week, equity indices in general are a bit of a mystery right now while other markets (FX, commodities) are showing more trend clarity. The FTSE could continue to bounce back-and-forth between yesterday’s support and the area in the upper-7700s.

Tactically, the market isn’t presenting a good directional opportunity, but for those looking to fade levels then you have some relatively steadfast support and resistance levels to look to.

Heads up: We have the BoE tomorrow and while not expected to be a major volatility event, keep an eye on GBP – the FTSE is likely to move opposite the currency should a strong directional move develop. For live coverage of the BoE, you can join my colleague Martin Essex starting at 10:45 GMT time.

Check out this guide for 4 ideas on how to Build Confidence in Trading.

FTSE Daily Chart

FTSE daily chart, 7600/550 area still important

You can join me every Tuesday at 9 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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---Written by Paul Robinson, Market Analyst

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EUR/GBP Technical Analysis: 7-Month Down Trend Back in Play

Fundamental analysis, economic and market themes

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EUR/GBP Technical Strategy: Flat

  • Euro vulnerable to deeper losses after breaking channel support
  • Dominant down trend established form October 2017 still intact
  • Improved risk/reward parameters sought to enter short position

See our free guide to help build confidence in your EUR/GBP trading strategy!

The Euro looks vulnerable to deeper losses against the British Pound after prices broke support guiding the upswing from lows set in mid-April. The overall trend continues to be defined by a falling channel containing price action since October 2017.

From here, a daily close below the 38.2% Fibonacci expansion at 0.8686 opens the door for a challenge of the 0.8620-37 area (April 17 low, 50% level). Alternatively, a move back above the 23.6% Fib at 0.8746 paves the way for a retest of the channel floor, now at 0.8770, followed by the May 4 high at 0.8843.

Euro vs British Pound Daily Price Chart

While entering short seems like a broadly compelling proposition, prices are a bit too close to immediate support to justify entering the trade immediately on risk/reward grounds. With that in mind, opting to stand aside and monitoring positioning for a more actionable setup appears sensible.

EUR/GBP TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter


EUR/USD Technical Analysis: Euro Down Move to Accelerate?

Fundamental analysis, economic and market themes

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EUR/USD Technical Strategy: NET SHORT AT 1.2276

  • Euro back at key support after upswing falters as expected
  • Breakdown to signal next stage of long-term bearish move
  • Looking for new opportunities to scale into short position

See our free guide to get help building confidence in your EUR/USD trading strategy!

The Euro is testing key chart support after an upswing faltered above the 1.18 figure as expected, with a break likely to mark the next leg in the long-term down trend. A look at the monthly chart shows the pair sitting squarely atop range resistance-turned-support that previously contained prices for over two years.

Euro vs US Dollar chart - monthly

Zooming in to the daily chart for a more actionable look, a daily close below immediate support in the 1.1527-77 area opens the door for a challenge of the 1.1285-1313 zone. Near-term resistance is in the 1.1662-1.1722 region, with a reversal above that exposing recent swing highs at 1.1840 and 1.1852.

EUR/USD Technical Analysis: Euro Down Move to Accelerate?

The EUR/USD short positioned initiated at 1.2407 and subsequently scaled up near 1.19 remains in play. Opportunities to add to exposure further will be evaluated on a break of support or a substantive upswing back above 1.17. The net cost basis is now 1.2276. A stop-loss will be activated on a discretionary basis.

EUR/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter


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