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Japanese Yen Technical Analysis: USDJPY Tests Key Channel Support

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY is very close to a long-threatened test of channel support
  • If it gives way, a key retracement level probably goes with it.
  • AUD/JPY by contrast looks more range bound

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The Japanese Yen is making technical headway against the US dollar, with a key medium-term uptrend channel under clear threat in USD/JPY.

The channel in question has bounded all trade since the lows of March, and charted a quite impressive Dollar bull run since.

Japanese Yen Technical Analysis: USDJPY Tests Key Channel Support

However, despite this ostensibly strong showing, it is surely notable too that the channel has not seen a major test of its upper boundary for some time now. Indeed the last one was all the way back on May 21 when the Dollar topped out at JPY 111.40. Since then USD/JPY has been much better acquainted with the channel’s lower reached, and it is now testing them more overtly than ever.

A slip below JPY 110.97 on a daily closing basis would see channel downside finally broken.

Japanese Yen Technical Analysis: USDJPY Tests Key Channel Support

That would also mean that the US Dollar had fallen conclusively below the first, 23.6% Fibonacci retracement of the rise up from the lows of March to the peaks of late July. That comes in very close to the current market, at 111.14 and on current showing seems unlikely to hold if tested. The next key level-38.2% retracement- would then be in focus. That comes in at 198.90.

It is probably also worth noting the possible formation of a pennant on the daily chart. This combination of lower highs and higher lows is usually seen as a ‘continuation pattern.’

Japanese Yen Technical Analysis: USDJPY Tests Key Channel Support

What that means is that the asset in question is likely to resume its previous trend once the pattern plays out. Disturbingly for Dollar bulls, this probably means that the slide from those July peaks could intensify.

The Yen is making similar gains against various other majors, notably the Euro and Sterling, however, the Australian Dollar seems to be holding up rather better against it.

Japanese Yen Technical Analysis: USDJPY Tests Key Channel Support

AUD/JPY trade looks rather more range-bound than that of other Yen crosses. July 31’s intraday top of JPY83.18 and July 24’s low of JPY81.84 seem to be providing the limits for now.

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!


XAU/USD Technical Outlook: Gold Prices Digest Recent Losses

Short term trading and intraday technical levels

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Gold is down nearly 7% year-to-date with price registering fresh yearly lows last week. Both price and momentum have been coiling up and the focus is on a breakout in the days ahead of guidance. Here are the updated targets and invalidation levels that matter for Gold. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

Gold Daily Price Chart

Gold Daily Price Chart

Technical Outlook: In last week’s Gold price forecast we highlighted that the, “threat of a near-term recovery remains evident while above the lower 50-line / 2017 March low-week close at ~1204.” Price registered a fresh yearly low at 1204 before rebounding with the weekly opening rangetaking shape just above this key threshold.

Interim resistance stands at 1215 backed by the monthly open at 1223. Broader bearish invalidation stands at 1236- a breach / close above this threshold would be needed to suggest a more significant low is in place. A break lower from here risks substantial losses for the yellow metal with such a scenario targeting the lower parallel (currently ~1190s), 1180 and the 78.6% retracement at 1175.

New to Forex Trading? Get started with this Free Beginners Guide

Gold 240min Price Chart

Gold 240min Price Chart

Notes:A closer look at price action sees gold trading just below the median-line of the broad descending pitchfork formation we’ve been tracking off the February / April highs. A breach above this slope would help alleviate further downside pressure. Note that intraday RSI has not broken above 60 since early July- look for a change in behavior. A break lower eyes initial support objectives at 1194 backed by 1175/80.

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

Bottom line: IF gold prices are going to rebound, this is a good spot to look. The broader short-bias remains vulnerable near-term while above 1204- look for a break of the weekly opening range for guidance with a breach 1215 targeting the December lows / upper parallel at 1236. From a trading standpoint, I’m looking for signs of exhaustion down here – I’ll favor fading weakness into 1204 / buying a break & retest of slope resistance as support. That said, respect a downside break – this is a pretty big pivot in price for Gold. Stay nimble here- with all the Trade War headlines circulating and trader sentiment pulling back from recent extremes, this contracting range in gold is likely to give way to a larger leg in the days ahead.

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

Gold Trader Sentiment

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  • A summary of IG Client Sentiment shows traders are net-long Spot Gold - the ratio stands at +6.02 (85.8% of traders are long) – bearish reading
  • Long positions are1.5% higher than yesterday and 2.3% lower from last week
  • Short positions are 7.2% higher than yesterday and 10.9% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

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

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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


S&P 500 Price Analysis – Wary as Highs Near, Dow Struggles to Keep Up

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

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S&P 500/Dow Highlights:

  • S&P 500 is a stone’s throw away from record highs
  • Caution warranted on fresh longs at this juncture (shorts too)
  • Dow lagging behind, if we see a turn it could get be a better short

For longer-term trading ideas, Q3 forecasts, and a library of educational content, check out the DailyFX Trading Guides

S&P 500 is a stone’s throw away from record highs, Dow lagging

The difference a week makes. Last week we were looking at a bearish short-term configuration that if selling took the S&P 500 through support it would likely open up room for more selling, but instead the area around 2800 led to a strong push higher.

The rally the past week has the S&P staring down new record highs on a move over 2873, but as the case has been for some time, buying new swing highs hasn’t been a particularly fruitful approach. Instead, it’s been waiting for dips that have paid. Yes, we are talking about the record high, not just an ordinary swing high, but even then, in the past the market has had a perverse way of ebbing just about the time all looks to be in the clear.

However, just because a cautious view is warranted on longs (new longs in particular), it doesn’t mean shorts are necessarily warranted at this juncture. Perhaps a volatile turnabout in price action around record highs will, but not until then, and even then, it’s a play for the aggressive. For now, risk/reward isn’t particularly great for either side of the tape.

Traders remain largely short the S&P 500, check out the IG Client Sentiment page to see how this acts as a contrarian indicator.

S&P 500 Daily Chart (Highs ahead)

S&P 500 daily chart, highs ahead

The Dow is operating a bit differently here as it sits right around 4% from the record high, lagging the S&P 500, Nasdaq 100, and the Russel 2000. As the S&P approaches a new high the Dow could soon contend with the peak of the February bounce at 25800.

If we see price action become volatile in the indices here soon, the Dow looks like the best of the bunch to pick on from the short-side. But even then, again, shorting this market in the absence of a clear risk-off theme is for the more aggressive-minded trader. It's also August, and barring downside risk, price action could be a grind...

Dow Daily Chart (Lagging, 25800 resistance)

Dow daily chart, lagging, 25800 resistance

We just put together a piece last week highlight the differences between the three major U.S. indices in this piece, ‘Difference Between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.’. Check it out to learn the varying characteristics one should know if you are going to trad them.

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


EUR/USD Technical Analysis: Euro May Bounce Before Deeper Losses

Fundamental analysis, economic and market themes

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EUR/USD Technical Strategy: NET SHORT AT 1.2276

  • Euro chart positioning hints bounce may precede deeper losses
  • Rebound will be treated as an opportunity to add to short trade
  • Support now just below 1.14, with break exposing 1.12 figure

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

The Euro might manage a near-term bounce against the US Dollar before returning to the long-term down trend revived Turkish crisis spillover fears. The four-hour chart reveals early signs of positive RSI divergence. This hints at ebbing downside momentum even as the pair sets new 13-month lows, which may precede a corrective bounce before the dominant bearish bias reasserts itself.

EUR/USD Technical Analysis: Euro May Bounce Before Deeper Losses

Turning to the daily chart, the expected bearish breakdown from a Triangle chart formation has broadly exposed the 50% Fibonacci expansion at 1.1329. A daily close below that opens the door for a challenge of the 61.8% level at 1.1206. Alternatively, a turn back above the 38.2% Fibat 1.1452 paves the way for a retest of support-turned-resistance in the 1.1527-77 area.

EUR/USD Technical Analysis: Euro May Bounce Before Deeper Losses

The EUR/USD short position activated at 1.2407 and then scaled up near 1.19 remains in play. A corrective bounce from here and subsequent signs of topping and/or upside exhaustion will monitored closely for opportunities to increase exposure further. In the meantime, opting for a wait-and-see approach appears to be most sensible.

EUR/USD TRADING RESOURCES

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

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


AUD/USD Technical Analysis: Bounce May Precede Deeper Losses

Fundamental analysis, economic and market themes

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AUD/USD Technical Strategy: NET SHORT AT 0.7547

  • Australian Dollar range break hints downtrend to resume
  • RSI divergence warns bounce may precede next down leg
  • Waiting for upswing or re-acceleration to scale up short

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

The Australian Dollar looks set to resume the downtrend against its US counterpart after breaking through the floor of a two-month congestion range. From here, a daily close below the 0.7145-69 area (double bottom, 38.2% Fibonacci expansion) opens the door for a test of the 50% level at 0.7071. Alternatively, a turn back above the chart inflection point at 0.7335 paves the way for a challenge of down trend resistance in the 0.7364-0.7461 congestion zone.

AUD/USD Technical Analysis: Bounce May Precede Deeper Losses

Shorter-term positioning hints that follow-through may not be immediate, with a corrective upswing preceding bearish trend continuation. The four-hour chart reveals signs of positive RSI divergence, which hints that downside momentum is ebbing. This can serve as lead-in for recovery, at least in the near term. That need not necessarily occur – divergence can just as well mark a period of sideways consolidation before trend resumption – but its appearance is a noteworthy warning sign of would-be sellers.

AUD/USD Technical Analysis: Bounce May Precede Deeper Losses

With that in mind, it seems premature to add further to the AUD/USD short position triggered at 0.7608 and subsequently scaled up near 0.7530. Price action will be monitored closely and if the bounce indeed materializes, signs of topping in that move will be sought to increase exposure. If the down move appears to be regaining traction without a prior recovery, this too may serve as a potential trigger to add to the trade (provided risk/reward considerations are acceptable).

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


GBP/JPY: Q3 Bullish Breakout Takes a Step Back

Price action and Macro.

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Talking Points:

- GBP/JPY sold-off each day of the week Monday-Thursday, and is currently trying to dig-out support around the 50% marker of the May-July bullish move.

- Yen weakness started to show potential as a workable theme earlier in the quarter, even offsetting the GBP-weakness that was showing in other pairs on the basis of Brexit dynamics. Will bears in the British Pound finally be able to eclipse sellers in the Japanese Yen to push prices back-below 145.00 in GBP/JPY? We look at both bullish and bearish scenarios below.

- Quarterly Forecasts have just been updated, and the Q3 forecast for GBP 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? Click here for GBP/USD Sentiment.

GBP/JPY Reverses After Earlier-Quarter Breakout

It’s been a big start to the second half of the year for the Japanese Yen. After opening into Q3, Yen weakness showed against a number of currencies, the British Pound included - and this helped GBP/JPY to make another approach at the 150.00 level. But, just as we saw in early-June, resistance came-in on the underside of the 2017 bullish trend-line, and prices promptly reversed. GBP/JPY has dropped every day of this week Monday thru Thursday, bringing to question the possibility of continued upside in the pair.

GBP/JPY Daily Price Chart

GBP/JPY Daily Price Chart gbpjpy

Chart prepared by James Stanley

This week’s pullback in GBP/JPY price action wiped out as much as 50% of the bullish move that started in late-May. The 50% marker of that move started to get tested yesterday, and after a quick breech below earlier this morning, buyers have pushed prices back-above the 146.26 area on the chart.

GBP/JPY Eight-Hour Price Chart

gbpjpy gbp/jpy eight hour price chart

Chart prepared by James Stanley

The Bullish Approach

At this stage, we may be looking at the potential for bullish continuation given a hold around 50% retracement of the recent bullish trend. While the British Pound continues to carry risk from ongoing Brexit negotiations, weakness in the Japanese Yen was able to outpace that concern earlier in the month, and this may be a theme that can continue in the near-term. Bullish approaches can look at stops below either the 61.8% Fibonacci retracement of the May-July move around 145.50; or alternatively below the 145.00 psychological level. On the target side of the bullish approach, traders can look at profit targets around 147.87, which is the 23.6% retracement of that same move, followed by 148.50, 149.32 and then the 150.00 psychological level.

The Bearish Approach

This week’s sell-off was brisk and consistent, and for those looking to implement a bearish bias on the pair, that backdrop can be workable as well. Traders would likely want to let prices firm for a bit considering the amount of short-term support that we’ve seen build from 146.00; but if we can make it back to the area around 147.00, the door could be opened for a lower-high to show up and that could allow for stops above 147.67. Traders can then look for targets at 146.26, followed by 145.54 and then 145.00.

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


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.

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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, But Can it Hold?

Price action and Macro.

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GBP/USD Talking Points:

- The British Pound has continued to sell-off after the BoE rate hike that took place earlier in August. Prices in the pair have continued to be offered-lower as the dual themes of Brexit and a dovish BoE have removed rationale for bulls to defend the bid. At this point, the most bullish aspect of GBP/USD appears to be just how entrenched this sell-off has become.

- GBP/USD is flashing oversold readings on the Daily chart and retail traders continue to try to pick a bottom with IG Client Sentiment showing a read of +2.78 as of this writing. Given the contrarian nature of the indicator, this would point to the potential for further downside in the pair.

- Quarterly Forecasts have just been updated, and the Q3 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.

Cable Crush Continues to Fresh 2018 Lows

The past week and a half has produced a rather aggressive sell-off in the British Pound, and this continues a theme that’s been active since mid-April. As we traded into Q2, the British Pound was holding on to some considerable strength from last year, largely built upon the basis of expectations for higher rates and hawkish policy from the Bank of England.

But as we traded deeper into the year that case for hawkish policy and higher rates has eroded. This started in mid-April when we looked at GBP/USD pulling back after a disappointing inflation print. And since then, both inflation and price action in GBP/USD has been in drawdown; matters haven’t been helped by the impending risk around Brexit negotiations between the EU and UK set for just a couple of months away now.

This came to light in early-August at the Bank of England’s ‘Super Thursday’ rate decision. Markets were ready for a rate hike as that had been widely telegraphed by the Bank of England, but the contextual details offered by the bank offered a fairly pessimistic take on future operating conditions, forecasting one potential rate hike ahead of the year 2020. And at that point, the one reason for bulls to defend the bid, the prospect of tighter policy in response to above-target inflation was removed from the equation. What’s taken place in price action since that rate decision has not been pretty for Cable bulls.

GBP/USD Daily Price Chart: Hastening of Sell-Off as RSI Goes Oversold (Again)

gbpusd gbp/usd daily price chart

Chart prepared by James Stanley

July UK Inflation Numbers Are Set to Be Released on Wednesday Morning

This week’s economic calendar brings an item of interest for GBP/USD traders as we have the July release of inflation numbers. This data point has very much been a driver of British Pound price action as this was the reason for the build of expectations for a more-hawkish Bank of England.

DailyFX Economic Calendar: UK Inflation to be Released on Wednesday Morning

DailyFX Economic Calendar

Chart prepared by James Stanley

Inflation as the Push Point

Inflation ballooned in the UK in 2017, largely in response to the ‘sharp repricing’ in the value of the British Pound around the Brexit referendum. After Brexit, and the ensuing dovish campaign from the Bank of England, the British Pound went into a ‘flash crash’ in October of 2016 as a dearth of demand was unable to offset the considerable selling pressure.

But – in response to that massive sell-off, retailers began to raise prices, particularly importers that didn’t want to take a 20% haircut on revenues out of the UK simply because of a weaker British Pound; and this started to show through inflation figures. As we came into 2018, the general expectation appeared to be for the Bank of England to shift into a more-hawkish stance to stem this inflation; but market forces started to take care of the job before the BoE could ever make much ground. Inflation fell to 2.7% in February. And then to 2.5% in March. And then we had three consecutive months at 2.4%. So, it would appear that inflation has started to soften on its own, which is what led to the dovish case made by the BoE at last week’s rate hike.

UK Inflation Softening in 2018 After Five Consecutive Months At-or-Above 3%

UK CPI Since July, 2017

Chart prepared by James Stanley

Bearish Continuation Potential – Can Inflation Give a Blip of Strength to Sell Into?

At this point, it appears as though the British Pound is nearing a backdrop similar to what happened after the Brexit referendum. This is when that dearth of demand led into the Flash Crash, and while forecasting another scenario of that nature would be impossible, this does appear to be a situation that can lend itself to further selling. Brexit is likely to remain an overhanging concern, and it doesn’t appear that we’re going to get any element of clarity there until September, at the absolute earliest. Rate policy at the Bank of England is now considered to be dovish after last week’s rate decision, and given the continued draw on inflation – there has been little reason for market participants to question that stance.

This combination of negative factors is likely the reason behind the current posture in GBP/USD, where the pair has been sitting on fresh yearly lows since the European open on Friday morning. This makes selling problematic, as we have oversold RSI readings on the Daily chart combined with this short-term build of support; and there are no nearby areas of resistance to use for stop placement.

This can help to highlight, however, zones that could be attractive for bearish continuation strategies in GBP/USD. Below, we look at two such areas on the chart, the first of which runs from a group of swing lows taken from last week around 1.2817 up to 1.2846. A bit deeper, we have another potential resistance area that runs from 1.2918 up to 1.2956. If we break back-above the 1.3000 level, traders would want to question the bearish continuation approach as something in the backdrop would’ve likely changed.

GBP/USD Hourly Price Chart: Lower-High Resistance Potential for Bearish Continuation

gbpusd gbp/usd hourly 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 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


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

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

Contact and follow James on Twitter: @JStanleyFX


EUR/JPY Price Plummets Through Fibonacci Support

Price action and Macro.

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EUR/JPY Talking Points:

- EUR/JPY has put in a rather outsized bearish breakout from the Fibonacci level that we had looked at last week. Prices in the pair sold-off by as much as 430 pips, but sellers got shy ahead of a test of the 125.00 level, and prices have started to pullback.

- At this point, the move could still be qualified as being stretched; but if we do see resistance show around prior areas of support around 127.50 or the 128.52 Fibonacci level we had looked at last Wednesday, the door can remain open for more downside.

- DailyFX Forecasts on a variety of currencies such as the US Dollar or the Euro are 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.

Do you want to see how retail traders are currently trading the Euro or the Japanese Yen? Check out our IG Client Sentiment Indicator.

EUR/JPY Bearish Breakout From Fibonacci Support

It’s been an active past couple of trading days in the Euro, as markets get a bit more cautious on the prospect of contagion in European banks from the developing situation in Turkey. While the single currency had continued to hold on to weakness from Q2, taken from the dual impacts of a dovish ECB along with increased political pressure from Italy, a new risk has come up, and that’s just how exposed banks European banks might be to the continued development of what’s taking place across the European border in Turkey. And, as we saw in the European financial collapse, the big concern isn’t just one or two banks facing hardships, as the European banking system is likely too connected for just a couple of banks to absorb all of the pain: The worry is about contagion, one or two banks unable to meet obligations then pushing other counter-parties over the edge, to the point where credit freezes as the banking system gets very risk averse very, very quickly.

At this stage, we’ve seen an increase in worry as indicated by the continued sell-off in the Euro. Just last week, we looked at EUR/JPY running into a key area of Fibonacci support. And while a support level of that nature can often be used for reversal strategies, we advised against looking for such, instead looking for a bearish breakout to fresh lows. That breakout started on Thursday and has pretty much continued ever since, seeing prices shed as much as 430 pips from the Wednesday high down to today’s low.

EUR/JPY Four-Hour Price Chart

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

Given our current backdrop, traders should be cautious of selling an oversold move. We saw a similar run of bearish price action in late-May all the way down to the 125.00-handle; but that’s around the time that bulls came back into the market and two weeks later we were right back up to the 130.00 level. This morning’s support pulled up just shy of that 125.00-handle, and the fact that sellers couldn’t continue to push for a re-test of the psychological level makes themes around bearish momentum a bit less attractive.

EUR/JPY Eight-Hour Chart: Sellers Relent Ahead of Big Support Test

eurjpy eur/jpy eight hour price chart

Chart prepared by James Stanley

EUR/JPY gapped-lower to open this week’s trading, and that move of weakness continued for the first few hours until a bit of support began to develop around 125.25. Since then, we’ve seen a continued push of bullish short-term price action, and this indicates that we may have a deeper retracement to work with in that bigger-picture bearish move. This also exposes the potential for resistance to come into play, and that can open the door for bearish continuation strategies in the pair.

The same Fibonacci level we had looked at for support last Wednesday could be re-utilized as potential resistance, and between that level and current prices we have a second area of interest around the 127.50 psychological level (marked from 127.24 up to 127.50 on the below chart). The area around 127.50 had helped to carve out support for a two-week period in the second half of June and since the recent sell-off has heated up, we have yet to see a resistance test at this prior area of support.

EUR/JPY Four-Hour Price Chart: Lower-High Resistance Potential From Prior Points of Support

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q3 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


NZD Technical Analysis Overview: NZDUSD & NZDJPY Focus Ahead of RBNZ

Fundamental analysis, news events, market reactions and macro trends.

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NZD Analysis and Talking Points

  • NZDUSD Relatively Rangebound, Support from 0.6680-0.67
  • NZDJPY Key Fib is Holding For Now

See our Q3 FX forecast to learn what will drive the currency through the quarter.

NZDUSD Relatively Rangebound, Support from 0.6680-0.67

Prices are still within the 0.67-0.6850 range with the pair situated at the 61.8% Fibonacci retracement. Buying interest above the 0.6700 continue to underpin the currency, however, DMAs do continue to head south, which in turn brings into focus the 0.6680-0.67 support area, whereby a firm break could open the gate to larger losses back down towards the mid-0.65s. On the topside, targets are for 0.68 and 0.6860.

IG Client Positioning SentimentTraders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZDUSD-bearish contrarian trading bias.

NZDUSD PRICE CHART: Daily Time Frame (January 2018-August 2018)

NZD Technical Analysis Overview: NZDUSD & NZDJPY Focus Ahead of RBNZ

Chart by IG

NZDJPY Key Fib is Holding For Now

The negative bias in the cross remains intact given the series of lower highs, while a rejection from the 50% Fib level sparking renewed selling in the cross. Eyes now on for a firm break below the 61.8% Fib level at 74.80, which is acting as support for now. If indeed this gives way, then the cross will look to make a move towards the 2018 low at 74.08 before making a run in on the November 9th low situated at 73.70.

NZDJPY PRICE CHART: Daily Time Frame (April 2016 – August 2018)

NZD Technical Analysis Overview: NZDUSD & NZDJPY Focus Ahead of RBNZ

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX


DAX Technical Update – Long-term Trend-line Met, Now What?

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

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DAX Technical Highlights:

  • DAX drops down to long-term trend support
  • Bottom and top-side t-lines converging/H&S potential
  • Price action not giving good cues in the near-term

For the intermediate-term fundamental and technical outlook for the DAX & Euro, check out the DailyFX Q3 Forecasts.

In last week’s DAX tech update, we were focused on a technical formation on the hourly chart which suggested near-term weakness. The target on a down-move was the February 2016 trend-line, and as it turned out, as far as we’re concerned given the long-term nature of the line, the line was tested. The test wasn’t a thorough one, but long-term levels need to be given a small buffer around them. These lines should be drawn with a crayon and not a fine-point pen.

So, what could be next? In the short-term, we will give support the benefit of the doubt as per usual. On the top-side, though, things are getting bunched up a bit with the convergence of the aforementioned long-term trend-line and the one running down off the record high. The convergence in price action since January suggests a big move is coming relatively soon (next ~6 weeks, just in time for one of the busiest times of the year).

One big-picture possibility, still, is for the developing head-and-shoulders dating back to June of last year to trigger. Its symmetry is coming into question given how far out the right side of the pattern is extending, but should the neckline break in the not-too-distant future it could still. This would first require a break below the Feb ’16 trend-line, followed by a break below roughly 11600. It’s not an immediate concern, so we’ll revisit it later should it become a relevant scenario.

In the short-term, it’s a tricky spot as shorts aren’t appealing with big support right at hand while longs have a bit of a headwind to contend with as price action thus far hasn’t been too reactive to the top-side (maybe a better test of the Feb ’16 t-line will change this.

So far this month, we’ve seen the FX market fly around but the same headlines hitting currencies haven’t impacted indices too much. This could change, but if things settle out across the board there may be a lull from now into September as this time of the year can be a relatively dull one. But don’t lose your focus if trading these markets, as we’ve seen in the past week things can heat up quickly.

For market sentiment and to learn more about how to use it in your analysis, check out the IG Client Sentiment page.

DAX Daily Chart (Feb '16 t-line)

DAX daily chart, Feb '16 t-line

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


USD/CAD Rate Forecast: Saudi Threat Brings Prospect of CAD Washout

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

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Canadian Dollar Rate Forecast Key Takeaways:

  • The ONE Thing: Saudi Arabia is dumping Canadian assets. The news comes ahead of a steadily weakening Canadian Dollar with oil weakening as well as Friday’s CA employment data. A miss in Canadian data could lead to broader CAD weakness.
  • Crude oil prices have fallen materially on the back of US EIA Inventory data showing a smaller decline than originally expected in stockpiles. The move to US$66.5 in WTI is the lowest price since late June and further harms the Canadian Terms of Trade.
  • Technical Outlook: USD/CAD support sits at C$1.2962 per USD. While the momentum on the US Dollar has cooled, the environment favors further USD/CAD gains than losses. A break below C$1.2962 would favor a behavior shift in the market away from a USD-long bias theme prominent since February against CAD and to a USD-long reduction mode.

Key Technical Levels for Canadian Dollar Rate to US Dollar:

  • Resistance: C$1.3262 Trendline drawn from Jan 2016 high
  • Spot: C$1.3066
  • Support: C$1.2950 June 14 low - end of corrective triangle pattern/base of rising channel

Saudi Appears To Have the Upper Hand in Canadian Dispute

Markets moved on Tuesday showing Canadian Dollar weakness with little explanatory power. Only hours later did the development come out that Saudi Arabia is set to offload CA assets in response to Ottawa’s critiquing of Saudi’s arrest of a female activist.

Saudi’s central bank is expected to hold some $15B in Canadian dollars in reserves, as well as the state pension funds, are no doubt heavily involved in similar industry’s as Canada. The comment picked up on by the Financial Times’ source that the “Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost,” should materially worry Canadian-exposed asset holders.

Wedge Pattern Beckons Volatility In USD/CAD

Please add a description for the image.

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

USD/CAD continues to hold rising support showing underlying strength. The issue traders need to address is the longer-term trendline resistance shown above. Institutions hold excessive bullish sentiment and long positions on USD.

The sentiment could extend, and strength could continue as the fundamental backdrop looks to argue. A tired trend is not a dead trend, and US economic growth has accelerated this year. The broader risk appears to be the underlying concerns of risk appetite with the volatile balance of payment data from China, and horrific terms of trade data from Canada alongside weakening oil could precede sharp strength in USD/CAD.

The levels to watch with keen focus are C$1.2950 and C$1.3262 per USD. A break above C$1.3262 would show a break above a 2-year trend line that could well extend as it did in 2015 when the oil route was becoming a household topic of conversation. A break below C$1.2950 would argue the USD strength is cooling off, but would not necessarily lead to a favorable USD/CAD short trade.

WTI Crude Oil Breaks Down Leaving Less Hope For CAD Bulls

Please add a description for the image.

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

The chart above shows a WTI crude oil, which is trading below the 100-DMA ($68.73) at $66.08. As mentioned above, the declining terms of trade and the spat with Saudi could put Canada at the wrong end of market forces at a time when risk sentiment appears top heavy.

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 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 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


Gold & Silver Price Analysis – Can These Things Rally, Even a Little?

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

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Gold/Silver technical highlights:

  • Gold trying to break trend-line resistance
  • Silver working on building a descending wedge

For the intermediate-term technical outlook and expected fundamental drivers in the months ahead, check out the DailyFX Q3 Gold Forecast.

Gold trying to break trend-line resistance

Gold price is trying to cross an important threshold, the trend-line bearing down from a swing high nearly two-months ago. It’s pressed on it several times in recent sessions, and as we discussed in yesterday’s webinar this increases the odds that it will break. Upward pressure is also coming from the top the 1205/1195 support zone.

A clean break above may not spark a sharp rally, but it will be a warning shot to shorts and a beacon of light for those looking to scoop the metal for at least a countertrend rally. For would-be longs, a safer approach may be to wait for a confirmed crossing of trend resistance and then a higher-low to form on a pullback.

Stay below the t-line and the trend remains firmly intact. The past 24-hours price has been hugging the trend-line, so we should see some type of resolution very soon.

Gold traders remain long by a hefty margin of 6-1; check out the IG Client Sentiment page for details as to why this is a headwind for higher prices.

Gold 4-hr Chart (Trend-line in focus)

Gold 4-hr chart, trend-line in focus

Silver working on building a descending wedge

Silver has a different look to it than gold, with a descending wedge forming on the 4-hr. Ideally, given the descending nature of the pattern and general trend weakness, a resolution to the downside develops.

But if the top-side trend-line is broken (likely along with gold breaking the June trend-line), then look for some type of rally to develop. However, between the two metals, gold is the preferred long candidate on any upward breaks of resistance, while silver favored as a short with a pattern breakdown.

Silver 4-hr Chart (Descending wedge developing)

Silver 4-hr chart building a descending wedge

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: Daily Range Shows No Sign of Cracking

Financial markets, economics, journalism and fundamental analysis.

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ASX 200 Technical Analysis Talking Points:

  • The index didn’t get far last week, indeed it slipped a little
  • Fundamentally, risk appetite was hit by worries about Turkey, among others
  • Technically, however, the ASX remains very much where it was

Get live, interactive coverage of all major Australian economic data at the DailyFX Webinars

The ASX 200’s technical picture hasn’t changed much since last week, which leaves it very much at the mercy of the prejudice of the beholder.

On the one hand, the index has clearly made no progress to the upside on its daily chart.

ASX 200 Technical Analysis: Daily Range Shows No Sign of Cracking

Its old trading range holds firm, as I said it probably would in my last look at the Sydney benchmark. On the other, however, it is holding up at a relatively high level. Investors are showing no clear desire to cash out and its monthly-chart uptrend is holding.

ASX 200 Technical Analysis: Daily Range Shows No Sign of Cracking

Indeed on this chart the index has clearly now topped its most recent significant peak, May 2015’s 5994.

So, how does all this leave us? Well, honestly pretty much where we were with the current trading range really all investors now have to play with. It comes in between July 17’s intraday low of 6195.3, which was also just about the closing low on July 4, and July 27’s intraday top of 6327, also July 9’s close.

The ASX 200 offers no very clear sign that this range is about to crack either way. The moving averages are in chronological order and, while momentum indicators are certainly rising, they are not screaming ‘overbought’ yet by any means.

Upside targets once it does break are tough to spot as the index hasn’t spent a lot of time at these levels for more than ten year’s. November 2007’s top of 6861 is the most obvious one, but it is a long way above the current market and looks like a big ask for even the most ardent of bulls. A sustained upside range break might see more focus on it, however.

Below, the 6175.6 level might be one to conjure with. It would represent the first, 23.6% Fibonacci retracement of the rise up from the lows of early April to the recent peaks of mid-July.

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: Range Shows No Sign of Losing Grip

Financial markets, economics, journalism and fundamental analysis.

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Nikkei 225 Technical Analysis Talking Points:

  • The Nikkei 225 remains well within a clearly defined range
  • There are obvious upside and downside targets but no impetus to hit either
  • It’s time to watch and wait

Get trading hints and join our analysts for interactive live coverage of all major economic data at the DailyFX Webinars.

The Nikkei 225’s daily chart points to a touch of technical stasis, of the sort now quite common across the equity market space.

The Tokyo stock benchmark has settled into a broad range since late July at what- by recent standards- are quite elevated levels. While bulls can if they like take some comfort that the market is clearly in no hurry to take cash off the table, there is clearly little impetus to push on towards recent highs, which remain just out of reach.

Nikkei 225 Technical Analysis: Range Shows No Sign of Losing Grip

In this respect, the Tokyo equity benchmark is behaving very like Australia’s ASX 200, for which similar patterns can be seen.

Of course, the range will break eventually but so far the Nikkei is offering chart watchers few clues as to when that day might come, or to which side it will be. As long as mid-July’s top of 22,927 remains unthreatened on a daily-closing basis we might guess that the index is probably biased lower, but that’s only a possibility.

The range is fairly broad, bounded to the downside by 22,317 and to the top by 22,830, so just playing it until it breaks offers at least some opportunity.

But if that mid-June top represents a plausible target for an upside range break, where might a slip through the downside find support? Well, the first, 23.6% retracement of the rise from the lows of late March to May 21’s 23,044 – a point which hasn’t been topped since- looks likely. That comes in a 23,397 and has held off the bears on a daily closing basis since July 13. Even if it fails, a cluster of likely props from late June in the 22,200 area may catch the fall.

Nikkei 225 Technical Analysis: Range Shows No Sign of Losing Grip

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: Institutions, Trade War Threats Drop WTI

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

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Crude Oil Price Forecast Key Points:

  • The ONE Thing: Demand concerns are not going away. Institutions per the CFTC are reeling in their bullish exposure, and Wednesdays nearly 4% drop will likely continue the trend of position squaring. The EIA Weekly Crude Oil Inventory Report showed a smaller draw than expected and the front-month WTI contract closed at the lowest level in six weeks on Wednesday.
  • Crude oil may see volatility and not the bullish kind that has preceded in 2018 after a quiet open in August and the end of US driving season as the ever-present dispute of US and China in the Trade War puts downward pressure on the commodity bloc as a whole.
  • WTI Crude Oil Technical Analysis Strategy: Crude oil faces big levels at $66/63, and a break below favors further selling as extreme positioning and middle east tensions were unable to lift crude much beyond $70.
  • Access our latest Crude Forecast for Q3 2018 here

KEY TECHNICAL LEVELS FOR WTI CRUDE OIL:

  • Resistance: $69.98– July 30 high
  • Spot: $65.99/bbl
  • Support: $63.41– June low preceding June 18-July 3 breakout to new 3yr highs

Institutions May Pull Back, More May Be On The Way

Please add a description for the image.

Source: CoT – USD Sees Net Speculative Buying for 15th Week in a Row

Institutional positions long crude were at historical extremes on the back of record high compliance of OPEC + production curbs, and WTI appears to have lost the impulsively bullish look. Now, the focus will turn to the US Economic growth engine to see if fiscal policy and improvements in US energy trade balance can help revive the price of crude oil.

If not, the best returns QoQ may be in the record books, and the risk may be returning to the downside.

Sanctions on Iran remain, but if demand is not enough to soak up the new oil, it may not matter enough.

Daily NYMEX WTI – Crude Drops Like A Stone Below 100-DMA

Please add a description for the image.

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

To unpack this chart, you should know that the impulsiveness has lost its momentum. A break below $63 could mark the medium-term end to a multi-year rally.

Historically, the move off the 2016 low sub-$30 matches cleanly the pattern in 2012-2014 before the crash. While a crash is not the favored view, traders should watch for a breakdown if the pattern has any semblance of the follow through move in 2014.

Resistance at $70/bbl would invalidate the bearish view that I’ve formed based on extreme positioning and the notion the leading engine of economic growth, the US is service-based, unlike China in 2009-2012 that was lifting oil with demand for oil due to physical assets.

Unlock our Q3 18 forecast to learn what will drive trends for Crude Oil

Forex Trading Resources To Enhance Your Strategy

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.

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

Talk markets on twitter @ForexYell

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


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 – Wedge Breakout Fake-out Furthered by BoE

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

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FTSE Technical Highlights:

  • FTSE wedge breakout on Tuesday reversed
  • Brings support into play around 7500
  • Generally choppy conditions not ideal

For the broader fundamental and technical outlook on the FTSE & British Pound, check out the DailyFX Q3 Trading Forecasts.

The FTSE’s fake-out breakout catches longs leaning the wrong way

Yesterday, the BoE raised rates by 25 bps to 0.75%, in line with expectations, but this didn’t keep the FTSE or sterling from having decent-sized moves. Prior to yesterday’s drop, on Tuesday, the FTSE broke higher out of an ascending wedge but reversed back inside it on Wednesday setting up the fake-out breakout.

With the market ‘trapped’ on the false breakout more fuel for selling was provided not only for yesterday’s decline, but should help lead to additional weakness in the days ahead. Looking lower is support at 7508, then the 200-day at 7479.

The caveat to trading the FTSE right now is two-fold; one, it’s been a choppy market in general, and, two, it’s August. Typically, if this month doesn’t have anything eventful in the way of risk-off it can be a quiet one as traders leave the desk to squeeze in vacation before school starts.

Keep an eye on the U.S. markets, there may be some reason to look for at least a little risk-off in the weeks ahead if certain developments take shape. Check out yesterday’s commentary on the S&P 500 and Nasdaq 100, along with what we had to say about the DAX if it broke its month-long channel (which it did yesterday).

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

FTSE Daily Chart (Wedge reversed)

FTSE daily chart, wedge reversed

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.

Tools for Forex & CFD Traders

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---Written by Paul Robinson, Market Analyst

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EUR/GBP Technical Analysis: Euro Takes Aim at Ten-Month Range Top

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EUR/GBP Technical Strategy: Flat

  • Euro accelerates higher vs Pound amid “no-deal” Brexit worries
  • Prices poised to challenge ten-month congestion range resistance
  • Improved risk/reward parameters needed for attractive long trade

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

The Euro is accelerating higher against the British Pound, with prices poised to break out of the choppy range containing them for the past ten months. Sterling’s recent weakness comes amid concerns about a “no-deal” Brexit, whereby the UK would leave the EU without an accord on the future economic relationship.

Resistance stands in the 0.9033-35 area, marked by the October 2017 high and the 50% Fibonacci expansion. A daily close above that opens the door for a test of the 61.8% level at 0.9075. Alternatively, a move back below the 38.2% Fib at 0.8995 exposes resistance-turned-support in the 0.8960-68 area.

EUR/GBP Technical Analysis: Euro Takes Aim at Ten-Month Range Top

Prices are bit too close to near-term resistance to justify entering long from a risk/reward perspective. On the other hand, the absence of an actionable topping signal warns against taking up the short side. Standing aside and waiting for a better-defined setup seems most prudent for now.

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


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.

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