Support & Resistance

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EUR/USD Technical Analysis: Ready to Test Above 1.24 Figure?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro aims above 1.24 after breaking yet another chart resistance level
  • Conflicting cues argue against taking long or short position at this time

The Euro has soared to the highest level in over three years against the US Dollar, with a break past yet another layer of chart resistance hinting the move upward will continue. Prices pulled back after showing a bearish candlestick pattern as expected but the move quickly turned follow a hawkish ECB meeting minutes.

From here, a daily close above the 50% Fibonacci expansion at 1.2430 opens the door for a challenge of the 61.8% level at 1.2637. Alternatively, a move back below the 38.2% Fib at 1.2223 paves the way for a retest of resistance-turned-support at 1.2092, the September 8 high.

Standing aside seems prudent for now. Longer-term positioning shows the Euro entering a critical resistance zone, arguing against chasing the currency upward. On the other hand, the absence of a clear-cut bearish reversal signal means that entering short is premature, especially given recent bullish momentum.

What will drive the EUR/USD trend in the first quarter? See our forecast here!

EUR/USD Technical Analysis: Ready to Test Above 1.24 Figure?


Japanese Yen Technical Analysis: Ancient USDJPY Uptrend Threatened

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • USD/JPY has fallen and stayed down
  • It’s now closing in on what could be a key uptrend channel
  • AUD/JPY has recovered, meanwhile, and looks set for more gains

Which 2018 trading opportunities do the DailyFX team of analyst find most compelling? Find out here.

The Japanese Yen has posted strong gains against the US Dollar in the past week, taking USD/JPY back to lows not seen since mid-September last year.

The fundamental justification for these moves is clear enough. The greenback has been under general pressure thanks to increasing market certainty that other developed markets will see tighter monetary policy in due course, crowding a field which for much of last year belonged solely to the US Federal Reserve. The Eurozone is held to be the most obvious candidate as stronger economic data see bets rise that stimulus withdrawal will accelerate.

The Yen has had a specific, domestic driver, too, even if its rationality is open to question. The Bank of Japan trimmed ever so slightly the amount bought at its regular bond-market operations last week. This was seen by the market as a sign that even Japan’s extraordinary accommodative monetary policy could be tightened and the Yen duly rose. Now the Bank of Japan has effectively denied the markets’ implicit charge since. It has stuck to its ancient line that all current settings will remain in place until inflation rises sustainably. But the Yen has not weakened, suggesting perhaps that the markets do not wholly buy this line.

In all events, USD/JPY’s fall to the 110.24 region puts early-September’s lows in the 107 region in focus, and they were the lows for 2017 as a whole.

Japanese Yen Technical Analysis: Ancient USDJPY Uptrend Threatened

If we look a little further back for clues, we find USD/JPY now within striking distance of what could be a quite significant longer-term upward channel on its daily chart. This channel is rooted in the lows of September 2016. Its lower bound has quite a few validation points, not least the intraday low of November 9, 2016 which provided investors with a very broad daily range but a rather smaller actual gain.

Channel upside need hardly detain us long as a test of it looks most unlikely in the near term. However it is probably worth pointing out that that upside is necessarily bounded by the highs of late 2016 and early 2017. These look like outliers now, given the trading action before or since. A more valid channel top would probably take in the lower highs of March or even May 2017.

Still, the point is that this reasonably long-term uptrend will be in serious trouble for the first time in its history if the Dollar closes below 109.75. That is not very far from current levels.

Japanese Yen Technical Analysis: Ancient USDJPY Uptrend Threatened

By the same token of course US Dollar bulls may be able to defend this uptrend. But the contest should come soon and its outcome will be worth watching.

The Australian Dollar took a knock against the Japanese currency at about the same time as USD/JPY began to fall more heavily, around January 10. However, AUD/JPY has fought back far more convincingly with rises chalked up for the past five sessions, albeit quite modest ones.

Japanese Yen Technical Analysis: Ancient USDJPY Uptrend Threatened

Aussie bulls need to make progress above that January 10 fall, which means they need to retake 88.78, before moving on to an assault of the previous high, January 5’s 89.08. At the moment the Aussie seems to have enough tailwind to suggest that both levels could be tested. Official Chinese Gross Domestic Product data on Thursday could provide the fundamental impetus, especially if they show growth comfortably in the ‘better’ region of Beijing’s “6.5% or better” target. Analysts expectations centre around a 6.8% gain.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


GBP/USD Technical Analysis: Strong 2017 Close Keeps Door Open for Sterling Strength

Price action and Macro.

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Talking Points:

- The British Pound just capped-off what a year that was likely surprising to many, as the currency gained 9.33% against the U.S. Dollar in 2017.

- The prospect of continued strength in inflation combined with a brutal amount of uncertainty around the U.S. Dollar can keep that theme of Cable strength as an attractive theme for FX traders.

- Want to see how GBP and USD are holding up to the DailyFX Forecasts? Click here for full access.

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Last year closed in a rather positive fashion for the British Pound, as the currency was up by 9.33% against the U.S. Dollar in 2017. This, of course, was marked by considerable USD-weakness throughout the period; and so far in 2018 that theme has continued as GBP/USD is holding support above the key psychological level of 1.3500. The trend channel that started off of the March lows remains, with price action currently sitting in the lower-half of this area while garnering a bit of support off of a prior region of swing-high resistance.

GBP/USD Daily: Bullish Trend Channel Remains From Start of March, 2017 Lows

GBP/USD Technical Analysis: Strong 2017 Close Keeps Door Open for Sterling Strength

Chart prepared by James Stanley

While the general trend in the pair was higher throughout last year, it was not without struggle. There were multiple periods in which price action moved in a rather messy, chaotic fashion; and this likely has to do with the burgeoning fundamental themes pertinent to each side of the currency pair. In the U.K., Brexit continues to remain a concern, and we’re seeing this coupled with higher rates of inflation along with the potential for tighter policy out of the Bank of England before the end of this year. In the U.S., questions abound concerning Fed policy as the world ushers in a new Fed Chair at the end of this month when Mr. Jerome Powell takes over the top spot at the bank. And this doesn’t even make mention of tax cuts or fiscal policy in the United States, which can also continue to be a driver in and around the U.S. Dollar.

After a burst of strength to close out the year saw the pair eclipse the key psychological level of 1.3500, prices have been moving in a sideways manner with little directional drive. A retracement coupled with higher low support above last week’s swing-low of 1.3493 can keep the door open for bullish continuation strategies; and this support zone can be extended up to 1.3520 to incorporate a couple of swing lows that printed in the latter portion of last week. This could enable traders to look at profit targets and break-even stop moves on a revisit of near-term resistance around 1.3585.

GBP/USD Hourly: Short-Term Support Zone 1.3490-1.3520

GBP/USD Technical Analysis: Strong 2017 Close Keeps Door Open for Sterling Strength

Chart prepared by James Stanley

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

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USD/CHF Technical Analysis: Two-Year Range Remains in-Force

Price action and Macro.

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Talking Points:

- USD/CHF has been range-bound for more than two years.

- As we move towards the close of 2017, price action remains near the middle of this two-year range.

- Want to see the DailyFX Q4 Forecast on USD? Click here for full access.

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As we near the end of 2017, the range in USD/CHF has now turned two years old. The removal of the peg from the Swiss National Bank in January of 2015 led to extreme volatility in the Franc; but after settling down in the months following, prices moved into a rather consistent range that’s now held for more than 24 months. Resistance around 1.0300 at the top of the range has shown twice, in December of 2015 and then again in December of 2016.

USD/CHF Daily: Range-Bound Since Q4, 2015

USD/CHF Technical Analysis: Two-Year Range Remains in-Force

Chart prepared by James Stanley

Perhaps most surprisingly, this range developed while the U.S. Dollar was in the midst of some rather respectable trends. In the latter portion of 2016, the Dollar caught a significant bid as we moved towards year-end after the election of U.S. President, Donald Trump. This created a fresh 14-year high in the Greenback per DXY; but in USD/CHF, we merely saw that revisit to resistance around 1.0300. But, as that troubling USD weakness began to show in the first and second quarters of the year, USD/CHF tracked-along with it, albeit in a more confined manner; eventually running down to support around the .9450 area, at which point buyers showed up to help cauterize losses before prices moved higher.

At this point, there are few reasons to anticipate a break of this range. Price action is currently testing the mid-line of the recent range around .9883, and this can make directional prognosis even more complicated at this point, as we’re in the middle of a meandering section of price action.

Until USD/CHF exhibits some tendency to trend, traders would likely want to move-forward under the expectation that this range will continue. Visits to support, categorized as the 2017 low of .9421 up to the .9550 level could be attractive for bullish exposure with targets cast towards parity and then 1.0200. And resistance of 1.0200-1.0350 can be investigated for short-side stances with targets cast towards parity and then .9775.

USD/CHF Daily: Middle of the Range as we Near Close of 2017

USD/CHF Technical Analysis: Two-Year Range Remains in-Force

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Topping Clues Emerge Near 0.79

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar looks uneasy at the highest in over 3 month vs US namesake
  • Confirmation of reversal needed to make for actionable short trade setup

The Australian Dollar rose to the highest level in over three months against its US counterpart but chart positioning warns that a turn lower may be ahead. Negative RSI divergence suggests that upside momentum may be fading, which may precede the formation of a top below the 0.79 figure.

From here, a daily close below the 38.2% Fibonacci expansion at 0.7806 opens the door for a retest of the 23.6% level at 0.7690. Alternatively, a push above the 50% Fib at 0.7900 paves the way for a challenge of the 61.8% expansion at 0.7994.

Final profit has been booked on the long AUD/USD position activated at 0.7666. Current positioning does not offer an actionable trade setup just yet. RSI divergence is not sufficient to trigger a short position without further confirmation. Standing aside seems prudent until a better-defined opportunity presents itself.

What is the #1 mistake that traders make, and how can you fix it? Find out here!

AUD/USD Technical Analysis: Topping Clues Emerge Near 0.79

Canadian Dollar Rate Forecast: Markets Set For Probable BoC Rate Hike

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

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Canadian Dollar Rate Talking Points:

  • USD/CAD Price Forecast: CAD looking to strengthen below 1.2350/90 on BoC
  • Bank of Canada rate hike expectations close to 90%. Failure to hike could bring volatility
  • Sentiment Highlight: Retail selling overtakes longs, bias bullish

The Canadian Dollar rate looks ripe for further strengthening as traders prepare for the Bank of Canada to hike rates with 85% probability per Bloomberg data ahead of the meeting. The Canadian Dollar rate could also strengthen should BoC Governor Poloz share a confident view that could further result in front-end Canadian Treasury selling that has been correlated to CAD strength.

A risk that traders should watch for would be a hawkish hold where the BoC fails to hike but encourages the markets to look for a rate hike at an upcoming meeting. Given the pricing in of a rate hike per overnight index swaps, a failure to hike now would like see USD/CAD test resistance at prior resistance near 1.26, which also is where the 100-DMA stands.

Another background data-point that traders should be aware of is the positioning data from the CFTC Commitment of Traders (CoT) report that showed institutions added to their CAD long exposure. The net CAD long is barely positive meaning an aggressive unwind or betting on significant CAD weakness does not appear to be a smart bet as institutions do not have an extended position that they’d need to unwind.

Unlock our Q1 forecast to learn what will drive trends for the US Dollar at the 2018 open!

USD/CAD Chart: Looking Heavy below Key Resistance

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Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

Major resistance on USD/CAD currently stands at 1.2904, where markets delivered a triple top pattern over Q4 2017. When looking at a triple-top, the breakdown through the bottom of the channel begins to act as a polarity point.

Learn about Triple Tops and Bottoms here from DailyFX

The next key level of resistance will be the support point at the bottom of the triple-top range. The bottom of the range is at 1.2665 to the opening range high of 2018 at 1.2590. This 75-pip range includes a large variety of significant technical points that includes the 38.2% retracement of the December to January 5 range.

Downside targets through the week’s end would be the triple-top target at 1.23335, which is the 100% expansion lower of the triple-top range with an extended downside target at 1.21522, the 1.618% expansion of the same range.

Valuable Insight from IG Client Positioning for USD/CAD: Retail selling overtakes longs, bias bullish

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

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Contact and discuss markets with Tyler on Twitter: @ForexYell


NZD/USD Technical Analysis: False Breakout Below 0.73 Figure?

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar breaks key trend resistance, hinting at further gains ahead
  • Negative RSI divergence warns against chasing prices higher however

The New Zealand Dollar appears poised to continue building higher against its US namesake after breaking resistance capping prices since late July 2017. Early signs of negative RSI divergence warn that upside momentum may be fading however, with a reversal downward possibly to follow.

From here, a turn back below the 50% Fibonacci retracement at 0.7170 would break the near-term uptrend and open the door for a retest of the 38.2% level at 0.7077. Alternatively, a push above the 61.8% Fib at 0.7261 paves the way for a challenge of the 76.4% retracement at 0.7375.

Positioning is conflicted, with the falling trend line break and momentum studies standing in opposition to each other. With that in mind, opting to remain on the sidelines seems most prudent until a better-defined trading opportunity presents itself.

Need help building confidence in your NZD/USD strategy? See our guide here!

NZD/USD Technical Analysis: False Breakout Below 0.73 Figure?

EUR/GBP Technical Analysis: 3-Month Range Floor Support Exposed

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8824
  • Euro recoils from resistance, suffers worst two-day drop in over a month
  • Short position activated, looking for a retest of recent range floor support

The Euro looks vulnerable to deeper losses after suffering the worst two days in over a month against the British Pound. Prices recoiled from resistance capping the upside since mid-October after putting in a bearish Evening Star candlestick pattern, with the medium-term range floor now in the crosshairs.

From here, a daily close below the 0.8733-46 area (September 27, November 1 lows) opens the door for a test of the 38.2% Fibonacci expansion at 0.8689. Alternatively, move back above former support in the 0.8842-65 zone, now recast as resistance, paves the way for a retest of the 38.2% Fib retracement at 0.8925.

Technical and risk/reward parameters appeared compelling and a short EUR/GBP position was activated at 0.8824, initially targeting 0.8746. A stop-loss will be triggered on a daily close above 0.8865. Profit on half of the trade will be booked and the stop moved to breakeven when (and if) the first objective is met.

Not sure where to start on your EUR/GBP trading strategy? Check out our beginners’ guide!

EUR/GBP Technical Analysis: 3-Month Range Floor Support Exposed

EUR/GBP Technical Analysis: 3-Month Range Floor Support Exposed

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8824
  • Euro recoils from resistance, suffers worst two-day drop in over a month
  • Short position activated, looking for a retest of recent range floor support

The Euro looks vulnerable to deeper losses after suffering the worst two days in over a month against the British Pound. Prices recoiled from resistance capping the upside since mid-October after putting in a bearish Evening Star candlestick pattern, with the medium-term range floor now in the crosshairs.

From here, a daily close below the 0.8733-46 area (September 27, November 1 lows) opens the door for a test of the 38.2% Fibonacci expansion at 0.8689. Alternatively, move back above former support in the 0.8842-65 zone, now recast as resistance, paves the way for a retest of the 38.2% Fib retracement at 0.8925.

Technical and risk/reward parameters appeared compelling and a short EUR/GBP position was activated at 0.8824, initially targeting 0.8746. A stop-loss will be triggered on a daily close above 0.8865. Profit on half of the trade will be booked and the stop moved to breakeven when (and if) the first objective is met.

Not sure where to start on your EUR/GBP trading strategy? Check out our beginners’ guide!

EUR/GBP Technical Analysis: 3-Month Range Floor Support Exposed

EUR/JPY Technical Analysis: Bears Push to Support, but Will Bulls Respond?

Price action and Macro.

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Talking Points:

- EUR/JPY has reversed by more than 300 pips off of the two-year high set just last Friday.

- Are you looking to improve your approach to markets? Our Traits of Successful Traders research may be able to help.

- If you’re looking to learn more about the FX market, please check out our New to FX Guide.

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EUR/JPY came into 2018 exhibiting the same strength that denominated much of the pair’s performance last year. The year of 2017 produced quite the run for EUR/JPY, as markets continued to attempt to get in-front of any potential tightening out of the ECB while expectations remained for the BoJ to remain loose and passive. But already, the New Year is proving to be a change of pace, as EUR/JPY reversed that bullish move and has now sold-off by more than 300 pips from the high that was set last Friday.

On the hourly chart below, we’re focusing-in on this recent reversal, and notable is how each fresh swing-high failed to test the prior swing-low of support. Also of note is how key areas of support, such as 135.00 or 134.41 have been unable to produce any element of respite in this down-trend; further illustrating just how bearish near-term momentum has become. Sellers haven’t even been willing to wait for resistance to show off of prior support, instead pushing the pair-lower before resistance might be able to come into play. This type of bearish anticipation from sellers can portend a continuation of the move-lower.

EUR/JPY Hourly: Bears Take Control Off of the Friday High

EUR/JPY Technical Analysis: Bears Push to Support, but Will Bulls Respond?

Chart prepared by James Stanley

The bigger question at this point is one of longer-term direction: EUR/JPY was strong throughout much of last year; and after an evening star formation printed on the daily chart with price action from Thursday, Friday and Monday of this week, near-term momentum has moved into a considerably bearish state. This leaves traders with the choice of following near-term momentum with the expectation of a reversal of the longer-term bullish trend, or to wait for price to hit longer-term levels of support in the effort of substantiating longer-term bullish plays. The daily chart of EUR/JPY may provide a bit of clarity on the matter, or at the very least help the trader determine their approach to the situation.

From September of last year into mid-December, EUR/JPY stuck within a fairly strong range. Resistance was showing at 134.41, or the 61.8% retracement of the 2014-2016 major move in the pair, while support was showing in a zone from 131.43-132.05. There were multiple inflections on each side of the range until prices finally posed a top-side break towards the end of the year. This led all the way into Friday’s fresh two-year high at 136.64. But since that high moved into a bearish pattern, few signs of support have been evident just yet, and this keeps the door open for two areas of importance. We’re fast nearing a trend-line projection that can be found by connecting the August low to the November low. And just below that trend-line is the same area of support that had become commonplace in Q4, running from 131.43-132.05. Each of these remain as potential support plays in EUR/JPY. Given how quickly this bearish move has come-in, traders will likely want to wait for support to settle-in before looking to buy; even at risk of giving up some of the topside move.

EUR/JPY Daily: Fast Approaching Longer-Term Support Zone, Trend-Line Projection

EUR/JPY Technical Analysis: Bears Push to Support, but Will Bulls Respond?

Chart prepared by James Stanley

For bearish approaches: Considering how fast and by how much this move has priced-in, traders would likely want to approach the short-side of EUR/JPY with caution. Short-term momentum strategies could allow for down-side entries; but with prices fast approaching longer-term support, profit potential and risk outlay become a concern. A down-side break of 131.00 could open the door for longer-term bearish approaches, as this would provide a fresh four-month low combined with a break of the support zone that held up the range so well to close out last year.

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

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GBP/JPY Technical Analysis: Stealth Taper Worries Bring 300-Pip Pull-Back

Price action and Macro.

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Talking Points:

- GBP/JPY has reversed by more than 300 pips off of the post-Brexit high set on Monday of this week.

- Are you looking to improve your approach to markets? Our Traits of Successful Traders research may be able to help.

- If you’re looking to learn more about the FX market, please check out our New to FX Guide.

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It’s been a peculiar past year for GBP/JPY. Noted for its aggressive nature, GBP/JPY is the pair that currency traders looking for volatility will generally flock towards. And while that volatility can cut in a rather brutal fashion in both directions, at the very least, we knew what to expect. But, over the past year-plus, GBP/JPY has taken on a far different nature, often spending weeks or months slowly moving in one direction or the other; trading more similarly to USD/CHF as opposed to what we’re usually used to seeing from GBP/JPY.

Coming into 2018, the pair had finally started to exhibit some tendencies towards trending. On Monday of this week, a fresh post-Brexit high showed-up in GBP/JPY when the pair touched 153.67. But that new high completed the day as a Doji, and then the fall on the following day gave us a three-candle-sequence that produced an evening star formation. The follow-thru price action this morning has continued that theme as prices in GBP/JPY continue to drop; and the decisiveness with which this move has priced-in harkens back to days of old in GBP/JPY price action.

GBP/JPY Daily: Evening Star Formation Leads to Punishing Follow-Thru

GBP/JPY Daily after Evening Star Formation

Chart prepared by James Stanley

The Likely Culprit – Fears, Prospects, Concerns Around ‘Stealth Taper’

The likely culprit behind this recent reversal pertains to Japanese QQE policy. Concerns began to become evident earlier in the week when the BoJ bought fewer long-dated bonds. This was inferred to indicate that the bank may be looking to scale back on stimulus as growth continues around-the-world; and likely, some parallels are being drawn from what happened in the Euro last year to what may happen with the Yen this year. As growth and stability showed with a bit more prominence throughout Europe last year, the expectation that the ECB would eventually look to exit stimulus kept prices in the Euro running-higher. When the ECB kicked the can on stimulus exit in October, a mere two weeks of weakness showed in the Euro before buyers came right back to the table with focuses shifted towards the new, revised target for European stimulus exit, looking towards September 2018.

My colleague, Tyler Yell, discussed this premise in his article yesterday entitled, Has the Silent BoJ Taper Begun? This is referring to ‘stealth taper’, when the Bank of Japan may utilize the flexibility of their open-ended QE program to actually start slowing bond purchases before making any formal announcements of stimulus exit.

Is this something that’s on the table? Possibly. But, to date, we have no information from the Bank of Japan indicating as such. As a matter of fact, as recently as the December rate decision saw the BoJ carry-forward their commitment to QE. Just a few months before that, we saw our first break of stride when an iteration of dissent showed within the board… but that dissent was from newly-installed BoJ board member Goushi Kataoka, who was actually looking for even more stimulus to get the Japanese economy tilted further towards that 2% inflation target.

So, there is a chance that this recent insertion of weakness is being driven by an overreaction to a subtle inference from earlier in the week.

Bearish Momentum Drives Towards 150.00

While all of the above is good and fine, the fact of the matter is that short-term support hasn’t yet shown in GBP/JPY. Similar to what we looked at in EUR/JPY just a couple hours ago, sellers haven’t even been willing to wait for resistance to form off of prior support. This has been a one-way ride thus far, and looking to buy, at least at this point, might feel akin to trying to catch a falling knife.

GBP/JPY Hourly: Sellers In-Control, Shallow Retracements Indicate Bearish Anticipation

GBP/JPY Hourly: Bears in Control, One Way Show

Chart prepared by James Stanley

The big question, at this point is whether support might show above the 150.00 psychological level. If price action does pose a sustained break below this key level, the prospect of bearish continuation could look considerably more attractive. But, until then, we have the potential for a continuation of that general trend that’s been fairly attractive, biasing towards Yen weakness. We’d see a couple of examples of support around 150.00 in the pair in December, and confirmed support, as indicated by a closed candle on the daily or four-hour chart, can open the door to similar strategies.

GBP/JPY Daily: Aggressive Weakness Fast Approaching Key Whole Number Level of ¥150.00

GBP/JPY Daily: Fast Approaching Key Whole Number Level of 150.00

Chart prepared by James Stanley

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

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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

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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.

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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


Crude Oil Price Forecast: Bulls Push to 50% of 2014 Drop, Brent to $70

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

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Crude Oil Price Forecast Talking Points:

  • WTI Crude Oil Technical Analysis Strategy: strong impulsive rise above $58.95 (Nov. high)
  • Hedge Funds load into bullish bets per CFTC data as price approached 50% of bear market
  • Trader Sentiment Highlight from IG UK: rise in net-bullish position may see price reverse ST

Crude Oil bears are having a hard time at the start of 2018 maintaining a shred of credibility. Naturally, there are arguments on the surface that have merit, but momentum is a cruel opponent as Oil short sellers are finding out. This week, Crude has continued to be bid on optimism that the supply surplus is on its way to a supply deficit relative to rising demand, which has pushed Brent above $70 and both the US and global oil benchmark to 50% of the 2014 drop.

Hedge Funds Look to Be “All In” on Upside

The CFTC’s Commitment of Traders report showed that hedge funds are set to push and look to profit on marginal gains in Crude Oil. Data as of January 9th showed a record long net position of $41,402 MM long. The rally in Crude oil has been backed solidly by the Hedge Funds loading into the trade as positive data such as the 2017 development per the US EIA and China General Administration of Customs showing that China passed the U.S. as the largest oil importer thanks to new refining capacity in China has boosted demand while OPEC holds off on discussing an exit strategy.

The concern, at least as the bear’s argument goes, is that shale production will explode given the high prices. This is possible, but would likely take a long time to make a material impact that would fundamentally shift the supply curve and physical market given the aggressive rise in demand recently seen. Additionally, US crude stockpiles continue to fall so without new supply coming on, price will likely continue to aggressively rise as the sequence of declines per the EIA weekly inventory report is the longest string of declines in a decade.

Technical Levels for WTI Crude Oil

After recently topping the 2015 high, short-term price support can be found at prior resistance at $59.02/05, which was the late-November high and H2 2017 price target that price eventually broke through in late December derived as the 1.618% Fib Expansion off 2017 low. A break below $59.05 would indicate the immediate trend has shifted to neutral, but it would take a break and close below $55.83 to shift from neutral to medium-term bearish.

Technical traders can also look to the 20-DMA as a form of dynamic support, that currently sits at $61.42/bbl whereas short-term traders may look to the 9-day midpoint at $63.07/bbl before getting out on fear that a wash-out could ensue as profit takers may not have much patience for a retracement.

Unlock our Q1 18 forecast to learn what will drive trends for Crude Oil at the open of 2018.

Crude Oil Chart Watch: Trendline & Price Support

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Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

WTI Crude Oil Insight from IG Client Positioning

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

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Gold Prices Primed for NFP After Exuberant Three Week Rally

Price action and Macro.

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Talking Points:

- Gold prices put in a bullish rally that has seen as much as $85 added over the past three weeks.

- Retail traders are currently long Gold with IG Client Sentiment currently showing +1.66-to-1. Given retail traders’ traditional contrarian nature, this is a bearish indication.

- Looking for trade ideas? Check out our trading guides. And if you’re looking for something more interactive in nature, check out our DailyFX Webinars.

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Just a few weeks ago, it looked as though Gold prices might be heading into another bearish trend. After catching another bout of resistance at $1,296, similar to what was seen earlier last year in both April and June, prices broke below a bullish trend-line, eventually finding some element of support around $1,240. But, just a few days later we went into the December Fed meeting; and matters haven’t really been the same ever since as Gold prices have moved into an aggressively bullish rally that’s seen 6.7% added from that prior low.

Gold Prices Daily: Bulls Take Over After 50% Retracement of 2017 Move

Gold Daily

Chart prepared by James Stanley

For sake of clarity, we’re looking at the four-hour chart below to focus-in on just how consistent this bullish move has been. Pullbacks have been rather scant, at least up to the past couple of days, and buyers have remained in-control for much of this period. This has led to a fairly pronounced case of divergence via RSI, denoting the challenge of chasing this bullish move in its current state.

Gold Hourly: Bulls on Parade as Prices Rally by More than $85 in Less than Three Weeks

Gold Four-Hour

Chart prepared by James Stanley

Tomorrow brings Non-Farm Payrolls out of the United States, and this can certainly add some kerosene to the situation. The complication with bullish stances at the moment is the fact that we’re so elevated beyond both short and long-term support that fitting in a stop at an attractive level can be a rather costly endeavor. Combine this with the fact that the short-term high is less than $2 away, and justifying those wider stops can be a bit of a challenge.

The item of attraction in this bullish theme around Gold prices as we move into tomorrow’s NFP report would be looking for an NFP-induced retracement that could allow entry into the bullish trend in a more risk efficient manner. The October swing-high around $1,306 helped to dig-out short-term support after yesterday’s retracement, and that prior swing high around $1,296 could be incorporated to identify a support zone. If price action pulls back to this level, and is met with support, the door is opened to bullish exposure with eyes on a return to $1,320.

Gold Daily: Prior Resistance as Potential New Support For Bullish Continuation

Gold Prices Daily Chart

Chart prepared by James Stanley

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

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Gold & Silver Technical Outlook: Can They Break Resistance?

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

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What’s inside:

  • Gold extending, but has two key significant points which could stall rally
  • Silver acting well, but has a lot of resistance to work through, still
  • Price action dependent, pullbacks may soon be signaled

Traders have been buying the rally in gold, see the IG Client Sentiment page to find out what this could mean in the near-term; for a longer-term technical and fundamental outlook, see the Q1 Forecast.

Gold continues to push higher with the help of a weak US dollar, now over $100 better than where it was a month ago. The recent extension has it trading at a trend-line dating back to 2013. The connecting points are important as one is the 2016 high and the other last year’s high.

If gold can overcome this significant hurdle, the next level is the 2017 high at 1357. A breakout beyond that point would be deemed important from the stand point of creating another higher-high since the rally began back in December 2016. This would leave room up to the 2016 high at 1375, an even bigger point of interest.

A scenario worth keeping in mind: If a reversal develops from around current levels we could see further development of a broad triangle formation dating back to mid-2016, with the 13-month underside trend-line as the bottom of the formation. From a big-picture perspective, this could be an explosive development.

For now, we’ll focus on how price action plays out at the aforementioned resistance levels and take it from there. You can join me on Tuesdays at 10:00 GMT for live in-depth technical analysis on precious metals and other commodities, along with equity indices.

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Gold: Daily

Gold daily price chart

Last week, silver held the trend-line off the December low, and is making another go at overcoming resistance. There is a price zone in the current vicinity up to 17.46, which is in confluence with the trend-line running down off the 2016 spike-high.

A breakout above these thresholds could spark momentum, with the next eyed line of resistance extending down from April, ~17.70. However, at the moment, silver is not only at resistance, but also lagging behind gold. This still leaves the burden of proof on buyers’ until a breakout above resistance can take shape.

Silver: Daily

Silver daily price chart

---Written by Paul Robinson, Market Analyst

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‎US Dollar Index (DXY) Forecast: Pessimism Holds on Move to 2009 Extreme

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

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US Dollar Index (DXY) Talking Points:

  • US Dollar Index Technical Analysis: approaching 2012 high could bring wave of selling
  • Traders right to fear new era of Dollar Weakness as other CBs move to taper
  • Trader Sentiment Highlight from IG UK: EUR/USD bearish bias from retail weakens

Things appeared to be going well fundamentally speaking for US Dollar Index Bulls. Economic data was surprising to the upside, and the Federal Reserve was sticking to their rate hike forecasts, which has helped to push the US Treasury 2-year yield above 2% for the first time since 2008.

Despite this, the US Dollar has recently traded below the 2017 low and now looks set to approach a polarity point on the chart marked by the Q1 2009 high. Aggressive and volatile capital marked the 2009 high flows sent markets rushing into Treasuries on a ‘world-ending’ capital market scenario that aggressively reversed and saw the US Dollar weaken over the next two years.

DXY Approaches Polarity Point of March 2009 High

A polarity point happens when prior resistance (typically a spike high or series of highs) converts into new support meaning that traders are unwilling to sell below a certain level. The very idea of a polarity point is that the market has a technically new understanding of how a market should trade. When a polarity level breaks, the market is seen entering into a new understanding of the value of that currency.

A key polarity point for the US Dollar Index is the March 2009 high at 89.71. Markets aggressively bid the US Dollar up through this level at the close of 2014 and the markets appeared content to keep the US Dollar at this “new normal” until now.

As the opening range solidifies for the first half of 2018, traders are now seeing the dollar has fallen in good times uniquely ripe to drop further as positive economic data reverts to the norm and likely begins to disappoint against economist’s expectations. It does not matter (at least when looking at the price) that other central banks are not on the same course of 3-4 hikes. What does appear to matter is that capital is flowing to riskier/ higher-yielding assets or repatriating to economies that are looking to taper their QE programs, which is expected to leave the USD further susceptible to weakness.

DXY Technical Update

The key technical level on the US Dollar is the 2018 opening range high that was traded at intraday on January 9 at 92.27. Given the bearish momentum picture, traders would do best to heed the momentum at present and continue to favor further DXY downside for now.

The dollar’s struggles are not going away and flow into other economies argues that weakness will persist. While there were arguments for short-term USD strength, they failed to materialize showing that pressure remains and US Dollar Index weakness remains preferred.

Short-term resistance is at the opening range high at 92.27. Below these levels, momentum prevails to favor focusing on the March 2009 high at 89.71 followed by the 61.8% Fibonacci retracement of the July 2014 to January 2017 range at 88.43.

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Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

Unlock our Q1 forecast to learn what will drive trends for the US Dollar through 2018's open!

Insight from IG Client Positioning: Pickup in short positioning favors support of price advance

EUR/USD sentiment is analyzed for insight since EUR/USD makes up 57.6% of DXY.

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We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Contact and discuss markets with Tyler on Twitter: @ForexYell


S&P 500 Trading Outlook: Hard to Buy, Even Harder to Short

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

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What’s inside:

  • S&P 500 continues to rise, buying not appealing but neither is shorting
  • Top-side channel line might provide support again on a pullback
  • Volatility likely to rise in meaningful way, just not today and not likely tomorrow either

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In the first couple of days to start the year, we noted that the S&P 500 was extended but that momentum wasn’t worth fighting. At the time, the market was at the upper end of the channel starting back at the beginning of December, a channel which it has been exceeded in recent sessions, and even as late as Wednesday tested as support.

The view hasn’t changed, the market is extended and while it may be tempting for some to short it because it’s ‘too high to buy’ or simply overbought, ‘up here’ can become ‘down there’ quickly in as strong of a market as the current one. Initiating fresh longs doesn’t hold much appeal, but shorting holds even less. There will be a time for shorts, just not yet.

What is a trader to do? Another dip back to the upper parallel may offer traders a level of support to lean on, but the time for a meaningful decline may also be nearing. Keep an eye on price action on any decline which unfolds. Not all declines are created equal. Those with momentum want to be sidestepped until momentum subsides and reverses, while dips (corrections) which are shallow and lacking any meaningful power are viewed as more favorable for entry.

As we’ve discussed on a couple of occasions, most recently at the very end of last year, volatility looks poised to rise at some juncture, and likely in a meaningful and sustainable way. You can check out detailed commentary on the subject in the Top Trading Opportunities in 2018 under “Resurgence of Volatility, S&P 500 Runs into Trouble”. But until we see cracks in the lining, we’ll have to continue trading in the market environment we are currently being dealt.

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S&P 500: Daily

S&P 500 daily price chart

---Written by Paul Robinson, Market Analyst

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DAX Technical Outlook: Bulls Hamstrung by Euro, May Soon Change

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

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DAX Highlights:

  • Euro rally hampering DAX strength, may soon change
  • Seen similar scenario before, euro pausing may be enough to help market
  • Notable technical levels, lines to keep an eye on

For longer-term fundamental and technical analysis on the DAX & Euro, see the DailyFX Trading Guides page.

The strong euro rally the past few days has dampened upward momentum on the DAX and other European indices influenced by the pull of the single-currency. Prior to the surge, the German benchmark looked poised to trade to new record highs.

There is reason to believe, though, that EURUSD may find it difficult to sustain momentum in the days ahead as it looks to have gotten ahead of itself; could this be enough to allow the DAX to finally notch a new record? There has been an interesting relationship change between the DAX & euro which we’ve seen before get corrected.

While the very short-term (1-week correlation) has been solidly negative, the 1-month correlation between the DAX & EURUSD just turned positive for the first time since late-October, and when it did such back then, it lasted only a couple of days before reverting to its typically strong negative reading. Prior to that, it’s happened on a few other occasions, but only relatively brief periods of time.

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Chart – DAX: Daily

DAX daily price chart with euro correlation

DAX, Euro correlation in lower pane turned positive, but may only be temporary like before. Market still holding onto most of rally from Jan 2 low, could soon challenge monthly high if support holds.

It’s interesting to note that during the last turn positive in the correlation, the euro had made a strong move lower which helped bolster the DAX to new record highs. Shortly after the swift down-move in the currency, momentum in stocks stalled and reversed forcefully lower. We may be in for a similar scenario, but in reverse this time.

The thinking on this end, is that the euro could soon begin a consolidation period or worse, and it’ll be enough to at least give European equities breathing room to trade higher. In terms of support, we’ll start with last week’s low at 13151, and from there trend-lines extending higher since last year.

On the top-side, there is resistance at a trend-line off the record high, followed by the monthly high at 13425. If the market can get into gear above the second threshold, it’s only a 100 points to the prior record at 13525.

---Written by Paul Robinson, Market Analyst

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ASX 200 Technical Analysis: Uptrend Threatened But Sill Holding

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The ASX 200’s uptrend endures
  • But it has been shaken and momentum looks weaker than it did
  • The next couple of trading sessions could be decisive

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The ASX 200 is clinging to its uptrend channel but certainly looks weaker technically than it did a week ago.

As you can see from the chart below, January 10 was an interesting day, if not one bulls would much want to revisit. The ASX slipped quite markedly in that session, as did many other Asian bourses. This was puzzling in one important respect- the region had quite a strong Wall Street lead to follow and there was no obvious piece of local bad news to rock the boat.

ASX 200 Technical Analysis: Uptrend Threatened But Sill Holding

But whatever its cause, January 10’s fall has clearly had an effect. It may be yet to completely invalidate the uptrend channel in place since December 6. But it has already given us an intraday foray bellow the channel downside, even if the channel is holding on a daily-close basis.

And, if we zoom in a bit we can see that the latest upside attempt appears to have fallen some way short of the channel top, putting the focus once again on the index’s lower boundary.

ASX 200 Technical Analysis: Uptrend Threatened But Sill Holding

Assuming that downside channel support holds, it may be best to wait a day or two to get the full picture. Monday brings the Martin Luther King Day holiday in the US. This will see both equity and bond markets closed and, probably, some thinning of Asian trade in advance of it.

That support comes in at the 6069 area, perilously close to current levels. The ASX was only 20 points or so above that point at the time of writing (0100 GMT Monday).

However, if we see a decisive break and daily close below the channel then it’s reasonable to assume that the bulls are losing heart- admittedly after a very good run. This need not mean heavy falls. December 29’s close at 6026 was also the intraday low of January 2 and that level may provide some near-term support.

The first Fibonnaci retracement of the remarkable rise from last October’s lows to January’s ten-year highs comes in at 6037.3. The second comes in at 5951.6, although the effects of a decisive fall through the psychologically important 6000 level may render that a tough prop to defend.

But we may be getting ahead of ourselves. The first order of business will be to see whether the current uptrend survives a return to normal US post-holiday trade. And that will have to wait effectively until Wednesday in the Asia Pacific region.

It might be best for the uncommitted to hold off until then.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


Nikkei 225 Technical Analysis: Upside Test Fails But Uptrend Holds

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Nikkei 225 remains at highs not seen for 26 years
  • This week has seen an attempt to strike out higher peter out
  • However the underlying uptrend looks secure

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The Nikkei 225 bounded up to new 26-year highs this week. General risk appetite met the twin national specifics of a strengthening Japanese economy and extremely accommodative monetary policy to put the index in a very sweet fundamental spot indeed.

There have been a couple of down days, possibly engendered by news of reduced bond purchasing from the Bank of Japan. This in turn prompted chatter about the chances of some of the country’s more extreme and unconventional monetary stimulus being withdrawn. But so far chatter is all investors have.

Of course the only technical questions which really matters at altitudes such as these are can the index stay up, and can it push on? Well, in the short term at least both can be answered with, ‘yes, probably.’

On the daily candlestick chart below you can see an uptrend line drawn from the intraday low of December 6. This line looks promising –again for a short or medium term indication- because it has a nice bit of validation in the two closely spaced intraday lows of December 29 and January 2.

Nikkei 225 Technical Analysis: Upside Test Fails But Uptrend Holds

A channel drawn from December 6 and encompassing all trade reveals that this week has seen the rejection of an upside push. However, it’s equally clear that the channel’s lower bound is some way below the market at the moment –around 22.790.

More broadly the index would seem to have plentiful support around that psychologically important 23,000 and on down to 22,400 or so. The benchmark has been consolidating hereabouts since the end of October.

Below that there’s region bounded by the shaded area in the chart below which might merit a look.

Nikkei 225 Technical Analysis: Upside Test Fails But Uptrend Holds

The market has not been minded to keep the index in that box for very long in the recent past- rather trading out of it to the upside. Of course it hasn’t been tested very recently and it would probably be asking too much for it to stand in the way of any more serious downside test. But it could still bear watching.

However the uptrend we initially discussed probably makes the best near-term indicator. It remains in place so bulls are probably justified in their hopes for more goodies ahead, even given the bounty they’ve already enjoyed.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


FTSE Technical Outlook – Rally Continues, but Caution Warranted

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

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What’s inside:

  • FTSE continues to extend rally following breakout of H2 2017 range
  • Projected target zone of 7850-7900 nearing, but…
  • Fresh longs cautioned as retracement risk heightens on short-term pattern development

See what’s expected to drive the FTSE and GBP this quarter in the Q1 Trading Forecasts.

Last week, when we discussed the FTSE we noted it as likely to continue trading higher as long as it didn’t fall back inside the range which developed during the second-half of last year. The target based on the height of the range (~300 points) pointed to an objective of 7850/900. We’re getting close.

Caution on new longs is warranted at this juncture, though, as retracement-risk is beginning to increase with each new push higher. On the hourly time-frame, a rising wedge is developing which may usher in a pullback. If the lower trend-line extending higher from 12/15 is broken, it could lead to the first real test of longs’ resolve in over a month. Rising wedge formations can lead to swift moves once triggered (if triggered).

In the event of a breakdown out of the pattern and 12/15 trend-line, support levels begin arriving around 7717, 7690, then nothing of substance until down around 7625. A move to that point will be closing in on the breakout zone of 7600/550, and we will certainly want to start finding buying interest at that point if the broader rally is to persist.

From a tactical standpoint, traders who are long can use the trend-line/rising wedge as a guide to stay the course as long as the current trend structure maintains its integrity. Aggressive short-term traders who are looking to short will be best served by waiting for a confirmed break of the pattern/trend-line; just because there is a bearish-looking price pattern doesn’t mean necessarily that it will trigger…

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FTSE: Daily

FTSE daily price chart

Hourly

FTSE 1-hr price chart

---Written by Paul Robinson, Market Analyst

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