Support & Resistance

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

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Canadian Dollar Rate Forecast Key Takeaways:

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

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

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

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

BoC Set Up Scene For Future Rate Hikes

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

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

Updated BoC Forecast for Potential Growth

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

Source: Bank of Canada

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

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

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

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

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

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

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

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

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

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

Not familiar with Fibonacci analysis, check out this insightful article

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

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Data source: IG Client Positioning

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

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as t1rading educational resources. Read more of Tyler’s Technical reports via his bio page.

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

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

Talk markets on twitter @ForexYell

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

Price action and Macro.

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Talking Points:

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

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

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

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USD/CHF Rallies to Fresh Three-Month-Highs

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

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

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

usdchf eight hour chart

Chart prepared by James Stanley

A New Trend Emerges

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

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

usdchf four hour chart

Chart prepared by James Stanley

Overbought Near-Term Urges Caution From Chasing

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

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

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

usdchf two hour chart

Chart prepared by James Stanley

To read more:

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

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

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Contact and follow James on Twitter: @JStanleyFX


Crude Oil Price Forecast: A Leg Higher On Shrinking US Stockpiles

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Crude Oil Price Forecast Talking Points:

  • WTI Crude Oil Technical Analysis Strategy: Bullish continuation anticipated in a volatile environment
  • A small increase in US production is little match for across the board drawdown in crude, gasoline, and distillates.
  • Trader Sentiment Highlight from IG UK: retail short positions favors further advances

OPEC and the United States seem to be sending Bullish signals to the Crude Oil market. OPEC and Russia appear to be setting the stage to keep oil cuts going despite a vanishing glut that caused them to engage the production curbs in the first place.

Second, shrinking US Oil stockpiles are showing a tighter physical market per the EIA report on Wednesday that puts pressure on physical buyers to buy now and hold as the benefits of carrying the physical exceed the costs as evidenced by backwardation.

These developments have led to Crude futures surging nearly 3% in New York with the price pushing closer to the $70/bbl mark for WTI and $75/bbl on Brent for June settlement. For the former, there remains a confluence of technical resistance from Fibonacci levels near the $70/bbl mark that could be seen as a place for buyers to take profits should the fundamental data develop fault lines.

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

US Oil Exports Remain Elevated and Keep Oil Bulls Humming

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Data source: Bloomberg, DoE

The chart above helps visualize the sharp rebound in US crude exports to nearly 1.8 million bpd that helps traders see how over-compliance by the OPEC+ constituents on the agreed upon production curb alongside Venezuela’s production collapse is paving the road for tighter markets and higher prices.

Technical Focus Looks to Price > Ichimoku Cloud, Fibonacci Targets

Crude oil looks set to test a key confluence of Fibonacci levels near the $70/bbl level that combines the 50% retracement of the 2014-2016 price range and the 100% Fibonacci extension of the 2016/2017 extremes drawn off the 2017 low of $42.07/bbl.

Given the fundamental view shared above and the continued market support from OPEC+, it’s hard to be long-term or medium-term bearish crude oil with a straight face with price trading above the Ichimoku cloud as the lagging line is also above price from 26-periods ago.

Want a full (& FREE) guide to walk you through Ichimoku? I created one here (click Advanced Guides)

Chart Watch:WTI Crude Price Continues To Push $70/bbl

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

WTI Crude Oil Insight from IG Client Positioning

Crude Oil Price Forecast: A Leg Higher On Shrinking US Stockpiles

Source: IG CLIENT SENTIMENT data provided by IG

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 (emphasis mine.)

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as t1rading educational resources. Read more of Tyler’s Technical reports via his bio page.

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

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

Talk markets on twitter @ForexYell

Join Tyler’s distribution list.


NZD/USD Technical Analysis: Down Trend Ready to Resume?

Fundamental analysis, economic and market themes

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NZD/USD Technical Strategy: FLAT

  • NZ Dollar rejected at 3-month channel top resistance once again
  • Entering short premature while near-term uptrend remains valid
  • Long side bias requires break of resistance above the 0.74 figure

The New Zealand Dollar is retreating from resistance defining the down move since late January but confirmation of a lasting down move is still absent. The near-term trend continues to be defined by a series of higher highs and lows, hinting the immediate path of least resistance favors the upside.

From here, a daily close below rising channel support at 0.7293 opens the door for a test of the 23.6% Fibonacci expansion at 0.7254. This is followed by a more series barrier at the intersection of the channel floor and the 38.2% level at 0.7140.

Alternatively, a move above the channel’s upper boundary – now at 0.7392 – paves the way for another challenge of long-standing resistance at 0.7434 (September 2017 high). If this too is breached, the July 2107 swing top at 0.7558 comes into the spotlight.

NZD/USD Technical Analysis: Down Trend Ready to Resume?

Final profit was booked on the short NZD/USD trade activated at 0.7320 and the position was closed. Re-entering on the short side seems premature as prices sit squarely above near-term support while getting long is unattractive in the context of overall positioning. On balance, staying flat seems most prudent.

NZD/USD TRADING RESOURCES

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

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

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AUD/USD Technical Analysis: Two-Year Uptrend Broken

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AUD/USD Technical Strategy: Flat

  • Australian Dollar two-year rising trend support has been broken
  • Long-term positioning hints down trend from 2011 has returned
  • Upswing to test above 0.76 figure sought for selling opportunity

Join our AUD/USD strategy webinar and get ready to trade the currency pair this week!

The Australian Dollar pierced support guiding the currency higher against its US counterpart since January 2016, signaling a tectonic trend change is in progress. The choppy two-year up move now looks corrective within an even longer-term structural decline started in July 2011.

AUD/USD Technical Analysis: Two-Year Uptrend Broken

From here, a daily close below support at 0.7566 (50% Fibonacci expansion, falling channel floor) opens the door for a challenge of the 61.8% level at 0.7508. Alternatively, a move back above support-turned-resistance in the 0.7625-43 area (38.2% Fib, March 29 low) sees the next upside barrier at 0.7726.

AUD/USD Technical Analysis: Two-Year Uptrend Broken

Prices are too close to immediate support to justify entering short from a risk/reward perspective. Instead, an entry order has been set up to sell the currency pair at 0.7617. If triggered, the trade will initially target 0.0.7566 and carry a stop-loss activated on a daily close above 0.7643.

AUD/USD TRADING RESOURCES

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

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

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GBP/JPY: Trend-Line Tango as Prices Bounce From Fibonacci Support

Price action and Macro.

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Talking Points:

- GBP/JPY has started to show volatility again after an uncharacteristically quiet 2017 continued into the early portion of this year. After an aggressive reversal showed in February brought on recovery in March, the pair has remained on the move so far in April.

- GBP/JPY put in an aggressive reversal around last week’s UK inflation numbers, and this has sent prices back below the post-Brexit trend-line. Support came-in around the ‘s3’ level that we looked at last week, and now we have a shorter-term trend-line helping to hold the lows. We look at both trend-lines below.

- Quarterly Forecasts have just been updated, and Q2 forecasts are now 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.

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

The Post-Brexit Trend-line Remains In-Play

Last week saw a vicious reversal show-up in GBP/JPY after the one-two combo of UK inflation and more dovish commentary from BoE Governor, Mark Carney. As we came into last week, GBP/JPY was riding high on a bullish trend that saw prices re-engage above the post-Brexit trend-line. This is a trend-line taken from the October, 2016 ‘flash crash’ low up to the August 2017 low. This trend-line projection offered multiple support hits in February, but soon became resistance in March when prices scaled-below.

Even when the pair recovered from the February sell-off, price action rubbed along the under-side of this trend-line for two weeks before a bullish breakout in April saw prices move back-above. But even that has been short-lived, as last week’s bearish reversal has sent prices right back-below that post-Brexit trend-line.

GBP/JPY Daily Chart: Back-Below the Post-Brexit Trend-Line

gbpjpy daily chart

Chart prepared by James Stanley

After last week’s read of UK inflation for the month of March, prices posed a quick reversal of that prior bullish theme. Shortly after the release of inflation numbers, we published an article on GBP/JPY entitled, GBP/JPY: Support at Prior Fibonacci Resistance, But Will it Hold? The answer to that question was a definitive ‘no,’ and we’ve since seen prices scale-down to the next level of relevance at the 50% retracement of that same move. This level is at 150.80, and this is a confluent level as we also have a shorter-term trend-line in this area, taken from the March-April lows.

GBP/JPY Eight-Hour Chart: Confluence of Support at 50% Marker, Trend-Line

gbpjpy eight hour chart

Chart prepared by James Stanley

Trend-Line Tango in GBP/JPY

At this stage, we have two bullish trend-lines from various time frames in GBP/JPY price action. The longer-term, post-Brexit trend-line is currently acting as intra-day resistance while the shorter-term bullish trend-line is continuing to provide support.

GBP/JPY Four-Hour Chart: Two Trend-Lines Remain In-Play in GBP/JPY

gbpjpy four hour chart

Chart prepared by James Stanley

Moving Forward

Given that we have a bearish item on the longer-term trend-line, taken from the break-below combined with intra-day resistance; combined with the shorter-term bullish item of prices holding support at the 50% retracement that’s confluent with that shorter-term trend-line, and there is a case that can be made on either side of GBP/JPY as we move into this week.

For traders with longer-term stances, waiting for the current impasse to first break could offer directional clues as to next steps. A break above 152.00 can re-open the door for longer-term bullish strategies, while a break below 150.00 begins to open the door for longer-term bearish approaches.

On a shorter-term basis, the more interesting item would appear to be bullish in nature; looking to trade a reversal of last week’s bearish drive in the pair as we near a Bank of Japan rate decision later in the week. The area of support around 150.80 was the ‘s3’ level from our article last Wednesday, and the same themes that we discussed there remain as attractive.

From the hourly chart below, we can see where prices have re-engaged above another Fibonacci level, this one at 151.39, serving as the 76.4% retracement of the Brexit-move in the pair, and this keeps the door open for a continuation of short-term higher-highs and higher-lows, anticipating a top-side break back-above the post-Brexit trend-line.

GBP/JPY Hourly Chart: Attempting to Carve Out a Bottom

gbpjpy hourly chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on GBP and/or JPY? Our DailyFX Forecasts for Q1 have a section specifically for each currency. We also offer a plethora of resources on our GBP/JPY page, and traders can stay up with near-term positioning in GBP/USD and USD/JPY via our IG Client Sentiment Indicator.

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

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Contact and follow James on Twitter: @JStanleyFX


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

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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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Contact and follow James on Twitter: @JStanleyFX


GBP/USD: Deeper Correction Potential After Inflation Misses Target

Price action and Macro.

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Talking Points:

- It’s been a brisk reversal of fortunes for the British Pound, as GBP/USD surged up to fresh post-Brexit highs earlier this week, and has already started to pullback after a disappointing inflation print for the month of March. Markets are still looking for a rate hike in May, but the bigger question is how this tempering in inflation may impact BoE expectations for later in the year and 2019.

- With prices now pulling back while displaying bearish characteristics on a shorter-term basis, the door opens for short-side setups, looking for a deeper retracement in the longer-term bullish trend. On a longer-term basis, support points around 1.4145 and 1.4088 remain attractive for longer-term support plays.

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

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

GBP/USD Pulls Back From Fresh Post-Brexit Highs

The British Pound has been on the move in April, and earlier this week we saw a fresh post-Brexit high print in GBP/USD. This move was very much driven by the expectation for higher rates in the UK, and as we near a ‘Super Thursday’ event in early-May, markets are looking for another 25 basis points of adjustment for just the second hike out of the BoE in the past ten years.

Before we get to that rate decision, however, we had March inflation numbers out of the UK to work with. All in all, this was an item of disappointment as inflation printed at 2.5%, missing the 2.7% expectation and marking the second consecutive month of slower price growth in the UK. Rate expectations for May remain high, but this does bring to question the BoE’s stance for the remainder of the year, and in short-order that bullish move in the British Pound posed a deeper pullback.

GBP/USD Four-Hour Chart: Bears Take Control After Inflation Miss

gbpusd four hour chart

Chart prepared by James Stanley

After that impulsive bearish move this morning, a bit of support began to show off of 1.4175, and buyers were soon able to push price action right back to the area of 1.4245, which was a prior point of resistance that we were looking at as potential support for bullish continuation plays. No support showed there during this morning’s sell-off, and with prices now finding resistance in this area, the door is opened for bearish continuation of the shorter-term move.

GBP/USD Hourly Chart: Lower-Lows, Lower-Highs Highlight Deeper Pullback Potential

gbpusd hourly chart

Chart prepared by James Stanley

Longer-Term Trend Remains Bullish

At this point, the longer-term trend remains bullish, and the allure of the above bearish setup is shorter-term in nature; looking for a deeper retracement within this bigger-picture bullish trend. The more proactive question is what might happen upon re-tests of deeper supports at areas such as 1.4145 or 1.4088. Each of these areas can be potential short-side targets on the pair; and if either comes into play, the door may reopen to bullish reversals.

GBP/USD Eight-Hour Chart: Deeper Pullback Potential Before Bigger-Picture Bullish Theme Becomes Attractive

gbpusd eight-hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on GBP/USD? Our DailyFX Forecasts for Q1 have a section specifically for GBP/USD. We also offer a plethora of resources on our GBP/USD 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


USD/JPY Rate Forecast: Looking Free To Rally As Pair Tests Ichimoku

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USD/JPY Rate Forecast Talking Points:

  • USD/JPY Price Forecast: JPY weakness may accelerate on break > 100-DMA at 109.01
  • Options premium shows waning premium to protect against JPY strength lifting USDJPY
  • USD/JPY Rate Insight from IG UK: changes in retail sentiment favors price declines

On Tuesday, April 24, the US Treasury 10-Year note yield topped 3% for the first time since January 8, 2014. As the yield on the note began to break higher thanks to a confluence of rising commodity prices and declining risk premium, eyes rightfully turned to USD/JPY that appeared artificially low.

Now, looking to other factors, the upside for USD/JPY may still likely be in the works. While you can say the US Dollar is stretched in the short-term per short-term momentum readings, traders would also do well to recognize the aggressive institutional short-US Dollar positions that would need to unwind if the USD strengthens further. Should an unwind happen on the USD short trade, which could happen fast, USD/JPY looks to be a favorable place to see the unwind play out in FX.

Options Premium Shows Further Support For USDJPY Upside (Orange Line)

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Data source: Bloomberg

See what we see when looking at the Japanese Yen. Check out our new Q2 Yen Forecast here.

The chart above shows the premium being paid to protect against JPY strength on the US Dollar via the options market. The market is called risk reversals and it helps you see where ‘insurance’ is being bid up to protect against a sharp move and the JPY is a common currency to gauge sentiment with via Risk Reversals over one-month.

Looking above, you can see the last time that traders were paying so little to protect against JPY strength was back in early January when USD/JPY was trading ~300 pips higher near 112. While this is not a full valuation model arguing that you should be long USD/JPY, you can see that the backdrop that favors further JPY strength continues to dissipate.

USD/JPY Rate Trades Above 100-DMA into Ichimoku Cloud

Please add a description for the image.

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

JPY weakness continues as the JPY has been sold off likely due to institutions frantically closing their YTD near-record short exposure on the pair via long JPY futures. On Tuesday, the price breached the 100-DMA at 109.02 and now faces the top of the Ichimoku cloud at 109.32. Given the positive backdrop for Bulls, traders are likely favoring a move to 110.

For traders who appreciate the Ichimoku cloud (click here for a free guide if you’d like to learn more), you’ll notice above that the recent trend of JPY strength that saw USD/JPY fall by over 7% appears to be eroding and giving way to a new uptrend.

Earlier, we shared the bullish options skew that favored a move higher. Another key driver that traders should be on the watch for with USD/JPY is a break of the lagging line on Ichimoku above the cloud. While there may be some volatility in the passage of that development (assuming it develops in the first place) as JPY option volumes on Monday were running 2.5X their 5-day average with strikes in the 110-112 range per Bloomberg, traders should keep their eye on the prize. Bullish targets beyond 110 favor an eventual move toward the 61.8% retracement point of the November to February range at that sits near 110.85 with stop losses focused around the recent pull-back low near 107.

A pull-back appears likely given that RSI(3) has USDJPY as one of the most stretched moves in the short-term, but a pull-back is likely to be viewed as an opportunity to buy the dip if the larger forces remain in play.

USD/JPY Insight from IG UK Client Positioning

USD/JPY Rate Forecast:  Looking Free To Rally As Pair Tests Ichimoku

Source: IG CLIENT SENTIMENT, data provided by IG

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY 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 USDJPY price trend may soon reverse higher despite the fact traders remain net-long.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as t1rading educational resources. Read more of Tyler’s Technical reports via his bio page.

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

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

Talk markets on twitter @ForexYell

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AUD/USD Technical Analysis: Two-Year Uptrend Broken

Fundamental analysis, economic and market themes

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AUD/USD Technical Strategy: Flat

  • Australian Dollar two-year rising trend support has been broken
  • Long-term positioning hints down trend from 2011 has returned
  • Upswing to test above 0.76 figure sought for selling opportunity

Join our AUD/USD strategy webinar and get ready to trade the currency pair this week!

The Australian Dollar pierced support guiding the currency higher against its US counterpart since January 2016, signaling a tectonic trend change is in progress. The choppy two-year up move now looks corrective within an even longer-term structural decline started in July 2011.

AUD/USD Technical Analysis: Two-Year Uptrend Broken

From here, a daily close below support at 0.7566 (50% Fibonacci expansion, falling channel floor) opens the door for a challenge of the 61.8% level at 0.7508. Alternatively, a move back above support-turned-resistance in the 0.7625-43 area (38.2% Fib, March 29 low) sees the next upside barrier at 0.7726.

AUD/USD Technical Analysis: Two-Year Uptrend Broken

Prices are too close to immediate support to justify entering short from a risk/reward perspective. Instead, an entry order has been set up to sell the currency pair at 0.7617. If triggered, the trade will initially target 0.0.7566 and carry a stop-loss activated on a daily close above 0.7643.

AUD/USD TRADING RESOURCES

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

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S&P 500/Nasdaq Technical Outlook: Don’t Fall in Love with the Rally Just Yet

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

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S&P 500/Nasdaq 100 Highlights:

  • S&P 500 finally trades free from congestion
  • First up is trend-line resistance, possible 2nd lower-high
  • Keep an eye on the Nasdaq 100

See what factors are expected to drive the S&P 500 this quarter, along with the Top Trading Opportunities for 2018 on the Trading Guides page.

S&P 500 finally trades free from congestion

It was getting to be a brutal few weeks in the S&P 500 as volatility went from ‘good’ to ‘bad’, that is from clean, but fierce moves to directionless swings, but still fierce. The break higher yesterday puts the market out into ‘open space’ a bit, which means short-term trading should improve.

Looking at the broader picture, though, the upside is still at considerable risk with the potential for a top to form still very much alive. The trend-line running off the record high could be rather significant for the index, as it could cap the current advance and carve out another lower-high.

The trend-line is the next ‘best spot’ to look for opportunities to short. Should we see a breakout above, then the market could still stall out and turn lower, but we’ll want to respect the upward momentum, and depending on price action perhaps flip the script to a more bullish outlook. On a decline in the near-term, the top of the recent congestion will be support until broken.

S&P 500 Daily Chart

S&P 500 daily chart with support/resistance

Keep an eye on the Nasdaq 100

Looking at the Nasdaq 100, a head-and-shoulders pattern is coming into view. It will of course require a turn down relatively soon to form the right shoulder and eventual break of the neckline to validate the pattern, but keep an eye on it.

The Nasdaq 100 is really run by only a handful of household names – Facebook, Amazon, Alphabet/Google, Apple, Microsoft, Netflix – but even as such, that makes it important because these have been market leaders. So goes the leaders, goes the market. For now, the H&S top is only a scenario, but should it come to fruition the market could be in for considerable pain.

Struggling with elevated volatility? We’ve got a guide designed to help you – Building Confidence in Trading.

Nasdaq 100 Daily Chart (H&S Potential)

Nasdaq 100 daily chart, head-and-shoulders potential

If you’d like to listen in on live analysis pertaining to global equity indices (and commodities), join me every Tuesday at 10 GMT time for technical insights.

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

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DAX & CAC Technical Outlook – More Strength Ahead?

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

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DAX/CAC Technical Highlights:

  • DAX yet to show signs of reversing despite resistance
  • Big-picture topping potential remains
  • Strength has the CAC trading in ‘open space’

Check out the DailyFX Q2 Forecasts for the DAX, CAC, Euro, and other major markets; see how our Trading Opportunities for 2018 doing too – DailyFX Trading Guides.

DAX yet to show signs of reversing despite resistance

The DAX rally off the lows found opposition last week after a slight breach above a swing-high in February and just below the 200-day MA, however; the reversal sparked only very minor selling. Yesterday’s turn back higher has the market geared up to take on the 200-day and better.

On a breakout above the 200, a thorough testing of the underside of the double-top from November-January should be in play. The zone extends from 12745 up to the mid-12800s and is likely to prove problematic. How problematic, we’ll need to wait and see.

Should we see a strong rejection, then we’ll perhaps flip the script to a short bias, but if it is anything like what we saw this past week, then we’ll need to respect the trend off the March low. There is still the possibility that we see a long-term top develop should we see a strong turn down in the weeks ahead.

We’ll delve more into the ‘head-and-shoulders’ top scenario at a later time should it become relevant. If this scenario is to come to fruition, it's worth noting that the DAX shouldn't climb too much higher from current levels.

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

DAX Daily Chart

DAX daily chart with price levels

Strength has the CAC trading in ‘open space’

Of the two big Euro-zone indices, the CAC has been an absolute monster off the late-March low. Nothing has provided any real opposition, not the 200-day MA, not the late-Feb swing-high. Looking higher, there isn’t much preventing the index from trading higher towards the January high, 2007 trend-line.

This doesn’t mean the index will necessarily get there without set-backs, or at all, but as far as quality price levels to lean on, resistance is difficult to come by. As long as we don’t see a strong turnabout in momentum, the benefit of the doubt remains with the long-side. Support first clocks in at the Feb swing-high around 5363.

Heads up, the ECB meets on Thursday. For live coverage, you can join my colleague Nick Cawley at 11:30 GMT time.

CAC Daily Chart

CAC daily chart

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

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Gold Prices Hold Channel as Bears Push Towards 2018 Lows

Price action and Macro.

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Talking Points:

- The US Dollar is catching a bid and this is helping to drive Gold prices-lower, continuing the reversal seen this month after a test of long-term resistance.

- Gold prices have been caught in an erratic range for much of the past three months, and this comes at a key juncture of long-term resistance on the chart. The 2017 bullish channel in Gold prices continues to hold, but a run of USD-strength is exposing the support side of near-term price action, making the prospect of bullish strategies less attractive.

- 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.

Do you want to see how retail traders are currently positioned around Gold? Click here for IG Client Sentiment.

Gold Prices Continue April Reversal

On a short-term basis, Gold has been filled with frenetic activity over the past month, and that statement can pretty much be applied to the entirety of 2018. A spate of strength started in mid-December and ran through January, but as soon as Gold prices began to test a key zone of resistance, that strength went on hiatus and prices have been bouncing back-and-forth rather aggressively ever since. There have been a litany of themes and a plethora of reasons, but the takeaway is one in the same: Gold prices have been range-bound now for over three months.

Gold Goes Range: Four-Hour Chart, Range-Bound for Past Three Months

gold prices four-hour chart

Chart prepared by James Stanley

On a longer-term basis, we can see where this range-bound activity over the past three months can be taken with a bearish bias. There was a bearish channel that formed off of the lower-lows and lower-highs that showed in February, and that channel has largely remained. In late-March/early-April, we saw the mid-line of this channel at work, as this helped to mark the April lows, around the $1,320 level on the chart.

Go

ld Eight-Hour Chart: Bearish Channel Remains

gold prices eight hour chart

Chart prepared by James Stanley

Going out a little longer, and we can see where the above bearish channel is part of a different channel, this being a bullish channel that’s been active in Gold since the beginning of last year. This bullish channel guided prices-higher for most of 2017 and into 2018, and this helps to form the ‘big’ zone of resistance that’s continued to thwart Gold bulls. This zone of resistance is taken from the 2016 high of $1,375.15 down to the 2017 high of $1,357.50. We’ve now seen four failed attempts at this zone already in 2018, highlighting how rigid this area is as resistance on the chart.

Gold Prices Weekly Chart: Big Picture Resistance Zone Continues to Hold the Highs

gold prices weekly chart

Chart prepared by James Stanley

Moving Forward

Given that we’re working with a longer-term area of resistance, the potential topside on bullish positions will likely remain capped until we get some form of resolution. This would mean that shorter-term plays could be based around near-term support levels, and if we do see buyers hold support above the April swing of $1,319.20, the door could open for bullish reversals back towards resistance around $1,344 up to $1,350.

On the other hand, if support cannot hold up above $1,319, the door is opened for a re-test of 2018 lows in the area that runs from $1,302-$1,308; and if that cannot hold, the area around $1,286 becomes attractive for the next stop of support.

Gold Prices Eye 2018 Lows

gold prices four hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on Gold prices? Our DailyFX Forecasts for Q1 have a section specifically for Gold. We also offer a plethora of resources on our Gold page, and traders can 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

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Contact and follow James on Twitter: @JStanleyFX


Silver Price Surge Brings Long-term Breakout into Play, Gold Too

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

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Silver/gold technical highlights:

  • Silver rockets higher, breakout potential surges with it
  • Capitulation in the futures market?
  • Gold could soon post weekly close above 2013 trend-line

For a longer-term fundamental and technical outlook on Gold or any of your favorite markets/currency pairs, check out the DailyFX 2Q Forecasts.

Silver rockets higher, breakout potential surges with it

Yesterday’s surge in silver finally sprung it free from the congestion it was caught in for the past couple of months and suddenly brings to light the prospects of an important long-term breakout. There is still some work to be done, but a weekly close above 17.70 will have silver trading out in ‘open space’.

The coiling price action over the past couple of years could lead to a strong move. Furthermore, large speculators in the futures market have given up on the precious metal in recent weeks by turning from net-long to net-short for the first time since 2003.

Silver Weekly Chart (Needs to get into ‘open space’)

Silver weekly price chart, breakout potential rises

Capitulation in the futures market?

This is what we had to say last month regarding CoT changes in the positioning of large speculators in the silver market: “After having held long for such an extended period, is their turn to net-short a sign of more weakness to come or capitulation on what has been a losing proposition since the top in 2011? Right now, we are leaning with the latter scenario.”

With the rally on the verge of growing legs, price action may soon corroborate the notion we have indeed seen a capitulation. Should silver continue rise, there is plenty of money on the sideline to provide silver with buying power to run it higher. But before getting too bullish, seeing price trade into ‘open space’ above two varying angled trend-lines will be needed before silver can gain momentum.

Silver Futures Positioning Chart (Large Specs Capitulate?)

Silver CoT futres positioning, large speculators may have capitulated

Gold could soon post weekly close above 2013 trend-line

We’ve been discussing gold and the 2013 trend-line quite a bit lately. Several times this year it has popped above it on an intra-week basis, but failed to close out Friday above the threshold. That has left gold in a state of limbo. Another fake-out breakout could happen this week, but as soon as it closes beyond the trend-line and above the trading range in place since January, then a big rally could be in order.

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

Gold Weekly Chart (Soon to close above?)

Gold weekly price chart nearing weekly close > 2013 trend-line,out of range

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

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ASX 200 Technical Analysis: Range Break Puts 6,000 In Bulls’ Sights

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • ASX 200 bulls are attempting to consign its recent trading range to history
  • They’ve had limited success so far but are trying
  • If they can crack it, then 6,000 will loom, but that is not a comfortable height for this index

Find out what the #1 mistake that traders make is and how you can fix it!

The ASX 200 is flirting with a break of its previous range top but has yet to prove conclusively that it can thrive above that point.

The top comes in at 5851.1, which had previously capped trade since March 22. The index has been above it for a couple of trading days now, but only just. It is already testing the base of a nascent uptrend channel from April 2. That now comes in at 5823.4 and it is tempting to suggest that that level, at least, is going to have to hold if the bulls aren’t to seem exhausted.

ASX 200 Technical Analysis: Range Break Puts 6,000 In Bulls' Sights

If they can consolidate above that line then a push back up to the previous peak of 5999.7 could be on the cards, but this index just can’t seem to get comfortable above the 6,000 level and there’s little reason to suppose that a current foray to that rarified altitude would last very long.

Looking to the downside, there is clearly strong support at 5826.0, which is where the index bounced back on April 2. Probably not coincidentally, this is also the lower boundary of the narrow trading band, which constrained ASX trade for much of 2017. That can probably be expected to hold if tested.

ASX 200 Technical Analysis: Range Break Puts 6,000 In Bulls' Sights

Fundamentally speaking, a strong US corporate earnings season is now hoped for. If delivered that may underpin global developed-market equity to some extent with the ASX probably no exception. Assuming no more gloomy headlines out of Syria it is hard to see a broad stock selloff while those hopes endure.

Watch the ASX closely for the next couple of days. If it can consolidate above its previous range then a push higher is likely, with 6,000 in the bulls’ sights again. But,bear in mind just how thin the index finds the air above that point.

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: Uptrend Holds, Tough Highs Loom

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Nikkei 225’s uptrend endures
  • But it has yet to retrace February’s sharp falls
  • Doing so could be very tough

Join our analysts for live coverage of major Japanese economic data at the DailyFX Webinars

The Nikkei 225 remains firmly in the broad, strong uptrend which has been in place since the lows of late March.

It’s rise has taken it past the previous significant peak, which came in at March 13’s intraday high of 22,105.5. The index is now in a band of which that level now forms support and with near-term resistance at hand in the form of February 27’s intraday top, 22,498.

If the bulls can keep their uptrend going, they will soon face the perhaps daunting task of fully retracing the sharp falls suffered by the Nikkei between February 2 and 5. They took the Tokyo stock benchmark down more than 1,600 points and won’t be fully erased until the index tops 23,360.

Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

This looks like a very big ask for the moment, although the index does seem to have its sights on that February top.

However, with its Relative Strength Index rising, albeit not yet into overbought territory, the index will probably need a consolidative pause around that level before setting out higher again.

Reverses will probably find initial support at the current uptrend line. It comes in at 21,879 at the moment.

There’s probably further support at 21614.6, That’ the 50% Fibonacci retracement of the rise up from last August’s lows to the highs of January. Below that lurks 61.8% retracement at 21,007 and 50% retracement at 20,255. Tellingly that last level is just about exactly where the Nikkei’s fall was arrested back in late March.

Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

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: Bullish Demand Narrative May Lift Oil Further

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: Bullish continuation anticipated in a volatile environment
  • Crude has advanced on a weakening fundamental backdrop that could revert higher and life Crude in the process
  • Trader Sentiment Highlight from IG UK: retail short positions trim favoring ST pullback

Supply has taken us this far, can demand carry us the rest of the way in this Bull Market that appears to know no bounds? Since the low in June near $42/bbl, WTI Crude Oil has risen by 61% toward $70/bbl, and the fundamental backdrop looks to favor further strength and rising prices.

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

US Crude Backwardation Strengthen toward the Spread’s Widest Level

Please add a description for the image.

Data source: Bloomberg

The chart above looks at a calendar spread between the December 2018 futures contract subtracted from the December 2019 futures contract. A positive number shows backwardation where there is a premium to buy know and hold. Because commodities are bought and not sold, this means the environment at hand is one of higher demand relative to anticipated supply, which looks appropriate as OPEC may be set to over-tighten the market.

Demand Looks Rosy As Caterpillar’s Key Industries Show Global Growth

Tuesday offered a new argument for optimism in Caterpillar’s quarterly results that showed faster than expected growth in Construction, mining, oil pumping and railroads. Regarding construction, Caterpillar said that the firm “expects broad-based growth in all regions in 2018, with the biggest drivers being strength for construction activity in North America and infrastructure development in China.” Pertinent to Crude, Caterpillar saw “continued strong demand for reciprocating engines for well servicing and gas compression applications in North America. The current turbines backlog remains healthy in support of the midstream Oil and Gas business." This shows the shale play remains strong and that has been evidenced by the deep discount that Midland Crude has displayed relative to Brent at -$12.62/bbl.

Caterpillar’s results mirror the optimism expressed by the Joint Technical Committee of OPEC who recently declared the global inventory glut as nearly cleared. Another source of ironic optimism for crude traders is that economic releases per the Global Citi Economic Surprise Index hit a two-year low. In other words, a reversion to the mean higher could lift the demand picture for Crude.

Please add a description for the image.

Data source: Bloomberg, Citi

Technical Focus: Price Continues To Follow Script of Tigthening Markets

WTI Crude Oil has a large barrier ahead at $70/bbl, a level not breached since November 2014. However, the backdrop does seem to favor the path of least resistance as pointing higher.

The April opening range low at $61.84/bbl for Crude should be the focal point for Bulls. While it would be difficult to give up recent gains on such a drop, it’s also likely premature to have a naked short above this level given the fundamental backdrop supplied above.

A break and close below $61.84 would open up the possibility of a larger set-back that could retrace toward the YTD low at $57.93/bbl. Short-term support comes from Ichimoku’s Base Line or Conversion (26-day midpoint at $65.69/bbl, which has held up price throughout the 2018 rally. Above $65.59, I’ll favor further upside toward and through $70/bbl.

Chart Watch: Crude Price Continues To Ride Channel Top, Bullish Shocks Still Likely

Crude Oil Price Forecast: Bullish Demand Narrative May Lift Oil Further

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

WTI Crude Oil Insight from IG Client Positioning

Crude Oil Price Forecast: Bullish Demand Narrative May Lift Oil Further

Insight from IG UK shows us that 39.2% of traders are net-long with the ratio of traders short to long at 1.55 to 1. In fact, traders have remained net-short since Apr 09 when Oil - US Crude traded near 6233.5; price has moved 8.7% higher since then. The number of traders net-long is 8.2% lower than yesterday and 10.4% higher from last week, while the number of traders net-short is 9.6% lower than yesterday and 7.7% lower from last week.

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 (emphasis mine.)

---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.

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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.

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 – 7300 Taken Out, Now What?

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

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FTSE Technical Highlights:

  • FTSE cleared big hurdle around 7300
  • The 200-day MA lies just ahead under 7400
  • Risk/reward for both sides not favorable at the moment

Check out the newly released DailyFX Quarterly Forecasts to find out what are likely drivers in the weeks ahead for the FTSE and GBP.

FTSE cleared big hurdle around 7300

The FTSE continues to be a surprise to the upside, and despite having had major resistance around 7300 to contend with and having rallied a good distance off the lows to get to that area (overbought), it still managed to blow right through it on Wednesday.

Just ahead lies the 200-day MA, which may or may not be a problem, but at this juncture given how far the index has come the thinking is it might be. However, it’s not the most influential of moving averages on its own, at least not in recent history, and with it lacking price levels in confluence it isn’t viewed as the most steadfast line of resistance.

This is where trading the footsie is getting tricky, and at the moment risk/reward on either side is lacking, especially for fresh longs. Seeing how the market reacts to former resistance around 7300, now support, may be a prudent approach – ‘wait-and-see’.

The ‘wait-and-see’ is whether it can hold it now that it has been reclaimed, or whether the footsie wants to drop back below it. The market could become choppy around 7300, as well, with no real adherence to it. Generally speaking, feeling the risk, but not the reward in being too involved at the moment. That’ll change, but patience, as is the case with a few other markets right now, may be a virtue worth exercising in the meantime.

New to Trading? We’ve got a Trading Guide designed just for you.

FTSE Daily Chart

FTSE daily chart

Tools for Forex & CFD Traders

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---Written by Paul Robinson, Market Analyst

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EUR/GBP Technical Analysis: Euro Bias Bearish Through Upswing

Fundamental analysis, economic and market themes

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EUR/GBP Technical Strategy: Flat

  • Euro manages four-day winning streak vs British Pound
  • Gains appear corrective within a broader bearish trend
  • Waiting for signs of topping to look for short trade setup

The Euro continues to recover against the British Pound as expected, but the overall trend continues to a bearish bias for the single currency. Prices have managed four consecutive days on the upside but the series of lower highs and lows set from late September 2017 continues to define the dominant trajectory.

From here, a daily close above the 50% Fibonacci retracement at 0.8794 opens the door for a challenge of the 61.8% level at 0.8835. Alternatively, a turn back below the 38.2% Fib at 0.8753 paves the way for a retest of the 23.6% retracement at 0.8702.

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

EUR/GBP Technical Analysis: Euro Bias Bearish Through Upswing

Current positioning seems too congested to justify taking a trade one way or another from a risk/reward perspective. Waiting for the upswing to show clear signs of topping to look for selling opportunities in line with the prevailing bias seems sensible. In the meantime, staying flat is probably most prudent.

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

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EUR/USD Technical Analysis: All Eyes on Congestion Area Support

Fundamental analysis, economic and market themes

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EUR/USD Technical Strategy: SHORT AT 1.2407

  • Near-term Euro positioning a bit more bearish vs last week
  • Congestion support break needed to confirm larger selloff
  • Tactically holding short trade from 1.24 still looks sensible

See our quarterly Euro trading guide to learn what will drive prices through mid-year!

The Euro recoiled from two-month trend line resistance against the US Dollar but sellers are still unable to punch through long-standing congestion area support. The symmetric Triangle setup noted last week seems to be invalidated however, marking a small but noteworthy bearish update of near-term positioning.

From here, a daily close below the 1.2154-73 area (March 1 low, 38.2% Fibonacci expansion) exposes the 1.2055-70 zone (50% level, August 29 high). Alternatively, a push back above near-term resistance at 1.2300 opens the door for another run at the falling trend line, now effectively at the 1.24 figure.

EUR/USD Technical Analysis: All Eyes on Congestion Area Support

Retaining in play the second half of a short EUR/USD position triggered at 1.2407 continues to look sensible after partial profit was booked. Price action over the past week seems to have tipped the scales a bit more in favor of a long-term down trend continuity. Confirmation will be sought for scale-up opportunities.

EUR/USD TRADING RESOURCES

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

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

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EUR/JPY Technical Analysis: Trend-Line Bounce From Fibonacci Support

Price action and Macro.

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Talking Points:

- Both the Euro and the Japanese Yen will see rate decisions from their respective economies this week, and each Central Bank appears to have a bit of operating room to offer dovish outlays to markets. This could bring on weakness in both the Euro and the Japanese Yen.

- Given prevailing trends, Yen-weakness could be much more promising to work with for FX traders, as a stimulus exit may not be too far away for the ECB as they investigate option for after the current program is set to expire in September. The Bank of Japan, on the other hand, has an open-ended program and has shown no signs of stopping or slowing QE. This keeps the topside of EUR/JPY as attractive in the near-term.

- If you’re looking to improve your trading approach, check out our Traits of Successful Traders research. And if you’d like more of a basic primer for the FX market, check out our New to FX Guide.

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Yen Weakness Returns in Q2

The first quarter of this year was fairly dramatic for the Japanese Yen. The Japanese currency continued to carry weakness as we walked into 2018, and this helped to bring a fresh two-year high into EUR/JPY as we opened the door into February. But the rest of February was not so kind to that trend, as a spate of Yen-strength began and ran into March, driving a reversal into the previously robust up-trend in EUR/JPY.

As this was happening, a key zone of prior support started to come into question. This zone runs from 131.43 up to 132.05, which is the 50% retracement of the 2008-2012 major move in the pair, and this zone had helped to hold support in EUR/JPY for the latter-four months of 2017. As prices reversed in February, support in that zone began to wane until, eventually, this area became resistance. We even looked at a short-side setup off of this area as we walked into Q2.

EUR/JPY Daily Chart: Support Becomes Resistance (And then Back to Support Again)

eurjpy daily chart

Chart prepared by James Stanley

April, however, has seen price action re-engage above this area; and as we wrote two weeks ago, this keeps the door open for bullish strategies. Since then, prices have found a bit of support on an upward sloping trend-line taken from the late-March, early April swing-lows.

EUR/JPY Four-Hour Chart: Bullish Trend-Line From March/April Lows

eurjpy four hour chart

Chart prepared by James Stanley

February Highs Yet to Be Broken

We looked into the topside of the setup a couple of different times since prices have moved back above this key zone, most recently ahead of last week’s open. And at this stage, we’ve seen a hold of support as strength has started to come back in EUR/JPY, but what we haven’t yet seen take place was a break to fresh highs. Prices continue to hold below the February 20th high of 133.06, and this offered another element of resistance just last week. For traders looking to take a more conservative stance with the setup, awaiting a topside break of this level could make the prospect of bullish continuation look much more likely. A top-side break of 133.06 exposes the Fibonacci level and prior area of support at 134.41.

EUR/JPY Four-Hour Chart: Resistance at 133.06 Remains

eurjpy four hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the Euro or Japanese Yen? Our DailyFX Forecasts for Q1 have a section for both EUR/USD and USD/JPY. We also offer a plethora of resources on our EUR/JPY page, and traders can 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

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Contact and follow James on Twitter: @JStanleyFX