Support & Resistance

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EUR/USD Technical Analysis: Two-Month Down Trend Broken

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro posts largest gain since June, breaks 2-month down trend vs. US Dollar
  • Short trade stopped out, current chart positioning bereft of actionable setup

The Euro launched sharply higher to score the largest daily in close to five months and break a two-month down trend against the US Dollar. The single currency’s impressive surge was triggered after third-quarter German GDP data registered significantly stronger than economists expected.

Near-term resistance is now at 1.1823, the 50% Fibonacci retracement, with a break above that on a daily closing basis opening the door for a test of the 61.8% level at 1.1887. Alternatively, a move back below the 38.2% Fib at 1.1760 sees the next major downside barrier at 1.1681, the 23.6% Fib.

The shortEUR/USD trade triggered at 1.1640 on the premise that prices had completed a large Head and Shoulders topping pattern has been stopped out. Current positioning does not offer an attractive setup to re-establish exposure on the long or short side, so opting for the sidelines seems most prudent.

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EUR/USD Technical Analysis: Two-Month Down Trend Broken


USD/JPY Showing Failure to Launch as Commodities Sag on Sentiment

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

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Talking Points:

  • USD/JPY Technical Strategy: anticipating break and hold above 115, after ST weakness
  • Support at Nov. 15 low, ST downward momentum, resistance at 114.73
  • Sentiment Highlight: rise in USD/JPY longs cast ST doubt on advancing price

USD/JPY continues to find reasons not to advance. The encouraging development for Bulls is that the weakness in USD/JPY has not brought strong selling of the pair or buying of JPY across the board. The recent cause ‘not to buy’ the cross apparently has been the drop in commodities. After the first week of trading in November, commodities that were hot in October has cooled off. Looking at the forward curves and other fixed income derivative markets, it does not appear there is consensus to favor either risk-off or selling of the USD, which could support USD/JPY going forward.

Bull markets tend to climb a wall of worry, and the chart of USD/JPY shows periods of jubilation to sideways price action. Should the appetite forrisk-return, which seasonal factors favor, the correlation of USD/JPY and risk sentiment could life the pair. A recent battle worth noting is the flattening of the UST curve, which could get a shock depending on end of year US legislating. Another hurdle of worry that has help back USD/JPY has been the pull-back in commodities. The broad Bloomberg Commodity Index peaked within 24-hours as USD/JPY.

Traders would do well to hold a longer-term bullish view above the October low of 111.65. The level of support closer to current price action is the November 15 low, the lowest level since mid-October at 112.48. A hold above these levels would favor the November 14 high at 113.93 followed by a test of the November high of 114.73. An approach toward the latter would favor that long-term forces are pushing toward an extension higher at the YTD high of 118.60, reached on January 3.

Unlock our Q4 forecast to learn what will drive trends for the Japanese Yen and the US Dollar through year-end!

USD/JPY Showing Failure to Launch as Commodities Sag on Sentiment

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

USD/JPY Insight from IG Client Positioning: steady rise in USD/JPY longs cast ST doubt on advancing price

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

USD/JPY Showing Failure to Launch as Commodities Sag on Sentiment

USDJPY: Retail trader data shows 53.2% of traders are net-long with the ratio of traders long to short at 1.13 to 1. The percentage of traders net-long is now its highest since Sep 27 when USDJPY traded near 112.881. The number of traders net-long is 0.9% higher than yesterday and 2.3% higher from last week, while the number of traders net-short is 11.6% lower than yesterday and 23.1% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias (emphasis added.)

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

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GBP/USD Technical Analysis: Slop to Chop, Direction Still Lacking

Price action and Macro.

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Talking Points:

- The British Pound continues to exhibit little discernable direction after the BoE’s rate hike.

- Sentiment is near-flat in GBP/USD, with 1.06 traders long for every one short. Click here to access our IG Client Sentiment Indicator.

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

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In our last article, we looked at a congested British Pound as Cable continued in a direction-less manner near-term. As we’d advised, navigating such sloppy price action presents a distinct set of challenges for traders as prevailing trends are lacking any discernable biases to work with. As such, we’d advised awaiting a break of support (1.2982-1.3026) or resistance (1.3320-1.3350) before looking to do so. The one setup that might’ve been available in the interim was a resistance check off of 1.3216, or the 50% retracement of the August-September bullish run. This level had previously functioned as resistance, and this opened the possibility of a relatively tight stop lodged above the 1.3320-1.3350 area. That resistance showed-up on Friday, and after an early swoon to start the week, prices have moved right back towards this area.

GBP/USD Hourly: A Month’s Worth of Mean Reversion

GBP/USD Technical Analysis: Slop to Chop, Direction Still Lacking

Chart prepared by James Stanley

This continued meander of mean reversion has left GBP/USD without any discernable near-term direction. By scrolling out on the chart, we can see where there’s an intermediate-term trend still at work as the 2017 bullish trend trudges on. That trend is in question, however, as the projection of this trend-line has been seeing considerable intra-day oscillation over the past couple of weeks. This trend-line first re-engaged on the heels of the BoE rate hike; and in some form or another, buyers have continue to offer some element of support around this level.

GBP/USD Daily: 2017 Bullish Trend-Line Shaking, but Continues to Hold

GBP/USD Technical Analysis: Slop to Chop, Direction Still Lacking

Chart prepared by James Stanley

This is not the only element of support around current levels, however, and this is where the backdrop on the pair gets a bit more complicated. Within the past month worth of sloppy chop, we have a number of support and resistance levels, further hindering any indications of trend that may have shown up. For traders looking to assign a directional approach, we continue to look for breaks of longer-term support or resistance before assigning a trend-side bias. On the support side of the coin, we’re looking for a break below the support zone that runs from 1.3026-1.2982 and on the resistance side, we’re following 1.3320-1.3350.

GBP/USD Daily: Support/Resistance Break to Usher in Directional Biases

GBP/USD Technical Analysis: Slop to Chop, Direction Still Lacking

Chart prepared by James Stanley

Until Then:

Realistically, it may take us a little while for the current slop in GBP/USD to resolve. The next Super Thursday meeting isn’t until February, and we’ll probably see considerable attention paid to the U.S. and European economies as we move towards year-end. The drivers around Brexit still exist, and this could continue to stoke volatility in the pair. Traders should be careful of executing shorts off of 1.3216 as we’d looked at last week. While that resistance played rather cleanly, a revisit around the same level just a few trading days later could be setting up a trap for bears, and if we do see the U.S. Dollar continue to weaken as we’ve seen over the past couple of days, that short position could end up being quite painful.

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

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USD/CHF Technical Analysis: Fibonacci Resistance at Four-Month Highs

Price action and Macro.

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Talking Points:

- USD/CHF has broken above a key level of resistance around .9770 as the pair trades at four-month highs.

- USD-strength has been a resilient theme thus far in Q4, and if this is something that continues, the topside of USD/CHF can remain as attractive in the near-term.

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

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Swissy is trading higher on the day after breaking out to fresh four-month highs last week. In our last article, we looked at the level of .9770 showing back-up as resistance after sellers came-in at .9837. The level of .9770 is the 38.2% Fibonacci retracement of the December 2016- September 2017 major move. Perhaps more importantly than any theoretical prognostications is the fact that this level functioned as resistance on multiple occasions over the past four months, rebuking upward advances in both June and August.

USD/CHF Daily: Fresh Four-Month Highs After Fibonacci Resistance at .9770 Gives Way

USD/CHF Technical Analysis: Fibonacci Resistance at Four-Month Highs

Chart prepared by James Stanley

Prices have rallied up to find resistance at another retracement from that same study, with the 50% level at .9880 currently helping to set near-term highs. This denotes the prospect of further bullish continuation, and a top-side breech of that level opens the door for bullish strategies targeting a re-test of parity (which, perhaps coincidentally, is 11 pips away from the 61.8% retracement of this same study).

USD/CHF Four-Hour: Fibonacci Resistance at .9880 After Double-Top Breakout

USD/CHF Technical Analysis: Fibonacci Resistance at Four-Month Highs

Chart prepared by James Stanley

This can open the door to a couple of different plays in the pair. With prices finding resistance on the under-side of a 50% Fibonacci retracement, buyers will likely want to try to avoid chasing the move for fear of getting caught on a top. Rather, traders can look for support to show-up at that area of prior resistance, around .9770, in the effort of trading bullish continuation.

Alternatively, if a higher-low support test does not show up, traders can look for the next area of resistance to come in around the parity figure. This is a huge psychological level on the pair, and it’s very close to the 61.8% retracement of the same move that’s helping to set current resistance. A visit towards parity opens the door for higher-low support to show around current resistance, and this can be attractive in the aim of trading bullish continuation in USD/CHF.

USD/CHF Four-Hour: A Large Zone of Resistance Looms Above (around parity)

USD/CHF Technical Analysis: Fibonacci Resistance at Four-Month Highs

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: 2017 Uptrend Under Fire

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Short
  • Aussie Dollar breaks 2017 uptrend support, hinting at significant reversal ahead
  • Short position activated below 0.76 figure looking for a test of 38.2% Fib support

The Australian Dollar has broken trend line support dating back to December 2016, suggesting the currency has reversed course against its US counterpart. The breakdown played out in the aftermath of disappointing wage growth data. The subsequent release of a mixed jobs report failed to offer a lasting reprieve.

From here, a daily close below the 38.2% Fibonacci expansion at 0.7539 opens the door for a challenge of the 50% level at 0.7480. Alternatively, a move back above the 23.6% Fib at 0.7612 – a move that would also undo the trend line break – paves the way for a retest of range floor support-turned-resistance at 0.7644.

Technical positioning seems to suggest bearish acceleration up ahead and a short AUD/USD position as been triggered at 0.7590. A stop-loss will be activated on a daily close above 0.7612. Profit on half of exposure will be booked and stop-loss moved to breakeven when (and if) the first objective is met.

What do retail traders’ AUD/USD buy/sell decisions hint about coming price moves? Find out here!

AUD/USD Technical Analysis: 2017 Uptrend Under Fire

CAD Trades Like Petrocurrency Again Right When Oil Concerns Mount

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

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Talking Points:

  • USD/CAD Technical Strategy: strong support at 1.2451, trendline providing support
  • CAD correlation to Crude Oil has recently picked up just in time for Crude to fall 5% from monthly high
  • Sentiment Highlight: shift to bullish retail bias provides ST bearish outlook

The Canadian Dollarmay have picked a poor time for the correlation to Oil to pick back up since Oil has spent the last handful of trading sessions retreating from a 27-month high. The uptrend of USD/CAD has recently found support from a trendline drawn off the September low and October 19 low as well as the 21-DMA near 1.2743. Below this zone, traders may find support at the 38.2% retracement of the September-October range at 1.2723.

The under-performance of economic data paused on Thursday through the trend since September of underperformance remains concerning for CAD bulls. The price of Crude Oil has recently begun to explain CAD volatility as the correlation has risen to +0.2 after being flat for much of the summer as the 2-year yield spread between government debt was a driving force of the currency. Crude Oil bears have re-emerged after doubts surfaced about the long and how many countries will join the OPEC+ ( a moniker for OPEC and strategic alliances like Russia) production curb extension past March 2018 to further support the price of Oil.

The technical outlook is focusing on further rises against the broader downtrend that began in early May. Short-term support is the trendline drawn from September and October 18 low. Over the next few trading sessions, a hold above the November 10/9 lows at 1.2666/68 will provide a broader bias higher though sentiment below argues we could test and break those levels of support. Currently, a hold above the trendline and 1.2666/68 area favors a march toward 1.2799 (Nov. 2 low), followed by 1.2817/58 (Oct. 25/26 high,) and lastly the 200-DMA at 1.2985.

Unlock our Q4 forecast to learn what will drive trends for the US Dollar through year-end!

CAD Trades Like Petrocurrency Again Right When Oil Concerns Mount

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

USD/CAD Insight from IG Client Positioning: overall selling bias provides ST bullish outlook

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

CAD Trades Like Petrocurrency Again Right When Oil Concerns Mount

USDCAD: Retail trader data shows 48.3% of traders are net-long with the ratio of traders short to long at 1.07 to 1. The number of traders net-long is 4.4% higher than yesterday and 9.7% lower from last week, while the number of traders net-short is 4.2% lower than yesterday and 45.7% higher from last week.

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

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

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NZD/USD Technical Analysis: Six-Month Support Gives Way

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar has broken 6-month support vs. USD, hinting at deeper losses ahead
  • Short position activated, targeting an initial decline to test below the 0.68 figure

The New Zealand Dollar has broken support that has been holding it up since mid-May, hinting that deeper losses against the currency’s US namesake area ahead. The drop came amid broad-based risk aversion after US Special Counsel Robert Mueller subpoenaed the Trump campaign.

From here, a daily close below the 38.2% Fibonacci expansionat 0.6745 sees the next downside barrier marked by the 50% level at 0.6672. Alternatively, a turn back above the 23.6% Fib at 0.6835 – now recast as resistance – opens the door for a retest of the 14.6% expansion at 0.6890.

Technical and risk/reward parameters appeared acceptable to attempt a short position and NZD/USD was sold at 0.6804, initially targeting 0.6745. A stop-loss will be activated on a daily close above 0.6837. Profit on half of the trade will be booked at the stop moved to breakeven if (and when) the first objective is met.

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NZD/USD Technical Analysis: Six-Month Support Gives Way

EUR/GBP Technical Analysis: Down Trend Preparing to Resume?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro may be ready to resume down trend vs British Pound after range top test
  • Breakdown confirmation, acceptable risk/reward setup needed to enter short

The Euro recoiled from familiar range resistance above the 0.90 figure against the British Pound, with prices flirting with a revival of the down started in late August. Prices have languished in sideways consolidation for two months but the overall bias has favored weakness since the trend turned at the post-Brexit vote high.

Immediate support is at 0.8879 (trend line, 23.6% Fibonacci expansion), with a break below that on a daily closing basis exposing the 38.2% level at 0.8796. Alternatively, a move back above the 14.6% Fib at 0.8931 paves the way for a retest of the 0.9015-33 area (October 12, November 15 highs).

Confirmation of a near-term bearish reversal requires a break of trend line support set from the November 1 swing low. Absent that, the bias remains defined by a series of higher highs and lows. When (and if) the break occurs, risk/reward parameters will be evaluated to see if a selling opportunity exists.

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EUR/GBP Technical Analysis: Down Trend Preparing to Resume?

EUR/JPY Technical Analysis: Support Bent, but Not Broken

Price action and Macro.

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Talking Points:

- EUR/JPY has rallied above the post-ECB swing-high of 133.10, complicating near-term directional biases.

- There are potential setups on both sides of the pair at the moment. The top-side is clearer, but resistance on the under-side of a key trend-line can keep the door opened on the short-side, as well.

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

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In our last article, we looked at the potential of a bigger picture break-down in EUR/JPY price action. That has not happened. After spending much of 2017 trending higher under the expectation that the ECB would invoke a ‘less loose’ policy before the end of the year, the single currency got slammed when the bank extended their stimulus outlay into 2018. This rate decision also brought with it the pronouncement that the ECB expects to keep rates at or near present levels well into the future; inferred to mean beyond 2018.

Near-immediately, EUR/USD broke through a key support zone and EUR/JPY traveled right back to the area that had held the lows for the prior six weeks. This zone that runs from 131.71-132.05 spans the August 1st high (131.71) to the 50% Fibonacci retracement of the 2008-2012 major move (132.05); and this area had helped to turn around prices in EUR/JPY on multiple occasions since mid-September. But after ECB (in maroon on the below chart), those lows began to slip a bit-lower, giving the appearance that support was about to breach as sellers took over. This case was even strengthened by the lower-high that showed up around 133.10 after ECB (highlighted by a green box below).

EUR/JPY Four-Hour: ECB-Fueled Weakness Budges Down to Slightly Lower-Lows

EUR/JPY Technical Analysis: Support Bent, but Not Broken

Chart prepared by James Stanley

But those sellers couldn’t hold the move; and as prices started to break-higher, that swing-high at 133.10 was exposed. As we came into this week, a couple of positive European data prints have helped to re-invigorate Euro bulls. German GDP came-in red hot at .8%, and this carries the Euro-Zone up to .6% quarterly growth. This puts Europe on pace to grow faster than the United States, and while the Fed has invoked four rate hikes over the past two years, the ECB remains pedal-to-the-floor on the stimulus front, with no signs yet of abating. This presents a fairly clear-case of divergence, and it appears as though markets don’t want to wait around for the ECB to signal the oncoming of higher rates before beginning to factor that in.

On the heels of yesterday’s GDP prints, the Euro caught another gust of life to surge higher. In EUR/JPY, this propelled prices above that prior swing high of 133.10, giving the appearance that a re-test of the 134.41 Fibonacci resistance level was in the cards. This is the 61.8% retracement of the 2014-2016 major move in the pair, and this level helped to turn around advances in EUR/JPY in September and then again in October. A third approach here becomes interesting for top-side breakouts above the double top. Also of interest on the bullish side is near-term potential support.

Prices have moved off of short-term highs, and currently appear to be trying to dig-out support around the prior swing around 133.10. If we do see a bullish response, as indicated by a candlestick wick on the four-hour chart, this can open the door to top-side setups looking for a re-test of 134.41.

EUR/JPY Technical Analysis: Support Bent, but Not Broken

Chart prepared by James Stanley

This isn’t an entirely one-sided story, however, as there may still be a case to be made on the bearish side of the coin. An aggressively bullish trend-line can be found by connecting the August low to the October 15th low. The projection of this trend-line coincides with that prior swing-high around 133.10, and the deeper projection of this level runs into current resistance. The fact that prices have put in a rather strong reaction thus far makes this an interesting observation, and if we do see prices fall back towards that prior zone of support around 131.71-132.05, the high off of this trend-line can be usable for stop placement on short-side approaches.

EUR/JPY Four-Hour: Resistance at Under-Side of Projection from Prior Bullish Trend-Line

EUR/JPY Technical Analysis: Support Bent, but Not Broken

Chart prepared by James Stanley

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

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GBP/JPY Technical Analysis: Fibonacci Resistance Becomes Support

Price action and Macro.

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Talking Points:

- The British Pound continues to exhibit little discernable direction after the BoE’s rate hike.

- Sentiment is near-flat in GBP/USD, with 1.06 traders long for every one short. Click here to access our IG Client Sentiment Indicator.

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

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Last month we looked at a bull flag formation in GBP/JPY as the pair worked-in support around a key Fibonacci level around 148.29. This is the 61.8% Fibonacci retracement of the May-October 2016 major move in the pair; but perhaps more importantly, this level had helped to cauterize resistance in the pair in December, and that resistance held all the way into September. This is when markets began pricing in the prospect of rate hikes from the Bank of England, and this has largely kept GBP/JPY supported since.

GBP/JPY Daily: Prior Fibonacci Resistance Becomes Fresh Fibonacci Support

GBP/JPY Technical Analysis: Fibonacci Resistance Becomes Support

Chart prepared by James Stanley

This isn’t an entirely one-sided equation, however, as prices have been beating on the door of support for over a week now and still bulls haven’t been able to bring prices up to fresh highs. There’s a level of resistance derived from a different Fibonacci retracement that appears to be helping carve-out resistance, and that level runs at 151.37 as the 76.4% retracement of the ‘Brexit move’ in the pair, taking the June 2016 high down to the flash crash low. This set of levels has been added to the below chart in red.

GBP/JPY Daily: Current Resistance Assisted by 76.4% Retracement of ‘Brexit Move’

GBP/JPY Technical Analysis: Fibonacci Resistance Becomes Support

Chart prepared by James Stanley

While support showing around prior resistance of 148.29 can strengthen the argument for additional topside in the pair, the continued inability of bulls to push prices to new highs, combined with the increasing aggressiveness of bears as indicated by the recent lower-highs is noteworthy. The British Pound was rather weak after that recent rate hike, largely on the basis of the dovish stance at the Bank of England. And those previous trends of aggressive Yen weakness appears to have calmed, at least for now. This leaves a lack of fundamental drivers, and correspondingly prices in GBP/JPY remain in a rather unmotivated and unattractive point to look at trend-side strategies. What could change that is an incline over the 151.38 Fibonacci level that had previously helped to set resistance. At that point, 151.38 could be approached similarly to 148.29 with the expectation for prior resistance to become new support.

Alternatively, a break-below the October low of 146.93 can open the door for short-side scenarios. Until then, be careful of playing in-between the cracks of support and resistance in GBP/JPY while the pair attempts to dig-out a longer-term direction.

GBP/JPY Hourly: Lack of Discernible Direction Throughout Much of November

GBP/JPY Technical Analysis: Fibonacci Resistance Becomes Support

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 Drops On Inventory Build, OPEC Plans but Trend May Continue

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Talking Points:

  • WTI Crude Oil Technical Strategy: Buying Dips Above
  • Crude Oil may approach 100% Fib extension at $53.94/bbl
  • Sentiment Highlight: positioning continues to favor a broadly bullish bias in the near term

The price of Crude Oil is off the highest prices of the month as investors digest a recent EIA report showing the first build in crude and crude products in two months and as they await clarity on OPEC+ (a moniker for OPEC and strategic alliances like Russia.) Traders should note the finish to the year has been kind to Crude recently, and the charts are suggesting we could see a similar rally, but traders may have to put up with the volatility that proves directionless until the Nov. 30 meeting of OPEC and allies has passed.

From a broader perspective, the recent 28-month high in crude oil last week, which was boosted by geopolitical tensions in the Middle East between Saudi Arabia that have led to a presence in Lebanon as warnings by the Saudi Royal court against Iran have escalated. Another key piece of industry news that provided price volatility, but may prove directionless in the end, is that Norway’s global leading sovereign wealth fund with $1 trillion in assets has proposed shedding their energy-intensive oil and gas stock portfolio. Their energy exposure is worth by nearly $35 billion, and this move would be to reduce concentration risk should an adverse energy price shock happen again. Another concern over the week came when the IEA reduced their demand forecast and said that $60

From current pricing, a hold of a daily close above the $54 figure (highest close in February) opens the door for a challenge of $52.83-53.94/bbl (September high, 100% Fib extension). Alternatively, a reversal and close back below $50.18 exposes $49.13 (October low, trend line pivot). A hold above support could keep price pushing to the top of the price channel or extend to the 1.618% Fib extension of the Aug-Sep. extremes to $59.08

Unlock our Q4 forecast to learn what will drive trends for the Euro and the US Dollar through year-end!

Crude Oil Drops On Inventory Build, OPEC Plans but Trend May Continue

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

WTI Crude Oil Insight from IG Client Positioning: Pickup in long positioning favors resistance on price advance

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

Crude Oil Drops On Inventory Build, OPEC Plans but Trend May Continue

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 Fall Back to Fibonacci Support as USD Re-Approaches Highs

Price action and Macro.

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Talking Points:

- Gold previously drove above $1,300 as USD-weakness showed-up after Non-Farm Payrolls earlier in the month.

- That theme of Gold strength came unraveled this week as USD-strength showed-up following last week’s CPI report.

- Want to see the DailyFX Q4 Forecast on Gold and the U.S. Dollar? Click here for full access.

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In our last article, we looked at Gold prices slipping back-below the $1,300 psychological level after bullish drive showed-up on the heels of the October NFP report. That print saw an abysmal number of -33k, and this led to a continuation of the USD-weakness that had become so commonplace in the first three quarters of the year. In short order, prices ran from a low just above $1,260 to a high above $1,305; but as we had written on Monday, if buyers were unable to hold support above the key figure of $1,300, a bearish retracement was likely around-the-corner. That’s what showed for most of this week as prices moved down to find support around the Fibonacci level at $1,278.76.

Gold Daily: Current Support at 61.8% Retracement of July-December, 2016 Bearish Move

Gold Prices Fall Back to Fibonacci Support as USD Re-Approaches Highs

Chart prepared by James Stanley

In our previous article, we looked at down-side targets at $1,296, $1,289, $1,284 and then $1,277.83; all of which have cleared. We had also mentioned that for bullish approaches, traders would likely want some element of a higher-low to show in order to confirm the potential for that theme’s attractiveness. That hasn’t happened yet, and this leaves Gold prices in a rather unworkable spot as we approach the weekend.

For next week, traders can look for a break of near-term support around $1,278.76 to open the door to for bearish continuation. Down-side targets can be cast towards prior points of swing-support at: $1,275, $1,267.50, $1,261, $1,254.06 followed by another run at the $1,250 psychological level. The prior swing-high around $1,291 obviates the bearish stance, and opens the door to the possibility of top-side setups as a re-test of $1,300 would appear likely.

Gold Prices Fall Back to Fibonacci Support as USD Re-Approaches Highs

Chart prepared by James Stanley

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

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Silver & Gold Coiling Towards a Breakout, but in Which Direction?

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

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What’s inside:

  • Silver and gold price contraction setting up for volatility to come shortly
  • Silver has the cleaner of the two patterns, but need to wait for breakout rather than predict
  • Moves could be fairly substantial once we finally have a resolution

What is expected to drive Gold & Silver into year-end? To find out, check out the DailyFX Q4 Forecast.

Both major precious metals – gold & silver – are carving out solid-looking symmetrical triangles, with the latter having the cleanest pattern. This sets the sector up for a move to come shortly. We’ll start with a look at silver since conviction is highest in its formation based on symmetry.

The contraction began over a month ago, with price swings now bringing silver very near the apex of the triangle. A breakout looks to be within days at most. The patterns hold a neutral bias at this juncture, but with the underside trend-line of the formation extending higher since July, a breakdown may prove to be the most powerful possible outcome. On the top-side, the 200-day MA has been helping shape the triangle, with yesterday’s rejection-day the most recent attempt to cross above. Whether the break comes lower or higher, the height of the pattern points to a measured move target (MMT) of about $1.35 from the apex. That could put silver at the September high or on approach of the July low. In either event, the move looks likely to be material.

Silver: Daily

Silver daily chart

Naturally, if one precious metal is in the process of making a big price move, or contracting in this case, then the other is doing similar. The symmetrical triangle in gold isn’t quite as clean in silver, but nevertheless the same outcome is anticipated once a breakout is confirmed. There is a key trend-line rising up from the December low which is in confluence with the apex of the triangle, and the 200-day MA aligns not far below. A breakdown out of the pattern would also require the December trend-line to be broken and the 200 is not likely to hold. The measured move targets (MMT) are ~1323 on a top-side breakout and ~1225 on the down-side. The key, again, is to wait for a confirmed break before taking action. Anticipating the breakout, or even worse ‘flip-flopping’ with each price swing can lead to unnecessary losses. It's best to take a reactionary approach with these patterns.

Struggling right now, or just want to learn more about trading psychology? –Check out this guide, Building Confidence in Trading.

Gold: Daily

Gold daily chart

For more technical analysis articles written by Paul, see his bio page.

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.


US Dollar Index Closes In On Strongest Weekly Gains of 2017

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

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Talking Points:

  • US Dollar Index Technical Strategy: Anticipating further upside above 92.55/82
  • Market shift of ECB expectations opens road for further USD gains
  • Sentiment Highlight: EUR/USD bearish bias from retail gives warning for further DXY weakness

The European Central Bank may have set the table for US Dollar Bulls to enjoy a fine fourth quarter this week.

On Thursday, President Mario Draghi caused a major shift in positioning as evidenced from multiple markets that were pricing in EUR strength over the coming quarters unwinding. The takeaways from Thursday was an assurance from the ECB was that the market should not worry about ECB rate hikes, which was something the market was pricing in before the meeting. Draghi also discouraged the use of the word taper (the wind-down of QE) as the ECB will be looking to provide substantial market support going forward, which caused the EUR to eventually fall below 1.16 and the DXY to break above 95.

This week, the US Dollar has traded to a three month high with sentiment rising and favoring further DXY strength going forward. On the charts, the significant development this week was the close above the confluence of resistance near 94.20. The zone around there combined three different technical focuses. First, the mid-August corrective/lower high was at 94.15 followed by a 161.8% extension at 94.20 of the initial move higher when the DXY was seen as too oversold in early September given possible rate hikes at 91.01 to the September 14 high of 92.65. Lastly, a price channel that has framed price action for most of 2017 also predicted price pressure developing above 94. The close this week that accounted for the highest weekly gain of 2017 likely indicates a shift in behavior toward the DXY?

From here, only a daily close below 92.66would open the door for challenging the current Bullish reversal. The first key upside focus is 95.25 (61.8% retracement of the June-September range.) Alternatively, a reversal back below the 92.66 exposes a likely continuation of the downtrend that would first target 91.53 (Sept. 20 low, first corrective higher low.)

Unlock our Q4 forecast to learn what will drive trends for the US Dollar through year-end!

US Dollar Index Closes In On Strongest Weekly Gains of 2017

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

Insight from IG Client Positioning: Pickup in long positioning favors resistance on price advance

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

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

US Dollar Index Closes In On Strongest Weekly Gains of 2017

EURUSD: Retail trader data shows 40.7% of traders are net-long with the ratio of traders short to long at 1.46 to 1. The number of traders net-long is 22.8% higher than yesterday and 18.0% higher from last week, while the number of traders net-short is 5.2% lower than yesterday and 2.7% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD 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 EURUSD price trend may soon reverse lower despite the fact traders remain net-short (emphasis added.)

---

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

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S&P 500, Dow Jones Price Sequences Leave Market in Limbo

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

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What’s inside:

  • S&P 500 rising wedge broke, but consolidation may be as bearish as it gets from here if no turn lower again soon
  • Dow Jones carving out a possible H&S top, but could also be a consolidation pattern
  • Market participants look likely to be best served being patient and waiting for a bit more clarity to present in the days ahead

Check out the DailyFX Quarterly Forecasts to find out how 2017 may end for global stock markets.

Last week, when we looked at U.S. indices, the S&P 500 and Dow Jones were both flashing signs of a forming a ‘mini-top’. Not the top, but a top which could lead to a minor pullback. Since then, we’ve seen a little bit of a decline, but is has been anything but a clean process and smacks more of a consolidation sequence so far.

The S&P 500 rising wedge break is still in play, but about to come off the board given how close the market is to a new high. If we are to see a turn lower, it needs to develop very soon. The June slope, which held as support on several occasions since last month (most recently on 11/14), was broke for a day (11/15) before being recaptured yesterday. Indeed, things are becoming sloppy. The thinking on this end, is that it would be best to see a nice horizontal period of trading, or consolidation, before breaking out into year-end. But we’ll see if the market wants to cooperate.

Check out this guide for tips on Building Confidence in Trading.

S&P 500: Daily

S&P 500, Dow Jones Price Sequences Leave Market in Limbo

The Dow isn’t presenting us with much better clarity than the broader S&P, but does have one potentially bearish price sequence taking shape in the form of a ‘head-and-shoulders’ pattern (Most easily visible on the hourly time-frame.) The Dow will need to turn down right about now and subsequently break the ‘neckline’ before we have validation, but it’s a scenario worth keeping in mind. Price action could just continue to move sideways, too, and a healthy period of consolidation take shape. As said a minute ago, that could be a good thing for setting up a long-trade later.

The bottom line: The market is still extended and generally choppy. There isn’t likely to be a tremendous amount of momentum showing up in either direction, and traders will need to continue to pick their spots wisely, or stand aside all together until clarify presents itself.

Dow: Hourly

S&P 500, Dow Jones Price Sequences Leave Market in Limbo

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


DAX Technical Analysis: Souring Risk Appetite & Rising Euro Weighing

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

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What’s inside:

  • DAX breaking down, testing important support
  • Global risk appetite turned on its head, pressuring stocks, but so is…
  • The euro strengthening and busting the ‘head-and-shoulders’ pattern

Find out where our analysts see the DAX and Euro ending the year in the DailyFX Q4 Forecasts.

Last week, when we looked at the DAX we were discussing the double tailwind in place for major European markets, strong global risk appetite for stocks and a weak euro. Both of which went from supportive to destructive as stocks, globally, are in retreat mode and EURUSD isn’t making good on the topping ‘head-and-shoulders’ pattern. More on the euro in a bit…

The Nikkei, which was the biggest upside impresser in recent weeks, put in an extremely violent turnaround day last week after a ~20% run. It is likely to rest or keeping pulling back for now. U.K. stocks have been weak since the FTSE 100 failed to cross over the 7500-area with any real conviction for the fourth time since June. In the world’s largest stock market – the U.S. – the S&P 500 has been a hold-out, but showing signs of vulnerability as discussed in yesterday’s webinar.

Getting to the technical picture in the DAX, specifically, it’s at a bit of spot here as it breaks down through the top-side trend-lines extending over from peaks in 2000 and 2015. This top-side slope proved problematic for much of last month before the German benchmark launched higher on the 10/26 ECB meeting. It was big resistance, but not looking to be big support right now. The area right around 12900 marks the bottom of that multi-week consolidation then, and also the prior June record high. This will be important to hold. This week.

With the DAX outside of the nice neat upward sloping channel lines off the August low, a failure to turn higher and willingness for dip-buyers to step in aggressively would be a warning sign that we are in for a deeper retracement, with the mid-12600s in focus.

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

DAX: Daily

DAX Technical Analysis: Souring Risk Appetite & Rising Euro Weighing

Keep an eye on the euro, it’s in the process of completely wrecking the ‘head-and-shoulders’ top it began dropping lower from on the ECB meeting. The crossing above the trend-line off the September high is a sign that more momentum may be on its way. With the one-month inverse correlation of the euro to the DAX sitting at -85%, the single-currency's impact is not going unnoticed.

EURUSD: Daily

DAX Technical Analysis: Souring Risk Appetite & Rising Euro Weighing

Bottom line: If we see weakness out of global stock markets and a failure for buyers to soon show up along with further strength out of the euro, the DAX could be in for a bit of a tough stretch.

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.


S&P/ASX 200 Technical Analysis: Rally to Resume After Pullback?

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The ASX 200 has raced up to new 10-year highs
  • However, the process has been rapid and exhausting
  • Now a short-term uptrend is under threat but this could be the measured consolidation bulls will have hoped for

New to all this financial market trading? The free DailyFX guide is right here and it is all yours.

The ASX 200 has had a fabulous run higher but has arguably long needed a little pause for reflection.

Could it now be getting one? Very probably.

November 7’s push above the psychologically notable 6,000 level took the index into highs not seen for ten-years. This up-move came in concert with gains for global indexes and after this year’s long parade of record Wall Street highs. However, the push also came at the tail end of a febrile, month-long run up which had seen the index become quite severely overbought.

It is now testing the lower boundary of a short-term uptrend channel which has been just about in place since October 20. I say “just about” because the channel has already been penetrated to the downside once, on October 27. That day saw an odd trading session in which the ASX closed about where it opened despite trading a wide range. It’s possible that the index should really have begun to consolidate that day and that the push higher since has lacked much of the bullish conviction which preceded it.

S&P/ASX 200 Technical Analysis: Rally to Resume After Pullback?

That’s not to say of course that anything more sinister need be under way, or that further, sharper falls need necessarily be feared. At current levels the ASX is within a whisker of the first, 23.6% Fibonacci retracement of its climb from October 4.

It’s reasonable to suppose that a much-needed consolidation is in place which will find support between here and the second retracement level. That comes in at 5899.0.

S&P/ASX 200 Technical Analysis: Rally to Resume After Pullback?

If the index slides below that level, then the bulls may find themselves with work to do if the entirety of that climb is not to come under question. A lot of near-term support would by then have given way.

Those bulls have got a a task on their hands anyway. They need to recapture that 6,000 level and make it a platform for further gains. Another failure to do will raise the risk of a bearish, “double-top” formation but, as things stand, consolidation and a further push higher looks like the most likely base case.

Right now the index needs to close above the 5952 level on a daily basis to keep its short-term uptrend on the rails. Watch that level carefully as Tuesday’s trading winds down.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


Nikkei 225 Technical Analysis: This Week’s Low Badly Needs To Hold

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Nikkei has had a stellar run
  • Now some of that is being retraced
  • So far price action says “rethink” rather than “regret” but caution is still warranted

Just getting started in the financial market trading world? Our beginners’ guide is here to help

The Nikkei 225 has looked in dire need of a rest for some time. Now it seems to be getting one. But is that all it’s getting?

The breakneck climb from early September saw the Tokyo stock benchmark rise to highs not seen for more than 25 years. Recent peaks had been unmatched since the dawning days of January 1992, and they came backed up by gains for other global bourses. However of course they also saw the index become grievously overbought. A 4000-point climb in a little over two months will have that effect.

Now the index has begun to retrace and that might be no bad thing. So far at least market action suggests a reasonable pause to re-group rather than a sudden outpouring of regret at all this autumn bullishness. Wednesday’s intraday low is the nadir of the pullback so far. It came in at 21,818 – exactly at the second, 38.2% retracement of the rise up from September 8’s lows.

Nikkei 225 Technical Analysis: This Week's Low Badly Needs To Hold

The first retracement of that climb was 22431.9. It gave way quickly and was abandoned as part of the Nikkei’s fall last Monday. However, the second seems to be offering bears a rather sterner test. For as long as it does then the Nikkei’s slip looks sensibly consolidative and need be no bar to a resumption of gains once it fades out.

With this in mind, Friday’s weekly close could be a good, near-term sentiment indicator. If our retracement level continues to staunch losses beyond that point, then the area between it and last week’s close of 22,672 to the upside would seem a plausible consolidative range. It might also be close enough to recent highs to give the bulls fresh hope. After all the first test of the long climb would then seem to have been passed with some aplomb.

Nikkei 225 Technical Analysis: This Week's Low Badly Needs To Hold

They might have considerably less hope, however, if 21,818 gives way. That event would put pressure on 21,321.8, by which point fully 50% of the climb would have been erased. Below that the bulls would have a lot of work to do to just to hold on, never mind get another assault on the year’s highs on track.

Indeed, a slip under that level might be the first clear sign that the index was no longer merely pausing but more seriously rethinking. But we’re not at that point yet.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


FTSE Technical Analysis: Damaging Week Paves Path for More Selling

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

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What’s inside:

  • Last week’s selling caused damage, global appetite for stocks diminishes
  • Support zone may provide bounce, but lower low suggests it could break
  • Looking to support at 7385, 7315/290 on a breakdown

Find out in the DailyFX Q4 Forecastswhat is expected to drive the FTSE & Pound through the end of the year.

The FTSE struggled for several days around a big area of resistance in record territory before turning aggressively lower last week. The UK index wasn’t alone, the DAX & Nikkei are a pair of other major global players which have taken it on the chin in recent sessions. The U.S. is positioned to be next. Risk trends may continue to be unfavorable for stocks across the board.

This morning the footsie is bouncing from a decent area of support to start the week, but that may be all it turns out to be. The market has clearly separated itself from the Feb 2016 trend-line, so we can safely remove that from the equation for now, and maybe for quite a while. Last week’s sell-off was a nasty one, taking out several weeks’ worth of price action in one clip. The trend-line off the September low was also broken in the process.

But support is support until it isn’t. The negative is – Friday’s close created a lower-low from the 10/25 swing-low. Between the forceful move lower and undermining of that swing low, a bounce which creates a lower high could set the FTSE up for a break of support. The next level to look to, or moving average in this case, is the 200-day MA currently at 7385 (and rising). Below there, the next area of significant price support doesn’t arrive until the ~7315/290 vicinity. The next trend-line doesn’t arrive until the low-trajectory line crossing over from the April low beneath the September low.

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FTSE: Daily

FTSE Technical Analysis: Damaging Week Paves Path for More Selling

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.