Support & Resistance

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EUR/USD Technical Analysis: 11-Month Down Trend at Risk

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro challenging 11-month down trend resistance above 1.08 mark
  • Clear-cut bearish reversal signal needed to initiate short position

The Euro has recovered to the highest level in almost two months against the US Dollar, with prices testing trend-defining chart resistance above 1.08. A break above this barrier would overturn the downward trajectory defining price action since early May 2016.

A daily close above 1.0828 (falling trend line, 38.2% Fibonacci retracement) initially opens the door for a test of the 50% level at 1.0978. Alternatively, a turn back below resistance-turned-support at 1.0682 paves the way for a challenge of the 1.0494-1.0528 area (February 22 low, 23.6% Fib expansion).

While prices are perched at a logical place for downward reversal, the absence of a defined topping signal suggests it is premature to enter short for now. Opting for the sidelines seems more prudent until adequate confirmation presents itself.

Are other traders buying or selling the Euro, and what does that hint about the trend? Find out here!

EUR/USD Technical Analysis: 11-Month Down Trend at Risk

USD/JPY Technical Analysis: JPY to 2017 Highs vs USD, Atop SW Ranking

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

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Talking Points:

JPY strength, alongside EUR strength, has become the lead story after the Federal Reserve’s Dovish Hike in mid-March. On Wednesday, the Japanese Yen surged to the highest level (which took USD/JPY lower) of 2017, and it’s uncertain what would stop the trend. The low on Thursday morning was 110.63, but there is scope for a move to the 50% retracement of the post-election rally should JPY strength continue, which looks to be developing from the JPY money markets.

Japanese Money markets via, the 3-month JPY LIBOR have risen more aggressively after the Dovish-Hike than USD LIBOR. The decreasing premium has aligned with JPY strength against the USD. While the BoJ is not expected to give the Fed a run for the mosthawkish central bank, a decreasing premium could continue to boost JPY against USD should the trend continue.

March 22, 2017, Strong/ Weak Rating (JPY Strong/ NZD Weak)

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On the chart below, which is shown in logscale, you can see that the price is also sitting below the bottom of two price channels. The larger channel is drawn with Andrew’s Pitchfork, which has framed price very well, despite the post-election volatility. In addition to trading below thesupport of the larger channel, we are also trading below Bear Flag or a corrective channel support.

The focus should now be on signs of continuation that a breakdown from Bear Channel support may open up a move toward 110/108 on JPY strength, which aligns with the 50, & 61.8% retracement of the post-election price range.

Despite the bearish tone, a trade above 114.48 would show an overlapping price structure that would negate a near-term Bearish view. Until then, we’ll keep an eye for a price break of channel support given the larger environment that may support pending JPY strength and USD weakness.

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D1 USD/JPY Chart: USD/JPY Trading < Price Channel Support, Possible Bear Flag Forming

USD/JPY Technical Analysis: JPY to 2017 Highs vs USD, Atop SW Ranking

Chart Created by Tyler Yell, CMT

USD/JPY Sentiment: Japanese Yen looks set to gain vs. weak USD

USD/JPY Technical Analysis: JPY to 2017 Highs vs USD, Atop SW Ranking

USDJPY: Retail trader data shows 75% of traders are net-long with the ratio of traders long to short at 3.04 to 1. In fact, traders have remained net-long since Jan 09 when USDJPY traded near 116.998; theprice has moved 3.3% lower since then. The combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias. (Emphasis Mine)

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Shorter-Term USD/JPY Technical Levels: Thursday, March 23, 2017

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

USD/JPY Technical Analysis: JPY to 2017 Highs vs USD, Atop SW Ranking

Contact and discuss markets with Tyler on Twitter: @ForexYell


GBP/USD Technical Analysis: Range Persists, but BoE on Defense with Inflation

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Long-term: range-bound; short-term: bullish.
  • Dollar-weakness after the FOMC rate hike last week started the bullish trend in Cable – but it was this week’s UK inflation print that’s extended the move with the potential for more near-term up-side.
  • If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our Speculative Sentiment Index Indicator (SSI).

In our last article, we looked at the multi-month range in GBP/USD while price action was sitting very near support ahead of some key event risk. On the immediate horizon was the Federal Reserve’s well-telegraphed rate hike, another Bank of England rate decision in which little was actually expected, and yet another example of higher-than-expected inflation out of the U.K. We discussed these fundamental themes in-depth in last week’s Fundamental Forecast for the British Pound.

The net result for all three of these drivers was a stronger spot price in Cable. The Federal Reserve rate hike produced Dollar-weakness as the Fed inserted a heavy dose of caution and dovishness along with that move. The Bank of England rate decision saw the first vote within the MPC for an actual rate hike, as Kristin Forbes dissented against keeping rates pegged to the floor; and then the meeting minutes indicated that Ms. Forbes may not be alone in her dissenting at future rate decisions.

GBP/USD Technical Analysis: Range Persists, but BoE on Defense with Inflation

Chart prepared by James Stanley

The big driver here is that potential for higher-than-expected inflation. After the ‘sharp repricing’ in the value of the British Pound around Brexit and then the ensuing dovish campaign from the Bank of England, the prospect of rising inflation seemed arithmetic. When a currency falls by 20% in value in a very short span of time, companies importing into that economy are going to take notice. And they’ll likely adjust prices-higher to account for the weakened exchange rate because they don’t want to see their profit margins disintegrate.

So, ever since the ‘flash crash’ in early-October, that’s been the prerogative in Cable: Looking for higher rates of inflation in order to read when the BoE may a) step away from emergency-like accommodation and, eventually b) start looking at potential rate hikes to stem rising inflationary forces.

On Tuesday of this week we got the most recent data point for UK inflation, and this is data for the month of February. Inflation came-in at an annualized rate of 2.3%. This is well-above the BoE’s target of 2%, the expectation for inflation during February to have been 2.1%; and heavily above the print in January of 1.8%. Trades have rushed to close up prior short-positions as price action in Cable has squeezed higher; with current resistance showing off-of the 1.2500 psychological level.

This carries the potential for bullish-continuation. The likely determinant for just how much continuation is probably going to come from how deep this run of USD-weakness may last. For those looking at longer-term setups, the range in Cable still persists and this should denominate approaches until the range breaks; in one direction or the other. If this recent bout of strength can pose a test beyond resistance, we may have the possibility of a bullish trend developing in GBP/USD. But this would likely need to be coupled with a strong break-lower in the Greenback, which can be difficult to surmise in an environment in which we just got a rate hike a week ago.

GBP/USD Technical Analysis: Range Persists, but BoE on Defense with Inflation

Chart prepared by James Stanley

For those that are looking to press near-term strategies, the current zone of resistance at 1.2500 could be a big ‘tell’ level. If bulls are able to drive prices above this level, there’s another potential area of resistance at 1.2552. This could be an ideal area to look for secondary resistance; at which point 1.2500 could be re-assigned as support in the effort of catching a higher-low on the near-term Cable chart:

GBP/USD Technical Analysis: Range Persists, but BoE on Defense with Inflation

Chart prepared by James Stanley

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

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USD/CHF Technical Analysis: Clean Slice Through Parity Support

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at a bearish channel break in USD/CHF with a significant zone of support sitting just underneath price action. This zone ran from the psychological level at parity up to the Fibonacci level at 1.0038; but perhaps most importantly, this area had exhibited numerous iterations of support and resistance over the past couple of years.

At last week’s rate hike from the Federal Reserve, an aggressive bout of USD-weakness transpired, and this drove Swissy price action below this zone of support without so much as a pause on the hourly chart:

USD/CHF Technical Analysis: Clean Slice Through Parity Support

Chart prepared by James Stanley

With this type of bearish momentum, in which even longer-term support levels show a pittance of actual support – traders need to take notice, particularly if trying to time a reversal. The simple fact that bulls were not able to hold-up price action during a sell-off at a key level is deductively-highlighting the prospect for bearish continuation.

The zone around .9850 is particularly interesting for that next pause-point on the move-lower. And if this doesn’t hold, just below, we have an approximate 50-pip zone of potential support that could be very interesting if it comes into-play. This is identified on the S2 zone of support below. For near-term resistance, we have a confluent zone around .9950 that could become attractive for bearish-continuation moves; with stops wedged above the level of parity.

USD/CHF Technical Analysis: Clean Slice Through Parity Support

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: A Triple Top in the Works?

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Bearish candlestick pattern hints at topping below 0.78 once again
  • Risk/reward parameters skewed against entering short trade for now

The Australian Dollarput in a Bearish Engulfing candlestick pattern, hinting prices may have topped below 0.78 figure against the US Dollar once again. A reversal lower would mark the second time that prices failed to overcome resistance dating back to in August 2016.

Near-term support is at 0.7659, the 14.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 23.6% level at 0.7604. Alternatively, a push above double top resistance at 0.7760 paves the way for a test of the April 2016 high at 0.7835.

Prices are too close to near-term support to justify entering a short trade from a risk/reward perspective. Either a bounce or a confirmed breach of near-term support is needed to pave the way for an actionable entry opportunity. In the meantime, opting for the sidelines seems most prudent.

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AUD/USD Technical Analysis: A Triple Top in the Works?

USD/CAD Technical Analysis: G20 Wildcard & FOMC Could Lift USD/CAD

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

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Talking Points:

The Canadian Dollar is allowing USD/CAD to move higher despite a recent setback in the USD. Much of the focus for CAD weakness has been placed on the upcoming G20 meeting where US Policy is expected to be the main focus and the weakness in Oil. Correlation has picked up between Crude Oil and the Canadian Dollar at the wrong time for CAD Bulls.

Recent reports came out that Saudi had cut back the amount of Crude Oil output they were trimming in part of the accord agreed to last November with OPEC. Given the concern of oversupply relative to demand at the hand of US Shale producers, Oil traders took this as an opportunity to further cut longs with Hedge Funds likely quick to exit the trade as many were long and looked for a move to $60/70 range.

The other issue on the table is how Canada’s major trading partner, the United States will proceed with trade after providing a statement at the G20 Finance Minister in Germany this weekend. Anything statement that hints at protectionism or ‘Buy American, Hire American,’ could carry USD/CAD further still. The focus remains appropriately at the December high (1.3598) and beyond given the structure and momentum of the uptrend.

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USD/CAD Technical Analysis The uptrend looks to be firing on all cylinders as USD remains supported ahead of FOMC rate announcement on Wednesday. The sharp rise in the 1.30/31-zone aligned with the May-December range 50% retracement opens up the possibility that we’re in-line to see another rise similar to May-December of ~1137.8 pips or a Fibonacci ratio of that amount fromthe late-January low.

If you look at the current 2017 low of 1.29684 and project the May-December range higher, you will notice that half the range or 568 pips brought us to the high last week of 1.3537, where we’ve since pulled back. However, a continuation higher of 61.8% or 100% expansion of the May-December range from the 2017 low of 1.2968 would open up targets beyond the December high of 1.3598 toward 1.36716 and 1.41062 respectively.

The recently overbought RSI(5) has pulled back, which may open up the opportunity if the trend continues higher for traders looking for longentries. Naturally, the success of the trade will depend on trend continuation.

What Did The Analysts Learn After Trading Of All 2016? Click Here To Find Out

D1 USD/CAD Chart: Continuing to Trade Higher In Bullish Channel

USD/CAD Technical Analysis: G20 Wildcard &amp; FOMC Could Lift USD/CAD

Chart Created by Tyler Yell, CMT

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Shorter-Term USD/CAD Technical Levels for Tuesday, March 14, 20173

USD/CAD Technical Analysis: G20 Wildcard &amp; FOMC Could Lift USD/CAD

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

T.Y.


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

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Short at 0.7205
  • Kiwi Dollar down trend may resuming down trend vs. US cousin
  • Break of near-term support paves the way back below 0.70 figure

The New Zealand Dollar is attempting to resume the two-month down trend against its US counterpart following a corrective recovery. Prices bounced last week after testing the 0.69 figure, spurred on by the outcome of the FOMC monetary policy announcement (as expected).

From here, a daily close below the 14.6% Fibonacci expansion at 0.7020 opens the door for a test of the 23.6% level at 0.6976. Alternatively, a reversal above 0.7075 (trend line, 38.2% Fib retracement) sees the next upside barrier marked by the 50% retracement at 0.7133.

A short NZDUSD position was triggered at 0.7205 and partial profit was subsequently booked after the trade hit its first objective. The rest of the trade remains open to capture renewed downward momentum. The stop-loss remains at the breakeven level (0.7205).

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

EUR/GBP Technical Analysis: Rejected at Two-Month High

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro turns lower as expected after forming bearish candle pattern
  • Risk/reward considerations argue against entering a trade for now

The Euro turned lower against the British Pound as expected after prices put in a bearish Dark Cloud Cover candlestick pattern having hit a two-month high. The single currency is attempting to regain upside momentum but thus far, bottoming confirmation is elusive.

A daily close above support-turned-resistance at 0.8640, the 38.26% Fibonacci retracement, opens the door for a retest of the 23.6% level at 0.8696. Alternatively, a push below the 50% Fib at 0.8595 sees the next downside barrier marked by the 61.8% retracement at 0.8550.

An actionable trade setup is absent at this time. Perhaps most critically, the available trading range is too narrow relative to ATR to justify taking a trade from a risk/reward perspective. As such, observing from the sidelines until a better-defined opportunity presents itself seems best for now.

What makes EUR/GBP one of the top DailyFX trades for 2017? See our forecast and find out!

EUR/GBP Technical Analysis: Rejected at Two-Month High

EUR/JPY Technical Analysis: Welcome Back, Big Figure (¥120.00)

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at the potential for bullish continuation prospects in EUR/JPY. After the ECB meeting from the week-prior, the pair had ran-up to set a new short-term high; after which a retracement of that bullish move had set-up a ‘higher-low’ around a key zone of support in the range between 121.65-121.95.

This support did not hold; and since then, we’ve had bears envelop near-term price action in EUR/JPY as the pair has shredded down to a deeper, perhaps more pivotal level of potential support. This level around ¥120.00 is very important to EUR/JPY price action; as just ten pips below we have a key Fibonacci retracement level at 119.90 – which is the 61.8% retracement of the 25-year move in the pair (taking the highest high (2008) and lowest low (the year, 2000) of the past 25 years).

EUR/JPY Technical Analysis: Welcome Back, Big Figure (¥120.00)

Chart prepared by James Stanley

Traders would likely want to avoid chasing the move-lower from here. This near-term burst of weakness could certainly carry continuation potential; but the prospect of selling whilst at a key area of long-term support could be daunting.

For those that do want to sell, they’ll likely want more information before plotting that strategy: Either a continued down-side run that could open the door for utilizing ¥120.00 as ‘lower-high’ resistance; or perhaps letting price action run up to a shorter-term swing point such as ¥120.82. Either of these methods could make for a more attractive way of looking for continuation rather than just chasing the move-lower.

On the bullish side, traders would likely want to see some element of support before looking to get long. If we can get some evidence of such, the prospect of a reversal setup could become considerably more attractive. But – if no support around ¥120.00 – no reversal. Catching falling knives can be a perilous task.

EUR/JPY Technical Analysis: Welcome Back, Big Figure (¥120.00)

Chart prepared by James Stanley

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

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GBP/JPY Technical Analysis: The Big Move Awaits

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term: Congested; Short-Term: Congested.
  • GBP/JPY continues to display some element of congestion; but once resolved, GBP/JPY looks ready to stage a ‘big move’.
  • If you’re looking for trading ideas, check out our Trading Guides. And if you’re looking for ideas that are more short-term in nature, please check out our Speculative Sentiment Index (SSI) Indicator.

In our last article, we looked at the continued congestion in GBP/JPY as the next directional move had continued to prove elusive. And a week later, we have little additional information that would indicate that the next directional move is afoot. While the pair was previously driven-lower with weakness around the British Pound from a combination of a) a dovish Bank of England and b) little hope for that changing as long as inflation remained subdued; more recently we’ve had a re-emergence of Yen-strength as risk tolerance has waned after last week’s rate hike from the Federal Reserve.

The net impact of all of this has been even more congestion…

So, rather than dial in on an hourly chart today in the effort of deciphering where this chop may resolve itself - we’re going to go tops-down in the effort of determining intermediate-term strategy in GBP/JPY.

Taken from the ‘Trump Bump’, price action in GBP/JPY is still bullish in nature as we’re above the 50% Fibonacci retracement of the most recent major move on the Daily chart. This level comes in at ¥136.65 – and notice how this level caught the bottom of an aggressive retracement in December and January. After this support level came into-play, the bulls returned and the up-trend around the ‘Trump Bump’ remained alive.

GBP/JPY Technical Analysis: The Big Move Awaits

Chart prepared by James Stanley

After that support inflection came-in, it looked as though bulls were ready to re-take control; and they did, for approximately 800 pips. But that strength couldn’t last long enough to set a new high, as sellers returned to produce a ‘lower-high’ as shown on the 4-hour chart below:

GBP/JPY Technical Analysis: The Big Move Awaits

Chart prepared by James Stanley

So, the net of the two above charts is a bigger picture up-trend with a shorter-term bearish move as a retracement of that up-trend. The complication arises when we look at how supply and demand has shifted as GBP/JPY has traded at or near fresh short-term lows. Frankly, each new low has seen bears dry up while bulls bring price action back. There has been a dearth of bearish directional movement whilst below support; and this makes the under-side of GBP/JPY unattractive for momentum-based strategies.

GBP/JPY Technical Analysis: The Big Move Awaits

Chart prepared by James Stanley

The primary issue with the under-side of GBP/JPY price action at the moment is a lack of seller conviction after new lows have been made. This can be indicative of a ‘bigger’ support level lurking below that sellers don’t want to trigger in-front of for fear of catching a bullish reversal. So the net setup would be a type of a descending wedge with an under-tested area of support. But we can apply the same logic: Using a break below this key long-term support level at 163.65 to open the door for bearish strategies; and a top-side break above the descending trend-line (which is also confluent with swing-high resistance) to open the door for bullish continuation strategies:

GBP/JPY Technical Analysis: The Big Move Awaits

Chart prepared by James Stanley

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

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USD/CNH Technical Analysis: 6.8 in Sight Ahead of US 3Q GDP


Talking Points:

- Pair keeps pushing higher after breaking resistance at the January 7 top around 6.7584

- 6.8 handle now within touching distance as we approach US 3Q GDP numbers

- Pullback to support might initiate further buying

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The US Dollar keeps printing fresh record highs versus the Chinese Yuan in offshore trade, as the pair now sits within touching distance from what might prove to be an important resistance level at the 6.8 handle.

The pair surged higher after breaking resistance around the 6.7 handle followed by the 2016 January high around 6.7584.

Indeed, momentum still looks strong as we head into today’s key US 3Q GDP numbers, which could prove influential for the pair’s direction in the near term.

As it were, price is now sitting in close proximity to the 6.8 handle, and a break higher seems an important milestone for further gains.

If the pair reverses course, downside moves might still be interpreted as corrective as long as buyers can keep price above the 6.7 level.

The next major resistance levels seem to be the 6.8 handle, and 6.8500 while potential levels of support could be 6.7584 followed by the area below 6.7400 and the 6.7 handle.

USD/CNH Daily Chart: October 28, 2016

USD/CNH Technical Analysis: 6.8 in Sight Ahead of US 3Q GDP

--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com

To contact Oded Shimoni, e-mail oshimoni@dailyfx.com

Follow him on Twitter at @OdedShimoni


CAC 40 Little Changed For The Week

Short Term Strategies, Scalping, Price Action Analysis, and Risk Management

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Talking Points:

The CAC 40 has bounced back from weekly lows, and is now trading up (+0.26%) so far for Thursday’s session. Top Winners for the CAC 40 include ArcelorMittal (+1.58%) and Renault (+1.47%). Top Losers for the CAC 40 currently include Pernod Ricard (-1.54%) and Orange (-1.28%).

Technically the CAC 40 has made little progress this week, and is currently trading just under Monday’s open at 5,018.10. Despite this lack of direction, the CAC 40 may still be considered in a short term uptrend. The Index remains above its 10 day EMA (exponential moving average), which is now found at 5,000.30. Prices have tested this value earlier in the session, and if the CAC 40 remains supported here it opens the Index up to potentially retest yearly highs found at 5,056.20.

CAC 40, Daily Chart with 10 Day EMA

CAC 40 Little Changed For The Week

(Created Using IG Charts)

Intraday analysis currently has the CAC 40 trading back above today’s central pivot, which is found at 4,993.23. If bullish momentum continues, traders may look for points of resistance at the R1 and R2 pivots, found at 5,033.23 and 5,054.03 respectfully. It should be noted that if the CAC 40 trades through today’s R2 pivot, the Index will need to breakout to new yearly highs before reaching the final intraday resistance pivot at 5,094.56.

If prices begin to reverse lower, traders should first look for the CAC 40 to trade back below the previously mentioned central pivot. A move of this nature opens the Index up to test key values of support. This includes the S1 pivot at 4,972.96 and the S2 pivot at 4,932.43. A move to either of these points should be seen as significant. This would place the CAC 40 back below its 10 day EMA suggesting a bearish turn in the short term trend.

CAC 40 Little Changed For The Week

--- Written by Walker, Analyst for DailyFX.com

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Crude Oil Price Forecast: Bearish Evidence Is Gathering Steam

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

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Talking Points:

CRUDE OIL TECHNICAL ANALYSIS Crude Oil showed volatility on Tuesday afternoon ahead of the DoE data when the API weekly print showed Crude Inventories rose 4.53M BBl last week, which further adds to the fear that oversupply is back in the Crude market despite OPEC’s efforts. The Technical focus has solely been on the 200-DMA, which has historically been a key divisor of the market between Bullish and Bearishness. The 200-DMA currently sits at 48.618/bbl as of Tuesday afternoon and price looks to be pushing lower.

Are commodity prices matching DailyFX forecasts so far in 2017? Find out here!

Crude Oil Price Forecast: Bearish Evidence Is Gathering Steam

Chart created using TradingView

One thing that Crude Oil Bulls cannot blame the drop in Oil prices on is the US Dollar. After a dovish hike, the Fed looks set to further frustrate Oil & Dollar Bulls. Now, it appears the focus is on the oversupply from US Shale that could continue to push price lower and possible to the $44/40 zone in the coming weeks if further weakness surfaces.

The price zone in focus if we continue to see price declines is the area encompassing the 38.2-50% retracement of the February-January price range that also houses the November low and the Median Line of Andrew’s Pitchfork drawn off the key pivots in mid-2015 through February. The zone is $44/$40.57. Naturally, a break back above the 200-DMA that aligns with USD-weakness (CL1 to DXY 20-day correlation is -.256) would help turn the focus higher toward the $55/57 zone.

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The price of Crude Oil recently traded below the 200-DMA with RSI(5) registering a bearish extreme. If the price pops higher as it did in April, August, and November of last year, the Bulls may feel as though they have dodged a bullet. However, the Crude Oil market does not have the fundamental support that other commodity sectors like base metals have, which could lead to an eventual breakdown toward the November low of $43.75/42.25.

The increasing oversupply, and lack of buying pressure alongside sentiment seems to favor a further drop in Crude Prices.

H4 USOIL Chart Shows the Price Possibly Set To Breakdown And Push Away From H4 Ichimoku Cloud

Crude Oil Price Forecast: Bearish Evidence Is Gathering Steam

Chart created using TradingView

Crude Has Retail Bulls Hopeful Despite Aggressive Decline Below 200-DMA

Crude Oil Price Forecast: Bearish Evidence Is Gathering Steam

Retail trader data shows 72.9% of traders are net-long with the ratio of traders long to short at 2.69 to 1. In fact, traders have remained net-long since Mar 01 when Oil - US Crude traded near 5424.1; price has moved 10.6% lower since then. The number of traders net-long is 4.7% lower than yesterday and 4.6% lower from last week, while the number of traders net-short is 0.4% lower than yesterday and 14.2% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall.

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

Key LevelsOver the Next 48-hrs of Trading as ofWednesday, March 15, 2017

Please add a description for the image.

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

Contact and follow Tyler on Twitter: @ForexYell


Gold Prices Rally Up to Pivotal Resistance Zone

Price Action, Swing & Short Term Trade Setups

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In our last article, we were looking at aggressively bearish price action in Gold prices as we walked-in to last week’s rate hike from the Fed. And the term ‘rate hike’ is important here rather than ‘rate decision’, because the Federal Reserve had widely-telegraphed their intentions ahead of the move. As we walked into last week’s rate decision it appeared that markets had already priced-in the move (see our prior article, Gold Prices Slide Down the Slope of Despair for further explanation): Gold prices were sitting on a critical support level at $1,200, which is the 50% retracement of the ‘big picture’ move in Gold prices, taking the Bretton Woods-fix of $35/oz up to the 2011 high at $1,920.

But along with that rate hike from the Federal Reserve came a healthy dose of caution. Fed Chair Janet Yellen avoided eliciting any significant hawkish concerns around policy normalization during her press conference; and the Fed’s dot plot matrix was curiously dovish – as the bank did not increase their expectations for rate hikes going out to the end of 2018. As we had walked into that rate hike, the various iterations of Fed-speak were noticeably hawkish. Markets were likely expecting that hawkish Fed-speak to translate into stronger expectations for more aggressive interest rate hikes. When this didn’t happen, markets responded with a strong sell-off in the U.S. Dollar, and a bullish pop in Gold prices. At this point, we’ve rallied up to a huge level in the Gold market, around the $1,250 psychological level.

Gold Prices Rally Up to Pivotal Resistance Zone

Chart prepared by James Stanley

So, this would appear to be another example of markets not ‘buying’ the Fed’s rate hike plans. After eight-plus years of passive accommodation, with numerous starts and stops, markets have come to expect the Fed to err on the side of caution. And given the high degree of uncertainty around the potential for fiscal policy in the United States, coupled with the uncertainty of the continued recovery in the United States; and it can make logical sense as to why that expectation has been built-in.

For those that do want to press bullish-themes in the Gold market, awaiting a break of the $1,250 level could make the prospect of additional top-side considerably more attractive. This is a big level for Gold prices, as this was the ‘Brexit swing-low’ as well as being the 50% retracement of the ‘big picture’ move; and we’ve seen numerous support/resistance inflections off of this level. Traders can let bulls drive price action beyond this resistance to highlight the potential for deeper movement, at which point this current level of resistance can be re-assigned as support in the effort of bullish continuation.

Gold Prices Rally Up to Pivotal Resistance Zone

Chart prepared by James Stanley

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

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Silver Price Trading in ’Open Space’; Leaning on Gold, USD for Direction

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

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What’s inside:

  • Silver lacks trading clarity
  • Gold backed off from trend-line resistance yesterday
  • DXY has room to fall before finding support

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As we discussed on Wednesday, clarity for silver prices is lacking and that we are running with the technical developments in gold and the US dollar for directional cues. Gold ran aground yesterday at the trend-line extending down from August. This puts gold, and with it silver in a somewhat bearish position. Silver also put in a minor reversal day, but not off any meaningful levels, which, again, without any substantial levels to work off of makes operating in silver a difficult endeavor at the moment.

Gold: Daily

Silver Price Trading in ‘Open Space’; Leaning on Gold, USD for Direction

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If we look to what’s been going on with USD, then we should continue to expect precious metals to at the least hold a bid, if not move higher. The US Dollar Index (DXY) still has room to go before it finds meaningful support.

DXY: Daily

Silver Price Trading in ‘Open Space’; Leaning on Gold, USD for Direction

Created with TradingView

So there you have it, gold at resistance, the US dollar looking lower. Generally, we would run with the yellow metal as more important, but conviction in further USD weakness is high on this end. Now, just because the dollar makes a move doesn’t mean precious metals must do the opposite – correlations, especially in the short-run, fall in and out of favor.

All-in-all, the lack of clarity and given support and resistance aren't in the vicinity of the current price we remain in limbo; and as they say, "when in doubt, stay out."

Silver: Daily

Silver Price Trading in ‘Open Space’; Leaning on Gold, USD for Direction

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---Written by Paul Robinson, Market Analyst

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Dollar Technical Analysis: USD Breaks From Larger Bullish Channel

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Talking Points:

-Dollar Technical Strategy: breaking below on LT trend support, breakdown < 99 opens up downside

-Previous Post: Dollar Technical Analysis: Recent Hikes Have Led To Peaks in DXY

-Mass exodus of institutional USD Bulls in Eurodollars likely to worry DXY Bulls

-If you’re looking for trading ideas, check out our Trading Guides

What if we get a flip of the recent narrative in global bonds? That could be developing if you watch the spread between government bonds with the US on the possible losing side if the observed trend continues. The observed trend has been that the Trump-induced reflation has been outsourced from the US, which has caused a tightening of the premium of US yields to other governments.

As an FX trader who has to keep an eye on fundamentals and themes, bond yields are important to watch. What is worth watching is a possible peaking of the yields (possible bottoming in the price of rates), which would allow other sovereign yields to come closer in line with US Yields. A narrowing of the yield spread could allow a macro mean reversion to develop that would likely mean a stronger EUR, JPY, and GBP as USD comes to a historical norm.

A Breakout Higher In TLT (Long Bond Price) Would Favor Relative USD Weakness

Dollar Technical Analysis: USD Breaks From Larger Bullish Channel

Chart Created by Tyler Yell, CMT

I recently discussed the record Eurodollar short position coming out of the market that would likely cause a ripple effect that leads to a softer USD. Another positioning development worth watching is the positioning unwind of bonds. At the beginning of the month, the speculative short positioning in Bonds (TNX) was at record levels as speculators were confident yields would skyrocket and the price would drop. This confidence is based on inflation overshooting, but the failure for inflation (which is tied to the price of Crude Oil) to outstrip forecasts could leave the record level of speculators on the wrong side of the trade.

After the “Dovish Hike” from the Fed on March 14, we’ve seen a move lower in yields and higher in price that aligns with what we see on the long bond price chart above. The narrative behind the dovish hike was against the reason speculators per the CFTC CoT held a record short position, which was that we’d see inflation pressures pushing the Fed to act. The chart above is of the Long Bond price that could show a completed move lower that is now set to reverse higher, which would narrow the gap between sovereign bonds.

The technical validation level of a stronger move higher that could likely weaken USD given the current correlation would take place on a price closing above 122.14, the late November high.

As noted earlier, a narrowing of the gap

Technical View: The level worth keeping tabs on in the DXY looks to be 99.23, which is the

February low and a little greater than 60 points away from spot on Friday afternoon. For a breakdown in DXY to occur, we’d likely need to see a further rise in the heavily weighted EUR (57.6% of DXY basket), which is fully possible given the US/German 10-Yr yield spread is near the narrowest level in 3-months. Over this week, we’ve seen EUR strength and a further narrowing in US/German spreads favoring EUR strength.

Therefore, keep an eye on a higher price in US rates (lower yields) as well as a stronger EUR and Japanese Yen, which recently hit 2017 highs against USD. Such an environment where DXY underperforms would turn price focus below 99.23 to the 50% retracement of the May-January range of 97.87. This price target would likely take price toward the bottom of the corrective channel drawn on the chart below in blue lines. A breakdown below 97.87 could show a longer-term DXY period of weakness is developing.

For traders looking for life in the greenback, resistance comes in at 101.01, the March 13 low. A break above 101.01 would show an overlap from a previous downtrend that could mean a break higher is developing and should be co-joined with EUR weakness. However, a failure for the price to surpass 101.01 could mean upside remains limited, and the price is merely consolidating before another fall instead of reversing higher. In this scenario, further downside is favored.

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Dollar Technical Analysis: USD Breaks From Larger Bullish Channel

Chart created by Tyler Yell, CMT

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Shorter-Term DXY Technical Levels for Friday, March 24, 2017

Dollar Technical Analysis: USD Breaks From Larger Bullish Channel

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

T.Y.


S&P 500 – Tuesday Sell-off Puts Bearish Price Sequence in Focus

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

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What’s inside:

  • S&P 500 slices through key confluence of trend-lines
  • Lower high, lower low sequence unfolding
  • Other global markets look headed lower, too, general risk aversion looks likely for now

New to the markets? See our Trading Guides.

On Tuesday, when we discussed the confluence of trend-lines off the Feb 2016 and November lows, this is what we had to say: It would require a break of the trend-lines and 2353 to add validation to the notion that we are seeing a deeper decline developing.”

The break on Tuesday was brutal, and without a turnaround soon – damaging. Yesterday’s bounce was meager, and if weak price action (slow upward momentum) continues for a short period of time, then the Tuesday break will likely prove to be the real deal. Market participants have been conditioned to ‘buy-the-dip’ (BTD), which still may be the way to go. Just that it may be prudent to do so later-on at lower prices.

Getting back to the short-term picture: There is a lower high, lower low sequence developing, which, again, is why a weak bounce would set up for more weakness as another lower high is carved out and the bearish sequence furthers itself along.

An ideal scenario in the short-term for shorts would be for the S&P to attempt to trade back above prior support at 2353/54 and fail to close above on a daily basis.

If the market can hold up and build a descending channel, a bull-flag could develop – a scenario which will take time and one we will delve into further at a later time should it come into view.

Other global markets don’t look so hot, and in the case of the DAX and Nikkei – outright bearish. (More on the DAX here, Nikkei here.) Generally speaking, global markets are setting up for a period of ‘risk-off’ and the S&P is likely to head lower for the foreseeable future.

S&P 500: Daily

S&amp;P 500 – Tuesday Sell-off Puts Bearish Price Sequence in Focus

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---Written by Paul Robinson, Market Analyst

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DAX – Breakdown from Bearish Pattern at Risk of Failing

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

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What’s inside:

  • DAX breaks rising wedge
  • Potential for another bearish formation to develop outside of the wedge
  • Needs to turn lower soon, else alternative paths will need to be considered

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The DAX broke down hard on Tuesday from the rising wedge we’ve been focusing on for the past couple of weeks; the break was the official trigger for such a pattern to kick off a momentous move lower. Or so it was supposed’ to be. At the moment, the market has other plans with yesterday’s 1%+ rise coming as a bit of a surprise. If the pattern is to still play out then additional strength from here should be limited, and very soon the market will turn around. But if it doesn’t, then of course we will need to consider alternate paths.

Another formation could come into view as a part of the rising wedge – ‘head-and-shoulders’. The break earlier in the week fleshed out a lower low from 3/8 and should we soon see a turn lower the right shoulder of the pattern could form. It’s just a thought at this time, but would fall in line with the rising wedge scenario still on the table. We still need that right shoulder and a break of the neckline before we can get excited.

Keep an eye on the CAC 40, as we made note of earlier this week it’s trading at a 16 ½ year trend-line.

DAX: Daily

DAX – Breakdown from Bearish Pattern at Risk of Failing

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---Written by Paul Robinson, Market Analyst

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ASX 200 Technical Analysis: Broken Trendline, Heavy Cap

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The ASX has looked stuck for weeks as the year’s peaks prove too high
  • However, it has at least not fallen far
  • Could this change with this week’s trendline break?

The Australian ASX 200 equity benchmark’s 2017 story is in many ways the story of developed-market stocks everywhere.

It entered the year quite triumphant after the long, steep climb which followed Donald Trump’s shock presidential election win. But then – well – it did nothing much of anything except hold on. The ASX hasn’t fallen far this year, but it hasn’t managed to build convincing gains either.

So far, so like most of its peers. But, unlike many of them, the ASX has tried to regain that top twice after its initial rejection on January 10, and failed on every occasion. It arguably made a third brave foray on March 2.

Bluntly, it looks as though the year’s peak around 5185.50 is becoming ever-more formidable resistance.

And there’s more bad news. As it fell this week, the ASX snapped a nice little rising trend line which had been in place for a comforting 32 straight sessions. It gave way on Wednesday. Now admittedly it has not yet done so conclusively. There must still be some hope that the index can fight its way back above it. Indeed, it will have accomplished that on Friday if it can close above 5765. That’s not a huge ask from current levels (5752.50 at 0400 GMT Friday)

But as things stand, the ASX is below a broken-if-minor trend line and way below a 2017 peak which has repeatedly proved too much for the bulls. These are both bad signs. Furthermore, clear daily-chart support is hard to spot at current levels. For that we have to get all the way back down to the 5605 level at which the index formed its last solid base, back in late January.

Under Pressure: ASX 200

ASX 200 Technical Analysis: Broken Trendline, Heavy Cap

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


Technical Analysis: Nikkei Slides Into an Uncomfortable Spot

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Nikkei’s falls this week have seen it break a modest but still significant uptrend
  • So far it has shown very little sign of the impetus to reverse them
  • If it can’t, the way down looks rather unguarded

Like many developed-market stock indexes, the Nikkei 225 has spent this year doing – well – not very much of anything. But that could be about to change, and not in a way bulls will like at all.

The index reached a significant intraday top of 19,686 on January 9. That was the peak so far of its long climb from the lows of autumn 2016, when the world was hunkering down for that US presidential election result.

But since January 9, the Nikkei has meandered around that top, providing sufficient peaks and troughs to keep the short-term traders in business but not really moving very far. However, that was until this week when something potentially significant occurred. Tuesday was a miserable day for stocks everywhere as Wall Street swooned. It was certainly poor for the Nikkei. It dropped to its lowest closing point since late February, then did so again on Wednesday.

In the process, it also managed to close below a moderate rising trend line. That line had been in place since January 18, but it gave way when the index slid through 19,178 on Tuesday. The Nikkei went on to close even further below it at 19,117.

It was a modest uptrend, but it’s broken. The Nikkei 225.

Technical Analysis: Nikkei Slides Into an Uncomfortable Spot

The bulls’ primary immediate objective must be to at least recapture that line, which now forms a resistance level at 19,208. However, they don’t seem able to do the deed, or even try very wholeheartedly. The index is now a good way below it at 19,062. That said, all it might take is a sudden Wall Street snap back to put a Nikkei rebound very much in play, but there hasn’t been much sign of that so far.

If the uptrend cannot be re-taken on a closing basis then likely support levels are some way down. They almost must be when rising trend-lines give way. Props will come in at February 7 and 8’s closing low of 11,850, with January 17 and 18’s closures in the 18,729 area lying in wait if those break.

Those will be the levels which bulls must give their all to defend. If they can’t, the way further down will be open.

There’s not much of the year’s first quarter left. How are the DailyFX analysts’ forecasts holding up?

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


FTSE 100 Tech Update: Bullish Outlook Falling Apart

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

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What’s inside:

  • FTSE 100 goes from holding near highs to rolling over
  • Has trend support below
  • Technical picture may not be the cleanest, but broad risk aversion warns

Looking for trading ideas? See our Trading Guides.

The title of Monday’s piece was, “FTSE 100 Remains Technically Sound”. Or perhaps not. The two days since the start of the week has brought the sharpest down-move since the January sell-off. The decline puts the footsie at an important spot, with the lower parallel off the Feb low on the verge of breaking. Should a drop below the lower parallel unfold, it doesn’t mean the trend has necessary turned down, but will quickly put to test trend support off the June lows. It would be at that point the market would need to show a response to support if it is to keep its bullish ways going. A decline below trend support would also carve out a lower low from the 3/9 pivot, a negative short to intermediate-term trend development.

FTSE 100: Daily

FTSE 100 Tech Update: Bullish Outlook Falling Apart

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As we said on Monday, keep an eye on other global markets, especially the DAX. It’s not that the German stock market holds the key for everyone else, but rather it’s about the technical clarity the DAX is presenting. The rising wedge formation we’ve been discussing finally broke to the downside, which suggests we will see a material sell-off develop over the near-term. U.S. markets broke hard on Tuesday as well, and the Nikkei looks the worst of the major markets we follow. Bottom line, a period of risk aversion looks to be upon us. And while the FTSE doesn’t present the clearest picture, the bias in general for global equities is one of caution to bearishness.

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.