Support & Resistance

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EUR/USD Technical Analysis: Euro Reveals Signs of Topping

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro forms bearish candlestick pattern below 1.08 figure vs. US Dollar
  • Waiting for confirmation, passage of event risk before selling seems prudent

The Euro turned sharply lower against the US Dollar, with prices putting in a bearish Dark Cloud Cover candlestick pattern to hint that a top may be taking shape. Confirmation is absent for the time being however, with the series of higher highs and lows defining the latest upswing still intact.

Near-term support is at 1.0518, a horizontal pivot that has acted as both an up- and down-side barrier in recent months. A daily close below that exposes the late-2016 floor at 1.0367. Alternatively, a push above the January 17 high at 1.0720 opens the door for a test of the 38.2% Fibonacci retracement at 1.0828.

A short position at current levels is not entirely unattractive for a purely technical perspective. Risk/reward parameters are also acceptable. However, looming event risk by way of the ECB rate decision and lingering uncertainty US fiscal policy warn against the trade at least until the near-term rise is decisively overturned.

Will the Euro mount a recovery in the first quarter of 2017? See our forecast and find out!

EUR/USD Technical Analysis: Euro Reveals Signs of Topping

USD/JPY Technical Analysis: All About The Yields

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

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Talking Points:

When the USD moves, USD/JPY shakes, and that is exactly what happened mid-week ahead of the transition to Donald Trump as U.S. President. Wednesday began a slew of important speeches that began with Janet Yellen, Chairwoman of the Federal Reserve, noting that the Fed would continue to stay the course with rate hikes, which helped lift U.S. Treasury Yields and subsequently USD/JPY.

USD/JPY has moved higher by ~300 pips in less than 24-hours and has retraced half to the 2017 Macro Opening Range.The move higher has notably caught the attention of traders looking for the next great Bull market in USD to align with Donald Trump taking office, which is possible if his inauguration is aligned with a sharp move higher in yields. It now appears after Yellen’s rather hawkish talk on Wednesday that any move higher would need to come from the market’s anticipation that Trump will bring inflation, which would push higher the required rate in bond markets globally.

Yellen provided about as much of a boost as possible by signaling to the market the Fed was going to continue tightening despite the uncertainty of how Trump’s policies would affect liquidity and financial markets.

Given the support that Yellen provided Treasury Yields, it now appears that the greatest catalyst for anticipated inflation, and therefore a higher USD/JPY would be Trump.

The move higher in USD/JPY looks to be that of position clearing as short USD/JPY positions were likely flushed out and were right to run for the exits. Holding a trade that moves against you 3-big-figures can be a sobering/ painful experience. Traders that are working to anticipate whether the trend is shifting back to the Bull’s favor would be well-served to keep a sharp focus on the recent lower high of 116.84 and the 61.8% retracement of the 2017 range at 116.29.

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A move above the 116.30/84 level would bring three key technical developments that would rightfully take the wind from the out of the Bear’s sails. First, a break above 116.29/84 would be the price and momentum gauge per 240 minuteIchimoku into Bullish Territory. Such a breakout would also take the price above a series of lowerhighs and would additionally cause a Bullish break from the corrective channel we’ve been watching.

While it is possible that the move lower is finished, I would offer a piece of evidence as to why I’d be cautious, and also what it could mean if the downside were done for now. Traders typically utilize Fibonacci Retracement to gauge corrective moves, and they like to focus on the 38.2-61.8% zone. Any correction to a trend that has not retraced that amount is either not finished with the trend correction, or if it is finished, is likely a very strong trend that could aggressively continue the previous trend advancement.

Therefore, if the trend has finished correcting despite not retracing 38.2% of the post-Election move, we could be in for an aggressive move higher in USD/JPY, which would likely be accompanied by an aggressive move higher in yields. The displayed chart below would likely see a move to the December higher followed by an attempt on the January 29, 2016, high of 121.688 followed by the 2015 high of 125.85. Naturally, a failure to overtake 116.29/84 and a turn lower in USD/JPY and US Treasury yields would favor that a deeper, and a more common retracement is still developing.

D1 USD/JPY Chart: USD/JPY Bounces At Channel Support, Now Targets Fibonacci Resistance

USD/JPY Technical Analysis: All About The Yields

Chart Created by Tyler Yell, CMT, Courtesy of TradingView

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Shorter-Term USD/JPY Technical Levels: January 19, 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: All About The Yields

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GBP/USD Technical Analysis: Drop After the Pop, Is the Bullish Move Over?

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Near-term price action showing bullish characteristics,, Long-Term still bearish.
  • Theresa May’s ‘Brexit speech’ propelled Sterling-higher; but already we’re seeing retracement. Does this move have any element of staying power?
  • 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 continued bearish state in GBP/USD as the pair traded very near the support zone that had developed just after the October flash crash in GBP. While very little was bullish about Cable at the time, the fact that sellers had been previously unable to break significantly below the psychological support zone of 1.2000 was at least somewhat worrisome for bears as the prospect of the Cable having ‘bottomed out’ was a very realistic possibility.

Since then, we’ve seen what many have classified as a short-squeeze on the pair after Theresa May’s Brexit speech yesterday. GBP/USD had moved down to test psychological support shortly after gapping-lower to start the week; but after that support test, the pair rocketed-higher after Theresa May’s Brexit speech gave hope that Brexit may not be as ‘hard’ as what many had feared.

Whether or not this was the start of a fresh bullish trend or short-squeeze retracement from a market caught off-guard has yet to be seen. Price action would need to confirm this bullish formation by setting a higher-low before traders may be able to move forward with bullish trend-continuation prospects.

Just underneath current price action is an opportune zone for such a higher-low to develop between the levels of 1.2201-1.2261. This zone had offered resistance in GBP/USD to close last week, just ahead of the gap-lower on Sunday that ended up testing the 1.2000 handle. This area also has multiple Fibonacci retracements, including the 38 and 50% Fibonacci retracements from the most recent Theresa May-inspired major move. If support can develop at this prior zone of resistance, the door is opened to bullish-continuation strategies. If this support does not hold, traders will likely want to question the sustainability of a further bullish move.

GBP/USD Technical Analysis: Drop After the Pop, Is the Bullish Move Over?

Chart prepared by James Stanley

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

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USD/CHF Technical Analysis: 2016 Range Resistance Awaits at .9949

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at the continued congestion in USD/CHF after the pair had surged up to fresh six-year highs in Mid-December. After a subsequent attempt to re-take those highs had failed just after the turn of the New Year, prices in USD/CHF have continued to head-lower without significant motivation. On the chart below, we’re looking at short-term price action in USD/CHF which still has yet to indicate strength in order to align with the longer-term trend. With this morning’s price action catching resistance off of old support (and also the 38.2% retracement of the post-Election move), traders would likely want to avoid moving forward with bullish strategies just yet.

USD/CHF Technical Analysis: 2016 Range Resistance Awaits at .9949

Chart prepared by James Stanley

The daily chart of USD/CHF, however, suggests that additional strength can be sought. Of particular interest is the zone of support from .9949 up to the parity level (1.0000), as this was a vitally important price action zone last year. The level at .9949 had helped to form range-resistance in USD/CHF throughout much of the second half of last year. This is also the 61.8% Fibonacci retracement of the major move in USD/CHF from the 2010 high to the 2011 low. And just a couple of pips below that at .9947, we have the 50% Fibonacci retracement of the post-Election move in the pair.

A support test in this region can open the door to bullish continuation strategies in the effort of trading an extension of the bullish move in the pair.

USD/CHF Technical Analysis: 2016 Range Resistance Awaits at .9949

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Long-Term Down Trend Resuming?

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Bearish candlestick pattern hints an Aussie top may be in place
  • Confirmation of near-term uptrend reversal needed to enter short

The Australian Dollar put in a bearish Dark Cloud Cover candlestick pattern, hinting prices may be readying to turn lower after finding resistance below the 0.76 mark. Prices hit a two-month high just yesterday but a resurgence of Fed rate hike speculation managed to offer a lifeline to the battered greenback.

From here, a daily close below the 14.6% Fibonacci expansion at 0.7479 opens the door for a test of the 23.6% level at 0.7423. Alternatively, a push above the January 17 swing high at 0.7569 paves the way into a congestion area capped by a double top at 0.7760.

Tempting though it may be to bet on long-term down trend resumption, patience seems prudent for now. The series of higher highs and lows defining the latest upswing remains intact, suggesting that further confirmation is needed before taking up the short side.

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AUD/USD Technical Analysis: Long-Term Down Trend Resuming?

USD/CAD Technical Analysis: BoC Bounce Faces Critical Test

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Talking Points:

Who said the markets were not listening to Central Bankers anymore? Much attention has been placed on the new era of Fiscal Policy when Donald Trump takes the U.S.’ highest office on Friday, which has been a key narrative in the higher yields theme. Trump looks to provide his own play on Shinzo Abe’s economic reform, which were both geared towards economic growth with the market seen as a lever to be pulled and not a force to reckon. However, on Wednesday, markets were reminded that Central Banker’s words matter when Stephen Poloz noted that “rate cuts remain on the table.”

Since those words were uttered at the Bank of Canada rate announcement, the price of USD/CAD has appreciated (indicating CAD weakness) by ~2.5%. Much of the appreciation also can be attributed to the words from the other Central Banker in this currency relationship, Janet Yellen. At a speech on Wednesday, Yellen noted that her and her colleagues see a few hikes each year going forward as the Fed’s foot remains, “on the pedal.” She also, unlike most other central banker’s around the world, failed to talk down her country’s strong currency. However, this could be seen as a desire to not cause a scene for President-Elect Trump to draw attention.

Yellen and Poloz provided a double-whammy of sorts to USD/CAD shorts, where one central banker zigged as the other zagged and led to a sharp move higher off the 1.3000 level, where USD/CAD also found support late in 2016.

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Thankfully, amid all the fundamental confusion, we can look to the charts for guidance. The focal point on the Daily chart for many has been the recent break below Trendline support as the USD was weakening on a pullback in yields. Thanks to Yellen’s comments above, the US Yields have moved higher again, which has helped USD, but the move higher in yields seems to undershoot the comments from the Chairwoman of the Fed.

The move higher in USD/CAD now faces a crucial test despite the strong move higher off the 1.3000 zone where the price has bounced in October, December, and now January. Keeping the Trendline break in mind, it’s worth watching how the price reacts to the top of the Bearish price channel drawn with the help of Andrew’s pitchfork, and the Fibonacci retracement levels on the move down. The first retracement of a move is anticipated to be deep, which typically is thought of as a 61.8-78.6% price retracement of the move. Such a retracement would keep the price within the Bearish channel while also acting as an aggressive shakeout of positions on the newly-formed CAD strength.

Despite favoring a rejection at the 1.3377/3474 zone, a move above this level would under the Bearish bias on USD/CAD that remains until this levels break. There is a lot to like about the USD if yields continue to move higher, but that remains a large “if.”If yields do move higher, we will anticipate another run to 1.36, where the price has failed to comfortably trade above in recent months.

Whether or not the recent break below the Trendline was an overshoot or a sign of things to come (i.e. more downside) will likely be dictated on the whether or not U.S. Yields move higher, taking the USD with it, or if CAD can regain its stronghold despite recent jawboning from Poloz.

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

D1 USD/USD Chart: Trading Well In a Falling Channel. Now Faces 61.8% Fibo

USD/CAD Technical Analysis: BoC Bounce Faces Critical Test

Chart Created by Tyler Yell, CMT

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Key Short-Term Levels as of Wednesday, January 19, 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.

T.Y.


NZD/USD Technical Analysis: Downturn Confirmation Sought

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar recoils from familiar resistance above 0.72 figure vs. US cousin
  • Near-term upswing needs to be negated to confirm case for bearish reversal

The New Zealand Dollar put in a bearish Dark Cloud Cover candlestick pattern below familiar resistance above the 0.72 figure, hinting a downward reversal may be ahead. The boundaries of the upswing from December 2016 lows remain intact however, warning that confirmation of downturn is absent thus far.

Near-term support is at 0.7073, the intersection of the 23.6% Fibonacci expansion and a recently broken trend line, with a break below that on a daily closing basis exposing the 38.2% level at 0.6982. Alternatively, a push above 0.7235 paves the way for a challenge of a longer-term trend line now at 0.7305.

Besides the absence of clear break in the series of higher highs and lows set from late December, the break of resistance guiding the down move from November is unchallenged and continues to argue for an upside bias in the near term. As such, opting to stand aside until greater confirmation emerges seems prudent.

Are retail traders buying or selling NZD/USD and what does it mean for the trend? Find out here!

NZD/USD Technical Analysis: Downturn Confirmation Sought

EUR/GBP Technical Analysis: Euro Drops Most in 6 Months

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro suffers worst loss in six months versus the British Pound
  • Reversal of near-term rising trend lacks confirmation for now

The Euro suffered the largest daily loss in six months against the British Pound but the boundaries of the upswing from December lows remain intact. This warns that while the corrective upswing of the past six weeks may be ending, clear technical confirmation saying as much is absent for now.

A daily close below the 23.6% Fibonacci expansion at 0.8624 opens the door for a test of the 38.2% level at 0.8484. Alternatively, a reversal back above the 14.6% Fib at 0.8711 – a former support barrier now recast as resistance – paves the way for a retest of the January 16 high at 0.8852.

Prices are too close to near-term support to justify entering short from a risk/reward perspective, even if reversal confirmation were in place. With that in mind, staying on the sidelines seems most attractive at this stage until the pair offers a better-defined opportunity.

Why do some DailyFX analysts see EUR/GBP as a top trade idea in 2017? Find out here!

EUR/GBP Technical Analysis: Euro Drops Most in 6 Months

EUR/JPY Technical Analysis: The Bullish Range is at Support

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at the continued up-trend in EUR/JPY after another dovish move from the ECB produced a mere blip in the ‘bigger picture’ bullish trend. Deductively, this is an extremely bullish signal as even a dovish Central Bank-move was unable to turn the trend; so as the Yen has been going through its own bout of retracement after a massive bout of weakness, EUR/JPY has remained relatively well-supported. This has produced a range-bound formation near the top of the ‘bigger picture’ up-trend, and this can be constructive for traders looking to add on short-Yen exposure or looking to offset short Euro-risk from other setups.

EUR/JPY Technical Analysis: The Bullish Range is at Support

Chart prepared by James Stanley

Given the veracity of the bullish move leading into this range, traders would likely want to proceed-forward with a trend-side bias; looking to buy around support and using resistance to scale-out of the position or manage-off bullish risk rather than looking to open fresh shorts.

Traders can look to the post-ECB swing-low in the pair at 120.87 to set risk, with potential resistance areas at 123.00 and 124.09, respectively. Given how quickly sellers have responded to resistance previously at 124.09, traders would likely want to set limits inside of this level, around 123.80-123.90 in the event that a recurrent test is unable to match that prior-high.

EUR/JPY Technical Analysis: The Bullish Range is at Support

Chart prepared by James Stanley

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

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GBP/JPY Technical Analysis: ¥142.50 to Mark Retracement Completion

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term (past 3 months: bullish. Near-term attempting to align with longer-term trend.
  • After a gap-lower to start the week, GBP/JPY has found footing to stage a bullish move of more than 500 pips off the lows.
  • If you’re looking for trading ideas, check out our Trading Guides.

In our last article, we looked at the retracement of the prior bullish move in GBP/JPY as the pair attempted to dig-out ‘higher-low’ support in the effort of longer-term trend continuation. And after a gap-lower to start the week, GBP/JPY finally found some element of support at the 50% Fibonacci retracement of the most post-Flash Crash move on Monday, leading to a burst of strength that’s lifted the pair by more than 500 pips off of the lows.

GBP/JPY Technical Analysis: ¥142.50 to Mark Retracement Completion

Chart prepared by James Stanley

Given the veracity of this near-term bullish price action, traders are likely already looking at the prospect of robust trend resumption. But scanning the longer-term chart indicates that we’re not quite ‘out of the woods’ on the retracement-front just yet, as we haven’t been able to break above the 50% marker of this most recent move-lower to denote that the longer-term up-trend is ready for resumption. Also of note is the fact that the zone around 142.50 is a psychological level that had offered multiple forms of support when the up-trend was running strong.

For traders that aren’t yet long and are looking to trade the up-trend in GBP/JPY, awaiting a top-side break and establishment of support above this level could open the door for bullish trend continuation.

GBP/JPY Technical Analysis: ¥142.50 to Mark Retracement Completion

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

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

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

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CAC 40 Little Changed on ECB News

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

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Talking Points:

CAC 40 is little changed today, despite this morning’s highly anticipated ECB (European Central Bank) rate decision. As expected rates were kept in line with expectations at 0.0%, but now the market is waiting on Mario Draghi to speak to get further insight into this decision. Top winners for the CAC 40 include Pernod Ricard (+1.26%) and AXA (+0.93%). Losers for the day include Essilor International (-2.42%) and Unibail-Rodamco (-1.36%).

Technically, the CAC 40 is drifting lower after yesterday’s breakout. However with the Index failing to trade to a new daily low or high, the Index is poised to close the session with the creation of an inside bar. This means traders may use Wednesdays high and low as points of support and resistance. A breakout above yesterday’s high of 4875.70 would place the CAC 40 back inside of last week’s range; while a move below the low at 4,827.10 suggests that the Index is preparing for a deeper retracement.

CAC 40, Daily Chart with Range

CAC 40 Little Changed on ECB News

(Created Using TradingView Charts)

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Intraday the CAC 40 is currently bouncing from short term support at 4,840. This point is depicted in the graph below as the S3 pivot, and bottom of today’s range. If prices remain supported here, the CAC 40 may attempt to trade back towards range resistance found at 4,866.60. It should be noted here that the Index has already tested this point of resistance once, and failed to breakout higher.

In the event of a late session breakout, traders should continue to monitor both the S4 and R4 pivots. A move below S4 at 4,826.60 would see the CAC 40 trading back in the direction of its short term trend. Further declines would expose new weekly lows, and the next critical point of daily support near 4,822.30. Alternatively, a bullish breakout above the R4 pivot at 4,880.00 may expose new weekly highs above 4,911.40.

CAC 40, 30 Minute Chart with Pivots

CAC 40 Little Changed on ECB News

(Created Using TradingView Charts)

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

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Crude Oil Price Forecast: Oil’s Impressive Polarity Zone Pivot

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

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Talking Points:

  • Crude Oil Technical Strategy: USOIL break from diagonal has seemingly found support near ~$50
  • Saudi Arabia's oil minister Al-Falih has said they “already exceeded” participation in OPEC deal
  • USD weakness providing additional lift for USOIL

The price of Crude Oil (CFD: USOil) appears to have found support at a crucial zone we’ve long focused on as a few fundamental and Intermarket points lend a hand to Crude Oil Bulls. The zone we’ve been watching is the price range of June 9 that extends from 50.35-51.72/bbl. The reason that this zone has found significance is that it comprises the daily range of an extreme day that has since acted as critical resistance and has recently been tested as support.

A key tenet of Technical Analysis that looks for observed behavioral changes from traders is when old resistance becomes new support. Such a zone is known as a polarity point and is shows a transition of a market view from a view of, ‘it’s not worth bidding through that level,’ to, ‘it’s not worth letting it fall below that same level.’

In our recent pieces, we’ve focused on a developing wedge pattern from the November low that was part of a ~30% move higher in Oil over nearly twomonths of trading. From a technical viewpoint, Oil has given us a clear zone of support and resistance, which will be helpful for building a bias going forward. Regarding support, we can use the polarity zone that is highlighted on the chart below and explained above. Regardingresistance, we can utilize the top of the Evening Star reversal pattern with resistance at $54.29.

The rising wedge pattern, which in the market context could either be an ending diagonal, which would favor an aggressive break below $50 followed by further downside or a leading diagonal would be favored as leading if we got a daily close above $54.29. A leading diagonal would be the most Bullish outcome for Oil if played out in a traditional manner where a small retracement against the direction of the diagonal is preceded by an aggressive move higher.

The recent weakness in the US Dollar that we’ve also been discussing and the fundamental backing from Saudi Arabia could also align with higher Oil prices in the near term.

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D1 Crude Oil Price Chart: Crude Oil Volatility Shows Initial Bounce Off Prior Resistance

Crude Oil Price Forecast: Oil’s Impressive Polarity Zone Pivot

Chart Created by Tyler Yell, CMT Courtesy of TradingView

Key Levels Over the Next 48-hrs of Trading as of Thursday, January 12, 2017

Please add a description for the image.

T.Y.

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Gold Prices Are Testing the Bullish Channel

Price Action, Swing & Short Term Trade Setups

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In our last article, we looked at the continued-move higher in Gold prices as the market was retracing a previously bearish trend. The election-inspired trend sent Gold prices lower by more than $225 in a little over a month to tally a peak-to-trough run of -16%. But shortly after the Fed hiked rates in December, Gold prices began moving-higher and haven’t yet stopped.

This has produced a rather clean bullish trend channel as prices have been running higher since setting that low in the second half of December (shown below).

Gold Prices Are Testing the Bullish Channel

Chart prepared by James Stanley

This bullish trend channel has already taken-out multiple points of resistance as traders have been bidding Gold prices higher. At $1,230.07 we have the 50% retracement of the post-Election move, and should this be taken out the bearish trend that had sent prices reeling after the election would be nullified.

Traders looking to execute bullish strategies can look to catch support off of prior resistance around the zone comprising $1,200-$1,204.76. Both of these prices are relevant Fibonacci levels and this zone had offered resistance when prices were on the way-up, so this can be a very opportune zone to look for that next zone of ‘higher low’ support.

Given the veracity of the move-higher, bears will likely want to wait for a break of swing support levels at $1,187.50 or $1,177 before entertaining down-side approaches.

Gold Prices Are Testing the Bullish Channel

Chart prepared by James Stanley

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

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Silver Prices: Trading Levels in Play

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

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What’s inside:

  • Silver rejected on attempted break above resistance
  • Multi-week upward trend still in tact
  • 2-hour chart helps provide clarity, trading levels

Trading Guides and Forecasts

On Wednesday, when looking at silver prices we discussed the critical area surrounding 17. This is what we had to say from a tactical standpoint:

“Traders looking to short, now is the time for price action to turn bearish – whether it be a sharp turn lower or a key reversal bar on a failed breakout above resistance. This would be the first true indication of a break in the upward momentum since bottoming in late-December.”

On Wednesday, silver traded up above the 17.24 threshold we had penciled in before reversing and closing at the low of the session. It was a sign of rejection, a sign that momentum was turning back lower. But we need to see a break in the upward trend off the December lows before the down-side can gain traction.

Silver: Daily

Silver Prices: Trading Levels in Play

Created with Tradingview

Pulling in closer to a 2-hour chart, silver is currently holding a lower parallel; and if silver is to make good on the rejection over 17 it will first need to break the near-term trend. Short-term traders looking to buy the dip on support, the lower parallel offers a line-in-the-sand. Resistance lies not far ahead, though, so a bounce back above 17 (especially 17.20/33) could stall-out quickly until overtaken on a daily closing basis. A drop below the lower parallel would be the cue for longs to turn cautious and shorts to look for a continuation of the rejection from resistance.

Support first arrives at yesterday’s low at 16.70, and beyond there we look to a couple of swing lows in the 16.56/50 vicinity and then 16.23. On the daily chart, there is potential for support to arrive at a parallel extending down off the December highs; this line is married to the lower parallel where silver found its low in December, crosses under lows in November and October. The level is in the 16.45/40 vicinity. Between short-term swing lows and the daily parallel, 16.40/56 will be a pivotal zone of support should we see weakness set in.

2-hour

Silver Prices: Trading Levels in Play

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---Written by Paul Robinson, Market Analyst

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Dollar Technical Analysis: Next Dollar Breakdown Could Travel

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

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Talking Points:

-Dollar Technical Strategy: overheated hawks and lack of Trump details keeps USD on heels

-US Dollar May Fall Further as Trump Inauguration Nears

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

The “Trump Trade” continues to unwind keeping the USD soft, as it’s fair to now wonder if all the good news was priced into the USD, which is why DXY cannot extend into new 14 year highs at the start of the year. The rates market remains a crucial component of any credible DXY narrative, and we continue to see a pull-back despite sovereign yields on the front of the curve sitting below the Dot plot expectations. Traders appeared disappointed with the lack of details from Trump's press conference ahead of the Inauguration Speech coming on Friday. The uninspiring Retail Sales on Friday likely adds to the lack of encouraging data to keep USD Bulls busy.

The lack of traditional economic data this week will continue to give the downside in USD further possibility as Yellen and other Fed speakers are unlikely to provide a spark for USD Bulls, which means USD remains vulnerable. The chart currently shows a series of lower highs against channel resistance and the H4 Ichimoku cloud in much the same way the XAU/USD traded ahead of the election before a significant sell-off that nearly put Gold into a bear-market after a stellar H1 2016.

The DXY appears to be taking a backseat to commodity currencies, like AUD, CAD, & NZD, which all remain well positioned for further catch up vs. falling currencies like the USD and GBP. The recent move lower to round out the opening range of 2017 took DXY to the 38.2% retracement of the post-election range. While strong-trends often find support in such a zone, it’s difficult to put too much faith that the move down to the December 14 low of 100.73 was the end of the DXY correction. To believe USD is done slipping, we’d want to see a strong move with price comfortably above the Ichimoku cloud.

The point to watch on the chart is the low from last week as well as the December 14 low of 100.73. A break below this zone would take the price of DXY below the 38.2% retracement of the post-election breakout as well as the median line of the current corrective move lower that has opened 2017. If we fail to move above the channel resistance and Ichimoku Cloud, there could soon be a strong break below the December 14 low to the December low of 99.43 and likely toward the 61.8% retracement of the same range at 98.89. It would have been difficult to imagine questioning the uptrend a few weeks ago, but we find ourselves asking if the market went “too far, too fast,” and now the search for equilibrium means the USD has more room to the downside.

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H4 Chart Shows DXY Consistently Failing Near Resistance, Which Could Precede Breakdown

Dollar Technical Analysis: Next Dollar Breakdown Could Travel

Chart created by Tyler Yell, CMT

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Shorter-Term DXY Technical Levels for Monday, January 16, 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 of trading.

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T.Y.


S&P 500: Patiently Awaiting Make or Break Event

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

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What’s inside:

  • S&P 500 chop continues, in limbo
  • High-level base, inverse H&S formation still in place; need to trigger first to validate
  • Tough trading environment calls for patience

Trading Guides and Forecasts

What is there new to say about the S&P 500 since we last discussed it on Tuesday?Not much. The market is in limbo at this juncture. From day-to-day the market looks headed higher, then maybe lower, then higher; but really it isn’t doing anything at all.

The high-level base, taking on the shape of an inverse H&S formation, is still setting up as it stands right now. But before it can come into play there needs to be an official trigger of the pattern by closing above the neckline and beyond the 2282 high set on Jan 6.

The market is currently trading outside the trend-line rising up off the November low, but given it didn’t break it and decline is encouraging. What would discourage the bulls’ case is a decline below the Jan 12 low at 2254 and Dec 14 low at 2248. At that juncture, the market would be well below the top-side trend-line extending over the 2007 and 2015 peaks. The S&P has responded twice off this line, so while it’s long-term in nature, it is mattering right now. A hard break below support would take the H&S scenario off the table, too.

S&P 500: Daily

S&P 500: Patiently Awaiting Make or Break Event

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It's tough trading right now across all time-frames. Choppiness is making it difficult for day-traders and swing-traders alike. This will of course change with time, but patience in waiting for further signaling will serve us best for the time-being. What will shake the market free from the recent malaise? Your guess is as good as anyone’s. We’ve got our levels noted, though, when things do get moving again.

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


DAX: Trend, Consolidation Suggest Higher (Eventually)

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

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What’s inside:

  • DAX base-building continues
  • Trend and consolidation point to eventual break higher, but…
  • We need to wait for a confirmed breakout, breakdown levels also identified

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Is the DAX gearing up for another move higher soon? The prevailing trend and period of base-building suggest the answer is – yes. Tuesday’s break lower and reversal helped further the bullish bias with a clear rejection coming ahead of key support just above 11400. The timing of an extended move higher? Hard to say, but the consolidation is three weeks old and becoming ripe for a breakout at some point soon. Perhaps that is just wishful thinking for movement and the market ignores our ‘wishes’, continuing to chop for a few more weeks.

In any event, we’ll be ready should we get the breakout we’re looking for. The range is a little rough around the edges, with the pop higher on 1/11 having a smallish rejection tail on a failure to hold above the August 2015 swing high, and the earlier week dip and recovery forming a legitimate tail on the daily candle. Eliminating those couple of days, the range becomes a bit clearer; we’ll call it 10520 to 11650, so about 130 points.

A strong close above 11650 and preferably also the 1/11 high at 11692 which will take out the 11670 8/’15 level as well, should get the DAX moving towards a visit of other top-side levels carved out during its decline in 2015 off of record highs. We’re looking at 11802, then 11920 with some fairly aggressive buying.

What will flip the script upside down? If the market closes firmly below 11520, then takes out the 11400 line (the low of the end of December range). At that juncture, we will look to the top-side trend-line (<11300) running over August and April peaks.

At the immediate moment, though, we’ll take it slow until we get a confirmed break one way or another.

DAX: Daily

DAX: Trend, Consolidation Suggest Higher (Eventually)

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---Written by Paul Robinson, Market Analyst

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ASX 200 Technical Analysis: Lower After Losing Key Support


Talking Points:

- ASX 200 lost key support at 5,380

- 5,300 support now in play for further downside pressure

- Index at decision point for short term directional conviction

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The ASX 200 traded sharply lower after losing the key support level at 5,380.

The index was trading in a well-defined range between the 5,380 resistance and the 4,750 support until July saw a breakout higher, followed by a sharp decline back inside that range.

The index blasted to the upside after forming a bullish “Morning Star” pattern around the 5,200 support, but the 5,500 level proved its merit as resistance and the index retraced to find support at the 5,380 level again.

As we mentioned in the last report, a break to either side appeared key for short term directional conviction.

Indeed, after moving below 5,380 the index declined sharply, and the drop came to a halt around the 5,300 support level.

At this stage, the ASX seems to be at a crucial decision point. After forming a series of higher highs and lows, the failure to hold above 5,380 appears to be implying a lower high which shifts our attention back to the reaction around the level.

A hold below 5,380 may be interpreted as a bearish sign, but further downside momentum might be required to break below 5,300 followed by the September low around 5,150. If that scenario comes into play, it could be said that bears are firmly in control.

Until then, the 5,300 level could be seen as a level to watch for short term directional plays, with the bias appearing to be tilted slightly to the downside in the short term as long as price is below 5,380.

A reversal for a move higher will need to take out 5,380 and the next resistance level seems to be 5,500 before threatening the last high around the 5,600 level for full blown bullish conviction.

ASX 200 Daily Chart: October 27, 2016

ASX 200 Technical Analysis: Lower After Losing Key Support

--- 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


Nikkei 225 Technical Analysis: 18,000 Key to Watch Going Forward


Talking Points:

- Nikkei 225 broke above trend line resistance from August 2015

- A combination of positive technical signs are encouraging for bulls

- Key resistance still looms as the index approaches the 18,000 handle

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The Nikkei 225 is trading higher after the index managed to clear an important trend line resistance from August 2015.

Nikkei prices have been ranging between the well-defined 18,000 resistance zone and the 15,000 support since the start of the year, with gains appearing to be corrective in the context of the near term down trend from June 2015 highs.

With that said, a confluence of bullish technical signs are proving encouraging for bulls: the 50 day moving average crossed over the 200 MA, and breakouts from key levels such as the 17,000 handle and the aforementioned trend line resistance are implying strength on the upside.

Taken together, this may shift our focus for the larger hurdle which is the resistance zone below 18,000. If bulls can clear that area, it appears like they can establish full control to mount a perceived resumption of the longer term weekly uptrend.

Levels of support on a move to the downside could be 17,000 followed by the 16,500 level.

Nikkei 225 Daily Chart: October 28, 2016

Nikkei 225 Technical Analysis: 18,000 Key to Watch Going Forward

--- 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


FTSE 100 Drops Towards Important Support Zone

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

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What’s inside:

  • FTSE dropping into key support zone of 7130/104
  • Support is support until it isn’t, warrants caution for bears
  • Key levels outlined

Trading Guides and Forecasts

This is what we had to say on Wednesday“We look for the index to continue to drop, with eyes set on the old record highs – 7104 on a closing basis, 7130 intra-day. It’s not a stretch to look for the market to get to those levels in the next few days or less.”

The morning low, at the time of writing, is 7131.50, so the market is knocking on the door of a significant zone of support. We are giving support a window down to ~7100 before a decline any further would be considered a breach of the old highs. A failure would need to occur on a closing daily basis; an intra-day piercing and recovery back above doesn’t constitute a valid break, and in fact depending on how strongly the market rebounded, it could be considered a bullish rejection.

First thing is first, the market is in the vicinity of key levels, and support is support until it isn’t. For now, from a short-term trading perspective it’s a good spot for shorts to become increasingly cautious while would-be longs may want to wait for a solid push into and hold of support before establishing a long position.

Should the market find downside clearance of 7100, the next level, or line rather, we look for the market to make a move on is the tend-line running up from the June low underneath the November low. Whether you draw the trend-line from ‘low-to-low’ or ‘close-to-close’, they both fall in the same vicinity. Minor horizontal support arrives at 7167/6997, with the latter, depending on the timing, possibly aligning with the June trend-line.

However, before we become focused on down-side levels below the old highs we look for the FTSE to hold on its initial test and bounce at the least, but need to bullish see price action before turning constructive.

FTSE 100: Daily

FTSE 100 Drops Towards Important Support Zone

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


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