Support & Resistance

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Japanese Yen Technical Analysis: USD/JPY Breaks Range Top

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY’s old range has snapped to the upside
  • The pair’s broader upward channel looks quite solid
  • There may be some indecision ahead though

Get live and interactive coverage of all major Japanese economic data at the DailyFX Webinars. We’d love to have you join us.

The Japanese Yen has come under pressure against the US Dollar in the past week, after a period of clear range trading ended with a break to the upside.

USD/JPY had clearly been stuck between the 50% and 61.8% Fibonacci retracements of its climb from the lows of 2018 to the peaks of the same year. However it has now made it through the top of that range in a well-respected uptrend channel from January 10 which still looks well-worth following.

The channel top was just about exactly where the most recent foray higher stalled last week, and the pair remains very securely above the channel base. That comes in a reassuring distance below the current market at 109.28.

Uptrend entrenched. US Dollar Vs Japanese Yen, Daily Chart

Neither an approach nor a retest of that looks very likely in the near-term, with another try at the range top far more likely. Still, the last few sessions have produced the narrower ranges which can indicate some indecision in the market. If that indecision results in a little slippage then that could represent a better buying opportunity for US Dollar bulls.

However, the pair’s Relative Strength Index remains quite subdued and certainly doesn’t suggest that the Dollar is anything like overbought at current levels. Taking that with the security of the current uptrend might suggest that the most likely path for USD/JPY remains the one higher.

The Australian Dollar has also managed an upside move against the Japanese currency, quite possibly feeding on the strength seen in USD/JPY. The Aussie’s former downtrend has been broken, if not yet terribly convincingly. If its bulls really want to stake a claim then their first target is the previous significant high. That is from February 5 and comes in at JPY79.86.

Unconfirmed progress? Australian Dollar Vs Japanese Yen, Daily Chart

Admittedly that is not very far from the market now, but a few daily closes above that would solidify the bullish case nicely.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Gold Price Technical Outlook: XAU/USD Breakout Imminent

Short term trading and intraday technical levels.

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Gold prices are trading within a well-defined range just below the monthly open and we’re looking for the break for guidance. These are the updated targets and invalidation levels that matter on the XAU/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAU/USD)

Gold Price Chart - XAU/USD Daily

Technical Outlook: In my latest Gold Weekly Technical Outlook we noted that the, “immediate focus is on a break of the 1302-1322 zone early in the month with the broader outlook weighted to the topside while above 1290.” Price registered a low at 1303 early in the week with gold now setting the February opening-range between these key levels. A downside break would threaten a larger correction towards the highlighted slope confluence with our medium-term bullish invalidation steady around ~1290.

A topside breach / close above the 78.6% retracement / monthly open at 1322 is needed to mark resumption of the broader uptrend with subsequent topside objectives eyed at channel resistance / 88.6% retracement at 1342 and the 2018 high-day close at 1348.

Why does the average trader lose? Avoid these Mistakes in your trading

Gold 120min Price Chart (XAU/USD)

Gold Price Chart - XAU/USD 120min

Notes: A closer look at price action shows gold trading within the confines of a descending channel formation extending off the January high with price marking a near-term consolidation range just below the upper parallel. Immediate resistance stands with the weekly open at 1313 with a topside breach exposing 1317 and 1322- look for a larger reaction there for guidance.

Initial support rests with the outside two-hour reversal close at 1308 backed by near-term bullish invalidation at 1302. Weakness beyond this threshold would expose support targets at the 61.8% retracement at 1296 and 1292- an area of interest for exhaustion If reached.

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Bottom line: We’re looking for a break of this near-term consolidation for guidance and while our broader outlook remains weighted to the topside, a break lower could risk a larger pullback before resumption. From a trading standpoint, we’ll favor fading strength while above while above 1302 targeting a topside breach of the monthly opening-range. Ultimately larger set-back would have us looking for exhaustion closer to slope support around 1290.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Gold Trader Sentiment

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold - the ratio stands at +2.43 (70.8% of traders are long) – bearishreading
  • Long positions are84.8% higher than yesterday and 1.3% higher from last week
  • Short positions are 79.2% higher than yesterday and 9.8% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning& recent changes gives us a stronger Gold-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

---

Active Trade Setups

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex


S&P 500, Dow, and Nasdaq 100 Charts: On to the Next Big Levels of Resistance

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

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S&P 500/Dow Jones/Nasdaq 100 Technical Highlights:

  • S&P 500 nearing 2800-area, several swing-highs from last year
  • Dow Jones 26k-ish stands between it and record highs
  • Nasdaq 100 trading around resistance already

Check out the forecasts for Global Stock Indices and other markets on the Trading Guides page.

S&P 500 nearing 2800-area, several swing-highs from last year

The S&P 500 is continuing to show impressive strength since its v-bottom began the day after Christmas, with it having a few points along the way where it could have been stopped in its tracks. But it wasn’t, and this has levels prior to the December swoon in view. The area surrounding 2800 is a big one.

From 2800 up to 2817 there were three peaks created from failed rallies, a logical area, with the rally having come this far, to look for stocks to weaken from. Watching price action will be key, as always, but especially around the levels just ahead.

While resistance looks likely to get tested soon, the upward channel structure over the past month will keep stocks pointed higher for as long as it holds. If the S&P is rejected off resistance, to further bolster the notion of a sizable retracement we’ll need to see the underside parallel undermined.

For now, the top-side must be respected, but the time for material weakness may be nearing…

Stocks are rallying, but will it last in the long-term? Find out where our analysts see stocks headed in the Global Equities Forecast.

S&P 500 Daily Chart (2800/817 big spot)

S&P 500 daily chart, 2800/817 big spot

Dow Jones 26k-ish stands between it and record highs

The Dow is nearing the 26k-area, a spot which is basically the equivalent of what 2800 is to the S&P 500. The zone runs up to near 26300. The focus is primarily on the S&P right now as it is the broader index, but depending on how price action plays out, the Dow may be the better index to short at some point if it shows relative weakness to the broader market.

Dow Daily Chart (26k-ish stands in the way)

Dow daily chart, 26k-ish stands in the way

Nasdaq 100 trading around resistance already

The Nasdaq 100 continues to lag behind, which is something to continue monitor given it was the bull-market leader with its leading group of stocks – FAANG – dominating price action and sentiment. The NDX is trading around the 200-day and near late-year swing highs equivalent to the ones discussed with regard to the S&P 500 and Dow. So far, relative weakness is making the 100 the preferred fade if the S&P finds material selling off resistance surrounding 2800/17.

Nasdaq 100 Daily Chart (trading around resistance)

Nasdaq 100 daily chart, trading around resistance

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

Tools for Forex & CFD Traders

Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX


EUR/USD Technical Analysis: Euro Down Trend Ready to Resume?

Fundamental analysis, economic and market themes.

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EUR/USD Technical Strategy: BEARISH

  • Tepid Euro rebound stalls at familiar resistance from January 2018
  • Near-term positioning hints bearish reversal may be brewing ahead
  • Sellers may seek breakout confirmation before committing in earnest

Build confidence in your Euro trading strategy with our free guide!

The Euro is retesting resistance defining the downtrend against the US Dollar since January 2018 once again. This barrier is now reinforced by rising counter-trend support guiding the upswing from mid-November lows, now acting as resistance after being broken last week.

The appearance of a Shooting Star candlestick at this barrier speaks to indecision and may precede a reversal downward. Sellers may be emboldened if they manage to extend any on-coming decline into a close below the range floor in the 1.1216-34 area, opening the door for longer-lasting bearish follow-through.

Euro vs US Dollar chart - daily

Zooming in to the timelier four-hour chart seems to reinforce the sense that a selloff is on the horizon. Prices have produced a Bearish Engulfing candlestick pattern coupled with negative RSI divergence, hinting the week-long EUR/USD recovery may now run its course.

Importantly, the series of higher lows establishing immediate support remains unbroken. Traders looking to take up the short side might wait for confirmation on a breach below this threshold to commit in earnest, especially since selling directly into support might be judged as unattractive on risk/reward grounds.

EUR/USD Technical Analysis: Euro Down Trend Ready to Resume?

EUR/USD TRADING RESOURCES

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

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


EUR/GBP Technical Analysis: Preparing for a Reversal Higher?

Classic technical analysis, macro and economic themes.

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EUR/GBP Technical Analysis

  • EUR/GBP declined after rising support line fell apart
  • Fading downside momentum may precede a reversal
  • Friday’s performance may set trajectory for next week

Just started trading EUR/GBP? Check out ourbeginners’ FX markets guide!

EUR/GBP aimed lower over the past few days after a near-term rising support line from the end of January broke. Progress to the downside was cushioned by a range of support between 0.86983 and 0.86683 as anticipated. This is a critical barrier that has had an impact on the pair on multiple occasions over the past eleven months or so.

Will the British Pound be able to resume gains against the Euro in the days ahead, continuing the dominant trend from earlier in January? While progress can be made lower, keep a close eye on RSI on the daily chart. If prices reach the January lows and surpass them, positive RSI divergence could form. This would indicate fading downside momentum and could precede a reversal to the upside.

EUR/GBP Daily Chart

EUR/GBP Technical Analysis: Preparing for a Reversal Higher?

EUR/GBP 4-Hour Chart

Zooming in on the EUR/GBP 4-hour chart shows exactly that. Momentum to the downside stalled after prices tried to breach the outer area of support at 0.86683. Meanwhile, the descending resistance line from about a week ago seems to be on the verge of falling apart. We are already seeing the pair closing above it, but it will have to surpass 0.86983 for a chance to aim back at resistance around 0.88108 – 0.88384.

In the meantime, should prices descend through support and pass January lows, the next area of interest could be the 50% midpoint of the Fibonacci extension at 0.85939. What move EUR/GBP makes soon may determine its trajectory next week. With that in mind, you may follow me on Twitter at @ddubrovskyFX for more timely updates on the currency cross.

EUR/GBP Technical Analysis: Preparing for a Reversal Higher?

**Charts created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter


Japanese Yen Technical Analysis: USDJPY Stuck, Can Fed Shift It?

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY has been confined to a quite narrow band for a while
  • A dovish performance from the US central bank tonight might bring a break
  • GBP/JPY remains within its uptrend channel despite Brexit headlines

Get live and interactive coverage of all major Japanese economic data at the DailyFX Webinars. We’d love to have you join us.

The Japanese Yen has been doing, well, not much, against the US Dollar so far this year beyond perhaps proving the value of Fibonacci retracement levels as trading points to conjure with.

USD/JPY has been effectively stuck in a broad trading band between 109.64 and 108.50 since January 6. It has broken both above and below it on occasion but the importance of those two levels to trade is obvious from the chart.

Range holding. US Dollar Vs Japanese Yen, Daily Chart

Moreover, they represent, respectively, the 50% and 61.8% Fibonacci retracement levels of the rise up from 2018’s March lows to the peaks seen in October.

Now we come to a period in the monthly data cycle when fundamental factors are likely to make their presence especially clear on the charts. The US Federal Reserve will set monetary policy later on Wednesday with the markets expecting a more cautious stance on interest rate rises and, perhaps, some emphasis on the absolute data dependency of any more this year.

Much of this prognosis seems to be in the price, but there could yet be at least a knee-jerk move lower in the US Dollar broadly on any confirmation. The Yen seems unlikely to escape this, and it could mean the USD/JPY range breaks to the downside at least temporarily.

However, it should be noted that Dollar bulls have defended current levels quite doggedly and an enduring move lower may be unlikely in the short term. In other words, falls could offer quite good buying opportunities for those with narrow time horizons.

Signs of more enduring weakness may bring the next-lower retracement level into play, however. That comes in at 107.09, but looks too far below the market for an early visit.

Meanwhile the upside looks barred by the sharp series of daily-chart falls seen between December 27 and January 2. Dollar bulls will have to work hard to make those back for anything like keeps and a close above December 26’s peak of 111.33 would be a first sign that they are up to the task.

With Brexit so much on market minds it probably makes sense to look at GBP/JPY this week.

Despite falling against the Japanese Yen in the past three sessions, the Pound remains perhaps surprisingly within the daily-chart uptrend channel which has bounded trade since the cross bounced on January 4.

Uptrend Channel Threatened. UK Pound Vs Japanese Yen, Daily Chart

Much of its fightback has been founded on the idea that the UK will not leave the European Union without some sort of deal. While that probably remains the markets’ base case, just about, uncertainty could see the Pound break below that channel this week.

If it does, near term focus would probably then be on a band of support from mid-January. However, should that give way too, and it easily might, then the entire recent rise could be put into doubt.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


GBPUSD: Cable Pulls Back From Fibonacci Resistance After FOMC Minutes

Price action and Macro.

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GBPUSD Talking Points:

- GBPUSD is softening after a strong four-day push, with resistance showing at the 14.4% retracement of the January bullish trend. Aiding in that pullback is US Dollar strength being driven from today’s release of FOMC meeting minutes from the January rate decision.

- Brexit remains a difficult driver to work with and the prospect of longer-term trend substantiation can remain as a challenge around GBP-pairs in the near-term. But, given the volatility that’s continued to show around the currency, the door can remain open for short-term strategies utilizing support and resistance levels in order to reinforce strong risk-reward ratios.

- DailyFX Forecasts are available on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

GBPUSD Backtracks After Testing Fibonacci Resistance

The British Pound is pulling back after testing above the 1.3100 level earlier this morning. This capped a strong topside run that showed up after the print of a fresh low less than a week ago. The month of January brought a stretch of strength into GBPUSD that likely caught many by surprise, especially considering the way that the year started for the pair: GBPUSD put in a rather large drop on January 3rd, slipping below 1.2500 temporarily as bears made a push. But the rest of January was marked by recovery, as GBPUSD climbed back above the 1.3000 psychological level to test above 1.3200.

As looked at last week, prices began soften from that bullish theme in the final week of January. And that pullback ran for more than a couple of weeks as GBPUSD tested below the 50% marker of the January bullish run. But since then, buyers have made a pronounced entrance back into the equation, particularly over the past two days of price action, helping to firm prices back above the 1.3000-handle.

GBPUSD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

At this point, prices have vaulted into another area of potential resistance, as the space between 1.3106-1.3117 has two different Fibonacci levels of interest. The 1.3106 level is the 14.4% retracement of the January bullish move, while 1.3117 is a longer-term level as the 38.2% marker of the ‘Brexit move’ in the pair.

GBPUSD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

GBPUSD Strategy

As discussed over the past few weeks, traders will likely want to continue to limit strategy around GBP-pairs to shorter-term variants, as the volatile nature of the backdrop around the British Pound can continue to evoke turns in either direction. Short-term strategies utilizing support and resistance levels to reinforce advantageous risk-reward ratios appears to be a prudent way of approaching matters in the near-term.

On the below hourly chart are a number of potential levels on either side of current price. For resistance, the zone that’s eliciting the current reaction remains relevant and that rests from 1.3106-1.3117. A bit higher at 1.3160 is the January 31st swing-high, and above this is the 2019 high at the 1.3218 marker that came into play a few weeks ago. For support, the next area of focus is 1.3000-1.3034, which helped to hold the lows earlier this morning. Below that is a zone that runs from 1.2893-1.2920, which currently marks this week’s swing low; and underneath that area is the same 1.2828-1.2850 area that was looked at last week.

GBPUSD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

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

Contact and follow James on Twitter: @JStanleyFX


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

Price action and Macro.

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Talking Points:

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

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

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

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USD/CHF Rallies to Fresh Three-Month-Highs

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

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

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

usdchf eight hour chart

Chart prepared by James Stanley

A New Trend Emerges

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

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

usdchf four hour chart

Chart prepared by James Stanley

Overbought Near-Term Urges Caution From Chasing

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

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

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

usdchf two hour chart

Chart prepared by James Stanley

To read more:

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

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

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EUR/JPY: Bounce Finds Sellers Sub-125, Break on the Horizon?

Price action and Macro.

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EUR/JPY Talking Points:

- After a significant surge of Yen-strength to start the year, EUR/JPY has spent much of the time since in varying forms of recovery, adhering to a bullish channel that’s built over the past few weeks of price action.

- Last week brought the bears back on the pair as Euro weakness became more prominent, and an early-week bounce is in-focus after sellers responded to offer resistance at the 38.2% marker of last week’s sell-off.

- DailyFX Forecasts are available on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Upward-Sloping Channel Forms After New Year Spill

It’s been an interesting start to 2019 for EUR/JPY. After spiraling lower shortly after the 2019 open, hitting a fresh 20-month low on the second trading day of the year, much of the time since has been spent in a range with an upward-sloping bias.

EUR/JPY Four-Hour Price Chart

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

After setting fresh monthly highs in the opening days of February, the bearish side of the pair has come back into view as Euro weakness has become a bit more prominent. And while both Euro and Yen weakness are showing against the US Dollar so far this week, the selling in the Euro has been more pronounced and this has helped EUR/JPY to tilt back down towards the 124.00 level.

A Fibonacci retracement drawn around the bearish move in February can be used to help substantiate levels of interest. The 125.00 psychological level that was looked at last month remains of interest, and this is very near the 50% marker of that recent move. This can be incorporated with the longer-term 38.2% retracement at 124.91 to establish a resistance zone. On the support side of the pair, the vicinity around 124.00 remains of interest, as the 38.2% retracement of the September-January sell-off resides at 124.09, and this is just a few pips below last week’s low in the pair at 124.15.

EUR/JPY Four-Hour Price Chart

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

EUR/JPY Strategy

At this stage, there are a few ways that traders can look to approach EUR/JPY. For those looking to implement a longer-term bullish view, waiting for the pair to reclaim ground above the 125.00 resistance area could make that prospect look more attractive. On the bearish side, traders looking to implement longer-term short-side themes may be best served for waiting for a test below the 124.00 level as indication that bears may be able to continue driving beyond recent support.

In the mean-time, traders have the option of working with the shorter-term mean reversion theme in the pair, in which stops can be investigated below the support zone coupled with initial targets around resistance of 124.92-125.00.

EUR/JPY Hourly Price Chart

eurjpy eur/jpy hourly price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

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

Contact and follow James on Twitter: @JStanleyFX


NZD/USD Technical Analysis: Double Top Forming Below 0.70?

Fundamental analysis, economic and market themes.

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NZD/USD Technical Strategy: NEUTRAL

  • Bearish Engulfing candlestick pattern hints Kiwi Dollar top is forming
  • Reversal confirmation needs break of trend support from January low
  • Breakdown would initially expose support region near the 0.67 figure

See our free trading guide to help build confidence in your NZD/USD trading strategy!

A New Zealand Dollar put in a Bearish Engulfing candlestick pattern on a test of resistance in the 0.6942-69 area, hinting that a move lower is ahead. A break below rising trend line support set from early January – now at 0.6842 – sets the stage for a decline to challenge the 0.6686-0.6713 zone.

Alternatively, a breach above resistance validated on a daily closing basis initially exposes the June 2018 swing top at 0.7060. This is followed by a more formidable upside barrier marking former range floor support in the 0.0.7174-88 region.

New Zealand Dollar vs US Dollar chart - daily

Confirmation of a bearish reversal – specifically, a clear breach of the near-term series of higher highs and lows – is still pending. That makes taking a short position at current levels appear to be premature. Opting for the sidelines appears to be most prudent until a better-defined opportunity presents itself.

NZD/USD TRADING RESOURCES:

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

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


DAX 30 & CAC 40 Charts: Resistance, Relative Weakness Remain Headwinds

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

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DAX 30/CAC 40 Technical Highlights

  • DAX lagging other indices, big resistance to contend with
  • CAC has resistance and bullish channel in focus

To see our intermediate fundamental and technical outlook for the DAX & Euro, check out the DailyFX Q1 Forecasts.

DAX lagging other indices, big resistance to contend with

The world’s largest and strongest stock market continues to put in a strong showing, but that could soon come to an end, as the S&P 500 is on the verge of trading up against strong resistance surrounding 2800. The DAX is not only severely lagging the U.S. but is also lagging in its own region (CAC).

This relative weakness in of itself is a bad sign for the DAX, add in the fact that it also has strong resistance which it can’t hurdle, and you have a situation where it won’t take much to knock the German market low.

The 2011 trend-line has been a problem ever since it was broken. This morning the Feb 5 high was breached, however; at this time the DAX is failing to maintain above. Even if it closes strong today, not far above lies a trend-line from the summer and the neckline of the H&S pattern dating back to 2017.

Those levels are above the 2011 trend-line, but not far enough to make reaching them a convincing recapture of the broken long-term trend threshold. The region from here up to just over 11500 is important.

Tactically, it would be ideal to see the S&P push into resistance and have the DAX continue to remain sluggish at resistance. If relative weakness is to hold true, then a global turn lower in stocks should see the DAX lower in aggressive fashion.

DAX Weekly Chart (2011 t-line, H&S neckline)

DAX weekly chart, 2011 t-line, H&S neckline

DAX Daily Chart (A lot of resistance in the area)

DAX daily chart, a lot of resistance in the area

CAC has resistance and bullish channel in focus

The French benchmark is pressing up into an area of resistance dating back to the middle of last year. Running lower into this zone is the 200-day MA, making the 5200/50-region an important one. The upward channel structure off the December low will need to be broken for selling to pick up, but given its sharp angle and heavy DAX this seems likely to happen on a round of weakness.

CAC Daily Chart (Resistance, bullish channel)

CAC daily chart, resistance, bullish channel

Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX


USD/CAD Rate Forecast: CAD Jumps Most in 2 Months on CA Oil Supply Cut

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Canadian Dollar Rate Forecast Key Takeaways:

  • The ONE Thing: If you thought the Brent & WTI breakdowns in price were bad, check out Canadian Select. Western Canada Select Crude from Alberta fell from summer high of $79 to trading near $13/bbl this month, which hurts A LOT the terms of trade in Canada. Canada announced production cuts to support the market in the same spirit as OPEC, but long-term
  • Weakening terms of trade will likely make it difficult for the Bank of Canada to remain hawkish or pushing toward two rate hikes in 2019 as is being currently priced. The CAD may be subject to oil volatility that will likely remain elevated into Thursday’s OPEC meeting.
  • Technical Outlook: The pair remains favored to move higher as the 55-Day Moving Average (DMA) has crossed above the 100-DMA providing a broader bullish framework. Shorter-term traders may look to price crossing above the 21-DMA to validate bullish trend continuation.

Key Technical Levels for Canadian Dollar Rate to US Dollar:

  • Resistance: C$1.3360, November 28 high
  • Spot: C$1.3185
  • Support: C$1.3079/84, 100-DMA/55-DMA

Canadian Crude Crash Prompts Production Cut, CAD Rallies as Result

Please add a description for the image.

Chart Created by Jake Schoenleb, @SchoenlebFX, Source: Bloomberg

Canadian crude oil is more expensive to refine, and transportation of Canadian crude has sharply cut the price of Western Canadian Select, the benchmark for heavy crude from Alberta’s oil sands. Western Canadian Select recently hit a low of $13.27 a barrel despite a high price of $79 earlier this year.

The 76.7% decline prompted free-market principles to be shelved and OPEC-like production cuts implemented. Historically, the spread between Western Select and WTI has been in the $10-$15 range, but in H2, the spread has blown to nearly $50/bbl.

Much of Canada’s terms of trade, an economic reading of an economies exports values against imported good values, has deteriorated alongside Western Select, which makes bidding up the CAD difficult. Indeed, while the US Dollar has wobbled higher in Q4 global oil markets have likewise broken down with November seeing Oil’s worst month since 2008.

Over the weekend, we learned that Alberta had ordered a production cut in alliance with the OPEC and strategic alliances expected to prop up the market once again. This helped WTI rally by as much as 3%, but the Alberta cut led to Western Select jumping $10/bbl (Remember, the low on November 15 was $13.27/bbl) to $32.91. In other words, while CAD has jumped aggressively against the USD, the 8.7% production cut (~325k bpd) that saw a ~140% or $19 rally translated into a ~1.2% rally in CAD as USDCAD fell from C$1.3360 to C$1.3160 per USD.

The question now becomes both is this move sustainable (please keep laughing to a minimum,) and if not, what will happen to CAD? Looking below, it could be that we are seeing a jump in CAD only to retrace recent weakness that may soon continue.

OPEC Likely To Shake Brent, Which Is Correlated To CAD

Please add a description for the image.

Chart Created by Jake Schoenleb, @SchoenlebFX, Source: Bloomberg

Traders may also wish to watch Brent, which is expected to be volatile into Thursday’s OPEC meeting where similar production cuts may be solidified. The correlation to CAD & Brent is near one-year highs, which is unfortunate for CAD bulls as oil recently had the worst month in a decade.

CAD Technical Analysis: Trend Line Break & Moving Averages Support USD/CAD

Please add a description for the image.

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

USD/CAD has strongly broken above the multi-year trendline and is not supported by the 55-MA crossing above the 100-DMA. The labeling above shows the recent retracement as a potential pullback in the pair before a larger advance.

Traders should keep an eye on C$1.3385 as that could be a double-top point if the US Dollar runs out of steam or CAD strength re-emerges. A break above C$1.3385 would turn focus toward the May 2017 high of C$1.38, and the 100% Fibonacci expansion from the base of ‘B’ to C$1.41 per USD. This view will remain in favor with weekly closes above C$1.30, which is the 61.8% retracement point of C$1.3385-C$1.2782.

A break below C$1.2782 would turn the focus toward a possible double top, and likely put traders on the sidelines until clarity formed.

Leveraged Funds Added CAD Short Positions, Though Not Aggressively

Please add a description for the image.

Data source: Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

The chart above from Paul Robinson’s Commitment of Traders index, one of my favorite indicators and a podcast session dedicated to the indicator can be found here, shows short positions in CAD have been a dominant trend in 2018 among leveraged funds.

The Commitment of Traders (CoT) is worthwhile reading for any shorter- or medium-term trader as it is seen as a one-stop shop to see how much of key assets are being bought or sold on any given week by both hedge funds and commercial institutions, and in today’s case, on Canadian Dollar futures.

Unless this trend reverses course, which would likely need sustainable support from other indicators, buying CAD at “bargain prices” may still be expensive if the trend of CAD weakness continues.

Forex Trading Resources To Support Your Strategy

We hope you enjoy DailyFX’s new podcast: Trading Global Markets Decoded

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feedhas intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we watch.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

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

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

Talk markets on twitter @ForexYell


Gold & Silver Price Charts – Major Long-term Levels to Dent Rally

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Gold/Silver Technical Highlights:

  • Gold makes new leg higher, has 1350/60-area in focus
  • Silver weaker, trading back at long-term trend-lines

See what drivers DailyFX analysts expect to move Gold in the coming weeks in the Q1 Gold Forecast.

Gold makes new leg higher, has 1350/60-area in focus

Last week, when I last looked at gold it was probing support by way of a zone extending back to last year and the trend-line off the November low. The surge from support posted not only a higher-high in the rally sequence dating back to August, but now has significant long-term resistance in focus.

For the past few years gold has been undergoing a significant period of consolidation and with it a triangle has been maturing. The top-side trend-line extends over all the way from 2014, crossing several peaks grouped together during the first part of 2018 in the vicinity of 1350/66.

The combo of trend-line and price resistance (as a result of the t-line) makes the upcoming spot a very important one both short and long-term. The thinking on this end is that at the very least we will see a pullback develop from major resistance even if gold is to trade on through and spark a major breakout above 1375.

Gold has a little room to go before it thoroughly tests resistance, however; risk/reward for longs has become quite unfavorable while the short-side is becoming increasingly appealing with a major backstop to use for assessing risk.

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets.

Gold Daily Chart (big resistance ahead)

Gold daily chart, big resistance ahead

Gold Weekly Chart (Big wedge forming)

Gold weekly chart, big wedge still forming

Silver weaker, trading back at long-term trend-lines

The story for silver remains the same – weaker than gold. As noted last week, with silver also trading around major long-term trend-lines it is viewed as the least favorable as a long between the two major precious metals. The July 2016 trend-line, underside of the 2003 trend-line, along with another from April 2017 make the current area a tough one for silver.

Yesterday, a rejection took place on an attempt to trade above the Jan 31 high and through resistance. Depending on how gold handles upcoming resistance (assuming it gets there), silver may see itself back off quite hard if the sector weakens.

Silver Daily Chart (several lines of resistance)

Silver daily chart, several lines of resistance

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX


ASX 200 Technical Analysis: Important 2018 Resistance Holds Firm

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ASX 200 Technical Analysis Talking Points:

  • The ASX 200 has made impressive gains
  • But they have stalled short of an interesting resistance band
  • Its fate is now of pressing importance

Get live, interactive coverage of all major Australian economic data at the DailyFX Webinars

The ASX 200 remains quite comfortably within its dominant medium-term uptrend but a few warning signs are starting to appear.

The most obvious perhaps is that it’s not quite as comfortable as it was last week, with that uptrend line now a lot closer to market levels and, therefore, at greater risk of test.

ASX 200 Daily Chart

But that might not be the gravest warning. It may be more worrying that the key resistance zone I identified last week remains too much for the bulls. The zone comes in between 6111 and 6232 and it bounded trade between September 6 and October 8 last year, before the long plunge down to the lows of late December.

Now it stands in the way of making back yet more of those falls, and the bulls haven’t been able to crack it despite two weeks of trying. They may simply need time to consolidate. The ASX’s Relative Strength Index looks elevated and suggests a degree of overbuying.

If the index can hold on around current levels while that state of affairs cools down. then that might in itself be a moderately bullish signal. Indeed, it would probably presage a foray into that resistance band, if not a trip above it.

However, the uncommitted might want a bit more proof that consolidation is really all we are looking at, rather than something more sinister such as the start of a process of topping out. Keep a close eye on this week’s daily closes. If the index can nose up into that resistance zone and remain there then it might be as well to play for some more upside.

If it can’t then it could be time to increase downside protection, perhaps at least.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Brent Crude May Not Stop at $90 As IEA Warns of ’Risky Situation’

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Brent Crude Oil Price Forecast Talking Points:

  • The ONE Thing: Brent maintains strong factors to support a bullish trend with favorable momentum being maintained. The last time Brent had this many quarters of consecutive gains was in 2Q 2008 before oil spiked aggressively, and added insult to injury ahead of the great financial crises.
  • The International Energy Agency’s Executive Director, Fatih Birol, noted that ‘expensive energy’ is back and that if OPEC does not open the taps, the energy market may soon hamper global growth at a time when sentiment is already tipping lower.
  • Brent Crude Oil Technical Analysis Strategy: Uptrends are naturally overbought, and momentum remains bullish.An inability to close below the 26-day midpoint ($81.70 shows the trend remains in force even as prices test channel resistance via Andrew’s Pitchfork.
  • Access our recent Crude Oil Fundamental Forecast here

Pullbacks have been shallow, and intuitions are not overly long, which could mean that crude has further upside to go. Traders soon learn the markets do not know the meaning of ‘too high’ or ‘too bid’ as momentum and fundamentals as well as sentiment are ever changing. The current momentum picture looks to take the petrol complex higher absent a breakdown through support currently at $81.70/bbl.

The Most Surprising Number In The Commitment Of Traders?

Please add a description for the image.

Chart Source: Weekly CoT Update for the Euro, Japanese Yen, Gold & Other Major Contracts

The chart above shows how institutional positioning sits relative to the 52-week range. When markets are near year-to-date or 52-week extremes like SPX500, you would expect long positions to show the most extreme positioning in the last 52-weeks. However, look at crude positioning.

Despite Venezuelan output in a virtual free-fall and uncertainty about access to Iranian supplies, institutions are holding long positions within the lowest quintile in 52-weeks. Due to FOMO, a strong breakout could cause a chase to follow that would cause traders not just to hold option exposure on crude, but futures as well that could bid up the front-month contract further.

Unlock our Q4 18 forecast to learn what will drive trends for Crude Oil into year’s end.

Brent Insight from the Futures Curve

The futures curve is a tool that speculators and hedgers or corporates alike look to as the perceived fair value of an asset at different points in time due to the available information. The back of the curve is often a helpful source of information about sentiment and perceived effects of current policies.

The December 2020 contract that makes up the back of the brent curve has been rising steadily. Despite arguments of a ‘well supplied’ oil market a strengthening tail of the curve tends to show a tighter oil market for longer. Expectations for a tighter market is exactly the argument made by Fatih Birol of the IEA who said that unless OPEC and their allies turn on the taps, the market is going to feel a squeeze as we enter a ‘red zone’ as the global economy is losing momentum.

Birol also noted in a Bloomberg interview that, ‘if there are no major moves from key producers, the fourth quarter of this year is very, very challenging.’

Technical View: Weekly Charts Shows Bullish Momentum, $90/bbl Target

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

Technically Speaking On Brent Crude:

  • Resistance:$86.65 / $90 (October opening range high, 61.8% Retracement of 2012/16 Range)
  • Spot: $84.56/bbl
  • Support:$81.70, $78 (26-day midpoint, the terminus of prior correction)

Once again, the only complaint bulls likely have about Brent is that the trend has been too strong to help identify re-entry points. However, the hammer candlestick on Monday’s price action saw the pair briefly drop below the 9-day midpoint before rising again and is currently set to close above the 9-day midpoint at $84.578/bbl.

Adding to trader’s confidence of the Elliott Wave persuasion is that the strong move from $78 happened at the end of a triangular correction before exploding higher to $86.65 for an 11.36% rally.

On a longer-term chart, traders can see that since May, when Brent broke above $52/bbl, momentum has remained bullish with MACD (5, 34, and 5) in positive territory. Traders may want to study the Q4 2010 and Q1 2011 rise a break above $90/bbl (trendline from 2008 high) could set up the FOMO breakout discussed earlier.

Traders will also see that momentum per Ichimoku (bright green line on the chart that lags price) continues to show bullish momentum. If nothing else, it should encourage short traders to wait.

Additional insights for Brent can be found in the options market that is showing $100 calls trading at large volumes. Additionally, backwardation via the December 2018- December 2019 brent contracts, while off the highs of the year, continue to show a healthy front-month premium that should also discourage less brave shorts.

Not familiar with Ichimoku? You’re not alone, and you’re in luck. I created a free guide for you here

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---Written by Tyler Yell, CMT

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

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

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CAC 40 Double Tops at Channel Line

Swing trading, chart patterns, breakouts, and Elliott wave.

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Talking Points

  • CAC 40 carves a double top pattern
  • Elliott Wave pattern could not push beyond the mid-line of the Elliott Wave channel
  • Bears are activated on a move below channel support near 5200

The Elliott Wave pattern on CAC 40 is intriguing. CAC 40 appears to have finished the five wave impulse move at the Elliott Wave channel mid-line. This implies a weak market and is a bearish pattern.

This pattern suggests that a longer term correction is underway. The first battle of support emerges near 5,200 where the blue Elliott Wave support channel emerges as well as the bottom of the Ichimoku cloud.

Interested in learning more about Elliott Wave and Ichimoku? Grab the beginner and advanced Elliott Wave guide as well as the Ichimoku guide.

CAC 40 Elliott Wave and Ichimoku Pattern

CAC 40 Double Tops at Channel Line

Created using IG Charts

Any near term bulls would need to show themselves in CAC 40 near 5,200. If this level breaks, then the door is opened up to 4,900-5,000. We have two different levels appearing there.

First, the previous wave ‘iv’ extreme is near 5,000. Previous fourth waves tend to act like a magnet in corrective moves.

Secondly, the 38% retracement of the June 2016 (Brexit) low to the November 1, 2017 highs appears near 4,921.

Therefore, if 5,200 breaks, traders can look for further weakness down towards the 4,900-5,000 price zone.

Lower potential exists, but we will need to see the structure of how the correction develops to weigh the odds further.

Why do traders lose money? Find out in our Traits of Successful Traders Research.

---Written by Jeremy Wagner, CEWA-M

Jeremy is a Certified Elliott Wave analyst with a Master’s designation. This report is intended to help break down the patterns according to Elliott Wave theory.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

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Other Elliott Wave forecasts by Jeremy:

GBP/USD Hanging Over the Edge of a Cliff

AUDUSD technical forecast hints at the market searching for a bottom.

Short term EURUSD Pattern Hints at Bounce to 1.17.

USD/CAD dives 200 pips, will it continue?

Gold price forecast points towards lower levels.

Crude oil prices reach highest level since July 2015.

NZDUSD Elliott Wave Analysis: Temporary Relief Rallies

USD/JPY : A Bird in the Hand is Better Than Two in the Bush


US Dollar Technical Analysis: Can USD Hold this Rebound?

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

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US Dollar Index (DXY) Key Points:

  • The ONE Thing: Sentiment Extremes in USD are not matched by a positive technical picture for the US Dollar. There appears to be a form of divergence in the works as the US Dollar is rising, but at a tepid pace despite the largest number of US Dollar bulls in 52-weeks per Paul Robinson’s breakdown of the CFTC report, CoT Update for US Dollar, Euro, British Pound, Gold, and More.
  • Technical studies may be disheartening for US Dollar bulls as sentiment extremes are showing a lack of an impulsive follow through.
  • Make no mistake; the dire Emerging Market headlines tend to align with a strengthening US Dollar. If the US Dollar continues to strengthen, there will likely be more/ worse headlines coming from EM, but a reversal in recent US Dollar strength could bring massive relief to many global markets with a high stock of USD-denominated debt.
  • Technical Outlook on the US Dollar: The US Dollar has retraced 50% of it’s August drop, which followed bearish MACD (5,34,5) divergence. However, a break of the August low at 94 would open up a move likely to 93.79/92.9.

Unlock our Q3 forecast to learn what will drive trends for the US Dollar through the rest of 2018!

It’s a popular time to be hot US assets. The US stock market is running away with the record books while others bourses are steeped in bear markets. Traders in Foreign Exchange are also apt to talk about the virtues of being long the US Dollar.

Their arguments are sound when taking a snapshot of the current global macro environment that is ripe of the following headlines:

  • The Federal Reserve looks set to keep hiking despite other central banks having difficulty leaving negative rates
  • Britain’s Brexit progress looks uncertain at best despite Britain being set to leave the EU on March 29, 2019,without an agreement in place to define future relations
  • Emerging Markets are in crisis mode with Brazil, South Africa, Indonesia, India, & Turkey seeing their currencies rapidly depreciating against the US Dollar.
  • China and the US are embroiled in a Trade War that seems to favor the US in the current atmosphere as China PMI recently slowed relative to expectations and the PBoC recently engaged in liquidity injections that may show a slowing economy.

More themes are going on right now, but you get the idea. We’re in an environment that one may think the US Dollar Index should be trading at or above the 2017 extreme or at least at 2018 extremes.

But, it’s not.

The US Dollar is working through a technical bounce right now with extreme sentiment, and technical traders should be aware that a flip in sentiment from bullish to bearishness could bring a sharp drop in the US Dollar that could lead into massive relief for emerging markets, commodities, and equities around the world.

A further rally in US Dollar would likely embolden the bears that are encircling multiple emerging market themes right now that could send us from theme to crisis.

Put simply, the strengthening US Dollar, despite being off the highs of 2018 and less than 50% of the 2017-2018 range remains a hamper to growth, and a coordinated move from the Fed to take some of the air out may “support the global market,” and lead to a falling USD into and through Q4.

Technically Speaking – A Weak Bounce On Extreme Sentiment

US Dollar Technical Analysis: Can USD Hold this Rebound?

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

Momentum per MACD (5, 34, 5) remains bearish at below zero, but bullish sentiment is at one-year extremes. That does not sound like an ideal recipe for a bullish breakout, and traders should be on the watch for a test and break below the August low near 94.

Such a break would likely align with a broad rally in emerging markets, I’m looking at you CSI300, and would also be signaled first and foremost by the USD/CNY that has made an argument for being The most important currency pair in the world (sorry, EUR/USD.)

Given the technical concern I have and the worsening macro global backdrop (it’s not pretty outside of US risky assets,) I am watching for a pullback toward 93.79/92.90 on the US Dollar Index. This comprises of two key pull-backs before the August high and the median line of the massive Andrew’s Pitchfork drawn from the key pivots in late 2017 and early 2018.

A break below this zone would argue for a broader regime shift and would likely be cemented through speculative futures positioning that you can track from Paul Robinson’s weekly wrap up.

My bearish these would be discredited on a break and close above 95.61, the 61.8% retracement of the August range. Such a move would technically favor a move toward 97, the top of the channel on the charts.

We’ll see.

New to FX trading? No worries, we created this guide just for you.

MORE SUPPORT FOR YOUR TRADING:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q3 have a section for each major currency, and we also offer an excess of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our popular and free IG Client Sentiment Indicator.

---Written by Tyler Yell, CMT

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

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

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

Talk markets on twitter @ForexYell


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

Price action and Macro.

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Talking Points:

- USD/CHF resisted off of a key area again this morning. Should USD-strength continue, a bullish move over this resistance level can open the door to breakout strategies in Swissy.

- While USD weakness continued well into this month, USD/CHF has been range-bound since July, deductively highlighting a relatively weak Swiss Franc that could become attractive for continuation should USD-strength continue to show.

- Want to see how USD has held up to the DailyFX Forecasts? Click here for full access.

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The U.S. Dollar has had a rather rough 2017. In a down-trend that’s seen as much as -12.3% of the U.S. Dollar’s value erased, even while the Fed talks up additional rate hikes, few currencies have been able to keep pace with the Greenback’s declines. After coming into the year trading above the 1.0300 level, USD/CHF has seen as much as 925 pips taken-out as the pair has driven-lower.

But after running into support in mid-July around the .9433 level (the 2016 low), the declines have slowed as USD/CHF has built into a rather volatile range-bound pattern. Resistance has begun to build around the .9773 level, and we’ve seen multiple iterations of resistance show-up here; each rebuking USD/CHF’s upward advance.

USD/CHF Daily: Range-Bound Since Re-Test of 2016 Low

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

Chart prepared by James Stanley

At this point, a top-side break of that well-worn resistance level could open the door to an attractive bullish breakout setup. Just above this area of resistance is another level of interest at .9813, as this is a prior swing-low point of support that also showed as a quick swing-high before the pair initially sank below .9770. This can be used in a couple of different ways. For traders looking at the more aggressive route of taking on bullish exposure on a break of .9775 (a few pips beyond the exact point of resistance), the level at .9813 can be utilized as an initial target and an opportunity to move the initial stop up to breakeven. Or, for those who want to approach USD/CHF a bit more conservatively, the .9813 level can be used to trigger the bullish breakout, with .9772 becoming an area to look to for stop placement in the effort of containing risk in the event that the breakout doesn’t continue-higher.

On the chart below, we’ve added five potential resistance levels above the .9813 inflection point, each of which has been derived from a prior price action swing and/or group of swings. Each of these can be used as potential targets should the bullish breakout continue if/when resistance is taken out.

USD/CHF Four-Hour: Potential Top-Side Resistance Levels Applied

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

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Rebound May Offer Opening to Sell

Fundamental analysis, economic and market themes.

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AUD/USD Technical Strategy: BEARISH

  • Aussie Dollar bounces after outsized drop vs USD, as expected
  • Sellers may wait for confirmation of exhaustion before trading
  • Near-term resistance capped at 0.7170 and support at 0.7054

Get help building confidence in your AUD/USD strategy with our free trading guide!

The Australian Dollar rebounded against its US counterpart from lows set in the wake of a dovish shift in RBA rhetoric, making good on signs of ebbing downside momentum identified last week. Prices now face resistance in the 0.7142-70 area, with a daily close above that initially exposing 0.7235.

Near-term support is in the 0.7054-76 region. A reversal that takes prices back through this barrier sets the stage for a test of 0.6982, the January 2 bottom. Taking out this barrier would finally take prices out of the choppy range containing them since early October, marking longer-term downtrend resumption.

Australian Dollar vs US Dollar price chart - daily

Sellers looking to establish or add to short exposure may view the latest bounce as an opportunity once signs of topping begin to emerge, hinting that the correction has run its course. That is yet to appear even in nearer-term positioning on the four-hour chart however, arguing for patience until confirmation can be had.

AUD/USD Technical Analysis: Rebound May Offer Opening to Sell

AUD/USD TRADING RESOURCES

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

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


FTSE Technical Analysis – Price Resistance & 200-day MA Keeping Lid on Upside

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

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FTSE Technical Highlights:

  • FTSE has price resistance and 200-day ahead
  • A soft to weak market is anticipated, watch the U.S. markets too

Get your forecasts today for the FTSE and Pound right here on the DailyFX Trading Guides page.

FTSE has price resistance and 200-day ahead

The rally in the FTSE off the December low has stalled of late around price resistance dating back to September. Looking just a bit over last week’s high there is the 200-day MA rolling lower, which if we see even another small push higher from here the market may be stopped in its tracks.

Other global markets, namely the U.S., continue to hold tough to trading higher which reflects a short-term relative weakness out of the U.K. benchmark. With resistance in the area this isn’t wholly surprising but is nevertheless a cautionary signal.

The S&P 500, as discussed the other day, is coming up on 2800/17, a big spot for the market. A turn lower from there could have global markets weakening in earnest. Indices such as the FTSE and DAX (especially the DAX) could be downside leaders as sellers hit the weakest markets.

For now, it is still a bit of a tough spot tactically, as resistance is in the area but the trend remains positive so far in the absence of a strong selling off noted levels. Soon that could change.

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

FTSE Daily Chart (Price and MA resistance)

FTSE daily chart, price and MA resistance

You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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---Written by Paul Robinson, Market Analyst

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