Support & Resistance

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EUR/USD Technical Analysis: Coiling Up for a Breakout?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro rally fizzles at 3-week high but breakdown unconfirmed
  • Waiting for prices to resolve congestion, show actionable setup

A Euro spiked up to a three-week high against the US Dollar but momentum faded, leaving the single currency within the bounds of an eleven-month down trend. At the same time, the shorter-term up move set from mid-December 2016 is yet to be invalidated, making for congested positioning.

A daily close back below the now-familiar inflection point at 1.0682 opens the door for a test of the 1.0570-90 area (April 10 low, trend line). A dense wall of resistance lies between the 38.2% (1.0780) and 50% (1.0853) Fibonacci expansion levels, an area bolstered by falling trend resistance set from early May 2016.

After booking initial profits on half of the EUR/USD short trade activated at 1.0684, remaining exposure stopped out at breakeven. Current positioning does not appear to offer an actionable setup to enter another trade. Opting for the sidelines seems most prudent for now.

What do retail traders’ buy/sell decisions hint about the Euro trend? Find out here!

EUR/USD Technical Analysis: Coiling Up for a Breakout?


French Elections & Softer US Data Favoring Further JPY Strength

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

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Talking Points:

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USD/JPY is working on its first close below the 200-DMA since the US Election outcome was announced on November 9. JPY remains the strongest currency in G10 with EUR the current weakest followed by USD, due to the few other currencies having a persistent supportive environment for currency strength. On Friday, the market got news of a soft Consumer Price Index that underperformed on both core and headline measures alongside Retail Sales.

In addition to Friday’s soft US data, we have Sunday’s first-round of the French election adding to a favorable environment for USD/JPY shorts. If the polls continue to show momentum for Mélenchon and Le Pen, we could continue to see the JPY strengthen as the options market continues to show traders buying puts on JPY crosses as protection. Such action in the options market also favors spot-exposed traders exiting their trades until the waters become less choppy. However, depending on who battles in the anticipated run-off for French President on May 7, we could continue to finish the month of April and the open of May.

Many traders are rightfully focused on the possible run-off between the surprising rise of Mélenchon to challenge La Pen and the outstanding favorite, Macron. A Macron win would likely be least favorable for JPY longs and most favorable for USD/JPY longs given that the market sees Macron as the least likely to stir concern about France abandoning the Euro.

Looking at the chart, a trader would be well served to keep an eye on IG trader sentiment (discussed below) and the 200-DMA as possible new resistance. If the price remains below the 200-DMA and the IG Trader Sentiment holds a bearish signal, we could be on our away to approaching 106.84, which is the 61.8% Fibonacci retracement of the August-December price range and the close of Nov.10.

Should price reverse higher, and we see the 200-DMA hold as support, which is not anticipated in the current macro background, the appropriate price level to focus on for USD/JPY is the March 27 low of 110.10 followed by the April 4/ 11 high of 110.92. The absence of a close above 110.92 alongside the sentiment picture explained below remaining in its current state since January 9 will keep the bias bearish.

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French Elections & Softer US Data Favoring Further JPY Strength

Chart Created by Tyler Yell, CMT

USD/JPY IG Trader Sentiment

French Elections & Softer US Data Favoring Further JPY Strength

What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!

USDJPY: Retail trader data shows 71.9% of traders are net-long with the ratio of traders long to short at 2.56 to 1. In fact, traders have remained net-long since Jan 09 when USDJPY traded near 117.304; price has moved 7.5% lower since then. The number of traders net-long is 2.6% higher than yesterday and 11.7% higher from last week, while the number of traders net-short is 8.2% higher than yesterday and 4.1% higher from last week.

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

Shorter-Term USD/JPY Technical Levels: Monday, April 17, 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.

French Elections & Softer US Data Favoring Further JPY Strength

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GBP/USD Technical Analysis: Breakout or Fake-Out?

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Long-term range yielding after yesterday’s surprise announcement from PM, Theresa May.
  • Cable put-in an almost 400-pip burst higher on the surprise announcement from PM May. But the question of continuation potential is very much alive as this simply introduces another risk factor into the Brexit negotiations.
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In our last article, we looked at the continued range in GBP/USD that developed shortly after the ‘flash crash’ in the British Pound. This range was largely governed by the competing forces of the continued dovish stance of the BoE with the rising tide of inflation being seen in the economy. As more evidence of stronger inflation presented itself, Cable caught bids to the upper-portion of that range; and then when various members of the Bank of England opined on the matter, prices had a tendency to drive back-down as it didn’t appear that the bank was in any rush to tighten policy.

And then a curveball showed up…

Yesterday morning, Prime Minister Theresa May announced that general elections would be held early, on June 8th of this year. The move was largely applauded as cogent political strategy in the effort of gaining a Conservative super majority to push through Brexit negotiations. And this very much may be the case; but given the volatility seen in global elections over the past year, it would seem that a bit of reservation should be due before any long-term prognostications are built based on early polling numbers.

The immediate impact to the British Pound was a quick run of strength that finally sent price action above the 1.2775-level. Prices continued to run in a rather aggressive fashion, all the way up to 1.2903 before sellers came-in. This led many outlets to claim that PM May’s announcement was a ‘game-changer’; and again, this very much may be the case but for traders putting money on the line, this is a leap-of-faith that shouldn’t yet be initiated until more information presents itself.

GBP/USD Technical Analysis: Breakout or Fake-Out?

Chart prepared by James Stanley

More likely, this surprise announcement added uncertainty to an already brutally uncertain future for the U.K., and investors responded as they generally do to additional uncertainty: By closing positions and ‘tightening up’ risk outlay. The degree of strength seen in Cable after yesterday’s announcement very much alludes to this being at least partly a factor to the Cable’s run-higher.

Given that yesterday’s move was at least partially-driven by short cover after another surprise development in the Brexit-saga, this leaves Cable in a fairly precarious position. Short-term price action remains bullish as we’re seeing some element of support show-up around that prior high of 1.2775; but the question remains as to whether yesterday’s announcement is a true driver for a tidal wave of change in GBP-price action.

Nonetheless, price is always ‘right’, and at this stage traders need to at least be open to the idea of the potential for bullish continuation in Cable. For those looking to or open to adding GBP-exposure after yesterday’s burst of strength, the prior price action swings from the February high (1.2706) and the March high (1.2616) can be helpful for seeking out deeper support or for setting risk levels.

GBP/USD Technical Analysis: Breakout or Fake-Out?

Chart prepared by James Stanley

As we’ve been discussing for the better part of the past six months, there is very much a recipe for Cable strength brewing right now. But that’s largely because of the already significant drop seen in GBP after the Brexit referendum. After the ‘sharp repricing’ in the British Pound after Brexit, inflation has begun to tick-higher, and this has created the thought that the Bank of England may move away from their post-Brexit accommodation because a) the brutal slowdown they were expecting never really materialized and b) staying on that unnecessary accommodation only opened up more risk on the inflationary front that would, eventually, force the BoE into action.

To be sure, many bullish trends begin as ‘short squeezes’. But until we have more information behind this move, we won’t be able to decipher if this does, in fact, carry potential for further gains.

Until then, trade the chart. And if you don’t like what the chart is showing (if you’re bearish on GBP), simply move over to another chart or wait until that market sets up more appropriately for you.

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

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USD/CHF Technical Analysis: Parity as the Decision Point

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • USD/CHF Technical Strategy: intermediate-term: mixed + choppy; short-term: bearish.
  • Swissy has shown support at the confluent level around .9950; but after a recent lower-low and another lower-high, bullish strategies will not be favored until price action climbs back-above parity.
  • 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 IG Client Sentiment.

In our last article, we looked at the potential for a burgeoning up-trend in USD/CHF, given the respectable drive seen in the Greenback towards the end of March. And this move did extend above the 1.0100 level in Swissy, giving rise to the hope for the top-side break of a bearish trend-line that’s held price action in USD/CHF since the beginning of 2017. But as geopolitical pressures began to mount over the situation developing on the Korean peninsula, Dollar strength waned and Swissy drove right-back down to the confluent zone of support around the .9950 level.

USD/CHF Technical Analysis: Parity as the Decision Point

Chart prepared by James Stanley

This recent false breakout leaves USD/CHF in a rather directionless manner. U.S. Dollar strength appears elusive at the moment, and this has removed a significant amount of motivation away from the top-side potential in the pair.

But from that above chart, you may have noticed something interesting about this most recent iteration of support around the .9950 level; and that’s the same confluent zone that we’ve been watching for the better part of the past half-a-year in the pair. There’s quite a bit going on around this price, as .9951 is the 61.8% retracement of the 2010-2011 major move in Swissy. At .9947 we have the 50% retracement marker of the ‘Trump Bump’, and at .9958 we have the 50% retracement of the much shorter-term recent move off of the March lows into the April highs. And this level isn’t just theoretical, as we saw a considerable amount of resistance show up around this price last year while USD/CHF was range-bound for much of the year ahead of U.S. elections.

Suffice it to say – there are/were plenty of reasons for buyers to step in around that level; and thus far we’ve seen support around this confluent zone hold. But the bigger question is whether this area of support is strong enough to propel a new trend that might, eventually, see a top-side break of that descending trend-line. And until buyers are able to push price action back-above the vaulted parity figure, traders will likely want to remain dubious of such an occurrence.

USD/CHF Technical Analysis: Parity as the Decision Point

Chart prepared by James Stanley

For traders looking at near-term exposure in USD/CHF, shorts can be favored while price resides below parity with the area around 1.0040 as potentially attractive for stop placement. If we do see price action break back-above parity, bullish themes could become attractive again.

USD/CHF Technical Analysis: Parity as the Decision Point

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Range Boundaries Taking Shape

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Australian Dollar range taking shape in the 0.75-0.76 area
  • Near-term congestion is still within longer-term down trend

The Australian Dollar is struggling to hold below the 0.75 figure against its US counterpart but seems equally unable to mount a convincing assault on the 0.76 mark. Overall positioning seems still favor the downside but near-term selling pressure has given way to sideways drift.

From here, a daily close below the March 9 low at 0.7491 opens the door for a test of the 50% Fibonacci expansion at 0.7440. Alternatively, a reversal back above the 23.6% level at 0.7604 sees the next upside barrier at 0.7679, the March 30 swing high.

A short AUD/USD trade was triggered at 0.7605. When it hit its initial objective, profit was booked on half of the position. Remaining exposure has now stopped out at breakeven. A compelling setup to re-establish a trade is absent for now, arguing in favor of standing aside.

What do retail traders’ AUD/USD buy and sell decisions hint about the price trend? Find out here!

AUD/USD Technical Analysis: Range Boundaries Taking Shape

USD/CAD Trades At 1-Month Highs On Commodity Downturn, CAD CPI Ahead

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Talking Points:

  • USD/CAD Technical Strategy: Favoring CAD Strength Continuing
  • Crude Oil helping to guide USD/CAD higher
  • CPI on Friday could turn the tide for CAD if BoC needs to shift from their dovish stance

The Canadian Dollar Bulls have why the 200-DMA (blue line at 1.3225) garners so much respect. Since testing the 200-DMA on April 13, USD/CAD has moved higher by over 2% thanks in part to the pull-back in Crude Oil.

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The price test worth watching as USD/CAD trades in a choppy fashion in the rising channel is the March 09 high of 1.3535. A break above 1.3535 could open up the argument that we’re soon to trade toward the highest levels since 14-months. However, before we get excited about a possible breakout in USD/CAD, remember that Friday holds the Canadian CPI data.

A strong CPI print has the ability to shift the BoC from their dovish tone if there is a print above 2%. Outside of the data, sentiment and relative strength tend to favor anticipation of a breakout higher. Looking at IG Client Sentiment, we see a sharp rise in USD/CAD short positioning as the CAD continues to sit as the second weakest currency in the G8 with AUD the weakest.

We use the Sentiment Reading as a contrarian indicator favoring further upside. The backdrop that would be needed to favor another test of the 200-DMA at 1.3225 would be a surprising CPI and a move higher in Crude Oil above the April high of $53.74/bb.

USD/CAD Trades At 1-Month Highs On Commodity Downturn, CAD CPI Ahead

Chart Created by Tyler Yell, CMT

USD/CAD Sentiment:

USD/CAD Trades At 1-Month Highs On Commodity Downturn, CAD CPI Ahead

USDCAD: As of April 20, retail trader data shows 38.9% of traders are net-long with the ratio of traders short to long at 1.57 to 1. The percentage of traders net-long is now its lowest since Apr 03 when USDCAD traded near 1.33841. The number of traders net-long is 9.1% lower than yesterday and 25.2% lower from last week, while the number of traders net-short is 43.0% higher than yesterday and 16.2% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDCAD-bullish contrarian trading bias.(Emphasis Mine)

What do retail traders’ buy/sell decisions hint about the CAD trend? Find out here!

---

Shorter-Term USD/CAD Technical Levels: Thursday, April 20, 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/CAD Trades At 1-Month Highs On Commodity Downturn, CAD CPI Ahead

Contact and discuss markets with Tyler on Twitter: @ForexYell


NZD/USD Technical Analysis: Prices Poised to Pick Direction

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar waiting for new direction cues to emerge amid congestion
  • Stalled near-term price action remains within bounds of larger down trend

The New Zealand Dollar is mired in a choppy congestion range below the 0.71 figure against its US cousin as prices struggle to find lasting directional momentum. Still, the broader longer-term trend bias appears to favor the downside.

Interim support is at 0.6975, the 23.6% Fibonacci expansion, with a daily close below that opening the door for a test of the 38.2% level at 0.6905. Alternatively, a push above the 38.2% Fib retracement at 0.7076 paves the way for a challenge of the 50% threshold at 0.7133.

Immediate selling pressure has ebbed and prices have become rudderless. Consolidation may precede downward resumption or a reversal higher, but thus far positioning looks non-committal. With that in mind, choosing to wait for a better-defined opportunity seems most attractive.

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NZD/USD Technical Analysis: Prices Poised to Pick Direction

EUR/GBP Technical Analysis: Euro Spikes to Key Resistance

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8497
  • Euro spiked higher after first round of French presidential election
  • Short trade triggered just below 0.85, aiming for return toward 0.84

The Euro spiked dramatically higher against the British Pound following the results of first-rounding voting in the French presidential election. Prices are now retesting trend line support-turned-resistance whose break last week may have marked completion of a large Head and Shoulders topping pattern.

From here, a daily close above 0.8480 (trend line, March 31 low) opens the door for a test of support-turned-resistance at 0.8605, the March 23 low. Alternatively, a move back below the February 22 bottom at 0.8403 paves the way for a challenge of a double bottom at 0.8334.

The post-election spike triggered the short entry order established last week but the magnitude of the gap and thin liquidity in early-morning Asian trade resulted in significant slippage, putting the trade in at 0.8497 rather than the pre-set rate of 0.8431. Accordingly, the first target will be revised to 0.8403. A stop-loss is set to activate on a daily close above 0.8480. Half of the trade will be booked and the stop moved to breakeven once the first objective is reached.

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

EUR/GBP Technical Analysis: Euro Spikes to Key Resistance

EUR/JPY Technical Analysis: V-Shaped Rally into Resistance

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • EUR/JPY Technical Strategy: Intermediate-term: congested; short-term: bullish.
  • EUR/JPY put in an aggressive support break to begin April; but has recovered a portion of those losses over the past four days after bouncing from the 115-zone.
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In our last article, we looked at a bull flag formation that was continuing to hold price action in EUR/JPY. This bull flag had lasted for over three months as the pair digested election-fueled gains. But after a support break of a really big level at ¥120.00, traders were likely going to want to wait for bullish price action to show before plotting strategies for top-side continuation.

That bullish price action never showed up; and as we entered the month of April, worries around French elections helped to drive weakness in EUR/JPY as the pair hurdled-lower by four more big figures. Support eventually showed up just a bit below the psychological level of ¥115.00, after which a momentous rally has taken place to volley price action right back up to another level of interest around ¥117.50. The zone around ¥117.50 is a key area to watch for a number of reasons: Not only is this a psychological level but just a bit-lower at ¥117.46 we have the 50% retracement of the July-December major move from last year; and when prices were falling this area caught three days of support before finally succumbing to selling pressure.

EUR/JPY Technical Analysis: V-Shaped Rally into Resistance

Chart prepared by James Stanley

For short-exposure: this would be the current bias given the veracity of the prior move-lower, and also taken from the fact that the recent rally has yet to cross the 38.2 or 50% retracement markers of that most recent move-lower. Should resistance hold around this zone of ¥117.50, the door could be opened for bearish strategies with eyes on the area around ¥118.50 for stop-placement. Short-side strategies would likely want to incorporate targets around ¥115.90, and ¥115.00 for scaling-out of positions.

EUR/JPY Technical Analysis: V-Shaped Rally into Resistance

Chart prepared by James Stanley

For top-side strategies: Traders would likely want to wait for a bit of confirmation before chasing a move that’s already put in significant run in the effort of controlling risk. Trying to buy a reversal with a +300 pip stop can be a dangerous way of going about matters, so traders will likely want to try to find a way to control risk. This can be done in one of two ways when trading a reversal: 1) Let price action break above resistance, and then look for support to show-up around that same level. This would be around the same ¥117.50 zone. Or 2) trade the move much shorter-term, and look to buy a ‘higher-low’ in the shorter-term move in the effort of taking prices back up to resistance.

EUR/JPY Technical Analysis: V-Shaped Rally into Resistance

Chart prepared by James Stanley

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

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GBP/JPY Technical Analysis: Downtrend Still Firmly In Place

Financial markets, economics, fundamental and technical analysis.

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Talking Points

- GBP/JPY continues to fall within the downward channel it has traded in for most of 2017.

- There’s little sign of that changing in the foreseeable future.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

Further losses are likely near-term in GBP/JPY as it continues to fall within the well-defined downward channel that has been in place for most of this year. As the Japanese Yen continues to be one of the havens of choice for investors concerned about Syria, North Korea and the French elections, the British Pound is one of many currencies to weaken against it.

Chart 1: GBP/JPY Daily Timeframe (December 2016 to April 2017)

GBP/JPY Technical Analysis: Downtrend Still Firmly In Place

Chart by IG

As the chart above shows, GBP/JPY would need to fall to around 136 to signal a sharper decline, while only a rise above 139 would imply a breakout to the upside. Even then, the 50-day and 100-day moving averages would provide resistance that would have to be overcome before the advance could accelerate.

Turning to the five-minute chart, a rise in GBP/JPY in late Asian/early European trading Wednesday soon ran out of steam and the cross then eased before rallying again.

Chart 2: GBP/JPY 5-minute Timeframe (April 12, 2017)

GBP/JPY Technical Analysis: Downtrend Still Firmly In Place

Chart by IG

The near-term outlook therefore remains bearish, with short positions in the cross favored. The key targets on the downside are the 136.51 low touched on January 16 and then the lower boundary of the channel on the daily chart, currently at 135.84. On the upside, the key resistance levels are the upper boundary of the channel, now at 139.10, the 50-day moving average at 139.55 and the 100-SMA at 141.02.

However, more cautious day traders favoring the downside might be wise to place a stop before then, at 138.30, where the 20-SMA currently sits.

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

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


Talking Points:

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

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

- Pullback to support might initiate further buying

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

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

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

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

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

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

USD/CNH Daily Chart: October 28, 2016

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

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

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

Follow him on Twitter at @OdedShimoni


CAC 40 Bounces Significantly From Weekly Lows

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

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Talking Points:

The CAC 40 is rebounding significantly this morning, and is now trading up +0.77% for Thursday’s session. European markets as a whole are trading higher, as equities have so far reacted positively to commentary made from various ECB policy officials this morning. CAC 40 traders should also note that there will continue to be considerable market risk this week, with the first round of the French presidential election will be held on April 23rd. CAC 40 leaders for Thursday include BNP Paribas (+3.07%) and Publicis (+2.86%). Top Losers for the Index include both Solvay (-1.50%) and ArcelorMittal (-0.33%).

Technically, even with today’s advance, the CAC 40 is trading in an ongoing short term downtrend. Early in today’s session the Index was rejected at its 10 day EMA (exponential moving average), found at 5,053.08. Traders should monitor this value, as the line will continue to act as a point of resistance if prices decline further. In the event that the CAC 40 rallies higher, a breakout above the 10 day EMA would signal a significant shift in momentum. A bullish move of this nature would allow traders to again set potential targets towards the standing 2017 high of 5,152.00.

CAC 40, Daily Chart with 10 Day EMA

CAC 40 Bounces Significantly From Weekly Lows

(Created Using IG Charts)

Sentiment totals for the CAC 40 (Ticker: France 40) have neutralized, as the Index has backed away from its yearly highs.Currently IG Client Sentiment reads at -1.17, with 46.1% of traders long the CAC 40. This is a significant shift from last Tuesday’s reading of -1.89 and last week’s reading of -3.62. If the CAC 40 traders to new weekly lows, traders may look for these sentiment totals to eventually flip positive. In this scenario, traders may begin looking for the emergence of a new longer term bearish trend. Alternatively, if the CAC 40 finds support and again rallies higher, sentiment totals may remain negative and shift back to extremes before the conclusion of the trading week.

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CAC 40 Bounces Significantly From Weekly Lows

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

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Crude Oil Price Forecast: Downside Stalls on OPEC Favoring Extension

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

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Talking Points:

  • Crude Oil Technical Strategy: Long above Q2 Opening Range @ $49.91/bbl
  • Libya reopens El-Feel Oil Field in West Libya, Returning unneeded Oil Supply to market
  • Saudi Arabia's oil minister remarks on likely renewal of the OPEC supply curb

While OPEC may be winning in their battle to balance the global Oil market, it is not necessarily happening on the timeframe they would prefer. Naturally, it is not helpful that Shale production is at its highest levels since 2015. The U.S. Shale resurgence coupled with OPEC’s supply management continues to provide hope for Oil bulls. While Crude dropped ~3% on Wednesday, there is also likely to be volatility on expiration-position squaring is occurring as May WTI contract expires Thursday.

The weekly chart below of the May contract shows key support in the $50.38-$49.59 zone. $50.38 is the 50% retracement of the March range, $49.91 is the April Opening Range low, and $49.59 is the 61.8% retracement of the May range.

Should these levels fail to hold up the price, traders will likely turn their attention to the Trendline drawn off the August 2016 low near $47.90, which held support well in March. This Trendline aligns well with the 55-WMA (blue line on the chart.) The sentiment picture is aligning with the downside view as will be explained below.

The resistance that would turn the focus away from further downside is the April 12 high of $53.74/bbl.

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Crude Oil Price Forecast: Downside Stalls on OPEC Favoring Extension

Chart Created by Tyler Yell, CMT

Crude Oil Sentiment:

Crude Oil Price Forecast: Downside Stalls on OPEC Favoring Extension

Oil - US Crude: As of April 20, retail trader data shows 54.4% of traders are net-long with the ratio of traders long to short at 1.2 to 1. The number of traders net-long is 40.0% higher than yesterday and 15.3% higher from last week, while the number of traders net-short is 30.1% lower than yesterday and 31.7% lower from last week.

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

(Emphasis Mine)

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Shorter-Term US OIL Technical Levels: Thursday, April 20, 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.

Crude Oil Price Forecast: Downside Stalls on OPEC Favoring Extension

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

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Gold Prices Hold Support Ahead of French Elections

Price Action, Swing & Short Term Trade Setups

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In our last article, we looked at the recent trend-line inflection after Gold prices shot-higher on the heels of the Federal Reserve’s March rate hike. This trend-line can be found by connecting the July high to the November ‘election spike’ in Gold prices; and the projection of that trend-line has helped to cap the advance that began in mid-March. But sellers haven’t had a free line here, as price action has continued to find support around the ‘S1’ zone that we’ve been watching, which is the 38.2% Fibonacci retracement from the major move of last July’s high down to December’s low.

Gold Prices Hold Support Ahead of French Elections

Chart prepared by James Stanley

With the first round of French elections set to take place on Sunday, there’s a logical reason for this continued banter between support and resistance in Gold prices. Likely, we’ll see Gold prices move with the results of this weekend’s election. Should either Jean-Luc Melanchon or Marine Le Pen make it into the next round, this can be seen as heightened geopolitical risk out of Europe, which will likely bring with it an extension of the up-trend in Gold prices. However, if we get a second round with Emmanuel Macron and Francois Fillon, that fear might take a back seat as fears of ‘bigger issues’ in Europe recede; and this could further allay those themes of geopolitical pressure that became prominent in early-April.

On the chart below, we’re looking at four different support levels with Gold prices (we’ve added a level at $1,270.94 since our last article), and these can be usable on either side of the trade. For bulls, these ‘zones’ could be areas for potential stop placement based on how much distance one might want to give to the trade. For bears, these zones can be targets for short-side positions. For those that aren’t sure or don’t have a bias or directional stance, waiting for next week’s open could be a very cogent approach given the potential for volatility around this weekend’s elections.

Gold Prices Hold Support Ahead of French Elections

Chart prepared by James Stanley

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

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Silver Prices Outlook: A lot Hinges on Gold Long-term Trend-line

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

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What’s inside:

  • Gold a big focal point for the outlook for silver prices
  • Silver pulling back from resistance, but has some trend support
  • Push above recent highs gives silver traction; gold will then have likely broken 2011 trend-line

What is behind this year’s rally in precious metals, and will it last? See our forecast for details.

When we last discussed silver prices, we were keeping an eye on gold as it neared the 2011 trend-line. It’s a big line of resistance for the yellow metal, and one traders should keep focused on in determining how things might play out with regard to silver.

So far, gold is struggling to overcome the long-term line of resistance as one would expect given it hasn’t been since November when it was last visited. For now, we will treat it as it is – a macro ‘line-in-the-sand’. At some point if gold is to break higher and have a sustained move, ideally it closes on a weekly basis above the line, not just on the daily time-frame. It’s too long-term of a trend-line to place much weight on a daily close above, as it could easily turn into a one-off event which is quickly reversed. A weekly close above would garner far more conviction as a valid breakout.

Gold: Weekly

Silver Prices Outlook: A lot Hinges on Gold Long-term Trend-line

Created with TradingView

As long as gold stays beneath we look for silver to struggle, as it too is also trading beneath resistance, although it’s of less significance. After popping above the late-Feb high on a couple of occasions in recent trade we are seeing sellers step in. The retracement has brought into play the trend-line off the March low, as well as a bit of retesting of the broken November trend-line. This could keep the short-term trend intact, but a clean move beyond recent highs will be needed to garner interest for a move towards the November high. If such a move develops it will likely be accompanied by a push in gold above the 2011 trend-line.

For now, the overall bias is fairly neutral but if certain events highlighted take shape conviction to the upside will grow.

Silver: Daily

Silver Prices Outlook: A lot Hinges on Gold Long-term Trend-line

Created with TradingView

Come check out the commodities and equity indices webinar every Tuesday with Paul for up to date analysis on precious metals. See the Webinar Calendar details.

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


Dollar Bulls See Pressure From All Sides As Confidence Erodes

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

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Talking Points:

Another year, another disappointing start to the DXY. Much like in January 2016 after the Federal Reserve raised the reference rate the month prior for the first time since 2006, the USD is not providing the follow through that many had hoped would come through. Now, looking at the options market for sentiment clues and the charts, it’s fair to say the DXY stands on a medium term brink of decisiveness worth watching.

Traders hoping for a turn-around in USD are likely better positioned by taking a short-EM view as opposed to DM FX given the recent catalyst and potential catalysts for varying DM currencies like JPY, EUR, & GBP. Of course, DXY has a heavy weighting towards DM currencies with the heaviest weighting favoring EUR direction.

On the chart, the key points worth watching on the downside is the YTD low at 98.86, which aligns with the Trendline seen on the chart is below drawn off the May low. Beyond the May Trendline, we could see a move toward the multiple 100% extensions (ABC moves lower) between 97.95/66 that could still indicate a deep pullback in a longer-term uptrend, a view many traders still hold.

If the price breaks the May Trendline as well as the confluence of 100% extension in the upper half of 97, we could begin to see the unraveling of sentiment for longer-term Bulls. In the options market, we continue to see medium term (3-month) outlooks deteriorate. Per Bloomberg, the weighted 3-month 25-delta risk reversal currently shows the smallest premium for calls relative to puts at 60bps since August 2016.

We would likely need to see a close above the confluence of resistance at 101 to expect to see the Bulls rush in. Until then, we’ll follow the yields and look for a move lower in DXY.

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Dollar Bulls See Pressure From All Sides As Confidence Erodes

Chart Created by Tyler Yell, CMT

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Shorter-Term DXY Technical Levels: Wednesday, April 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.

Dollar Bulls See Pressure From All Sides As Confidence Erodes

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

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S&P 500: Last Stand for Shorts, Chart Beginning to Tilt Higher

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

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What’s inside:

  • S&P 500 challenging trend-line off record high
  • Bearish case hinges on the market staying below, else picture starts turning positive
  • Levels and lines under consideration

Can the S&P 500 continue its bull-run in Q2? See ourforecast to find out what is driving the stock market!

On Tuesday, we asked if Monday’s rally was as good as it gets for the week. Our bias has been towards lower prices, as we’ve been operating off the notion of seeing the S&P 500 head towards a lower low beneath the March low of 2322, but so far it has managed to hold above despite the sequence of lower highs since the record high notched on March 1. We’ve yet to see a lower low. Last Friday’s low arriving above the March low may turn out to be the opposite, as a higher low may be in place, potentially marking the beginning of a once bearish sequence turning bullish.

More downside could be in store, though, but if that is to be the case then we want to see the top-side trend-line hold as resistance. This pretty much means yesterday should be as good as it gets this week, and over the short-term in general if the slightly bearish tilt to the chart is going to be maintained. A cross beyond the upper trend-line doesn’t give the ‘all-clear’ for longs, but it would certainly strengthen the case that the correction since early March has concluded. If the market turns lower right here, right now we still view the 2300 area as a possible spot for the decline (correction) to end. A break above both the top-side trend-line, recapturing of the November trend-line, and higher high above the April 5 swing high of 2378 would be the ‘all-clear’ signaling in our book that a new leg higher is underway.

All-in-all, the case for lower prices is still intact, but barely. The market needs to turn lower pronto or else we will be looking to change gears towards a market rally.

S&P 500: Daily

S&P 500: Last Stand for Shorts, Chart Beginning to Tilt Higher

Created with TradingView

Join Paul every Tuesday for the ‘Equity Indices & Commodities for the Active Trader’ webinar. See the Webinar Calendar details and a listing of all live events with DailyFX analysts.

---Written by Paul Robinson, Market Analyst

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DAX Short-term Trading Outlook: More Weakness Ahead

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

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What’s inside:

  • DAX breaks lower Feb parallel and 12050
  • Hourly chart sporting a downward channel which we will use as a guide
  • Short-term trading levels and lines of interest

Is this just a healthy pullback for the DAX, or could a larger decline be developing? See the Q2 forecast to find out what DailyFX analysts have to say.

On Tuesday, we discussed the importance of closing below the lower parallel running back to the early-Feb low and 12050 for shorts to gain traction. The close on Tuesday was below noted levels and came right at the 3/28 gap-fill. Yesterday was a nothing day, with one of the tighter intra-day ranges we’ve seen in while, and this morning we saw a smallish gap lower and fill to start the day. We’re lacking any real snapback at this time, which favors more downside.

DAX: Daily

DAX Short-term Trading Outlook: More Weakness Ahead

Created with TradingView

Should the market get a little pep in its step, we’re looking to 12050 as resistance, and then the underside of the broken channel, which at this time comes in at over 12100. On the hourly chart the DAX is running lower in a descending channel, which we will use as a short-term guide; stay below the upper parallel and a bearish bias remains intact, while a jump above will warrant consideration for alternative paths. The lower parallel may act as minor support with further selling, but the next significant swing point comes in at 11850, with 11916 as a possible stopping point along the way. Below 11850, we look for 11722 to come into play.

All-in-all, the game-plan is to continue to focus on short-term entries from the short-side, but should the DAX violate the current bearish posturing we will be quick to change gears.

Hourly

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Created with TradingView

Come check out the commodities and equity indices webinar every Tuesday with Paul for up to date analysis on the DAX. See the Webinar Calendar details.

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


Technical Analysis: Battling ASX 200 Hangs On Up There

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The ASX 200 has pushed on from last week’s highs
  • It might even be consolidating into a new, higher range
  • But the jury is still out on that prospect. Keep a close watch on short-term support

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Australia’s major equity benchmark has defied timorous global risk appetite and even falls in the price of iron ore – the country’s major export commodity – to set new highs.

Already at its peaks for 2017 when I last took a technical look at it on April 6, the index has pushed on again to new levels not seen since early 2015.

Holding on: The ASX 200

Technical Analysis: Battling ASX 200 Hangs On Up There

And there are reasons to think it can stay up here.

For one, the shorter-term 50-day moving average remains comfortably above the longer 200-day version. There’s no sign whatsoever of the gloomy ‘crossover’ which can signal a trend change here as indeed the last time it happened for the index, back in May 2016.

For another, both averages continue to slope nicely if more gradually upward. That is another hopeful sign for the bulls, if not a conclusive one.

The ASX also appears to have consolidated, at least to some extent, at these higher levels. The 5853.8 point has provided it with a reasonably solid base in the past ten sessions or so.

However, the benchmark is also now pushing up into highs where it has not been comfortable for very long in recent history. As this chart shows its last foray was back in 2015, and it was short one indeed. In the current febrile global investment atmosphere, the chance of this being a longer stay must be at least questionable.

Short Stay

Technical Analysis: Battling ASX 200 Hangs On Up There

The ASX’s strength has also looked like a bit of an outlier at times, with the likes of the Nikkei 225, for example, sending rather more mixed signals.

This needn’t be bad news for the battling Australian index of course. But keep a close eye on that near-term base. If it can hold, then more cautious optimism would seem justified

If it gives way then we could be back to 2017’s range trade very soon.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


Technical Analysis: Nikkei 225 Bulls Must Show Their Hand Soon

Financial markets, economics, journalism and fundamental analysis.

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Talking Points

  • The Nikkei was in trouble last week, it’s arguably in more now
  • The year’s range has broken and a rising trendline is looking more and more vulnerable
  • The bulls have an awful lot to do

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I last took a technical look at the Nikkei 225 back on March 11. It was in a spot of trouble. It was also at a point below which it could easily get into a lot more, as further falls would see 2017’s trading range conclusively broken to the downside.

There have been further falls.

In fact, the index now looks rather seriously damaged, at least from a short and medium-term technical perspective.

This is not a pretty picture: Nikkei 2225

Technical Analysis: Nikkei 225 Bulls Must Show Their Hand Soon

Chart Compiled Using TradingView

As you can see the bottom of a rising channel which has been in place since the middle of last year is getting uncomfortably close. It comes it at around 17600 now, with the index itself at 18475 or so.

Then there are those averages. Admittedly the “bullish crossover” which saw the 50-day moving average top its older, 200-day brother back in October – and which heralded a 3000-point bull run – has not been reversed.

But the lines do seem to be converging at this point. Should they continue to do so a bearish crossover would be the result. That in turn would probably put all gains seen since the current rising trend took hold in grave doubt.

In short, the bulls have an awful lot of work to do, with the recapture of 2017’s previous range bases around 18738 probably their first order of business. If they can’t make that then a bearish picture probably gets more so.

PS. There is a caveat to all of the above. It gets a “PS” because it’s nothing to do with technical analysis. The Japanese economic data we’ve seen of late has not been at all bad. Trade reports speak of robust export and import surges. Business and consumer surveys reveal at least relative and, sometimes, absolute confidence.

Moreover, the Nikkei’s current weakness is surely at least in part a global response to geopolitical worries and a disinclination among investors to take undue risk now. After all, a glance at the index compared to – say – the S&P 500 shows rather similar performance. Some equity rethink has clearly been in train well beyond Tokyo.

Close enough: Nikkei 225 vs. S&P 500

Technical Analysis: Nikkei 225 Bulls Must Show Their Hand Soon

Chart Compiled Using TradingView

But a continued run of optimistic Japanese numbers suggests that there could be scope for the benchmark to regain its old heights, and maybe then some, should that global risk backdrop improve.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


FTSE 100 Gets Hammered, Looking to Go Negative on the Year

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

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What’s inside:

  • FTSE 100 gets hammered below multiple support levels
  • Looking for lower prices following relief bounce
  • Levels of importance outlined

How will ‘Brexit’ impact the FTSE in Q2? Check out our equity markets forecast for details.

On Thursday, we described the FTSE 100 as “treading close to a breakdown”, and had this to say, The June trend-line which held the FTSE up from day one of the month is coming under siege again, and given where the market is trading it could become especially important should it fail to keep a floor in place.”

The three lows created since mid-March around the 7263/55 vicinity became a focal point of interest once the June trend-line was broken. Not only did those levels give-way to selling yesterday, but the first level of support below those bottoms clocking in at 7192 was proven not to be support at all. The next big level we have penciled in comes in at 7093, which aligns with the early-February low and highs from October. Should that level not hold, the market may look to support at the 200-day MA which currently clocks in at 7010.

From a trading perspective, unless you jumped on board intra-day yesterday as support levels cracked you were left with little to take action on. Buying as support was breaking certainly wasn’t in our playbook. Moving forward we will look for a recovery bounce to alleviate short-term oversold conditions before moving down to support. If the footsie is to head lower, it likely will have trouble making it much back above 7200 before rolling back over. On a drop to support under 7100 we'll pay close attention to how the market responds for cues as to whether it will hold or not.

FTSE 100: Daily

FTSE 100 Gets Hammered, Looking to Go Negative on the Year

Created with TradingView

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---Written by Paul Robinson, Market Analyst

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

You can follow Paul on Twitter at @PaulRobinonFX.