Support & Resistance

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Gold Price Outlook: XAU Bears Grind into Support at Fresh 2019 Lows

Short term trading and intraday technical levels.

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Gold prices are down 2.5% from the April high with a four-day decline now testing fresh yearly lows. These are the updated targets and invalidation levels that matter on the XAU/USD charts this week. 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 (XAUUSD)

Gold Price Chart - XAU Daily - GLD 4/17/2019

Technical Outlook: In my latest Gold Weekly Technical Outlook we noted that, “From a trading standpoint, the risk remains weighted to the downside while below 1302 but ultimately, a larger setback should offer more favorable entries closer to the yearly range lows.” Price is probing this support zone now at 1275/76 – a region defined by the January opening-range low and the 38.2% retracement of the 2018 advance.

A break / close below this threshold is needed to keep the immediate short-bias viable targeting the 2018 slope (red) and a more significant support confluence at 1253/58 – an area of interest for possible gold price exhaustion IF reached. Monthly open resistance stands at 1292 with bearish invalidation steady at 1302.

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

Gold 120min Price Chart (XAUUSD)

Gold Price Chart - XAU 120min - GLD 4/17/2019

Notes: A closer look at price action shows Gold trading within the confines of a near-term descending pitchfork formation extending off the March / April highs with a four-day decline taking gold within pips of the lower parallel. Yearly open resistance stands at 1280 backed by the 38.2% retracement / median-line at 1287- a rally surpassing this zone would shift the focus towards subsequent objectives at the weekly opening-range high at 1292 & the 61.8% retracement at 1296. Support rests with the lower parallel, currently around ~1268 backed by the 100% extension at 1258 and the 50% retracement at 1253 – both levels of interest for exhaustion / long-entries IF reached.

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Bottom line: Gold is approaching down-trend support just lower at the objectively yearly range lows and leaves the immediate short-bias at risk while above 1275- expecting side-ways to lower price action / look for a bigger reaction on a test of slope support. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops- IF price is indeed heading lower, look for failure / exhaustion ahead of the median-line on a recovery here. Keep in mind we’ll have to re-adjust the Fib levels if a new low is registered. Review our latest Gold 2Q forecasts for a longer-term look at the technical picture for XAU/USD prices.

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 - XAU Price Chart - GLD Positioning
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +3.24 (76.4% of traders are long) – bearish reading
  • Long positions are4.2% higher than yesterday and 6.3% higher from last week
  • Short positions are 4.7% higher than yesterday and 5.0% higher 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. Yet traders are less net-long than yesterday but more net-long from last week andthe combination of current positioning and recent changes gives us a further mixed Gold (XAU/USD) 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


Potential Upstart in Volatility as S&P 500, Dow & Nasdaq 100 Approach Record Highs

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

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

  • S&P 500 still in rising wedge, scenarios the same
  • Dow Jones wedging up too, 500 points from high
  • Nasdaq 100 nearly notched new record close

Check out the fundamental and technical forecast for stocks as they rise towards record highs in the Q2 Equity Markets Forecast.

S&P 500 still in rising wedge, scenarios the same

Lately, I’ve been focused on the rising wedge forming in the S&P 500, and with it still trading inside the pattern it continues to be a focal point. The scenario where the market breaks through the top-side is looking increasingly likely, but as pointed out last week, since record highs are just ahead it could result in a false breakout and reversal as sellers show up. Or maybe not…

A breakout to new record levels and momentum could pick up, which is why paying attention to how it unfolds is important. Around major thresholds such as record highs, even if the market is to continue marching on, volatility has in the past rose as eager sellers show up. This would be a welcomed event of course for the short-term two-way trader.

If in the event the market rolls over from here, then a traditional bearish trigger could be in place for the rising wedge, but this is looking like an increasingly lower probability outcome.

Traders are generally short the S&P 500, find out on the IG Client Sentiment page what this could be for prices moving forward.

S&P 500 Daily Chart (Still in rising wedge…)

S&P 500 daily chart, still in rising wedge...

Dow Jones wedging up too, 500 points from high

The Dow is working on a rising wedge of its own, with the price action since about a month ago narrowing to a point. As goes the S&P goes the Dow. The underside of the wedge is also the trend-line off the December low and so a downside wedge-break could usher in sellers quickly. However, the trend is still higher and as said regarding the S&P a top-side break is looking increasingly likely. A move higher will have focus on the old record high at 26951.

Dow Jones Daily Chart (wedge forming)

Dow Jones daily chart, wedge forming

Nasdaq 100 nearly notched new record close

The Nasdaq 100 came only a few points away from a new record close yesterday. Watch how price action plays out here as the market tries to climb to a new record high. A forceful rejection would bring into play the trend-line off the December low and June ’16 slope. For now the benefit of the doubt remains higher but that could change towards at the least a more tradable two-way market even if a new high is obtained as new highs are often tested not long after getting achieved.

Nasdaq 100 Daily Chart (testing old record)

Nasdaq 100 daily chart, testing old record

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 Downtrend Expected to Resume

Fundamental analysis, economic and market themes.

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EUR/USD Technical Strategy: BEARISH

  • Euro downtrend intact after rebound form support below 1.12
  • Candle structure, negative RSI divergence hints at downturn
  • Break of near-term support near 1.1280 may be confirmation

See the quarterly Euro forecastto learn what is likely to drive price action through mid-year!

The Euro rebounded from support below the 1.12 figure against the US Dollar to retest resistance guiding the single currency lower since late September 2018. Prices action has been choppy, but a shallow series of lower highs and lows suggests the prevailing near-term bias remains bearish.

Candlestick structure hints at indecision. Long upper wicks and small candle bodies point to forceful rejections on back-to-back tests of resistance hints at fraying bullish conviction. Early signs of negative RSI reinforce the sense that upside momentum is ebbing.

EUR/USD Technical Analysis: Euro Downtrend Expected to Resume

Zooming in to the four-hour chart, the first layer of support looks to be at 1.1285, the intersection of a chart inflection barrier and a counter-trend line. Breaking below that exposes 1.1250 next. A minor upside hurdle lines up at 1.1332 but bearish bias invalidation calls for a break of trend resistance, now at 1.1390.

Euro vs US Dollar chart - 4 hour

EUR/USD TRADING RESOURCES

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

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


EUR/GBP Technical Analysis: Bullish Cues Clouded by Brexit Saga

Classic technical analysis, macro and economic themes.

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EUR/GBP Technical Analysis

  • EUR/GBP remains in consolidation mode
  • Brexit is clouding fundamental landscape
  • Technical analysis hints turn higher next

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

EUR/GBP remains in persistent consolidation mode since its descent through April 2018 lows in late February. Prices have spent most of the time since then ranging between well-defined resistance just under 0.86983 and persistent-support above 0.84722. Brexit-related news is creating elevated anticipated volatility in the British Pound outlook, clouding the fundamental landscape.

Until a resolution of some sort is made, whereby it becomes clearer what the next phase is in the UK’s position with the EU will be, more of the same could be in store for Sterling. Technical analysis does show where EUR/GBP could be heading next, but do keep in mind that significant follow-through, be it up or down, should come with a supportive fundamental backdrop.

On the daily chart below, the pair has formed a Morning Star bullish candlestick pattern. Simultaneously, positive RSI divergence is still present, indicating that downside momentum is fading. Both of these price signals warn that perhaps the Euro might find some lift against the British Pound.

Clearing resistance above 0.8698 open the door to testing 0.88108 after. Otherwise, descending has 2016/2017 support levels eyed above 0.83001. I am closely following the pair’s performance and you may follow me on Twitter here @ddubrovskyFX to stay updated.

EUR/GBP Daily Chart

EUR/GBP Technical Analysis: Bullish Cues Clouded by Brexit Saga

Chart Created in TradingView

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--- 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 Creeps Back Into Uptrend

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Japanese Yen Technical Analysis - TALKING POINTS:

  • USD/JPY is back within its old uptrend
  • It has yet to consolidate here, however
  • GBP/JPY is in range, but could be headed lower

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 returned to the defensive against the US Dollar after a period of daily-chart strength last week, with USD/JPY well illustrating the value of Fibonacci retracement levels to technical analysis.

Between April 7 and 10 the pair retreated below the uptrend channel which had previously bounded trade since the lows of March 25. A surge in market risk aversion saw the Dollar and Yen locked in a ‘battle of the havens’ which the latter seemed to be winning. USD/JPY saw three consecutive days of quite heavy falls up to April 10.

However, then Mr. Fibonacci took charge. USD/JPY’s fall duly halted at the first, 23.6% retracement level of 2019’s rise.

US Dollar Vs Japanese Yen, Daily Chart

That came in at 110.86 which, not at all coincidentally, was the intraday low of April 10. Since then the pair has edged albeit gingerly back into that uptrend channel and, perhaps as significantly, risen back into the important resistance zone composed of the previous significant highs. They were struck in early March.

It is notable however that USD/JPY remains biased towards the bottom of its uptrend channel and has yet to seriously threaten the top of that resistance band. It doesn’t look terribly overbought according to its momentum indicators so the uncommitted might be well advised to wait a couple of days and see how things go.

If the Dollar can remain comfortable in both uptrend and resistance zone, then it might not be unreasonable to expect a further push higher. That said the next significant top is December’s 113.69 and that will probably remain too much for the bulls to hope for anytime soon. Falls are likely to find support again at that first retracement level, with the second waiting below at 110.07.

Against the British Pound the Japanese Yen remains all-too predictably bounced around by the seemingly endless twists of the Brexit story.

British Pound Vs Japanese Yen, Daily Chart.

That said the cross remains within the very broad trading band which has marked trade since mid-February, even if the old daily-chart uptrend now looks a bit historic.

It is perhaps notable however that there is some risk of a lower high on the chart if April 4’s peaks of 146.94 can’t be topped. They’re not far above the market by any means, and they may well give way. But they haven’t yet and, if they don’t it could be a bearish sign threatening at least a retest of key support at 143.85.

JAPANESE YEN TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by David Cottle, Analyst for DailyFX

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


GBP Price Outlook: GBPUSD Coils Deeper into Triangle

Price action and Macro.

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GBPUSD Talking Points:

- GBPUSD remains in the descending triangle formation and prices have continued to hold resistance around last week’s highs, taken from the 38.2% retracement of the ‘Brexit move’ at 1.3117.

- GBPUSD has been digesting in this formation for over a month now after setting a fresh high on March 13th. But the GBPUSD support zone around the 1.3000 psychological level has continued to hold the lows, leading to a descending triangle formation.

- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euro and 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 GBPUSD? Check out our IG Client Sentiment Indicator.

GBPUSD Coils Deeper into Digestion

As a number of FX markets continue to coil, the British Pound has not been immune. The chaotic month of March has led into a digestion type of start for April trade in the currency, and against the US Dollar, GBPUSD continues to coil deeper within a descending triangle formation.

GBPUSD Price Four-Hour Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

As looked at a couple of weeks ago, a revisit to the key support zone in GBPUSD that runs from 1.2962-1.3000 re-opened the door for topside strategies; and prices in GBPUSD spent most of last week working-higher, eventually finding resistance at a Fibonacci level at the price of 1.3117. This is the 38.2% retracement of the ‘Brexit move’ in the pair, and since last Tuesday – this has marked near-term resistance in GBPUSD.

GBPUSD Price Two-Hour Chart

gbpusd price gbp/usd two hour price chart

Chart prepared by James Stanley

GBPUSD Price Drives Deeper into Digestion

Taking a step back, and GBPUSD remains in the descending triangle, with the 1.2962-1.3000 zone hold the lows that have printed since late-February. Resistance is coming from a descending trend-line taken from late-March swing highs. Such a formation will often be approached in a bearish fashion, with the expectation that the same motivation that’s driven in sellers at lower-highs will, eventually, carry-through for a breakdown below horizontal support.

GBPUSD Price Eight-Hour Chart

gbp price gbpusd eight hour price chart

Chart prepared by James Stanley

GBPUSD Retail Sentiment: Retail Betting on a Hold of Support

Retail traders are continuing to hold a net long position in GBPUSD, with the two out of three retail traders holding long positions in the pair. This is likely driven-by an expectation for the support inflection from a couple of weeks ago to continue to hold.

But – retail positioning is often looked to as a contrarian indicator, begging the question, is GBPUSD nearing a breakdown below support?

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

GBPUSD IG Client Sentiment: More than Two out of Three Retail Traders Are Long

gbpusd gbp/usd retail sentiment via IGCS

Chart prepared by James Stanley

GBPUSD Near-Term Strategy

At this stage, the descending triangle pattern is likely well-known. Meaning traders should stay vigilant for false breaks, and as looked at in this week’s FX Setups, price action in GBPUSD could technically break-above the descending trend-line while continuing to carry a bearish posture. This places emphasis on the zone of resistance potential that’s held the April highs. This comes from a confluent area on the chart from 1.3181-1.3187, with the latter of those prices functioning as the 23.6% Fibonacci retracement of the 2014-2016 major move in GBPUSD. A hold of resistance at-or-around this level keeps the door open for short-side approaches.

For those looking at bullish strategies in the pair, traders would likely want to await a break-above 1.3200 to move-forwards with confidence that bulls are taking the reins. Alternatively, a revisit to and hold of support around the 1.2962-1.3000 zone could re-open the door for continued mean-reversion.

GBPUSD Price Hourly Chart

gbp price gbpusd 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 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 an abundance 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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Japanese Yen Technical Analysis: USDJPY Bulls Must Top 112.00

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY has broken above its 2019 uptrend channel
  • However, it hasn’t yet managed to top 112.00
  • Even if it does, an important resistance band will loom

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 remains on the defensive against the US Dollar, even if the latter is making heavy weather of a key psychological resistance point.

USD/JPY has managed to rise above the downtrend channel previously dominant since January 10. It was an extension of the rise seen consistently from this year’s lows, printed on January 2.

US Dollar Vs Japanese Yen, Daily Chart

US Dollar bulls have yet to conclusively push trade above the 112.00 handle despite trying for a few days now. It looks as though they will probably succeed in doing so either this week or next, assuming that fundamental risk appetite endures and isn’t thrown a Yen-strengthening curveball from left-field.

Even if they do, though, there will remain resistance beyond the psychological with which those bulls will have to contend if they are to solidify their gains.

There’s a band of resistance between 112.48 and 113.03 which will be important once the 112.00 level has been topped. That band has been an important gateway to significant highs in trade going back to September last year and Dollar bulls should be aware that time spent above it has tended to be fleeting and could well prove so once again unless the pair can be pushed convincingly beyond the upper boundary.

USD/JPY reversals will probably find near-term daily chart support between 111.05 and 110.23. That range bounded trade between February 11 and 28. Of course the pair would remain solidly in its uptrend even if that range were to break, but it would certainly look less comfortable there than it has in the last two weeks.

Meanwhile, the Euro has been creeping doggedly higher against the Japanese Yen since January 1, but that process looks to be stalling.

Euro Vs Japanese Yen, Daily Chart

If this downtrend break is confirmed by daily or weekly closes beneath it then the first Fibonacci retracement support of this year’s rise will be in focus. It comes in at 126.02, with the next, 38.2% prop at 125.12.

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!


NZD/USD Technical Analysis: Down Trend Resumption at Hand?

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NZD/USD Technical Strategy: NEUTRAL

  • New Zealand Dollar probes below 0.67 following soggy CPI figures
  • Confirmation still needed to make the case for downtrend resumption
  • Close above trend line from October’18 lows invalidates bearish bias

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

The New Zealand Dollar sank following disappointing CPI data, with prices on pace to register the largest drop in two weeks. A clear-cut breakout remains unconfirmed however as prices push up against support in the 0.6699-0.6727 area. This has been an important inflection region since July 2018.

A daily close below this barrier would strongly suggest that the downward trend against the US Dollar started in April 2018 is resuming and expose the next downside hurdle in the 0.6591-0.6619 zone. Neutralizing selling pressure probably needs a close above rising trend line support-turned-resistance, now at 0.6834.

In the meantime, traders may judge current positioning as unattractive for an actionable trade. On one hand, a short seems ill-advised from a risk/reward perspective as prices sit squarely at support. On the other, the absence of compelling evidence for a bullish reversal hints that taking up the long side is premature.

New Zealand Dollar vs US Dollar chart - daily

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 Technical Outlook: Extending into Resistance

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

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DAX 30 Technical Highlights

  • DAX running into confluent resistance lines
  • CAC nearing multiple turning points from last year

Fresh quarterly forecasts are out, to see where our team of analysts see the Euro, DAX, and other markets are headed in the coming weeks, check out the DailyFX Q2 Trading Forecasts.

DAX running into confluent resistance lines

Last week, the DAX was able to hang onto the gap from April 3, and with that we are seeing a push higher into an area of resistance that comes via a pair of t-lines. The trend-line running down off the record notched in January 2018 is the most important of the two, but also the top-side parallel from the beginning of this year is running in line with the trend-line.

This potentially makes the current 100 or so point zone (~12100/200) an important one to watch. The trend off the low in December has been persistent, and other major global indices (namely the U.S.) have shown no signs of turning just yet, so it’s possible the DAX trades on through.

From a tactical standpoint, existing longs may want to give the market a chance to break above the trend-lines, and if it doesn’t and price action shows a rejection at resistance, then looking to turn defensive may be the prudent play. On the flip-side, ‘would-be’ shorts will likely be best served waiting for obvious signs of selling to show up first before getting too aggressive.

All-in-all, the trend and tone generally remain positive for the DAX, so despite resistance it may not pull off in a meaningful manner. That outlook could change, though, should we see a violent turnabout here soon.

DAX Daily Chart (confluent lines of resistance)

DAX daily chart, confluent lines of resistance

CAC nearing multiple turning points from last year

The CAC is coming up on several swing highs created from June to September in the 5539/60-area. This could certainly be enough to at least dent the latest advance higher and push price back down to the trend-line off the December low. Watch how price action plays out here, along with how the DAX responds to its own set of obstacles.

CAC Daily Chart (Jun-Sep swing highs)

CAC daily chart, jun/sep swing highs

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 Prices Moving Closer to Triggering Technical Patterns

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

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Gold/Silver Technical Highlights:

  • Gold drop from t-line, descending wedge nearing completion
  • Silver is moving near neckline, support test (break soon?)

See what fundamental drivers and technical signposts our team of analysts are watching in the DailyFX Q2 Gold Forecast.

Gold drop from t-line, descending wedge nearing completion

The other day it was noted that gold was supported in the near-term after reversing from support levels, with the trend-line off the Feb high initially targeted. With Wednesday’s touch of resistance and yesterday’s drop from it, a descending wedge is becoming increasingly clear.

The pattern is often regarded as bearish given the increasingly lower highs indicating sellers coming in more aggressively each step of the way. With that said, though, these patterns can still turn out to be bullish. But here is why it is more probable gold is headed lower.

Pulling back to the bigger picture, gold remains stuck in a multi-year wedge. It most recently came off the top of the broad formation, leaving plenty of room to the downside (~1215/25). To trigger the descending wedge a drop below 1281 is needed, and to further along momentum a decline below the August trend-line.

On the top-side, a close above the upper t-line of the wedge and 1310 is required to gain more buying interest. Should this lesser likely scenario come to fruition, the top of the long-term wedge (2014 t-line) will be targeted in the 1340s.

A breakout could happen in a day, it could take a week or longer, so it won’t be much more time before gold gets rolling again with directional clarity. Likely lower…

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 and currencies.

Gold Daily Chart (descending wedge)

Gold daily chart, descending wedge

Gold Weekly Chart (Inside broader wedge formation)

Gold weekly chart, inside broader wedge formation

Silver is moving near neckline, support test (break soon?)

Silver is sporting a bearish price pattern of its own, one discussed frequently as of late. The head-and-shoulders pattern is near the neckline, which is in approximate confluence with the top of a range from last year. A decline below 14.70 will have prices cleared to move towards 14.

Alternately, the entire price sequence since the beginning of the year could be a falling wedge with a bullish outcome. A breakout above the trend-line off the Feb high and 15.34 is needed to give this scenario legs.

Silver Daily Chart (H&S nearing neckline)

silver daily chart, H&S nearing neckline

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: Support Solid Despite Lack of Progress

Financial markets, economics, journalism and fundamental analysis.

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ASX 200 Technical Analysis Talking Points:

  • The index has made little clear progress in the past week
  • That said it has moved into a higher overall trading range
  • It also looks quite relaxed still above the key 6000 mark

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

The ASX 200 has still failed to push on past its previous significant high but, nonetheless, a look at the daily chart suggests that it’s still the bears who have it all to prove.

The Sydney stock benchmark may be making heavy weather of resistance at 6284.6 which was the intraday high of March 7 and 2019’s peak so far.

Higher Range. ASX 200, Daily Chart

However, the index still looks pretty comfortable quite close to that peak. It has also clearly moved into a higher range overall in the last week or so, with the lower bound now coming in at 6172.4 rather than the 6104. Which held good from mid-February to the end of March.

There’s also a possible but inconclusive suggestion of a pennant formation on the daily chart.

Possible Pennant. ASX 200, Daily Chart

This often-telling confluence of up- and downtrends is usually seen as a ‘continuation pattern.’ What this means is that, once it breaks, the status quo before it began to form will be renewed. In this case, however the immediately preceding period saw a bit of a meander, but it is at least possible that the climb up from the lows of late December will resume.

On the bearish side immediate support comes in at the current range base of 6172.4, with the old base in focus should it break. Fundamental focus is on US corporate earnings at the moment. Disappointing showings from major Wall Street banks have already sent stocks lower in New York this week, but not too much lower.

ASX bulls will probably still have cause to hope as long as the current broad range holds up through earnings season.

However, a break through it will put focus on deeper falls, perhaps toward the 6064.7 mark. That is still only be the first, 23.6% Fibonacci retracement of 2019’s rise though. Things might get more serious below that level with obvious support rather lacking ahead of the second retracement at 5922.5. A probe of that region would obviously entail the surrender of the psychologically crucial 6000 point. That would be serious for the bulls, but it doesn’t appear imminent and, assuming no gross earnings-season shocks, more upside looks entirely possible for the ASX.

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?

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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

Please add a description for the image.

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

More Support For Your Trading:

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

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’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 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


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.

Follow on twitter @JWagnerFXTrader .

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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?

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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: Aiming to Test Below 0.71 Figure?

Fundamental analysis, economic and market themes.

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AUD/USD Technical Strategy: BEARISH

  • Australian Dollar rejected after multiple tests of four-month resistance
  • Break of support from April swing low hints at probe below 0.71 ahead
  • Downswing might develop into long-term bearish trend resumption

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

The Australian Dollar recoiled from resistance guiding it lower against its US namesake since early December. The drop followed several days of grinding forays to the upside that ultimately fizzled. What’s more, progress proved to be elusive despite a supportive fundamental backdrop. That gives the currency pair’s subsequent retreat an air of capitulation.

Continued progress to the downside faces rising trendline support set from early March (now at 0.7088) but the true test of sellers’ mettle comes in the 0.6982-7021 area. A daily close below this would confirm the formation of a bearish Descending Triangle chart pattern carved out since late 2018. That would speak to the resumption of the structural decline launched in January 2018.

AUD/USD Technical Analysis: Aiming to Test Below 0.71 Figure?

Turning to the four-hour chart, there seems to be adequate momentum to at least begin attempting such a move. Prices have broken well-established support from the April 2 swing bottom. That seems to set the stage for a test below the 0.71 figure to challenge the March-based trend line, followed by the 0.7049-73 congestion area. A close above 0.7207 probably neutralizes immediate bearish pressure.

Australian Dollar vs US Dollar chart - 4 hour

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 Chart Outlook – Trading at Important Trend-line Resistance

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

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FTSE Technical Highlights:

  • FTSE up against trend-line off record high
  • Risk is for a move lower from here
  • Keep an eye on GBP triangle, it may matter

For the recently released Q2 FTSE & GBP Forecasts, check out the DailyFX Trading Guides page.

FTSE up against trend-line off record high

The FTSE is basically where it was a week ago when I did the last technical update, which means it is still up against the trend-line off the record high. This leaves the index still vulnerable to weakness in the days ahead.

Not only is the market up against trend resistance but it is also in a relatively extended state. After meaningful swings the FTSE in is known in particular for its overlap in price action, or deep retracements, even if the trend is to continue on…

A pullback to the lower slope off the December low could make for a good test of the trend since then. If the FTSE is indeed strong, though, it might not decline back to that point, something to pay attention to. A continued consolidation around trend resistance would be signaling a likelihood that it will break higher. For now, giving shorts the benefit of the doubt below the weekly high of 7476.

FTSE Daily Chart (t-line resistance)

FTSE daily chart, t-line resistance

We discussed a bit last week GBP’s once again impact on the FTSE, as the negative correlation on a monthly basis sits right near -0.70, a statistically significant relationship. GBPUSD is nearing the breakout point of a wedge, and with that might come a strong move that either helps (GBP lower) or hurts (GBP higher) the FTSE. Perhaps the relationship breaks down as correlations are known to do, but it’s worth watching, even if it is just from a total risk perspective if holding positions in both the FTSE and GBP.

GBPUSD Daily Chart (watch for wedge breakout)

GBPUSD daily chart, watch for wedge breakout

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

You can join me every Wednesday at 9 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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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

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