Support & Resistance

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EUR/USD Technical Analysis: Smallest 20 Day Range in 2 Years

Swing Trading, Forex Technical Analysis, Chart Pattern Set Ups, Breakout Trading

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Talking Points

-EUR/USD carves its tightest 20 day trading range since August 2014

-FOMC meeting on Wednesday is likely to keep volumes and price action muted

-Favor a range bound strategy until this trading range breaks

Since the day after the Brexit vote, EUR/USD has been trading in a fairly tight trading range on low volume. In fact, the highest high to the lowest low for the past 20 trading days is the tightest range seen in EUR/USD since August 2014.

Beginning June 24 to today, the highest high is 1.1185 and the lowest low price is 1.0951. Therefore, if price pushes down to 1.0900-1.0951, we could see some volatility kick up as traders jockey for bullish support versus a bearish break.

EUR/USD Technical Analysis: Smallest 20 Day Range in 2 Years

Chart created using FXCM’s Trading Station

Also, with the FOMC scheduled for Wednesday afternoon, there could be a void of trading volumes to meaningfully push price in one direction or the other.

Lastly, Sentiment as measured through SSI is showing weak participation. The SSI ratio is hovering near 50% as longs and shorts are nearly equally weighted on both side. See EUR/USD trader positioning here.

All of this points towards a market condition geared towards range bound strategies in EUR/USD until we see a break of the post Brexit range of 1.0951 – 1.1185. Even still, a break of this range doesn’t necessarily negate the potential for range bound conditions.

Since we have today’s low of 1.0951 identified as a key level to watch, a trader can tune to Grid Sight Index to see how similar price action has behaved in the past.

Learn more about Grid Sight here.

Biggest reason EUR/USD traders lose? This could be why.

Interested in a quarterly outlook for EUR or USD? Download our quarterly forecast here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

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USD/JPY Bullish Reversal? Not Out of the Woods Yet

Swing Trading, Forex Technical Analysis, Chart Pattern Set Ups, Breakout Trading

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Talking Points

-Japanese fiscal stimulus is anticipated to be significantly smaller than expected sending USD/JPY lower

-Prices dropped into previously cited support zones as USD/JPY tries to build a medium term base

-Technical structure remains bullish medium term and a break above 105.42 builds the case a low is in place targeting 111-115

Overnight, Japan’s finance minister stated the government has yet to make a final decision on the size of the recently announced stimulus package. Therefore, traders felt the stimulus coming out of Japan could end up smaller than expected. My colleague Christopher Vecchio says the stimulus program is anticipated to be 6 trillion Yen vs the expected 10 trillion Yen. As a result, the Yen strengthened driving USD/JPY lower.

The technical picture for USD/JPY continues to play out according to the playbook we highlighted on Friday. We were anticipating a sell-off that may turn into a bullish reversal at lower levels. One of the levels identified was 103.90. Today’s low thus far is 103.99. Therefore, it is possible the low is in place.

USD/JPY Bullish Reversal?  Not Out of the Woods Yet

The key level we’re watching is 105.42. Above here and we have overlap with the July 21 low and the case builds the low is set.

So long as we are below 105.42, we need to consider the possibility of one more dip lower to finish off the 5 waves down from July 20. Support levels to watch are 103.90 and 103.50.

Don’t lose sight of the bigger picture. The medium term technical picture suggests an important low may form nearby that could send prices shooting higher towards 111 and possibly 115. A break above 105.42 shifts the probabilities higher the move is underway.

In looking across other JPY crosses like EUR/JPY, GBP/JPY, and AUD/JPY, they appear to be building medium term bases as well. Therefore, USDJPY or JPY crosses may be an area of focus over the next several days.

Be mindful of market volatility potentially kicking up Wednesday afternoon into Friday morning. First, the FOMC concludes their 2 day meeting Wednesday afternoon. Then, Thursday night into Friday morning the BOJ is expected to present their latest monetary statement. Any surprises out of either camp could create some USDJPY volatility.

Lastly, keep an eye on live trader positioning in USD/JPY. The current SSI reading is +1.65. If this number moves significantly in one direction or the other, it could signal a price move in the opposing direction.

Having trouble trading USD/JPY? This may be why.

Interested in a quarterly outlook for USD and/or JPY? Download our quarterly forecast here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Bigger-picture trend still bearish, shorter-term chop building near support.
  • GBP/USD is stabilizing above the 1.3000 psychological level, but rips-higher will likely face pressure given the expectation for future rate cuts out of the Bank of England.
  • SSI - If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking at opening a trading account, FXCM has a contest at the beginning of next month for certain account holders. Click here for full details.

In our last article, we looked at the British Pound shortly after the most recent Bank of England rate decision. And as we mentioned, even though the bank held rates flat at that meeting, the world would likely be looking for another rate cut in the month ahead as the BOE wades through another Super Thursday batch of announcements. Traditionally, adjustments to rates from the BOE have been coupled with fresh inflation projections to provide proper context of the move; so after Mark Carney began talking up the prospect of rate cuts just days after the Brexit referendum, August became a likely expectation to see that next rate cut.

However, that being said many were still looking for a cut, with as high a probability as 86% ahead of that BOE meeting. So when the bank didn’t cut, we saw quite a few rate-cut bets jump out of the market, leading to bullish near-term price action. As we advised in our last article, traders can let GBP/USD rip-higher to a more comfortable level of resistance before looking to trigger-in to the short trade in anticpation of next month’s rate cut.

Since then, the Cable has meandered in a choppy downward-sloping channel, but has remained well-above prior lows set earlier in the month of July. And while price action on the 4-hour chart may be offering down-side continuation entries, scaling back to the daily highlights the juxtaposition facing trend chasers currently in the Cable. The most recent swing-high on the daily chart is the same identified in our last article, right around the 1.3500 psychological ‘big figure’ that also happened to be the financial collapse low in the pair. This has been a massively important level in the pair for well over 6 years now, and traders looking to chase the pair lower from here would likely want to investigate stop placement above this level; which with current prices would amount to a stop of more than 325 pips. And for a situation that only has 385 pips until we reach that multi-year low, the risk-reward of the setup could be seen as utterly unappealing right now.

GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

Created with Marketscope/Trading Station II; prepared by James Stanley

Moving forward the stance will remain the same, looking for a better level of resistance that could offer a more appealing entry on the down-side move. We’ve kept the same price action zones as last week, and have added another more aggressive area of potential resistance from 1.3335-1.3350. This would be a level for short-term approaches with targets set towards the most recent swing-low at the 1.3064-vicinity. Should price action rip higher to find resistance in this zone, attractive risk levels could be instituted for shorter-term approaches.

GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

Created with Marketscope/Trading Station II; prepared by James Stanley

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

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US DOLLAR Technical Analysis: Struggling To Mount Resistance

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

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Talking Points:

  • US Dollar Technical Strategy: So Close, Yet So Far From A Significant Break
  • The Major Known Event Risk Is Behind Us, What Comes Next?
  • What Is Needed For a USD Breakout?

Access Our Free Q3 Dollar Outlook As The Fed Appears Cornered Regarding Effective Monetary Policy

The US Dollar has had the fundamental backdrop for a breakout even the most optimistic US Dollar Bulls should be thankful. However, after the Brexit vote was confirmed on June 24, the US Dollar has failed to make significant headway. A lack of upside appears worrisome because what the market is not doing can be as significant (if not more so) than what is doing because investors, therefore, do not see the value in bidding up an asset with an ideal fundamental backdrop.

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Of the four counterparts for the US Dollar of the EUR, GBP, JPY, & AUD, only the AUD had a great run post-Brexit that could help make the argument that there was a better purchase over the US Dollar. The JPY initially strengthened to 98.77 on the Brexit confirmation but has since weakened to ~106 JPY per USD. GBP has been volatile as expected, though it has firmed post-Theresa May’s appointment as PM along with her cabinet.

If the US Dollar cannot find lift-off here, it’s tough to imagine the scenario that it will. Thankfully, we can look to the charts for guidance from here.

The Fundamentals And Technical Picture May Be Aligning to US Dollar Strength

US DOLLAR Technical Analysis: Struggling To Mount Resistance

Given the technical picture on the charts, we are now seeing fault lines before the ceiling breaks on US Dollar. Currently, we have resistance at 12,050/53 (post-Brexit high). A breakout above the H2 Opening range high would favor the USD is beginning to flex its muscle as a reserve currency despite the Fed’s wishes. Below, we’ll discuss what levels to watch, and what other markets could complement such a strong move.

The Bearish channel (red) has done a fine job of framing price action. When combining the bearish price channel with the 200-Day Moving Average (12,023), you can begin to see that we are still in a corrective price channel. Therefore, we must await a breakout before we celebrate the strength of the US Dollar and only a break above resistance should favor the Bulls well into Q3.

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Support & Resistance Levels As of July 7, 2016

We’ve warned that even a dire fundamental picture in the US regarding expected interest rate hikes (a fundamental driver of currency strength) could be swept aside with a break above the 12,050 zone. The price appears to have found resistance for now, but a break higher should turn focus on further US Dollar upside.

While resistance is clustered in the 12,023 (200 DMA) and the post-Brexit higher of 12,053, the support levels are more dispersed. Post-Brexit, initial Support has been found in the 11950/60 zone. A break below initial support would favor a move toward the 38.2% Fibonacci Retracement zone of the post-Brexit range at 11,911. Below there, the Weekly S2 Support sits at 11,897. If we’re going to see a breakout higher, these levels should hold.

A break below the 11,900 level would favor a larger Dollar-negative shift that could put us on the watch for a retest of the May/June lows ~11,670/680.

One thing to be on the lookout for are the implications of the announcement that former Chairman of the Federal Reserve, Ben Bernanke would be advising the Bank of Japan. He was a proponent of ‘Helicopter Money’ as a last resort if QE efforts and effects have reached their limit and the government is unwilling to create a fiscal policy to stimulate aggregate demand.

Such a move would likely bring a lot of volatility in the JPY as well as the entire global financial system if a new step is taken by the Bank of Japan to accelerate growth.

Shorter-Term US Dollar Technical Levels for Thursday, July 14, 2016

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

US DOLLAR Technical Analysis: Struggling To Mount Resistance

T.Y.

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USD/CHF Technical Analysis: Swissy Sticking with the Channel

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • USD/CHF Technical Strategy: Bullish near-term price action structure continues to build.
  • As the US Dollar continues to trade within a range, CHF may remain as an attractive candidate to voice long-USD themes.
  • SSI - If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking at opening a trading account, FXCM has a contest at the beginning of next month for certain account holders. Click here for full details.

In our last article, we looked at the continued bullish structure showing in USD/CHF, with a warning about the longer-term, bigger picture wedge in the pair (shown below).

USD/CHF Technical Analysis: Swissy Sticking with the Channel

Created with Marketscope/Trading Station II; prepared by James Stanley

And given the amount of resistance at the projection on the top-side of that wedge, with two different Fibonacci retracement levels within a few pips of that price, traders would likely want to cap top-end profit targets around this region.

But the reasons for bullish continuation in USD/CHF continue to be attractive, with the US Dollar printing fresh near-term highs as we approach the Federal Reserve meeting next week. And while no hike is expected at next week’s meeting, the fact that U.S. equities remain at all-time highs means that, at the very least, we’ll likely hear the bank talk up the prospect of a rate hike in the second half of this year (perhaps even two, which would be very bullish USD). Combine this with the fact that the Swiss National Bank is on-guard against excessive Franc strength, and this could provide for continuation of the top-side move.

On a shorter-term basis, the channel that we discussed last week in USD/CHF remains alive and well. The support level we had mentioned just above .9750 offered yet another inflection before the top-side move had resumed. At this stage, traders can look for support in the .9850 region in the effort of continuation. For traders wanting to tread a bit more conservatively, deeper support could be sought out in the region around .9800, as this is the 76.4% retracement of the prior major move.

USD/CHF Technical Analysis: Swissy Sticking with the Channel

Created with Marketscope/Trading Station II; prepared by James Stanley

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

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AUD/USD Technical Analysis: Ripping Into the Reversal Zone

Swing Trading, Forex Technical Analysis, Chart Pattern Set Ups, Breakout Trading

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Talking Points

-AUD/USD presses into a potential reversal zone of .7520-.7600

-Near term and medium term patterns are bearish against .7678

-Follow SSI in the resistance zone for clues if the price zone may hold or break

AUD/USD has finally pushed up into the bearish reversal zone. We have been anticipating this bump higher as recent as Friday. The .7520-.7600 level was highlighted on Friday as a zone which may represent the final leg of a bullish push. It is possible we may see one more high above .7545, though it is not required as the previously bullish pattern can now be counted as completed.

The top side key level to watch under this analysis is the July 14 high of .7678. A move above .7678 threatens the near term wave picture, though the medium term outlook would remain bearish.

On a successful move lower we have horizontal support and trend line support near .7285-.7300. The next level of support is .7150.

Based on the Elliott Wave count, we are anticipating a sustained move down towards .70 and possibly .65 as AUDUSD would be falling in a 3rd wave that began on July 15. We previously noted :

“If this outlook holds, then AUD/USD would be at risk of falling hard in a 3rd of 3rd wave lower. Third waves tend to be the longest and strongest of the Elliott Wave sequence.”

“AUD/USD Quietly Coils Together 2 Bearish Patterns in a Row” July 22, 2105

With Sentiment, measured via SSI, clocking in at +1.06, that means there is about 50% of the traders who are going to be on the wrong side of a trade. With news event risk heavy over the next 24 hours (namely Australian CPI coming out later today and FOMC concluding their two day meeting tomorrow), this could create a knee jerk reaction that catches many AUDUSD traders off guard. See if FXCM traders are buying or selling AUDUSD here.

AUD/USD Technical Analysis: Ripping Into the Reversal Zone

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Interested in a quarterly outlook for USD or other markets? Download our quarterly forecast here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

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USD/CAD Technical Analysis: Breakout but How Far?

Swing Trading, Forex Technical Analysis, Chart Pattern Set Ups, Breakout Trading

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Talking Points

-USD/CAD reaches highest level in 4 months

-Tight confluence of resistance in USD/CAD near 1.3304-1.3381

-Follow GSI and SSI in the resistance zone for clues if the price zone may hold or break

USD/CAD has broken the range and has reached its highest level in 4 months. Renewed US Dollar strength is helping to lift the pair higher.

There is a confluence of resistance USD/CAD will need to push through to tack on any meaningful gains. There are 4 levels of resistance joining in an 80 pip range that is likely to slow down or possibly resist prices.

  1. 200 Day Simple Moving Average (1.3304)
  2. 38.2% retracement of the Jan 20 to May 3 2016 down trend (1.3315)
  3. Proposed yellow wave c = yellow wave a (1.3344)
  4. Proposed wave Y = wave W (1.3381)
USD/CAD Technical Analysis: Breakout but How Far?

Chart created using FXCM’s Trading Station

In the labeling above, ‘W’ and ‘Y’ are proposed zig zags, which is an Elliott Wave pattern. Oftentimes, the ‘c’ waves have an equality distance to the ‘a’ waves which is the basis behind the 3rd and 4th resistance points above.

Therefore, we have a confluence of resistance forming in the 1.3304-1.3381 price range. Due to the multiple levels of technical resistance, it has a higher probability chance of slowing down or repelling prices. A break above the 1.3304-1.3381 range does open the door to 1.36.

If prices are resisted and if a down trend resumes, then support levels come into play near 1.3150 and 1.3000.

A couple of early warning tools we can use to assist us in trading around the above price levels are GSI and SSI.

Grid Sight Index (GSI)

GSI is a big data indicator that analyzes millions of prices points and thousands of trend components in real time to determine how the current price pattern stacks up against some historical patterns. The result is a percentage indicating the number of historical patterns that moved higher and the number of historical patterns that moved lower.

Therefore, use GSI on USDCAD ‘m3’ or ‘m5’ to see how the historical patterns compared when the price approaches the levels mentioned above.

Learn more on GSI here.

Keep in mind that just because a certain pattern moved a certain way in the past doesn’t mean that pattern will work itself out in the same fashion moving forward.

Speculative Sentiment Index (SSI)

SSI has been shifting lower prior to this recent break higher. This is a result of the number of short traders hitting their highest level in 5 months. SSI is a contrarian type of indicator that can provide clues about price movement depending on how sentiment is shifting. So if short traders are entering into the trades, then we would look to do the opposite.

USD/CAD Technical Analysis: Breakout but How Far?

As price enters into one of the cited levels above, see how SSI shifts and then do the opposite. See live trader positioning via SSI here.

Bottom line, look for USDCAD to experience difficulties pushing through the confluence of resistance. GSI and SSI can provide us with some early warning signs if the levels are going to break and if USDCAD moves higher or if the levels are going to hold and repel prices lower.

Having trouble trading USD/CAD? This may be why.

Interested in a quarterly outlook for USD or other markets? Download our quarterly forecast here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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Check out the latest standings for the FXCM trading contest HERE.




NZD/USD Technical Analysis: Sinking to 2-Month Low

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • New Zealand Dollar working on 7th consecutive decline vs. US counterpart
  • Chart setup, risk/reward parameters argue against a trade at current levels

The New Zealand Dollar declined against its US namesake as expected, sinking to the lowest level in nearly two months as sellers attempt to breach the 0.70 figure. Prices are working on their seventh consecutive decline, which would make for the longest losing streak since early January.

A daily close below the June 15 low at 0.6963 opens the door for a challenge of the 61.8% Fibonacci retracement at 0.6923. Alternatively, a reversal back above the 38.2% level at 0.7077 paves the way for a retest of the 23.6% Fib at 0.7171.

Taking a trade seems unattractive at this stage. On one hand, prices are too close to support to justify entering short from a risk/reward perspective. On the other, the absence of a defined bullish reversal signal hints taking up the long side is premature. It seems prudent to stand aside until something better-defined emerges.

Losing money trading NZD/USD? This may be why.

NZD/USD Technical Analysis: Sinking to 2-Month Low



EUR/GBP Technical Analysis: Forming Head and Shoulders Top?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro may be carving out Head and Shoulders top vs. British Pound
  • Waiting for confirmation, improved risk/reward before entering short

The Euro may be carving out a top against the British Pound after rising to the highest level in three years in the wake of last month’s UK Brexit referendum. Prices are showing the makings of a bearish Head and Shoulders (H&S) topping pattern which – if confirmed – may precede a downturn.

Completion of the H&S setup on a daily close below the pattern’s neckline at 0.8324 sees the next downside barrier at 0.8234, the 38.2% Fibonacci retracement. Alternatively a push above the 23.6% Fib expansion at 0.8491 paves the way for a challenge of the 0.8627-41 area (38.2% threshold, July 6 high).

Confirmation of the H&S setup on a daily closing basis is needed before the setup is actionable. Furthermore, proximity to support argues against entering short from a risk/reward perspective. With that in mind, standing aside seems prudent for the time being.

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EUR/GBP Technical Analysis: Forming Head and Shoulders Top?



EUR/JPY Technical Analysis: 4-Hour Chart Showing Fresh Trend Potential

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • EUR/JPY Technical Strategy: Aggressive top-side reaction showing higher highs and lows on the 4-hour chart.
  • After recent events in Japanese elections, pressure may be removed from the long-side of the Yen, at least temporarily.
  • If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking at opening a trading account, FXCM has a contest at the beginning of each month for certain account holders. Click here for full details.

In our last article, we looked at the aggressive down-trend showing in EUR/JPY with a caution towards chasing the move much lower without at least some evidence of resistance showing. That resistance never showed up, and over the weekend a significant win in Japanese elections gave Prime Minister Shinzo Abe a super-majority in the upper-house of parliament. As we discussed on Tuesday, this could be a game-changer, at least in the near-term for Japan and the Yen, as the threat of a massive increase in stimulus from the country with lessened political resistance could be enough to offset risk aversion flows.

Price action in the Yen has been extremely bearish this week on the heels of those election results, and given that we’ll likely see investors continuing to attempt to position-in ahead of any potential BoJ action, this move of Yen weakness could have near-term staying power.

On EUR/JPY, the level of 115.37 is especially interesting. This is the 61.8% retracement of the ‘Abe-nomics’ move in EUR/JPY, taking the low set in 2012 just before he recapture the PM post, to the highs in 2014. This price area had also offered swing-support in the post-Brexit referendum, we had discussed using this level as potential resistance a couple of weeks ago, but that never showed up. And when price action finally did cross above this line-in-the-sand, it ended up becoming support shortly thereafter.

Also of interest in this zone of potential support is a projected trend-line that can be found by connecting the low from the year 2000 to the low of March 12th, 2011 (shown in purple on the below chart).

Moving forward, traders can look for top-side entries by waiting on higher-lows to develop. Between 116.20-116.50 is an area nearby current price action in which traders with aggressive stances could investigate for bullish entries; and a bit below we have the zone between 115.00-115.50 straddling that Fibonacci level at 115.37. Should support develop in either of these regions, traders can look at top-side triggers with targets cast towards the psychological level at 117.50, the price action swing high at 118.00, and then the Fibonacci level at 119.90, which is just 10 pips shy of the 120-big figure while also being the 61.8% retracement of the ‘big picture’ move in the pair, taking the low from the year 2000 to the highs of 2014.

EUR/JPY Technical Analysis: 4-Hour Chart Showing Fresh Trend Potential

Created with Marketscope/Trading Station II; prepared by James Stanley

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

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GBP/JPY Technical Analysis: Five Days of Res at the 61.8, but Not Quite Bearish

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term price action appearing to make an attempt at a bullish move.
  • GBP/JPY has continued to claw-back Brexit losses, and is now seeing higher-lows come-in with horizontal resistance (ascending wedge pattern).
  • If you’re looking for additional trade ideas, check out our Trading Guide and if you’re looking for shorter-term ideas, check out our SSI indicator.

In our last article, we warned that the recent top-side move in GBP/JPY might have room to run. This was based upon the two-pronged impact of a) no rate cut out of the BOE and b) the prospect of additional stimulus coming from Japan. So despite the veracity of the previous down-trend, such significant changes in the macroeconomic backdrop in GBP/JPY made for the prospect of a continuation of the reversal until, eventually, we may see a new trend develop.

Since that last article, we’ve seen GBP/JPY continuing to carve-out higher-lows, further confirming this thesis. But gains have continued to be tempered by near-term resistance at 140.63, which is the 61.8% of the ‘Brexit-move’ in GBP/JPY. This horizontal level of resistance to go along with inclining lows highlights an ascending wedge formation on the daily chart (shown below).

GBP/JPY Technical Analysis: Five Days of Res at the 61.8, but Not Quite Bearish

Created with Marketscope/Trading Station II; prepared by James Stanley

The type of congestion seen in a wedge pattern often preludes a big move. This type of digestion will often take place around trend-changes, as sellers that are late to the party get offset by buyers looking to jump on the new trend’s direction. Given the amount of resistance seen at this 61.8% level, the point of control for sellers becomes obvious; but it’s the higher-lows that make the setup interesting as buyers are getting increasingly more aggressive and incrementally less-patient as they try to get long in GBP/JPY.

Given that we have a fairly well-heeled form of near-term resistance, traders can wait for the wedge to actually break before looking to get long. To do this, traders would want to wait for price action to find near-term support on this current level of resistance. This would necessitate a top-side burst higher before the long entry could be taken off of support, but if this move in GBP/JPY truly becomes a new trend, there are numerous top-side levels to look to for profit targets; and traders would likely be able to get more amenable risk levels by placing stops underneath the next iteration of ‘higher-low’ support.

GBP/JPY Technical Analysis: Five Days of Res at the 61.8, but Not Quite Bearish

Created with Marketscope/Trading Station II; prepared by James Stanley

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

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USD/CNH Technical Analysis: 6.6500 Support Now in Focus

Short-Term trading, Price Action Analysis, Trader Psychology.

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Talking Points:

- USD/CNH held below short term support at 6.6860

-The failure to trade higher might put focus on possible support at 6.6500

- FOMC rate decision could prove volatile for the pair

Find REAL TIME traders positioning with DailyFX’s SSI Indicator Here

The US Dollar is trading lower versus the Chinese Yuan in offshore trade, as the 6.6860 level held as resistance.

As was mentioned in the prior report, the 6.6860 resistance level continued to hold with impressive accuracy, implying that technically short term focus might be put on the 6.6500 level for possible support.

A hold above 6.6500 appears crucial from a technical perspective in order to see that the bulls are still in control. A break below the level may imply that the 6.6 handle could be tested.

With that said, the FOMC rate decision today seems likely to increase volatility, which might see short term levels break.

A move above 6.6860 could have eyes at the 6.7 handle initially for possible resistance, followed by the January high around 6.7584.

USD/CNH Daily Chart: July 27, 2016

USD/CNH Technical Analysis: 6.6500 Support Now in Focus

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

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




CAC 40 Trades Sideways Into the Weekly Close

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

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Talking Points

  • CAC 40 Consolidates in a 100 Point Range
  • Current Resistance for the CAC 40 is Found at 4,400
  • If you are looking for more trading ideas for equities markets, check out our Trading Guides

The CAC 40 is little changed in today’s trading and is up just .09% on the session. Orange telecom is leading the Index, trading up +2.36 %. Today’s minor advance marks the fifth consecutive day of consolidation for the CAC 40. Pending an aggressive move into the weekly close, the Index will remain inside of key values of daily support at 4,300 and resistance at 4,400.

CAC 40, Daily Chart

CAC 40 Trades Sideways Into the Weekly Close

(Created using Marketscope 2.0 Charts)

Technically the CAC 40 is finding intraday resistance at the R4 Camarilla pivot point, at 4,384. If price breaks above this value, it opens the Index up to make an attempt on the daily point of resistance mentioned previously. If the CAC 40 is rejected here, traders should look for price action to fall back inside of today’s trading range. This range is depicted below and begins at 4,369. A move under the R3 pivot here suggests that the CAC 40 may continue to decline and then continue to test values of support. S3 support is found at 4,342, and the S4 pivot resides at 4,327 for the session.

CAC 40, 30 Minute Chart

CAC 40 Trades Sideways Into the Weekly Close

(Created using Marketscope 2.0 Charts)

Find out real time sentiment data with the DailyFX’s sentiment page.

Sentiment for the CAC 40 (Ticker: FRA40) is practically flat with SSI (speculative sentiment index) reading at -1.14. This value remains slightly negative with 53% of positioning short relative to 47% long. If SSI remains neutral, it may suggest further consolidation for the CAC 40. Alternatively, if prices breakout higher, SSI may shift towards a more negative extreme. Alternatively, if prices break under support, traders may look for SSI to flip to a positive reading.

CAC 40 Trades Sideways Into the Weekly Close

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WTI Crude Oil Price Forecast: Late Week Breakout Exposes New Lows

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

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Talking Points

  • Crude Oil Technical Strategy: Favoring Downside Under $44.70
  • Critical Daily Support Found at $43.00
  • Sentiment Points Toward Price Declines; 56% of Positioning is Long

Access Our Free Q3 Oil Outlook HERE

The price of WTI Crude Oil (CFD: USOil) is breaking lower this Friday, ending a significant period of consolidation for the commodity. Crude Oil prices had previously been range bound between resistance at $46.90 and support at $44.47. With this morning’s breakout, prices are now trading off new weekly and monthly lows, which currently reside at $43.90.

WTI Crude Oil Price (UsOil), Daily Chart

WTI Crude Oil Price Forecast: Late Week Breakout Exposes New Lows

(Created using Marketscope 2.0)

This daily breakout lower, has signaled a resumption of bearish momentum that has been developing since Crude Oil put in its 2016 high at $51.64. This high is still working as a value of resistance for the commodity, but next support may be found near the May 2016 low at a price of $43.00. A move through this value next week would be significant. It would suggest that the 2016 rally has indeed faltered, and open the commodity up to further speculation on further price declines.

Traders should note that if prices rally above $43.00, it opens Crude Oil prices to technically trade in a series of consolidating price patterns. In this scenario, traders should continue to monitor the market for the creation of new highs to symbolically represent the resumption of Crude Oil’s bullish trend.

WTI Crude Oil (UsOil) Daily Chart

WTI Crude Oil Price Forecast: Late Week Breakout Exposes New Lows

Sentiment for WTI Crude Oil (Ticker: USOil) has flipped positive with SSI (speculative sentiment index) reading at +1.30. With 56% of positioning net long, this may indicate further losses for Crude Oil prices. In the event that Crude Oil prices break lower, traders may look for SSI to move towards a positive extreme of +2.0 or greater. Alternatively, if Crude Oil bounces from support, SSI may flip back to a negative reading.

Are FXCM traders long or short the market? Find out here!

WTI Crude Oil Price Forecast: Late Week Breakout Exposes New Lows

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Gold Prices Trying to Carve Support, But Will FOMC Cooperate?

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • Gold Technical Strategy: Intermediate-term trend still bullish, but near-term price action bearish.
  • Gold has continued to temper gains ahead of this week’s FOMC announcement, and if the Fed does take a hawkish stance with eyes towards a potential hike in September, the retracement in Gold prices could run deeper.
  • If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator.

In our last article, we looked at Gold prices attempting to carve-out ‘higher-low’ support with the prospect of top-side continuation of the bullish trend. And in the article just before that, we had looked at just how overbought the recent up-trend in Gold prices had become, driven by a combination of fear-based risk aversion along with the expectation for even more monetary dovishness.

But as we approach another FOMC meeting later this week, it’s the questions revolving around monetary policy that may be giving continued pause to the up-trend in Gold prices. This is very similar to what happened in May, as the Fed talked up the prospect of a June rate hike and Gold prices plummeted from the $1,300 handle all the way down to $1,200. Of course, the Fed ended up relenting as U.S. data worsened; and this re-emergence of dovishness from the Fed had helped to catapult Gold prices higher again, just as we had seen in February and March of this year.

After a blowout NFP report earlier in the month and as U.S. stock prices sit at or near fresh all-time highs, the Fed has ample opportunity to talk up the prospect of rate hikes in the second half of this year; and if that takes place the expectation is that Gold will sell-off while the U.S. Dollar continues to firm. This is likely at least part of the reason for the near-term softness in Gold prices and a continued pause in the bullish-trend. The fact that Gold prices haven’t hit a new high since that most recent NFP report would confirm this thesis.

If the Fed does take on a hawkish stance towards hikes in the remainder of this year, with particular interest revolving around their next meeting in September, we’re likely going to see a deeper dive to a lower support level in Gold prices. The zone between $1,283.82-$1,301.61 could be especially interesting, as each price is a longer-term Fibonacci level. The price of $1,283.82 is 61.8% of the move from the 1999 low to the 2011 high (38.2% retracement of that move), while the price of $1,301.61 is 50% of the 2008 low to the 2011 high (the Financial Collapse Move). This is the same price zone that we had identified two weeks ago as our ‘S3’ zone of support, and should price action move down to this region, traders can begin looking for support in the effort of top-side continuation.

Gold Prices Trying to Carve Support, But Will FOMC Cooperate?

Created with Marketscope/Trading Station II; prepared by James Stanley

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

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Silver Prices TA: Caught Between Quickly Intersecting Lines

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

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What’s inside:

  • Silver pullback looking constructive in price action, market positioning remains a concern
  • Intra-day time-frame reveals the metal stuck between trend-line resistance and horizontal support
  • A break higher leaves more freedom for movement than a break lower at this time

The spike-and-reverse from earlier in the month acted as an exhaustion-move ending the sharp rise beginning from beneath 16 to start the month of June. The decline in silver the past couple of weeks has thus far been relatively benign in the absence of heavy selling outside of an isolated day last week. The net result leaves us wondering if the worst of the decline is over, with support coming in at 19.20. The trend off the lows in December suggests this could be the case.

The continually building in net long exposure by large speculators in the futures market suggests otherwise, though. But this extreme has been suggesting caution for a while now as price action has said otherwise. In any event, a decline in futures positioning along with a decline in the price of silver would invoke more confidence in the recent pullback remaining constructive.

Silver Weekly/Futures Positioning (COT)

Silver Prices TA: Caught Between Quickly Intersecting Lines

Looking at silver through the lens of an intra-day chart: It has found support twice right around 19.20, however, top-side trend-line resistance is keeping it from making any advances. It is currently testing the trend-line at the time of this writing. With silver stuck between the two we will focus on which one it breaks for short-term guidance. A break above the trend-line at this time appears to open up the most room for a move given the lack of significant horizontal resistance; nothing for about ~$1 from here (~20.66). On the down-side, if 19.20 breaks then support exists quickly thereafter between 19 down into the mid-18s.

The descending trend-line and horizontal support could soon converge, creating a wedge situation. This would be ideal given the explosive moves these patterns can produce.

Silver 2-hr [Weekly]

Silver Prices TA: Caught Between Quickly Intersecting Lines

Today kicks off the two-day FOMC meeting, with tomorrow the rate decision and policy statement. There are no expectations of a change in rates, so as per usual it will be about the language of the statement. It may or may not be a volatility-producing meeting, but in any event we should be prepared.

Start tracking trader sentiment today via the ‘Speculative Sentiment Index’.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

He can be reached via email at probinson@fxcm.com.




S&P 500: Sharply Unchanged, Consolidating or Topping?

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

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What’s inside:

  • Market conditions remain ripe for a decline, but…
  • Price action still remains contained
  • FOMC meeting this week, not likely to induce high volatility, but always need to be on toes

Recently we have been discussing reasons why the market is ripe for a decline – high levels of complacency, waning breadth, and a propensity for the market to pullback not long after record highs – but thus far that has meant nothing. (For details, read here.) And while the market has yet to decline, it has also failed to make any sustainable headway. On Friday, another attempt to break to higher ground was met with sellers.

All of this price action during the past couple of weeks has resulted in a big net zero effect in either direction. Is it a consolidation for another thrust higher, or a ‘slow-roll’ which will eventually result in a downdraft? Well, given nothing has really changed in terms of market conditions, we still lean towards the latter.

However, until a sustained move above resistance in the 2174/78 vicinity or below the 2160/55 support zone is achieved, the S&P is left to drift. The market we are faced with today is difficult for both the swing trader and intra-day trader, which makes it especially important we keep our powder dry for better days of trading.

S&P 500: Sharply Unchanged, Consolidating or Topping?

Today kicks off the two-day FOMC meeting; tomorrow will hold the decision on rates and release of policy statement at 18:00 GMT. There are no expectations of the Fed moving away from 0.50%, so the market’s attention will be on any language changes in the statement. It would seem likely this will be a low volatility meeting, however, we should always be on our toes just in case.

Find out what separates the best from the rest in our trading guide, ‘Traits of Successful Traders’. Maybe you have already read it, if so check out one of our other free trading guides for traders of all experience levels.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

He can be reached via email at probinson@fxcm.com.




DAX: Momentum Weakening into Zone of Resistance

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

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What’s inside:

  • The DAX reverses off resistance
  • Pattern still in play
  • Important support and resistance outlined

The last time we discussed the DAX was on Friday, and the index was attempting to close yet again above the high of the pivotal reversal day created on 7/18. Yesterday’s close was above, but it occurred with the formation of another reversal bar – this time at the lower end of a resistance zone between ~10250 and 10350. This zone represents a trend-line off the 4/21 peak, in addition to a back-side retest of the long-term trend-line (2011) and tops created in recent months.

The fact a reversal bar took shape doesn’t mean the market must turn lower, but when it happens from a pivotal area odds are certainly increased as it is evidence of sellers showing up where you might ‘expect’ them to.

DAX: Momentum Weakening into Zone of Resistance

The broadening top formation we had been discussing is still alive as well, despite its shape becoming stretched. A break below support around 10100 is important, as it not only was a level we used previously as resistance on the daily, but it had become important from both a resistance then support standpoint in the past week-and-a-half. (The 'old-resistance-turns-new-support' thing.)

Looking out over the past few months, all sizable swings higher and lower have been reversed, making the current run following the EU referendum into resistance more favorable for sellers once it decisively pushes back lower. Upward momentum in recent sessions has been lacking, resistance of size is in view, a clean break below 10100 will likely bring the bearish broadening pattern into play. Should this be the case, then 9900 and lower quickly become the risk. But, until support is broken it needs to continue to be treated as such.

DAX: Momentum Weakening into Zone of Resistance

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

He can be reached via email at probinson@fxcm.com.




FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

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

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What’s inside:

  • Trading in the FTSE 100 remains choppy
  • Ascending wedge near triggering
  • FOMC later today, may have an impact on global stock markets

The FTSE 100 has made little head-way in the past two weeks after the monster rebound off the ‘Brexit’ day low. It appeared as though a pullback may develop following the reversal-day back on 7/14 at resistance created in August 2015, but so far following a one-day dip after the reversal event the FTSE has done little but chewed its way sideways.

Despite the FTSE struggling to trudge higher, there has been little reason to short the low volatility grind. It appears to be a combination of typical price action following extremely volatile swings, summer trading, and no significant catalyst to spur market participants.

The hourly chart shows the 100 working its ways towards breaking out of an ascending wedge. The depth of the triangle points to a measured move of ~130 points, which could take the FTSE up to around 6875, and if it were to trigger to the downside, ~6580. The ascending nature of the pattern within an uptrend suggests it should breakout to the upside, but a downside break is always possible, especially given resistance at hand. It is best to wait for these patterns to trigger before making a commitment.

FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

Resistance levels on a further climb are at last July and June swing highs of 6813 and 6874 (matching ascending wedge MM), respectively. Support comes in around 6610, then just beneath 6500 lies a one-year support zone of about 80 points or so which the market broke through on June 30 when Carney suggested the BoE would provide needed accommodations to the market.

FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

Later today the FOMC will release its decision on interest rates and monetary policy statement. There are no expectations of the Fed raising rates, so the market will be focused on language changes which may provide indications on the timing of another possible rate hike. Depending on how risk sentiment in the US plays out following the release, global equity markets could find themselves impacted in the next day of trading.

Watch trader positioning in real-time via the ‘Speculative Sentiment Index’.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

You can email him directly at probinson@fxcm.com with any questions or comments.




ASX 200 Technical Analysis: Rally Continues as 5,500 Provides Support

Short-Term trading, Price Action Analysis, Trader Psychology.

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Talking Points:

- 5,500 acts as a short term support after a break higher

- Index might need a “higher low” above 5,380-5,400 to confirm bullish trend

- A hold above those levels appears crucial for continued bullish conviction

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

The ASX 200 appears to have found short term support at the 5,500 level, after a break above the level has seen continued upside momentum.

The ASX has been trading for the past months in a well-defined range between the 5,380 resistance and the 4,750 support, which coincided with the 0.618 Fib level of the long term up trend leg from 2012.

After moving above the range top resistance, the ASX is trading 2016 highs at the moment, and upside conviction continues to look strong at the time of writing.

Levels of possible resistance on a move higher might initially be resistance around 5,570-5,600, and the 5,700 level.

With that said, the index may need to see a correction lower and find support above the 5,380-5,400 area to form a “higher low” in order to confirm that indeed we are probably seeing a reemergence of the long term up trend.

A failure to hold above 5,380 might be seen as a bearish signal and put the focus initially on the 5,300 figure, which could act as support.

ASX 200 Daily Chart: July 25, 2016

ASX 200 Technical Analysis: Rally Continues as 5,500 Provides Support

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

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




Nikkei 225 Technical Analysis: Index Stalling Below 17,000

Short-Term trading, Price Action Analysis, Trader Psychology.

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Talking Points:

- The Nikkei seems to lose momentum as we approach the 17,000 for possible resistance

- Clear push below 16,500 may indicate downside momentum

- Gains appearing to be corrective in the context of the near term downtrend, OBV divergence

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

The Nikkei 225 is treading water after moving above the 16,500 level. The index broke above 16,500 but has since seen momentum stall, failing to reach the 17,000 handle for possible resistance.

OBV is showing a short term divergence on the move higher, while volatility is seeing a significant shift lower (on an ATR 14-day study). Taken together, this might indicate that the recovery is losing some momentum, which could imply that a push below 16,500 could signal that short term momentum favors the downside. This could put the focus on the 16,000 area for possible support.

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

A move below the 16,000 area could expose the 15,000 range lows once again.

If price manages to stay above 16,500, focus might be put on the 17,000 handle for possible resistance, before the 2016 range highs below 18,000.

Nikkei 225 Daily Chart: July 25, 2016

Nikkei 225 Technical Analysis: Index Stalling Below 17,000

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

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