Support & Resistance

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EUR/USD Technical Analysis: Sellers Ready to Retake Initiative?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Pending Short at 1.0631
  • Euro recoils from familiar resistance below 1.07 figure vs US Dollar
  • Near-term down trend launched in early February may be resuming

A sharp Euro recovery stalled at a familiar chart barrier below the 1.07 figure, hinting that a corrective bounce from a monthly low may have been exhausted. Near-term positioning has favored the downside since prices broke through the floor of a bearish Rising Wedge chart pattern two weeks ago.

Near-term support is in the 1.0518-28 area (November 24 low, 23.6% Fibonacci expansion), with a daily close below that exposing the 1.0341-67 zone (December 15 low, 38.2% level). Alternatively, a push above support-turned-resistance at 1.0682 opens the door for a retest of the 38.2% Fib retracement at 1.0828.

Last week, partial profit-taking and a breakeven stop-out unwound a Euro short trade from 1.0623. Positioning now looks as though it might offer an opportunity to re-establish the trade under similar parameters and an order has been set to sell at 1.0631. If triggered, the trade will initially target 1.0528 with a stop-loss activated on a daily close above 1.0682.

Are other traders buying or selling the Euro, and what does that hint about the trend? Find out here!

EUR/USD Technical Analysis: Sellers Ready to Retake Initiative?

USD/JPY Technical Analysis: Relative Strength Keeps USD/JPY Lower

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

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Talking Points:

The Japanese Yen has quietly snuck into the top spot of G8 FX on a relative basis. One of my core trading rules is never to sell the strongest currencyand never to buy the weakest currency until a significant technical shift has developed.

On Friday morning, USD/JPY fell near 112 but did not hit the breakdown target illustrated in Tuesday’s webinar of 111.78. The price of USD/JPY now looks poised to test the February low at 111.594. In addition to the Febarury low, the 100-DMA sits near 111.73, and if neither of these levels hold as support, we could see the persistence strength persist. The SSI reading of +2 seem to favor the move lower into and possibly through support.

The move lower seems to align with the drop in global equity indices and a move back into the recently-hated treasuries, which have not seen the yield fall toward 2.32. The yield on the US 10yr has fallen ~6.5% in February, which has correlated well to both a soft-USD and persistent JPY.

You can see on the chart below the USD/JPY has trended quietly lower and is now approaching two key zones of advanced Technical Analysis support. First, the Ichimoku Cloud Base and the lower median line of Andrew’s Pitchfork drawn from the Closing Summer Low, which has done a fine job of framing price action since October.

The relative ranking is based on a 240-minute chart with a 200-period moving average applied, and the ranking is based on an indexing of whether a currency is often above or below the 200-ma against a multitude of currency pairs. The strong JPY reading and subsequent weak EUR ranking means they are on the winning and losing side, respectively of the 200-MA against other currency pairs.

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H4 USD/JPY Chart: USD/JPY Trading Above February Low (111.594) With Bearish Momentum

USD/JPY Technical Analysis: Relative Strength Keeps USD/JPY Lower

Chart Created by Tyler Yell, CMT

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Shorter-Term USD/JPY Technical Levels: February 24, 2017

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

USD/JPY Technical Analysis: Relative Strength Keeps USD/JPY Lower

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GBP/USD Technical Analysis: Cable Congestion, Rally to Resistance

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at GBP/USD as price action had been rather direction-less of recent. As we noted, this appeared to be playing in the longer-term bout of congestions that’s taken place near multi-year lows after the tumultuous second half of 2016. This, of course, spans the ‘Brexit referendum,’ the ensuing dovish campaign from the Bank of England, and then the ‘flash crash’ in early October. But ever since those flash crash lows have come-in, GBP/USD has sputtered anytime a legitimate test of resistance has come into-play; leading to, in essence, four months of congestion.

GBP/USD Technical Analysis: Cable Congestion, Rally to Resistance

Chart prepared by James Stanley

Within this congestion has been numerous attempts for prices to trend-higher; starting with the Bank of England’s Super Thursday in early November. When the BoE shifted inflation expectations-higher, price action in the British Pound attempted to break-out higher, but resistance came in at 1.2775, which is very near a prior level of swing-support. Since then, price action has been unable to set any new high’s or lows, leading into what has been, in essence, four months of congestion in Cable price action.

GBP/USD Technical Analysis: Cable Congestion, Rally to Resistance

Chart prepared by James Stanley

On a more near-term basis, we’ve seen price action in Cable rally up to a level of resistance that should further temper bullish excitement in the pair. The level of 1.2552 is the 50% retracement of the major move spanning from the September 22nd high down to the low on January 16th (excluding the ‘flash crash’ low).

GBP/USD Technical Analysis: Cable Congestion, Rally to Resistance

Chart prepared by James Stanley

For those that do want to push an aggressively-bullish stance, a sustained break above the February 9th high (1.2582, the same ‘activator’ level looked at in our last article) could open the door for such an approach. At the very least, this would show that bulls may be gaining some level of conviction on a longer-term basis that could, potentially, continue for a bit.

For those that want to take a more conservative stance on a market that’s been rather choppy of late, breaking above that longer-term level of resistance at 1.2775 could make such a prospect more probabilistic, as this could finally signal some element of resolution with this choppy price action that Cable has been exhibiting.

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

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USD/CHF Technical Analysis: Parity Still In Play

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at the return of bullish price action in Swissy with eyes on the level of parity (1.0000) for support. And recent price action in USD/CHF has very much moved-along with general Dollar trends, in which the Greenback posed a near-historic run in the final two months of last year to lead-in to an extended bout of retracement in January.

But as we came into February, that move-lower in USD/CHF was looking a bit overdone, as we had remarked on the RSI divergence that had already begun to show. And while the first two weeks of February saw the return of bullish price action in the Dollar, the week since has been considerably less-directional as the Greenback has continually been rebuked at resistance.

But of particular note is that while the U.S. Dollar failed to punch-up to a new-high this week, USD/CHF was able to do so, albeit barely, before sellers returned. This would indicate an additional inclusion of Franc-weakness, and this could be encouraging for those looking to time long positions in the effort of getting on the side of the ‘bigger picture’ trend in USD/CHF.

For those looking to accumulate bullish exposure in USD/CHF, waiting for ‘higher-low’ support would likely be the most attractive way of moving-forward in the near-term. On the chart below, we look at three potential zones of support for bulls to track in the effort of catching that next higher-low support. The first zone, or ‘S1’ runs around 1.0033-1.0041, and this includes the 38.2% retracements from both major moves of the post-Election run as well as the January retracement. A bit deeper, the ‘S2’ level is set around parity, which is confluent with the 50% level of the January retracement. And from .9947-.9966 we have another confluent zone that includes the 50% retracement of the post-Election move.

USD/CHF Technical Analysis: Parity Still In Play

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Six-Week Uptrend Broken

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Pending Short at 0.7710
  • Aussie down trend may be resuming after break of 6-week support line
  • Upswing sought to enter short with improved risk/reward parameters

The Australian Dollarappears to be topping as expected, with prices putting in a bearish Evening Star candlestick pattern and breaking support guiding prices higher since mid-January. Positioning suggests the long-term down trend may be resuming after a protracted recovery form December 2016 lows.

Near-term support is in the 0.7595-0.7609 area (23.6% Fibonacci expansion, January 24 high), with a break below that on a daily closing basis exposing the 0.7498-0.7505 region (November 29 high, 38.2% level). Alternatively, a turn above trend line support-turned-resistance at 0.7689 sees the next major upside barrier at 0.7760, a double top capping gains since August 2016.

Risk/reward parameters are skewed against taking a short position at current levels. With that in mind, an entry order has been established to sell the pair at 0.7710. If triggered, the trade will initially target 0.7609 and carry a stop-loss activated on a daily close above 0.7760.

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AUD/USD Technical Analysis: Six-Week Uptrend Broken

USD/CAD Technical Analysis: Time Correction Heading Into BoC

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

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Talking Points:

USD/CAD has many traders losing patience after a strong downtrend took the price below the rising Trendline (red) drawn of the closing low in May. On Wednesday, we get the Bank of Canada, but we’ll be without a Monetary Policy Report and subsequent press conference. Therefore, it’s fair to say that there will be a nod toward the positive developments in the commodity market with uncertainty on the horizon surrounding new Trade Policies coming from friends of the south and the possible implications of the USD.

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The two charts below, an H4 and Daily Chart, show complementary views that favor a continuation of the downside move that began in November. We’ve seen Canadian Dollar strength that is backed by much of the Commodity run and subsequent USD weakness since the Fed hiked in December. However, February has been a sideways affair.

As many of you have read in my prior reports, consolidation (as we get in a Triangle Pattern), tend to favor continuation of the prior trend. In the case of USD/CAD, that would favor a move lower when we do get the subsequent volatility.

I’m awaiting a price breakdown and close below the support levels of 1.3083/76 to validate the view. However, we do see a lot of support at 1.3000 as the price continues to hold up above 1.3000 or find bids. Regarding resistance, the price has had a difficult time breaking above the twin forms of resistance of the 200-DMA at 1.3148 and the Fibonacci Zone that currently rests at 1.32274/31285.

As to whether I am looking for support or resistance to breaking, I would favor price remaining below this resistance level, while looking for a subsequent move lower. A break above the Daily Ichimoku Cloud near 1.3350 would invalidate the Bearish Momentum Bias.

H4 USD/CAD Triangulation For February Favors Eventual Trend Continuation Lower

USD/CAD Technical Analysis: Time Correction Heading Into BoC

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

Should momentum eventually continue its course that it begun in November and keep trading below the cloud, I will favor an eventual move lower to 1.2815/2759, which is comprised of two key pivots in late summer. An eventual move lower is consistent with the typical tenets of Ichimoku Momentum-Based trend following that I adhere to in my trading.

D1 USD/CAD Chart: Trading Between Long-Term 1.3000 Support and 200-DMA at 1.3148

USD/CAD Technical Analysis: Time Correction Heading Into BoC

Chart Created by Tyler Yell, CMT

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Shorter-Term USD/CAD Technical Levels for Monday, February 27, 2017

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

USD/CAD Technical Analysis: Time Correction Heading Into BoC

T.Y.


NZD/USD Technical Analysis: Rejected at Range Top Again

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Pending short at 0.7205
  • Kiwi Dollar retreats after testing familiar range top once again
  • Looking to enter short position on a test above the 0.72 figure

The New Zealand Dollar recoiled downward after testing now-familiar range resistance above the 0.72 figure, hinting at renewed selling ahead against the currency’s US cousin. Overall chart positioning has argued for a bearish bias since a top was established in early February, as expected.

Near-term support is at 0.7138, the 38.2%Fibonacci expansion, with a break below that opening the door for a challenge of the 50% level at 0.7064. Alternatively, a daily close above the 0.7229-39 area (23.6% Fib, December 14 high) paves the way for a test of the 0.7376-0.7403 zone (November 8, February 7 highs).

Prices are a bit too far below the range top to justify entering short currently from a risk/reward perspective. Instead, an entry order to sell the pair will be established at 0.7205. If triggered, the position will initially target 0.7138 and carry a stop-loss activated on a daily close above 0.7239.

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NZD/USD Technical Analysis: Rejected at Range Top Again

EUR/GBP Technical Analysis: Ready to Test Below 0.84?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8461
  • Euro bounces sharply higher after hitting 2-month low vs. British Pound
  • Overall bias favors weakness, sellers aiming at long-standing double bottom

The Euro recoiled sharply higher after hitting the weakest level in two months against the British Pound but overall positioning still seems to favor the downside. Continued selling from here puts the spotlight on a major double bottom capping losses since early September 2016.

Near-term support is in the 0.8334-70 area (double bottom, 50% Fib expansion), with a daily close below that exposing the 61.8% level at 0.8257. Alternatively, a turn back above the 38.2% Fib at 0.8484 opens the door for a retest of rising trend line support-turned-resistance, now at 0.8568.

An order to enter short at 0.8461 has been triggered. The trade initially targets 0.8370, with a stop-loss set to trigger on a daily close above 0.8506. Profit on half of the position will be taken and the stop moved to breakeven when the first objective is reached.

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

EUR/GBP Technical Analysis: Ready to Test Below 0.84?

EUR/JPY Technical Analysis: Break Down to a Big Level

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at resistance showing in EUR/JPY at an area that was previously support around the 121-handle. And given that this happened shortly after a test below the 120-psychological level, the potential for a continuation of ‘lower lows’ and ‘lower highs’ brought along the prospect of range-like price action in the pair to finally yield.

After the open of trading this week, EUR/JPY continued to sell-off after reacting to last week’s resistance; and bearish momentum appeared to continue to gain speed as we tested deeper support levels at 120.14, 119.91 and then 119.30. This was likely driven, at least in part, by a dose of political risk around French elections. But as risk aversion around French elections appeared to soften this morning, support came in on EUR/JPY around an extremely interesting level; highlighting how the prior bullish trend that started after the U.S. Presidential election is holding on by a thread.

EUR/JPY Technical Analysis: Break Down to a Big Level

After this morning’s support test, buyers came-in fairly quickly around the announcement that French Presidential candidate Francois Bayrou was dropping out of the race in order to further support an alliance with Emmanuel Macron. This seemingly decreased the odds of a Marine Le Pen victory, which has largely been considered a Euro-negative. So this is still very much a fluid, developing situation; similar to Brexit or the U.S. Presidential Election in that matters are due to change very quickly.

From a price action perspective – those looking to trade further Euro breakdown could seek out a short-term setup utilizing the prior batch of resistance, around 120.40 for risk placement, targeting that same prior low around 118.60.

For those investigating bullish stances, they’d likely want to see prices breaking above that batch of resistance at 120.40 to prove that buyers may be able to take control of the situation; after which a support test in the zone from 119.91-120.14 could offer the top-side trigger.

EUR/JPY Technical Analysis: Break Down to a Big Level

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

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GBP/JPY Technical Analysis: Deeper into the Wedge

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/JPY Technical Strategy: Intermediate-term: Congested, symmetrical wedge building.
  • GBP/JPY reacted off of the key resistance zone around ¥142.50, but support showed shortly thereafter, highlighting the diminishing range currently showing in GBP/JPY.
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In our last article, we looked at a persistent batch of confluent resistance in GBP/JPY around the ¥142.50 psychological level. This led into a bearish batch of price action that brought prices back below the ¥140-handle, albeit briefly, until bulls returned to volley prices-higher. The net of this diminishing range has been further build inside of a symmetrical wedge pattern (shown below):

GBP/JPY Technical Analysis: Deeper into the Wedge

Chart prepared by James Stanley

Moving forward, traders can look for a break of the wedge to indicate the next directional move. A top-side break above trend-line resistance could open the door for bullish continuation strategies; while a break below support could signal the potential for bearish price action. On the chart below, we identify barriers that could be used on either side of recent GBP/JPY price action to institute such an approach. On resistance, we’re looking at the same zone of confluent resistance from our last article around ¥142.50, and on the support size we’re looking just below the ¥140-psychological level.

GBP/JPY Technical Analysis: Deeper into the Wedge

Chart prepared by James Stanley

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

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


Talking Points:

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

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

- Pullback to support might initiate further buying

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

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

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

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

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

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

USD/CNH Daily Chart: October 28, 2016

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

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

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

Follow him on Twitter at @OdedShimoni


CAC 40 Consolidates with an Inside Bar

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

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Talking Points:

  • CAC 40 Consolidates with an Inside Bar
  • An Inside Bar May Help Traders Identify Future Breakouts
  • Looking for additional trade ideas for equities markets? Read our 2017 Market Forecast

CAC 40 has failed to make little progress this week, and has failed to make any significant progress for today’s session. So far for Thursday’s trading, the Index is trading up slightly (+0.15%). Top winners for the CAC 40 include Bouygues (+4.55%) and Airbus (+3.91%). Losers for the day include Veolia Environment (-6.59%) and Peugeot (-1.76%).

Technically, the CAC 40 may be considered as trading in a short term uptrend. Despite the consolidation of the last two sessions, the Index remains above its 10 Day EMA (exponential moving average) found at 4,885.09 However with today’s lack of volatility, the Index may close with the formation of an inside bar. That means traders may reference Wednesday's daily candle to identify future market breakouts. Bullish breakouts may be considered above Wednesday’s high of 4,923.10. Alternatively, bearish breakouts may be considered beneath Wednesday’s low of 4,865.80.

CAC 40, Daily Chart with Range

CAC 40 Consolidates with an Inside Bar

(Created Using IG Charts)

Intraday the CAC 40 is now bouncing above today’s central pivot found at 4,898.60. If prices continue to rally above this value, this opens the Index up to test further values of resistance. This first includes the R1 pivot found at 4,931.40, and then the R2 pivot at 4,955.90.

If prices are rejected near present values, bearish momentum may begin as the CAC 40 trades back below the previously mentioned central pivot. Key values of intraday support include the S1 and S2 pivots found at 4,874.10 and 4,841.30 respectively.

CAC 40, 30 Minute Chart with Pivots

CAC 40 Consolidates with an Inside Bar

(Created Using IG Charts)

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

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Crude Oil Price Forecast: Pushes Into LT Resistance On Low Volatility

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

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Talking Points:

The price of Crude Oil Continues to run up against long-term resistance when looking at the 2017 Opening Range High of $55.21/bbl and Andrew’s Pitchfork that is drawn off of three key pivots in 2015 and 2016. When looking at the long-term chart, the low volatility can be worrisome. We recently shared how last week; Crude Oil posted its lowest weekly trading range in 13-years.

The volatility has caused many to play a strangle options strategy that benefits off of lower volatility with an expectation over the next six months that price would remain between $45/65 per barrel. However, while we’re at resistance, we should be cognizant of the bullish forces behind the price of crude Oil.

The last two times OPEC cut production in 2003 and 2008; the price rose significantly over the following years. Additionally, as OPEC pulls back market supply, despite the US quickly gaining market share, we see Forward Prices in Crude Oil demonstrating that supplies should eventually tighten. We also saw this week a premium for the front-month contract relative to the 12-month contract, which is known as backwardation and happens when traders sell later months to lock in gains and can communicate a tightening in supply in the coming months.

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The first chart speaks for itself as it shows that the price is moving into long-term resistance with little volatility. This doesnot equal a sell-signal but should be watchedif the price breaks below the lowermedian channel line. A sharp break below the shorter-term APF would argue that we’ve been knockedout of the current Bullish bias market. Conversely, a sharp move higher through the long-term Pitchfork Resistance could be another indication, along with the Forward Price data that we’re about to see a continuation of the persistent move higher. This wouldlikely turn many of the Strangle option trades unprofitable, but such is life in markets.

17-Month Chart Crude Oil: Andrew’s Pitchfork Applied

Crude Oil Price Forecast: Pushes Into LT Resistance On Low Volatility

Below is the main chart that has had our focus as it has encouraged us to favor a drift higher. We recently broke above the key lowerhigh at $54.29 in the opening range of 2017. This happened on the breakout of the triangle pattern that also encouraged us to focus higher, and we’ll continue to do so until we break below key support of the Ichimoku Cloud near $48/bbl and the polarity zone of $50/52 that has long held our attention.

One other point on the chart below, keep an eye on RSI(5). We remain in Bullish Territory, but the RSI has been quiet, which aligns with the low price volatility. I am watching for a spike higher as that would likely be a long-term validation that the trend will continue, and we should keep our focus higher.

D1 Crude Oil Price Chart: Crude Oil Has Broken Above Pre-Defined Evening Star Resistance at $54.29

Crude Oil Price Forecast: Pushes Into LT Resistance On Low Volatility

Chart Created by Tyler Yell, CMT Courtesy of TradingView

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Key Levels Over the Next 48-hrs of Trading as of Friday, February 24, 2017

Crude Oil Price Forecast: Pushes Into LT Resistance On Low Volatility

T.Y.

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Gold Prices Stick in the Range: Undeterred by Rate Hike Fears

Price Action, Swing & Short Term Trade Setups

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In our last article, we looked at Gold prices trading at a key support zone after the first day of Fed Chair Janet Yellen’s Humphrey-Hawkins testimony. As we wrote, the fact that Gold prices remained within support while the Dollar was surging-higher was potentially troublesome for Gold bears. If what we were seeing at the time was a legitimate ‘rate hike fears’ theme, Gold prices likely would’ve seen a deeper test below that support zone, or, at the very least, a more feeble attempt by buyers at quelling those short-term losses.

The second day of Chair Yellen’s testimony wasn’t quite as boisterous for Dollar bulls, as a reversal began in the Greenback that catapulted Gold prices right back up to the resistance zone around $1,243. This zone of resistance had also functioned as a pivotal support swing in October, just ahead of the ‘Trump Trade’ that drove Gold prices lower by more than $210 in the following seven weeks.

But ever since the Fed hiked rates in December, matters haven’t been the same for Gold traders. Gold prices set a fresh low the day after that rate hike, and have since spent most of the time trending-higher. This further illustrates that Gold prices do not appear to be buying the Fed’s rate hike plans, as the bank has continued to persistently claim that they’re looking at approximately 3 rate moves this year, yet Gold prices continue trending-higher.

Gold Prices Stick in the Range: Undeterred by Rate Hike Fears

Chart prepared by James Stanley

Moving forward, traders looking at momentum-based strategies will likely want resolution of this range-like price action before proceeding further. On the top-side of price action, a break above $1,245 could open the door for bullish-trend strategies, while a down-side break below $1,215.17 could bring on bearish-breakout strategies. In between these two prices – be careful, as price action has been very choppy in this region of recent.

Gold Prices Stick in the Range: Undeterred by Rate Hike Fears

Chart prepared by James Stanley

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

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Silver Price Squaring Off with Notable Resistance

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

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What’s inside:

  • Silver price trades into key area of resistance
  • Move beyond likely to bring target of 19 into play
  • Last week made nine consecutive weeks higher

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Last week, we looked beyond just the price action in silver to seek further clarity on where it was headed. While silver was continuing to channel its way higher, gold was coiling up into a triangle; one which has since resolved upward and along with it silver pushed into a key area of resistance. The area surrounding 18.50 has been high on our radar for a while now; to be more precise the very bottom of resistance clocks in at 18.40, right about where it’s trading now. The general zone around 18.50 comes by way of the swing low created in August, which set the tone later on in November. Prior to the U.S. presidential election several attempts to close above the August level were rejected, with daily closes falling just above or beneath the 18.50 mark.

The 18.50 mark also roughly coincides with the upper parallel of the trend-line running higher from the head of the bottoming inverse H&S formation. It’s only minor in significance, though, but could be problematic in the very near-term with larger resistance also at hand. A rise above all resistance and it seems likely we will see a quick shot to 19, the measured move target for the inverse H&S as well as the November spike highs. At that juncture, we would reassess the situation, especially given that heading into this week silver has been up nine consecutive weeks. A drop from here below the month-long lower parallel would be reason to put the brakes on longs and look for a larger decline to unfold towards the December trend-line.

Silver: Daily

Silver Price Squaring Off with Notable Resistance

Created with TradingView

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---Written by Paul Robinson, Market Analyst

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Dollar Technical Analysis: Will Trump Make USD Great Again?

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

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Talking Points:

-Dollar Technical Strategy: failing to gain Bullish traction at lower quartile of rising channel

-Previous Post: Dollar Technical Analysis: Vulnerable DXY On Fed’s Concern on Strength

-Broader USD trend remains higher, Trump speech to Congress could turn momentum

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Will he or won’t he? That appears to be the key question about whether or not President Trump will be providing enough details about his purported stimulus plan to the joint-session of Congress on Tuesday. There is widespread fear that lack of details could align with month end flow to provide more supply of USD and potentially bring DXY lower still.

In addition to President Trump, the Fed Speaker calendar is rather full this week, which opens up second-tier volatility. On Friday, Chairwoman Yellen will provide her Economic Outlook, which will likely be supportive of the multi-hike in 2017 view, but discuss shortfalls in the labor market due to structural gaps widening in skills supplied vs. skills demanded. Yellen will be preceded by Fed Vice Chair Stanley Fischer on Friday, which rounds out a heavy Fed week. However, Fed Fed members are expected to make the impact of President Trump.

Either way, traders should respect the upcoming event risk this week. A slew of concrete details that push inflation expectations higher and possible to show the Fed as being behind the curve could cause USD to appreciate aggressively relative to recent volatility.

Technical View:

Most of the G10 FX currencies have been spectacularly quiet with few macro views changing. The dollar does appear to be at a crossroads that we can see on the chart below. We’re trading near the lower quartile of a multiple-month rising channel. This type of zone is known as Trend Support, and many traders have been anticipating that Buyers will soon step in to bid up the USD. On the other hand, much of the hope that helped bid-up the USD has been pricedin, and despite a tightening Fed, it appears that there is still room for USD weakness that would be validated on a break below the channel support. Channel support on the chart below aligns with the base of the Ichimoku Cloud on the Daily Chart near 100.

The chart below highlights the recent corrective high, which ran out of steam near the 50% retracement of the 2017 range. A breakdown from here would be indicative that most of the recent move higher to 101.70 was more profit takers than buyers looking to Bid the USD higher. Current resistance remains near the February high of 101.76 followed by the 61.8% retracement of the 2017 range at 102.07. A break above there could see the DXY shorts bail in a hurry and bring about a sharp appreciation. If we do not see the hoped for concrete details of a stimulus alongside JPY & EUR firming up, the USD could have a difficult road in the coming weeks.

Either way, the event risk ahead and the levels were focusing on should provide a helpful map.

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Dollar Technical Analysis: Will Trump Make USD Great Again?

Chart created by Tyler Yell, CMT

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Shorter-Term DXY Technical Levels for Monday, February 27, 2017

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

Dollar Technical Analysis: Will Trump Make USD Great Again?

T.Y.


S&P 500: ’Buy the Dip’ May Not Work as We March Towards a New Month

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

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What’s inside:

  • U.S. indices showing vulnerability
  • Volatility has been compressed, March can often be a volatile month
  • Watching closely how the market responds to support for possible change in character; 'buy the dip' could soon become 'sell the rip'

See the Webinar Calendar for a schedule of upcoming live events with Paul or any of the other DailyFX analysts.

U.S. indices have been on a tear for all of February, but as of yesterday price action became unstable with a sharp morning break and afternoon rebound. The Nasdaq 100 put in an engulfing bar while the S&P 500 suffered a smaller set-back. At the time of this writing, we’re headed for a weaker open. Europe is taking it on the chin, with the DAX leading the way lower by about 1.5%, and the S&P futures following suit by heading lower by 10 handles.

With weakness in the near-term setting in, we’re starting to think about how far the S&P could decline before finding potential support. The first line of interest is the Feb ’16 trend-line about 25 handles lower. For now, all we can do is consider weakness as a pullback within an ongoing uptrend, but with volatility having been compressed for a few months, and March, an often-volatile month just ahead, we could be in for a bumpy ride. The CBOE Volatility Index (VIX) has a tendency of grinding sideways to lower for a few months then popping sharply – now may be the time for another spike to come.

S&P 500: Daily

S&P 500: ‘Buy the Dip’ May Not Work as We March Towards a New Month

Created with TradingView

VIX: Daily

S&P 500: ‘Buy the Dip’ May Not Work as We March Towards a New Month

Created with TradingView

With that in mind, we’ll be paying close attention to how the market reacts to support, as the pattern since the November low has been for weakness to be met quickly by buying. If that pattern begins to change, then we could have seen the best of the market for now. It may not be the ‘buy the dip’ theme we’ve become accustomed to, but rather a 'sell the rip' mantra we'll want to live by.

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


DAX Treading on Trend-line, Important for Near-term Outlook

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

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What’s inside:

  • DAX turns lower from resistance
  • Trading on December trend-line, important it holds in the near-term
  • A break and no significant support until the 11400/500 area

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On Thursday, we said the DAX looked headed towards the old record highs from 2015 at some point, but if it were going to do so it was going to have to clear some nearby resistance. The first levels (lines) came in by way of a pair of top-side trend-lines extending back into the spring and summer of last year, of which one came in right at the Wednesday high. The turn lower from resistance quickly brought into play a trend-line from December as the Jan high failed to act as support.

This is a fairly crucial area, at least in the short-term. While a break of the trend-line doesn’t constitute a trend change, it does weaken the backdrop in the near-term without significant support then arriving until the 11400/500 vicinity. A daily close below Friday’s low of 11722 would be important as it would clearly be a break of the trend-line. The swing low on 2/17 (11693) at that point would only be considered minor support, with no significant support coming in until the 2/8 low at 11480 down to 11405.

However, if the trend-line can hold, then with a little work the DAX could find itself funneling back higher towards the top-side trend-lines it turned lower from and 12079 level.

DAX: Daily

DAX Treading on Trend-line, Important for Near-term Outlook

Created with TradingView

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---Written by Paul Robinson, Market Analyst

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ASX 200 Technical Analysis: Must This Be A Double Top?

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Talking Points:

  • The ASX 200 could be forming a double top
  • The benchmark is mounting another assault on the peaks of January 9
  • The bulls will have to hold these to convince

The ASX 200 equity index could be at a key juncture, at which the bulls’ resolve could be both tested and crucial.

The benchmark had been climbing nicely from November right up until the start of January. On the ninth of that month it topped out at 5823.60. It then retreated from that peak and, although it didn’t fall far, it has only girded itself to challenge that summit again in the past week or so. And so far it hasn’t managed to pass that peak.

If it fails again the high of January 9 will start to look a lot like a technical “double top” and become all the more formidable a barrier for that.

Indeed, a conclusive failure here could put longer-term strength in doubt, with support at December 9’s closing low of 5538.70 in focus below. Of course if that too were to fail then the entire rise from early November could be brought into question.

For the moment, however, the bulls seem to understand their positon and are trying to defend it. At the current 5796 mark the ASX is above the 5792.2 closing level on that peak day, January 9. But not by much. And it’s still well below that session’s intra-day top. Still, if the index can continue on to close around current levels consistently then the bulls may have proved their point.

But if not, then the prospect of a double top will threaten.

In the balance: the ASX 200’s torrid start to the year

ASX 200 Technical Analysis: Must This Be A Double Top?

Chart Compiled Using TradingView

What does the rest of the year’s first quarter have in store? The DailyFX analysts’ forecasts are here.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


Nikkei 225 Technical Analysis: Pennant Setup May Mean More Gains

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Talking Points:

  • The Nikkei 225 has lost puff since scaling the peaks of early January
  • Numerous attempts to retake them have ended in failure
  • However the downside hasn’t been tested too much either, which is an encouraging sign

Japan’s Nikkei 225 equity benchmark has stalled markedly since its quite impressive climb from November 2016.

That rise took the index up to 19570.7 on January 4, from lows of 16262.50 on November 11. The former level is a reasonably significant peak too, unmatched since late 2015.

But the going has been much heavier since. This year the index has made four attempts to break higher. All of them have stalled. The good news from a technical standpoint is that things could be about to get better.

As you can see from the red lines in the chart below, the Nikkei’s efforts to rise may have been abortive but they haven’t been altogether routed. Lower highs are clearly being offset by a procession of higher lows. The index is actually forming what is known as a Pennant pattern. This could be good news for Nikkei bulls.

Rising trendline unthreatened.

Nikkei 225 Technical Analysis: Pennant Setup May Mean More Gains

Compiled Using IG Charts

This is typically a continuation pattern and tends to indicate a pause in a trend rather than a turning point. They’re a sign that congestion is being cleared from a market, albeit slowly perhaps. And as you can also see from the chart that rising, white trend line from July 2016 is utterly unthreatened by current price action for all the index’s apparent dithering. In short the trend is still upward.

What tends to happen once a continuation pattern runs its course is a resumption of the action which preceded it. If that is the case this time then the Nikkei 225 could merely be girding itself for another move higher.

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


FTSE 100 Technical Posturing Weakens, Watch GBPUSD

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

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What’s inside:

  • The FTSE 100 breaks down out of triangle on short-term chart and trend-line
  • On the verge of breaking more key support
  • GBP/USD rallies higher out of wedge, could put near-term pressure on the 100

See the Webinar Calendar for a schedule of upcoming live events with Paul or any of the other DailyFX analysts.

The FTSE 100 took a little bit of a hit yesterday afternoon once the U.S. market entered into action. Sterling rallying by about 75 bps vs the US dollar didn’t make matters any better; the 21-day correlation between GBP/USD and the footsie is currently -68%.

The other day we took a close-up look at the footsie on the hourly, making note of a developing triangle and expressed our continued bias towards the top-side. However, as is the case with these types of formations we must wait for the break, which we got. Downward. This cracked the index below the trend-line rising up from the head of the inverse head-and-shoulders pattern we have been running with. The footsie is currently challenging the bottom of the recent congestion period extending back to 2/14 and the neckline of the H&S formation. A break below this area, we’ll call it 7250, is likely to result in more selling. On a break of support we will look to 7227 and lower.

FTSE 100: Hourly

FTSE 100 Technical Posturing Weakens, Watch GBPUSD

Created with TradingView

Currency impact. As already noted, there is a significant inverse correlation of -68% on a 21-day basis between GBP/USD and the FTSE 100. Yesterday, cable broke higher out of a wedge formation, which could mean we are about to finally see a directional move. If this is the case, then downward pressure is likely to be exerted on the FTSE in the days to come. There are of course other factors at work here – i.e. general risk sentiment – but the ‘what is bad for sterling is good for stocks and vice versa’ theme remains in play. Especially when it comes to the FTSE 100 out of the UK indices, due to the index largely comprised of companies which earn a majority of their profits outside the UK and benefit from weaker sterling prices.

GBP/USD: 4-hr

FTSE 100 Technical Posturing Weakens, Watch GBPUSD

Created with TradingView

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---Written by Paul Robinson, Market Analyst

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

You can follow Paul on Twitter at @PaulRobinonFX.