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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: Retail Buyers Load In Before Trump Speech

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

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Talking Points:

JPY strength continues into the close of February and in anticipation of President Trump’s speech that will be analyzed for details on the timing of stimulus that could revive the reflation trade. There is a strong positive correlation to yields of US Treasuries and USD/JPY and a clear message from President Trump that inflationary inducing policies are on their way would likely help boost USD/JPY. Lack of details could keep the market on its current course of giving back-post election gains, most notably in JPY crosses. An additional fundamental note worth considering is that March is the last month of the Japanese Fiscal Year, which may lead to further JPY demand in the coming weeks from Japanese accounts that could push USD/JPY lower.

As of Tuesday, the Japanese Yen is the strongest currency in G8 FX on a relative basis, when analyzed on an H4-chart against a 200-DMA. From a momentum perspective, it’s difficult to tell when the momentum will stall. Traders who track momentum can look to RSI(5) on the Daily Chart to see if a higher low in RSI(5) aligns with the chart support of the Ichimoku Cloud and Andrew’s Pitchfork drawn from the closing low of last Summer. The 100-DMA also aligns with the Ichimoku Cloud base at 111.74.

Lastly, traders who utilize sentiment via SSI in their analysis should note there has been a large surge in long orders in USD/JPY. SSI is currently +2.7344 on USD/JPY as 73% of retail traders are currently long. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long provides asignal that the USDJPY may continue lower. The trading crowd has grown more net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish bias.

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The chart shows the momentum in 2017 has been Bearish. Momentum is famous for pushing past the point of expectation so Trader’s may want to think twice or reduce counter-trend trade size on USD/JPY.

Trader’s looking for a breakout will likely focus on the February high of 114.95 to validate that the Bull trend from Q42016 is resuming. Selling the strongest currency, which the JPY currently is, is ill-advised due to the momentum component and the lack of subsequent sustainable USD strength.

The US Dollar has stabilizedrecently, thanks in part to the re-emergence of geopolitical risk in Europe with upcoming elections that have subsequently kept EUR near the bottom of the relative strength rankings in G8FX.

Tonight’s speech from President Trump could breathe new life into the Bulls that seem to have taken 2017 off so far. If we get a breakout higher in USD pairs in favor of USD, we should keep an eye on an aggressive shift in positions or add to early reversal bets. Such a move could make March an exciting month for trading. Without such a reversal, we’ll anticipate further low volatility and USD-weakness.

D1 USD/JPY Chart: USD/JPY Trading Into Bullish Channel & Ichimoku Cloud Support

USD/JPY Technical Analysis: Retail Buyers Load In Before Trump Speech

Chart Created by Tyler Yell, CMT

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Shorter-Term USD/JPY Technical Levels: February 28, 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: Retail Buyers Load In Before Trump Speech

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GBP/USD Technical Analysis: Breakdown, Key Support in Sight

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at the continued congestion in Cable after GBP/USD had just broken-up to a fresh two-week high. But as we warned, sellers had come in at a key level around 1.2550, and buyers would likely want to wait, at the very least, until a break of the resistance level at 1.2582 took place before pressing bullish continuation strategies.

Since then, price action in the British Pound has broken down. Shortly after last week’s article, Cable settled back-down to prior area of support around 1.2400, and over the past 24 hours, a strong-run in the U.S. Dollar has elicited a breach of that prior batch of support. But just as we wanted to tap on the breaks for bullish continuation last week, traders may want to proceed with caution if investigating down-side continuation strategies, at least for now, as a key support level around 1.2250 sits just underneath current price action.

GBP/USD Technical Analysis: Breakdown, Key Support in Sight

Chart prepared by James Stanley

The reason to temper that excitement is that the long-term chart on GBP/USD remains considerably oversold, with price action continue to run near 30-year lows. So while the prospect of continued down-side might seem attractive on shorter-term charts, continued moves-lower could elicit new buyers as Cable tests historic. For those looking to voice USD-strength strategies, there are likely more attractive areas to watch, at least with a longer-term vantage point.

GBP/USD Technical Analysis: Breakdown, Key Support in Sight

Chart prepared by James Stanley

For those that do want to move forward with shorter-term vantage points, a break of the key support zone at 1.2250 could open the door for near-term breakout strategies. For such an approach, traders would likely want to look to prior levels of interest to factor-out profit targets for such positions. Below, we take a look at a few zones of interest.

GBP/USD Technical Analysis: Breakdown, Key Support in Sight

Chart prepared by James Stanley

--- 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: Big Level Plays, Now What?

Price Action, Swing & Short Term Trade Setups

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Talking Points:

In our last article, we looked at an interesting reaction in EUR/JPY as a longer-term support swing came into play around ¥118.50. This level had given a fairly aggressive series of bounces in late November/Early December, and a subsequent attempt to take-out this level last week was rebuffed by buyers. But as we warned, the down-side break of the prior range should not be treated lightly; and with such a big level in the mind of market participants at ¥118.50, another visit to this zone seemed highly-probabilistic.

Since then, we’ve seen another test of ¥118.50, with price action even driving a little below to set a new three-month low in the pair at ¥118.19. But buyers showed-up shortly thereafter and have begun to take control of the situation, as prices have now rallied up to resistance, breaking-above a down-ward sloping trend-line.

EUR/JPY Technical Analysis: Big Level Plays, Now What?

Chart prepared by James Stanley

Given the prior breach of support combined with the aggressive bullish price action that’s shown-up after-the-fact, and there is a legitimate prospect of top-side continuation plays. The primary issue with timing the long position at the moment is the fact that prices are sitting right on a major psychological level at ¥120.00, and this is coming after a strong break-higher. Bulls may want to wait for one of two things before investigating top-side continuation strategies.

Traders can utilize inside price action to look for top-side trend continuation by looking for a ‘higher-low’ to show-up around a prior level of interest. On the chart below, we look at three potential zones of support for such an approach.

EUR/JPY Technical Analysis: Big Level Plays, Now What?

Chart prepared by James Stanley

The down-side on waiting for a higher-low is that it may never show up. If excitement is really building in this theme, buyers may not allow for price action to drip down far enough to test support; so traders can also adopt ‘outside price action’ in the attempt of getting on the long-side of EUR/JPY. For such an approach, traders want to first wait for new highs to further iterate that bulls may be able to take control; and then prior levels of resistance can be watched for ‘higher-low’ support in the effort of trend continuation. On the chart below, we look at three potential levels to utilize for this type of approach.

EUR/JPY Technical Analysis: Big Level Plays, Now What?

Chart prepared by James Stanley

--- 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.
  • If you’re looking for trading ideas, check out our Trading Guides. And if you’re looking for ideas that are more short-term in nature, please check out our Speculative Sentiment Index (SSI) Indicator.

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 Trends Lower in the Short Term

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

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Talking Points:

CAC 40 is trending lower, and is set to close down for its 4th consecutive trading session. So far for Tuesday, the Index is trading down -.10%. European markets as a whole are mixed, with German Unemployment data in focus for tomorrows trading. Top winners for the CAC 40 include Carrefour (+1.89%) and Vivendi (+1.30%). Losers for the day include Schneider Electric (-0.48%) and Pernod Ricard (-0.51%).

Technically, the CAC 40 is trending lower in the short term. The Index is currently below its 10 Day EMA (exponential moving average) which is found at 4,866.29. If prices continue to trend lower, the next major point of support may be found at last Friday’s low at 4,806.10. A move below this point would suggest a larger bearish retracement may be in play, against the pairs long term uptrend. It should be noted here that the CAC 40 remains above its 200 day MVA (simple moving average), which is found at 4,592.01.

CAC 40, Daily Chart with Averages

CAC 40 Trends Lower in the Short Term

(Created Using IG Charts)

Intraday the CAC 40 is trading beneath its central pivot, found at 4,854.93. Typically this is interpreted as bearish, and now the Index is challenging intraday support found at the S1 pivot at 4,834.96. If prices continue to decline here, it opens the CAC 40 to test other values of support. This includes the S2 and S3 pivots found at 4,813.23 and 4,893.26 respectively.

It should be noted that if prices rebound, the CAC 40 will need to first breakout above the previously mentioned central pivot. At which point, other intraday values of resistance include the R1 and R2 pivot found at 4,876.66 and 4,896.63.

CAC 40, 30 Minute Chart with Pivots

CAC 40 Trends Lower in the Short Term

(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 Bounce Off of Higher-Low; Is the Bull in Retreat?

Price Action, Swing & Short Term Trade Setups

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  • Gold Technical Strategy: Intermediate-term: Bullish move still alive after price action bounced off a ‘higher-low’ level of support.
  • With the rapid increase in odds for a rate hike in March, the bullish move in Gold prices may be fleeting. But if the Fed backs off, or offers dovish commentary to markets ahead of or around March, Gold will likely get another leg-higher.
  • If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our Speculative Sentiment Index Indicator (SSI).

In our last article, we looked at Gold prices staying within a relatively-clean range; even as the U.S. Dollar was showing signs of moving-higher. This highlighted the fact that Gold prices were seeming undeterred by rate hike fears.

Since then, we’ve seen another top-side expansion in Gold prices, as key levels at $1,248 and $1,250 (the Brexit Swing-Low) were taken-out by rising prices. Yesterday’s one-two combo of comments from San Francisco Fed President John Williams and then the Joint Address to the Union from Donald Trump served to spike us rate hike expectations-higher, and this led to an additional burst of strength in the Greenback; finally tilting price action in Gold a bit lower. This quick run of buyer-drive in the Greenback showed vividly in USD/JPY, EUR/USD and GBP/USD; but Gold prices continued to catch bids at current elevated levels. As we wrote this morning, for those looking to fade that quick rush of USD-strength, support in Gold prices could be pretty attractive for such a theme.

With odds for a March rate hike screaming-higher over the past 24 hours, Gold bulls will likely want to exercise a bit of prudence in the near-term. The primary point of consternation for Gold prices at the moment appears to be the possibility of a March rate hike. Over the previous two weeks, we’d seen the Fed make numerous hawkish denotations, but Gold prices were noticeably undeterred. But as we saw odds for March spike-higher yesterday, we began to see sellers taking control, albeit briefly. If this theme of USD-strength, led by rate hike expectations can continue for the next week, this could lead to an exciting reversal setup around the March FOMC meeting if the bank doesn’t actually hike.

Gold Prices Bounce Off of Higher-Low; Is the Bull in Retreat?

Chart prepared by James Stanley

On the chart below, we get a bit closer with the one-hour variety; and as we can see from near-term price action, bearishness appears around-the-corner. As long as markets are ramping up expectations around March, we’ll likely see some degree of this continuing to take place. Nonetheless, the longer-term up-trend remains intact and likely will until markets are fairly certain that the Fed will actually hike rather than just talk about it.

This opens the door for near-term bearish price action to drive prices down to longer-term support; and if the Fed does back-down from March, the bullish move can be ready to resume.

Gold Prices Bounce Off of Higher-Low; Is the Bull in Retreat?

Chart prepared by James Stanley

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

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Silver Struggling at Resistance, Gold on the Verge of Breaking Support

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

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What’s inside:

  • Silver price struggling to overcome 18.50, needs to hold channel support to keep bullish bias
  • Gold on the verge of breaking a confluence of support
  • Levels and lines of interest outlined

Looking for trading ideas? See our Trading Guides.

The other day we described silver as ‘squaring off with notable resistance’, and that it would need to overcome ~18.50 to move towards the larger target of 19. We are seeing a bit of stalling here, but no selling pressure as of yet. For now, we will continue to focus on the channel it has risen higher in over the course of the past month. But, if silver is unable to continue through 18.50 and trades below the lower parallel, then stepping away from the long-side looks like a prudent move, and turning towards shorts may become the way to go. On a break, we will look to 17.84 and then the December trend-line as the next likely levels (depending on timing they could arrive at the same price).

Silver: Daily

Silver Struggling at Resistance, Gold on the Verge of Breaking Support

Created with TradingView

Which brings us to gold…

Gold broke higher recently out of a triangle formation, but found resistance at a trendline extending back to August; it's now coming off with a bit of momentum. The down-move is exposing the trend-line off the December low, horizontal support, as well as a potential reversal (break of the lower-trendline) of the triangle it recently traded up from. All three of these events arrive at the same point; meaning a close below this confluence of support will likely lead to further, if not accelerated, losses. On a break, the first level of minor support comes in at 1226, with more significant support arriving around 1217. If this happens, then it is likely the neat channel silver has maintained will be compromised, and lower we go. Of course all levels could hold, and so would a bearish bias, for now.

Gold: Daily

Silver Struggling at Resistance, Gold on the Verge of Breaking Support

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.


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

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

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 Trading Outlook: Price Sequence in View

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

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What’s inside:

  • S&P 500 isn’t providing much for the swing-trader at this point, but…
  • A technical formation could give the very short-term minded an opportunity
  • Levels and lines of importance outlined

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

On Friday, we touched briefly on the potential for the compression in volatility in recent months to lead to a period of volatile trading ahead. Volatile trading is usually synonymous with ‘risk-off’. But before we get too excited about an uptick in broad-scale volatility we need to see price action support the notion of gyrating markets, something we have yet to see. Yesterday, the S&P and Dow both closed to new record highs, while the Nasdaq 100 just shy of fresh record levels.

The trend is up, no denying that, but risk/reward for new longs at this juncture is not desirable; but shorting into new highs isn’t an attractive approach either. From this seat, it leaves us in a state of limbo for opportunity beyond very short-term time horizons.

There may be something for the short-term trader to work with on the hourly chart, as an expanding triangle (aka 'reverse symmetrical triangle' (RST) or ‘megaphone’) has developed through the sequence of lower lows and higher highs. The expansion in price swings (as small as they may be) suggests growing instability and a potential inflection point. If the formation is to lead to a downturn, then the S&P should turn lower starting as soon as today. If the market begins to pull off, momentum will be key; should the S&P begin to decline but hold shortly thereafter, then the pattern may be in to fail as a signal of a short-term top and another leg higher could soon develop. The lower parallel extending up from the Feb 8 swing low will be viewed with interest upon any test we could see here shortly; a break below may spur the selling needed to send the market towards its first area of support in the vicinity of 2355/2351. A break below support would put the topping pattern in full swing (we’ll touch more on that later should it become relevant).

S&P 500: Hourly

S&P 500 Trading Outlook: Price Sequence in View

Created with TradingView

So, while volatility is low, and generally speaking there isn’t a good swing-trade out there at this time, traders with very short-term time horizons may soon find some edge to work with.

Looking for trading ideas? See our Trading Guides.

---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.


DAX Springing to Life After Thorough Test of Support

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

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What’s inside:

  • DAX makes good on holding December trend-line
  • Trading strongly higher towards gauntlet of resistance ahead
  • Bullish market bias continues to remain intact

Looking for trading ideas? See our Trading Guides.

On Monday, we looked at the test the DAX was putting the December trend-line through; so far, so good as it not only held for three trading sessions, but this morning we’re getting a strong lift of over 1%. An ‘uplifting’ speech by President Trump to congress is helping put markets in a good mood to start the day (S&P 500 futures are trading higher by about 50 bps).

Moving on to the techs, this is what we had to say to start the week: 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.”

The word “funneling” was used because that is exactly what price action is beginning to do for much of the first two months of the year. The top-side trend-lines running back to a pair of peaks in 2016 are converging with the December trend-line. A matured rising wedge could end with a big rip, or warn of a top; we’ll worry about that more at a later time.

In the immediate future, the 2/22 high of 12031, April ’16 trend-line, 12079 (level from 2015), and then just a shade higher the August ’16 trend-line are our biggest concern. All of these technical events lie within closely proximity to one another. It’s certainly a gauntlet of resistance for the market to overcome, which is why it may initially find difficulty peeling through even if an assault on the 2015 record highs lies around the corner.

Key support remains the December trendline, which was further reinforced with importance on this last decline. We’ll continue to run with that trend-line and a constructive bias for as long as it holds and no other bearish price action rears its ugly head.

DAX: Daily

DAX Springing to Life After Thorough Test of Support

Created with TradingView

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

---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.


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

Financial markets, economics, journalism and fundamental analysis.

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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

Financial markets, economics, journalism and fundamental analysis.

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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.

Have you always wanted to know more about trading the markets? The DailyFX trading guide is here to help.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


FTSE 100 Trading Outlook: Slight Short-term Edge Given to Sellers

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

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What’s inside:

  • FTSE 100 trading has turned choppy, but...
  • Edge appears to have turned slightly in favor of sellers
  • Short-term support and resistance levels outlined

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

The FTSE 100 is showing a bit of indecision here after breaking free on Thursday from a period of congestion. Last week, the index quickly traded lower out of the wedge formation we were watching, but the initial dive was short-lived.

Conviction level is low right now, with choppy price action dominating the current trading environment. The lack of a clean technical backdrop and catalyst is making it difficult at the moment to garner a high level of confidence. Risk isn’t particularly favorable for either side of the market, but from where we sit it looks as though the advantage lies with sellers at the moment.

Looking in a little closer, it appears a lower high could be developing after a couple of failed attempts to trade higher into resistance – triangle congestion, former neckline.

Short-term technical levels/lines to watch on the downside are the trend-line rising up from the Feb 2 low, then just beneath there the Thursday low at 7192. A drop below last week’s swing low will bring focus to the longer-term trend-line rising up from the June low around the 7140 mark at this time. On the top-side, the footsie needs to trade through the thicket of resistance in the 7250/320 vicinity to help clear a path for higher prices.

FTSE 100: Hourly

FTSE 100 Trading Outlook: Slight Short-term Edge Given to Sellers

Created with TradingView

Looking for trading ideas? See our Trading Guides.

---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.