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: Avoid The Low VIX Trap For Buying JPY

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

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Talking Points:

There is a lot going on with correlated markets to USD/JPY that should keep your attention. Many traders are familiar that the VIX, which remains near historically low levels of 12 is inversely correlated to USD/JPY or positively correlated to the JPY due to the unwind of the Carry Trade. The VIX is the SPX500 Implied Volatility Index, also known as the fear barometer, so a higher VIX implies more fear and therefore wider possibilities for SPX500 prices over the coming year. The combination of a low VIX and high or “overbought”SPX500 aligns, most often, with a stronger JPY and lower USD/JPY. The persistent decline in the VIX has seen USD/JPY bound around 112.

We noted in the recent article title, USD/JPY Technical Analysis: An Intermarket and Technical Powderkeg, that there is a lot going on behind the scenes that could cause USD/JPY to move and move big. Another positively correlated market is UST Yields, which have been unable to breakout higher (bond prices pushed lower) but have received news that the Fed appears ready to hike multiple times in 2017 as they are sitting near the targets of both mandates of price stability (inflation at 2%) and full employment.

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Many traders may look at these events and think that we’re about to see a breakout in the VIX and that the S&P at all-time highs means that a crash is imminent. While the future is unknown by definition, one should be a caution to attribute a fixed outcome to the future as the VIX seems to show less fear than in times past. If this is correct, we could continue to see the SPX500 push higher alongside USD/JPY finding upside traction.

Looking at the chart below, you can see that the price of USD/JPY is no longer trading within the Bearish countertrend channel. The price move higher in mid-February has seemed to put USD/JPY on an upward trajectory with price support near 112.61/88 that should hold our attention.

If the VIX remains lower, and the price of USD/JPY continues to trade above 112.61, we can begin to subtly shift our bias higher, which would be validated on a break above 115. A move above 115 in USD/JPY would align with a nice continuation move in the newly drawn Andrew’s Pitchfork as well as show a breakout above the Daily Ichimoku Cloud.

Conversely, a breakdown and close below the early February low of 111.59 would keep us neutral as USD/JPY continues to correct a multi-year uptrend. The takeaway is that even though the VIX seem ready to breakout and the SPX500 appears overbought per RSI going back multiple decades; it could be an expensive mistake to presume we’re about to see a breakdown in USD/JPY and try and short the pair without validation of a move below 111.594. If the price can work it’s way higher in Andrew’s Pitchfork that is biased higher, my bias will be higher as well.

H4 USD/JPY Chart: USD/JPY Trading Above Counter-Trend Bearish Channel & Recent Range 61.8% Fibo

USD/JPY Technical Analysis: Avoid The Low VIX Trap For Buying JPY

Chart Created by Tyler Yell, CMT

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Shorter-Term USD/JPY Technical Levels: February 22, 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: Avoid The Low VIX Trap For Buying JPY

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GBP/USD Technical Analysis: Holding Ground, but Drivers Lacking

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Intermediate-term mixed; Near-term mixed.
  • The big driver for the top-side cable move will likely be inflationary pressure, moving the BoE away from dovishness and, perhaps even to a hawkish move in the not-too-distant future. This appears less-relevant, for now, after the most recent BoE Super Thursday.
  • 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 the move-lower in the British Pound after the Bank of England’s Super Thursday batch of announcements. And while the BoE added a healthy increase to their growth forecasts, they coupled this with a cut to inflation forecasts; which removed some of the bullish motivation that was previously-showing in the pair.

At this point, price action on the daily chart of Cable is looking rather direction-less with little to work with while prices hover around the 1.2500-psychological level.

GBP/USD Technical Analysis: Holding Ground, but Drivers Lacking

Chart prepared by James Stanley

The fact that the U.S. Dollar has been rather strong for much of February while Cable has been congested could denote the fact that the British Pound has exhibited at least some strength during the month. But this also highlights an issue with the bullish side of the pair at the moment, and that’s one of drivers, or perhaps more accurately, a lack thereof.

What makes the prospect of top-side in Cable really attractive is the idea of rising inflationary after the ‘sharp repricing’ in the British Pound around Brexit and the ensuing dovish-campaign from the Bank of England. While this is all very logical, and has even begun to show, the BoE has appeared unmoved by the threat of rising inflation; indicated most recently when the bank actually downgraded inflation forecasts for 2017 while dramatically increasing their expectations for GDP-growth. And this doesn’t even include the prospect of short-USD exposure that would come-along with long GBP/USD exposure; as Dollar strength has begun to show prominently again throughout February.

So, while this theme, or at least the potential for this theme remains very much alive (given the fact that we’ve seen continued support while USD has been ripping-higher), it does not appear to be a hot-button at the moment and traders would likely want to wait for price action to denote bullish continuation potential before looking to press long-exposure. For such an approach, a top-side break of 1.2580 could open the door for such a theme.

GBP/USD Technical Analysis: Holding Ground, but Drivers Lacking

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: Bearish Reversal Cues Building

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Evening Star candlestick pattern, negative RSI divergence hints at topping
  • Confirmation of reversal sought to establish actionable short trade setup

The Australian Dollarput in a bearish Evening Star candlestick pattern, hinting a top may be taking shape near double top resistance below the 0.78 figure. Negative RSI divergence warns of ebbing upside momentum and bolsters the case for a downside scenario.

From here, a daily close below the 14.6% Fibonacci retracement at 0.7649 opens the door for a challenge of the 23.6% level at 0.7597. Alternatively, a push above the aforementioned double top at 0.7760 paves the way for a test of the 38.2% Fib expansion at 0.7811.

Compelling confirmation of a bearish reversal is absent for now while near-term series of higher highs and lows set from mid-January remains unbroken. With that in mind, opting to remain on the sidelines until a more actionable selling opportunity emerges seems prudent.

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AUD/USD Technical Analysis: Bearish Reversal Cues Building

USD/CAD Technical Analysis: Wedging Between Hard Support And 200-DMA

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

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Talking Points:

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USD/CAD has fallen away from most traders attention as its volatility has dropped alongside the small price variances in Crude Oil. Looking at supportive components of the USD/CAD currency pair, we’ve seen similar stability in the 2yr US/CA sovereign debt spread for most of 2017. The stability helps to show that there is not much happeningregarding expected monetary policy that is going to drive the currency pair higher or lower for now.

However, we can look at the chart to see that price on the Daily chart is sitting below the Ichimoku Cloud. Price below the cloud is a classic Bearish indicator alongside the lagging line (bright green) that is also below price and the cloud meaning the current price is below than the closing price from 26 periods or days ago.

Adding to the Ichimoku picture that favors further downside over a bullish reversal, we can see the price is sitting below the 200-DMA and above support at 1.300. While the 200-DMA has not acted as a stiff deterrent to price in one direction or another, we can see that the price below the 200-DMA also aligns with the momentum pictures as visualized with RSI(5) and the Andrew’s Pitchfork to complement what we see with Ichimoku.

The Andrew’s Pitchfork provides a bearish channel, and the top of the channel aligns with the Ichimoku Cloud. Both technical forms of price resistance come together at 38.2-61.8% retracement of late-January to February range at 1.3128/3227. A failure for the price to break above the channel and thus, the Cloud would continue to discourage long trades and favor a trend continuation lower. The momentum picture via RSI(5) appears to show a rising wedge. Rising wedges tend to be followed by aggressive down moves.

Because we trade price and not the RSI(5), we should await a break below 1.3000 followed by an RSI(5) breakdown before anticipating lower levels in USD/CAD. A daily close below 1.3000 could bring about further USD weakness as we’ve seen against other commodity currencies like the Australian Dollar and bring about a test to the late-summer pivots of 1.28157 and 1.27594. For now, my swing-bias favors a move to these levels.

A Bullish reversal, which would be validatedon the move above the Pitchfork & Cloud would turn focus to the late-January high of 1.33875. Such a move would likely bring more confusion than clarity as USD/CAD has been a choppy pair after bottoming in May.

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D1 USD/CAD Chart: Trading Between Long-Term 1.3000 Support and 200-DMA at 1.3141

USD/CAD Technical Analysis: Wedging Between Hard Support And 200-DMA

Chart Created by Tyler Yell, CMT

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T.Y.


NZD/USD Technical Analysis: Downward Bias Favored

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Short at 0.7207
  • Kiwi Dollar rebounds after dropping to one-month low vs USD
  • Overall positioning continues to argue in favor of a downside bias

The New Zealand Dollar paused to digest losses after hitting a monthly low against its US counterpart but chart positioning continues to favor a bearish outlook. Prices topped as expected after retesting trend line support-turned-resistance set from January 2016.

Near-term support is at 0.7138, the 38.2% Fibonacci expansion, with daily close below that clearing a path to challenge the 50% level at 0.7064. Alternatively, a push back above the 0.7229-39 area (23.6% Fib, December 14 high) opens the door for a retest of the 0.7376-0.7403 zone (November 8, February 7 highs).

A short trade taken at 0.7205 hit its first objective and partial profit was booked. A subsequent rebound stopped out the second half of the position at breakeven. Risk/reward parameters look acceptable anew and a fresh short has been activated at 0.7207, targeting 0.7138. Half of exposure will be booked on hitting the first objective. A stop-loss will trigger on a daily close above 0.7239.

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NZD/USD Technical Analysis: Downward Bias Favored

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: WTI Within 1XATR Of 2017 Highs On OPEC News

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

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Talking Points:

The last technical article painted a picture that the chart for Crude Oil appeared to favor the Patient Bulls. This view was taken from the background and larger momentum view as showed with price in relation to the Daily Ichimoku Cloud and Andrew’s Pitchfork drawn on the chart. Add to price sitting in a Bullish or upward bias with these two advanced indicators; the price has been triangulating since the beginning of the year.

Price consolidations that are visualized as a sideways move are very boring to watch, but their bias is rather clear. Consolidation tends to favor continuation of the prior trend. Since Mid-August, the price of Crude Oil has march confidently higher alongside many other commodities and commodity currencies. While Crude Oil has lagged many of its commodity brethren, there does appear to be a unified march higher in the commodity field that could continue if the anticipation of inflation persists.

On the fundamental front, we got word that OPEC is looking to step up its compliance with the late-November supply cut accord. Recent numbers we’ve seen were regarding compliance to the agreed-upon cuts were as high as 92%, but recent comments from OPEC were revealed to seek 100% compliance, which would further drop the international supply of Oil, which could continue to favor further upside.

Upon this comment from OPEC seeking higher compliance, we got a few institutions raising their Crude Oil Forecasts with Citi raising their forecast by $55/barrel. The combination of events seems to shift the focus back higher to new resistance near $55.25/bbl followed by $57.50/bbl.

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Looking at the chart, we continue to see a new and higher floor in Oil at $50 per barrel, as we could be moving toward a possible supply deficit, which Goldman Sachs has predicted despite rising U.S Crude stockpiles.

The higher price floor has encouraged the view that we see an Elliott-Wave pattern known as a triangle, which is a mid-trend correction pattern. Naturally, this would mean that the price is taking a break from its prior advance higher in a bull market (lower in a bear market) before advancing again. Therefore, we continue to be on the look for validating signs that price is again marching higher.

Tuesday’s breakout on news of seeking increased OPEC Compliance, which OPEC Secretary-General Mohammad Barkindo recently said current compliance has been, “very encouraging,” alongside institutions pushing forecasts with the chart structure remaining bullish will keep our focus higher unless we see a close below the February low of $51.25/bbl.

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

Crude Oil Price Forecast: WTI Within 1XATR Of 2017 Highs On OPEC News

Chart Created by Tyler Yell, CMT Courtesy of TradingView

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Key Levels Over the Next 48-hrs of Trading as of Tuesday, February 21, 2017

Crude Oil Price Forecast: WTI Within 1XATR Of 2017 Highs On OPEC News

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 Holding, Looking to Gold for Further Guidance

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

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What’s inside:

  • Silver staying within confines of multi-week channel
  • Gold could provide guidance upon pattern completion
  • Staying with a bullish bias as long as the techs continue to warrant

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Not a lot has changed since when we last looked at silver prices on Friday; the upward channel within the rise out of the inverse head-and-shoulders pattern continues to keep prices supported in the near-term. The US dollar has been rallying, but precious metals aren't paying too much attention at this time. We’ll keep that relationship at arm’s length as per usual unless it begins to truly matter again.

For now, the focus is on the rising channel, with our attention drawing towards the developing triangle in silver's sibling metal. Gold could soon find itself wedged up nicely into an apex and make a break for it; silver to some degree will react to a strong break in gold. It’s preferred that the pattern in gold tightens up a bit, first, before breaking out. We’ll continue to monitor…

Gold: 4-hr

Silver Price Holding, Looking to Gold for Further Guidance

Created with TradingView

Silver could break down out of the three-week-long channel, but maintaining above 17.75 is key to keeping short-term prospects positive. A break below there would likely bring the trend-line off the December low into play, as well as the neckline of the bottoming H&S we’ve been discussing for the past few weeks. That is our bigger picture line-in-the-sand. On the top-side, stay in the channel and take out the 2/16 high of 18.14, and we should see a move to the next objective around the 18.50 mark. This represents a swing low from back in August as well as key closing prints on several spike highs back in November. As long as there isn’t a key failure the eventual target remains at 19, the November peak and measured move target of the inverse H&S formation.

Silver: Daily

Silver Price Holding, Looking to Gold for Further Guidance

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


Dollar Technical Analysis: YTD Highs In 2-Yr Yields Fail To Lift DXY

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Talking Points:

-Dollar Technical Strategy: rebound after six-weeks of new lows may be running out of steam

-Previous Post: Dollar Technical Analysis: You Should Watch This DXY Bounce

-Broader trend still higher, but doubts mount as bullish fundamentals don’t push price up

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

The US Dollar appeared to have everything going for it on Wednesday, but you would not know that by looking at the price. The Consumer Price Index surpassed economist’s expectations, which pushed higher the probability of the next rate hike in March to 42% as of Wednesday afternoon. Janet Yellen, in her testimony to Congress also continued her tone from Tuesday that appeared more hawkish than recent testimonies to Congress, but none of this was able to keep the DXY bid.

The trend in positive economic news developments in the UShasbeen visualized in the Citi Economic Surprise Index for the USD. Citi’s Surprise Index places a value on actual news releases relative to economists expectations, and the move higher from -20 in October to currently over +40. The rise in this index helps to visualize why the fall in Treasuries as investors and traders prepare for higher yields due to Federal Reserve action of raising interest rates. On Wednesday, the 2yr Treasury Yield traded at 2017 highs as the on the run issues were sold off. Since the election in November, there has been a strong positive correlation between the USD and the US 2YR Yield, but that may be breaking down.

It’s too early to tell, but it should be noted that it is possible the the USD has simply been unable to keep up with all the expectations placed on it following the election. Even Janet Yellen has voiced a concern or doubts about the ability of all the fiscal programs promised by President Trump to be enacted as well as voiced concern over proposed and some passed immigration policies could have on destabilizing the “full” employment market.

Despite this week's positive developments, the DXY failed to hold the bid that many likely anticipated. In our last technical note on the DXY, we noted that the recent bounce was important to watch, and the bounce itself should not be surprising. The bounce is important to watch because it happened at a confluence of support but should not have been surprising because after six straight weeks of new lows starting in late December, a bounce, even a tepid one is expected.

Looking at the chart below, the most important component is that the overall trend since mid-2016 is higher and the bias should overall be given to the Bullish view. In other words, the burden of proof still rests largely on the shoulder of the Bears despite the USD being the weakest G8 currency over recent weeks.

Regarding the potential for Bearish continuation of the 2017 trend, you should also note that we look to be making lower highs on the RSI(5) on the Daily Chart, which could show that we’re continuing to get less momentum behind the Bullish moves that could open up the view that we’re about to see a breakdown. If we break below the February low of 99.23, it’s fair to say that a larger breakdown is upon us.

What will likely be a painful new experience to many is that the breakdown (should it develop) could take place among a hawkish Fed or an environment of rising interest rates. The markets are a world built upon expectations, and it could be that the expectations became too much for the USD to live up to. We’ll have to wait for the next big move to build a firmer bias on this view.

For now, we’ll watch the three key zones of resistance. The main forms of resistance, for now, are the Fibonacci zone that comprises the 61.8-38.2% retracement of the 2017 range that occupies 102.07-100.99. We’re currently trading in that zone now, and a break above this zone could show that the broadertrend is soon to resume. A hold of resistance here along with the other forms of resistance, which are comprised of the Median Line of the rising pitchfork (LT Bullish) and the Daily Ichimoku Cloud followed by a break below the 99.23 February low would turn the focus definitively lower.

You may find it helpful to remember that the Median Dot Plot forecast at the December FOMC for the Fed to hike in 2017 was three hikes, anything that falls short of that and that sheds doubt on the potential inflation-inducing policies of President Trump could weight on the USD. In addition to the inability of the USD to support the momentum that it rode into 2017 on is the relative strength that is appearing from Europe & Japan.

There are major elections coming up in Europe that could have long-lasting political ramifications, but if the European yield curve continues to steepen as it has lately, there could be evidence that the future inflation in Europe that many thoughts had no chance of showing up is arriving.

These themes are not tradable yet, but should be watched as there are a multitude of ramifications here, least of which would be ECB tapering that could lift EUR. However distant, these possibility aligning with DXY price action should be watched.

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Dollar Technical Analysis: YTD Highs In 2-Yr Yields Fail To Lift DXY

Chart created by Tyler Yell, CMT

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Shorter-Term DXY Technical Levels for Wednesday, February 15, 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: YTD Highs In 2-Yr Yields Fail To Lift DXY

T.Y.


S&P 500 Technical Outlook: More of the Same for Now

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

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What’s inside:

  • U.S. indices continue relentless rise into record territory
  • S&P 500 has two trend-lines in focus; one as support, the other as resistance
  • FOMC meeting minutes tomorrow, otherwise calendar light.

Looking for trading ideas? See our Trading Guides.

The relentless rise in the U.S. continued on Friday with new record closes in the major indices; the S&P 500 has tacked on about 13% since it bottomed ahead of the U.S. presidential election in November. As we said last week, the market appears to be in a ‘blow-off’ stage. When and where it stops is difficult to predict, but risk is clearly rising for fresh long positions, however; shorting isn’t an appealing proposition in the least bit.

The S&P is currently between two trend-lines rising up from the low in November and one extending back to the Feb low last year. The latter is viewed as support on any minor dip from here, while the steeply rising November trend-line is viewed as potential resistance with further strength. We will continue to run with the trend, but are on alert for a sign of exhaustion and potential reversal.

Tomorrow, at 19:00 GMT the FOMC minutes from the Jan 31/Feb 1 will be released – a potential source of volatility, but not expected to rock the boat too much. Outside of the minutes the calendar is lacking in terms of scheduled high impact events this week. See the economic calendarfor events on the docket.

S&P 500: Daily

S&P 500 Technical Outlook: More of the Same for Now

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


DAX: Resistance Looms, but Support Not Far Below

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

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What’s inside:

  • DAX trend higher ‘keeps on keeping’
  • Levels and lines lie ahead which stand in its way towards achieving record highs
  • Support below on weakness

See the Webinar Calendar for a schedule of upcoming live events with DailyFX analysts.

The DAX ‘keeps on keeping’, testing levels we’ve been taking note of running as far back as 2015; where several swing highs were created on the decline from record highs. Thus far, the market continues to surpass those levels, with the first one nearly 600 handles lower. The trend for several months has been higher, and now the German index looks as though it could at some point join the UK and US in notching out new record highs this year; 12391 is the level to surpass.

If it is to do so, though, it still has a few more levels and lines to peel through before doing so; the top-side trend-line extending back to April, another off the August peak, and then another 2015 swing high arriving at 12079. Those three levels come together in close proximity. This might be where we see a break in the action and a potential spot to look for the market to pull back. On any weakness, if the DAX is to keep the trend since November intact, a decline should hold around either the Jan high of 11893 or the trend-line not far below.

Should the DAX blow through the trio of resistance, then we will look to another shorter-term top-side trend-line off the Jan 4 high as the last line of resistance before the old record high can be achieved.

Looking a little further out in time and using our imagination a bit, there is an alternate path which could unfold, but will require some time before coming to fruition. Given the converging top-side trend-line and rising December trend-line, a rising wedge may eventually carve itself out. From where that takes us, we’ll worry about that should the pattern come into view. For now, it's just food for thought.

DAX: Daily

DAX: Resistance Looms, but Support Not Far Below

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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.


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?

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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: Bullish Hopes Battered But Alive

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Talking Points:

  • The Nikkei has risen nicely since September, but seems to have hit an impasse
  • The 19600 level seems beyond it; the bulls have failed there four times
  • However, there may yet be reason for hope

Like many of its global peers, Japan’s Nikkei 225 equity benchmark has been rising quite consistently since September 2016. However, it appears to have hit something of a barrier.

For the last four weeks, the index has failed repeatedly to get above the 19600 level for any length of time, despite repeated assaults on that summit. For times the bulls have tried, and four times they have failed.

Is this barrier becoming significant, or will it too fall in time?

Well, a look at the moving averages for the index might well suggest the latter. The shorter-term, 100-day average has been above the 200-day since they crossed over back in mid-December. That sort of cross is held to be a bullish signal, and so it proved. The Nikkei is not around 19,300. Back then it was at 18416 or so.

As you can see from the chart below the two moving averages continue to diverge, which suggests that the index could still have more upside to give. It has already given plenty since that bullish crossover but the two have diverged more sharply since, which might give the bulls reason to hope.

The Nikkei may need to overcome resistance at the 19584 level to convince investors that it has what it takes for another leg higher. Above that, the next level to conjure with will be resistance at 20,012. The Nikkei hasn’t been that high since last November.

That sort of level would also offer investors the considerable psychological support of seeing the index back above 20,000. However recent history suggests that it doesn’t stay up there for long.

Still sending bullish signals. Nikkei moving averages.

Nikkei 225 Technical Analysis: Bullish Hopes Battered But Alive

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Would you like to know more about trading the financial markets? The DailyFX Trading Guides are here to help you get right there.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


FTSE 100: Consolidating or Rolling Over?

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

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What’s inside:

  • DAX maintaining its bullish posturing
  • Support and resistance outlined
  • Limited market moving data due out this week; Euro-zone CPI, FOMC minutes tomorrow

Looking for trading ideas? See our Trading Guides.

When we examined the FTSE 100 last Thursday we said the short-term trend was weakening, but that we would continue to run with the bullish inverse head-and-shoulders pattern in play since 2/10. The footsie has been very choppy the past few sessions, literally trading today at the same prices it was last Monday. Slowly rolling over, or merely consolidating for another move higher?

Given the generally healthy appetite for stocks, globally, and trend in the FTSE we are giving the benefit of the doubt to the notion of the index undergoing a period of consolidation prior to higher prices. It also doesn’t hurt that there is a good amount of short-term support in the area. Range lows at 7252 along with the trend-line rising up from the Feb 2 low and H&S neckline. The triple combination of range low/t-line/neckline makes for a solid confluence of technical events worth leaning on. Stay above, staying bullish; break below, turning neutral to bearish.

The consolidation is beginning to take on the shape of a triangle, and with a little more time could help provide a nice breakout scenario from coiled price action. Ideally, an apex develops close to the trend-line rising up from the Feb 2 low before making a break for it.

In any event, further strength should see the inverse H&S to its measured move target (MMT) and record highs from January (7354). A break below beforementioned support could result in a lower high on the daily or a developing range – we’ll delve further into this scenario if it becomes relevant.

FTSE 100: Daily

FTSE 100: Consolidating or Rolling Over?

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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.