Support & Resistance

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

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

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Talking Points

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

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

-Favor a range bound strategy until this trading range breaks

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

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

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

Chart created using FXCM’s Trading Station

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

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

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

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

Learn more about Grid Sight here.

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

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

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

Follow me on Twitter at @JWagnerFXTrader .

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USD/JPY Technical Analysis: Bulls Still Haven’t Broken Resistance

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

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Talking Points

-Japanese fiscal stimulus is anticipated to be announced Thursday night into Friday morning

-USD/JPY has overlapped July 21 low signifying the medium term bias is bullish

-Follow shifts in sentiment for clues on the near term direction of USD/JPY

The next 24-36 hours may see some volatile price swings for USD/JPY. Bank of Japan is scheduled to release their latest round of monetary statements and which may include additional measures of stimulus.

We previously wrote how the medium term bias for USD/JPY is bullish. Tuesday’s break above 105.42 creates overlap with the July 21 low. That overlap is significant because it suggests the move from 107.49 to 103.99 was a corrective consolidation and the prices may fully retrace to above 107.49 in the coming weeks.

USD/JPY Technical Analysis: Bulls Still Haven't Broken Resistance

The pattern that stands out right now is that we have a 5 wave impulsive move from July 8 to July 14 to start a new uptrend. According to Elliott Wave theory, there are two other patterns that start off a new trend with a five wave move and both of those patterns are followed by another move of similar size. Therefore, once support is formed, we can target another 600 pip move higher as that was the distance of the July 8-14 trend.

Should prices find support and move higher, the next top side level of resistance comes in near 106.72 then 107.50. Above these levels opens the door towards 111.

If prices continue to consolidate lower, consider the previous swing lows near 104.00 as support.

From a sentiment perspective, the growth in short traders has been slowing down from the recent 10 month high. The current SSI reading is +1.38 which is slightly lower than yesterday and still favors the bulls. However, if less traders become interested to the short side, then that could indicate top side potential is waning. Use the shifts in SSI to provide near term clues on price direction. See FXCM’s live trader positioning on USD/JPY here.

Suggested Reading:Bulls Aren't Out of the Woods Yet

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

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

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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




GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

Price Action, Swing & Short Term Trade Setups

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Talking Points:

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

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

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

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

GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

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

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

GBP/USD Technical Analysis: Choppy Cable Seeks Resistance

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

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

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US DOLLAR Technical Analysis: Struggling To Mount Resistance

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

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Talking Points:

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

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

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

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

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

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

US DOLLAR Technical Analysis: Struggling To Mount Resistance

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

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

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Support & Resistance Levels As of July 7, 2016

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

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

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

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

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

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

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

US DOLLAR Technical Analysis: Struggling To Mount Resistance

T.Y.

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USD/CHF Technical Analysis: Swissy Sticking with the Channel

Price Action, Swing & Short Term Trade Setups

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Talking Points:

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

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

USD/CHF Technical Analysis: Swissy Sticking with the Channel

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

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

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

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

USD/CHF Technical Analysis: Swissy Sticking with the Channel

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

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

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AUD/USD Technical Analysis: Ripping Into the Reversal Zone

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

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Talking Points

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

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

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

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

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

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

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

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

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

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

AUD/USD Technical Analysis: Ripping Into the Reversal Zone

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

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

Follow me on Twitter at @JWagnerFXTrader .

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USD/CAD Stalls Before Getting Out of the Driveway

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

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Talking Points

-USD/CAD breaks higher, but doesn’t follow through

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

-OBV is bearish, SSI is bullish; Follow GSI for clues if the price zone may hold or break

Have you ever had one of those cars that wasn’t reliable? You know, the one that when you put it into gear, it would frequently stall out on you. Well, USD/CAD reminds me of such a car.

USD/CAD broke higher on Monday, but has offered little by way of additional follow through. On Monday, we wrote how the Loonie has reached its highest level in 4 months. The breakout has been less than dramatic. Since Monday, USD/CAD has traded sideways in a very tight 95 pip range.

We identified in Monday’s report four different levels that may offer resistance in the coming days. Those levels still hold and are bound by 1.3304-1.3381. With significant amounts of resistance looming overhead, the inability to push further ahead suggests the path of least resistance may be lower. Volume, as measured through On Balance Volume (OBV) supports a weak outlook on price , too.

USD/CAD Stalls Before Getting Out of the Driveway

Chart created using FXCM’s Trading Station

On Balance Volume (OBV) has been showing signs of a sideways range. As price pushed to a new 4 month high on Monday July 25, OBV was still well below levels seen in May. This divergence doesn’t look good for bulls as it says the amount of volume on up candles has been weak.

From a sentiment perspective, there might be a hint of bullishness, though it is weak. Even though the number of short traders has increased to 5 months highs (see sub-chart below) the substantial amount of overhead resistance is going to make for a murky journey. As a result, being positioned long at current price levels isn’t appetizing as the risk to reward ratio is skewed heavily against us which is not a trait of successful traders.

Suggested Reading:

Learn how to use USD/CAD live trader positioning in your trading decision

USD/CAD Technical Analysis – Breakout but How Far?

USD/CAD Stalls Before Getting Out of the Driveway

Bottom line, it may be best to wait for USD/CAD to push into the 1.3304-1.3381 resistance zone before initiating trades. Since we have mixed signals via OBV and SSI, perhaps lean to the Grid Sight Index for assistance as to the near term direction.

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

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

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

To receive additional articles from Jeremy via email, join Jeremy’s distribution list.

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




NZD/USD Technical Analysis: 0.7000 Could Be Key Going Forward

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

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Talking Points:

- NZD/USD having problem cracking resistance at 0.7120

- Further upside conviction might need to see a break above resistance at 0.7250

- 2.25% Official Cash Rate might be keeping the Kiwi bid, key intra-day levels here

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The NZD/USD is trading higher after the FOMC rate decision, but the pair seems to be having trouble breaking long term resistance at 0.7120 at the time of writing.

The pair has seen a bounce higher after finding support at a zone below the 0.7000 handle following sharp decline last week.

At this stage, the NZD/USD might need to see further strength to move above the 0.7120 resistance, which could indicate another attempt to make new highs. A break above may expose what could be a key resistance area below the 0.7250 level, which coincides with the 0.38 Fib of the downtrend starting from July 2014.

A hold below the 0.7120 level might imply that the latest push higher is corrective and could put the focus again on the 0.7000 figure for possible support. A move below the 0.70 figure will change the current market “structure” and might have eyes on 0.69 and 0.67 for potential support.

Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 46.4% of FXCM’s traders are long the NZD/USD at the time of writing. The SSI is mainly used as a contrarian indicator, implying a slight long bias.

You can find more info about the DailyFX SSI indicator here.

NZD/USD Daily Chart: July 28, 2016

NZD/USD Technical Analysis: 0.7000 Could Be Key Going Forward

--- 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




EUR/GBP Technical Analysis: Sideways Trading Post Brexit

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

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Talking Points:

- EUR/GBP trading sideways between well-defined technical levels

- Further upside conviction might need to see a break above resistance at 0.8500

- The 0.8250 level appears to be the initial focus for possible support

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The EUR/GBP is trading sideways between well-defined technical levels after the pair surged higher following the Brexit vote.

At the moment, the technical picture appears clear; further upside conviction may need to see a break above the 0.85 handle initially, which proved influential in the past, and also coincides with possible trend line resistance.

A break higher might expose the “post-Brexit” highs around the 0.86 figure before what appears to be a key area of resistance above the round 0.87 number.

A failure to move above the 0.85 handle could put the focus on the 0.8250 level for possible support, but longs may hold back from entering there without being able to achieve new highs.

If this scenario plays out, is seems likely that eyes will be on the zone below 0.81 to the 0.80 level, which also coincides with possible long term trend line support and the 0.38 Fib of the up move (as measured from the November 2015 lows), for possible reemergence of the uptrend.

Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 29.9% of FXCM’s traders are long the EUR/GBP at the time of writing. The SSI is mainly used as a contrarian indicator, implying strength ahead.

You can find more info about the DailyFX SSI indicator here.

EUR/GBP Daily Chart: July 28, 2016

EUR/GBP Technical Analysis: Sideways Trading Post Brexit

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

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




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

Price Action, Swing & Short Term Trade Setups

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Talking Points:

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

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

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

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

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

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

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

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

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

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

Price Action, Swing & Short Term Trade Setups

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Talking Points:

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

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

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

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

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

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

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

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

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

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

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USD/CNH Technical Analysis: 6.6500 Support Now in Focus

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

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Talking Points:

- USD/CNH held below short term support at 6.6860

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

- FOMC rate decision could prove volatile for the pair

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

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

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

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

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

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

USD/CNH Daily Chart: July 27, 2016

USD/CNH Technical Analysis: 6.6500 Support Now in Focus

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

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




The CAC 40 Breaks Higher Ending Consolidation

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

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Talking Points

  • CAC 40 Breaks Above 4,400 Ending its Consolidation
  • Current Resistance is Found at the 200 Day SMA at 4,458.00
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The CAC 40 is breaking higher today, after trading through key resistance at 4,400. So far, the Index is trading up 1.65% for the session, and is now challenging its 200-day SMA (Simple Moving Average) at 4,458.00. If price action continues to trade above this value, it may suggest a significant change in the CAC 40’s trend. It is worth noting here that the CAC 40 is still trading down -3.7% year to date.

CAC 40, Daily Chart

The CAC 40 Breaks Higher Ending Consolidation

(Created using Marketscope 2.0 Charts)

Short-term technicals for the CAC 40 are looking increasingly bullish as price continues to trade over the R4 Camarilla pivot, at 4,433.00. Initial bullish targets for today’s breakout were placed at 4432.6, which represents a 1 X extension of today 29.6-point ranges. Since price is already trading above this value, traders may begin looking for a 2x extension towards 4,492.20.

Traders looking for a reversal today should first look for the CAC 40 to be rejected at the 200 day SMA mentioned above at 4,458.00. If price declines below this value, it opens the Index to trade back under the R4 pivot and back towards values of support. Values of support include the S3 pivot support at 4,388.22 and S4 pivot at 4,373.60. A move below S4 should be considered significant, as it would completely invalidate this morning’s breakout. In this scenario, traders may realign their expectations as the CAC 40 trades back in the direction of the primary trend.

CAC 40, 30 Minute Chart

The CAC 40 Breaks Higher Ending Consolidation

(Created using Marketscope 2.0 Charts)

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WTI Crude Oil Price Forecast: 3-Month Lows As U.S. Supply Glud Renews Sub-$40 Fears

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

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Talking Points:

Access Our Free Q3 Oil Outlook As Oil's Best Quarter Looks For Confirmation

The price of WTI Crude Oil (CFD: USOil) traded at its lowest levels in three months this week as the Crude rally looks less sustainable than the equity rally that recently saw the SPX500 reach lifetime highs this month. A few weeks ago, we shared a new data point that helped forecast the price decline that has developed:

Recent reports show the short-term floating storage is sitting (pun intended) at its highest level since 2009 per the IEA July Oil Market Report. Bloomberg recently noted that ~9 million barrels of crude were stored off the coast of the North Sea in the UK, which was a significant jump of ~7 million barrels in May.

For what it’s worth, as I was flying into Houston Airport on July 22, I was amazed at the Oil Tanker’s sitting offshore. While I do not fly into Houston regularly, it does add to the report’s credibility, as it seemed a tanker could not turn around without running into other tankers in the Gulf of Mexico.

Track short-term Crude Oil price levels and patterns with the GSI indicator!

For this reason, we have encouraged you to keep an eye on increasing supply in H2 2016, and whether or not supply will be met with sufficient demand. As we head into the close of July, Crude Oil price is down ~20% from the June peak, and seasonal supply per the EIA report is at its highest in at least two decades.

That being said, we appear to be seeing a new wave of supply coming onto the market, and if demand cannot keep up (which the storage on Oil tankers argues it cannot), we could move lower. To explain how much lower, let’s move on to the charts.

Crude Oil Price Chart Shows Little Support & Strong Downward Momentum Is Building

WTI Crude Oil Price Forecast: 3-Month Lows As U.S. Supply Glud Renews Sub-$40 Fears

Few things are going right for Crude Oil Bulls when looking at the price chart. We’re seeing buyers fail to come in and support the price that nearly doubled from ~$26/bbl in February to ~$51/bbl in June. We’ve recently seen a breakdown through the 38.2% Fibonacci retracement level of the February-June range at $41.85/bbl, and a further breakdown is favored when looking at Ichimoku Cloud.

Ichimoku Cloud is a trend following indicator that allows you to see the “big-picture trend” on the chart. If price (shown via candles), and the momentum line (bright green on my chart) are below the cloud, we are in a bearish environment. Buying against the momentum and trend is not advised because a downtrend tends to gather steam much like a snowball rolling down a mountain.

For now, we can use the bottom of the cloud, which aligns with the 100-DMA at $44.63/bbl as clear resistance. Until price breaks above this level on a closing basis, higher prices should be viewed as more favorable levels to enter a short position as opposed to “buying low.”

Significant support aligns at the 61.8% Fibonacci Retracement zone of the February-June zone, which is also the late-March low ~$35.81/bbl. While fighting a trend is not encouraged, that is a level to see if buyers begin to show up due to bargain prices.

A failure for this level to hold will put the pit back in the stomach of Oil producers, as they will likely wonder if we are yet to see the low of this Millennium to date.

Bottom Line:

The pullback we have seen is not surprising, but unfortunately, the evidence is building that we could see downside acceleration. Furthermore, now that we have broken below the 100-DMA, a stronger break toward the next key support of 50% of the February-June range at $38.835/bbl could be underway.

For now, be on the watch for further US Dollar strength that would continue to pressure the price of Oil down through the 38.2%-61.8% retracement zone of the February-June rally.

Contrarian System Warns of Further Downside As of 7/28/16

WTI Crude Oil Price Forecast: 3-Month Lows As U.S. Supply Glud Renews Sub-$40 Fears

In addition to the technical focus around multiple support-zones, we should keep an eye on retail sentiment. Further downside is currently aligned with our Speculative Sentiment Index or SSI for now.

As of mid-day Thursday, The ratio of long to short positions in the USOil stands at 2.98, as 75% of traders are long. Long positions are 21.8% higher than yesterday and 244.2% above levels seen last week. Short positions are 1.5% lower than yesterday and 17.6% above levels seen last week. Open interest is 15.0% higher than yesterday and 58.6% above its monthly average.

We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives a signal that the USOil may continue lower. The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.

Key Levels Over the Next 48-hrs of Trading As of Monday, July 14, 2016

WTI Crude Oil Price Forecast: 3-Month Lows As U.S. Supply Glud Renews Sub-$40 Fears

T.Y.

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

Price Action, Swing & Short Term Trade Setups

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Talking Points:

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

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

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

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

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

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

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

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

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Silver Prices Explode Higher, Top-side Levels in Sight

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

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What’s inside:

  • Silver prices explodes above downtrend line
  • Top-side resistance levels come into view
  • How it reacts at resistance will be the tell on broader indications

On Tuesday, when we last examined silver we made note of quickly converging lines – a trend-line keeping price pointed lower and horizontal support – of which broke first would be the direction we would go with. Simple as that.

Yesterday, the top-side trend-line broke in early US hours, causing the initial spike higher, but later after the FOMC rate decision and policy statement was released we saw a quick jab lower followed by another explosive drive higher. Due to the distance between highly visible support and resistance ‘to our left’ it looked as though the stronger, less contended move would be to the upside. Indeed, that was the case as silver finished out the day trading up nearly 4%.

Whether this is the start of another leg higher or not, we will need to see how silver reacts upon top-side levels. It is currently squaring off with a level around 20.48, and a move beyond there brings 20.66, then 21.11 into play. A broader consolidation period on the daily could develop between the low ~19 and ~21 before moving to higher ground; we will need to see how silver handles resistance.

Silver Prices Explode Higher, Top-side Levels in Sight

For now, the immediate burst higher suggests we could press on a bit higher, but need to be mindful of price action up here which may indicate a turn lower is on its way, as silver could still be undergoing a larger consolidation phase.

Silver Prices Explode Higher, Top-side Levels in Sight

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---Written by Paul Robinson, Market Analyst

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S&P 500: The Range Won’t Last Forever, It Just Feels Like It

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

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What’s inside:

  • FOMC does nothing to break the S&P 500 free from its range
  • Support and resistance boundaries remain the same, waiting for a break
  • Traders need to stay alert despite 'boring' market conditions

The title of yesterday’s commentary: “S&P 500: Looking to the FOMC to Spring It Free”. Well, we're still waiting…It was a rather uneventful reaction to the outcome of the Fed, with only a range of approximately 15 handles and a closing price about 2 handles higher than where the S&P was prior to the release of the decision and policy statement.

Traders are struggling to find opportunity in the sideways chop we call the stock market. The Nasdaq 100 has moved up a bit since the S&P started the horizontal waltz and the Dow has moved down just a shade. Patience is required...

We have discussed reasons why the market looks more likely than not to break to the down-side (complacency, breadth & market tendency), but until price action breaks out in either direction none of the indicators or studies we look at matter at this time.

Support continues to remain in the 2155/60 area, while resistance in the 2174/78 zone. A sustained break of either side will be required to grab our attention. Traders looking to play the range can continue to do so as long as these boundaries hold, but the situation is growing long in the tooth and a break is growing closer.

S&P 500: The Range Won’t Last Forever, It Just Feels Like It

What will break the market from its range? Anyone’s guess. Tonight at midnight GMT time we have the BoJ in store; the general consensus is the central bank will make a move, but to what extent is the big question mark. Depending on this outcome, markets could be making moves heading into tomorrow. Perhaps this will be a kick start for a directional move out the S&P, perhaps not. In any event, we should be on our toes as this range won’t last forever even if it feels like it will.

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

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




DAX: Confluence of Resistance Should Prove Formidable in the Short-term

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

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What’s inside:

  • The DAX holding strong
  • But facing down a confluence of resistance
  • Might not be the beginning of a major decline, but pullback from here is expected

In Wednesday’s commentary, we discussed the intersection of multiple angles of resistance the DAX is currently facing, and so far it has yet to matter. To recap: This area consists of a back-side retest of the 2011 trend-line, horizontal resistance from peaks created in May and June, as well as the all-important downtrend line off the 2015 record highs (possible top of macro bull-flag). We also noted that in the vicinity the neckline of what could be an inverse H&S pattern as a part of the giant bull-flag. The pattern considerations are some picture stuff. Let’s dial in and look at what is immediately in front of us.

The intersection of the previously mentioned lines of resistance should prove to be formidable in the near-term. We stress should because thus far no bearish signaling we have seen has played out as one might expect. However, the strength of resistance is coming in numbers, and the 2015 down-trend line really helps reinforce the area between ~10300/10400 as being a big one.

What to watch for: A turn in daily momentum and undercut of the prior day low; that would be a good start for a decline.

What to expect on a turnaround: A move back towards the 10000 level we were previously focused on as resistance would be reasonable to expect.

What will change our mind? A break above the prior before mentioned zone and the April peak at 10486. At that juncture the macro-tech patterns discussed yesterday will start to unfold. But at this time, given the huge climb since the EU referendum and multiple inflection points, a pullback prior to a further advance looks like the more likely scenario.

DAX Daily: Jan '16 to Present

DAX: Confluence of Resistance Should Prove Formidable in the Short-term

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

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FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

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

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What’s inside:

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

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

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

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

FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

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

FTSE 100 Technical Analysis: Ascending Wedge Nearly Complete

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

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

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

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




ASX 200 Technical Analysis: Index Trading at Resistance

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

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Talking Points:

- Index might be trading at resistance between 5,570-6,600

- Price might need a “higher low” above 5,380-5,400 or 5,500 to confirm bullish trend

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

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The ASX 200 surge higher continues. The index has seen impressive conviction to the upside in the last couple of weeks after a break above a long term range resistance around 5,380-5,400.

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

After clearing the range top resistance, the ASX continues to print new 2016 highs, and upside conviction appears strong at the time of writing.

At the moment, the index is trading at what could be an area of resistance around 5,570-5,600, with the next possible resistance level sitting at the 5,700 level figure.

The index may need to see a correction lower to gain further momentum though, and find support above the 5,380-5,400 area or the 5,500 level to form a “higher low” in order to confirm that indeed we are probably seeing a reemergence of the long term up trend.

A failure to hold above 5,380 might be seen as a bearish signal and put the focus initially on the 5,300 level for potential support.

ASX 200 Daily Chart: July 28, 2016

ASX 200 Technical Analysis: Index Trading at Resistance

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

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




Nikkei 225 Technical Analysis: Pivoting Around 16,500 Again

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

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Talking Points:

- The Nikkei 225 stalls below the 17,000 handle

- Clear push away from 16,500 could indicate short term momentum

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

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The Nikkei 225 is trading sideways, pivoting around the 16,500 level. The index initially broke above 16,500 but has since seen momentum stall, failing to reach the 17,000 handle.

OBV showed a short term divergence on the move higher, while volatility is seeing a significant shift lower (on ATR 14-day study). Taken together, this might indicate that the recovery is losing some momentum.

Indeed, price managed to carve out a “bearish engulfing” pattern just below the 17,000 figure and a trend line resistance. This seems to make the 16,500 level crucial once again, and a clear push from the level could be indicative of short term momentum.

A move lower could put the focus initially on the 16,000 area for possible support.

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

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

If price manages to see a clear push above 16,500, this might put on the 17,000 handle for possible resistance, before the 2016 range highs below 18,000.

Nikkei 225 Daily Chart: July 28, 2016

Nikkei 225 Technical Analysis: Pivoting Around 16,500 Again

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

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