Support & Resistance

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EUR/USD Technical Analysis: Uncomfortable at 7-Month Highs?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro rises to the highest level in nearly seven months vs. US Dollar
  • Negative RSI divergence warns of turn as long-term resistance nears

The Euro continues rise against the US Dollar, advancing to the highest level in nearly seven months, but negative RSI divergence hints at ebbing upside momentum. The longer-term trend continues to broadly favor the downside, with key resistance now just below the 1.14 figure.

Nearer term, a daily close above the 61.8% Fibonacci expansion at 1.1261 opens the door for a challenge of the 76.4% level at 1.1361. Alternatively, a reversal back below the 50% Fib at 1.1181 – now recast as support – paves the way for a retest of the 38.2% expansion at 1.1100.

An actionable trade setup is absent at this point. The absence of a clear-cut bearish reversal signal argues against a short trade. On the other hand, prices are too close to resistance to make a tactical long trade attractive from a risk/reward perspective. With that in mind, opting to stay flat seems most prudent.

How has our second-quarter Euro forecast shaped up so far with a month left to go? Find out here!

EUR/USD Technical Analysis: Uncomfortable at 7-Month Highs?


USD/JPY Technical Analysis: Sharp Retracement Faces Big Test

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

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What can traders expect from USD/JPY in a year of US rate hikes? Here are our thoughts.

Talking Points:

  • USD/JPY technical strategy: anticipating a hold > 110 on closing basis
  • Breakdown < 110 could signal further JPY strength on the near horizon
  • 100% upside- extension of Andrew’s Pitchfork set as key trend resistance

JPY strength has been a major headline this week as political turmoil from the US to Brazil helped take trader’s attention away from the low-volatility Bull market. The risk-off bid was felt around markets as Gold (a classic risk-off instrument), and US Treasuries saw their largest gains of 2017. However, despite the have flows pushing USD/JPY below 111, it’s worth keeping an eye on signs of a reversal higher. If the reversal higher takes place, we could see a resumption of JPY weakness much like we’ve seen over the last month. It is also worth noting that a lack of a bid in USD/JPY could spell doom for the Bulls as many DXY longs could look to soon liquidate their position.

Make no mistake, USD has been weak lately. Luckily for USD/JPY bulls, JPY has been weaker on a relative basis, at least until this week. Thursday is seeing of the USD/JPY’s biggest drop since November, and as long as 110 holds, we could see brave buyers step in before the overall trend resumes. To get a sense of what’s likely, there are a few levels worth watching.

On the chart below, you can see the price action from April take out the top of a bearish falling channel (Andrew’s Pitchfork) that contained the price for most of the year. Now, we appear to be testing the top of the channel as support. The top of the channel and the recent stall in downward price action can be found at the 61.8% retracement level of the April-May range. While deep, a 61.8% retracement is appropriate within an uptrend. Below the 61.8%, retracement of the April/May rise is the 200-DMA at 109.73.

A hold of price on a closing basis above 110.51, the 61.8% Fibonacci of April/May rise, and the 200-DMA would likely signal a deep set-up in a trend set to continue. A break above Wednesday’s high at 113.12 would further encourage that view that the Bull trend is likely set to resume higher. A break below the 200-DMA, on the other hand, would be a clear indication that a move to new 2017 lows below 108.13 is likely soon approaching.

Join Tyler in his Daily Closing Bell webinars at 3 pm ET to discuss market developments.

USD/JPY Technical Analysis: Sharp Retracement Faces Big Test

Chart Created by Tyler Yell, CMT

USD/JPY IG Trader Sentiment: Yen Rallies Giving Bearish Signal Based on Sentiment

USD/JPY Technical Analysis: Sharp Retracement Faces Big Test

What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!

USDJPY: Retail trader data shows 58.0% of traders are net-long with the ratio of traders long to short at 1.38 to 1. The percentage of traders net-long is now its highest since Apr 26 when USDJPY traded near 111.197. The number of traders net-long is 12.4% higher than yesterday and 10.0% higher from last week, while the number of traders net-short is 23.5% lower than yesterday and 24.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias. (Emphasis Mine)

The takeaway from me for IG Client Sentiment on USD/JPY is that longs are getting more aggressive on a daily and week-over-week basis. In taking a contrarian view, this opens up the likelihood of further breakdown continuing Wednesday’s price action. A break below Wednesday’s close and the 200-DMA with this sentiment picture holding could precede an aggressive breakdown.

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Shorter-Term USD/JPY Technical Levels: Friday, May 12, 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: Sharp Retracement Faces Big Test

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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GBP/USD Technical Analysis: Bad News Taken with a Bullish Bias

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • GBP/USD Technical Strategy: Long-term mixed, intermediate-term bullish, near-term range-bound.
  • The bad news continues to stack up for GBP; but Cable continues to remain supported above prior range resistance.
  • 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 IG Client Sentiment.

In our last article, we looked at GBP/USD as the 1.3000 psychological level loomed ominously above price action. After multiple attempts to take out the level fell just short of crossing 1.3000, each of which was met with a ‘higher low’ indication of support, it seemed as though finally crossing the vaulted psychological level was simply a matter of time. Well, it finally happened, but shortly after a series of negative drivers showed up for GBP; and with another one registering this morning with GDP growth coming-in below expectations, the hits just keep stacking up against the British Pound.

Two weeks ago, we saw a batch of poor numbers post for the U.K., as industrial production fell by .5% in the month of March from the month prior, and trade numbers came-in worse than expected as the U.K.’s trade deficit spiked-up to a six-month high. Later on that same day, the Bank of England hosted this quarter’s Super Thursday event; and at the accompanying press conference, BoE Governor Mark Carney took a familiarly dovish tone when he implied that the BoE is unmoved by the prospect of faster inflation, with the expectation that inflation can go as high as 3% by the end of the year. For a Central Bank sitting on an interest rate of .25%, that would be a -2.75% real rate; and yet the Bank of England continued to talk up the prospect of continued dovish accommodation.

The net result of the above collection of negative drivers was a mere higher-low along with a support test of a prior resistance point at 1.2825. Bulls returned shortly thereafter to continue driving prices-higher, with that eventual cross of the 1.3000 level taking place a week later. But since then, even more negative drivers have continued to print, and Cable bulls appear to be as unmoved by these negative pieces of data as the Bank of England is by the prospect of stronger inflation.

GBP/USD Technical Analysis: Bad News Taken with a Bullish Bias

Chart prepared by James Stanley

When negative news appears to be getting shrugged off or discounted by a market, while positive drivers (of which there have been few for GBP of recent) get accentuated and garner more attention; we’re witnessing a sentiment shift in the market as those dips or pullbacks produced by negative news or drivers are simply being used by bulls to add to or initiate long positions.

This can create a daunting backdrop for short-sellers in Cable, and those looking to fade this recent gust of strength in the pair would likely want to wait for support to break before entertaining such strategies. The zone around 1.2825 could be an initial support area to watch for such a trigger, but the longer-term level around 1.2750 would probably be far more proactive for an approach.

On the long side, the primary challenge is going to be one of risk management. With so many swing-lows above the prior areas of support at 1.2825 and 1.2750, price action has become rather sloppy and picking an area to place a stop for a long position can be challenging. For intermediate-term swing trades, that area around 1.2825 is likely going to be most attractive while longer-term horizons would probably want to look at nesting stops below the 1.2750 psychological level. Both approaches would require rather large stops of approximately 135 and 210 pips respectively; and factoring profit targets two or three hundred pips beyond the 1.3000 level of resistance could become a constraint.

GBP/USD Technical Analysis: Bad News Taken with a Bullish Bias

Chart prepared by James Stanley

On the chart below, we’re looking at prior price action in Cable in the effort of finding top-side targets for longer-term outlooks should this bullish move in GBP/USD advance. The 1.3500 level is notable, as this area had helped to offer some short-term support during the chaos of price action after the referendum; and just above this psychological level is approximately 140 pips of still unfilled gap from the weekend after Brexit.

GBP/USD Technical Analysis: Bad News Taken with a Bullish Bias

Chart prepared by James Stanley

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

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USD/CHF Technical Analysis: Swissy Swings into the Sweet Spot of Support

Price Action, Swing & Short Term Trade Setups

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Talking Points:

- USD/CHF Technical Strategy: Longer-term range-bound, intermediate & shorter-term mixed.

- USD/CHF has put in some trending tendencies recently; first with a bullish move up to 1.0095 and then an aggressively bearish move into a very interesting zone of potential support.

- 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 IG Client Sentiment.

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In our last article, we looked at the bearish price action that had engulfed USD/CHF after the pair had found resistance at 1.0095. The bearish move was quick and aggressive, offering very little pause for traders to load-up on the bearish side of the pair. But as we had pointed out, a key zone of potential support sat just below price action, running from .9684 up to .9738. The lower-portion of this zone is the 50% Fibonacci retracement of the 8-year move in USD/CHF, taking the high set in November of 2009 down to the low in August of 2011.

Prices in USD/CHF have been bound between the 50% and 61.8% retracements of this major move since July of last year.

USD/CHF Technical Analysis: Swissy Swings into the Sweet Spot of Support

Chart prepared by James Stanley

On the below chart, we scroll-down to the Daily time frame and add another Fibonacci retracement around the ‘election move’ in the pair, taking the November low up to the December high. The 76.4% retracement comes-in at .9738, and this makes up the top-side of the support zone that we’ve been following. And within that zone sits a projected trend-line that can be found by connecting the low in May of 2015 to the low in November of last year.

USD/CHF Technical Analysis: Swissy Swings into the Sweet Spot of Support

Chart prepared by James Stanley

This opens the door to bullish swing setups, and this can be utilized with either a short or intermediate-term horizon, based upon how tightly one wants to keep their stop on the setup. For those looking at a longer-term setup with a bit more ‘wiggle room’ on the entry, stops would likely be favored below .9625 while more aggressive stances would likely want to use the upper portion of the support zone, or perhaps even the trend-line projection itself. Those values are at .9738 and (projected) .9725, respectively.

Short-side approaches or those with bearish biases would likely want to wait for a cleaner entry. Prices fell so consistently from the prior high at 1.0095, there is a dearth of nearby areas to use for stop placement. A break below this zone of support could subsequently open the door to down-side continuation strategies but, until that happens, bears should be cautious after a big move ran into a confluent area of support.

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

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AUD/USD Technical Analysis: 2-Month Channel Resistance Broken

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Pending long at 0.7461
  • Aussie Dollar breaks 2-month channel top, hints at further gains
  • Looking to establish tactical long position below 0.75 figure

The Australian Dollarmay be poised to continue higher after breaking the top of a falling channel that had contained gains against its US counterpart for two months. It remains to be seen whether the move will amount to a correction or if prices are laying the foundation for a longer-term advance.

Near-term resistance is now at 0.7554, the 38.2% Fibonacci expansion, with a daily close above opening the door for a test of the 0.7609-24 area (chart inflection point, 50% level). Alternatively, a reversal back below 0.7461 (channel top resistance-turned-support) targets the 14.6% Fib at 0.7415.

A short AUD/USD trade activated at 0.7423 was stopped out. Getting long looks compelling but the risk/reward setup is skewed against the trade. An order has been set up to enter long at 0.7461. If triggered, the initial target will be 0.7554 with a stop-loss activated on a daily close below 0.7415.

Retail traders are short the Aussie Dollar. Find out here what that hints about coming price moves!

AUD/USD Technical Analysis: 2-Month Channel Resistance Broken

USD/CAD Technical Analysis: CAD Strength Needs Oil to Follow Through

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

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Where have the commodity FX buyers gone in 2Q? See our forecast to find out what’s driving market trends!

Talking Points:

  • USD/CAD technical strategy: strong zone of support (1.3575/3441) likely to hold
  • USD/CAD downside momentum currently stalled, watching support at 1.3575
  • 1-week CAD volatility rising in anticipation of BoC decision/ NAFTA renegotiations

The Canadian Dollar continues to consolidate losses against the USD following the rebound in Crude Oil. In recent days, markets were cheered to hear that Saudi Arabia & Russia were encouraged by the lack of progress in their first round of production cuts to extend the next round of production cuts into Q1 2018. Naturally, US E&P in shale regions continues to pump aggressively, though production has dropped for the first time in 13 weeks, this news helped lift the price of Oil as well as Canadian Dollar demand.

Many traders wondering whether or not CAD will remain under pressure and USD/CAD would possible move higher are encouraged to look at the charts, which shows a large zone of price support from prior resistance starting at 1.3575. A failure for the price to penetrate the 1.3575/3441 support zone followed by a move above 1.3700 would favor a continuation higher even though some favored oscillators show USD/CAD as overbought.

Next week, traders can look to the Bank of Canada, which is fully expected to keep rates on hold despite an overheating housing market that recently caused Moody’s to downgrade a handful of Canadian financials. Should USD weakness persist, we could see further downside in USD/CAD, which would likely test the 61.8% Fibonacci level of the April/May rise at 1.3441. A close below 1.3441 would favor a stronger reversal in the pair and market developments should be watched to find the appropriate driver and whether or not it is expected to continue.

Join Tyler at his Daily Closing Bell webinars at 3 pm ET to discuss key market developments.

USD/CAD Technical Analysis: CAD Strength Needs Oil to Follow Through

Chart Created by Tyler Yell, CMT

USD/CAD Insight from IG Client Positioning

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

USD/CAD Technical Analysis: CAD Strength Needs Oil to Follow Through

USDCAD: Retail trader data shows 33.2% of traders are net-long with the ratio of traders short to long at 2.01 to 1. In fact, traders have remained net-short since Apr 18 when USDCAD traded near 1.33163; the price has moved 2.2% higher since then. The number of traders net-long is unchanged than yesterday and 18.1% higher from last week, while the number of traders net-short is 8.5% lower than yesterday and 19.6% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current USDCAD price trend may soon reverse lower despite the fact traders remain net-short. (Emphasis mine)

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Shorter-Term USD/CAD Technical Levels: Thursday, May 18, 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/CAD Technical Analysis: CAD Strength Needs Oil to Follow Through

Contact and discuss markets with Tyler on Twitter: @ForexYell


NZD/USD Technical Analysis: Kiwi Snaps 2-Month Channel Top

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar channel top break hints at further gains vs. US cousin
  • Breakout confirmation still needed on double top resistance breach

The New Zealand Dollar has broken above channel resistance guiding prices lower over the past two months, hinting at further gains on the horizon. The pair must still negotiate double top resistance before the case for near term follow-through looks compelling however.

A daily close above 0.7054, a barrier that contained the upside since late March, opens the door for a challenge of support-turned-resistance at 0.7135. Alternatively, a reversal back below the channel top – now at 0.7006 – paves the way for a retest of support in the 0.6931-44 congestion area.

While the bullish argument has undeniably strengthened in recent days, the absence of breakout confirmation argues against entering long. On the other hand, prices would need to produce compelling evidence of bearish reversal to contemplate taking up the short side. Taken together, this argues in favor of staying flat.

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NZD/USD Technical Analysis: Kiwi Snaps 2-Month Channel Top

EUR/GBP Technical Analysis: Year to Date Down Trend Broken?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro soars to the highest level in 2 months vs. British Pound
  • Prices are on pace to overturn the year-to-date down trend

The Euro has surged to the highest level in two months against the British Pound and now looks poised to break channel resistance capping gains since the start of the year. The latest upside push follows deepening political uncertainty ahead of the UK general election on June 8.

Confirmation of the channel top break on a daily closing basis opens the door for a test of the March 13 high at 0.8787. Alternatively, a reversal back below the 76.4% Fibonacci expansion at 0.8675 sees the next downside barrier at 0.8606, the 61.8% level.

The short EUR/GBP position activated at 0.8577 was stopped out. The absence of a clear-cut bearish reversal signal argues against attempting to re-enter while taking up the long side seems premature absent confirmation of a breakout. With that in mind, opting for the sidelines seems most prudent.

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

EUR/GBP Technical Analysis: Year to Date Down Trend Broken?

EUR/JPY Technical Analysis: Grasping at Highs

Price Action, Swing & Short Term Trade Setups

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Talking Points:

  • EUR/JPY Technical Strategy: Intermediate-term: bullish, short-term: bullish.
  • EUR/JPY put in an impressive bounce off of last week’s lows; but sellers have shown up ahead of the prior swing-high.
  • If you’re looking for trading ideas, check out our Trading Guides. If you’re looking for shorter-term ideas, check out our IG Client Sentiment.

In our last article, we looked at the retracement of the previously overbought bullish trend in EUR/JPY. After the pair had shown indications of ‘topping out’ in the week prior, sellers finally grasped some element of control in EUR/JPY as a move of strength in the Yen drove through multiple support levels. But as we warned, the longer-term formation here was still bullish in nature. And given the potential for continuation in themes of Euro-strength and Yen-weakness, the bid side of the pair could remain favored if support began to show on longer-term charts.

That support did show up, and buyers returned to perch EUR/JPY right back towards those previous highs.

EUR/JPY Technical Analysis: Grasping at Highs

Chart prepared by James Stanley

But as this morning’s price action neared that prior swing-high, something interesting happened: Bulls lost motivation, and sellers began to show-up with a bit more strength, pulling shorter-term price action lower.

EUR/JPY Technical Analysis: Grasping at Highs

Chart prepared by James Stanley

The fact that bulls stopped short of those prior highs by a single pip may be deductively telling us something: While the trend in EUR/JPY is decidedly bullish, prices may still be a bit overbought. While prior bullish trends in USD/JPY and GBP/JPY have put in deeper retracements, continued strength in the Euro has kept a larger sell-off or pullback at bay. Meaning that there are likely far more longer-term bullish positions still being held in EUR/JPY as the prior retracement was shallower than what was seen in other JPY-pairs.

Moving forward, traders would want to acknowledge the continued strength here while exuding some element of caution given the potential for the pair being at a turning point. If EUR/JPY finally breaks above that prior swing-high at 125.82, bullish continuation can be in order by looking to catch the next ‘higher-low’ in the pair. But - if we do not break above that prior high, meaning that this morning’s swing was a ‘lower-high’ by a single pip, the fact that bulls got shy as we approached that prior swing may be noteworthy. If prior swing support around 124.50 gets taken out after bulls were unable to over-take this prior high, the door could be re-opened to short-term bearish momentum strategies.

EUR/JPY Technical Analysis: Grasping at Highs

Chart prepared by James Stanley

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

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GBP/JPY Technical Analysis: New Trend, New Direction, Same Levels

Price Action, Swing & Short Term Trade Setups

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Talking Points:

Just a week ago, it looked like a near-certainty that GBP/JPY would soon perch-up to a fresh post-Brexit high. With the combined forces of GBP-strength and JPY-weakness, GBP/JPY went on a robust run after the U.S. Presidential election that saw more than 2,000 pips set a high at 148.46. But as that move digested after the December rate hike from the Fed, with fears of ‘Hard Brexit’ bringing GBP-lower, GBP/JPY pulled back down to the mid-130’s again.

In mid-April, the theme of Yen weakness caught another gasp of strength that re-drove those prior bullish trends, with GBP/JPY making an aggressive move in an attempt to take out that prior-high at 148.46. The trend was strong, with very little pullback or retracement as bulls bid each minor pullback. Price action had moved within 34.7 pips of taking out that prior-high, with a top developing at 148.11.

Since then, bears have re-taken control of GBP/JPY, pushing prices-lower by as much as 450 pips over the last six trading days. This has driven price action below multiple levels of prior support, with many of those prior support levels now showing as some form of resistance.

GBP/JPY Technical Analysis: New Trend, New Direction, Same Levels

Chart prepared by James Stanley

Given the size of this bearish retracement, those utilizing longer time-horizons will likely want to wait for matters to calm before looking to take on bullish exposure. The area around ¥141.50 could be particularly interesting for such an approach, as this is a confluent zone of potential support. At ¥141.59 we have the 50% retracement of the ‘Brexit move’ in GBP/JPY, and at ¥141.86 we have the 50% retracement of the most recent bullish ramp in the pair that started in mid-April. If support does, in fact, develop here; the door could be opened for topside swing and longer-term plays.

GBP/JPY Technical Analysis: New Trend, New Direction, Same Levels

Chart prepared by James Stanley

Near-term, and until 141.50 comes back into play, the bearish side of the pair is likely going to look most attractive; particularly for those utilizing short-term momentum-based strategies. GBP/JPY has been showing some element of resistance off each of the support levels we looked at in our last article, and below we’ve update that with recent price action.

GBP/JPY Technical Analysis: New Trend, New Direction, Same Levels

Chart prepared by James Stanley

--- Written by James Stanley, Strategist 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

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

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, EUR/USD Pause Ahead of Next Week’s Data

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

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Talking Points:

Both the CAC 40 and EUR/USD continue to consolidate into the end of this week’s trading. Euro-Zone markets will particularly be looking towards next Wednesday’s Unemployment Rate and CPI data to help provide direction. German Unemployment rate (May) is expected to be released at 5.8%, and EUR-Zone CPI (YoY) (May) is expected in at 1.9%.

Technically, the CAC 40 has traded in a narrow 93.4 point range this week. However the Index may again be trending downward in the short term with today’s move back below the 10 day EMA (exponential moving average) found at 5,342.76. So far for Friday’s session, the Index is trading down 0.92%. If the CAC 40 continues to trend lower, traders will next look for the Index to retest the standing monthly low at 5,238.40. Top winners for the CAC 40 include Publicis (+0.50%) and LafarageHocim (+0.36%). Losers for Friday’s trading include Societe Generale (-3.05%) and Credit Agricole (-1.89%).

CAC 40, Daily Chart with Averages

CAC 40, EUR/USD Pause Ahead of Next Week's Data

(Created Using IG Charts)

The EUR/USD can also be seen consolidating in the daily graph below. So far the pair has traded in a 100 pip range, with a weekly high of 1.1268 and low of 1.1168. Compared to the CAC 40, the EUR/USD remains above its 10 day EMA which is found at 1.1159. This line continues to remain a point of short term support for the pair, and breakout below this value exposes monthly lows which currently reside at 1.0839. Traders should note that the EUR/USD continues to trend higher above its 200 day MVA (simple moving average). If this trend resumes, and the current pattern of consolidation concludes, traders may look for prices to breakout above the standing 2017 high which is found at 1.1268.

EUR/USD, Daily Chart with Averages

CAC 40, EUR/USD Pause Ahead of Next Week's Data

(Created Using IG Charts)

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

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Crude Oil Price Forecast: Pushing Into Important Price Resistance

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

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Can OPEC push crude oil prices higher? To see our thoughts, access the DFX Q2 Oil forecast here.

Talking Points:

  • Crude Oil Technical Strategy: Bullish on a close above $50/bbl
  • OPEC expected to extend production cuts in Vienna next week
  • Oil price remains trapped in bearish falling channel, < Ichimoku cloud

The price of WTI crude Oil does not seem to be bothered by the headlines signaling political turmoil in the US, but rather is favoring the outlook that OPEC is expected to extend the production curb another 9-months. On May 25, investors will likely get confirmation of whether or not the production cuts will be extended, but we have already heard the support of the idea from Russia and Saudi Arabia. While many feel that OPEC has been left little choice, but to cut production due to the increase in production from shale discounting their efforts, traders still seem content to bid for Oil, which has kept the price pushing ever higher towards the important $50/bbl level for WTI Crude. The question that will continue to remain, even if the 9-month extension is approved and compliance among the members remains impressive is whether or not Non-OPEC production (i.e., shale) will swamp the deal’s effectiveness and keep the market oversupplied.

While the fundamental story shows that we should be working ever-closer to a balanced market with OPEC increasing how long they will pull back production, the charts seem also seem to favor upside if the price can close on a daily basis above $50/bbl. Given the current news cycle and encouraging EIA inventory data out of the US, the market appears to be supported near $48/bbl. A break above $50 along with the developing sentiment picture below helps to paint a picture that we’ll soon see a move to the top of the falling bearish channel near $52/bbl.

If the price can break above the top of the bearish channel, we expect the US production to play less of a factor in headlines as traders start to focus once again on an approach toward $60/bbl. If crude does move higher, it’s worth keeping an eye on Oil-driven currencies like USD/CAD, USD/NOK, and USD/MXN.

Of course, OPEC is working to put the market in a place where demand outstrips supply. If they can do that, they’ll need a helping hand from the demand side, which will likely be dependent on a resumption of positive economic activity in the US & China that has been absent of late.

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Crude Oil continues to stay offered below $47.11 as Ichimoku favors downside continuation

Crude Oil Price Forecast: Pushing Into Important Price Resistance

Chart Created by Tyler Yell, CMT

Crude Oil Sentiment:

Crude Oil Price Forecast: Pushing Into Important Price Resistance

Oil - US Crude: As of May 8, retail trader data shows 68.0% of traders are net-long with the ratio of traders long to short at 2.13 to 1. In fact, traders have remained net-long since Apr 19 when Oil - US Crude traded near 5301.8; price has moved 7.3% lower since then. The number of traders net-long is 6.6% lower than yesterday and 23.0% lower from last week, while the number of traders net-short is 3.4% higher than yesterday and 11.2% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse higher despite the fact traders remain net-long. (Emphasis Mine)

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Shorter-Term US OIL Technical Levels: Thursday, May 18, 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.

Crude Oil Price Forecast: Pushing Into Important Price Resistance

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Gold Prices Bounce Off of Fib Support After Falling Below Bullish Channel

Price Action, Swing & Short Term Trade Setups

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Talking Points:

- Gold Technical Strategy: Longer-term bearish, intermediate-term bullish, short-term mixed.

- Gold prices caught support off of a key Fib level, but sellers have yet to relent.

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In our last article, we looked at the recent up-trend in Gold prices running within a fairly consistent bullish trend channel. But this was just a part of the story, as the backdrop in Gold prices ahead of that bullish run was considerably bearish after price action had driven from a high above $1,295 down to a new low below $1,215.

Gold Prices Bounce Off of Fib Support After Falling Below Bullish Channel

Chart prepared by James Stanley

Even the bearish move above needs to be taken in context, as this was coming fresh on the heels of another ‘rate hike rally’ that likely had some additional bullish drive on the basis of risk aversion. After the Fed hiked rates in December, Gold prices set a low around $1,122 before going on to rally for the next two months. Prices pulled back in the first half of March as the Federal Reserve furnished a plethora of warnings about impending rate hikes; but after rates were actually hiked, Gold prices set another ‘higher-low’ before going on to rally for another month. This brought upon a test of a key trend-line that can be found by connecting the July high to the election night spike in Gold prices.

Gold Prices Bounce Off of Fib Support After Falling Below Bullish Channel

Chart prepared by James Stanley

The two above themes put Gold prices in a fairly precarious position at the moment. The longer-term formation is still bearish, but near-term, there are still some bullish tendencies here as support continues to show around the 50% Fibonacci retracement of that most recent major move. So, for those looking to trade shorter-term strategies, the bullish side would likely be most attractive using the support that came-in around the 50% retracement as a basis for risk placement. And for those that want to treat the bullish side with a bit more caution, adding a Fibonacci retracement on the most recent bearish move lower, from the $1,295-high down to the $1,214-low, can help to time the setup. The 50% retracement of that shorter-term move comes in at $1,254.80; and if prices can re-cross above this level, the prospect of bullish continuation will look considerably more attractive.

Gold Prices Bounce Off of Fib Support After Falling Below Bullish Channel

Chart prepared by James Stanley

Alternatively, longer time frames will likely want to avoid the bullish side, at least for now, as price action was unable to set a higher-high when re-testing $1,264. After support came-in around $1,249 earlier this morning, bulls were able to drive prices-higher; but sellers re-emerged just shy of the 50% Fib retracement of the shorter-term bearish move. This gives the appearance that sellers were merely using this morning’s support bounce to further position-in to bearish setups; and this further adds proof to the idea that we may be near another turn in Gold prices.

On the bearish side, there are a couple of ways that traders could move forward with current levels. A break below $1,245.20 would give us a ‘lower swing low’, and this could highlight the prospect of bearish continuation. If a fresh low prints, current support around $1,249 could be re-assigned as ‘lower-high’ resistance in the effort of bearish continuation. The second method would be to wait for another re-test of swing-high resistance around $1,254. Another re-test of this zone coupled with a short-term ‘lower-high’ could open the door to short-side swing setups.

Gold Prices Bounce Off of Fib Support After Falling Below Bullish Channel

Chart prepared by James Stanley

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

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Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

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

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What’s inside:

  • Gold, silver bouncing into resistance
  • Taking cues from gold with its cleaner picture
  • Neutral to bearish as long as resistance stays in place

Find out what’s driving precious metals in our market forecasts.

Precious metals have been in bounce-mode the past couple of weeks, but can the bounce turn into something more? Silver hasn’t had the cleanest levels to work with, which is why we’ve deferred to gold instead to help shape our outlook. Gold is up against a solid area of resistance in the low-1260s along with the underside of the trend-line extending higher from December; it’s backed off a couple of times in the past week but continues to hang tough. If gold doesn’t soon turn lower then probability increases it will make a serious run at overcoming the recent swing high at 1265 towards a much more important area of resistance. On a break above there isn’t much room left for gold to run before the long-term 2011 bull/bear line-in-the-sand becomes another obstacle, a much larger obstacle to overcome. Macro-speaking – stay below, then big-picture bias remains neutral to bearish; make a break above and things could quickly become interesting from the long-side.

Gold: Weekly

Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

Daily

Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

So, to answer the earlier-proposed question – there is still a lot of work to be done before gold (and silver) can go from bouncing into a full-blown rally.

Looking at price action in silver over the near-term, while gold struggles to overcome the low-1260s silver is trading around a trend-line running under swing-lows in January and March. A bearish reversal bar was put in on Tuesday, but has yet to lead to any follow-through. A break above the Tuesday high at 17.31 will negate the reversal bar.

Silver: Daily

Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

For now, the picture is a bit murky in silver, but looking to gold as long as the yellow metal stays below 1265 then the bias for precious metals as a whole is neutral to bearish over the near-term. A break above resistance in gold could bring in some short-term momentum but efforts to push higher may be quickly thwarted by the 2011 bull/bear trend-line.

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

---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.


DXY Breaks Below 3-yr Trendline, Bucks Seasonal Trend

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

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Talking Points:

The dollar has been a bit of a whipping boy of late as bad data continues to stack up for the currency that was expected to be the darling of G10FX in 2017. The Dollar Index (DXY) traded at new 2017 lows on Wednesday after concerns grew on whether or not the current US administration would be able to progress their inflation inducing agenda. The hope that had surfaced at the election of President Trump was expected to align nicely with the reduction of accommodation from the Federal Reserve.

For a quick trip to the land of economic theories, traders can dust off their textbooks to locate the Mundell-Fleming model, which helps explain expected the impact on exchange rates in the short-term when monetary and fiscal policies diverge. The hope that Dollar bulls had was that we were about to witness a nice combination of relatively restrictive monetary policy as the Fed hiked rates and mused about reducing their $4.5T balance sheet while the administration led an expansionary Fiscal policy of the world’s reserve currency.

However, we’ve seen bond markets less than confident that the restricting monetary policy efforts fo the Federal Reserve will come to pass in the coming years. At the same time, doubts are growing about how much fiscal policy (infinitely harder to approve than monetary policy in the current framework), will expand given the drama that has surfaced out of the US capital.

Despite the economic models, economic weakness compared to prior expectations and political drama have led to significant DXY weakness, which has helped propel EUR/USD to 2017 highs. Traders looking at the chart should keep an eye on the 3-year Trendline acting as new resistance. The Trendline is currently +100 points away from Thursday's spot at 98.80. An inability for the price to close above 98.80 would favor a continuing trend of DXY weakness toward the November low of 95.89.

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DXY trading at levels not seen since Election Day. Weak upside anticipated over reversal

DXY Breaks Below 3-yr Trendline, Bucks Seasonal Trend

Chart Created by Tyler Yell, CMT

IG Client Sentiment Highlight: EUR (57.6% of DXY) Sentiment Favoring Further Upside

DXY Breaks Below 3-yr Trendline, Bucks Seasonal Trend

EURUSD: As of May 18, retail trader data shows 26.0% of traders are net-long with the ratio of traders short to long at 2.85 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.06101; the price has moved 5.0% higher since then. The number of traders net-long is 8.7% lower than yesterday and 36.9% lower from last week, while the number of traders net-short is 2.7% higher than yesterday and 29.7% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias (Emphasis mine)

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Shorter-Term DXY Technical Levels: Thursday, May 18, 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.

DXY Breaks Below 3-yr Trendline, Bucks Seasonal Trend

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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S&P 500 - Downmove Erased, Record Highs in Sight, Again

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

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What’s inside:

  • S&P 500 rebounds sharply, trades back above 2380 level and fills gap
  • Should the high get tested or broken, can momentum continue?
  • Fading price swings for quick-hitters the preferred approach right now

Find out what’s driving the stock market in our market forecasts.

In the last update, after the market was walloped on Trump headlines the S&P 500 looked poised for follow-through, but the market had a different idea. Instead of looking towards support levels from back in March and April, we’re now staring at record levels again.

The 2380 level was an important one for a few weeks as the market consolidated just above it following the first round of the French elections. It held on several occasions, and when the market took a hit last week it was sliced through with ease. On Friday, the market attempted to break back above but settled out the week right at the key juncture. So far, this week that key level hasn’t been anything more than an afterthought.

Yesterday, the S&P filled last week’s gap, with the next level of resistance arriving not far ahead at the record high of 2306. Should we see a push to that point or just beyond, can the market continue its recent surge, or will it be a fake-out breakout? Often times indices will breach a key level only to take the rug out from beneath those who most recently entered the market. With that in mind, entries are favored on pullbacks if conditions are right, not chasing breakouts. A rejection off the highs may shift the market lower with range-trading coming into play as general conditions become increasingly unclear. Should we see a move lower our biggest interest will be in how the 2380 level is handled. A hold, and we may see a push back towards the highs; a fold below and the market may be looking to at least probe last week’s low.

Overall, conviction is muted from either side of the tape and favors traders looking to fade levels on rejections with short-term objectives in mind. This will be the preferred tactical approach until the big-picture presents a clear set-up.

Heads up: Later today, the FOMC minutes from the earlier-month meeting will be released. When the March minutes were released on April 5 the market underwent an unexpected bout of volatility. It seems unlikely we will have a redux, but traders need to be prepared regardless.

S&P 500: Daily

S&amp;P 500 - Downmove Erased, Record Highs in Sight, Again

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

---Written by Paul Robinson, Market Analyst

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

You can follow Paul on Twitter at @PaulRobinonFX.


DAX Technical Outlook: Attempt to Stabillize Continues

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

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What’s inside:

  • DAX attempting to make good on Thursday reversal, clear 12660
  • A clearance on a daily closing basis brings into play the underside of key trend-line, record highs
  • Failure could mean another leg lower towards last week’s low and other notable support levels

Find out what’s driving global equity markets in our market forecasts.

The DAX is doing its best to stabilize after getting knocked off balance last week on headlines out of Washington. The price action since Thursday’s reversal day has been on the sluggish side, with the area around 12660 having been an issue the past couple of days. If we are to see higher prices, climbing convincingly above is the first step. Perhaps today we will see just that.

If we can see a solid day closing daily bar above 12660 then the next objective will be the underside of the trend-line running over peaks from July-April and then under recent price action before the Trump news hit the wires. Given the angle of the trend-line, trade up to that point will bring the DAX very near the record highs recently notched out at 12842.

Another rejection though to make good on Thursday’s reversal and close below 12660 could set the market up for another push lower. The first targeted level is Thursday’s low at 12490, then prior peaks in the vicinity of 12375/90. Below there we would turn to the trend-line running up from the December low.

For now, price action in either direction isn’t fully convincing from where we sit. Risk/reward isn’t particularly favorable with clarity lacking.

Heads up: Tomorrow at 18:00 GMT, the FOMC will release its minutes from the earlier-month meeting. Last month it sparked a sizable sell-off in the U.S. which in return caused a gap-down the following day. We may see nothing substantial this time around, but traders should be prepared.

DAX: Daily

DAX Technical Outlook: Attempt to Stabillize Continues

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

---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.


Technical Analysis: ASX 200 Set to Break Chart Deadlock

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Australian benchmark has been stuck between a broken uptrend and quite strong support
  • Now it looks as though something has to change
  • The next couple of days could be well worth watching

Make sure your ASX trading strategy is up to the mark with thisDailyFX guide

A week may be a long time in some markets but the last seven days haven’t changed much in terms of the ASX 200’s technical picture.

My last look, a week back, found the index worryingly below an uptrend channel which had thereto lasted for all of 2017. Support at the lows of February 28 March 23 was containing losses.

A week later the index remains below that uptrend channel but those supports are holding. Indeed, it can hardly be coincidental that the clearest recent low (May 18’s intraday bottom) was also February 28’snadir of 5679.90.

Technical Analysis: ASX 200 Set to Break Chart Deadlock

However, as you can see from the chart above, price action since that bounce has been inconclusive at best. The bulls have shown no appetite to regain the 5834 level which came before the precipitous fall seen on May 17. But, by the same token, bears have yet to retest that now-critical support level we talked about earlier.

It looks as though something is about to give though. The index is currently flirting oh-so-closely with the top of a downtrend line which has been in place since it topped out back in early May.

Technical Analysis: ASX 200 Set to Break Chart Deadlock

If it can close above this level, currently 5778.70, then the bulls might start to feel a little bolder. If it can’t, then the downtrend strongly suggests another try at that 5679.90 prop and the lows for this year which lurk beneath.

One modest bit of support for the bullish view might come from the index’s Relative Strength Index (RSI). This isn’t flashing any warning signs yet, up or down, but it is meandering down towards territory at which many analysts would think the market was oversold.

The next couple of days’ closing levels should be very interesting indeed.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX


Nikkei 225 Technical Analysis: Nasty Slip Did No Lasting Damage

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Nikkei’s uptrend has been threatened, but still endures
  • The index may now be attempting some consolidation at higher levels
  • Momentum indicators suggest that this should not be too tall an order

Make sure your Nikkei trading strategy is up to the mark with this DailyFX guide

The Nikkei 225’s swoon on May 16 and 17 have put a nasty dent in a promising uptrend but have not fatally holed it.

Before those falls the index had put in an impressively bullish performance. Indeed, it had risen for sixteen of the 25 prior sessions with no notable losses even on the days when it did finish in the red.

Those sessions are the kernel of an uptrend which began on April 17 and which still endures, as you can see:

Nikkei 225 Technical Analysis: Nasty Slip Did No Lasting Damage

One modest caveat might be that the lower bounds of this trendline are simply the intraday lows of April 19 and, more recently, May 18. These are probably not the sort of significant support levels to which bulls could look for much succor in a serious downturn but, for the moment at least, their uptrend line is unthreatened.

And with support in mind we should probably look at where the index most recently bounced: last Friday’s 19473 level, which also contained the sharp, two day fall we were talking about at the start of this piece. While not especially significant, it did form a closing low back in early March. And it was the level around which the index held for about nine sessions after that point, so it may be worth watching again now.

Nikkei 225 Technical Analysis: Nasty Slip Did No Lasting Damage

With that support holding and the uptrend intact then it looks as though the bulls still have the reins here. It’s also worth pointing out that the relative strength indicators do not suggest that there is any overbuying of the index at present, even if they have crept up a little in recent days.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


FTSE 100 – Confluence of Support Keeps Bears in Hibernation

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

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What’s inside:

  • FTSE 100 maintaining above big area of support after thorough test last week
  • Might not see a big rally, but neutral to bullish bias warranted above support
  • Top-side trend-line, record high are the only things standing in the market’s way

Find out what’s driving Sterling and the FTSE 100 in our market forecasts.

Monday’s update was titled, “Trading Between Key Lines of Influence”. With only a couple of trading sessions and price action having not moved much since, the FTSE is still on a mission of price discovery beyond noted lines of influence. Monday and Tuesday saw the market move up towards recent record highs and the top-side trend-line extending over peaks in January and March, but found a few sellers on approach.

If weakness sets in, the footsie won’t have far to drop before it should find sponsorship on the trend-line rising up from the April low; but even more important is the 2013 trend-line which was confirmed as support last week on the quick-hit in response to US politics souring. The long-term trend-line proved itself a problem from January through April before the FTSE finally broke on through. But it wasn’t just the breakthrough which captured our attention, it was the successful retest on a sharp drop which was also viewed as an important event. There was confluence with prior peaks as well, but all-in-all old resistance was proven to be a solid form of new support.

With that in mind, as long as the market can stay above this critical line of influence, then the market remains healthy from where we sit. Looking higher, the top-side trend-line (Jan/Mar) and record high at 7533 will be the hurdles to clear for higher prices to result.

Heads up: Later today the minutes from the earlier-month FOMC meeting will be released, and while it likely won’t cause any chaos, we can’t dismiss its potential impact on the market. Last month, the S&P 500 dove sharply and in response we saw Asia and Europe gap lower the day after.

FTSE 100: Daily

FTSE 100 – Confluence of Support Keeps Bears in Hibernation

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

---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.