Support & Resistance

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Japanese Yen Technical Analysis: USDJPY Still Eyes 112 Resistance

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY is still clearly within its daily chart uptrend
  • It has struggled with 112 resistance, but perhaps not for much longer
  • AUD/JPY looks stuck in a broad range

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The Japanese Yen has yet to surrender a key short-term psychological resistance point to the US Dollar, but it may do so very soon.

USD/JPY remains well within the uptrend channel which has bounded trade for much of this year. However, the JPY112.00 level has capped the market. The pair has failed to get above there on a daily closing basis despite coming close in the last three weeks and even topping that point intraday on March 1.

Spot the Pennant. US Dollar vs Japanese Yen, Daily Chart.

Now however we can clearly see the convergent uptrend and downtrend lines of a pennant formation on the daily chart. This is what’s usually known to technical analysts as a ‘continuation pattern.’ What that means is that the previous market impulse is likely to be regained once the pattern has been broken.

Clearly that looks like quite good news for US Dollar bulls as it implies that USD/JPY will resume its rise, probably quite soon.

Whether or not it can get comfortable above the 112.00 point and prime itself for another attempt at the peaks of late 2018 is much more debatable. However, playing for continued modest gains at least seems like the most sensible plan for now.

Against the Australian Dollar meanwhile, the Japanese currency looks rather stuck. Scrappy range trade with many narrow daily ranges has dominated this cross since at least early January.

Going nowhere? Australian Dollar Vs Japanese Yen, Daily Chart

The Australian Dollar is inching steadily upward within that range though, possibly getting something of a tailwind from USD/JPY’s current sedate rise.

However, this range has been tenacious and the peak remains some way above the market at JPY79.83. If general risk appetite holds up, the cross might be able to get there, but it’s worth noting the possibility of a lower low within the current range unless the Aussie can manage to nudge above that range top.

As that looks far from certain, playing the range seems like the best idea.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Gold Price Technical Outlook: XAU/USD Reversal to Risk Further Losses

Short term trading and intraday technical levels.

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Gold prices reversed just ahead of monthly open resistance after posting two equal legs higher and leaves the risk for further losses. These are the updated targets and invalidation levels that matter on the XAU/USD charts into the close of the week.

New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guide

Gold Daily Price Chart (XAU/USD)

Gold Price Chart - XAU/USD Daily

Technical Outlook: In my last Gold Technical Outlook we noted that the price correction was testing slope support with more, more significantzone eyed,just lower at 1275/76 – a region defined by the 38.2% retracement of the August rally and the objective 2019 opening-range low.” Gold registered a low at 1280 with price respecting slope on a close basis before recovering higher. The advance failed this week at former channel support, turned resistance, with the subsequent sell-off breaking back below the 1302 pivot zone.

The decline is now testing the 61.8% retracement of the advance at 1292 and a break below this threshold would risk another test of slope support with broader bullish invalidation steady at 1275/76 where the yearly opening-range low converges on the 38.2% retracement. Ultimately, a topside breach above monthly open resistance at 1313 is needed to shift the focus higher targeting the 61.8% retracement at 1321.

Why does the average trader lose? Avoid these Mistakes in your trading

Gold 120min Price Chart (XAU/USD)

Please add a description for the image.

Notes: A closer look at price action shows gold breaking below a near-term ascending channel formation extending off the monthly lows. The risk is lower sub-1302 with a break lower targeting the median-line around ~1285 backed by yearly open support at 1280 and 1275/76 – both levels of interest for possible exhaustion / long-entries IF reached.

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Bottom line: The immediate risk is lower while below 1302 but ultimately, we’re looking for a new low to satisfy a larger correction. From a trading standpoint, a good place to reduce short exposure / lower protective stops. We’ll be on the lookout for a possible fade opportunity closer to the yearly open / slope support.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Gold Trader Sentiment

Gold Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +2.67 (72.7% of traders are long) – bearishreading
  • Long positions are11.2% lower than yesterday and 6.1% lower from last week
  • Short positions are 14.1% higher than yesterday and 21.7% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold 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 Gold price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

---

Active Trade Setups

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex


S&P 500 at Resistance, Dow Jones & Nasdaq 100 Charts Showing Divergence

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

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S&P 500/Dow Jones/Nasdaq 100 Technical Highlights:

  • S&P 500 is trading at strong resistance
  • Dow Jones demonstrating relative weakness
  • Nasdaq 100 new cycle high, leading the way

Check out the forecasts for Global Stock Indices and other markets on the Trading Guides page.

S&P 500 is trading at strong resistance

The S&P 500 is trading at big resistance via the 2800/17 zone, where on repeated occasions last year the market turned lower. It recently turned lower from this zone as well after reaching to the upper-bounds of it. In confluence with price is the lower parallel of a recently broken channel.

If the current push higher fails it may turn into a double-top or the top of a trading range down to perhaps the recent low of 2722. In either event, resistance must be respected as such until we see a breakout.

Given the significance of resistance and lack thereof after 2817, a closing breakout is seen as probable to take the market up to the record high or better. But at this time the general feeling is that we need a bit more information before drawing any concrete conclusions as to what the next maneuver should be…

Stocks are rallying, but will it last in the long-term? Find out where our analysts see stocks headed in the Global Equities Forecast.

S&P 500 Daily Chart (2800/17 is strong resistance)

S&P 500 daily chart, 2800/17 is strong resistance

Dow Jones demonstrating relative weakness

The Dow is showing glaring divergence on the back of Boeing (BA) getting hammered following another crash of one its 737 jets. While this might be a reason to excuse the Dow of divergence, it nevertheless shows relative weakness and may be a sign of fracturing in breadth. At the least, it gives traders a target for shorting should we see the S&P start to roll over from resistance. If the S&P breaks out look for the Dow to follow suite back through the 26k+ territory that it turned down from not long ago.

Dow Daily Chart (relative weakness)

Dow daily chart, relative weakness

Nasdaq 100 new cycle high, leading the way

The Nasdaq 100 and its basket of bull market darlings (FAANG) are showing the most strength and this may be a sign that the S&P will break on through to the other side. For traders targeting longs on a broader market breakout, this is the go-to index for now.

Nasdaq 100 Daily Chart (leading the way)

Nasdaq 100 daily chart, leading the way

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

Tools for Forex & CFD Traders

Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX


EUR/USD Technical Analysis: Euro Down Trend Expected to Resume

Fundamental analysis, economic and market themes.

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EUR/USD Technical Strategy: BEARISH

  • Euro back at 14-month down trend resistance vs US Dollar
  • Near-term chart positioning hints bearish resumption likely
  • Confirmation of turn on immediate support break pending

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The Euro is back to testing resistance guiding it lower against he US Dollar since January 2018, a barrier reinforced by the top of a choppy channel in play over the past two months. Another rejection might open the door for the next leg in the single currency’s slow downward grind while a break higher has might set the stage for a significant medium-term trend reversal.

Euro vs US Dollar chart - daily

A look at the four-hour chart seems to imply that more immediate positioning favors downside continuation. The appearance of negative RSI divergence on a test of near-term resistance in the 1.1321-31 area speaks to ebbing upside momentum that might precede a reversal. The series of higher highs and lows set from the March 7 low remains intact however, hinting that confirmation is still needed.

EUR/USD Technical Analysis: Euro Down Trend Expected to Resume

On balance, this seems to argue for a patience. The bearish implications of overall positioning argue against taking up the long side but the absence of an actionable trigger to activate a short trade mean that doing so is probably premature. With that in mind, traders might opt for the sidelines until a more compelling opportunity presents itself. That may come courtesy of a variety of fundamental catalysts on tap ahead.

EUR/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter


EUR/GBP Technical Analysis: Outlook Clouded by Conflicting Signals

Classic technical analysis, macro and economic themes.

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EUR/GBP Technical Analysis

  • EUR/GBP facing conflicting technical cues for next move
  • Weekly chart suggests dominant downtrend resumption
  • Daily chart hints of a turn higher to the falling trend line

Just started trading EUR/GBP? Check out our beginners’ FX markets guide!

After clearing the April 2018 lows a couple of weeks ago, EUR/GBP has accelerated the dominant downtrend from the beginning of this year, falling about 0.8%. On the weekly chart below – which can be used to analyze prevailing trends in the medium-term - the pair is aiming to confirm another close to the downside. If that is the case by the end of this week, it leaves the Euro increasingly vulnerable to the British Pound.

The push towards 2016/2017 support, a range between 0.830 to 0.833, has fundamentally been driven by the Brexit saga. In a series of votes in the UK’s Parliament this week, the one that arguably produced the most aggressive Sterling gains was rejecting a ‘no-deal’ Brexit. I am closing following developments out of the nation and you may follow me on Twitter here @ddubrovskyFX to stay updated on EUR/GBP’s actions.

EUR/GBP Weekly Chart

EUR/GBP Technical Analysis: Outlook Clouded by Conflicting Signals

Taking a closer look at the EUR/GBP daily chart below, the pair had another retest of the falling trend line from early January after the 4-hour chart hinted of a climb in the short-term. It held, further solidifying it as a persistent barrier for bulls. Now, positive RSI divergence warns that downside momentum is fading after a cautious descent through 0.8528.

This may precede a turn higher, emphasizing resistance as the falling trend line (red line on the chart below). Otherwise, resuming the dominant downtrend has immediate support eyed at 0.8451. This is the 78.6% Fibonacci extension, which is drawn by using the decline in January (from the peak at 0.911 to 0.862) and the subsequent climb to 0.884.

EUR/GBP Daily Chart

EUR/GBP Technical Analysis: Outlook Clouded by Conflicting Signals

**Charts created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter


Japanese Yen Technical Analysis: USDJPY Bulls Still Struggle With 112

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Japanese Yen Technical Analysis Talking Points:

  • 112.00 still eludes USD/JPY bulls to the upside
  • The overall uptrend remains intact, however, and a break is simply a question of time while this is so
  • GBP/JPY’s uptrend is probably a little shakier on fundamental, Brexit-related grounds.

Get live and interactive coverage of all major Japanese economic data at the DailyFX Webinars. We’d love to have you join us.

The Japanese Yen has managed to fend off challenges from Dollar bulls since late February with the psychological 112.00 level remaining out of reach for USD/JPY.

The pair did manage to poke above that point on an intraday basis on February 28 and again on March 5. However daily closes above the line proved elusive and the Dollar has since retreated from the upper reaches of the 111.00 handle.

Dollar bulls are by no means out of the game, but the uncommitted might want to wait and see whether they can manage a higher high over the next week-or-so’s trading. This is possible but hardly certain.

US Dollar Vs Japanese Yen, Daily Chart

If they can, then a period of consolidation above 112.00 (probably involving at least one weekly close) will likely be needed before the pair can tackle the next upside target. That’s a zone of resistance between 112.49 and 113.03 that bars the way up to the last significant peak- December 13’s 113.70.

USD/JPY remains well within its uptrend channel, so these higher tests remain very much on the cards even if progress may be slow.

To the downside the pair can expect immediate support between 110.42 and 110.9, which is where trade was concentrated between mid-late February. Channel support meanwhile is some way below the market, in the 109.90 region.

Brexit uncertainties continue to plague the UK Pound, but GBP/JPY nevertheless remains above the convincing uptrend which has held daily-chart sway since January 3.

Uptrend Holds. UK Pound Vs Japanese Yen, Daily Chart

The cross has bounced at that line once again this week but, given those fundamental uncertainties, any sign of a higher high above the recent significant peak of 148.59 may well simply offer a better opportunity to go short, at least over the short-term.

Resources for Traders

Whether you are new to trading or an experienced old hand DailyFX has plenty of resources to help you. There is our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There is also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and best of all they’re free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


GBP/USD Technical Analysis: Dips Down for a Test of Fibonacci Support

Price action and Macro.

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GBPUSD Talking Points:

- Theresa May’s strategy for a third vote of her Brexit plan to Parliament has been scuttled ahead of the EU summit on the schedule for later this week, injecting additional uncertainty in the already very uncertain matter of Brexit.

- Outside of Brexit, UK inflation numbers are released on Wednesday and the Bank of England has a rate decision on the schedule for Thursday. This is a non-Super Thursday event, so there will not be updated projections and forecasts. But the FOMC rate decision the day before can continue to push USD-volatility, and this can carry impact to GBPUSD.

- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

GBPUSD Scales Back to Fibonacci Support Zone

It’s been another setback in the continuing Brexit drama as Theresa May’s third attempt to gain Parliamentary approval of her plan has been scuttled; leaving the UK in a continued position of inertia as there’s little indication of how a final Brexit will actually look. And on that note, we don’t even know when this might start to take shape, as PM May’s approach this week was largely taken in order to gain Parliamentary approval ahead of this week’s EU summit.

On other matters – there are a couple of relevant items on the economic calendar out of the UK this week; and in pertinence to the US Dollar side of GBPUSD, an FOMC rate decision waits in the wings for Wednesday. Given the nature of US Dollar price action of recent, with the currency reversing after a test of yearly highs, the tone with which the Greenback trades will likely carry impact in GBPUSD.

On that note, it’s been a general tone of strength in GBPUSD over the past week as the US Dollar has continued to pullback from that resistance. GBPUSD opened last week with a test below the 1.3000 handle, but buyers were back in short-order to push prices back up to 1.3289, albeit temporarily. That move soon priced-out and after a quick-test below 1.3050, prices shot up to a fresh nine-month-high, making for a fairly volatile show in short-term price action for last week.

GBPUSD Two-Hour Price Chart

gbpusd gbp/usd two hour price chart

Chart prepared by James Stanley

After this morning’s news began to circulate that Ms. May would not be sending her plan to Parliament for a third vote, GBPUSD dropped down to a key area on the chart which is currently helping to hold the lows. The price of 1.3187 is the 23.6% Fibonacci retracement of the 2014-2016 major move; and 1.3181 is the 38.2% retracement of the April 2018 – January 2019 sell-off.

This confluent zone last came into play in early-March when it helped to set support-turned-resistance; and before that this zone had also helped to hold the highs in January of this year.

GBPUSD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

GBPUSD Strategy

As discussed in these technical pieces over the past month, near-term volatility in GBPUSD continues to show rather vividly with jagged moves on either side of price. This can make for an especially daunting backdrop to short-term trend or momentum strategies given numerous swings that have been seen of recent. For traders utilizing short-term approaches on GBPUSD, swing trades off of support or resistance levels with relatively tight stops would likely be one of the few attractive ways of approaching the matter.

Below current support, a secondary zone exists from 1.3087-1.3117; and below that is the 1.3000 psychological level which can be incorporated with last week’s swing-low to produce a zone that runs from 1.2962-1.3000. Above current prices, the prior support zone from 1.3231-1.3250 could be looked to for near-term resistance; and above that the 1.3290-1.3300 area remains. And a bit-higher is a third zone of potential resistance at those recent highs that runs from 1.3350-1.3381.

GBPUSD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

GBPUSD Big Picture

This incorporates the US Dollar into the mix as longer-term trends will likely need some level of participation from both currencies in the pair; but as discussed last week, the longer-term setup in GBPUSD continues to work towards an ascending triangle formation, which will often be approached with the aim of bullish strategies. Last week produced a quick flicker above resistance, thereby making the 1.3350-1.3382 zone a complicated area to begin staging bullish breakout approaches.

But – a bit higher is another relevant zone around the 1.3500 handle. The price of 1.3470 is the 38.2% retracement of the 2015-2016 major move; and 1.3478 is the 50% marker of the Brexit move in the pair. At 1.3500 is a major psychological level, making for a batch of resistance that may prove difficult to break without proper motive.

Traders looking at longer-term setups or looking to work with a bigger-picture break of that ascending triangle can look to this key zone on the chart for continuation potential.

GBPUSD Weekly Price Chart

gbpusd gbp/usd weekly price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

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

Contact and follow James on Twitter: @JStanleyFX


USD/CHF: Fresh Three-Month Highs as Bulls Retain Control

Price action and Macro.

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Talking Points:

- USD/CHF has continued to strengthen through April, following a bullish break of a bearish trend-line that took place as we turned the page into Q1.

- At this stage there is a legitimate concern around the pair being overbought on a near-term basis, as RSI is in overbought territory on both daily and four-hour charts, and RSI divergence has been showing for some time on lower time frames.

- Are you looking to improve your trading approach? Check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

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USD/CHF Rallies to Fresh Three-Month-Highs

In the first quarter of this year, USD/CHF was one of the most attractive pairs for playing continuation of USD-weakness. The Swiss Franc’s strength was synergistic with Dollar-weakness, and as each of those themes remained prominent through the first half of Q1, USD/CHF drove down to fresh two month lows.

But in the month of March, something began to shift, and the bearish response that had been so consistent in the pair began to wane. By the end of the month, we traded above a bearish trend-line, and then in early-April, we looked at using that trend-line for fresh support as the pair solidified above the .9500 psychological level. That theme has continued to run as a weak Swiss Franc is now being combined with a strong US Dollar, and prices in the pair are now trading at fresh three-month-highs.

USD/CHF Eight-Hour Chart: Fresh Three-Month Highs

usdchf eight hour chart

Chart prepared by James Stanley

A New Trend Emerges

Another newer trend-line has formed in the pair, taken from the late-March to mid-April lows. That trend-line is shown in blue on the four-hour chart below, and noteworthy here is how prices are well-elevated above this trend-line, denoting a currently overbought state in the pair.

USD/CHF Four-Hour Chart: A New Trend-Line Forms From March/April Lows

usdchf four hour chart

Chart prepared by James Stanley

Overbought Near-Term Urges Caution From Chasing

Both the daily and four-hour charts of USD/CHF are showing overbought RSI, and on shorter time frames, the indicator has been diverging for some time. This highlights the danger of chasing at this point as that trend is well priced-in, and a pullback could make bullish continuation strategies a bit more attractive.

On the below chart, we’re looking at three potential areas of interest, each of which are above that bullish trend-line looked at above.

USD/CHF Two-Hour Chart: Higher-Low Support Potential for Pullback Plays

usdchf two hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on FX pairs? Our DailyFX Forecasts for Q1 have a section for the more popular major currencies. We also offer a plethora of resources on our USD/CHF page, and traders can stay up with near-term positioning via our IG Client Sentiment Indicator.

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

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Japanese Yen Technical Analysis: USDJPY Bulls Must Top 112.00

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Japanese Yen Technical Analysis Talking Points:

  • USD/JPY has broken above its 2019 uptrend channel
  • However, it hasn’t yet managed to top 112.00
  • Even if it does, an important resistance band will loom

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The Japanese Yen remains on the defensive against the US Dollar, even if the latter is making heavy weather of a key psychological resistance point.

USD/JPY has managed to rise above the downtrend channel previously dominant since January 10. It was an extension of the rise seen consistently from this year’s lows, printed on January 2.

US Dollar Vs Japanese Yen, Daily Chart

US Dollar bulls have yet to conclusively push trade above the 112.00 handle despite trying for a few days now. It looks as though they will probably succeed in doing so either this week or next, assuming that fundamental risk appetite endures and isn’t thrown a Yen-strengthening curveball from left-field.

Even if they do, though, there will remain resistance beyond the psychological with which those bulls will have to contend if they are to solidify their gains.

There’s a band of resistance between 112.48 and 113.03 which will be important once the 112.00 level has been topped. That band has been an important gateway to significant highs in trade going back to September last year and Dollar bulls should be aware that time spent above it has tended to be fleeting and could well prove so once again unless the pair can be pushed convincingly beyond the upper boundary.

USD/JPY reversals will probably find near-term daily chart support between 111.05 and 110.23. That range bounded trade between February 11 and 28. Of course the pair would remain solidly in its uptrend even if that range were to break, but it would certainly look less comfortable there than it has in the last two weeks.

Meanwhile, the Euro has been creeping doggedly higher against the Japanese Yen since January 1, but that process looks to be stalling.

Euro Vs Japanese Yen, Daily Chart

If this downtrend break is confirmed by daily or weekly closes beneath it then the first Fibonacci retracement support of this year’s rise will be in focus. It comes in at 126.02, with the next, 38.2% prop at 125.12.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

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NZD/USD Technical Analysis: NZ Dollar Coiling Up for a Breakout?

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NZD/USD Technical Strategy: NEUTRAL

  • NZ Dollar remains mired in a narrowing range vs US counterpart
  • Double top below 0.70 might still happen but confirmation needed
  • Narrowing coil undermines risk/reward setup absent a breakout

See our free trading guide to help build confidence in your NZD/USD trading strategy!

The New Zealand Dollar continues to struggle with establishing a clear-cut directional bias against its US counterpart. The case for a double top below the 0.70 figure remains broadly intact, with a series of lower highs following the appearance of a Bearish Engulfing candlestick pattern. A matching series of lower lows is struggling to take root however, with uptrend support set from October conspicuously intact.

At this stage, confirmation of a reversal seems like it needs a daily close below both that trend line – where the outer layer of support is now at 0.6730 – as well as the 0.6700-20 chart inflection area. Doing so would probably set the stage for a challenge of the 0.6591-0.6619 zone. Alternatively, a breach above the 0.6893-0.6903 region opens the door for another challenge of the would-be double top in the 0.6942-69 band.

New Zealand Dollar vs US Dollar price chart - daily

An actionable trade setup appears to be absent at this time. Traders will likely need a defined breakout one way or another to show directional conviction. In fact, even a shorter-term tactical bet seems unattractive as the narrowing space between immediate support and resistance undermines risk/reward parameters. With that in mind, patience on the sidelines might be seen as prudent.

NZD/USD TRADING RESOURCES:

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter


DAX 30 & CAC 40 Charts – Levels, Lines to Contend With, but Trend Still Bullish

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DAX 30/CAC 40 Technical Highlights

  • DAX big-picture resistance won’t matter until bullish sequence is snapped
  • CAC hits trend-line, but bullish as long as impressive channel maintained

To see our intermediate fundamental and technical outlook for the DAX & Euro, check out the DailyFX Q1 Forecasts.

DAX big-picture resistance won’t matter until bullish sequence is snapped

On Friday, the DAX nudged to a new cycle high off the December low, but as discussed last week, big-picture resistance will continue to be an ordeal for the German benchmark to handle. From a macro technical standpoint, the neckline, March 2018 low, 200-day MA, and 2011 trend-line make this area right here, right now very big.

It’s the kind of retest of major thresholds, especially the neckline, that can end up becoming a major turning point. But while this may indeed be the case, and resistance is to be respected until broken, it won’t matter until the multi-month bullish sequence is snapped.

The loose channel is guiding the DAX higher, with the lower parallel acting as the key line of support to watch. This type of structure in the intermediate-term can help keep one of trouble when looking at long-term prospects.

As long as the lower line holds then the market is still pointed higher, however; break the channel and then the forces of the longer-term topping pattern can exert pressure on the market. Clear above resistance while staying within the channel and the drive higher may accelerate.

DAX Daily Chart (Resistance, but still bullish sequence)

DAX daily chart, resistance, but still bullish sequence

DAX Weekly Chart (Important big-picture spot)

DAX weekly chart, important big-picture spot

CAC hits trend-line, but bullish as long as impressive channel maintained

The rally off the December low has been an impressive one, with the CAC maintaining a trend within a very impressively narrow channel. The French index is up against a trend-line from May, which may cause a pullback here soon, but as long as the channel stays intact no good reason to be bearish. Even if the channel breaks it doesn’t mean the market will undergo major selling, but it will at the least warrant caution for longs.

CAC Daily Chart (T-line resistance, impressive bullish channel)

CAC daily chart, t-line resistance, impressive bullish channel

Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX


USD/CAD Rate Forecast: CAD Jumps Most in 2 Months on CA Oil Supply Cut

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Canadian Dollar Rate Forecast Key Takeaways:

  • The ONE Thing: If you thought the Brent & WTI breakdowns in price were bad, check out Canadian Select. Western Canada Select Crude from Alberta fell from summer high of $79 to trading near $13/bbl this month, which hurts A LOT the terms of trade in Canada. Canada announced production cuts to support the market in the same spirit as OPEC, but long-term
  • Weakening terms of trade will likely make it difficult for the Bank of Canada to remain hawkish or pushing toward two rate hikes in 2019 as is being currently priced. The CAD may be subject to oil volatility that will likely remain elevated into Thursday’s OPEC meeting.
  • Technical Outlook: The pair remains favored to move higher as the 55-Day Moving Average (DMA) has crossed above the 100-DMA providing a broader bullish framework. Shorter-term traders may look to price crossing above the 21-DMA to validate bullish trend continuation.

Key Technical Levels for Canadian Dollar Rate to US Dollar:

  • Resistance: C$1.3360, November 28 high
  • Spot: C$1.3185
  • Support: C$1.3079/84, 100-DMA/55-DMA

Canadian Crude Crash Prompts Production Cut, CAD Rallies as Result

Please add a description for the image.

Chart Created by Jake Schoenleb, @SchoenlebFX, Source: Bloomberg

Canadian crude oil is more expensive to refine, and transportation of Canadian crude has sharply cut the price of Western Canadian Select, the benchmark for heavy crude from Alberta’s oil sands. Western Canadian Select recently hit a low of $13.27 a barrel despite a high price of $79 earlier this year.

The 76.7% decline prompted free-market principles to be shelved and OPEC-like production cuts implemented. Historically, the spread between Western Select and WTI has been in the $10-$15 range, but in H2, the spread has blown to nearly $50/bbl.

Much of Canada’s terms of trade, an economic reading of an economies exports values against imported good values, has deteriorated alongside Western Select, which makes bidding up the CAD difficult. Indeed, while the US Dollar has wobbled higher in Q4 global oil markets have likewise broken down with November seeing Oil’s worst month since 2008.

Over the weekend, we learned that Alberta had ordered a production cut in alliance with the OPEC and strategic alliances expected to prop up the market once again. This helped WTI rally by as much as 3%, but the Alberta cut led to Western Select jumping $10/bbl (Remember, the low on November 15 was $13.27/bbl) to $32.91. In other words, while CAD has jumped aggressively against the USD, the 8.7% production cut (~325k bpd) that saw a ~140% or $19 rally translated into a ~1.2% rally in CAD as USDCAD fell from C$1.3360 to C$1.3160 per USD.

The question now becomes both is this move sustainable (please keep laughing to a minimum,) and if not, what will happen to CAD? Looking below, it could be that we are seeing a jump in CAD only to retrace recent weakness that may soon continue.

OPEC Likely To Shake Brent, Which Is Correlated To CAD

Please add a description for the image.

Chart Created by Jake Schoenleb, @SchoenlebFX, Source: Bloomberg

Traders may also wish to watch Brent, which is expected to be volatile into Thursday’s OPEC meeting where similar production cuts may be solidified. The correlation to CAD & Brent is near one-year highs, which is unfortunate for CAD bulls as oil recently had the worst month in a decade.

CAD Technical Analysis: Trend Line Break & Moving Averages Support USD/CAD

Please add a description for the image.

Chart Source: IG Charting Package, IG UK Price Feed. Created by Tyler Yell, CMT

USD/CAD has strongly broken above the multi-year trendline and is not supported by the 55-MA crossing above the 100-DMA. The labeling above shows the recent retracement as a potential pullback in the pair before a larger advance.

Traders should keep an eye on C$1.3385 as that could be a double-top point if the US Dollar runs out of steam or CAD strength re-emerges. A break above C$1.3385 would turn focus toward the May 2017 high of C$1.38, and the 100% Fibonacci expansion from the base of ‘B’ to C$1.41 per USD. This view will remain in favor with weekly closes above C$1.30, which is the 61.8% retracement point of C$1.3385-C$1.2782.

A break below C$1.2782 would turn the focus toward a possible double top, and likely put traders on the sidelines until clarity formed.

Leveraged Funds Added CAD Short Positions, Though Not Aggressively

Please add a description for the image.

Data source: Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

The chart above from Paul Robinson’s Commitment of Traders index, one of my favorite indicators and a podcast session dedicated to the indicator can be found here, shows short positions in CAD have been a dominant trend in 2018 among leveraged funds.

The Commitment of Traders (CoT) is worthwhile reading for any shorter- or medium-term trader as it is seen as a one-stop shop to see how much of key assets are being bought or sold on any given week by both hedge funds and commercial institutions, and in today’s case, on Canadian Dollar futures.

Unless this trend reverses course, which would likely need sustainable support from other indicators, buying CAD at “bargain prices” may still be expensive if the trend of CAD weakness continues.

Forex Trading Resources To Support Your Strategy

We hope you enjoy DailyFX’s new podcast: Trading Global Markets Decoded

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feedhas intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we watch.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Talk markets on twitter @ForexYell


Gold & Silver Price Outlook Becoming Increasingly Bearish

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Gold/Silver Technical Highlights

  • Gold price action smacks of a ‘corrective grind’
  • Silver building a complex head-and-shoulders pattern

DailyFX has created a library of guides to help traders of all levels navigate markets, check them out today on the Trading Guides page.

Gold price action smacks of a ‘corrective grind’

Recent price action in gold has been a bit of a grind, and while it has yet to lead to a trade set-up that could soon change. The down-move starting last month left the precious metal vulnerable and with price struggling to gain traction another leg lower could be in the works in the not-too-distant future.

The 1300/11 area is a fitting spot for gold to struggle with both price and slope resistance in the vicinity. It’s not all that clean, but near-term price action is taking on the outline of a rising channel. A breakdown below the March 14 low at 1293 should have the path of least resistance in favor of shorts again.

A break would quickly bring the 1281/77-area into focus, which is also around the neckline of a head-and-shoulders pattern. It’s not the prettiest pattern, but sometimes it’s those which don’t look the best that work the best. A break below the neckline will bring into play trend support from August.

An update will be provided long before then, so for now just worrying about the next step which is to look for a rollover beneath the near-term swing-low at 1293, then the neckline. To negate a bearish bias a convincing rally needs to grow legs to above 1320 or so…

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.

Gold Daily Chart (Poised to roll over soon…)

Gold daily chart, poised to roll over soon...

Silver building a complex head-and-shoulders pattern

Silver is working on a similar pattern as gold, but with a bit more complexity. It will need to roll down past the recent low at 14.98 and to the neckline along with support from last year carved out during a range. To get silver safely in the clear for shorts, a drop below 14.70 needs to develop. Because of thick support and recently more resilient price action in silver, gold has become the preferred short.

Silver Daily Chart (H&S pattern gaining clarity)

Silver daily chart, H&S pattern gaining clarity

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX


ASX 200 Technical Analysis: Evening Star Threatens Deeper Reversal

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ASX 200 Technical Analysis Talking Points:

  • The ASX 200 made a new 2019 high last week
  • It hasn’t fallen far since either
  • That said an evening star pattern has been formed that should worry the bulls

Get live, interactive coverage of all major Australian economic data at the DailyFX Webinars

The ASX 200 sits close to six-month highs and seems reasonably comfortable at altitude, but there are some clear technical warning signs which traders might do well to heed.

The Sydney equity benchmark managed its 2019 peak last Thursday and, while it hasn’t fallen far since, in doing to it made an evening star pattern on the chart which could be a bad sign for the bulls. That pattern can be seen in the daily candles of March 6-8, where the characteristic rise, slip and fall for consecutive days are clearly seen.

Bearish Signs? ASX 200, Daily Chart.

An evening star is a bearish reversal pattern, suggesting falls ahead. In this case that possibility is only compounded by the fact that March 8’s down day took the index below an uptrend line which had previously held all year.

Still, there may yet be cause for hope. So far, the index has refused to collapse. Indeed, it remains above even the first Fibonacci retracement of this year’s rise. That comes in well below the market at 6057.6. Should that give way then there may well be some impetus behind a bearish trade which would abandon the psychologically crucial 6,000 level and put the second retracement at 5916 in focus. But we are not there yet.

First support is likely to be found at the recent lows in the 6120 region and, while these hold bulls can hope that the influence of the evening star may not be severe. Should they give way however then it might be as well to play for a deeper retracement and to be protected against another slip below the 6000 point.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!


Brent Crude May Not Stop at $90 As IEA Warns of ’Risky Situation’

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Brent Crude Oil Price Forecast Talking Points:

  • The ONE Thing: Brent maintains strong factors to support a bullish trend with favorable momentum being maintained. The last time Brent had this many quarters of consecutive gains was in 2Q 2008 before oil spiked aggressively, and added insult to injury ahead of the great financial crises.
  • The International Energy Agency’s Executive Director, Fatih Birol, noted that ‘expensive energy’ is back and that if OPEC does not open the taps, the energy market may soon hamper global growth at a time when sentiment is already tipping lower.
  • Brent Crude Oil Technical Analysis Strategy: Uptrends are naturally overbought, and momentum remains bullish.An inability to close below the 26-day midpoint ($81.70 shows the trend remains in force even as prices test channel resistance via Andrew’s Pitchfork.
  • Access our recent Crude Oil Fundamental Forecast here

Pullbacks have been shallow, and intuitions are not overly long, which could mean that crude has further upside to go. Traders soon learn the markets do not know the meaning of ‘too high’ or ‘too bid’ as momentum and fundamentals as well as sentiment are ever changing. The current momentum picture looks to take the petrol complex higher absent a breakdown through support currently at $81.70/bbl.

The Most Surprising Number In The Commitment Of Traders?

Please add a description for the image.

Chart Source: Weekly CoT Update for the Euro, Japanese Yen, Gold & Other Major Contracts

The chart above shows how institutional positioning sits relative to the 52-week range. When markets are near year-to-date or 52-week extremes like SPX500, you would expect long positions to show the most extreme positioning in the last 52-weeks. However, look at crude positioning.

Despite Venezuelan output in a virtual free-fall and uncertainty about access to Iranian supplies, institutions are holding long positions within the lowest quintile in 52-weeks. Due to FOMO, a strong breakout could cause a chase to follow that would cause traders not just to hold option exposure on crude, but futures as well that could bid up the front-month contract further.

Unlock our Q4 18 forecast to learn what will drive trends for Crude Oil into year’s end.

Brent Insight from the Futures Curve

The futures curve is a tool that speculators and hedgers or corporates alike look to as the perceived fair value of an asset at different points in time due to the available information. The back of the curve is often a helpful source of information about sentiment and perceived effects of current policies.

The December 2020 contract that makes up the back of the brent curve has been rising steadily. Despite arguments of a ‘well supplied’ oil market a strengthening tail of the curve tends to show a tighter oil market for longer. Expectations for a tighter market is exactly the argument made by Fatih Birol of the IEA who said that unless OPEC and their allies turn on the taps, the market is going to feel a squeeze as we enter a ‘red zone’ as the global economy is losing momentum.

Birol also noted in a Bloomberg interview that, ‘if there are no major moves from key producers, the fourth quarter of this year is very, very challenging.’

Technical View: Weekly Charts Shows Bullish Momentum, $90/bbl Target

Please add a description for the image.

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

Technically Speaking On Brent Crude:

  • Resistance:$86.65 / $90 (October opening range high, 61.8% Retracement of 2012/16 Range)
  • Spot: $84.56/bbl
  • Support:$81.70, $78 (26-day midpoint, the terminus of prior correction)

Once again, the only complaint bulls likely have about Brent is that the trend has been too strong to help identify re-entry points. However, the hammer candlestick on Monday’s price action saw the pair briefly drop below the 9-day midpoint before rising again and is currently set to close above the 9-day midpoint at $84.578/bbl.

Adding to trader’s confidence of the Elliott Wave persuasion is that the strong move from $78 happened at the end of a triangular correction before exploding higher to $86.65 for an 11.36% rally.

On a longer-term chart, traders can see that since May, when Brent broke above $52/bbl, momentum has remained bullish with MACD (5, 34, and 5) in positive territory. Traders may want to study the Q4 2010 and Q1 2011 rise a break above $90/bbl (trendline from 2008 high) could set up the FOMO breakout discussed earlier.

Traders will also see that momentum per Ichimoku (bright green line on the chart that lags price) continues to show bullish momentum. If nothing else, it should encourage short traders to wait.

Additional insights for Brent can be found in the options market that is showing $100 calls trading at large volumes. Additionally, backwardation via the December 2018- December 2019 brent contracts, while off the highs of the year, continue to show a healthy front-month premium that should also discourage less brave shorts.

Not familiar with Ichimoku? You’re not alone, and you’re in luck. I created a free guide for you here

More Support For Your Trading:

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If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Talk markets on twitter @ForexYell


CAC 40 Double Tops at Channel Line

Swing trading, chart patterns, breakouts, and Elliott wave.

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Talking Points

  • CAC 40 carves a double top pattern
  • Elliott Wave pattern could not push beyond the mid-line of the Elliott Wave channel
  • Bears are activated on a move below channel support near 5200

The Elliott Wave pattern on CAC 40 is intriguing. CAC 40 appears to have finished the five wave impulse move at the Elliott Wave channel mid-line. This implies a weak market and is a bearish pattern.

This pattern suggests that a longer term correction is underway. The first battle of support emerges near 5,200 where the blue Elliott Wave support channel emerges as well as the bottom of the Ichimoku cloud.

Interested in learning more about Elliott Wave and Ichimoku? Grab the beginner and advanced Elliott Wave guide as well as the Ichimoku guide.

CAC 40 Elliott Wave and Ichimoku Pattern

CAC 40 Double Tops at Channel Line

Created using IG Charts

Any near term bulls would need to show themselves in CAC 40 near 5,200. If this level breaks, then the door is opened up to 4,900-5,000. We have two different levels appearing there.

First, the previous wave ‘iv’ extreme is near 5,000. Previous fourth waves tend to act like a magnet in corrective moves.

Secondly, the 38% retracement of the June 2016 (Brexit) low to the November 1, 2017 highs appears near 4,921.

Therefore, if 5,200 breaks, traders can look for further weakness down towards the 4,900-5,000 price zone.

Lower potential exists, but we will need to see the structure of how the correction develops to weigh the odds further.

Why do traders lose money? Find out in our Traits of Successful Traders Research.

---Written by Jeremy Wagner, CEWA-M

Jeremy is a Certified Elliott Wave analyst with a Master’s designation. This report is intended to help break down the patterns according to Elliott Wave theory.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

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Other Elliott Wave forecasts by Jeremy:

GBP/USD Hanging Over the Edge of a Cliff

AUDUSD technical forecast hints at the market searching for a bottom.

Short term EURUSD Pattern Hints at Bounce to 1.17.

USD/CAD dives 200 pips, will it continue?

Gold price forecast points towards lower levels.

Crude oil prices reach highest level since July 2015.

NZDUSD Elliott Wave Analysis: Temporary Relief Rallies

USD/JPY : A Bird in the Hand is Better Than Two in the Bush


US Dollar Technical Analysis: Can USD Hold this Rebound?

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

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US Dollar Index (DXY) Key Points:

  • The ONE Thing: Sentiment Extremes in USD are not matched by a positive technical picture for the US Dollar. There appears to be a form of divergence in the works as the US Dollar is rising, but at a tepid pace despite the largest number of US Dollar bulls in 52-weeks per Paul Robinson’s breakdown of the CFTC report, CoT Update for US Dollar, Euro, British Pound, Gold, and More.
  • Technical studies may be disheartening for US Dollar bulls as sentiment extremes are showing a lack of an impulsive follow through.
  • Make no mistake; the dire Emerging Market headlines tend to align with a strengthening US Dollar. If the US Dollar continues to strengthen, there will likely be more/ worse headlines coming from EM, but a reversal in recent US Dollar strength could bring massive relief to many global markets with a high stock of USD-denominated debt.
  • Technical Outlook on the US Dollar: The US Dollar has retraced 50% of it’s August drop, which followed bearish MACD (5,34,5) divergence. However, a break of the August low at 94 would open up a move likely to 93.79/92.9.

Unlock our Q3 forecast to learn what will drive trends for the US Dollar through the rest of 2018!

It’s a popular time to be hot US assets. The US stock market is running away with the record books while others bourses are steeped in bear markets. Traders in Foreign Exchange are also apt to talk about the virtues of being long the US Dollar.

Their arguments are sound when taking a snapshot of the current global macro environment that is ripe of the following headlines:

  • The Federal Reserve looks set to keep hiking despite other central banks having difficulty leaving negative rates
  • Britain’s Brexit progress looks uncertain at best despite Britain being set to leave the EU on March 29, 2019,without an agreement in place to define future relations
  • Emerging Markets are in crisis mode with Brazil, South Africa, Indonesia, India, & Turkey seeing their currencies rapidly depreciating against the US Dollar.
  • China and the US are embroiled in a Trade War that seems to favor the US in the current atmosphere as China PMI recently slowed relative to expectations and the PBoC recently engaged in liquidity injections that may show a slowing economy.

More themes are going on right now, but you get the idea. We’re in an environment that one may think the US Dollar Index should be trading at or above the 2017 extreme or at least at 2018 extremes.

But, it’s not.

The US Dollar is working through a technical bounce right now with extreme sentiment, and technical traders should be aware that a flip in sentiment from bullish to bearishness could bring a sharp drop in the US Dollar that could lead into massive relief for emerging markets, commodities, and equities around the world.

A further rally in US Dollar would likely embolden the bears that are encircling multiple emerging market themes right now that could send us from theme to crisis.

Put simply, the strengthening US Dollar, despite being off the highs of 2018 and less than 50% of the 2017-2018 range remains a hamper to growth, and a coordinated move from the Fed to take some of the air out may “support the global market,” and lead to a falling USD into and through Q4.

Technically Speaking – A Weak Bounce On Extreme Sentiment

US Dollar Technical Analysis: Can USD Hold this Rebound?

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

Momentum per MACD (5, 34, 5) remains bearish at below zero, but bullish sentiment is at one-year extremes. That does not sound like an ideal recipe for a bullish breakout, and traders should be on the watch for a test and break below the August low near 94.

Such a break would likely align with a broad rally in emerging markets, I’m looking at you CSI300, and would also be signaled first and foremost by the USD/CNY that has made an argument for being The most important currency pair in the world (sorry, EUR/USD.)

Given the technical concern I have and the worsening macro global backdrop (it’s not pretty outside of US risky assets,) I am watching for a pullback toward 93.79/92.90 on the US Dollar Index. This comprises of two key pull-backs before the August high and the median line of the massive Andrew’s Pitchfork drawn from the key pivots in late 2017 and early 2018.

A break below this zone would argue for a broader regime shift and would likely be cemented through speculative futures positioning that you can track from Paul Robinson’s weekly wrap up.

My bearish these would be discredited on a break and close above 95.61, the 61.8% retracement of the August range. Such a move would technically favor a move toward 97, the top of the channel on the charts.

We’ll see.

New to FX trading? No worries, we created this guide just for you.

MORE SUPPORT FOR YOUR TRADING:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q3 have a section for each major currency, and we also offer an excess of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our popular and free IG Client Sentiment Indicator.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as t1rading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Discuss this market with Tyler in the live webinar, FX Closing Bell, Weekdays Monday-Thursday at 3 pm ET.

Talk markets on twitter @ForexYell


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USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Price action and Macro.

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Talking Points:

- USD/CHF resisted off of a key area again this morning. Should USD-strength continue, a bullish move over this resistance level can open the door to breakout strategies in Swissy.

- While USD weakness continued well into this month, USD/CHF has been range-bound since July, deductively highlighting a relatively weak Swiss Franc that could become attractive for continuation should USD-strength continue to show.

- Want to see how USD has held up to the DailyFX Forecasts? Click here for full access.

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The U.S. Dollar has had a rather rough 2017. In a down-trend that’s seen as much as -12.3% of the U.S. Dollar’s value erased, even while the Fed talks up additional rate hikes, few currencies have been able to keep pace with the Greenback’s declines. After coming into the year trading above the 1.0300 level, USD/CHF has seen as much as 925 pips taken-out as the pair has driven-lower.

But after running into support in mid-July around the .9433 level (the 2016 low), the declines have slowed as USD/CHF has built into a rather volatile range-bound pattern. Resistance has begun to build around the .9773 level, and we’ve seen multiple iterations of resistance show-up here; each rebuking USD/CHF’s upward advance.

USD/CHF Daily: Range-Bound Since Re-Test of 2016 Low

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

At this point, a top-side break of that well-worn resistance level could open the door to an attractive bullish breakout setup. Just above this area of resistance is another level of interest at .9813, as this is a prior swing-low point of support that also showed as a quick swing-high before the pair initially sank below .9770. This can be used in a couple of different ways. For traders looking at the more aggressive route of taking on bullish exposure on a break of .9775 (a few pips beyond the exact point of resistance), the level at .9813 can be utilized as an initial target and an opportunity to move the initial stop up to breakeven. Or, for those who want to approach USD/CHF a bit more conservatively, the .9813 level can be used to trigger the bullish breakout, with .9772 becoming an area to look to for stop placement in the effort of containing risk in the event that the breakout doesn’t continue-higher.

On the chart below, we’ve added five potential resistance levels above the .9813 inflection point, each of which has been derived from a prior price action swing and/or group of swings. Each of these can be used as potential targets should the bullish breakout continue if/when resistance is taken out.

USD/CHF Four-Hour: Potential Top-Side Resistance Levels Applied

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

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

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AUD/USD Technical Analysis: Bearish Chart Setup Awaits Confirmation

Fundamental analysis, economic and market themes.

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AUD/USD Technical Strategy: BEARISH

  • Aussie Dollar still stuck in a range below 0.72 figure vs US namesake
  • Overall positioning hints at bearish Triangle formation taking shape
  • Daily close below 0.7054 might mark initial confirmation of reversal

Get help building confidence in your AUD/USD strategy with our free trading guide!

The Australian Dollar continues to be mired in a choppy range below the 0.72 figure against its US counterpart. While this speaks to near-term indecision, the currency’s inability to build higher following November’s break above trend resistance guiding prices higher since January 2016 seems telling.

Indeed, the series of lower highs from early December may be carving out a Triangle formation. That typically marks consolidation before the resumption of the preceding trend. In this case, such a setup would carry decidedly bearish implications. Confirmation is still pending at this time however.

Prices are sitting squarely atop support in the 0.7054-76 area, making a short position seem unattractive from a risk/reward perspective. On the other hand, opting for the long side – even as a tactical trade without pretentions to lasting follow-through – might be seen as premature absent a clear bullish reversal signal.

Incoming event risk by way of the RBA monetary policy announcement might be another reason that traders are discouraged from committing to directional bet one way or the other at the moment. We will be tracking the rate decision and its AUD/USD impact live.

Australian Dollar vs US Dollar chart - daily

AUD/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter


FTSE Technical Analysis – Support on Dip, New Levels of Resistance Targeted

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

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FTSE Technical Highlights:

  • FTSE broke above solid resistance, now turns into source of support
  • Trend-line, top of channel coming into focus as next target of resistance

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FTSE broke above solid resistance, now turns into source of support

The FTSE has put together a nice rally the past few sessions, stringing together 8 consecutive positive days up to today. Monday’s pop put the index above the confluence of resistance (price/200-day) penciled in as key last week.

The breakout has former resistance now turned into support as per usual, with the 7260/30 area in focus on a dip. A t-line from late Jan is also running right in the vicinity. On weakness a hold of support will keep the technical picture clean and moving along inside the channel from the December low.

Looking higher, resistance doesn’t clock in until the trend-line off the record high, about another 130 points or so from current levels. The top of the channel may be in confluence depending on the timing of when the market gets up to that point, if it does.

From a tactical standpoint, the FTSE could use a breather and today may be the beginning of taking a rest. A small dip/consolidation on or above support will do the index some good and may help create a good base for a continued run to the aforementioned resistance lines.

Check out this guide for 4 ideas on how to Build Confidence in Trading.

FTSE Daily Chart (Support below, t-line/channel resistance above)

FTSE daily chart, support below, t-line/resistance above

You can join me every Wednesday at 9 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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---Written by Paul Robinson, Market Analyst

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