Daily Technical Analysis by Kate Curtis from Trader's Way

USDJPY recently broke down from its range visible on the 4-hour time frame, signaling that a selloff is in order. Price seems to be in the middle of a correction to this area of interest, though, and the 38.2% retracement level could serve as resistance.

However, the 100 SMA is still above the longer-term 200 SMA so the path of least resistance might still be to the upside. If the pair breaks past the Fibs, it could be on track towards testing the range resistance at 115.00 once more.

Stochastic is indicating oversold conditions and is pulling up, indicating a return in buying pressure. Once the oscillator reaches the overbought zone and turns lower, sellers could gain the upper hand a push for a test of the swing low at 110.75.

The main event risk for the dollar is the healthcare vote in Congress, as this would be indicative of whether or not the Trump administration can be able to push its agenda when it comes to other reforms. A victory in repealing Obamacare could revive gains in the US markets and the dollar on stronger expectations of tax reform and financial deregulation.

On the other hand, being unable to repeal Obamacare would deal a large blow to confidence for the Trump presidency, leading investors to doubt if fiscal policy changes can be enacted soon. Meanwhile the Japanese yen is benefitting from both anti-dollar and risk-off flows.


Fed Chairperson Yellen also has a testimony lined up and this should provide more insight on the Fed’s hawkishness. Other policymakers have previously confirmed the possibility of seeing three rate hikes this year so similar remarks from Yellen could keep the dollar supported.

By Kate Curtis from Trader’s Way

EURUSD is starting to trend higher on its 1-hour time frame, moving inside an ascending channel and just coming off a bounce from resistance. A pullback to the channel support at the 1.0750 minor psychological level could take place.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the channel support, adding to its strength as a floor. Price seems to be breaking below the near-term dynamic inflection point at the 100 SMA to indicate a bit of selling pressure.

Stochastic has already reached the oversold area, which means that sellers are already getting exhausted. Once the oscillator pulls higher, buyers could gain more traction and trigger a bounce back to the channel resistance past 1.0800 or at least until the recent highs.

Dollar traders seem to have been disappointed by Congress’ decision to postpone the vote on the healthcare bill since they weren’t able to gain enough support. According to the Freedom Caucus, they cannot make a decision based on the current form of the new bill since they want a broader repeal of Obamacare.

Discussions could continue in Washington and the uncertainty could weigh on dollar demand. After all, this vote is seen as a test of the Trump administration when it comes to their strength in pushing their agenda through Congress, which would set the tone for their future policy changes like tax reform and financial deregulation.


As for the euro, PMI readings from the manufacturing and services sectors of France and Germany are lined up today. Apart from that, polls continue to show a lead for Macron, which is bullish for the euro because it eases concerns of a victory by pro-Frexit Le Pen.

By Kate Curtis from Trader’s Way

EURGBP has been trending lower on its 1-hour time frame, moving inside a descending channel connecting the latest highs and lows of price action. Price gapped higher over the weekend and is about to test the channel resistance around .8670.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Also, the 200 SMA coincides with the channel resistance, adding to its strength as a ceiling. Stochastic is making its way down from the overbought zone to indicate a return in selling pressure.

In that case, the pair could head back down to the channel support around .8570 or until the previous lows close to the .8600 major psychological level. On the other hand, a climb past the channel resistance could lead to a reversal from the downtrend.

Economic data from the euro zone turned out mostly stronger than expected last Friday, as flash manufacturing and services PMI readings from Germany and France printed improvements and showed a much stronger pace of expansion among the industries. There were no economic reports out of the UK then.

German Ifo business climate data is due today and a rise from 111.0 to 111.2 is eyed, indicating a pickup in confidence. Stronger than expected data could lead to another boost for the shared currency as most economic figures have been supporting the shift in the ECB’s stance to a less dovish one.

There are no major reports due from the UK today, but the pound has also drawn some support from upbeat CPI and retail sales data. However, the main theme for the currency’s price action this week is the looming Article 50 date on March 29 as the European Council’s response could set the tone for upcoming negotiations.

By Kate Curtis from Trader’s Way

EURAUD Channel Retracement (Mar 28, 2017)

EURAUD has formed higher lows and higher highs, moving inside an ascending channel pattern visible on its 4-hour chart. Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the channel support just above the 1.4000 major psychological level.

This is also close to the 100 SMA dynamic support, which is safely above the 200 SMA and indicating that the path of least resistance is to the upside. The gap between the moving averages is widening to reflect stronger bullish momentum. The 200 SMA is slightly below the channel support but could serve as the line in the sand for a larger correction.

Stochastic is pointing down from the overbought area to indicate that sellers are about to take control of price action, opening the opportunity for a countertrend trade to short at this channel resistance. If selling pressure is strong enough, price could even break below the channel support and spur a reversal.

Economic data from the euro zone turned out better than expected once more, with the German Ifo business climate index rising from 111.1 to 112.3, outpacing the consensus at 111.2 to signal a much stronger pickup in optimism. This follows stronger than expected manufacturing and services PMI releases from Germany and France last Friday, underscoring the ECB’s shift to a less dovish stance.


As for the Aussie, there have been no major events so far, save for a speech by RBA Assistant Governor Debelle. The currency seems to be taking its cue from risk appetite and traders look wary of higher-yielding assets these days. The next big event for the Aussie might be the Chinese CPI releases on Friday.

By Kate Curtis from Trader’s Way

NZDUSD seems to be tired from its climb as a short-term reversal pattern formed on its 1-hour chart. Price failed in its last two attempts to break past the .7050 minor psychological resistance and is testing the support near .7000, creating a double top formation.

A break below the neckline could set off a drop of at least 50 pips or the same height as the chart pattern. Price could also drop all the way down to support at the .6900 major psychological mark.

The 100 SMA seems to be making a downward crossover to show that bears are gaining the upper hand. However, stochastic is pulling up from the oversold region to suggest that buyers might take over soon. If so, a bounce back to the tops at .7050 could be possible.

Economic data from the US turned out stronger than expected, as the CB consumer confidence index rose from 116.1 to 125.6 - its highest reading in more than 16 years. The Richmond manufacturing index also turned out higher than consensus as it rose from 17 to 22 instead of dipping to 16. Aside from that, Republicans have emphasized that they will continue to pursue healthcare reform, reviving market confidence in the Trump administration’s plans.


There were no major reports out of New Zealand yesterday and none are due today so market sentiment could be the main driver of Kiwi price action. Note that the UK government will officially trigger Article 50 today and a few press conferences are lined up, which should provide a glimpse of how the negotiations could go and spark more volatility than usual in the markets.

By Kate Curtis from Trader’s Way

GBPJPY continues to trend lower and is moving inside a descending channel on its 4-hour chart. Price just bounced off support at the 137.50 minor psychological level and could be on its way for a test of resistance at the 139.00 major psychological mark.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. The 100 SMA is also close to the channel resistance, adding to its strength as a ceiling.

Stochastic is pulling up from the oversold region, which suggests a return in buying pressure. If bulls are strong enough, price could break past the channel resistance and go for a test of the 200 SMA dynamic inflection point at 140.00.

Brexit-related events seemed to go by without a hitch in the past trading sessions so the pound did not sell off too much. Still, the lingering uncertainty surrounding the negotiation process could be enough to keep a lid on the currency’s gains in the near term.

As for the Japanese yen, there have been no major reports from Japan recently, leaving the yen to move based on market sentiment. So far, risk-off flows and falling US bond yields have been positive for the Japanese currency.


On Friday, Japan will print its household spending, industrial production, and CPI readings. Improvements could be enough to give the yen another boost on weaker expectations of additional BOJ easing. For today, US final GDP data and political headlines could also influence yen flows.

By Kate Curtis from Trader’s Way

EURUSD has been selling off recently but it could be approaching a turning point as it nears the bottom of the longer-term ascending channel visible on the 4-hour time frame. Price could test support at the 1.0650 minor psychological level and bounce right back up to the resistance at 1.0950 to 1.1000.

Stochastic is deep in oversold territory, which means that sellers are already exhausted. Once the oscillator turns higher and climbs out of the oversold area, buying pressure could kick in and keep losses contained. However, if selling pressure persists, EURUSD could break below the channel support and start a downtrend.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. Price broke below the 100 SMA dynamic support to reflect some bearish momentum but it could still find support at the 200 SMA dynamic inflection point near the bottom of the channel.

Economic data from the euro zone turned out weaker than expected, with the Spanish flash CPI showing a 2.3% gain versus the projected 2.6% increase and the German preliminary CPI up 0.2% versus 0.4%. This led traders to doubt that the ECB can sustain its shift to a less dovish stance with weaker inflationary pressures in play.

To top it off, Brexit-related uncertainties could continue to dampen the shared currency’s gains as forcing the UK to give up access to the single market could also have repercussions for euro zone trade activity. UK net lending to individuals came in line with expectations but BBA mortgage approvals came up short.


German retail sales data is due today and a 0.7% rebound is eyed. German unemployment change is also due, along with French consumer spending and preliminary CPI. As for the UK, the final GDP reading for Q4 is lined up, along with the current account balance. No revisions are expected for the 0.7% growth figure.

By Kate Curtis from Trader’s Way

EURJPY failed in its last few attempts to break past the 123.00 area, creating a double top formation on its 4-hour chart. Price has yet to break below the neckline at the 118.00 major psychological mark before confirming the longer-term drop. If that happens, price could fall by around 500 pips or the same height as the chart formation.

The 100 SMA is above the longer-term 200 SMA on this chart so the path of least resistance is still to the upside. However, the moving averages could be oscillating, which suggests that range-bound conditions might persist and support at 118.00 could hold.

Stochastic is dipping into the oversold area, which signals that sellers are getting tired and might let buyers take over. In that case, a bounce back to the range resistance at 123.00 could take place or at least until the middle around 120.50 to 121.00.

Economic data from the euro zone turned out mostly weaker than expected last week, with headline flash CPI down from 2.0% to 1.5% versus the 1.8% forecast and the core CPI down from 0.9% to 0.7%. German retail sales and unemployment change data turned out stronger than expected but data from France fell short of consensus.

As for the yen, Japanese reports also turned out mixed but the lower-yielding currency is taking advantage of weaker US bond yields and the pickup in risk aversion. Household spending is down 3.8% year-over-year versus the projected 1.6% drop while preliminary industrial production turned out stronger than expected.

Earlier today, Japan’s Tankan survey printed mixed results as the manufacturing component improved from 10 to 12 versus the estimated reading of 14 while the non-manufacturing component rose from 18 to 20, outpacing the consensus at 19.

By Kate Curtis from Trader’s Way

USDCAD has been moving sideways on its 1-hour time frame, bouncing off support at the 1.3285 area and resistance at 1.3400. Price is currently testing the top of the range at the moment and if it holds as a ceiling, another drop to the range support could be due.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This suggests that the range resistance is more likely to hold than to break. Stochastic is indicating overbought conditions and is turning lower, also hinting that sellers could take price back down to 1.3285.

However, if a breakout occurs, price could head north by an additional 100 pips or the same height as the chart formation. Similarly a break lower could push USDCAD lower by 100 pips as well.

Economic data from the US has been in line with expectations as the ISM manufacturing PMI fell from 57.7 to 57.2 as expected. The sub-index for prices advanced from 68.0 to 70.5, outpacing the consensus at 68.5, while the employment component also increased. Indices for production and inventories were down.

In Canada, the BOC Business Outlook Survey indicated optimism among respondents that domestic demand is picking up and that upward pressures are seen on price levels and hiring. However, the Loonie was dragged down by the dip in crude oil as traders await the latest batch of inventory reports.


Both the EIA and API reports reflected a slower than expected build in stockpiles for the other week so a similar outcome could give a boost to crude oil and the Canadian dollar. On the other hand, another strong increase could revive oversupply concerns. FOMC minutes, NFP data, and Canadian jobs figures are due later on in the week.

By Kate Curtis from Trader’s Way

USDCAD recently broke out of its range and reached the 1.3450 minor psychological resistance before pulling back down to the broken resistance. Applying the Fib tool on the latest swing low and high shows that the 38.2% level is close to the area of interest and might keep losses in check.

If so, USDCAD could head back to the swing high or much higher. However, the 100 SMA is still below the longer-term 200 SMA on this time frame so the path of least resistance is to the downside. Stochastic is indicating oversold conditions and is turning higher, though, suggesting that bullish pressure could return. A bit of bullish divergence can be seen as well since price made higher lows while stochastic had lower lowers.

Economic data from the US turned out stronger than expected as the trade balance printed a narrower deficit due to stronger export activity. As for Canada, its trade balance slipped from a surplus of 0.4 billion CAD to a deficit of 1.0 billion CAD.

The FOMC minutes are up for release in the US trading session and hawkish remarks could allow the dollar to regain ground. On the other hand, disappointment over the lack of conviction when it comes to future rate hikes could mean losses for the US currency.


The US ISM non-manufacturing PMI and ADP non-farm employment change are also lined up, and these could provide hints on how the NFP report due on Friday could turn out. Meanwhile, US crude oil inventories data could show a draw of 0.1 billion barrels in stockpiles which might be positive for crude oil and the correlated Loonie.

By Kate Curtis from Trader’s Way

GBPAUD formed lower highs and higher lows, creating a symmetrical triangle formation on the 4-hour time frame. Price is starting to break past the triangle resistance, signaling that pound bulls are taking control of price action and could push for more gains.

Stochastic is heading north to show that buyers are on top of the game, but the oscillator is nearing the overbought zone to signal potential weakness in buying pressure. If sellers take over, price could pull back to the top of the triangle or probably even make another move towards support.

The 100 SMA is below the 200 SMA, also indicating that the path of least resistance is to the downside. In addition, the 100 SMA seems to be holding as dynamic resistance at the moment.

UK data came in stronger than expected as the services PMI climbed from 53.3 to 55.0, higher than the consensus at 53.5. Prior to this, the RBA statement turned out less upbeat than expected as the central bank emphasized the weakness in the jobs sector. Australian retail sales also missed expectations while the trade balance came in stronger than expected.


There’s not much in the way of top-tier data from the UK or Australia today so consolidation could still take place. However, China just reported a weaker than expected Caixin services PMI, which could signal weaker demand for Australia’s raw material products. UK manufacturing production and a speech by BOE Governor Carney are lined up on Friday.

By Kate Curtis from Trader’s Way

GBPUSD has formed lower highs and higher lows on its 1-hour time frame, creating a symmetrical triangle pattern that could be due for a breakout soon. Price is currently testing the triangle support at 1.2460, still trying to decide whether to go for a bounce or a break.

A candle closing below the 1.2450 minor psychological level could be enough to confirm a break lower, which could set off a longer-term drop for the pair. Note that the chart pattern is approximately 200 pips tall so the resulting breakdown could be of the same size. Similarly, a break past the triangle resistance around the 1.2500 mark could set off a 200-pip climb.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. However, the gap is pretty close so moving averages could be oscillating to indicate range-bound conditions. Stochastic is heading south so there’s some selling pressure left before it indicates oversold conditions.

Event risks for this trade setup include the release of UK manufacturing and industrial production reports. The former could show a 0.3% gain while the latter is slated to post a 0.2% uptick. The goods trade balance is also due, along with the UK Halifax HPI.


The bigger catalyst could be the US NFP release as this could be indicative of future Fed policy changes. Analysts are expecting to see an increase of 174K in hiring, with leading indicators such as the ADP non-farm employment change report and the ISM manufacturing PMI surveys showing mixed signals.

By Kate Curtis from Trader’s Way

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GBPUSD had previously been trading inside a range with support at 1.2100 and resistance at 1.2700. Just recently, price made an upside breakout, signaling that further gains are likely. The rectangle is 600 pips tall so the resulting uptrend could be of the same size.

In addition, a bullish flag appears to have formed, also serving as a continuation signal. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, and the gap between the moving averages is widening to reflect stronger buying pressure.*

Stochastic has been on the move down but is turning higher once more to indicate a return in bullish momentum. Still, a pullback to the broken range resistance around 1.2700 could be possible before price resumes its climb.

The French elections over the weekend left Macron and Le Pen as frontrunners for the next set of polls in May, allowing European pairs to stage a relief rally on hopes that Macron could take the lead. Meanwhile, the recently announced UK snap elections has been positive for the British currency on hopes of a new Brexit strategy.

There are no major reports due from the UK today while the US has a speech by dovish member Kashkari. Later on in the week, both the UK and the US will print their preliminary Q1 2017 GDP readings.

By Kate Curtis from Trader’s Way

GBPJPY recently had lower highs and found support at the 137.00 major psychological level, creating a descending triangle pattern. Price just recently broke above the resistance at 139.00, indicating that bulls are taking control of price action. The chart pattern is approximately a thousand pips tall so the resulting breakout could last by the same amount.

However, the 100 SMA is still below the 200 SMA on this chart so the path of least resistance could be to the downside and a pullback to the broken triangle resistance at 138.00-139.00 could take place. In addition, stochastic is turning down from the overbought zone to show that sellers are regaining control of price action.

The outcome of the first round of the French elections turned out positive for European markets, adding to the already strong bullish pressure on the pound spurred by the announcement of the UK snap elections. The main event risk for the pound might be the UK preliminary GDP release later in the week as analysts are expecting to see a slightly weaker 0.4% growth figure.


As for the yen, the BOJ statement could also pose some risks especially if the central bank starts jawboning the yen. After all, a strong currency isn’t good for the country’s exports and domestic inflation so the BOJ might be keen on dampening the yen’s gains.

By Kate Curtis from Trader’s Way

EURUSD is moving inside an ascending channel on its 4-hour chart and is currently approaching the resistance at 1.0950 to 1.1000. If this area keeps gains in check, the pair could head back to support at the 1.0700 major psychological level or at least until the mid-channel area of interest.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the resistance is more likely to hold than to break. The moving averages are close to the bottom of the channel, adding to its strength as a potential floor. Stochastic is already in the overbought zone, which means that buyers might already be exhausted and willing to let sellers take over.

There are no major reports due from the euro zone today so the main event risk might be Trump’s tax reform announcement. If market watchers are unimpressed by the details or likelihood that the changes will be implemented by the end of the year, the dollar could wind up giving up more ground against its counterparts. Data from the US turned out mixed recently, with housing data coming in stronger than expected and consumer confidence falling short.


As for the euro, the optimism after the first round of the French elections continues to keep the shared currency supported. To top it off, polls continue to show a widening lead in favor of Macron, lowering the odds of a Le Pen victory and a Frexit.

By Kate Curtis from Trader’s Way

USDCAD has formed higher lows on its 4-hour time frame, moving above a new ascending trend line connecting the lows since mid-February. Price found resistance at the 1.3650 minor psychological level and seems to be in the middle of a correction.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% level lines up with an area of interest or former resistance at the 1.3500 major psychological level. The 100 SMA just crossed above the 200 SMA to suggest that the path of least resistance is to the upside.

Stochastic is just turning down from the overbought region, though, indicating that buyers are taking a break and letting sellers take over. In that case, a larger pullback to the trend line or 61.8% Fib near the moving averages could be possible.

Canadian retail sales data turned out mixed as the core reading came in better than expected while the headline figure fell short of estimates. The CMHC warned that property markets in Toronto could be overheating but the US crude oil inventories report showed a larger than expected draw in stockpiles, easing oversupply concerns for the commodity.


Meanwhile, the Trump tax reform plan turned out disappointing for dollar bulls as it didn’t contain as many details as expected. Also, the White House announcement on Trump agreeing not to terminate NAFTA for now is leading to short-term gains for CAD.

By Kate Curtis from Trader’s Way

USDJPY has been on a climb recently but zooming out to the longer-term charts shows that it’s still on a downtrend. Price is moving inside a descending channel pattern on its daily and 4-hour time frame but is in the middle of a correction at the moment.

Using the Fib tool on the latest high and low shows that the 61.8% level coincides with the channel resistance around the 112.50 minor psychological mark. This also lines up with a former support zone, which could hold as resistance.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Once the selloff resumes, the pair could test the swing low at 108.00 or move down to the channel support. Stochastic is heading south from the overbought zone to show that sellers are in control of price action.

Economic data from Japan came in mixed earlier today as household spending and preliminary industrial production came in weaker than expected while inflation readings were mostly strong. Retail sales also beat expectations with a 2.1% year-over-year gain versus the projected 1.6% increase.


The main event risk for the dollar is the advance GDP release, which might show a slower growth figure of 1.3% compared to the previous period’s 2.1% gain. The price index and employment cost index are likely to influence inflation expectations as well. Chicago PMI and speeches by FOMC members Brainard and Harker are lined up.

By Kate Curtis from Trader’s Way

EURAUD has been trending higher recently but profit-taking could happen as the pair is testing the top of its ascending channel on the 4-hour chart. If so, the pair could head back to the channel support at the 1.4300 area for a quick pullback.

This support area lines up with the 100 SMA dynamic inflection point, adding to its strength as a floor. The 100 SMA is above the longer-term 200 SMA on this time frame, confirming that the path of least resistance is to the upside.

Stochastic is on the move down to show that sellers are in control of price action. This also signals that the channel resistance around 1.4650 could keep gains in check for the time being and that a correction is due.

Over the weekend, China printed its official PMI readings and reported declines in both manufacturing and non-manufacturing sectors. The former dipped from 51.8 to 51.2 versus the projected fall to 51.7, reflecting a much slower pace of industry expansion than expected. The latter dropped from 55.1 to 54.0.


European banks are closed for the holiday today so lower liquidity is expected and no major reports are lined up. In Australia, the RBA statement is coming up on Tuesday so traders might price in their expectations as early as today. Later in the week, expectations for the second round of French presidential elections could have an impact on euro movement.

By Kate Curtis from Trader’s Way

GBPAUD recently broke to the upside from a symmetrical triangle formation and is now breaking past a double bottom neckline around 1.7100. This would mean strong bullish signals for the pair, as the chart patterns are approximately a thousand pips in height.

The 100 SMA is still below the longer-term 200 SMA on the daily time frame so the path of least resistance is to the downside. However, the gap between the two is narrowing to indicate a potential upside crossover and draw more bulls in the game.

Still, it’s worth noting that stochastic is indicating overbought conditions at the moment and could turn lower to reflect a pickup in selling pressure. In that case, GBPAUD could still make it back down to the bottoms at 1.6000 if selling pressure kicks in.

The RBA is scheduled to announce its monetary policy statement today and no changes to interest rates are eyed. In their earlier statement, the RBA sounded less upbeat about the economy as they acknowledged the slowdown in hiring.


Aside from that, PMI reports from China turned out weaker than expected. Over the weekend, both the official manufacturing and non-manufacturing PMI printed steeper than expected declines to reflect a slowdown in industry growth. Earlier today, the Caixin version of the manufacturing PMI indicated a fall from 51.2 to 50.3 versus the projected rise to 51.4.As for the pound, UK PMI readings are also due this week and more signs of resilience in the economy even with Brexit concerns could keep traders bullish on the currency.

By Kate Curtis from Trader’s Way