Bad inflation data is weighting on the GBPUSD pair (0.3 % vs 0.4 % expected) and that could possibly mean no rate hike anytime soon and it caused a deeper retracement in the price. Technically we can see an uptrend on H4 time frame and the price is reaching deeper retracement zone and important crossroads.
POC (78.6, historical buyers, trend line) 1.4140-55 is important as the price could find now moment buyers that would spike the price up towards L4 1.4220. However only if the 4h candle closes above 1.4220 we could see 1.4350 again. POC is very close to the first leg of bearish M pattern too, so if 1.4115 is lost the price will go for another test of 1.4050 and 1.4000.
The EURUSD went down early today towards 1.1400 and was rejected. As I thought, Friday profit taking tanked the pair towards 1.1350 where it showed the range. The pair is still in range however, price action suggests that the range might break.
Why do I say bullish range? Take a look at EMA 89. On Friday it was flat BUT above the ascending 3 touch trend line. Today price spiked from confluence making for another possible long trade and at the same time EMA angle has shifted upward but still above the trend line. However it is still Monday and the price might either break or retrace. If a retracement happens, watch for POC within 1.1370-90 zone ( L3, Ascending Trendline,WPP) where the price should reject towards 1.1453 high with interim resistance at 1.1470. If we don’t see a breakout pure H1 momentum or H4 candle close above 1.1470 would target for 1.1528. L5 Weekly target.
Only a break below 1.1325 negates the scenario and the price is back into a downtrend towards 1.1270.
EURJPY broke below sideways chop last night when it was announced that OIL production cut back negotiations failed. There was a gap on JPY pairs and today early correction has closed most of gaps. JPY and OIL correlation links back to Risk-off sentiment, as Oil price drops, some sectors of Equities drop. So If Oil is dropping, inflation expectations would drop, which is not necessarily a good thing for Equities. In that environment risk-off prevails, and JPY gets stronger.
Technically EURJPY broke below sideways chop range (red rectangle) and if risk off sentiment prevails EURJPY could reject from POC (50.0, Doji, previous breakout point L3 ) within 122.55-70 else any breakout of 122.90 towards 123.05 zone might put the pair back into the sideways chop range. If we see a rejection 122.14 and 121.72 are targets for another bearish support retest.
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NZDJPY is one of the pairs pair that has a strong correlation to equities. Nikkei and DAX are +92/90 correlated to NZDJPY and that is extremely high correlation, so they are moving in the same direction. Most important Yen crosses ( USDJPY, AUDJPY, NZDJPY) are an excellent Risk ON/OFF indicator. As the rate of one currency increases relative to another, investors are attracted to the higher yielding currency.
Technically NZDJPY is bullish but we see an inner trend line that has been broken with H4 perfectly aligned with previous swing. If we see H1 momentum above or H1 close above H4 camarilla pivot, the pair can make a bullish breakout to H5 and that is 77.54. If we see a pullback towards 75.64-80 zone (previous breakout point, bullish order block (A), 50.0,L5) the price could spike from POC towards 76.34 (L3), and further towards the H3 - 76.86. market is currently calm ( as expected ) so we might expect volatile session later during the day. We may expect a movement just before, during Draghi speech today or after.
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Today Federal Reserve Chair Jane Yellen and other FOMC members could give us cues about potential rate hike in June. Market doesn’t expect changes in Federal Funds Rate ( 0.50 % vs 0.50 %) decision today so we should focus on the statement itself as it is focused on the future. FOMC members always vote on where to set the target rate. All the individual votes are published in the FOMC statement afterwards.
USDJPY should be observed today as it is clearly in the range set by a Bearish Two Crows pattern. Pre FOMC range is 111.52-110.85. If we see 1h close above H3 camarilla PP or momentum breakout above 111.53 the pair could spike towards 111.85. Breakout below 110.83 should target 110.50 and 110.30. Be careful with ANY positions today as other USD and Yen crosses will be affected too.
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Yen crosses fell heavily after BOJ decided no to go with more stimulus for now. The drops were direct and that means - VERY strong, without any retracement. Nikkei was slaughtered too. BOJ appeared quite hawkish last night even more than FED(!). The market was surprised by The Bank of Japan holding off on expanding monetary stimulus, investors were expecting more Abenomics which Kuroda failed to deliver.
Technically 82.80-83.00 is POC1 (38.2, historical sellers, inner trend line) and the price should reject after a potential first touch of the zone. However the drop was huge and more substantial retracement is favored. POC2 (EMA89, L4, inner trend line 2) 84.05-20 is another potential bearish rejection zone and if the price retraces in the zone we might also start looking for short opportunities.
So focus is on POC1 and POC2 as the price should reject off these zones. Targets are 82.09 and 81.66.
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EURUSD is looking determined to break 1.1500
Last week, the dovish FED sent USD in a downward spiral. The weakness in USD is obvious vs EUR, JPY and GBP. I have already warned about the strong GBPUSD, and today we are also witnessing the strength in the Fiber - EURUSD.
The most popular currency pair is gaining ground. Strong MACD suggests a possible breakout of 1.1492 ascending channel that will lead to 1.1507 , 1,1520 and potentially 1.1557 if we see a H1 momentum or candle close above 1.1507. If we see a retracement then 1.1448 and 1.1415 are levels to pay attention to. 1.1448 is the mini channel bottom within the equidistant channel, while 1.1415 shows a confluence with L3, DPP and previous bullish order block (blue rectangle).
At this point the EURUSD is at the top of the channel so pay attention to either breakout or a retracement towards POC1-2.
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Surprising RBA decision to cut rates on Tuesday made the market tumble. It is clear that RBA is not happy with the current AUD rate so it wants its currency to be weaker. Investors should probably look to exit from any longs and based on RBA decision the bias should turn to the downside again. Remember AUDUSD is correlated to ASX200 index so pay attention to it too.
Technically the AUDUSD shows a Momentum Candle that I have been explaining on webinars and on Live Forex Expo seminar in London. Sheer momentum trading could give you huge profits. At this point price is trying to break 0.7465 and if we see H1 momentum break or 4h close below the level 0.7390 should be the target. Positional trades should come in play on a retracement towards POC. 0.7550-70 is POC zone (inner trend line, 38.2, L3, EMA89) and the price could retest the zone for next positional short trade. In that case targets are 0.7465 and IF it breaks 0.7388.
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AUDUSD may drop further due to inflation forecast
The AUDUSD dropped heavily after unexpected rate cut. The problem is that Australia is already addicted to debt and even more debt could turn Australia into Japan which is full of debt. Additionally, the statement suggested the inflation between 1-2 % in 2016 followed with 1.5-2.5 % through mid 2018. Moreover, as the inflation problem was not enough, the RBA also expressed its worries about the strong AUD (!) that definitely hurts the exports.
Another rate cut in August is possible and sell the rallies is the option.
The POC comes at 0.7392-0.7402 (DPP, Equidistant channel top, H3) and slightly above within 0.7420-35 we have another strong POC2 (H4,EMA89) and we could see another rejection on pullbacks towards POCs. Another important level to watch for is 0.7285 (X cross breakout) as momentum break or H4 close below will target 0.7220.
Whilst most economists are now predicting further cuts by the RBA, some saying even the cash rate may drop to 1% (meaning another -75bps), this is putting some downward pressure on the AUD.
As for the NZD, it is largely reliant on its Dairy trade as its key exports, and there has been a lot of media on the weak dairy prices. Keep an eye out for the RBNZ to intervene if the AUDNZD approaches parity, as its one of its key export markets, and they may follow the RBA with further rate cuts which may see the NZD change direction against the AUD.
Technically POC comes within 1.0650-60 zone (L3,23.6, Breakout-retest) while deeper retracement may target 1.0685-95 zone (61.8, DPP, H3,inner trend line, EMA89). We could expect fresh sellers to kick in within POC zones targeting 1.0615 and 1.0570.
GBP/USD is proceeding higher with a strong momentum
Our previous GBPUSD predictions came true, though after a bigger pullback and the pair has made a strong bounce to the upside. Again, fears of Brexit diminished and the pound has been bought on dips.
Today’s Second Estimate GDP came as expected and it is important because it measures a change in the inflation-adjusted value of all goods and services produced by the economy. Technically GBPUSD has made a form of ascending scallop pattern. POC (DPP, L3, 61.8, double top breakout) comes within 1.4660-70 zone and pullbacks toward the zone could be used for long trades. The targets are 1.4740 and 1.4770. If the pair breaks 1.4770 with a strong momentum or we see a 4h close above it, next target is 1.4825.
AUD/NZD stepping up the trend line
AUD/NZD is in uptrend and traders are looking for new long opportunities on a pullback. New Zealand CPI is below expectations, there is also a possibility of a rate cut. Generally speaking, New Zealand is a smaller economy, it might eventually lose to trade agreements and currently Australia has more bargaining power and more diverse economy. Fresh AUD strength started after elections but we also saw commodities up in the past week.
Technically AUDNZD is showing confluence within H3, 61.8, and ascending trend line. 1.0640-60 is POC zone and we could see now moment buyers. If the pair makes 4h close above H4 it should target 1.0740. H4 chart shows possible extension to 1.0770. 1.0600 should hold for uptrend scenario to be valid.
Yuppy is going down
The EUR/JPY is making bearish swings on daily chart and our mini chart suggests a continuation of bearish trend. Sell on rallies could be possible close to POC 113.35-50 (H3,DPP, trend line). Additionally POC zone is 78.6 fib of the last bearish swing on H1 chart. The target is 112.75 and if the price makes a momentum break below 112.75, it will target 112.25. Only below 112.25, 111.40 is possible but it will hardly happen today as we are in a holiday trading mode.
The GBP/USD is waiting for BOE decision today regarding further reports and monetary policy. The pair is showing a strong marubozu candle on daily chart which indicates that most traders are exiting their short prior to BOE Official bank rate announcement. Whether they will cut the rate, it is yet to be seen but market is predicting a 0.25 % cut.
Technically we can see Head and Shoulders on intra day time frame but also strong buying off the support that is presented as two strong wicks (purple rectangle). If the pair breaks below 1.3270 we might see 1.3230 and 1.3170. Above 1.3350, 1.3415 is possible. Watch for volatility that will rise for sure just before the announcement and during the presser.
The EUR/USD spiked straight from our POC after the analysis on Session Recap webinar. After initial spike the pair dropped after stronger than expected NFP data. Next POC zone is 1.1120-40 (38.2, WPP, H3, Inner trend line) but also pay attention to current rejection from 23.6 and EMA 89. Dark cloud that is formed on H4 could directly tank the price (without a pullback to POC) towards 1.1050-35. Only below 1.1035 the pair should test 1.0980 the confluence of L4 camarilla and rising trend line.
EUR/CHF bullish but close to historical sellers
The EUR/CHF is in a strong uptrend but it is getting close to historical sellers. As we can see on the chart, the inner trend line has been broken and the pair is currently slightly above H3 - in no man’s land. There are 2 scenarios. If the pair gets to historical sellers we could see sellers taking over the pair. POC2 (H4, quad-top, historical sellers) 1.0925-1.0935 is the zone for short entries towards 1.0890. Conversely, 1.0890-1.0900 POC ( inner trend line, L4, EMA89, DPP) is the zone where we might expect bounce towards 1.0930 zone. Pay attention to movement as the range is small and the pair is in the middle of nowhere at this point.
The USD/CAD has been dropping after a strong marubozu candle (highlighted in purple) breakout to the upside. At this point it is looking like a dead cat bounce. For all who are wondering what a dead cat bounce is there is an old adage saying that even a dead cat will bounce if it is dropped from high enough. In Forex if the strong rally is faded then we might assume a dead cat bounce. We can see that USD/CAD pair has countered a strong marubozu candle even stronger than its breakout and we can assume that the downtrend is in progress. POC (50.0, trend line, H3, EMA89) comes within 1.3075-95 zone and the price should face sellers if it gets there. If we see a deeper pullback next POC zone where now moment sellers are is POC2 (61.8,H4) 1.3120-30, and rejection should be valid. In both cases a sustained selling will get the pair down to 1.3020 followed by 1.2990. Only the breakout below 1.2990 will aim for 1.2920.
GBP/JPY is targeting sub 130.00 zones
The dragon - GBP/JPY currency pair is in a strong downtrend. The uncertainty of the GBP due to upcoming Brexit, with the already sensitive Yen due to stimulus in Japan and bullish trends in Equities, just add to the overall volatility of the GBP/JPY pair. Currently the GBP/JPY is close to L3 Weekly PP so we might see some bounce before next leg of selling. Traders should pay attention to 131.80-132.00 zone. (H3, WPP) for short trade setups. Additionally we have another confluence coming within 132.35-60 zone (23.6, H4 WPP, historical sellers, inner trend line). Both zones should provide short trading opportunities towards 130.00. If we see break of 130.00 than 129.80 is the next target followed by 128.72 where we should see a bounce.
USD/CAD keeps selling on rallies in a strong zig zag
The USD/CAD has been in a strong downtrend after a break of a trend line (blue) indicated by a failed W bullish pattern in uptrend (green rectangle). At this point we see a strong bearish zig zag targeting sub 1.2800 levels, if the pair proceeds with downtrend. Retracement to POC targets 1.2910-25 zone (61.8, historical sellers, H4 cam DPP, EMA89). If we don’t see a pullback towards POC then we will need watch for h1 momentum or 4h close below L3 - 1.2850 that could tank the pair down to 1.2788. Below 1.2788, the pair is targeting 1.2722.
GBP/USD double top in progress
The GBP/USD has broken through resistance on the winds of Inverted Head and Shoulders pattern (green rectangle). POC comes within 1.3165-80 and we could see rejection towards 1.3102 and if it breaks then 1.3020 is next. POC (double top, 61.8, bearish order block) should reject the price but if we see a 4h close above 1.3180 then 1.3238 is next. Pay attention to POC and levels as the price either rejects or breaks through POC.
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