USDJPY has tanked breaking important patterns and supports clearly showing risk-off sentiment. Purely risk off sentiment across markets is the cause for Yen to appreciate against the G10 currencies.Many carry trades involving cheap credit from Japan are invested across foreign markets, and during risk-off, many of those trades are reversed and repatriated back into Yen, causing demand for Yen.
Technically USDJPY still has the room to fall down. As we can see on the chart, bear pennant has been broken to the downside making USDJPY hit L5 weekly CAM support. Pullbacks within POC zone 113.90-114.10 could be used for another short selling. The zone shows strong confluence selling at the Bearish pennant breakout and we should see institutional selling again if the price retraces.
However if the price breaks now moment double bottom -110.98 it should proceed to 110.06 previous weekly high.
We have heard many times before “Buy the dips, sell the rips”. Recently we had some USD gains and there were some rumours that OPEC may cut production, so Oil price went up. If OPEC cuts production traders should go long all equities with both CAD and RUB currency crosses. Remember Oil is connected to CAD and RUB. Because USA and Canadian markets are on holiday we are not seeing some big price movements at this moment.
Technically USDCAD is showing multiple patterns suggesting that selling on rallies is the option. At the top price has failed to break the neckline of inverted Head and Shoulders. It dropped heavily making a correction with the successful break of inverted head and shoulders at the bottom. The backwind of Inverted Head and Shoulders made a Bear flag variant pattern and 1.3885-1.3900 looks like a good place to short. POC (38.2, H3, EMA89, H3, DPP) should hold the price and in the case of positional POC sell the target is 1.3780. Any breakout below 1.3780 targets 1.3710. We should pay attention to current price around 1.3820 as it shows a potential inverted head and shoulders in progress which if realized could spike the price UP towards our POC for a subsequent sell.
As we know AUDUSD is a hard commodity currency.Basically, when its risk-on environment, commodities prices tend to increase, and traders go long AUD due to that factor. When commodities prices go up, Stock Markets go up and there is demand for positive swaps on AUD pairs currently as opposed to JPY (JPY weakened today). AUD bounce has also been stimulated by the PBOC, Oil and RBA. Oil is connected to commodity currencies so it gave AUD additional boost.
Technically AUDUSD is showing a possible breakout and positional trading. The pair is slowly grinding up in an ascending channel towards important levels. If the price retraces to 0.7130-40 POC (50.0, WPP, EMA89) we might see another bounce towards 0.7212. The price is currently 0.7191 so we might even see a direct test of 0.7212 before any retracement.
If the price closes above the channel and makes a breakout above the channel and H4 confluence (0.7215), next level should be 0.7267. So pay attention to any retacement towards POC for long setups or a breakout as stated above.
Risk warning: your capital is at risk
An unexpected jump in Crude Oil inventories (It influences the price of petroleum products that affects both growth and inflation) had a small impact on USDCAD yesterday as gains were limited and the pair continued to tank during US session.
The USDCAD is technically bearish and we can see a strong POC at 1.3465-80 (H4, X cross, EMA89, the channel top) that we can use for possible short trades. However the price is showing sellers in now moment (green rectangle) and we could see an immediate rejection towards 1.3390. If that doesn’t happen eyes should be on POC. The pair is initially targeting 1.3390 and a strong momentum or H1/H4 close below 1.3365 will target 1.3320-10, the channel bottom and L5 confluence zone.
The EURUSD is focused on ECB meeting this week on Thursday where investors will re-assess ECB further policy but until then we need to analyze the possible intraday movement of the most traded Forex pair. After good NFP but bad wages data on Friday the EURUSD spiked to 1.1040 region after the rejection from 1.0920.
Today the pair has initially been sold but the overall trend is bullish. H1 shows a cup with handle pattern where handle is formed in upper half of the cup. POC for positional trades is 1.0925-50 but only above 1.0955 the pair can gain upside momentum towards 1.1040. Point A is the right cup lip and it serves as the breakout point whereas point B is the handle low confluence. Only above 1.1040 the price will open the door for 1.1150.
However the pattern and the setup will become invalid if the price breaks below 1.0895.
Your capital is at risk
As we could see, after yesterday’s webinar USDJPY dropped like a stone from POC giving us more than 140 pips of a profit. The setup was based on a running triangle and general 114.00 rejections and straight after the webinar we had a trade that is more than 140 pips in profit now. But that’s not all. Traders should pay attention to L4 breakout as 4h close or H1 momentum below could tank the price further down to 112.20 all the way to 111.55. If the price rejects off 112.50-60 zone watch for a retest of 113.20-35 zone (L3, doube trend line, EMA89) that could give us another shorting opportunity. MACD momentum is very strong so L4 breakout is possible too but only if we see a valid H1/H4 close.
This is what I like to see and this is when traders can make both pips and money trading momentum, breakouts and subsequently making positional trades. Yesterday FED neutral to dovish statement (more dovish though) sparked the upside momentum on the EURUSD pair and BOOM! The pair behaved as was published before FOMC and after a perfect consolidation the pair broke all upside levels hitting the target.
What would EURUSD need to do for an encore? Obviously the pair is going towards magnetic 1.1375 level (Feb high + H4 camarilla WPP) where we could see some initial selling. 4h close above it will expose 1.1555 that could be next swing target. Positional trades could happen within 1.1260-50 zone (23.6, H3, inner trend line). Because we don’t see any retracement on 4h time frame yet we can use historical price action that is repeating in now moment (see the chart). That’s the beauty of Forex trading.
The AUDUSD is gaining its handle above 0.7500 level and the RBA stayed neutral on recent AUD strength. In my opinion its mainly USD weakness, but Commodities prices have improved the last few weeks - Iron Ore, Copper, Oil (LNG), Gold, and Bauxite and AUDUSD is linked to hard commodities.
The technical analysis is showing the ascending scallop formed on H1 chart and clear POC within 0.7560-75 zone (X-cross, WPP, 38.2, EMA89). Additionally there is an inner trend line that shows buying strength on pullbacks (red rectangles) Retracement within the zone is additionally supported by historical breakout point (blue rectangle) at 0.7590 so that level can also reject the price. The target is 0.7670 and 4h close above 0.7670 will target 0.7750. In my opinion its mainly USD weakness, but Commodities prices have improved the last few weeks, Iron Ore, Copper, Oil (LNG), Gold, Bauxite, etc.
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.
*Your capital is at risk
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.
*Your capital is at risk
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.
*Your capital is at risk
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.
Your capital is at risk.
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.
Your capital is at risk.
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.
