Following a report that European Oil storages have hit their limits and that Oil tankers were being hired in Europe to store excess Oil, we saw the Oil price retreat over the past week, causing CAD weakness. Trump’s historic Presidential win has only seen USD strength as his fiscal policy plans are likely to lead to more US Debt and Inflationary expectations have risen, meaning a rate hike is a greater chance.
USD/CAD is in uptrend and currently we can see a regular divergence playing out that could give a retracement in uptrend. POC 1.3427-1.3460 (L3, EMA89, WPP, 50.0, inner trend line) could spike the price to the upside targeting 1.3600. Additionally if we see a breakout above Inner trend line (ITL) or 4h close above it 1.3550 and 1.3600 are in play again. In the case of deeper retracement price may reach POC2 1.3375-90 (L4,trend line, 61.8) and spike towards 1.3465 in the same scenario.
The GBP/USD is showing signs of immediate strength as we see strong ascending trend lines on H4 chart and retracement trend line which has been broken. The zone 1.2395-1.2415 (L4, EMA89, retracement trend line) marks POC, but since 4h candle has already closed we might see a continuation of bullish trend around 1.2455 towards 1.2506. If we see a 4h close above 1.2506 next targets are 1.2560 and 1.2600. 1.2675 can only be reached if we see a daily close above 1.2600. The GBP/USD needs to stay above 1.2375 for this scenario to succeed.
The EUR/CAD is waiting for Crude Oil inventories data on the expectations that OPEC is planning to cut in a meeting this or next week. Crude Oil data should create CAD volatility. Technically EUR/CAD is nose diving within the bearish channel with 1.4200 as strong support. POC zone (EMA89, bearish order block, channel top) 1.4280-1.4305 shows a retracement trend line break (RT) and is suggesting more downside to come. If the pair continues with a drop below the POC or rejects again from POC the target is 1.4200 with 1.4130 and 1.4098 as next targets. However any spike above 1.4305 could target 1.4325 and eventually 1.4402. I expect rallies to be sold as cut is clearly bullish for Oil. That will translate EUR weakness into Oil additional strength.
Base metals are up - Copper, Iron Ore. LNG (Oil) is also stable and going up while Australian Treasury Yields have increased the past month. We can see an overall JPY weakness across the board. Technically, we have 2 POC zones 83.10-25 is the retracement trend line break and X cross ™ so if the price pullbacks to the zone it might spike up. The price is above H3 camarilla resistance so it might also reject from H3. In the case of deeper retracement we should pay attention to 82.65-75 POC2 (trend line, DPP, L3, bullish order block). The 4h close or 1h momentum above 83.40 should aim for 84.40 - final target for this swing.
Following Trump’s Presidential victory the USD has continued from strength to strength as US Treasury Yields have increased in the past month. It appears that profit taking is occurring on the USD at present. CAD has bounced following an Oil price bounce following conjecture that OPEC will cut oil production in next week’s meeting.
Technically USD/CAD is ranging between L3 H3 pivots, strictly defined with camarilla so we need to pay attention to possible breakouts. We see 2 X cross. Above 1.3505 we could see 1.3525 and 1.3550. Below 1.3452, 1.3420 is possible. Friday is a profit taking day so we might see a breakout.
With all eyes firmly on the OPEC meeting this week to see if they cut oil production and raise the Oil price, other key items this week affecting USD is Advance GDP, Consumer Confidence, NFP and Unemployment rate. The EU reports its inflation numbers this week, a key concern for the ECB and Draghi also speaks again. EUR weakness may gain some traction as Italy holds its Constitutional Referendum, a No Vote win could lead to Renzi resigning, political instability in Italy and snap elections sooner rather than later. Bad debts held by Italian Banks stand near EU360Bn, and a No Vote along with political instability may lead to further pressures on Italian Banks ability to remain solvent and ensure the EU Banking systems is sound.
As we could see in the previous LIVE Session Recap video, the EUR/USD has perfectly rejected from 1.0660 zone and so far it has been rejecting it with strong momentum. Technically 1.0635-60 is still valid POC zone (H4, X cross, 61.8, historical sellers) but we also need to pay attention to a possible retracement (gray) trend line break. 4h close below could instill further bearish continuation towards 1.0540 and 1.0503. Rallies towards POC zone could possibly be shorted into providing that 1.0720 stands strong. Break below 1.0500 could target 1.0450.
The EUR/GBP is has a potential to break the range and proceed to the upside if we see a rejection off POC. POC comes within 0.8510-15 zone ( V shape, DPP, EMA89, trend line). If we don’t see a retracement to POC , pay attention to H1 close above descending trend line. The pair could reach 0.8550, 0.8575 and 0.8615 if there is a H1 momentum or 4h close above 0.8575. Additionally the pair rejected slightly above the bullish order block that is located just above L3 support. This further supports a bullish bias for this pair.
The EUR/JPY is showing a regular bearish divergence on intraday timeframe. Traders should watch for any H1 momentum or 1h close below the trend line that might be an early cue that the price might drop towards 120.67 and 120.16. 120.16 is a nice confluence of L4, EMA89 and Bullish Order Block where bounce might be expected. However, if we see a 4h close above H3 - 121.70, the price should continue upside towards 122.20 where H4 is located.
Whilst risk-off has prevailed in Equities this week ahead of the Italian Referendum, we are drawn to the NFP today to give us some insights into whether the US Fed will hike sooner rather than later. Despite this risk-off, the JPY has been weakening. Given ADP NFP signalling over 216k jobs added this month, a strong NFP above 200k may give the USD bulls another kick and help USD/JPY move forward to 115. But it won’t be that easy in the case of bad NFP and Unemployment result. On a good NFP the USD/JPY might spike to 114.50 and 115.00. Bad NFP should tank the pair down to 113.35-00 POC ( L5, Bullish order blocks, ascending trendline). We need to observe the reaction then. 113.00 zone is the strong zone which might spike to pair even on a bad result.
However, if the result comes a whole lot worse than expected (<100k) 112.50-00 can’t be ruled out.
The latest Italian referendum initially saw the EUR/USD down to 1.0505 and that went with our expectations, although the pair didn’t reach 1.0461 and below that would open the door to parity. The EUR/USD was subsequently bought heavily and shrugged all the losses it had made. The main event this week is ECB meeting and their press conference. The head of the ECB, Mario Draghi, is expected to announce that the central bank has several tools available to help avert a funding crisis, not neglecting the possibility that the ECB will be buying more Italian debt in the upcoming months.
Technically the EUR/USD is close to POC within 1.0790-1.0820 zone (61.8, bearish order block, descending trend line) . Due to previous range the zone is wider now. If it rejects from the zone pay attention to 1.0676 where we have a strong support now. any break below 1.0670 should target 1.0610 initially. Breakout above 1.0750 has happened yesterday so at this point we need to see if the pair will reach the POC zone and reject from there.
Today the ECB meets in an important meeting that may decide whether the ECB QE programme continues at the current rate of EU80Bn in Bonds per month and the duration of the overall programme. Some analysts are suggesting the programme rate may reduce but the overall duration remains the same or longer, hence more assets on the ECB Balance Sheet over the longer term. How the market reacts to this, is much to be seen. FOMC is scheduled for next week, and many analysts tip a rate hike in the US, along with Bond markets pricing at least a 25bps rise, however, I am more of the view that they will wait until Trump’s inauguration as President before they hike, so they might be waiting until the February 2017 meeting.
Technically the EUR/USD is under a retracement on 4h chart and it is touching important resistance. Sustained break above 1.0850 is hard at this point but due to ECB we need to be careful. Watch for possible rejection if 1.0850 is reached and close below the retracement trend line should signal another move down towards 1.0700 and 1.0650. Move below 1.0650 targets 1.0590 zone.
The USD/JPY is going up in a strong bullish zigzag that is supported by ascending trend line. Market is expecting a 0.25 % rate increase and it could have already been priced in the USD/JPY bullish move. However before the Federal Funds Rate decision and FOMC statement we might have another bullish setup within POC zone. 114.85-115.00 (L3, DPP, 38.2, EMA89, ascending trend line) could reject the price if we see a retracement. The target is 116.10. If we don’t see a retracement then a 4h close or strong 1h momentum above 116.12 could spike the price up towards H5 -116.70. So pay attention either to a retracement or spike above H4 camarilla pivot.
The main event this month is FOMC Economic projection with statement and Federal Funds Rate decision. Market expects a hike of 0.25 % (from 0.50% to 0.75%). Any deviation from expected result will move the USD heavily. Today’s GBP data was better than expected with Average Earnings Index coming +0.2 % better than expected while the change in the number of people claiming unemployment-related benefits during the previous month dropped to 2.4k.
GBP/USD is currently at support and bullish POC zone comes within 1.2628-48 (neckline support, L3, 61.8, trend line) and the bounce from there could target 1.2696 and 1.2730. The problem for bulls is head and shoulders pattern and in the case of a drop watch for 1.2615. Break below should target 1.2584 and 1.2560. Volatility is not high now, but it could spike during London profit taking and when NY traders join up.
USD spiked strongly after FED decided to hike rates. The rate was hiked before Trump was inaugurated so it leaves room for more hikes to come. I personally expect no more than 2 rates in 2017. FOMC statement was hawkish and generally USD could renewed strength.
Technically the EUR/USD should stay below 1.0600 in order for bearish momentum to prevail. At this point we see a bullish regular divergence that is driving the price to the upside in a form of retracement. POC zone for new shorts could be within 1.0550-65 (bearish order block, 23.6). 23.6 is not a strong retracement point but in strong trends, the price tends to retrace no more than 23.6. Targets are 1.0500 and 1.0455. Have in mind that 1.0455 is a major support now and only a 4h close below 1.0450 would signal for a continuation move towards 1.0400 and 1.0345.
The latest comments from BOJ Kuroda saw GBP/JPY going up. Generally he implied that weak yen can raise prices as import costs would rise but conversely weak yen might indirectly affect the output gap. He also mentioned that USD is strong and Yen is not weak and their monetary policies don’t target Forex market. After his presser the GBP/JPY shot up.
Technically 145.60-80 is a POC zone (H3, trend line, DPP, 50.0, bullish order block) If we see a retracement the price could bounce from POC zone and ideally 1h/4h candle should close above 146.15 above EMA89 and upper escending trend line. Targets are 144.66 and 147.17. Spike above 147.17 targets 147.95 and in that case the ascending scallop pattern could be formed.
The EUR/USD spiked from the zone I showed on Session Recap providing pips to traders who traded longs in a form of counter trend trading. Generally speaking, the trend is still bearish and to me it is clear that a weekly close below 1.0470 is needed for further downside. Technically we see 2 most prominent trend lines on H4 chart that mark the downtrend. POC zone is spotted around 1.0410-20 on 4h charts. Weekly close below 1.0470 (slight below weekly camarilla pivot) should open the door for 1.0300 and 1.0280. 1.0470 is a strong order block and historical s/r level. Weekly pivot is making an X cross ™ with a trend line so it just adds to its strength. 4h close below 1.0280 would expose 1.0200.
After a fakeout move to the upside, the EUR/GBP has made a rounded bottom and spiked to the upside very close to POC zone. The POC comes within 0.8495-0.8510 (H5, 78.6, bearish order block, descending trend line). If we see a rejection from POC the target is 0.8415 confluence zone providing that 0.8550 holds. Additionally the EUR has been rejecting from 1.0470 as I stated in the EUR/USD article and if we see a weekly close below 1.0470, the EUR/GBP could proceed even lower than 0.8415. If we don’t see any retracement towards POC, a 4h close below H3 at 0.8450 should provide continuation towards the target.
Thin liquidity during holidays could spike Forex pairs in a more sudden and volatile price movements. The EUR/USD is showing higher lows on the price and lower lows on the oscillator that accounts for a hidden bullish divergence. However, due to a thin liquidity 2 way movement is possible. Above L3 camarilla pivot - 1.0460, we could see 1.0475 and 1.0490 as possible targets . Should the price drop below an X cross ™ at 1.0435 watch for 1.0425 and 1.0405. ATR range is much lower so the targets are lower too.
When other pairs are moving in a low ATR, the GBP/JPY aka “The Dragon” simply doesn’t care about thin holiday liquidity. ATR of last seven days is 115 and that leaves traders with a more room to trade it. Technically we have 2 POC zones. The first POC zone 143.35-143.50 (38.2, bearish order block, ATR level) could reject the price should the pair retrace. Slightly above it is POC2 143.60-85 (H3,50.0, DPP, ATR projected top). Traders should pay attention to possible ejections from the zones towards 143.00 and 142.40.
If we don’t see any retracement, than the momentum break of 142.40 or 4h close below it will aim for 142.16 - projected low and 141.65 if the pairs extends below the projected target.
