Daily Technical Analysis by Kate Curtis from Trader's Way

AUDNZD Ascending Channel (Jun 20, 2017)

AUDNZD has been trending higher, moving inside an ascending channel visible on its 1-hour time frame. The pair has just bounced off support and could be due for a test of resistance soon.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If bullish pressure is strong enough, a break past the resistance at 1.0600 could mark the start of a steeper climb. However, stochastic is already indicating overbought conditions and turning lower could indicate a return in selling momentum.

The main event for the Kiwi is the RBNZ decision later on this week, during which the central bank might keep rates on hold while giving some hawkish hints. However, a bit of jawboning is also expected since the currency has been outpacing most of its peers for the past few weeks.

As for the Aussie, the RBA meeting minutes are up for release. The central bank was mostly upbeat in their latest policy decision so the minutes could reinforce these views. For now, though, Moody’s downgrade on big Australian banks due to housing conditions could limit the currency’s gains.

By Kate Curtis from Trader’s Way

GBPUSD Make or Break (Jun 21, 2017)

Cable is sitting right on the ascending channel support visible on its daily time frame. A bounce could take it back up to the resistance at the 1.3250 minor psychological level while a break could spur a longer-term selloff.

The 100 SMA has just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In addition, the moving averages are close to the channel support at the 1.2750 minor psychological level, adding to its strength as a floor.

Stochastic is treading lower but is approaching the oversold area to indicate weakening selling pressure and a potential return in bullish momentum.

Brexit risks are currently weighing on sterling these days as the UK government could get pushed around by EU officials. Note that PM May has yet to strike a coalition with the DUP to have a stronger front. The upcoming Queen’s Speech could restore some confidence in the UK government and economy, which might be bullish for the currency.

As for the dollar, the recent slide in equities could dampen its gains once more as markets don’t seem to be impressed by the Trump administration’s push for fiscal reform. While FOMC member Dudley gave a hawkish testimony, other policymakers like Evans don’t seem to be as upbeat.

By Kate Curtis from Trader’s Way

EURCAD Area of Interest (Jun 22, 2017)

EURCAD recently sold off but seems to be finding support at an area of interest visible on its daily time frame. Applying the Fib tool on the latest swing high and low also shows that the 38.2% level lines up with support at the 1.4800 mark.

The 100 SMA crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is also turning up to indicate a return in bullish momentum, which might be strong enough to take the pair up to the swing high at 1.5300.

Crude oil prices have been on a decline lately and this seems to be taking its toll on the positively-correlated Canadian dollar, which has previously drawn support from hawkish BOC hints. US crude oil stockpiles posted a larger than expected draw of 2.5 million barrels but traders seemed more focused on rising output from Libya.

As for the euro, improved sentiment in the European region seems to be shoring up the shared currency for now. There were no major reports out of the euro zone and only the ECB Bulletin is lined up next. In Canada, the retail sales and CPI reports are lined up for Thursday and Friday, respectively.

By Kate Curtis from Trader’s Way

EURJPY Descending Channel (Jun 23, 2017)

EURJPY is trending lower on its 4-hour time frame and is currently testing the resistance of its falling channel. If the 124.00 handle holds as resistance, the pair could slide back to support at the 122.00 handle.

The 100 SMA is below the longer-term 200 SMA on the 4-hour chart so the path of least resistance is to the downside. In addition, these moving averages line up with the channel resistance, adding to its strength as a ceiling.

Stochastic is still on the move up, though, so there may be some buying pressure left. In that case, a break past the resistance could lead to a reversal from the ongoing selloff.

There have been no major reports out of the euro zone so far this week as traders are keeping close tabs on Brexit negotiations instead. Looking ahead, the PMI reports from the manufacturing and services sectors of Germany and France are lined up.

Analysts are expecting small dips in activity, which could push the shared currency lower against the safe-haven yen. Japan has its flash manufacturing PMI up for release and a climb from 53.1 to 53.4 is expected.

By Kate Curtis from Trader’s Way

USDCHF Long-Term Range (Jun 26, 2017)

USDCHF has sold off recently but it could find strong support at a long-term range bottom around the .9500-.9550 levels. A bounce off this area could lead to a move back to the resistance at 1.0400 or at least until the mid-channel area of interest at .9900.

The 100 SMA is below the longer-term 200 SMA on the daily chart so the path of least resistance is to the downside. In that case, a break of support could be possible, sending the pair on a longer-term drop. Stochastic is also pointing down to show that sellers are in control of price action.

Economic data from the US turned out weaker than expected at the start of the week as headline and core durable goods orders both missed expectations. The former showed a 1.1% drop versus the projected 0.5% dip while the latter indicated a meager 0.1% uptick versus the projected 0.4% gain. Fed Chairperson Yellen’s testimony is lined up next.

There have been no major reports out of Switzerland yet and none are due today. This signals that market sentiment and profit-taking could drive price action for the franc. The next major report is the UBS consumption indicator and it might show an improvement from the earlier 1.48 reading.

By Kate Curtis from Trader’s Way

AUDJPY Double Bottom Breakout (Jun 27, 2017)

AUDJPY recently formed a double bottom pattern on its daily time frame to signal that a reversal from the selloff is underway. Price just broke past the neckline around the 84.50 minor psychological level to confirm that bulls are charging.

The chart pattern is approximately 300 pips tall so the resulting rally could be of the same size. However, stochastic is turning down from the overbought region to indicate a pickup in selling pressure. Also, the gap between the moving averages is narrowing to signal that sellers could regain the upper hand.

There are no major reports lined up from the Australian economy today so any big moves could be spurred by changes in market sentiment and commodity prices. In particular, a surge in iron ore prices could prove bullish for the Australian currency.

Meanwhile, there are no major reports due from Japan as well so yen price action could hinge on US bond yields and risk sentiment. Keep in mind that it’s almost the end of the month and quarter so there could be a lot of profit-taking happening towards the end of the week.

By Kate Curtis from Trader’s Way

EURNZD Area of Interest (Jun 28, 2017)

EURNZD appears to be pulling up from its dive with the recent strong bounce, but this might represent a mere correction from the long-term slide. Applying the Fib tool on the latest swing high and low shows potential pullback areas.

In particular, the 50% retracement level could hold as resistance as this lines up with a former support zone. It also coincides with the 200 SMA dynamic inflection point. The 100 SMA is safely below the longer-term 200 SMA so the path of least resistance could be to the downside.

Stochastic is on its way up to suggest that buyers could be in control of price action for now. However, the oscillator is already dipping into the overbought zone to hint at rally exhaustion soon. If sellers take over, a drop back to the swing low could take place.

Earlier in the day, ECB Governor Draghi dropped hawkish hints in saying that the central bank might withdraw stimulus soon. This led to fresh speculations of tapering bond purchases, which could shore up the value of the shared currency.

Meanwhile, CFTC Commitments of Traders reports are hinting at extreme positioning for the Kiwi, which basically means that it could be hitting a top. In that case, profit-taking could weigh heavily on the currency at the end of the month and quarter.

By Kate Curtis from Trader’s Way

EURGBP Short-Term Channel (Jun 29, 2017)

EURGBP continues to trend higher after breaking past a major range resistance visible on its longer-term charts. On the 1-hour time frame, it can be seen that the pair is moving inside an ascending channel formation and is testing support.

The 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. In other words, support at .8800 is more likely to hold than to break, sending price back up to the .8900 area. Stochastic is also pulling up from the oversold area to signal a return in bullish pressure.

Earlier in the week, ECB head Draghi hinted that they could withdraw stimulus soon, sending the euro on a strong rally. However, these gains were quickly erased when policymakers signaled that the Governor’s remarks may have been misinterpreted.

As for the pound, BOE head Carney’s remarks also sounded more upbeat than usual as he mentioned that a global boom would make a rate hike necessary. The vote on the Queen’s Speech could likely drive pound price action from here but this relatively hawkish statement could keep the currency afloat.

By Kate Curtis from Trader’s Way

GBPUSD Countertrend Play (Jun 30, 2017)

The ascending channel on Cable’s daily time frame is still intact and price is heading towards the resistance around 1.3400. A countertrend opportunity could arise if reversal candlesticks form around this area. In that case, a move back to support at the 1.2900 area could take place.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the moving averages are close to the channel support, adding to its strength as a floor. Stochastic is heading up to indicate the presence of buying pressure.

Hawkish remarks from a few BOE officials have shored up the pound in the past few days, along with the lack of negative Brexit updates. Even Governor Carney acknowledged that removal of stimulus could be necessary if inflationary pressures continue to dampen consumer spending.

As for the dollar, weaker expectations that the Trump administration could follow through on its reform agenda has weighed on the currency. The next rate hike isn’t due until the fourth quarter of the year so some dollar weakness could be in the cards in the next few months.

Of course Brexit risks remain and there’s always a good chance that tensions during talks could dampen demand for the UK currency. Low liquidity during the summer months could make this pair more sensitive to headlines.

By Kate Curtis from Trader’s Way

USDJPY Double Bottom (July 03, 2017)

USDJPY looks ready for more gains as the pair has formed a double bottom on its daily time frame. Price failed in its last two attempts to break past the 108.00 support zone and is on its way to test the neckline at 114.00-114.50. A break past this resistance could send the pair up by around 600 pips or the same height as the chart formation.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, but the gap is narrowing to signal that a new crossover could take place. If this materializes, price could still gain bearish momentum and test support again. Also, stochastic is indicating overbought conditions and might be ready to head back down, reflecting a return in selling pressure.

Earlier today, economic data from Japan came in mixed, following last Friday’s set of weaker than expected inflation readings. This underscores the BOJ’s stance of keeping monetary stimulus in place for the time being, unlike most major central banks which seem to have shifted to a less dovish bias lately.

Meanwhile, medium-tier data from the US turned out mostly stronger than expected last week, but the real test of dollar strength could come on Friday’s NFP release. Another downbeat jobs figure could undermine the Fed’s rate hike timeline but an upbeat result could reinforce rate hike expectations for September.

By Kate Curtis from Trader’s Way

EURUSD Retracement Setup (July 04, 2017)

EURUSD recently surged past the resistance at the 1.1250-1.1300 psychological levels then climbed close to the 1.1450 minor psychological resistance. Price retreated from here, indicating that a correction from the rally is happening.

Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% retracement level coincides with the broken resistance, which might now hold as support. The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside while the 200 SMA lines up with the 50% Fib, which might also keep losses in check.

Stochastic has pulled up from the oversold area to indicate a return in buying pressure. This could reflect a shallow correction opportunity so the 23.6% Fib might already be enough to hold as support and push the pair up to the swing high and beyond.

Euro zone data turned out mixed on Monday as some final manufacturing PMI readings from its top economies fell short of expectations. Meanwhile, the US printed an impressive ISM manufacturing PMI reading which reflected stronger hiring for the month, hinting that the NFP release might beat estimates as well.

Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness. US banks are closed for the Fourth of July holiday.

By Kate Curtis from Trader’s Way

USDJPY Short-Term Uptrend (July 05, 2017)

USDJPY has been trending higher recently, moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and could be due for a test of support near the 112.50 minor psychological level from here.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. The 100 SMA is also close to the bottom of the channel, adding to its strength as a floor. Stochastic is heading down to signal that sellers may be in control but the oscillator is nearing oversold levels.

US banks have been closed for the Fourth of July holiday so liquidity has been lower than usual. Tankan data from Japan has shown some improvements but it looks like the Asian currency is reeling from the recent North Korean nuclear missile test launch.

Looking ahead, US factory orders data is up for release today and analysts are expecting to see a 0.4% drop. The FOMC minutes are also due and this should provide more clues on when the Fed might hike rates or start unwinding its balance sheet.

Only the average cash earnings and leading indicators data are due from Japan for the rest of the week, but the yen could be more sensitive to risk flows and global bond prices. With that, the US NFP report could also prove to be a big catalyst before the week comes to a close.

By Kate Curtis from Trader’s Way

AUDUSD Channel Pullback (July 06, 2017)

AUDUSD is trending higher on its short-term time frames, moving inside an ascending channel on its 1-hour chart. Price is currently testing support and might be due for a bounce back to resistance at the .7750 to .7800 levels. Stochastic is indicating oversold conditions and is pulling up to signal a return in bullish momentum.

Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the channel support at the .7600 major psychological level and an area of interest. The 100 SMA also coincides with this level and is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

The RBA was less hawkish than expected in their monetary policy statement this week, barely highlighting the improvements in the economy and emphasizing that there are still a few roadblocks in place. Meanwhile, the FOMC minutes revealed that policymakers are still divided on their tightening and unwinding time line.

Australia is set to print its trade balance next and a larger surplus of 1.00 billion AUD from the earlier 0.56 billion AUD figure is expected. A stronger than expected result could spur a rally for the Aussie, especially since China has printed mostly stronger PMI readings lately to signal a recovery in demand.

The US NFP release on Friday could also be an event risk for this pair as traders are hoping to see an upside surprise. PMI readings and other leading indicators are hinting at strong employment prospects, which might be enough to shore up rate hike expectations for September or December.

By Kate Curtis from Trader’s Way

GBPJPY Range Resistance (July 07, 2017)

GBPJPY has been moving back and forth between support around the 138.50 and the range resistance at 147.50-148.00 visible on the daily time frame. Price is currently testing the resistance and could be due for a drop back to support. Stochastic is indicating overbought conditions, which means that sellers could take over while buyers take a break.

However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the resistance is more likely to break than to hold, possibly sending the pair up by 900 pips or the same height as the rectangle pattern.

The yen has been giving up ground against its rivals recently on the BOJ’s dovish monetary policy stance and the rise in US bond yields. Japan’s average cash earnings figure and the leading indicators are lined up for release and strong data could still shore up demand for the Japanese currency.

Another event risk for the yen is the upcoming US jobs report which might influence bond yields. Strong results could draw traders back to US assets and out of the yen while weak figures could renew yen gains. As for the pound, UK manufacturing and industrial production figures are due, with analysts expecting to see stronger gains this time.

By Kate Curtis from Trader’s Way

GBPAUD Channel Support (July 10, 2017)

GBPAUD has been trading inside an ascending channel pattern visible on its 4-hour time frame and is currently testing support. A bounce could take it back up to the resistance at 1.7150 to 1.7200 while a breakdown could mark the start of a reversal.

The 100 SMA is still 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 bottom of the channel, adding to its strength as support. At the same time, stochastic is heading up from the oversold area to signal a return in bullish pressure.

Economic data from the UK turned out mostly weaker than expected last week, from its PMI readings to manufacturing production data, to signal that the economy might be on shaky footing leading up to Brexit. UK jobs data is up for release today and a higher number of claimants at 10.4K versus the earlier 7.3K is expected, but traders are likely to pay closer attention to the average earnings index to see any signs of wage growth.

Meanwhile, the Aussie was also weighed down by a less upbeat RBA decision. Only medium-tier reports are due from the Australian economy this week so weak readings could underscore the central bank’s not so hawkish view. NAB business confidence, Australian home loans, and Westpac consumer sentiment data are lined up.

By Kate Curtis from Trader’s Way

EURAUD Area of Interest (July 11, 2017)

EURAUD is trending higher recently and has been moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and could be due for a test of support at the 1.4900 major psychological level.

Applying the Fib tool on the latest swing low and high shows that the 61.8% retracement level coincides with the channel support. If this keeps losses at bay, price could recover to the channel resistance at 1.5100 or higher. In addition, the channel support lines up with a former resistance level, adding to its strength as a floor.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This short-term moving average is currently holding as dynamic support but a larger pullback to the 200 SMA closer to the 50% Fib might be in order. Stochastic is already indicating oversold conditions but has yet to pull up to reflect a return in bullish momentum.

Economic data from the euro zone came in line with expectations on Monday, with the German trade balance widening from a surplus of 19.7 billion EUR to 20.3 billion EUR and the Sentix investor confidence index dipping from 28.4 to 28.3. There were no reports from Australia but China did print a weaker than expected CPI reading of 1.5% versus the consensus of a climb to 1.6%.

Up ahead, Australia will report its NAB business confidence index and home loans figure. The housing market in Australia has been under the spotlight after Moody’s downgraded four of its top banks due to exposure to risky mortgages. Only the Italian industrial production is due from the euro zone next, although traders are likely to keep speculations of ECB tapering in play unless economic reports disappoint.

By Kate Curtis from Trader’s Way

NZDUSD Short-Term Retracement (July 12, 2017)

NZDUSD recently broke below support at the .7250 minor psychological level and dipped close to the .7200 handle before showing signs of a correction. Applying the Fib tool on the latest swing high and low on the 1-hour time frame shows that the 50% retracement level coincides with the broken support.

The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. The gap between the moving averages is getting wider to reflect stronger selling pressure.

Stochastic is still pointing up to signal that buyers are in control of price action for now. A larger correction could last until the 61.8% Fib at .7270 or until the 200 SMA dynamic inflection point while a break past that area could mean that bulls are back in control.

Fed officials shared mixed views on the timing of future rate hikes and balance sheet unwinding. FOMC members Brainard and Kashkari also stressed the need to wait for more inflation data to see if the slowdown is temporary before tightening again.

There have been no major reports from New Zealand so the Kiwi has been sensitive to market sentiment and counter currency price action. Fed head Yellen has a speech coming up and more cautious remarks could mean more losses for the dollar.

By Kate Curtis from Trader’s Way

EURGBP Channel Retracement (July 13, 2017)

EURGBP is trending higher on its short-term time frames but it could have room for retracement to nearby support zones. Price is moving inside an ascending channel with support at the .8800 major psychological level.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 50% level is in line with the mid-channel area of interest and the 100 SMA dynamic support while the longer-term 200 SMA is closer to the 61.8% Fib. The 100 SMA is above the 200 SMA so the path of least resistance is to the upside, which means that the uptrend is more likely to continue than to reverse.

The pair already seems to be bouncing off the 50% Fib around .8850 while stochastic is moving out of the oversold area to signal a return in buying pressure. In that case, price could make its way up to the channel resistance or the swing high from here.

UK economic data turned out stronger than expected as the number of claimants rose by only 6K versus the projected 10.3K increase. The unemployment rate improved from 4.5% to 4.6% but the average earnings index fell from 2.1% to 1.8% as expected.

Economic data from the euro zone also turned out better than expected as the region’s industrial production rose 1.3% versus the projected 1.0% gain and the previous 0.3% uptick. However, the German WPI fell flat instead of posting the projected 0.2% rebound. German and French final CPI readings are due next.

By Kate Curtis from Trader’s Way

EURUSD Breakout and Correction (July 14, 2017)

EURUSD recently broke to the upside of a symmetrical triangle pattern then zoomed up close to the 1.1500 handle before pulling back. Price is retesting the broken triangle resistance which might now hold as support.

Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the broken triangle resistance and is also close to the 1.1400 major psychological support. If this area continues to keep losses in check, the pair could climb back to the swing high or higher.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic is also heading higher to indicate that bullish momentum is in play. A break below the 61.8% Fib, however, could signal that bears are putting up a fight.

Economic reports from the euro zone came in line with expectations. The German final CPI reading was unchanged at 0.2% while the French final CPI was also maintained at a flat reading. Italy’s trade balance and the region’s trade balance are up for release today.

Meanwhile, the dollar had a mixed forex performance as Fed head Yellen shared a relatively balanced view of the economy and its risks. She did reiterate that they could start balance sheet unwinding later this year but warned that they’ll be watching the impact on the yield curve to gauge if future rate changes are still necessary.

US PPI figures came in mixed and the CPI readings are due today. Fed policymakers have been emphasizing how inflation trends will influence their rate hike decisions so stronger than expected results could mean more upside for the US currency. US retail sales are also due, and both headline and core readings could show rebounds.

By Kate Curtis from Trader’s Way

AUDUSD Long-Term Breakout (July 17, 2017)

AUDUSD had been trading inside an ascending triangle on its long-term time frame and has just broken past the resistance at the .7750 minor psychological mark. This signals that the pair is in for an uptrend, which might last by at least 900 pips or the same height as the triangle formation.

The 100 SMA is still below the longer-term 200 SMA on the weekly chart, though, so the path of least resistance is still to the downside. However, the gap between the moving averages is narrowing to signal a potential upside crossover.

Stochastic is pointing up but is already dipping into the overbought zone to indicate weakening bullish pressure. Once the oscillator turns lower, bears could regain control and push for a pullback to the broken resistance. Stronger bearish momentum could put the pair back inside the triangle.

US economic data turned out weaker than expected on Friday, casting doubts again on another Fed interest rate hike in September or December. Headline CPI posted a flat reading instead of the estimated 0.1% uptick while the core CPI had a meager 0.1% gain instead of the estimated 0.2% increase. Headline and core retail sales were down 0.2% while preliminary UoM consumer sentiment also fell short of estimates.

There were no major reports out of Australian then while today has top-tier data from its main trade partner China. GDP is projected to dip from 6.9% to 6.8% while industrial production could hold steady at 6.5%. Retail sales and fixed asset investment could also show small dips. The RBA monetary policy meeting minutes are lined up on Tuesday

By Kate Curtis from Trader’s Way