NZD/USD is forming a rising channel on its 1-hour time frame, after having bounced off the bottom near the .8200 major psychological support. The pair has moved past the middle of the channel after the New Zealand CPI release and is on its way to test the top around the .8400 mark.
Shorting at the channel resistance or at .8400 with a stop above the previous highs and a target at the bottom of the channel could yield a high return on risk for a medium-term play. Stochastic is already in the overbought zone, indicating that bears are ready to sell this pair again soon.
To protect profits and minimize exposure, you can adjust your stop to entry once price hits the middle of the channel around .8300.
By Kate Curtis from Traderâs Way
EUR/USDâs recent selloff might soon be over, as the pair formed a double bottom on its 1-hour time frame. This is a classic reversal pattern and the uptrend could be confirmed once the pair breaks above the neckline of the formation.
Right now, the pair is still testing the neckline resistance around the 1.3600 major psychological level while stochastic has reached the overbought zone. Take note though that the oscillator hasnât crossed down yet though, which suggests that thereâs still enough buying momentum left.
A long order above the neckline around 1.3600 could be a good entry area. Setting the stop below the 1.3550 mark with a target of 100 pips, which is roughly the same size as the chart pattern, could yield a 2:1 return on risk.
By Kate Curtis from Traderâs Way
CAD/JPY might be in for more losses, as the pair just broke below the support of the rising channel on its 4-hour time frame. Stochastic is already in the oversold zone but hasnât crossed upwards, indicating that sellers have enough momentum to push the pair even lower.
Shorting at market with a stop above the channel support and a target of the previous lows around the 92.00 major psychological level could yield a high return on risk for a quick day trade.
Bear in mind that the BOC just hinted that they are ready to cut interest rates if inflation remains weak and the Loonie remains strong.
By Kate Curtis from Traderâs Way
GBP/JPY has made a stellar rally in the past few trading days, thanks to improved fundamentals in the UK. However, yesterdayâs yen strength triggered a sharp selloff, which could simply be a retracement for this pair.
Right now, the pair is finding support at a former resistance level around the 171.50 minor psychological level. Stochastic has reached the oversold zone and climbed out, indicating that buying pressure is back.
Going long at market with a stop below the latest bounce or 171.50 and a target of the previous highs around 173.50 could yield a good return on risk for a short-term trade.
By Kate Curtis from Traderâs Way
AUD/USD suffered a sharp selloff towards the end of last week, when the world economic leaders in Davos confirmed that a slowdown is in the cards for the emerging nations. It didnât help that China also printed a weaker than expected HSBC manufacturing PMI reading.
AUD/USD broke below the .8800 major psychological level but might pull back to this area before heading any lower. The 50% Fibonacci retracement level lines up with the former support area around .8775. If this area holds as resistance, the pair might make its way back to the previous lows around .8700.
Shorting at .8775 with a stop above the 61.8% Fib level and a target of .8700 could yield a decent return on risk for a day trade.
By Kate Curtis from Traderâs Way
AUD/JPY recently made a sharp selloff on global growth concerns and risk aversion but the pair seems ready to make a quick retracement. On the 4-hour time frame, the 61.8% Fibonacci retracement level of the latest swing high and low lines up with the former support area above the 91.00 major psychological level.
Shorting at this level with a stop above the previous support and a target at the recent lows around 88.50 could yield a high return on risk. Stochastic is still moving out of the oversold region, indicating that bulls are in control at the moment. Waiting for the oscillator to cross down before entering a short trade could be a conservative trade decision.
By Kate Curtis from Traderâs Way
USD/CHF seems to be on the start of an uptrend on its 1-hour time frame, as a rising channel is beginning to form. The pair just found support at the bottom near the .8950 minor psychological level and might be on its way to test the top.
Stochastic is pointing up, indicating that bulls are in control at the moment. However, the oscillator is close to reaching the overbought zone, which suggests that bears might take over soon. If thatâs the case, USD/CHF might encounter resistance around the middle of the channel near .9050.
Going long at market with a stop below the previous low and a target of the top of the channel around .9200 could yield a good return on risk. To protect profits or minimize exposure ahead of the FOMC statement, one could adjust the stop loss to entry later on.
By Kate Curtis from Traderâs Way
The RBNZ decided to keep interest rates unchanged at 2.50%, much to the disappointment of Kiwi bulls expecting to see policy tightening. The pair sold off after the event but might be due to find support at the bottom of its 4-hour range.
Stochastic is still pointing down, indicating that bears are in control, but a bounce might take place around the .8100 to .8150 levels. Going long at this area with a stop below .8100 and a target of the middle of the range around .8300 could yield a 2:1 return on risk.
By Kate Curtis from Traderâs Way
GBP/USD is still on an uptrend on the 4-hour time frame, as can be seen on the rising channel on the chart. The pair is selling off but might be ready to find support at the bottom of the channel.
Stochastic is already moving out of the oversold region though, which indicates that pound bulls are ready to push the pair back up. Going long at the bottom of the channel around the 1.6400 major psychological level with a tight stop below the channel and a target at the top of the channel could yield a high return on risk.
Moving the stop to entry once price reaches the middle of the channel around 1.6550 can help reduce exposure and protect profits in case price reverses.
By Kate Curtis from Traderâs Way
The bottom of USD/CHFâs channel held last week, as risk aversion was still present in the trading markets. The pair is currently moving towards the middle of the channel, which might act as medium-term resistance.
Take note that stochastic is already in the overbought zone, which means that price might be ready to dip later on. If thatâs the case, it could fall back to the bottom of the channel and find support around the .9000 major psychological level.
On the other hand, if the risk-off environment carries on for the next few days, USD/CHF might still make its way to the top of the channel around the .9200 major psychological level.
By Kate Curtis from Traderâs Way
USD/JPY recently broke below the 102.00 major psychological support level and dipped below the 101.00 mark this week. However, with stochastic reaching the oversold region and crossing upwards, dollar bulls may be back in action for the near term.
If that happens, the pair could retrace to the former support zone, which is around the 61.8% Fibonacci retracement level. Cautious traders can wait for reversal candlesticks or for stochastic to reach the overbought zone before shorting around 102.00.
A short order at 102.00 with a 50-pip stop and a 100-pip target would yield a 2:1 reward to risk.
By Kate Curtis from Traderâs Way
Thanks to strong New Zealand jobs figures, NZD/USD made a stellar rally in the past trading session and climbed back above the .8200 handle. However, the pair might be encountering resistance right at that area, which has acted as a support level in the past.
At the same time, price has made lower highs while stochastic drew higher highs, forming a bearish divergence. Stochastic is already moving out of the overbought zone, hinting at a potential short-term selloff.
If that happens, the pair might be on its way to test the former lows around the .8100 major psychological level. Shorting at market with a 100-pip stop and a target of .8100 would be a 1:1 return on risk.
By Kate Curtis from Traderâs Way
A classic reversal chart pattern has formed on GBP/JPYâs 1-hour time frame, indicating that the recent selloff is almost over. However, the pair has yet to make a break above the neckline of the formation before a rally is confirmed.
Take note that stochastic is already in the overbought zone and looks ready to cross down, which means that a bit of consolidation or pullback might be in the cards before an actual upside break.
Going long above the 166.00 major psychological resistance with a stop around 165.00 or lower and a target of 200 pips could make close to a 2:1 return on risk. Bear in mind that the chart pattern is roughly 200 pips in height, which suggests that the potential breakout could be of the same size.
By Kate Curtis from Traderâs Way
USD/JPY might be in for a bit of consolidation in the trading hours leading up to the US non-farm payrolls release. Another weak figure is expected, as cold weather conditions could weigh on the employment change figure for January.
If thatâs the case, the support turned resistance area around the 102.00 major psychological level might hold as a barrier for further rallies. Stochastic is already in the overbought zone, which suggests that dollar bears are ready to push the pair back down.
Shorting at market if the NFP figure comes in below consensus and aiming for the previous lows around 101.00 with a tight 50-pip stop could yield a 2:1 return on risk for a quick day trade.
By Kate Curtis from Traderâs Way
GBP/USD just broke below the long-term rising trend line on its 4-hour chart recently but appears ready to make a pullback before resuming its selloff.
The pair has bounced off support at the 1.6300 major psychological level earlier in the month and has pulled up to the 38.2% Fibonacci retracement level on the latest swing high and low. Stochastic is already indicating overbought conditions, which means that the downtrend might resume soon.
Shorting at the test of the trend line around the 1.6450 minor psychological resistance or at market around the 38.2% Fib level with a stop back above the trend line could yield a high return on risk if one aims for new lows. Moving the stop to entry once price tests the former lows around 1.6300 is a good way to reduce risk.
By Kate Curtis from Traderâs Way
NZD/USD recently broke below the ascending trend line on its 4-hour time frame and dipped below the .8100 mark. However, weak data from the US and improved risk sentiment have allowed the pair to pull back to the former support level.
Stochastic is already in the overbought zone and is showing signs of heading lower. If Kiwi bears take control and risk appetite gets weaker, NZD/USD might fall back to its former lows.
Shorting at market with a stop above the trend line and a target of .8100 could yield as much as 3:1 return on risk. To protect profits, the stop can be trailed by 50 to 100 pips.
By Kate Curtis from Traderâs Way
AUD/USD made a strong break above a recent resistance level, thanks to reassuring comments from Fed Chairperson Janet Yellen. However, price seems to be stalling around the .9000 major psychological level and might need to make a pullback before resuming its rally.
Stochastic is pointing down from the overbought zone, indicating that a quick selloff may be in the cards. If thatâs the case, the pair could dip to the former resistance level, which lines up with the 50% Fibonacci retracement level. If stochastic reaches the oversold region and crosses upward then, it might be a signal for a bounce.
Going long at the 50% Fib or the .8975 area with a stop below the 61.8% Fib or at .8950 and a target of new highs could yield a good return on risk for a short-term trade. Be mindful of the upcoming Australian jobs release though if youâre holding on to the trade until Thursdayâs Asian trading session.
By Kate Curtis from Traderâs Way
The euro might be under fresh selling pressure as an ECB official recently spoke of the possibility of negative deposit rates in the region.
On its 1-hour time frame, the pair is testing a falling trend line connecting the recent highs, at the same time finding resistance at the 140.00 major psychological level. Take note though that stochastic is still moving higher, which suggests that there might be a brief pullback before it resumes its selloff.
Shorting at market with a wide stop above the recent high or around 140.50 and a target of the former lows around 137.00 could yield at least a 2:1 return on risk.
By Kate Curtis fromTraderâs Way
USD
Data was light in the US session but that didnât stop the Greenback from cashing in on the weakness of most of its major currency counterparts, except for the British pound. The Federal budget balance came in better than expected at a deficit of 10.3 billion USD instead of the estimated 16.4 billion USD shortfall. US retail sales data are up for release today, with the core figure projected to show a 0.1% uptick and the headline figure to print a flat reading. Weaker than expected results might be in the cards since hiring has been weak in the past couple of months.
EUR
The euro suffered heavy selling pressure in recent trading because of remarks from an ECB official saying that the central bank is considering implementing negative deposit rates. Draghiâs speech did not have much of an impact on price action since he simply reiterated his previous remarks. Euro zone industrial production came in below consensus and printed a 0.7% decline instead of the projected 0.2% dip. German final CPI and the ECB monthly bulletin are up for release today, but these arenât expected to have a huge impact on the euro.
GBP
The pound enjoyed a strong rally against its currency rivals in recent trading, after BOE Governor Carney announced upgrades in its growth forecasts. He upgraded the GDP forecast for the year from 2.8% to 3.4%, pushing GBP/USD back above the 1.6600 mark. Although the RICS house price balance came in weaker than expected at 53% versus the estimated 56% reading, this wasnât enough to erase the poundâs gains. No reports are due from the UK today.
CHF
The franc struggled to hold its ground to the dollar in recent trading, as Swiss CPI printed a 0.3% decline following the previous 0.2% dip. Deflation remains a concern in the Swiss economy, making it difficult for the franc to extend its rallies. Swiss PPI is up for release today and might be indicative of future inflation prospects. After printing a flat reading in the previous release, a 0.1% dip is expected.
JPY
The yen regained a bit of ground on the heels of risk aversion in the markets, after Janet Yellen recently confirmed that the Fed would push through with its taper and wonât bother with the potential crash in emerging markets. There have been no major releases from the Japanese economy so far and none are due today, which suggests that yen pairs could be swayed by risk sentiment.
Commodity Currencies (AUD, NZD, CAD)
The Australian dollar got sold off heavily in todayâs Asian trading session because of weak Australian jobs data. The employment change figure showed a 3.7K decline following the previous monthâs 23K drop. This was enough to push the jobless rate up from 5.8% to 6.0%, taking AUD/USD below the .9000 mark and AUD/JPY below 92.00. No other reports are lined up from the comdoll economies but the downturn in risk appetite might keep weighing on the rest of the comdoll pairs for the rest of the day.
By Kate Curtis fromTraderâs Way
After that hawkish BOE inflation report, GBP/AUD made a strong break above the neckline of the double bottom pattern earlier this week. However, after finding resistance at the 1.8600 handle, the pair looks ready to make a quick pullback before resuming its climb.
On the 1-hour time frame, the neckline and former resistance is between the 38.2% and 50% Fibonacci retracement levels. Stochastic is making its way out of the oversold zone, which means that pound bulls are ready to push the pair back up.
Going long at the 38.2% Fib with a stop below the 50% Fib level and a target around 1.8600 could yield at least a 2:1 return on risk.
By Kate Curtis fromTraderâs Way