USD/JPY is currently in a new uptrend but this has yet to be established, as the pair is making an attempt to test the rising trend line on the 4-hour time frame. Stochastic bounced from the oversold zone but headed back down, indicating that there’s enough selling pressure to push for a trend line test.
Take note that the trend line lines up with the 200 SMA, which has served as a support area for the pair on the last correction wave. A bounce from the 102.00 major psychological support and trend line might lead to a rally up to 103.00 or the previous highs.
Of course this might depend on how the US NFP release turns out. A slower pace of jobs growth is expected while the jobless rate could tick higher, but this might be mostly a result of an improvement in participation rate.
Going long at 102.00 with a 50-pip stop below the trend line and 200 SMA and a target of 103.00 could make a simple 2:1 reward-to-risk setup.
By Kate Curtis from Trader’s Way
USD/CHF has been trading inside a rising channel for nearly a month before the ECB rate decision last week triggered a sharp break lower. Since then price has made a decent correction close to the bottom of the channel.
Stochastic is moving down from the overbought area, indicating that a selloff may be in the cards. This could be enough to push the pair to new lows, possibly until the .8800 major psychological support if the downtrend persists.
Shorting on a pullback to the .8950 broken channel support with a stop inside the channel and a target of .8850 could yield a 3:1 return on risk for a short-term trade.
By Kate Curtis from Trader’s Way
GBP/JPY has been moving inside a range for more than a couple of months already and it looks like the pair is gearing up for a test of resistance at the 173.00 major psychological handle. A strong selloff from this area could lead to a test of support at the 170.00 mark.
Take note though that stochastic is already heading down from the overbought zone, which means that sellers are already starting to pile in. This could lead to an early selloff from its current levels even before GBP/JPY reaches the top of the range.
Shorting at 173.00 with a 100-pip stop and a target of 170.00 could yield a 3:1 return on risk. Adjusting the stop to entry once price tests the middle of the range is a good way to reduce risk.
By Kate Curtis from Trader’s Way
USDCAD is still trading inside the rising channel on its 1-hour time frame and may be ready to resume the climb if it finds support at the bottom of the channel near the 1.0850 minor psychological level.
Stochastic is already in the oversold zone, hinting that a bounce might take place soon. If you’re bearish on this pair though, you could still catch the selling momentum from its current levels until the bottom of the channel since the stochastic hasn’t crossed upward yet.
On the other hand, if you’re looking to follow the ongoing uptrend, you could set a buy order at the channel support and aim for the top above the 1.0950 minor psychological level. With a tight stop, this could yield a 2:1 return on risk for a day trade.
By Kate Curtis from Trader’s Way
AUD/USD is finding resistance at the top of its range, visible on the 4-hour forex time frame. At the same time, stochastic is moving down, which means that there’s enough selling pressure to push price down.
A strong selloff could last until the bottom of the range near the .9220 levels. A weak one could only last until the mid-range area of interest near the .9300 major psychological support.
Shorting at market with a tight stop above the previous spikes or the .9450 handle and a target of .9200 could yield a high reward-to-risk ratio but it might be prudent to adjust the stop to entry once price tests the .9300 area.
By Kate Curtis from Trader’s Way
Thanks to BOE Governor Carney’s hints that the UK central bank is looking to hike interest rates earlier than markets expect, GBP/AUD has made a strong convincing bounce off the range support visible on its 4-hour forex chart.
Stochastic is also moving higher, indicating that there is enough buying pressure to pus the pair towards the middle of the range and beyond. Jobs data from the UK has been much stronger than expected while Australia’s labor reports have been weak, adding further confirmation that the rally could continue.
Going long at the current levels with a stop below the range support and a target at the range resistance at 1.8300 could yield a 2:1 return on risk for a swing trade.
By Kate Curtis from Trader’s Way
After the sharp rally in the past couple of days, GBP/USD is now stalling at a major psychological resistance level, which is also around the yearly highs at 1.7000. Stochastic is moving down, which means that pound bears are ready to take control of price action.
A selloff could last until the next major psychological level or the 1.6900 mark, which would act as support for the pullback. A deeper correction could last all the way until the 1.6700 previous month lows.
On the other hand, a strong upside break would mean that more gains are in the cards for this currency pair. Of course, this depends on how the upcoming UK events (CPI, retail sales, BOE minutes) turn out and whether or not they support an earlier tightening cycle from the BOE.
Going long above the 1.7000 handle with a wide stop and a large long-term profit target in case the UK events are bullish for the currency could be a good swing trade setup. Shorting on a downside break of 1.6950 could pave the way for a short-term trade until the 1.6700 support zone.
By Kate Curtis from Trader’s Way
EUR/AUD has been in a strong downtrend, with the falling trend line connecting the highs of the price on the 4-hour time frame still intact. Stochastic is in the overbought zone, indicating that bulls are already exhausted. A move below the 80.00 level would suggest that selling momentum is about to pick up and that price would head south.
The 61.8% and 50% Fibonacci retracement levels are closer to the trend line resistance, with the former coinciding with a broken support zone. A bearish divergence appears to be forming, as stochastic made higher highs while price made lower highs, supporting the idea of trend continuation.
Shorting at 1.4600 with a wide stop of 150 pips above the trend line and a target of 1.4400 or the previous lows could yield more than a 1:1 return on risk.
By Kate Curtis from Trader’s Way
USD/CHF has been trading inside a range for the past few days but it appears that the pair is already hinting at further losses. A downside break took place after the latest FOMC interest rate decision, as the US central bank downgraded 2014 GDP forecasts and reiterated its plan to keep rates low for a considerable time.
Stochastic has already reached the oversold zone though, indicating that dollar bears are exhausted. A quick bounce to the bottom of the range might take place before the pair chalks up more losses. However, this could be also a sign that the move lower was a false break and that USD/CHF might have a chance to test the range resistance above .9000.
Shorting at the previous lows or at the .8950 area would catch the momentum of an actual downside break and a more prolonged selloff. Aiming for the previous lows at .8900 with a 25-pip stop could yield a 2:1 return on risk.
By Kate Curtis from Trader’s Way
GBP/CHF’s uptrend is still intact, as seen on the 4-hour forex chart with an ascending trend line connecting price lows. Stochastic still hasn’t reached the oversold zone, which suggests that a deeper pullback might happen before the rally resumes.
At the same time, the 100 and 200 simple moving averages are in line with the rising trend line, making it a strong potential support zone. A bounce off the 1.5100 major psychological level, which coincides with a shorter-term broken resistance area, could lead to a rally up to the previous highs at 1.5300.
Going long at 1.5100 with a stop below 1.5000 and a target of 1.5300 could yield a 2:1 return on risk. Aiming for new highs could improve the reward potential but it would be prudent to adjust the stop to entry once price tests the previous highs.
By Kate Curtis from Trader’s Way
GBP/USD has recently made a strong convincing break past its yearly highs at the 1.7000 major psychological level, indicating a continuation of the long-term rally. However, price has retreated back to the 1.7000 area after reaching highs past the 1.7060 levels.
Stochastic is also exhibiting a bearish divergence, which indicates trend exhaustion. The technical indicator is currently pointing down from the overbought level, which means that bulls might not be ready to push the pair higher anytime soon. This could mean that a pullback near the broken resistance area is in play.
Going long at the 1.7000 level with a stop below the 61.8% Fibonacci retracement level at 1.6975 could yield a high return on risk if one aims for new highs. Moving the stop to entry once price tests the latest resistance at 1.7060 could be a good way to protect profits.
By Kate Curtis from Trader’s Way
EUR/NZD has been in a steady downtrend, as the ECB rate cut has weighed on the euro’s value. At the same time, the recent RBNZ rate hike is keeping the New Zealand dollar afloat against its major forex counterparts.
The pair has just come off a test of channel resistance near the 1.5625 levels. Stochastic is indicating that a bearish divergence is playing out, which means that there’s enough momentum to sustain a drop until the bottom of the channel around 1.5530.
Shorting at market with a stop above 1.5625 and a target at 1.5530 could yield a 1:1 return on risk for a quick day trade.
By Kate Curtis from Trader’s Way
EUR/GBP is showing signs of pulling back to the retracement levels and trend line marked on the 4-hour time frame. As you can see, the 50% Fibonacci retracement level lines up with the .8050 minor psychological level, which might act as resistance for the pair.
Stochastic seems to be showing signs of moving lower, which might mean a return of selling pressure for this pair. If the Fibs hold as resistance, price might fall back to its previous lows near the .7950 minor psychological level or create new ones.
Data from the euro zone, such as German and French manufacturing and services PMIs, have been weaker than expected. Meanwhile, the BOE inflation report showed that Carney clarified rate hike expectations will be based on data, but it doesn’t change the central bank’s stance to start moving towards higher rates.
Shorting at .8050 with a stop above .8100 and the trend line and a target of new lows could make a good return on risk.
By Kate Curtis from Trader’s Way
USD/JPY has been consolidating inside a symmetrical triangle for almost an entire month, as traders are torn in picking a clear direction for this pair. However, the bleak US GDP release has resulted in a sharp downside break from triangle support and indicated that the next trend could be downward.
Stochastic is headed lower, indicating that selling pressure is still present. Price has already made its retest of the broken support level and resumed its drop, indicating that sellers are in control. A break below the previous lows around 101.65 could be a sign of further selling momentum.
Shorting at 101.50 with a 50-pip stop back inside the triangle could offer a strong return on risk if one aims for roughly 150 pips, which is approximately the same height as the chart pattern.
By Kate Curtis from Trader’s Way
GBP/AUD is consolidating inside a descending triangle pattern, showing a potential range play for short-term traders or a possible breakout and longer-term bias for swing traders.
Price is just testing the top of the triangle with stochastic moving down from the overbought zone. This suggests that price could move back to the bottom of the triangle near the 1.8050 minor psychological level for another potential bounce. A breakout in either direction could last by as much as 200 pips, which is the same height as the chart pattern.
Watch out for significant breaks past the 1.8100 mark for a possible long-term rally or a break below the 1.8050 area for a potential selloff.
By Kate Curtis from Trader’s Way
The downtrend of EUR/AUD is still intact, as the pair is trading below a falling trend line on its 4-hour time frame. However, the upcoming events this week could be crucial in determining whether this trend will carry on or not.
Price is testing the 38.2% Fibonacci retracement level, which is around the 1.4550 minor psychological handle. Stochastic is already in the overbought zone, indicating that sellers could jump in sooner or later.
The RBA will announce its interest rate decision today and possibly determine the longer-term direction of the AUD. Hawkish remarks could lead to an Aussie rally while downbeat cautious comments might lead to a selloff. Later on, the ECB will announce its policy decision but no changes are expected for now.
Selling at 1.4550 with a stop above the 1.4600 mark and a target of new lows could yield a good return on risk if the economic events turn out in favor of a selloff.
By Kate Curtis from Trader’s Way
The rising channel on AUD/USD’s 1-hour forex chart is still holding and it appears the pair found resistance at the .9500 major psychological level, which lines up with the top of the channel. At the same time, stochastic is moving down from the overbought zone, indicating enough selling momentum to take the pair lower in the short-term.
If you’re willing to take a countertrend trade, you could still hop in a short position until the bottom of the channel at the .9400 handle. This setup might offer a limited reward though, as the move has already taken place.
On the other hand, if you’re bullish on this pair and would like to go on a long trade, you could wait for an actual test of the channel support at .9400 and aim for the .9500 levels for a profit target. This could offer a better return on risk if you set a tight stop below the channel and wait for stochastic to turn from the oversold area before setting orders.
By Kate Curtis from Trader’s Way
USD/CHF has been in a sharp selloff for the past couple of weeks, mostly due to US dollar weakness. However price has started pulling up after dipping close to the .8850 minor psychological support.
The Fibonacci retracement levels on the 1-hour time frame indicate that the pullback might last until the 38.2% level, which lines up with a former support area and the 200 SMA (simple moving average). However, price already seems to be finding resistance at the 100 SMA at the moment, with stochastic reflecting overbought conditions.
A selloff from those areas could last until the .8850 area once more if the non-farm payrolls release today turns out weaker than expected.
By Kate Curtis from Trader’s Way
AUD/USD has been making higher lows and finding resistance at the .9460 area, creating an ascending triangle on its 4-hour time frame. The pair just found resistance at the top of the triangle and is on its way to test the bottom, which might continue to hold as support.
Stochastic is already in the oversold area, indicating that selling pressure is already exhausted. Price might bounce off the .9375 levels before resuming its climb back to the top of the triangle later on.
If you plan on going long at the triangle support, make sure you stet a tight stop below the .9350 area to exit the trade if a breakdown takes place. Aiming for the top of the triangle could yield a 2:1 return on risk for a short-term trade.
By Kate Curtis from Trader’s Way
CAD/JPY has been moving inside a descending triangle pattern on its daily forex time frame, as price made lower highs and found support at the 92.00 major psychological level.
The pair has just come off a test of resistance and may be heading back down for another test of support, although stochastic is moving out of the oversold area. Price might pull up for a bit before heading lower, which would be a potential 200-pip drop.
Shorting at market with a stop above the triangle or the 95.00 handle could yield more than a 2:1 return on risk. Strong data from Japan could lead to more gains for the yen, especially against the Canadian dollar as Canada has seen a lot of weak reports recently.
By Kate Curtis from Trader’s Way