NZD/USD has been selling off strongly in the past few days, yet the pair could be in for a relief rally as it is finding support at the bottom of the rising channel forming on its 4-hour forex time frame.
Stochastic has already reached the oversold zone, indicating that a bounce might be in the cards, as price tests the support at the .8500 major psychological level. If that happens, NZD/USD might be able to climb up to the area of interest at the middle of the channel, which is around the .8700 mark.
On the other hand, a move below the rising channel could confirm that the longer-term uptrend is already over and that more losses are in the cards for this pair. NZD/USD could move all the way down to the next support zone around the .8300 mark or even until .8100.
By Kate Curtis from Trader’s Way
AUD/USD had been trading inside an ascending triangle chart pattern for quite some time before breaking to the downside and indicating that further losses could be in the cards. Price has found a bit of support at the .9300 area and may be due for a pullback, as stochastic is starting to move out of the oversold zone.
With that, price could retreat to the .9400 major psychological handle, which is near the broken triangle support. From there, if selling pressure remains strong, AUD/USD could resume its drop and head back down to the lows near the .9200 levels.
Shorting at .9400 with a stop above the top of the triangle or .9460 and a target of .9200 could yield a good return on risk for a medium-term trade.
By Kate Curtis from Trader’s Way
USD/JPY has recently made a strong upside breakout from the descending triangle on a longer-term time frame. From there, price has made a strong rally past 102.00 then formed a bullish flag pattern, indicating that there could be buying pressure left.
Stochastic is moving lower and if it reaches the oversold zone, another rally might take place. Going long above the 103.00 mark and aiming for a hundred pips with a tight stop could yield a high return-on-risk. Take note that the mast or earlier move is approximately 100 pips in height.
The US non-farm payrolls report is up for release today and a stronger than expected reading might lead to more gains for this pair. Bear in mind that the FOMC already acknowledged the recent improvements in the labor sector and another strong NFP report might convince policymakers that it’s about time to move closer to tightening monetary policy.
By Kate Curtis from Trader’s Way
AUD/CAD has been trading inside a range on its 1-hour time frame, finding support at the 1.0115 area and resistance at the 1.0215 level. Price has recently come off a test of the range support and appears ready to test resistance once more.
Stochastic is on middle ground, although it is on its way down and indicating a pickup in selling pressure. A move higher could signal a return of buyers, which might take the pair up to the top of the range before drawing in sellers. If the range resistance holds, another test of the range support might take place.
Shorting at 1.0215 with a tight stop and a target of 1.0118 could yield a high return on risk for a day trade. Trailing the stop could be a good way to minimize risk and lock in profits as price moves lower.
The event risks for this setup include the Australian retail sales and trade balance releases, as well as the Canadian trade balance release.
By Kate Curtis from Trader’s Way
USDJPY has staged strong gains in the past few days yet it appears to be stalling at a major resistance zone. Price is moving around the 105.50 area, which lines up with the previous year highs and a long-term support zone broken in the past years. This also lines up with the 61.8% Fibonacci retracement level on the latest downtrend.
This resistance could keep further rallies in check, which might push USDJPY back down to the near-term support at the 101.00 consolidation support or lower to the 97.50 area of interest. In that case, the longer-term downtrend could be set, and eventually see USDJPY much lower.
On the other hand, a strong upside break from this area of interest could push price up to the next resistance zone at 113.00. Further gains could lead USDJPY to rally all the way up to the swing high at the 124.00 level.
Much could hinge on the BOJ’s monetary policy stance and the upcoming NFP release, which might set the tone for Fed policy guidance. Recall that BOJ Governor Kuroda expressed openness for further easing should the Japanese economy weaken while Fed Chair Yellen said that they could tighten sooner if consistent labor improvements are seen.
By Kate Curtis from Trader’s Way
Reviewing the long-term price action of EURCAD indicates that the pair may be in the middle of a huge market correction, as the recent selloff is stalling at the 38.2% Fibonacci retracement level of the previous uptrend.
At the same time, this retracement zone lines up with an area of interest or a resistance turned support level. Stochastic is already in the oversold area, indicating that buyers could take control of price action sooner or later. Price is also finding support at the 1.4100 major psychological level, with the next potential support at the 1.4000 major psychological mark.
A rally from this area could take EURCAD up to the near-term broken support at 1.4500. Further gains could take it to the previous highs eventually.
Going long at market with a wide stop below the 1.4000 mark and a target at the previous highs could yield a high return on risk.
By Kate Curtis from Trader’s Way
AUDUSD has been trading inside a rising channel on its 1-hour forex time frame for the past month, but it looks like a breakdown is happening. The pair is currently hovering around the channel bottom near the .9250 to .9300 psychological levels, with a downside break likely to indicate that more losses are in the cards.
Note that stochastic is already in the oversold region and is starting to move up, indicating a potential return in buying pressure. However, the recent selloff has been so sharp that bears might still have enough energy to push the pair lower.
A bounce from the current levels could take AUDUSD back to the channel resistance near the .9400 handle or at least until the middle of the channel at .9350. On the other hand, a downside break could push AUDUSD down to the .9200 support zone or lower.
Shorting on a break of .9250 with a stop above .9300 and a target of .9100 could yield a high return on risk for a short-term trade. Adjusting the stop to entry once price tests the .9200 support zone could be a good way to minimize exposure.
By Kate Curtis from Trader’s Way
AUDJPY has recently broken the major resistance level at the 96.00 psychological handle a few weeks back and made a strong rally to the 98.75 area. However, price appears to be retreating as traders booked profits and sentiment appears to be turning for the Australian dollar.
With that, price could pull back to the broken resistance zone, which might act as support from now on. This is in line with the 50% to 61.8% Fibonacci retracement levels, which might keep any losses in check. A shallow retracement might last until the 38.2% level only, which is near the 97.00 major psychological support.
Stochastic has already reached the oversold region, indicating that selling pressure is weakening. When the oscillator moves out of the oversold zone and starts heading north, price could resume its climb and possibly test the previous highs near 98.75. Stronger buying momentum might even lead to the formation of new highs beyond 99.00.
Weak Japanese data could keep yen gains at bay, as the BOJ is being pressured to increase stimulus for the economy. Meanwhile, Australia is also showing a few signs of weakness, along with China. The recent dip in Chinese imports spells downbeat prospects for Australia’s export sector, which accounts for a huge part of overall economic growth.
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The event risk for this trade is the Australian jobs release tomorrow and the Chinese CPI. Earlier today, Japanese core machinery orders and PPI already came in below expectations.
By Kate Curtis from Trader’s Way
NZDJPY has been moving in a steady uptrend inside a tight ascending channel on its 4-hour chart. Price is currently testing the channel support near the 87.50 minor psychological level while stochastic is almost in the oversold area.
Buyers could return once stochastic climbs out of the oversold zone but for now, it looks like sellers could stay in control. If selling pressure remains strong, price could break below channel support and start a reversal. This downtrend could carry on until the next support zone near the 86.50 to 87.00 psychological levels.
On the other hand, a bounce could take the pair up to the channel resistance near the 88.00 major psychological level. Going long at market with a tight stop and a target of 88.00 could yield a high return on risk for a day trade. If you’re bearish on this pair, you could wait for an actual test of 88.00 or a break below the channel support and a longer-term profit target.
Earlier today, the RBNZ announced its decision to keep interest rates unchanged at 3.50% for the time being while calling attention to the overvalued Kiwi. However, weak fundamentals from Japan might also be enough to keep this pair afloat.
By Kate Curtis from Trader’s Way
CADJPY is on a short-term uptrend, as a rising trend line can be drawn to connect price lows since August on its 1-hour forex chart. Price is currently testing this ascending support zone and may be due for another bounce to its previous highs or beyond.
At the same time, stochastic is indicating a pickup in buying pressure, which might be enough for CADJPY to sustain its climb. A bullish divergence is playing out, after stochastic made lower lows while price made higher lows, further adding confirmation that bulls are in control of price movements for now.
Further gains could take CADJPY up to the 97.70 level or its previous highs while a stronger bull run could push it past the 98.00 major psychological level. On the other hand, a break below the rising trend line could be an early reversal signal and the start of a short-term downtrend for the pair.
By Kate Curtis from Trader’s Way
GBPUSD is currently testing a key area of interest as seen on its daily time frame, which could mean that the recent selloff could reverse. Stochastic is starting to move up from the oversold zone, indicating that selling pressure is exhausted.
A rally could take GBPUSD back up to its previous highs near the 1.7200 major psychological level eventually. A weak bounce might last only until the areas of interest around 1.6500 and 1.6700.
On the other hand, another run in selling momentum could push GBPUSD to the next Fib level near the 1.6000 major psychological handle. Further declines below this support zone could lead to a test of the 61.8% Fibonacci level, which is near the 1.5700 major psychological support.
There are several event risks lined up for the UK economy this week, including the much-awaited Scottish independence vote. If Scotland is able to secure independence, the UK economy might be in for a bit of political and economic instability, which might lead to more pound weakness. Also due this week are the UK jobs and spending data, along with BOE minutes and inflation figures.
By Kate Curtis from Trader’s Way
AUDUSD has been on a strong downtrend since the start of the month but may be due for a quick correction after gapping down early this trading week. Price dipped below the .9000 major psychological level and could pull up to the .9100 mark before heading further south.
MACD is reflecting a pickup in buying momentum, which might be enough to push AUDUSD to the 38.2% Fibonacci retracement level from the latest swing high and low. This is close to the .9100 area and the 100 simple moving average, which could hold as dynamic resistance for the pair.
A higher retracement could last until the .9150 minor psychological resistance, which is close to the 200 simple moving average. Stochastic is climbing to the overbought zone, indicating that there’s enough buying pressure left for a market correction.
A return of sellers could push AUDUSD back to its recent lows around .8990 or lower to the .8900 major psychological support zone. Event risks for this setup are the FOMC statement and the RBA minutes release.
Shorting at .9100 with a stop above .9150 and a target of .8900 could yield a 4:1 return on risk, with the use of a trailing stop to protect profits and minimize exposure.
By Kate Curtis from Trader’s Way
GBPUSD is taking a break from its recent selloff as the pair found support at a long-term area of interest. The daily chart shows price stalling at the 38.2% Fibonacci retracement level, which lines up with a former resistance zone.
Stochastic is also confirming this potential pickup in buying pressure, as the oscillator is starting to move out of the oversold zone. MACD is also reflecting oversold conditions, with the potential return of buyers likely to trigger a strong bounce.
In this case, GBPUSD could make its way back up to the previous highs near the 1.7200 major psychological level eventually. Of course this mostly depends on the outcome of UK events this week, which include the release of the BOE minutes and the Scottish referendum.
A weak rally might last until the near-term area of interest at the 1.6500 major psychological level, as the upcoming FOMC statement might also renew demand for the US dollar. A break below the pair’s current levels could lead to a test of the 1.6000 major psychological support zone.
By Kate Curtis from Trader’s Way
An uptrend appears to be forming on GBPNZD, as a rising trend line can be drawn to connect the recent lows on the 1-hour time frame. However, stochastic has just reached the overbought area and is heading lower after price tested the 2.0100 major psychological resistance.
This could lead to a test of the rising trend line, which lines up with the 38.2% Fibonacci retracement level and the 2.0000 major psychological handle. This acted as resistance in the past and may hold as support for now.
A bounce from this area could push GBPNZD back to its previous highs at 2.0100 or higher if buying momentum picks up. Going long at 2.0000 with a stop below the Fibonacci retracement levels and trend line and aiming for new highs around 2.0200 could yield a high return-on-risk for a short-term trade. Aiming higher while keeping a trailing stop could improve profitability while minimizing exposure.
Data from the UK has been strong recently, supporting a bullish bias for the pound, as the BOE has also showed a couple of policymakers voting to hike rates. However, the Scottish referendum is still a huge event risk for this setup, as Scotland’s independence might lead to political and economic uncertainty for the United Kingdom.
By Kate Curtis from Trader’s Way
USDCAD is forming a head and shoulders pattern on its 4-hour forex time frame, indicating that a reversal from the previous uptrend might take place. For now, price is still testing the neckline of the formation near the 1.0950 minor psychological support area.
Stochastic is moving up from the oversold zone, suggesting that a bounce might take place. MACD is giving the same signal, which means that sellers aren’t ready to push USDCAD down for now.
However, a break below the neckline of the head and shoulders pattern might mean a 150-pip selloff, which is the same height as the chart formation. This could take price down to the 1.0800 major psychological support zone.
Shorting below the 1.0950 level and aiming for 1.0800 with a tight stop around 1.1000 could yield a high return on risk for a short-term trade. Event risks for this trade include Canadian CPI and wholesale sales releases in today’s New York trading session.
By Kate Curtis from Trader’s Way
GBPJPY has been on a steady uptrend and may be due to resume its climb, as a bullish divergence has formed on its 1-hour time frame. Stochastic made lower lows while price made higher lows, with the oscillator already starting to move out of the oversold zone.
This indicates that the upward momentum could push price back to the previous highs near the 180.00 major psychological resistance eventually. Price has to break above the current consolidation pattern at the 38.2% Fibonacci level before confirming the return of buying pressure.
MACD is also hinting at possible pickup in price action, as GBPJPY resumes its ascent. Strong momentum could even lead to the formation of new highs beyond 180.00. However, a deeper pullback to the Fib levels and trend line is still possible, as price could also find support near the 100 and 200 simple moving averages.
By Kate Curtis from Trader’s Way
USDCAD appears to be forming a rising trend channel on its 1-hour forex chart, as the pair recently made higher lows and higher highs. Price just bounced from the 1.0950 minor psychological level, which lines up with the channel’s bottom, and might be on its way to test the range resistance at 1.1200.
However, stochastic is indicating overbought conditions and hinting that the mid-channel area of interest might hold as resistance for now. If that happens, USDCAD could retest the bottom of the channel which is closer to the 1.1100 major psychological support for now.
A bounce from this area could still lead to a strong rally to the top of the channel but a breakdown could be a sign that the uptrend would reverse. Going long at 1.1100 with a stop below 1.0950 and a target of 1.1200 could yield a decent return-on-risk for a simple day trade.
The event risks for this setup are minimal, as there are no major events from the US or Canada today. Bear in mind though that latest inflation figures from Canada came in strong but BOC Governor Poloz downplayed these reports. Meanwhile, US data has mostly surprised to the upside and confirmed that the Fed could move closer to tightening policy.
By Kate Curtis from Trader’s Way
NZDUSD might be due for a strong bounce, as the pair is testing the bottom of the ascending trend channel on its daily time frame. Trade balance from New Zealand came in better than expected as it showed a smaller deficit and a considerable recovery in exports.
A bounce from the current levels could take NZDUSD back to the top of the channel eventually, and this lines up with the .8900 major psychological level. Stochastic is climbing out of the oversold region anyway, indicating that buying pressure could return.
A weak rally might last only until the mid-channel area of interest near the .8300 major psychological handle. Bear in mind though that the pair just sold off sharply after breaking below the neckline of the double top formation, indicating that the downtrend might carry on.
Going long at market with a wide stop below the channel support or the .8000 handle could yield a high return on risk if one aims for the top of the channel. Trailing the stop could be a good way to minimize exposure and lock in gains.
By Kate Curtis from Trader’s Way
USDCAD is moving inside a rising channel on its 1-hour time frame, indicating that the uptrend is getting stronger. However, price has just encountered resistance at the top of the channel and may be due south.
The channel resistance lines up with the 1.1150 minor psychological level and the bottom of the channel is near the 1.1000 mark, paving the way for a potential 150-pip trade if price moves lower.
Stochastic is indicating a possible bounce though, as the indicator is moving out of the oversold zone. In this case, another test of the channel resistance might be possible or perhaps an actual breakout if buying pressure is very strong. A break past the 1.1200 mark could confirm that more gains are in the cards for USDCAD.
On the other hand, a return in selling pressure could lead to a drop to 1.1000 and a potential break of channel support if the downward momentum is strong enough.
Bear in mind that data from Canada has mostly disappointed, as the recent retail sales figures fell short of expectations. US durable goods orders data is due today and strong figures might lead to an upside channel break.
By Kate Curtis from Trader’s Way
EURUSD has been trending lower and has recently made another strong break below support at the 1.2800 major psychological level. Price dipped to the 1.2700 mark before making a quick bounce and starting a potential retracement.
Using the Fibonacci tool on the latest swing high and low on the 1-hour time frame shows that the 50% Fib level lines up with the 1.2800 handle, which might serve as resistance. A higher pullback could reach until the 61.8% Fib level, which lines up with a broken support area and the 100 simple moving average.
Stochastic is almost in the overbought zone, indicating that sellers could push prices down again soon. MACD, on the other hand, is still reflecting the presence of strong buying momentum.
Shorting at the 50% or 61.8% Fibonacci retracement levels with a stop above the 200 SMA line in the sand could yield a high return on risk for a swing trade, if one aims for new lows. Trailing the stop could be a good way to minimize exposure and lock in profits along the way.
By Kate Curtis from Trader’s Way