EURJPY appears to be retracing from its recent rally earlier in the month, as price has found resistance near the 141.00 major psychological level and pulled back to the 139.00 area. A deeper pullback could last until the 61.8% Fibonacci retracement level, which is close to the 138.00 major psychological support and a former resistance level.
Stochastic is already moving out of the oversold zone, hinting that buying pressure is ready to pile back on. This could push EURJPY back to the previous highs or at least until the 140.00 major psychological level.
However, a break below the 138.00 area of interest could be a sign that further losses are in the cards, which could take EURJPY back to the next support near 136.00. This might depend on the event risks lined up from both Japan and the euro zone this week, with another slew of weak data expected from both nations. Take note that the ECB is set to have its interest rate decision this week as well.
Going long at 138.00 with a stop around 137.00 and a target of 141.00 could yield a 3:1 return-on-risk. Aiming for new highs could improve the reward ratio but it would be prudent to have a trailing stop once price tests the previous highs.
By Kate Curtis from Trader’s Way
USDJPY seems to be having trouble sustaining its gains past the 109.50 minor psychological level, opening the case up for a quick retracement. Price appears to have pulled back to the 38.2% Fibonacci retracement level on the 1-hour forex time frame.
A deeper correction could last until the 61.8% Fib level, which is near the 109.00 major psychological handle and the simple moving averages. The 100 SMA is still moving above the 200 SMA for now, indicating that the uptrend is still valid.
Stochastic is moving down though, reflecting a pickup in short-term selling momentum. MACD is on middle ground but is also moving down, confirming that bears might be in control of price action for now.
A break below the 109.00 handle could indicate that a longer-term correction might take place, possibly until the 108.50 minor psychological support zone. Going long at 109.00 with a stop at 108.50 and a target of new highs at 110.00 could yield a simple 2:1 return-on-risk for a short-term trade.
Event risks for this trade include data from Japan (household spending, retail sales, industrial production, unemployment rate, and Tankan surveys) and the upcoming US NFP release on Friday.
By Kate Curtis from Trader’s Way
EURJPY appears to have found support at the 200 simple moving average, which is close to the 61.8% Fibonacci retracement level on the 4-hour time frame. Weak euro zone inflation data sparked a round of euro selling in yesterday’s London session, but mixed Tankan survey results from Japan in today’s Asian session led to a bounce.
Price could continue to head back up now that the 138.00 handle has held as support as well. A break above the 100 SMA could confirm that further gains are likely, possibly until the previous highs near the 141.00 handle. MACD and stochastic are reflecting the pickup in buying momentum.
On the other hand, a break below these recent support levels could lead to a stronger round of euro selling, which could push EURJPY back down to the previous lows at the 136.00 handle.
Going long at market with a stop below the 61.8% Fibonacci retracement level and a target at 141.00 could yield a high return-on-risk for a technical trade.
By Kate Curtis from Trader’s Way
GBPUSD has been in a steady downtrend in the past weeks, more so last Friday when the US released a strong NFP reading. Price has dropped from the 1.6150 area to 1.5950 where it is currently consolidating.
The US showed a 248,000 increase in hiring for September, outpacing the estimate of a 212,000 increase. Apart from that, previous data was also upgraded and the jobless rate fell from 6.1% to 5.9% in the period.
Stochastic is reflecting oversold conditions, which means that a pullback might take place. If so, price could retreat to the falling trend line near the 1.6100 major psychological level and the simple moving averages. MACD is also hinting at a possible short-term bounce, which might offer a better price to short.
A downside break from the current consolidation pattern is also likely, as a candle close below 1.5950 would suggest that bears are back in control. Setting short orders on a pullback to 1.6100 or a break below 1.5950 could catch the overall downtrend.
By Kate Curtis from Trader’s Way
EURUSD has been moving in a downtrend for quite some time, forming a descending trend line in connecting the recent highs. The pair has bounced off the 1.2500 major psychological support level and pulled up to the 1.2650 area, which lines up with the trend line and 200 SMA resistance.
Stochastic is reflecting overbought conditions and showing a bearish divergence with higher highs while price is making lower highs. This could be a sign that the downtrend would resume sooner or later, which might then take EURUSD back to the previous lows at 1.2500.
MACD is also in the overbought area, suggesting that a drop to the support level might take place. Stronger selling pressure could even lead EURUSD to form new lows later on.
Shorting at market with a stop above the 200 SMA or trend line and a target at 1.2500 could yield a high return on risk. Aiming for new lows could improve the return on risk but it would be prudent to trail the stop once price hits the previous lows.
Event risks for this trade include the release of the German industrial production figures and a couple of speeches from FOMC members. Bear in mind that euro zone reports were weaker than expected recently while the US printed an upbeat September NFP reading.
By Kate Curtis from Trader’s Way
USDJPY appears to be having trouble sustaining its gains past the 110.00 major psychological resistance, as a double top pattern has formed on its 4-hour time frame. Price is currently testing the neckline around the 108.00 handle.
A break below this level might confirm that a selloff is in the cars, possibly around 200 pips in height, which is the same as the chart formation. Take note though that stochastic is already in the overbought area, indicating that a bounce back to the 110.00 resistance is possible. MACD is also hinting at a possible pickup in buying pressure.
A downside break from the neckline could lead to a drop to the next support area at the 106.00 major psychological level. Near-term support can also be found at 107.00-107.50, which acted as previous resistance and is near the 200 simple moving average.
Event risks for this trade include the release of the FOMC meeting minutes, which could show if policymakers are starting to draft an exit strategy and when they plan to implement this.
By Kate Curtis from Trader’s Way
EURUSD seems to have capped off its selloff, as price is now retreating from the 1.2500 levels to the 1.2700 area. The pair got a boost from a dovish FOMC minutes, which indicated that the Fed isn’t likely to hike interest rates early next year.
A pullback could take EURUSD up to the previous support zone around the 1.2800 levels, as stochastic is just starting to make its way out of the oversold zone. This signals that buying momentum is in play and that a larger correction might be in the works.
A break above the 1.2800 mark could lead to a bigger retracement to the 1.3000 major psychological mark, which might also hold as resistance and keep the pair in a downtrend. MACD is hinting at a pickup in buying momentum as well.
If the selloff resumes, EURUSD could make its way back down to the former lows at 1.2500 or perhaps make new ones. After all, the trend remains strong and the path of least resistance for this pair is to the downside, as fundamentals favor a short euro bias.
By Kate Curtis from Trader’s Way
GBPNZD has been on a strong uptrend in the past few weeks, as diverging monetary policy biases have driven the pair to the 2.1000 levels. A correction is taking place, with the pair pulling back to the Fibonacci levels on the 4-hour chart.
The 38.2% Fibonacci level lines up with the 100 simple moving average, which might act as dynamic support for price action. The 200 SMA is between the 61.8% and 50% Fibonacci levels, which might also keep any losses in check.
The 2.0000 major psychological level is close to the 61.8% Fib and a former resistance zone, which might act as support. Stochastic is moving up from the oversold zone, hinting at a return of buying pressure while MACD is also moving higher.
A rally could take the pair back up to the previous highs at 2.1000 while a selloff could lead to a test of the previous support around the 1.9500 mark. From a fundamental standpoint, the bias for this pair is to the upside as the RBNZ has intervened in the currency market to weaken the Kiwi while the BOE is open to tightening policy next year.
By Kate Curtis from Trader’s Way
EURJPY looks poised for more losses, as the pair recently broke below the descending triangle support on its daily time frame. Stochastic is already in the oversold zone, indicating that a bounce might take place in case the break is a fakeout.
A rally could take the pair up to the previous highs near the 140.00 area, but the moving average downward crossover is suggesting that the path of least resistance is to the downside. MACD is also moving lower, which suggests that downward momentum is building up.
Take note that the chart pattern is approximately a thousand pips in height, which means that the resulting selloff might last by the same amount. This could take EURJPY to the next area of interest around the 126.00 levels.
The event risks for this trade include testimonies by Draghi and the German ZEW economic sentiment release later on this week. There are no major reports up for release from Japan, but the risk-off environment could keep the lower-yielding yen supported.
By Kate Curtis from Trader’s Way
AUDUSD appears to be forming a reversal chart pattern on its 4-hour time frame, indicating that the downtrend is already over. A triple bottom can be seen, as price found support around the .8700 handle and is unable to head any lower for now.
With that, the pair could test the neckline of the pattern around the .8850-.8900 psychological levels. An upside breakout could confirm that more gains are in the cards. Take note that the chart pattern is approximately 200 pips in height, which suggests that the resulting uptrend might be at least the same size.
For now, the 100 simple moving average is acting as resistance for price action, yet stochastic and MACD are hinting at a pickup in buying momentum. A return in selling pressure could lead to a test of the .8700 support or perhaps a breakdown and continuation of the longer-term downtrend.
Event risks for this trade include the Chinese CPI and US retail sales release on Wednesday, which might indicate whether the correction is over or a reversal is likely to take place.
By Kate Curtis from Trader’s Way
EURUSD may be in for another set of losses, as the pair formed a reversal chart pattern on its 1-hour time frame. A double top formation can be seen, with price nearing the neckline around the 1.2600 major psychological support.
Stochastic is indicating oversold conditions though, which suggests that a bounce might take place. MACD is on middle ground, barely providing any clear clues for now. A bounce off the 1.2600 handle could lead to the formation of another top at the 1.2800 resistance zone.
On the other hand, a strong downside break would confirm that a selloff until the previous lows at 1.2500 might be in the cards. Take note though that the chart pattern is roughly 200 pips in height, which means that the resulting breakdown could be off the same size. In this case, EURUSD might find its way down to the 1.2400 mark and make new lows.
Earlier this week, the euro zone had another set of bleak economic data, mostly from Germany. However, the latest FOMC minutes led to weaker demand for the dollar, as the Fed officials didn’t express eagerness to hike rates next year. Despite that, the US is on a fundamentally stronger footing compared to the euro zone, making the path of least resistance to the downside for EURUSD.
By Kate Curtis from Trader’s Way
USDCAD has recently broken past the 1.1200 major psychological resistance and zoomed close to the 1.1400 handle in the past weeks, before showing signs of a retracement. Price is now retreating back to the 1.1200 area, which lines up with the moving averages and the Fibonacci levels.
In particular, the 50% Fibonacci retracement level lines up with the 100 SMA while the 200 SMA lines up with the 61.8% Fibonacci retracement level. This is also within the vicinity of an area of interest or former resistance zone.
Stochastic is almost in the oversold area, indicating that there’s a bit of selling pressure left but that a bounce might take place soon. MACD is also heading lower, which could lead USDCAD to fall until the 1.1200 support zone before recovering.
If that happens, the pair could find its way back to the 1.1400 highs or perhaps head further north. On the other hand, a downside break from the 1.1200 support zone could lead to more losses for the pair and possibly a move to the next support area at 1.1100.
Bear in mind that US retail sales came in weaker than expected while Canada’s employment report released in the previous week came in better than consensus. This could pose a downside risk for the pair in the meantime, although weaker oil prices are also weighing on the Canadian dollar.
By Kate Curtis from Trader’s Way
USDCAD has formed a reversal pattern on its 1-hour time frame, suggesting that a downtrend might take place. Price has yet to break below the neckline support at the 1.1250 minor psychological level before confirming the potential selloff.
Stochastic is moving out of the oversold zone though, indicating that a bounce might take place before the downtrend happens. The pair could still pull up to the 1.1300 major psychological resistance before heading down. MACD is also suggesting a potential return in short-term buying pressure.
If the bounce is strong enough, another test of the previous highs might happen, creating a triple top formation, which is still a valid reversal pattern. A break past the 1.1400 mark, on the other hand, would indicate that the uptrend could carry on.
By Kate Curtis from Trader’s Way
EURUSD is moving in a short-term uptrend since the ascending trend channel on its 1-hour time frame is still holding. Price is making its way to the channel support near the 1.2750 minor psychological level, which might continue to hold as a floor.
Stochastic is moving out of the oversold area, with a shallow bullish divergence indicating a possible bounce. If that happens, EURUSD might make its way back to the top of the range near the 1.2900 major psychological level. MACD is also reflecting a potential return in buying pressure.
In addition, the SMAs are in line with the channel bottom, reinforcing the potential support. If this is broken though, it could be a sign that EURUSD is in for a downtrend and may be due to test the previous lows at the 1.2500 levels.
(
)
Going long at 1.2750 with a tight stop and a target of 1.2900 could work for a technical trade. If you’re bearish on this pair, you could wait for a downside break of 1.2700 and aim for the lows near the 1.2500 area.
By Kate Curtis from Trader’s Way
EURJPY has pulled up from its continuous dive in the past month and appears to be making a quick correction. For now, it is stalling at the 38.2% Fibonacci level, which is aligned with a former support zone and the 136.50 minor psychological resistance.
Stochastic is indicating overbought conditions, which confirms the potential return of sellers and a possible drop to the previous lows around the 134.00 area. At the same time, the 100 SMA has just crossed below the 200 SMA, reflecting a pickup in selling pressure.
MACD is moving higher though, which means that a higher correction is still possible. The 200 SMA lines up with the 138.00 handle and the 50% Fibonacci level, which might also act as resistance.
Shorting at market with a stop above the 61.8% Fib or 138.50 and aiming for new lows could work for a longer-term trade. Adjusting the stop to entry once price tests the previous lows around 134.00 could be a good way to reduce risk ahead of key events.
The event risks for this trade include the release of the German and French manufacturing and services PMIs later this week, with weak data likely to spur another round of euro selling.
By Kate Curtis from Trader’s Way
A short-term selloff might be in the cards for AUDCAD, as the pair created a double top pattern on its 1-hour time frame. Price has found resistance at the .9950 mark and is finding support at the neckline around .9850.
A break below this support zone could confirm the potential downtrend, which might last until the .9700 levels or the previous lows. Take note though that stochastic is moving out of the oversold area, reflecting a return in buying momentum, which could take price back to the recent tops.
A rally could lead to another test of the .9950 resistance and the formation of a triple top, which would still be a valid reversal pattern. Shorting at the top of the range could offer a higher return-on-risk, with a tight stop above 1.0000. On the other hand, a break below .9850 could offer the chance to short around .9800 and aim for .9700, for a smaller reward ratio.
By Kate Curtis from Trader’s Way
NZDUSD is currently testing the bottom of the ascending trend channel on its 1-hour time frame, still deciding whether to go for a bounce or a break. Stochastic is indicating oversold conditions with a bullish divergence, suggesting that a bounce might take place. MACD is also in the oversold area and hinting at a possible rally.
The moving averages aren’t offering good clues at the moment since the indicators are moving sideways. The 100 SMA is still moving above the 200 SMA, which suggests that the uptrend could stay intact.
A bounce from the current levels might take NZDUSD up to the top of the channel near the .8050 minor psychological level. A weaker rally might last just until the mid-channel area of interest at .7950.
On the other hand, a downside break of support might lead to a longer-term downtrend and perhaps a test of the previous lows near the .7700 handle. After all, the latest CPI release from New Zealand was weaker than expected at 0.3% for the third quarter versus the projected 0.5% increase.
By Kate Curtis from Trader’s Way
USDJPY is stalling at an area of interest, which lines up with the 108.00 major psychological resistance level. This also coincides with the 200 SMA and the 61.8% Fibonacci retracement on the latest swing high and low of the 4-hour chart.
Stochastic is suggesting a pickup in selling pressure, as the indicator has reached the overbought zone. MACD is suggesting that there may be a bit of buying pressure left.
A selloff could take the pair back down to its previous lows at the 105.50 minor psychological mark. The 100 SMA has just crossed below the 200 SMA, which suggests that a downtrend is in the cards.
On the other hand, an upside break past 108.00 could be a sign that more gains are in the cards, enough to take USDJPY to its previous highs at 110.00. Event risks for this trade setup include the US new home sales release and potential profit taking at the end of this trading week.
By Kate Curtis from Trader’s Way
USDCHF has been in a strong climb recently, even breaking past a key resistance area around the .9500 handle. However, the pair seems to have lost steam and may be due for a pullback to the area of interest.
Using the Fib tool on the latest price swing indicates that the 50% Fibonacci level lines up with the broken resistance near .9475 and the 200 SMA. The 100 SMA has just crossed higher, confirming that an uptrend is starting and that a bounce is likely. Stochastic is almost in the oversold area, which also indicates that buying pressure could return soon.
MACD is giving a different signal though, as the indicator is moving on middle ground and is hinting that selling pressure might still pickup. In that case, USDCHF could make a deeper pullback, possibly until the .9450 minor psychological mark. Increased selling momentum could lead to a drop back to the next support zone at the .9400 mark.
Going long at .9475 with a stop below .9400 might be enough to catch the longer-term rally, if it persists. Short-term traders going for a higher return on risk could opt for a tighter stop just below .9450 and aim for the previous highs at the .9550 minor psychological resistance.
By Kate Curtis from Trader’s Way
CADJPY has been forming an ascending trend channel on its 1-hour forex chart, as it made higher highs and higher lows. A bullish divergence can be seen, with stochastic making lower lows.
MACD is also reflecting a pickup in buying momentum, as the indicator seems to be climbing. This could lead to a CAD/JPY bounce from the current 96.00 levels back to the top of the channel at the 97.50 minor psychological resistance.
At the same time, the 100 SMA is holding as support after having crossed above the 200 SMA, indicating that the uptrend might carry on. A break below channel support, however, might lead to a test of the longer-term 200 SMA. A drop below this area could confirm that the climb is over and that more losses are in the cards.
There are no major event risks for this trade setup today, although the Japanese retail sales report showed stronger than expected results during the Asian session. This might lend support for the yen for the rest of the day, yet the difference in monetary policy biases of the Bank of Canada and Bank of Japan might keep the pair afloat.
Bear in mind that the BOC recently acknowledged the pickup in inflation in Canada while the BOJ expressed its concerns that Japan might not meet its inflation target and that more easing might be necessary.
By Kate Curtis from Trader’s Way