The downtrend on EURJPY seems to be over, as price formed a double bottom pattern on its 1-hour time frame and broke past the neckline resistance around 137.00. The pair is climbing past the 138.00 handle and may have a couple hundred more pips to go.
As you can see, the chart pattern spans from the 134.00 area to 137.00, which suggests that the potential uptrend might last by as much as 300 pips. Stochastic is already in the overbought area though, which means that buying pressure is fading. At the same time, price is stalling around the 200 SMA resistance.
MACD is indicating that a bit of buying momentum is still present and that a few more gains might be possible. However, a selloff could take price back to the neckline, which is close to the 100 SMA support area. Bear in mind though that the short-term SMA is moving below the long-term SMA, which indicates a downtrend.
There are no major event risks for this trade today, as there are no reports lined up from the euro zone and Japan. Risk sentiment might be crucial in determining whether the uptrend could carry on or not, particularly with the FOMC statement coming up.
By Kate Curtis from Trader’s Way
CADJPY is in a rising channel on its 1-hour time frame but is already nearing the top of the range. Resistance at the 97.50-98.00 area might hold and push the pair back to the bottom of the channel.
Stochastic is already in the oversold area, which means that buying pressure is about to wane soon. If this happens, reversal candlesticks might form at the channel resistance, which would be interpreted as a sign that the recent climb is over.
Shorting at 98.00 with a stop at 98.50 and a target at the channel support around 96.50 could yield a good reward-to-risk for a short-term countertrend play. If you’re bullish on this pair, you might be better off waiting for a test of channel support and a potential bounce back up to the top of the channel.
There are no major event risks for this setup since there are no economic reports due from Japan or Canada. Risk sentiment might drive price action for the time being, with the latest FOMC statement giving an upbeat assessment and helping support risk appetite.
By Kate Curtis from Trader’s Way
GBPUSD has been moving sideways for most of the month and has recently found support at the bottom of the range once more. Price bounced off the 1.5950 minor psychological support level and may be headed for the top of the range.
The resistance is located around the 1.6125-1.6150 levels, as the pair has been forming lower highs recently. Stochastic is still moving towards the oversold zone and reflecting selling momentum, which suggests that another test of support is possible before the pair heads any higher.
MACD is also suggesting a potential return in buying momentum as the indicator is starting to climb already. There are no event risks due from the UK while the US economy has a few medium-tier reports on tap that might trigger movement for the GBPUSD pair.
US personal spending and income, core PCE price index, and Chicago PMI are due today. Recall that the FOMC turned hawkish in their latest policy statement and strong data might add support to this bias, which might be positive for the dollar. In that case, a downside break from support and a longer-term selloff is also possible.
By Kate Curtis from Trader’s Way
EURUSD seems to be gearing up to make new lows, as price is testing the previous ones near the 1.2500 major psychological level. A break below this area could signify that further losses are in the cards for the pair and that selling pressure has strengthened.
Stochastic and MACD are already reflecting oversold conditions though, which suggests that sellers are feeling exhausted and that a bounce might be due. In that case, price could retreat until the SMAs around the 1.2700 mark or until the nearby area of interest at 1.2600 before resuming the drop.
A rally past 1.2700, however, might indicate that buying pressure is returning and that a reversal might be in the cards. If this line in the sand holds as resistance, euro bears might join the downtrend at better prices and eventually push price below 1.2500 onto new lows around the 1.2300-1.2400 major psychological levels.
Major event risks for this trade include the ECB interest rate decision on Thursday and the US non-farm payrolls release on Friday. Dovish remarks from the ECB could be the catalyst for a strong downside break, along with strong US jobs data.
By Kate Curtis from Trader’s Way
NZDUSD could be in for a correction after breaking below the support zone at the .7800 major psychological level. The pair has dipped to the .7700 area and has shown signs of retracing.
The Fibonacci retracement tool indicates that the 38.2% level lines up with the area of interest at .7800, which could hold as resistance for now. Stochastic is moving up, which means that price could head back to the .7800 area for now.
At the same time, the 100 SMA and 200 SMA are around the 50% Fib, which might also hold as resistance. MACD is moving up, reflecting how buyers are in control of price action for now. Once sellers jump back in, price could head back to its previous lows at .7700 or perhaps make new ones.
Event risks for this trade setup include the dairy auction in New Zealand and the release of the quarterly jobs report on Wednesday and Thursday respectively. Strong figures could pave the way for a sharper correction, possibly until the 61.8% Fib level.
Shorting at .7800 with a stop at .7900 and a target of .7700 could yield a 1:1 return on risk. The US non-farm payrolls report is due on Friday and this might lead to another dollar if the actual data comes in strong.
By Kate Curtis from Trader’s Way
USDCHF has broken above the resistance at the .9550 minor psychological level and looks prime for a pullback to the Fibonacci levels marked on the 1-hour time frame. The pair appears to be finding support at the 38.2% level, although stochastic hasn’t moved up from the oversold area yet.
This suggests that a deeper retracement to the 50% Fib might be in order, as this lines up with the 200 SMA. It also coincides with the broken resistance area and might act as support. MACD is also starting to turn higher, indicating a potential pickup in buying momentum.
A bounce could take the pair up to the previous highs near the .9700 major psychological mark and possibly on to new ones. On the other hand, a break below the 200 SMA and 61.8% Fib might be a sign that a downtrend is in order and that a test of the previous lows around .9400 is possible.
By Kate Curtis from Trader’s Way
GBPUSD has recently broken below a significant support level, a sign that further losses could be in the cards. After dipping close to the 1.5850 minor psychological support, price has pulled up for a retest of the area of interest.
The broken support zone lines up with the 38.2% Fibonacci retracement level and the 100 simple moving average. Stochastic is already in the overbought area and is starting to move lower, indicating that pound bears are taking control of price action. In this case, price could head back to the recent lows or perhaps create new ones.
MACD is moving higher though, suggesting that a higher pullback is still possible. Price could still retreat to the 50% and 61.8% Fibonacci retracement levels, which are near the 200 SMA. For now, the path of least resistance is to the downside, as the short-term SMA is moving below the long-term SMA.
An upside break from 1.6050 or the 61.8% Fib might indicate that the break was a fakeout and that GBPUSD could resume its climb back to the 1.6200 major psychological mark. Bear in mind though that services PMI came in weaker than expected for the UK yesterday, which is currently weighing the pound down.
Event risks for this trade today include the BOE interest rate statement, although no actual changes are expected.
By Kate Curtis from Trader’s Way
GBPAUD recently made a strong upside break past resistance at the 1.8400 major psychological level and may be due for a retracement. The Fib levels based on the latest swing low and high on the 1-hour chart show that the 50%-38.2% area lines up with the 1.8350-1.8400 potential support zone.
A bounce from this region could lead to a rally back to the pair’s previous highs near the 1.8700 major psychological mark while a selloff could still find a floor at the 61.8% Fib or 1.8300 handle. However, a break below the Fib levels would indicate that a longer-term selloff is taking place.
Strong buying momentum might lead to a break past the previous highs and the creation of new ones, possibly until the 1.8900 mark. There are no major event catalysts left for a strong move until the end of the week though.
Fundamental factors suggest that the bias is a sideways move for the time being, as both BOE and RBA gave off dovish biases in their recent rate statements.
By Kate Curtis from Trader’s Way
GBPUSD has been steadily moving lower, as a descending trend line can be drawn to connect the recent highs of price action. At the same time, stochastic is indicating overbought conditions, suggesting that sellers could take control of price action after the pullback is completed.
The pair could find resistance around the 1.5900 major psychological level, which lines up with the trend line and the 100 simple moving average. Take note that the 100 SMA is moving below the 200 SMA, confirming that the downtrend is intact.
MACD is still heading higher though, which means that there may be a bit of buying momentum left before the selloff resumes. Stops could be placed past the 200 SMA, which might serve as the line in the sand for any corrections. An upside break past that area could be the start of a reversal.
There are no event risks for this setup today, although traders might be pricing in expectations for top-tier releases later on this week. Risk appetite seems weak with geopolitical tensions flaring once more, putting the odds in favor of another leg lower.
By Kate Curtis from Trader’s Way
AUDUSD has recently broken below the .8700 major psychological support zone and dipped to the .8550 area before making a pullback. This correction might last until the broken support area and the Fibonacci retracement levels on the 4-hour time frame.
The 38.2% level seems to be holding for now, as it lines up with the .8700 broken support. However, a higher pullback could still take place and lead to a test of the simple moving averages, as the 100 and 200 SMA line up with the 61.8% Fib. Stochastic is pointing down, reflecting a pickup in selling momentum.
On the other hand, MACD is still moving up, which indicates that there is room for a larger correction. The .8700-.8750 psychological levels might hold as resistance if the downtrend remains intact but a break past these resistance levels could show that a reversal is starting.
There are no event risks for this setup as US banks are on holiday today. Earlier today, Australia reported a decline in its NAB business confidence report, as the reading slipped from 5 to 4.
By Kate Curtis from Trader’s Way
After breaking below support at the .8700 major psychological level and dipping to the .8550 mark, AUDUSD has pulled up to the area of interest and may be due to resume its drop soon.
The 38.2% Fibonacci retracement level lines up with the broken support and may hold as resistance. Stochastic is almost in the overbought area already, although there may be a bit of buying pressure left until the oscillator starts crossing down from the region. With that, a higher correction to the next Fib levels, which are below the .8800 major psychological mark could still be possible.
If the selloff resumes, AUDUSD could make its way back down to the previous lows near .8550 or perhaps create new ones. There are no major event risks for this trade for the rest of the day, as Australia already released its wage price growth report which came in line with expectations. There are no top-tier releases lined up from the US today, as risk sentiment might also be a key driver of price action.
By Kate Curtis from Trader’s Way
USDJPY has been moving in a strong uptrend, with a short-term rising channel forming on its 1-hour time frame. Price just came off a test of resistance and may be due to head lower in a bit, offering a better entry area for buyers looking to jump in a long trade.
Stochastic is moving towards the overbought area though, which means that buying pressure might still be enough to push for another test of channel resistance. MACD is on middle ground, barely offering any clear clues at the moment.
A selloff could lead to a test of the bottom of the channel near the 115.00 major psychological level and the 100 SMA. The short-term SMA is still moving above the longer-term 200 SMA anyway, confirming that the uptrend could stay intact. A bounce off 115.00 could lead to another test of the previous highs at 116.00 or higher.
Japanese data came in mixed earlier today, with a stronger than expected core machinery orders report and a weaker than expected PPI. As for the US, initial jobless claims are up for release, with stronger than expected data likely to boost the dollar once more.
By Kate Curtis from Trader’s Way
EURUSD has been moving inside a symmetrical triangle pattern since the start of the month, creating higher lows and lower highs. The pair just came off a test of triangle resistance and may be due south, possibly until the triangle support or lower.
Stochastic confirms the potential selloff, as the oscillator is making its way down to the oversold level. MACD is on middle ground but may also be starting head lower and reflect a pickup in bearish momentum.
However, the SMAs look ready to make a crossover, with the 100 simple moving average moving closer to the 200 SMA. This could be a sign that the pair is ready to head back up, possibly creating a break from the top of the triangle.
A breakout in either direction could last by as much as 200 pips, which is the same height as the chart pattern. Going long above 1.2500 and aiming for 1.2700 with a 100-pip stop could yield a 2:1 return on risk while shorting below 1.2400 with a 100-pip stop and a target of 1.2200 could also have the same reward ratio.
The path of least resistance, in terms of fundamental biases, is to the downside. After all, the ECB just eased monetary policy while the Fed is moving towards hiking interest rates sometime next year. Risk sentiment also favors the safe-haven dollar for now, as geopolitical tension is bringing uncertainty back to the table.
Event risks for this EURUSD trade today include the release of GDP readings from the top euro zone economies, namely France and Germany. Weak figures could confirm the chance of a euro zone recession, which could drive EURUSD much lower. In the US, retail sales and consumer sentiment data are due.
By Kate Curtis from Trader’s Way
GBPUSD looks prime for a pullback as price found support around the 1.5600 major psychological level. The pair appears to be retreating to the descending trend line visible on its 4-hour forex chart.
Stochastic has already reached the overbought area, indicating that the correction is almost over. The oscillator has yet to move lower before confirming that selling pressure is building up and that bears are ready to push GBPUSD back down.
The 100 SMA lines up with the descending trend line resistance around the 1.5800 major psychological level. The 200 SMA is slightly above the trend line and may be a good area to place a stop. MACD is still climbing though, indicating that there’s enough bullish momentum to trigger a test of the trend line.
If 1.5800 holds as resistance, GBPUSD might make its move back to the previous lows or probably create new ones. There are no major event risks for this setup today, as the U.K. has no top-tier releases lined up while the US only has the industrial production and capacity utilization reports due.
By Kate Curtis from Trader’s Way
EURGBP has been falling for the past few months but a reversal pattern has just formed on its daily chart. This indicates that an uptrend may start as soon as price breaks past the .8000-.8050 resistance levels.
If the .8000 mark holds as resistance though, price could make another bottom around the .7800 handle. Stochastic is already in the overbought area anyway, indicating that buying pressure is weakening.
On the other hand, a push past the .8050 area could mean as much as 250 pips in gains for EURGBP as the chart pattern is roughly of the same height. Further gains could take it to the next resistance zone at .8350.
Recall that the BOE just dumped its bias to tighten early next year, citing weak inflationary pressures and a potential drag from the euro zone. Meanwhile, data from the euro zone hasn’t been so bad recently, as the region was able to escape an economic contraction so far.
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Event risks for this trade today include the release of UK CPI data, which might add support to the central bank’s dovish bias. German and euro zone ZEW economic sentiment figures are also due today and might add to volatility.
By Kate Curtis from Trader’s Way
AUDUSD has recently been on a short-term climb, but it looks like the rally could be reversed now that a head and shoulders pattern formed on its 1-hour forex time frame. Price is a few pips away from testing the neckline below the .8700 handle and may be due for a breakdown soon.
If that happens, the pair could fall by as much as 100 pips, which is the same height as the chart pattern. This could take AUDUSD to the next support zone around the .8550-.8600 levels. Stochastic is heading lower, reflecting a pickup in selling pressure.
MACD, on the other hand, is on middle ground and barely offering any clear clues. For now, the 100 SMA is moving above the 200 SMA, indicating that there’s a chance that the uptrend could carry on.
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Event risks for this trade include the release of the FOMC minutes later on, which might confirm whether or not the Fed is on track to tighten sometime next year. Hawkish remarks could reaffirm dollar strength against the “historically high” Australian dollar.
By Kate Curtis from Trader’s Way
EURUSD is moving inside a rising channel on its 1-hour forex chart, with price just finding resistance at the top of the range. Stochastic is moving lower, indicating that sellers are in control of price action for now. MACD is also heading down, which confirms the bearish momentum.
With that, EURUSD could make its way back to the bottom of the channel, which lines up with the 1.2450-1.2500 area and the simple moving averages. The 100 SMA just crossed above the longer-term 200 SMA, indicating that an uptrend is starting.
Another bounce off channel support or the SMAs could lead to a test of channel resistance around the 1.2600-1.2625 levels. Strong buying pressure might even lead to an upside break of resistance.
Event risks for this trade include the release of PMI readings from France and Germany, which could set the tone for euro movement for the rest of the week. Strong figures could lead to more gains for the shared currency, as these might convince traders that the region could avoid recession.
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In the US, CPI figures are due and these could indicate whether or not the Fed has to be worried about price pressures. Strong data could remind traders that the US central bank is on track to tighten policy next year and possibly renew dollar demand.
By Kate Curtis from Trader’s Way
USDJPY has been on a steady climb but it appears to be retreating from its latest rally. Price peaked close to the 119.00 handle then showed signs of retracement to the 116.50-117.00 levels.
The Fibonacci tool on the latest swing high and low shows that the 61.8% level lines up with the rising trend line on the 1-hour time frame. This is also close to the 200 simple moving average, which could hold as a dynamic support zone.
Stochastic is still pointing down, which means that there’s enough selling momentum for a deeper retracement. However, the 50% Fib might also hold as support since it lines up with the 100 SMA, also a dynamic inflection point that has held so far.
There are no major reports out of Japan and the US today, which might mean that the trend could carry on. Profit-taking could take place before the trading week comes to a close though before the overall trend resumes next week.
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Bear in mind that the Japanese economy slumped in recession and the BOJ committed to their easing plan while the US saw improved data and the Fed is on track to tighten next year. With that, the path of least resistance is to the upside, as traders predict that the pair might reach 120.00 before the end of this year.
By Kate Curtis from Trader’s Way
A short-term rally might take place for AUDUSD, as the pair formed a double bottom pattern on its 4-hour time frame. Price is still a few pips away from the neckline around the .8800 major psychological level but stochastic is indicating that there may be enough buying pressure left for a breakout.
MACD is also moving higher, indicating that bulls are in control of price action for now. An upside break from the neckline could yield as much as 250 pips in gains, which is the same height as the chart pattern. However, if the .8800 mark holds as resistance, the pair could move back to the bottom around .8550.
Take note that price is also finding resistance around the simple moving averages, as the 100 SMA is still moving below the 200 SMA. This suggests that the downtrend could still carry on and even push AUDUSD to new lows.
The recent rate cut by the PBoC has been received positively by the Australian dollar, as this could mean renewed demand for commodity exports and better global growth prospects. There are no event risks for this forex setup today, although risk sentiment might be a key driver of price action.
By Kate Curtis from Trader’s Way
USDCHF has been moving sideways recently, creating a range between support at the .9575 area and resistance at .9725. The simple moving averages are criss-crossing, confirming the range-bound market behavior.
Price just came off a test of resistance and may be headed for the bottom for now. However, stochastic is indicating oversold conditions already, which means that buyers could jump back in and push for another test of .9725.
A continued drop could lead to a test of support once more or possibly the mid-range area of interest at the .9650 minor psychological level. MACD is heading down, indicating that there’s a bit of selling pressure left.
Event risks for this USDCHF setup today include the release of US CB consumer confidence data, which might show an improvement from 94.5 to 95.9. There are no major reports lined up from Switzerland today, leaving risk sentiment as a main driver of price action.
By Kate Curtis from Trader’s Way