NZDJPY Double Bottom Breakout (Jun 09, 2017)
NZDJPY could be in for a long-term climb as it broke past the neckline of its double bottom pattern on the daily time frame. Price was unable to break below the 75.00-75.50 area in its last two attempts and has rallied past the resistance at the 79.00 handle.
This signals that the pair could be in for around 400 pips in gains, which is the same height as the chart formation. The 100 SMA is above the longer-term 200 SMA on this chart but the gap is narrowing to indicate weaker bullish momentum. Note, however, that price already broke past the 100 SMA dynamic inflection point.
Stochastic is also indicating overbought conditions so buyers might want to book profits soon. If so, another move towards the bottoms could take place or at least a quick pullback to the 79.00 mark.
Data from New Zealand has been mostly upbeat this week, particularly when it comes to commodity prices. The ANZ commodity prices index advanced by 3.2% while the GDT auction yielded a 0.6% gain in dairy prices. Quarterly manufacturing sales increased 2.8% versus the 0.3% forecast.
As for the yen, it has been giving up some ground as risk appetite is starting to return. Traders are propping US assets back up and letting go of their long yen holdings as a result. Japanâs final GDP reading was downgraded from 0.5% to 0.3% instead of being upgraded to the 0.6% forecast.
By Kate Curtis from Traderâs Way
GBPJPY Channel Support (June 12, 2017)
Guppy sold off sharply upon testing the channel resistance on its 4-hour time frame and is now hovering around support. A bearish flag pattern can be seen so a continuation of the move could lead to a break below the channel support around 139.00.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 200 SMA dynamic resistance lines up with the top of the channel, adding to its strength as a ceiling. Stochastic is heading south to show that sellers are still in control of GBPJPY price action.
Bearish pressure could stay in play for the pound now that the UK elections have resulted in a hung parliament, which is a more politically unstable position compared to a few months back. This could weaken the governmentâs negotiating stance during Brexit talks and PM May seems to be scrambling to fix the situation.
This week, there are a number of top-tier releases lined up from the UK, namely CPI, retail sales, jobs data, and the BOE decision. As for the yen, the BOJ has its policy decision scheduled on Friday so there may be volatility from that end as well.
By Kate Curtis from Traderâs Way
EURGBP Range Breakout (June 13, 2017)
EURGBP was previously trading inside a range with support around .8400 and resistance at .8800. Just recently, the pair broke past the resistance to signal that buyers are taking hold.
Price closed back below the resistance in a quick pullback at the end of the previous week but is now reestablishing the climb. However, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside.
Stochastic is also on the move down to show that sellers might regain control of price action. However it also appears to be turning higher to suggest that buyers are putting up a fight.
The UK elections resulted in a hung parliament, which means more political uncertainty as the government moves closer to the start of Brexit negotiations. Traders are now looking to the Queenâs speech next week and to upcoming top-tier UK data to see if the economy can weather this potential storm.
UK CPI is lined up first and no change in the headline reading of 2.7% is eyed. Core CPI could dip from 2.4% to 2.3%. Later in the week, UK retail sales and jobs data are due but the bigger mover might be the BOE decision.
Meanwhile, the euro has gained support on a stronger political showing in France. Macronâs government is highly expected to secure legislative majority, which could mean an easier time for them to pass reforms. German ZEW economic sentiment index is due today and a rise from 20.6 to 21.6 is eyed.
By Kate Curtis from Traderâs Way
GBPJPY Downtrend Channel (Jun 14, 2017)
GBPJPY just bounced off its channel support again and could be gearing up for a correction to the resistance at the 141.50 minor psychological mark. If this keeps gains in check, the selloff could resume back to the swing low or to the channel support at 138.00.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA is edging close to the channel resistance, adding an extra barrier in case a pop higher happens. Stochastic is still pointing up to show that buyers are in control of price action for now.
The UK just printed stronger than expected CPI, allowing traders to speculate that the BOE statement later in the week could be more hawkish. In addition, headlines are showing that the UK government may have already struck a coalition with the DUP to have a more stable front in next weekâs Brexit talks.
Meanwhile, Japanâs BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected. The FOMC statement could also influence yen price action indirectly as dollar demand is usually negatively correlated.
By Kate Curtis from Traderâs Way
EURCAD Breakdown and Correction (Jun 15, 2017)
EURCAD recently broke below a rising wedge formation visible on its 4-hour time frame, signaling that bearish pressure has returned. Price dipped to the 1.4800 area before showing signs of a pullback.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the broken wedge support around 1.5050-1.5100. This is also around the moving average dynamic inflection points.
The 100 SMA is still above the longer-term 200 SMA on this time frame but a downward crossover seems to be looming, possibly drawing more sellers to the mix. Stochastic is still indicating oversold conditions, though, so the correction could be in play for a while.
The Loonie got a strong boost earlier in the week when BOC policymaker Wilkins mentioned that they need to assess whether additional stimulus is still necessary or not. This was echoed by BOC head Poloz who said that rates are excessively low, prompting may to speculate that a hike is underway soon.
Meanwhile, the euro has been dragged lower by weaker than expected medium-tier reports from Germany. This includes WPI, final CPI, and the ZEW economic sentiment index. French final CPI and Canadian manufacturing sales are due next.
By Kate Curtis from Traderâs Way
GBPNZD Channel Resistance (Jun 16, 2017)
GBPNZD is trending lower but has just pulled up to the channel resistance around the 1.7750 minor psychological mark. If this area keeps gains in check, the pair could head back down to support at the 1.7200 handle.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 200 SMA coincides with the channel resistance as well, adding to its strength as a ceiling.
Stochastic is still moving up to indicate that there is some buying pressure left. If bulls stay in control, they could push for a break past the channel resistance and a downtrend reversal for this pair. However, the oscillator is already nearing the overbought level.
The BOE decision turned out more hawkish than expected as three policymakers voted to hike rates due to rising inflationary pressures. This was a relatively tight decision as many had been expecting the central bank to be more cautious owing to Brexit-related risks.
Prior to this, headline and core CPI came in stronger than expected while the claimant count change was also better than consensus. However, the average earnings index and retail sales both fell short, indicating that consumers are feeling the pinch from higher prices of goods.
As for the Kiwi, data has been weaker than expected, with the economy expanding by only 0.5% versus the projected 0.7% growth figure in Q1. However, inflation reports from New Zealand have also been beating expectations and traders might hold out for next weekâs RBNZ decision.
By Kate Curtis from Traderâs Way
GBPNZD Countertrend Play (Jun 19, 2017)
GBPNZD has just bounced off its descending channel resistance and is making its way towards support. If the bottom at the 1.7300 handle holds, price could make another test of resistance. Stochastic is already indicating oversold conditions, which means that sellers are tired and could let buyers take over.
However, the 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the pair could be due for a break lower. In that case, price could establish a steeper selloff.
The pound drew some support from a surprisingly hawkish BOE decision but was unable to hold on to its gains versus the Kiwi, which is also waiting on a potentially hawkish central bank decision this week. Data from the UK economy has been mixed but inflation and consumer spending data signal that policymakers might need to tighten in order to keep growth supported
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Event risks for the week include headlines pertaining to Brexit talks and the Queenâs speech. There are speculations on a âhard Brexitâ or even the possibility of a âno dealâ situation which could be bearish for the currency. On the other hand, smooth negotiations could stoke expectations that the UK can emerge with a beneficial deal that would be bullish for the pound.
By Kate Curtis from Traderâs Way
AUDNZD Ascending Channel (Jun 20, 2017)
AUDNZD has been trending higher, moving inside an ascending channel visible on its 1-hour time frame. The pair has just bounced off support and could be due for a test of resistance soon.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If bullish pressure is strong enough, a break past the resistance at 1.0600 could mark the start of a steeper climb. However, stochastic is already indicating overbought conditions and turning lower could indicate a return in selling momentum.
The main event for the Kiwi is the RBNZ decision later on this week, during which the central bank might keep rates on hold while giving some hawkish hints. However, a bit of jawboning is also expected since the currency has been outpacing most of its peers for the past few weeks.
As for the Aussie, the RBA meeting minutes are up for release. The central bank was mostly upbeat in their latest policy decision so the minutes could reinforce these views. For now, though, Moodyâs downgrade on big Australian banks due to housing conditions could limit the currencyâs gains.
By Kate Curtis from Traderâs Way
GBPUSD Make or Break (Jun 21, 2017)
Cable is sitting right on the ascending channel support visible on its daily time frame. A bounce could take it back up to the resistance at the 1.3250 minor psychological level while a break could spur a longer-term selloff.
The 100 SMA has just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In addition, the moving averages are close to the channel support at the 1.2750 minor psychological level, adding to its strength as a floor.
Stochastic is treading lower but is approaching the oversold area to indicate weakening selling pressure and a potential return in bullish momentum.
Brexit risks are currently weighing on sterling these days as the UK government could get pushed around by EU officials. Note that PM May has yet to strike a coalition with the DUP to have a stronger front. The upcoming Queenâs Speech could restore some confidence in the UK government and economy, which might be bullish for the currency.
As for the dollar, the recent slide in equities could dampen its gains once more as markets donât seem to be impressed by the Trump administrationâs push for fiscal reform. While FOMC member Dudley gave a hawkish testimony, other policymakers like Evans donât seem to be as upbeat.
By Kate Curtis from Traderâs Way
EURCAD Area of Interest (Jun 22, 2017)
EURCAD recently sold off but seems to be finding support at an area of interest visible on its daily time frame. Applying the Fib tool on the latest swing high and low also shows that the 38.2% level lines up with support at the 1.4800 mark.
The 100 SMA crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is also turning up to indicate a return in bullish momentum, which might be strong enough to take the pair up to the swing high at 1.5300.
Crude oil prices have been on a decline lately and this seems to be taking its toll on the positively-correlated Canadian dollar, which has previously drawn support from hawkish BOC hints. US crude oil stockpiles posted a larger than expected draw of 2.5 million barrels but traders seemed more focused on rising output from Libya.
As for the euro, improved sentiment in the European region seems to be shoring up the shared currency for now. There were no major reports out of the euro zone and only the ECB Bulletin is lined up next. In Canada, the retail sales and CPI reports are lined up for Thursday and Friday, respectively.
By Kate Curtis from Traderâs Way
EURJPY Descending Channel (Jun 23, 2017)
EURJPY is trending lower on its 4-hour time frame and is currently testing the resistance of its falling channel. If the 124.00 handle holds as resistance, the pair could slide back to support at the 122.00 handle.
The 100 SMA is below the longer-term 200 SMA on the 4-hour chart so the path of least resistance is to the downside. In addition, these moving averages line up with the channel resistance, adding to its strength as a ceiling.
Stochastic is still on the move up, though, so there may be some buying pressure left. In that case, a break past the resistance could lead to a reversal from the ongoing selloff.
There have been no major reports out of the euro zone so far this week as traders are keeping close tabs on Brexit negotiations instead. Looking ahead, the PMI reports from the manufacturing and services sectors of Germany and France are lined up.
Analysts are expecting small dips in activity, which could push the shared currency lower against the safe-haven yen. Japan has its flash manufacturing PMI up for release and a climb from 53.1 to 53.4 is expected.
By Kate Curtis from Traderâs Way
USDCHF Long-Term Range (Jun 26, 2017)
USDCHF has sold off recently but it could find strong support at a long-term range bottom around the .9500-.9550 levels. A bounce off this area could lead to a move back to the resistance at 1.0400 or at least until the mid-channel area of interest at .9900.
The 100 SMA is below the longer-term 200 SMA on the daily chart so the path of least resistance is to the downside. In that case, a break of support could be possible, sending the pair on a longer-term drop. Stochastic is also pointing down to show that sellers are in control of price action.
Economic data from the US turned out weaker than expected at the start of the week as headline and core durable goods orders both missed expectations. The former showed a 1.1% drop versus the projected 0.5% dip while the latter indicated a meager 0.1% uptick versus the projected 0.4% gain. Fed Chairperson Yellenâs testimony is lined up next.
There have been no major reports out of Switzerland yet and none are due today. This signals that market sentiment and profit-taking could drive price action for the franc. The next major report is the UBS consumption indicator and it might show an improvement from the earlier 1.48 reading.
By Kate Curtis from Traderâs Way
AUDJPY Double Bottom Breakout (Jun 27, 2017)
AUDJPY recently formed a double bottom pattern on its daily time frame to signal that a reversal from the selloff is underway. Price just broke past the neckline around the 84.50 minor psychological level to confirm that bulls are charging.
The chart pattern is approximately 300 pips tall so the resulting rally could be of the same size. However, stochastic is turning down from the overbought region to indicate a pickup in selling pressure. Also, the gap between the moving averages is narrowing to signal that sellers could regain the upper hand.
There are no major reports lined up from the Australian economy today so any big moves could be spurred by changes in market sentiment and commodity prices. In particular, a surge in iron ore prices could prove bullish for the Australian currency.
Meanwhile, there are no major reports due from Japan as well so yen price action could hinge on US bond yields and risk sentiment. Keep in mind that itâs almost the end of the month and quarter so there could be a lot of profit-taking happening towards the end of the week.
By Kate Curtis from Traderâs Way
EURNZD Area of Interest (Jun 28, 2017)
EURNZD appears to be pulling up from its dive with the recent strong bounce, but this might represent a mere correction from the long-term slide. Applying the Fib tool on the latest swing high and low shows potential pullback areas.
In particular, the 50% retracement level could hold as resistance as this lines up with a former support zone. It also coincides with the 200 SMA dynamic inflection point. The 100 SMA is safely below the longer-term 200 SMA so the path of least resistance could be to the downside.
Stochastic is on its way up to suggest that buyers could be in control of price action for now. However, the oscillator is already dipping into the overbought zone to hint at rally exhaustion soon. If sellers take over, a drop back to the swing low could take place.
Earlier in the day, ECB Governor Draghi dropped hawkish hints in saying that the central bank might withdraw stimulus soon. This led to fresh speculations of tapering bond purchases, which could shore up the value of the shared currency.
Meanwhile, CFTC Commitments of Traders reports are hinting at extreme positioning for the Kiwi, which basically means that it could be hitting a top. In that case, profit-taking could weigh heavily on the currency at the end of the month and quarter.
By Kate Curtis from Traderâs Way
EURGBP Short-Term Channel (Jun 29, 2017)
EURGBP continues to trend higher after breaking past a major range resistance visible on its longer-term charts. On the 1-hour time frame, it can be seen that the pair is moving inside an ascending channel formation and is testing support.
The 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. In other words, support at .8800 is more likely to hold than to break, sending price back up to the .8900 area. Stochastic is also pulling up from the oversold area to signal a return in bullish pressure.
Earlier in the week, ECB head Draghi hinted that they could withdraw stimulus soon, sending the euro on a strong rally. However, these gains were quickly erased when policymakers signaled that the Governorâs remarks may have been misinterpreted.
As for the pound, BOE head Carneyâs remarks also sounded more upbeat than usual as he mentioned that a global boom would make a rate hike necessary. The vote on the Queenâs Speech could likely drive pound price action from here but this relatively hawkish statement could keep the currency afloat.
By Kate Curtis from Traderâs Way
GBPUSD Countertrend Play (Jun 30, 2017)
The ascending channel on Cableâs daily time frame is still intact and price is heading towards the resistance around 1.3400. A countertrend opportunity could arise if reversal candlesticks form around this area. In that case, a move back to support at the 1.2900 area could take place.
The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the moving averages are close to the channel support, adding to its strength as a floor. Stochastic is heading up to indicate the presence of buying pressure.
Hawkish remarks from a few BOE officials have shored up the pound in the past few days, along with the lack of negative Brexit updates. Even Governor Carney acknowledged that removal of stimulus could be necessary if inflationary pressures continue to dampen consumer spending.
As for the dollar, weaker expectations that the Trump administration could follow through on its reform agenda has weighed on the currency. The next rate hike isnât due until the fourth quarter of the year so some dollar weakness could be in the cards in the next few months.
Of course Brexit risks remain and thereâs always a good chance that tensions during talks could dampen demand for the UK currency. Low liquidity during the summer months could make this pair more sensitive to headlines.
By Kate Curtis from Traderâs Way
USDJPY Double Bottom (July 03, 2017)
USDJPY looks ready for more gains as the pair has formed a double bottom on its daily time frame. Price failed in its last two attempts to break past the 108.00 support zone and is on its way to test the neckline at 114.00-114.50. A break past this resistance could send the pair up by around 600 pips or the same height as the chart formation.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, but the gap is narrowing to signal that a new crossover could take place. If this materializes, price could still gain bearish momentum and test support again. Also, stochastic is indicating overbought conditions and might be ready to head back down, reflecting a return in selling pressure.
Earlier today, economic data from Japan came in mixed, following last Fridayâs set of weaker than expected inflation readings. This underscores the BOJâs stance of keeping monetary stimulus in place for the time being, unlike most major central banks which seem to have shifted to a less dovish bias lately.
Meanwhile, medium-tier data from the US turned out mostly stronger than expected last week, but the real test of dollar strength could come on Fridayâs NFP release. Another downbeat jobs figure could undermine the Fedâs rate hike timeline but an upbeat result could reinforce rate hike expectations for September.
By Kate Curtis from Traderâs Way
EURUSD Retracement Setup (July 04, 2017)
EURUSD recently surged past the resistance at the 1.1250-1.1300 psychological levels then climbed close to the 1.1450 minor psychological resistance. Price retreated from here, indicating that a correction from the rally is happening.
Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% retracement level coincides with the broken resistance, which might now hold as support. The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside while the 200 SMA lines up with the 50% Fib, which might also keep losses in check.
Stochastic has pulled up from the oversold area to indicate a return in buying pressure. This could reflect a shallow correction opportunity so the 23.6% Fib might already be enough to hold as support and push the pair up to the swing high and beyond.
Euro zone data turned out mixed on Monday as some final manufacturing PMI readings from its top economies fell short of expectations. Meanwhile, the US printed an impressive ISM manufacturing PMI reading which reflected stronger hiring for the month, hinting that the NFP release might beat estimates as well.
Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness. US banks are closed for the Fourth of July holiday.
By Kate Curtis from Traderâs Way
USDJPY Short-Term Uptrend (July 05, 2017)
USDJPY has been trending higher recently, moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and could be due for a test of support near the 112.50 minor psychological level from here.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. The 100 SMA is also close to the bottom of the channel, adding to its strength as a floor. Stochastic is heading down to signal that sellers may be in control but the oscillator is nearing oversold levels.
US banks have been closed for the Fourth of July holiday so liquidity has been lower than usual. Tankan data from Japan has shown some improvements but it looks like the Asian currency is reeling from the recent North Korean nuclear missile test launch.
Looking ahead, US factory orders data is up for release today and analysts are expecting to see a 0.4% drop. The FOMC minutes are also due and this should provide more clues on when the Fed might hike rates or start unwinding its balance sheet.
Only the average cash earnings and leading indicators data are due from Japan for the rest of the week, but the yen could be more sensitive to risk flows and global bond prices. With that, the US NFP report could also prove to be a big catalyst before the week comes to a close.
By Kate Curtis from Traderâs Way
AUDUSD Channel Pullback (July 06, 2017)
AUDUSD is trending higher on its short-term time frames, moving inside an ascending channel on its 1-hour chart. Price is currently testing support and might be due for a bounce back to resistance at the .7750 to .7800 levels. Stochastic is indicating oversold conditions and is pulling up to signal a return in bullish momentum.
Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the channel support at the .7600 major psychological level and an area of interest. The 100 SMA also coincides with this level and is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.
The RBA was less hawkish than expected in their monetary policy statement this week, barely highlighting the improvements in the economy and emphasizing that there are still a few roadblocks in place. Meanwhile, the FOMC minutes revealed that policymakers are still divided on their tightening and unwinding time line.
Australia is set to print its trade balance next and a larger surplus of 1.00 billion AUD from the earlier 0.56 billion AUD figure is expected. A stronger than expected result could spur a rally for the Aussie, especially since China has printed mostly stronger PMI readings lately to signal a recovery in demand.
The US NFP release on Friday could also be an event risk for this pair as traders are hoping to see an upside surprise. PMI readings and other leading indicators are hinting at strong employment prospects, which might be enough to shore up rate hike expectations for September or December.
By Kate Curtis from Traderâs Way
