Daily Technical Analysis by Kate Curtis from Trader's Way

RBNZ Governor Graeme Wheeler also adopted forward guidance in his latest rate decision in saying that the central bank is looking to increase interest rates by next year. According to him, the recovery in the housing sector and the rise in commodity prices could lift inflationary pressures and require a rate hike.

NZD/USD is currently trading at the top of its recent range around the .8100 major psychological level. Sustained buying momentum could eventually trigger a sharp breakout throughout the rest of the trading sessions, pushing NZD/USD to new highs.

The size of the recent range is around 350 pips so the upside break might be of the same size. Setting a 100-pip stop and going long at market would yield a good reward-to-risk ratio.

By Kate Curtis from Trader’s Way

NZD/USD has been trending higher on its 1-hour time frame, thanks to rate hike speculations confirmed by the recent RBNZ meeting. The pair is currently stalling close to the .8100 handle, which might be a good entry point for a long trade if the retail sales report comes in weak.

With two months’ worth of weak jobs data, consumer spending could slow down in the U.S. and fall short of expectations. If that happens, the Fed Septaper might not push through and trigger a sharp dollar selloff. NZD/USD might bounce to new highs if that happens.

On the other hand, a strong US retail sales release would confirm the Septaper for next week and provide support for the US dollar. NZD/USD could break below the .8100 mark and possibly go as low as .8000.

With that, a straddle play might be a good option for this pair if it continues to consolidate prior to the US retail sales release.

By Kate Curtis from Trader’s Way

USD/JPY is currently treading above the 98.80 area, which is right in line with a former resistance turned support zone. Stochastic is moving up from the oversold region, suggesting a potential bounce.

Take note that Japanese traders are on holiday today, which opens the possibility for higher volatility for yen pairs. Traders are awaiting news on the Fed’s Septaper for the FOMC statement on Wednesday this week so the dollar could be extra sensitive to US data.

US Empire State manufacturing index and industrial production are due today. Weaker than expected data could worsen the dollar’s ongoing selloff while strong figures could keep USD/JPY above the support zone.

By Kate Curtis from Trader’s Way

GBP/USD is still on its current uptrend, based on the rising channel on the pair’s 1-hour time frame. The pair just came off a dip and bounced from the 1.5600 area to the 1.5900 mark last week and appears ready to make another test of support.

The pair is edging lower ahead of the UK CPI release today, as traders expect a dip from 2.8% to 2.7%. However, a higher than expected reading might put pound bulls back into action, as it would prompt some policymakers to call for an earlier end to easing.

A buy order at the 1.5850 minor psychological support at the bottom of the channel could be a good entry level. A stop below the 1.5800 mark should be enough to weather volatility for today’s releases while a target at 1.6000 would yield a 2:1 reward to risk ratio.

By Kate Curtis from Trader’s Way

NZD/USD has been on a very strong uptrend since the start of the month, as the RBNZ’s hawkish remarks and risk appetite have been spporting the pair.

The pair looks ready to make another test of the trend line around the .8200 major psychological support level but stochastic is still pointing down, suggesting a stronger move lower.

Take note that the FOMC statement is scheduled for today and that this could cause a lot of volatility for dollar pairs. A taper decision might trigger a downside break of this trend line and signal the start of a downtrend.

Kiwi bulls could enter at a bounce at .8200 with a tight stop and a possible stop-and-reverse setup if the trend line breaks in the US session.

By Kate Curtis from Trader’s Way

GBP/USD staged a strong rally yesterday, thanks to the upbeat BOE minutes and the Fed’s decision against tapering. This was enough to push GBP/USD past the upward channels on the 1-hour and 4-hour time frames.

Right now, a bullish pennant consolidation pattern is forming. Although the path of least resistance is to the upside, there’s still a couple of event risks for the UK today.

The UK will release its retail sales and CBI industrial orders expectations. A small rebound is expected but we might be in for strong figures, given how the UK economy has been performing recently.

A long order above the 1.6150 area is a good level to enter and a tight stop below the pennant would yield a good reward-to-risk if you’re aiming for the 1.6300 resistance.

By Kate Curtis fromTrader’s Way

USD/CHF is in a solid downtrend these days, as a falling trend line can be formed when connecting the highs of the price. The pair has broken below several key support levels but might be in for a pullback today.

There are no reports due from Switzerland, as the positive sentiment from the recent SNB statement is expected to keep the franc supported. As for the US, there are a few medium-tier reports due today but might not be enough to save the Greenback from the ongoing selloff.

On the 1-hour time frame, the pair is consolidating around the .9100 major psychological level. A pullback to the trend line could reach until the .9200 handle, which is a former support area on a longer-term time frame and could act as resistance now.

Stochastic is already in the overbought region, although it could still edge higher. A short at .9200 with a stop of 50 pips and a target at .9100 would be a 2:1 trade.

By Kate Curtis from Trader’s Way

AUD/USD seems to be having trouble sustaining its rallies, as a major correction might take place instead. The pair found resistance at .9500 and may pull back to an area of interest before resuming its rally.

The .9200 major psychological support is right around the 50% Fibonacci retracement level while the 38.2% level lines up with the .9300 mark. These areas could act as support if the pair does make a huge correction.

Going long at .9300 with a stop below .9200 and a target at .9500 or higher makes for a good reward-to-risk on a swing trade. Stochastic is moving down, suggesting that Aussie bulls are taking a breather for now.

By Kate Curtis from Trader’s Way

USD/CHF has been trending lower in the past few days but it seems to be having difficulty sustaining its decline past the .9100 major psychological support level. With that, a pullback might be in the works, possibly until the falling trend line on the 1-hour time frame.

The 61.8% Fibonacci level lines up with the .9200 major psychological level, which has acted as support in the past. However, the 38.2% level lines up better with the falling trend line and might also act as resistance.

Stochastic is already in the overbought region, suggesting that the selloff could resume anytime soon. Switzerland is set to print its UBS consumption indicator today and an improvement for the month of August could allow USD/CHF to decline again.

By Kate Curtis from Trader’s Way

NZD/USD has retreated from its recent rallies, as bulls are unable to take the pair significantly past the .8400 major psychological resistance.

Since then, the pair has sold off to the .8250 minor support but could be in for more losses, as it approaches the Fibonacci retracement levels. The .8100 area, which is in line with the 50% Fib, could act as strong support since it is in line with a broken resistance level.

Stochastic is already in the oversold region with a slight bullish divergence, signaling that the selloff could reverse soon. Going long at .8100 with a 100-pip stop and a target of .8400 would be a 3:1 trade.

By Kate Curtis from Trader’s Way

USD/JPY has been climbing slowly inside a rising channel on its 4-hour time frame, and is currently testing the bottom. In addition, price has formed a bullish divergence with higher lows while stochastic made lower lows, suggesting a continuation of the climb.

Stochastic is already moving up but hasn’t reached the overbought zone, which means that dollar bulls still have enough energy to push the pair up, at least until the middle of the channel around 100.00.

A buy order at the top of the recent consolidation and a stop below the channel could offer a good reward-to-risk ratio. Aiming for the middle of the channel is a reasonable target for an end-of-the-week trade, as the rally could gain traction towards the U.S. session. A longer-term trader could aim for the top of the channel or the previous highs around 101.50.

By Kate Curtis from Trader’s Way

USD/CHF just broke below the key .9100 handle on Friday’s dollar weakness, but the pair might be due for a quick pullback before heading any lower.

The 1-hour chart shows that the former support at .9100 lines up with the 61.8% Fibonacci retracement level, which makes it a good area of resistance. Stochastic is in the middle, suggesting that dollar bulls have enough energy to push for a retest of .9100.

There are no major reports from Switzerland and the US so ongoing trends might continue. Take note that the US debt ceiling deadline is approaching and a potential government shutdown could weigh on the dollar.

Shorting at .9100 with a 50-pip stop and a target of .9000 would be a 2:1 trade.

By Kate Curtis from Trader’s Way

USD/JPY has been trading inside a rising channel for quite some time but the range broke earlier this week. This suggests that a downtrend might be in the works, possibly after a quick retest of the broken support.

On the 4-hour time frame, stochastic is still climbing, which suggests that dollar bulls or yen bears are still in control for now. The broken channel bottom is around the 99.00 major psychological level, which could act as resistance from now on.

Bear in mind that the U.S. economy is currently facing a potential government shutdown, as lawmakers are unable to reach a deal on their debt ceiling plan. Further conflict could weigh on the dollar, as a government shutdown has negative effects on growth and overall economic performance.

By Kate Curtis from Trader’s Way

GBP/USD was rejected at the 1.6250 minor psychological resistance yesterday, as pound bulls need to gather more energy before pushing this pair higher.

The pair could retrace to the 50% Fibonacci retracement level on the 1-hour time frame, as it is in line with the previous resistance at the 1.6150 minor psychological level. Stochastic is already in the oversold region, although it has yet to cross upwards, which suggests that the pair could still dip a little lower.

UK manufacturing PMI came in weaker than expected yesterday, adding to selling pressure on the pair, but the ongoing US government shutdown is expected to be dollar negative in the near term.

A long order at 1.6150 with a stop below 1.6100 and a target of 1.6250 would yield a good reward-to-risk ratio.

By Kate Curtis from Trader’s Way

AUD/JPY is making a reversal pattern on its 1-hour time frame, which means that the current downtrend could be turning.

The pair has formed a double bottom formation on the 91.00 major psychological level but the neckline at the 92.50 minor psychological resistance has yet to be broken.

Stochastic is in the overbought region, which means that the pair could dip a little lower before getting enough energy for a test of 92.50. From there, stronger buying pressure could eventually trigger a break of the neckline and the start of an uptrend.

The double bottom is 150 pips tall so the resulting breakout could be of the same size. Going long at market and aiming for the 92.50 mark then for 94.00 could yield a good reward to risk with a stop below 91.00.

By Kate Curtis from Trader’s Way

A double top pattern has formed on GBP/USD’s short term time frame, which means that a possible reversal from the current uptrend could happen.

The pair is still holding steady above the neckline around 1.6175 but a breakdown might confirm that a selloff would happen in the coming days. The pattern is about 120 pips in height so the resulting breakdown might be of the same size.

A short order at the 1.6150 minor psychological support level could be enough to catch the breakdown and yield a good reward to risk ratio if one aims for 100 pips. A stop at the 1.6200 handle above the neckline would mean a 2:1 trade.

By Kate Curtis from Trader’s Way

GBP/USD suffered a sharp selloff on Friday but it appears that the longer-term uptrend is still intact, as evidenced by the rising channel on the 4-hour time frame.

The pair is hovering around the middle of the channel around the 1.6050 minor psychological support while stochastic is already in the oversold region. The stochastic hasn’t crossed upwards yet so a deeper slide might be in the cards.

The pair still has a chance at testing the channel support around the 1.5900 major psychological support before resuming its climb. A long order at 1.5900 with a 100-pip stop and a target of the previous highs around 1.6250 would yield a 3.5-to-1 return on risk.

By Kate Curtis from Trader’s Way

AUD/USD could be in for a decline today as the .9450 minor psychological level has been holding well as resistance so far. A drop could last until the recent support around the .9350 minor psychological level.

The intraweek resistance is in line with the top of a triangle on the 1-hour time frame while the potential support at .9350 is found at the bottom of the triangle.

Stochastic is in the overbought zone and moving down, hinting at a potential selloff. There are no major reports due from both the US and Australia today so the ranges could hold.

Shorting at .9450 and having a 50-pip stop with a 100-pip target would be a 2:1 trade for the day.

By Kate Curtis from Trader’s Way

CAD/JPY’s downtrend is still very much intact, as the falling trend line connecting the price’s highs is still holding on the 1-hour time frame. The pair just made a couple of tests of the trend line earlier this week and it appears that it could continue to hold for the rest of the week.

Stochastic is in the oversold zone, which means that Loonie traders will take the pair up for a pullback before letting the selloff resume. The trend line coincides with the 94.00 major psychological resistance level and a former support area.

Shorting at 94.00 with a 50-pip stop and 100-pip profit target could be a 2:1 trade for the day.

By Kate Curtis from Trader’s Way

GBP/AUD has been moving sideways on its 4-hour chart, as it found support at 1.6900 and resistance at 1.7400.

Right now, it is testing the bottom of the range while stochastic is starting to move out of the oversold region. This suggests that a bounce could take place, possibly until the middle of the range around 1.7150.

Data from the UK has been weak though, with manufacturing production falling by 1.1% recently. Meanwhile, jobs data from Australia has been mixed, as hiring was weaker than expected but the jobless rate improved from 5.8% to 5.6% in September.

Going long at 1.6900 with a 100-pip stop and a target at 1.7150 would be a 2.5-to-1 trade then going for the top of the range at 1.7400 would be a 5:1 trade.

By Kate Curtis from Trader’s Way