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EUR/USD breaks out of 7 months pattern

October 29, 2015 in Chart Alert

In the “Alerts – Observations – Watch Outs” sub-forum of our Forex forum section we had been talking about the ascending triangle pattern of EUR/USD. In the last alert we had indicated the following:

“Any decisive break below 1.1060 should extend the decline to test the 1.1000 to 1.1020 support first and then possibly more. However, the psychological aspects of approaching parity level may cause some volatile upward moves and hence caution is required.”

The pair had moved the way we had indicated. During last week the pair had broken the support of the base of the triangle slightly. However, this week’s moves brought a decisive break from the pattern. Not only that but that previous support level acted as resistance.

EUR/USD breaks out of 7 month chart pattern.
Please note that for past 7 months the price action was contained in this pattern. We now expect a test of 1.0809 first and if that support fails then further decline towards the low of 1.0470 will be expected.

And upside will be expected to be limited to 1.1105 to 1.1135 resistance zone.

Focus Remains on the Downside for GBP/USD

October 1, 2015 in Chart Alert

GBP/USD’s fall from 1.7192 had completed 50% retracement and refused to go any further. The second wave of downward move seems to have 38.2% retracement level as resistance instead of support.

GBP/USD after 50% retracement

The upward move from 1.4567 had reflected the psychological support of 1.4500 range. However, the pair could not break the psychological barrier of 1.6000 ranges. The fall from there brought the aid of 1.5500 psychological support, which remained in place for 8 weeks but then the breakout was witnessed.

The bearish momentum targeted the previous support of the low of the week of may 31st i.e. 1.5170. Please check the nice little spinning tops candle of that week in the following chart. This support was very critical as it also brings in the psychological support of approaching 1.5000 ranges. However, the support did not sustain and that makes the bearish out look quite strong.

GBP/USD weekly chart with psychological resistance and supports.

Let’s did a bit deeper and check the price-action of last 15 years.

Historical GBP/USD chart of past 15 years.

It is evident from the chart that since 2009 the price-action has been in a volatile sideways mode and the pair clearly failed to take out the year 2005’s strong support turned resistance.

There was a fake-out of this sideways movement during 2013 which had resulted in a strong upward jump but the price again failed to take out the above mentioned support turned resistance and the subsequent fall again broke the rectangle chart pattern. The above chart speaks for itself and indicates why the focus remains on downside now.

Let’s have another look on the same chart but from a different angle:

GBP/USD monthly chart with triangle chart pattern.

The triangle pattern on the above monthly chart had a breakout which did not sustain. The decline has cause a downward breakout of the support and that support seems to be acting as resistance now.

Let’s get back to the weekly chart once again:

GBP/USD chart with gartley pattern

The above chart shows an approximate Gartley pattern on the weekly chart. It’s not an ideal one as the retracement levels are not ideal to the Gartley pattern but then who says that the world is ideal. Will this Gartley cause the trend resumption to target 1.4500 ranges once again? Well, possibilities do exist but first we expect the pair to target 1.5055. If 1.5000 support fails then decline should extend first towards 1.4800 and then possible 1.4580.

On the upside we expect resistance near 1.5355 and any break above that will start neutralizing the above outlook. Please note that this resistance is derived from the daily chart.

15 years of EUR/USD in Nut & Shell – Expect Further Decline

September 28, 2015 in Chart Alert

Past 8 months’ price action of EUR/USD has seen an ascending triangle formation emerging up. Now as far as any triangle chart pattern is concerned, a break out can be on either side. However, we are in favor of a downward breakout and some further decline.

The first reason is that the 17 months’ fall of the pair completely failed to even complete the 38.2% Fibonacci retracement level. We will come to the second reason shortly but before that, Yes, we are already on short-selling side.

Check the weekly chart of EUR/USD covering all the above facts including our entry for the short position.

EUR/USD weekly chart with ascending triangle formation.

Now let’s go a bit more into the past to see what we were talking about as the second reason. The following EUR/USD chart is the monthly chart of past 15 years.

EUR/USD monthly chart of past 15 years with descending triangle pattern.

It is quite evident that the resistance faced during June 2003 (yes, over 12 years back – the first red arrow on left hand side) had turned into a strong support zone and that remained in place for over 11 years.

That 11 years old support was  broken during January 2015. and since then that support seems to have turned into a resistance zone.

Let’s move on to another point and that is the descending triangle pattern which had been in place since June 2008 i.e. well over 6 years. The breakout of January 2015 was a break of a pattern which had been in place for over 6 years and that calls for some extended stay below that pattern. The support turned into resistance also favors this logic.

Please note that this alert is not for very short-term trades as we are talking about years of price-action and in such case a couple of hundred pips here and there are not even peanuts. Any upside is expected to be limited to be up to 1.1880 in the mid-term but for the immediate future we expect resistance below 1.1525 and with that a decline first towards 1.1090 and then some more.

The psychological support zone of the parity (EUR/USD =1)  seems to be the only friend of the euro right now but will that hold. Do share your comments, please.

GBPCHF Breaks Important Support

August 24, 2015 in Chart Alert

GBP/CHF broke below the support of the upper edge of daily Ichimoku cloud today. This move certainly makes the near term bearish sentiments stronger and overall we expect further pull back towards downside.

GBP/CHF breaks below the support.

However, a couple of points to be kept in mind are as follows:

  • The fall from 1.5411 can be attributed to the psychological resistance of the approaching 1.5500 level and hence can be considered as a natural move.
  • The current price is near the 38.2% retracement support of the move from 1.3818. This support, which was at 1.4802 was skightly breached but a decisive breakout has still not taken place.
  • The current price is also slightly above the previous strong support on 1.4791.

GBP/CHF against upcoming support levels.

Any decisive break below 1.4791 should extend the fall, first towards 1.4660 and then possibly 1.4614/1.4620 support zone of the 50% retracement support zone. Here the psychological support of the approaching 1.4500 ranges should also come into the picture.

On the upside, we expect the first resistance at or below 1.4920. Any break of this resistance should delay any further fall. However, in such case also, we would expect any recovery to be limited to 1.5125.

GBP/CHF Chart showing the resistance levels.

USD/CAD Outlook – The Pair Is Near Some Resistances

July 14, 2014 in Chart Alert

During the previous USD/CAD outlook update, we had indicated that the price was hitting a mid-term trend-line support and that we could expect some upward gains, including the possibilities of a near-term bottoming. The support was witnessed within a couple of days of posting that outlook. Let’s have the new chart with the current price-action.

USD/CAD weekly chart with support trend-line

USD/CAD weekly chart - support at trend line.

The upward gains looks small on the weekly chart but a look on a shorter-time-frame charts will indicate that the gains were substantial:

USD/CAD 4 hourly chart - the upward jump

As mentioned in the previous post referred above, we still remain in favor of further gains by USD/CAD. However, the price-action is near some resistance levels and some caution may be required.

Immediate possible resistances

USD/CAD and expected resistances

As indicated in the above USD/CAD daily chart, the currency pair was in a sideways mode for 4 days during the later part of June. The resistance during this range bound moves was in the range of 1.0749 to 1.0760. Some resistance is expected in this range again. Eventually a break of this resistance is expected but immediately after that the 55-day EMA may come as another resistance. The current 55-day EMA is at 1.0777 and hence resistance may be faced in the range of 1.0775 to 1.0790. One previous two occasions the resistance was witnessed slightly above the 55-day EMA. In fact this resistance will also be supported by the resistance of the lower edge of the very thing daily Ichimoku cloud.

Possible resistance of daily Ichimoku cloud

USD/CAD daily ichimoku cloud resistance

While we are talking aboy Ichimoku cloud, let’s have a look on another time-frame. The following USD/CAD chart is with the weekly Ichimoku cloud. Interestingly the very next resistance of Tenkan-line is falling near 1.0800 and the next one i.e. the upper edge of the cloud is also almost at the same level i.e. in the range of 1.080 to 1.0820.

USD/CAD weekly Ichimoku cloud resistance

Outlook – What to expect if the above resistances fail?

USD/CAD retracement levels for expected gains.

In case USD/CAD manages a break over 1.0825 and sustains over that level then it will be expected to target 38.2% retracement of the fall from 1.1278 to 1.0620. This level is at 1.0871. The interesting points to be observed are that 38.2%, 50% and 61.8% retracements are very close to some of the strong resistances previously witnessed. This combination makes those levels as quite strong resistances. Considering this a lot of caution will be required if the upward momentum continues to complete the mentioned Fibonacci retracement levels.

USD/CAD: 14 years Price-Action in a Nutshell – Is A Near-Term Bottom In Place?

July 9, 2014 in Chart Alert

USD/CAD had dipped to 1.0620 and seems to be finding some support since then. The price-action during past 6 days has been failing to dip below 1.0600 to enter the psychological ranges of 1.0500. Let’s see what else has been going with the currency pair and what can we expect during the coming days.

USD/CAD daily chart

USDCAD daily chart - July 9 2014

Past 22 months’ price-action of USD/CAD has seen a support trend-line emerging. The recent fall has touched that trend-line again and hence a short-term or possibly even a near-term bottoming can not be rules out. If this support continues then we can see the pair to see some gains in the coming days. Please check the following weekly chart with the support trend-line since early September 2012:

USD/CAD weekly chart with support trend line

Well, the support of the trend-line does not seem to be alone in the making. This support coincided with the support of the lower edge of the weekly Ichimoku cloud. Do check the following USD/CAD weekly chart with Ichimoku cloud:

USD/CAD with weekly Ichimoku cloud

The previous bottom for USD/CAD was at 0.9405. The upward move since then had taken the currency pair to 1.1278. The recent move to 1.0620 has not really completed the 38.2% Fibonacci retracement as that level is 1.0562. However, the recent moves may be considered almost as the completion of that retracement as the difference is just 58 pips.

USD/CAD almost completes 38.2% retracement

USDCAD weekly chart with Fibonacci retracements

Even if the trend-line resistance fails, a very strong support can be expected slightly below it, near 1.0562. This is not just because of the support of the retracement level but because of the psychological support of 1.0500 ranges.

While we are on it, let’s also have a look on the overall historical price-action of USD/CAD.

USD/CAD historical chart

As the above monthly chart shows, during the first week of February 2002, USD/CAD had hit a high of 1.6193. From there a long-term downtrend had started, which had taken the currency pair to as low as 0.9056 on November 1st, 2007. The recovery from this low had completed the 38.2% retracement but had missed the 50% retracement by going half way towards it. Practically speaking, the moves beyond the 38.25 retracement were very short-lived. The pair had then fell from 1.3063 to 0.9406. The fall was rather sharp but support had come well before a retest of the previous low of 0.9056. The subsequent move had completed the 38.2% retracement of this second leg of the fall. A resistance near the 38.2% level was well expected and that resistance saw the recent leg of downward moves.

What to expect?

The support of 0.9406, which was well over the previous 0.9056 suggests that a bottom may already be in place at 0.9056. The lows have been continuously getting higher and on the other hand recently the price-action had tried to break above the high of past almost 5 years.

USD/CAD breaks above the resistance

The high for USD/CAD during August 2009 was 1.1124 and after almost 5 years the pair tried to break above it repeatedly to touch 1.1278. Yes, we can say that the gains could not sustain, but it was a break of that resistance nevertheless.

Considering all these facts, we remain in favor of upside for USD/CAD technically and at least for near-term. As mentioned above that even if some further downward moves take place, another support should be seen very soon and in 1.0540 to 1.0558 region.

Now, lets take a look on some other charts as well, mainly different time-frames of Ichimoku cloud as we have covered other things more or less.

USD/CAD with monthly Ichimoku cloud

USD/CAD with monthly Ichimoku cloud

The above monthly Ichimoku cloud chart shows that the previous attempt of recovery had failed below the upper edge of the daily Ichimoku cloud, when the price had gone as high as 1.3063 and had fallen strongly to 0.9406. However the recent gains had at-least tried to break above the could. The movement could not sustain but for 3 months there was an attempt of breaking over. The monthly candle is still well above the support level of Kijun line, while the Tenkan line stays well above the kijun line, bullishly. The Kijun-line support is at 1.0495 but we would expect a support well above that, as mentioned above.

USD/CAD with the daily Ichimoku cloud

USD/CAD with daily Ichimoku cloud - Break of resistance after a month.

The above USD/CAD daily Ichimoku cloud chart shows that the currency pair has broken out of the resistance of Tenkan-line, first time, after a month. The current price is again at Tenkan-line level and a support here is expected. Combine this support with the above mentioned support of the mentioned trend-line and we get a feeling for the possible positive outlook for USD/CAD.

USD/JPY – Further upside is favored

June 8, 2014 in Chart Alert

This USD/JPY update follows the previous post titled “USD/JPY Should See Some More Gains But Caution Needed“. The previous post had indicated gains towards 102.75 resistance. The currency pair had moved that way and touched 102.79 before retreating back and then jumping again. Let’s look into the charts to see what they indicate. We will also touch upon the fundamentals a bit.

USD/JPY and 200-day moving average

USDJPY daily chart with 200 day moving average - June 8 2014

The pair had broken over the 200-day moving average resistance but could not sustain. Last Friday’s resistance came just below that. However when we are talking about this resistance which may possibly sustain, let’s take a look on the significance of the recent supports.

USD/JPY chart with daily Ichimoku cloud - June 8 2014

The above chart shows that though the effort to break above the daily Ichimoku cloud’s upper edge was practically failed, the pair found a strong support over the lower edge of the cloud. This facts indicate that USD/JPY’s fight to gain further has not ended as yet.

USD/JPY daily chart with exponential moving averages - June 8 2014. The chart indicates positive outlook.

The support also came at 55-day EMA as the above chart is indicating. In-fact the 55-day EMA is also supported by 22-day EMA currently, as both are at the same level. The weekly closing was well over the weekly exponential moving average i.e. the 5-day EMA.

USD/JPY and previous resistances - daily chart - June 8 2014. Previous resistances seem to have turned into support.

The recent support at 102.11 also suggests that the previous resistance zone might have turned into support as the above 8-hourly chart indicates. In fact we prefer 4-hourly chart but this is to cover more price-action.

What else is in the favor of expecting further gains?

Daily MACD remains above the signal line and with quite convincing bullish gap.

USDJPY with MACD - June 8 2014. The MACD remains bullish.

Last week’s candle’s body was the largest during past 7 weeks. The price-action had also broken over the short-term resistance line and remains well over it.

USDJPY weekly chart with trend lines - June 8 2014

A look on the fundamentals and what to expect

Last month i.e. April 2014’s non-farm payrolls were revised from 288K to 282K. The market consensus for May 2014’s NFP were for 218K. The drop of USD/JPY had already factored that drop in the payrolls. The final release came out slightly weaker at 217K. However, on the other side the markets were expecting the unemployment rate in the U.S. to rise from 6.3% to 6.4%. The unemployment rate did not rise and remained same. The overall effect goes in the favor of the U.S. dollar. Please note that you can find the up to date revised NFP data at the above indicated post as well as at “Up-to-date non-farm payroll data since 1939

Coming Monday Asian morning session will see the GDP data releases from Japan. The quarter over quarter GDP for Q1 is expected to see a strong jump to 1.4% from the previous 0.2%. The annualized GDP figures are expected to rise from 0.3% to 5.6%. The expected figures for both these economic releases are quite optimistic. If the results come even slightly disappointing then the USD/JPY should jump quite strongly towards 103.01 resistance first and then possibly towards 104.00.

On the other side any break below 102.11 will start making the above outlook neutral. However in such case also we will expect a strong support at 101.80/101.82. This zone represents the support of the Kijun-line of daily Ichimoku cloud. If that support fails then the focus will turn back towards downside.

GBP/CAD: The Canadian Dollar may weaken a bit before the Pound Sterling bows again

June 4, 2014 in Chart Alert

GBP/CAD continues the recovery from 1.8100 but the jump from that support was a natural one, considering the psychological aspects of 1.8000 ranges. The daily MACD has given a bullish signal but let’s see if the push is expected to continue or a failure to sustain is in line.

GBP/CAD daily chart with MACD: GBPCAD gets a bullish signal by daily MACD.

The above chart is also showing a short-term trend line. On one hand this line is indicating a resistance near 1.8375 to 1.8395, but on the other hand is also suggests that some more gains towards that resistance zone can, very well, be expected. While we are on thos, let’s have a look on another GBP/CAD chart with daily Ichimoku cloud.

Another GBP/CAD char with daily Ichimoku cloud indicating resistance zone which is same as the resistance zone of the trend line.

The above chart shows that the Tenkan line remains below the Kijun line after the weak bearish crossover had taken place. There are two points to be noted here:

  1. The bearish gap between the two lines is still strong and convincing.
  2. The price-action has broken the resistance of the Kijun line. Of course, not a decisive break but combined with the tail of the lates daily candle, it is giving a strong suggestion for further gains.

Let’s also have a look on the exponential moving averages for the currency pair:

GBP/CAD daily chart with 5, 22 and 55 day EMAs.

GBP/CAD has been in a strong uptrend after a sideways movement which spanned for a long time. The pair had been shy of 1.65oo and fearful of 1.5000 by remaining well over 1.5200. In fact the gap of 200 pips from the psychological support and the gap of merely 50 or so pips from 1.6500 was a strong suggestion of an upward break, which took place and the pair sky-rocketed to touch 1,8670.

Let’s see how GBP/CAD mpved during past 4 years:

The weekly chart of GBP/CAD showing how the pair jumped up after a long sideways price-action.

There is nothing to suggest that the trend has ended but such big moves need consolidations.

But are there any indications to suggest further consolidation?

Yes, there are. Let’s check the following weekly chart:

Weekly chart of GBPCAD showing that a double-top chart pattern has emerged.

The double-top chart pattern is not a perfect one, as shown in the above chart. However, it is there, when we are talking about a jump of 3426 pips from 1.5244 to 1.8760. The pattern had completed when the currency pair had broken below 1.8165 which represented the neckline.

What can be expected by GBP/CAD?

  • Resistance as indicated above.
  • Any break below 1.8100 should take GBP/CAD to 1.8020 first and then possibly 1.7960/1.7980.
  • In case 1.7958 support fails then the decline should extend towards 1.7868 to 1.7890.

The question will still remain if the consolidations, if take place, will be limited as indicated above? Well, no one can predict what happens tomorrow but the price-action analysis would say that, yes even deeper declines can not be ruled out. Lets check where even the first level of retracement (Fibonacci) i.e. 38.2% retracement lies. The following chart shows that.

Weekly chart showing the Fibonacci retracement levels for GBPCAD.

USD/JPY should see some more gains but caution needed

June 3, 2014 in Chart Alert

This update follows yesterday’s update where we had mentioned that USD/JPY should gain 36 to 59 pips. Well, as of now the currency pair has gained 48 pips. Some more gains are surely expected but the current price action is near some key resistance levels. Let’s look at the current charts to see what can be expected now.

USD/JPY daily Ichimoku cloud chart - The pair is near the resistance of the upper edge.

 

The above daily Ichimoku cloud chart indicates that the currency pair had decisively taken out the resistance of the lower edge, as we had predicted yesterday. The price is now approaching the upper edge and resistance is clearly evident. The price-action has gone into sideways mode after touching 102.48.

USD/JPY daily chart with 200-day moving average resistance.

The current 200-day moving average is at 102.59. This resistance is the first critical resistance even before the upper edge of the daily cloud.

What goes in favor of further gains?

The above two charts suggest resistances but let’s check on what goes in the favor of expecting further gains.

Weekly chart indicating that the currency pair has broken over the trend line resistance.

The above weekly chart shows the break of the trend-line resistance which has been in place for past 8 weeks. This fact, combined with the fact that the pair had jumped up strongly without retesting 100.75 support, suggest that we should be able to see some more gains towards 102.75 to 103.01 resistance zone.

USD/JPY weekly chart with 5-day EMA and 22-day EMA.

The above chart shows the break above the trend line more clearly. The chart also shows that though the 5-week exponential moving average is still below the 22-week EMA but the bearish gap is not convincing.  There are all the possibilities of a bullish crossover and such a move may see gains which may very well extend beyond 103.01, and towards 104.00.

USD/JPY – Will go up by 36 pips or 59 pips?

June 2, 2014 in Chart Alert

USD/JPY had tried to breach 101.43 support but just by 1 pip. The pair had jumped up from 101.42. purely from technical and price-action point of views, the recent moves have a bit or story to tell. And well, that story may be a base to predict the immediate future moves of USD/JPY.

To start with, the USD/JPY is clearly fallen into a sideways mode between the psychological levels of 100.00 and 105.00. The recent low was at 100.82 on May 21, 2014. This support had come 7 pips above the previous support at 100.75. This fact goes in the favor that 100.00 is having it’s psychological edge.

Let’s wee what happened today?

The pair broke the 55-day EMA

Well, we still need to see if this break sustains or not but at least as of now this statement stands true.

The pair found resistance at the lower edge of the cloud but overcame that

Well, again we need to wait for a bit to see if that sustains or not but yes, the pair struggled a bit against the lower edge of the daily Ichimoku cloud but then overcame it to break that resistance.

Now what?

102.14 may prove to be a minor resistance. However, I doubt that resistance will sustain. A failure of that should take the currency pair to test 102.36. However, the pair, then should test the 200-day moving average resistance at 102.59 and then possibly 102.75.

If all the above mentioned resistances fail then we will look forward to 104 ranges.

Let’s have a look on the charts which show all the above mentioned facts:

Break of 55-day EMA and a head and shoulder pattern coming into the picture

Chart showing the break of 55-day EMA resistance and the emerging head and shoulders pattern

Apart from all the other points, please do not miss the emerging head and shoulder pattern in the above chart. This pattern will only complete with a break over 102.36 but the probability is quite high.

USD/JPY and the 200-day moving average resistance

USD/JPY daily chart, indicating that the resistance of the lower edge of the daily Ichimoku cloud is failing.

Daily MACD remains bullish for USD/JPY

Daily MACD remains over the signal line - A bullish sign for near-term.

How far EUR/USD may fall?

May 28, 2014 in Chart Alert

The near-term bearish sentiment had become stronger for EUR/USD when the pair had broken below the previous support of 1.3443, after finding a good support 5 pips over that level once. The fact that the pair had fallen strongly, ahead of 1.4000 level can also not be missed. After touching 1.3993 and missing that important level just by 7 pips had given a strong suggestion that the currency pair is not yet ready for that landmark. Some of the points we will be touching in this alert were already covered in the weekly outlook of May 24th.

Let’s have a look on the daily chart with some observations:

EURUSD daily chart - break of recent range after the break of a major support.

As the above chart indicates, that the currency pair even broke below 1.3612 which was the low of the range during past 4 trading days. This break simply added fuels to the already existing bearish sentiments.

What can be expected?

Let’s have a look on the weekly chart:

EURUSD weekly chart - trend line and double top - possibilities to hit 1.3540 or more.

The above chart shows the break of the trend line support as well as the double-top pattern. These points were also covered in the above mentioned weekly update. With all the above facts combined and a break below 1.3612, further declines are fully expected as it also signified that the psychological fear of 1.3500 ranges is not so strong. The fall should extend, first towards 1.3540 and may even hit 1.3485.

Do check more at EUR/USD analysis and outlook page.

EUR/USD on the way to complete double-top chart pattern

May 21, 2014 in Chart Alert

EUR/USD had gone down to 1.3648 last week and in doing so the pair had broken below the hammer styled candle of May 15th. That daily candle had created some doubts about a possible reversal and failure of the chart pattern. However, the subsequent market moves seems to be just a brief market noise and the pair saw a sharp fall again, which took it below the neck line.

EURUSD double top chart pattern

What to Expect?

Caution is required for a possible support at 1.3643 of February 27th. In case the price breaks below that, then a sharp drop towards 1.3565 can not be ruled out. Remember 1.3562 strong support of February 12th for the same, which also brings in the psychological support of 1.3500 ranges. However, possibilities of a drop towards 1.3520 will come into the picture with such a move.

Do also keep an eye on EUR/USD outlook.