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Short-term bearish shadows for USD/JPY

April 10, 2014 in Chart Alert

We had mentioned on March 15th that we would expect some volatile side ways moves between 100.00 and 105.00 for USD/JPY. The pair is moving that way. The recent strong fall from 104.13 suggested that the resistance of the psychological level of 105.00 is staying intact even when the pair had tried to break over it.

100 and 105 fight is on one side but the which side has more pull? Well, overall we stand by what we have been mentioning that a decisive break over 105.00 and a test towards 108.00/110.00 are on the way, sooner or later. However, the recent price-action has indicated that the downside pull is gaining strength. We do not take that as bearish outlook but just as a correction.

Let’s see what the charts say.

The pair broke the support of 200-day moving average

Break of 200 day moving average

The pair broke the support of the short-time trend line

break of trend line support

The weekly MACD stays bearish

Weekly MACD bearish

The daily MACD gave a bearish crossover signal

Daily MACD bearish crossover for USDJPY

What now?

Well, all of the above observations are indicating a bearish outlook. And yes, a further drop is expected. The question is whether this drop will find a support in the range of 100.75 to 101.20 or not.

Longer time trend line support for USDJPY

The possibilities of a break of that support are high now. However, the current outlook will not turn really bearish till a  decisive break below 100.60 takes place. 100.70/100.75 represents the near-term trend line support and though a sharp fall like this may cause a brief break of this support but any decisive break below 100.60 may extend the fall towards 100.20 to 99.80 first and then may be lower.

Conclusion

Overall outlook stays bullish.If we keep the technical and price action-studies aside then the negative factors against JPY are the political tensions with the neighbors i.e. China and Korea. In fact mainly China. However, the background effects of these tensions may go in the favor of JPY more than against it. The Japanese governments decision about allowing weapon exports may favor  JPY and the pair may weaken further.

Will USD/JPY break the support pattern?

March 15, 2014 in Chart Alert

USD/JPY’s fall from 103.76 suggested that the previous support zone had turned into resistance. This fact had brought in the first wave of bearish sentiments and those got stronger when the pair failed the resistance zone which remained in place during February 5th to February 26th. This previous resistance zone was expected to turn into support to keep the near-term bullish outlook intact.

Support and resistance zones of USD/JPY

previous support turned into resistance for USDJPY

The recent low has retested the support level of March 3, 2014 when the price touched exactly 101.20, as indicated in the above chart.

The bearish signal from daily Ichimoku cloud

Bearish signal from daily ichimoku

As shown in the above Ichimoku cloud chart, the a medium strength bearish signal followed the medium signal bullish signal almost immediately when the Tenkan line moved below the Kijun line inside the cloud. The story did not end there and the price action broke below the lower edge of the cloud to strengthen the bearish sentiments.

Are all hopes lost for the near-term?

USDJPY testing 200-day moving average support

The price has not yet broken below the previous support of 101.20. moreover the recent trend pattern has been a support near 200-day moving average. The current 200-day moving average is at 101.13. We will stay cautious in considering further weakness till the price action does not break below 101.13 decisively.

What to expect?

Retracement levels of USDJPY

The previous support at 101.20 had indicated that the 50% Fibonacci retracement level of the move from 96.94 to 105.44 had turned into support. The recent low has again tried to retest that support. However, a decisive break below 101.13 will represent a break of that support as well as the support of 200-day moving average. Such a move will move the focus towards 100.75 first and then towards the 61.8% retracement of the above mentioned move i.e. 100.19.

Do check the various updates of USD/JPY outlook and share your opinions in the comment box below.

What did GBP/JPY’s recent support whispered?

February 23, 2014 in Chart Alert

GBP/JPY surely lost upward momentum during the the last week and that may cast some doubts about the continuation of further gains. However, a deeper look on the recent support indicates that the possibilities of a retest of 174.84 and gains beyond that are quite high.

What the recent support indicated?

Support of the price action channel

GBP/JPY price action channel

From a near-term perspective, the support indicated that the support of the price-action channel which has been in place for past 15 months held tight. This adds to the ongoing bullish sentiments.

Ongoing support near 22-week EMA

Chart depicting the support near 22 week EMA

Longer-term perspective – price-action of past 10 years

The previous resistance turns into support - GBP/JPY chart of 10 years

The recovery after the great cash had failed at 163.07 during August 2009. Since then GBP/JPY had stayed below that level for over 4 years. We had mentioned that this previous resistance should now act as support in an old post titled “Is GBP/JPY Up For Reversal?“. That was exactly what happened. The recent fall found strong support well above this level at 163.88. This fact indicates that the old resistance is now acting as support and that also goes in the favor of the bullish sentiments.

The short-term view

The near-term view of GBPJPY

One factor which is adding to the cautious approach to expect further gains immediately is the near-term resistance trend line. A break of this is critical for further gains.

Do also keep an eye on the periodic GBP/JPY outlook updates.

Revisiting the combination of resistances for AUD/USD

February 23, 2014 in Chart Alert

On February 9, 2014 we had indicated that AUD/USD is up against a combination of resistances. The chart posted in that alert was as follows:

AUD/USD on February 9, 2014

AUD/USD and combinations of expected resistances

Now let’s check the updated chart as on February 23, 2014

AUD/USD finding resistance at the first retracement level

The situation is practically unchanged. The attempt for the second recovery failed at 0.9080. Which clearly indicates that the pair is finding it difficult to break the resistance of the 38.2% retracement of the fall from 0.9758 to 0.8660. This resistance is at 0.9079. The first recovery attempt had failed 6 pips above this and the second one failed at 1 pip above this level.

Practically just above we have the following resistances:

  1. 200-day moving average at 0.9147, which also gets the support of the resistance mentioned in point #2 below.
  2. 0.9163 to 0.9167 range which had proved to be a strong resistance during December 1 to 10, 2013.
  3. 0.9203 to 0.9205 resistance zone of November 22 to 26, 2013, which also coincides with the 50% retracement of the above mentioned fall.

Possibilities of further gains are higher but the combination of the forces keeps us cautious.

Do check the periodic AUD/USD outlook updates also.

EUR/USD is in a resistance zone but focus remains upside

February 16, 2014 in Chart Alert

EUR/USD’s movement has been in a very volatile sideways for past 6 weeks, since the pair had faced a strong resistance at 1.3894 . However we have been in the favor of further gains as we had mentioned in an old post titled “EUR/USD 2014 Outlook – The Pair Is At Two Years High But Is It Done?“. Let’s have a closer look on the recent as well as overall price-action since the strong fall from 1.4940 of May 2011 to the low of 1.2042 of July 2012 took place. The overall picture indicates the reasons why we still expect further gains from the pure price-action perspective.

EUR/USD weekly chart – Bullish sentiments

EUR/USD weekly chart with retracement level resistance and support

Observations:

  1. The fall from January 2013’s high of 1.3711 had represented the resistance of the approaching 61.8% retracement level of the move from 1.4940 to 1.2042. However the subsequent support indicated that a previous minor resistance zone had turned into a strong support zone.
  2. The subsequent recover had initially found resistance below the 50% retracement level, however the break of that support took EUR/USD to exactly the 61.8% retracement level. This level proved to be a strong resistance, however the fall from there found a strong support well over the 38.2% retracement level as well as the 55-week EMA level.
  3. The subsequent recovery again found resistance in the previous resistance zone of 61.8% level but then the pair managed a break over that to touch 1.3894. The recovery could not sustain ahead of the 1.4000 psychological level.
  4. The fall from 1.3894 found a strong support near the 50% retracement level and again well ahead of the previous low as well as the 55-week EMA.

Conclusion

All the above observations are indicating that not only the lows have been getting higher but the previous resistances have been turning into support levels. More importantly the supports have been coming at the expected support levels. These points, in turn, indicate the underlying bullish sentiments.

Let’s also have a closer look on the more recent price-action of EUR/USD.

EUR/USD daily chart – Hitting a resistance zone

Resistance and supports for EUR/USD - daily chart

Observations

  1. The recent fall found support in a support zone indicated by the blue horizontal line in the above chart. This zone has been acting as support since the end of September 2013. There was a break of this during November 2013 but overall this area has been acting as support time and again.
  2. The recent support also came well above the short-term trend-line which is shown in green color. This suggests that the pair might have already bottomed up.
  3. As also clear from the above daily chart that the current price action is in a strong resistance zone which is marked by the top two horizontal yellow lines.

Conclusion about what to expect

The resistance at 1.3839 is the key hurdle. This is not just a previous resistance but brings in the psychological fear of approaching 1.4000 level. We expect a break of this, however caution is required till a failure of this resistance does not take place.

A break above 1.3839 should take the pair to test 1.4000 first and then possibly towards 1.4240.

For the ready reference we are also adding the chart from the previous post which we had mentioned above, showing the price action of past 10 years.

EUR/USD during past 10 years

Chart showing EUR/USD's past 10 years' price-action.

GBP/USD breaks above one more hurdle

February 15, 2014 in Chart Alert

GBP/USD had achieved one landmark on January 23, 2013 when the pair had broken above August 2011’s strong resistance of 1.6618. This resistance had cause the pair to fall by 1376 pips to as low as 1.5272. This break had turned the focus towards the next key resistance of 1.6746 which was the high of the last week of April 2011 and had brought a decline of 965 pips. Last week GBP/USD achieved another landmark in it’s upward journey by breaking over 1.6746 when the pair touched 1.6755.

GBP/USD weekly chart - break over the high of April 2011.

However, the break over 1.6746 did not come without a struggle. The pair had hesitated below this resistance for close to 3 weeks. This break adds to the bullish sentiments further especially because the pair had found support over the expected support level as we had indicated in a post titled “Will GBP/USD Test The Trend Line Support Again?“. The support had indicated that the 4 year old resistance trend-line has now turned into a support trend-line.

Let’s have a closer look on the above chart to check on the above mentioned support:

Chart depicting the recent support for GBP/USD

Historical price action of GBP/USD

During the financial crisis of 2008, the pair had fallen from the high of 2.1161 (November 2007) to as low as 1.3504 of January 2009. Over a short period of 14 months GBP/USD had crashed by 7657 pips. Within a short period of 7 months the pair had completed the 38.2% retracement of that fall when it had recovered to 1.7042 during August 2009. However the recovery could not sustain and the pair went into a very volatile sideways mode below 1.7042 and above 1.3504. The price action during the past 5 years was mainly governed by two long-term support and resistance trend-lines.

GBP/USD price action during past 10 years

GBPUSD - 10 years historical chart

What makes the recent strong upward jump more important is the fact that this is the third time the pair broke over the 38.2% retracement of the fall from 2.1161. The 38.2% retracement was at 1.6429.

What can be expected now?

The subsequent breaks over the above mentioned key resistance levels of 1.6618 and then 1.6746 confirms that the bullish sentiments are intact. The focus is now for the test of the psychological level of 1.7000. Mid-term bullish sentiments will get confirmed if the pair manages a break above 1.7042. If such a move takes place then the focus will turn towards the 50% retracement which is at 1.7332 and is approximately halfway to the next psychological level of 1.7500.

Do keep an eye on the periodic updates of GBP/USD outlook and do share your opinions in the comment box to discuss the price action further.

The combination of resistances for AUD/USD

February 9, 2014 in Chart Alert

The support seen at 0.8660 was a failure of o.8770 support seen during the week of August 23, 2010 but on the other hand it was also a failure to retest July 2010’s 0.8633 support. A chart about these points was posted on a update titled “Australian Dollar’s fall – Was it just the employment numbers?“.

The support also highlighted the strong psychological support of approaching 0.8500 level. The possibilities of further consolidations are good. This post is just to observe the combination of upcoming resistances. This view also finds support from the fact that after two previous failed attempts to sustain a break over 55-day EMA, this time the pair seems to be sustaining above this resistance.

chart depicting the combination of upcoming resistances for AUD/USD.

 

As marked in the above chart the combination of resistances are as follows:

  1. 0.9086 of January 13, 2014 corresponds to the 38.2% retracement of the fall from 0.9758 to 0.8660.
  2. 0.9163 to 0.9167 resistance zone of December 2013 corresponds to the 200-day moving average resistance.
  3. 0.9203 to 0.9205 resistance zone of November 2013 corresponds to the 50% retracement level of the move from 0.9758 to 0.8660.

You may also like to check the periodic AUD/USD outlook updates. Do share your comments and opinions in the comment box.

Will GBP/USD test the trend line support again?

February 8, 2014 in Chart Alert

GBP/USD has seen a strong fall to 1.5959 after showing some strong bullish sign by touching 1.6668. This post is an extension of one of the previous chart alert titled “GBP/USD Achieves One More Milestone” to check on the updated status.

As we had mentioned in the above mentioned post, despite breaking over the expected strong resistance of 1.6618 and moving as high as 1.6668, the pair had not been able to sustain the momentum. This fact is evident from the weekly closings. If the resistances hold then the pair may try to test the 4 year old resistance trend line which should now act as support. This support zone would be in the range of 1.6180/1.6190.

The following weekly chart shows the current status of the price-action against the long-term trend-lines:

Chart showing GBP/USD's support and resistance trend lines.

Let’s take a closer look on the above chart.

A closer look on GBPUSD trend lines and recent resistance

If the supports first at 1.6217 and then 1.6080 fails then the possibilities to test the psychological level of 1.6000 can not be ruled out. However such a move may extend further to complete the 38.2% retracement of the gains from 1.4813 to 1.6668.

GBP/USD and retracement levels

We are keeping our fingers crossed but overall there is no change in the mid-term bullish outlook.

Do check the regular updates of GBP/USD outlook and do share your comments and opinions about the price-action of GBP/USD.

An Eye on EUR/JPY

February 2, 2014 in Chart Alert

A cautious approach considering a possible reversal of EUR/JPYEUR/JPY continued it’s strong fall and that has brought the bearish outlook in the picture. However, the current price action is testing a very critical support zone. As we had mentioned at “Will EURJPY Test The 16 Months Old Support Pattern Again?” , the pair has been maintaining a support pattern of finding a support near the 22-week EMA for past 16 months. The current price -action is testing that level.

EUR/JPY and 22-week EMA

EUR/JPY testing the strong support level which has been in place for past 16 months.

The current 22-week EMA is 137.43 and the recent low has been 137.50.

On one side we have the price near a critical support but what else is different for the recent fall? Well, since the uptrend started from the low of 94.12 of July 2012, this is the first time that the pair has seen a decline for 5 weeks continuously.

5-weeks of continuous fall

5 weeks of continuous fall for EURJPY.

While the continuous fall for 5 weeks catches the eye but it is still less than the 886 pips of fall which had taken place in 4 weeks during May and June of 2013. The past 5 weeks have seen a fall of 819 pips.

What could be the next support level?

EURJPY and 200-day moving average.

If the above mentioned support fails then the bearish sentiments will get a good confirmation. However the next support may come at 200-day moving average which is currently at 135.45.

You may also like to check the detailed and periodic updates of EUR/JPY outlook. Do share your opinions in the comment box below.

Can we expect further declines by EUR/USD?

February 1, 2014 in Chart Alert

As this is a chart alert for EUR/USD and hence we will just touch upon the important facts about the price-action. The price action is indicating further fall but there are some factors which are also arguing about the same.

Point 1: The recent fall broke the 200-day moving average and that brings in the bearish sentiments.

EUR/USD breaks 200 day moving average support first time after the first week of August 2013.

Point 2: During October 2013 the pair had touched a high of 1.3832. December 2013 saw the pair to go higher to 1.3895. All the moves beyond 1.3832 show a failure to sustain above 1.3832, however.

EUR/USD's failure to sustain over 1.3832 despite inching higher.

Point 3: The 38.2% retracement of the gains from 1.2755 to 1.3894 is at 1.3459. This level is slightly below the recent low of 1.3479 and may bring support.

EUR/USD and Fibonacci retracements support levels.

Point 4: The price action is also close to a zone which had cause continuous support during three weeks of September and October 2013. The low of that support i.e. 1.3461 is just 2 pips above the 38.2% retracement support, as mentioned above.

EUR/USD - near the previous support levels

 

Do also check the weekly updated EUR/USD outlook. Share your opinions and comments in the comment box to discuss the price-action further.

Will EURJPY test the 16 months old support pattern again?

January 26, 2014 in Chart Alert

The break of 140.00 when EUR/JPY touched 139.75 during last week indicates that the pair may extend it’s decline. However the weekly closing slightly above 140.00 suggests that the support may still work. There is another support in the picture and that is the lower edge of the daily Ichimoku cloud.

Price action near the lower edge of the cloud

EURJPY and daily Ichimoku cloud

Further consolidations can not be ruled out. However that does not change the overall outlook which remains bullish. EUR/JPY has been following a support pattern for past 16 months and till that holds, further recoveries will still be expected.

EUR/JPY’s support pattern

Support pattern for EURJPY

As clear from the above chart, the pair has been finding support near 22-week EMA since September 2012 i.e. past 16 months. The current 22-week EMA is at 137.42.

More or less the same facts about the current support of Ichimoku cloud and 16 months old support pattern near 22-week EMA also hold true for GBP/JPY and lets have a look on those charts as well.

GBP/JPY and daily Ichimoku cloud

GBPJPY and daily Ichimoku cloud

Support near 22-week EMA

Support pattern for GBPJPY

You may also like to check the weekly updates of EUR/JPY outlook.

GBP/USD achieves one more milestone

January 25, 2014 in Chart Alert

We had been talking about the long standing support and resistance trend-lines for GBP/USD, and the fact that during November 2013, GBP/USD pair had ultimately had a breakout from the long containment to move over the resistance trend-line for 4 years.

The last week highlighted the achievement of another milestone when the pair broke over 1.6618 to go as high as 1.6668. 1.6618 had proved to be a very strong resistance during the week of August 15, 2011. The pair had fallen by 1347 pips to 1.5271 from that resistance.

GBP/USD weekly chart with support and resistance trend-lines

GBPUSD weekly chart - break of another resistance.

Lets have a closer look on the same chart to check on the short-term possible support levels:

GBP/USD weekly chart for a closer look of supports and resistances

What to expect?

Considering the fact that for past 5 weeks the weekly closings and openings have been finding resistance at 1.6483/1.6485, the possibilities of some more downward consolidation can not be ignored. However, the overall outlook remains bullish till the pair manages to remain over 1.6309. Even a failure of that support will not be enough to make the outlook bearish but only turn it to neutral for the near-term. The bearish sentiments will only start pouring in if the support at 1.6217 fails. With all these the next target should be 1.6746.

You may also like to check the weekly updated GBP/USD outlook.

Do share your comments/opinions to discuss the price-action further.