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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.

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.

NZDUSD drops after bearish price action signals

April 3, 2014 in Forex Analysis

nzdusd

The NZDUSD rallied straight into a weekly resistance level last week, which has contained prices on 3 consecutive tests (visible on the weekly chart). The most recent re-test of the market top, seen the daily candle produced two bearish rejection candle price action trade setups, which have now ripened into profit.

Last session the bulls were shaken out, and price finally dropping lower. The sell off was quite aggressive, coming straight down from the open price of the day, and closing near the day lows. We’re now moving into London trading hours, and we can see the current daily candle has demonstrated that an asian session retracement has been rejected.

Statistically, when we see this type of asia session rejection after a “power day”, it’s typical to see further extensions of the overall movement. Price has already breached the low of the previous bear day and looking to move onto the bearish side of the mean value. Once price breaches the 20 ema, there is so much open space for the market to fall into. Traders who aren’t in the move can wait for further bearish price action setups to develop, if the downward movement develops into a full blown bearish trend.

Waiting for price action buy signal on the AUDUSD

March 27, 2014 in Forex Analysis

audusd waiting to buy

The Australian dollar has been the performer this week with strong bullish closes on every trading session, pushing the AUDUSD into fresh highs. We’ve been focusing a lot on the AUDUSD because it’s been dropping some nice clean price action signals.

On the AUDUSD daily chart you can see the market has just fired up higher off the back of a bullish rejection candle with a strong close to the body. Now the market has breached a key containment level and floating at new highs, we are waiting for pullbacks into the mean value for buying opportunities.

We’re watching the important level marked on the chart to hold as support. A bullish price action reversal signal will be the icing on the cake here. The area we’ve got the spot light on also should line up nicely with the mean value, which creates a “hot spot” or high confluence area to look to get long.

USDJPY: Looks For Directional Trigger

March 26, 2014 in Forex Analysis

The pair remains trapped in a range as it looks to create directional moves. This development leaves it vulnerable to the downside possibly towards the 101.27 level. Below here will expose the 100.75 level with a violation aiming at the 100.00 level and subsequently the 99.50 level. Its daily RSI is bearish and pointing lower suggesting further decline. On the upside, resistance resides at the 102.62 level. A cut through here will aim at the 103.00 level and then the 103.50 level, its psycho level. On the whole, USDJPY faces downside pressure on correction.

Waiting for price aciton sell signal on the GBPUSD

March 26, 2014 in Forex Analysis

gbpusd waiting to short

The GBPUSD market recently broke a key level after a large bearish rejection candle formed right on support. The rejection candle was covered more in detail in our previous post: GBPUSD bears putting heavy pressure on support.

Now the market has broken downwards and produced modest bearish movement from the support breakout event, we’ve started to see the market recover from some of those losses in a counter-trend retracement in this weeks trading.

This counter-trend movement is to be expected, and in fact we need these movements to occur to bring price back to it’s mean value where we can look for trade opportunities. We’ve got our sights lines up on a bearish ‘hot spot’ where an important support or resistance level lines up with the mean value. If a bearish price action signal printed here on the daily chart would over a nice low risk/high probability trading opportunity. Keep your eyes pealed.

AUDUSD bullish pin bar reversal | anticipating higher prices

March 25, 2014 in Forex Analysis

audusd bullish pin bar

The AUDUSD daily chart price action shows the market is slowly making its way upwards, in a slow grinding upwards trend. Last session the market tried to sell off but the bulls got involved at the mean value and drove prices back higher to close the day higher than it’s open.

This is a strong rejection candle and its very likely we will see higher prices develop from this setup. Keep and out for any further retracements back to the mean to grab a tweaked entry price to this bullish momentum. The overhead resistance may be a trouble area here but the bullish pressure here is mostly likely to eventually over come the containment line, which could lead to the next extension upwards of the uptrend.

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.

Text book perfect bearish swing trade on AUDNZD

March 10, 2014 in Forex Analysis

audnzd perfect text book trade setup

The AUDNZD has been getting a lot attention of us price action traders the last few months dropping some really nice clear cut signals in the monster downtrend which developed. Recently the market has bounced of a strong long term monthly support level, dropped a large bearish rejection candle and is now heading back down looking to retest those important monthly lows.

On friday after the NFP release, the AUDNZD rejected a move higher into an old support level which responded as new resistance, a dictionary definition of a swing level pretty much. The market close right on the lows of Friday’s trading, leaving no lower wick what so ever, a very bearish indicator.

This is such a key level for a bearish signal to form, multiple non-correlated variable are lining up to support a short position. The swing level, the mean value, the fact the market closed lower than it’s open price and the high of the rejection candle made a lower high. There isn’t really any more boxes to tick here and we will probably see lower prices develop next week with a possible retest of the monthly lows.

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.