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Daily Technical Analysis by Kate Curtis from Trader's Way

Forex Analysis by Kate Curtis of Trader's Way . Kate Curtis updates the outlook and analysis daily in this sub-forum.
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USDCAD Retracement Setup (May 29, 2017)

Postby katetrades » Mon May 29, 2017 5:01 am

USDCAD has pulled back from its rally to the 1.3785 area to test the Fibonacci retracement levels visible on its daily chart. This lines up with a former resistance level at the 1.3400 area that might now hold as support.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, these moving averages are close to the 61.8% Fib, which might be the line in the sand for the uptrend.

Stochastic is already indicating oversold conditions and is turning higher, suggesting that buyers could regain control of price action. RSI is pulling up as well so USDCAD might follow suit.

Economic data from the US came in mostly stronger than expected last week, with only the core durable goods orders figure falling short. This report printed a 0.4% drop versus the projected 0.4% uptick. However, traders appear to have focused on the upside surprise in preliminary Q1 GDP, which was upgraded from 0.7% to 1.2%, outpacing the estimated 0.9% growth figure.

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Meanwhile, the Loonie has gained a lot of support from the OPEC decision to extend its output deal by nine months as expected. This could keep a lid on global supply and allow prices to stay afloat even as demand weakens, something that is positive for the Loonie.

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EURGBP Channel Resistance (May 30, 2017)

Postby katetrades » Tue May 30, 2017 4:10 am

EURGBP has been trending lower on the daily time frame and is currently testing the resistance of its descending channel. If this keeps gains in check, price could head back down to support at the .8300 major psychological level.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is pretty narrow so a crossover could happen anytime.

Stochastic is already indicating overbought conditions and appears ready to turn lower, possibly drawing sellers back to the game. On the other hand, sustained buying pressure could lead to a break past the channel resistance at .8700 and a reversal from the selloff.

In his latest testimony, ECB head Draghi acknowledged that economic risks have subsided but warned that headline inflation could remain subdued. He also mentioned that an extraordinary amount of monetary policy support is needed, leading to some euro weakness.

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Meanwhile, the latest poll from ComRes indicated a 12-point lead for Theresa May's Conservative party at 46% versus the 34% of Labour. This is a wider gap compared to the YouGov results at a 5-point lead, assuring market watchers that the UK can avoid additional political uncertainty ahead of Brexit negotiations.

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GBPNZD Retracement Setup (May 31, 2017)

Postby katetrades » Wed May 31, 2017 2:53 am

GBPNZD has sold off quite sharply recently but this dive could come to a halt as price nears an area of interest. Recall that the pair also broke past the neckline of a double bottom pattern, indicating that further gains are in the cards.

Applying the Fib tool on the latest swing low and high shows that the 61.8% retracement level lines up with the former resistance and neckline at the 1.7700 major psychological mark, which might now hold as support. If so, the pair could make its way back up to the swing high near 1.9000.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside while stochastic is indicating oversold conditions. However, the gap between the moving averages is narrowing to indicate that a downward crossover and pickup in bearish pressure could come into play.

The latest poll from YouGov suggests a narrowing lead for PM May's Conservative Party and indicated that it would fall 16 seats short of securing the majority. This could mean more political uncertainty down the line and a weaker bargaining stance for the UK government in Brexit talks.

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Meanwhile, the RBNZ just released its Financial Stability Report and mentioned that risks are fading. The central bank reiterated that the country's financial system remains sound but that risks stem from higher funding costs. The RBNZ also noted that house price pressures are slowing but are still elevated relative to income and rent.

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NZDJPY Range Setup (Jun 01, 2017)

Postby katetrades » Thu Jun 01, 2017 6:02 am

NZDJPY has been moving sideways, bouncing off support around the 78.00 major psychological level and resistance at 78.85. Price just got rejected on its test of the resistance and could be setting its sights back on support.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. In addition, the 100 SMA appears to be keeping losses in check at the moment since it lines up with the mid-range area of interest.

Stochastic is on the move down to show that sellers are still in control of price action. However, the oscillator is nearing the oversold area to show that buyers might be ready to get back in the game soon.

The latest RBNZ Financial Stability Report reflected lower risks in the housing sector as price pressures are reportedly abating. The report also acknowledged improving global financial conditions. New Zealand is due to release its quarterly overseas trade index next and a 4.0% increase is eyed.

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As for the yen, Japan is set to release its capital spending figure and might show a 3.9% increase, slightly higher than the previous 3.8% figure. The final manufacturing PMI is also lined up and no changes to the initial 52.0 figure is expected.

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GBPJPY Channel Resistance (Jun 02, 2017)

Postby katetrades » Fri Jun 02, 2017 2:44 am

GBPJPY has been trending lower on its 1-hour chart, moving inside a descending channel formation. Price is currently testing the resistance and could be due for a move back to support around 140.50.

The 100 SMA is below the longer-term 200 SMA on this time frame, indicating that the path of least resistance is to the downside. In addition, the 200 SMA coincides with the channel resistance, adding to its strength as a ceiling.

Stochastic is already hovering around the overbought zone to indicate that buyers are tired from the rally and that sellers might take over. On the other hand, if bulls stay in control, a break past the resistance at 143.50 could mark the start of an uptrend.

Economic data from the UK showed a bit of a slowdown, with the manufacturing PMI down from 57.3 to 56.7, just slightly above the consensus at 56.5. Nationwide HPI showed a 0.2% drop in price levels versus the projected 0.2% uptick.

In Japan, reports have printed stronger than expected results. Capital spending is up 4.5% versus 3.9% in the first quarter while the final manufacturing PMI was upgraded from 52 to 53.1 to reflect a stronger pace of industry expansion.

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Japan's consumer confidence index is due next and an improvement from 43.2 to 43.6 is expected. In the UK, the construction PMI is due and a drop from 53.1 to 52.7 is eyed.

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EURCAD Rising Wedge (Jun 05, 2017)

Postby katetrades » Mon Jun 05, 2017 2:51 am

EURCAD has formed higher lows and higher highs, consolidating in a rising wedge formation on its 4-hour chart. Price seems to have bounced off the resistance at the 1.5250 minor psychological level and could be due for a test of support.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This could either mean that an upside breakout is due or that the wedge support would keep losses in check. Note that stochastic is indicating overbought conditions and is turning lower to indicate a return in bearish pressure. 

Economic data from the euro zone has been mostly stronger than expected last week but Draghi has stayed cautious in his recent speeches. This suggests that this week's ECB statement might not contain any major shifts in bias, especially since the flash CPI readings turned out weaker than expected.

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Meanwhile the Loonie has still been under selling pressure as oil failed to stage a strong rebound even after the OPEC decided to extend their output deal by nine months. Traders could continue to pay attention to inventories data from the API and EIA to see if the reductions in supply could continue.

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EURJPY Symmetrical Triangle (Jun 06, 2017)

Postby katetrades » Tue Jun 06, 2017 5:27 am

EURJPY has formed lower highs and higher lows, creating a symmetrical triangle formation visible on its 4-hour time frame. Price just bounced off the resistance and is on its way to testing support at the 124.00 major psychological mark.

The 100 SMA is above the longer-term 200 SMA on this time frame so it's more likely for support to hold than to break. Also, the 100 SMA appears to be holding as dynamic support at the moment. 

Stochastic is indicating oversold conditions, which means that sellers might book profits soon and let buyers take over. Once the oscillator pulls up from the oversold area, buying pressure could take price back up to the resistance at 125.00.

Most euro zone banks have been closed in observance of Whit Monday and data has been less upbeat than usual. These are just the final services PMI readings from the top economies, though, and the bigger event risk is likely the ECB statement due later this week.

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As for the yen, the Japanese currency has gained some support from a weaker dollar when the US NFP disappointed last week. Japanese average cash earnings data is due next and a 0.3% increase is eyed.

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EURNZD Reversal Formation (Jun 07, 2017)

Postby katetrades » Wed Jun 07, 2017 4:00 am

EURNZD seems to be ready to head further south as it formed a head and shoulders pattern on its 1-hour chart. Price has yet to break below the neckline at 1.5650 before confirming that further losses are in the cards.

The chart pattern is approximately 600 pips tall so the resulting breakdown could be of the same size. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. 

However, the gap between the moving averages is narrowing to reflect weaker bullish pressure and a potential downward crossover. Still, stochastic is indicating oversold conditions, which means that sellers might book profits from here and let buyers regain control.

Earlier today, New Zealand reported a 0.6% gain in dairy prices during the latest GDT auction. This marks the sixth consecutive increase, which means that the dairy industry has been on a good streak for the past three months. The ANZ commodity price index in New Zealand also chalked up a 3.2% rebound over the earlier 0.2% drop.

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In Europe, the upcoming snap elections in the UK is weighing on investor sentiment. Traders are also on edge ahead of the ECB decision, although the central bank might sound less dovish this time owing to another round of data improvements.

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EURCAD Rising Wedge Still Intact (Jun 08, 2017)

Postby katetrades » Thu Jun 08, 2017 3:35 am

EURCAD recently sold off to the bottom of its wedge formation on the 4-hour time frame then bounced right back to the top. Another test of the resistance could be underway, but a breakout might be looming soon as the consolidation is getting tighter.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If price breaks higher, it could rally by an additional 400 pips or roughly the same height as the chart formation. Stochastic is on the move up, also indicating that buyers are in control of price action.

Earlier in the day, there were rumors that the ECB would cut its inflation outlook in their upcoming monetary policy statement. However, the shared currency quickly recovered from the drop that ensued.

As for the Loonie, the surprise buildup of 3.3 million barrels in oil stockpiles revived oversupply concerns as analysts had been expecting to see a reduction of 3.1 million barrels. Canadian building permits also printed weaker than expected results with a 0.2% dip versus the projected 2.4% gain.

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Up ahead, the ECB statement could spur a breakout for this pair as the tone of Draghi's testimony could have some clues on future policy moves. Canada has NHPI and housing starts due, along with a speech by BOC Governor Poloz.

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NZDJPY Double Bottom Breakout (Jun 09, 2017)

Postby katetrades » Fri Jun 09, 2017 11:21 am

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.

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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. Japan's final GDP reading was downgraded from 0.5% to 0.3% instead of being upgraded to the 0.6% forecast.

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