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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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GBPJPY Channel Support (June 12, 2017)

Postby katetrades » Mon Jun 12, 2017 1:41 am

Guppy sold off sharply upon testing the channel resistance on its 4-hour time frame and is now hovering around support. A bearish flag pattern can be seen so a continuation of the move could lead to a break below the channel support around 139.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 200 SMA dynamic resistance lines up with the top of the channel, adding to its strength as a ceiling. Stochastic is heading south to show that sellers are still in control of GBPJPY price action.

Bearish pressure could stay in play for the pound now that the UK elections have resulted in a hung parliament, which is a more politically unstable position compared to a few months back. This could weaken the government's negotiating stance during Brexit talks and PM May seems to be scrambling to fix the situation.

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This week, there are a number of top-tier releases lined up from the UK, namely CPI, retail sales, jobs data, and the BOE decision. As for the yen, the BOJ has its policy decision scheduled on Friday so there may be volatility from that end as well.

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EURGBP Range Breakout (June 13, 2017)

Postby katetrades » Tue Jun 13, 2017 4:13 am

EURGBP was previously trading inside a range with support around .8400 and resistance at .8800. Just recently, the pair broke past the resistance to signal that buyers are taking hold.

Price closed back below the resistance in a quick pullback at the end of the previous week but is now reestablishing the climb. However, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside.

Stochastic is also on the move down to show that sellers might regain control of price action. However it also appears to be turning higher to suggest that buyers are putting up a fight.

The UK elections resulted in a hung parliament, which means more political uncertainty as the government moves closer to the start of Brexit negotiations. Traders are now looking to the Queen's speech next week and to upcoming top-tier UK data to see if the economy can weather this potential storm.

UK CPI is lined up first and no change in the headline reading of 2.7% is eyed. Core CPI could dip from 2.4% to 2.3%. Later in the week, UK retail sales and jobs data are due but the bigger mover might be the BOE decision.

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Meanwhile, the euro has gained support on a stronger political showing in France. Macron's government is highly expected to secure legislative majority, which could mean an easier time for them to pass reforms. German ZEW economic sentiment index is due today and a rise from 20.6 to 21.6 is eyed.

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GBPJPY Downtrend Channel (Jun 14, 2017)

Postby katetrades » Wed Jun 14, 2017 11:24 am

GBPJPY just bounced off its channel support again and could be gearing up for a correction to the resistance at the 141.50 minor psychological mark. If this keeps gains in check, the selloff could resume back to the swing low or to the channel support at 138.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA is edging close to the channel resistance, adding an extra barrier in case a pop higher happens. Stochastic is still pointing up to show that buyers are in control of price action for now.

The UK just printed stronger than expected CPI, allowing traders to speculate that the BOE statement later in the week could be more hawkish. In addition, headlines are showing that the UK government may have already struck a coalition with the DUP to have a more stable front in next week's Brexit talks.

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Meanwhile, Japan's BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected. The FOMC statement could also influence yen price action indirectly as dollar demand is usually negatively correlated.

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EURCAD Breakdown and Correction (Jun 15, 2017)

Postby katetrades » Thu Jun 15, 2017 2:42 am

EURCAD recently broke below a rising wedge formation visible on its 4-hour time frame, signaling that bearish pressure has returned. Price dipped to the 1.4800 area before showing signs of a pullback.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the broken wedge support around 1.5050-1.5100. This is also around the moving average dynamic inflection points.

The 100 SMA is still above the longer-term 200 SMA on this time frame but a downward crossover seems to be looming, possibly drawing more sellers to the mix. Stochastic is still indicating oversold conditions, though, so the correction could be in play for a while.

The Loonie got a strong boost earlier in the week when BOC policymaker Wilkins mentioned that they need to assess whether additional stimulus is still necessary or not. This was echoed by BOC head Poloz who said that rates are excessively low, prompting may to speculate that a hike is underway soon.

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Meanwhile, the euro has been dragged lower by weaker than expected medium-tier reports from Germany. This includes WPI, final CPI, and the ZEW economic sentiment index. French final CPI and Canadian manufacturing sales are due next.

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GBPNZD Channel Resistance (Jun 16, 2017)

Postby katetrades » Fri Jun 16, 2017 4:09 am

GBPNZD is trending lower but has just pulled up to the channel resistance around the 1.7750 minor psychological mark. If this area keeps gains in check, the pair could head back down to support at the 1.7200 handle.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 200 SMA coincides with the channel resistance as well, adding to its strength as a ceiling.

Stochastic is still moving up to indicate that there is some buying pressure left. If bulls stay in control, they could push for a break past the channel resistance and a downtrend reversal for this pair. However, the oscillator is already nearing the overbought level.

The BOE decision turned out more hawkish than expected as three policymakers voted to hike rates due to rising inflationary pressures. This was a relatively tight decision as many had been expecting the central bank to be more cautious owing to Brexit-related risks.

Prior to this, headline and core CPI came in stronger than expected while the claimant count change was also better than consensus. However, the average earnings index and retail sales both fell short, indicating that consumers are feeling the pinch from higher prices of goods.

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As for the Kiwi, data has been weaker than expected, with the economy expanding by only 0.5% versus the projected 0.7% growth figure in Q1. However, inflation reports from New Zealand have also been beating expectations and traders might hold out for next week's RBNZ decision.

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GBPNZD Countertrend Play (Jun 19, 2017)

Postby katetrades » Mon Jun 19, 2017 4:05 am

GBPNZD has just bounced off its descending channel resistance and is making its way towards support. If the bottom at the 1.7300 handle holds, price could make another test of resistance. Stochastic is already indicating oversold conditions, which means that sellers are tired and could let buyers take over.

However, the 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the pair could be due for a break lower. In that case, price could establish a steeper selloff.

The pound drew some support from a surprisingly hawkish BOE decision but was unable to hold on to its gains versus the Kiwi, which is also waiting on a potentially hawkish central bank decision this week. Data from the UK economy has been mixed but inflation and consumer spending data signal that policymakers might need to tighten in order to keep growth supported.

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Event risks for the week include headlines pertaining to Brexit talks and the Queen's speech. There are speculations on a "hard Brexit" or even the possibility of a "no deal" situation which could be bearish for the currency. On the other hand, smooth negotiations could stoke expectations that the UK can emerge with a beneficial deal that would be bullish for the pound.

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AUDNZD Ascending Channel (Jun 20, 2017)

Postby katetrades » Tue Jun 20, 2017 4:55 am

AUDNZD has been trending higher, moving inside an ascending channel visible on its 1-hour time frame. The pair has just bounced off support and could be due for a test of resistance soon.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If bullish pressure is strong enough, a break past the resistance at 1.0600 could mark the start of a steeper climb. However, stochastic is already indicating overbought conditions and turning lower could indicate a return in selling momentum.

The main event for the Kiwi is the RBNZ decision later on this week, during which the central bank might keep rates on hold while giving some hawkish hints. However, a bit of jawboning is also expected since the currency has been outpacing most of its peers for the past few weeks.

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As for the Aussie, the RBA meeting minutes are up for release. The central bank was mostly upbeat in their latest policy decision so the minutes could reinforce these views. For now, though, Moody's downgrade on big Australian banks due to housing conditions could limit the currency's gains.

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GBPUSD Make or Break (Jun 21, 2017)

Postby katetrades » Wed Jun 21, 2017 5:08 am

Cable is sitting right on the ascending channel support visible on its daily time frame. A bounce could take it back up to the resistance at the 1.3250 minor psychological level while a break could spur a longer-term selloff.

The 100 SMA has just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In addition, the moving averages are close to the channel support at the 1.2750 minor psychological level, adding to its strength as a floor.

Stochastic is treading lower but is approaching the oversold area to indicate weakening selling pressure and a potential return in bullish momentum. 

Brexit risks are currently weighing on sterling these days as the UK government could get pushed around by EU officials. Note that PM May has yet to strike a coalition with the DUP to have a stronger front. The upcoming Queen's Speech could restore some confidence in the UK government and economy, which might be bullish for the currency.

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As for the dollar, the recent slide in equities could dampen its gains once more as markets don't seem to be impressed by the Trump administration's push for fiscal reform. While FOMC member Dudley gave a hawkish testimony, other policymakers like Evans don't seem to be as upbeat.

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EURCAD Area of Interest (Jun 22, 2017)

Postby katetrades » Thu Jun 22, 2017 5:25 am

EURCAD recently sold off but seems to be finding support at an area of interest visible on its daily time frame. Applying the Fib tool on the latest swing high and low also shows that the 38.2% level lines up with support at the 1.4800 mark.

The 100 SMA crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is also turning up to indicate a return in bullish momentum, which might be strong enough to take the pair up to the swing high at 1.5300.

Crude oil prices have been on a decline lately and this seems to be taking its toll on the positively-correlated Canadian dollar, which has previously drawn support from hawkish BOC hints. US crude oil stockpiles posted a larger than expected draw of 2.5 million barrels but traders seemed more focused on rising output from Libya.

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As for the euro, improved sentiment in the European region seems to be shoring up the shared currency for now. There were no major reports out of the euro zone and only the ECB Bulletin is lined up next. In Canada, the retail sales and CPI reports are lined up for Thursday and Friday, respectively.

By Kate Curtis from Trader's Way
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EURJPY Descending Channel (Jun 23, 2017)

Postby katetrades » Fri Jun 23, 2017 5:08 am

EURJPY is trending lower on its 4-hour time frame and is currently testing the resistance of its falling channel. If the 124.00 handle holds as resistance, the pair could slide back to support at the 122.00 handle.

The 100 SMA is below the longer-term 200 SMA on the 4-hour chart so the path of least resistance is to the downside. In addition, these moving averages line up with the channel resistance, adding to its strength as a ceiling.

Stochastic is still on the move up, though, so there may be some buying pressure left. In that case, a break past the resistance could lead to a reversal from the ongoing selloff.

There have been no major reports out of the euro zone so far this week as traders are keeping close tabs on Brexit negotiations instead. Looking ahead, the PMI reports from the manufacturing and services sectors of Germany and France are lined up.

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Analysts are expecting small dips in activity, which could push the shared currency lower against the safe-haven yen. Japan has its flash manufacturing PMI up for release and a climb from 53.1 to 53.4 is expected.

By Kate Curtis from Trader's Way
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