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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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USDCHF Long-Term Range (Jun 26, 2017)

Postby katetrades » Mon Jun 26, 2017 1:41 pm

USDCHF has sold off recently but it could find strong support at a long-term range bottom around the .9500-.9550 levels. A bounce off this area could lead to a move back to the resistance at 1.0400 or at least until the mid-channel area of interest at .9900.

The 100 SMA is below the longer-term 200 SMA on the daily chart so the path of least resistance is to the downside. In that case, a break of support could be possible, sending the pair on a longer-term drop. Stochastic is also pointing down to show that sellers are in control of price action.

Economic data from the US turned out weaker than expected at the start of the week as headline and core durable goods orders both missed expectations. The former showed a 1.1% drop versus the projected 0.5% dip while the latter indicated a meager 0.1% uptick versus the projected 0.4% gain. Fed Chairperson Yellen's testimony is lined up next.

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There have been no major reports out of Switzerland yet and none are due today. This signals that market sentiment and profit-taking could drive price action for the franc. The next major report is the UBS consumption indicator and it might show an improvement from the earlier 1.48 reading.

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AUDJPY Double Bottom Breakout (Jun 27, 2017)

Postby katetrades » Tue Jun 27, 2017 4:36 am

AUDJPY recently formed a double bottom pattern on its daily time frame to signal that a reversal from the selloff is underway. Price just broke past the neckline around the 84.50 minor psychological level to confirm that bulls are charging.

The chart pattern is approximately 300 pips tall so the resulting rally could be of the same size. However, stochastic is turning down from the overbought region to indicate a pickup in selling pressure. Also, the gap between the moving averages is narrowing to signal that sellers could regain the upper hand.

There are no major reports lined up from the Australian economy today so any big moves could be spurred by changes in market sentiment and commodity prices. In particular, a surge in iron ore prices could prove bullish for the Australian currency.

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Meanwhile, there are no major reports due from Japan as well so yen price action could hinge on US bond yields and risk sentiment. Keep in mind that it's almost the end of the month and quarter so there could be a lot of profit-taking happening towards the end of the week.

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EURNZD Area of Interest (Jun 28, 2017)

Postby katetrades » Wed Jun 28, 2017 6:17 am

EURNZD appears to be pulling up from its dive with the recent strong bounce, but this might represent a mere correction from the long-term slide. Applying the Fib tool on the latest swing high and low shows potential pullback areas.

In particular, the 50% retracement level could hold as resistance as this lines up with a former support zone. It also coincides with the 200 SMA dynamic inflection point. The 100 SMA is safely below the longer-term 200 SMA so the path of least resistance could be to the downside.

Stochastic is on its way up to suggest that buyers could be in control of price action for now. However, the oscillator is already dipping into the overbought zone to hint at rally exhaustion soon. If sellers take over, a drop back to the swing low could take place.

Earlier in the day, ECB Governor Draghi dropped hawkish hints in saying that the central bank might withdraw stimulus soon. This led to fresh speculations of tapering bond purchases, which could shore up the value of the shared currency.

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Meanwhile, CFTC Commitments of Traders reports are hinting at extreme positioning for the Kiwi, which basically means that it could be hitting a top. In that case, profit-taking could weigh heavily on the currency at the end of the month and quarter.

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EURGBP Short-Term Channel (Jun 29, 2017)

Postby katetrades » Thu Jun 29, 2017 5:03 am

EURGBP continues to trend higher after breaking past a major range resistance visible on its longer-term charts. On the 1-hour time frame, it can be seen that the pair is moving inside an ascending channel formation and is testing support.

The 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. In other words, support at .8800 is more likely to hold than to break, sending price back up to the .8900 area. Stochastic is also pulling up from the oversold area to signal a return in bullish pressure.

Earlier in the week, ECB head Draghi hinted that they could withdraw stimulus soon, sending the euro on a strong rally. However, these gains were quickly erased when policymakers signaled that the Governor's remarks may have been misinterpreted.

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As for the pound, BOE head Carney's remarks also sounded more upbeat than usual as he mentioned that a global boom would make a rate hike necessary. The vote on the Queen's Speech could likely drive pound price action from here but this relatively hawkish statement could keep the currency afloat.

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GBPUSD Countertrend Play (Jun 30, 2017)

Postby katetrades » Fri Jun 30, 2017 4:53 am

The ascending channel on Cable's daily time frame is still intact and price is heading towards the resistance around 1.3400. A countertrend opportunity could arise if reversal candlesticks form around this area. In that case, a move back to support at the 1.2900 area could take place.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the moving averages are close to the channel support, adding to its strength as a floor. Stochastic is heading up to indicate the presence of buying pressure.

Hawkish remarks from a few BOE officials have shored up the pound in the past few days, along with the lack of negative Brexit updates. Even Governor Carney acknowledged that removal of stimulus could be necessary if inflationary pressures continue to dampen consumer spending.

As for the dollar, weaker expectations that the Trump administration could follow through on its reform agenda has weighed on the currency. The next rate hike isn't due until the fourth quarter of the year so some dollar weakness could be in the cards in the next few months.

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Of course Brexit risks remain and there's always a good chance that tensions during talks could dampen demand for the UK currency. Low liquidity during the summer months could make this pair more sensitive to headlines.

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USDJPY Double Bottom (July 03, 2017)

Postby katetrades » Mon Jul 03, 2017 9:38 am

USDJPY looks ready for more gains as the pair has formed a double bottom on its daily time frame. Price failed in its last two attempts to break past the 108.00 support zone and is on its way to test the neckline at 114.00-114.50. A break past this resistance could send the pair up by around 600 pips or the same height as the chart formation.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, but the gap is narrowing to signal that a new crossover could take place. If this materializes, price could still gain bearish momentum and test support again. Also, stochastic is indicating overbought conditions and might be ready to head back down, reflecting a return in selling pressure.

Earlier today, economic data from Japan came in mixed, following last Friday's set of weaker than expected inflation readings. This underscores the BOJ's stance of keeping monetary stimulus in place for the time being, unlike most major central banks which seem to have shifted to a less dovish bias lately.

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Meanwhile, medium-tier data from the US turned out mostly stronger than expected last week, but the real test of dollar strength could come on Friday's NFP release. Another downbeat jobs figure could undermine the Fed's rate hike timeline but an upbeat result could reinforce rate hike expectations for September.

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EURUSD Retracement Setup (July 04, 2017)

Postby katetrades » Tue Jul 04, 2017 3:45 am

EURUSD recently surged past the resistance at the 1.1250-1.1300 psychological levels then climbed close to the 1.1450 minor psychological resistance. Price retreated from here, indicating that a correction from the rally is happening.

Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% retracement level coincides with the broken resistance, which might now hold as support. The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside while the 200 SMA lines up with the 50% Fib, which might also keep losses in check.

Stochastic has pulled up from the oversold area to indicate a return in buying pressure. This could reflect a shallow correction opportunity so the 23.6% Fib might already be enough to hold as support and push the pair up to the swing high and beyond.

Euro zone data turned out mixed on Monday as some final manufacturing PMI readings from its top economies fell short of expectations. Meanwhile, the US printed an impressive ISM manufacturing PMI reading which reflected stronger hiring for the month, hinting that the NFP release might beat estimates as well.

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Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness. US banks are closed for the Fourth of July holiday.

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USDJPY Short-Term Uptrend (July 05, 2017)

Postby katetrades » Wed Jul 05, 2017 3:08 am

USDJPY has been trending higher recently, moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and could be due for a test of support near the 112.50 minor psychological level from here.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. The 100 SMA is also close to the bottom of the channel, adding to its strength as a floor. Stochastic is heading down to signal that sellers may be in control but the oscillator is nearing oversold levels.

US banks have been closed for the Fourth of July holiday so liquidity has been lower than usual. Tankan data from Japan has shown some improvements but it looks like the Asian currency is reeling from the recent North Korean nuclear missile test launch.

Looking ahead, US factory orders data is up for release today and analysts are expecting to see a 0.4% drop. The FOMC minutes are also due and this should provide more clues on when the Fed might hike rates or start unwinding its balance sheet.

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Only the average cash earnings and leading indicators data are due from Japan for the rest of the week, but the yen could be more sensitive to risk flows and global bond prices. With that, the US NFP report could also prove to be a big catalyst before the week comes to a close.

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AUDUSD Channel Pullback (July 06, 2017)

Postby katetrades » Thu Jul 06, 2017 5:05 am

AUDUSD is trending higher on its short-term time frames, moving inside an ascending channel on its 1-hour chart. Price is currently testing support and might be due for a bounce back to resistance at the .7750 to .7800 levels. Stochastic is indicating oversold conditions and is pulling up to signal a return in bullish momentum.

Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the channel support at the .7600 major psychological level and an area of interest. The 100 SMA also coincides with this level and is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

The RBA was less hawkish than expected in their monetary policy statement this week, barely highlighting the improvements in the economy and emphasizing that there are still a few roadblocks in place. Meanwhile, the FOMC minutes revealed that policymakers are still divided on their tightening and unwinding time line.

Australia is set to print its trade balance next and a larger surplus of 1.00 billion AUD from the earlier 0.56 billion AUD figure is expected. A stronger than expected result could spur a rally for the Aussie, especially since China has printed mostly stronger PMI readings lately to signal a recovery in demand.

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The US NFP release on Friday could also be an event risk for this pair as traders are hoping to see an upside surprise. PMI readings and other leading indicators are hinting at strong employment prospects, which might be enough to shore up rate hike expectations for September or December.

By Kate Curtis from Trader's Way
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GBPJPY Range Resistance (July 07, 2017)

Postby katetrades » Fri Jul 07, 2017 4:21 am

GBPJPY has been moving back and forth between support around the 138.50 and the range resistance at 147.50-148.00 visible on the daily time frame. Price is currently testing the resistance and could be due for a drop back to support. Stochastic is indicating overbought conditions, which means that sellers could take over while buyers take a break.

However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the resistance is more likely to break than to hold, possibly sending the pair up by 900 pips or the same height as the rectangle pattern.

The yen has been giving up ground against its rivals recently on the BOJ's dovish monetary policy stance and the rise in US bond yields. Japan's average cash earnings figure and the leading indicators are lined up for release and strong data could still shore up demand for the Japanese currency.

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Another event risk for the yen is the upcoming US jobs report which might influence bond yields. Strong results could draw traders back to US assets and out of the yen while weak figures could renew yen gains. As for the pound, UK manufacturing and industrial production figures are due, with analysts expecting to see stronger gains this time.

By Kate Curtis from Trader's Way
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