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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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EURJPY Countertrend Play (Sep 14, 2017)

Postby katetrades » Thu Sep 14, 2017 8:17 am

EURJPY is still moving in an uptrend but is currently bouncing off the top of its ascending channel resistance on the 4-hour time frame. Stochastic is also turning lower from the overbought zone to indicate a pickup in selling pressure.

If this keeps up, price could drop to the channel support at the 130.50 minor psychological level. This lines up with the moving averages dynamic inflection points. However, the 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is still to the upside.

Euro bulls could wait for an actual test of the channel support before going long and aiming for the channel resistance at the 132.50 minor psychological level or higher.

Data from the euro zone has been mostly stronger than expected so far this week. The German final CPI reading was unchanged at 0.1% as expected but the WPI was stronger than expected at 0.3% versus the projected 0.1% gain. The region's employment change figure for Q2 was also better than expected at 0.4% versus 0.3% while the previous period's reading enjoyed an upgrade.

As for the yen, data has also been upbeat as the BSI manufacturing index recovered from -2.9 to +9.4, much higher than the projected +4.8 reading. Annual PPI came in a notch lower than the projected 3.0% figure at 2.9% but still marked a decent improvement over the earlier 2.6% figure.

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There are no major reports due from both the euro zone and Japan today, so price action could hinge mostly on market sentiment. Also note that the yen has sold off on dollar strength as expectations for an upbeat CPI release kicked in when the PPI beat consensus.

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NZDJPY Breakout and Pullback (Sep 15, 2017)

Postby katetrades » Fri Sep 15, 2017 8:14 am

NZDJPY was previously consolidating inside a falling wedge formation before an upside breakout occurred. Price reached a high of 80.40 before pulling back, possibly making a retest of the broken wedge resistance. Stochastic is heading lower for now, so sellers have the upper hand until the oscillator hits oversold levels and turns higher.

Applying the Fib tool on the latest swing low and high on the 4-hour time frame shows that the 61.8% level is closest to the broken resistance and also lines up with an area of interest or former resistance. This is also close to the 100 SMA dynamic support, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

Risk appetite has picked up for the most part of the week as geopolitical risks related to North Korea's missile threats have been subdued. At the same time, dollar strength has translated to yen weakness, buoying most yen pairs higher in the past few days, although signs of profit-taking are materializing.

There have been no major reports out of New Zealand this week, with the election polls being the main source of volatility. Earlier on, a poll indicating that the Green Party would likely not get enough votes to secure seats in Parliament spurred speculations that the National Party won't have trouble holding on to majority.

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There are no major reports from both Japan and New Zealand until the end of the week, but risk sentiment could be in for a big shift once more if North Korea launches another test or makes more threats over the weekend. Also, the US retail sales release could influence yen-dollar dynamics once more.

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EURGBP Resistance Turned Support (Sep 18, 2017)

Postby katetrades » Mon Sep 18, 2017 4:58 am

EURGBP sold off sharply from its previous rally to the .9300 region, pulling back to an area of interest around the .8700 to .8800 levels. This lines up with the 50% to 61.8% Fibs, which could hold as potential support. Stochastic is already indicating oversold conditions to show that sellers need to take a break, but the oscillator has to pull higher to signal that buyers are getting back in.

The 100 SMA is still above the longer-term 200 SMA on the daily time frame so the path of least resistance is still to the upside. Price is also trading around the 100 SMA dynamic support but a larger pullback to the 200 SMA dynamic inflection point closer to the lowest Fib is possible.

The pound got a strong boost from better than expected UK CPI, which then fueled hawkish expectations for the BOE decision. The central bank acknowledged that the economy has been improving and signaled a potential tightening move down the line, with MPC member Vlieghe reiterating those upbeat points on Friday.

Meanwhile, the euro was also previously supported by ECB tapering expectations but has been vulnerable to a selloff with some officials expressing concern about currency appreciation. Also, the region's trade balance turned out weaker than expected on Friday at a surplus of 18.6 billion EUR versus the earlier 21.7 billion EUR and the estimated 20.1 billion EUR figure.

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Euro zone final CPI readings are due today, along with the Italian trade balance. As for the UK, the freshly released Rightmove HPI showed a 1.2% decline in house prices, following the earlier 0.9% drop. UK retail sales is due later in the week and analysts are expecting to see a 0.2% uptick.

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USDCAD Downtrend Pullback (Sep 19, 2017)

Postby katetrades » Tue Sep 19, 2017 6:12 am

USDCAD continues to trend lower but seems to be in a correction from its current selloff. Applying the Fibonacci retracement tool shows that the the 50% level lines up with the trend line resistance and the 1.2400 major psychological level that might keep gains in check.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. The 100 SMA is already holding as dynamic resistance at the moment but both RSI and stochastic are still on the move up to signal that the correction is still in play.

The line in the sand is at the 61.8% Fib or the 1.2500 handle, which lines up with a previous support zone. A convincing break past this area could signal that buyers are getting stronger and are ready to sustain an uptrend.

The main event risk for this setup is the FOMC statement as the central bank will also release its updated growth forecasts, which might contain revisions on account of the recent hurricanes. In this meeting, a press conference is also scheduled so traders are likely to pay close attention to Yellen's responses to get clues on whether December tightening is still possible or not.

Canada's top-tier events aren't scheduled to take place until Friday, during which the CPI and retail sales figures will be printed. Stronger than expected results could continue to fuel expectations for another BOC interest rate hike before the end of the year.

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Both the BOC and the FOMC have hiked interest rates twice this year but the former has been more of a surprise compared to the latter. In fact, rate hike expectations for the Fed have considerably fallen in the past few months on downbeat inflation and slowing employment.

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EURCAD Triangle Resistance (Sep 20, 2017)

Postby katetrades » Wed Sep 20, 2017 4:05 am

EURCAD is forming a descending triangle on its 4-hour chart and could be due for a test of the top. This lines up with the 61.8% Fibonacci retracement level near the 1.4850 minor psychological mark and a former support zone.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the resistance is more likely to hold than to break. Price is currently testing the 100 SMA dynamic resistance but may still have some momentum left to test the 200 SMA dynamic inflection point.

Stochastic is already indicating overbought conditions and is starting to turn lower to show a return in selling pressure. If any of the Fibs are able to keep gains in check, price could fall back to support around the 1.4500 handle.

The main event risks for this trade are the Canadian retail sales and CPI releases on Friday. Analysts are expecting to see a 0.2% increase in headline retail sales, faster than the earlier 0.1% uptick, and a 0.4% gain in the core version of the report. Headline CPI is projected to come in at 0.2% after staying flat in the previous month.

As for the euro, volatility could also kick higher towards the end of the week with a couple of speeches by Draghi and the PMI readings from its top economies. ECB officials have been trying to talk down the shared currency, wary of spurring more gains on speculations of ECB tapering.

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If Draghi emphasizes the challenges posed by a stronger euro, the shared currency could give up more of its recent gains. On the other hand, focusing on the improvements in the region and giving more clues on what their next policy moves might be could keep it supported.

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GBPNZD Ascending Trend Line (Sep 21, 2017)

Postby katetrades » Thu Sep 21, 2017 4:50 am

GBPNZD has been trending higher and is moving above an ascending trend line connecting the latest lows of price action since August 22. Price has surged past the area of interest around 1.8200 and has found resistance at 1.8700 before pulling back.

Applying the Fib tool on its latest swing low and high shows that the 61.8% level lines up with the area of interest and trend line. It also coincides with the 100 SMA, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

The gap between the moving averages is getting wider to indicate that bullish momentum is getting stronger. At the same time, stochastic is indicating oversold conditions and might turn higher to also reflect a return in buying pressure. If that happens, a test of the swing high could be underway.

Economic reports from the UK have been mostly stronger than expected, with CPI, claimant count, and retail sales all surpassing estimates. This supports the BOE's hawkish stance, even as Carney recently admitted that the rise in global rates was partly the reason for their tightening bias.

As for the Kiwi, data has also been mostly upbeat this week. The GDT auction yielded a stronger 0.9% gain in prices compared to the previous 0.3% uptick while the current account balance reflected a smaller deficit. The Q2 GDP is due next and a 0.8% growth figure is eyed, stronger than the earlier 0.5% expansion.

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However, the upcoming RBNZ decision could be preventing the Kiwi from advancing any further as jawboning remarks are expected. The parliamentary elections also poses uncertainty even as surveys hinted a National Party victory.

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AUDJPY Uptrend Setup (Sep 22, 2017)

Postby katetrades » Fri Sep 22, 2017 6:11 am

AUDJPY continues to trend higher and is moving inside an ascending channel pattern on its 4-hour chart. Price just bounced off the resistance at 90.30 and is making a pullback to support at the 89.00 area.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the channel support, adding to its strength as a floor. However, price already seems to be bouncing off the 50% Fib and could be poised for another test of resistance from here.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. Stochastic is still pointing down to indicate that there may be a bit of selling pressure left before Aussie bulls get back in the game.

The BOJ kept interest rates on hold as expected and didn't trigger too much of a reaction from the Japanese currency. The central bank also maintained its pace of JGB purchases while keeping a relatively upbeat outlook on the economy.

However, the Aussie was on the decline due to weaker commodity prices, particularly metals like iron ore. The latest FOMC statement, which turned out more hawkish than expected, was being blamed for the selloff as a tightening bias would weigh on global demand down the line.

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There are no other reports lined up from Japan or Australia for the rest of the week as traders look to market sentiment for clues. There are still some concerns about an attack from North Korea, which would drastically weigh on the higher-yielding Aussie and might lead to a gap over the weekend if the tension escalates.

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AUDNZD Channel Breakdown (Sep 25, 2017)

Postby katetrades » Mon Sep 25, 2017 4:52 am

AUDNZD recently broke below the ascending channel support on its 4-hour time frame to signal that a reversal is underway. Before that happens though, price could still make a pullback to the broken support. However, the 100 SMA is still above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that there's a chance the uptrend might resume.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the broken support lines up with the 61.8% level around the 1.1000 major psychological level. Stochastic is pointing up to show that buyers are in control for now until the oscillator hits overbought levels and turns back down.

The New Zealand elections held over the weekend resulted to a victory for the National Party but not enough for them to take majority. This means that politics will be in limbo for a bit longer as the country waits for a coalition to be formed.

Another potential event risk for the Kiwi is the upcoming RBNZ decision. Even though no actual interest rate changes are expected, traders appear to be pricing in a less upbeat statement from the central bank since jobs growth recently disappointed. Kiwi strength could also be one of the issues pointed out and more jawboning could keep a cap on the currency's gains.

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There are no major catalysts lined up for the Aussie, which indicates that it might simply act as a counter currency in the next few days or be more sensitive to price action of gold and iron ore. Market sentiment could also push these higher-yielding currencies around.

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GBPUSD Countertrend and Correction Setups (Sep 26, 2017)

Postby katetrades » Tue Sep 26, 2017 3:03 am

GBPUSD is still trending higher on its longer-term charts and is testing the top of its ascending channel visible on the daily time frame. This could mean an opportunity for a countertrend play back to the support at 1.3100 or a correction setup there.

The 61.8% Fibonacci retracement level lines up with the bottom of the channel and a former resistance level. It's also close to the 100 SMA dynamic support, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside.

However, stochastic is indicating overbought conditions and could be ready to head south anytime soon, which means GBPUSD might follow suit. If any of the Fib levels keep losses in check, price could head back up to the swing high at the 1.3650 minor psychological resistance again.

Risk aversion seems to be peeking back in the markets early this week as North Korea announced that the US has declared war on the hermit nation. This could mean more jitters in the days ahead and heightened tensions between the two nations that might limit risk-taking.

In the UK, Prime Minister May's Brexit speech failed to revive bullish sentiment for the economy and its negotiating stance. More updates on this issue are set to hit the headlines with meetings between the top officials scheduled in the next few days.

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As for the dollar, the Fed's hawkish sentiment gave the currency strong support last week and it remains to be seen whether this could last or not, given the developments from North Korea. FOMC officials have several testimonies scheduled throughout so their policy stance could also push the Greenback around.

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EURJPY Rising Trend Line (Sep 27, 2017)

Postby katetrades » Wed Sep 27, 2017 5:01 am

EURJPY has been trending higher recently, with a rising trend line connecting the lows on the 4-hour time frame. Price is moving close to testing this support area, which lines up with the 61.8% Fibonacci retracement level and the 131.00 major psychological level.

This trend line also coincides with the 100 SMA, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. The gap between the moving averages is widening, reflecting stronger bullish momentum.

Stochastic is also indicating oversold conditions, so sellers might take a break and let buyers regain control from here. In that case, EURJPY could make its way back up to the swing high at 134.50 and beyond.

The outcome of the German elections seems to be weighing on the shared currency at the moment due to the rising popularity of AfD and the fact that Merkel's political party still needs to negotiate with rivals for a coalition government. But once this uncertainty is resolved, the focus could return to improving euro zone fundamentals and ECB tapering expectations.

As for the yen, the Japanese snap elections could also bring in some uncertainty and stronger support for PM Abe would mean a continuation of Abenomics, which has typically been bearish for the currency. Another factor that could impact yen price action is the shift in market sentiment stemming from North Korea tensions.

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Japan is set to print its core inflation readings, along with the latest household spending, retail sales, and industrial production figures, on Friday. Upbeat reports could keep the currency supported while downbeat data could reinforce the idea of prolonged BOJ easing.

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