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Forex Forum to Share, Discuss, Communicate and Trade Forex • Daily Technical Analysis by Kate Curtis from Trader's Way
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GBPAUD Channel Support (July 10, 2017)

PostPosted: Mon Jul 10, 2017 1:33 am
by katetrades
GBPAUD has been trading inside an ascending channel pattern visible on its 4-hour time frame and is currently testing support. A bounce could take it back up to the resistance at 1.7150 to 1.7200 while a breakdown could mark the start of a reversal.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the bottom of the channel, adding to its strength as support. At the same time, stochastic is heading up from the oversold area to signal a return in bullish pressure.

Economic data from the UK turned out mostly weaker than expected last week, from its PMI readings to manufacturing production data, to signal that the economy might be on shaky footing leading up to Brexit. UK jobs data is up for release today and a higher number of claimants at 10.4K versus the earlier 7.3K is expected, but traders are likely to pay closer attention to the average earnings index to see any signs of wage growth.

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Meanwhile, the Aussie was also weighed down by a less upbeat RBA decision. Only medium-tier reports are due from the Australian economy this week so weak readings could underscore the central bank's not so hawkish view. NAB business confidence, Australian home loans, and Westpac consumer sentiment data are lined up.

By Kate Curtis from Trader's Way

EURAUD Area of Interest (July 11, 2017)

PostPosted: Tue Jul 11, 2017 4:56 am
by katetrades
EURAUD is trending higher recently and has been 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 at the 1.4900 major psychological level.

Applying the Fib tool on the latest swing low and high shows that the 61.8% retracement level coincides with the channel support. If this keeps losses at bay, price could recover to the channel resistance at 1.5100 or higher. In addition, the channel support lines up with a former resistance level, adding to its strength as a floor.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This short-term moving average is currently holding as dynamic support but a larger pullback to the 200 SMA closer to the 50% Fib might be in order. Stochastic is already indicating oversold conditions but has yet to pull up to reflect a return in bullish momentum.

Economic data from the euro zone came in line with expectations on Monday, with the German trade balance widening from a surplus of 19.7 billion EUR to 20.3 billion EUR and the Sentix investor confidence index dipping from 28.4 to 28.3. There were no reports from Australia but China did print a weaker than expected CPI reading of 1.5% versus the consensus of a climb to 1.6%.

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Up ahead, Australia will report its NAB business confidence index and home loans figure. The housing market in Australia has been under the spotlight after Moody's downgraded four of its top banks due to exposure to risky mortgages. Only the Italian industrial production is due from the euro zone next, although traders are likely to keep speculations of ECB tapering in play unless economic reports disappoint.

By Kate Curtis from Trader's Way

NZDUSD Short-Term Retracement (July 12, 2017)

PostPosted: Wed Jul 12, 2017 4:10 am
by katetrades
NZDUSD recently broke below support at the .7250 minor psychological level and dipped close to the .7200 handle before showing signs of a correction. Applying the Fib tool on the latest swing high and low on the 1-hour time frame shows that the 50% retracement level coincides with the broken support.

The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. The gap between the moving averages is getting wider to reflect stronger selling pressure.

Stochastic is still pointing up to signal that buyers are in control of price action for now. A larger correction could last until the 61.8% Fib at .7270 or until the 200 SMA dynamic inflection point while a break past that area could mean that bulls are back in control.

Fed officials shared mixed views on the timing of future rate hikes and balance sheet unwinding. FOMC members Brainard and Kashkari also stressed the need to wait for more inflation data to see if the slowdown is temporary before tightening again.

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There have been no major reports from New Zealand so the Kiwi has been sensitive to market sentiment and counter currency price action. Fed head Yellen has a speech coming up and more cautious remarks could mean more losses for the dollar.

By Kate Curtis from Trader's Way

EURGBP Channel Retracement (July 13, 2017)

PostPosted: Thu Jul 13, 2017 6:30 am
by katetrades
EURGBP is trending higher on its short-term time frames but it could have room for retracement to nearby support zones. Price is moving inside an ascending channel with support at the .8800 major psychological level.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 50% level is in line with the mid-channel area of interest and the 100 SMA dynamic support while the longer-term 200 SMA is closer to the 61.8% Fib. The 100 SMA is above the 200 SMA so the path of least resistance is to the upside, which means that the uptrend is more likely to continue than to reverse.

The pair already seems to be bouncing off the 50% Fib around .8850 while stochastic is moving out of the oversold area to signal a return in buying pressure. In that case, price could make its way up to the channel resistance or the swing high from here.

UK economic data turned out stronger than expected as the number of claimants rose by only 6K versus the projected 10.3K increase. The unemployment rate improved from 4.5% to 4.6% but the average earnings index fell from 2.1% to 1.8% as expected.

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Economic data from the euro zone also turned out better than expected as the region's industrial production rose 1.3% versus the projected 1.0% gain and the previous 0.3% uptick. However, the German WPI fell flat instead of posting the projected 0.2% rebound. German and French final CPI readings are due next.

By Kate Curtis from Trader's Way

EURUSD Breakout and Correction (July 14, 2017)

PostPosted: Fri Jul 14, 2017 5:11 am
by katetrades
EURUSD recently broke to the upside of a symmetrical triangle pattern then zoomed up close to the 1.1500 handle before pulling back. Price is retesting the broken triangle resistance which might now hold as support.

Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the broken triangle resistance and is also close to the 1.1400 major psychological support. If this area continues to keep losses in check, the pair could climb back to the swing high or higher.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic is also heading higher to indicate that bullish momentum is in play. A break below the 61.8% Fib, however, could signal that bears are putting up a fight.

Economic reports from the euro zone came in line with expectations. The German final CPI reading was unchanged at 0.2% while the French final CPI was also maintained at a flat reading. Italy's trade balance and the region's trade balance are up for release today.

Meanwhile, the dollar had a mixed forex performance as Fed head Yellen shared a relatively balanced view of the economy and its risks. She did reiterate that they could start balance sheet unwinding later this year but warned that they'll be watching the impact on the yield curve to gauge if future rate changes are still necessary.

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US PPI figures came in mixed and the CPI readings are due today. Fed policymakers have been emphasizing how inflation trends will influence their rate hike decisions so stronger than expected results could mean more upside for the US currency. US retail sales are also due, and both headline and core readings could show rebounds.

By Kate Curtis from Trader's Way

AUDUSD Long-Term Breakout (July 17, 2017)

PostPosted: Mon Jul 17, 2017 3:17 am
by katetrades
AUDUSD had been trading inside an ascending triangle on its long-term time frame and has just broken past the resistance at the .7750 minor psychological mark. This signals that the pair is in for an uptrend, which might last by at least 900 pips or the same height as the triangle formation.

The 100 SMA is still below the longer-term 200 SMA on the weekly chart, though, so the path of least resistance is still to the downside. However, the gap between the moving averages is narrowing to signal a potential upside crossover.

Stochastic is pointing up but is already dipping into the overbought zone to indicate weakening bullish pressure. Once the oscillator turns lower, bears could regain control and push for a pullback to the broken resistance. Stronger bearish momentum could put the pair back inside the triangle.

US economic data turned out weaker than expected on Friday, casting doubts again on another Fed interest rate hike in September or December. Headline CPI posted a flat reading instead of the estimated 0.1% uptick while the core CPI had a meager 0.1% gain instead of the estimated 0.2% increase. Headline and core retail sales were down 0.2% while preliminary UoM consumer sentiment also fell short of estimates.

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There were no major reports out of Australian then while today has top-tier data from its main trade partner China. GDP is projected to dip from 6.9% to 6.8% while industrial production could hold steady at 6.5%. Retail sales and fixed asset investment could also show small dips. The RBA monetary policy meeting minutes are lined up on Tuesday

By Kate Curtis from Trader's Way

AUDUSD Bullish Channel (July 18, 2017)

PostPosted: Tue Jul 18, 2017 4:21 am
by katetrades
AUDUSD has been trending higher and is moving inside a bullish channel formation on its 4-hour chart. Price is bouncing off the resistance and could be due for a pullback from here. Stochastic is turning lower from the overbought zone to show that buyers are taking a break and allowing sellers to take over.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the channel support around the .7650 minor psychological level. The 100 SMA is also close to the bottom of the channel, adding to its strength as support. This short-term SMA is above the longer-term 200 SMA to show that the path of least resistance is still to the upside.

Economic data from China, Australia's main trade partner, turned out mostly stronger than expected. The economy grew by 6.9% in Q2 versus expectations of a dip to 6.8%. Retail sales and industrial production also ticked higher, reflecting strong internal demand and a likely boost to Australia's commodity exports.

The RBA will release its monetary policy meeting minutes today and give more insight as to why they decided to keep policy unchanged and when they might consider hiking rates. In the US, economic reports have been mostly weaker than expected lately, particularly when it comes to CPI and retail sales.

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Australia will release its jobs report later in the week and likely report a slower increase in hiring. There's not much in the way of top-tier data from the US this week but traders could start pricing in less upbeat remarks for the FOMC meeting next week.

By Kate Curtis from Trader's Way

GBPJPY Short-Term Reversal (July 19, 2017)

PostPosted: Wed Jul 19, 2017 4:18 am
by katetrades
GBPJPY has failed in its last two attempts to break past the 147.50 minor psychological resistance, creating a double top reversal formation. Price is currently testing the neckline at 145.50 and could be due for at least 200 pips in losses if its breaks.

The 100 SMA is still above the longer-term 200 SMA, though, so the path of least resistance is to the upside. Also, the 100 SMA is holding as dynamic support for now and a bounce could take price back up to the tops or higher. Stochastic looks ready to pull up to indicate a pickup in buying pressure but it has room to go lower before hitting oversold conditions.

Economic data from the UK turned out weaker than expected and BOE Governor Carney confirmed that this was in line with BOE estimates. Headline CPI is down from 2.9% to 2.6% while core CPI dropped from 2.6% to 2.4%, lessening pressure on the central bank to tighten monetary policy.

The BOJ has its monetary policy decision lined up on Thursday's Asian trading session and many are expecting the Japanese central bank to sound dovish. However, recent reports have shown some improvements and there's also a chance that policymakers could sound more neutral.

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UK retail sales are also due later on this week and a drop is eyed, owing to weak wage inflation and rising price levels. However, analysts project that a 0.4% rebound over the earlier 1.2% slump could be in the cards.

By Kate Curtis from Trader's Way

GBPUSD Rising Wedge (July 20, 2017)

PostPosted: Thu Jul 20, 2017 4:18 am
by katetrades
GBPUSD has formed higher lows and slightly higher highs, creating a rising wedge pattern visible on its daily chart. Price is currently testing the resistance and might be due for a move back to support soon. Stochastic looks ready to head south from the overbought zone so selling pressure could pick up soon.

However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. This suggests that the wedge support at the 1.2750-1.2800 levels could keep losses in check or that the pair could attempt to break past the resistance at 1.3100.

UK economic data has been weaker than expected so far this week, with headline and core CPI reflecting much weaker inflationary pressures. This reduces the need for the BOE to hike interest rates to keep price levels in check.

The retail sales report is due next and another decline could reinforce the view that spending and growth are taking hits from rising inflation. Consumer spending already fell 1.2% in May and another drop could mean more losses for the pound, but analysts are expecting to see a 0.4% rebound.

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As for the US dollar, delays in the Trump administration's fiscal reform plans are dampening demand for the currency. After all, this could push tax cuts much later into next year and limit growth prospects, lessening the need for the Fed to hike as they start their balance sheet runoff.

By Kate Curtis from Trader's Way

EURAUD Channel Retracement (July 21, 2017)

PostPosted: Fri Jul 21, 2017 5:02 am
by katetrades
EURAUD is trending lower and moving inside a descending channel connecting the highs and lows of price action since the latter part of May. Price is bouncing off the channel support and could be due for a pullback to resistance. Stochastic is moving up to show that buyers are in control of price action but the oscillator is already dipping into the overbought region to signal potential rally exhaustion.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the channel resistance around the 1.4850 minor psychological mark. The 100 SMA is above the longer-term 200 SMA for now so the path of least resistance is still to the upside, but a new crossover seems likely and this might draw more sellers to the market.

If any of the Fib levels hold as resistance, price could make another test of the channel lows at 1.4400. On the other hand, sustained buying pressure could spur a break past the channel resistance and start a reversal for EURAUD.

The ECB decided to keep monetary policy unchanged as expected while reiterating that tapering has not been discussed yet. During the presser, Draghi repeated that inflation is not quite up to the level that they'd like to see just yet before trimming asset purchases. He did say that they're seeing broadening signs of growth but that these have yet to translate to stronger price pressures.

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Meanwhile, the Aussie took some hits upon seeing slightly weaker than expected jobs data. The economy added 14K jobs in June versus the projected 14.4K figure and the previous reading was downgraded from 42K to 38K. The jobless rate was unchanged at 5.6%. A couple of RBA policymakers are set to give testimonies today and jawboning remarks are expected.

By Kate Curtis from Trader's Way