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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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Re: Daily Technical Analysis by Kate Curtis from Trader's Wa

PostPosted: Mon Jul 24, 2017 5:00 am
by TradersWay
USDCAD Descending Channel (July 24, 2017)

USDCAD keeps trending lower and is moving inside a descending channel pattern on its 1-hour time frame. Price is currently testing support near the 1.2550 minor psychological level and could be due for a bounce back to the resistance near 1.2600.

Stochastic is heading down to show that there's still some selling pressure left. If sellers are strong enough, they could push for a break of the channel support, triggering a steeper selloff for USDCAD.

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 carry on than to reverse. 

Economic data from Canada came in mostly in line with expectations last Friday, except for the core retail sales figure which showed a 0.1% dip instead of the estimated flat reading. Headline retail sales beat expectations with a 0.6% gain, twice as much as the projected 0.3% uptick. 

Dollar demand remains weak as traders are starting to price in less hawkish expectations from the FOMC statement this week. Although the minutes of their earlier meeting reflected confidence in their outlook, the latest batch of reports and developments could cloud their optimism.

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Traders are also hoping to get more details on the balance sheet runoff and confirmation that it would start later this year could weaken expectations of another interest rate hike in September. Discussions among OPEC and non-OPEC leaders are reportedly scheduled within the day and this could impact Loonie price action as well.

By Kate Curtis from Trader's Way

EURUSD Channel Correction (July 25, 2017)

PostPosted: Tue Jul 25, 2017 3:56 am
by katetrades
EURUSD has been trending higher after breaking past a long-term resistance level last week. Price is trading inside an ascending channel visible on its 1-hour time frame and is currently bouncing off the resistance.

This could spur a correction to the channel support at the 1.1550 minor psychological level, which is close to the 61.8% Fibonacci retracement level on the latest swing low and high. This also coincides with the 200 SMA dynamic support.

Speaking of moving averages, the 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. The 100 SMA is near the 38.2% Fib and mid-channel area of interest, which might also be potential support in a shallow correction. Stochastic has been on the move down but seems to be pulling up early.

Economic data from the euro zone was not so impressive at the start of the week. Flash manufacturing and services PMI readings from the top economies were mostly below expectations, except for the French manufacturing PMI, leading many to doubt that the ECB can taper as early as September.

The German Ifo business climate index is lined up today and a dip from 115.1 to 114.9 is expected. Another weaker than expected read could mean more losses for the shared currency as tapering expectations weaken again. As for the dollar, relatively upbeat PMI readings renewed some support ahead of the FOMC decision later this week.

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The flash manufacturing PMI is up from 52.0 to 53.2, higher than the forecast at 52.3, while the services PMI held steady from an upgraded 54.2 figure. Existing home sales printed a dip to 5.52M. The CB consumer confidence index is due today and a fall from 118.9 to 116.5 is expected.

By Kate Curtis from Trader's Way

USDJPY Triangle Support (July 26, 2017)

PostPosted: Wed Jul 26, 2017 4:29 am
by katetrades
USDJPY has formed lower highs and higher lows on its 4-hour time frame, trading inside a symmetrical triangle pattern. Price is currently testing support and could be due for a bounce back to resistance.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, stochastic is pointing up to indicate that bullish momentum is in play. However, the gap between the moving averages is narrowing to signal a potential downward crossover while the oscillator is nearing overbought levels.

If bearish pressure kicks in, USDJPY could test the triangle support at 111.50 again or attempt to break lower. The chart pattern is approximately 500 pips tall so the resulting breakout could be of the same size.

The main event risk for this pair is the FOMC decision as traders are waiting to find out if the Fed would maintain its hawkish bias or not. Recall that CPI and retail sales have been weaker than expected but there's a good chance that policymakers might insist that these are due to temporary factors.

Reiterating that they are prepared to hike rates one more time before the year ends and signaling that they could start balance sheet unwinding in September could spur stronger dollar demand. On the other hand, a shift in tone to a more cautious one could trigger losses.

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As for Japan, data on household spending and inflation due on Friday could also lead to big yen moves since this could determine whether the BOJ would stick to its dovish stance or not.

By Kate Curtis from Trader's Way

USDCAD Short-Term Channel (July 27, 2017)

PostPosted: Thu Jul 27, 2017 4:05 am
by katetrades
USDCAD continues to trend lower and is moving inside a descending channel visible on the 1-hour time frame. Price is currently testing support and could be due for a pullback to the resistance once more.

Stochastic is pulling up from the oversold area to suggest that profit-taking off the 1.2450 area might take place. 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 lines up with the channel resistance to add to its strength as a ceiling.

The FOMC decided to keep interest rates on hold at 1.00-1.25% as expected after hiking in June. They also signaled that balance sheet unwinding could begin "relatively soon" and that they would stick to reinvesting for now.

What drew dollar bears in was the Fed's new assessment that overall inflation has declined, compared to their previous statement that it "declined recently" and is "somewhat" below 2%. Still, the Fed noted that hiring has been solid and that household spending and business investment continue to expand.

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As for the Canadian dollar, it got another strong boost from an uptick in crude oil. The EIA reported a larger than expected draw of 7.2 million barrels versus the projected reduction of 3.3 million barrels. US durable goods orders data is due next and there are no major reports lined up from Canada.

By Kate Curtis from Trader's Way

AUDNZD Resistance Turned Support (July 28, 2017)

PostPosted: Fri Jul 28, 2017 4:33 am
by katetrades
AUDNZD recently broke past the resistance at the 1.0550 minor psychological level then zoomed up to the 1.0800 levels before pulling back. Applying the Fib tool on the latest swing low and high on the 4-hour time frame shows that the 61.8% level lines up with the broken resistance.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the gap between the moving averages is widening to indicate strengthening bullish pressure. The 100 SMA appears to be holding as dynamic support as well while the 200 SMA is closer to the area of interest.

Stochastic is pointing down to signal that there may be some selling pressure left, but the oscillator is also closing in on the oversold level to indicate potential profit-taking If that happens, buyers could push price back up to the swing high.

Economic data from Australia has not been so upbeat this week, though, as the headline CPI printed a lower than expected 0.2% uptick versus the projected 0.4% gain. Import prices also fell short of consensus for the quarter and hinted of lower price pressures down the line.

Australia just reported a lower than expected quarterly PPI reading of 0.5% versus the projected 0.6% increase, adding to the narrative that inflation could stay subdued and prevent the RBA from tightening anytime soon.

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There have been no major reports from New Zealand, leaving the Kiwi at the mercy of market sentiment. This higher-yielding currency usually draws support during risk-on days and tumbles when risk aversion is present.

By Kate Curtis from Trader's Way

EURCAD Descending Channel (July 31, 2017)

PostPosted: Mon Jul 31, 2017 3:47 am
by katetrades
EURCAD has been trending lower, moving inside a descending channel on its 4-hour chart. Price has bounced off support and has made its way towards resistance at the 1.4650 minor psychological level, which might continue to keep gains in check.

If so, another test of support at the 1.4300 major psychological level could take place. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the selloff is more likely to continue than to reverse.

The moving averages appear to be holding as dynamic resistance areas as they line up with the top of the channel. Stochastic is on its way down also, indicating that sellers are in control of price action.

Euro zone data came in mixed on Friday as German and French preliminary CPI beat expectations while French consumer spending fell short. Canada's GDP also beat expectations with a 0.6% gain versus the projected 0.2% expansion.

Up ahead, German retail sales and the region's flash CPI readings are due. Stronger than expected figures would assure investors that spending remains supported and that inflation could convince the ECB to move on with tapering asset purchases sooner than initially expected.

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Final manufacturing and services PMIs from the top euro zone economies are lined up for the rest of the week while Canada will release its jobs report on Friday. Analysts are expecting to see a 14.6K increase in hiring.

By Kate Curtis from Trader's Way

GBPUSD Countertrend Play (Aug 01, 2017)

PostPosted: Tue Aug 01, 2017 2:53 am
by katetrades
GBPUSD has been trending higher and moving inside an ascending channel on its daily time frame. Price is making its way to the top of the channel and could be due for a bounce off the 1.3300 major psychological mark. Stochastic is nearing the overbought zone and turning lower could draw sellers back in.

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 uptrend is more likely to continue than to reverse. Also, the 100 SMA lines up with the bottom of the channel, adding to its strength as support if price pulls back.

UK net lending to individuals data turned out stronger than expected at 5.6 billion GBP versus the projected fall to 4.9 billion GBP. Mortgage approvals came in line with expectations at 65K. Next up, the UK will print its Nationwide HPI and manufacturing PMI, which is projected to tick back up from 54.3 to 54.4.

The US dollar is being dragged lower by tensions with North Korea and inside the White House itself. The hermit nation recently conducted a successful ICBM test that could potentially hit most of the United States, according to a couple of intelligence officials. Meanwhile, Trump just fired his communications director Scaramucci after 10 days in office. Chicago PMI also turned out weaker than expected with a steep fall to 58.9.

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US core PCE price index and personal spending and income data are due next. Analysts are expecting the inflation figure to hold steady at 0.1% while personal spending might also show a meager 0.1% uptick. Personal income could post another 0.4% gain.

By Kate Curtis from Trader's Way

USDCAD Short-Term Reversal (Aug 02, 2017)

PostPosted: Wed Aug 02, 2017 8:31 am
by katetrades
USDCAD failed in its last two attempts to break below the 1.2400 area, creating a double bottom formation on its 1-hour time frame. Price has yet to break past the neckline at 1.2575 before confirming the potential reversal.

The chart pattern is around 175 pips tall so the resulting rally could be of the same size. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside for now, but the gap is narrowing to signal that an upward crossover might take place soon.

Stochastic is already indicating overbought conditions, which suggests that buyers might want to take a break and let sellers take over. In that case, USDCAD could head back down to form another bottom near 1.2400. RSI is still pointing up so there's some buying pressure left.

Economic data from the US turned out mostly in line with estimates. The ISM manufacturing PMI fell from 57.8 to 56.3, slightly weaker than the 56.4 consensus. Most of the components chalked up declines while the prices component surged from 55 to 62.

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The API report printed a surprise buildup in crude oil stockpiles instead of the projected draw, leading some to speculate that oversupply troubles may be back and that the EIA might report an increase in inventory as well. Underlying inflation figures from Canada have been weaker than expected while the manufacturing PMI showed a faster pace of industry growth.

By Kate Curtis from Trader's Way

GBPNZD Double Bottom (Aug 03, 2017)

PostPosted: Thu Aug 03, 2017 4:32 am
by katetrades
GBPNZD bounced a couple of times off the 1.7400 level, creating a double bottom pattern with a neckline at the 1.7850 minor psychological level. Price has yet to break past the resistance before confirming that a longer-term uptrend is in order.

The 100 SMA is above the longer-term the 200 SMA to confirm that the path of least resistance is to the upside. The 100 SMA is close to the neckline, adding to its strength as resistance. If it holds, another move towards the bottoms could take place.

Stochastic is moving up to show that there's some bullish momentum in play, possibly enough to trigger a neckline breakout. However, the oscillator is also nearing overbought levels so buyers might want to pause soon and let sellers take over.

The BOE decision is the main event risk for the day as traders are waiting to find out if the central bank can maintain its hawkish views from the previous announcement. At that time, three policymakers voted for a hike on stronger inflationary pressures but the latest batch of CPI readings have disappointed.

A less hawkish bias could push the pound lower against its peers while an actual rate hike might be needed to keep the pound afloat. Other reports have indicated mixed results, with hiring staying strong and retail sales trying to hold steady. Business PMI readings have also reflected some resilience.

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As for the Kiwi, the weaker than expected quarterly jobs report released earlier this week could keep the currency on the back foot. Employment fell by 0.2% instead of rising by 0.7% while the previous quarter's gain was downgraded to 1.1%.

By Kate Curtis from Trader's Way

AUDJPY Correction Levels (Aug 04, 2017)

PostPosted: Fri Aug 04, 2017 4:42 am
by katetrades
AUDJPY staged a strong rally recently but appears to be topping out at the 89.00 area. A correction could be due before this pair heads any further north, and applying the Fibonacci tool on the latest swing low and high on the daily time frame shows that the 23.6% level lines up with a former resistance.

If this area of interest holds as support, price could make another attempt at breaking past the 89.00 to 90.00 ceiling and establishing a stronger climb. On the other hand, a larger pullback could still find support at the 38.2% Fib near 86.50 or until the 61.8% Fib at 85.00.

The 100 SMA crossed below the longer-term 200 SMA to signal that the path of least resistance is to the downside. However, these moving averages could still hold as dynamic support since they line up with the lowest Fib. Stochastic is heading down but is nearing oversold levels to signal that buyers could return to the game.

The RBA refrained from making any policy changes in their statement this week while maintaining their neutral bias. Data has been somewhat weaker than expected, though, particularly when it comes to trade activity so the central bank might sit on its hands for much longer.

As for the yen, the BOJ also kept its policy unchanged, contrary to some expectations that they could be more dovish. This allowed the yen to hold on to its gains and even take some risk-off flows away from the US dollar. Earlier today, the Japanese average cash earnings figure missed expectations and posted a 0.4% drop.

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Up ahead, the NFP report could impact yen pairs since US bond yields tend to influence demand for the lower-yielding Japanese currency. A stronger than expected result could fuel demand for the dollar and lead to yen weakness while downbeat data could support the yen instead of the dollar.

By Kate Curtis from Trader's Way