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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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NZDJPY Long-Term Ceiling (August, 7, 2017)

PostPosted: Mon Aug 07, 2017 3:15 am
by katetrades
NZDJPY is currently bouncing off the long-term range resistance at the 83.00 major psychological level, possibly putting it back on track towards testing support around 73.00 or at the mid-range area of interest around 78.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. Stochastic is also heading south to signal that selling pressure is still in play. However, the oscillator is already dipping into the oversold region to signal that Kiwi bears are tired and might let buyers take over.

The main event risk for this setup is this week's RBNZ decision during which the central bank would likely keep interest rates on hold. Traders are also expecting a few dovish remarks since the latest batch of reports from New Zealand signaled a fall in dairy prices and overall inflation.

Meanwhile, the Japanese yen could be able to hold on to its gains as the BOJ didn't sound as dovish as expected in their latest policy decision. In addition, potential dollar weakness on subdued tightening expectations could support the yen.

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Keep in mind, however, that the latest NFP report turned out stronger than expected and provided some support for US bond yields, thereby weakening demand for the lower-yielding yen. US CPI readings are due later on this week and another batch of strong figures could continue to undermine yen strength.

By Kate Curtis from Trader's Way

USDCHF Descending Channel (Aug 08, 2017)

PostPosted: Tue Aug 08, 2017 4:45 am
by katetrades
USDCHF has been trending lower on its short-term time frames, with price moving inside an ascending channel that's been holding since November last year. Price has bounced off support and is on its way to test the resistance.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 50% level lines up with the channel resistance at .9800 while the 61.8% level coincides with a broken support zone near .9900. The 100 SMA also lines up with the top of the channel, adding to its strength as a ceiling.

This short-term moving average is below the longer-term 200 SMA so the path of least resistance is to the downside. Stochastic is heading up to the overbought level but hasn't crossed down yet so there may still be some buying pressure left. If the resistance holds, USDCHF could make another test of the .9500 swing low.

Strong US equity performance allowed the dollar to hold on to its gains, particularly against the Swiss franc which is sensitive to potential SNB intervention. US consumer credit dipped, however, to signal weaker financial confidence.

SNB foreign currency reserves grew from 694 billion CHF to 714 billion CHF to signal that the central bank might be expanding its forex holdings to keep the franc weak. Swiss CPI was down 0.3% as expected.

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The Swiss jobless rate is up for release today but no change from the 3.2% reading is eyed. As for the US, the NFIB small business index is due, along with the JOLTS job openings data and IBD/TIPP Economic Optimism index.

By Kate Curtis from Trader's Way

AUDNZD Ascending Channel (Aug 09, 2017)

PostPosted: Wed Aug 09, 2017 3:17 am
by katetrades
AUDNZD made higher highs and higher lows, moving inside an ascending channel on its 1-hour time frame. Price just bounced off the resistance and looks ready for another test of support.

Using the Fib tool on the latest swing low and high shows that the 61.8% level lines up with the channel support around 1.0725 and a former resistance level. This also coincides with the 100 SMA dynamic support.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stochastic is still turning lower to indicate that sellers are on top of their game but the oscillator is dipping into the oversold region to signal a return in bullish pressure.

Australia reported a 1.2% drop in its Westpac consumer sentiment index after previously rising by 0.4%. Chinese CPI also dipped from 1.5% to 1.4% instead of holding steady, signaling weaker inflation pressures down the line.

New Zealand is waiting for the RBNZ decision but this is expected to be downbeat as well. Quarterly inflation and employment have been disappointing so the central bank might blame the Kiwi's appreciation for this, taking the opportunity to talk down the currency.

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Earlier in the week, New Zealand reported a drop from 2.1% to 2.2% in quarterly inflation expectations while Australia has its MI inflation expectations report due in tomorrow's Asian session.

By Kate Curtis from Trader's Way

NZDJPY Trend Pullback (Aug 10, 2017)

PostPosted: Thu Aug 10, 2017 3:18 am
by katetrades
NZDJPY has been trending lower on its short-term time frames after recently bouncing off a long-term ceiling. Price is forming a descending trend line and a correction is underway.

Applying the Fib retracement tool on the latest swing low and high shows that the 50% level lines up with the falling resistance around 81.30. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In other words, the selloff is more likely to resume than the reverse.

Stochastic seems to be turning down from the overbought area, though, which suggests that sellers are eager to push price back down to the swing low near 80.15 or lower.

The RBNZ decided to keep interest rates unchanged at 1.75% as expected, adding that accommodative monetary policy remains appropriate for now. They did express concern about weak price pressures and reiterated that a lower NZD is needed.

Meanwhile, the Japanese yen has gained support on risk-off flows coming from the tensions with North Korea. The latest headlines are suggesting that Pyongyang is looking into a simultaneous firing of missiles on Guam, the nearest U.S. territory in the Pacific, and calling Trump's "fire and fury" remark as "nonsense."

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Any indication that the situation is getting worse could mean more downside for higher-yielding currencies like the Kiwi and a likely rally in the safe-haven yen. On the other hand, easing tensions could bring risk-taking back to the table and keep the pair supported.

By Kate Curtis from Trader's Way

EURGBP Countertrend Setup (Aug 11, 2017)

PostPosted: Fri Aug 11, 2017 2:47 am
by katetrades
EURGBP is still trending higher as it tests the top of the ascending channel resistance visible on the 4-hour time frame. Stochastic is moving up to signal that there's still some bullish pressure left but the oscillator is also closing in on the overbought zone to indicate potential profit-taking.

If that happens, price could pull back to the channel support near the .8900 major psychological mark. However, the 100 SMA 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 also widening to indicate stronger bullish momentum.

A small pullback could last until the mid-channel area of interest close to the 100 SMA dynamic support or find a floor closer to the 200 SMA dynamic inflection point. Sustained buying momentum could even lead to an upside break of resistance at .9100 and a steeper rally.

Euro zone economic reports have been mostly stronger than expected so far this week, supporting the odds of ECB tapering before the end of the year. Data from the UK has been less upbeat, with manufacturing production falling flat and the goods trade balance showing a larger deficit of 12.7 billion GBP.

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German and French final CPI readings are due today and no downgrades could allow the shared currency to hold on to its gains. There are no reports due from the UK economy so traders might hold out until next week's batch of top-tier data, which includes CPI, jobs, and retail sales figures.

By Kate Curtis from Trader's Way

Another NZDJPY Correction (Aug 14, 2017)

PostPosted: Mon Aug 14, 2017 3:54 am
by katetrades
NZDJPY continues to trend lower as its moves below a descending trend line visible on the 1-hour and 4-hour time frame. Price could be due for another pullback to the trend line, which lines up with the 61.8% Fibonacci retracement level.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. The 100 SMA also lines up with the trend line resistance, adding to its strength as a ceiling. If it holds, another drop to support at the 79.00 handle could take place.

Stochastic is already indicating overbought conditions and might be heading lower so the pair could follow suit. Also, a bearish divergence can be seen since stochastic made higher highs while price had lower highs.

Over the weekend, New Zealand reported a 2.0% rise in its headline retail sales and a 2.1% increase in core retail sales. This is stronger compared to the previous period's 1.5% gains. Prior to this, however, the RBNZ sounded less upbeat about inflation prospects and even expressed their desire to see a lower Kiwi.

In Japan, the preliminary GDP reading chalked up a stronger 1.0% growth figure compared to the earlier 0.3% expansion. The yen is also gaining support from risk-off flows coming from the tensions with North Korea.

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New Zealand has its GDT auction coming up later in the week, along with its quarterly PPI report. Stronger than expected gains in producer prices and dairy prices could revive better inflation expectations and prevent the RBNZ from jawboning further.

By Kate Curtis from Trader's Way

GBPNZD Ascending Triangle (Aug 15, 2017)

PostPosted: Tue Aug 15, 2017 3:41 am
by katetrades
GBPNZD has formed higher lows and found resistance around the 1.7900 major psychological level, creating an ascending triangle pattern on its 4-hour time frame. Price is still hovering around the triangle support near the 1.7750 mark, still deciding whether to make a bounce or a break.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the moving averages are close to the triangle support, adding to its strength as a floor. Stochastic is still heading down, though, so there's room for price to drop. Note that the chart pattern is approximately 400 pips tall so the resulting breakout could last by the same amount.

Over the weekend, New Zealand reported stronger quarterly retail sales figures compared to the previous period. Headline retail sales ticked 2.0% higher while core retail sales advanced 2.1%. There have been no reports from the UK economy yesterday.

UK CPI is up for release today and a rebound is expected from 2.6% to 2.7% for the headline reading and from 2.4% to 2.5% for the core figure. Stronger than expected results could revive BOE tightening expectations while weak data could push the pound much lower.

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New Zealand has its GDT auction coming up in the next Asian session and a rebound in dairy prices could lift the Kiwi. Quarterly PPI figures are lined up for Thursday.

By Kate Curtis from Trader's Way

EURUSD Short-Term Downtrend (Aug 16, 2017)

PostPosted: Wed Aug 16, 2017 4:34 am
by katetrades
EURUSD is starting to trend lower and move inside a descending channel formation. Price is bouncing off support and might be due for a test of the resistance at the 1.1800 major psychological level.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is narrowing to signal a potential upside crossover. If so, bulls could return to the game and push for an upside break of resistance.

Stochastic is heading higher to show that bullish momentum is still in play. This oscillator is already nearing overbought levels to signal rally exhaustion. In that case, the moving averages around the middle of the range could hold as resistance and trigger another move back to support.

Euro zone data turned out weaker than expected in the previous session as Germany printed a 0.6% expansion for Q2 versus the projected 0.7% growth figure. French and Italian banks were closed for the holiday so there were no other reports to prop up the shared currency.

Meanwhile, the US dollar drew strong support from upbeat retail sales and Empire State manufacturing index. Not only did the July figures beat expectations but the June report also enjoyed upgrades. Import prices came in line with estimates of a 0.1% uptick.

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The euro region's flash GDP is due today and analysts are expecting to see another 0.6% growth figure. The US has its FOMC minutes lined up and any remarks downplaying the odds of a September hike could be dollar bearish.

By Kate Curtis from Trader's Way

NZDJPY Inverse Head and Shoulders (Aug 17, 2017)

PostPosted: Thu Aug 17, 2017 7:26 am
by katetrades
NZDJPY appears to be done with its tumble as price is forming an inverse head and shoulders pattern on its 1-hour time frame. Price also seems to have broken past the neckline at 80.00 to confirm that gains are in the cards.

The chart pattern is approximately 100 pips tall so the resulting rally could be of the same size. However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse.

Price is still testing the 200 SMA dynamic resistance but a break higher could be enough to confirm that buyers are regaining the upper hand. Stochastic is also pointing up to signal that bullish momentum is returning.

New Zealand reported stronger than expected quarterly PPI, which sets the tone for stronger inflationary pressures down the line. Over the weekend, the Q2 retail sales figures also indicated a strong pickup in consumer spending, which would likely support overall growth.

As for the yen, the pickup in risk appetite after concerns about North Korea eased is forcing the lower-yielding currency to retreat. However, Japan just reported stronger than expected trade balance, supporting the idea of JGB trimming by the BOJ.

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There are no other reports due from either Japan or New Zealand for the rest of the week so this pair could move to the tune of overall market sentiment, which might be driven by headlines in the next few days.

By Kate Curtis from Trader's Way

GBPJPY Triangle Breakdown (Aug 18, 2017)

PostPosted: Fri Aug 18, 2017 4:17 am
by katetrades
GBPJPY was previously trading inside an ascending triangle visible on its daily time frame and has just broken below support to signal that bears have gotten the upper hand. The chart pattern is around 2300 pips tall so the resulting selloff could be of the same size.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. However, the gap is pretty narrow so a downward crossover could be possible, drawing more sellers in the mix. Stochastic is already indicating oversold conditions, though, so profit-taking could take place.

Economic data from the UK has been mostly stronger than expected this week, with the claimant count change, average earnings index, and retail sales all coming in higher than consensus. However, CPI was still notably weak and this carries the most weight in dictating BOE policy biases.

As for the yen, the lower-yielding currency is able to gain on risk-off moves in the past few days, as well as dollar weakness on the rumored resignations among top officials in Washington. There are prevailing speculations that the Trump administration will have a hard time pushing its fiscal policy reform forward now that several GOP members are distancing themselves from the President.

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Japan is still set to print its CPI readings at the end of the week and strong figures could prompt more expectations of further BOJ tapering. The central bank has already trimmed its JGB purchases in its recent operations, adding another bullish factor for the Japanese currency.

By Kate Curtis from Trader's Way