Daily Technical Outlook

[katetrades]

EUR/USD Channel Support (December 3, 2013)

EUR/USD is still in its uptrend for now, although the pair was pushed down to test the channel support on the ascending trend line on the 1-hour time frame. A bounce from this area could take the pair to its previous highs around 1.3600 or perhaps to new highs around 1.3650.

Take note that stochastic is already climbing out of the oversold area, which means that euro bulls are ready to buy this pair again. A tight stop below the channel support should yield a good return on risk.

A breakdown could still be possible, depending on how euro zone events turn out in the coming days. Bear in mind that the ECB interest rate decision is coming up and any talk of negative rates could push this pair down to the 1.3400 level or lower.

By Kate Curtis from Trader's Way

 

[katetrades]

GBP/USD Rising Trend Line (December 4, 2013)

GBP/USD has been making significant breaks above psychological handles recently, confirming that the pair has strong bullish momentum. However, there have been a few pullbacks, eventually creating a short-term rising trend line on its 1-hour time frame.

At the moment, the pair is sitting on the trend line and testing support around the 1.6400 major psychological level. Stochastic is indicating oversold conditions, which hint at a possible bounce to the previous highs or new highs, depending on how U.K. data turns out.

Going long at market with a 50-pip stop and a target of 100 pips could yield a 2:1 return on risk. Moving the stop to entry once price tests the previous highs around 1.6450 is a good way to manage risk.

By Kate Curtis from Trader's Way

 

[katetrades]

NZD/USD Forming a Channel (December 5, 2013)

NZD/USD has been trending lower in the near term, as seen on the 1-hour and 4-hour time frames. To be specific, a falling channel is starting to form on the 4-hour chart, as the pair is getting ready to test the trend resistance.

Stochastic is moving higher, which means that Kiwi bulls might push the pair up to the top of the channel around the .8300 major psychological resistance. From there, if the oscillator crosses down, bears might move in and push the pair back down to the previous lows around .8100 or new lows possibly at .8050.

Shorting at .8300 with a tight 50-pip stop and a target at .8050 would be a 5:1 trade but it might be helpful to move the stop to entry once price tests the middle of the channel around .8200.

By Kate Curtis from Trader's Way

 

[katetrades]

AUD/USD Retracement Scenario (December 6, 2013)

AUD/USD has broken down to new lows yet again, dipping below the .9050 minor psychological support thanks to stronger than expected U.S. GDP data. This was enough to revive taper expectations for the FOMC meeting in December, but this could depend on the NFP release today.

However, a pullback might be in the cards before the pair heads any lower. The 38.2% Fibonacci retracement level seems to be acting as resistance at the moment while stochastic is confirming a potential selloff.

Shorting at market with a stop above the farthest Fib level (.9100) and aiming for the longer-term support at .8900 could provide a high return on risk, but be mindful of the additional volatility from the NFP release in today’s New York trading session.

Kate Curtis from Trader's Way

 

[katetrades]

EUR/CHF Testing Long-Term Support (December 10, 2013)

EUR/CHF has been selling off very aggressively but the pair might be due for a strong bounce soon, as it is currently testing a long-term bottom around the 1.2200 major psychological level.

Take note that this is 200 pips away from the SNB’s floor, which was implemented a few years back. Fears of intervention could trigger a sudden bounce, which might take EUR/CHF back to its recent highs around 1.2350.

At the same time, stochastic is indicating oversold conditions and the oscillator seems ready to make its way up. Going long at market with a 100-pip stop and a target of 1.2350 could be a 1.5-to-1 return on risk.

By Kate Curtis from Trader's Way

 

[katetrades]

GBP/JPY: Bullish Divergence in Play (December 11, 2013)

GBP/JPY might be on its way to resume its climb, now that price has made higher lows while stochastic drew lower lows. The support at the pair’s previous week highs around 169.00 seems to be holding well.

However, a deeper retracement could still be in the cards, as the pair hasn’t quite reached the 38.2% Fibonacci level yet. This is in line with the 168.50 minor psychological level and yen pairs tend to react to these round numbers quite well.

Going long at market and setting a stop below 168.50 and aiming for the intraweek high at 170.00 could be a 2:1 return on risk, which is good for a day trade.

By Kate Curtis from Trader's Way

 

[katetrades]

NZD/USD Channel Break (December 12, 2013)

NZD/USD has been trading in a downtrend for the past few weeks but it appears that the pair is ready to break out. Earlier today, the RBNZ had its monetary policy statement and decided to keep interest rates unchanged at 2.50%. However, RBNZ Governor Wheeler hinted that they could hike rates soon since inflationary pressures are very strong.

With that, NZD/USD might have enough energy for an upside break above the top of the channel. The .8300 area is already outside of the channel resistance, which suggests that it might be a good entry level. Setting a tight stop of 50 pips back inside the channel and below the .8300 handle should provide the trade enough leeway.

Aiming for the previous highs around the .8500 major psychological resistance seems to be a reasonable target, providing a potential 2-to-1 return on risk.

By Kate Curtis from Trader's Way

 

[katetrades]

NZD/JPY Rising Channel (December 13, 2013)

NZD/JPY has been on a steady uptrend on its 1-hour time frame and might be ready to push higher, given the RBNZ’s hawkish rhetoric in their latest interest rate decision. Although the central bank kept interest rates unchanged, they did hint that they could hike if inflationary pressures remain strong.

Right now, the pair is hovering at the middle of the rising channel in a consolidation pattern. Stochastic is still pointing up and moving towards the overbought zone, which means that there’s enough upward momentum left. A rally could take the pair from its current levels to the top of the channel while a selloff could still find support at the bottom of the channel.

An aggressive long entry could be set at market and aiming for the top of the channel while a more conservative entry could be set at the bottom of the channel and targeting the top of the channel.

By Kate Curtis from Trader's Way

 

[katetrades]

GBP/USD Reversal Signal? (December 16, 2013)

A double top pattern has formed on GBP/USD’s 4-hour time frame, indicating that the pair’s rally might soon be over. The pair seems to be testing the neckline around the 1.6300 major psychological support.

The pattern is roughly 100 pips in height, which suggests that the breakdown might be at least of the same size. Shorting at market with a 50-pip stop and a 100-pip target is a 2:1 return on risk.

Take note though that stochastic is already in the oversold region, which suggests that a bounce might take place first. If you’re aiming for a conservative entry, you could wait for a quick retracement to the 1.6350 area before shorting.

By Kate Curtis from Trader's Way

 

[katetrades]

AUD/USD to Bounce or Break? (December 17, 2013)

AUD/USD is testing a key support level at the moment, as the .8950 level is in line with the pair’s lows for the year. Stochastic is pointing up, indicating a potential bounce but fundamental factors are hinting at further losses for the Aussie.

For one, the government’s outlook report revealed that officials are expecting a wider budget deficit for the incoming year. Although credit rating agencies haven’t announced any downgrades yet, many are worried that this might lead to spending cuts and tax hikes, which could be negative for growth.

Besides, RBA Governor Stevens has repeatedly emphasized his desire for AUD/USD to reach the .8500 handle. The FOMC statement is coming up and a decision to taper could push this pair lower.

A good way to play this setup is to setup a straddle, with a buy order above .9000 and a sell order below .8900. Having a wide stop is also recommended since a lot of volatility is expected in the coming days.

By Kate Curtis from Trader's Way

 

[katetrades]

GBP/USD Short-Term Downtrend (December 18, 2013)

On its 1-hour time frame, GBP/USD is trending lower, after forming a double top reversal pattern on its 4-hour chart earlier this week. The pair has since broken below the neckline around 1.6350, confirming the potential selloff.

Comments from BOE Governor Carney saying that QE is about to end have lifted the pair but it appears to be trading below a falling trend line. The pair could pull up to the trend line resistance around the 1.6300 major psychological level before resuming its drop. Stochastic is still climbing out of the oversold region indicating a quick rally.

Be mindful though that the FOMC statement is coming up and a decision to taper could send this pair much lower. Shorting at 1.6300 with a stop above 1.6350 and a target of 1.6000 could yield a 6:1 return on risk. Make sure to adjust your exposure prior to today’s major events though.

By Kate Curtis from Trader's Way

 

[katetrades]

AUD/CAD Major Correction (December 19, 2013)

AUD/CAD seems prime for a large correction on its 1-hour time frame, as the pair has found support around its recent lows around .9450.

The pair could pull up to any of the Fib levels marked, particularly the 61.8% level, which is in line with a former support zone. However, a shallow retracement is also possible until the 38.2% Fib, which is also close to an area of interest.

Stochastic is still pointing up, which means that there’s enough buying pressure to push for a retracement. Shorting at the 38.2% Fib with a stop above the 61.8% Fib could yield a good return on risk for a day trade.

By Kate Curtis from Trader's Way

 

[katetrades]

USD/CHF Trend Play (December 20, 2013)

USD/CHF is still trending lower on its 4-hour time frame, despite the strong bounce seen after the FOMC interest rate statement. The pair has dipped to new yearly lows around the .8850 area and might be ready to test those lows again.

There’s a falling trend line connecting the price’s highs and the pair might pull up to that resistance area before heading any lower. This is in line with the .9100 major psychological level. Stochastic is already in the overbought region but hasn’t crossed down yet, which suggests that the pair could push a little higher still.

Shorting at .9100 with a 100-pip stop and a target of .8900 could be a 2:1 trade while aiming for the recent lows could be at least 2.5:1.

By Kate Curtis from Trader's Way

 

[katetrades]

GBP/USD: Retracement Setup (January 6, 2014)

GBP/USD has broken past the 1.6500 handle last December but failed to sustain its rallies until the start of this year. This suggests that a huge retracement might be in the cards, as the pair gathers more buying power.

The 50% Fibonacci retracement level lines up with an area of interest. As you can see from the chart, the level is also close to the 1.6200 major psychological support level.

Going long at 1.6225 with a stop below 1.6200 or the 61.8% Fib level could provide the pair enough leeway for a pullback. Stochastic is already in the oversold region, which means that sellers are already exhausted. Aiming for the 1.6500 mark seems to be a reasonable target and could yield roughly a 3:1 return on risk.

By Kate Curtis from Trader's Way

 

[katetrades]

USD/JPY Trend Continuation? (January 7, 2014)

USD/JPY is still on a strong uptrend, as seen from the rising trend line connecting the lows of the price on the 4-hour time frame. At the moment, the pair is testing the trend line around the 104.00 major psychological handle.

Stochastic has dipped and climbed out of the oversold region, indicating that a bounce might take place. However, a breakdown is still possible if dollar bulls are exhausted.

A break lower could last until the next support level at the 103.00 major psychological level while a bounce could go until the previous highs around the 105.50 mark.

By Kate Curtis from Trader's Way

 

[katetrades]

Reversal Pattern on EUR/USD (January 8, 2014)

A double top has formed on EUR/USD’s 1-hour time frame and it seems that the pair has confirmed the potential selloff. It has broken below the neckline around the 1.3650 minor psychological level but is waiting for more selling momentum.

Stochastic is on middle ground at the moment, but is pointing upwards. This suggests that a quick pullback might still take place before the pair heads any lower. However, you can opt to enter at the break of the recent low around 1.3575 if you think the selloff will resume soon.

Shorting on a pullback to the 1.3650 area with a stop above 1.3700 and a target of around 200 pips, which is the same height as the formation, could yield a good return on risk.

By Kate Curtis from Trader's Way

 

[katetrades]

USD/CHF Descending Trend Line Break (January 9, 2014)

The downtrend on USD/CHF may soon be over as the pair already closed above the falling trend line on its daily time frame. As you can see though, stochastic has reached the overbought zone, which means that buyers may be getting tired.

However, the oscillator hasn’t crossed down yet, which suggests that there’s enough buying momentum. The pair could climb up to the next area of interest around the .9200 major psychological level.

Longer-term traders could aim higher and trail stops to protect profits.

By Kate Curtis from Trader's Way

 

[RazvanM]

These are some pretty interesting bearish signals. Shooting star on H1 (several minutes before confirmation), the price hit the resistance area and a trend line and the 28 periods RSI has his a resistance zone. I would say that it is quite probable to bounce back to 1.3580, at least. Only a close above 1.3630 would change my mind now.

 

[katetrades]

AUD/USD: NFP Straddle Setup (January 10, 2014)

AUD/USD is testing a major support level, as seen on its daily time frame. The pair has previously bounced off the .8850 to .8900 area in the past but has formed a bearish flag right on that area.

Data from China and Australia have mostly been weaker than expected while RBA Governor Stevens continues to express his preference for a weaker Australian dollar. The event risk for today is the NFP release, which might be positive for the US dollar if it comes in strong.

If that’s the case, AUD/USD might make a strong break below support and trade to the next support area around .8600, which is Stevens’ ideal level for the pair. However, a weak figure might trigger a quick bounce, possibly until the near term resistance around .9150.

By Kate Curtis from Trader's Way

 

[katetrades]

Uptrend on GBP/USD (January 13, 2014)

GBP/USD is still on an uptrend, despite the sharp selloff that occurred recently. The pair has just bounced off the bottom of the rising channel on the 1-hour time frame as indicating potential rallies.

Stochastic is moving out towards the overbought zone, which means that further rallies might be short-lived, possibly until the recent highs around 1.6600 or until the top of the channel near 1.6700.

Going long at market with a stop below the channel and a target of 1.6700 could make a good return on risk for a short-term trade. Moving the stop to entry once price tests the previous highs can minimize exposure later on.

By Kate Curtis from Trader's Way