Daily Technical Outlook

[katetrades]

USD/JPY Bullish Pennant (August 1, 2014)

USD/JPY has recently made a strong upside breakout from the descending triangle on a longer-term time frame. From there, price has made a strong rally past 102.00 then formed a bullish flag pattern, indicating that there could be buying pressure left.

Stochastic is moving lower and if it reaches the oversold zone, another rally might take place. Going long above the 103.00 mark and aiming for a hundred pips with a tight stop could yield a high return-on-risk. Take note that the mast or earlier move is approximately 100 pips in height.

The US non-farm payrolls report is up for release today and a stronger than expected reading might lead to more gains for this pair. Bear in mind that the FOMC already acknowledged the recent improvements in the labor sector and another strong NFP report might convince policymakers that it’s about time to move closer to tightening monetary policy.

By Kate Curtis from Trader's Way

 

[JimFXtrader]

After bad data Nonfarm Payrolls and American occupation, the upward bounce for the EURUSD has given way, any close below 1.3433 leads to 1.3474 upload step - 1.3510

 

[Startanu]

(1,3420) The EUR/USD is confirming a nice rebound that already favoured a retest of the 1,3430/40 area where we expect good resistance and from where we could see a retracement toward the 200 hours line, now found at 1,3393. The holding of this line will favour another test on the upside suggesting a retest of the 1,35 area where we suggest selling going again short!!
Resistance 1.3345 1.3510
Support 1.3390 1.3360

 

[katetrades]

GBPUSD Retracement Play (August 13, 2014)

GBPUSD has been on a downtrend ever since the BOE showed a bit of hesitation when it comes to tightening monetary policy by the end of the year. Price has broken below a support area around the 1.6850 minor psychological level and has traded near the 1.6750 handle.

From there, price bounced up for a retracement, possibly until the broken support zone. This lines up with the 50% Fibonacci level, but it looks like the 38.2% level is holding for now. Stochastic is already moving down towards the oversold area, indicating that selling pressure might fade soon.

A higher pullback could last until the 50% Fibonacci level and the resulting selloff could take the pair back to its previous lows at 1.6750 or lower. Take note that the UK claimant count change and BOE inflation report are up for release today and this might determine the longer-term direction of the pound.

By Kate Curtis from Trader's Way.

 

[katetrades]

EURUSD Symmetrical Triangle Pattern (August 15, 2014)

EURUSD has been consolidating tightly, as the pair made lower highs and higher lows, forming a symmetrical triangle pattern on its 1-hour time frame. Price is currently testing the bottom of the formation while stochastic is moving out of the oversold zone, indicating that a bounce might take place.

A rally could last until the top of the triangle at the 1.3400 handle. However, a downside break is still possible, given the recent set of bleak euro zone GDP figures. In that case, the resulting selloff could last by as much as 150 pips, which is the same height as the chart pattern.

On the other hand, euro bulls could refuse to let up and push the pair back to the triangle resistance or higher. An upside break could take the pair up to the area of interest at the 1.3500-1.3550 psychological levels.

Most euro zone banks are on holiday today though, which opens up the possibility of profit-taking before the end of the week and a potential bounce for the shared currency. Medium-tier reports to be released from the US in the New York trading session could also have a stronger than usual impact on this pair.

By Kate Curtis from Trader's Way.

 

[katetrades]

EURGBP Countertrend Setup (Aug 18, 2014)

EURGBP has been moving inside a rising channel for most of the month, as price made higher lows and higher highs. At the moment, the pair is testing the top of the rising channel, which lines up with the .8000 major psychological barrier.

At the same time, stochastic is moving lower, indicating a pickup in selling pressure. This could lead to a selloff until the channel support near the .7950 minor psychological level.

Shorting at .8000 with a tight stop above the latest highs and a target of .7950 could yield as much as a 2:1 return on risk. Trailing the stop and aiming for a channel breakdown could improve the potential return.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDUSD Descending Channel Setup (August 19, 2014)

NZDUSD has been moving inside a falling channel on its 1-hour time frame, reflecting a short-term downtrend. Price has just found resistance at the top of the channel and is moving to the bottom.

The channel support test might lead to a bounce for NZDUSD, as this lines up with the .8400 major psychological level. Stochastic is in the oversold zone, indicating that buyers could be in control of price action soon. In that case, a rally from .8400 could take NZDUSD back to the channel resistance near the .8460 levels.

Going long at .8400 with a tight stop and a target of .8460 could yield as much as a 2:1 return on risk for a short-term trade. Take note that this would be a countertrend setup though.

Event risks for this trade include the New Zealand dairy auction, as another decline in prices might lead to a steeper selloff for the Kiwi. On the other hand, a rebound could lead to gains for the pair as it would suggest that the sector is starting to recover.

By Kate Curtis from Trader's Way

 

[katetrades]

USDJPY Ascending Trend Channel (Aug 20, 2014)

USDJPY has been moving inside a rising channel on its 4-hour forex time frame, with price gearing up to test the top of the range around the 103.50 minor psychological resistance.

Stochastic is already in the overbought zone, indicating that the rally might end soon. However, the indicator has yet to turn from the overbought region and, until that happens, buyers could stay in control of price action.

If price turns from the top of the trend channel, price could move back to the bottom of the channel near the 102.00 major psychological support. If buying pressure remains strong though, the selloff might last until the mid-channel area of interest only.

Shorting at 103.50 with a tight stop around 104.00 and a target of 102.00 could yield a 3:1 return on risk. Adjusting the stop to entry once price reaches the middle of the channel could be a good way to protect profits and minimize exposure.

The main event risk for this trade is the release of the FOMC meeting minutes, which might show that the Fed isn’t considering hiking rates yet. However, the reaction to the release might be subdued as traders refrain from taking any huge positions ahead of the Jackson Hole Symposium starting Thursday.

By Kate Curtis from Trader's Way

 

[katetrades]

USDCHF Long-Term Reversal (Aug 21, 2014)

USDCHF looks poised for more upside, as the pair is breaking above an area of interest and neckline of a reversal pattern on its daily time frame. Stochastic is still moving up, indicating buying momentum.

As you can see, price appears to have formed a complex head and shoulders pattern on its daily chart, indicating that the previous downtrend is already over and that a reversal will take place. A strong break past the .9150 mark could take the pair up by as much as 450 pips, which is the same height as the chart pattern.

Going long at the .9150 level with a stop below the .9000 major psychological level and a target of 450 pips or at .9600 could yield a 3:1 return on risk.

Bear in mind that the latest FOMC meeting minutes turned out bullish for the dollar, as policymakers started discussing tightening monetary policy sooner than anticipated. Meanwhile, growth in Europe has been weak and could continue to weigh on the Swiss franc.

By Kate Curtis from Trader's Way

 

[JimFXtrader]

Breakout Bullish to 138.06, Move up probability to 139.50

 

[katetrades]

USDCHF Retracement Setup (August 22, 2014)

USDCHF has recently broken above strong resistance level at the .9100 major psychological mark. Price has rallied close to the .9150 area before retreating, possibly to make a retest of the broken resistance before heading higher.

Stochastic is already moving up from the oversold zone, indicating that buyers are ready to push price back up. The retracement could last until the 38.2% Fib, which lines up with the .9100 handle.

Going long at .9100 with a stop at the 50% Fib and a target of new highs could yield at least a 2:1 return on risk. Adjusting the stop to entry once price hits the previous highs near .9150 could be a good way to protect profits and minimize exposure.

Bear in mind that the Jackson Hole Symposium is going on this weekend and might have an impact on how pairs open in next week’s trading.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Rising Trend Channel (August 25, 2014)

GBPJPY has been moving in an uptrend since mid-March, as price has been trading inside a rising trend channel visible on its 4-hour forex chart. Price has recently tested the channel support and bounced off the 171.00 major psychological level, possibly making its way back to the top of the channel.

Stochastic is heading down from the overbought zone though, suggesting that a bit of a selloff might happen. Another test of the channel support could be in the cards before price heads further north, possibly until the channel resistance at 176.00 or until the mid-channel area of interest at 173.50.

Going long at another test of channel support with a stop below 171.00 and a target of 176.00 could yield a high return-on-risk. Adjusting the stop to entry once price tests the mid-channel area of interest could be a good way to minimize exposure.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDJPY Pullback Trade (August 26, 2014)

AUDJPY recently made a strong break past the 96.00 major psychological resistance level, which has acted as a long-term ceiling for price rallies. This could be a sign that more gains are in the cards for the pair, but a correction might take place first before it heads further north.

Using the Fibonacci retracement tool on the latest swing high and low shows that the 38.2% level lines up with the 96.00 mark, which might serve as support moving forward. Stochastic is making its way in the oversold zone, which is a sign that buying momentum could return soon.

Going long at the 96.00 mark with a stop below the 61.8% Fib or the 95.00 handle and a target of new highs near 98.00 or higher could yield at least a 2:1 return on risk. A market entry could also work if stochastic crosses above the oversold area early, hinting that the climb could resume right away.

Adjusting the stop to entry once price hits the 97.00 mark or previous highs could be a good way to minimize exposure or lock in gains. Adding on the break of the previous highs could improve the return on risk.

By Kate Curtis from Trader's Way

 

[katetrades]

USDCAD Reversal Formation (August 27, 2014)

USDCAD seems to be exhausted from ts recent climb, as a reversal chart pattern can be seen on its 4-hour time frame. The pair is forming a double top after failing to break past the 1.1000 major psychological level in a couple of attempts. Price has yet to drop to the neckline at 1.0850 before completing the pattern.

If USDCAD is able to break below the formation’s neckline, it would confirm that a reversal is in play. This could lead to losses of as much as 150 pips for the pair, which is around the same height as the chart pattern.

If you’re strongly bearish on this pair, you could hop in at market and aim for the neckline support first. If it breaks, you can add to your position then aim for 1.0700 or lower. Trailing your stop can be a good way to minimize exposure and protect profits.

Bear in mind that the US is set to release its preliminary GDP reading later this week and possibly show a downgrade from 4.0% to 3.9%, with retail sales data being lowered. Business investment and net exports could make up for this downgrade and keep the GDP reading steady, but a sharp downgrade could lead to longer-term weakness for the US dollar.

By Kate Curtis from Trader's Way

 

[katetrades]

USDJPY Uptrend Reversal (August 28, 2014)

After rallying strongly last week, it appears that USDJPY could be in for a reversal as a head and shoulders pattern can be seen on its 1-hour forex chart. Price is currently testing the neckline of the formation, still pending a breakdown and confirmation for the potential selloff.

The drop might last by close to a hundred pips, which is the same height as the chart pattern. A selloff below the 103.75 zone could take the pair down to 103.00 or possibly until 102.75. Stochastic is moving lower, indicating that sellers are in control of price action for now.

Shorting at 103.75 and aiming for 102.75 with a tight stop above 104.00 could yield at least a 3:1 return on risk.

Bear in mind though that the BOJ has recently shown signs of considering further easing, as Governor Kuroda admitted that the economy could use stimulus if inflation starts to weaken again. Meanwhile, Yellen sounded less dovish than usual and acknowledged that consistent improvements in the economy could push the Fed to tighter earlier than anticipated.

Important Japanese economic reports are up for release at the end of the week and this could show whether or not the country is still seeing weakness in data after the April sales tax hike.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Trend Setup (August 29, 2014)

GBPJPY has been on a downtrend, as a falling trend line can be drawn to connect the recent highs of price. The pair is finding resistance at the 172.00 major psychological level, which could continue to keep any gains in check.

Further downside momentum could take the pair down to the previous lows and support zone at the 170.50 minor psychological level. Stochastic is on middle ground but is pointing down, reflecting the potential return of selling pressure.

Shorting at market with a stop above the 173.00 handle and a target of 170.50 could yield a 1.5-to-1 return on risk. Aiming for new lows could improve the reward ratio but it would be prudent to adjust the stop to entry once price tests the previous lows.

Take note though that data from Japan came in mostly weaker than expected earlier today, which could increase the odds of further easing from the BOJ in their monetary policy statement next week. Governor Kuroda recently admitted that weak inflationary pressures could push them to add stimulus while economic analysts have mentioned that the economy could see a deeper slowdown in exports and consumption.

As for the pound, data has somewhat been stable, yet traders are still doubtful that the BOE could start tightening before the end of the year. Signs of improvement in the UK could lead to another test of the GBPJPY trend line or perhaps an upside break and a longer-term reversal.

By Kate Curtis from Trader's Way

 

[JimFXtrader]

Look the zone 1.3111 - 1.3077 for move bullish EURUSD

 

[katetrades]

GBPCAD Countertrend Setup (Sept 1, 2014)

GBPCAD has been moving in a downtrend on its 4-hour time frame but appears to be finding support at the bottom of the rising channel. Price has bounced off the 1.8000 major psychological level and might rally up to the middle of the channel or the top.

Stochastic has also moved out of the oversold area, indicating a pickup in buying momentum. Going long at market and aiming for the top of the channel with a tight stop below the channel support could yield a high return on risk, although the odds of a strong bounce are not so high since the pair has been moving lower.

Moving the stop to entry once price tests the middle of the channel could be a good way to protect profits and minimize exposure, especially ahead of this week’s top-tier events. Both the BOE and BOC are scheduled to announce their monetary policy decisions this week, and this might lead to volatility for the GBPCAD pair.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDJPY Channel Resistance Play (Sept 2, 2014)

NZDJPY has been trading in an uptrend, as a rising channel can be drawn on its recent price action. The pair is still making its way to the top of the channel, which might hold as near-term resistance.

The top of the channel is at the 88.00 major psychological level but it appears that buying pressure is already starting to weaken, with stochastic moving down from the overbought zone. This could lead to a selloff back to the bottom of the ascending range, which is around the 87.00 major psychological support.

Shorting at 88.00,with a tight stop and a target of 87.00 could yield a good return-on-risk, although this would be a countertrend setup. If you are bullish on this pair, you could opt to wait for the bounce off the channel support instead.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Support Turned Resistance (Sept 3, 2014)

EURCAD has sold off sharply in August, but it looks like the pair is prime for retracement back to an area of interest. Price could pull up to the broken support area at the 1.4400-1.4450 psychological levels, which are close to the 38.2% Fibonacci retracement level.

Stochastic is already in the overbought zone, indicating that selling pressure could return as soon as it crosses lower. For now, the oscillator is showing that a bit of buying momentum is left and that price could still reach the nearby Fib level.

Shorting at the 1.4400 handle with a stop at 1.4500 or higher could yield at least a 1:1 return on risk if one aims for the previous lows at 1.4250. Going for new lows could improve the reward ratio, but it would be prudent to move the stop to entry or trail it once price tests the previous lows.

The event risks for this trade are the upcoming ECB rate decision and the Canadian jobs release. For today, the BOC is set to make its monetary policy statement and no major changes are expected.

By Kate Curtis from Trader's Way