Daily Technical Analysis by Kate Curtis from Trader's Way

[katetrades]

GBPJPY Ascending Channel (Nov 23, 2015)

GBPJPY has been moving on an uptrend on its 4-hour time frame, with an ascending channel connecting the latest highs and lows of price action. Price is currently testing the channel support at the 186.50 minor psychological level and might be due for a bounce back to the resistance at 189.00.

The pair also seems to be drawing support from the 100 SMA, which has held as a dynamic inflection point. This short-term moving average is above the longer-term 200 SMA, indicating that the uptrend is likely to carry on.

Meanwhile, stochastic has already reached to oversold area so the recent rally might soon turn. RSI is also indicating oversold conditions and might be ready to climb, with price likely to follow suit.

There were no reports released out of the UK and Japan on Friday, and Japanese banks are on holiday today so there are no reports lined up as well. Later on in the week, the BOJ monetary policy meeting minutes are up for release and might spur volatility among yen pairs.

There are no major reports out of the UK, with most of the focus on Japan. The Tokyo and national core CPI readings are lined up on Friday, along with the unemployment rate and household spending data. Strong figures could support the idea that the BOJ isn't likely to increase its easing efforts anytime soon while weak data could keep the likelihood of more easing in play.

As for the UK, recent reports have been mixed, suggesting that the economy is no longer as strong as it used to be. The BOE has shifted to a less hawkish stance, hinting that they might hike rates much later than initially anticipated.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDUSD Trend Line Pullback (Nov 24, 2015)

AUDUSD has recently broken above the falling trend line visible on its 1-hour chart, indicating that a reversal is underway. Price is showing signs of pulling back to the broken resistance area and the 61.8% Fib at the .7100 handle might hold as support.

The pair seems to be bouncing off the 38.2% Fib already, indicating that bulls are eager to charge. However, a larger pullback to the lower Fib levels closer to the moving averages is still a possibility. Both stochastic and RSI are on the move down so sellers are still in control.

Meanwhile, the 100 SMA recently crossed below the 200 SMA, indicating that the downtrend might carry on. An upward crossover might be needed to confirm that an uptrend is starting to take place.

Earlier this week, the US printed a couple of bleak figures, namely its flash manufacturing PMI for November and its October existing home sales report. For today, the CB consumer confidence numbers are due and it might show a rise in confidence from 97.6 to 99.3.

Event risks for the Aussie include RBA Governor Stevens' speech today and quarterly private capital expenditure data lined up on Thursday. US durable goods orders data and personal income and spending reports are also up for release mid-week.

Keep in mind that the Fed is on track towards hiking interest rates in December, unless economic data hugely disappoints. Fed head Yellen recently emphasized that the path of rate hikes would be gradual, possibly to keep market expectations in check and prevent any sudden spikes in volatility.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Long-Term Range (Nov 25, 2015)

EURGBP appears to have made yet another bounce off the bottom of its long-term range. Price tested the .7000 major psychological level recently and is staring to make its way higher.

Stochastic is starting to head back up from the oversold area, indicating a return in bullish momentum. Similarly, RSI is also climbing out of the oversold region to show that buyers are regaining control.

The 100 SMA is below the 200 SMA for now but an upward crossover seems imminent. The moving averages are edging closer together and a crossover could add confirmation that a rally is in the cards.

Earlier this week, the BOE Inflation Report hearings were held, highlighting the shift of a less upbeat tone for the UK central bank. This echoes their less hawkish sentiment shared during the BOE statement and minutes, indicating that policymakers are inclined to keep rates low for much longer.

Meanwhile, the euro is recovering against most of its forex peers, following the terror attacks in Paris and the dovish ECB statement. On Monday, PMI readings from Germany and France came in mostly stronger than expected.

The only major events lined up from the euro zone are the Spanish flash CPI and French consumer spending data due on Friday. Meanwhile, the UK is set to print its second estimate GDP reading for Q3 and probably show no change from the initial 0.5% estimate.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPAUD Potential Pullback (Nov 26, 2015)

GBPAUD has sold off sharply recently, breaking below a significant support level around 2.1200. From there, the pair dipped to a low of 2.0715 before showing signs of a retracement.

Using the Fib tool on the latest swing high and low on the 4-hour chart shows that the 50% Fibonacci retracement level lines up with the broken support level, which might hold as resistance moving forward. A larger correction could last until the 61.8% Fib while a shallow pullback could reach until the 38.2% Fib at 2.1000.

The 100 SMA is starting to cross below the 200 SMA to indicate a pickup in selling pressure, confirming that GBPAUD could resume its drop at some point and possibly retest its previous lows. However, both stochastic and RSI are pointing up so sellers may allow buyers to take control in the short-term.

Earlier in the week, the BOE Inflation Report hearings reminded traders that the BOE has shifted to a less hawkish stance. According to BOE Governor Carney, interest rates could remain low for quite some time, as opposed to their earlier statements suggesting that they could start tightening monetary policy by early 2016.

Data from Australia has been less upbeat, though, as the quarterly construction work done report indicated a 3.6% drop versus the projected 1.8% decline. Later on, Australia is set to print its quarterly private capital expenditure report and might show a 2.8% slide, a slower pace of decline compared to the previous 4.0% drop.

Other event risks for the pound include the release of the second GDP estimate for Q3 2013. No revisions are expected for the initially reported 0.5% increase but any changes could push the pound in a particular direction.

By Kate Curtis from Trader's Way

 

[katetrades]

USDJPY Reversal Pattern (Nov 27, 2015)

USDJPY has been climbing recently but a reversal pattern just formed, indicating that a downtrend might be next. Price made a double top pattern on the 4-hour time frame and is currently testing the neckline at the 122.50 minor psychological level, with a downside break likely to confirm the selloff.

The chart pattern is approximately 100 pips in height so the resulting breakdown could be of the same size. However, the 100 SMA is above the longer-term 200 SMA, which means that the uptrend could still carry on.

Meanwhile, stochastic is on the move up so buying pressure is still present. Similarly, RSI is heading higher so price might follow suit. In that case, a move back to the tops or beyond could be seen.

Event risks for this setup include the release of Japanese spending and inflation reports in today's Asian trading session. Another decline in household spending and CPI readings are expected, although the BOJ has specified that they're not looking to expand their easing program anytime soon.

Stronger than expected data could support the BOJ's confident stance, pushing USDJPY below the neckline support and possibly until the 121.50 handle. US traders are off on the Thanksgiving holidays, which suggests that there might not be enough support for the Greenback.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDUSD Reversal Signal (Nov 30, 2015)

NZDUSD has been on a selloff but it looks like a reversal may be in order. Price is forming an inverse head and shoulders pattern on its 4-hour time frame, with an upside break of the neckline at the .6600 handle likely to send the pair up by 200 pips or the same height as the formation.

Technical indicators, however, are suggesting that the downtrend could still carry on. The 100 SMA is far below the 200 SMA and is showing no signs of making an upward crossover, which means that the path of least resistance is to the downside.

Meanwhile, stochastic and RSI are in the oversold regions so sellers might take control. In that case, NZDUSD could resume its drop to the .6400 major psychological support or much lower.

Event risks for this setup include the New Zealand Global Dairy Trade auction midweek, which might yield another decline in dairy prices. In addition, a bunch of top-tier reports are lined up in Australia and these might also influence Kiwi price action.

As for the US dollar, the non-farm payrolls release is due on Friday and another upbeat jobs reading could seal the deal for a Fed rate hike in their December meeting. For the month of November, a 201K increase in hiring is expected, slower than the previous 271K gain.

By Kate Curtis from Trader's Way

 

[katetrades]

USDJPY Range Resistance (Dec 1, 2015)

USDJPY has been moving sideways on the short-term time frames, still waiting for more catalysts to spur a trend in either direction. At the moment, price is approaching the top of its range around the 123.75 level.

If this area continues to hold as resistance, a move towards the bottom of the range at 122.40 might take place. On the other hand, a long green candle closing above the range resistance could signal that further gains are in the cards. The rectangle is approximately 135 pips in height so any breakouts could yield the same amount of pips in gains or losses.

The 100 SMA is above the 200 SMA so the path of least resistance is to the upside. However, stochastic is already indicating overbought conditions so it's likely that the top of the range might still hold as a ceiling. Similarly, RSI is nearing the overbought area so a return in selling pressure might be seen.

Event risks for this setup include the US NFP release on Friday, as this could make or break the case for a December Fed liftoff. Although market expectations favor a rate hike in the next FOMC meeting, a very downbeat figure could still bring more uncertainty to the mix and spur losses for the US currency.

Earlier this week, data from Japan came in mixed, as retail sales beat expectations with a 1.8% gain while the preliminary industrial production report came up short with just a 1.4% increase. According to BOJ Governor Kuroda, additional stimulus isn't necessary to ward off deflation and boost economic growth.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Double Bottom (Dec 2, 2015)

GBPJPY could be in for a strong rally, as a reversal pattern can be seen on its 1-hour time frame. Price failed in its last two attempts to break below the 184.00 major psychological support and is testing the neckline resistance at the 186.00 handle.

An upside break from the neckline could confirm that an uptrend is in order, potentially taking price up by 200 pips or the same height as the chart formation. However if the neckline continues to keep gains in check, another move towards the bottoms could take place.

Stochastic has just reached the oversold area and turned higher, indicating a return in bullish momentum. Meanwhile, RSI is also starting to head north, which means that GBPJPY might follow suit. For now, the 100 SMA is below the 200 SMA so the path of least resistance is to the downside but an upward crossover seems possible.

Event risks for this trade setup include the PMI releases from the UK, as these serve as leading indicators for economic growth. Other factors affecting market sentiment favor further gains for the pound, as risk appetite is in play.

News that the IMF added the Chinese yuan to its SDR with its reserve currency status has allowed higher-yielders to regain ground. This is because the move might open up Chinese markets for more trading activity, lending positive growth prospects for the global economy.

Only medium-tier reports are lined up from Japan next, although recent data has come in mixed. Retail sales indicated an upside surprise of 1.8% in gains while the preliminary industrial production fell short.

By Kate Curtis from Trader's Way

 

[AmanK]

AUDUSD: Retraces from its 7-weeks Highs

After closing the previous day above the 7-weeks major resistance of 0.7300, the traders are restoring to technical selling on the wake of long positions being built by them ahead of the major OZ’s data. Yesterday, the currency pair was all geared up when RBA did not change the interest rates and opened the gates for rate cuts anytime soon, while on the other side the worst contraction of US’ ISM Manufacturing data since 2009, gave a further boost to the A$ making it close the day higher by 1.31% at 0.7322. After rallying to its 7-weeks level of 0.7340 ahead of OZ’s GDP numbers, the pair started moving southwards when its GDP rose to 2.5% in Q3 higher than the expectations of 2.4%. Along with these upbeat figures, the RBA’s Governor stated that not only does Central banks all over the world can help improve the situations but also other ways shall be looked for boosting the economies. Technically, AUD is trading within a symmetrical triangle, wherein if it breaches on the upside the pair can cross 0.7400 level. However, with Janet Yellen to speak twice this week and jobs data due at the end of this week, it seems the pair will trade in the consolidated range of 0.7340 and 0.7020.

 

[katetrades]

AUDUSD Ascending Trend Line (Dec 3, 2015)

AUDUSD has been moving in a steady uptrend, trading above an ascending trend line connecting the latest lows of price action. Price recently made a swing high near the .7350 minor psychological level before showing signs of a pullback.

A correction could take the pair back down to the rising trend line support, which is near the 61.8% Fibonacci retracement level. A shallow pullback might last until the 38.2-50% Fib levels, with the latter coinciding with the .7250 minor psychological support.

The 100 SMA is starting to cross above the 200 SMA to show that the uptrend is likely to carry on. These moving averages are also climbing near the ascending trend line, potentially adding to its strength as a support area.

Meanwhile, stochastic is making its way down from the overbought region to indicate a buildup in selling pressure. RSI is also heading lower so AUDUSD might follow suit.

Event risks for this trade setup include the release of Australia's trade balance and retail sales figures. The earlier releases from the economy came in stronger than expected, with the GDP showing a 0.9% expansion and the RBA reiterating its shift to a less dovish stance.

As for the US dollar, the upcoming NFP release could spur volatility, although market watchers are bracing themselves for an upbeat surprise since the ADP report and ISM PMI components showed employment gains.

However, the pickup in risk appetite stemming from the Chinese yuan's inclusion in the IMF SDR is favoring the higher-yielding Australian dollar versus the lower-yielding US dollar for the time being.

By Kate Curtis from Trader's Way