Daily Technical Analysis by Kate Curtis from Trader's Way

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EURJPY Symmetrical Triangle (Jun 06, 2017)

EURJPY has formed lower highs and higher lows, creating a symmetrical triangle formation visible on its 4-hour time frame. Price just bounced off the resistance and is on its way to testing support at the 124.00 major psychological mark.

The 100 SMA is above the longer-term 200 SMA on this time frame so it's more likely for support to hold than to break. Also, the 100 SMA appears to be holding as dynamic support at the moment.

Stochastic is indicating oversold conditions, which means that sellers might book profits soon and let buyers take over. Once the oscillator pulls up from the oversold area, buying pressure could take price back up to the resistance at 125.00.

Most euro zone banks have been closed in observance of Whit Monday and data has been less upbeat than usual. These are just the final services PMI readings from the top economies, though, and the bigger event risk is likely the ECB statement due later this week.

As for the yen, the Japanese currency has gained some support from a weaker dollar when the US NFP disappointed last week. Japanese average cash earnings data is due next and a 0.3% increase is eyed.

By Kate Curtis from Trader's Way

 

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EURNZD Reversal Formation (Jun07, 2017)

EURNZD seems to be ready to head further south as it formed a head and shoulders pattern on its 1-hour chart. Price has yet to break below the neckline at 1.5650 before confirming that further losses are in the cards.

The chart pattern is approximately 600 pips tall so the resulting breakdown could be of the same size. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside.

However, the gap between the moving averages is narrowing to reflect weaker bullish pressure and a potential downward crossover. Still, stochastic is indicating oversold conditions, which means that sellers might book profits from here and let buyers regain control.

Earlier today, New Zealand reported a 0.6% gain in dairy prices during the latest GDT auction. This marks the sixth consecutive increase, which means that the dairy industry has been on a good streak for the past three months. The ANZ commodity price index in New Zealand also chalked up a 3.2% rebound over the earlier 0.2% drop.

In Europe, the upcoming snap elections in the UK is weighing on investor sentiment. Traders are also on edge ahead of the ECB decision, although the central bank might sound less dovish this time owing to another round of data improvements.

By Kate Curtis from Trader’s Way

 

[katetrades]

EURCAD Rising Wedge Still Intact (Jun 08, 2017)

EURCAD recently sold off to the bottom of its wedge formation on the 4-hour time frame then bounced right back to the top. Another test of the resistance could be underway, but a breakout might be looming soon as the consolidation is getting tighter.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If price breaks higher, it could rally by an additional 400 pips or roughly the same height as the chart formation. Stochastic is on the move up, also indicating that buyers are in control of price action.

Earlier in the day, there were rumors that the ECB would cut its inflation outlook in their upcoming monetary policy statement. However, the shared currency quickly recovered from the drop that ensued.

As for the Loonie, the surprise buildup of 3.3 million barrels in oil stockpiles revived oversupply concerns as analysts had been expecting to see a reduction of 3.1 million barrels. Canadian building permits also printed weaker than expected results with a 0.2% dip versus the projected 2.4% gain.

Up ahead, the ECB statement could spur a breakout for this pair as the tone of Draghi's testimony could have some clues on future policy moves. Canada has NHPI and housing starts due, along with a speech by BOC Governor Poloz.

By Kate Curtis from Trader’s Way

 

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NZDJPY Double Bottom Breakout (Jun 09, 2017)

NZDJPY could be in for a long-term climb as it broke past the neckline of its double bottom pattern on the daily time frame. Price was unable to break below the 75.00-75.50 area in its last two attempts and has rallied past the resistance at the 79.00 handle.

This signals that the pair could be in for around 400 pips in gains, which is the same height as the chart formation. The 100 SMA is above the longer-term 200 SMA on this chart but the gap is narrowing to indicate weaker bullish momentum. Note, however, that price already broke past the 100 SMA dynamic inflection point.

Stochastic is also indicating overbought conditions so buyers might want to book profits soon. If so, another move towards the bottoms could take place or at least a quick pullback to the 79.00 mark.

Data from New Zealand has been mostly upbeat this week, particularly when it comes to commodity prices. The ANZ commodity prices index advanced by 3.2% while the GDT auction yielded a 0.6% gain in dairy prices. Quarterly manufacturing sales increased 2.8% versus the 0.3% forecast.

As for the yen, it has been giving up some ground as risk appetite is starting to return. Traders are propping US assets back up and letting go of their long yen holdings as a result. Japan's final GDP reading was downgraded from 0.5% to 0.3% instead of being upgraded to the 0.6% forecast.

By Kate Curtis from Trader's Way

 

[modi mood]

Thkx

 

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GBPJPY Channel Support (June 12, 2017)

Guppy sold off sharply upon testing the channel resistance on its 4-hour time frame and is now hovering around support. A bearish flag pattern can be seen so a continuation of the move could lead to a break below the channel support around 139.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 200 SMA dynamic resistance lines up with the top of the channel, adding to its strength as a ceiling. Stochastic is heading south to show that sellers are still in control of GBPJPY price action.

Bearish pressure could stay in play for the pound now that the UK elections have resulted in a hung parliament, which is a more politically unstable position compared to a few months back. This could weaken the government's negotiating stance during Brexit talks and PM May seems to be scrambling to fix the situation.

This week, there are a number of top-tier releases lined up from the UK, namely CPI, retail sales, jobs data, and the BOE decision. As for the yen, the BOJ has its policy decision scheduled on Friday so there may be volatility from that end as well.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Range Breakout (June 13, 2017)

EURGBP was previously trading inside a range with support around .8400 and resistance at .8800. Just recently, the pair broke past the resistance to signal that buyers are taking hold.

Price closed back below the resistance in a quick pullback at the end of the previous week but is now reestablishing the climb. However, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside.

Stochastic is also on the move down to show that sellers might regain control of price action. However it also appears to be turning higher to suggest that buyers are putting up a fight.

The UK elections resulted in a hung parliament, which means more political uncertainty as the government moves closer to the start of Brexit negotiations. Traders are now looking to the Queen's speech next week and to upcoming top-tier UK data to see if the economy can weather this potential storm.

UK CPI is lined up first and no change in the headline reading of 2.7% is eyed. Core CPI could dip from 2.4% to 2.3%. Later in the week, UK retail sales and jobs data are due but the bigger mover might be the BOE decision.

Meanwhile, the euro has gained support on a stronger political showing in France. Macron's government is highly expected to secure legislative majority, which could mean an easier time for them to pass reforms. German ZEW economic sentiment index is due today and a rise from 20.6 to 21.6 is eyed.

By Kate Curtis from Trader's Way

 

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GBPJPY Downtrend Channel (Jun 14, 2017)

GBPJPY just bounced off its channel support again and could be gearing up for a correction to the resistance at the 141.50 minor psychological mark. If this keeps gains in check, the selloff could resume back to the swing low or to the channel support at 138.00.

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 is edging close to the channel resistance, adding an extra barrier in case a pop higher happens. Stochastic is still pointing up to show that buyers are in control of price action for now.

The UK just printed stronger than expected CPI, allowing traders to speculate that the BOE statement later in the week could be more hawkish. In addition, headlines are showing that the UK government may have already struck a coalition with the DUP to have a more stable front in next week's Brexit talks.

Meanwhile, Japan's BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected. The FOMC statement could also influence yen price action indirectly as dollar demand is usually negatively correlated.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Breakdown and Correction (Jun 15, 2017)

EURCAD recently broke below a rising wedge formation visible on its 4-hour time frame, signaling that bearish pressure has returned. Price dipped to the 1.4800 area before showing signs of a pullback.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the broken wedge support around 1.5050-1.5100. This is also around the moving average dynamic inflection points.

The 100 SMA is still above the longer-term 200 SMA on this time frame but a downward crossover seems to be looming, possibly drawing more sellers to the mix. Stochastic is still indicating oversold conditions, though, so the correction could be in play for a while.

The Loonie got a strong boost earlier in the week when BOC policymaker Wilkins mentioned that they need to assess whether additional stimulus is still necessary or not. This was echoed by BOC head Poloz who said that rates are excessively low, prompting may to speculate that a hike is underway soon.

Meanwhile, the euro has been dragged lower by weaker than expected medium-tier reports from Germany. This includes WPI, final CPI, and the ZEW economic sentiment index. French final CPI and Canadian manufacturing sales are due next.

By Kate Curtis from Trader’s Way

 

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GBPNZD Channel Resistance (Jun 16, 2017)

GBPNZD is trending lower but has just pulled up to the channel resistance around the 1.7750 minor psychological mark. If this area keeps gains in check, the pair could head back down to support at the 1.7200 handle.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 200 SMA coincides with the channel resistance as well, adding to its strength as a ceiling.

Stochastic is still moving up to indicate that there is some buying pressure left. If bulls stay in control, they could push for a break past the channel resistance and a downtrend reversal for this pair. However, the oscillator is already nearing the overbought level.

The BOE decision turned out more hawkish than expected as three policymakers voted to hike rates due to rising inflationary pressures. This was a relatively tight decision as many had been expecting the central bank to be more cautious owing to Brexit-related risks.

Prior to this, headline and core CPI came in stronger than expected while the claimant count change was also better than consensus. However, the average earnings index and retail sales both fell short, indicating that consumers are feeling the pinch from higher prices of goods.

As for the Kiwi, data has been weaker than expected, with the economy expanding by only 0.5% versus the projected 0.7% growth figure in Q1. However, inflation reports from New Zealand have also been beating expectations and traders might hold out for next week's RBNZ decision.

By Kate Curtis from Trader’s Way