Technical Analysis by Admiral Markets

[Admiral Markets]

EUR/USD 4 hour time frame pullback

The latest Italian referendum initially saw the EUR/USD down to 1.0505 and that went with our expectations, although the pair didn't reach 1.0461 and below that would open the door to parity. The EUR/USD was subsequently bought heavily and shrugged all the losses it had made. The main event this week is ECB meeting and their press conference. The head of the ECB, Mario Draghi, is expected to announce that the central bank has several tools available to help avert a funding crisis, not neglecting the possibility that the ECB will be buying more Italian debt in the upcoming months.
Technically the EUR/USD is close to POC within 1.0790-1.0820 zone (61.8, bearish order block, descending trend line) . Due to previous range the zone is wider now. If it rejects from the zone pay attention to 1.0676 where we have a strong support now. any break below 1.0670 should target 1.0610 initially. Breakout above 1.0750 has happened yesterday so at this point we need to see if the pair will reach the POC zone and reject from there.

 

[Admiral Markets]

EUR/USD is waiting for ECB meeting today

Today the ECB meets in an important meeting that may decide whether the ECB QE programme continues at the current rate of EU80Bn in Bonds per month and the duration of the overall programme. Some analysts are suggesting the programme rate may reduce but the overall duration remains the same or longer, hence more assets on the ECB Balance Sheet over the longer term. How the market reacts to this, is much to be seen. FOMC is scheduled for next week, and many analysts tip a rate hike in the US, along with Bond markets pricing at least a 25bps rise, however, I am more of the view that they will wait until Trump's inauguration as President before they hike, so they might be waiting until the February 2017 meeting.

Technically the EUR/USD is under a retracement on 4h chart and it is touching important resistance. Sustained break above 1.0850 is hard at this point but due to ECB we need to be careful. Watch for possible rejection if 1.0850 is reached and close below the retracement trend line should signal another move down towards 1.0700 and 1.0650. Move below 1.0650 targets 1.0590 zone.

 

[Admiral Markets]

USD/JPY in uptrend before FOMC decision

The USD/JPY is going up in a strong bullish zigzag that is supported by ascending trend line. Market is expecting a 0.25 % rate increase and it could have already been priced in the USD/JPY bullish move. However before the Federal Funds Rate decision and FOMC statement we might have another bullish setup within POC zone. 114.85-115.00 (L3, DPP, 38.2, EMA89, ascending trend line) could reject the price if we see a retracement. The target is 116.10. If we don't see a retracement then a 4h close or strong 1h momentum above 116.12 could spike the price up towards H5 -116.70. So pay attention either to a retracement or spike above H4 camarilla pivot.

 

[Admiral Markets]

PRE FOMC Analysis: GBP/USD is close to support

The main event this month is FOMC Economic projection with statement and Federal Funds Rate decision. Market expects a hike of 0.25 % (from 0.50% to 0.75%). Any deviation from expected result will move the USD heavily. Today's GBP data was better than expected with Average Earnings Index coming +0.2 % better than expected while the change in the number of people claiming unemployment-related benefits during the previous month dropped to 2.4k.
GBP/USD is currently at support and bullish POC zone comes within 1.2628-48 (neckline support, L3, 61.8, trend line) and the bounce from there could target 1.2696 and 1.2730. The problem for bulls is head and shoulders pattern and in the case of a drop watch for 1.2615. Break below should target 1.2584 and 1.2560. Volatility is not high now, but it could spike during London profit taking and when NY traders join up.

 

[Admiral Markets]

EUR/USD 1.0455 is the major support

USD spiked strongly after FED decided to hike rates. The rate was hiked before Trump was inaugurated so it leaves room for more hikes to come. I personally expect no more than 2 rates in 2017. FOMC statement was hawkish and generally USD could renewed strength.
Technically the EUR/USD should stay below 1.0600 in order for bearish momentum to prevail. At this point we see a bullish regular divergence that is driving the price to the upside in a form of retracement. POC zone for new shorts could be within 1.0550-65 (bearish order block, 23.6). 23.6 is not a strong retracement point but in strong trends, the price tends to retrace no more than 23.6. Targets are 1.0500 and 1.0455. Have in mind that 1.0455 is a major support now and only a 4h close below 1.0450 would signal for a continuation move towards 1.0400 and 1.0345.

 

[Admiral Markets]

GBP/JPY could form an ascending scallop pattern

The latest comments from BOJ Kuroda saw GBP/JPY going up. Generally he implied that weak yen can raise prices as import costs would rise but conversely weak yen might indirectly affect the output gap. He also mentioned that USD is strong and Yen is not weak and their monetary policies don't target Forex market. After his presser the GBP/JPY shot up.
Technically 145.60-80 is a POC zone (H3, trend line, DPP, 50.0, bullish order block) If we see a retracement the price could bounce from POC zone and ideally 1h/4h candle should close above 146.15 above EMA89 and upper escending trend line. Targets are 144.66 and 147.17. Spike above 147.17 targets 147.95 and in that case the ascending scallop pattern could be formed.

 

[Admiral Markets]

EUR/USD Bears Need a Close Below 1.0470

The EUR/USD spiked from the zone I showed on Session Recap providing pips to traders who traded longs in a form of counter trend trading. Generally speaking, the trend is still bearish and to me it is clear that a weekly close below 1.0470 is needed for further downside. Technically we see 2 most prominent trend lines on H4 chart that mark the downtrend. POC zone is spotted around 1.0410-20 on 4h charts. Weekly close below 1.0470 (slight below weekly camarilla pivot) should open the door for 1.0300 and 1.0280. 1.0470 is a strong order block and historical s/r level. Weekly pivot is making an X cross ™ with a trend line so it just adds to its strength. 4h close below 1.0280 would expose 1.0200.

 

[Admiral Markets]

EUR/GBP POC zone confluence with H5 camarilla pivot

After a fakeout move to the upside, the EUR/GBP has made a rounded bottom and spiked to the upside very close to POC zone. The POC comes within 0.8495-0.8510 (H5, 78.6, bearish order block, descending trend line). If we see a rejection from POC the target is 0.8415 confluence zone providing that 0.8550 holds. Additionally the EUR has been rejecting from 1.0470 as I stated in the EUR/USD article and if we see a weekly close below 1.0470, the EUR/GBP could proceed even lower than 0.8415. If we don't see any retracement towards POC, a 4h close below H3 at 0.8450 should provide continuation towards the target.

 

[Admiral Markets]

Hidden Bullish Divergence During Thin Liquidity

Thin liquidity during holidays could spike Forex pairs in a more sudden and volatile price movements. The EUR/USD is showing higher lows on the price and lower lows on the oscillator that accounts for a hidden bullish divergence. However, due to a thin liquidity 2 way movement is possible. Above L3 camarilla pivot - 1.0460, we could see 1.0475 and 1.0490 as possible targets . Should the price drop below an X cross ™ at 1.0435 watch for 1.0425 and 1.0405. ATR range is much lower so the targets are lower too.

 

[Admiral Markets]

GBP/JPY More Downside Expected

When other pairs are moving in a low ATR, the GBP/JPY aka "The Dragon" simply doesn't care about thin holiday liquidity. ATR of last seven days is 115 and that leaves traders with a more room to trade it. Technically we have 2 POC zones. The first POC zone 143.35-143.50 (38.2, bearish order block, ATR level) could reject the price should the pair retrace. Slightly above it is POC2 143.60-85 (H3,50.0, DPP, ATR projected top). Traders should pay attention to possible ejections from the zones towards 143.00 and 142.40.
If we don't see any retracement, than the momentum break of 142.40 or 4h close below it will aim for 142.16 - projected low and 141.65 if the pairs extends below the projected target.