Sellers on Gold Have Appetite for More

Buyers on Gold struggle to hold above the crucial support on 1765 USD/oz. If broken, the target is on the 1680 USD/oz and in theory, this level looks extremely solid.

Nasdaq finishes the head and shoulders pattern and is ready to break the neckline.

DAX is still fighting on pre-Covid February highs.

EURUSD with a sharp reversal but still with a positive sentiment.

NZDCAD with a potential very dangerous false bullish breakout.

EURCHF corrects the recent surge.

Two safe haven currencies, CHFJPY test the 117.7 again. As long, as we stay below, the sentiment is negative.

For a look at all of today’s economic events, check out our economic calendar.

Dollar With a Bullish Correction

Nasdaq is locked inside of the symmetric triangle and is waiting for a breakout.

DAX pretty much the same but inside of the ascending triangle.

FTSE with a dangerous head and shoulders pattern.

Gold is aiming for 1850 USD/oz.

Dollar Index bounces from a crucial horizontal support.

EURUSD goes lower after two daily shooting stars on 1.19.

GBPUSD with a double top formation.

CHFJPY breaks the lower line of the symmetric triangle pattern.

For a look at all of today’s economic events, check out our economic calendar.

Thursday On Indices Brings Us a Correction

Seems that Thursday will be a correction day on global stock exchanges, which is pretty normal and sellers should not get overly excited about seeing a red color on the screens.

FTSE is getting ready for a bearish correction, probably aiming 38,2% Fibonacci.

CAC is doing pretty much the same.

Gold is defending crucial support on 1850 USD/oz.

Oil is testing the most important support in the past few weeks – 41.3 USD/bbl.

AUDUSD aims lower after creating the Head and Shoulders pattern.

EURUSD goes lower after the false breakout of a dynamic resistance.

EURAUD tests and bounces from the lower line of the long-term range.

USDCAD bounces from the long-term horizontal support.

CHFJPY – two safe haven currencies locked inside of the symmetric triangle pattern.

GBPCAD with exactly the same situation.

For a look at all of today’s economic events, check out our economic calendar.

New Week Starts With Bearish Stocks and Bullish Yen

DAX and CAC start the new week on the back foot

Nasdaq drops below 23,6% Fibonacci and uses it as a resistance

SP500 is in a slightly better position and buyers are still above crucial supports

EURUSD consolidates below dynamic resistance

GBPUSD bounces from the important horizontal resistance

USDJPY continues heavy drop after the bearish breakout from the triangle

EURJPY bounces from the neckline of a very handsome H&S pattern

CHFJPY also has a H&S pattern but the price is currently above crucial support so a further drop is not so certain

GBPJPY breaks long-term dynamic support which changes the sentiment into a negative one

For a look at all of today’s economic events, check out our economic calendar.

“WARS” Zones Of Another Kind, The Wuhan Acute Respiratory Syndrome

So, traders will pivot from the other Wars, Trade and Iran, and into the “WARS” zones of another kind, the Wuhan Acute Respiratory Syndrome zone, where the latest travel restrictions now confine nearly 60 million Chinese.

Traders who would be typically discussing the weekend football results are now sadly focusing on mortality scores this morning. And trust me, absolutely no market professional likes making money off misery, but we all have a job to do to protect client’s savings. So, risk profiles need to be adjusted as the Wuhan frenzy factor kicks in, and risk markets enter the fear zone, a highly pandemic place in its own right. Even more so after President Xi calls the rapid spread of the virus a grave situation.

So defensive strategies will be priced at a premium out of the gate as investors shed China and global risk proportionally to the mounting reports of confirmed Wu- flu cases worldwide. Suggesting the market risk lights could start flickering between amber and red.

While much of the focus has been on the usual suspects’ luxury, travel, and tourism, just calculating the number of canceled tourist trips, declines in retail trade and similar factors are not sufficient to get a full picture of the impact of “WARS.” The structural changes to the global economy complicate the economic analysis of this because there are linkages within economies, across sectors, and across international trade and capital flows that need to be factored.

The biggest threat to the global economy is not just because the disease spreads quickly across countries through networks related to global travel. But also, because any economic shock to China’s colossal industrial and consumption engines will spread rapidly to other countries through the increased trade and financial linkages associated with globalization.

Unlike 2003 where SARS was less impactful on the developed world market, the rest of the world could feel the pinch this time around. And if the virus stunts China’s domestic economic growth in an echo of the SARS epidemic nearly 20 years ago, the falls could be even more precipitous than projected. And there are two reasons why: 1) consumption is now a more substantial part of China’s GDP, and 2) China’s overall growth trajectory. In 2002, retail sales accounted for 34% of nominal GDP; this share is now over 40%. And since China has been at the forefront of the global economic recovery this year, mostly driven by consumption, there could be a massive knock-on effect globally as China’s pivot from a brick and mortar economy to a services powerhouse means they import much more from abroad than they ever did

There has already been a significant markdown in China exposure and leisure stocks – as positioning had been extremely consensus in both. But not only could we see a multi-sector ASEAN equity market fire sale unfold, but a massive chunk of the nascent great global growth trade of 2020 could unwind. After all, a possible one percent haircut to China’s GDP is not a trivial matter, and indeed, when China sneezes, the world catches a cold.

According to the IMM commitment of traders, equity futures long positioning has continued to rise to new records, call volumes have surged to the highest since October 2018, and sentiment indicators are at the top of their historical band. Over the last three months, equity funds have also seen inflows of $75bn, the strongest since early 2018, with cyclical sectors being big beneficiaries, especially Tech, Financials, and Industrials. Indeed, the market’s fear factor has given way to greed, which could leave current positions precariously perched. Pullbacks of 3-5% in the S&P 500 have been typical every 2 to 3 months historically, but now we’re stretched to about 3.5 months, and if a significant Wu-Flu risk wobble occurs, we could see more profound positioning unwinds as a pandemic panic ensues.

There is nowhere that China’s economic influence is more on display than in Asia. The key driver of ASEAN’s steady growth over the past decade has been the rapid growth in bilateral trade with China. China has been ASEAN’s largest trading partner in the past ten years, with two-way trade reaching $292 billion in the first half of 2019. And thus, makes the rest of Asia extremely vulnerable to a China economic slowdown.

And although I have the usual assortment of crazy trade ideas going through my head, unusual for me, I’m starting to think cash is the right place to be for the next few weeks instead of trying to stand in front of the Wuhan freight train. It’s too early in the year to go into a trading hole.

Oil market

Oil sold off aggressively last week on concerns about the impact on China’s economy of the outbreak of a SARS-like virus. Brent was down close to 6% on the week as trader moved to price in a worst-case scenario around Chinas travel and transportation demise. But now traders are left with the impossible task of factoring in the global demand impact as the outbreaks are getting reported worldwide, not to mention a potential 1 % hit to China GDP. Given the extremely tight linkage between China’s economic growth and its appetite for oil, there’s no place to hide for oil bulls and as we saw last week, taking a bullish leap of faith proved to be a fruitless exercise in frustration.

Since the Wu-Flu incubation period is estimated at between 5 days and two weeks, we’ll need to assess the true extent of the damage after the Lunar New Year holiday, so I suspect the balance of oil markets demand devastation risk remains on the wobble until then.

Gold Markets

Gold is performing well in large part because of the slump in US yields since the new year. This fact seems to be offsetting the impact of a strong US dollar to a more considerable degree. And with the Fed on hold, so a risk-off induced break lower in yields could be relatively unobstructed, which would be very bullish for gold.

Also, the details of Friday’s US PMI report were a little downcast. New business did rise, but at a slower pace. Both manufacturers and service providers recorded a more gradual expansion of new orders than expected. And new export orders placed with US private sector firms dipped into the contractionary territory at the start of 2020. Which supported also provided a fillip to gold priced on Friday

But a Wuhan flu triggered sell-off in equity markets will likely drive gold demand out of the gates today, and long-term strategic buyers could compound the move higher as they start to position for the Wu-flu to spread at a faster pace in the coming weeks. The more rapid pace of contagion will represent another significant headwind to global growth. Given how early we are in the newfound growth cycle, more policy easing will be needed to support growth, which could be viewed as bullish for gold. A policy response from the PBoC is a given. But the big question is if the Feds need to react at some point down the road. All of which would be bullish for gold

Still, the effects on the US economy are a long way’s off as trade flows between China and the US have been reduced to a trickle due to tariff wars. And with only two, at this juncture, reported flu cases stateside, it’s not going to have a significant impact on US consumers, but its the fear factor that’s impossible to gauge. None the less at this stage of contagion the Wu-Flu is unlikely to have a material effect on the FOMC policy.

But in case you needed more reasons to buy gold this week, all eyes and ears will be honed on Chair Powell’s FOMC presser. Still, more specifically, Powell will be grilled about the financial stability risks created via the Fed’s liquidity injection due to balance sheet expansion.

There’s no blueprint for unwinding the balance sheet without some element of risk. But the fear heading into this FOMC meeting is a communication misstep. At some point, the Fed will need to communicate a temporary pause in the Fed’s repo activities as it can’t go on forever. Still, a misstatement could easily trigger a huge adverse market reaction. This in itself demands some protection either via long gold or downside USDJPY structures.

ASEAN currency markets

Depending on how widespread the outbreak gets, we could see more shifts in the market long ASEAN axes with tourist-heavy THB and the global growth-sensitive TWD as most vulnerable in this case.

The preferred way to trade this through FX is THB – with the economy dependent on tourism, the loss over China New Year will weaken GDP and weigh on the Baht, precipitously.

The THB remains the most exposed to the new coronavirus outbreak as Thailand is a top destination for Wuhan tourists. Analysis of seat capacity on flights by OAG shows that the two largest international markets are Thailand, with nearly 107,000 seats and Japan with 67,000 seats available.
Coronavirus – Tracking Down the Bug (OAG)

Other analysts estimates suggest a 3% haircut to tourists during the Lunar New Year holiday week.

But if the virus stunts economic growth in an echo of the SARS epidemic narrative and triggers a deeper slowdown in China and weakens the RMB. Then the Yuan correlated basket of KRW and MYR have the most to lose so we could see a further unwinding of capital market risk in South Korea and Malaysia this week.

G-10 Currency Markets

G10 FX vols are holding in for now in though spot markets will be quiet in Asia due to the Lunar New Year holidays across the region. Implied levels are already low, and concerns regarding the new coronavirus outbreak continue, so market makers do not want to be short vol just in case fear escalation. If the virus outbreak continues to expand, it could significantly impact the currency market where the safe-haven JPY and CHF should shine while the USD will attract its lion share of safe-haven flows. I don’t like either of those trades mind you 1) due to Japan’s economic proximity to ground zero, and 2) the SNB doesn’t care about the US Treasury currency manipulators tag.

The Euro continues to struggle even in the face of a moon shot on this week’s ZEW data, and while hints of a move towards a symmetric inflation target are a small positive within the context of the ECB policy review. Still, without a more supportive fiscal policy input and a bounce in rates, the Euro could languish.

But the Euro has been a critical funding currency of the “carry trade” this year, especially into the ASEAN basket. Hence, as local currency bullish bets unwind, it could add some support to the underlying EUR risk as those shorts get covered.

As for the market short dollar narrative, the US dollar will undoubtedly be a big talking point during the US presidential election, and the Fed is likely to end up cutting rates following the strategy review. But these events are later in the year, and for now, it’s hard to fight safe-haven US bond driven currency inflows.

AxiCorp’s Innes discusses Wu-Flu on morning podcast 6:23 min

False Breakout on the NZDUSD!

In my opinion, the big contributor here is the technical situation with the Head and Shoulders pattern as a main player.

The reversal from the beginning of the week is a false breakout above the neckline of the big inverse head and shoulders pattern. NZDUSD loves this structure! The head of this is build from a smaller iH&S. What is more, the right shoulder had two H&S patterns inside. The last one is the false breakout mentioned above. As a technical analyst, I call this amazing. The sentiment here is negative.

Second one is the pair of two safe heavens, CHFJPY. Currently we are inside of a pennant, which is formed after the breakout of two major down trendlines. Bullish momentum seen recently is driven by the double bottom formation on the long-term chart. Currently, most traders wait. Price breaking the upper line of the pennant, will give us a signal to go long and price breaking the lower line, will give us a signal to go short.

Last one is Gold, where we are also inside of the sideways trend. The price did not manage to break the 1518 USD/oz resistance, which caused a proper drop. Now, we are testing the lower line of the rectangle. As long as we stay above, buyers can be optimistic but breakout to the downside will change the outlook to a negative one.

This article is written by Tomasz Wisniewski, Director of Research and Education at Axiory

Liquidity Trade ??

With global economic engines still clattering and in desperate need of some high-grade Central Bank stimulus, investors are still pinning their hopes on central bank policy.

Frankly, with the calamitous state of affairs in global capital markets, the Feds will likely consider a significant policy pivot to make up for the last FOMC policy debacle while other central banks which are out of policy wiggle room consider more non-conventional policies around QE, equity buying or even the possibility of helicopter money by the ECB and other central banks who are currently running deep in negative territory.

After a number of surprise rate cuts by various central banks over the past couple of weeks, and given the latest trade war infused market carnage, investors will certainly be hanging on Powell’s every word for any indication of how the committee is leaning concerning its rate decision on September 18th.

Jackson Hole

Last weeks frenetic gyration in risk assets will be put through the rinse cycle again this week as the Fed’s Jackson Hole event comes front and centre. We’ll also get the latest FOMC meeting minutes to absorb while another round of Eurozone PMI’s will be used to measure the pulse of global growth.

But indeed, all eyes will be on Jackson Hole this week which will hopefully go a long way to pacifying these turbulent markets. Fed Chair Powell is offering opening remarks on Friday which could be pivotal heading into the next Fed meeting on September 18. And considering the global economy is dealing with a considerable downdraft and a US yield curve inversion shocker, the Fed may very well have to abandon the insurance metaphor as hefty doses of monetary (and potentially even fiscal) will go a long way to stabilising market sentiment. The question now in the context of the latest market meltdown is the absolute scope Jay Powell is willing to move away from the insurance cut mantra. The market wants to hear one thing and one thing alone, and that is the FOMC committee are unambiguously transitioning towards an easing cycle.

Now and again something significant does come out of the central bank soiree, and with Germany debating fiscal policy there might be some coordinated economic +monetary policy academic paper or proposal in focus as most of the G-10 Central Banks conventional policy arsenals are at or nearing exhaustion.

Indeed nothing like a good dose of policy easing to correct the market ills and grease the wheels of global capital markets

Oil markets

Oil managed to mostly recover from Thursday’s lows after US President Trump’s mention of a planned call with his Chinese counterpart Xi Jinping.

At today’s open prices remain supported by a softening of US trade war bombast ahead of a planned US-China trade call which could open the door to another face to face. Also, Oil markets are getting a boost from expectations of an explicit dovish policy pivot from Jay Powell.

However, risk asset will remain prone to negative trade headlines and a more profound yield curve inversion if this week’s Eurozone PMI’s produce another shockingly weak survey.

Oi Prices finished the week on the ups but given the whippy intraday day moves which are expected to continue as trade-related headlines come in fast and furious, even picking outlier trading ranges is getting tougher by the headline which is making for treacherous trading conditions. And likely contributing to the oil markets lower liquidity profile.

But with so much doom and gloom built into oil markets via US crude inventory build and weaker macro indicators, the US-China trade overhang desperately needs to be resolved for markets to recover.

Gold Markets

Given the policy uncertainties that may or may not unfold later in the week from Jackson Hole, Gold could consolidate further before eventually resuming its upward momentum, a sturdy build in positioning notwithstanding, for no other reason that every central bank remains in contention for the Yellow Jersey in the race to zero

After some aggressive price action last Wednesday and Thursday, the yellow metal failed to make new highs, which could say a bit about the speculative length in the markets.

With that in mind, given the position builds, it likely triggered some relatively hefty weekend inspired profit-taking as the dollar remained on solid ground and equity markets bounced off weekly lows as risk sentiment has been steadily improving after US President Trump’s mention of a planned call with his Chinese counterpart Xi Jinping.

The main Headline risk for gold remains the easing of US-China trade tensions, while support will come from dovish signals from the Fed, and talk of central banks QE or anything that sounds like helicopter money by the ECB or the BoJ which should continue to underpin market sentiment.

On Friday, Gold prices held up in Asian and European trading before weakening in US action. Gold’s initial strength came for the usual assorted worries about the global economic slowdown and deteriorating trade conditions, but prices edged lower amid dwindling bid side liquidity as the day wore on.

End of week book-squaring and profit-taking looks to have contributed to the decline as did a short-covering rally in US equities after a turbulent week helped to encourage Gold profit-taking as well.

Bond Markets

The U.S. economic data does not suggest a coming recession, but this does not mean the U.S. economy is immune from the knock-on effects of a slowing global economy, but contagion will probably take the long road from China. So, the U.S. inversion makes more of a statement about growth in the rest of the world. And the UST 2/10’s inversion is likely getting amplified by the overload of negative-yielding debt in Europe, suggesting Bunds are causing the moves in U.S. treasuries, rather than the other way around. This view is supported by the Granger causality test as global inflation expectations shift lower, Bunds tend to drive U.S. treasuries likewise.

Currency Markets

G-10 safe havens should remain in demand or at least hold steady as traders are reluctant to hold risk positions which remain vulnerable to headlines, Tweets, comments and flows if there is any risk appetite left in the markets it’s supported by little more than the “who blinks first” narrative as U.S. and China are set to restart trade talks.

Yen and CHF demand will be triggered by trade headlines; however, traders could get discouraged from buying more CHF and JPY for fear of a strong SNB or BoJ reaction.

I’ve been trading USDJPY from the long positions, but it is starting to get complicated again as short term money is staying short buying into all the US recessionary cheerleading.

The Euro

Weak Eurozone data and a dovish ECB suggests an imminent test of the mid 1.10’s, but the prospects of Germany increasing deficit spending triggered EURUSD short-covering which dampened the markets downward momentum considerably heading into the weekend. Deficit spending suggests a more pragmatic mechanism free from the drama of helicopter money and less harmful for the Euro.

USDASIA

The markets feel way too heavy long USD for my tastes, so I joined the markets which went into risk reduction mode ahead of the weekend. Given the markets remain long USD positioned across the Asia basket, I suspect the market will remain capped unless USDCHH moves higher and or if the US-China trade talks deteriorate. So, the markets will need some persuading to add more USDCNH top side risk. So we could expect a relatively muted Asia FX market response today.

The Ringgit

The Ringgit closed the week on a positive tone after the surprisingly sturdy Q2 GDP print which saw the USDMYR fall below what was a healthy 4.18 support level. The BNM has also liberalised their FX rules to allow more hedging by foreigners.

So, with that positive domestic economic backdrop, pressure coming off the Yuan and risk tentatively stabilising and supporting oil prices, it should temper the negative views toward the Ringgit but will fall well short of a bullish shift in attitude.

Mad World

The world does appear to have gone utterly mad, but if you think the oval office couldn’t outdo themselves, think again. I finally got a chance to read over all of last weeks reports and the Washington Post sums this up perfectly, “President Trump has pushed top aides to investigate whether the U.S. government can purchase the sizeable ice-smothered island of Greenland.

This article was written by Stephen Innes, Managing Partner at VM markets LLC

FED moved the Market but technical analysis still Works

Movements that we see on the chart right now are in the same time very technical, which is a great thing also for those traders that tend to ignore the news and put more attention to the dots and lines on the chart.

First instrument today is the EURUSD, which on Wednesday, broke the local horizontal support on the 1.111 (yellow). That breakout was a legitimate signal to go short. For the past several hours we do have an upswing though but this is a normal price action movement, which is the broken support being tested as a newest resistance. First contact with the yellow area is positive for the sellers as we can see the bounce. As long, as the price will stay below the yellow line, the sell signal will be present.

FED cutting rates was also a fuel for bigger movements on the SP500. Here, the price eventually chose to go down. The movement is also technical, as we do have a triple top formation and the breakout of the 23,6% Fibonacci. The movement towards the 38,2% is very probable.

Last one is the CHFJPY so a battle of safe heavens. Currently, JPY is winning. The price respected the down trendline and broke the lower line of the flag pattern. That is a beautiful bearish price action movement and should be continued in the nearest future.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Australian Dollar tango down

Some traders prefer to avoid such market conditions and trade elsewhere. For those, we made this video. Today,3 occasions on the pairs without the USD.

First one is the AUDCAD, where the price is falling down sharply after two bearish price patterns. First, major one, is the flag, which is present in the proper downtrend and was giving us a hint, that this trend was about to be continued. The breakout happened after the price drew a second pattern – double top formation. Currently, we are close to mid-term lows, which can be a good occasion for taking some profits and, in consequence, reversal.

Second instrument is the EURAUD, where we can also witness the weakness of the Australian currency. Setup presented here is the Head and Shoulders pattern, with a false breakout to the downside. Movement south stopped on the long-term up trendline and since that, we do have a strong upswing. In my opinion, the positive sentiment should be continued.

CHFJPY is the last instrument in this analysis. Here, the price is creating the third bearish correction pattern in a row. We already had one flag and a pennant and now, we are having flag again. The sell signal will be created, when the price will break the lower line of the flag and horizontal support on the 109.1. Chances for that are quite high.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Weaker Global Sentiment & Mrs Lagarde at the ECB – CHFJPY Moves Lower

Under Lagarde the IMF repeatedly backed and called for ongoing or further ECB support, so markets are clearly hoping for additional and wide ranging easing measures, although part of the rally in bonds and weakness in the EUR may reflect relief that market-focused Draghi won’t be followed by Bundesbank President Weidmann, who has a much more traditional view on monetary policy.

Indeed, like Fed’s Powell, Lagarde is a lawyer and not a trained economist. However, while many in Germany may lament that Weidmann lost out and that the ECB missed the chance to distance the central bank somewhat from financial market pressures, Lagarde’s skill as negotiator and her wide ranging contacts may help to fill the cracks in the monetary union that are becoming more apparent and to not only improve public support for the central bank, but also to get politicians to finally push ahead with the banking union and further integration.

The euphoria following the prospect of the restarting of US-China talks and cooling of trade tensions (for now at least) has subsided as we move into July, adding a renewed bid for the Japanese Yen.

The CHFJPY pair may not be on every trader’s radar but with a trading system, trading plan and good risk management no asset should be ignored. Indeed the sign of a good trading system/strategy is that it should be applicable to as many markets as possible, be that forex, commodities or equities.

“A chart is a chart” is the call of many chartists. But whatever time frame, asset or approach an individual trader takes they have to be able to follow the rules, accept their losing trades as well as their winning trades and above all manage their risk.

Below are three Trend Following and one Mean Reversion approach to the pair from the close on July 2.

  1. Is the Daily Moving Average approach – the baseline for this approach is a breach and break of the 20-SMA, (109.37) with a Target 1 set by the ATR x 1.25 (108.55) and Stop Loss at the turn in the market (110.55). The higher time frames (Week & Month) are both biased to the downside so the move on the Daily chart is with the trend.
  2. Shows the EMA Crossing Strategy which is also based on moving averages and utilizes the ATR for target setting too, this time ATR x 1 and ATR x 2.5. Stop Loss, as ever, above the turn.
  3. Shows the clarity and simplicity of the Heikin Ashi candle approach – lack of upper wicks and a red candle enough to suggest a short position, Stop Loss again above the turn but this time no target, simply a wait for the candle to change colour.
  4. If Mean Reversion is your approach then again the simplicity of the Awesome Oscillator could be for you. This approach suggested a turn in sentiment July 1 but has yet to suggest a short position as the histogram remains north of zero.

For details on all these approaches and how to manage the most important aspect, YOU then join us during July for our exclusive series of educational webinars.

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Yen Bulls gain Confidence

That is the case right now as tensions around the trade wars between China and US are increasing. All three setups are pretty similar to each other and the correlation between them is high.

First one is the CHFJPY, which on Monday, broke the crucial long-term support using the bearish gap. The breakout, from the technical point of view, was promoted by the descending triangle pattern. After the breakout, the price rushed to close the gap and created the pennant formation. Pennant was promoting a further slide and this is precisely what happened. The sentiment right now is definitely negative.

AUDJPY is the second one and here we also had a gap, which allowed to break a major support. In this case, the support is dynamic and connects higher lows since January. Traders managed to close the gap and after that, immediately started to sell. As long as we stay below the black line, bears have bigger chance for a success.

Last one is the GBPJPY loved for its volatility. Most recently, the price managed to break crucial horizontal support on the 143.8, which gave us a proper sell signal. Whole slide was initiated at the beginning of May with a very nice false breakout pattern. When you see this, tell me, how can you not love this kind of setups?

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Two Different Signals for the AUD

Today’s setups are a bit weird. How is that possible? Well, it means that second currencies in the pairs are the main drivers of those movements. Let’s see.

We will start with the AUDCHF, where the situation is bearish and the price broke major supports. First of all, AUDCHF broke the lower line of the symmetric triangle pattern. What is more, in the same time, we broke the horizontal support slightly below 0.71. Currently we do have a typical pullback but as long as we stay below those two resistances, the sentiment remains negative.

Second pair is the AUDJPY, where we do have a buy signal. It comes from the fact, that the pair broke the upper line of the wedge pattern and bounced from the upper line of the ascending triangle pattern. The movement towards the horizontal resistance on the 79.8 is very probable.

That brings us to the third instrument. From the above, we can assume that the CHFJPY should be very strong…and it is! The price is in the nice up trend after breaking the upper line of the triangle. Yesterday, CHFJPY broke two major resistances, horizontal and dynamic one. With this, it seems that the sky is the limit.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

EUR Climbs Higher

Minutes stopped being a Tier 1 data quite some time ago. Now, markets have other issues to be worried about. In this Trading Sniper video, we do have two pairs with the EUR and one with safe haven currencies.

First, EURUSD. The pair created a nice inverse head and shoulders pattern on the H1/H4 chart. The price already broke the neckline and tested that twice as a closest support. Both tests were positive for the buyers and gave us long tails on the H1 candles. The buy signal is ON, with the mid-term downtrend line as the closest target.

EURNZD is the next pair but the situation here is very similar. The price is also creating an inverse head and shoulders pattern. The neckline (along with the 38,2% Fibo) was broken today and that gave a nice bullish momentum for the buyers. The mid-term buy signal is ON.

The last pair is the CHFJPY, so a clash of the safe haven assets. Here, the price broke the upper line of the symmetric triangle pattern and the horizontal resistance around 110.3. After that, buyers successfully tested that as a support. Current price action tells us that we should expect a further upswing here and that is our outlook on this instrument.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Important CHF Pairs’ Technical Overview: 10.01.2019

USD/CHF

In spite of dropping to the lowest levels in fifteen-weeks’ time, the USDCHF still bounced off the eleven-month long ascending support-line, at 0.9710, which together with near oversold RSI signal brighter chances of the pair’s pullback moves to 0.9790 & 0.9840 immediate resistances. Should the pair manage to conquer 0.9840 barrier, the 200-day SMA level of 0.9885, the 0.9915 trend-line resistance and the 0.9950, including 50-day SMA, can entertain the buyers. In case prices close beneath 0.9710, also dip under 0.9700 round-figure, on a D1 basis, the 0.9680, the 0.9630 and the 0.9600 may flash on the chart. Moreover, pair’s sustained downturn below 0.9600 might not hesitate visiting the 0.9580 and the 0.9530 rest-points.

CHF/JPY

Having reversed from 111.25-40 resistance-region, the CHFJPY is likely declining towards 110.00 and then to 109.70 before testing the 109.20 support. Given the quote slips under the 109.20, the 108.60 and the 108.20 may regain market attention prior to highlighting the recent low around 106.15. Alternatively, a clear break of 111.40 could help the pair to rise in direction to 111.90 and 112.80-90 hurdles to north. Though, pair’s successful rally above 112.90 can please Bulls with 113.50 & 114.00 levels.

GBP/CHF

With the short-term descending trend-line restricting the GBPCHF upside, the pair is likely to aim for 1.2375-65 support-zone, breaking which 1.2285 might appear on sellers’ radar. If Bears refrain to respect the 1.2285 mark, the 61.8% FE level of 1.2165 should be targeted while holding short positions. Meanwhile, break of 1.2510 resistance-line can accelerate the pair’s recovery to 1.2590-1.2605 resistance-area. Assuming the buyers’ capacity to cross 1.2605, the 1.2670 and the 1.2710 could become their favorites.

AUD/CHF

AUDCHF presently rises to confront the 0.7030-45 broad resistance that’s been limiting the pair’s upside since three-weeks. If at all the prices surpass 0.7045, the 0.7070 & the 0.7100 could offer intermediate halts during their rally to 0.7150. On the contrary, 0.6960 support-line seems adjacent rest for the pair, breaking which it can dip to 0.6885 and 0.6825. However, extended south-run past-0.6825 can recall 0.6675 as a quote.

Technical Checks For Important JPY Pairs: 28.12.2018

USD/JPY

Having failed to cross 111.35-40 horizontal-resistance, the USDJPY again dips beneath 200-day SMA and aims for the 109.80-75 rest-region. In case oversold RSI fall short of activating the pair’s U-turn around 109.75, the 109.30, the 109.00 and the 108.60 can act as intermediate halts before drawing market attention to the 108.10-107.75 support-zone. Alternatively, an upside clearance of 111.40 on a daily closing basis could quickly fuel the quote towards the 111.80 and the 100-day SMA level of 112.40. Moreover, pair’s successful rise beyond 112.40 enables it to confront the 113.15 and a downward slanting resistance-line near 113.80.

CAD/JPY

Even after trading near the lowest levels in nine-months, the CADJPY is yet to provide a weekly closing under 80.65-50 area that has been restricting the pair’s downturn since early 2017. If at all the Bears manage to conquer 80.50, the 80.00, the 79.60 and the 78.80 are likely following numbers to appear on the chart. Meanwhile, the 82.05-15 may continue limiting the pair’s near-term advances, breaking which 83.00 & 83.50 might lure the buyers. It should also be noted that the pair’s sustained up-move past-83.50 can flash the 84.30, the 84.70 and the 85.60 on Bulls’ radars.

CHF/JPY

CHFJPY struggles with 200-day SMA level of 112.40 in order to justify its strength in targeting the 112.80 and the 113.10, comprising 50-day SMA. Though, three-month old descending trend-line, at 113.85 now, may confine the pair’s up-moves after 113.10, if not then 114.00 and the 114.40 can grab the limelight. On the downside, the 111.55-35 seem immediate support for the pair, breaking which 111.00 and the 110.60 needs to be observed carefully. Given the pair’s extended south-run below 110.60, the 110.00, the 109.45 and the 108.60 may become sellers’ favorites.

Technical Checks For USD/CHF, EUR/CHF, CHF/JPY & NZD/CHF: 19.12.2018

USD/CHF

Multiple failures to rise past the 1.0000-1.0005 region highlights the importance of short-term ascending trend-line, at 0.9900, for USDCHF traders, which if broken can quickly drag the pair to 0.9880 and then to the 0.9860 supports. However, 61.8% FE level of 0.9825 and the 0.9800 round-figure may restrict the pair’s further declines. On the upside, the 0.9960 and the 0.9985 could serve as immediate resistances for the pair before diverting market attention to 1.0000-1.0005 area for one more time. Assuming the pair’s ability to cross 1.0005 mark, the 1.0050, the 1.0080 and the 1.0110 might offer intermediate halts during the rally targeting 1.0130.

EUR/CHF

EURCHF successfully cleared a month old descending resistance-line and is heading towards 1.1355-60 resistance-zone. In case buyers refrain to respect the 1.1360 barrier, the 1.1380, the 1.1400 and the 1.1430 can appear on their radars. Meanwhile, the 1.1290 and the 1.1250 are likely adjacent rests that the pair may avail prior to visiting the 1.1230, the 1.1220 and the 1.1200 consecutive supports.

CHF/JPY

Eight-week long upward slanting support-line and near oversold RSI seem challenging the CHFJPY sellers aiming the 112.90 and the 112.45-40 levels to south. Should prices dip beneath 112.40, the 112.00, the 111.80 and the 111.50 might please the Bears. Given the pair’s U-turn from 113.10 support-line, the 113.45 and the 113.75 may entertain buyers, breaking which 113.95 TL resistance can play its role. If at all the quote surpasses 113.95 hurdle, the 114.35-40 and 114.60 could come back on the chart.

NZD/CHF

Having bounced off the 0.6745-40 region, the NZDCHF is witnessing recovery in direction to 0.6840 and then to the 0.6880-85 resistances. Though, pair’s sustained rally beyond 0.6885 enables it to confront the 0.6935, the 61.8% FE level around 0.6980 and the 0.7000 psychological-magnet. Alternatively, the 0.6755 and the 0.6745-40 can keep limiting the pair’s near-term downside. Let’s say the pair drops below 0.6740 mark, then it becomes vulnerable to plunge towards the 0.6700, the 0.6650 and the 0.6600 supports.

Technical Overview of Important JPY Pairs: 12.12.2018

USD/JPY

Although USDJPY’s U-turn from 100-day SMA & support-line of short-term symmetrical triangle helped it cross 50-day SMA, the triangle-resistance, at 114.00, could challenge the pair’s strength. Given the buyers’ ability to surpass 114.00 barrier on a daily closing basis, the 114.55 and the 115.00 might entertain them before pleasing with 61.8% FE level of 115.30. On the contrary, 50-day SMA level of 113.00 and the 112.55 can offer immediate supports to the pair ahead of highlighting 112.35-30 support-confluence for one more time. If at all prices slid beneath 112.30, the 111.60, the 111.00 and the 110.65, comprising 200-day SMA, may flash on Bears’ radars to target.

EUR/JPY

EURJPY struggles between four-month old ascending trend-line and 50-day SMA, namely the 127.70 and the 128.90 levels, with 129.30 & 126.60 being follow-on numbers to watch in case of either side breaks. Let’s say comparative strength of JPY drag the pair beneath 126.60, then the 125.55, the 125.00 and the 124.60 may become sellers’ favorites. Alternatively, the 129.70-75 resistance-zone, including 200-day SMA & nearby downward slanting TL, can try limiting the pair’s rise past-129.30, failing to which may propel it to 130.00 and the 130.50 resistance-levels.

AUD/JPY

Having reversed from 50-day & 100-day SMA joint, the AUDJPY seems heading north to 82.50 & 83.00 but 83.90 and the 84.45-55 horizontal-area could confine the pair’s additional upside. Should Bulls refrain to respect the 84.55 hurdle, the 85.60 and the 86.00 may mark their presence on the chart. Meanwhile, D1 close below 81.20 SMA intersection can quickly fetch the quote to 80.40 and the 80.00 consecutive rest-points. During the pair’s extended south-run after 80.00, the 79.45, the 79.00 and the 78.55 might gain traders’ attention.

CHF/JPY

While 114.60 triggered the CHFJPY’s pullback, counter-trend traders may only have 113.50 to be happy with as adjacent support-line, at 112.95, and the 112.30-25 region, including 200-day SMA & seven-month long ascending trend-line, can trouble them afterwards. Given the pair drops below 112.25, the 111.70 and the 111.25 could play their roles of supports. In case prices surge beyond 114.60, the 114.90 and the 115.10-15 are likely levels to limit the pair’s advances, breaking which 115.60-65 may be targeted if holding long positions. Moreover, pair’s successful rise above 115.65 can escalate the rally to 116.00 and then to the 116.50 resistances.

Technical Update For USD/CHF, EUR/CHF, CHF/JPY & CAD/CHF: 05.12.2018

USD/CHF

With nearly 100-pip range between 1.0010-05 and 0.9920-15 aptly limiting the USDCHF moves, the pair is presently expected to revisit the 0.9950 rest-point ahead of testing the 0.9915 range-support for one more time. However, pair’s drop beneath the 0.9915 can quickly fetch it to 0.9885 and the 0.9860 marks ahead of highlighting the 0.9845 as a support. Meanwhile, an upside clearance of 1.0010 could propel the quote to 1.0050 and then to the 1.0080 resistances whereas pair’s successful trading beyond 1.0080 enables it to aim for 1.0100 and the 1.0130 numbers to north.

EUR/CHF

Failure to surpass a month-long descending trend-line again drags the EURCHF to 1.1300-1.1295 support-zone, which if broken may further weaken it towards 1.1270 & 1.1260. Though, sellers’ refrain to respect the 1.1260 might not hesitate flashing 61.8% FE level of 1.1225 on the chart. Alternatively, aforementioned TL can keep restricting the pair’s near-term advances at 1.1345, breaking which the 1.1360, the 1.1400 and another resistance-line around 1.1415 may play their roles of resistances. Given the pair’s ability to cross 1.1415 barrier, it can then rise to 1.1435 & 1.1470 figures.

CHF/JPY

CHFJPY’s bounce off the 113.00-112.95 rest-region can help it target the 113.50 and the 113.75 resistances but the 113.95-114.00 may challenge buyers afterwards. Assuming the pair’s sustained rally above 114.00, the 114.20, the 114.40 and the 61.8% FE level of 114.60 could entertain Bulls. If at all prices slide below 112.95, an ascending support-line stretched since late-October might confine additional downturn at 112.70, if not then 112.40 & 112.10 could become Bears’ favorites. Moreover, pair’s extended declines past-112.10 opens the door for its plunge to 111.85 & 111.50.

CAD/CHF

Even if 0.7580-85 acts as a strong resistance-area for the CADCHF, pair’s downside may find it hard to last longer than 0.7470-65. In case the quote dips beneath 0.7465, the 0.7440, the 0.7415 and the 0.7395 can appear on pessimists radars. On the contrary, 0.7555 may cap the pair’s immediate recovery before diverting market attention to 0.7580-85. Should the pair crosses 0.7585 hurdle, the 0.7625 and the 0.7645 are likely following numbers to grab limelight.

Important JPY Pairs’ Technical Overview: 28.11.2018

USD/JPY

Following its pullback from 112.30, the USDJPY is again preparing to conquer 114.05-10 horizontal-resistance; however, a closing break above the same is required for the pair to aim for 114.55 & 114.75 numbers to north. In case prices manage to provide a D1 close beyond 114.75, the 61.8% FE level of 115.35 and the 115.50 could entertain buyers prior to pleasing them with 116.00 round-figure. On the downside, 112.90 & 112.50 may limit the pair’s near-term declines before highlighting the 112.30, the 100-day SMA level of 112.15 and an upward slanting trend-line, at 112.00, as supports. Assuming the pair’s dip beneath 112.00, the 111.30 & 110.70 might offer intermediate halts during its plunge to 110.35, comprising 200-day SMA.

EUR/JPY

EURJPY is also struggling with immediate resistance-line and can drop to 127.75 but an ascending TL, at 127.25, could challenge sellers then after. Given the pair’s refrain to respect 127.25, the 126.65-60 support-zone may gain market attention as break of which might not hesitate fetching the quote to the 126.00, the 124.95 and the 124.60 consecutive rest-points. Should the pair surpasses 128.75 adjacent barrier, it can quickly rise to 129.10 & 200-day SMA level of 129.85. Moreover, pair’s successful north-run above 129.85 could take a break near 130.00 ahead of targeting 130.55 & 131.40 resistances.

AUD/JPY

With three week long descending trend-line still being unbroken, chances of the AUDJPY’s dip to 81.85 and then to 81.65 support-line can’t be denied. If at all the pair keep trading southwards past-81.65, the 81.20, the 81.00 and the 80.40-35 may question the Bears whereas break of 80.35 could flash 80.00 & 79.75 on the their radars. Meanwhile, an upside clearance of 82.55 resistance-line can escalate the pair’s recovery to 82.80 & 83.05. Though, pair’s advances beyond 83.05 may push Bulls to opt for 61.8% FE level of 83.65 as landmarks.

CHF/JPY

Even after crossing 50-day SMA, the CHFJPY is yet to break the 113.90-95 resistance-region in order to claim the 114.20 & the 114.70 levels. In case the pair maintains strength above 114.70, the 115.05-10 can try confining its rally, if not then 115.60 & 116.00 may mark their presence on the chart. Alternatively, 113.40 & 113.00 seem immediate supports for the pair, breaking which 112.50 and an ascending support-line, at 111.90, should be observed closely. Given the pair’s sustained downturn below 111.90, the 111.50 & 110.90 may become pessimists’ favorites.

Three perspective bearish setups

Today we will not focus on any major instrument on the forex market as we have three interesting setups on more exotic pairs. First, we go to CHFJPY. The pair was having a nice bullish correction, which was initiated by the inverse head and shoulders pattern. Thee price tried to break the mid-term down trendline twice but was unsuccessful, which is a negative sign. This may create a situation, where instead of on the iH&S pattern and a rise, we will get a flag and a further downswing.

EURNZD dropped below the horizontal support after creating the double top formation. That is definitely negative and opens us away towards the long-term up trendline. The sell signal is ON.

Last instrument here is the AUDCHF, which is having a similar situation as EURNZD but the horizontal support is still fighting. That is an upper line of the ascending triangle, which was broken yesterday. That is normal that we are testing that as a support but the outcome is unknown. If the price will close a day below the orange line, we will get a major sell signal.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis