What’s Next After GBP/USD Bearish Pullback Reaches 1.39?

The GBP/USD made a bearish reversal as expected in our video analysis. The main question is whether the uptrend is over or is it just a retracement?

This article analyses what future price patterns are critical for answering this key question.

Price Charts and Technical Analysis

GBP/USD 26.02.2021 4 hour chart

The GBP/USD bearish retracement was expected. But the impulsiveness of the decline is very strong, which is 1 of the main reasons for the potential end of the uptrend.

  1. The main pattern to keep an eye on now is the potential bounce at the support zone. This includes the Fibonacci targets, retracements, and 144 ema close.
  2. A strong bullish bounce (green arrows) makes it more likely that the current decline is part of a wave A (grey) of a larger wave 4 (purple) correction.
    1. In that case, a bearish bounce at the previous highs is expected and a larger consolidation zone should appear.
  3. A weak bullish bounce (grey arrows) indicates lack of buyers and a bearish continuation pattern.
    1. In that case, a bearish breakout (red arrows) should take the price lower.
    2. This could confirm a wave 1 (orange) of a new downtrend.

The GBP/USD bullish bounce will be a key factor in determining the next price swings. The bearish pullback after the heavy uptrend was expected. Now it’s a key moment to see whether the price patterns indicate a larger correction down.

On the 1 hour chart, we can see the difference in expectations. Both scenarios are equally possible from a wave analysis point of view.

  1. A strong bullish bounce could create a bullish ABC up (blue arrows).
  2. Whereas a bear flag (grey arrows) should send the GU pair lower again (red arrow) in a wave 345 (light blue).

GBP/USD 26.02.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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

EURUSD Feb 26th, 2021

From yesterday’s reported top at 1.2241, EUR/USD traded exactly to 1.2242 then dropped to 1.2137 or 105 pips. At 1.2137, EUR/USD was located between 1.2131 to 1.2139. While 105 pips for one leg of the trade, existed for the day, the actual trade was multiple longs and shorts. The 105 pips was a downside trade but pips were gained from previous longs.

Actual for yesterday was 2 longs and 2 shorts to profit from nearly every traded pip within the structure offered yesterday.

View my website for 2014 and 2015 and prior to the ECB interest rate changes as featured many examples to day trades by multiple longs and shorts. For longs and shorts then traded 80 and 90 pips in 1 direction as opposed to today’s 50 and 60 ish pips.

While the day trade allows for an abundance of profit pips quickly, certain days are offered trades for a 24 hour duration. Yesterday’s EUR/USD lacked criteria for a 24 trade due to small ranges and known long in advance of the day trade.

While EUR/USD was presented, 8 currency pairs are traded twice daily and 9 pairs if AUD/EUR is considered. For 8 currency pairs amounts to 80 day trades per week Then comes 18 weekly trades and traded as mutliple longs and shorts to profit from nearly all traded pips during the week.

EUR/USD Today

Here’s today’s EUR/USD

1.2097, 1.2104, 1.2112, 1.2119, 1.2125, 1.2127, 1.2134, Vs 1.2165, 1.2173, 12181, 1.2188, 1.2195, 1.2203, 1.2211 and 1.2219.

Changes from yesterday include 22 pips dropped from the upside and 19 pips from the downside. In actuality, no changes.

Gold today achieved 1753 lows from reported 1815 and next target as written resides at 1728.

DXY dropped below 89.95 to 89.67 lows and the drop allowed EUR/USD to travel higher yesterday. DXY since regained 89.95 and traded to 90.45 or 78 pips from 89.67 to 90.45.

The S&P’s traded to 3801 lows. Miles of downside remain.

 

AUD/USD Daily Forecast – Australian Dollar Remains Under Pressure

AUD/USD Video 26.02.21.

Australian Dollar Is Losing Ground Against U.S. Dollar

AUD/USD continues to pull back while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 90.30 and made an attempt to settle above the next resistance at 90.50 but did not manage to develop sufficient upside momentum. As a result, the U.S. Dollar Index remains in the range between 90.30 and 90.50. In case the U.S. Dollar index gets above 90.50, it will move towards the 50 EMA at 90.65 which will be bearish for AUD/USD.

Today, foreign exchange market traders will focus on Personal Income and Personal Spending reports from the U.S. Analysts expect that Personal Income increased by 9.5% month-over-month in January after growing by 0.6% in December. Personal Spending is projected to grow by 2.5% in January after declining by 0.2% in December.

The current pullback in commodity markets puts additional pressure on commodity-related currencies, including Australian dollar. If this pullback continues, Australian dollar will likely move lower.

Technical Analysis

aud usd february 26 2021

AUD/USD gained downside momentum and managed to get below the support at 0.7860. AUD/USD has recently made an attempt to settle below the next support level at 0.7820 but failed to move lower and remained in the range between 0.7820 and 0.7860.

In case AUD/USD declines below the support at 0.7820, it will get to another test of the next support level at the 20 EMA at 0.7805. A successful test of this level will push AUD/USD towards the next support level at 0.7780. If AUD/USD settles below the support at 0.7780, it will head towards the next support which is located at 0.7760.

On the upside, the nearest resistance level for AUD/USD is located at 0.7860. If AUD/USD gets above this level, it will head towards the next resistance at 0.7875. RSI has moved back into the moderate territory, and there is plenty of room to gain upside momentum in case the right catalysts emerge. A move above the resistance at 0.7875 will open the way to the test of the resistance at 0.7890.

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

Economic Data from France Disappoints ahead of a Busy U.S Session

After a relatively busy Asian session, on the economic data front, the French economy was in focus early in the European session.

2nd estimate GDP figures for the 4th quarter and consumer spending numbers for January were in focus.

Prelim inflation figures for February were also on the docket this morning.

French Stats Disappoint

In January, consumer spending slumped by 4.6%, month-on-month, partially reversing December’s 22.4% rebound. Economists had forecast a 3.5% decline.

According to Insee.fr,

  • The consumption of manufactured goods tumbled by 12.9%.
    • Durable goods purchases fell by 9.9%, with spending on clothing and textiles sliding by 27.8%.
    • The 27.8% slide in spending on clothing and textiles left spending down by 14.4% year-on-year.
    • Other manufactured goods purchases fell by a relatively more modest 7.7%.
  • Energy consumption rose by 6.3%, however, with food consumption increasing by 1.7%. The upside in energy consumption was attributed to colder weather conditions.

4th quarter GDP numbers were also EUR negative. According to 2nd estimates, the economy contracted by 1.4%, quarter-on-quarter, revised down from a 1st estimate 1.3%.

According to Insee.fr,

  • Gross disposable household income increased by 1.5%, in spite of the contraction in the French economy.
  • The combined effect of the rise in purchasing power and drop in consumption expenditure (-5.4%) strongly increased households’ savings rate, which stood at 22.2%.
  • In the 4th quarter, a 2nd national lockdown coupled with curfews weighed on the economy.
  • In spite of this, the contraction was moderate compared with the 2nd quarter contraction stemming from the first lockdown.
  • Gross fixed capital product rose by 1.1%, while total domestic demand hit reverse.
  • Foreign trade continued to recover, with exports rising by more than imports, delivering a positive contribution to GDP.

French GDP Q4 (QoQ)

Prelim inflation figures were not much better. In February, consumer prices fell by 0.1%, partially reversing a 0.2% rise from January.

According to Insee.fr, the annual rate of inflation softened from 0.6% to 0.4% mid-way through the quarter.

CPI Feb Prelim

Market Impact

Ahead of the stats, the EUR had struck a current day high $1.21830 before falling to a pre-stat and current day low $1.21290.

Upon the release of the inflation figures, the EUR rose from $1.21346 to a post-stat high $1.21594 before easing back.

At the time of writing, the EUR was down by 0.12% to $1.21520.

EURUSD 260221 Minute Chart

For the European majors, there was no support from today’s stats.

At the time of writing, the DAX30 and the EuroStoxx600 were down by 0.87% and by 0.91% respectively. The CAC40 was down by 1.06%.

Next Up

A busy U.S session. Key stats from the U.S include inflation and personal spending figures that will draw plenty of attention.

EUR/USD Daily Forecast – U.S. Dollar Shows Strength Ahead Of The Weekend

EUR/USD 26.02.21.

Euro Is Losing Ground Agaisnt U.S. Dollar

EUR/USD is currently trying to settle below the support at 1.2130 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 90.30 and is moving towards the next resistance at 90.50. If the U.S. Dollar Index settles above this level, it will head towards the 50 EMA at 90.65 which will be bearish for EUR/USD.

Yesterday, EU reported that Consumer Confidence improved from -15.5 in January to -14.8 in February, in line with the analyst consensus. Industrial Sentiment improved from -6.1 to -3.3 while Services Sentiment increased from -17.7 to -17.1. Both reports exceeded analyst expectations.

It looks like rising U.S. Treasury yields have finally managed to provide additional support to the American currency. If Treasury yields continue to move higher, the U.S. dollar may get more support. At the same time, it remains to be seen whether dollar’s upside move will be sustainable as the U.S. will soon introduce another round of economic stimulus.

Technical Analysis

eur usd february 26 2021

EUR/USD lost upside momentum and declined towards the support level at 1.2130. This is a worrisome development for the bulls as EUR/USD had decent chances to move higher after it managed to get above the resistance at 1.2175.

However, the upside move was short-lived, and EUR/USD is currently trying to settle below 1.2130. If this attempt is successful, EUR/USD will head towards the 50 EMA which is located at 1.2115. A move below the 50 EMA will open the way to the test of the support at 1.2080. If EUR/USD declines below this level, it will head towards the support at 1.2060.

On the upside, EUR/USD must stay above the support at 1.2130 to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2155. If EUR/USD gets above this level, it will head towards the resistance at 1.2175. A successful test of this level will open the way to the test of the resistance at 1.2220.

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

GBP/USD Daily Forecast – British Pound Continues To Pull Back

GBP/USD Video 26.02.21.

U.S. Dollar Gains Ground Against British Pound

GBP/USD continues to pull back from recent highs and is trying to settle below the support at 1.3950 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle above the resistance level at 90.30. If this attempt is successful, the U.S. Dollar Index will head towards the next resistance at 90.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at UK Nationwide Housing Prices data for February. Analysts expect that housing prices increased by 0.2% month-over-month. On a year-over-year basis, housing prices are projected to grow by 6.5%.

Later, market’s attention will shift to economic data from the U.S. Personal Income is projected to grow by 9.5% month-over-month in January while Personal Spending is expected to increase by 2.5%.  The reports will show how stimulus checks boosted consumer activity and may have a material impact on the trading dynamics of the American currency.

Technical Analysis

gbp usd february 26 2021

GBP/USD continues to move lower as traders take profits after the recent rally. The current pullback is so strong that RSI has already moved from the extremely overbought territory to normal levels.

Currently, GBP/USD is trying to settle below the support level at 1.3950. If this attempt is successful, GBP/USD will head towards the next support level which is located at the 20 EMA at 1.3920.

A move below the 20 EMA will open the way to the test of the support at 1.3900. If GBP/USD declines below this level, it will head towards the next support level at 1.3880.

On the upside, GBP/USD needs to get back above 1.3950 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3980. If GBP/USD settles above this level, it will move towards the resistance at 1.4000.

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

February 26th 2021: Dollar Index Recovers amidst US Treasury Yield Surge

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.4 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound, however, shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

EUR/USD stabbed to peaks at 1.2243 on Thursday, yet on the back of the DXY finishing off worst levels as US Treasury yields spiked, the currency pair wrapped up in the shape of a shooting star pattern off highs.

Upstream, we see Quasimodo resistance at 1.2278; to the downside, we’ll likely zero in on demand from 1.1923/1.2001—houses support at 1.1965—a previous Quasimodo resistance.

RSI action remains north of the 50.00 centreline, on the doorstep of resistance at 60.30.

H4 timeframe:

Shaped by way of a shooting star and a gravestone doji, candle action peaked just south of supply priced in at 1.2282/1.2245 on Thursday and retreated back to support at 1.2179. Having seen this level serve well as resistance since mid-January, the odds of buyers attempting to make an entrance here is high.

Though should 1.2179 fail to offer a floor, Quasimodo support at 1.2135 is likely to call for attention.

H1 timeframe:

The one-sided decline amid US hours on Thursday delivered a forceful 1.22 breach to the downside and subsequent test of support at 1.2166 (a previous Quasimodo resistance level).

In the event 1.2166 fails to rejuvenate buying, the 100-period simple moving average at 1.2156 could make a show, closely shadowed by trendline support, taken from the low 1.2023.

Interestingly, the RSI turned from resistance at 78.97, a base capping upside since the middle of January. Note also that the value dropped through the 50.00 centreline.

Observed levels:

The area formed between H1 trendline support (1.2023), the 100-period simple moving average and H1 support at 1.2166 (green zone) is an area buyers possibly have on the watchlist today. Not only is the zone bolstered by a nearby H4 support at 1.2179, monthly price suggests scope to approach higher levels. A H1 close above 1.22 is likely to add bullish conviction.

Consequently, the above analysis implies the daily timeframe’s shooting star pattern is perhaps brittle.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

AUD/USD, up by 2.9 percent in February, recently came within touching distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

Also technically notable is February’s bullish engulfing pattern (although this formation is generally best noted at troughs).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Thursday, as you can see, carved out a bearish outside reversal pattern from supply at 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082), movement nearly engulfing three previous candles.

Lower on the curve, demand is next in line at 0.7726/0.7806, intersecting with trendline support, etched from the low 0.5506.

RSI bearish divergence also greeted the charts yesterday, with the value subsequently exiting overbought space and registering 61.00.

H4 timeframe:

Risk sentiment suffered Thursday, consequently dragging risk-sensitive currencies lower, including the Australian dollar and New Zealand dollar.

The one-way decline, south of resistance at 0.8021, drove AUD/USD into demand at 0.7848/0.7867, fastened above supports at 0.7843 and 0.7805.

H1 timeframe:

Thursday’s downside moves eventually overwhelmed buying interest off 0.79, allowing for a test of the 50.0% retracement level at 0.7865, plotted ahead of 0.7850 support. Lower, we see a reasonably clear run back to 0.78.

What’s also technically appealing is the RSI indicator dipping a toe in oversold territory and recording bullish hidden divergence.

Observed levels:

The combination of H4 demand at 0.7848/0.7867, together with the 50.0% retracement at 0.7865 and the 0.7850 support on the H1 may be a welcomed area by buyers today.

Though should 0.7850 cave, the 0.78 figure is likely in the firing range, a psychological support merging with the upper side of daily demand at 0.7806 and H4 support at 0.7805.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February, up by 1.5 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Supply at 106.33/105.78 came under fire in recent movement, as USD/JPY registered a third successive daily gain, despite declines witnessed in US equities (action that usually reinforces a JPY bid).

With buyers gaining confidence north of the 200-day simple moving average at 105.48, additional supply is worth taking into consideration at 107.58/106.85.

Additionally, RSI action remains healthy off 57.00 support, on the verge of shaking hands with overbought terrain.

H4 timeframe:

Unable to hold back buyers, resistance at 106.11 stepped aside on Thursday and was swiftly retested as support in recent hours.

This drew light towards the 127.2% Fib projection at 106.44, with a break uncovering Quasimodo resistance at 106.58.

H1 timeframe:

Quasimodo resistance at 106.27 entered the fight on Thursday, forcing a 106 retest. Upstream, the 127.2% Fib projection at 106.44 on the H4 is next in the line of fire, followed by 106.50 resistance.

Technically, we’re also seeing bearish divergence form out of the RSI.

Observed levels:

Chart studies suggest we’re heading higher in the short term, backed by the monthly timeframe’s technical picture and a somewhat fragile supply on the daily timeframe at 106.33/105.78. So, with that being said, a H1 bullish breakout theme could emerge above 106.27, with 106.44 (H4) and 106.50 resistance (H1) targeted.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4241, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

Sterling dropped sharply against the US dollar on Thursday, snapping a five-day bullish phase.

Largely driven by a surge in US Treasury yields backing a USD spike higher, GBP/USD retreated 1 percent and now flirts with support priced in at 1.4011.

The RSI rotated lower from 77.40 and exited overbought levels.

H4 timeframe:

Trendline support, extended from the low 1.3566, is now within a stone’s throw from making an entrance, intersecting with a 38.2% Fib level at 1.3982. Traders considering the trendline as a base for potential buying are urged to consider 1.3942/1.3900 demand (previous supply), as price could whipsaw through trendline support to collect fresh buyers off the aforementioned demand.

H1 timeframe:

1.41 put up little fight on Thursday, with price also overthrowing the 100-period simple moving average to the downside in strong fashion.

The pair, as you can see, settled around the key figure 1.40, a large psychological level that’s sponsored by a nearby 61.8% Fib level at 1.3985 and a 161.8% Fib projection at 1.3982, as well as Quasimodo support from 1.3959.

With reference to the RSI oscillator, you will also note the value entered oversold terrain, testing lows around 26.00.

Observed levels:

The combination of H4 trendline support and 38.2% Fib confluence at 1.3982, in addition to 1.40 support on the H1, alongside 61.8%/1.618% Fib confluence around 1.3985, could see short-term buying develop today.

What’s also supportive of a bid hitting the charts, of course, is the monthly chart trading north of trendline resistance and daily price crossing swords with support from 1.4011.

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EUR/USD Mid-Session Technical Analysis for February 25, 2021

The Euro is trading higher late Thursday as the U.S. Dollar continued to weaken after dovish signals from the U.S. Federal Reserve boosted the reflation trade in currency markets.

Easy financial conditions, the promise of fiscal stimulus and accelerating COVID-19 vaccine rollouts have driven money into what’s known as the reflation trade, referring to bets on an upswing in economic activity and prices.

At 17:36 GMT, the EUR/USD is trading 1.2229, up 0.0059 or +0.48%.

Fed Chair Jerome Powell reiterated on Wednesday that the central bank will not tighten its policy until the economy improves.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out the previous main top at 1.2190. A trade through 1.1952 will change the main trend to down.

The minor trend is also up. A trade through 1.2109 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is 1.2349 to 1.1952. The EUR/USD is currently trading on the strong side of its retracement zone at 1.2197 to 1.2151. This zone is new support.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.2197.

Bullish Scenario

A sustained move over 1.2197 will indicate the presence of buyers. The daily chart indicates there is plenty of room to the upside with 1.2349 and 1.2413 the next likely upside targets. Depending on the volume, we could see an acceleration to the upside or a slow grind.

Bearish Scenario

A sustained move under 1.2197 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 1.2151. A move through this level will indicate the selling is getting stronger with the next targets the minor bottom at 1.2109, followed by the main 50% level at 1.2074.

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

USD/CAD Daily Forecast – U.S. Dollar Tries To Rebound Against Canadian Dollar

USD/CAD Video 25.02.21.

U.S. Dollar Is Moving Higher After Sell-Off

USD/CAD has recently made an attempt to settle below the support at 1.2490 but lost downside momentum and rebounded towards the resistance at 1.2525 while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index settled below the support level at 90 and made an attempt to get below the next support level at 89.75. Currently, the U.S. Dollar Index continues to trade in a range between the support at 89.75 and the resistance at 90. If the U.S. Dollar Index declines below 89.75, it will gain additional downside momentum which will be bearish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims declined from 841,000 (revised from 861,000) to 730,000 compared to analyst consensus of 838,000. The better-than-expected report failed to provide support to the U.S. dollar.

Meanwhile, Treasury yields continued to move higher and put material pressure on precious metals and stocks. However, higher yields did not boost the American currency which typically benefits from higher yield environment.

Tomorrow, foreign exchange market traders will focus on Personal Income and Personal Spending reports from the U.S. which will show how stimulus checks boosted consumption in January. Analysts expect that Personal Income grew by 9.5% month-over-month in January while Personal Spending increased by 2.5%.

Technical Analysis

usd cad february 25 2021

USD to CAD is currently trying to get back above the resistance at 1.2525. If this attempt is successful, USD to CAD will gain additional upside momentum and head towards the next resistance level which is located at 1.2550.

In case USD to CAD gets above 1.2550, it will head towards the resistance at 1.2590. A move above this level will push USD to CAD towards the resistance which is located at 1.2625.

On the support side, a move below 1.2525 will open the way to the test of the support level at 1.2490. USD to CAD managed to get below this level during the current trading session but failed to develop additional downside momentum. If USD to CAD declines below the support at 1.2490, it will move towards the next support at 1.2450.

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

USD/JPY Price Forecast – US Dollar Trying to Make Fresh High Against Yen

The US dollar has rallied a bit during the trading session on Thursday to reach towards the most recent high, showing signs of strength again that could send this market much higher. After all, we have recently broken above the downtrend line, and starting at this point we are seeing the 50 day EMA turn to the upside. Furthermore, the 200 day EMA is starting to slowly creep to the upside as well. In other words, we are starting to see the trend shift to the upside on multiple indicators.

USD/JPY Video 26.02.21

The ¥105 level underneath has been supported recently, and of course is a large, round, psychologically significant figure. That being said, if we were to break down below that level it would not only be breaking a large, round, psychologically significant figure, but also the most recent low. To the upside, I believe that the market could go looking towards the ¥108 level, but it obviously will be very noisy due to the fact that we have seen a lot of volatility in the 10 year note which of course drives yields up and down.

Those yields continue to strengthen the US dollar against a low yielding currency such as the Japanese yen. This has been very choppy to the upside but at the same time it certainly looks as if we have seen a significant amount of momentum and relentless bullish pressure, telling me pretty much everything that I need to know in the meantime. That being said, you will need to be very cautious about your position size, due to the fact that the volatility could shake you out in general.

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

GBP/USD Price Forecast – British Pound Stalling at Major Resistance

The British pound has rallied just a bit during the trading session on Thursday that sent the market testing the 1.42 level testing the major resistance barrier on the weekly chart. This has been a target of mine for quite some time, so the fact that we got to that area tells me that the market is more than likely to continue to see a little bit of a pullback. If we do pull back from here, I think there are plenty of areas underneath that would offer buying opportunities. The 1.40 level would be the initial area that I think traders would be looking to get involved with. After that, the next area is probably closer to the 1.3750 level, which was the scene of a major breakout previously.

GBP/USD Video 26.02.21

The 1.3750 level being broken to the upside is not only an area that everybody will be paying attention to because of the previous breakout, but the fact that the 50 day EMA is starting to reach towards that area. This is probably the most preferable set up if we get that opportunity, but we may or may not be that lucky. Keep in mind that the British pound continues to see money flowing into the market due to United Kingdom inoculating so many people. Furthermore, the economy is starting to open up so that should bring in more money into the market yet as well. At this point in time, I do not like the idea of buying a breakout above the 1.42 level, because that would be even more parabolic. Simply waiting for an opportunity sometimes is exactly what traders have to do.

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

GBP/JPY Price Forecast – British Pound Breaking 150 Yen

The British pound has rallied a bit during the trading session on Thursday to break above the ¥150 level. That is a very bullish sign, but we are a bit parabolic at this point in time, so I would not be surprised at all to see this market pullback from here. Ultimately, I think that the market will find plenty of buyers underneath in order to get long yet again. The ¥147.50 level would be an area that I think a lot of people would be interested in, and most certainly the ¥145 level will be. The 50 day EMA is reaching towards the ¥145 level, so it all ties together quite nicely.

GBP/JPY Video 26.02.21

That being said, I think that it is only a matter of time before we can get to the upside and I think that is probably how you have to look at this market, as one that will offer the occasional value play that you can take advantage of. This is clearly a “risk on” type of move, and therefore I have no interest in shorting this market whatsoever. I think that if you are patient enough you should get plenty of opportunities to get long of this market. The ¥150 level of course is a headline grabbing type of level, but clearly, we have much further to go to the upside.

I am skittish about buying the market all the way up here though, because quite frankly one has to wonder how much more momentum we can continue to produce? This will be especially true as we head into the weekend so I think that if you are patient you should get an opportunity. The alternate scenario is that we go sideways around the ¥150 level, working off some froth and then go higher. I would be okay with either one of those scenarios.

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

EUR/USD Price Forecast – Euro Breaks Above Short-Term Resistance

The Euro rallied again during the trading session on Thursday to break above the 1.22 handle. The market breaking above there it kicks off the possibility of a move to a fresh, new high, as the market is basically breaking the neckline of “an inverted head and shoulders”, which of course is a bullish sign. Ultimately, that could send this market looking towards 1.24 handle. Pullbacks at this point in time look to be supported, especially near the 50 day EMA.

EUR/USD Video 26.02.21

When you look at the market in general though, it is still stuck in a major consolidation area. Because of this, the market looks very likely to continue seeing back and forth behavior but clearly the Euro is favored over the US dollar in the short term. Whether or not we can break down or out of the overall range that I have marked on the chart would be a completely different question, and I do think that there is a significant amount of resistance between the 1.23 level and the 1.25 handle.

To the downside I see the 1.20 level as major support that extends down to the 1.19 handle. In other words, we are essentially squeezing in a relatively tight range with a slightly upward bias is how I see this market. Short-term back-and-forth with an upward bias is probably the best way to look at this market, as it will almost certainly be driven back and forth by the rolling lockdowns in the European Union while we have significant stimulus coming out the United States.

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

AUD/USD Price Forecast – Australian Dollar Struggling With Big Figure

The Australian dollar has rallied a bit during the trading session on Thursday, but clearly is paying close attention to the 0.80 level. That is an area that I have been talking about for some time, because it is a major pivot on the monthly chart that has determined the overall trend of the market, and if we can break above the 0.80 level significantly that should send this market looking towards the 0.90 level. On the other hand, if we pull back from here it is likely that the market could drop to the 0.75 handle. We are at a major inflection point so it is most certainly worth paying attention to.

AUD/USD Video 26.02.21

The Australian dollar is highly levered to the commodity markets, which of course are highly levered to the idea of the “reflation trade”, as stimulus should have demand for copper and other hard assets like that strengthening over time. In fact, copper is reaching all-time highs on a daily basis, so obviously with Australia being such a major exporter of copper, it makes quite a bit of sense that there will be a lot of demand for the Aussie. At this point, it is likely that we will see the Aussie make several attempts to get above the 0.80 level, where it becomes a “buy-and-hold” scenario. If we do pull back, as long as we can hold the 0.75 handle, then I believe that buyers will return sooner rather than later. In general, we are a little bit overextended, so a pullback is actually the healthiest thing that we could see in the short term with this market being so bullish.

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

Did Elon Musk Tweet Anything About the Euro?

Experts say, that fundamentally, many traders are anticipating rates to increases soon. Furthermore, investors are pricing in the swift recovery in the Euro Block nations.

The first instrument is the main currency pair, the EURUSD. Here, we have a beautiful inverse head and shoulders pattern. At the beginning of the week, the price broke the neckline of this pattern and later used that neckline as a support. The upswing from today’s morning, gave the ultimate confirmation and left no doubts about the long-term direction for the pair. In the short-term, we can expect a small bearish correction but in the long-term, the sentiment is definitely positive.

Now the EURCHF, where the pair is so far having one of the best weeks on record. It all started with a breakout from the symmetric triangle pattern and a breakout from the horizontal resistance at 1.087. What happened next is just pure momentum, and stop losses-activation, spiced up by the general weakness of the Swiss Franc. In the short-term some form of a correction can happen but in the long-term, the sentiment is very bullish.

I will finish this with the weekly chart of the EURJPY, where the price is above two major supports. The first one is the broken downtrend line, which was connecting lower highs from 2014 and the second one is at 127, which was respected many times as a support and resistance since 2015. As long as the price stays above those two supports, the long-term sentiment remains positive.

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

EUR/USD is Strong but Possible Fade Coming Soon

The EUR/USD is in a strong uptrend but 4h looks like it could use a retracement.

A rejection from the POC zone which is close to 1.2250 might start a bigger retracement towards 1.2117 and 1.2078. However we still don’t see a clear signal. A rejection candle or a bearish candlestick pattern configuration might instill new selling pressure along with profit taking. Only if the market breaks 1.2280 without a bearish signal we will see further move up.

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

Cheers and safe trading,

Nenad

 

EUR/USD, DXY and Interest Rates

All life in a market price is the beginning at parity or 1.0 then prices travel upwards. Parity is the safe number and allows a market price to trade above.

The difference between 1.0207 and 1.0070 is 0.0137 or 0.0068. By 0.0068, DXY informs the range today and only for today is located at 90.58 and 89.22. EUR/USD ranges are located at 1.2246 and 1.2110.

The problem is the ranges are to wide for today’s daytrade. Good to know this information but the daytrade will result in losses by longs and shorts entered at wrong prices and target never to materialize.

Take EUR by itself using averages and we have 1.2248 and 1.2108. Wrong again to ranges and result to trade losses. To DXY by itself and we have 90.92 and 88.87. Guaranteed losses and both not even good for future targets.

Interest rate averages change daily and informs the depth and degree of overbought and oversold in relation to parity yet its common to use those averages to gauge ranges although the day ranges are never exact for a day trade. Important is interest rate average ranges

AUD/USD became a strange currency by the last RBA drop to OCR and its the first ever fixed average at 1.0015. NZD is in the richter scale to overbought. Traditional averages once changed daily by wider movements and in relation to daily interest rates. But under the patron saint of central bank authoritarian control, no longer are wide movements seen as experienced in great trade days of old.

Consider the EUR/USD just before the ECB went negative in 2014, interest rate averages were trading at 1.04 and 1.05. Negative or not to the ECB as the EUR was flying miles lower by its own volition. NZD is a 0 point currency and trades at 1.09. This is extraordinary but noted also by a quick view.

Today’s EUR at 1.0070 is a drop from 1.0082 yesterday. Quite extraordinary, yesterday’s Fed interest rates failed to change so today we deal with the same 1.0207 and overbought for USD and oversold EUR/USD.

The second element is add daily interest rates to the structure to find the exact shorts, longs and ranges for today. Ranges are fairly fixed due to interest rates changes by small amounts.

Overnight rates once changed substantially everyday and was wholly responsible for interest rate average movements but no longer since the central bank changes in 2016. Today, interest rate maturities run prices but not by much as maturities rarely change by any movements worthy to talk about so its why daily movements became fixed into far less ranges than pre 2016.

Outlined today is the exact methodology used by central banks for their own trades. I am perfectly in line to any central bank on the planet. And its very simple to trade and factor everyday. The trade requires a click and nothing else.

EUR/USD today

1.2116, 1.2123, 1.2131, 1.2139, 1.2147, 1.2155, Vs 1.2185, 1.2193, 1.2201, 1.2209, 1.2216, 1.2224, 1.2232 and 1.2241.

Most Vital: 1`.2147 and 1.2155 Vs 1.2209 and 1.2241.

EUR/USD today dead stopped at 1.2224 and above 1.2209. EUR will go short today. The trader job is click and click.

DAX

The same interest rates used for currencies are deployed for stock indices. Here;s the DAX structure.

69.88, 34.94, 17.47, 8.73, 4.36, 2.18, slight changes daily but not much. The best the DAX can trade is 2 times its range and today that means 139.76 points.

S&P’s

Here’s the structure: 19.63, 9.81, 4.90, 2.45, 1.22. The best the S&P’s can trade s 2 times its range or 39.26 points. Slight changes daily but very small. The structure for stock indices and currencies is fixed but the fix is what earns profits.

Aussie Soars to Fresh 3-Year Highs Amid Global Growth Hopes

The so-called ‘commodity currency’ has been lifted by rising iron ore prices, as demand from China increased.

The Aussie has also benefited from hopes of a faster than expected recovery from the pandemic. The rollout of the COVID-19 vaccine and Australia’s falling unemployment rate has brightened the economic outlook.

Early this month, the Reserve Bank of Australia (RBA) kept interest rates at near-zero and said it would increase its bond-buying program. Governor Philip Low stated: “The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. Given the current outlook for inflation and jobs, this is still some way off.”

On Wednesday, the US dollar fell to new three-year lows against commodity-linked currencies such as the Canadian, Australian and New Zealand dollars. The move came after a dovish testimony from Federal Reserve Chair Jerome Powell.

Powell stated that the Fed is “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible.” He confirmed that it will be “some time” before the Fed considers changing course.

The commitment to low-interest rates and bond-buying from the Fed has supported expectations of an increase in global economic activity and inflation. Commodities prices typically rise when inflation is accelerating. In this way, they offer a hedge against inflation. Risk-sensitive, commodity currencies such as the Australian dollar were lifted by the anticipation of global economic growth and rising inflation.

Meanwhile, copper continued its winning streak on Wednesday, reaching its highest levels in almost a decade. The industrial metal has more than doubled in price since last March. Australia is the world’s 6th largest copper producer.

By Dan Blystone, TradersLog.com

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

AUD/USD Forex Technical Analysis – Needs to Hold .7970 to Sustain Upside Momentum with .8135 Next Major Target

The Australian Dollar is trading at a three-year high on Thursday, boosted by rising metal and energy prices. Money also continues to flow from the safe-haven U.S. Dollar into the higher risk Aussie as traders bet the currency will benefit from a pick-up in global trade.

The Aussie is also being supported by a weaker U.S. Dollar which fell after Federal Reserve Chair Jerome Powell reiterated on Tuesday that U.S. interest rates will remain low and the Fed will keep buying bonds to support the U.S. economy.

At 09:35 GMT, the AUD/USD is trading .7994, up 0.0024 or +0.30%.

The interest rate differential between Australian Government bonds and U.S. Government bonds is also favoring the Australian Dollar. Australian 10-year yields shot up to 1.705%, the highest since May last year and a jump of 29 basis points this week alone. The spread over Treasuries widened out to 30 basis points, from zero a couple of weeks ago.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the February 16, 2018 main top at .7988.

A trade through .7724 will change the main trend to down. This is highly unlikely. However, due to the prolonged move up in terms of price and time, traders should watch for the formation of a closing price reversal top.

The minor range is .7724 to .8006. Its 50% level or pivot at .7865 is the nearest support.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7970.

Bullish Scenario

A sustained move over .7970 will indicate the presence of buyers. Holding over .7988 will indicate the buying is getting stronger.

The daily chart indicates there is plenty of room to the upside with the January 26, 2018 main top at .8135 the next likely upside target.

Bearish Scenario

A failure to hold .7988 will be the first sign of weakness, but turning lower for the session on a break under .7970 will indicate the buying is getting weaker and the selling a little stronger. If this continues to generate enough downside momentum, we could see a correction into the pivot at .7865.

A close under .7970 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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

EUR/USD Bullish Breakout in Wave C of ABC Zigzag Pattern

The EUR/USD made a bullish bounce at the 144 ema close. The uptrend is now aiming at the Fibonacci targets after price action broke above the resistance.

This article reviews the main targets for the bulls. We also analyse the potential bearish reversal zones.

Price Charts and Technical Analysis

EUR/USD 25.02.2021 4 hour chart

The EUR/USD is making a bullish break as expected. The swing up is probably a wave C (grey) of larger ABC pattern (grey).

The main targets are therefore the -27.2% and-61.8% Fibonacci levels. Also the 78.6% and 88.6% Fibonacci retracement levels are key.

  • A bearish reversal could take place in this resistance zone.
  • The bounce (orange arrows) would confirm the end of the ABC (grey) in wave B (pink).
  • A bearish wave C could take place in the larger wave 4 (purple).
  • Later on, even a wave D and E could develop as part of a triangle pattern.

On the 1 hour chart, price action completed a bearish abc pattern(light blue) in wave 4 (orange).

The bullish swing is showing strong momentum. This is probably a wave 3 (light blue).

A bull flag chart pattern (grey arrows) would confirm the expected wave 4 (light blue) pattern. But price action must not break below the top of wave 1 otherwise the wave analysis becomes invalid (red circle).

EUR/USD 25.02.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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