Ranges are wide this week and markets are easily capable to handle the big moves expected. Watch in particular EUR/NZD and EUR/AUD then GBP/USD.
AUD/USD and NZD/USD topside pairs NZD/CAD and AUD/CAD both broke lower and signifies its a matter of time before AUD/USD and NZD/USD break and trade much lower. Bottom pairs AUD/CHF and NZD/CHF are both overbought and assists to further downside to AUD/USD and NZD/USD.
GBP/AUD last week’s vital points were located from 1.8130 to 1.7885. This week 1.8130 to 1.7905. GBP/AUD broke 1.7885 and traded 80 pips lower. GBP/AUD correlates to GBP/USD at – 64% and caution is warranted to trade GBP/AUD.
GBP/NZD last week reported ranges from 1.9318 to 1.9176. This week 1.9318 to 1.9188. GBP/NZD last week first broke 1.9176 to trade 82 pips to 1.9094. GBP/NZD then traded above 1.9176 to achieve 1.9415 highs and closed at 1.9290 vs last week’s close at 1.9244. GBP/NZD correlation to GBP/USD run -43% and caution to this week’s trade.
EUR/USD and all EUR pairs are deeply oversold and matches to richter scale overbought to USD/JPY and USD/CHF. Moves lower to USD/JPY and USD/CHF are corrective unless 105.70 and 0.9064 breaks lower. EUR/USD higher is corrective unless 1.2020 and 1.2034 trades higher. Weeks ago was reported EUR/USD targets at 1.1800’s and 1.1700’s.
JPY cross pairs represent the best market moves for most pip gains beginning with GBP/JPY as all JPY cross pairs are overbought and current prices are miles to high.
Last post was shown GBP/JPY true moving averages and the 20 day is located at 148.38 then the 50 day at 145.26. The 20 day average matches the 10 year average at 148.36 and off by 2 pips. A break at 148.00’s then GBP/JPY larger range becomes 148.38 to 142.30.
Watch EUR/CAD higher this week, EUR/GBP oversold and GBP/USD overbought.
Next 2 and 10 year yields, levels, ranges and targets. Inflation as a 3 month interest rate and its relationship to the 2 year yield.
AUD/USD broke its long standing and much written line at 0.7821 and traded 57 pips to 0.7877. Above 0.7821, AUD/USD ranges between 0.7821 to the 10 year average at 0.8305 or 484 pips. Below 0.7821, AUD/USD trades 0.7821 to 0.7308 or 513 pips. Below 0.7821 exists 0.7605.
DXY last week maintained its 148 pip range between 89.95 to 91.43. Above 91.43 next targets 92.78 in a 135 pip range.
GBP as written in the last post maintains deep overbought status across all GBP pairs except GBP/NZD. Watch 1.9136 this week for best moves.
EUR/USD opens in fairly perfect neutrality however ranges continue to compress. Problem pair EUR/JPY and all JPY cross pairs maintain deeply overbought status for week 4. EUR/CAD, EUR/NZD and EUR/AUD open the week massive oversold. EUR/CAD and EUR/AUD will provide the best moves.
Stand clear EUR/CHF as AUD/CHF and NZD/CHF will provide better movements.
NZD/USD 0.7267 then 0.7356 Vs 0.7267 and 0.7990. NZD/CAD is overbought while NZD/JPY heading into week 4 maintains richter scale overbought status.
Overall, NZD/USD traded 200 pips from 0.7100’s to 0.7300’s for the past 2 months and provided support to GBP and AUD to allow both to move higher. Explains the divergence seen in EUR/NZD Vs GBP/NZD this week.
USD/JPY watch 104.97 and USD/CAD 1.2587 Vs 1.2826.
The first Monday in July started off positively with indices heading higher. This could have been triggered by traders’ good mood following the US Independence Day, or optimism over the COVID pandemic, perhaps it’s the freshly printed US dollars from the Federal Reserve, flooding the market. Instead of focusing on what has happened, let’s focus on what will probably happen next.
Let’s start with the SP500, on Monday it broke a crucial mid-term resistance on the 3155 point. This resistance has held its own since mid-June, buyers tried to break it a few times but failed, which makes it a significant level. This area was broken during the Asian session and the price remained above it during the European and American hours. The SP500 tested the broken resistance as a close support during the beginning of the European session on Tuesday. It’s crucial to hold the price above this support level to get a mid-term buy signal. Otherwise, we may experience a false bullish breakout pattern, which may be pretty unpleasant for demand.
Moving on the NZDUSD, the price of the pair is currently correcting the bullish movement that happened after the defense of the 0.639 support level and the breakout of the dynamic down trendline. Here, the price is also testing the broken horizontal resistance as a close support, which can work out for sellers.
Meanwhile the NZDCAD’s price is bouncing from the major down trendline on the weekly chart. As long as the price stays below the trendline, sentiment is negative. More will be revealed on Friday when we can view the shape of the weekly candle. Anything with a bearish body, will be considered a sell signal.
Unemployment rate rose, which is bad but the Unemployment change was higher than expected. That was an information, which could have been perceived as a positive one. Despite that, AUD dropped, why? The reason for that was that this data was only partially good as most of those gains were coming from the part-time jobs. Those numbers increased the chances for a further rate cut in Australia, which is negatively affecting local currency.
First, we will show You the AUDUSD, where the bearish flag is a fact. The price broke its lower line and went down. The latest development here is the price successfully testing 0.694 as a resistance. That is a confirmation of a negative sentiment, that we mentioned yesterday.
Negative sentiment can be also seen on the AUDJPY, where instead of the double bottom formation and an upswing, the price created the pennant resulting in a downswing. Sell signal is ON.
Few words about the NZDCAD, which was on our radar for a long time. After heave drop, the correction time came and the price created the flag formation (red lines). This kind of patter, as you know, should bring us a further decline but the sell signal will be created, when the price will break its lower line.
FX is pretty quiet today too but we have few setups that you may find interesting.
First one is Gold, which most recently found and confirmed the most important horizontal support – 1270 USD/oz. As long as we stay above this line, the sentiment seems positive and we are still playing the correction scenario, not the reversal one. The real buy signal will be triggered, when the price will break two black dynamic resistances.
Oil – the second most popular commodity among FX traders is in a slightly worse situation than Gold. Here, we also have a price bouncing from a support but the thing is that the bearish momentum looks pretty strong here. Last week was catastrophic for Crude and it seems that this is not the end of bullish troubles.
Now something more exotic but very technical – NZDCAD. The sell signal from march was a proper one. We had a bearish engulfing pattern together with a false breakout. The price dropped creating a legitimate downtrend. Most recently, we do have a bullish correction, which is aiming for the long-term horizontal resistance. Chances that we will get there are pretty high, especially that in the same time, this is a 38,2% Fibonacci. Sentiment is still negative.
Usually, when AUD jumps, we have a similar movement on the NZD. This time is a bit different. NZD is not following this path. Actually, on NZDCAD we do see a very good, long-term sell signal.
NZDCAD is one of my favorite pairs in the group of trading occasions for weeks or even months. Here, we are going down driven by the bearish engulfing on the weekly chart along with the double top formation and the false breakout above the down trendline. About the double top formation…most recently, we broke the neckline of this pattern and tested that as the closest resistance. That takes away all the arguments from the bulls and opens us a way towards the lows from October. That gives us an opportunity for 550 pips trade. Sweet, isn’t it?
Next one is Gold, which is using this risk-off mode on the market that we see right now. The price is making a double bottom formation at the end of a wedge pattern. That can be a good start for an upswing. The buy signal will be triggered when the price will close above the upper red line.
A very similar setup can be found on the USDRUB. Actually here, you have an example, what can or should happen to gold in the future. USDRUB already broke the upper line of the wedge, using the double bottom formation. The buy signal is ON and we should see a further rise.
On most of the assets that does not change the long-term situation but on some, it may be a start of a bigger reversal, which may be continued for the next few weeks.
As an example of the second group I give You Gold. The price created the double bottom formation and is now trying to break the neckline of this pattern. What is great here is that this neckline is in the same time the neckline of the much bigger head and shoulders formation and is in the same area as the lower line of the symmetric triangle. Those two were previously strong supports and now, play role of a crucial resistance. Price closing a week above the blue and black lines will give us a proper buy signal.
USDCHF stopped the surge and it seems that is ready for a bearish correction. The aim for the correction is on the green and black line – horizontal and dynamic support respectively. Sentiment here is still ultra-positive.
Last instrument is the NZDCAD, where the price is creating a strong bullish weekly candle – hammer. This candle is being drawn on the neckline of the double top formation, which my stop the bearish plan, at least for a while. The sentiment is still negative but the major sell signal will be triggered, when the price will break the lows of the hammer candle. As long as we are above, the bullish correction is the most favorable scenario.
Hello Friday! Be or not to be for many trading signals as today we are about to finish another weekly candle. There are some instruments, were the last week’s candle brought us a proper signal and in this week it is all about the confirmation. An example of that one is NZDCAD and that will be the first instrument in our short review.
This week was all about the confirmation of that long-term sell signal and most probably (as the day did not finish), sellers did a great job as we are about to close this week on new lows. That kind of price action can be considered as bearish and that is our view on this instrument.
Next one is gold, which finally reached our target – neckline of the head and shoulder pattern. Contact was positive for sellers as the price draw a nice hammer on the daily chart. As long as we stay above the neckline there is no sell signal. Actually, with that yesterday’s bounce, we may say that the sentiment is bullish.
Last one is the USDCHF, where we have a very nice bearish setup. Setup not signal though! For the signal we need to see a breakout of the lower line of the flag. What is interesting here is that the price is approaching a combination of 4 crucial resistances. If that is not a good place for a bounce than I do not know what is.
Charts are full of sudden and unexpected changes of the direction, boring sideways trends and false breakouts. As an example, I do have AUDUSD, where first, the price went down due to the dovish RBA and most recently, went higher thanks to the good retail sales data and the positive rumors about the agreement between the US and China – Australia’s biggest trading partner.
Technically, the movement is rather typical: false bearish breakout of crucial support brings us a strong upswing. The price is now testing the dynamic mid-term resistance. Breakout of that red line will bring us a nice buy signal.
Next instrument is NZDCAD. Today’s rises here are correlated with the strength of the AUD but also it is a take profit action from the recent significant drop. Rising prices create a great selling opportunity. The sell signal is still pretty strong and what you are getting now are the higher prices, which can significantly improve the risk to reward ratio of the short position.
The last one is the Bitcoin. After the rocket upswing that we witnessed yesterday, we have a time to relax right now. The sentiment is still super positive and the target for this upswing is around the psychological barrier of 6000 USD.