Daily Technical Outlook

[katetrades]

GBPJPY Ascending Triangle (May 19, 2016)

GBPJPY has formed higher lows and found resistance at the 162.00 major psychological level, creating an ascending triangle pattern on its 4-hour time frame. Price made a bounce off support around 155.50 earlier on and appears poised to test the triangle resistance.

The 100 SMA is above the 200 SMA so the path of least resistance is to the upside. However, stochastic is already indicating overbought conditions so buyers might need to take a break soon. Similarly RSI is in the overbought area and is turning lower, suggesting that sellers might be ready to take control.

If so, GBPJPY could head back to the triangle support around the 156.00 major psychological level this time. This is also near the moving averages, which might hold as dynamic support levels.

Earlier in the week the UK printed mixed economic data, as the CPI readings fell short of expectations while the jobs report surprised to the upside. Headline CPI fell from 0.5% to 0.3% while the core CPI dropped from 1.5% to 1.2%. Meanwhile, the April claimant count showed a 2.4K drop in joblessness instead of the estimated 4K gain. The average earnings index climbed back to 2.0% instead of falling from 1.8% to 1.7%.

In addition, opinion polls showing a slightly larger lead in favor of staying in the EU are keeping the pound supported, especially after central bankers have highlighted the risks that might stem from a Brexit.

Data from Japan has been mostly stronger than expected so far, as the GDP reading beat expectations with 0.4% growth and the industrial production report revised to show a stronger 3.8% increase. Core machinery orders also beat expectations with a 5.5% gain instead of the estimated 1.9% drop.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPAUD Strong Uptrend (May 20, 2016)

GBPAUD has been trending higher on the 1-hour time frame, moving above an ascending trend line connecting the latest lows of price action. Profit-taking seems to have taken place around the 2.0350 minor psychological resistance, opening the possibility of a pullback to the rising support area.

The trend line coincides with the 2.0000 major psychological mark and the 100 SMA,which has held as a dynamic support area. In addition, the 100 SMA is above the longer-term 200 SMA so the uptrend is likely to carry on.

Stochastic is already indicating oversold conditions and is starting to turn higher, indicating that sellers are exhausted and allowing buyers to take over. RSI is still on the move down, though, so there might be enough selling pressure left to spur a test of the trend line.

Data from the UK has been mixed this week, as CPI readings fell short of expectations while jobs and retail sales surprised to the upside. Headline CPI fell from 0.5% to 0.3% while core CPI slipped from 1.5% to 1.2%. The April claimant count showed a gain of 2.4K jobs instead of the estimated 4K decline while the average earnings index improved from 1.8% to 2.0%. Retail sales grew 1.3% versus the 0.6% consensus.

As for the Australian dollar, data from China has been weaker than expected over the weekend, with retail sales, fixed asset investment, and industrial production all indicating weakness. This could lead to lower demand for Australia's raw material commodity products, thereby weighing on exports and production.

Also, the RBA recently cut interest rates by 0.25% and signaled room for further easing. The BOE, on the other hand, has maintained a relatively upbeat stance but cautioned that a potential Brexit could pose more risks to the UK economy.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPAUD Strong Uptrend (May 20, 2016)

GBPAUD has been trending higher on the 1-hour time frame, moving above an ascending trend line connecting the latest lows of price action. Profit-taking seems to have taken place around the 2.0350 minor psychological resistance, opening the possibility of a pullback to the rising support area.

The trend line coincides with the 2.0000 major psychological mark and the 100 SMA,which has held as a dynamic support area. In addition, the 100 SMA is above the longer-term 200 SMA so the uptrend is likely to carry on.

Stochastic is already indicating oversold conditions and is starting to turn higher, indicating that sellers are exhausted and allowing buyers to take over. RSI is still on the move down, though, so there might be enough selling pressure left to spur a test of the trend line.

Data from the UK has been mixed this week, as CPI readings fell short of expectations while jobs and retail sales surprised to the upside. Headline CPI fell from 0.5% to 0.3% while core CPI slipped from 1.5% to 1.2%. The April claimant count showed a gain of 2.4K jobs instead of the estimated 4K decline while the average earnings index improved from 1.8% to 2.0%. Retail sales grew 1.3% versus the 0.6% consensus.

As for the Australian dollar, data from China has been weaker than expected over the weekend, with retail sales, fixed asset investment, and industrial production all indicating weakness. This could lead to lower demand for Australia's raw material commodity products, thereby weighing on exports and production.

Also, the RBA recently cut interest rates by 0.25% and signaled room for further easing. The BOE, on the other hand, has maintained a relatively upbeat stance but cautioned that a potential Brexit could pose more risks to the UK economy.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPAUD Strong Uptrend (May 20, 2016)

GBPAUD has been trending higher on the 1-hour time frame, moving above an ascending trend line connecting the latest lows of price action. Profit-taking seems to have taken place around the 2.0350 minor psychological resistance, opening the possibility of a pullback to the rising support area.

The trend line coincides with the 2.0000 major psychological mark and the 100 SMA,which has held as a dynamic support area. In addition, the 100 SMA is above the longer-term 200 SMA so the uptrend is likely to carry on.

Stochastic is already indicating oversold conditions and is starting to turn higher, indicating that sellers are exhausted and allowing buyers to take over. RSI is still on the move down, though, so there might be enough selling pressure left to spur a test of the trend line.

Data from the UK has been mixed this week, as CPI readings fell short of expectations while jobs and retail sales surprised to the upside. Headline CPI fell from 0.5% to 0.3% while core CPI slipped from 1.5% to 1.2%. The April claimant count showed a gain of 2.4K jobs instead of the estimated 4K decline while the average earnings index improved from 1.8% to 2.0%. Retail sales grew 1.3% versus the 0.6% consensus.

As for the Australian dollar, data from China has been weaker than expected over the weekend, with retail sales, fixed asset investment, and industrial production all indicating weakness. This could lead to lower demand for Australia's raw material commodity products, thereby weighing on exports and production.

Also, the RBA recently cut interest rates by 0.25% and signaled room for further easing. The BOE, on the other hand, has maintained a relatively upbeat stance but cautioned that a potential Brexit could pose more risks to the UK economy.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPAUD Strong Uptrend (May 20, 2016)

GBPAUD has been trending higher on the 1-hour time frame, moving above an ascending trend line connecting the latest lows of price action. Profit-taking seems to have taken place around the 2.0350 minor psychological resistance, opening the possibility of a pullback to the rising support area.

The trend line coincides with the 2.0000 major psychological mark and the 100 SMA,which has held as a dynamic support area. In addition, the 100 SMA is above the longer-term 200 SMA so the uptrend is likely to carry on.

Stochastic is already indicating oversold conditions and is starting to turn higher, indicating that sellers are exhausted and allowing buyers to take over. RSI is still on the move down, though, so there might be enough selling pressure left to spur a test of the trend line.

Data from the UK has been mixed this week, as CPI readings fell short of expectations while jobs and retail sales surprised to the upside. Headline CPI fell from 0.5% to 0.3% while core CPI slipped from 1.5% to 1.2%. The April claimant count showed a gain of 2.4K jobs instead of the estimated 4K decline while the average earnings index improved from 1.8% to 2.0%. Retail sales grew 1.3% versus the 0.6% consensus.

As for the Australian dollar, data from China has been weaker than expected over the weekend, with retail sales, fixed asset investment, and industrial production all indicating weakness. This could lead to lower demand for Australia's raw material commodity products, thereby weighing on exports and production.

Also, the RBA recently cut interest rates by 0.25% and signaled room for further easing. The BOE, on the other hand, has maintained a relatively upbeat stance but cautioned that a potential Brexit could pose more risks to the UK economy.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Downtrend Correction (May 23, 2016)

EURGBP recently made a break below the head and shoulders neckline support then dipped to a low of .7650. Price is showing signs of a pullback from the breakout move, possibly retesting the broken neckline around .7750-.7800.

Applying the Fib tool on the latest swing high and low shows that the 38.2% level coincides with the broken support, which might now keep gains in check. A higher correction could last until the 61.8% Fib closer to the .7800 major psychological mark and the descending trend line connecting the latest highs on the 4-hour time frame.

This is also near the 100 SMA dynamic inflection point. This short-term moving average is below the longer-term 200 SMA, indicating that the path of least resistance is to the downside. Stochastic and RSI are both on the move up so buyers are in control for now, but sellers could return once these oscillators reach the overbought levels.

Event risks for this setup include any updates on the Brexit polls, as a widening margin in favor of those voting to stay in the EU could mean more gains for the pound. The BOE Inflation Report is lined up tomorrow and reassuring remarks from policymakers could keep the pound supported as well.

As for the euro, a number of medium-tier reports are lined up from its top economies, providing hints of the entire region's economic performance. Flash manufacturing and services PMIs are due from France and Germany today.

Later on in the week, the UK will print its revised Q1 GDP reading while the euro zone will have its ZEW economic sentiment index and German Ifo business climate reading released.

By Kate Curtis from Trader's Way

 

[katetrades]

EURAUD Descending Triangle Resistance (May 24, 2015)

EURAUD has been climbing recently but these rallies could hit a barrier around the top of the descending triangle on its daily time frame. This is located around the 1.5800 major psychological level, with a turn lower likely leading to a drop towards the long-term support at the 1.4550 minor psychological level.

The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside. In addition, stochastic has been indicating overbought conditions for quite some time so buyers are already exhausted. RSI is starting to head south from the overbought levels so a return in selling pressure might be seen.

However, if buyers stay on top of their game, an upside breakout could take place and take EURAUD to the next resistance at the 1.6000 major psychological mark and beyond. The chart pattern is more than 1,500 pips tall so the resulting breakout could last by the same amount.

Earlier today, RBA Governor Stevens emphasized in his testimony that they are very committed to inflation-targeting, hinting that the central bank might cut rates again if necessary. Recall that the Australian central bank already surprised the markets with a 0.25% rate cut this month on weakening inflation expectations.

However, data from the euro zone has been mixed, lending some downside pressure on this pair. German ZEW economic sentiment data is due today and another downbeat result could spur more declines for the shared currency. Analysts are expecting to see a rise from 11.2 to 12.1. Germany's Ifo business climate index is due tomorrow and a rise from 106.6 to 106.9 is expected.

As for Australia, quarterly construction work done is still due and a 1.4% slump is eyed, following the previous 3.6% decline. Quarterly private capital expenditure is expected to show a 3.2% decline, putting more pressure on the RBA to ease again.

By Kate Curtis from Trader's Way

 

[katetrades]

USDCAD Short-Term Pullback (May 25, 2015)

USDCAD has been trending higher on its short-term time frame, moving above a rising trend line connecting the latest lows of price action on the 1-hour chart. Price appears to be hitting a resistance at the 1.3150 minor psychological level, creating the opportunity for a pullback play.

Using the Fib tool on the latest swing high and low shows that the 61.8% level lines up with the trend line and the 200 SMA. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside and the rally is likely to carry on.

Stochastic is on middle ground, barely offering any strong directional clues. RSI is also treading sideways so consolidation could be in play. If any of the Fib levels hold as support, USDCAD could revisit its previous highs at 1.3150 and even create new ones.

Event risks for this setup include the BOC interest rate decision. Analysts aren't expecting any changes from the 0.50% benchmark rate, although dovish remarks could be made since Canada's trade and consumer sector have lagged in the past few months. BOC Governor Poloz could also discuss the impact of the wildfires in Alberta.

As for the US, only the flash services PMI is due. A climb from 52.8 to 53.1 is expected, indicating a pickup in industry growth. US crude oil inventories data is also due today and a drop of 1.7 million barrels is expected.

Market sentiment could continue to influence this pair's trends, although profit-taking ahead of the BOC announcement could be seen, taking USDCAD for a significant correction from its uptrend.

By Kate Curtis from Trader's Way

 

[katetrades]

EURUSD Descending Channel (May 26, 2015)

EURUSD has been trending lower on its 1-hour time frame, moving inside a descending channel connecting the latest highs and lows. Price appears to be on its way to test the resistance once more after the channel support held.

Applying the Fib tool on the latest swing high and low shows that the 61.8% level coincides with the top of the range near the 1.1200 major psychological level. This also lines up with a broken short-term support level and the 100 SMA dynamic resistance.

This short-term moving average is below the longer-term 200 SMA, confirming that the path of least resistance is still to the downside. If the resistance area holds, EURUSD could revisit the lows at 1.1135 or form new ones closer to the 1.1100 major psychological level. Stochastic and RSI are both indicating overbought conditions so sellers could take control soon.

Data from the euro zone has been mixed this week, as the German and euro zone ZEW economic sentiment figures both missed expectations and indicated weaker optimism while the German Ifo business climate reading printed stronger than expected results.

As for the dollar, the lack of top-tier events has left it sensitive to risk sentiment. For today, though, the US durable goods orders report is due. Analysts are expecting to see 0.3% gains for both the headline and core figures. Initial jobless claims data is also due today. This pair could see more action on Friday, as the US preliminary GDP reading is up for release and an upgrade from 0.5% to 0.8% is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDUSD Descending Channel (May 27, 2015)

NZDUSD has been trending lower on the short-term charts, moving inside a descending channel on the 1-hour time frame. Price is currently testing the resistance and a drop towards support might be due.

The top of the channel lines up with the moving averages, which usually hold as dynamic inflection points. In addition, the 100 SMA is below the 200 SMA so the path of least resistance is to the downside, possibly taking price down to the channel bottom at .6650.

Stochastic is already moving out of the overbought region, indicating that selling pressure is returning. RSI is on middle ground, barely offering any strong directional clues for now.

Event risks for this setup include Fed Chairperson Janet Yellen's speech and the US preliminary GDP reading. Most Fed officials had been hinting at the possibility of a June rate hike but Fed head Yellen could continue to express caution. If she does sound more hawkish than usual, the US dollar could be in for more gains.

Also, the US GDP reading is expected to be upgraded from 0.5% to 0.8% to show a faster pace of growth in Q1 than initially reported. If so, this would underscore policymakers' views that the economy is strengthening and that tightening could be in order.

As for the Kiwi, downbeat data from New Zealand's closest economic ally Australia could also weigh on the currency. Earlier in the week, Australia reported a huge slump in private capital expenditure and construction work done, hinting at weaker prospects in the region.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Long-Term Area of Interest (May 30, 2016)

EURGBP has been selling off recently but it appears to be stalling at a longer-term correction level. Zooming out to the daily time frame reveals that price is stalling at the 50% Fibonacci retracement level and might be due for a bounce. A larger correction could last until the 61.8% Fib level or .7400, which lines up with a former resistance level.

On this daily time frame, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. In addition, stochastic has already reached the oversold area to indicate a possible return in buying pressure while RSI is also showing oversold conditions.

A bounce from the 50% or 61.8% Fib could take EURGBP back up to the previous highs at the .8100 major psychological mark or higher. On the other hand, a continued drop below the .7400 handle could push the pair down to the next support at .6950-.7000.

Event risks for this setup this week are the ECB rate statement and the UK PMI releases. No actual changes are expected from the ECB but the central bank could retain its dovish stance and discuss the risks of a Brexit, which might also push the pound around.

As for the UK PMI readings, improvements are expected from both the manufacturing and construction industries while no change in the services PMI might be seen. Stronger than expected data could keep the pound afloat, as this would reassure traders that the UK economy is stable ahead of the EU referendum in June 23.

Anti-Brexit remarks could also allow the pound to hold on to its gains, as these usually tip the scales in favor of staying in the EU for voters. Opinion polls could also influence pound price action in the next few weeks.

By Kate Curtis from Trader's Way

 

[katetrades]

USDJPY Rising Channel (May 31, 2016)

USDJPY has been trending higher recently, moving inside a rising channel pattern on the 1-hour time frame. Price just came off a test of resistance and might be ready for a pullback to the channel support, which is near the moving averages.

The 100 SMA is above the 200 SMA, confirming that the path of least resistance is to the upside. The 61.8% Fibonacci retracement level lines up with the bottom of the channel around the 110.20 level and the dynamic support at the moving averages, making it the line in the sand for any short-term correction.

Stochastic is already on the move up, indicating that buyers are starting to regain control. If so, the 23.6% Fib might be enough to keep losses in check and push the pair back up to the recent highs at 111.35 and beyond. RSI is also turning higher to indicate a return in bullish momentum.

News that the Japanese government is planning on delaying the next sales tax hike from April 2017 to October 2019 is currently weighing on the Japanese currency, as this would delay a return to a primary surplus and even risk a possible credit rating downgrade. Market watchers are also speculating that Abe's decision to delay an increase in consumption tax might be a sign of political weakness in the ruling party.

As for the US dollar, traders are set to return from their Memorial Day holiday and might influence USDJPY trends. US CB consumer confidence data and the Chicago PMI are up for release today, with the former expected to rise from 94.2 to 96.1 and the latter estimated to climb from 50.4 to 50.8.

Later on in the week, the US NFP report could have a strong impact on USDJPY price action, as traders are on the lookout for more signs that the Fed can push through with a June rate hike. Last week, Fed Chairperson Yellen confirmed that a rate hike could be appropriate in the coming months but noted that wage and productivity growth are still weak.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Descending Channel (Jun 01, 2016)

EURGBP has been trending lower recently but has just bounced off a descending channel that's forming on its 4-hour time frame. This could offer a pullback opportunity to the top of the channel near the dynamic resistance at the moving averages.

The 100 SMA is below the 200 SMA so the downtrend is likely to carry on. Applying the Fib tool on the latest swing high and low shows that the 50% level lines up with the channel resistance around .7750. If this holds as resistance, the pair could resume its drop to the previous lows at .7570 or much lower.

Stochastic is already in the overbought zone but hasn't turned lower so there may be some buying pressure left to complete the pullback. RSI is also in the overbought area but has yet to turn down to indicate a return in selling momentum.

Brexit online and telephone polls conducted by The Guardian suggested that public opinion may be shifting in favor of leaving the EU, triggering a sharp selloff for the pound. If the UK leaves the EU, additional economic and financial uncertainty could be seen, possibly shaving off a chunk of the economy's growth and hurting employment.

Meanwhile, data from the euro zone came in mixed. German retail sales fell 0.9% instead of showing the projected 1.0% gain but unemployment fell by 11K versus the projected 4K drop. French preliminary CPI beat expectations with a 0.4% increase while euro zone flash CPI estimates came in line with expectations of a 0.1% decline in the headline figure and a 0.8% increase for the core figure.

Up ahead, UK manufacturing PMI is up for release and a rise from 49.2 to 49.6 is eyed. although Brexit updates could have a stronger say in price action. Final manufacturing PMI readings are lined up from the top euro zone economies as well.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Ascending Triangle Support (June 02, 2016)

GBPJPY sold off from its ascending triangle resistance once more, making its way down to the bottom of the formation at the 157.00 levels. Price could be due for a bounce or a break, with technical indicators suggesting that another move to resistance might be seen.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. This could take GBPJPY back up to the top of the triangle at the 163.00 handle. However, a break lower could result in a drop to the bottom of the pattern at 151.00 or a 1,200-pip downtrend, which is the same height as the chart formation.

Meanwhile, stochastic is already indicating oversold conditions so sellers may be feeling exhausted and willing to let buyers take over. RSI is also in the oversold area but hasn't turned higher, suggesting that there's some bearish pressure left.

Brexit survey results have been weighing on the UK currency lately, as some have indicated a lead in favor of those voting to exit the EU. This would open more economic and financial uncertainty for the UK economy, not to mention a potential year-long recession and a likely drop in employment.

Economic data has actually been upbeat, as the UK manufacturing PMI climbed from 49.4 to 50.1, reflecting a return to industry expansion. The construction PMI is due today and a dip from 52.0 to 51.9 is eyed while tomorrow's services PMI could show a rise from 52.3 to 52.5.

As for the yen, news that PM Abe has decided to delay the sales tax hike is supporting the currency on hopes of stronger consumer spending and price pressures for a few more years. However, this could wind up hurting the government's chances of achieving its fiscal targets and put the country at risk of a credit rating downgrade.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPUSD Reversal Signal (June 03, 2016)

Cable could be in for a selloff, as the pair formed a double top pattern on its 4-hour time frame. Price failed in its last two attempts to break past the 1.4700 major psychological level and is currently testing the neckline around 1.4350-1.4400.

A break below this support area could push the pair lower by 300-350 pips, which is the same height as the chart formation. The 100 SMA is above the 200 SMA for now, indicating that the path of least resistance is to the upside, but the gap between the moving averages is narrowing so a downward crossover signaling a return in bearish pressure could be possible.

Stochastic is already indicating oversold conditions, which means that sellers might need to take a break and allow buyers to take over. If so, GBPUSD could be drawn back to the tops at 1.4700 or perhaps on a break higher. Similarly, RSI is in the oversold area.

Trade catalysts for today include the UK services PMI and the US NFP release. The services PMI is expected to rise from 52.3 to 52.5 to indicate a faster pace of industry growth, and this might have an impact on pound action since it comprises a huge part of overall economic activity.

Still, Brexit poll updates could overshadow UK economic reports, as a wider lead in favor of those voting to leave the EU could wind up erasing the currency's gains once more. On the other hand, a lead in favor of those voting to stay could give the UK currency a boost.

As for the NFP, analysts are expecting to see a 159K increase in hiring, lower than the earlier 160K rise. A weaker than expected result could be bearish for the dollar since this would undermine Fed rate hike hopes for June or July. Traders are also paying close attention to wage growth, with the average hourly earnings expected to show a meager 0.2% uptick, since this has been highlighted by Fed Chairperson Yellen.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Triangle Breakdown (June 06, 2016)

GBPJPY had been moving inside an ascending triangle pattern on its 4-hour time frame and has just broken below support. This signals that the pair could be in for longer-term losses, possibly by around a thousand pips or the same height as the chart formation.

However, the 100 SMA is above the 200 SMA for now so the path of least resistance might still be to the upside. In addition, stochastic is indicating oversold conditions so selling pressure might be exhausted while RSI is also in the oversold area as well. These hint that a pullback to the broken triangle support around 157.50 might take place before the pair carries on with its drop.

A strong return in buying pressure, however, could lead to a move back inside the triangle pattern and perhaps a test of the resistance around 162.00-163.00. Even stronger bullish momentum could spur an upside breakout.

Brexit polls have been weighing the pound down for the past few days since some have been showing a shift in the lead in favor of those who want to exit the EU. This scenario could bring increased economic and financial uncertainty but leaders of the pro-Brexit camp have been emphasizing issues concerning immigration and security.

Meanwhile, Japanese Prime Minister Abe's decision to delay the sales tax hike gave the yen a boost as this promised a longer period of strong consumer spending and price levels. The downbeat non-farm payrolls report from the US also played a role in fueling this pair's move lower, as the drop in demand for the dollar triggered a sharp yen rally.

The UK economic calendar is light this week and the only top-tier report is the manufacturing production figure due Wednesday which might show a 0.1% uptick. As for the yen, Japan's final GDP reading, preliminary machine tool orders report, and tertiary industry activity data are due. Stronger than expected data could help keep the pound afloat but Brexit updates might take the center stage in price action.

By Kate Curtis from Trader's Way

 

[katetrades]

EURJPY Falling Wedge (June 07, 2016)

EURJPY has formed lower highs and lower lows, creating a falling wedge pattern on its 4-hour time frame. Price just bounced off support and could be due for a test of resistance soon.
This resistance area lines up with a broken short-term support level around 122.75, which might now hold as resistance. It is also near the moving averages or dynamic inflection points. In addition, the 100 SMA is below the 200 SMA so the path of least resistance is still to the downside.

Stochastic is on the move up so euro bulls are in control of price action for now, likely taking EURJPY up to the wedge resistance. Similarly, RSI is heading north so EURJPY could follow suit. An upside breakout past 123.00, however, could be a sign that an uptrend is about to take place.

Data from the euro zone came in mixed yesterday, as the region's retail PMI climbed from 47.9 to 50.6 to indicate industry expansion. However, German factory orders fell short of expectations with a 2.0% slide versus the projected 0.4% drop.

There are no major reports out from Japan today, leaving risk sentiment in play. The country's current account balance, final GDP reading, and Economy Watchers Sentiment index are up for release in the next Asian session.

As for the euro, German industrial production and French trade balance numbers are on today's docket. French non-farm payrolls and German trade balance data are lined up for Thursday. Apart from these, Brexit concerns also appear to be weighing on the shared currency.

By Kate Curtis from Trader's Way

 

[katetrades]

EURUSD Bullish Continuation Pattern (Jun 08, 2016)

EURUSD had a strong rally recently but price is currently stuck in a tight consolidation pattern. This appears to be a bullish flag, which is considered a continuation signal. A break past the resistance at the 1.1385 level could be enough to confirm that further gains are in the cards.

Note that the mast of the flag is approximately 100 pips tall so the resulting rally could last by the same number of pips, taking EURUSD up to the 1.1485-1.1500 handle. The 100 SMA is above the 200 SMA so the path of least resistance is to the upside, and the gap between the moving averages is widening to indicate stronger bullish pressure.

Stochastic is on the move up but is already in the overbought area, signaling that bullish pressure could weaken soon. RSI is on middle ground, barely providing any strong directional clues at the moment. A break lower and a return in selling pressure could lead to a drop to the 1.1300 support level.

There have been no major reports out of the euro zone and the US recently, as dollar traders are likely waiting for more confirmation that the Fed won't hike rates this month or the next. Economic data from the US has been stronger than expected yesterday, as the non-farm productivity and unit labor costs data were upgraded.

As for the euro, the region's GDP enjoyed an upward revision from 0.5% to 0.6% to keep the shared currency supported. There are no major reports lined up from the euro zone and the US today. Keep in mind also that Brexit-related updates have been pushing the euro around as well, with polls favoring the "stay" vote likely to keep the currency afloat.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPUSD Triangle Pattern (June 09, 2016)

GBPUSD has formed higher lows and lower highs, creating a symmetrical triangle pattern on its 4-hour time frame. Price has just bounced off the top of the triangle and might be ready for a test of support.

Stochastic is on the move down so price might follow suit, taking it down to support at the 1.4400 major psychological level. RSI is also heading south, indicating that pound bears are in control of price action. Once these oscillators reach the oversold levels, buyers could push the pair back up again.

The 100 SMA is still above the 200 SMA so the path of least resistance is to the upside for now. However, a downward crossover could bring more sellers back in the game, triggering a downside breakout for the pair. If so, GBPUSD could be in for a 350-pip drop, which is roughly the same height as the chart formation.

Data from the UK came in stronger than expected yesterday, with manufacturing production up by 2.3% versus the projected flat reading. However, the pound seemed to shrug off this report as it focused mostly on Brexit updates.

So far, polls are showing mixed outcomes in terms of the lead swinging in favor of the "leave" or "stay" camps. These updates could continue to affect GBPUSD in the days leading up to the referendum, although a stronger lead in favor of either camp could lead to a breakout.

As for the dollar, the downbeat NFP report and words of caution from Fed head Yellen are keeping a lid on its gains. Traders are no longer expecting a Fed rate hike in this month's meeting and are pricing in weaker odds of tightening for next month.

By Kate Curtis from Trader's Way

 

[katetrades]

EURUSD Long-Term Range (June 10, 2016)

EURUSD has been trending higher recently but looking at the longer-term time frames shows that the pair is actually hitting the top of its range. On its daily chart, it can be seen that the pair has found resistance around the 1.1450-1.1500 levels and support at 1.0550. If the range resistance holds, another move towards support could be in the cards.

However, the 100 SMA is still above the 200 SMA on this time frame, signaling that the path of least resistance is to the upside. This suggests that an upside breakout from the range could be seen, potentially taking the pair up by an additional 1,000 pips or the same height as the chart formation.

Stochastic is already pointing down to show a potential return in bearish pressure. RSI is also starting to head south even without reaching the overbought area so EURUSD might follow suit.

Data from the euro zone has been mostly stronger than expected recently, allowing the shared currency to advance against the dollar. The US currency has been weighed down by weak NFP results last week, causing traders to price in lower odds of a Fed rate hike this month or the next.

Still, the ECB has been pretty downbeat, announcing lower than expected upgrades to growth and inflation. The central bank also pointed out that there are several uncertainties on the horizon, one of which is a potential Brexit which might bring additional troubles to the region.

Brexit polls indicating a lead in favor of those voting to leave the EU have also been weighing on the euro lately while surveys showing otherwise have provided some support. Still, the next few weeks could be volatile for the pairs as traders position ahead of the EU referendum. Only the US preliminary UoM consumer sentiment index is due today.

By Kate Curtis from Trader's Way