Daily Technical Outlook

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
Revisiting the NZD/USD Range (July 5, 2013)

The NZD/USD range on its 1-hour time frame is still intact, as the pair just made a test of resistance this time around.

The pair has been moving between the .7700 area as support and resistance around .7830. The pair jumped to the top of the range but quickly turned as stochastic headed back down. The oscillator is still headed south, which suggests that Kiwi bears are in control of price action.

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If that’s the case, NZD/USD could make another test of the bottom of the range near .7700. That’s more than 100 pips from its current levels and a tight stop above the previous day high could yield a good reward-to-risk ratio for a day trade.

Bear in mind though, that the US will be releasing its NFP report in today’s US session and that US traders are just about to return from their Fourth of July holiday, which could mean additional volatility for this pair.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USD/CAD Rising Channel Setup (July 8, 2013)

The Loonie has been edging lower against the U.S. dollar gradually, as the pair has formed a shallow rising channel on its 1-hour time frame. The pair is currently testing the top of the channel, with stochastic pointing down and suggesting that a slight selloff could be in the works.

If that’s the case, USD/CAD could fall back to the bottom of the channel around the 1.0500 major psychological support before resuming its climb to the 1.0600 area. A tight stop above the previous highs could yield a good reward to risk ratio for a day trade.

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There are no major reports due from the US today but Canada will be printing its building permits data and BOC business outlook survey. Upbeat results could allow the Loonie to bounce back against the dollar, at least for the day.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBP/USD: Major Correction (July 9, 2013)

Thanks to the dovish BOE rate statement, GBP/USD suffered a sharp selloff last week. The pair plummeted more than 400 pips, as it fell from the 1.5300 handle to below 1.4900 towards the end of the week.

This sudden drop could mean that a large correction might take place before the downtrend resumes. The pair could pull up to the 1.5000 area first, which is close to the 38.2% Fibonacci retracement level. A larger retracement could mean a pullback all the way to the 61.8% Fib, which is close to the 1.5150 minor psychological resistance.

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There are no major reports from the US today but the UK has its manufacturing production due. A rebound of 0.5% is expected and this might be enough to take GBP/USD a little higher for the day.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USD/CAD: FOMC Minutes Setup (July 10, 2013)

USD/CAD is trending higher on its 1-hour time frame after it found support around the 1.0500 area. The Loonie is currently being supported by the rise in oil prices, which was spurred by the conflict in Egypt, but this could change once the FOMC meeting minutes are released.

In their latest statement, the Fed talked about their plan to reduce bond purchases by the end of the year and possibly end their stimulus program in the middle of 2014. This sparked a huge dollar rally, especially since this was followed by strong U.S. economic figures.


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The minutes should shed light on how strongly the policymakers feel about reducing bond purchases. Strong support from most Fed officials could boost the dollar during the release at 7:00 pm GMT.

USD/CAD could bounce from the bottom of the channel at 1.0500 and climb back to the top and even break higher. Stochastic is already in the oversold region, suggesting a potential bounce could take place soon.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
Major Correction on USD/JPY (July 11, 2013)

USD/JPY suffered heavy selling pressure in yesterday’s trading when the FOMC meeting minutes revealed that not all Fed officials are in agreement with Bernanke’s tapering schedule. The minutes showed that some policymakers are still waiting to see significant improvements in the labor market before considering a reduction of bond purchases.

On its 4-hour time frame, USD/JPY appears to be finding support at the 98.50 minor psychological level. This is in line with the 38.2% Fibonacci retracement level.

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Stochastic is in the oversold region, suggesting a potential bounce could take place soon. At the same time, a bullish divergence has formed when you connect the previous low from the middle of June.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USD/CAD Resistance Turned Support (July 12, 2013)

The disappointing FOMC meeting minutes triggered a sharp selloff for USD/CAD, pushing it below the 1.0500 handle and down to the 1.0350 area. Stochastic is already in the oversold region, suggesting that a potential bounce could take place soon.

The pair is currently stalling around the 50% Fibonacci retracement level, which is in line with a former resistance area.

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There are no reports due from Canada today, but the US is set to print its PPI data and UoM consumer sentiment report. Stronger than expected figures could remind traders that the Fed is still relatively one of the more hawkish central banks, which could renew demand for the US dollar.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBP/USD: Asian Box Setup (July 16, 2013)

GBP/USD is making a tight consolidation pattern on its shorter-term time frames (1-hour and 15-minute charts), as traders await the release of the UK CPI data.

Annual inflation is expected to reach 3.0% in June, after climbing from 2.4% to 2.7% in May. This would imply that inflation is way beyond the central bank’s 2.0% target, which would mean that the Bank of England has very limited options when it comes to loosening monetary policy.

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A reading in line with expectations or higher might trigger pound buying, as it would imply that the BOE will be less inclined to lower interest rates or increase asset purchases in the near future. A lower reading could be bearish for the pound.

A straddle trade for the release might be a good strategy, as the pair found resistance at 1.5115 and support around 1.5085. Going long at around 1.5125 or going short at 1.5075 could work for a day trade. Aiming for the previous lows around 1.5000 or the previous highs at 1.5200 with tight stops could yield a decent reward-to-risk for a day trade.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUD/USD Falling Channel (July 17, 2013)

AUD/USD’s rally might soon be over as the pair is finding resistance at the top of the falling channel on the 1-hour time frame. Stochastic just crossed down from the overbought region and is pointing down, suggesting heavy selling pressure up ahead.

Those needing more confirmation could wait for momentum to push the pair below the .9200 major psychological level. Bernanke is set to make a speech in today’s US session and possibly boost the dollar if he maintains that the Fed is ready to reduce bond purchases by the end of this year.

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The pair could fall back to the .9000 major psychological support level, which is also around the bottom of the channel. A stop above the .9300 handle could yield a 2:1 trade while a stop right above the channel test would give a larger reward to risk potential.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USD/CAD Double Bottom Formation (July 18, 2013)

USD/CAD seems ready to bounce back from its recent selloffs, as the pair formed a reversal pattern on its 1-hour time frame.

Recall that USD/CAD is already finding support at a retracement level and former resistance around 1.0375. The pair made a couple of attempts to break below this barrier recently but failed.

With that, a double bottom has formed with support at the 1.0350-1.0375 area and a neckline near 1.0450. A breakout above the neckline would confirm that the short-term downtrend is over and that a rally might take place.

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The pattern is around 100 pips tall so the breakout could go as high as 1.0550. Aiming for this level with a stop below 1.0400 would yield a 2:1 trade.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
Riding the GBP/USD Uptrend (July 19, 2013)

The uptrend for Cable is still going on the 1-hour time frame, as the pair is trading inside a channel with higher lows and higher highs. The pair is currently sitting around the middle of the channel, picking a direction to go.

In addition, a symmetrical triangle has formed, and an upside breakout could continue into an upside break from the top of the channel. Otherwise, the pair could keep edging lower and eventually find support at the bottom of the channel.

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Stochastic is pointing down, suggesting that pound bears could be in control at the moment.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EUR/USD: Ascending Triangle (July 22, 2013)

EUR/USD is still stuck in consolidation for now, with an ascending triangle pattern forming on its 1-hour time frame.

An upside breakout could signal that the pair is headed all the way up to the previous high around 1.3400 while a downside break could mean that EUR/USD will be on its way to test the former lows around 1.2750 again.

Stochastic is in the overbought region, suggesting that a downward move might be more likely as euro bulls are running out of steam. However, the oscillator has yet to cross down before the sell signal is confirmed.

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There are no major reports on deck from the euro zone today but the US will be releasing its existing home sales report. A strong figure could trigger enough dollar buying to push EUR/USD below the bottom of the triangle, but the upcoming reports for the week could be more crucial in sustaining momentum.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
USD/CAD Canadian Retail Sales Setup (July 23, 2013)

USD/CAD has been selling off aggressively but the pair could take a break from its recent dives, as it approaches the 1.0300 major psychological level. This is in line with a former resistance level and area of interest, as well as the rising trend line connecting the pair’s lows.

Canada is set to print its core and headline retail sales figures and possibly show a recovery in both. Core retail sales could rebound by 0.1% after falling by 0.3% last month while the headline figure could print a 0.4% uptick, higher than the previous 0.1% growth. However, weaker than expected data could trigger a selloff for the Canadian dollar.

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Stochastic is already in the oversold region, suggesting that a potential bounce is in the cards.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EUR/GBP Setup for Euro Zone PMI Releases (July 24, 2013)

Two of the largest economies in the euro zone, namely Germany and France, will be printing their manufacturing and services PMIs in today’s UK session. Small improvements are expected, although most of the figures are likely to stay below the 50.0 level indicating industry expansion.

Strong data could allow the euro to go for more gains and possibly end the day stronger against the pound. As seen on the 4-hour time frame, the pair is finding support at the former resistance level around .8600.

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Stochastic has moved out of the oversold region and is still pointing upwards, suggesting that further rallies could be in sight. If that’s the case, EUR/GBP could climb back up to its recent highs around .8700.

A stop below the 61.8% Fib or .8570 might be a safe enough line in the sand if you plan to go long.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUD/USD Range Setup (July 25, 2013)

AUD/USD suffered a heavy selloff in yesterday’s trading, as the .9300 handle held as strong resistance and pushed the pair to the middle of its range.

Weak Chinese PMI was the culprit for the selloff, as the HSBC figure printed a deeper contraction for July. However, the quarterly inflation report from Australia came in line with consensus and printed a 0.4% uptick in price levels.

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AUD/USD could be on its way to test the bottom of the range and, if you’re in the bear camp, you can still catch a short trade from its current levels or on a shorter-term retracement until .9050. On the other hand, if you’re in the bull camp, you can wait for a test of .9050 before going long.

Stochastic is already in the oversold region but hasn’t quite moved up yet, which suggests that the selling pressure is still there but it could run out soon.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUD/USD Short-Term Resistance (July 26, 2013)

AUD/USD appears to be forming a smaller range on its 1-hour time frame. The pair is on its way to test resistance at the .9300 major psychological level while stochastic is giving the overbought signal.

There are no reports due from Australia or the U.S. today, which suggests that the pair could stay within consolidation.

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If that’s the case, AUD/USD could edge back down to test the bottom of the range around the .9150 minor psychological level by the end of the week or next week. A tight stop above the previous spike near .9320 would yield a good reward-to-risk ratio.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
NZD/USD Bullish Pennant (July 29, 2013)

NZD/USD has enjoyed a strong rally last week, as the RBNZ interest rate statement turned out relatively hawkish. Governor Wheeler specified that the central bank might keep rates low until next year only, prompting traders to speculate that a rate hike could be in the cards for 2014.

With that, NZD/USD broke past the .8000 major psychological barrier and reached the .8100 area. At the moment, the pair is consolidating below this level, waiting for a bigger push.

An upside break from the bullish pennant could mean another 100-pip rally to the .8200 handle or higher. On the other hand, a downside break could trigger a test of the .8000 former resistance.

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Stochastic is still pointing up, which suggests there’s still enough upward momentum.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUD/USD Approaching Range Support (July 30, 2013)

The range on AUD/USD is still holding for now, as the pair found resistance at the .9300 major psychological level earlier this week. The pair is now on its way to support around the .9050 minor psychological level.

Stochastic is in the oversold region, suggesting that a bounce might take place soon. There are no major reports from Australia today, which means that the ranges could hold, unless there’s a huge shift in market sentiment.

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As for the US, only the CB consumer confidence and the S&P/CS house price index are up for release and these aren’t expected to cause wild price swings.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
Trading GBP/USD for the US GDP Release (July 31, 2013)

GBP/USD retreated from its recent highs during yesterday’s trading, and this may have been a result of profit-taking ahead of today’s major US events.

The US Advanced GDP reading is up for release and the economy is expected to have grown by 1.1%, slower than the previous 1.8% expansion. Take note that the Q1 GDP reading was already revised lower from the initial estimate of 2.2%.

A weaker than expected reading would therefore be very negative for the dollar as it would remind traders that the economy is still weak and might not survive with less stimulus.

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GBP/USD seems to be finding support at the 38.2% Fib, which is in line with an area of interest and the 1.5200 major psychological level. A bounce could take the pair up to its recent highs around 1.5400.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUD/USD: Waiting for a Retest (August 1, 2013)

AUD/USD has finally broken below its recent range, with resistance at .9300 and support at .9050. The pair has dipped below the .900 handle but it could still make a retest of the former support before heading any lower.

Stochastic has been in the oversold region for quite some time already, which suggests a potential move up. However, given the weak Chinese and Australian fundamentals, the downtrend could remain intact.

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The .9000 to .9050 levels form a good sell zone as one could aim for new lows if the selling pressure remains very strong.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
NFP Setup: USD/CHF Retest (August 2, 2013)

Dollar strength is still persistent, as USD/CHF already broke above the falling trend line on its 1-hour time frame. This suggests that a new trend is about to form, but that price might pull back first before heading any higher.

Using the Fibonacci retracement tool on the USD/CHF 1-hour chart shows that the Fibs are in line with the broken trend line. In particular, the 38.2% Fib level is in line with an area of interest, which has acted as support or resistance in the past.

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Stochastic is in the overbought region for now, suggesting that the dollar bulls are running out of steam. Strong US NFP figures could revive the dollar rally later on though.

By Kate Curtis from Trader's Way