Daily Technical Outlook

katetrades

Master Trader
Feb 11, 2013
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84
Dominica
www.tradersway.com
USDCAD Retracement Setup (May 29, 2017)

USDCAD has pulled back from its rally to the 1.3785 area to test the Fibonacci retracement levels visible on its daily chart. This lines up with a former resistance level at the 1.3400 area that might now hold as support.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, these moving averages are close to the 61.8% Fib, which might be the line in the sand for the uptrend.

Stochastic is already indicating oversold conditions and is turning higher, suggesting that buyers could regain control of price action. RSI is pulling up as well so USDCAD might follow suit.

Economic data from the US came in mostly stronger than expected last week, with only the core durable goods orders figure falling short. This report printed a 0.4% drop versus the projected 0.4% uptick. However, traders appear to have focused on the upside surprise in preliminary Q1 GDP, which was upgraded from 0.7% to 1.2%, outpacing the estimated 0.9% growth figure.

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Meanwhile, the Loonie has gained a lot of support from the OPEC decision to extend its output deal by nine months as expected. This could keep a lid on global supply and allow prices to stay afloat even as demand weakens, something that is positive for the Loonie.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURGBP Channel Resistance (May 30, 2017)

EURGBP has been trending lower on the daily time frame and is currently testing the resistance of its descending channel. If this keeps gains in check, price could head back down to support at the .8300 major psychological level.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is pretty narrow so a crossover could happen anytime.

Stochastic is already indicating overbought conditions and appears ready to turn lower, possibly drawing sellers back to the game. On the other hand, sustained buying pressure could lead to a break past the channel resistance at .8700 and a reversal from the selloff.

In his latest testimony, ECB head Draghi acknowledged that economic risks have subsided but warned that headline inflation could remain subdued. He also mentioned that an extraordinary amount of monetary policy support is needed, leading to some euro weakness.

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Meanwhile, the latest poll from ComRes indicated a 12-point lead for Theresa May's Conservative party at 46% versus the 34% of Labour. This is a wider gap compared to the YouGov results at a 5-point lead, assuring market watchers that the UK can avoid additional political uncertainty ahead of Brexit negotiations.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPNZD Retracement Setup (May 31, 2017)

GBPNZD has sold off quite sharply recently but this dive could come to a halt as price nears an area of interest. Recall that the pair also broke past the neckline of a double bottom pattern, indicating that further gains are in the cards.

Applying the Fib tool on the latest swing low and high shows that the 61.8% retracement level lines up with the former resistance and neckline at the 1.7700 major psychological mark, which might now hold as support. If so, the pair could make its way back up to the swing high near 1.9000.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside while stochastic is indicating oversold conditions. However, the gap between the moving averages is narrowing to indicate that a downward crossover and pickup in bearish pressure could come into play.

The latest poll from YouGov suggests a narrowing lead for PM May's Conservative Party and indicated that it would fall 16 seats short of securing the majority. This could mean more political uncertainty down the line and a weaker bargaining stance for the UK government in Brexit talks.

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Meanwhile, the RBNZ just released its Financial Stability Report and mentioned that risks are fading. The central bank reiterated that the country's financial system remains sound but that risks stem from higher funding costs. The RBNZ also noted that house price pressures are slowing but are still elevated relative to income and rent.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
NZDJPY Range Setup (Jun 01, 2017)

NZDJPY has been moving sideways, bouncing off support around the 78.00 major psychological level and resistance at 78.85. Price just got rejected on its test of the resistance and could be setting its sights back on support.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. In addition, the 100 SMA appears to be keeping losses in check at the moment since it lines up with the mid-range area of interest.

Stochastic is on the move down to show that sellers are still in control of price action. However, the oscillator is nearing the oversold area to show that buyers might be ready to get back in the game soon.

The latest RBNZ Financial Stability Report reflected lower risks in the housing sector as price pressures are reportedly abating. The report also acknowledged improving global financial conditions. New Zealand is due to release its quarterly overseas trade index next and a 4.0% increase is eyed.

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As for the yen, Japan is set to release its capital spending figure and might show a 3.9% increase, slightly higher than the previous 3.8% figure. The final manufacturing PMI is also lined up and no changes to the initial 52.0 figure is expected.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPJPY Channel Resistance (Jun 02, 2017)

GBPJPY has been trending lower on its 1-hour chart, moving inside a descending channel formation. Price is currently testing the resistance and could be due for a move back to support around 140.50.

The 100 SMA is below the longer-term 200 SMA on this time frame, indicating that the path of least resistance is to the downside. In addition, the 200 SMA coincides with the channel resistance, adding to its strength as a ceiling.

Stochastic is already hovering around the overbought zone to indicate that buyers are tired from the rally and that sellers might take over. On the other hand, if bulls stay in control, a break past the resistance at 143.50 could mark the start of an uptrend.

Economic data from the UK showed a bit of a slowdown, with the manufacturing PMI down from 57.3 to 56.7, just slightly above the consensus at 56.5. Nationwide HPI showed a 0.2% drop in price levels versus the projected 0.2% uptick.

In Japan, reports have printed stronger than expected results. Capital spending is up 4.5% versus 3.9% in the first quarter while the final manufacturing PMI was upgraded from 52 to 53.1 to reflect a stronger pace of industry expansion.

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Japan's consumer confidence index is due next and an improvement from 43.2 to 43.6 is expected. In the UK, the construction PMI is due and a drop from 53.1 to 52.7 is eyed.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURCAD Rising Wedge (Jun 05, 2017)

EURCAD has formed higher lows and higher highs, consolidating in a rising wedge formation on its 4-hour chart. Price seems to have bounced off the resistance at the 1.5250 minor psychological level and could be due for a test of support.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This could either mean that an upside breakout is due or that the wedge support would keep losses in check. Note that stochastic is indicating overbought conditions and is turning lower to indicate a return in bearish pressure.

Economic data from the euro zone has been mostly stronger than expected last week but Draghi has stayed cautious in his recent speeches. This suggests that this week's ECB statement might not contain any major shifts in bias, especially since the flash CPI readings turned out weaker than expected.

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Meanwhile the Loonie has still been under selling pressure as oil failed to stage a strong rebound even after the OPEC decided to extend their output deal by nine months. Traders could continue to pay attention to inventories data from the API and EIA to see if the reductions in supply could continue.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURJPY Symmetrical Triangle (Jun 06, 2017)

EURJPY has formed lower highs and higher lows, creating a symmetrical triangle formation visible on its 4-hour time frame. Price just bounced off the resistance and is on its way to testing support at the 124.00 major psychological mark.

The 100 SMA is above the longer-term 200 SMA on this time frame so it's more likely for support to hold than to break. Also, the 100 SMA appears to be holding as dynamic support at the moment.*

Stochastic is indicating oversold conditions, which means that sellers might book profits soon and let buyers take over. Once the oscillator pulls up from the oversold area, buying pressure could take price back up to the resistance at 125.00.

Most euro zone banks have been closed in observance of Whit Monday and data has been less upbeat than usual. These are just the final services PMI readings from the top economies, though, and the bigger event risk is likely the ECB statement due later this week.

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As for the yen, the Japanese currency has gained some support from a weaker dollar when the US NFP disappointed last week. Japanese average cash earnings data is due next and a 0.3% increase is eyed.

By Kate Curtis from Trader’s Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURNZD Reversal Formation (Jun 07, 2017)

EURNZD seems to be ready to head further south as it formed a head and shoulders pattern on its 1-hour chart. Price has yet to break below the neckline at 1.5650 before confirming that further losses are in the cards.

The chart pattern is approximately 600 pips tall so the resulting breakdown could be of the same size. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside.

However, the gap between the moving averages is narrowing to reflect weaker bullish pressure and a potential downward crossover. Still, stochastic is indicating oversold conditions, which means that sellers might book profits from here and let buyers regain control.

Earlier today, New Zealand reported a 0.6% gain in dairy prices during the latest GDT auction. This marks the sixth consecutive increase, which means that the dairy industry has been on a good streak for the past three months. The ANZ commodity price index in New Zealand also chalked up a 3.2% rebound over the earlier 0.2% drop.

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In Europe, the upcoming snap elections in the UK is weighing on investor sentiment. Traders are also on edge ahead of the ECB decision, although the central bank might sound less dovish this time owing to another round of data improvements.

By Kate Curtis from Trader’s Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURCAD Rising Wedge Still Intact (Jun 08, 2017)

EURCAD recently sold off to the bottom of its wedge formation on the 4-hour time frame then bounced right back to the top. Another test of the resistance could be underway, but a breakout might be looming soon as the consolidation is getting tighter.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If price breaks higher, it could rally by an additional 400 pips or roughly the same height as the chart formation. Stochastic is on the move up, also indicating that buyers are in control of price action.

Earlier in the day, there were rumors that the ECB would cut its inflation outlook in their upcoming monetary policy statement. However, the shared currency quickly recovered from the drop that ensued.

As for the Loonie, the surprise buildup of 3.3 million barrels in oil stockpiles revived oversupply concerns as analysts had been expecting to see a reduction of 3.1 million barrels. Canadian building permits also printed weaker than expected results with a 0.2% dip versus the projected 2.4% gain.

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Up ahead, the ECB statement could spur a breakout for this pair as the tone of Draghi's testimony could have some clues on future policy moves. Canada has NHPI and housing starts due, along with a speech by BOC Governor Poloz.

By Kate Curtis from Trader’s Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
NZDJPY Double Bottom Breakout (Jun 09, 2017)

NZDJPY could be in for a long-term climb as it broke past the neckline of its double bottom pattern on the daily time frame. Price was unable to break below the 75.00-75.50 area in its last two attempts and has rallied past the resistance at the 79.00 handle.

This signals that the pair could be in for around 400 pips in gains, which is the same height as the chart formation. The 100 SMA is above the longer-term 200 SMA on this chart but the gap is narrowing to indicate weaker bullish momentum. Note, however, that price already broke past the 100 SMA dynamic inflection point.

Stochastic is also indicating overbought conditions so buyers might want to book profits soon. If so, another move towards the bottoms could take place or at least a quick pullback to the 79.00 mark.

Data from New Zealand has been mostly upbeat this week, particularly when it comes to commodity prices. The ANZ commodity prices index advanced by 3.2% while the GDT auction yielded a 0.6% gain in dairy prices. Quarterly manufacturing sales increased 2.8% versus the 0.3% forecast.

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As for the yen, it has been giving up some ground as risk appetite is starting to return. Traders are propping US assets back up and letting go of their long yen holdings as a result. Japan's final GDP reading was downgraded from 0.5% to 0.3% instead of being upgraded to the 0.6% forecast.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPJPY Channel Support (June 12, 2017)

Guppy sold off sharply upon testing the channel resistance on its 4-hour time frame and is now hovering around support. A bearish flag pattern can be seen so a continuation of the move could lead to a break below the channel support around 139.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 200 SMA dynamic resistance lines up with the top of the channel, adding to its strength as a ceiling. Stochastic is heading south to show that sellers are still in control of GBPJPY price action.

Bearish pressure could stay in play for the pound now that the UK elections have resulted in a hung parliament, which is a more politically unstable position compared to a few months back. This could weaken the government's negotiating stance during Brexit talks and PM May seems to be scrambling to fix the situation.

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This week, there are a number of top-tier releases lined up from the UK, namely CPI, retail sales, jobs data, and the BOE decision. As for the yen, the BOJ has its policy decision scheduled on Friday so there may be volatility from that end as well.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURGBP Range Breakout (June 13, 2017)

EURGBP was previously trading inside a range with support around .8400 and resistance at .8800. Just recently, the pair broke past the resistance to signal that buyers are taking hold.

Price closed back below the resistance in a quick pullback at the end of the previous week but is now reestablishing the climb. However, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside.

Stochastic is also on the move down to show that sellers might regain control of price action. However it also appears to be turning higher to suggest that buyers are putting up a fight.

The UK elections resulted in a hung parliament, which means more political uncertainty as the government moves closer to the start of Brexit negotiations. Traders are now looking to the Queen's speech next week and to upcoming top-tier UK data to see if the economy can weather this potential storm.

UK CPI is lined up first and no change in the headline reading of 2.7% is eyed. Core CPI could dip from 2.4% to 2.3%. Later in the week, UK retail sales and jobs data are due but the bigger mover might be the BOE decision.

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Meanwhile, the euro has gained support on a stronger political showing in France. Macron's government is highly expected to secure legislative majority, which could mean an easier time for them to pass reforms. German ZEW economic sentiment index is due today and a rise from 20.6 to 21.6 is eyed.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPJPY Downtrend Channel (Jun 14, 2017)

GBPJPY just bounced off its channel support again and could be gearing up for a correction to the resistance at the 141.50 minor psychological mark. If this keeps gains in check, the selloff could resume back to the swing low or to the channel support at 138.00.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA is edging close to the channel resistance, adding an extra barrier in case a pop higher happens. Stochastic is still pointing up to show that buyers are in control of price action for now.

The UK just printed stronger than expected CPI, allowing traders to speculate that the BOE statement later in the week could be more hawkish. In addition, headlines are showing that the UK government may have already struck a coalition with the DUP to have a more stable front in next week's Brexit talks.

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Meanwhile, Japan's BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected. The FOMC statement could also influence yen price action indirectly as dollar demand is usually negatively correlated.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURCAD Breakdown and Correction (Jun 15, 2017)

EURCAD recently broke below a rising wedge formation visible on its 4-hour time frame, signaling that bearish pressure has returned. Price dipped to the 1.4800 area before showing signs of a pullback.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the broken wedge support around 1.5050-1.5100. This is also around the moving average dynamic inflection points.

The 100 SMA is still above the longer-term 200 SMA on this time frame but a downward crossover seems to be looming, possibly drawing more sellers to the mix. Stochastic is still indicating oversold conditions, though, so the correction could be in play for a while.

The Loonie got a strong boost earlier in the week when BOC policymaker Wilkins mentioned that they need to assess whether additional stimulus is still necessary or not. This was echoed by BOC head Poloz who said that rates are excessively low, prompting may to speculate that a hike is underway soon.

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Meanwhile, the euro has been dragged lower by weaker than expected medium-tier reports from Germany. This includes WPI, final CPI, and the ZEW economic sentiment index. French final CPI and Canadian manufacturing sales are due next.

By Kate Curtis from Trader’s Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPNZD Channel Resistance (Jun 16, 2017)

GBPNZD is trending lower but has just pulled up to the channel resistance around the 1.7750 minor psychological mark. If this area keeps gains in check, the pair could head back down to support at the 1.7200 handle.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 200 SMA coincides with the channel resistance as well, adding to its strength as a ceiling.

Stochastic is still moving up to indicate that there is some buying pressure left. If bulls stay in control, they could push for a break past the channel resistance and a downtrend reversal for this pair. However, the oscillator is already nearing the overbought level.

The BOE decision turned out more hawkish than expected as three policymakers voted to hike rates due to rising inflationary pressures. This was a relatively tight decision as many had been expecting the central bank to be more cautious owing to Brexit-related risks.

Prior to this, headline and core CPI came in stronger than expected while the claimant count change was also better than consensus. However, the average earnings index and retail sales both fell short, indicating that consumers are feeling the pinch from higher prices of goods.

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As for the Kiwi, data has been weaker than expected, with the economy expanding by only 0.5% versus the projected 0.7% growth figure in Q1. However, inflation reports from New Zealand have also been beating expectations and traders might hold out for next week's RBNZ decision.

By Kate Curtis from Trader’s Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPNZD Countertrend Play (Jun 19, 2017)

GBPNZD has just bounced off its descending channel resistance and is making its way towards support. If the bottom at the 1.7300 handle holds, price could make another test of resistance. Stochastic is already indicating oversold conditions, which means that sellers are tired and could let buyers take over.

However, the 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the pair could be due for a break lower. In that case, price could establish a steeper selloff.

The pound drew some support from a surprisingly hawkish BOE decision but was unable to hold on to its gains versus the Kiwi, which is also waiting on a potentially hawkish central bank decision this week. Data from the UK economy has been mixed but inflation and consumer spending data signal that policymakers might need to tighten in order to keep growth supported.

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Event risks for the week include headlines pertaining to Brexit talks and the Queen's speech. There are speculations on a "hard Brexit" or even the possibility of a "no deal" situation which could be bearish for the currency. On the other hand, smooth negotiations could stoke expectations that the UK can emerge with a beneficial deal that would be bullish for the pound.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
AUDNZD Ascending Channel (Jun 20, 2017)

AUDNZD has been trending higher, moving inside an ascending channel visible on its 1-hour time frame. The pair has just bounced off support and could be due for a test of resistance soon.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If bullish pressure is strong enough, a break past the resistance at 1.0600 could mark the start of a steeper climb. However, stochastic is already indicating overbought conditions and turning lower could indicate a return in selling momentum.

The main event for the Kiwi is the RBNZ decision later on this week, during which the central bank might keep rates on hold while giving some hawkish hints. However, a bit of jawboning is also expected since the currency has been outpacing most of its peers for the past few weeks.

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As for the Aussie, the RBA meeting minutes are up for release. The central bank was mostly upbeat in their latest policy decision so the minutes could reinforce these views. For now, though, Moody's downgrade on big Australian banks due to housing conditions could limit the currency's gains.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
GBPUSD Make or Break (Jun 21, 2017)

Cable is sitting right on the ascending channel support visible on its daily time frame. A bounce could take it back up to the resistance at the 1.3250 minor psychological level while a break could spur a longer-term selloff.

The 100 SMA has just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In addition, the moving averages are close to the channel support at the 1.2750 minor psychological level, adding to its strength as a floor.

Stochastic is treading lower but is approaching the oversold area to indicate weakening selling pressure and a potential return in bullish momentum.

Brexit risks are currently weighing on sterling these days as the UK government could get pushed around by EU officials. Note that PM May has yet to strike a coalition with the DUP to have a stronger front. The upcoming Queen's Speech could restore some confidence in the UK government and economy, which might be bullish for the currency.

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As for the dollar, the recent slide in equities could dampen its gains once more as markets don't seem to be impressed by the Trump administration's push for fiscal reform. While FOMC member Dudley gave a hawkish testimony, other policymakers like Evans don't seem to be as upbeat.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURCAD Area of Interest (Jun 22, 2017)

EURCAD recently sold off but seems to be finding support at an area of interest visible on its daily time frame. Applying the Fib tool on the latest swing high and low also shows that the 38.2% level lines up with support at the 1.4800 mark.

The 100 SMA crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is also turning up to indicate a return in bullish momentum, which might be strong enough to take the pair up to the swing high at 1.5300.

Crude oil prices have been on a decline lately and this seems to be taking its toll on the positively-correlated Canadian dollar, which has previously drawn support from hawkish BOC hints. US crude oil stockpiles posted a larger than expected draw of 2.5 million barrels but traders seemed more focused on rising output from Libya.

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As for the euro, improved sentiment in the European region seems to be shoring up the shared currency for now. There were no major reports out of the euro zone and only the ECB Bulletin is lined up next. In Canada, the retail sales and CPI reports are lined up for Thursday and Friday, respectively.

By Kate Curtis from Trader's Way
 

katetrades

Master Trader
Feb 11, 2013
2,554
8
84
Dominica
www.tradersway.com
EURJPY Descending Channel (Jun 23, 2017)

EURJPY is trending lower on its 4-hour time frame and is currently testing the resistance of its falling channel. If the 124.00 handle holds as resistance, the pair could slide back to support at the 122.00 handle.

The 100 SMA is below the longer-term 200 SMA on the 4-hour chart so the path of least resistance is to the downside. In addition, these moving averages line up with the channel resistance, adding to its strength as a ceiling.

Stochastic is still on the move up, though, so there may be some buying pressure left. In that case, a break past the resistance could lead to a reversal from the ongoing selloff.

There have been no major reports out of the euro zone so far this week as traders are keeping close tabs on Brexit negotiations instead. Looking ahead, the PMI reports from the manufacturing and services sectors of Germany and France are lined up.

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Analysts are expecting small dips in activity, which could push the shared currency lower against the safe-haven yen. Japan has its flash manufacturing PMI up for release and a climb from 53.1 to 53.4 is expected.

By Kate Curtis from Trader's Way