Analyst Articles – Forex News 24

EURUSD Counts Down to a Break but Euro Itself a Short-Term Bear Swing
XAU at Support, Fresh 2019 Lows
Crude Oil Prices Stalling Ahead of US Energy Earnings and GDP Data
AUD/USD and EUR/AUD May Be at Turning Points, Facing Trend Lines
FX Week Ahead – Top 5 Events: Australia Inflation; BOC Meeting; US GDP and More
Q1’19 US GDP & EURUSD Price Forecast
March US Durable Goods Orders & USDJPY Price Forecast
April Bank of Japan Meeting & EURJPY Price Forecast
FX Price Action Setups in EUR/USD, GBP/USD, AUD/USD and USD/CAD
How to Determine a Bull or Bear Market

EURUSD Counts Down to a Break but Euro Itself a Short-Term Bear Swing

Posted: 20 Apr 2019 04:29 AM PDT

Euro Technicals Talking Points:

Technical Forecast for the Euro: Bearish

There are two ways to view the Euro lately. One perspective is that offered by EURUSD which has worked its way into an ever-dwindling range that is raising speculative of a medium-term, significant break while simultaneously encouraging short-term speculative traders to trade the pair aggressively. Yet, a look to the Euro independent of the Dollar, presents a very different picture. From most of its crosses, we find the shared currency has extended a multi-week rally. It isn't a move that could readily qualify as a self-sustaining trend, but it nevertheless draws unmistakable contrast to the world's most liquid currency pair. If you intend to trade the Euro moving forward, EURUSD should be considered given its weight; but rely on the other liquid Euro-crosses and even an equally weighted measure of the currency for your gauge of critical inflection/acceleration points as well as general intent.

From the standard, daily chart of EURUSD below, we find the epitome of range-bound trading activity. The trend of lower swing highs dating back 10 months now establishes the most provocative resistance around 1.1355. That being said, the series of highs rejecting bulls at around 1.1325 is more immediate upside restraint while the 200-day moving average and mid-point to the 2016-2018 bull wave fall neatly around 1.1450. This is not a very broad zone of resistance which is consistent with an extended period of congestion. Support is more singular. While the November, March and April lows differ by as much as 40 points, they generally fall in line with the 61.8% Fib of the aforementioned 'phase' as well as the 61.8% Fib of the historical range of the exchange rate going back to the Euro's trade inception 20 years ago. Watch 1.1200 very closely.

Chart of EURUSD and 200-day Moving Average (Daily)

As EURUSD continues to bounce between its converging boundaries, the expectations for a breakout (which is non-directional, but many confuse with a 'break up') naturally grow. Yet, recognition of the congestion does not equate to any extreme timeline resolution. Consider below a monthly chart of the same pair with an 8-month historical range that reflects only one period of quiet more extreme than what we have recently experienced – the Summer of 2014. While this signals the same inevitability of a significant return to trend, it is just as important to consider the time scale of the transition. This is a monthly chart and we have yet to see the sparks that would signal even the early vestiges of a break.

Chart of EURUSD and 8-Month Historical Range as Percentage of Spot (Monthly)

While the Euro itself is not as constricted as the EURUSD insinuates, it is still generally limited as to its trend development. Below, we have an equally weighted index made out of the seven most liquid Euro crosses. While the explicit technical levels do not translate readily to any individual pairs, the fact that the 1.3000 level seen in this chart held to multiple and spaced out tests back to August 2017 indicates a fairly consistent refrain from the currency. Through the end of March, bearish progress started to catch a little traction for a 'break'; yet the markets were not ready to run with the move. These past three weeks offered a recovery that is now falling into a more reserved three-month span top. While it doesn't offer any great insight for the likes of EURUSD, the general restraint could carry serious weight for the likes of EURGBP or EURCHF.

Chart of an Equally-Weighted Euro Index and 20-Day ATR (Daily)

A pair that offers a more recognizable picture relative to the equally-weighted index is EURGBP. The past few weeks have seen a measured advance that has found a general resistance waiting to slow its progress to a halt around 0.8675. We left this past week holding that boundary and an inverse head-and-shoulders pattern is still in place with this most recent jog higher. Under more active conditions, this would look like a loaded formation, but given the Euro's stretch and the Sterling's constant lack of traction, range is even more the path of least resistance.

Chart of EURGBP and 100-day Moving Average (Daily)

Already putting in a signal supportive of range, we have EURJPY which posted its biggest daily drop in a month on Friday to retreat from a fairly dense collection of resistance. The series of lower highs back to October now happens to coincide with the 38.2% Fib of the September to January bear wave (excluding the flash crash wick on January 3rd) and the 38.2% Fib of the upswing from the June 2016 low to last year's February high all at 126.75. Range support is more of the 'zone' variety down around 124 to 123.50.

Chart of EURJPY (Daily)

In contrast to the hold of EURGBP and the tentative turn of EURJPY, EURCHF looks like it has achieved breakout velocity in favor of the more liquid currency in the pairing. Having broken through the 200-day moving average and the trendline pulled from descending swing highs back to August falling around 1.1350, it would seem that the threshold is crossed and the sky open to momentum. As impressive as this momentum has been – the strongest run over 15 trading days since August 2017 – it is still fighting the lackluster picture behind the Euro. The Franc has dropped across the board, but it is less likely to be the singular major that can develop a clear trend while the rest of the FX market struggles.

Chart of EURCHF and 200-day Moving Average (Daily)

EURCHF

If you are very convinced of the impending breakout and return to trend, it is worth consulting with implied (expected) volatility. The CME's Euro Volatility Index below has shown a dramatic collapse spurred on by the short-term relief of certain key fundamental risks and heading into the long, holiday weekend. Given the historical congestion and the known liquidity drain of the holiday, it is reasonable to project a deflated chance of a charge for the Euro or EURUSD. However, much as the congestion is overdone, so too is the slide in volatility. I would treat this as a contrarian signal, but remember the time frames that we are approaching this picture from. While a break and more significant price swings are inevitable, it could still take weeks to realize.

Chart of EURUSD and CME's Euro Volatility Index (Daily)

As we await the market's next significant movement, it is worth considering how market participants are positioned behind the Euro. Larger speculative interests measured through futures by the Commitment of Traders report has the net short interest continuing to build through last week and sitting at levels comparable to the end of 2016 (when the pair was forming its bottom). In contrast, the more mobile retail traders are more than happy to continue trading surprisingly reliable range in EURUSD. Eventually, this group will call for another turn when the break finally does arrive, but they are well suited to the conditions that we continue to trace out.

Chart of Net Speculative Positioning in EURUSD Futures from CFTC Report (Weekly)

Chart of Retail Trader Positioning from IG Clients (Daily)

Other Weekly Technical Forecast:

Crude Oil Forecast: 50% Off the Lows – Can Bulls Continue Rally

British Pound Forecast: GBPUSD, EURGBP & GBPNZD

US Dollar Forecast: Big Test of Resistance Nearing

Gold Forecast: XAU at Support, Fresh 2019 Lows

Australian Dollar Forecast: AUD/USD and EUR/AUD May Be at Turning Points, Facing Trend Lines

2019-04-20 10:00:00

Can you get luxurious from fx trading? The reply is if you go from canadian forex, and gradual forex, use algorithms in fxtrading, what is circulate in forex 1 greenback canadian, netdania forex, submit overloaded plus of the forex system indicators, and account the counselling fx strategy. We present win win all.

XAU at Support, Fresh 2019 Lows

Posted: 20 Apr 2019 03:16 AM PDT

Gold prices have plummeted more than 5.5% off the 2019 highs with the precious metal probing fresh yearly lows to trade at 1274 ahead of the New York close on Thursday. These are the updated targets and invalidation levels that matter on the XAU/USD weekly chart. for an in-depth breakdown of this setup and more.

New to Gold Trading? Get started with this How to Trade Gold -Beginners Guide

Gold Weekly Price Chart (XAU/USD)

Notes: In my last Gold Weekly Technical Outlook we noted that a weekly doji formation off the monthly highs left the risk, "weighted to the downside while below 1302," with near-term support eyed, "at 1275/76 – "where the objective yearly opening-range low converges on the 38.2% retracement of the 2018 advance and former pitchfork resistance." XAU/USD is testing this threshold now with a weekly close below needed to keep the short-bias viable heading into next week.

A downside break targets broader bullish invalidation at ~1253/58– a region defined by the 52-week moving average, the 100% extension of the decline off the yearly highs and the 50% retracement of the 2018 advance (area of interest for possible exhaustion IF reached). Monthly open resistance stands at 1292 with a breach above the 2019 high-week close at 1327 needed to mark resumption of the broader uptrend.

For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: Gold is trading into confluence support here on the back of a five-day decline. While a break of the monthly opening-range lows does keep the focus lower into the close of April, price is now testing the yearly lows and a weekly close below former pitchfork resistance is needed to keep the short-bias in play. From at trading standpoint, a good place to reduce short-exposure / lower protective stops – be on the lookout for near-term exhaustion / recovery. Review my latest Gold Price Technical Outlook for a closer look at the near-term trading levels.

Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading

Gold Trader Sentiment

A summary of IG Client Sentiment shows traders are net-long Gold – the ratio stands at +2.88 (74.2% of traders are long) – bearish reading
Long positions are2.3% higher than yesterday and 9.5% higher from last week
Short positions are 3.1% higher than yesterday and 6.0% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Goldprices (XAU/USD) may continue to fall. Traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Gold trading bias from a sentiment standpoint.

See how shifts in Gold retail positioning are impacting trend- Learn more about sentiment!

Learn how to Trade with Confidence in our Free Trading Guide

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

Other Weekly Technical Forecast:

Crude Oil Forecast: 50% Off the Lows � Can Bulls Continue Rally

British Pound Forecast: GBPUSD, EURGBP & GBPNZD

US Dollar Forecast: Big Test of Resistance Nearing

Australian Dollar Forecast: AUD/USD and EUR/AUD May Be at Turning Points, Facing Trend Lines

2019-04-20 10:00:00

Crude Oil Prices Stalling Ahead of US Energy Earnings and GDP Data

Posted: 19 Apr 2019 06:17 PM PDT

Oil Fundamental Forecast: Neutral

Crude oil prices stalled with S&P 500, trading in a narrow range on mixed news
The commodity awaits the US Energy Security Conference, US-Japan trade talks
Earnings from Chevron and Exxon Mobil due. Oil eyes US first quarter GDP too

Trade all the major global economic data live and interactive at the DailyFX Webinars. We'd love to have you along.

Oil Weekly Wrap

Crude oil prices spent most of last week consolidating between a narrow range. The sentiment-linked commodity followed a similar performance on Wall Street where the S&P 500 also appeared to stall in its dominant uptrend since late December. The rather tepid performance in both of them, especially before the Good Friday holiday, reflected a mixed start to US earnings as the health-care sector dragged down stocks.

Efforts from the Organization of the Petroleum Exporting Countries (OPEC) continues to support the commodity on the sidelines. Saudi Arabia output, a key member, declined to 10.14m barrels per day (b/d) in February as petroleum exports softened to 6.98m b/d. On the chart below, I have created a visualization of oil's rise alongside the S&P 500 and declines in OPEC production.

Oil Week Ahead

With that in mind, crude oil prices will be looking to either extend their dominant downtrend or risk stalling in the near-term. Fundamentals that are weighing against the commodity include solid US production and concerns that major central banks have brought about the global growth outlook. Better-than-expected Chinese first quarter GDP failed to inspire much market confidence last week.

This is a little concerning as the world's second-largest economy is a major consumer of petroleum. The week ahead holds the Annual Energy Security Conference in Washington DC on Wednesday. The panel is expected to focus on evolving geopolitical realities and trade relationships between the US and the world. Concerns may be brought about global growth despite US-China trade talks progressing.

Speaking of trade, Japan's Prime Minister Shinzo Abe will visit the White House for talks with US President Donald Trump. At the same time, Mr Trump seems to be eager to bring up tariff threats against the European Union, risking another front on the trade war. If talks between the US and Japan head in a similar direction, that could bode ill for oil. Japan's Economy Minister noted the importance of an early accord.

Other items on the docket for oil prices include the ongoing US earnings season. Next week contains those from Chevron and Exxon Mobil, important parts of the energy sector. Do also keep an eye on the weekly official DOE inventory figures and how those compare to API estimates. US first quarter GDP is also a big item, especially for risk trends and the sentiment-linked commodity.

Oil Trading Resources:

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Other Weekly Fundamental Forecast:

Australian Dollar Forecast: Australian Dollar Faces The Big One As Official CPI Numbers Loom

2019-04-20 01:00:00

AUD/USD and EUR/AUD May Be at Turning Points, Facing Trend Lines

Posted: 19 Apr 2019 03:07 PM PDT

Australian Dollar Technical Forecast

The Australian Dollar may be at turning points versus USD, EUR
AUD/USD may test the floor of rising channel as resistance held
EUR/AUD at turning point, more declines exposes downtrend risk

Have a question about what's in store for Australian Dollar next week? Join a Trading Q&A Webinarto ask it live!

AUD/USD Technical Outlook

The Australian Dollar remains in an ascending channel against its US counterpart that took shape in late February. AUD/USD's recent performance does hint that it could be readying to test the floor of the channel, hinting of cautious losses in the coming days. This is mainly due to near-term resistance holding which is a range between 0.7184 and 0.7207 on the daily chart below.

Whether or not there may be follow through will depend on how support holds. The former descending resistance line from late January (blue dotted line below) could emerge as new support, making for a tough barrier to breach. If the Aussie clears it, the next psychological area seems to be just above 0.7050. Otherwise, breaking through resistance opens the door to testing 0.7235.

AUD/USD Daily Chart

EUR/AUD Technical Outlook

Against the Euro, the Australian Dollar is at a critical turning point. Zooming out on a weekly EUR/AUD chart, the pair is sitting right on a rising trend line going back to February 2017. If broken, this would open the door to potentially entering a dominant downtrend in the medium term. But to get a better idea to see what's in store for the pair in the near-term, let's turn our attention to the daily chart.

EUR/AUD Weekly Chart

EUR/AUD is recently closed under near-term support at 1.5722 which is the low achieved back in late January. Prices initially struggled closing under it for most of this month. Still, positive RSI divergence warns that downside momentum is fading and this may precede a turn higher. As such, it will be essential to watch how EUR/AUD performs ahead.

If there is a break under the February 2017 trend line, watch support next at 1.5581. Otherwise, near-term resistance appears to be at 1.5852, the psychological barrier that tamed prices back in the summer of 2018.

For more updates on the Australian Dollar, feel free to follow me on twitter here @ddubrovskyFX.

EUR/AUD Daily Chart

* Charts created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

2019-04-19 22:00:00

FX Week Ahead – Top 5 Events: Australia Inflation; BOC Meeting; US GDP and More

Posted: 19 Apr 2019 01:54 PM PDT

Talking Points:

– The Q1'19 Australia inflation report will help keep the RBA on hold for now, but traders shouldn't dismiss rising odds of a rate cut later this year.

– With oil prices continuing their rebound, the Bank of Canada is no longer expected to cut rates over the next six-months.

– The initial Q1'19 US GDP report is expected to show that concerns over a recession induced by the US government shutdown were overblown.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

04/24 WEDNESDAY | 01:30 GMT | AUD CONSUMER PRICE INDEX (1Q)

Due in at 1.5% from 1.9% (y/y), the Q1'19Australia inflation report is expected to be another signpost for the RBA that necessitates neutrality in its policy stance in the near-term and perhaps more dovish considerations by the end of the year. Even though labor markets have continued to improve in recent months, a lack of wage growth and rising indebtedness of households (already at all-time highs) makes for a concerning future for consumption trends.

Read the full report: Q1'19 Australia Inflation Report & AUDUSD Price Forecast

04/24 WEDNESDAY | 14:00 GMT | CAD BANK OF CANADA RATE DECISION

Overnight index swaps are pricing in a 7% chance of a 25-bps rate cut through July 2019. Through September 2019, odds of a rate cut only increase to 18.9%.As such, we're expecting the BOC to signal that it's firmly in a neutral policy stance, with the continued implicit understanding that oil prices will help guide the next rate move.

Read the full report: April Bank of Canada Meeting & USDCAD Price Forecast

04/25 THURSDAY | ~01:00 GMT | JPY BANK OF JAPAN RATE DECISION

The Bank of Japan remains mired in its three-decade war of attrition with deflationary pressures, and 2019 has yet to prove successful in getting topline inflation readings back towards the BOJ's medium-term target of +2%.The March National Japanese CPI report came in at a paltry0.5%, the core inflation reading (ex-fresh food) came in at 0.8%, and the core-core inflation reading (ex-fresh food and ex-energy) came in at 0.4% (y/y). It's fairly predictable that the BOJ will remain one of the world's most dovish central banks for the foreseeable future.

Read the full report: April Bank of Japan Meeting & EURJPY Price Forecast

04/25 THURSDAY | 12:30 GMT | USD DURABLE GOODS ORDERS (MAR P)

The US economy revolves around consumption trends, given that approximately 70% of GDP is accounted for by the spending habits of businesses and consumers. As such, the Durable Goods Orders reportmake for an important barometer of the US economy. The preliminary March print is expected to show a gain of 0.6% after the 1.6% drop in February.

Read the full report: March US Durable Goods Orders & USDJPY Price Forecast

04/26 FRIDAY | 12:30 GMT | USD GROSS DOMESTIC PRODUCT (1Q A)

The Bloomberg News survey is calling for US GDP to come in at 2.2% annualized. Depending upon where you look, estimates vary. The New York Nowcast estimate for Q1'19 US GDP is only at 1.4%, while the Atlanta Fed GDPNow model is pointing at 2.8% growth. Regardless, it does appear that any near-term concerns about the US economy dippinginto a recession were overblown.

Read the full report: Q1'19 US GDP & EURUSD Price Forecast

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

2019-04-19 20:30:00

Q1’19 US GDP & EURUSD Price Forecast

Posted: 19 Apr 2019 01:18 PM PDT

Talking Points:

– The initial Q1'19 US GDP report is due on Friday, April 26 at 12:30 GMT.

– Q1'19 US GDP expectations come in between 1.4% and 2.8%, but the trend is clear: the US government shutdown impact was limited, and the Fed isn't likely to cut rates anytime soon.

– Retail traders are fading US Dollar gains, and the outlook for EURUSD has turned bearish.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

04/26 FRIDAY | 12:30 GMT | USD GROSS DOMESTIC PRODUCT (1Q A)

For much of the first quarter, there was great concern that the US government shutdown between December 23 and January 25 would have a significant negative impact on Q1'19 US GDP. And while the Congressional Budget Office estimated that a net $3 billion in wages would be lost, ultimately, it appears that the underlying strength of the US economy will have prevailed past the government's self-inflicted wounds.

As such, rate expectations have evolved in a manner to suggest that market participants no longer feel the Federal Reserve will embark on a dovish policy course in the imminent future. In fact, at the end of March, Fed funds futures were pricing in greater than a 50% chance of a 25-bps rate cut by July 2019; now, markets are favoring the Federal Reserve to stay on hold for the rest of 2019.

Such a dramatic shift in expectations in just the span of a few weeks has proven helpful to the US Dollar as it tries to work off a six-month long consolidation (via the DXY Index), mirroring the multi-month consolidation seen in EURUSD.

Pairs to Watch: DXY Index, EURUSD, USDJPY, Gold

EURUSD Technical Forecast: Daily Price Chart (January 2018 to April 2019) (Chart 1)

EURUSD rates weakened meaningfully by the end of the week, with the uptrend from the April 2 low busted by the breakdown on April 18. Momentum has started to shift more to the downside, now that EURUSD price is below the daily 8-, 13-, and 21-EMA envelope. Similarly, daily Slow Stochastics have started to swing lower, while daily MACD has narrowed and nearly flipped to the downside.

Given rising European growth concerns, a strong Q1'19 US GDP report could reinvigorate US Dollar bulls and help breakout of the multi-month ranges trapping price action. After all, the last six-months of trading in EURUSD has been the tightest six-month range seen since the inception of the Euro on January 1, 1999.

IG Client Sentiment Index: EURUSD (April 19, 2019) (Chart 2)

igcs, ig client sentiment index, igcs eurusd, eurusd price chart, eurusd price forecast

EURUSD: Retail trader data shows 60.2% of traders are net-long with the ratio of traders long to short at 1.52 to 1. The number of traders net-long is 10.8% higher than yesterday and 6.2% lower from last week, while the number of traders net-short is 22.7% lower than yesterday and 14.1% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bearish contrarian trading bias.

FX TRADING RESOURCES

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

2019-04-19 20:00:00

March US Durable Goods Orders & USDJPY Price Forecast

Posted: 19 Apr 2019 12:37 PM PDT

Talking Points:

– The preliminary March US Durable Goods Orders report is due on Thursday, April 24 at 12:30 GMT.

– Q1'19 US GDP expectations have rebounded considerably after reaching as low as 0.2% in the early-March; the Atlanta Fed GDPNow estimate is up to 2.8%.

– Retail traders have started to fade US Dollar gains, although the outlook for USDJPY is mixed.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

04/25 THURSDAY | 12:30 GMT | USD Durable Goods Orders (MAR P)

The US economy revolves around consumption trends, given that approximately 70% of GDP is accounted for by the spending habits of businesses and consumers. As such, the Durable Goods Orders reportmake for an important barometer of the US economy. Durable goods are items with lifespans of three-years or longer – from refrigerators and washing machines to cars and airplanes. These items typically require greater capital investment or financing to secure, meaning that traders can use the report as a proxy for business' and consumers' financial confidence and health. The preliminary March print is expected to show a gain of 0.6% after the 1.6% drop in February.

The Durable Goods Orders reportcould help solidify the rebound in US growth expectations seen since early-March. Based on the information received thus far about Q1'19, the Atlanta Fed GDPNow forecast is looking for growth at 2.8% after hitting a low of 0.2% in the second week of March. The next update to the Q1'19 forecast will be released after Tuesday's US economic data.

Pairs to Watch: DXY Index, EURUSD, USDJPY, Gold

USDJPY Technical Forecast: Daily Price Chart (January 2018 to April 2019) (Chart 1)

Price action in USDJPY has been constructive since breaking the downtrend from the March swing highs. Likewise, USDJPY prices were able to clear out the March 20 bearish outside engulfing bar high at 111.69, suggesting that pressure is building for a more substantive topside move. A near-term resistance band comes into play between 112.14, the March high, and 112.30, the swing lows from November and December 2018.

IG Client Sentiment Index: USDJPY (April 19, 2019) (Chart 2)

USDJPY: Retail trader data shows 34.2% of traders are net-long with the ratio of traders short to long at 1.92 to 1. In fact, traders have remained net-short since Mar 31 when USDJPY traded near 110.83; price has moved 1.0% higher since then. The number of traders net-long is 1.8% lower than yesterday and 11.1% lower from last week, while the number of traders net-short is 6.7% lower than yesterday and 25.8% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.

FX TRADING RESOURCES

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

2019-04-19 19:00:00

April Bank of Japan Meeting & EURJPY Price Forecast

Posted: 19 Apr 2019 11:25 AM PDT

Talking Points:

– The April Bank of Japan meeting is set to conclude on Thursday, April 24, sometime after 1:00 GMT.

– Surprise action taken by the BOJ on Friday, April 19 to cut bond purchases suggests that the BOJ will stand pat at its April meeting.

– Recent changes in retail trader positioning suggest that EURJPY may soon reverse lower.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

04/25 THURSDAY | ~01:00 GMT | JPY Bank of Japan Rate Decision

Ahead of the April BOJ meeting, policymakers opted to surprise market participants on Friday, April 19 with a cut to their bond purchase program from ¥180 billion per month to ¥160 billion per month. With policy so predictable – the whole world knows about Japan's multi-decade battle with deflation – the only way the BOJ can effectively implement its monetary policy is via surprise. The surprise action to cut bond purchases reinforces the idea that the BOJ will stand pat at its April meeting.

Pairs to Watch: AUDJPY, EURJPY, USDJPY

EURJPY Technical Forecast: Daily Price Chart (January 2018 to April 2019) (Chart 1)

The attempt by EURJPY prices for a topside breakout is on the precipice of failure. Despite having cleared out the downtrend from the September 2018 and March 2019 swing highs through the second week of April, EURJPY has fallen back to its daily 8-, 13-, and 21-EMA envelope now. Slow Stochastics have turned lower and are no longer in overbought territory; daily MACD has started to narrow and point lower. The next few days will prove critical; a move back below the daily 21-EMA (currently 125.66) would represent a move back below the downtrend from the September 2018 and March 2019 swing highs and warrant a bearish forecast for EURJPY prices.

IG Client Sentiment Index: EURJPY (April 19, 2019) (Chart 2)

EURJPY: Retail trader data shows 38.0% of traders are net-long with the ratio of traders short to long at 1.63 to 1. In fact, traders have remained net-short since Apr 08 when EURJPY traded near 125.473; price has moved 0.3% higher since then. The percentage of traders net-long is now its highest since Apr 11 when EURJPY traded near 125.662. The number of traders net-long is 11.2% higher than yesterday and 15.1% higher from last week, while the number of traders net-short is 31.9% lower than yesterday and 8.8% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURJPY prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EURJPY price trend may soon reverse lower despite the fact traders remain net-short.

FX TRADING RESOURCES

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

2019-04-19 18:00:00

FX Price Action Setups in EUR/USD, GBP/USD, AUD/USD and USD/CAD

Posted: 19 Apr 2019 10:48 AM PDT

Forex Talking Points:

– DailyFX Quarterly Forecasts for Q2 have been recently released, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.

– For trading ideas, please check out our Trading Guides. And if you're looking for something more interactive in nature, please check out our DailyFX Live webinars.

– If you'd like more color around any of the setups below, join in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those sessions from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Is This the Week that USD Bulls Finally Make Their Move?

After a slow start to Q2, USD bulls came back into the equation in the latter-portion of this week, pushing prices up for a test of the bearish trend-line as taken from the March and April swing-highs. As looked at in the Thursday webinar, this creates somewhat of a challenging backdrop given that just ahead is yearly resistance around the 97.71 level. And while a re-test of that price isn't out of the question, what is more debatable is whether buyers will have the ammunition to continue pushing above this price if a bullish breakout is to show.

This highlights the backdrop for next week, as breakout potential exists in major pairs such as EUR/USD and GBP/USD. If the late-week theme of US Dollar strength does continue, bearish breakouts in either of those pairs can remain as attractive scenarios. On the other hand, next week's economic calendar is relatively light as it's the final full week of April; and a plethora of drivers arrive the week after around the May open, which could be a much more opportune time for the establishment of a fresh theme across major currencies. If the USD is to shy away from resistance next week, that could keep interest around pairs such as AUD/USD or USD/CAD, as looked at below.

US Dollar Daily Price Chart

Bearish EUR/USD on Breakout Potential

This will likely be the market that has traders' attention next week, as EUR/USD broke-below a bear flag formation on Thursday morning and sellers were able to bring on a push below 1.1250. Price action has since pulled back to this level, keeping the door open for bearish continuation. The primary complication being the rigidity of support in the six-month-old range and the fact that multiple bearish attempts have already been thwarted in this zone.

This can keep the door open for bearish breakout potential in EURUSD, in which a push below 1.1175, the March low, opens the door for further downside price action. Alternatively, for traders that want to try anticipating the breakout or pushing short-Euro stances a bit more aggressively, a hold of resistance inside of the 1.1275-1.1290 area in the early-portion of next week could allow for stops above the 1.1325-area, targeting re-tests of the 1.1200-area. At that point, break-even stop moves could be investigated as bearish breakout potential would remain on the residual portion of the position.

EUR/USD Four-Hour Price Chart

Bearish GBP/USD on Breakout Potential

Similar to the above scenario in EUR/USD with one important exception: The digestion that's led into current prices is shorter-term in nature. While EUR/USD has been range-bound for six months, GBP/USD has experienced a few different trends during that time. A bearish Q4 led into a very bullish first two months of Q2. But since March, GBP/USD prices have been digesting that early-year move, and this has created a descending triangle formation.

The support side of this theme has built-in over the past two months around the 1.2960-1.3000 area on the chart, and this has held through multiple iterations. For resistance, a descending trend-line has developed since mid-March. This type of formation will often be approached in a bearish fashion, with the expectation that the same motivation that's driven-in bears at lower-highs will, eventually, take-over for a break through horizontal support.

Last week, I had looked at bearish potential in GBP/USD, carried by the expectation for a revisit to support. Prices have since continued to hold around 1.3000, and this keeps the door open for breakout potential in the pair, with downside breaks opening the door for a move towards the confluent 1.2900 level on the chart. Below that, the 1.2830 level is of interest, followed by 1.2785. On a longer-term basis, a big batch of confluent support exists in the 50-pip zone between 1.2671-1.2721, and this could function as a bigger-picture target for GBP/USD in the event that bears re-gain control.

GBP/USD Eight-Hour Price Chart

AUD/USD Range Due for a Break?

The range in AUD/USD has been consistent so far this year, and the resistance side of this formation came into play again this week by helping to mark the two-month-high in the pair. This comes in at .7206, which is the 76.4% Fibonacci retracement of the 2008-2011 major move in the pair. That resistance inflection led to a 70-pip pullback in the latter-portion of this week, right around the time that USD-strength showed up; but something else interesting showed up, which was a semblance of support around a prior area of short-term resistance.

I had looked at this setup in the Thursday webinar, hypothesizing that there may soon be a bullish move in AUD/USD should buyers show ability to hold prices above the .7113-.7125 area on the chart. This could keep the door open for a re-test of .7200, at which point break-even stop moves could be investigated. Should prices then breakout to fresh highs, target potential exists around the .7250 psychological level, just inside of the 2019 high.

AUD/USD Eight-Hour Price Chart

USD/CAD Holds Highs Near Key Resistance

Next week's Bank of Canada rate decision will likely be one of the highlights on the economic calendar, and this meeting comes amidst a very interesting technical backdrop in USD/CAD. The pair has been range-bound for almost two months now, and above price action is a thicket of resistance as taken from a number of different Fibonacci studies.

This can keep attention on the short-side of USD/CAD, with invalidation around the 1.3470 area that marks the three-month-high in the pair. For support, target potential could exist around the 1.3290 area that marks the April-low, followed by 1.3250 and 1.3132 which helped to mark the March swing-low.

USD/CAD Four-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you're looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we're looking at what we're looking at.

If you're looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

2019-04-19 17:22:00

How to Determine a Bull or Bear Market

Posted: 19 Apr 2019 10:07 AM PDT

How to Determine a Bull or Bear Market

Bull and bear markets are two very different animals – in more than one way. The ability to discern whether you are in a Bull market (going up) or a Bear market (going down) is fundamental for traders and investors alike. And if you can identify when the market is changing from one bias to the other, then you can put yourself in a position to benefit from a market that is moving either up and down.

We will look at how fundamental and technical analysis can help you identify when the market is 'nearing a turn' and how you should look to position yourself to take advantage of this move.

Differences Between a Bull and Bear Market – Talking Points

Traders should know how to confidently approach, enter and exit both Bull or Bear markets.
Macro-fundamental shifts normally signal market shifts.
Positive sentiment helps fuel a Bull market and negative sentiment a Bear market.
Bear market moves tend to be more volatile.
Technical analysis can help pinpoint market entry and exit points.
See a real-life example of a changing market.

What is a Bull Market?

How to Determine a Bull or Bear Market

Bull markets are characterized by rising prices, ongoing positive sentiment and a positive economic backdrop. A common metric used to define a Bull market is when the price of an asset has moved 20% higher from its recent, significant low. Bull markets can last for months or even years.

What is a Bear Market?

How to Determine a Bull or Bear Market

A Bear market is diametrically opposite to a Bull market and is characterized by falling prices, low or negative sentiment and, normally, a weakening economic backdrop. Bear markets can produce violent price swings and moves can also last for months or years – though they tend to unfold more quickly than their counterpart.

If you want to look at more extreme versions of Bull and Bear markets to draw more direct lessons, the links below highlight major historical moves and how to trade a transitional event:

Fundamentals are Signposts to a Bull or Bear Market

How to Determine a Bull or Bear Market

Fundamental analysis helps traders paint a contemporary landscape of a financial market, allowing them to then 'dig down' using other analytical tools and techniques. The role of a central bank is crucial in modern financial markets and they should be followed closely to determine the current state of the economy and the future path of interest rates.

If a central bank announces that it is changing its monetary policy stance or that the economy is now expanding/contracting, then foreign exchange and fixed income markets will also change their price/value to reflect this. In addition, the political landscape needs to factored in, along with any trade disruptions or disputes both internally and with external partners.

Stock and share fundamentals are slightly different as they tend to be more company-focused, looking at metrics including: cash flow, dividends, earnings, return on investment and management history and competence among other considerations.

Sentiment an Important Driver

How to Determine a Bull or Bear Market

Market sentiment has a very important role to play when deciding if an asset class is on the cusp of a turn or not. Sentiment is seen as the overall market tone with an optimistic, positive sentiment a driver of a bull market, while a negative or pessimistic market bias will normally see prices driven lower.

"Greed" and "fear" are the extremes of the spectrum, with a bull market drawing in investors who look to jump on the trend, while a bear market rife with those clamouring to cut risk will also attract short-sellers who look to profit from falling prices. When these indicators hit extreme levels, they may also suggest that a market is about to turn as positioning becomes too one-sided, leaving the trend vulnerable to reversal.

Contrarian sentiment indicators can also prove very useful in gauging a market move, as traders look to go against extreme levels of fear and greed.

Bear Markets Can be Very Volatile

How to Determine a Bull or Bear Market

In a bull market, traders are confident of the market backdrop and are prepared to invest or trade and hold positions for longer. In a bear market, uncertainty stalks the market leaving traders constantly worried about falling prices. If you are short in a bear market, it can become difficult to continue holding your position – and your nerve – due to this over-riding uncertainty and the fear of a sharp reversal. This uncertainty adds volatility to the market as traders can be swayed into buying and selling at levels they would not normally consider, due to erratic price action.

Large price falls can also tempt buyers back into the market – 'Buy the Dip' – who then sell their position quickly when prices keepfalling, again adding to negative sentiment and erratic price action. The adage remains true – 'Don't Try to Catch a Falling Knife'. Remember it is common to see a short-term bull move in a long-term bear market and the other way around.

Technical Analysis is Drivenby Price Action and Nothing Else

How to Determine a Bull or Bear Market

Technical analysis is the use of statistical analysis to help evaluate the price of an asset or market. By using historical trade data, including price and volume, traders can build a chart and see if an asset or a market is undervalued or overvalued and identify timeframes over which these conditions may reverse or extend. Active traders may use charts with timeframes as short as one minute while longer-term investors may use daily or weekly charts to help them determine their view when making a more informed trading decision.

There are many different price trends that can help traders 'predict' future moves.

These include:

Directional price trends – an upward trend with higher highs and higher lows confirms a bull market, whereas a downward trend with lower highs and lower lows confirms a bear market.
Historical price patterns – many technical analysts look to the past to help predict the future. Does an asset always rally or fall at a certain price level on a chart and if so how many times has this occurred? Does one asset have a direct relationship with another – correlation – and if so, how accurately are the two markets correlated and are there any time lags between moves?
Volume can help identify market changes – if an asset suddenly reverses direction on a larger-than-normal volume, traders should be aware that a change in direction may be taking place. If the move is on small or normal volume, then a reversal is more unlikely. If the volume in an uptrend is falling, it is likely that the momentum of this move is slowing, another sign of a potential market reversal.

Market Changing from Bearish to Bullish

How to Determine a Bull or Bear Market

S&P 500 Changing Between a Bull and Bear Market

The chart below shows how the S&P 500 has changed between a bull and bear market – and back again – over the last 23 years. While the chart shows when and where the market reversed it is important to also look 'behind the scenes' and see what fundamental changes drove the market.

The first bear market started in early 2000 as the dot-com bubble burst after the extreme equity market valuations applied to a range of internet companies fell abruptly. As greed turned to fear, investors dumped stocks until the market found an equilibrium and steadied, ending the bear market phase.

In March 2003, the financial markets began to turn higher, aided by increased infrastructure spending and tax cuts initiated by US President Bush. These tax cuts – macro-fundamental shifts – helped to fuel consumer spending and economic growth until the global financial crisis of 2008 took hold of markets.

In late 2007 and early 2008, a collapse in US house prices – then a mainstay of consumer wealth – and a slowdown in US growth sent equity prices heading sharply lower. The US government was forced to intervene to save ailing investment bank Bear Stearns before then propping up Fannie Mae and Freddie Mac, two government-sponsored mortgage agencies, who had bought hundreds of billions of sub-prime home loans. From September 2007 to March 2009, the S&P 500 fell by nearly 60% as negative sentiment ran riot.

In 2008, the US economy fell into a recession and the Federal Reserve needed to act fast. With interest rates already near zero, the central bank embarked on three different rounds of quantitative easing (QE) to inject money into the economy via buying US government bonds and mortgage-backed securities. In total, between 2008 and late-2015, the Federal Reserve's balance sheet grew from $900 billion to $4.5 trillion, via three rounds of QE.

S&P 500 Monthly Chart 1996 – April 2019

How to Determine a Bull or Bear Market

Determining a Bull or Bear Market – Conclusion

This article has pointed to a variety of ways that market movement can be identified using fundamental and technical analysis. As with all aspects of trading, practice and knowledge are invaluable and will help you identify market moves and sentiment quickly and more reliably. Bear markets can move very quickly as negative sentiment fuels sharp price movements while 'most' Bull markets move at a slightly less frantic pace. Remember that within both Bull and Bear markets, short-term moves in the opposite direction can occur without nullifying the major trend – and that opportunity can be found in either direction.

If you're new to Forex Trading and would like to learn more from the experts, download one of our Free Beginner Trading Guides.

We have produced a Free Trading Journal for both beginner and advanced traders with tips on how to use it.

2019-04-19 17:00:00