Analyst Articles – Forex News 24

Dow Jones 200-day Targeted, Bearish S&P 500 Chart Pattern Triggered
USDMYR Upside Breakout Struggles, USDSGD and USDIDR Uptrend Eyed
May Opening Range on Radar Following Fed Meeting
Crude Oil Prices Eye Stocks Amid Resuming US, China Trade Talks
USD/SEK Looking to Test New Support? USD/NOK Eyeing Resistance
NZDUSD Clears Support as New Zealand Dollar Drops on RBNZ Rate Cut
Brazil Markets Eye Selic Rate, Pension Reforms
DIS Stock Could Fill Gap on Poor Earnings
Gold Prices Await Breakout as Volatility Rebounds from All-time Low
FX Price Action Setups in EUR/USD, GBP/USD, AUD/JPY and GBP/JPY

Dow Jones 200-day Targeted, Bearish S&P 500 Chart Pattern Triggered

Posted: 08 May 2019 01:02 AM PDT

S&P 500/Dow Jones Technical Highlights:

S&P 500 rising wedge triggered with conviction
Dow Jones looking at 200-day as next level

Check out the fundamental and technical forecast for stocks as they rise towards record highs in the Q2 Equity Markets Forecast.

S&P 500 rising wedge triggered with conviction

Last week it was noted that the rising wedge in the S&P 500 was a focal point but needed a convincing break before it could be validated as bearish. The gap on Monday was mostly taken back, however, yesterday that reversal was wiped out with force. This has the S&P firmly outside the formation and looking lower.

The initial target for these patterns arrives near the bottom of its formation, but before arriving at that point the 200-day and a minor swing-low arrive around 2775. This leaves a solid 100+ point move until the widely-watched MA is reached. The bottom of the pattern doesn't arrive until the 2720s, but first we will want to see the market's reaction to the 200-day should it reach it.

To negate the breakdown, we will need to see some solidly bullish price action and time is likely needed to repair such a break. It's possible it was a head-fake but given the extended nature of the market and the fact the formation tipped off around the old high suggests it probably wasn't. For now, running with a bearish trading bias until otherwise proven we shouldn't.

Traders are generally short the S&P 500, find out on the IG Client Sentiment page what this could be for prices moving forward.

S&P 500 Daily Chart (Rising wedge broke)

Dow Jones looking at 200-day as next level

The lagging Dow should reach its 200-day quicker on further selling in equity markets, it only needs to trade down to 25409 to do so. Beyond that support level, next up is the swing-low from March 11 at 25208, which would be an important level to watch as it would constitute a lower-low in the upward sequence off the December low. For now, just looking for the long-term MA to get tested and taking it from there…

Dow Jones Daily Chart (200-day looks to be next)

To learn more about U.S. indices, check out "The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities." You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

Tools for Forex & CFD Traders

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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2019-05-08 07:55:00

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USDMYR Upside Breakout Struggles, USDSGD and USDIDR Uptrend Eyed

Posted: 07 May 2019 11:47 PM PDT

ASEAN Technical Outlook – USD/PHP, USD/SGD, USD/IDR, USD/MYR

USD/MYR upside breakout could struggle to find follow-through
Singapore Dollar uptrend eyed via the USD/SGD rising channel
USD/IDR uptrend eyes resistance, USD/PHP rise may fall short

Trade all the major global economic data live as it populates in the economic calendar and follow live coverage for key events listed in the DailyFX Webinars. We'd love to have you along.

USD/MYR Technical Outlook

USD/MYR is attempting a break above near-term resistance at 4.1448 which if confirmed, may extend the dominant uptrend from March. This was initiated via the Falling Wedge bearish formation coupled with positive RSI divergence. This time, negative RSI divergence, which shows fading upside momentum, hints that the Malaysian Ringgit may appreciate in the near-term. As such, the push higher in USD/MYR ought to be treated with caution despite dovish support from a rate cut from Bank Negara Malaysia. Turning lower places support at what could be a potential rising trend line from the middle of March (pink line below).

USD/MYR Daily Chart

USD/SGD Technical Outlook

The Singapore Dollar brushed off the Shooting Star from last week which warned of indecision. The lack of confirmation via further closes lower overturned this potential bearish warning in USD/SGD. Rather, the focus now seems to be on a rising channel going back to late March which is represented by the blue parallel lines below. Negative RSI divergence warns of a turn lower which places support as the floor of the rising channel. However, the cautious uptrend from late March could still hold in the medium-term with resistance just under 1.3658.

USD/SGD Daily Chart

USD/IDR Technical Outlook

USD/IDR extended its uptrend from late April following the push above the falling trend line from December, also brushing off a Shooting Star candle. The Indonesian Rupiah thus finds itself sitting under immediate resistance at 14340. Meanwhile, just under it is a rising support line from late April which if broken, opens the door to testing 14255. Otherwise, extending its advance opens the door to testing 14646. You may feel free to follow me on Twitter @ddubrovskyFXfor timely updates on ASEAN currencies.

USD/IDR Daily Chart

USD/PHP Technical Outlook

USD/PHP has been struggling to achieve upside follow-through after pushing above the near-term falling resistance line from the middle of March (red dotted line below). The Philippine Peso has largely been tamed by a downward-sloping resistance range from the same time (parallel pink lines below). If USD/PHP does breakout higher, it may struggle to find follow-through as a range of resistance (52.24 – 52.37) keeps the currency pair at bay. A turn lower has support eyed as a range between 51.59 and 51.69.

USD/PHP Daily Chart

**All Charts Created in TradingView

Read this week's ASEAN fundamental outlook to learn about the underlying drivers for these currencies!

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

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2019-05-08 06:30:00

May Opening Range on Radar Following Fed Meeting

Posted: 07 May 2019 10:27 PM PDT

Gold Price Talking Points

Gold retraces the decline following the Federal Reserve meeting, with the price of bullion carving a fresh series of higher highs and lows, but the broader outlook warns of a shift in market behavior as a head-and-shoulders formation remains in play.

Image of daily change for major financial markets

Gold Price Outlook: May Opening Range on Radar Following Fed Meeting

Image of daily change for gold prices

Gold prices were battered at the start of the month as the Federal Open Market Committee (FOMC)showed no interest in altering the monetary policy outlook, and it seems as though the central bank will stick to the sidelines going into the second-half of the year as Chairman Jerome Powell & Co. 'don’t see a strong case for moving in either direction.'

It seems as though the FOMC is in no rush to alter the forward-guidance for monetary policy as the 'baseline view remains that, with a strong job market and continued growth, inflation will return to 2 percent over time,' and the central bank may continue to endorse a wait-and-see approach at the next quarterly meeting in June as the committee starts to winddown the $50B/month in quantitative tightening (QT).

Image of fed fund futures

Nevertheless, Fed Fund Futures still reflect a greater than 50% probability for a December rate-cut even though the FOMC insists that 'incoming data since our last meeting in March have been broadly in line with ourexpectations,' and it remains to be seen if Chairman Powell & Co. will continue to project a longer-run interest rate of 2.50% to 2.75% as 'transitory factors' appear to be dragging on inflation.

With that said, comments coming out of the FOMC may continue to impact gold as a slew of Fed officials are scheduled to speak over the coming days, and a batch of less-dovish comments may drag on the price of bullion as it raises the scope for higher U.S. interest rates.

Keep in mind, there appears to be a broader shift in market behavior as the price for bullion snaps the 2019 opening range, and the precious metal may continue to give back the advance from the 2018-low ($1160) as a head-and-shoulders formation remains in play.

Gold Price Daily Chart

The broader outlook for gold remains mired by the head-and-shoulders formation amid the break of neckline support, with the Relative Strength Index (RSI) highlighting a similar dynamic as it tracks the bearish trends from earlier this year.
However, the price for bullion now threatens the opening range for May after failing to clear the April-low ($1266), with recent series of higher highs & lows raising the risk for a larger recovery.
Need a break/close above $1288 (23.6% expansion) to open up the Fibonacci overlap around $1298 (23.6% retracement) to $1302 (50% retracement), with the next region of interest coming in around $1315 (23.6% retracement) to $1316 (38.2% expansion).
Nevertheless, failure to break out of the monthly opening range may bring the downside targets back on the radar, with the first area of interest coming in around $1260 (23.6% expansion).

For more in-depth analysis, check out the 2Q 2019 Forecast for Gold

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

2019-05-08 05:00:00

Crude Oil Prices Eye Stocks Amid Resuming US, China Trade Talks

Posted: 07 May 2019 09:14 PM PDT

CRUDE OIL & GOLD TALKING POINTS:

Crude oil prices edge gently lower after breaking trend support
Gold price action muted but overall setup carries bearish bias
All eyes now focused on resuming US, China trade negotiations

Crude oil prices tracked stocks lower amid broad-based deterioration in risk appetite yesterday. The downbeat mood appeared to reflect lingering worries about escalation in the US-China trade war. Gold prices edged marginally higher as the risk-off mood weighed on bond yields, but haven-seeking buying of the US Dollar undermined meaningful upside progress.

Dismal Chinese trade data showing an unexpected drop in exports looks to have been shrugged off for now as markets focus on the upcoming arrival of Chinese negotiators in Washington DC for another round of trade talks. Signs of sluggish progress are likely to translate into a replay of yesterday's price action, while the appearance of a more conciliatory tone may turn it on its head as risk appetite rebuilds.

Likewise of note, EIA inventory flow statistics are expected to show that US stockpiles added 1.1 million barrels last week. Leading API data hinted at a larger 2.81-million-barrel rise yesterday, opening the door for a downbeat surprise that might pressure oil prices. Yesterday, the government predicted that US output will average 12.45 million barrels per day in 2019, a record high.

Did we get it right in our 2Q crude oil and gold forecasts? Get them here to find out!

GOLD TECHNICAL ANALYSIS

Gold prices remain caught between resistance set form late-February highs and support guiding the uptrend since mid-August 2018. Overall positioning seems to carry a bearish bias, courtesy of a recently completed Head and Shoulders (H&S) topping pattern. Downside resumption on a daily close below 1260.80 sees the next downside barrier in the 1235.11-38.00 area, although the H&S setup implies a measured move to 1215.00. Immediate resistance is at 1293.64, with a break above that exposing the 1303.70-09.12 zone.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are inching lower within the bounds of a narrow channel having broken rising trend support established from late-December lows. From here, a daily close below support at 60.39 exposes the 57.24-88 area next. On the topside, a dense layer of overlapping resistance levels extends up though 67.03. If prices were to break above that, the $70/bbl figure is likely to be back in the crosshairs.

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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2019-05-08 03:30:00

USD/SEK Looking to Test New Support? USD/NOK Eyeing Resistance

Posted: 07 May 2019 08:38 PM PDT

NORDIC FX, NOK, SEK WEEKLY OUTLOOK

USD/SEK may find new support at 9.5323
USD/NOK approaching resistance range
Bearish outlook for NOK, SEK remains

See our free guide to learn how to use economic news in your trading strategy!

SEK TECHNICAL ANALYSIS

After peaking above 17-year highs, USD/SEK's sugar rush may soon cool and result in a sugar crash with an eye at a possible new support at 9.5323. Negative RSI divergence is signaling underlying momentum is waning after the pair surged almost three percent in three days in April. The biggest jump was caused by the Riksbank rate decision and dovish commentary from central bank Governor Stephen Ingves.

USD/SEK – Daily Chart

Zooming out to a weekly chart, year-to-date USD/SEK has increased over seven percent, with a total of over 20 percent starting in January in 2018. A week-by-week view shows underlying momentum remains strong with a fundamental backdrop that is supportive of a broad upward trajectory for the pair at least until year end.

USD/SEK – Weekly Chart

A monthly chart shows two possible support levels USD/SEK may test if a major reversal occurs. Right now, the pair is hovering on the cusp of 9.4907 (red line). If the pair cannot continue to trade above this level, the next possible floor lies at 9.2981 (orange line), with what will likely be another strong psychological support at 9.2275 (blue line).

USD/SEK – Monthly Chart

The latter price level was tested as resistance in the last breaths of 2016 with the most recent attempt just this past February. The break above of it in February and subsequent follow-through in March and April reinforced a bullish outlook for USD/SEK.

NOK TECHNICAL ANALYSIS

After rebounding from the upper lip of the upward-sloping support channel (red range), USD/NOK is on track to test a resistance range between 8.74-8.75 (blue channel). The last time the pair traded within this range was back in December 2018.

USD/NOK – Daily Chart

USD/NOK has been trading on the edge of the lower bound of resistance, with long wicks and small bodies implying indecision. Given the broad upward trajectory along the steep support channel, it is not likely that this resistance will hold for long. The fundamental backdrop for USD/NOK is supportive of continued upward momentum.

USD/NOK – Daily Chart

Whether the pair will break above resistance this week in large part has to do with the upcoming Norges Bank Rate decision. If officials express unexpectedly dovish undertones, it could cause the pair to spike above this level.

However, if they are more hawkish than expected or are less dovish than what market participants are anticipating, it could cause the pair to have a sharp dip. However, it would not likely cause enough of a shift to overhaul the broad uptrend the pair has had since March 2018.

Taking a monthly chart into perspective shows that the pair appears to be forming a bullish Flag setup, a continuation pattern that involves a brief period consolidation prior to resuming its previous trajectory. After being stuck in a two-year downward-facing trading range (blue parallel channels), the pair broke out in November 2018 and has continued to trade higher.

The next major resistance appears to be at 8.9931 (yellow line). Beyond that, the target point could be at 11.1213. If USD/NOK continues to trade higher with this target in mind, it is uncertain whether the pair will be able to climb along the steep and upward-sloping 2018 March support channel. Nearer term, the pair will likely be able to breach 8.9931 by year-end.

USD/NOK – Monthly Chart

SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

2019-05-08 03:30:00

NZDUSD Clears Support as New Zealand Dollar Drops on RBNZ Rate Cut

Posted: 07 May 2019 07:20 PM PDT

NZD/USD cleared support, extending its downtrend after the New Zealand Dollar dropped as the Reserve Bank of New Zealand (RBNZ) cut rates to 1.50% from 1.75% as expected.

2019-05-08 02:00:00

Brazil Markets Eye Selic Rate, Pension Reforms

Posted: 07 May 2019 04:08 PM PDT

TALKING POINTS – SELIC RATE, USD/BRL, PENSION REFORM

USD/BRL, Ibovespa eyeing Selic rate decision
Economists are expecting hold at 6.50 percent
What is driving Brazilian monetary policy?

See our free guide to learn how to use economic news in your trading strategy!

Tomorrow, Banco Central do Brazil will be announcing its decision on whether it will adjust the benchmark Selic rate. The decision by the nine-committee council – known as Copom – will be released on May 8 at 21:00 GMT. Since April 2018, the central bank has held rates at 6.50 percent following a series of deep cuts in 2017 that were used as a way to stimulate growth after the country endured a recession.

Analysts are expecting for officials to keep interest rates at this all-time low until there are clear signs that President Jair Bolsonaro's pension reforms are able to survive in the legislature. Later today, the president of the lower house's special commission will announce a schedule for the debates. This follows last month's landmark decision to declare that the pension reforms were constitutionally legal.

Similar to how the BoE is guiding its policy around the outcome of Brexit, the Brazilian central bank is holding on any rate adjustments until there is further clarity on pensions policy. To read more about why progress on these reforms is driving Brazilian financial markets and influencing local monetary policy, read my updated BRL and Ibovespa outlook here.

However, the Brazilian central bank finds itself at a cross roads. Economic indicators have been broadly underperforming relative to economists' expectations, with last week's industrial production data missing estimates. That might imply broader implications for global growth, preceding the recent deterioration in US-China trade relations.

The probability of another Brazilian recession will likely rise if the pension reforms are not passed this year, making the market impact of each development that much greater. Volatility is likely to be amplified as the clocks runs out. You may follow me on Twitter @Zabelin.Dimitri for updates on the pension reforms and the reaction in local assets.

Selic Rate Decisions 2017-2019

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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2019-05-07 23:00:00

DIS Stock Could Fill Gap on Poor Earnings

Posted: 07 May 2019 02:19 PM PDT

Dow Jones Price Outlook Talking Points:

Dow Jones Price Outlook: DIS Stock Could Fill Gap on Poor Earnings

As earnings season draws to a close, Disney's financial findings could deliver a needed spark to reignite equity optimism, or at least slow the bleeding, when the company reports after Wednesday's close. Trade war concerns have weighed on the Dow Jones and other equity markets as the likelihood of higher tariffs increase as the week progresses. Thus, a strong report from the Index's hottest stock over the last month would be a meaningful first step for the Index to gather its footing.

Surprisingly, option traders have priced in relatively low volatility for DIS after earnings. Although VIX has spiked to its highest levels since January 23, the added risk of earnings seems to have had little impact on the implied volatility of the stock. That said, 20-day implied volatility is considerably higher at nearly 44% which would result in a possible trading range of $75.18 to $192.94.

Contributing to the extreme 20-day implied volatility, DIS rallied 17.65% in the month prior – good for the largest gain in the Industrial Average over that timeframe. Most of the strength followed the announcement of their streaming service in early April as Disney shares gapped nearly 10% higher. With lofty expectations, bruised sentiment and a beleaguered index, it would seem risks are heavily skewed to the downside for Disney – with a large gap looming beneath.

Disney (DIS) Stock Price Chart: Daily Time Frame (August 2018 – May 2019) (Chart 1)

Learn about the conditions necessary to form a gap

With an earnings-related implied trading range from $128.99 to $139.13, option pricing suggests the unfilled gap – from $126.56 to $118.06 – falls outside the expected price action. That said, volatility in the broader market could exacerbate price movement and look to test the gap.

The sizable jump makes immediate support unclear. On a break lower the 20 and 50-day moving averages could offer some buoyancy, but given that they exist inside the gap, could see their efficacy reduced. Similarly, a support trendline around $119 may suffer the same fate – leaving the horizontal support at $118.06 the last line of defense.

To the topside, Disney would face resistance at record highs at $142.27 on an attempted move higher. Like the gap beneath, the stock's all-time highs also appear outside the implied 1-day trading range, which suggests the stock would first have to break through $135.35 – a level that has rebuked the stock in the last four trading sessions.

Should Disney miss and fill the space down to $118.06, Disney shares could be expected to subtract 107 points from the Industrial Average (calculated using Disney's Tuesday close price and Dow Divisor per WSJ). In the meantime, trade war developments will continue to influence the Dow Jones as investors weigh the exact implications of a complete breakdown in negotiations. For a follow up on Disney earnings and price action, follow @PeterHanksFX on Twitter.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you're looking to improve your trading approach, check out Traits of Successful Traders. And if you're looking for an introductory primer to the Forex market, check out our New to FX Guide.

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2019-05-07 21:05:00

Gold Prices Await Breakout as Volatility Rebounds from All-time Low

Posted: 07 May 2019 01:43 PM PDT

Talking Points:

– GVZ, the ETF tracking volatility in GLD – in effect, a rolling 1-month implied volatility contract – hit an all-time low (going back to 2008) on May 3.

– Now that measures of volatility across asset classes are rising, a breakout in Gold prices after the recent consolidation may be around the corner.

– Changes in retail trader positioning suggest that Gold prices could turn higher soon.

Looking for longer-term forecasts on Gold and Silver prices? Check out the DailyFX Trading Guides.

Gold prices have been trading sideways for the past few weeks, but the slumber may soon be coming to an end. Measures of volatility across global asset classes are rising in tandem – equities, bonds, commodities, currencies, and all – thanks to surprising developments along the US-China trade war front and the sudden implications for global growth. Rising volatility in energy markets, for example, has underscored the bearish bias in crude oil prices.

Amid the increased volatility, investors may soon be forced to decide on whether Gold prices will retain or lose their uptrend from the August 2018 lows. As the backbone of the entire rally over the past nine-months has started to come into focus, Gold prices have been surprisingly dogged by a quiet market. If trading is both a function of price and time, it seems that only time is pushing the charts forward right now.

This view is best understood hindsight by looking at the most popular Gold volatility ETF, GVZ. GVZ tracks the rolling 30-day (or 1-month, as is conventionally quoted in FX markets), implied volatility of gold prices. The CBOE's tracking ETF applies the VIX methodology to options on its Gold price ETF, GLD.

GVZ (Gold Volatility) Technical Analysis: Daily Price Chart (April 2018 to May 2019) (Chart 1)

On Friday, May 3, GVZ, the measure of 1-month implied Gold volatility, hit an all-time low going back to the instrument's origination back in 2008. Unlike other asset classes, where rising volatility is seen as a bad omen for prices, Gold is harmed by low volatility: lower levels of uncertainty reduce the safe haven appeal of Gold.

Accordingly, with GVZ jumping to its highest level since April 16, the recent consolidation in Gold prices could soon find resolution; the coiling observed last week could soon yield a breakout.

Gold Price Technical Analysis: Daily Chart (April 2018 to May 2019) (Chart 2)

Recent observations on gold prices remain valid. Since setting a fresh yearly low on April 16, gold prices have been moving sideways around former symmetrical triangle support. As the ascending trendline from the August, October, and November 2018 lows has come into view, gold prices have been range trading between 1266.18 and 1288.58.

To this end, the gold price forecast is remains neutral for the time being. But the bounds of the consolidation are well-established, and a breakout may be around the corner now that Gold volatility has started to rise: a move above 1288.58 by mid-May would constitute a topside break of the consolidation (and the downtrend from the February and March 2019 highs); conversely, a move below 1266.18 would equal a downside break of the consolidation (and the uptrend from the late-2018 swing lows).

IG Client Sentiment Index: Spot Gold Price Forecast (May 7, 2019) (Chart 3)

Spot gold: Retail trader data shows 73.7% of traders are net-long with the ratio of traders long to short at 2.8 to 1. The number of traders net-long is 0.4% lower than yesterday and 2.8% higher from last week, while the number of traders net-short is 2.9% higher than yesterday and 4.4% higher from last week.

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

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 Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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2019-05-07 20:00:00

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

Posted: 07 May 2019 01:02 PM PDT

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

It's been a peculiar start to the week, at least when considering prior 2019 trends. US equities continue to exhibit tendencies of a turn, and various themes of risk aversion continue to show across global markets. This includes strength in both Gold and the Yen to go along with weakness in the Euro and a non-directional display of digestion in the US Dollar. In this webinar, I looked across the landscape to dial in on price action setups across FX major pairs.

Forex Talking Points:

– If you're looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.

– If you're looking for a primer on the FX market, we can help. To get a ground-up explanation behind the Forex market, please click here to access our New to FX Trading Guide.

If you'd like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

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.

S&P 500: Sellers Pounce After Fall Below Rising Wedge

Just last week, I asked if US stocks were nearing a turn. A few trading days later, and evidence continues to stack up that a pullback is in order, and perhaps a bit more. The big pivot here appeared around last week's FOMC rate decision; and while not much was said, FOMC Chair Jerome Powell didn't talk up the prospect of rate cuts. He said that the next move could be higher or lower without committing in either direction, and this was taken as a buffer to the market's growing expectations for a cut at some point this year. Ahead of that rate decision, odds were over 65% for at least one cut in 2019. Less than a week later, and probabilities are now closer to 56.8%. Notably, US equities rallied last Friday to recover a large-portion of the FOMC-fueled losses in the index. But, this week hasn't been so kind thus far, as sellers have remained aggressively on the ask.

At the open of this webinar, I pointed out a level that would soon come into play, and 90 minutes later, the Fibonacci level at 2868 is being tested through.

S&P 500 Four-Hour Price Chart

Chart prepared by James Stanley

Yen Strength – Unfilled Gaps – Warning Signs

Going along with that theme of risk aversion has been the scenario of Yen-strength, which remains a visible theme across FX-pairs. The Yen gapped-higher to open this week, and this shows as gaps-down in pairs like EUR/JPY, USD/JPY and AUD/JPY. AUD/JPY has already filled that gap around yesterday's RBA rate decision; but the remaining unfilled gap in both EUR/JPY and USD/JPY is of concern, as Yen strength has remained without so much as a pullback so far this week.

I discussed two very different ways of working with the above gaps. In EUR/JPY, I pointed out a key support level coming into play on the chart as it was happening, taken from the Fibonacci level around 123.10. A hold of support here opens the door for bullish reversals, with eventual targets tilted towards that gap, looking for it to fill before a bigger picture bearish wave may come back into play.

EUR/JPY Four-Hour Price Chart

Chart prepared by James Stanley

On the other side of the matter, for those looking at continued risk aversion, the short-side of AUD/JPY could be of interest; looking for the downward movement to continue after yesterday's RBA-fueled gap-fill in the pair. I had laid the groundwork for this setup in the Aussie technical forecast two weeks ago, and with the support zone around 77.50 being taken-out, the door can remain open for a run-down to the 75.00 area on the chart.

AUD/JPY Daily Price Chart

Chart prepared by James Stanley

In USD/JPY, directional plays could be more challenging. The item to watch appears to be which Fibonacci level will come back into play from the November 2017 – March 2018 major move. Each of the retracement levels from that study has had some pull with near-term price action in the pair so far this year; and just two weeks ago the 76.4% retracement helped to set the high in the pair. At 110.86, around this week's high, is the 61.8% retracement of that major move. And on the underside of price action, 109.67 lurks as the 50% marker of that major move, last in play in late-March when it helped to set the low.

USD/JPY Eight-Hour Price Chart

Chart prepared by James Stanley

GBP/JPY Nears Key Fibonacci Support

For those looking to fade Yen-strength, GBP/JPY may be of interest. The pair is closing in on a big support level around 143.79. This is the 38.2% retracement of the 2016-2018 major move in the pair, and this same price has come-in as support on four separate occasions over the past few months. And, of note, there is remaining unfilled-gap here, approximately 225 pips higher on the chart.

GBP/JPY Four-Hour Price Chart

Chart prepared by James Stanley

Crude Oil Bounces from 60, But is the Bullish Trend Done?

I had looked into this setup last week, remarking that support at 61.58-61.87 no longer looked as attractive, instead steering the focus to a support zone a little lower that ran from 60-60.35. That zone came into play shortly after this week's open, and this held as buyers posed a push back up to 62.84. Since then, however, that bullish theme has come unraveled and prices are sitting in the middle of the recent range. This draws away some attractiveness from another support test at 60.00.

Crude Oil Four-Hour Price Chart

Chart prepared by James Stanley

EUR/USD: Is this It?

EUR/USD has been in varying forms of a range for almost six months now. And that range started to give way a couple of weeks ago but, to date, sellers haven't been able to make much of a dent. The prior support zone that runs from 1.1187-1.1212 remains in-play and has helped to set resistance today. I had looked into the pair in this week's FX Setups as one of the more attractive ways to work with themes of USD-strength.

EUR/USD Daily Price Chart

Chart prepared by James Stanley

GBP/USD Pulls Back to Higher-Low Support: Can Bulls Maintain?

On the other side of the US Dollar, GBP/USD retains some interest. This is driven by last week's 'Super Thursday' rate decision at the Bank of England, when BoE Governor Mark Carney warned that faster rate hikes may be necessary: A decidedly hawkish tone in a global environment full of doves. As the US Dollar sold off on Friday, GBP/USD put in a noticeable topside breakout, rushing to fresh monthly highs. I looked into the pair in this week's FX Setups, attempting to play a pullback. The first zone, running from 1.3087-1.3117, helped to set the lows yesterday. But, sellers remained persistent and prices pushed down to the 's2' zone that runs from 1.3039-1.3053, and this has so far helped to hold the Tuesday lows. This keeps GBP/USD in a position of interest for continued USD-weakness.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley

USD/CAD Tests Resistance Near Key Level of 1.3500

USD/CAD continues to display jagged price action but, of note, buyers are calming as price action remains near resistance at the 1.3500 figure. This can keep the prospect of reversals active in the pair, particularly for themes of USD-weakness.

USD/CAD Four-Hour Price Chart

Chart prepared by James Stanley

USD/CHF Holding Near Two-Year Highs

A similar backdrop exists here in USD/CHF in which reversals may be favored. The context is a bit different, however, as USD/CHF sits near two-year highs after a very aggressive bullish run. This can make the pair a bit less attractive for reversal potential than what might be seen in USD/CAD; and if we do get a washout in the US Dollar, in which the US currency pulls back to break through a series of near-term supports, bullish plays in USD/CHF may become interesting again; attempting to incorporate CHF weakness into strong-USD scenarios.

USD/CHF Weekly Price Chart

Chart prepared by James Stanley

AUD/USD Attempts to Recover, Grasps for .7000 as Short-Term Support

AUD/USD finally tested below the .7000 big figure when prices gapped-down to start this week. But, an RBA rate decision last night helped the pair to further recover, bouncing back-above the psychological level and running towards the .7050 area on the chart that set last week's swing-highs. Buyers pulled back, and at this point, price action appears to be attempting to set higher-low support off of the .7000 level. This can keep the door open for short-term bullish scenarios, looking for AUD/USD to move towards the .7100 level.

AUD/USD Two-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 for Q4 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 an abundance 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

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2019-05-07 19:45:00