Daily Technical Analysis by Kate Curtis from Trader's Way

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EURAUD Head and Shoulders (Apr 11, 2018)

EURAUD could be due for a downtrend as a head and shoulders pattern has formed on its 4-hour chart. Price has yet to break below the neckline at 1.5900 to confirm the potential drop.

The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the up-side. This means that the uptrend is more likely to resume than reverse. Also, stochastic is indicating oversold conditions and is pulling up to suggest that buyers could regain control.

Easing trade tensions between the US and China could revive demand for the Aussie as traders are no longer worried about falling commodities and risk-off flows. Data from Australia has been weaker than expected today, though, as the Westpac consumer sentiment index printed a 0.6% drop.

Then again, data from the euro zone hasn't been all that impressive as French and Italian industrial production both missed estimates. ECB head Draghi has a speech coming up today and cautious re-marks could continue to weigh on the shared currency.

Later in the week, China will be releasing its trade balance and this would likely impact AUD action. Apart from that, any headlines related to trade talks could also prove positive for the Aussie.

By Kate Curtis from Trader's Way

 

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AUDUSD Descending Channel (Apr 12, 2018)

AUDUSD is trending lower on its 4-hour time frame and is currently on its way to the resistance. Applying the Fib retracement tool on the swing high and low shows that this lines up with the 50% correction level around .7800.

The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the downtrend is more likely to continue than to reverse. Stochastic is also turning down from the overbought zone to indicate that sellers are ready to take control once more, possibly sending price back down to the swing low or the channel bottom.

Cooling tensions between the US and China when it comes to tariffs appears to have led to a relief rally for the Aussie, but fresh geopolitical risks on Syria are in play. This could once again revive demand for the safe-haven dollar, especially as the FOMC minutes were more hawkish than before.

Fed policymakers agreed that gradual rate hikes should be maintained as the economic outlook has improved in recent months and annual inflation could keep rising. However, CPI data hasn't been so impressive as the headline figure posted a 0.1% dip instead of staying flat.

By Kate Curtis from Trader's Way

 

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EURUSD Triangle Pattern (Apr 13, 2018)

EURUSD has formed lower highs and higher lows to create a symmetrical triangle on its 4-hour time frame. Price is approaching the peak of the formation so a breakout could be due soon. Note that the chart pattern spans 1.2150 to 1.2550 so the resulting breakout could lead to either a 400-pip rally or a 400-pip drop.

The moving averages have been oscillating so it's tough to tell which direction it could take at this point. Stochastic is on the move down, though, which suggests that sellers have the upper hand.

Dollar demand has ticked higher in recent sessions thanks to higher US bond yields. Easing geopolitical risks from Syria and China have also contributed to improved investor sentiment, but there has been talk of a potential US military strike on eight areas in Syria.

US preliminary UoM consumer sentiment and inflation expectations are lined up today and these could allow the Greenback to extend its climb if the numbers turn out stronger than expected. As for the euro, German final CPI and the regoin's trade balance are up for release.

By Kate Curtis from Trader's Way

 

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EURAUD Break and Retest (Apr 17, 2018)

EURAUD recently broke below its head and shoulders neckline to confirm that a downtrend is underway. Price is pulling up to this broken resistance for a retest, and holding as resistance could send the pair down to fresh lows.

The 100 SMA is still above the longer-term 200 SMA, though, to indicate that the path of least resistance is to the upside. This suggests that the longer-term uptrend could still resume from here. Stochastic is nearing overbought levels, however, so sellers could return as price finds resistance at this 61.8% Fibo-nacci retracement level.

Economic data from China came in mostly in line with estimates, with only the industrial production re-port falling short. The figure slid from 7.2% to 6.0% versus the estimated dip to 6.4% to signal potentially weaker demand for raw material commodities from Australia.

Meanwhile, the quarterly GDP still reflected a 6.8% growth figure as expected. Fixed asset investment fell from 7.9% to 7.5% versus the 7.7% forecast while retail sales jumped from 9.7% to 10.1% instead of holding steady.

There are no major reports from the euro zone but commentary from ECB officials has mostly been hawkish, which could keep the shared currency supported. A return in risk-off flows stemming from geopolitical tensions could also be negative for the Aussie.

By Kate Curtis from Trader's Way

 

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USDJPY Bearish Correction Play (Apr 18, 2018)

USDJPY previously broke below support around the 109.00 major psychological level and has dipped to a low of 105.25 before pulling up. Applying the Fibonacci retracement tool on the swing high and low on the daily time frame shows that the 50% Fib lines up with the broken support.

The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside or that the selloff is likely to resume. Stochastic is turning lower from the overbought zone to show that selling pressure is picking up.

The US dollar has been able to regain some ground recently thanks to strong medium-tier data and a pickup in bond yields on cooling geopolitical risks. FOMC members have also dropped some optimistic remarks on economic growth and inflation, as well as the labor market.

FOMC members Quarles and Dudley still have speeches lined up in today's US session that could further stoke tightening expectations. Japan has its national core CPI and tertiary industry activity index due before the end of the week, likely adding volatility to this pair as well.

By Kate Curtis from Trader's Way

 

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GBPJPY Channel Pullback (Apr 19, 2018)

GBPJPY continues to trend higher but has bounced off the top of its long-term ascending channel visible on the 4-hour time frame. Price could be gearing up for a pullback to support at the 151.50 minor psy-chological mark.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% level is closest to the channel support and might be enough to keep losses in check. The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the rally could still resume.

In addition, the 100 SMA coincides with the 50% Fibonacci retracement level, adding to its strength as a potential floor in the event of a larger dip. The gap between the moving averages is widening to reflect stronger bullish momentum. Stochastic is moving down but is nearing oversold conditions to show that sellers are feeling exhausted.

UK CPI came in weaker than expected as the headline figure fell from 2.7% to 2.5% instead of holding steady while the core figure dipped from 2.4% to 2.3%. Prior to this, the jobs report came in mostly stronger than expected but traders focused on the miss in the average earnings index, which would dampen inflationary pressures.

There have been no major reports out of Japan but the yen has been weakening on account of improving risk appetite and dollar strength. US bond yields have been on the rise, reviving the appeal of the US currency as a safe-haven. Japan's national core CPI and tertiary activity index are due on Friday.

By Kate Curtis from Trader's Way