EUR/USD: Another Consolidation Break? (October 24, 2013) EUR/USD is inside another c
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EUR/USD is inside another consolidation pattern on its 1-hour time frame and, based on previous price action, this could mean another upside break.
Take note though that stochastic is already in the overbought region, which means that euro bulls are running out of buying power. However, the oscillator hasn’t quite crossed down from the 80.00 level yet, so there could be further upside potential.
The key level to break is the 1.3800 major psychological resistance. A break above that level might mean more rallies, possibly until the next major psychological resistance at 1.3900.
On the other hand, a downside break below 1.3750 might mean a move back to the former support around 1.3600. A straddle setup might be the best way to play this scenario with a 50-pip stop and a 100-pip target for a 2:1 return on risk.
For the Kiwi bulls, the recent selloff in the Kiwi might be an opportunity to catch a long trade at a better price. However, the pair has still a few hundred pips to go before reaching potential buy zones.
On the daily time frame, the Fibonacci retracement tool shows that the 50% Fib is in line with a former resistance level. This is also aligned with the .8150 minor psychological level, and this kind of confluence could make it a strong support area.
Stochastic is still pointing down, which means that Kiwi sellers could push the pair much lower in the coming days. If you’re bearish on this pair, there might be some further downside to catch, possibly until the nearest Fib level around .8250.
Waiting for the bounce at .8150 might take a while but this is a long-term setup to watch, as it offers a good return on risk with a stop below .8000 and a potential target to .8550. It might also be worth holding on for the longer run, as it also offers a positive carry.
GBP/USD: Trading the CBI Realized Sales (October 28, 2013)
There isn’t much in terms of data in today’s economic schedule, but there could be an opportunity for a quick scalp trade for GBP/USD. The UK is set to print its CBI realized sales report at 12:00 pm GMT today and possibly spark some volatility for the pair.
GBP/USD is currently trading inside a rising channel on its 1-hour time frame but it is testing the bottom. A break below this level, which might be sparked by a weak CBI figure, could take the pair to the next visible support at 1.5925. A bounce from the current levels could push GBP/USD to the top of the channel around 1.6275.
The rally is projected to be weaker than the possible selloff because sentiment for the UK is bearish lately. Risk appetite is also low, thanks to the downbeat sentiment spurred by China’s rising interest rates.
AUD/USD: Ascending Channel Support (October 29, 2013)
On its 4-hour time frame, AUD/USD’s highs and lows can be connected to form an ascending channel. This shows that the pair’s uptrend is still intact, provided that the bottom of the channel holds as support for now.
Stochastic is already in deep in the oversold region, suggesting that selling pressure is already exhausted and that a bounce will take place soon. If that’s the case, the pair could climb back to the top of the channel at .9750 to .9800 or at least until the middle around .9650 to .9700.
A downside break, on the other hand, could last until the area of interest around .9300. If you’re bullish on this pair though, you could go long at market and set a tight stop below the channel support to get out of the trade as soon as the bottom breaks.
Going long at market or .9550 until .9750 with a 100-pip stop would be a 2-to-1 return on risk. Moving your stop to entry around the middle of the channel is a good way to manage risk and protect profits.
USD/CHF Support Turned Resistance at .9000? (October 30, 2013)
Risk aversion has been keeping the franc’s gains at bay, as USD/CHF recently bounced off the .8900 major psychological support. Perhaps franc bulls are waiting for more buying momentum before pushing this pair lower.
With that, the pair could still pull back to the falling trend line forming on the 1-hour time frame before resuming its drop. This is in line with the 61.8% Fibonacci retracement level, right around the .9100 former support level.
However, the recent resistance at the .9000 major psychological level could already hold as stochastic is already in the overbought region. Shorting at market with a stop above .9100 and aiming for new lows would be a good position trade. Moving the stop loss to entry once the pair tests the .8900 support can help minimize risk.
GBP/USD’s recent rallies seem to be over as the pair ranged between the 1.6200 handle and the 1.6000 area in the past few weeks. In fact, a reversal chart pattern can be seen on the daily time frame, as the pair made a double top formation.
The pair is still around a hundred pips away from testing the neckline of the pattern, but sellers could be drawn to that level in the coming days. Stochastic is moving down from the overbought region, which suggests that pound bears can push the pair lower.
Take note though that GBP/USD has yet to break below the key 1.6000 support level and the neckline of the pattern at 1.5900 before a longer-term downtrend is confirmed. The pattern is roughly 300 pips in height so the resulting breakdown could be of the same size.
GBP/USD is approaching the bottom of its range on the 1-hour time frame, and it just might reach that support level depending on the UK manufacturing PMI release. The report is projected to post a small decline, reflecting a slight downturn in the industry.
If the decline is minimal or if the actual figure comes in stronger than expected, GBP/USD could hold above the 1.5950 minor psychological support and bottom of the range. Stochastic is moving up anyway, which suggests that there’s a stronger possibility of a rally instead of a drop. A bounce could last at least until the middle of the range, right around 1.6050.
On the other hand, if the report comes in much worse than expected, GBP/USD could break below the 1.5950 mark trade until the next support zones at 1.5800 to 1.5850.
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The Japanese Yen outperformed in overnight trade, rising as much as 0.4 percent on average against its top counterparts, as risk appetite soured and drove demand for the safe-haven currency. Asian stocks followed Wall Street lower after the Federal Reserve disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric, as expected. The New Zealand Dollar underperformed after the RBNZ hinted that the elevated exchange rate may limit scope for interest rate hikes planned for next year. details
EUR/JPY suffered a heavy selloff starting Thursday last week when ECB officials hinted that a rate cut is in the cards. EUR/JPY dropped from the 135.50 area by close to 300 pips before making a quick bounce at the start of this trading week.
Sentiment remains very bearish for this pair but a retracement might take place before sellers push the pair lower. If that’s the case, EUR/JPY could pull back to the 38.2% Fib, which is in line with a former support level. It is also an area of interest, which means it could act as resistance from now on.
Stochastic is pointing down, suggesting that selling pressure is still strong. Shorting at 133.60 with a stop above the 134.00 mark and a target of new lows could make a good return on risk for a swing trade.
USD/CHF Major Correction to .9200 (November 5, 2013)
USD/CHF’s rallies might soon be over, as the pair is approaching a potential resistance level. The .9200 major psychological mark has acted as support in the past and is around the Fibonacci retracement levels on the daily time frame, which means that it could keep the pair from climbing any higher.
Stochastic hasn’t quite reached the overbought zone yet though, so dollar bulls could still push this pair up to the .9200 mark for now. Be mindful of a turn and a downward crossover in stochastic, as this could suggest that dollar bulls are exhausted and that bears might jump in.
Shorting around .9200 with a stop above the highest Fib level and a target of the previous lows around .8950 could yield a high return on risk.
