The pair managed to bounce near the 100.00 psychological support and broke higher overnight confirming a potential bullish reversal in the hourly chart.
The key technical resistance was at 101.25 and if prices retrace lower then we expect strong buyers to appear around this level for another leg to the upside. In the meantime, the pair has reached a strong barrier at 101.72 level, which represents the 50% retracement of the entire decline that began from 102.80 peak, therefore, prices may stabilize in the coming hours before the next directional move to happen.
To summarize, the trend remain bearish in the daily chart, while the hourly chart turned bullish as far as 100.45 low is in place, meanwhile, a move back to 101.25/101.00 area should give strong support to the pair.
Beginning with USD/CAD, the pair failed to break above 1.3280/1.3300 monthly resistance zone and turned sharply after prices dropped below 1.3194 support. The pair has reached a high of 1.3278 following crude oil inventories release before the sell-off begin. The move was fast because of the surprise effect following the output-cap deal and by now the pair the outlook has become strongly bearish in the short-term.
Technically, momentum indicators turned negative and a continuation lower is likely in the coming hours. Regarding the next levels of interest, the selling pressure should send prices to as low as 1.3000 psychological support while a recovery towards 1.3155/1.3172 zone is likely to cap any rally attempt.
To conclude, as far as 1.3225 peak is intact in the hourly chart, the trend should stay bearish.
The single currency was the only major currency to rise against the Dollar despite Deutsche bank fears.
The Euro bulls managed to protect 1.1125 daily support as prices jumped above the 1.1200 handle after finding a low around 1.1138 level. Therefore, the outlook remain slightly positive in the hourly chart and another re-test of 1.1250 barrier is likely in the coming hours. Meanwhile, the daily trend is clearly neutral and we will wait for additional momentum before to confirm the next directional move.
From an intraday perspective, traders should focus on 1.1175 level in the downside and 1.1238 level ahead of U.S ADP figures.
The Sterling continue to weaken after breaking below 1.2798 low, which represented the lowest level for this year. This breakdown reinforced the negative outlook for the British pound that began following the Brexit decision.
Technically, the pair is bearish in both the daily and the hourly charts, however, the RSI indicator stands at the oversold territory, and an upside correction cannot be ruled out in the near future.
Looking at the wave structure, 1.2617 is considered as the theoretical target completion for the bearish cycle that began from 1.3445 peak, and should give some support to the pair once reached.
As of now, traders are likely to keep selling rallies around 1.2770/85 zone to play a continuation of the main negative trend. In the opposite, only a daily close above 1.2850 will cancel this negative scenario.
The pair bounced strongly yesterday despite Oil strength as commodity currencies were weak across the board.
From a technical point of view, the pair should remain well supported above 1.3130 low and another wave higher is expected as prices managed to overtake 1.3195resistance level.
If the pair resume its upside momentum, then we will look for resistance around 1.3250 level, from where the pair may stabilize before to continue its advance. In the flipside, a drop below 1.3170 should expose 1.3145/30 zone.
Overall, the pair remain bullish in the daily chart as prices continue to respect the higher low structure that began from 1.3000 psychological support.
The Japanese Yen weakened against the U.S Dollar since the beginning of this week, as prices failed several time to break below 100.00 major support.
In addition, the pair succeeded to break above the bearish trend line drawn from 104.35 peak and to overtake 102.80 hourly resistance (Post BoJ high), which reinforces a continuation higher in the coming hours in the direction of 103.35/50 resistance zone.
The pair turned bullish in the short-term, and as far as 102.00 low is in place, the preference should be for longs.
The New Zealand fell sharply after we saw a big rejection from 0.7300 barrier during yesterday’s U.S trading session. The pair showed a head and shoulders reversal pattern in the daily chart, which can extend the sell-off in the coming hours.
The broken neckline was located at 0.7203 level and a pullback to around this level should offer another selling opportunity for bears. The next level of interest stands at 0.7154, which represents the 61.8% retracement of the entire rally seen from 0.6950 low.
Therefore, the outlook is strongly bearish in this pair and the upside momentum should remain limited below 0.7215 peak, while the theoretical target for this formation stands at 0.6930 area.
FX Weekly Technical Outlook (10 to 14October 2016)
EUR/USD
The Euro remain strong compared to a basket of major currencies as the single currency managed to protect 1.1100 psychological support despite the recent strength seen in the U.S Dollar during last week.
Technically, the pair keep trading inside a wide range that comes from 1.1250 resistance to 1.1120/1.1100 support zone and only a clear break outside of this sideways formation, should provide more clues about the future price action in the coming days. Consequently, our view remain neutral regarding this pair.
Looking at the levels of interest for the week ahead, traders should focus on 1.1240/50 in the upside while in the downside, a breakdown below 1.1150 should open the way for further downside in the direction of 1.1100 handle.
FX Weekly Technical Outlook (10 to 14October 2016)
GBP/USD
The pair fell to lowest level since March 1985 during early Asian session trading as algorithms intensified the sell-off.
The Sterling sank to as low as 1.1841 shown in Bloomberg reinforcing the bearish outlook that followed the recent Brexit decision. As of now, it is clear that cable remain under pressure, however traders should approach this pair very cautiously in the coming days as we have seen a strong bounce from the lows.
From a technical standpoint, the pair should follow two different paths in the near-term. Either a recovery towards 1.2540/60 before the sell-off or a continuation lower if 1.2485 peak holds.
For the second scenario, a daily close below 1.2225 support is needed for another dip in the direction of 1.2060/1.1960 support zone, from where a potential major low is likely to be found in the coming days.
Overall, the pair remain strongly bearish in both the hourly and the daily chart, which keeps the preference for selling rallies instead of buying the dips. In the opposite, a break above 1.2770 peak should confirm a potential bullish reversal.
FX Weekly Technical Outlook (10 to 14October 2016)
USD/JPY
The Japanese Yen has weakened significantly last week as traders began to book profits on their short positions since the beginning of this third quarter.
Technically, the short-term trend has turned bullish and as far as prices keep trading above 100.75 support, another extension higher remain possible. Therefore, if Friday’s drop continue during the beginning of the coming week, then we expect strong buyers to appear around 102.10/101.65 zone as these levels represents the 50-61.8% fibonacci retracement of the entire recovery that began from 100.08 low.
In the flipside, a daily close above the psychological of 104.00 is necessary to support the reversal outlook.
From a wider angle, the daily trend still bearish and as far as 104.30 peak is intact , the probability of a major bullish reversal reversal will remain weak.
