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FX Price Action Setups in EUR/USD, USD/CNH, USD/CAD and NZD/USD

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FX Price Action Setups in EUR/USD, USD/CNH, USD/CAD and NZD/USD

It’s been a busy week already and tomorrow brings an extra quotient of risk as US markets will be closed for an official day of mourning for former US President, George H.W. Bush. This means that the Jerome Powell semi-annual Humphrey Hawkins testimony that was set to begin on Wednesday has been postponed to a yet-to-be-named date; and the next major USD item on the calendar is Friday’s release of Non-Farm Payrolls data from the month of November.

The equity ramp that showed at the beginning of this week has now been completely faded-out, and prices in the Dow are dipping into territory that had come into play on the heels of Chair Powell’s speech last week. The US Dollar, meanwhile, has put in a bifurcated day of price action as weakness leading into this morning down to a key Fibonacci level has brought buyers back to the bid, and prices are now jumping towards an area of unfilled gap on the chart that runs up to around 97.19. In this webinar, I looked at price action setups around the US Dollar, focusing on major currency pairs in the effort of devising strategy.

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

US Dollar Bounces From Fibonacci Support

The US Dollar gapped-down to start this week’s trade and bears remained fairly-active on the open, continuing to push-lower without allowing that gap to fill-in. This led to a test of the bullish trend-line that’s been at work for the past couple of months yesterday morning, and that bounce also failed to fill-in the gap that remains from 94.04-94.19. Weakness continued to push into this morning, after which the 96.47 Fibonacci support level came back into play.

US Dollar Hourly Price Chart

us dollar hourly chart

Chart prepared by James Stanley

After a few hours of struggle, bulls were able to re-grab control to propel prices back to the 97.00 area. Unfilled gap remains, and the key here is monitoring how deeply bulls can drive. If the swing-high from last week is taken-out at 97.31, the scope for further upside is there, and the door could soon re-open to topside strategies in the US Dollar. If, on the other hand, that gap fills and then sellers hold resistance below this prior swing, the door remains open for short-side strategies, and that could be attractive in venues such as NZD/USD and USD/CNH.

US Dollar Four-Hour Price Chart

us dollar four hour price chart

Chart prepared by James Stanley

EUR/USD Streak of Higher-Lows Nears Trend-Line Resistance

From a number of vantage points, the past month has been relatively quiet in EUR/USD, as the pair has continued to build into a symmetrical wedge pattern.

EUR/USD Four-Hour Price Chart

eurusd four hour price chart

Chart prepared by James Stanley

On a shorter-term basis, the big question is whether bulls can continue to push after bringing-in a series of higher-lows over the past few weeks. Sellers remain active, as shown from last week’s resistance hold at 1.1400. But this week, prices were able to edge above that level, even if by a little bit, and this shows a potential shift in the balance-of-power in the pair, with sellers getting a bit more shy while bulls grow more anticipatory as indicated by higher-low support.

In the webinar, I discuss how to move forward with a formation such as the symmetrical wedge as shown below. Wait for the break to get a directional bias, and then look for a pullback to open the door for exposure potential on continuation strategies.

EUR/USD Two-Hour Price Chart

eurusd two hour price chart

Chart prepared by James Stanley

GBP/USD: Cable Flickers to Fresh Low as Brexit Continues in a Messy Manner

Next week brings the Parliament vote for Theresa May’s Brexit plan, and matters never really looked all that positive there. A blow may have been dealt before the vote ever takes place, and this showed up earlier today when UK Parliament found the government in contempt. So, the vote next week isn’t looking so positive.

As discussed by our own Martin Essex, this opens a series of options, including the potential for a new Prime Minister, which may turn out to be Pound-positive.

Nonetheless, the pair remains in a dangerous spot, as prices quickly set a fresh yearly low before pulling-back above the Fibonacci level that helped to set that support. This can be a difficult move to plot for continuation as prices still remain rather far away from nearby resistance swings.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USD/CHF Builds Higher Lows with Parity Holding Resistance

I discussed this last week, but the prior theme of USD/CHF weakness doesn’t look as attractive after the support test at .9902 two weeks ago. Bullish breaks above parity could soon re-open the door for topside strategies.

USD/CHF Four-Hour Price Chart

usdchf four hour price chart

Chart prepared by James Stanley

USD/CNH to Two Month Lows as Yuan Reversal Gains Speed

I had looked at this one a month ago, essentially trying to catch a top as USD/CNH neared a key resistance level at 6.9875. It took a few weeks for the setup to show much attraction, but to open this week Yuan-strength has been back in the cards and this has helped to bring both targets into play. The bigger and more important question at this point: Is there more room to run on the downside?

USD/CNH was in a concerted up-trend from April into October, and if this theme does hold there may be more room to run.

USD/CNH Daily Price Chart

usdcnh daily price chart

Chart prepared by James Stanley

USD/CAD Finds Resistance at Prior Support

USD/CAD was in a strong and consistent up-trend leading into this week. The pair gapped-lower to go along with that move in DXY, and prices peeled below the bullish trend-line that’s been in place since the start of Q4. At this point, the zone that I had used for prior support is now helping to show short-term resistance, and this lines up with the under-side of that bullish trend-line. Similar to USD/CHF above, there may be a flip scenario taking place here, although it’s still in the very early stage. The remaining unfilled gap up to last week’s close around 1.3300 would likely need to be filled before short-side setups can become attractive.

USD/CAD Four-Hour Price Chart

usdcad four hour price chart

Chart prepared by James Stanley

NZD/USD Pulls Back from Fresh Five-Month Highs

It’s been a positive Q4 for the Kiwi since a difficult first nine months of the year. The month of October saw a build of support even as the US Dollar was jumping up to fresh yearly highs, and as soon as November opened along with some USD-weakness, NZD/USD was set to fly-higher on the chart. That theme of strength has largely remained since, with a couple of resistance inflections helping to show key areas on the chart. One of those areas that had held the highs on two separate occasions last week remains as support potential, and this runs from around .6870-.6877. In the webinar, I discussed a few options for working with that setup.

NZD/USD Four-Hour Price Chart

nzdusd nzd/usd 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 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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Traders Net-Short Are 63.3% Higher from Last Week

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US500,SP500

TRADERS REMAIN NET-SHORT

US 500: Retail trader data shows 24.6% of traders are net-long with the ratio of traders short to long at 3.07 to 1. In fact, traders have remained net-short since Jan 07 when US 500 traded near 2473.53; price has moved 11.9% higher since then. The number of traders net-long is 1.7% higher than yesterday and 1.6% lower from last week, while the number of traders net-short is 5.2% higher than yesterday and 63.3% higher from last week.

For more in-depth analysis, check out the Q1 2019 Forecast for Equities

S&P 500 SUGGESTS STRONG BULLISH BIAS

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger US 500-bullish contrarian trading bias.

— Written by Nancy Pakbaz, CFA, DailyFX Research

Follow Nancy on Twitter @NancyPakbazFX



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On to the Next Big Levels of Resistance

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S&P 500/Dow Jones/Nasdaq 100 Technical Highlights:

  • S&P 500 nearing 2800-area, several swing-highs from last year
  • Dow Jones 26k-ish stands between it and record highs
  • Nasdaq 100 trading around resistance already

Check out the forecasts for Global Stock Indices and other markets on the Trading Guides page.

S&P 500 nearing 2800-area, several swing-highs from last year

The S&P 500 is continuing to show impressive strength since its v-bottom began the day after Christmas, with it having a few points along the way where it could have been stopped in its tracks. But it wasn’t, and this has levels prior to the December swoon in view. The area surrounding 2800 is a big one.

From 2800 up to 2817 there were three peaks created from failed rallies, a logical area, with the rally having come this far, to look for stocks to weaken from. Watching price action will be key, as always, but especially around the levels just ahead.

While resistance looks likely to get tested soon, the upward channel structure over the past month will keep stocks pointed higher for as long as it holds. If the S&P is rejected off resistance, to further bolster the notion of a sizable retracement we’ll need to see the underside parallel undermined.

For now, the top-side must be respected, but the time for material weakness may be nearing…

Stocks are rallying, but will it last in the long-term? Find out where our analysts see stocks headed in the Global Equities Forecast.

S&P 500 Daily Chart (2800/817 big spot)

S&P 500 daily chart, 2800/817 big spot

Dow Jones 26k-ish stands between it and record highs

The Dow is nearing the 26k-area, a spot which is basically the equivalent of what 2800 is to the S&P 500. The zone runs up to near 26300. The focus is primarily on the S&P right now as it is the broader index, but depending on how price action plays out, the Dow may be the better index to short at some point if it shows relative weakness to the broader market.

Dow Daily Chart (26k-ish stands in the way)

Dow daily chart, 26k-ish stands in the way

Nasdaq 100 trading around resistance already

The Nasdaq 100 continues to lag behind, which is something to continue monitor given it was the bull-market leader with its leading group of stocks – FAANG – dominating price action and sentiment. The NDX is trading around the 200-day and near late-year swing highs equivalent to the ones discussed with regard to the S&P 500 and Dow. So far, relative weakness is making the 100 the preferred fade if the S&P finds material selling off resistance surrounding 2800/17.

Nasdaq 100 Daily Chart (trading around resistance)

Nasdaq 100 daily chart, trading around resistance

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

Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX



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Aussie Dollar Falls on RBA Minutes, US-China Trade Talks Eyed

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TALKING POINTS – AUSSIE DOLLAR, RBA MINUTES, ZEW, TRADE WARS, CHINA

  • Aussie Dollar, commodity bloc FX down on downbeat RBA meeting minutes
  • Germany’s ZEW survey may compound worries about slowing global growth
  • Trade wars in focus on US-China negotiations, fears of US auto tariff hike

The sentiment-linked Australian, Canadian and New Zealand Dollars weakened in otherwise quiet Asia Pacific trade. The move appeared to be inspired by an ominous tone in minutes from February’s RBA policy meeting. Meanwhile, the US Dollar corrected gently higher.

RBA officials cited “significant uncertainties”, noting that trade tensions and cooling domestic demand have increased negative knock-on risks from China. They added that consumption may fall if domestic house prices fall much further. They suffered the worst drop since 1983 in the three months through January.

TRADE WAR DEVELOPMENTS, GERMAN ZEW DATA MENACE MARKETS

Looking ahead, Germany’s ZEW survey of analyst sentiment may compound the downbeat mood, especially if it echoes the disappointing trend in regional data outcomes since September. A small improvement in the forward-looking Expectations index is nevertheless expected to keep it within a hair of six-year lows.

The tone of US-China trade negotiations may also be formative as a delegation from Beijing arrives in the US for continued talks. Both sides painted a rosy picture earlier in the week, but the Trump administration may be preparing a spoiler as the President ponders raising auto import tariffs.

What are we trading? See the DailyFX team’s top trade ideas for 2019 and find out!

ASIA PACIFIC TRADING SESSION

Asia Pacific Trade Economic Calendar

EUROPEAN TRADING SESSION

Europe Trade Economic Calendar

** All times listed in GMT. See the full economic calendar here.

FX 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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