Forex Spider's Den GF Edition

Yesterday's AUDUSD analysis on Session Recap webinar has already been respected as AUDUSD moved +50 pips from POC also providing us with the cue where the GBPAUD may go. As you can see from the correlation table which is a part of Admiral Markets Supreme Edition AUDUSD and GBPAUD are moving in the opposite direction that is indicated by a strong negative index -92. As my Session Recap analysis predicted AUDUSD rejected straight from 0.7570 while GBPAUD continued north.
Technically there is still a scope for more upside on GBPAUD pair. After tanking that happened after Head and Shoulders breakout, V shaped reversal turned the pair to the upside.1.8820-40 is POC zone and the pair is trying to reach 1.8915. If H1/H4 candle closes above 1.8915 we should see 1.8950 and 1.9015 if 1.8950 breaks. Momentum in strong - as indicated by a Price Action zigzag + MACD above 0 so GBPAUD is in buy the dips mode and a potential breakout of H3 level.

 

Commodities and Equities prices have rebounded from their interim lows of Early February 2016, and it has resulted with strong gains across these markets. Clearly this has been a risk-on scenario, causing AJ to be bullish during this period as well. Equities are reaching key resistance levels and are showing signs of market fatigue by the End of this Quarter and Month. This shows that risk-off sentiment may come back to the fore, meaning it could be a nice setup for a short position on AJ.
Technically 86.15-30 zone (now moment sellers, WPP, 50.0) is POC, and the pair should ideally be contained below the zone and below the trend line (blue with red rectangles). If h4 confirms the shooting star we may see more downside for the pair. We also have a bullish T-89 but what we also see is giant bearish divergence that additionally confirms my opinion about fundamental and technical outlook. The price is at 85.90 at the moment of writing this analysis. Now what we could also see is a possible spike to POC (because of bullish T-89 and general uptrend) towards 86.15-30 zone (now moment sellers, WPP, 50.0) where we could see possible sellers. The first target is 85.65 and only a 4h close below (or strong H1 momentum) will target 85.17.
Have in mind that this is a counter trend analysis due to above mentioned factors + divergence and if the pair goes above 86.70 the bearish outlook will become invalid.

 

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Today the most important event is FOMC minutes where FED will be providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates and future guidance of their economic policy. I personally expect dovish FED minutes because on last meeting chief Yellen implied that only 2 instead of 4 rate hikes would be appropriate for 2016. If the FED confirms and repeats the same outlook today,than they will probably explain it deeper so the minutes should be dovish. Currently I am ruling out April hike and I will be paying a close attention to ANY clue of next interest rate timing. But as with FED its never 100 % sure.

Technically EURUSD is consolidating after a nice move to the upside.As I have showed on previousSession Recap the EURUSD has rejected straight from 1.1330 POC zone reaching 1.1405 and that was good to fill our day with green pips before FOMC. Traders should pay attention to 1.1335 to the downside as the break below will expose 1.1300 and 1.1225. To the upside 1.1435 is the important resistance and the break above will expose 1.1450 and 1.1500. Dovish minutes should spark another rally (buying the dip or a direct bounce) in EURUSD but if the FED surprises us with a hawkish statement then I expect EURUSD to drop.

 

We have seen no specific trigger to GBPUSD huge drop as there has been no U.K. data to digest except for Services PMI. Recent BREXIT pools suggest the vote could go wither way as in the recent polls there are 43 % of those who support UK in EU while 41 % think that UK will be better without EU (Source:Financial times). So, fundamentally it seems that bearish bias is all over the GBPUSD market and technical analysis supports the bearish bias too.

1.4130 failed to hold the price substantially in the bullish zone and we can see that H4 important trend line has been broken. The trend line is also thrusting through the range bound zone (red rectangle) and that accounts for POC 1.4135-1.4170. Regular bullish divergence spiked up the price yesterday towards current POC and it seems that the retracement has lost its steam. At this point,the zone is rejecting the price and any pullbacks within the zone could be sold into if bearish trend is to persist. Next target should be 1.4037 and ONLY if we see a 4h close below 1.4000 the door for 1.3885 will be open.

 

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The EURUSD went down early today towards 1.1400 and was rejected. As I thought, Friday profit taking tanked the pair towards 1.1350 where it showed the range. The pair is still in range however, price action suggests that the range might break.
Why do I say bullish range? Take a look at EMA 89. On Friday it was flat BUT above the ascending 3 touch trend line. Today price spiked from confluence making for another possible long trade and at the same time EMA angle has shifted upward but still above the trend line. However it is still Monday and the price might either break or retrace. If a retracement happens, watch for POC within 1.1370-90 zone ( L3, Ascending Trendline,WPP) where the price should reject towards 1.1453 high with interim resistance at 1.1470. If we don't see a breakout pure H1 momentum or H4 candle close above 1.1470 would target for 1.1528. L5 Weekly target.
Only a break below 1.1325 negates the scenario and the price is back into a downtrend towards 1.1270.

 

Japanese equities are very important for Yen movements and AUDJPY is my favorite along with USDJPY. When foreign investors buy or sell Japanese equities currency-unhedged there is a positive correlation between the Yen and Japanese equities. Translated to common words it means they buy Japanese Equities using Spot rate at the time and so if JPY appreciates / depreciates then it affects the value of the investment for foreigners. So sometimes a foreign investor can buy Japanese Stocks and hedge the JPY component. Remember -Nikkei down - AJ/UJ down too.

Technically AUDJPY is contained within a bullish pennant with strong bullish advance (marked as red rectangles). As long as the pennant holds we could see rejections from the bottom within 83.40-50 zone and a potential breakout of the pennant with 84.11 and 84.45 as targets.

 

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The GBPUSD has washed off Brexit talks and it is showing an upward momentum on intraday time frames. After better than expected Claimant Count change (Change in the number of people claiming unemployment-related benefits during the previous month) the pair is showing now moment buyers off 1.4345-60 withing a bull flag. If we add the distance of the flag pole to the possible breakout point we can see that the pair might be targeting 1.4477 and only H4 close or H1 momentum above 1.4477 will target 1.4541.

Current momentum is strong and we might see a bullish continuation as flag is suggesting.

 

NZDJPY is one of the pairs pair that has a strong correlation to equities. Nikkei and DAX are +92/90 correlated to NZDJPY and that is extremely high correlation, so they are moving in the same direction. Most important Yen crosses ( USDJPY, AUDJPY, NZDJPY) are an excellent Risk ON/OFF indicator. As the lending rate of one currency increases relative to another, investors are attracted to the higher yielding currency.
Technically NZDJPY is bullish but we see an inner trend line that has been broken with H4 perfectly aligned with previous swing. If we see H1 momentum above or H1 close above H4 camarilla pivot, the pair can make a bullish breakout to H5 and that is 77.54. If we see a pullback towards 75.64-80 zone (previous breakout point, bullish order block (A), 50.0,L5) the price could spike from POC towards 76.34 (L3), and further towards the H3 - 76.86. market is currently calm ( as expected ) so we might expect volatile session later during the day. We may expect a movement just before, during Draghi speech today or after.

 

The USDCAD went down as analyzed on a previous Session Recap webinar and CAD was also supported by a good CPI and retail sales. Currently it seems the pair is waiting for FED decision this week and technically we see the range.
USDCAD price action is showing consolidation within the triangle which is also contained withing the consolidation zone (red rectangle). What traders would love to see is a breakout to the downside that would justify the bearish trend. If H1 closes below 1.2678 with a momentum candle or now moment sellers we could see it within 1.2620-00 target zone. Only a h1 momentum candle or 4h close below 1.2592 will mark 1.2530 as next potential target.
Traders should watch for a potential breakout in the trend (bearish) direction as any spike above the interim high (blue rectangle) could spike the pair towards 1.2740 thus making a bearish triangle breakout invalidated.

 

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Yen crosses fell heavily after BOJ decided no to go with more stimulus for now. The drops were direct and that means - VERY strong, without any retracement. Nikkei was slaughtered too. BOJ appeared quite hawkish last night even more than FED(!). The market was surprised by The Bank of Japan holding off on expanding monetary stimulus, investors were expecting more Abenomics which Kuroda failed to deliver.
Technically 82.80-83.00 is POC1 (38.2, historical sellers, inner trend line) and the price should reject after a potential first touch of the zone. However the drop was huge and more substantial retracement is favored. POC2 (EMA89, L4, inner trend line 2) 84.05-20 is another potential bearish rejection zone and if the price retraces in the zone we might also start looking for short opportunities.
So focus is on POC1 and POC2 as the price should reject off these zones. Targets are 82.09 and 81.66.

 

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Last week, the dovish FED sent USD in a downward spiral. The weakness in USD is obvious vs EUR, JPY and GBP. I have already warned about the strong GBPUSD, and today we are also witnessing the strength in the Fiber - EURUSD.
The most popular currency pair is gaining ground. Strong MACD suggests a possible breakout of 1.1492 ascending channel that will lead to 1.1507 , 1,1520 and potentially 1.1557 if we see a H1 momentum or candle close above 1.1507. If we see a retracement then 1.1448 and 1.1415 are levels to pay attention to. 1.1448 is the mini channel bottom within the equidistant channel, while 1.1415 shows a confluence with L3, DPP and previous bullish order block (blue rectangle).
At this point the EURUSD is at the top of the channel so pay attention to either breakout or a retracement towards POC1-2.

 

Surprising RBA decision to cut rates on Tuesday made the market tumble. It is clear that RBA is not happy with the current AUD rate so it wants its currency to be weaker. Investors should probably look to exit from any longs and based on RBA decision the bias should turn to the downside again. Remember AUDUSD is correlated to ASX200 index so pay attention to it too.

Technically the AUDUSD shows a Momentum Candle that I have been explaining on webinars and onLive Forex Expo seminar in London. Sheer momentum trading could give you huge profits. At this point price is trying to break 0.7465 and if we see H1 momentum break or 4h close below the level 0.7390 should be the target. Positional trades should come in play on a retracement towards POC. 0.7550-70 is POC zone (inner trend line, 38.2, L3, EMA89) and the price could retest the zone for next positional short trade. In that case targets are 0.7465 and IF it breaks 0.7388.

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The AUDUSD dropped heavily after unexpected rate cut. The problem is that Australia is already addicted to debt and even more debt could turn Australia into Japan which is full of debt. Additionally, the statement suggested the inflation between 1-2 % in 2016 followed with 1.5-2.5 % through mid 2018. Moreover, as the inflation problem was not enough, the RBA also expressed its worries about the strong AUD (!) that definitely hurts the exports.
Another rate cut in August is possible and sell the rallies is the option.
The POC comes at 0.7392-0.7402 (DPP, Equidistant channel top, H3) and slightly above within 0.7420-35 we have another strong POC2 (H4,EMA89) and we could see another rejection on pullbacks towards POCs. Another important level to watch for is 0.7285 (X cross breakout) as momentum break or H4 close below will target 0.7220.

 

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