Forex Spider's Den GF Edition

Not surprisingly EURUSD has bounced in London session making new weekly highs after the price has closed above 1.0920 on Friday. The pair was given additional boost after good German IFO report. German IFO represents one of the most important indications of an overall economic health. It is an early sign of a future investing and spending.

The pair perfectly touched 1.1113 as we could see then reversed. Currently the price is contained within a neutral territory just above the Rising Wedge and below double trend line confluence. If the pair proceeds to test 1.1113 again it could be an early sign of reversal towards 1.0920 then 1.0875 and 1.0780. We could see ( marked as blue rectangles ) historical sellers which are making double trend line confluence. It also rejecting H4 camarilla PP and 78.6 fib. If we get H4 close below 1.1080 it could give additional momentum to bears towards lower targets.

However for this scenario to be valid,1.1180 must stay unbroken (H5 and 88.6). We need to pay attention to yellow marked area (1.1115-1.1080-1.1055) as the next price movement will depend of the rejection of 1.1115, H4 close below 1.1080 and momentum break of 1.1055. If the price fails to do that, it could proceed towards 1.1185 boosted by month's end profit taking and general lower liquidity during holidays.

 

US FED will release the statement today, without any press conference and we will probably have some range-bound market till FED statement. Expectations towards rate hike are rising and we could see a rate hike in between September and December. US CPI has come in line with expectations, Core Durable Orders also while major news release for CAD will be GDP later in the week (Friday). However any mention of a possible hike is bullish to USD and traders will pay close attention to FED's statement.

Technically USDCAD has broken through 4h trend line and it is falling towards POC. POC1 (L4, triple bottom, 50.0 fib ) comes at 1.2930 zone and the zone could reject the price. If the retracement continues, next zone to watch for is 1.2865-45 (L5, 61.8 fib) just above strong round number support which makes a confluence with double top/historical breakout point and 78.6. That support is naturally 1.2800. If the pair gains upward momentum after rejection it will target .1.3030 and 1.3100. Only H4 close above 1.3100 will target 1.3150.

However a drop below 1.2800 could extend towards 1.2750 and 1.2700.

 

GBP is gaining upward momentum lifted by preliminary GDP estimates and that could be aditional signal that UK economy is recovering. FED is still undecided about the dates for a rate hike. Latest statement cleared out that FED officials want to see further job market gains before the hike.

1.5570-80 zone shows strong confluence. Pullback towards POC zone (L3,50.0,ascending trend line, inner trendline) could be used for long entries, however keeping in mind that any momentum break or 4H close below 1.5545 could initiate bearish pressure towards 1.5500. General intraday trend is bullish and GBPUSD should target 1.5560 and 1.5710. Adding to a bullish zig zag MACD has just crossed above 0 line and its signalling for a possible bullish momentum .

 

USDJPY has bounced after FED statement which clearly stated that the rate hike is inevitable after further job gains. We think it could come in September or December, but December seems more likely. According to Reuters poll economic growth in US is picking up pace which goes in accordance with FED's possible tightening monetary policy in September.
USD has shown strength even after bad advance GDP data which is the primary gauge of the economic's health.
Technically USDJPY is showing V shaped reversal variant 2 with a possible rejection from current levels towards 123.40 zone. If rejection happens we could use POC zone at 123.40 ( 78.6, L4, historical buyers ) for a new long trade towards 124.55. 4H close above 124.55 will target 125.05.Judging from current sentiment even lower TFs show a predominant long trend and if we align lower and higher time frames we are getting a good picture of an overall trend.

 

Two weeks ago, I have warned that GBPUSD will start to move in a sideways formation and that was to be expected due to low volatility month. Inflation data from UK is due on Tuesday and most important thing BoE is focused at this point is improving labor and inflation data.
Technically we see a rectangle formation on H4 time frame, and there is a host of historical sellers up there. 1.5690-1.5705 ( rectangle top sellers, historical sellers, H3 ) POC could be good for shorts towards 1.5580 and 1.5530. 1.5530-50 region could show some buyers as we can see there are also historical buyers and it is making a confluence with L4 camarilla support. Only a H4 close below 1.5530 could target 1.5455 lower border of rectangle range. This pattern could be invalidated if H4 candle closes above 1.5725.

 

Last week NZDUSD dropped by a huge percent after PBOC devalued Yuan. Usually soft commodities ( AUD ) perform better then hard commodities ( NZD ), but this time NZD also dropped by a volatilty caused by devaluation. The pair is correcting itself now, and technically it shows Regular Bearish Divergence on H1 chart.
V Shaped Reversal that happened has retraced the pair to the level where it was sold instantly ( 0.6650 ), Next wave of sellers is showing up at POC ( H4, historical sellers, 61.8, regular bearish divergence ) at 0.6600 zone. Pullbacks towards 0.6600 could be used for further shorts towards 0.6550-40 and only a momentum break or 4H close below L4 ( 0.6540 ) would target 0.6510-00. Pay attention to the triangle as vortex of the triangle is close so, if the pair rejects from POC it still needs to pass below DPP/L3/Triangle lower TL ( 0.6550-40 )

 

Waiting for FOMC meeting minutes and report which is due on Wednesday, EURUSD has dropped after 4h closed below 1.1070. Fundamentally economic growth in Germany looks strong as we know that lower EUR fits exporters such as Germany. But still. Every FED meeting minutes is important as we might get a clue on rate hike timing

Technically the pair shows strong confluence at 1.1070 and 1.1000 zone. 1.1070 is showing the battle between buyers and sellers ,indicated by wicks, but also weekly PP. We know that PP are used for placing new orders , so traders should always pay attention to both Daily and Weekly PP. If we get H4 close ( presumably with stronger body ) above 1.1070, the pair could proceed to test 1.1185 and 4h close above 1.1185 will target 1.1250-65 the confluence zone of ascending upper trend line and H4 camarilla pivot.

Looking the downside we can spot lower ascending trend line, previous lows and inner trend line thrust. It is clear that 1.1000 is very important. Below EURUSD is targeting 1.0940 and if we get 4h close below it should target 1.0820-10.

Looking at the whole picture it looks like EURUSD is setting up for a Rising wedge ( upper ascending and lower ascending TL ) which is bearish. As the main trend is bearish, adding the forming of a bearish wedge, EURUSD could be traded both ways but selling into rallies is the better option at the moment.

 

The GBPUSD pair surprised with higher then expected CPI ( 0.1 actual vs 0.0 forecast ) but still the number is not good enough to justify a rate hike. Today Retail sales dropped by 0.5 % ( -0.1 % actual vs 0.4 % ) forecast and we know that retail sales is one of the primary gauges of consumer spending. Adding to that a member of MPC committee implied that inflation is still not close to 2 % target.

Technically GBPUSD was bought after strong CPI release but was quickly rejected from 1.5700 levels. After the rejection GBPUSD showed LH and LL with one weak HH after FOMC report yesterday. Still unable to recover above 1.5700, the pair looks bearish at the moment and 1.5645 is very important level to watch for. Below 1.5645 the pair could target 1.5600 and 1.5535. We can also spot a rising Equidistant channel but the pair has not confirmed uptrend unless 1.5700 is taken out.1 5645 shows history of buying which was strongly broken after bad retail sales. Although CPI number came better then expected , it shows that GBP needs more stimuli for a justified rate hike.

However any strong H4 candle above 1.5645 will aim for 1.5700 and 1.5750 as correlation between EURUSD and GBPUSD is strong while USDx has weakened.

 

China stocks in a global sell off, SP500 breaking the sideways market, and possibly tanking hard, FOMC in my opinion will not raise hikes in next 6 months. Hectic Asia session gave us a lot to think about. Currently, the most traded currency pair - EURUSD looks like it is targeting strong resistance zone at 1.1538-48. The pair bounced heavily in Asia session coming an inch close to 1.1500. As we can see on the chart the pair is relentlessly going north, coming close to abpve mentioned target. Additionally R3- resistance is also in the zone so we might expect some selling in the zone ( 1.1538-48). 1.1255-45 is important to watch for as strong buyers could be expected there. Retracement down to 1.1255-45 WILL NOT negate bullish trend and it is a good place to place long trades. L3, DPP, Previous Double Top, 61.8 is constituting for POC and if the pair manages to retrace, we should expect next leg of buying.
Additionally 1.1460 is interim resistance and we should also watch the price action around that level.

 

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After yesterday's very turbulent market the price is correcting itself. EURUSD is currently in uptrend and fundamentals also support it. According to Moody's PM Tspiras resign is Credit positive so EUR got some relief in addition to boost from falling USD and market crash yesterday. Technically EURUSD has broken through important level 1.1460 and any pullbacks towards 1.1450-70 could be used for potential long trades. We can see Hidden bullish divergence which is hinting for the continuation of uptrend, and there is a strong break of previous seller zone( blue rectangle ). We can also spot 38.2 and L4 confluence. 38.2 is characteristic retracement in strong trends and L4 is strong pre-breakout support. So if we get a bounce EURUSD could even target 1.1780 during the week.
If the price goes below 1.1405 that would negate this scenario but the EURUSD WILL still be bullish. The only difference would be a deeper retracement then.

 

GBPUSD has been trading inside an equidistant channel which supports the uptrend zig zag. The price has been making higher highs and higher lows which is showing us a scholastic example of uptrend. At 78.6 fib – deeper retracement there is a strong confluence with equidistant channel lower trend line so the price might get a bounce in the zone ( 1.5670-85 ) and try another push toward 1.5740 and 1.5780. That being said if the price gets H4 close above cam H4 level ( 1.5780 ) it will target 1.5855 the confluence spot of H5 and upper equidistant channel.

The bullish bias should persist as long as GBPUSD is above 1.5620.

 

USDJPY reached 120.50 after a big spike down preceded by PBOC decision to reduce its interest rate and ease bank reserve requirements. Technically a huge drop which we see on USDJPY chart is actually a BEARISH PENNANT and short to mid term the pair could bounce from 120.50 targeting even 114.40 levels (!). Bearish pennant can be seen on H4 chart but zooming in we can see it better on H1 chart. Adding the flagpole distance to the projected distance from breakout and we get 114.40.

Weekly cam pivots show L4/L5 confluence with a bearish pennant adding one more part of chart confluence. The projected move is short to mid term. Intraday shorts could reach 119.10 zone. Have in mind that the move is valid as long as 121.50 stands strong.

 

GBPUSD felt heavily after EUROSTOXX50 futures surged couple of days ago and was influenced by a global fear of China slowdown and PBOC Yuan devaluation. Also, BOE is still holding off from rate hikes and we have some clues that the hike could come at the end of the year. BOE's governor Carney unwillingness to share any more details about recent events and possible rate hike led to a strong sell off of GBPUSD pair.

Technically the pair sold off 1.5800-20 zone as i suggested on LIVE webinars- pre fact, but even I am a bit surprised of the huge GBPUSD weakness in the recent days. 1.5530 level shows the X Cross- the intersection of trend lines. X cross usually finds strong confluence with other price factors, this time it is H5 camarilla pivot. 1.5530 is a strong point for taking short trades. Interim resistance is 1.5445 zone as we can see H3 camarilla and double top confluence. Interim support lies at 1.5360 and if that level is broken the price should accelerate to 1.5330. Notice that 1.5330 is previous double bottom and when you are reading price action you should always take HISTORICAL price action into account. Historical buyers lie at 1.5330 and in the context of historical vs now moment buyers we could see bounce from that spot. if 1.5330 is lost 1.5260 is next.

 

Most important release for EUR last week was German inflation which came out to be better then expected, while USD was boosted by a better-then-expected GDP (3.7 %) which is a sign of US economy expanding. EURUSD dropped to 1.1170 zone on end of month ( EOM ) profit taking.
Technically EURUSD is contaied within a bearish equidistant zig zag after touching 1.1700 zone and we can see that 1.1250 couldn't have withstood bearish pressure. POC ( H4, 61.8, EQ channel top ) comes in 1.1250-60 zone and there could be rejection towards 1.1170 , 1.1105 and 1.1030. We could expect some buying in the lower zone ( 1.1105 / 1.1030 ). MACD is showing a slow grind withing its own channel while still below 0 line which indicates bearish momentum even on H1 timeframe. Bearish zig zag is valid as long as 1.1310 is not broken.

 

Not surprisingly RBA decided to put rates on hold , leaving rates unchanged. During RBA monetary policy meeting it was concluded that the inflation forecast is consistent whereas low interest rates support both borrowing and spending. RBA statement caused just a small bounce in the pair effectively leaving the pair within the sideways range.

Technically last 10 days AUDUSD has been trading below 0.7200 and any rallies toward have been a chance to short it further as I have stated before. The pair shows hidden divergence and compression triangle shows a possible breakout soon. Hidden bearish divergence is telling us that the pair is ready to proceed down possibly testing 0.7070 and 0.7020. Anyway, for trend traders some pullback is required as R:R is significantly higher then. POC comes around 0.7205 spot and if 0.7230 stays strong , another good opportunity for short is there. Historical sellers, 50.0 fib, Divergence top all constitute a strong POC and upper trendline of the triangle will be adjusted then too for additional resistance.

AUDUSD is bearish targeting 0.7070, 0.7020 and 0.6990 but the decision should be about either going for a breakout trade or a classic pullback trend trade.

 

If you remember my past article about EURUSD on 24.AUG I warned that 1.1255 is crucial for EURUSD upside. EURUSD dropped mainly because of Chinese equity markets, Shaghai index and EUROSTOXX50 futures especially at London open. Some hawkish comments about possible rate hike also gave boost to USDx which additionally lowered the pair. Yesterday we saw 2 rejections from 1.1260 each for 50+ pips and finally 1.1260 level was broken again. PMI rose to 53.3 from 51.8 and it better then preliminary estimate.

Technically we can spot HUGE Bearish M pattern which went below 1.1260 and it stopped at 1.1155 .EURUSD was sold subsequent spike to 1.1260 ( green circles ) and we can easily spot Historical vs Now moment sellers. Last drop from 1.1260 was good for intraday shorts but now the price is heavily bought from BUFFER ZONE. BUFFER zone shows clear levels which we should be focused on.

Historical PA shows BPC pattern at 1.1260 (1) so my conclusion is – as long as EURUSD is above 1.1260 it is bullish and below 1.1155 it is bearish. MACD is gaining a possible momentum ( when above 0 line ) so above 1.1260 we can expect 1.1360 and 1.1395. Only h4 close above 1.1395 will target 1.1500 again.

Below 1.1155 we can expect 1.1000 but so far this looks like a bullish price action with a possible scope for 1.17 retest.

 

As we could witness it, Canada is currently undergoing a recession as the economy is suffering due to low oil prices. Oil prices have been falling sharply also through the summer and fall of 2014. As with GDP, oil prices do have a significant impact on employment and overall economy. Canada's dependance on oil and gas is threatening its overall economy and it is reflected on the charts.

USDCAD is showing an inner trend line and a possile retracement. We see a perfect confluence at 1.3195 zone ( L4, 61.8 , double bottom ) and deeper 1.3140 ( 88.6, L5 ). Targets are 1.3310 and 1.3340. On the chart we can see important touches of trend line and if the retracement happens ideally it would reach POCs and bounce. If the price closes above inner trendline there could be a short term breakout towards previously mentioned targets. Watch US/LO market overlap as USDCAD best movement happens during that session.

 

As we already know AUD is largely dependent on China and China50 indices ( China A50 cash market )are heavily correlated to AUD pairs, especially AUDJPY. I have mentioned many times that china stock market was opened up for margin lending earlier this year and after the huge long bounce, commodities plummeted taking AUD pairs into spiral of doom. Also Governor of PBOC ( People's Bank of China ) stated that stocks will be much calmer soon. -" rout in local stocks war is near an end".

US unemployment rate fell to 5.1 percent- record low since 2008 and that might be one stop closer to a rate hike soon. Technically AUDUSD is short into rallies. AUD weakness and USD strength are giving us a lot opportunities to short into rallies. We can see that AUDUSD is contained within the equidistant channel where a previous double bottom was broken -0.6982. H3, previous double bottom, WPP , and 38.2 % is constituting POC so any pullbacks towards 0.6985-0.7000 could be used for shorting into rallies. Additionally master candle support which has already been broken is sitting exactly at 50.0 fib and channel top - 7035 zone which is also constituting for a strong POC. Above we can Roof pattern which marks previous top exactly at EQ channel. Roof pattern trendline is intersecting 0.7100 so that level is used for stops.

Have in mind that targets are 0.6850 and 0.6550 if 0.7100 stays unbroken.

 

JPY economy has been giving us mixed signals lately. Retail sales have risen 4 straight month in a row while household spending dipped lower then expected. EUR is also moved by Chinese data and general market sentiment. We must include last ECB meeting which was very dovish so EUR might further weaken against Yen.

Technically we are witnessing a bearish zig zag on H4 timeframe and last H4 candle is showing hidden bearish divergence which is a continuation sign. We have a clear 3 touch descending trend line which is in a confluence with important 134.90-135.10 zone. The zone is showing a confluence of 61.8 fib, previous double bottom-breakout point ( horizontal red line ), H4 and Hidden bearish divergence.

If 135.50 stays strong we could expect a drop towards 133.70 then 133.20. 131.50 and 130.40 are final targets for the move. The price should not exceed 135.50 as it in that case it will form ascending scallop pattern