Forex Spider's Den GF Edition

USDCHF has been trading in a consolidation pattern as we can see it on the chart but recent Higher Low has made another channel inside consolidation pattern. That channel looks like a consolidation before breakout to the upside and actually it shows a good trading pattern if we get the price to our level with additional momentum afterwards. When price is moving sideways we don't use fibonacci ratios but instead we use channels and important s/r pivots aligned with HISTORICAL vs NOW MOMENT buyers or sellers. POC is showing up in 0.9725-35 zone ( L3, Rising trendline, historical buyers ) and bounce from that level can get the price up to 0.9820. If breakout above 0.9825 happens we could expect 0.9900. H5 around 0.9865 will be harder to reach at this point. For this scenario to be valid 0.9695 should hold as 0.9695-0.9680 is the buffer zone for a possible short breakout.

Alternatively if the pair drops below 0.9680 it could proceed to 0.9650 as a momentum / stop grabber trade.

 

The AUDUSD has rejected from the first POC we had last week - 1.7070 which i presented LIVE on Session Recap webinar and today we see another move up which traders could use to short into. Any hawkish comment about rate hike or an actutal hike will be used to buy dollar on dips and in this case sell AUDUSD on rallies. Have in mind that tomorrow RBA will have a meeting where it will issue in-depth insights about economical conditions. Asia session should be volatile.
Technically the pair is trying to reach POC/POC 2 zone which is the zone for possible shorts. POC ( H3, 78.6, previous sellers ) stands around 1.7140 zone while POC2 ( H4, 88.6, hidden bearish divergence dip ) stands at 0.7175-85. Historical Hidden bearish divergence should hold the pair from further advancement ( 0.7220 ) so we shoul look for rejections in the zones. From risk:reward perspective POC2 is better to short into but still we need to watch reactions around first POC as the zone could give some short term opportunities too.

 

While we are patiently waiting for FOMC meeting we need to know that interest rate differential between US and Switzerland definitely favors the dollar. Having a record unemployment rate at 5.1 % FOMC is a step closer to rate hike and recent Yellen comments suggested that China turmoil had no significant impact on FED's plans about the hike.

USDCHF is buy the dips mode. Technically we can spot V shaped reversal which has been very strong to the extent that it is forming a giant inverted head and shoulders pattern on H4 chart. We should be focused on a retracement towards 0.9630-40 zone ( 78.6, previous buyers, L3, X cross ) If the retracement happens we could take a long position with a good r:r . Inner trendline is providing support so 0.9595 should hold ( inner trend line, 88.6 ).

Rejection from POC targets 0.9760 and H4 close above the level will target 0.9820.

 

The EURJPY has made a substantial correction from 132.20 zone forming inverted head and shoulders pattern. As we can see H4 chart shows both M and inv H & S but the price is sitting exactly at M breakout point ( 2 ). We can clearly see 2 inner trend lines which are forming X cross confluence within POC zone ( 78.6, H3 , previous triple top swing ) 137.50-70. I have marked all important touches with red rectangles and we can observe how price respects it. Have in mind that today we will have a VERY important FED statement and volatility will be huge.

Fade moves usually happen during huge volatility and order liquidation can spur additional momentum. The price is too high at this point to long into ( the top of right shoulder + M breakout point -2 ). If the price rallies to POC zone it could reject but in that case 138.50 needs to hold the price. The target is 135.50-20 zone where the bottom of the shoulder is based. Showing both M and inv H & S is telling us that the price is undecided so another fade could happen in the POC zone. BE VERY cautious as I don't recommend any trading 2h prior to FOMC. Treat the analysis as possible move and it would be best to happen when the market volatility is normal.

 

After FED dovish statement last Thursday we have seen a whipsaw on USD correlated pairs. EURUSD huge rally was strongly rejected and USD was heavily bought partially due to profit taking and Greek elections which have been held on Sunday.
As we can see on the chart USDJPY is showing inverse head and shoulders, which has been formed after failed inverse head and shoulders. From the analysis perspective it clarifies 2 strong POC points. First POC could be used for longs ( DPP, the bottom of the right shoulder, 38.2, L3 ) and it stands in 119.60-75 zone. The zone could reject the pair towards second POC where we could search for short opportunities and that is 120.65-80 (H4, 88.6, sellers at failed head and shoulders ). The rejection should aim for 119.60 zone.
In the first case 118.90 needs to hold and in the second case 121.05 should hold. We should be paying attention to both zones , and trade it accordingly whichever comes first.

 

EURGBP has broken through important trend line and it has made another leg down. The pair I showing bearish movement on H4 timeframe, and there is a possibility of yet another retest of 0.7190 zone. We can see that trend line has been broken effectively becoming an inner trend line which gave the pair additional momentum to the downside.
First POC comes at 0.7260 zone ( H3, now moment sellers , breakout-retest ) and second POC is close standing at 0..7275 zone. ( 88.6, H4 ). These 2 spots can provide rejection towards 0.7190 zone. For this scenario to play out 0.7300 level should hold.

 

The GBPUSD fell sharply after UK deficit rose. Adding to that public borrowing has risen unexpectedly and BOE revised down their growth outlook for the next half of the year. We also see no rate hike hints in near future.
Technically we can see that a giant triangle on the pair has been broken to the downside. On 4 hour time frame there has been no retest at this point. Also we see that POC ( L4,23,6, previous double bottom/historical sellers ) stands at 1.5320-40 and if its reached the pair should dip towards 1.5250 and 1.5190 initially. Have in mind also that when watching lower time frames we can also see that 1.5275 too is a level to watch for as it shows confluence on lower TFs.

 

GBPJPY is proceeding with downtrend and as long as the H5 holds (189.00) 177.40 is the target. Looking at the chart we can see that the move is already happening and the target is L5. Meanwhile H4 chart is showing a zig zag downtrend and the first support is 181.60 with next support zone at 180.35-00. Have in mind that we are looking at mid term setup, so for all who are holding shorts from 187.xx zone, it is a good sign as the price is behaving technically valid. POC for next pullback comes at 184.10-30 (DPP, previous 5-touch bottom,38.2) and X-cross and H3 are giving the price a strong resistance at 184.90. So mid-term shorts are in profit while short-term traders could find now moment sellers at POC with 180.35-00 initial target. Any H4 close or momentum break below 188.00 will target 177.40, so the valid breakout trading should include either Breakout-Retest setup or valid BPC pattern ( Breakout-Pullback-Continuation ) on H1 timeframe.

 

NZDUSD pair is correlated to Chinese markets and China A50 index and any turmoil is reflected on the pair. Weak data reflects at the price and as I analyzed it earlier NZDUSD is sold on rallies. Next fade could come soon as we can spot a strong POC which could reject the price.

POC comes at 0.6410-30 as we see a confluence of historical sellers ( blue rectangles ), H3, 88.6 deep fib retracement and X cross. Initially NZDUSD is targeting 0.6295 zone and if H4 candle closes below 0.6295 (L4 camarilla) then Breakout-Pullback-Continuation pattern should target 0.6250 and 0.6220. Have in mind that H4 camarilla pivot needs to hold ( 0.6480 ) for the price to remain bearish.

 

As you could read in my previous GBPUSD analysis, the pair has dropped straight to target even proceeding to next level of support - 1.5105 zone. The latest estimate of British 2nd quarter growth showed that economy grew at a pace of 2.6 % and that could still give some validity to a possible hike. Traders are also eyeing NFP data tomorrow and a lower then estimated number ( 202K ) may delay US rate hike.

Technically GBPUSD dipped to 1.5105 zone and we can see that it has made a double bottom and bullish divergence. That shows a POC in 1.5090-1.5100 zone and if the price rejects , while holding above 1.5090 we might see 1.5330 which is the confluence target of WPP, H3 and X cross. X cross shows an intersection of historical buyers ( now sellers ) and inner trend line. Have in mind that this is a counter trend analysis/setup that shows a possible exhaustion of sellers at the confluence zone.

 

AUDUSD rallied during previous week boosted by profit taking Friday and bad NFP reports. There are some indications that RBA could cut interest rates on OCT 6- when the next meeting is scheduled for.There have also been reports about two rate cuts by the end of next year.

Technically AUDUSD is in downtrend and is forming a giant head and shoulders pattern on H4 timeframe. POC comes in the 0.7125-45 zone (H4, 61.8, Historical sellers ) and the price could reject towards 0.7080, 0.7015 and 0.6960. For this scenario to succeed 0.7205 should hold the price.

 

USD has recovered to some extent after bad NFP result mostly by rising of US yields and general USD sentiment. Technically we can spot a huge bearish pennant on H4 chart with a clear range in between. Adding to that we can see that MACD is going sideways and histograms are very small which indicates that the pair is stuck in a range with no momentum.

POC inside a bearish pennant comes in 120.80-121.00 and if the price stays inside the pennant we might see another rejection towards 119.80 and eventually 118.60. Only H4 close below 118.60 or momentum breakout with stop grabbers will target for a retest of 118.15 and if the price breaks 118.15 it might proceed towards 116.12.

Have in mind that the pair is also bought on DIPS so x cross confluence around 119.00 might attract buyers. If the pair breaks and closes above 121.65 it will negate the pennant.

 

After being bought from 1.1180 as expected, EURUSD is trying to make another swing to the upside particularly on H4 timeframe. Today early in the morning we have witnessed a sudden EURUSD bounce which was faded. The move could be a possible attempt to stop grab stops which are definitely placed in the 1.1300-30 zone. The fade which happened afterwards suggest that there might be another possibility for a rally if the price doesn't close below 1.1255

H4 timeframe is showing a downtrend but also we can spot INVERTED Head and Shoulders pattern ( red rectangle ). Now we have a battle between bulls and bears. General trend is down but we see an inverted Head and Shoulders pattern. That boils down to POC which comes in 1.1325-35 zone. If we get a stop grab/bounce above 1.1335 the price may reach 1.1385. In that case now moment sellers should appear and reject the price ( X cross, 78.6, H5 confluence )

If we see a fade then 1.1335 zone should hold it and reverse the price towards 1.1255. MACD is positive but any weakening histogram on MACD while still above 0 would indicate a possible FADE

 

As you could read in my previous USDJPY ANALYSIS and my FXstreet INTERVIEW USDJPY bearish pennant has given us great shorting setups. As i have already stated, I expect a range play in the currency pair and this is the time where we might see a bounce.

USDJPY is showing inverted head and shoulders pattern variant on H1 chart and we can see that 120.00-10 is rejecting the price. POC comes exactly in the 120.00-10 zone ( L3, trend line ,DPP ) and sustained momentum above the zone will target 120.50 and 121.60. Additionally , the head of inverted H & S pattern is a V shaped reversal with a clear break above 120.00 zone. If the right shoulder bottom stay intact ( 119.60 ) USDJPY should reach above mentioned levels.

 

AUDUSD is correlated to Chinese equities and data as China is a big exporter for Australia. China imports Australian resources mainly bauxite, coal, gold, LNG, some copper and iron ore, but when China slows it also slows Australian exports. Chinese imports fell app 20 % in September while Westpac consumer sentiment showed higher actual numbers vs estimate and previous number so fundamental data has been mixed through Asia session.
Technically we can see POC at 0.7200 zone ( Inner trend line, trend line, historical vs now moment buyers) which is observed in a context of a huge W bullish pattern. If the price rejects of 0.7200 zone then 0.7280 ( W pattern breakout point ) and 0.7410 are possible targets. If we see a 4H close above H3 camarilla pivot the price should proceed towards 0.7490.
For this scenario to be valid the price should stay above 0.7150-40 zone.

 

EURUSD and other USD pairs completely reversed the trend mainly due to USD weakness then their own strength. It creates some uncertainty for swing traders and short term traders whether totake long or short positions. Situation is 2 fold at this point. EURUSD can be traded both ways. ECB is expected to extend QE programme beyond 2016 and FED probably will not hike in 2015 as i already explained. Of course there is always a scope for a surprise but that is how i see things now.
Technically speaking EURUSD has made a W pattern and we can see clearly 1.1460 resistance, as i stated a lot of times- 1.1460 IS important resistance. Mid term if W target is achieved EURUSD could reach 1.1580 then if 1.1640 holds we should see a drop towards 1.0900-1.0800 as I explained in my Fxstreet interview. A failure to complete W pattern might result in short term selling towards 1.1310-30 confluence zone ( WPP, L3, 50.0, previous breakout-retest point ) where EURUSD could be bought towards 1.1460 and 1.1580 if 1.1230 stands strong.
I have marked bot MID term and SHORT term views with different colors ( Red arrow/fib for short term, black arrow/fib for mid-term ).

 

USDSGD is one of the interesting pairs to trade and analyze. Fundamentally the pair is susceptible to Chinese data , especially Chinese GDP. Latest data also show the raise of Singapore government bonds by 0.05 % while 10 year bond gained 0.02 %.

Technically the pair is bouncing off support and it is showing a retracement but both MACD and Price patterns show a bearish trend. H4 chart shows a bearish zig zag and X cross confluence in 1.3920 zone. H3 weekly PP, Inner trend line and historical selling show a possible retest where the price should reject towards 1.3780 and 1.3720. Stronger downtrend will be confirmed only if the pair drops below 1.3664 where it will target 1.3520.

 

As I already stated a couple of times, USDJPY is range bound with a bit more buying into dips. Presumably it is done by institutional traders as we can see from the chart. Scholastic example of double bottom vs V shaped reversal spike the pair up close to 120.00 level. Interim resistance zone lies at 120.00-10 ( channel top + H3 ) and we could see some selling towards 119.40 which is important support.

I would pay attention to 119.00-118.80 zone as the dip in could be used for some short term buying towards 119.85-120.05. POC ( L3, 61.8, historical buyers ) shows some historical strength (marked by a blue line) so I am expecting a bounce in the zone towards 120.05. Only a 4h close above H3 weekly PP (120.14) will open the way towards 120.50 and above.

 

The latest elections in Canada showed that Liberal party won elections which was a surprise. That could be positive for Canada, but i expect that it weights down on CAD national currency. All god things which have happened to Canada might be forgotten ( balanced budgets, low taxes , good foreign policy ) as Liberal's Party leader Trudeau is promising to run deficits and pull out operations in Syria and Iraq which is bad news for U.S conservatives. The dropping oil price on Wednesday also tanked down CAD and the trend for USDCAD is BULLISH now.

Technically we can see that Up channel has been established again and the pair is zig-zagging toward Bullish targets. The break of 1.3045 level has established INVERTED Head and Shoulders pattern and another bullish leg to the upside. POC comes in 1.3030-45 zone and dips in the zone could be used for another leg of buying. Targets are 1.3188 ( X cross, H3 ) and 1.3235 ( H4 , channel overhead ). If the 4h candle closes above 1.3235 then 1.3315 will be next target. 1.2950-30 zone should hold for this scenario to succeed.

 

BOJ is facing problems due to oil price drop and recession while USD remains strong as a safe heaven. I have warned about USDJPY staying in the range and possible dip buying. Technically we should be ready to buy the dip again. The pair is showing INVERTED ROOF pattern ( A+B = breakout C ) which is already playing out.In the case of deeper retracement - POC2 comes in 120.35-120.20 zone (L4, 61.8, previous sellers/now moment buyers, X cross) and the target is 122.00 with 122.70 as the second target if 4h candle closes above 122.06. Traders should also pay attention to 120.60 zone which is also POC (L3, DPP, 38.2) where rejections could also happen. I am personally more inclined to deeper retracement (POC2) but just in case we should be paying attention to possible rejections in the POC1 zone too.