Forex Spider's Den GF Edition

The EURUSD has been ranging in the wake of FOMC decision which is scheduled for 6 PM GMT today. No rate hike is expected this week especially because job growth has been slowed down in recent months.Consumer spending and worse than expected payroll gains also contribute to no rate hike today.
Technically EURUSD has failed to close below 1.1010 and that makes it a fake out. Clear and strong close of 4h candle is needed below 1.1010 for further down towards 1.0965 and 1.0900. Failure to break 1.1010 and MACD weakening could be early cues that we might see a correction. 1.1140 zone shows potentially good spot where the EURUSD could reject. Positioning in the zone could be possible on a pullback (H3, WPP ,38.2, historical sellers). Resistance lies above at 1.1190 (X cross - 50.0).
If we get a pullback towards 1.1140 and stay below 1.1200, 1.0965 and 1.0900 are targets.

 

The RBNZ decided to hold with rate cuts last night but it was explicitly said that exchange rate is linked to interest rate decision. Judging from RBNZ comments we can conclude that they are not happy with the current levels in exchange rate and there is a POSSIBILITY for a further cut in December. Although the statement was hawkish just a single sentence which is implying that high exchange rate is unsustainable made me think about possible rate cut in December. As we know NZD is soft commodity currency and if dairy prices stay high so will the NZDUSD.

Technically 0.6725-40 is showing a very good confluence with recent sellers. POC also shows 61.8 fib, H3 and 89 EMA which also suggest a possible T-89 ™ pattern. Those who are familiar with my Price Action Trading School know that Pin Bar rejection off 89 EMA ( T-89 chart pattern ) is very strong. So we have a multiple confluence there. Adding to that there is also an inner trend line which serves as resistance just above POC. Targets for the move are 0.6620 and 0.6595.

 

The EURJPY has rallied from a temporary bottom in 131.60 zone and now it is rallying towards POC. This time POC is a neckline of inverted Head and Shoulders pattern type 2- "Inverted Head and Shoulders leaned" .133.30-20 zone is the zone where we should watch for rejections or a breakout to the upside. EURUSD is highly correlated to EURJPY and that is why we need to watch 2 potential scenarios with EURJPY. If you remember my EURUSD analysis from Friday, the pair is currently dropping from POC which also has an impact on EURJPY. As you can see from this excellent Correlation Table (the tool which is a MUST for a serious trader) EURUSD and EURJPY have +94 correlation on last 200 H4 bars, which is considered a highly positive correlation and these pairs are moving roughly in the same direction. Assuming that EURUSD continues to fall , EURJPY will also reject from POC.
Any rejections from POC should target 132.05 initially and any H4 close above POC should target 133.95. POC ( H3, neckline ) is 2 way directional this time and pay attention to rejection ( trend ) or breakout (counter trend)

 

The AUDUSD has had a relief rally after the RBA decided to keep the rates at 2 %. The RBA indicated at the start of 2015 that it wanted to achieve 0.75 for the AUDUSD pair; currently it has surpassed this achievement as it is currently at 0.7200. As I have also explained 2 days ago on that basis, I doubt the RBA will cut rates further. Having said that, if commodities continue to weaken further, expect AUDUSD to weaken further under free markets.
Technically we have 2 POCs. The first POC is 0.7210-0.7225 zone (61.8, descending trend line) and the price could reject here BUT we see that HISTORICAL sellers are a bit higher. POC 2 shows historical sellers, 78.6 ,and X-cross. The zone is 0.7255-70 and if the price get here, we could expect now moment sellers. First target for any rejection off POC or POC2 is 0.7190 zone (H3, 89 EMA) then 0.7150 and 0.7110 (23.6, inner trend line)

 

The USDCAD appreciated after positive US ADP, ISM and trade balance reports ,generally maintaining positive USDCAD movement. Today we are focused on 1.3120-50 region where rejections could happen. ( 89 EMA, 38.2, H3, WPP ). Rejections could push the price towards 1.3190 and any strong momentum push or H4 close above 1.3190 will target 1.3300 region. We can also spot an ascending trend line ( 5-touch trend line ) and as long as the price is above the trend line USDCAD should proceed higher.

 

The EURUSD dropped like a stone after much better than expected NFP report hitting 1.0710 a historical support which holds the price from proceeding lower. The trend is clear and we also need to watch a possible position where we could enter another sell. H3, WPP, EMA 89 and the top of the equidistant channel mark the zone where we could expect another rejection. The zone is 1.0820-35. A rejection from the zone should target 1.0710 initially. 1.0706 is double bottom so a strong break of 1.0705 should accelerate the price towards 1.0670-50 (Monthly L3 support and Weekly L3 confluence).

 

The USDCAD is currently in retracement mode on higher time frames. Housing prices in Canada dropped from a 3y high reading (231.3 to 198.1) and we could also read OECD forecasts that Canada's Eco growth will slow down this year.

The correlation on H4 timeframe is highly negative with GBPUSD and strong negative with EURUSD so if those pairs are heading down, USDCAD will surge up. Currently USDCAD is very close to POC which comes in 1.3215-35 zone and is already started to reject it. POC is showing inverted Head and Shoulders variant 2 pattern ( Leaned Inv Head and Shoulders ) with L3, previous swing and EMA 89. The zone could reject the pair towards 1.3320 and 1.3370. Additionally H4 timeframe is showing higher high and higher low so when we zoom in to H1 timeframe, we see POC clearly.

 

The USDCHF is in a strong uptrend, boosted by recent talks about possible rate hike in December and a very positive NFP data last Friday.
Technically we see a bullish zigzag and a confluence of L3, WPP and previous breakout-retest zone which makes a POC. POC is 0.9975-0.9995 zone and rejection from the zone targets 1.0180. If the pair closes above 1.0180 it should proceed to 1.0290. 0.9915 is a strong support ( L4, EMA 89, Trend line ) and it needs to hold for the price to remain bullish.

 

The EURUSD is very bearish. Technically we can spot bear flag on H4 time frame and as I have shown in my last EURUSD analysis and Session Recap webinars 1.0835 was the place to go short. The last rejection from POC was good for 150+ pips and we can still pinpoint 1.0835 as POC for shorting into rallies. We can spot a confluence of historical sellers, H3 , bear flag top. Above there is a cluster of resistance (flagpole, EMA , H5 at 1.0900 zone ) and MACD is having bearish momentum too. That all tells us that the pair is very bearish.

We should pay attention to 1.0670. As i have been showing a lot of times 1.0670 is a VERY strong support supported by ACCU pivot point too. A strong break of 1.0670 is needed for 1.0592 and lower zones. There is a technical target overshoot below L5 on H4 timeframe. 1.0520 could be reached if 1.0590 break as we add the height of the flag pole to the breakout point of the flag.

 

As i have shown in my previous EURUSD analysis and the Analysis before it, EURUSD has clearly rejected from POCs and proceeded in trend direction. Overall, the first target zone has almost been met - 1.0620 and it happened after the break of 1.0670 as I have suggested. We need to think about 2 potential scenarios. The first is CONTINUATION point of view and the second is POSITIONING.

The first scenario is likely to happen after breakout of 1.0630 - yesterday's low and triple bottom. The target is 1.0590 zone and the break of it will target 1.0520. The second scenario takes POC point of view. We have POC in 1.0700-0720 zone (X-cross, L3) and the CURRENT rejection of 1.0690 which is currently good for 30 pips. The pattern is T-89 which i have been showing in my PATS webinars also.

For both scenarios targets are 1.0590 and 1.0520 but if we get another T-89 or POC rejection have in mind that the price still needs to break 1.0630 to proceed lower.

 

As you could read in my previous GBPUSD analysis the pair has broken through 1.5190 initially then went down to a target zone - 1.5155. The pair has been contained below 1.5250 as presumed but today we have seen a breakout through 1.5250 which is telling us that the pair might be targeting 1.5350. From the contextual point of analysis we have 2 different focal points. 1.5200-20 is the POC zone where we can see a confluence of Monthly inner trend line, X cross, 89 EMA and inner trendline. If the pair retraces to the zone we could expect a bounce towards 1.5300 and 1.5350. If the pair doesn't pull back towards POC then we should pay attention to 1.5300. If we get a H1/H4 close or high momentum push above 1.5300 we should see 1.5350. In both ways 1.5150 should hold.

 

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Latest comments from FED members pushed the pair to the upside again re-aligning technical with fundamental analysis. As I have already explained couple of times with EURUSD analysis selling the rallies is the valid option while buying the dips with USDJPY is valid option too. Adding to my previous comment about technical and fundamental realignment, the USD gained on US strong jobs data as Fed is one step closer to a rate hike.
Technically the pair is following a bullish zig zag pattern with a strong confluence in POC zone. 122.60-40 is the zone where the pair might bounce on retracement (88,6, E89, L3, previous vs now moment buyers). From historical vs now moment perspective ( candle marked with red) we can see that the zone is historically strong as strong buyers have already protected the zone. 124.40 should be target but high momentum or H4 candle close is needed above 123.75 which is also a breakout point for the pair. The correlation with EURUSD is highly negative so it complements our EURUSD view too.

 

The EURUSD has bounced from 1.0600 support and it is slowly grinding to the upside. A slow grind reflects its bearish trend as it is a fine, gradual retracement rather than a wild ,strong rally. The ECB policy board is scheduled for December 3 and we will see if ECB will take additional easing steps (further cut in the deposit rate). As i have been showing on my Session Recap webinars, the EURUSD is bearish and safest trades are short trades on rallies.

Technically, the pair is captured inside a wedge and only a break below 1.0650 (bottom of the wedge,38.2,E89) will target 1.0600 zone and below. However if we dont see a breakout soon, the pair could rally up to POC 1.0725 zone (H4, 78.6, X-cross) where it could be rejected towards the edge again. So, we need to pay attention to wedge and POC to estimate where the pair will react in short term.

 

The EURAUD pair is in a strong downtrend. We can see that the pair is literally swimming through equidistant channel. A precise zigzag pattern inside an equidistant channel is telling us that the pair is sold on rallies. However we can also see - Inverted Head and Shoulders pattern and the price is very close to POC. 1.4725-40 is the zone where we could look for rejections. POC (61.8, E89, bullish order block) is also aligned with historical sellers.
The current price is 1.4696 and we can also see 2 pinbar rejections which are telling us that the price may drop from the current level too.(INV Head and Shoulders neckline). Anyway it is a good time to be ready for any action which might happen now or in POC zone. The target for the move is 1.4625 and if the level is broken we should see 1.4590. Only if 1.4590 breaks the target is 1.4500 - a continuation trade.

 

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There are two VERY imporant, key meetings this month. FED and ECB. ECB meeting is scheduled for this Thursday and we need to be very careful. There is a possibility for a rate cut by 10/20 bp although the expectations are that there will be no cut, but we need to be prepared for everything. The inflation is low, EU zone recovery is stagnant, EM (Emerging Markets) are slowing down and ECB could take action. Adding to that I also expect further QE.
Technically the EURUSD is contained within the equidistant channel and we might see some weaker price action until Thursday. That being said the pair is still in "Sell the Rallies" mode. The first POC (DPP,38.2,E89) is in 1.0610-20 zone while the 2nd POC is just a bit higher in 1.0640-50 zone ( double top, EQ channel high, 61.8). If the pair manages to stay below 1.0690 we could see a further drop towards 1.0520.
EURUSD is moving slowly which is normal considering an upcoming ECB meeting and I dont expect anything big before Thursday.

 

USDJPY is consolidating in a bullish pennant as investors are eagerly awaiting tomorrow's ECB decision and NFP report on Friday. The pair is congested within the bullish pennant and logically it should break to the upside which will confirm the validity of the pattern. If it fails the patter will be unsuccessful.

Target for the bullish breakout is determined by adding the height of the flagpole to actual breakout point. We can also see that H3 WPP is making a confluence with the actual pennant which is telling us that it is preferred that we see H1 strong candle or H4 close above H3 which could be a breakout/continuation move. Due to the nature of a bullish pennant the only valid setup is to the upside. The target is 124.10 zone. Any drop below the pennant (or continuation to the downside) will negate the bullish outlook.

 

Today we expect a huge volatility as we have ECB decision and press conference scheduled for 13:45 GMT. As I have stated many times regarding USD, there is a strength in USDx and there is a scope for EURUSD to proceed more down. However, due ti the nature of ECB meeting today I advise to stay out of EURUSD as we should focus on currencies that are also trending and showing good patterns.

NZDUSD has been trending nicely within the equidistant channel. We can spot T-89 pattern in progress. T-89 is the part of POC zone( 38.2, double bottom, historical buyers). Rejection from the zone 1.6610-20 targets 1.6710 - the top of equidistant channel. If the price pullbacks to the zone we should watch for any bullish reversal patterns as the zone could reject the price once more.

 

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