Forex Spider's Den GF Edition

The EURUSD has found strong buyers in the 1.0800 zone and is well confined withing the borders of a Bullish flag on H4 time frame. The situation with this pair is really interesting as we have a possible hidden bearish divergence in a bull flag with an inverted head and shoulders pattern in progress. If the MACD prints a HH and the price prints a LH that would confirm the hidden divergence and the price should drop towards 1.0850 again.
Because the price is bullish on intraday time frames but still bearish on higher time frames, the only valid option for bears is to fade rallies around POC - 1.0950-1.0970 zone which shows a strong confluence (possible hidden bearish divergence, H3, the top of the flag). I see this zone for potential short trades. The stronger confirmation would be if hidden bearish divergence gets confirmed so pay attention to both possible divergence and POC zone. If the price closes above 1.0985 on H4 time frame we could see 1.1045 as it will also confirm a breakout of inverted head and shoulders pattern.

 

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After a strong bounce from 1.0800 the EURUSD is still bought on dips. The lack of important data today and US bank holiday will probably keep the pair within the range, but it will also give us the opportunity to long on dips.

Technically POC comes within 1.0870-80 (L3, X cross.T-89 pattern) and it is also supported by a hidden bullish divergence. Hidden divergence is a trend continuation type of divergence and in this case it supports the bounces off the support. Adding to that we can see the Ascending scallop pattern right off the trend line.

However, the pair needs to stay above 1.0800 and only below 1.0800 we will see stop grabbing toward 1.0740 zone.

 

After yesterday's BOE Governor mr.Mark Carney comments where he stated there was no timetable for raising interest rates, GBPUSD fell heavily from POC as suggested on last Live webinar and in the FXstreet article where I suggested both 1.4225 and 1.4050 levels. The first rejection off 1.4225 made more than 100 pips to the upside but Carney's comments made a huge drop in the exchange rate. In the midst of Chinese growth hitting 25y low we have concluded that BOE is unlikely to raise interest rates soon.
Technically GBPUSD is sold on rallies. 1.4200 has been broken and we should pay attention to a possible retest. The price is in retracement due to regular bullish divergence and 1.4200-10 is looking interesting for intraday shorts. However, better retracement could come at POC which is a tad higher within 1.4235-60 zone. We see a multiple confluence of previous double bottom, 50.0,61.8 H4 and EMA89. The buffer zone for shorts 1.4235-60 is bigger due to a multiple important confluence points. The targets are 1.4124 and 1.4095. If 1.4124 breaks we could see a breakout setup towards 1.4095 without any retracement to the upside. Below 1.4095 we have a very important level which is 1.4050.
So we need to pay attention to 1.4200-10 and 1.4235-60 with a potential breakout of 1.4124.

 

Today, there will be an important ECB meeting where ECB should announce a minimum bid rate which is expected to remain on hold. But as always, ECB conference is very important as investors are actually waiting for any additional cues from mr.Draghi about further economic measures. China slowdown, Oil price, Stock markets, among other things have influenced a strong risk aversion and after the initial drop the EURUSD has been ranging for 6 weeks. The ECB bid rate announcement is scheduled for 12:45 GMT and conference will start 45 minutes later
The range can be easily spotted on H4 chart. The main range is 1.0984-1.0802. Now depending how investors interpret mr.Draghi speech we might see either a break of 1.0984 or 1.0802- the main range. A hawkish stance could propel the pair within 1.0925-35 zone and above it we should see 1.0984 and 1.1050. Extremely HAWKISH stance might even target 1.1100.
Dovish stance should tank the pair towards 1.0850 zone and below 1.0850 we should see 1.0802 with 1.0770 if it breaks. Extremely dovish stance could pull the pair down to 1.0700 zone.
We need to pay attention to these levels as today's ECB conference would probably mark a new trend.

 

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The EURUSD has completed its first swing within he channel and on intraday chart we can see a range with bearish bias. POC comes within 1.0850-60 zone (H4,EMA89,EQ channel top,previous breakout spot) and the price could be rejected towards 1.0770-50. Only a clear break of 1.0770 can tank the price down to 1.0710.

However if we see a strong momentum or 4h close above 1.0880 we could see 1.0920 and 1.0970. So, from R:R perspective shorts are justified as long as EURUSD stays within POC range and stops are placed slightly above 1.0880.

 

Today's focus is on FOMC meeting and that is the reason why the market has been calm all day long. We should expect FED to focus on China slowdown, market volatility and weak US data. At the present FED could probably take a pass on policy and mention "patience". There are 2 possible scenarios: Hawkish scenario would be mentioning another rate hike soon (March) and if the FED skips any mention of raising rate hikes and takes on weak US data in the statement addressing both global and GDP slowdown, the statement will be considered dovish. The statement will come in the written form at19:00 GMT.

Technically the pair is ranging with slightly bullish bias so we need to pay attention to important levels. 118.65-80 is POC (H3, 88.6, historical sellers) and on dovish statement the pair should drop towards 118.00 and 117.40 L5 intraday support. Currently the price shows a combined V shaped reversal and inverted Head and Shoulders in progress that could spike the price up towards POC sell zone.

However if the price breaks and closes above 119.00 (slightly above historical sellers and H4) it might spike up to 119.40 where it will face resistance. MACD is flat providing us with additional confirmation that market is in waiting mode so pay attention to increased volatility just before,during and after the statement has been publicly released.

 

NZDUSD December trade balance showed much smaller deficit as exports beat the expectations but due to RBNZ dovish stance on the currency, the pair has been sold on rallies. RBNZ governor Wheeler stated that additional NZD depreciation would be appropriate and the monetary policy should be accommodative.
The pair has broken through ascending trend line and it proceeds towards POC1 1.6465-75 (H3, 50.0, bearish order block, previous breakout point, T-89) where it might reject. The zone already rejected the pair via T-89 pattern so we are watching it again for further rejections. If the price proceeds above POC1 it will face a strong X cross resistance within 1.6490-1.6500 zone. The targets for rejections are 1.6440 and 1.6400 initially.Some bounce at 1.6400 is expected due to historical buyers at the support.

 

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BoJ's dovish move to introduce negative rates was in response to poor inflation in Japan and a strengthening JPY, which the later, has the potential to cause a negative impact on its economy and its exports. Nonetheless, in the short term, the JPY should weaken on this news.

The pair has made a momentum break above L4 support -119.30 and EMA89 has closed above suggesting a valid breakout. The price may either a) continue with the trend b) retrace to POC zone (DPP, L3, 50.0). Watch the chart carefully- because we have a strong momentum break on USDJPY we might see a shallow retracement to 23.6 (blue coloured -121.00) and the price might continue towards H3 resistance at 121.95.

If the price respects a zig-zaggish standard retracement pattern, it could drop towards POC and reject from there. The zone is 120.15-30 and as long as the price holds above 119.30 the targets are 121.95 and 122.80 if we get hourly or 4h close above 121.95.

 

The NZDUSD bounced following better than expected NZD employment data – jobs report. Investors started to disregard latest RBNZ gov. Wheeler's comments re further rate cuts as he implied that the outlook for the economy is looking positive, expanding his annual forecasts towards 3 % annually

Technically the pair is looking strong as it broke through running ascending flat top triangle. Running triangle means a triangle with no vortex at the top formed but it is still treated as triangle pattern. We should pay attention to a possible Breakout Retest pattern within 1.6545-55 zone as we also have a strong confluence there (H4, double top, 38.2). The price has already broken through strong H5 resistance so we need to watch for divergence in order for the price to retrace towards BR zone.

Positional trades might come slightly below the BR zone within 1.6510-20 (61.8, H3, EMA89). The target is 1.6655.

 

The AUDUSD surged heavily to the upside straight towards 0.7150-80 as I have analysed on Session Recap webinar, making it definitely the trade of the week. My guess is that RBA is not so happy with recent AUD strength as divergence between commodity prices and currency is not good for AUD.

Currently we can see a huge HIDDEN BEARISH DIVERGENCE which should follow the main 4H trend which is still bearish. The price has made both high and low and its getting within POC zone in the form of a retracement (78.6, historical breakout retest patterns, bearish order blocks). The zone is 0.7220-45. What traders should look for is – bearish reversal patterns. The logic is simple – as long as we have a divergence we need a trigger for it. The trigger is any of Bearish reversal patterns. Have in mind that even if the price proceeds above POC but the bearish pattern shows IN THE ZONE, it will still be a valid trigger. A good pattern would be a shooting star or a dark cloud cover.

If we get a pattern within POC zone, the pair could drop targeting 0.7140 (H3 support) and 0.7070 (50.0, EMA89 confluence). Have in mind that for the bearish pattern trigger to be valid, the hidden bearish divergence should still be visible on the chart.

 

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The GBPUSD has spiked above 1.4600 zone and as I have shown in the latest AUDUSD coverage very often a retracement is mistaken for a trend change which is wrong. Similarly to AUDUSD (which has perfectly rejected from POC making 180 possible pips), the GBPUSD is in a similar situation. Any retracement towards POC zone could be considered another sell into rally with the 1.4255-40 as the target zone.

POC (Xcross, 50.0, EMA89, Bearish order block) comes within 1.4500-10 zone. Rejections from the zone target 1.4375 and 1.4240. Around 1.4240 the price might bounce making another retracement to the upside. A strong 1H momentum or 4h close below 1.4375 should also tank the price towards 1.4240.

 

The light volume and lower volatility made AUDUSD possible trade bidirectionally. The initial rebound from 0.7050 made 30 pips initially as suggested on previous Session Recap webinar followed by a decline caused by investors dumping assets. Today's FED's chief Yellen testimony could be volatile and that is why I recommend caution. The testimony has been scheduled for 15:00 GMT. As head of the central bank, which controls short term interest rates, she has more influence over the nation's currency value than any other person so pay attention to subtle clues about future monetary policy.

Technically the AUDUSD could retrace towards POC zone (0.7125-40) that consists of H3, triple top, 61.8 and X-cross ™. However, we can also see Inverted Head and Shoulders pattern on H1 but also a HUGE Head and Shoulders variant characterized by the triple top.If the price rejects from POC it could target 0.7080-70 (EMA89 and 38.2 fib) potentially going lower towards 0.7030 and 0.7000. If the price makes a 4h close above 0.7150, bearish rejection could be negated.