USDJPY and EURUSD Technical Analysis

Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 123.18, 122.36, 121.54
• Resistance: 124.09, 125.11, 125.93

The US Dollar stalled below the 124.00 figure after attempting to mount a recovery against the Japanese Yen. Near-term resistance is at 124.09, the 23.6% Fibonacci expansion, with a break above that on a daily closing basis exposing the 38.2% level at 125.11. Alternatively, a reversal below the 38.2% Fibretracement at 123.18 clears the way for a challenge of the 50% threshold at 122.36.

Risk/reward considerations argue against entering long with prices in close proximity to resistance. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature. We will remain flat for now, waiting for an actionable opportunity to present itself.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com


More...

• EURUSD 1997 analog
• GBPUSD faces resistance at 1.57
• NZDUSD Fibonacci confluence at .64

EUR/USD
Weekly



-“The tightening range since the May high could compose a triangle within a larger advance from the March low.” A broader range does of course remain possible but with EURUSD breaking support this week, one must consider a more immediate bearish alternative. Comparisons with 1997 (pre euro trading but a calculated value is plotted) price behavior are striking. In both 1997 and 2015, the rate plunged out of the gate into March. Weekly RSI registered extremes the weeks of 3/3/97 and 3/9/15. Ensuing corrections stretched into the weeks of 5/19/97 and 5/11/15. In 1997, EURUSD dropped sharply into the week of 8/4 before making reversing sharply to return to its May high. If something similar happens here, then EURUSD would trade down to about .9840 in August before trading back to 1.1450+.

GBP/USD
Weekly



-“GBPUSD has broken above its 52 week average for the first time since September 2013. There are hurdles to clear from slope resistance (on various time frames) up to about 1.60. As such, a period of consolidation below 1.60 may be in store before an attempt on 1.64+ (2 equal legs from the April low).”
-The ‘period of consolidation’ turned into a 6 figure decline from well-defined slope resistance. The rate faces resistance up to 1.5705/10.

AUD/USD
Weekly



-“A slope confluence pinpointed the May high, which keeps the broader trend pointed lower. A long term level to be aware of in AUDUSD is the line that connects the 2001 and 2008 lows, which is near .7100. Be aware that the range that has been underway since April could persist for months and morph into a triangle or flat pattern.” The immediate picture is bearish as long as price is below .7740. Range expansion objectives yield .7143 and .6902.

NZD/USD
Weekly



-“One can’t help but notice that an epic double top is possible with a target of .5898. That would trigger on a drop below .7370.”
-“A bearish wedge pattern has formed and yields an objective of .6607.” Look towards the mentioned objectives (.6607 and .5898). The wedge objective has been reached as has the 2010 low at .6560. The next levels to be aware of are .64 (61.8% retracement of the 2009-2011 rally and 50% retracement of the 2000-2011 rally) and .60 (long term double top target).

USD/JPY
Weekly



-“A USDJPY breakout from the 6 month coil would open up 123.16-124.13 (high close from June 2007 and 2007 high). A measured objective from the pattern yields 125.72 and 128.12.”
-“USDJPY ended up trading to 125.85 (the mentioned 125.72 was the December range x .618 + the December high…basically a Fibonacci range expansion). Failure at long term uptrend resistance indicates potential for an important top to form. As I type, there are 2 days left in June and USDJPY is little changed for the month (month open is 124.10). In other words, a monthly doji could form…at a 20 year trendline (former support…may provide resistance now)!”
-“June’s trade produced a monthly key reversal in USDJPY.” USDJPY has snapped back but a break above the long term resistance confluence (uptrend resistance and the line from the 1995 and 2005 highs) is still needed in order to minimize downside risk.

USD/CAD
Weekly



-“A 10 month trendline has supported USDCAD on recent dips. The development indicates potential for resumption of the broader bull move.” USDCAD has broken out. 11 year highs aren’t far off. The 2009 high is at 1.3062 (just below the 127.2% extension of the March-May range, which is at 1.3083).

USD/CHF
Weekly



-“The break above near term slope this week indicates a short term behavior change. .9250 needs to hold in order to look higher. Watch for resistance near .9600 (50% from the March high at .9599 and 2 equal legs from the May low at .9621).”
-“USDCHF dropped into .9250 this week (low was .9242) and promptly rocketed to .9500. Focus is higher as long as price is above .9242. The mentioned .9600 may provide resistance. Near term support is estimated at .9330. A break above .9600 would target .9913 (Fibonacci).” .9330 held as support on 7/10 and the rate has reached initial resistance at .96. A more well-defined level is probably .9720 (61.8% retracement of decline from March high and 4/23 high).


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Talking Points

• USD/JPY struggles below key Fibo
• GBP/USD meanders below minor retracement
• EUR/USD fails again at key moving average

USD/JPY

• USD/JPY continues to consolidate below the 124.70 78.6% retracement of the June/July range
• Our near-term trend bias is higher in the exchange rate while above 123.00
• A daily close above 124.70 is needed to re-instill upside mometum into the exchange rate
• A minor turn window is seen here
• A close back below 123.00 would turn us negative again USD/JPY

USD/JPY Strategy: Like the long side while above 123.00

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	123.00	123.60	124.00	124.40	124.70

GBP/USD

• GBP/USD has settled into a range below the 61.8% retracement of the June/July decline at 1.5700
• Our near-term trend bias is negative while below 1.5700
• Weakness under 1.5470 is needed to trigger another leg lower in the pound
• A minor turn window is eyed here
• A daily close above 1.5700 would turn us positive on GBP/USD

GBP/USD Strategy: Like short side while below 1.5700

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
GBP/USD	1.5470	1.5565	1.5580	1.5700	1.5820

EUR/USD

EUR/USD has settled into a fairly tight range to start the week as it awaits some important releases in a few days. Last week’s double failure at the 50-day moving average near 1.1100 keeps the exchange rate in a fairly clear negative technical position ahead of this event risk. The 1.0800 area remains a critical pivot zone as a close below there would confirm a resumption of the broader downtrend and set into motion a more important decline. However, the contraction in range over the past few months does make us wonder if the market is setting up a bear trap. The potential inverse head and shoulders pattern on the daily (price action since July) doesn’t help things either, but only a move through 1.1130 would start to turn things more clearly positive for the euro.


more...

• EUR/USD closing in on 50-day moving average
• USD/JPY consolidates below minor retracement level
• NZD/USD range trading above multi-year low

USD/JPY

• USD/JPY continues to consolidate below a minor retracement level at 125.20
• Our near-term trend bias is higher in the exchange rate while above 124.00
• A daily close above 125.20 is needed to set off the next leg higher in the exchange rate
• A very minor turn window is eyed tomorrow
• A daily close below 124.00 would turn us negative on USD/JPY

USD/JPY Strategy: Like the long side while above 124.00

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	123.35	124.00	124.85	125.20	125.55

NZD/USD

• NZD/USD continues to consolidate above .6500
• Our near-term trend bias is negative on the kiwi while below .6735
• A move under .6500 is needed to set up a test of a key long-term retracement around .6400
• A very minor turn window is eyed tomorrow
• A daily close above the .6735 would turn us positive on the bird

NZD/USD Strategy: Like the short side while below .6735

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	.6500	.6530	.6550	.6630	.6735

EUR/USD

The big news overnight in the FX markets was the decision by the PBoC to devalue the CNY. This not surprisingly prompted a fairly immediate dollar rally across the board. USD strength was short-lived in the case of EUR/USD, however, as the pair made back all its PBoC inspired losses by the beginning of European trading (purportedly on the back of a large unwind of short EUR/CNH positions). The loss of downside momentum in EUR/USD over the past few days in the face of some fairly positive USD news clearly raises the risk for a deeper upside correction in the pair. The 50-day moving average around 1.1100 remains critical in this regard as it has so successfully repelled rally attempts over the past month. Any traction above this level would be a pretty clear bullish change in behavior. Failure around this level followed by a break of 1.0950 likely paves the way for a renewed assault on the critical downside pivot at 1.0800.

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Is the EUR/USD in a bull trap? Or, is it actually up-trending?

Originally Posted by cryptocurrency

Is the EUR/USD in a bull trap? Or, is it actually up-trending?

It depends on timeframe. For example.

Monthly timeframe/chart (the situation at year-end)

As we see - this is the primary bearish market condition started one year ago:

For now - the price is ranging between 1.1466 resistance and 1.0461 support levels.

• If the price breaks 1.1466 resistance so we may see a local uptrend as bear market rally within the primary bearish.
• If the price breaks 1.0461 so the primary bearish trend will be continuing.
• If not so the price will be ranging within the levels.

Thus, we are having 3 basic scenarios by year-end: bearish will be continuing with less than 1.04 for EURUSD; ranging condition; market rally with 1.25 as a target. But this will be a primary bearish condition for all 3 scenarios anyway.

Weekly timeframe/chart (the situation for September-October)

Well ... the price may go to the bullish area of the chart by breaking 1.1466 resistance from below to above. But it will be ranging bullish as the price will be inside Ichimoku cloud. The resistance level for the price to be finally turned to the bullish is 1.2199.

So, there are 3 versions of the situation as well:

• bearish by breaking 1.0461 support;
• bearish ranging (there is bearish ranging now);
• bullish by breaking 1.2199 resistance

Daily timeframe/chart (the situation for the next two weeks)

This is bullish market condition started in the end of last week (because of China I think). The price was on bullish breakout by breaking Ichimoku cloud from below to above. So, there are also 3 variations for the market movement:

• price is crossing 1.1016 support with 1.0807 as a next bearish target: price will be turned to the bearish condition;
• price will cross 1.1713 fro below to above: bullish market condition;
• if not so the price will be ranging within the levels.

Thus, if someone (on TV or in newspaper) are talking about bullish euro or about strong dollar and so on - it may be good to ask them: this conclusion was made to be related to what for example? It was compared with last year or with 5 minute price? Which price was used? daily? weekly? H4? ...

Because in global point of view: the EUR/USD pair is on bearish condition since the beginning of August last year. So, more bearish or less bearish - it does not really matter (in global point of view). The price will start to be turned to the bullish at 1.25 to be finally in bullish at 1.33/1.34. If the price is starting to break 1.25 so we may say something about "price may be reversed to the bullish in the near future'.

That's all news

Talking Points

• USD/JPY testing key resistance zone
• EUR/USD cracks important support

EUR/USD

• EUR/USD has come under aggressive pressure since failing near the 1.1685 12th square root relationship of the year-to-date low earlier in the week
• Our near-term trend bias is now lower in the euro
• The 61.8% retracement of the July – August advance near 1.1150 is the next downside attraction of note with weakness below needed to re-affirm the budding downtrend
• A minor turn window is eyed today
• A daily close back over 1.1500 would turn us positive on the exchange rate

EUR/USD Strategy: Square

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.1100	1.1150	1.1235	1.1405	1.1500

AUD/USD

• AUD/USD continues to meander around a critical long-term support confluence at .7085 - .7165
• Our near-term trend bias is negative while below .7415, but this could change if price action turns more constructive at this key support
• A daily/weekly close below .7085 is needed set off a more important move to the downside
• A Fibonacci turn window is seen here
• A daily close over .7415 would turn us positive on AUD/USD

AUD/USD Strategy: Like only reduced short position while below .7415

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	.7030	.7085	.7150	.7200	.7415

USD/JPY

USD/JPY and most other ‘risk markets’ seem to be coming up on an important near-term juncture in both price & time. If Monday’s meltdown under the 161.8% projection of the June – July decline in the exchange rate was indeed some sort of important low then we should find out in the next week or so of trading. Looking at the cyclical picture, the ideal time to see near-term downside forces try to re-assert themselves is around the early part of next week. Immediate attention pricewise looks be on 125.65/80 (and with good reason as there is a lot of stuff there including the 200-day moving average and the July closing low), but if USD/JPY does have a little more upside left then it will be hard to see this zone holding up so we can’t rule out a push to Gann resistance at 121.45 or even 122.55. Assuming USD/JPY does peter out then this is where things will get interesting as it should lead to some sort of retest into a more important cyclical pivot around the end of next week/start of the week of September 7th. A couple of things to be on the lookout for is if USD/JPY doesn’t stall out by the middle of next week as this would argue a low is already firmly in place and that a meaningful retest is unlikely. Similarly only a modest 1-2 day pullback early next week followed by a quick break back through the anticipated high would also severely undermine retest chances. We will revisit how things are shaping up heading into the more important turn window if spot exhibits the weakness that we expect.


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