Forex Strategies

GBP/JPY 4H chart 7/1/2013 3:35PM EDT



Breakout: On Monday, we asked whether the GBP/JPY was going to follow USD/JPY and EUR/JPY in breaking above a similar falling trendline or key level. For GBP/JPY, it was testing not only a falling trendline but a common resistance since June, just under 152 as well as the 200-4H SMA. A break above 152 is now exposing the GBP/JPY to the next resistance at 154.20, then 154.80. The break so far is still weak as the 4H RSI failed to tag 70, so let’s monitor the throwback to see if there is still a chance to develop bullish momentum to extend the breakout to the next resistance area.

Throwback: GBP/JPY stalled at 152.75 and fell back to a previous support pivot near 151.20 where it bounced back up heading into the 7/3 US session. If price holds above 151.20, the bullish break is still valid. Below that it is not as clear, but still has a chance. A break below 150.45 and a rising trendline from June however will invalidate the bullish outlook and put the focus back to the 149.22 pivot and possibly the June low near 147.10.


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EUR/CHF 4H chart 7/3/2013 9:08AM ET



I should clarify that there is not bullish bias technically, YET, but there is a chance for a new bullish bias to develop, and the market is “testing” this scenario.
Consolidation range: We were looking at the EUR/CHF as it was trading at a recent consolidation range resistance. There was a crack of the range resistance and the 4H RSI tagged 70. This breakout attempt failed a couple of times as a bearish divergence formed with the RSI, after which price retreated.

Momentum: The RSI showed attempt to establish bullish momentum with the reading tagging 70. Now, back at 40, it has a chance to show further development of bullish momentum if the reading holds above 40 and returns above 60.

Central pivot: Price also has a chance to establish bullish bias if it holds above the central pivot it is testing now around 1.2290. A break and close below that should put the focus back to the lows around 1.2220. Holding above 1.23 will keep focus on the range highs.

Breakout: A break above 1.2285 to follow will signal bullish correction, which opens up first the 50%-61.8% fibonacci retracement area between 1.2433 to 1.2484. Then, a more aggressive outlook would be the 1.2556 (78.6% retracement) – 1.2570 resistance, and then the 2013-high at 1.2648.


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AUDJPY : 91.04

Aud/Jpy is at an interesting juncture today, having registered a bearish outside day (H 92.42/L 90.15/C 90.77) it looks as though it is heading for another test of the strong rising trend/Fibo support (50% pivot of 74.45/103.73) at 89.85. A break would see plenty of stops being triggered for a run lower, potentially towards the major Fibo support at 86.35 (see chart).
If wrong, a turn higher would head back towards the days highs which will offer strong resistance at the 200DMA. The cross has attempted to break above this a couple of times now and failed and I think we may want to now take a look at the downside.

The daily MACDs are not suggesting that this is going to happen today but the weeklies definitely give the impression that the downside will eventually get a decent workout.
We are looking to sell a rally towards 91.50 with a SL above the 200DMA, while looking for a test of 89.85 and possible a fair bit lower.

Aggressive traders could sell it here, but we think we may see a minor squeeze higher before it heads down.

AUDJPY Daily



AUDJPY Weekly




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The EUR/USD is stuck to the 1.3000 level, waiting for ECB monetary policy decision in a couple hours, having found selling interest around 1.3030, 61.8% retracement of its latest daily bullish run, but also buyers around 1.2920, 78.6% of the same rally. *Immediate short term support comes at 1.2980, and a price acceleration below it should signal a retest of yesterday’s low, while once below, 1.2880 area is next.Steady gains above 1.3030 however, on a more optimistic outlook coming from the Central Bank, may support an upward continuation in the pair towards 1.3090/1.3110 price zone.




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Markets are very slow today ahead of ECB and BOE and also because of closed markets in the US in observance of Independence Day. As such, market could be very choppy and overlapping today with no-real direction.

On the EURUSD we are tracking an incomplete correction in wave 2 which can be a flat because of a three wave fall from 1.3100 to 1.2930. If that’s the case then wave (c) should be made by five waves and reverse from 1.3100-1.3150 resistance zone. Keep a close eye on this region if ECB will cause some buying; potential “fake rally”.

EURUSD 1h



GBPUSD is also bullish ahead of BOE after sharp reversal from 1.5127 which is the first leg of a minimum three legs up. Ideally, pair is in wave 4 correction that may test 1.5340 later today, before we can start looking for some bearish reversal signs. Larger downtrend remains bearish for the pound.

GBPUSD 1h



Stocks futures also found a support yesterday during the US trading hours and it seems that recent downward pull-backs were in three waves, therefore corrective and part of a larger uptrend. We expect push above recent highs. If you are trading stocks futures then this may be some intra-day opportunity for you against latest swing low.

Stocks futures 1h –DAX, S&P, NASDAQ, DJIA


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After getting slapped lower following the ECB and BOE forecasts last night, it is probably worth taking another look at at the crosses for ERAUD and for GBPAUD.

EurAud, as can be seen on the daily chart below, does not seem to like it much above 1.4300 having been strongly rejected twice, and thus with the daily MACD momentum building to the downside, it would seem that selling into strength, looking *for a decline to the rising trend support, where it coincides with the first major Fibo support at around 1.3750, may be a plan.

It is obviously going to be pretty choppy after the NFP, so I would not necessarily advocate selling it here, and much will depend on the outcome of the result, but purely from a technical point of view, if we see a spike in the order of 100 -150 pips or so it might be worth going short with a SL above the double top high, at just above 1.4400, looking for a run lower to around 1.3800 area….just a thought!

EURAUD Daily



The same applies to GbpAud, even more so actually, which has corrected from 1.6917 to 1.6413…a lazy 500 points, in 24 hours..which included a NY holiday!

The peak fell shy of our long term target at 1.7225 (76.4% of 1.8140/1.4410 –

(Weekly outlook 24/29 June), and I think in the near term it will find it difficult to regain Wednesday’s high.

Although it will undoubtedly be pretty violent later on, after the NFP, it seems that selling into any kind of strength towards 1.6700 now may not be a bad result, with a SL placed above *1.6800 (76.4% of 1.6917/1.6413). The daily MACDs are pointing quite sharply lower and a break of rising trend/Fibo support at around 1.6325/50 could see a deeper correction, possibly to 1.6185 (23 May high) or even to 1.5950 (38.2% of 1.4397/1.6917).

GbpAud Daily




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Risk assets, including Aud, Kiwi are higher after CB outlook. Now waiting on the NFP for a hint as to QE tapering – or not!

Both the ECB and the BOE were pretty bleak in their economic outlook on Thursday, suggesting that further stimulus will be required, sending stock markets, the dollar and the commodity bloc currencies higher. We now await today’s US Jobs data and NFP, for a clue as to whether the Fed will begin tapering their own stimulus programme any time soon, or not. Before then, expect a quiet session. TGIF.Have a good weekend.

EUR/USD: 1.2915

Despite the US holiday, the dollar and equities made strong gains today, particularly against the Euro and Sterling, after the respective Central Banks were both pretty downbeat in laying out a dovish outlook at the their monthly IR meetings.

In the case of the Euro, although rates remained unchanged, Mario Draghi indicated that “the Governing Council expects the key ECB rates to remain at present or lower levels for an extended period of time.” and went on to say that there had been “extensive discussion about a possible rate cut”.

The Euro quickly fell from above 1.3000 to 1.2882 on his comments, since when it has stabilized above 1.2900, where it is now likely to sit until the NFP /US employment (exp +165K/7.5%) data later in the session.

A strong number would most likely see the dollar make further gains, with the Euro likely to head lower, as shown by the downside momentum which is building *in the 4 hour charts. The first point to watch on the downside, below the 1.2882 session low, will lie right ahead at the 50% Fibo support of 1.2042/ 1.3710 at 1.2876. This could prove strong, but a break would head to the weekly cloud support at 1.2840 which should also prove to be strong. Below here, 1.2796 comes into play and, and once again, this should be solid support having been the 17 May low, from where it bounced to 1.3415. This is also the neckline of the Head/Shoulder formation that we have been watching for the last few months. A break would see much lower levels, – I suspect, eventually to around 1.1700, – and if we close below 1.2800 today after the NFP, on a weekly basis, then the northern hemisphere summer might not be so quiet and rangebound after all!!

On the topside, declining trend resistance at around 1.3000 will act as the first hurdle (1.3010: 23.6% of 1.3415/1.2882) above which the Euro could head back towards 1.3085 (38.2%) and 1.3150 (38.2%) but looks rather unlikely.

Wait and see the outcome of the NFP. I still prefer the Euro to head lower, but there are some decent levels of support on the downside so I don’t think progress is going to be that easy.Selling rallies seems to be the way to go though.

Economic data highlights will include:
German Factory Orders, US Unemployment/NFP
Meta Trader – AxiTrader EUR/USD: 4 hour



USD/JPY: 100.00

Dollar Yen has had a choppy session but ultimately has not strayed too far from 100.00 and is unchanged from this time yesterday, with much of the action taking place elsewhere. The Yen crosses are proving rather volatile following the ECB, BOE statements and*I would imagine that these will continue to provide most of the action for the session until the NFP, *and I don’t see the dollar doing too much until then as we hang close to current levels (99.90: 61.8% of 103.73/93.78)

Technically there is rising trend support close by at 97.75 and if we can break below this we could see a run towards the recent 99.24 low and possibly to stronger rising trend/Fibo support at 98.70. 97.75 looks pretty well supported for now though so the immediate downside looks limited.

On the topside, back above 100.00 could see a run to 100.40 (minor) and then to 100.85 (3 July high) beyond which 101.35 (76.4% of 103.73/93.78) will come into play.

The hourlies are flat while the 4 hourlies are pointing a bit *lower. The dailies look positive though, and it all adds up to a rather confusing picture but *suspect that buying dips is probably still the best bet, although it looks as though it will continue to be a choppy ride and if we end up chopping*around between 99/101 for a couple of days I would not be surprised.

Meta Trader – AxiTraderUSD/JPY: 4 hour

GBP/USD: 1.5075

The BOE left rates unchanged, but the dovishness of the press statement sent Cable sharply lower, breaking through recent support, reigniting the recent downtrend from 1.5750 and trading in London down to as low as 1.5055 before a dead cat bounce. Mark Carney has certainly made a splash! The statement indicated that the ‘‘increase in market rates weighs on outlook for economy’’ and went on to note that “the Chancellor had requested that the MPC provide an assessment, alongside its August Inflation Report, of the case for adopting some form of forward guidance.” It is beginning to look as though we could well see some further form of easing in the next month which will undoubtedly keep the pressure on Sterling. The FTSE will like it though and showed its enthusiasm today in rising by 3.1%

Sterling, having collapsed, has broken through some strong support, has since been unable to recover and continues to look pretty horrible on the charts. Below 1.5055, the next port of call on the downside is at 1.5005 (29 May low), which would mean that Cable has given up all of its recent gains since the rally to 1.5750, but under 1.5000 is very strong weekly rising trend support at 1.4935, which, if seen, I think should hold at the first attempt. If not Cable could be in real trouble and headed back to the March 1.4830 low and possibly a fair bit lower. We will deal with that later.

On the topside, a break of 1.5100, which currently looks doubtful, would see some acceleration towards 1.5130 and possibly to 1.5215 (23.6% of 1.5750/1.5055).

With both the 4 hour and daily charts pointing lower any sort of rally looks to be a selling opportunity, but ultimately all will depend on the NFP, so wait till then and go with the flow.

Meta Trader – AxiTraderGBP/USD: 4 hour



USD/CHF: 0.9565

The dollar made good gains against the Chf on the back of the ECB decision. Momentum is pointing higher still, although we are now at important resistance which needs to be overcome (61.8% of 0.9838/0.9130) to make progress towards 0.9600 and possibly towards the 76.5% Fibo level at 0.9670.

The downside now has support at 0.9530 (minor) and then at 0.9500 and at the channel base at 0.9485.

All depends on the NFP but buying dips appears to be the ongoing strategy.

Meta Trader – AxiTraderUSD/CHF: 4 hour




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People always ask me about gold bullion. They want to know if it’s the right time to get back into gold bullion as an investment. While many other advisors are advocating a wholesale abandonment of gold bullion, I believe the time to buy is close.Finding the proper entry point in the market is never easy, but there are several factors that combine to indicate an ideal investment opportunity. The first step to recognizing when the investment opportunity arises is to understand some gold bullion fundamentals.

While most people are aware that the retail public has been buying gold bullion in huge quantities (as seen by the record sales from the federal government through the U.S. Mint), they may not know about the profound demand from nations like India and China. And even that level of demand still has been far less than the amount of gold bullion sold by investors in exchange-traded funds (ETFs). With ETFs selling close to 600 metric tons so far in 2013, demand for gold bullion far outweighs supply.
Recent price action is indicating that a short-term bottom is close at hand. Price action is extremely important when it comes to determining how good an investment opportunity really is—whether for gold bullion or any other asset.

As an example, just a few days ago I wrote the article “Are You Missing a Great Investment Opportunity in Precious Metals?” in which I discussed the investment opportunity in platinum. While there will be a deficit for platinum, it’s important to watch the price action for indications that the price of platinum is getting close to a bottom—the most favorable investment opportunity.
At the time I wrote the article, the price for platinum was a $1,299.50. Just a couple days later, the price for platinum moved quite favorably—it’s now trading almost $100.00 higher.

Similarly, it’s important to watch the price action of gold bullion. While there is an investment opportunity, mistiming it could prove costly.

The chart for gold bullion from August 2012 to July 2013 is featured below:



Over the last few days, there have been very bullish moves in the price action of gold bullion. It appears, at least over the short term, that demand is now beginning to overcome the level of supply.
The horizontal lines on the chart above represent the Fibonacci retracement zones from high to low on the recent moves in gold bullion. For those skeptical of technical analysis, the Fibonacci calculations for the retracement areas have proven quite prescient, as noted by previous areas in which gold bullion temporarily halted its decline.

While there are still many long-term headwinds in store for gold bullion, it appears to me to be a good short-term investment opportunity right now. I would use these Fibonacci retracement areas as possible target zones for a move up, with a tight stop placed below.

Fundamentally, one bullish impact of the low price of gold bullion is that some miners will need to slow or stop production until the price of gold bullion becomes lower than the cost of production. That temporarily lowers supply, which will increase the price of gold bullion, even if demand remains the same.

We are entering a new dynamic for gold bullion, as the asset purchase program by the Federal Reserve is likely to end over the next year, which will prompt higher interest rates. Higher interest rates are negative for gold bullion in an environment of low inflation, since the cost to carry gold bullion increases. But we don’t know for sure when interest rates will rise or if inflation will remain low. Historically, the Fed has been behind the curve, and I think there is a chance that inflation will soon begin to accelerate much faster than people are expecting.

Over the short term, I do think that gold bullion might have hit bottom and could move up into the $1,400 to $1,500 area. At this point, the risk to reward as an investment opportunity for gold bullion looks favorable.


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Reported buying interest around 1.50 figure has been breached and the GBP/USD trades at its lowest level in 4 months, around 1.4970. Both, the daily and the 4 hours chart present a strong bearish momentum, that suggest the downside remains exposed, with 1.4830, this year low from March 12th as next probable target. However, there is a major risk factor coming in a couple hours: US monthly employment figures.*The American economy is expected to have created around 163K new jobs, a bit below previous month, while unemployment rate is expected to come around 7.5%, so far the lowest level printed since early 2009. If numbers overcome such expectations, Pound will likely receive another hit in the chin against the greenback, and approach mentioned 1.4830 level. On the other hand, a disappointing ready will likely see dollar down across the board, as investors will consider is too early to continue pricing in a possible end for QE. In that case, 1.5010 will be the immediate resistance, followed later by the 1.5090 area.




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Article Summary: News trading often brings the biggest moves of the month. Because of this, it’s no wonder that trader’s seek out high importance news events to try and catch a big move. However, if you don’t have a solid plan for trading the upcoming event, you’re likely better off not trading at all. Here is a plan to make sure you’re ready when a big move comes your way.

“Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be.” – William Eckhardt

Have you ever wondered why markets move so much before a news release? Quite simply, it’s because of massive amount of traders are entering or exiting based on the news release and these traders want to do so at the price they feel is best. This causes a relatively large move immediately following a news release.

Now, trading the news is exciting. However, it’s also risky due to the large moves that follow a news release and because of these moves you need to be well prepared ahead of time if you’re interested in trading around big news events. First, it’s important to cover how to know when a big news event is coming out.

Learn Forex: News Events Cause Forex Prices to Fluctuate Greatly


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A Quick Primer on the DailyFX Economic Calendar

The DailyFX Economic Calendar is a key tool to help make you aware of when a High Importance event is coming out like the Federal Reserve Minutes or a Bank of Japan Rate Decision. To find the news that will most likely move the market, you should adjust the filter to only see High Importance events so that your calendar isn’t flooded with news that has little probability in moving the market. Once the filter is applied, you can begin looking for news events on currencies that you’re trying to find good opportunities in.

Learn Forex: DailyFX Economic Calendar Can Help You Be Aware Of Market Moving Events



The Two Kinds of News Results You Should Be Aware Of

Now that you know what news events to focus on, you should know that all news releases are not treated equal and you should know the differences. what the expectations for the numbers are. The expectations are important because the market has likely priced in the expectations so that should the news release is exactly at expectations you wouldn’t expect too large of a move. On the other hand , if news releases and the numbers are way out side of expectations, then you will see a massive move in which you should be prepared to trade if this style of trading fits your risk profile.

Whether you’re trading a short-term or longer-term strategy, you need to know how news comes out in regards to expectations. If markets come out in line with expectations then you will approach the set up completely differently than if the release is completely outside of expectations.

Release In Line With Expectations: Locate Key Price Levels to Enter Into a Trade
More than likely, you will see a reaction to the news event even if the numbers come in line. This can be because a flow of orders comes in the moves around prices but regardless of the reason this is your opportunity to have the market prove to you a level of support or resistance. If price touches that important level and holds, you can enter in a way so that your risk is still tight as the market continues business as usual.

Learn Forex: When News Comes Out In Line, Look For a Good Entry on the Current Move


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There are two simple and objective tools you can use to find support or resistance so you can identify a high probability entry off a news event. The first would be Pivot Prices which are objective points of support and resistance based on prior price action. The other tool would be a trendlines which is a manually drawn line connecting price points where the trend continue.

Release Outside of Expectations: Locate Breakout Levels to Enter Into a Trade

Learn Forex: Trendlines Can Help You Catch an Entry as The Next Move Unfolds


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If a trendline is truly broken, retested and then continues in the direction of the break, you have a clear trade with tight risk. Naturally, a trend line break would most likely happen only on high volatility caused by news coming outside of expectations. When an entry is triggered of such a move, you can place a tight stop below the trendline to prevent you from holding a counter trade if the trend resumes.
Happy Trading!
--Written by Tyler Yell, Trading Instructor


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