USD/CHF – Technical Analysis

With the weakening of the dollar that we have seen since the end of last week, there has been significant strength in this safe haven pair.

DAILY TIME FRAME

On the daily chart above, we can see that price was consolidating below the highlighted region, 0.91800, which was acting as resistance before breaking to the upside with price continuing to push higher until a reversal was seen at the 61.8 fib level. Paying close attention to the downward and upward arrows, we can see how the highlighted region has been offering resistance as well as support but once price broke below the region again, it continued to act as resistance as you can see by looking at the last downward arrow.

4 HOUR TIME FRAME

One the 4 hour chart above, we can see that one could have gained entry on this pair by looking at the break and retest of the ascending trend line which also lined up with the 61.8 fib level where  price created a lower high and went on to create a lower low where the first take profit region has already been achieved. Looking at the highlighted region, we can see that price has been very reactive to the 0.90550 area where price has found support in the past. If we have a 4 hour closure above this level, I would await a pullback using the fib tool to find potential entries.

Later tonight, we have Speaker of the United States House of Representatives, Nancy Pelosi, announcing whether a deal has been reached with Democrats regarding a stimulus package to support American households and businesses.  In terms of dollar news for the rest of the week, be on the look out for Initial Jobless claims as well as Manufacturing and Markit Composite PMI’s being released on Thursday and Friday, respectively.

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EUR/JPY – Potential Continuation to the Upside

Today, we will be going over the euro versus the Japanese yen. In the previous blog on this pair, we were looking at the psychological round number of 123.000 holding as support which was achieved. Price went on to create a higher high which saw a 160 pip move to the upside, coming a few pips short of the first take profit region.

4 HOUR TIME FRAME

On the 4-hour chart above, we can see that there was candle confirmation on the 61.8 with a morning star formation. At market open there was a gap to the downside but price went on to create a higher high, there was a pullback to the neck line of the inverse head and shoulder but price ultimately broke lower finding support just below the key level of 124.000.

1 HOUR TIME FRAME

On the 1-hour chart, looking at the upper highlighted region, we can see that this weeks high of 124.700 has been holding as resistance. We could wait for a break of structure above the shown highlighted region and look for candle stick confirmation on the retest of 124.700 shown by the arrows.

1 HOUR TIME FRAME

Also, on the 1-hour time frame, if there is a break of structure but 124.700 does not hold as support we could use the fib tool to gain entry at one of the preferred fib levels. A reversal off either of the fib levels would print a potential inverse head and shoulder pattern which would line up with a retest of the neckline of the higher time frame inverse head and shoulder pattern.

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EUR/JPY – Updated Analysis

In the previous blog on this pair, we were looking at a pullback to complete a potential inverse head and shoulder. Although this was not achieved, once we had the candle closure above the ascending parallel channel, price went on to climb 150 pips to the upside.

DAILY TIME FRAME

On the daily chart above, we had a bullish engulfing candle that confirmed the move to the upside. Once price broke out of the area of consolidation, we had an extended drive into the key level of 124.000 which lines up with previous resistance where price reversed from. Looking at the current daily candle, we can see that price has wicked into the psychological round number of 123.000 which also lines up previous support shown by the lower highlighted region.

4 HOUR TIME FRAME

On the 4-hour chart above, we can see how the lower highlighted region also acted as resistance while price was consolidating and has now potentially turned into support if this current candle can close above 123.000. If we have a candle closure on or above the middle-highlighted region, we could have a potential inverse head and shoulder along with the rejection of the 61.8 fib level. If price does break lower, we could find support around the 78.6 fib level as well as the ascending parallel channel.

Drop down to the lower time frames to look for entry opportunities and always remember to use the correct risk management. Subscribe to receive blog posts sent directly to your e-mail.

EUR/NZD – Technical Analysis

Today, we’ll be going over the Euro versus the New Zealand dollar with technical analysis starting on the daily time frame.

DAILY TIME FRAME

On the daily chart above, we can see that a new high was made on the 23rd of September when the price closed above the previous high of 1.77850. Looking at the fib tool plotted, we can see there was a double bottom on the deepest preferred level of retracement, the 78.6, proving that 1.75000 is a strong level of support where a higher low was formed.

4 HOUR TIME FRAME

Dropping down to the 4-hour chart, we can notice a falling wedge shown by the two trend lines drawn which are converging to one point which signals a potential bullish breakout.

1 HOUR TIME FRAME

Dropping down to the 1-hour chart, we can see price wicked into a previous level of support as well as the 61.8 fib level forming a hanging man. If this level holds as support, I’d expect further upside from here but if it does move below this level, the 78.6 fib level as well as a 3rd touch of the trend line would be the next place where price could potentially find support.

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EUR/JPY – Technical Analysis

Looking at the Euro versus the Yen, price has pulled back significantly since printing the post crisis high of 127.07 on September 1st. Below is a top down analysis of this pair starting on the daily chart.

DAILY TIME FRAME

On the chart above, we can see a fib plotted from the start of the most recent bullish drive to the most recent high, price has come 10 pips short of the 61.8. We can also see by looking at the candlesticks that price has begun to slow down around this level and if this significant fib level can hold as support, we can expect a move to the upside but if price breaks below, I would look at the next fib level to offer support. A bullish engulfing candle closure on this time frame, however, would offer further confluence.

4 HOUR TIME FRAME

On the 4-hour chart above, we can see that at market open we had a push below the parallel channel drawn with the current candle driving price back above the channel.

1 HOUR TIME FRAME

On the hourly chart, we can see that price is looking to break structure. If the current candle can close above 122.840 that would confirm a break of structure to the upside. Using the fib tool, I would then wait for a retracement into the horizontal ray which illustrates a potential inverse head and shoulder pattern and also lines up with the parallel channel which has been acting as dynamic support since September 21st.

With the Brexit deadline two and half weeks away, chief negotiators on both sides – Lord Frost for the UK and Michael Barnier for the EU – are set to oversee this week’s Brexit discussions before the formal meeting takes place on Friday. Failure to reach a deal by the deadline would result in the UK and EU adopting World Trade Organization (WTO) rules instead of having a free trade agreement which is what the UK are hoping for. Under the WTO rules, tariffs would be applied to most goods which UK businesses send to the EU, making UK goods more expensive and harder to sell in Europe, vice versa.

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USD/CAD – Technical Analysis

Today we’ll be going through the lower time frames on the U.S. dollar versus the Canadian dollar. With price continuing to create higher highs and higher lows, let us look at a potential long set-up.

4 HOUR TIME FRAME

On the 4 hour chart above we can see that the neck line of the inverse head and shoulder as well as the descending trend line was broken with price beginning to break to the upside again now after consolidating around the 1.33000 area.

1 HOUR TIME FRAME

On the 1 hour chart, we can see that the bullish momentum is continuing with the most recent candle printing a bullish engulfing creating a higher high on this time frame. For the best possible risk to reward, I would wait for price to create a higher low around the 61.8 fib level which will also provide a retest of the neck line area as well as the descending trend line. If price continues to create a new high without any retracement to the desired level, it will invalidate this set-up.

Remember to use correlating pairs to your advantage and to always wait for candlestick confirmation before entering any set-ups. Subscribe to receive updates sent directly to your e-mail.

GBP/USD – Technical Analysis

The Bank of England decided to hold bank rates at 0.10% but also discussed the effectiveness of negative rates which has seen the pound fall significantly in the last two hours.

4 HOUR TIME FRAME

Looking on the 4-hour chart above, we can see there was a pullback into the 78.6 as well as the key level of 1.30000 where price printed a doji and continued to fall 130 pips lower.

1 HOUR TIME FRAME

On the 1 hour chart above, we can see that price was trading above the ascending trend line and a reversal can be seen just short of the 78.6 where price continued to fall lower, closing below the trend line and hitting the first take profit area. Looking at the highlighted region, we can see that price is currently trading near a pivotal support/resistance area with the retest of the trend line also a potential area for resistance.

The Bank of England is expecting the third quarter GDP to be 7% lower when compared to the fourth quarter GDP of 2019.

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USD/CAD – Uptrend Continues

U.S. oil prices have dropped since the beginning of last week as oil stockpiles in the US rose significantly. The weakening demand can be attributed to the coronavirus pandemic and although U.S. refineries have only gradually returned to operations since storms caused shutdowns around the Gulf of Mexico region, U.S. crude inventories still rose to 2 million barrels and it is expected that oil will see a further slump in price next week.

DAILY TIME FRAME

Looking at US dollar versus the Canadian dollar above on the daily time frame, we can see price bottomed out around 1.30425 and plotting a fib from the opening candle of this week until the high, we’ve had a rejection off of the 61.8 which lines up with previous support and resistance shown by the highlighted region.

4 HOUR TIME FRAME

Dropping down to the 4-hour chart above, we can see that the highlighted region also illustrates a potential inverse head and shoulder pattern. We could see a push down into the right shoulder region again coinciding with a 3rd touch of the trend line but with the U.S. CPI numbers coming out positive it is unlikely that will be achieved. The right shoulder area would’ve offered the best risk to reward but dropping down to a lower time frames can offer more opportunity.

30 MINUTE TIME FRAME

On the 30-minute chart above, we can see how there was a lower time frame move off the 61.8 as well as a break and retest of the counter trendline drawn where entries could have been scaled in. 1.32000 has proven to be a key level which could offer support if price can break and close above that area.

Remember to always use correlating pairs to your advantage and follow the fundamental events of the pairs you are trading to add confluence. Hit the subscribe button below to receive updates sent directly to your e-mail.

European Central Bank Looking to Hold Rates

There were 4 key monetary policy decisions made today at the ECB’s Monetary Policy Meeting. It was speculated that the ECB would consider cutting interest rates in order to combat the deflation that was seen in August, but the decision has been made to hold rates for now, therefore confirming their accommodative monetary policy.

The interest rates on the main financing operations, the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively, which shows the ECB still has faith in the economy bouncing back from August’s poor inflation rate which came out at -0.2%. The negative inflation rate tells us that low demand in most industries are forcing European factories to cut prices in order to remain competitive in their respective industries. It is clear the ECB are looking to keep the key interest rates at their present or lower levels until the inflation rate converges sufficiently close to the projected level of 2%.

Quantitative easing will continue under the pandemic emergency purchase programme (PEPP) with a total of 1,350 billion euros. This has been put into place to offset the downward impact of the pandemic and to move towards the projected path of inflation. The Governing Council will conduct net asset purchases under the PEPP until at least the end of June 2021 in order to support the economic recovery.

Net purchases under the asset purchase programme (APP) will continue at a monthly pace of 20 billion euros, together with the purchases under the additional 120 billion euro temporary envelope available until the end of the year. It is expected that monthly net asset purchases under the APP will continue as long as it’s necessary to reinforce the accommodative impact of their policy rates, and to end shortly before the ECB decides to raise their key interest rates.

The Governing Council will continue to provide ample liquidity through its refinancing operations in order to support bank lending to firms and households. Overall, the ECB have chosen to keep their current monetary policy in order to stimulate economic growth as lower interest rates can encourage borrowing and investing which can subsequently push the inflation rate to their desired target.

With the ECB president, Lagarde, playing down the worries about deflation, we’ve seen EURUSD push to 1.90 for the first time in over a week and is moving towards the two year high of 1.20 which was achieved on September 1st.

Following fundamental events can be extremely beneficial to your trading style as it gives you an extra confluence and an overall directional bias on specific pairs. Remember to always stick to your personal trading plan and always use the correct risk management. Subscribe to this blog below to receive updates sent directly to your e-mail.

EUR/JPY – Updated Analysis

Welcome to another blog by AspireFX, today we will be covering what has taken place with the euro versus the yen since the last blog post.

4 HOUR TIME FRAME

Starting on the 4-hour time frame with the same zones drawn in as the previous post, I was anticipating a move into 126.000 which was achieved as we can see by looking at the downward pointing arrow. Looking at the upward pointing arrows, we see how the lower zone held as support leaving another two wicked rejections with price closing around the upper zone that was shown. After the second wicked rejection of the zone, price went on to create a higher high and the last rejection closed as a hammer leaving a huge wick to the downside. Looking at the fib drawn, we can see that the 78.6 retracement is still valid, and we could still see upside on this pair, however price has been consolidating around this area.

1 HOUR TIME FRAME

On the 1-hour chart above, we can see price has been struggling to break the resistance of 126.000 as well as the support of 125.300 so it’s clear that this pair is currently trading between a 70 pip range. Looking at the fib drawn on this time frame, we can see that the 61.8 lines up nicely with the previous support area and the current candle is attempting to engulf the previous one. At market open, price failed to make a higher high so we could see another move into the lower zone if the current zone fails to hold as support.

From a fundamental perspective, there will be GDP releases for both the yen and the euro tomorrow morning which will be very important to consider. The yen revised GDP for Q2 is forecast lower as there was a downward revision in capital expenditure meaning businesses and organizations spent less money acquiring/maintaining fixed assets. Household Spending in Japan for July will also be released tomorrow. Brexit talks will resume tomorrow as well, with the latest statement out of the UK saying that if a free trade deal is not reached by 15 October, both parties should move on as they have still not come to an agreement on key points such as fishing rights and state aid.

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