joaquinmonfort

GBP/USD: at lows threatening to breakout of range

Cable has moved down to the base of the consolidation zone, putting in a temporary low just one point above the previous 1.5541 lows (visible on 4-hr chart). Since re-touching the range floor the exchange rate has pulled back up a bit although it is still quite close to the lower border line.

If there is a third retouch of the lows that could be quite critical and lead to a stronger breakout – assuming it does breakout.

On balance I expect a move lower eventually, since that would be in line with the dominant mid-term down-trend. A move below the 1.5541 lows would provide confirmation, targeting support from the S2 monthly pivot at 1.5483 initially, and perhaps even lower eventually, with a final target calculated by extrapolating the height of the range down, to 1.5335. Alternatively 61.8% of the height gives a closer target at 1.5410.

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EUR/USD: recapitulation back into the 'zone'

EUR/USD has weakened again after briefly breaking out of the possible wedge pattern and touching the 50-day MA.

It has now fallen back down to within the wedge pattern, apparently resuming the broader down-trend lower.

I would say on balance the v.short-term trend visible on the 4-hr chart is now down, however, ideally I would want to see further confirmation from the pair breaking below the 1.2277 lows, which would then probably signal a continuation lower to support at the S2 monthly pivot at 1.2230.

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USD/JPY: v.short-term trend down but pair bouncing

In the very short-term the pair is in a mini-down-trend since rolling-over at the December 8th highs.

Early this morning, however, it formed a long-wick hammer at oversold extremes, on the 4-hr chart, which is a strong recovery sign – and sure enough the pair has moved up since then.

Nevertheless the v.short-term down-trend remains intact, and given the high event risk on the horizon, there is the possibility of a break lower. A move below the hammer lows at 115.56 would generate an initial target at 115.00 round-number support, followed by 114.70.

Despite the short-term downside bias the pair is in a long-term up-trend which will probably resume at some point. There is a possibility that the current move down has already finished after forming an a-b-c correction, visible on the daily chart, however, its too soon to say.

It is the FOMC today and much volatility in either direction is possible.

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EUR/USD: resistance overhead; FOMC on tap

The EUR/USD pair is rising in a very short-term up-trend; it has breached the previous highs and moved up as far as the 50-day MA peaking at 1.2569 and then rotating and falling back down; it is currently trading at 1.2470.

The very short-term trend remains up and is likely to extend; the exchange rate may also have broken out of the falling wedge pattern visible on the daily chart, generating an upside target of 1.2600. Upside is capped, however, by several layers of resistance, including the 50-day and the R1 monthly pivot at 1.2589.

The FOMC is today and much volatility is expected. Traders need to act with caution or stay out of the market altogether. Given the strong recent payrolls data there is speculation the FOMC may take a hawkish stance, which would see a recapitulation of the pair, although global factors mitigate.

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GBP/USD: trapped within range

Cable is in a sideways range within a broader down-trend. Eventually it will probably break lower, out of the range, since the trend prior was down and so it is likely to continue.

A break below the consolidation zone lows at 1.5541 would probably lead to a move down to the monthly pivot at 1.5483.

Alternatively, given the v.short-term trend, visible on the 4-hr chart, has a bullish bias, it could also possibly break higher out of the range, with a move above the 1.5825 highs signalling a bullish move out of the zone, towards a target at the R1 monthly pivot at 1.5917, although this is less probable given the overall bearish trend.

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EUR/USD is breaking higher; the pair has moved above the 1.2494 highs and is extending the v.short-term up-trend.

The move this morning confirms a breakout of a possible falling wedge pattern on the EUR/USD daily chart, generating an upside target of 1.2600, as a minimum expectation.

The R1 monthly pivot situated at 1.2589, however, is a closer target as it too is forecast to provide resistance at that level.

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USD/JPY: signs of broader bearish correction

The pair remains in a very short-term down-trend visible on the 4-hr chart, despite a pull-back following the news Prime Minister Abe's DLP party won elections held on Sunday.

The three down days after the highs reached last week were a bearish sign that there will probably be more downside, probably even down to the 114.70 level.

There is a substantial amount of support just below the current lows, first at 117.25 and then at 116.75, from the monthly pivot, however a clearance below the pivot including a 20-pip margin – so below 116.55 - would probably indicate further downside, with a target, initially at 116.00 round-number support.

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EUR/USD: fledgling up-trend continues

There is little change in the analysis: the EUR/USD is in a long-term down-trend but there are faint signs of a bullish reversal on the horizon. We have had three up-days in a row off the lows - which is a bullish sign - and the very short-term trend visible on the 4-hr chart is also now up after the pair made two higher highs and higher lows.

The pair may have formed a wedge pattern on the chart which is now in the process of breaking out. If it successfully breaks out of this pattern then that will generate an upside target of 1.2600 as a minimum expectation.

For confirmation of a continuation of this fledgling bullish trend higher, I would ideally wish to see a move above the 1.2494 highs, with a target at the R1 monthly pivot at 1.2589.

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GBP/USD: trend-line resisting further gains

Cable is currently pushing up against resistance from the major trend-line situated in the 1.5720s.

The very short-term trend, as measured on the 4-hr chart is now arguably up since forming two higher highs and two higher lows, however the longer-term trend is definitely still down, and likely to resume.

A break above the 1.5756 highs and the monthly pivot at the same level - as well as a 20-point margin of confirmation – giving a level a 1.5776 - would mark a definitive break above the trend-line, extending the fledgling v.short-term trend higher, to a potential initial target at the 1.5824 where a support and resistance line is situated.

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EUR/USD: potential for upside breakout

The EUR/USD remains in a long-term down-trend although there are signs of a potential bullish reversal on the horizon. For example, we have just had three up-days in a row – which is a bullish sign – and the very short-term trend, visible on the 4-hr chart, is bullish after the pair made two higher highs and higher lows.

It is debatable whether or not the pair has broken out of a possible wedge formation visible on the daily chart, but if it has then that could signal the potential for more upside up to a target at 1.2600.

In any case I would ideally wish to see a break above the 1.2494 highs to confirm a move up to the next target at resistance from the R1 monthly pivot level at 1.2589.

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Usd/jpy:

Monday, Tuesday and Wednesday's three down days in a row were a strong bearish sign – possibly even of a reversal of the medium-term trend.

This is particularly the case as they have came after a possible measured move, which is a

large zig-zag pattern, which in this case started in July 2014.

The three down-days could have signalled the start of a period of weakness or consolidation for the pair. Based on past performance there is a 66% chance of the pair moving at least 300 points below yesterday's low. In this case that gives a target of 114.70.

The v. short-term trend, visible on the 4hr chart, is also down, after making two lower lows and two lower highs, and this further supports the possibility of more down-side evolving. The only problem is that there is a substantial amount of a support now, not far below today's lows, first at 117.25 and then at 116.75 from the monthly pivot.

The pair has rallied up to the trend-line this morning, and then retracted back from it, and the broader trend is still up, however, a clear breach of the monthly pivot including a 20-point margin – so of 116.55, could lead to a move down to 114.70.

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EUR/USD: fledgling bullish signs

Monday, Tuesday and Wednesday's three down days in a row were a strong bearish sign – possibly even of a reversal of the medium-term trend.

This is particularly the case as they have came after a possible measured move, which is a

large zig-zag pattern, which in this case started in July 2014.

The three down-days could have signalled the start of a period of weakness or consolidation for the pair. Based on past performance there is a 66% chance of the pair moving at least 300 points below yesterday's low. In this case that gives a target of 114.70.

The v. short-term trend, visible on the 4hr chart, is also down, after making two lower lows and two lower highs, and this further supports the possibility of more down-side evolving. The only problem is that there is a substantial amount of a support now, not far below today's lows, first at 117.25 and then at 116.75 from the monthly pivot.

The pair has rallied up to the trend-line this morning, and then retracted back from it, and the broader trend is still up, however, a clear breach of the monthly pivot including a 20-point margin – so of 116.55, could lead to a move down to 114.70.

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GBP/USD: possible resumption of down-trend

Cable has risen up to just under the major trend-line at 1.5720 and has since started to pull-back. It formed what looks like an a-b-c correction on the 4-hr chart and it may be about to resume the down-trend now.

The overall trend down, which began at the 2014 highs is still intact and therefore expected to continue. A break below the current lows at 1.5541 would probably indicate such a resumption was underway, with the next move anticipated to reach a target at the S1 monthly pivot situated at 1.5484.

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EUR/USD: possible a-b-c correction now complete

The EUR/USD pair continued rising and completed an A-B-C correction on the 4-hr chart, within a dominant longer-term down-trend.

Wave C reached equality with A and briefly surpassed a trend-line for the move down, reaching 1.2447. Then it formed a long-wick shooting-star reversal candlestick, which is normally a strong bearish signal. There is now the possibility that the down-trend is resuming.

A breach of the B wave swing lows at 1.2291 could probably confirm the bearish resumption, with the next move down probably reaching support at the S2 monthly pivot at 1.2231.

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EUR/USD: a-b-c correction in down-trend

EUR/USD has formed an A-B-C correction within the dominant down-trend.

Wave C of the ABC has not lengthened a full 100% of A but it has lengthened more than 61.8%. There is a possibility that C could extend 100% as this would also reach a trend-line and a possible reversal point at 1.2395.

Eventually I expect the down- rend to resume, moving back down towards Monday's lows. A breach of the B wave swing lows at 1.2291 would probably confirm the bearish resumption, with the next move down probably reaching support at the S2 monthly pivot at 1.2231.

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GBP/USD: down-trend expected to extend yet lower

Cable has recovered a little today after bearishly breaking out of its range following the dollar's sudden rise on Friday.

Overall it is still in the mid-term down-trend which began after the July 2014 highs and is expected to continue eventually, once the current bounce has run out of steam.

A break below the current lows at 1.5541 would probably indicate such a resumption was underway, with the next move anticipated to reach a target at the S1 monthly pivot situated at 1.5484.

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EUR/USD: down-trend resuming but support ahead

The down-trend has resumed and it will probably continue pushing lower.

There is, however, much support not far below the current level. This starts at 1.2230 provided by the S2 monthly pivot and then again at 1.2215 from a major multi-year trend-line.

Ideally I would want to see a clearance of both these levels, including a 20-point margin – so below 1.2195 – for confirmation of more downside. The next target down would be at round-number support at 1.2100, followed by the 1.2042 historic lows.

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USD/JPY: breaking clearly above 120.00

The pair has pushed up through the key 120.00 level with surprising ease and has continued higher. It is currently in the 120.40s.

The trend is up on all time-frames and is expected to continue higher. The next major resistance level is at 120.95 where the R1 monthly pivot is situated. For trader's keen to enter the market there is a possible opportunity to go long if the pair pushes above the current day highs at 120.45, with a target at R1.

For more patient investors, a break above R1 at 120.95, including a 20-point margin could confirm further upside to a target at 122.00, at round-number resistance – or major highs at 123.43.

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EUR/USD: spike higher but down-trend still dominant

The EUR/USD rose rapidly after yesterday's ECB meeting even though the governing council elected to do nothing, and the outlook for monetary policy changed little.

Nevertheless there was a spike higher which reached the major trend-line for the longer-term bearish move down. Since then the pair has begun consolidating. The overall trend remains down, but the spike higher could continue after the current pause has completed.

Because the broader trend is down traders would normally look to sell, however there is much support not far below current levels, at 1.2230, provided by the S2 monthly pivot and then again at 1.2215 from a major multi-year trend-line.

Until these support lines are breached I would not recommend trading. Ideally I would want to see a move clearly below the 1.2215 level, with initial confirmation coming form a move below 1.2195 and then 1.2180, and a target at 1.2100 and then at 1.2042 from historic lows.

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GBP/USD: coiling into small triangle

Cable is in a messy sideways range since establishing a new low in the middle of November. This tranche of activity could be interpreted as a small slightly imperfect triangle pattern.

It is the BOE rate meeting today, but extra volatility is not guaranteed as the bank is expected to leave policy unchanged and and if there are changes in voting which could trigger volatility these will not be divulged until later when the minutes are published.

It is most probable that the exchange rate will break lower following in line with the direction of the larger down-trend. A move below the 1.5584 lows of the 1st December would probably confirm a move down to the S1 monthly pivot at 1.5484.

Alternatively, a breakout higher would be confirmed by a move above the 1.5825 highs, which would probably lead to a move up to 1.5869 support and resistance – however traders should act with caution as this is in the contrary direction to the broader trend.

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EUR/USD: down-trend extending; ECB meeting today

The EUR/USD pair has broken out of its consolidation range and is continuing its down-trend lower. The pair has moved under the S1 monthly pivot at 1.2347 and it will probably now continue down in line with the broader trend, to the next target at S2 at 1.2230.

Today is the ECB rate meeting and much volatility is expected, as well as the possibility of a break lower, with a move below today's 1.2294 lows possibly confirming a continuation down to the pivot at 1.2230, or even possibly all the way to the multi-year trend-line at 1.2215.

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USD/JPY: pushing higher

No real change: the pair is in a strong up-trend which is likely to continue. The next target is at 119.75, calculated from the November 3rd measuring gap, followed by considerable resistance from the major round-number level at 120.00.

Today has seen further gains further reinforcing the trend. There is slight divergence with both RSI and OBV but it is not acute, nevertheless there are no signs yet from the exchange rate itself that it is starting to correct. Therefore overall, more upside is to be expected, up to the aforesaid targets.

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EUR/USD: bearish breakout from range

The dominant down-trend has resumed and pushed lower. The pair appears to be breaking out of the sideways range it has been in during most of November. The bullish convergences with MACD and OBV have been ignored and we are going lower.

The pair has breached the November 24 lows and the S1 monthly pivot and is moving down towards the next target at the S2 monthly pivot at 1.2230.

A re-break of today's current 1.2322 lows would probably lead to a continuation down to the target at S2 although I recommend a cautious approach to money management.

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GBP/USD: possible bull-flag on 4hr chart

Cable has bounced from the 1.5590 lows back up into the range. It has been in a broadly sideways trend since the 14th November lows.

There is a possibility that a bull-flag is forming on the 4-hr chart which could lead to a move higher, with an extension up to 1.5800. A break above 1.5730 could provide confirmation the flag was breaking higher, although given the volatile sideways market environment, and the dominant down-trend, a cautious approach to money-management is recommended.

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EUR/USD: falling back down into range

The overall trend continues to be bearish and remains intact. The pair is now moving down back within the range after being rebuked by the trend-line.

There are still faint signs of a potential reversal on the horizon. Yesterday I noted that on the daily chart there is a triple convergence between MACD and price and double between OBV and price. Without an actual move higher, however, it's too early to say whether these convergences will bear fruit in the form of a rally.

Nevertheless a move above the 1.2531 highs would supply more bullish confirmation and see a probable move up to 1.2589.

There is much support underpinning the 24th November lows, but a clearance of those lows, by breaking under 1.2327 might signal a move down to a target at the major multi-year trend-line at 1.2215.

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