Wednesday, November 30, 2016

EUR/USD, NZD/USD and USD/JPY in the Weeks before the FOMC Interest Rate Decision



EUR/USD reached the resistance of the range at 1.06664 where it formed a double top and started falling towards the support. I think the pair will soon test the support around 1.05200 - 1.05000, but I doubt it will fall much below that level.

I expect a new move to the upside within the established range and for the consolidation to continue up until mid-December.



NZD/USD reached the trendline it broke below on the weekly time frame, and, as we could have expected, started falling again.

Despite that I think that the move to the upside will continue and the pair will keep oscillating around the trendline until mid-December again, when we will find out whether FOMC will hike the interest rate or not.



USD/JPY, on the other hand, has been rising for two days now after a small correction to the downside and at the moment it is above 113.500, which is close to the last high formed on the 25th November at the 113.895 level.


I think it is possible for the pair to continue rising towards 115.000 – 115.200, which is a strong resistance zone on the monthly time frame.

If the pair does succeed in breaking above that zone and the breakout is confirmed we could see it rise towards 115.500 – 116.000.


Tuesday, November 29, 2016

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Saturday, November 26, 2016

NZD/USD Has Broken Below the Flag on the Weekly Time Frame



The flag’s height is 452 pips and the breakout is at the 0.70960 level (the blue trendline). If the pair reaches the limit of that flag it should fall towards 0.66270.

The current move to the upside is likely an attempt to test the trendline that was broken through.

At the moment I cannot tell how long will this test last or what level it will reach, but the possibility exists for it to reach 0.72700 – 0.72800, where is the resistance trendline of the downwards trend channel (in red). As for when that could happen – we should not be surprised if the trendline test lasts up until FOMC announces whether it will hike the interest rate in mid-December this year.


Friday, November 25, 2016

GBP/USD Is Forming Yet Another Flag



Or at least that is what the pair looks like on the daily time frame where you can clearly see the range that formed in the past few days.

Of course, those bars are forming in a rather large zone of about 100 pips, which provides good trading opportunities.

There are two weeks left until the FOMC meeting on 14th December, when they will decide whether they will hike the interest rate, and in my opinion the closer we get to that day, the less volatile the markets will become while waiting for the news to come out.

So in my opinion up until mid-December the GBP/USD pair will continue forming a slightly bullish range but it wil be without a set direction.

I, personally, would trade this pair (as well as other instruments) on as small a time frame as possible, because it appears that until the FOMC announcement the market will be quite sluggish and chaotic.


Thursday, November 24, 2016

The EUR/USD Drop Stopped at the Critical Support Zone around 1.0520 – 1.0580



At the moment the pair has stopped at the critical level of 1.0518 and is forming a rather tight range between 1.0518 and 1.0580.


It looks like the USD will remain pretty strong at least until the FED meeting when they have to decide whether they will hike the interest rate or not.

The bulls do not want to lose control over the USD and I think that it is very possible for the pair to continue forming a range around this critical zone until the news about the interest rate come out in the beginning of December.

It’s difficult to make a prognosis about what direction the pair will take after that. From a technical analysis point of view I think that the pair will continue falling and if there is an interest rate hike we will see a major drop towards parity.

If the interest rate remains as it is I think there will be a move to the upside towards 1.1000 and above.


Tuesday, November 22, 2016

My Expectations about a USD/JPY Trend Reversal Remain Valid



Apart from the trend channel breakout, which can be seen on the 1-hour time frame screenshot, inside the trend channel itself the pair has formed a pennant pattern, and it has broken below  its support trendline too.

The pattern is especially obvious on the 30-minute and 15-minute time frames.


The RSI divergence on the 4-hour time frame remains valid.

At this stage the pair has fallen to 110.266 and it has rebounded from that level, testing the breakout levels of the trend channel and the pennant pattern. That is normal and in my opinion the move to the downside requires a catalyst to happen – a news event that will provoke a sell off of this pair. This usually occurs during the American or the Asian sessions, so all we can do now is be patient.


Monday, November 21, 2016

USD/JPY Climbed with 1000 Pips without a Correction. What Can We Expect?



Despite all the RSI divergences the USD/JPY pair continues rising, and up until now it has risen with 999.300 pips with almost no correction (from 101.190 to the last high at 111.183). The USD is in a very powerful bullish trend and the reason for this is often cited as the election of the new American president, but I think that the expected rate hike in December also has an influence over it.

Whatever the reason, the USD rose immensely, and since 105.050 until the last high the pair has been climbing in a range channel (in red). For the moment the closest target for the move to the downside is the support trendline of that channel.

Considering the RSI divergence between the last two highs on the H1 time frame as well as the immense rally of this pair without any significant correction, I think that the last RSI divergence could reach its limit.

That will be possible, however, only if the pair breaks below the support trendline of the channel and that breakout is confirmed, signaling for the beginning of a more long-term correction.


Saturday, November 19, 2016

NZD/USD Formed a Flag and Broke Below It



The figure is very clear on the weekly time frame and its height at its base is 550 pips. If the pair reaches its limit it will fall to 0.6530.


On the H4 time frame below the resistance of the middle line of the BB indicator you can see a bearish hammer bar, which is a signal for a renewal of the move to the downside.



On the M5 time frame there is a breakout below a figure that resembles a symmetrical triangle, with a height at its base of 20 pips. I say that it resembles a symmetrical triangle because only the converging trendlines make it appear so. The figure has filled out the entire space between the trendlines, and as we know when there is a symmetrical triangle the most favourable breakout occurs between 2/3rds to 1/3rd L distance from the beginning of the figure. Despite that the move to the downside has begun.



The closest support is at 0.7000, and the support zone around 0.6900 – 0.6850 (visible on the monthly time frame) is especially strong.



The Strong EUR/USD Bearish Trend Continues



That is logical, considering how strong the dollar has been in the past few months.

On the monthly time frame you can see that the pair is in a historical support zone, from which it has rebounded twice (during April and December 2015). The support zone is marked by a thick blue line on the chart above, but it is also marked by the BB indicator, since the pair has reached the support of the lower band.


On the weekly time frame the pair is analyzed according to the Elliott Wave Theory, based on which the move to the downside is not over yet.


On the H1 time frame there is a RSI divergence between two lows (you can see the same divergence on the H4 time frame as well at the moment), but considering the strong bearish trend it should not be a good enough signal for a deep correction.


On the M15 time frame there is a pennant and the pair has broken below its support trendline, heading towards its limit, which is at 1.0566.

For now we can only guess whether the pair will stop there and will rebound for a correction or it will continue falling, breaking below that historical support zone. At this moment it is clear for me, however, that the possibility to see EUR/USD reach parity is increasing.


Wednesday, November 16, 2016

The USD/JPY RSI Divergence Is Deepening



Although the USD/JPY pair did not reach the expected limit of the RSI divergence>>>  and continued climbing, said divergence not only remained but it also deepened. We can also see divergences on the 1-hour time frame – there are three for the past three highs alone, as you can see on the screenshot (in practice there are a lot more since the last RSI high that formed on 14.11.2016).

The pair formed two spinning top bars in the resistance zone around 109.50 on the 1-hour time frame, and when such bars appear at a resistance or a support level they are usually a signal for a reversal.

Despite all that the bulls remained in power and the pair moved to the upside with another 24 pips in the next two hours. At that stage the bulls could not remain in control and the next bar was controlled by the bears, engulfing the last two bullish ones.

The RSI divergence remained, signaling for a corrective move to the downside the limit of which is at 107.00 should it occur.

Now it remains to be seen whether this divergence will have the expected result or the pair will make another attempt to reach 110.00 before it begins a more serious correction to the downside.


Tuesday, November 15, 2016

The ActivTrades Financial Trading Summit 2016



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Monday, November 14, 2016

USD/JPY Could Fall to 107.00 – 106.91


The upwards USD/JPY trend continued during the last day of the previous week and in the beginning of this one, and the pair reached 108.156.

It is obvious that the move to the upside is very powerful, something made clear by the two strong pinbars on the daily time frame.

Despite that we can see RSI divergence on the 15-minute time frame between the last three highs, which is a signal that we can expect a corrective move to the downside towards 107.00 – 106.91.

It is also obvious that for now the bulls don’t want to give up and are trying to lengthen their control over the move to the upside, which will continue until the European session ends. If the divergence is a valid signal then the move to the downside will possibly take place during the American session.

On the other hand, if the pair continues rising I think its next target will be 108.50.


Saturday, November 12, 2016

EUR/USD Could Not Break below the 1.0830 – 1.0850 Zone and It Looks It Will Rebound from It



That is especially noticeable on the one-hour time frame, where there are several bullish bars, as well as a RSI divergence with a limit around 1.0890 or 1.0900.


However, that is not that much of a move to the upside and if said divergence does not deepen in the beginning of next week there could be a breakout below that strong support zone (between 1.0930 and 1.0850) and then the pair could continue falling towards 1.0650 – 1.0600 or even towards 1.0550, as it has been expected to for quite a while now.

All this could be a little surprising to happen given the news coming from overseas that could weaken the dollar, more or less. Still, if the pair does drop, that would be yet another proof that the markets follow their own direction, regardless of any political or economic news that can be the catalyst of significant, but short-term movements.


Friday, November 11, 2016

USD/JPY Is at a Crossroads, and the Market Couldn’t Pick a Direction Today



From a technical analysis point of view this pair is very interesting and at a first glance it offered an unambiguous solution.

There was a sideways consolidation channel with very well-defined trendlines in blue, which offered a movement of about 70 in the direction of a possible breakout.

In the end of the range there was a triangle (in red), which offered a movement of 68 pips after a breakout, as well as a RSI divergence on the four-hour time frame with an expected limit at around 104.50.

So far none of these signals has had the expected results. The pair did break below the triangle, broke below the sideways consolidation channel, then rebounded to test the triangle support trendline.


We should also not forget that the main trend is to the upside and every move to the downside is a correction.

Soon the market will close and I don’t think that there will be any further development for this week.

Considering the market volatility caused by the US election results in the past week, I think that any further observation and trading of this pair should happen after the start of the new trading week.


Thursday, November 10, 2016

A Day after the Elections a Powerful Daily Bullish Bar Is a Signal for the Continuation of the USD/JPY Bullish Trend



After the results of the US election came out and Donald Trump became the 45th President of the USA the markets reacted with a dollar crash, which was sharp and powerful, but occurred over a relatively short period of time.

The market, however, quickly overcame that panicked reaction and the currencies continued on their expected way.

The USD/JPY reaction was especially impressive – the pair managed to drop with 420 pips for about eight hours and then rebounded for about the same amount of time. In the end it formed a powerful bullish pinbar on the daily time frame that closed above the long-term trend channel (in blue) and formed an unquestionable breakout. After registering a low at 101.189 yesterday the pair closed at 105.648, and today, after an insignificant retracement, USD/JPY climbed above 106.50.

In my opinion, this confirms my expectation that the USD/JPY trend has reversed and from now on every retracement can be used to open new long positions.


Wednesday, November 09, 2016

Donald Trump Is the New President-Elect of the USA



The Republican candidates Donald Trump and Michael Pence have won the presidential elections in the United States of America.

Apart from winning the presidential and the vice-presidential seats now the Republican party also won control over the American Senate and House.

Donald Trump will undeniably appoint at least one Supreme Court Justice. Depending on who retires in the next four years he might appoint more than one.

Thirty-one state governors are also Republican, compared to only eighteen democrats and one independent. The Republican party has not had such major control over the governing of the USA since 1928.

I think that political change will lead to an inevitable economic change in the country. The market right now is certainly in great turmoil. The long-term effects of these changes remain to be seen.
After all, the Great Depression began in 1929.


Monday, November 07, 2016

The EUR/USD Correction Could Continue to 1.0966



The RSI divergence we could observe on the four-hour time frame was a signal that after the market opened this week there would be a move to the downside and that was exactly what happened.

The pair opened with a 80 pips bearish gap which was only partially recovered before the pair started moving slowly to the downside.

Every divergence has a certain strength and based on that we can figure out the target of the move that follows it. The divergence (in red) on the 4-hour time frame has a target around 1.0966.

We should not forget, however, that this week there will be important economic news coming out, and tomorrow is the day when the American voters will elect the next US president and the results of these elections could cause strong and unexpected moves in either direction.


Friday, November 04, 2016

Will You Trade During the Election Day?



 The election campaign of the candidates for the new four-year US presidential term is almost over. The elections will be held on 8th November and the American people will choose the new host of the White House.

My impression is that the markets are slowly getting less and less volatile. It is very possible that on Monday, which is generally a consolidation day, the volatility will drop even more while everyone are waiting for the election results.

Whatever those results turn out to be, they will undoubtedly leave a strong and long-lasting mark on both the external and internal policy of one of the most powerful countries in the world. And they will inevitably have a strong effect on the financial markets.

We will likely see strong volatility during the election day and right after.

My personal choice and intention is to wait out these elections as a spectator. To those who do decide to trade and trade the USD especially, I wish you success and good luck.



Wednesday, November 02, 2016

EUR/AUD and EUR/USD Are Forming a Powerful Bullish Trend



EUR/AUD has formed a RSI divergence between the last two lows, as well as an engulfing bullish bar on the weekly time frame and strong bullish bars once again on the weekly and the daily time frames, which demonstrate that the bulls are in control now.


These signals are unequivocal and very telling that at the moment the pair is forming a strong upward trend.

Every retracement this pair forms can be used to open long positions at the moment and, in my opinion, this RSI divergence between the last two lows on the daily and weekly time frames will result in a move to the upside towards 1.4884.


The same logic applies to EUR/USD.

The move to the upside began after a RSI divergence between the last two lows on the daily and weekly time frame, as well as an engulfing bullish bar on the weekly time frame. In this case the move to the upside resulting from this divergence will likely reach 1.1254.


Tuesday, November 01, 2016

“US Election Fever: Which way will it go”, an ActivTrades Webinar



This week is full of high impact economic events, but next week we will witness what is undoubtedly the event of the year, or more precisely, the US presidential elections. Whoever wins these elections will be the person who will shape the American – and in many ways global – social, political and economic landscape for years, maybe decades to come, especially considering that this president will likely appoint at least two Supreme Court Justices.

These elections have also undoubtedly affected the markets and will continue doing so in the near future. Fortunately the leading online broker ActivTrades is holding a free webinar called “US Election Fever: Which way will it go?” focused on this very topic, during which professional trader Paul Wallace will bring clarity to this vital issue.

The webinar will be held on 3rd November 2016, between 7pm and 8pm.

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I Expect USD/CAD to Fall Today



The pair hasn’t been able to break above 1.3415 for three days now and after it formed a pair of doji bars (the third hasn’t closed yet) we could accept that it is very likely for the pair to rebound from that level and move to the downside.
 

On the four-hour time frame there is a pennant and USD/CAD has already broken below it although during the European session the pair retraced to test the breakout level.

If my analysis is correct and the pair reaches the 112 pips limit of that pennant, then we can likely expect a drop towards 1.3266.

 I think that drop will most likely start, if it starts at all, at the beginning of the American session, since both currencies are very popular for both investors and traders on the American continent.