Thursday, August 31, 2017

EUR/USD Pulled Back From The Resistance Trend Line


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EUR/USD reached the resistance trend line of the channel, but could not break out above it at this stage and began depreciating. That is especially obvious on the D1 time frame.

On the same time frame we can see a RSI divergence between the last four highs, which, if it reaches its limit, could lead the pair to 1.1400, which is a little over than 38.2% of the pair’s rally from 1.04945 (26th February 2017).

The pair is in a resistance zone both on the monthly and weekly time frames. Not to mention that today is the last day of August and we will see how the monthly bar will close in a few hours, which will help us figure out whether there will be a deeper correction.

Tomorrow the US Change in Non-Farm Payrolls data will be announced, which usually causes major volatility on the market and sometimes becomes a catalyst for large movements. So if there will be a correction the news tomorrow could be the beginning of it.

Wednesday, August 30, 2017

GBP/USD May Be Range-bound For The Next Few Days


After dropping with about 500 pips (from 1.32684 to 1.27734) the GBP/USD pair found a support in the zone around 1.2770 – 1.2800 and started moving north.

On the W1 time frame the pair is in the zone around the middle line of the Bollinger Bands indicator and I think it may continue being range-bound in this zone in the following days.


On the D1 time frame there may be a possible move to the upside, to the resistance at 1.3040.
Alternately, the closest support for the pair is around 1.2880.

Of course, all that depends on the data of the US Change in Non-Farm Payrolls, which will be announced this Friday and which always causes major volatility on the market.


Monday, August 28, 2017

The Forex Calendar for This Week



This week there will be several events that traders should be aware of while they trade as they are likely to cause major volatility on the market. 

While on Monday there are no relevant events, on Tuesday we can expect a speech by the Reserve Bank of New Zealand Governor Graeme Wheeler as well as the US CB Consumer Confidence data.

On Wednesday we can expect the announcement of the US Crude Oil Inventories and the ADP Non-Farm Employment Change, as well as the US Preliminary GDP q/q data.

On Thursday is the announcement of the Canadian GDP m/m and US Employment Claims.

And finally, on Friday we can expect the US Non-Farm Employment Change and US Unemployment Rate, together with the British Manifacturing PMI.

Saturday, August 26, 2017

EUR/USD Keeps Climbing



After the pair broke out above 1.1910, which was a local high since 1st March 2015, it has shown that there will be an even larger rally in the coming months.

I think that next week EUR/USD will reach 1.1940 – 1.1950. Whether it will have any strength left to keep rallying without a significant correction remains to be seen.

Let’s examine the RSI indicator as well.
So far it is not showing signs of divergence on any of the time frames, which means that the further rally is very possible.

Also, August is about to end, so we need to pay attention to how the monthly bar will close. Depending on how the chart will develop in the last days of the month we could make a prognosis about whether it is time for a correction or, on the contrary, the upward trend will accelerate.


Thursday, August 24, 2017

USD/JPY Is At A Strong Crossroads



From 11th August 2017 to 21st August 2017 the pair has reached the zone around 108.60 – 108.90 three times without being able to break out below it.

What else can be seen on the charts:

From 114.494 (11th July 2017) to 108.906 (11th August 2017) the pair has formed a wedge, within which it has formed two triads of waves and on 11th August 2017 it reached the above-mentioned support zone.

The breakouts above the resistance trend line of the wedge began much earlier, around 110.85 (4th August 2017), after which the pair developed within a wide range and started attempting to breakout the strong support zone.

The conclusions:

In case there is a fourth attempt to break out below the support zone the possible target to the downside will be around 107.30 – 107.00, which is the diagonal trend line in red, which from a resistance has become a support.

In case that there is no breakout I think there will be a strong rally to the upside and the possible target will be around 120 -122.


Wednesday, August 23, 2017

The GBP/USD Bearish Trend Remains Valid


GBP/USD broke out below the diagonal support in the zone around 1.2860 – 1.2870 and kept depreciating in a state that almost resembled freefall. I think that the GBP could find a potential support around the 1.2700 level and in a case it succeeds in breaking out below that support it could continue depreciating toward 1.2600.

In the alternate scenario for a move to the upside a potential resistance could be the diagonal trend line (in blue) it broke out below around 1.2900 – 1.2930 but that is the less probable scenario, in my opinion.

In the long term there is a possibility for the pair to continue developing to the downside for a test of the support around 1.2000.


Tuesday, August 22, 2017

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Monday, August 21, 2017

EUR/USD Remains Range-bound


EUR/USD has remained range-bound for the past two weeks, and the drop of about 200 pips that has occurred up until now has been corrective.

That correction, however, does not appear to be over. I think that it is possible for the range to continue in the following days, since the economic calendar for this week seems rather devoid of news that could become a catalyst for major movements in either direction.

The closest support for the pair is around the 1.1700 level. A drop below that level and a breakout below the support trend line could lead the pair to 1.1600 – 1.1580.

A breakout above the resistance trend line would mean, I think, an acceleration of the move to the upside.


Friday, August 18, 2017

GBP/USD Is At A Strong Diagonal Support. USD/JPY Broke Out Below The Local Low



The trend line that connected the last lows (from 14th March 2017 until now) of the corrective rally of GBP/USD is a rather strong diagonal support for the pair. It has been consolidating at it for four days now without being able to pick a direction.

A clear breakout and D1 and W1 bars that close below the trend line would mean a drop to the next support at 1.2600 or even to 1.2550.

In case the bears fail we could see a rally toward 1.2900 – 1.2950.





Meanwhile the potential head and shoulders pattern on the USD/JPY chart did not come to fruition.

The third test of the local low at 108.729 was successful and the pair reached 108.601 mere minutes ago.

There are only a few hours left until the end of the trading week and the strong bears don’t seem to leave any hope for a rally.

I think that if the weekly bar closes as it appears it will – as a bearish pin bar, next week we could see a breakout below 108.129. That will be a significant signal for a strong and long-term drop in the following weeks and even months.


Thursday, August 17, 2017

There Is An Attempt To Form A Head And Shoulders Pattern On The USD/JPY Charts



USD/JPY failed to break out above 110.90 – 111.00 and the FOMC Meeting Minutes announcement yesterday served as a catalyst of an impressive move to the downside to the support at 109.50, which is a little above the 61.8% Fibo of the rally from 108.729 to 110.947.

At same time one can notice that the pair is forming a head and shoulders pattern on the H4 time frame which is not finished yet.

At the support on the H4 time frame there is also a bullish bar, which is a possible signal for a rally.
The head and shoulders pattern will be confirmed only if the pair does break out above 111.00. I think if there is such a confirmation and it reaches its limit we could expect a rally to 113.00.

In the alternate scenario there will be a drop and a test of the support at at 109.00 - 108.70.



USD/CAD Is Forming The Expected Drop



Despite the reversal pattern>>>  the USD/CAD pair formed another high before it started dropping.

Despite that, on the H4 time frame we could discern a figure that could be interpreted as a flag with some caveats.  There has been a breakout and the pair has tested it before it reached 1.27778. That, in turn, allowed traders to open short positions from higher levels.


 The limit of the trend channel (or the flag – whatever we call it we should be aware what would follow next) is around 180 pips from the breakout level. That means that if the pair reaches this limit it should drop to 1.2526.

It is too early to make a prognosis what will happen after that, but I think the main scenarios are two – a drop to test the local low at 1.24135 or a correction to the upside.

We should watch how the W1 candlestick will close, or even how the monthly one will close, although there is some time until that happens, in order to form a more long term prognosis.



Tuesday, August 15, 2017

The USD/JPY Correction May Be Over



The end of the correction will be confirmed after (or if) there is a breakout above 111.05 and the pair forms a new high compared to those it formed during its drop.


Despite everything, up until this moment there have been enough arguments supporting the idea that the upward trend has been renewed and that the long-term target is at 122.00 or even 125.00:
-The pair has broken above the downward trend channel without a doubt.

-The move to the upside from 108. 729 up until now has been in the form of an impulse and has nothing in common with the corrective rallies the pair formed during its move to the downside.
If this supposition is correct then after nine months of wide consolidation there are serious reasons to expect a strong and long-term rally.

The swap for this pair being positive is yet another serious reason (apart from the ones listed above) for the long positions that have been opened so far to be kept open and for new ones to be opened while the pair rallies.

The W1 time frame showcases the possible rally to its target to the upside.

This scenario could be invalidated in case the pair drops below 108.729.


Monday, August 14, 2017

USD/CAD May Renew Its Move To The Downside



After a short-term correction in favour of the USD USD/CAD will probably renew its move to the downside.

On the D1 time frame the pair has reached the resistance marked by the Bollinger Bands indicator in the zone around 1.2750 and it has not been able to break out above it, forming a pair of daily bars that are a rather clear reversal pattern.


Оn the H4 time frame the pair has dropped with about 100 pips, after which there was a short-term correction and I think that there will likely be a new drop (which will form three waves to the downside). If my supposition is correct, then the first target to the downside should be the zone around 1.2615 – 1.2600.

If the drop continues, the next target will be in the zone around 1.2580 – 1.2550, which is a strong support zone visible on the D1 time frame.


Saturday, August 12, 2017

USD/JPY: A Correction Or A Trend Reversal?





That is the question I asked myself at the end of the past trading week and even during the last hours of the American trading session.

 The reason for that are the first signals for a deeper correction at least, if not a trend reversal.  And those signals are:

- On the W1 time frame the pair has reached a strong support zone around 108.80 – 108.70.
- On the H4 time frame the waves the pair formed to the downside came in threes with a relatively similar height and are very visible in the two trend channels (in red and blue).
- On the H1 time frame during the news on Friday and the volatility that followed the pair formed very typical sharp movements in both directions, which are often the first signal for a trend reversal.

And, in the end, a trading idea for next week:

The trend channel that formed on the H1 time frame has a height of 31 pips and there is a possibility for that to rise to 38 pips. In case of a breakout there could be a rally with the same height. After the pair reaches the limit of that rally I think the pair will retrace for a test of the breakout and it may or may not reach the trend line, according to the theory. That is when it will become clearer whether USD/JPY will start moving to the upside or not.