USD/JPY Is Renewing Its Rally

The RSI indicator on the USD/JPY H4 time frame made an important breakout above divergence resistance trend line (in red) that has been formed from 23rd October 2017 to 6th November 2017, the continuation of which has been tested many times up until the breakout.

The RSI indicator however could now break out below the second trend line of the divergence (in blue) and during this whole time it developed between the two lines.

Since the moment of the breakout it was clear that the pair would start rallying and anyone who knows the RSI indicator and its signal has probably already made use of it.

What can we expect from now on?

In my opinion, the pair will renew its rally and the first serious resistance to the upside is around 112.70 – 112.80. If there is a successful breakout above that resistance we could expect the rally to continue to 113.20.

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The Forex Calendar For This Week

US Fed Chair Janet Yellen’s term ends next year and president Trump did not reappoint her but appointed Jerome Powell in her place. This week Fed Chair Designate Powell will testify on his nomination before the Senate Banking Committee in Washington DC and that is bound to have a significant effect on the market. Apart from that here are the other scheduled events that we should be aware of while we trade:

On Monday there are no big events, but on Tuesday will be announced the British Bank Stress Test results and BoE Governor Mark Carney will hold a press conference, then will be announced the US Consumer Confidence CB. Jerome Powell will testify before the US Senate Banking Committee and after him the US Treasury Secretary Steven Mnuchin will speak at the annual conference on the evolving structure of the US treasury market.

On Wednesday we can expect an entire day of OPEC meetings, the announcement of the US Preliminary GDP q/q, speeches by the BoE Governor Carney, the US Fed Chair Janet Yellen and then the US Crude Oil Inventories will be announced.

On Thursday we can expect the European CPI Flash Estimate y/y and the US Unemployment Claims.

On Friday will be announced the British Manufacturing PMI and the US ISM Manufacturing PMI.

GBP/USD May Test The Local High At 1.36554

On the monthly time frame the potential target of the medium term rally of the GBP/USD pair is the zone around 1.3950 – 1.4000 and for the moment the pair is attempting to resume its move to the upside to that target.

 

The bars on the W1 time frame are also a signal for the continuation of the rally within the trend channel (in red) with the first strong resistance on the same time frame is on the zone around 1.3520 – 1.3550. In case the pair breaks out above that resistance we could expect the rally to continue to the resistance trend line (in red) of the channe.

Despite that we should keep in mind the already formed bearish bar on the monthly time frame (October 2017) which is at the high of the rally from 1.19858 (16^th January 2017) to 1.36554 (20^th September 2017) and usually is a signal for an impending drop. This bar is on a very large time frame, however, so it is uncertain how trustworthy of a signal it is. So the abovementioned zone around 1.3520 – 1.3550 should be watched very carefully, since it is not out of the question for the pair to begin falling for a test of the historical low at 1.19858 after it.

EUR/CAD May Possibly Rise to 1.70+

The end of the month is near and it is a good idea to watch the EUR/CAD pair, because based on how the pair is developing on the smaller time frames on the monthly one could form a pin bar.

On the W1, D1 and even H4 time frame the pair has signals for a move to the upside.

On the D1 time frame the next target of the rally should be around 1.5250 - 1.5270. If the pair breaks out above that resistance level I think we could expect for the rally to continue in the long term to the upper part of the trend channel around 1.70+.

In the alternative scenario there will be a drop to the support trend line of the channel around 1.4500, but this scenario appears less probable.

USD/JPY Is Consolidating Again And The Depreciation Is Likely To Continue

After a week of focusing on The Turtle Experiment, which is an interesting and exciting part of the history of Forex trading, this week I decided to return to the analysis of one of my favourite currency pairs so let’s examine what is happening on the market.

I am looking at the USD/JPY charts and what I am seeing convinces me yet again that the Japanese candlesticks patterns should be followed without a doubt.

On the W1 time frame USD/JPY has formed three bars under the resistance at 114.80 – one doji and two spinning top bars, which were a signal for the current depreciation, which is now a fact.
The pair reached the zone of the first serious support around 111.80 – 111.40.  In case there is a breakout I think we will see a drop to the support of the range around 108.000 – 107.000.

The candlestick pattern on the W1 time frame is a signal for just such a drop.

Possible Scenarios For The EUR/USD Correction

EUR/USD continues the correction of the rally from 1.04934 to 1.20924 (from 22nd February 2017 to 8th September 2017) and the possible first wave to the downside (from от 1.20924 to 1.15529) developed within a trend channel (in red) reaching the trend lines of support and resistance twice and breaking out above the resistance trend line at around 1.1740.

The test of the resistance trend line also developed up until now. If we interpret the trend channel as a flag then the pair should rally and test the local high at 1.20924 after which it should develop another wave to the downside as a part of the correction.

The second scenario is for this to be a false breakout and for the pair to drop directly to 1.1480 and below.

The third scenario is for the development of an inverted head and shoulders pattern (in blue) after which the pair will resume its rally to 1.2092.

The Forex Calendar For This Week

The biggest scheduled event this week that can affect that market is the announcement of the FOMC meeting minutes on Wednesday, but apart from that here the other events that we should be aware of before we begin trading:

On Monday the ECB President Mario Draghi will speak twice and later today will be announced the Australian Monetary Policy Meeting Minutes.

On Tuesday the Reserve Bank of Australia Governor Philip Lowe will give a speech, then the UK will announce the Inflation Report Hearings, after which the US Fed Chair Janet Yellen will speak.

Wednesday is particularly eventful. Apart from the FOMC meeting minutes, we can also expect the UK Autumn Forecast Statement, the US Core Durable Goods Orders m/m, Unemployment Claims, Crude Oil Inventories and the NZD Retail Sales q/q.

Finally, on Thursday will be announced UK Second Estimate GDP q/q, the Canadian Core Retail Sales m/m and the Swiss National Bank Governing Board Chairman Thomas Jordan will speak.

On Friday there are no big scheduled events.