USD/JPY Formed a Double Bottom and Started Rising

My prognosis for the USD/JPY pair appears to be coming true.

After the pair formed a double bottom which is very obvious on the daily and weekly time frames, USD/JPY started rising and it reached the resistance trendline.

Of course, such a long-term trend isn’t easy to reverse, but if the pair does break out above the trendline this could be the first signal that a reversal is about to happen.

USD/JPY has been falling for 14 months, and I think that if there is a reversal we can expect a move to the upside towards 115.00 – 117.00 which will likely last another 12 – 14 months, perhaps even longer. The bullish move will be corrective, which I think is the hardest to trade out of the entire cycle of five impulse and three corrective waves of the Elliott Wave Theory. In my opinion, that means that intraday trading will be the most prudent approach.

GBP/USD Is Forming a Sideways Consolidation

After the powerful move to the downside provoked by Janet Yellen’s speech on Friday which continued during the European session on Monday, GBP/USD has been forming a sideways consolidation for the past 36 hours. The zone in which the pair is forming said consolidation is very clear on the four-hour time frame – it is between the support at 1.30587 and the resistance at 1.31196.
The height of the range is 61 pips.

Should there be a breakout below or above either of the levels mentioned above the expected further movement of the pair will be the height of the range, beginning from the breakout level.

My expectation is that the breakout will be to the downside, but we should not forget that surprises are always possible.

EUR/USD Fell and It Will Likely Continue Falling

After the positive way in which the FED Chair Janet Yellen spoke about the US economy back on Friday the EUR/USD pair fell with almost 170 pips, and today, at the beginning of the new trading week, the pair continued falling and dropped with another 50 pips.

Despite all that, if we look at the daily and weekly time frames we will see that the pair is in the strong support zone around 1.1150 – 1.1200.

We should keep in mind, however, that in the end of the current week will be announced the new data about the US change in Non-farm Payrolls, which usually causes strong market volatility. I think that it is quite possible for the pair to remain in a relatively tight range around its current level until then and on Friday we might see another drop towards the support at 1.0950, which can be seen on the weekly time frame.

The Market Finally Started Moving Thanks to Janet Yellen

The long-awaited speech of the FED Chair Janet Yellen in Friday had the expected result and it gave the market the logical push, causing all currency pairs to move in favour of the USD.

Some of these pairs moved in a predictable way – for example, AUD/USD started falling after the two bearish pinbars that formed on the weekly time frame.

The GBP/USD movement wasn’t particularly surprising either. Before Yellen’s speech there were a pair of spinning top bars on the daily time frame below the resistance at 1.3280 (the pair failed to reach 1.3300 after all) which were a good reason to believe that the corrective move to the upside was over and that there would be a new drop.

The situation with the USD/CAD was interesting – many people thought that the drop would continue, but that didn’t happen. In my opinion, at this stage the move to the downside is over and we are likely to witness a new move to the upside towards 1.3250 and even a new high above 1.3300.

The Market Is Very Calm before Janet Yellen’s Speech

 The market is terribly calm today – that usually occurs before important high impact events, such as the speech that the FED Chair Janet Yellen will give tomorrow, which is likely to create some volatility among the USD-related currency pairs.

The only currency pair, which today had if not a clear direction, then the expectation for a clear direction, was GBP/USD.

The pair logically started dropping after the obvious bearish bars formed on the four-hour time frame during the night and at this moment it has reached the diagonal trendline at 1.3170.

This is a very important level because if the pair forms a bullish bar that is a signal for a reversal here, the move to the upside towards 1.3270 could be renewed.

In the alternate scenario GBP/USD will continue dropping towards the support at 1.3050.
Whichever of these scenarios turns out to be more valid, I doubt it will become reality before Janet Yellen’s speech tomorrow.

The British Pound Continues Rising – Its Target Is 1.3300

As bad as the news coming out of the UK were after the referendum, there is no way for the British pound to only keep dropping. The market does not abide movement in one direction only.

So after the huge drop came the returning relative sense of normalcy on the market, and, naturally, the GBP had to start moving to the upside, even if it was just a correction (for now at least).

The move to the upside began from 1.2865 and has continued for nine days now.

There are only around 60 pips left until GBP/USD reaches the resistance at 1.3300, which the pair will likely climb tomorrow. I think it is not very likely for the pair to do that today. In my opinion, we will likely see a sideways consolidation until the end of the American session today and during the Asian one as well, and tomorrow we can expect a new move north.

I think I will close my long positions at this level and I will wait and see how this pair will behave. There is a possibility it will continue rising, but it is still too early to think about using that.

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AUD/USD Closed the Second Weekly Bar as a Bearish Hammer – The Drop Is a Matter of Time

It was especially important to follow how the second bar on the weekly time frame would close.

As you can see, the two bars are almost identical and are unambiguous signals for future drop, although today the pair moved correctively to the upside. As it is, that move to the upside reached the resistance at 0.7640, marked by the middle line of the Bollinger Bands indicator on both the four-hour and the daily time frames, which means that said level is a very strong resistance level and in my opinion this is a good place to open short positions, considering the expected bearish movement.

If the pair does start dropping we can expect a strong support at 0.7450.

On the other hand, if move to the upside continues for the moment AUD/USD will possibly first test the resistance trendline (the purple line), in which case I expect it to form a slightly bullish sideways consolidation.

Will USD/JPY Form a Double Bottom?

Although USD/JPY renewed its move to the downside, it is yet to form a new low.

If we look at the daily time frame we will notice that 100.00 – 99.00 is a very strong resistance zone. The last two candlesticks on the same time frame are spinning tops , which means that there is a significant possibility for the pair to form a double bottom and to start rising again. We will have to keep an eye out for the kind of a candlestick USD/JPY will form in the beginning of next week, as it will likely be very telling whether we will really see a double bottom and a new move to the upside.

Truth be told, such a long-term trend like the one we can observe on the daily, weekly and monthly time frames is not easy to reverse, so we might see one or two more tests of that level before the trend becomes bullish.

All that said, I have little doubt that there will be a reversal.

AUD/USD Reached a Critical Level of its Corrective Move to the Upside

The figure on the screenshot was formed a while ago, when the developing move to the upside had reached only the middle of it >>> .

Now the pair has reached a critical level of said move to the upside, namely the resistance trendline (the purple line) of the downwards trend from 1st April 2013 up until today as well as the resistance zone marked by the upper band of the Bollinger Bands indicator on the weekly time frame, not to mention that it has also formed a bearish pinbar on the same time frame and is forming a second one at the moment.

Today is Friday, so we will soon see how the second pinbar will close and whether it will remain as it is.
If it does, the most likely scenario for next week is a move to the downside towards 0.7480 - 0.7380 or even towards 0.7200.

LCrude Will Continue Climbing towards 51.00 at the Very Least

The pinbar that formed on the weekly LCrude time frame had the result that I expected and LCrude has been been moving inexorably to the upside for three weeks now, having formed one small correction. I think it’s quite possible for that rally to continue towards the zone around 51.00 – 52.00, where there is a resistance visible on weekly time frame.

The more optimistic scenario is for a move to the upside towards 65.00 – 66.00, an idea supported by the pinbar formed on the monthly time frame at 34.00, as well as what we know about corrective waves – they tend to form in pairs, with correction between them.

If we examine the monthly time frame we will see a fully formed corrective wave from 26.045 to 51.654, then a retracement after which the move to the upside continued. If we assume that the second corrective wave will be as long as the first one, then that optimistic scenario for a rally towards 65.00 could turn out to be valid.

USD/CAD Continues Falling

Yesterday the USD/CAD pair fell with almost 140 pips and then formed a corrective flag, but today it broke below that flag and it seems that the move to the downside will continue.

The height of that flag is around 60 pips, and by projecting these 60 pips from the breakout level at 1.2876 we can ascertain that its limit is around 1.2815.

If we take a look at the weekly time frame, however, we will notice that the strong support zone is at 1.2650. Of course, the pair could stop dropping higher, especially considering its correlation with LCrude.

Once thing is certain – LCrude continues climbing, and CAD, also known as a petrocurrency, continues dropping.

GBP/USD Is About to Start Climbing

Despite the powerful bearish trend the GBP/USD pair appears to be on the verge of a small correction to the upside.

1.2850 – 1.2870 is a support zone, if one examines it on the 4-hour time frame, and on the 1-hour time frame the pair is forming doji candlesticks right around that support zone, marked by the Bollinger Bands indicator.

Even if the pair continues falling, the possibility for a correction to the upside from this zone is quite serious and the correction could reach the resistance trendline (the red line).
Another argument supporting the scenario where the pair is about to move to the upside is the presence of three waves to the downside, which can be seen on the monthly time frame, and which are almost equal in depth.

In the alternate scenario, of course, the pair will continue falling without a correction towards 1.2800 – 1.2700.

All that said, I think the latter scenario is less probable.

USD/CAD Will Continue Dropping

The almost five-month long corrective move to the upside of USD/CAD appears to be at its end. In the past week the pair fell with almost 250 pips and at the moment it is at the support at 1.2950 that can be seen on the weekly time frame.

I think that the pair will likely break below that level with ease and the move to the downside will continue at least until it reaches 1.2850 or even 1.2800.

The more optimistic but also less probable scenario is for the drop to continue all the way to the zone around 1.2650.
 

It’s also interesting to examine the situation on the monthly time frame, where the pair has been moving around the strong support zone around the middle line of the Bollinger Bands indicator for the past five months or so and it has been forming spinning top bars. Now we need to wait and see how the August bar will close to be able to figure out the USD/CAD movement in the long-term.

LCrude Will Continue Climbing

The LCrude charts this week could have been used for a trading textbook illustration.

The pinbar on the weekly time frame was a clear signal for a move to the upside and after a short retracement in the past two days it sharply moved north, which was completely expected.
It is important to see how the weekly bar will close tomorrow, but my expectation is that it will do so around $44.65 – $44.80.

If we examine the large time frames, i.e. the weekly and the monthly ones, it becomes clear that the most probable scenario is a further move to the upside towards $65. That move will need time to develop, but it is very likely to happen.

Will the RBNZ Cut Its Interest Rate?

The most important news that we can expect in the next few hours is the announcement of the Reserve Bank of New Zealand’s interest rate. Considering the fact that the Reserve Bank of Australia recently cut its own interest rate this news is expected with even more interest.
Usually these two countries, so close both geographically and economically, maintain a difference of 0.50% between their interest rates.
Currently that difference is 0.75% which is a significant cause to think that RBNZ will cut its interest rate as well.

At the moment NZD/USD is moving to the upside in a correction, and it is forming a flag on the daily and the weekly time frames. In case the expectation for a rate cut does come true we will likely see a sharp move to the upside and then a significant drop.

In the alternate scenario the RBNZ won’t change the interest rate this month, which will cause some market volatility, but the corrective move to the upside will continue.

As I mentioned, the news is coming out in a few hours, so we will soon find out which one of these scenarios is valid.

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The LCrude “Free Fall” Appears to Have Ended

Or at least this is what the pin bar that formed on the weekly time frame is a signal for. Everyone using a price action strategy consider that one of the most telling reversal signals one can see. And since in this case it formed on the weekly time frame, said signal should have long-term effects.

Experienced traders would usually wait for a slight retracement after such a signal (usually to the middle of the pin bar). Being aware of this I looked for this possibility on a much smaller time frame, i.e. the daily one. On that time frame you can see that LCrude has reached the resistance at 42.80 – 43.00 and it is possible it will begin retracing. I sincerely hope that will happen, because at the end of it there will be an excellent opportunity to open a long-term long position.

AUD/USD Continues Consolidating in a Price Channel

Neither the fact that the Reserve Bank of Australia lowered the interest rate twice, nor the NFP or any other kind of important fundamental events can end the consolidation in the price channel that I had spoken about over a month ago.

The channel is the same and the consolidation around the middle line of the Bollinger Bands indicator on the weekly time frame continues and it appears that it will keep doing so for at least a few more weeks.

Since we all know how important trendlines are to technical analysis, I am especially interested in what will happen when the pair reaches the resistance trendline of the downward trend channel (i.e. the purple trendline).

I think that the pair will most likely continue consolidating in the upward channel. Whether the market will prove me right remains to be seen.

EUR/USD Will Probably Continue Dropping

Sometime ago my analysis for the EUR/USD pair had turned out completely wrong. That made me take a closer look at it, since this is the most traded pair on the Forex market.

What is the technical analysis picture of it today?

On the screenshot of the weekly time frame you can see a flag so well-formed that it could called an almost textbook example of one and the support trendline of that flag has been broken at 1.1148. After that the pair moved to the downside, then retraced to test the broken trendline.

The height of the flag, i.e. the distance between the first low and the first high of the flag, is 823 pips. That means that in the case of a breakout we need to project these 823 pips to the downside – i.e. in the direction of the breakout – which means that the flag’s limit is at 1.0309.

Of course, we should keep in mind that this pattern is forming on the weekly time frame, so it will take quite a long time for the pair to reach that level.

USD/JPY Might Continue Falling, Depending on the NFP Tomorrow

Despite my expectations that Wave A of the correction would end, USD/JPY continued dropping, either to test the last low or to form a new one.

Tomorrow will be released the data about the US change in the Non-Farm Payrolls and for the moment the expectations are that the data will be worse than before. If that happens, we could see the pair continue falling. I think it is very possible for such news to drive USD/JPY to form a new low below 100.00 or even one below 98.00.

Despite all that my expectations remain the same – I think it is a matter of time before we see Wave B of the correction, which should lead to a move to the upside towards 115 – 116, or maybe even higher than those levels.

Will LCrude Continue Dropping

The LCrude surprisingly climbed today, after the Crude Oil inventories that came out turned out to be more positive than expected.

At this stage, however, that hasn’t affected the Canadian dollar, which moves in correlation with LCrude. USD/CAD dropped during the European and American sessions with almost 100 pips, but that happened before the Crude Oil inventories data and the rest of the fundamentals today came out.

What is interesting in this case is whether this is the end of the LCrude move to the downside that has been continuing for two months now, or will we see another drop towards 38.00 – 38.50.

Whether that will happen is hard to predict, but one thing is clear – the LCrude drop is nearing its end and it’s time to see a seasonal move to the upside.

A Possible Double Bottom for USD/CAD

Despite the range in the past few days the USD/CAD pair formed a few very good intraday movements that can be seen on the four-hour time frame, and which had excellent entry and exit points.

Today the pair did the same – it formed an excellent signal for a movement to the downside with the doji candlestick at 1.31210. The drop continued, as I expected, until the pair reached the lower band of the Bollinger Bands indicator at 1.30047 while at the same time USD/CAD also formed a double bottom.

Of course, anyone who knows the BB indicator knows that it is not the holy grail of trading, but we should still be careful when a pair reaches these zones of support and resistance. Fortunately, I know this indicator well and I know how the price behaves when it reaches these zones, which allowed me to close my short positions at maximum profit.

What will follow next? There is less than an hour until the most recent candlestick closes on the four-hour time frame and, of course, it remains to be seen how it will do so.

There are five more hours until the end of the American session, and from its very beginning today the American traders started buying very aggressively, which gave the bulls a lot of strength. If the four-hour time frame candlestick closes as it is now I will be considering opening long positions with target 1.33000 very seriously.