AUD/NZD probing a 5+ year trend line

09. March 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

This chart has been on my radar for a very long time. I have had a “love/hate” relationship over the last year with this currency pair as we have seen some “near trend line breaks” mid year last year. I had high hopes we would break, but never transpired.

We are faced with a similar situation now with the pair quickly approaching the 1.1100 key resistance for the pair. The reason why its so important is that a little later today we have the RBNZ (Reserve bank of New Zealand) making a decision on rates. Most expect the RBNZ to stay on hold, but some of us expect that they could open the door to future cuts in the coming meeting(s).

I have long argued on the Morning EDGE webinar that the slowdown in China has already been priced into the AUD currency, but the NZD currency has been slower to price it in. Now that China is New Zealand’s largest trading partner, I feel that this “repricing” will eventually occur, and it will be seen predominately in the AUD/NZD exchange rate.

Here is the current chart in the AUD/NZD on a weekly basis where you can see the massive trend line:

3-9-16AUDNZD1

Back in January I also mentioned the bigger pattern that is developing (and becoming more symmetrical), the inverted H&S pattern:

3-9-16AUDNZD2

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have built a long position in the AUD/NZD over the last several weeks and am looking to add to my position if the pair breaks above the 1.1100 level in the coming days (on a closing basis)

EUR/USD sitting on critical support

01. March 2016 · 2 comments · Categories: EDGE Chart of the Day · Tags: ,

The EUR/USD has been falling recently on concerns that the ECB is about to take further steps regarding easing monetary policy on March 10th. We have also seen some USD strength due to some recent stronger economic data. This has pushed the EUR/USD to some key support which may cause a bounce ahead of the ECB meeting.

At this point the expectations have swung to a point where the market is expecting the ECB to act, and may be priced into the current exchange rate of the EUR/USD (the EUR/USD was 500+ pips higher a couple weeks back) and I think there is a good chance the pair stabilizes/bounces near current levels.

Let’s take a look at the pair, technically:

3-1-16EURUSD

As you can see above, the pair is “back testing” a multi-month broken trend line (yellow) after multiple touches before the breakout in February.

I3-1-16EURUSD1

Today we are testing the 61.8 Fibonacci retracement level near 1.0850.

I am expecting the EUR/USD to bounce and/or stabilize from here.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: Over the last 24 hours I have established longs near current levels in anticipation of this.

EUR/USD on the cusp of a major retracement

03. February 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

Last week I wrote about the EUR/USD nearing major resistance. The last paragraph was important to understand, in my opinion:

“Conventional wisdom would tell you after the ECB meeting (Mario Draghi hinting at more action in March) and the FOMC a little less dovish than the market expected this week, the pair would move lower from here. But sometimes in the market conventional wisdom doesn’t always pan out.”

As the market starts to think/believe that the FOMC is not going to be able to deliver multiple rate hikes as originally thought (think December expectations) the risk is that the EUR/USD starts a “retracement cycle” which in my opinion, could take us back into the high teens (1.1500+) especially if US economic data continues to disappoint.

Here is an updated chart:

2-3-16EURUSD

The NFP this Friday is going to be an important number, especially for the USD this week. A weak reading could lead to a breakdown in the DXY, therefore a move higher in the EUR/USD. A breakout by the end of the week above 1.1060 would be a pretty bullish sign for the EUR/USD.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am looking to establish DXY shorts in the coming days

 

Massive Hourly Descending Wedge in Crude Oil

02. February 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags:

Keep an eye on crude oil in the coming hours (especially in Europe and North American trade). The hourly RSI (seen below) stopped falling and we are in a massive descending wedge. Descending (and ascending) typically are reversal patterns, so this chart suggests in the coming 6-12 hours we should get a recovery in price (higher). I doubt it will create an actual “longer term trend change” however, if it does happen, the daily chart may set up a “higher low” which is an indication a trend may be changing in the near term.

2-2-16CL1

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

 

EUR/USD nearing major resistance

28. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The EUR/USD is on my radar today (and the rest of the week) as we are at a major inflection point. This is major resistance here as we approach the 1.1000 level. Take a look at the chart below:

1-28-16EURUSD

In the past, I had looked at the pair as having strong bear flag formation, but a move above the 1.1000-1.1050 level would put that previous analysis in jeopardy:

1-28-16EURUSD1

Conventional wisdom would tell you after the ECB meeting (Mario Draghi hinting at more action in March) and the FOMC a little less dovish than the market expected this week, the pair would move lower from here. But sometimes in the market conventional wisdom doesn’t always pan out.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have no EUR/USD position, but may initiate one in the coming days

 

AUD/NZD Pushes higher out of consolidation

27. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The AUD/NZD broke higher today following the RBNZ’s decision to keep rates unchanged. Dovish comments about inflation look to be the culprit keeping the NZD under pressure.

Regardless, the AUD/NZD has finally broken higher out of a tight consolidation the last several months. A strong downtrend line has been taken out as a result:

1-27-16AUDNZD

Personally, I have been building a long term AUD/NZD long position the last couple months as I do belive that China’s economic slowdown has been priced more accordingly to the AUD, but not as much into the NZD over the last couple years. Since China has become New Zealand’s largest trading partner, I think that price has yet to catch up to the NZD.

Longer term I am looking at the possibility of an inverted head and shoulder development on the weekly and monthly charts:

1-27-16AUDNZD2

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have a long position in the AUD/NZD

EUR/CAD Setting up “Bearish Engulfing” Candle after 20+ year TL Rejection

22. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

Let me first tell you I have a EUR/CAD short position from earlier this week (near 1.4800) so I am in essence “talking my book.” However, the development by the end of the week was unexpected, but also a massive development technically. I felt I must tell you about it, even if you didn’t pick up on my cues from my tweet last week that it was already on my radar.

The EUR/CAD had tested the 20+ year trend line last week, and you can see that chart here:

1-22-16EURCAD1

You may have to check a couple different broker feeds to get those longer term values, but it is the same value I see at my MBT Desktop Chart as well:

1-22-16EURCAD3

If you take a closer look, what you will notice is the bearish engulfing candle on the weekly chart:

1-22-16EURCAD2

It is still early in the session, so anything can happen for the rest of the day and before the market closes. However, it would engulf even if we get 100+ pip rally. Also note we had a false breakout (noted red circles) above 1.5530 for this last week that will only add fuel to the fire. A close today back above 1.5466 would invalidate the engulfing pattern.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer, I am short the EUR/CAD and am looking for an exit of position in the coming week.

 

EUR/GBP may find near term resistance

20. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , , ,

Just a couple weeks back, you may recall reading that the EUR/GBP “snapped a major trend line” and since then the EUR/GBP continued higher by a couple hundred pips. However, today another trader (Rick P, Wizetrade trader) identified that the EUR/GBP is retesting a broken trend line from back in 2000. We also noticed it is testing previous horizontal support (July 2012 and Jan 2015) which is current resistance (today). See below:

1-20-16EURGBP1

If you look at the daily chart below, the current candle is developing a shooting star. I understand there is a lot of time today before the candle closes, but some sort of near term reversal candle may develop:

1-20-16EURGBP2

Although the EUR/GBP may head higher in the future because of “Brexit” fears, or perhaps expectations of a BOE rate hike continue to push out towards 2017. In the very near term, we could see a pullback towards the .7500 pence level again.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am looking to establish a EUR/GBP short in the next 24 hours

GBP/JPY could bounce from current levels

14. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The GBP/JPY (Guppy) is sitting on some key long term support, but more importantly is forming a descending wedge on the hourly chart, which is typically a reversal pattern. Here is the longer term chart first:

1-14-16GBPJPY2

As you can see above, the 127% extension of the 2015 lows to highs comes in around the 169.20 JPY level.

1-14-16GBPJPY1

The hourly chart shows a descending wedge, and if the currency pair closes at new highs for today, the bounce should start.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am not long the GBP/JPY, but am looking to establish longs in the coming day(s)

Canadian (CAD) Currency Downside Targets

13. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

As much as it pains me to blog this (I am short some CAD from earlier this week) but I have to point out the CAD looks as if it has more downside before we can see a legitimate bounce. Here is what the CAD futures contract shows us:

1-13-166C

Downside trend line, 261% extension and AB=CD extension all comes in around the same spot around the .6800 level.

Unfortunately, my finger is already a little smelly as I have been trying to “pick the bottom.”

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am currently long some CAD currency

 

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