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

 

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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

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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.

 

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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

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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)

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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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USD/NOK and Crude divergence

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

Everyone is talking, blogging and tweeting about crude oil today and I figured I should throw my 2 cents in as well.

Crude oil may have found some near term support today. I am on the fence whether or not we can create a sustainable low here since the price action has been so bearish today (and recently).

What has caught my eye in the last couple sessions is the recent divergence between crude and the USD/NOK. Typically, this correlation has been very strong (crude down, USD/NOK up etc.) but the last couple sessions we have seen a strong divergence.

1-12-16USDNOKCrude1

Crude is the line chart, the USD/NOK is the candlestick chart. You notice the USD/NOK has stalled the last week as crude continues lower.

What this means to me is if crude does at least “bounce” here or near here, the probabilities of a pullback in the USD/NOK are high. As you can see below, we have also rejected a 161% extension of the last major pullback from September high to the lows in October.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am establishing NOK longs for the next few days.

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EUR/GBP snaps multi-year trend line

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

The EUR/GBP has been in a steep downtrend for the last couple years since 2013, and yesterday we took notice. This week we not only snapped that downtrend, but we also are breaking out from key resistance above the .7500 pence level:

1-8-16EURGBP2

Although it is still early in the day and we could close back above the .7500 level, what you will notice is that longer term we held a minor Fibonacci level, and also made higher lows:

1-8-16EURGBP2

A natural target for the reversal pattern is a potential “double bottom” on the daily chart, which suggests we could rally as far as .8000 in the coming months ahead:

1-8-16EURGBP3

Although I think a “Brexit” is highly unlikely this year, the risks and uncertainty surrounding the U.K. early this year may be enough to fuel a move higher in the EUR/GBP like this. If anything, a move like this in the EUR/GBP, with as much liquidity that trades through this pair daily, should keep you defensive while attempting to play the GBP on the long side (even on crosses).

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am not in a EUR/GBP long (yet) but will be buying on dips in the coming days.

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Nikkei testing major support

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

We have been watching the Nikkei closely, as it is approaching a long term uptrend line dating back from 2012:

1-6-16Nikkei

As many of you know, the JPY has been extremely strong all week. Many traders (such as myself) have been waiting for a pullback to get long some JPY (i.e. short EUR/JPY, AUD/JPY etc.):

1-6-166J

If you take a look closer to the Nikkei, and compare to the 6J (JPY contract) you can see the very strong correlation:

1-6-166JNKD

If the Nikkei sustains a break down, the JPY may not pullback any time in the near future.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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