The Nikkei has hit the 161% extension and may post (at the EOD and there is definitely some time left) a reversal candle with a long wick.
To me, that was a suckers rally this morning, and stopped out some shorts, got a lot of traders long on a breakout. Sunday night will be a very interesting open in Asian trade.
Here is the chart:
Blake Morrow
Chief Currency Strategist, Wizetrade
The German stock market index (DAX) is in an ascending wedge. Typically, these are reversal patterns that end up reversing lower (descending wedges are bullish reversal patterns). Although I don’t trade the German DAX it is important to me as a currency trader so I know where to strategically trade.
A sustained break below 11,200 could target the 10,260 level which represents the 38% retracement of the move from October lows to last weeks highs.
Blake Morrow
Chief Currency Strategist, Wizetrade
The EUR/GBP has fallen to .7270+/- pence and levels not seen since 2007. For those who have followed me for years on my live broadcasts know I have been a bear on the pair for many years, always expecting a move down towards the low .7000 levels since we were in the .9000’s. Now that we are here I think there is room for a near/intermediate term bounce.
I love when a currency approaches multiple confluences meet up at a single data point like the EUR/GBP. As you can see via the monthly chart, we will close the month with a pretty bearish candle, however the previous resistance form May 2003 and multiple monthly Fibonacci supports match up near the .7200-.7250 levels.
I suspect that in the coming weeks we will see a solid bounce in the EUR/GBP.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I started building a long yesterday when I first noticed this chart and plan to hold for the next several weeks.
Whenever you are in the “Apex” of a triangle it is easy to get chopped up. The US Dollar index (DXY) is no different. I was hoping today’s testimony from the FOMC Chair would have created a breakout, but it looks like we will have to continue to wait.
Blake Morrow
Chief Currency Strategist, Wizetrade
The USD/CHF is testing key resistance at the .9530 level. The reason why this level is so critical is that since the Swiss National Bank (SNB) EUR/CHF floor removal, the investment community has no clear reference of what the low price was on January 15, 2015 following the unprecedented move of the SNB. I have heard quotes as low as .73XX to .85XX and as you can see my charts show a low of just below .8000. Therefore our only good points of reference are previous lows as we are testing now.
With less retail and institutional investors dabbling with anything involved with “CHF” the path higher (lower CHF) may meet less resistance should we break .9530. Ironically, this is exactly how the SNB wanted to see this play out, a slow grind lower in the CHF.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am currently long USD/CHF and may add to that position in the coming day(s)
The BOE Inflation Report and comments from Mark Carney were viewed as hawkish today. The GBP/USD is reflecting this in the price action as the pair breaks higher. Also, please note the GBP is strong against the EUR, CAD, AUD, NZD and CHF as well.
The GBP/USD looks set to test the 1.5480 and the 1.5800, which would be the 38% retracement of the drop from July 2014.
Blake Morrow
Chief Currency Strategist, Wizetrade
The GBP/NZD could be in store for quite a fireworks display. The daily chart is in a triangle, and with tomorrow’s “Inflation Report” from the BOE the GBP could stage a big move. Bullish or bearish, but the implications for the GBP/NZD could be good.
If the BOE is a little more hawkish on future inflation (like the FOMC) we could see a squeeze higher in the GBP/NZD to test the recent highs at 2.1050 (approximate). Often, false breaks (like the highlighted breakdown) could lead to a big reversal (higher in this case). You may recall this post of the highlighted area in January.
In the event the 2.1050 level breaks, the longer term outlook could be very bullish. Keep in mind if the market starts to price in hikes from the BOE (again) and perhaps future cuts from the RBNZ (???) then the chart below is a huge possibility:
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I have been building a long position since below 2.000 GBP/NZD spot
The EUR/JPY is in a bear flag formation (set up) and does not go into play until a break below the 132.50 support. However, one of the characteristics I have noticed about this chart is the RSI (on the bottom) which has gotten back to a neutral reading, which clears a way for another wave of selling, should the chart pattern play out.
Here is the chart:
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I have a short EUR/JPY position from the last week, with intentions of adding once we clear support.
The last time the DXY was my EDGE Chart of the Day the DXY peaked within pips of what we had expected. Since then the USD has been consolidating, slowly building a “flag” pattern on the 4 hour chart. Based on this chart below, the USD index could pullback towards the 127% extension at 92.93, just above the major breakout point from November 2005 (faint blue line 92.65) which may be the next buying opportunity for the USD index (92.70-90). Here’s the chart:
Blake Morrow
Chief Currency Strategist
Disclaimer – I am short some USD’s (via spot market) currently, but may flip to long in the coming session(s)
The GBP/JPY has stalled its downside move at the very important 61.8% retracement level, and is developing a wedge. The “apex” of the wedge is tightening, suggesting that a breakout could occur in the coming sessions (my assumption is the NFP).
However, if you take a step back to the weekly charts, you will notice that the long term up-sloping trend line (since initial BOJ easing in 2012) comes in at 175.00. Therefore if the pair breaks to the downside, the move could end up being a very large move lower.
Blake Morrow
Chief Currency Strategist, Wizetrade
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