Archive April 2019

NZD TALKING POINTS – NEW ZEALAND UNEMPLOYMENT RATE, NZD/USD, FOMC

See our free guide to learn how to use economic news in your trading strategy!

The New Zealand fell alongside bond yields after mixed employment data crossed the wires. While the unemployment rate fell to 4.2 percent and beat the 4.3 percent forecast, the participation rate and employment change disappointed. In fact, labor force participation fell to its weakest point since Q2 2017. The undershooting data is a deviation from the country’s overall economic trajectory which has seen indicators fall in line with analysts’ expectations for the past few months.

NZD/USD, NZD/JPY – Daily Chart

Slower growth in employment undercuts inflationary pressure which the RBNZ has reiterated is still below its two percent target. This gives the central bank further impetus to cut rates following its meeting in March that sent the New Zealand Dollar tumbling. This was subsequently followed by weaker-than-expected CPI in April, likely a result of the ailment caused by reduced consumption as a result of fewer hirings

Overnight index swaps are currently pricing in a 76.1 percent probability of a cut by September. The monetary policy statement from the March 27 meeting cited “reduced momentum in domestic spending” and slower global growth as key concerns that caused the central bank to pivot to a more dovish disposition. Much like what ECB officials said in March, risks have broadly tilted towards the downside.

The cycle-sensitive New Zealand Dollar will continue to monitor US-China trade talks as the two appear to be closing in on a deal. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are traveling to Beijing today to continue the negotiations. However, given prevailing global growth trends,

the broader questions remain that even if a US-China trade spat is resolved, will it be enough to lift global sentiment?

Looking ahead, the cycle-sensitive New Zealand Dollar – along with global markets – will be eyeing the upcoming FOMC meeting. Market participants are expected for the central bank to hold the benchmark rate where it is, with commentary from Fed Chairman Jerome Powell as the key catalyst for any major market moves. Get live coverage of the rate decision and market reaction here!

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

AAPL, AMD Earnings Talking Points:

• Apple (AAPL) announced a substantial buyback plan, continuing the trend from recent quarters
• Advanced Micro Devices (AMD) narrowly beat expectations but saw its stock price pop 7%
• Wednesday’s FOMC rate decision will now be the focus of traders as the central bank looks to offer insight on its policy path after strong US GDP in the first quarter

Stock Market Update: GE, GM Earnings Recap, AAPL and AMD Ahead

Apple delivered strong quarterly results after Tuesday’s close, avoiding another miss from a FAANG member after Google missed the day prior. Similarly, AMD beat out Wall Street estimates. As a key player in the semiconductor space, AMD will look to join AAPL in bolstering the Nasdaq after it slumped in Tuesday trading compared to its more diversified counterparts.

AAPL Earnings Recap

After a cut to their earnings outlook caused a USDJPY Flash Crash, Apple looks to have righted the ship. Despite lower forecasts, traders were thrilled to see the strong performance and pushed the stock 5% higher in after-hours trading. Earnings per share read in at $2.46 on $58 billion in revenue – higher than the expected $2.37 EPS on $57.5 billion in revenue expected.

Apple (AAPL) Stock Price Chart: Daily Time Frame (January – 2019) (Chart 1)

Outside of the two headline figures, an announcement to buyback $75 billion worth of shares likely buoyed price – but could be indicative of broader economic illness. Buybacks have been a point of contention in recent months, ranging from economists who are wary of current stock market valuations to politicians in Washington that question their economic fairness.

Either way, one thing is clear. Flush with cash, Apple has shelled out considerable capital on share repurchases and is now responsible for 12 of the 20 record-quarter buybacks according to data from S&P Global. Apple’s actions play into the larger theme of growth concerns as companies are frequently unable to find efficient uses of capital and invest in themselves, effectively inflating stock valuations. While the ramifications of elevated share repurchases may eventually weigh on investor sentiment, Wednesday’s session will look to more immediate developments.

Check out our Second Quarter forecasts for the S&P 500, Dow Jones, Gold and more.

AMD Earnings Recap

Contributing another strong performance to the season, AMD offered $0.06 EPS on $1.27 billion in revenue – compared to analyst expectations of $0.05 and $1.26 billion respectively. Although narrow, the beat was accompanied by a rally in AMD’s share price. Immediately following the release, AMD jumped 7% but remained within its implied price range – probing trendline resistance around $29.25.

AMD Stock Price Chart: Daily Time Frame (December 2018 – April 2019) (Chart 2)

Check out the Technical Forecast for the S&P 500, Dow Jones, DAX 30, and FTSE 100.

With the risk of an abysmal report from AAPL in the rearview, traders will now await Wednesday’s FOMC rate decision. Ahead of the event, check out a variety US Dollar trade set ups and view our Economic Calendar for all upcoming events in the week ahead.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: USDCAD’s Failed Breakout Attempt Hinges on Next Crude Oil Price Move

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Forex Talking Points:

– If you’re looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.

– If you’re looking for a primer on the FX market, we can help. To get a ground-up explanation behind the Forex market, please click here to access our New to FX Trading Guide.

If you’d like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

US Dollar: Stage Set for FOMC, NFP

This is one of the more exciting backdrops that we’ve had around the US Dollar in some time. The currency put in a bullish breakout last week to set a fresh 22-month high. And potential for bullish continuation even looked attractive coming into this morning, but bears have continued to push and prices have put in the makings of a reversal from a false breakout, setting the stage for a fairly exciting three-day-span on the economic calendar.

Tomorrow brings the FOMC, Thursday brings the Bank of England’s Super Thursday rate decision, and Friday brings the big one with Non-Farm Payrolls. The big question is whether USD-bulls can get back in the driver’s seat after this week’s pullback, and I looked into that along with quite a bit more in this price action webinar.

US Dollar Pulls Back to S2 Zone as Bulls Pull Back from the Bid

Perhaps its just some position squaring after last week’s breakout, but bulls have continued to step back from the bid so far in this week’s trade. The first support zone followed in DXY helped to hold yesterday’s low, and the ‘s2’ zone has come into play to help mark today’s low. But, as looked at on shorter-term charts, sellers have continued to push and it looks as though there may be a continued pullback ahead of tomorrow’s FOMC rate decision.

This highlights support potential around the 97.20-97.30 area on the charts. A bit deeper offers another zone of potential around 96.75-97.90.

US Dollar Four-Hour Price Chart

Chart prepared by James Stanley

EUR/USD Tests Key 1.1212 Level

This is a big item of interest across FX markets at the moment, as EUR/USD has also pulled back from last week’s breakout. The primary difference is one of context, as EUR/USD is testing resistance around the prior area of support. A hold of resistance here, with a daily close inside of the Fibonacci level at 1.1212 can keep the door open for short-side continuation strategies. There are another two areas of resistance potential above, although the bearish trend theme wouldn’t be as attractive; but those exist around 1.1250-1.1262 and the area around 1.1325.

EUR/USD Four-Hour Price Chart

Chart prepared by James Stanley

GBP/USD Bulls Make Their Mark

Similarly, last week’s bearish breakout in GBP/USD has come into question, and the big difference from EUR/USD above is the fact that buyers have continued to push beyond resistance potential at that prior area of support. This can make the pair a bit more attractive for short-USD thesis, and traders looking to institute bearish strategies should be a bit more cautious given the aggressiveness with which buyers have been pushing so far today. But – there is resistance potential at prior areas of interest around 1.3087-1.3117 and 1.3181-1.3187. A bullish break back-above 1.3200 puts the bearish theme into question.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley

USDCAD Continued Reversal Potential

On the short side of the US Dollar, USD/CAD remains compelling. The pair posted up to resistance last week around the 1.3500 handle, and that’s since come into help hold the highs. The complication at this point would be chasing the move lower after bearish price action has begun to build. In the webinar, I look at how traders could play short-term pullbacks to re-open the door for bearish setups.

USDCAD Four-Hour Price Chart

Chart prepared by James Stanley

USD/CHF: Time to Flip?

I had looked at the short-side of USD/CHF coming into this week, trying to catch a reversal off of two-year-highs. But, as we were looking at this in the webinar, I started to ponder an early exit, which is abnormal for me. The issue here is that the US Dollar has put an impressive pullback. But USD/CHF is just blinking while remaining near resistance, highlighting a really weak Swiss Franc. This doesn’t seem the most opportune spot to look for USD-reversals given the lack of movement that’s shown so far, dissimilar to USD/CAD above.

USD/CHF Four-Hour Price Chart

Chart prepared by James Stanley

AUD/USD Range Potential Remains

Also of interest for short-USD scenarios is a continued hold of support in AUD/USD. The .7000 big figure came into play last week and, since then, buyers have helped to hold the lows in the pair. Prices are currently struggling in the prior support zone from .7050-.7075, and this could be a theme to watch ahead of FOMC tomorrow as a push above that .7075 level can re-open the door to short-term bullish trend strategies, looking to fill-in the longer-term range. This could offer target potential in the zones from .7125-.7150 and again from .7185-.7206.

AUD/USD Four-Hour Price Chart

Chart prepared by James Stanley

US Oil Rallies and Turns on Venezuelan Coup Attempt

It’s been a really busy day for Oil traders. WTI came into the week holding a zone of support around the ‘s1’ area that I’ve been following. Prices soon started to rally and that theme hit fever pitch this morning on news of a reported coup in Venezuela, at which point prices soon jumped towards resistance. But, the same 64.77 level that was in play earlier this month came back into the picture, and prices soon pushed-lower, making for a volatile showing so far today.

This sets the stage for the rest of the week, in which considerable motive will remain on both sides of the matter given the heavy economic calendar outlay. Support potential could be sought from 61.58-61.87 and a bit-lower, from 60-60.35.

US Oil Four-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

MEXICO GDP & USDMXN – TALKING POINTS:

• USDMXN jumped higher immediately following Mexico’s GDP data release which showed the Latin American economy contracted by 0.2 percent in the first quarter
• Weaker growth across Mexico’s services sector largely contributed to the country’s deceleration in economic activity, but the Peso is holding up relatively well against the US Dollar
• New to forex or looking for additional information to sharpen your trading skills? Check out this article that covers Mexican Peso Fundamentals or download the free DailyFX educational guide on How to Trade Economic News

Mexico released its 1Q 2019 GDP report this morning which indicated a 0.2 percent decline from the previous quarter. The headline number looks particularly disappointing considering that the economic contraction widely missed analyst expectations of 0.3 percent growth while President Andrés Manuel López Obrador predicted an aggressive growth rate of 2.0 percent for 2019.

In the World Economic Outlook and Financial Stability Report published earlier this month, however, the IMF slashed Mexico’s economic growth forecast once again to 1.6 percent. Today’s uninspiring data could potentially open the door to further downward revisions.

MEXICO GDP GROWTH PRICE CHART: QUARTERLY TIME FRAME (OCTOBER 2011 THROUGH MARCH 2019)

The decline in Mexico’s latest GDP report may have been partly due to tension flaring up between the US and Mexico over their pending USCMA trade deal recently – the ongoing uncertainty, which Mexico’s central bank previously highlighted as a risk, has likely dampened consumer sentiment, business activity and economic growth.

Also, the US released its own GDP report last week which illustrated a 1.2 percent drop in imports from Mexico. It now appears that this largely impacted Mexico’s economic growth – particularly once considering the US accounts for roughly 80 percent of Mexico’s exports.

In fact, Mexico is now the largest trading partner with the US which could be a result of the US-China Trade War. The possibility of the recent slowdown in US consumption and imports from Mexico continuing poses a threat that could materially drag down Mexico’s economy.

In addition, seeing that Mexico is the eleventh largest oil producer in the world, the recent decrease in supply negatively impacted its oil exports which also contributed to lower than expected GDP.

USDMXN PRICE CHART: 15-MINUTE TIME FRAME (APRIL 28, 2019 TO APRIL 29, 2019)

At first, USDMXN advanced steeply once the data was published but the Mexican Peso has since trimmed losses against US Dollar. Price action surrounding today’s GDP report saw the currency pair fluctuate nicely between the 1-standard deviation trading range of 18.893 to 19.096 calculated from USDMXN overnight implied volatility which was highlighted yesterday.

Greenback gains against the Peso could be dwindling due to widespread USD weakness expressed by the DXY US Dollar Index slipping nearly 0.4 percent so far today. Aside from the Euro largely dragging the US Dollar lower in response to the Eurozone’s relatively upbeat GDP report, expectations for a dovish Fed ahead of the central bank’s FOMC meeting tomorrow could be weighing negatively on USD crosses as well.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

– Written by Rich Dvorak, and Nancy Pakbaz, CFA

– Follow @RichDvorakFXand @NancyPakbazFXon Twitter

Talking Points:

– Crude Oil prices appear to be holding a key trend level as fresh supply concerns arise around Venezuela.

– After softer Canada GDP figures for February, Crude Oil strength may be a prerequisite to see any significant Canadian Dollar strength.

– Recent changes in trader positioning suggest that Crude Oil may still have further gains ahead.

Looking for longer-term forecasts on Oil prices? Check out the DailyFX Trading Guides.

Crude oil prices are trading higher as a result of supply concerns coming out of Venezuela. With a purported military coup underway, it seems possible (if not likely) that there are constraints placed upon the world’s tenth largest oil producer. Such a development may just be what oil prices need to maintain their uptrend from the low seen in 2016. There are implications for USDCAD as well, given that the energy sector accounts for nearly 11% of Canadian GDP.

Crude oil prices have spent the past few weeks lingering around an important technical area, running into the trendline from the February 2016 and May 2017 swing lows – a trendline, once broken in November 2018, that signaled the ‘flush’ in markets. Accordingly, a break in oil prices around 64 could be a trend defining move for the coming months.

Crude Oil Technical Analysis: Daily Price Chart (February 2016 to April 2019) (Chart 1)

Failure to continue the rally here would suggest that oversupply concerns may be becoming more prominent on traders’ minds now that the June OPEC cut expiry is around the corner; or success rallying here would indicate that near-term concerns about tightening supply due to sanctions on Iran or a military coup in Venezuela are driving sentiment.

Regardless, traders should fully anticipate a tug-and-pull in the newswires over the coming weeks; volatility in oil should stay elevated.

Crude Oil Technical Analysis: Daily Price Chart (August 2018 to April 2019) (Chart 2)

In the very near-term, even as oil price battles with their former trendline support (now resistance), it’s still holds that the predominant trend direction remains pointed to the topside. Even as price is enmeshed in the daily 8-, 13-, and 21-EMA envelope, the uptrend from the late-December 2018 and March 2019 swing lows remains intact, with the most recent tests coming on April 26 and 29.

But failure to rally here could prove to be a technical death knell for oil prices: a move below last week’s low at 62.26 would constitute several key breaks, including: the daily 21-EMA; the uptrend from the December 2018 low; and decisive rejection from the trendline from the February 2016 low. Either way, we’re at a key inflection point in the oil market.

IG Client Sentiment Index: Crude Oil Price Forecast (April 30, 2019) (Chart 3)

Oil – US Crude: Retail trader data shows 49.8% of traders are net-long with the ratio of traders short to long at 1.01 to 1. The number of traders net-long is 3.7% higher than yesterday and 18.1% higher from last week, while the number of traders net-short is 14.2% higher than yesterday and 1.4% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil – US Crude prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil – US Crude-bullish contrarian trading bias.

USDCAD Technical Analysis: Daily Price Chart (February 2018 to April 2019) (Chart 4)

USDCAD prices have seen little follow-through following the bullish breakout from the symmetrical triangle last week. The April BOC meeting catalyzed the move higher, and even as the DXY Index has moved to fresh yearly highs, USDCAD has yet to push to a fresh high post-BOC. Even today, after a mostly disappointing Canada GDP report for February, USDCAD has yet to see any meaningful traction higher.

As noted in the February Canada GDP preview, it shouldn’t be a surprise that we saw a weaker growth reading; after all, Eurozone PMIs bottomed out in February; and Q1’19 US GDP expectations bottomed out in late-February/early-March. Soft growth midway through Q1’19 wasn’t just an issue for Canada, but rather, most of the developed world.

USDCAD Technical Analysis: Daily Price Chart (September 2018 to April 2019) (Chart 5)

That said, even as USDCAD price struggles to run higher, it’s far too soon to say that the bullish breakout attempt is a failure; traders may simply be digesting the move before loading back up for another swing higher. The daily 8-EMA coincides with the symmetrical triangle’s original resistance now turned support around 1.3430; if the bullish breakout attempt is valid, then this level should hold. Failure below 1.3430 would increase the odds of a reversal within the triangle itself back towards original support around 1.3330 (near the 38.2% retracement of the Q4’18 low to Q4’19 high range at 1.3327).

IG Client Sentiment Index: USDCAD Price Forecast (April 30, 2019) (Chart 6)

USDCAD: Retail trader data shows 36.3% of traders are net-long with the ratio of traders short to long at 1.76 to 1. In fact, traders have remained net-short since Apr 17 when USDCAD traded near 1.33494; price has moved 0.7% higher since then. The number of traders net-long is 19.1% higher than yesterday and 26.3% higher from last week, while the number of traders net-short is 5.0% lower than yesterday and 34.1% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDCAD trading bias.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

GE, GM, AAPL, AMD Talking Points:

• General Electric (GE) burned less cash than anticipated and gapped higher before subsequently slipping beneath resistance
• General Motors (GM) plummeted after the automaker missed on both revenue and vehicle sales
• Apple (AAPL) is due to report after the close in a week where investors are on high alert for flash crashes

Stock Market Update: GE, GM Earnings Recap, AAPL and AMD Ahead

General Electric and General Motors delivered split quarterly results Tuesday morning, with both stocks remaining within their earnings-related implied volatility range. Despite a quarter of negative cash flow, GE burned less cash than expected as the company continues to restructure and trim fat. Shares of the company gapped higher, only to retrace below technical resistance.

General Electric (GE) Stock Price Chart: 1 – Hour Time Frame (February – April) (Chart 1)

On the other hand, General Motors saw both revenue and number of vehicles sold fall beneath expectations. GM shares gapped lower at the open, down roughly 2.6%. The stock may now look for support from December’s rising trendline and a close above last week’s swing low at $38.96 may see the level offer a modicum of support.

General Motors (GM) Stock Price Chart 1 – Hour Time Frame (February – April) (Chart 2)

While both former blue-chips remained in their implied range, tech giant Google fell considerably outside its own range after shares slipped 8% on the back of a bad miss. The FAANG group and corresponding tech sentiment will now look to the release of earnings from Apple (AAPL) and Advanced Micro Devices (AMD).

AAPL, AMD Earnings Implied Volatility

AAPL Earnings Outlook

After a cut to their earnings outlook caused a USDJPY Flash Crash, the market may have heightened sensitivity when it comes to Apple’s quarterly results. Only trailing Microsoft in market cap, Apple has substantial sway over US indices – beyond a sentiment standpoint. That said, the company’s size assists in keeping the implied volatility of its stock price contained. With 1-day implied volatility near 5%, AAPL could swing as high as $211 or as low as $191.

Apple (AAPL) Stock Price Chart: Daily Time Frame (October 2018 – April 2019) (Chart 3)

In the range, the stock will have to negotiate the 61.8% Fibonacci retracement from October’s highs to January’s lows. The level will look to act as support, having rebuked attempted moves lower in the prior two weeks. Beyond that, lows from April 8 and 12 at $196.53 will be another price point to watch. To the topside, only April’s swing-high at $208.48 is within the implied range and will offer the first form of resistance. Secondarily, the 78.6% Fib level at $213.94 may come into play should earnings really impress.

Check out our Second Quarter forecasts for the S&P 500, Dow Jones, Gold and more.

AMD Earnings Outlook

AMD is another hot stock to watch. As a posterchild of the semiconductor boom, AMD is a highflyer and has returned 44% year to date. That said, implied volatility ahead of earnings and in the weeks to follow is heightened. Earnings related volatility is expected above 12%, suggesting an implied price range of $24.20 to $30.88.

AMD Stock Price Chart: Daily Time Frame (November 2018 – April 2019) (Chart 4)

Intraday trading has pressured shares beneath the 61.8% Fib at $27.25. A close below would be a notably bearish development over the longer term, marking the first close under the level since April 2. Although the level has influenced price in the past, it is unlikely to offer much influence immediately after earnings given its current proximity to the trading price. In the days to follow however, $27.25 may once again mark an important technical point.

Check out the Technical Forecast for the S&P 500, Dow Jones, DAX 30, and FTSE 100.

Also inside the implied range, a descending trendline from September will offer resistance to the topside before the 78.6% Fib level at $30.29 comes into play. Conversely, technical support will come into play at $25.12 – the 50% Fib level. A rising trendline from December could also come into play if earnings are especially underwhelming. As traders paradoxically await today’s close, view our Economic Calendar for all upcoming events in the week ahead and follow @PeterHanksFX on Twitter for equity insight.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: USDCAD’s Failed Breakout Attempt Hinges on Next Crude Oil Price Move

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Euro has rallied nearly 0.6% against the US Dollar since the start of the week with the price recovery now testing monthly open resistance heading into the close of April trade. These are the updated targets and invalidation levels that matter on the EUR/USD charts this week with the FOMC & NFPs on tap. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Forex Trading? Get started with this Free Beginners Guide

EUR/USD Daily Price Chart

Technical Outlook: In my latest EUR/USD Weekly Technical Outlook we noted that price was approaching weekly support at 1.1186, “with a break below the 2017 pitchfork support around ~1.1130s needed to validate a larger break of the multi-year uptrend formation in Euro.” Price registered a low at 1.1111 before reversing sharply higher to close back above pitchfork support last week.

Look for initial support at 1.1186 with near-term bullish invalidation now set to the yearly low-day close at 1.1139– a close below this threshold is needed to mark resumption of the broader downtrend targeting the lower parallel and channel support, currently around ~1.11. Confluence daily resistance stands at 1.1228/39 where the median-line converges on the monthly open and the 38.2% retracement. A breach / close above would be needed to suggest a more significant low is in place.

Why does the average trader lose? Avoid these Mistakes in your trading

EUR/USD 120min Price Chart

Notes: A closer look at price action shows Euro testing monthly open resistance today at 1.1228 after breaching above near-term trendline resistance extending off the monthly highs. Look for exhaustion ahead of 1.1175 IF this breakout is legit with a breach above the 61.8% retracement at 1.1242 needed to fuel the next leg higher in price. Subsequent topside objectives at ~1.1280 and the April high-day close at 1.1299 – expect a bigger reaction there IF reached.

Learn how to Trade with Confidence in our Free Trading Guide

Bottom line: Euro has responded to longer-term slope support and price needs to hold above the low-day close to keep the long-bias viable. From a trading standpoint, the immediate risk is for a pullback here but we’re looking for downside exhaustion while above 1.1175. Keep in mind we’re heading into the start of a new month with the FOMC and US Non-Farm Payrolls (NFP) on tap- stay nimble here.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

EUR/USD Trader Sentiment

• A summary of IG Client Sentiment shows traders are net-long EUR/USD- the ratio stands at +1.27 (55.9% of traders are long) – weak bearishreading
• Traders have remained net-short since April 12th; price has moved 0.5% lower since then
• The percentage of traders net-long is now its lowest since April 17th
• Long positions are24.0% lower than yesterday and 6.1% lower from last week
• Short positions are31.9% higher than yesterday and 0.9% lower from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Euro prices may continue to fall. Yet traders are less net-long than yesterday & compared with last week and therecent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher, despite the fact traders remain net-long.

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

—

Relevant Euro / US Economic Data Releases

Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Active Trade Setups

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

GBP Talking Points:

– GBP/USD is in focus as the next two days bring Central Bank rate decisions from each economy represented in the quote. The Federal Reserve announces their rate decision tomorrow, and Thursday morning brings the Bank of England’s Super Thursday rate decision, which means a press conference and updated projections to go along with the rate decision.

– GBP/USD put in an aggressive bearish breakout last week, quickly pushing down to the confluent area around 1.2900. But selling pressure soon dried up, and prices have been retracing-higher ever since; setting the stage for a very interesting backdrop ahead of the next two days of rate decisions.

– DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading GBPUSD? Check out our IG Client Sentiment Indicator.

GBP/USD Breakout Bounces from Support at 1.2900

GBP/USD continues to recover following last week’s breakdown, and today has brought a strong pace of gains ahead of tomorrow’s FOMC rate decision and the ‘Super Thursday’ Bank of England event on the day after. Leading into this bounce, GBP/USD had broken down to fresh two-month lows, pushing below the support side of a descending triangle formation that had been brewing since mid-March.

The 1.2900 area was the initial target looked at for bearish breakout themes in GBP/USD last week, continuing a downside run that had started the week prior as GBP/USD price action built-in resistance off of the 1.3117 level.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley

At this point, GBP/USD prices have burst back-above the bearish trend-line that made up the resistance side of that triangle; and along the way, the 1.3000 level was taken-out in fast order. And while this may be just a short-squeeze scenario following last week’s breakdown, given the heavy calendar over the next few days, traders would likely want to move forward with a bit of caution on either side of the argument.

I had looked at bearish continuation scenarios in GBP/USD in this week’s FX Setups; but the resistance zone that was being followed for lower-high resistance failed to quell the rally, leaving more questions than answers around the pair ahead of the oncoming Central Bank onslaught; and this leaves potential on either side of GBP/USD depending on how the trader wants to move forward around the US Dollar.

GBP/USD Two-Hour Price Chart

Chart prepared by James Stanley

GBP/USD – The Bullish View

GBP/USD currently has an imbalance amongst retail traders in the IGCS data, with 1.54 traders long for every one that is short, as of this writing. This isn’t a large enough imbalance to get excited around bearish continuation strategies, but it does highlight the fact that many retail traders are looking to play a bounce in GBP/USD.

At this stage, the long side of GBP/USD could be considered a tenuous theme, as we have but a couple days of strength following last week’s bearish breakout. But – the degree to which bulls have returned highlights the potential for that theme to continue to build. Resistance at 1.2960-1.3000 didn’t even slow down buyers on the way up, and right now prices are looking very stretched on short-term charts.

This opens up the potential for a pullback to short-term support at prior resistance, at which point bullish strategies can become attractive again. The prior area of resistance from 1.2976-1.3000 could be re-utilized as potential support for traders looking to institute bullish strategies on GBP/USD.

GBP/USD Hourly Price Chart

Chart prepared by James Stanley

GBP/USD – The Bearish View

This market view would likely need to be coupled with a bullish view on the US Dollar, as Cable bears will likely have very little power without participation from the US Dollar. But – given last week’s USD breakout and the drivers on the calendar for the next couple of days, GBP/USD bears could incorporate the assumption that the current bullish move is a short-squeeze scenario; instead looking to fade this rip in the direction of the longer-term trend.

For that theme, there are two areas of potential, both of which have been in-play this month. The prior resistance zone from 1.3087-1.3117 could be re-utilized. This is the same zone of resistance that was used to anticipate the earlier-month breakout, and should this zone come back into play, with a show of resistance, and the door could soon re-open to downside themes in GBP/USD.

If that’s unable to hold the highs over the next couple of days, a deeper area of resistance potential comes into play, and this is the same zone that held the early-April highs that runs from 1.3181-1.3187. If price action is able to break-above this zone, then likely something else is going on; whether it be from a US Dollar breakdown or some very positive developments on the Brexit front. Nonetheless, this could serve as a form of invalidation to the bearish approach, and that can, at the very least, make the risk management of the situation relatively clear-cut.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

USD/CHF Technical Analysis: Upward Trend Losing Momentum

USD/CHF Technical Strategy

• USD strength seen in the last two weeks.
• USD/CHF important levels to watch.

See the Q2 USD forecast to learn what is likely to drive price action through mid-year!

Since mid-April USD has been rallying against most major currencies, including the CHF, due to better than expected economic data (Retail Sales and GDP Q1) easing FED concerns about current economic growth levels. Markets will be waiting tomorrow for the latest US interest rates decision with no change expected. How will this affect USD/CHF?

See the DailyFX Economic Calendarfor a comprehensive look at the week’s important data releases.

Just getting started and need a hand?See our beginners’ guide for FX traders

USD/CHF Daily Price Chart (Aug 2018 – April 30, 2019)

Bearish Developments and Levels to Keep in Focus

Since March 20th USD/CHF has been pushing higher and breaking significant resistance levels, however the most important development was on April 18th when prices broke through Nov 13th high at 1.0128 and continued rallying to print 1.0239 on April 26th, its highest levels since nearly 2 and a half years.

On Tuesday April 23rd USD/CHF prices broke a significant level at 1.0215 but failed to close above, and this failure was repeated five times in the following days, to highlight a weakness in the uptrend momentum, which also shows on RSI reading dropping from 80 to 76 considering that any fall in RSI reading below 70 would uphold the bearish bias.

Today April 30th prices are testing the up-trend line originated from the 10th Jan Low and if prices break and remain below 1.0184 then any sell off would eye the end of the range at 1.0134. Support levels at 1.0167 – 1.0161 and 1.0148 -1.0143 should be monitored along the way.

What if USD/CHF closes above 1.0215?

In this case, bullish sentiment would suggest a draw towards 138 .20% Fibonacci extension at 1.0285, if the move breaks resistance levels as 1.0230, 1.0255, 1.0278 first.

USD/CHF Prices 2 Hour Chart (April 30 2019)

We notice a formation of a Double Top pattern where the neck line resides at 1.0169, and prices might swing lower towards 1.0109 if USD/CHF breaks through and remains trading below. Support at 1.0128 also needs to be watched.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

Having trouble with your trading strategy?Here’s the #1 mistake that traders make

Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Being aware of these errors, can help traders become more efficient in their forex trading. Although all traders make trading mistakes regardless of experience, understanding the logic behind these mistakes may limit the snowball effect of trading impediments. This article will outline the top ten trading mistakes and ways to overcome them. These mistakes are part of a constant learning process whereby traders need habitually familiarise themselves with them to avoid repeat wrongdoings.

The video included highlights six trading mistakes, however there will be more covered in the article below. It is important to note that trading comes with the inevitability of loss, but these may be minimised with the exclusion of human error/mistakes.

Prior to committing to forex trading, consider these 10 widespread trading mistakes you must evade as they contribute to a large proportion of unsuccessful trades.

Mistake 1: No trading plan

Traders without a trading plan tend to be haphazard in their approach because there is no consistency in strategy. Trading strategies have predefined guidelines and approaches to every trade. This prevents traders from making irrational decisions due to adverse movements. Devoting to a trading strategy is key because veering away may lead to traders plunging themselves into unchartered territory with regards to trading style. This eventually results in trading mistakes due to unfamiliarity. Trading strategies should be tested on a demo account . Once traders are comfortable and understand the strategy, this can be translated to a live account.

Mistake 2: Over-leveraging

Margin/leverage refers to the use of loaned money to open forex positions. While this feature requires less personal capital per trade, the possibility of enhanced loss is real. The use of leverage magnifies gains and losses, so managing the amount of leverage is key. Learn more on what is leverage in the forex market.

Brokers play an important role in protecting their customers. Many brokers offer unnecessarily large leverage levels such as 1000:1 which puts novice and experienced traders at significant risk. Regulated brokers will cap leverage to appropriate levels guided by respected financial authorities. This should be taken into consideration when selecting a fitting broker.

Mistake 3: Lack of time horizon

Time investment works hand in hand with the trading strategy being implemented. Each trading approach aligns itself to varying time horizons, therefore understanding the strategy will lead to gauging the estimated time frame used per trade. For example, a scalper will target shorter time frames whilst positions traders favour the longer time frames. Explore the top 8 forex trading strategies for varying time horizons.

Mistake 4: Minimal research

Forex traders are required to invest in proper research to employ and execute a specific trading strategy. Studying the market as it should be, will bring light to market trends, timing of entry/exit points and fundamental influences as well. The more time dedicated to the market, the greater the understanding of the product itself. Within the forex market, there are subtle nuances between the different pairs and how they work. These differences need thorough examination to succeed in the market of choice.

Reacting to media and baseless advice should be avoided without verification from the employed strategy and analysis. This is a common occurrence with traders. This does not mean these tips and media releases should not be considered, but rather investigated systematically prior to acting on the information.

Mistake 5: Poor risk-to-reward ratios

Positive risk-to-reward ratios are often overlooked by traders which can result in poor risk management. A positive risk-to-reward ratio such as 1:2 refers to potential profit being double the potential loss on the trade. The chart below shows a long EUR/USD trade with a 1:2 risk-to-reward ratio. The trade was opened at a level of 1.12698 with a stop at 1.12598 (10 pips) and a limit of 1.12898 (20 pips). An effective indicator to help identify stop and limit levels in forex is the Average True Range (ATR) which uses market volatility to base entry and exit points.

Having a ratio in mind helps to manage expectations of traders, this is important because after much research by DailyFX, improper risk management has proven to be the number one mistake made by traders.

EUR/USD 1:2 risk-to-reward ratio:

Mistake 6: Emotion based trading

Emotional trading often leads to irrational and unsuccessful trading. Traders frequently open additional positions after losing trades to compensate for the previous loss. These trades usually have no educational backing either technically or fundamentally. Trading plans are there to avoid this type of trading therefore, it is imperative that the plan is followed closely.

Mistake 7: Inconsistent trading size

Trading size is crucial to every trading strategy. Many traders trade unsuitable sizes in relation to their account size. Risk then increases and could potentially erase account balances. DailyFX recommends risking a maximum of 2% of the total account size. For example, if the account contains $10,000 then a maximum of $200 of risk is suggested per trade. If traders observe this general rule, the pressure of overexposing the account will be removed. The inherent risk of overexposing the account on a particular market is extremely dangerous.

Mistake 8: Trading on numerous markets

Trading on a few markets lets traders gain the necessary experience to become proficient at these markets without scratching the surface of a few markets. Many novice forex traders look to trade on multiple markets without success due to lack of understanding. This is something that should be done on a demo account if need be. Noise trading (irrational trading) often leads traders to place trades without the proper fundamental/technical justification on varying markets. For example, the Bitcoin craze of 2018 sucked in a lot of noise traders at the wrong time. Unfortunately, many traders entered at the ‘FOMO or Euphoria’ stage of the market cycle which resulted in significant losses.

Mistake 9: Not reviewing trades

Frequent use of a trading journal will allow traders to identify possible strategic flaws along with successful facets. This will enhance the traders overall understanding of the market and strategy for future. Reviewing trades not only highlight errors, but beneficial aspects as well which must be reinforced on a constant basis.

Mistake 10: Selecting an unsuitable broker

There are numerous CFD brokers globally, so choosing the right one can be difficult. Financial stability and proper regulation are essential before opening an account with a broker. This information should be readily available on the brokers website. Many brokers are regulated in countries where guidelines are weak, to circumvent regulations in stricter jurisdictions such as the US (Commodity Exchange Act) and the UK (FCA).

Safety is the primary focus; however, a comfortable platform and ease of execution is also central to choosing a broker. Becoming accustomed with the platform and costing should be given ample time prior to trading with live funds.

Forex Trading Mistakes: A Summary

Having the correct foundational base to trade forex is important before undertaking any form of live trading. Taking the time to understand the do’s and don’ts of forex trading will benefit traders in future. All traders will eventually make mistakes but minimizing them as well as eliminating repeat offenses must be practiced and become expected behaviour. The primary focus of this article is to adhere to a trading plan with proper risk management, and a suitable reviewing system.

• If you are new to forex be sure to get up to date with the basics of forex trading through our New to Forex guide.
• Our research team analyzed over 30 million live trades to uncover the Traits of Successful Traders. Incorporate these traits to give yourself an edge in the markets.
• Traders often look to retail client sentiment when trading popular forex markets. DailyFX provides such data, based on IG client sentiment.