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Tomorrow brings the two most impactful events on this week’s economic calendar with the April rate decision out of the ECB, followed later in the day by the release of FOMC Meeting Minutes from the March rate decision. This was the meeting in which the Fed cut rate forecasts for 2019 from a prior expectation of two hikes down to zero; so the minutes from that meeting may offer a bit of clarity as to just how bearish the bank might be following that dovish shift.
In this webinar, I looked at price action setups across the FX-space, focusing in on US Dollar pairs ahead of tomorrow’s drivers.
USDCNH Gyrates out of Bear Flag, Builds Inverse Head and Shoulders Pattern
This is a pair that not many retail traders follow but, of recent, has had some clean technical inflections. I looked at reversals off of a top in November, and that’s filled in through the rest of 2018 and the first quarter of 2019. During Q1, prices built into a rather consistent bearish channel, making a bear flag formation.
It was around the last FOMC rate decision that prices in the pair began to move out of that channel, and since then price action has continued to exhibit range-like tendencies with a hold of resistance around the 6.7500 area on the chart. This can keep focus on the topside of the pair and the potential for a fresh bullish trend should that resistance give way.
USD/CNH Four-Hour Price Chart
US Dollar Builds Lower-Highs as Ascending Triangle Remains
The longer-term look at the US Dollar displays a rather clear ascending triangle formation, and this was the centerpiece of the Q2 technical forecast for the US Dollar. The big question is whether that formation is ready to give way just yet, and judging by shorter-term price action, it does not appear so. Prices have continued to respect a pattern of lower-highs over the past few weeks, and this may point to the necessity for a deeper retracement before that topside theme is ready to fire.
US Dollar Daily Price Chart
On the support side of USD (DXY), the 96.47 Fibonacci level remains of interest, and below that is the trend-line projection from the support side of the ascending triangle. The 95.00 level can serve as a form of pattern invalidation, and a push below that could soon re-open the door for bearish strategies in the US currency.
US Dollar Four Hour Price Chart
EURUSD Holds Range Support Ahead of ECB
The European Central Bank brought a bit of news to the fray last month when they announced a fresh round of TLTRO’s to go along with cuts to both growth and inflation forecasts. This was a more-dovish outing than what many were expecting, and EURUSD did drop in the aftermath of these drivers as prices tested below the support side of a range that had been in-play for the prior five months.
But, as discussed in the webinar shortly after that event, there was another item of support just underneath, taken from the 1.1187 level. This has since helped to cauterize that low while also holding a higher-low that showed-up on Friday. I had looked at this as part of this week’s FX Setups, looking at bullish strategies given respect of support; with bearish potential should bears push below the 1.1175 level.
EURUSD Four-Hour Price Chart
GBPUSD Bounces from 1.3000 but Longer-Term Backdrop May be Shifting Bearish
This was a focal point in last week’s webinar as price action in GBPUSD has started to tilt-lower. As looked at on the daily and eight-hour charts, price action is showing a descending triangle formation, which points to bearish potential should the 1.2962-1.3000 zone give way. The next area of support potential is around the confluent zone around the 1.2900 level.
GBPUSD Four-Hour Price Chart
AUDUSD Range Remains
It’s not exciting for most traders, but AUDUSD has displayed a very consistent range over the past few months. I had published an article earlier this morning looking into that formation, and resistance at .7150 has since held this morning’s high. In the webinar, I looked into how strategy could be used to trade short-term trends inside of this range; as well as looking at strategy for the range itself.
AUDUSD Four-Hour Price Chart
NZDUSD Attempts to Hold Fibonacci Support
Late-March brought a pronounced bearish move out of NZDUSD around the RBNZ rate decision. I had looked at the setup going into that meeting, as prices were griding near a confluent area of resistance on the chart. That setup filled-in fairly quickly, and now support has come back into play off of the .6717 area, and this is the same level that’s helped to hold the lows in the pair since mid-January.
NZDUSD Four-Hour Price Chart
USDCAD Targeting 1.3250
I looked at the bearish side of USDCAD in this week’s FX Setups, and that’s started to fill-in. This keeps focus on the 1.3250 area for the next item of support.
USDCAD Four-Hour Price Chart
Gold Prices Hold 2019 Support Zone
This was a focus piece published earlier today entitled, Gold Price Technical Outlook: GLD Rallies from Key Chart Support. This is a market of interest for tomorrow’s drivers, and this can have a relationship with the ascending triangle looked at above in the US Dollar. If and when the Dollar breaks out from that ascending triangle formation, the downside of Gold prices can get very attractive again. But – until that happens, Gold is retaining bullish structure, and focus is on the 1325 level for topside trend potential.
Gold Price Eight-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