The 61.8% retracement is rest point now and next downside target
The AUDUSD moved below the 100 hour MA, 200 hour MA and 100 day MA yesterday. That shiifted the bias more to the downside. The 50% midpoint stalled the fall at 0.69958
Today, that 50% level (was also the low from July 17 – see post from yesterday) was broken and it opened the door for more downside wander. The 61.8% at 0.69756 was breached on a single bar, but failed. The price has been able to stay above since then. Traders will be looking for a break to continue to progression lower. Holding keeps the dip buyers in the game.
EURUSD is opening the new week of July in good balance. The current quotations are 1.1220. Today is going to be a quiet day on the exchange market. The macroeconomic calendar is empty, and Monday has all chance to remain calm. However, some news from abroad is worth considering: the world trade wars may soon take a new step, because the US are now planning to bring Vietnam under their control. I was June when the US President Donald Trump first said that Vietnam is abusing the situation, sometimes behaving worse than China. Clearly, he was speaking about its trading behaviour. After the situation with the Chinese export to the USA became complicated, Vietnam developed a robust activity and increased the volume of export to the US. The export is said to have grown to 8% GDP, which is truly a lot. Naturally, Trump does not like it. As early as May Vietnam appeared on the list of countries – currency manipulators, and now it is prone to get increased taxation on its goods. The start is the same as with China: in July the US put a tax on the Vietnamese steel as high as 400%. Such conditions are absolutely noncompetitive, so the volume of the Vietnamese steel dropped significantly. With other goods it is more or less the same. The tax for Vietnamese goods may amount to 25%, as with China, which will deteriorate the export greatly and influence the GDP of the country. For the exchange market such steps will show not just deepening, but also widening of trade wars, so that the next goal of American trade protection may become any country of the world. In such circumstances demand for safe currencies, such as the dollar and yen, usually grows
GBPUSD failed for the 2nd week in a row below 2018 lows
2018 low came in at 1.2453
The GBPUSD traded below its 2018 low at 1.2453 for the 2nd week in a row, and barring a sharp fall today, the pair will fail on that break for the 2nd week in a row.
Last week the low reached 1.24378. This week the low got all the way down to 1.23815 on Wednesday before bouncing (helped by better retail sales on Thursday) and the dollar selling on the back of the William’s comments. With two shots at going lower and two fails, traders may tilt short/intermediate term bias more to the upside (i.e., look for a dip to buy) with stops on a break back below the 1.2453 level. Where is support? Drilling to the hourly chart below, the pair is approaching support at the 200 hour MA at 1.24938 level and the 100 hour MA at the 1.24715 level. If you recall from yesterday, the pair moved up to 1.24968 just above the 200 hour MA, retraced to the 100 hour MA (blue line) before the run higher on the William’s commnets. IN between sits the swing low from July 4 at 1.24805. The pair currently trades at 1.2506. The low for the day just reached 1.2494 – just ahead of the 200 hour MA.
It’s Friday and new positions may not be the best idea, but into trading next week, I would look toward the 100 and 200 hour MAs to be a support level for buyers with the idea that 2 failed shots to go and extend lower (below 2018 lows at 1.2453) is enough, and that the “market” may look to explore the upside instead. Much will depend on the support against the 100 and 200 hour MAs. On a move to the upside, the obvious hurdle is at the 100 bar MA on the 4-hour chart at 1.25484. In the run higher yesterday and also today, that MA stalled the rallies. It will take a move above to give the dip buyers some added confidence (but likely not until next week). Of course, the pound has a lot of hurdles on the road ahead with Brexit. The price action will reflect the good and the bad. However, from the two chances in the last two weeks, the sellers certainly had their shot and they missed. Do the longs look to take a shot now? Watch the support levels but respect them too. Moves below are the risk.
The AUDUSD has been waffling up and down in trading today. The low to high trading range is only 20 pips on the day. The 22 day average is 41 pips. So the range is 1/2 what is normal over the last month of trading. The price has been trading above and below an old floor area at the 0.6956 level. The market is unsure what to do now.
The most recent high in the NY session stalled at the 200 hour MA (green line currently at 0.6963). The price is also below the 50% retracement of the move up from the May 30 low at 0.69599. Stay below each keeps the sellers more in control/tlts the bias to the downside. If the sellers are able to keep the the lid on the pair (stay below 200 hour MA), the 61.8% at 0.69453, and then the 0.6935-36 area (swing highs from May 28 and May 30) will be targeted.
The long slow bearish channel in the euro is getting close to breakout decision, notes Al Brooks.
The EURUSD currency pair has been in a bear channel for a year. Protracted bear channels often end with a sharp break below the channel and then a reversal up. There is no sign yet that the pattern of two- to three-week rallies and two- to three-week selloffs is about to end.
The EURUSD weekly chart has been forming lower highs and lows for a year. This is a bear channel and there is no sign that it is about to end. Consequently, traders continue to buy reversals up from every new low and sell reversals down from rallies to above the 20-day exponential moving average. The legs up and down have lasted two to three weeks.
The daily chart has been in a tight trading range for a month. Every trading range has both buy and sell setups. The bears have a double top with the May 1 and May 13 highs. The bulls have a double bottom with the April 26 and May 23 low.
Because the chart is now near the 52-week low, traders are expecting a reversal up. The reversal can come from above or below the May 23 low. But, a two- to three-week reversal up is more likely that a strong break below the May low.
Possible sell climax below yearlong bear channel
When a bear channel lasts a long time, it often ends with a sell climax. There can be a strong break below the bear channel, but 75% of the time, a bear break below a bear channel reverses up within five bars.
Five bars, but on what time frame? It is the highest time frame that shows the channel. That is the weekly chart.
If traders see a strong selloff over the next few weeks that breaks strongly below the 52-week low and the bear channel, they should be ready for a reversal up. If there is a reversal up, it usually leads to a swing up. The minimum goal would be 10 bars and two legs. It could last longer and go much higher. Since the weekly chart is in a Spike and Channel bear trend, traders will expect a reversal up to test the start of the bear channel. That is the June 14, 2018 high of 1.1851. Since that is far above, any rally would take many months to get there.
Bear channels usually evolve into trading ranges. Therefore, even if the bulls get a strong reversal up, it will probably be a bull leg in a trading range that will last a year or more.
As we can see in the H4 chart, the pair is quickly trading upwards to update the high at 1346.68. Right now, XAUUSD is getting closer to the retracements of 61.8% at 1315.80.the next upside target may be the retracement of 76.0% at 1327.35. The support is at 1266.23.
In the H1 chart, the pair is rising steadily. The closest target is the retracement of 61.8% at 1315.80. The support level is the retracement of 38.2% at 1297.00.
USDCHF, “US Dollar vs Swiss Franc”
In case of the USDCHF, the after reaching the long-term retracement of 23.6%, USDCHF is trading close to 1.0000. The next downside target may be the retracement of 38.2% at 0.9836. At the same time, there is a convergence on MACD, which may indicate a possible pullback.
In the H1 chart, the pair is starting a new short-term rising correction. The upside targets may be the retracements of 23.6%, 38.2%, and 50.0% at 1.0002, 1.0020, and 1.0035 respectively. The local support is the low at 0.9972.
GBP/JPY crumbled in May. The pair fell to 136.95 from 145.26 at the open of trading on May 3. That’s the worst month for the pair since Brexit in 2016. Looking back, the chart told the story. There was a wedge and triple bottom at 143.23 that gave way on May 8 and it was straight lower from there. Those technical levels were ones I had been highlighting ahead of the breakdown and afterwards.
In a world of uncertainty, gold shines ever-brighter. That’s certainly the case today with Trump announcing new tariffs and risk assets getting beaten up. Gold is up $17 to $1306. The rally breaks the May high of $1303 and means the precious metal will close the month at the highs. Gold also rallied nicely in the Nov-Dec period on a similar round of fears about trade. The upside here is considerable but it will need to coincide with a deteriorating in economic data. The Fed funds market is pricing in a 73% chance of two Fed rate cuts this year.