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.

Trading Room

Fibonacci Retracements Analysis 04.06.2019 (GOLD, USDCHF)

03.06.2019

XAUUSD, “Gold vs US Dollar”

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.

The pair fell nearly six percent

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.

Gold up $17 today

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.

USD/JPY holds firm amid calmer tones but price action this week shows that traders are indecisive

USD/JPY goes forward to bounce around between 109.152 to 109.702 levels

The pair still sits in a narrow range today (20 pips) but is at the highs as markets are in a calmer mood to start the new day. Treasury yields are mostly flat after a recovery in overnight trading while US equity futures are up by 0.2% ahead of European trading.
That said, the price action that we saw yesterday pretty much epitomises the kind of mood we’re seeing in the pair this week i.e. traders are finding it hard to settle on a firm direction. In that sense, sentiment is not helped by the fact that Treasury yields rose towards the end of US trading yesterday after a sharp fall earlier in the week.
The thing that puzzles me most this week is that USD/JPY is still sitting at this range despite global yields tumbling and as 10-year Treasury yields hit lows not seen since 2017. But after observing how yields came back up yesterday, it could be a hint of caution that a straightforward risk-off run may not be so straightforward.
Right now, the bond market is in charge of trading direction so the best way to get a grip of yen pairs is to go with the flow and what they are telling us. Using USD/JPY as a gauge:
USD/JPY goes forward to bounce around between 109.152 to 109.702 levels

The near-term bias is now more neutral as price holds in between both key hourly moving averages. That also backs the case that traders remain indecisive in chasing a risk-off move for the time being. The risk for sellers here is if price starts lurking towards the 200-hour MA (blue line) @ 109.81 and break above that.
It would signal that the near-term bias is turning more bullish again but I reckon we need the bond market to also confirm such a move. And the same can be said for the case for a downside move in USD/JPY.
If global yields continue to fall further, I just don’t see how the pair can continue to trade at its current levels. Eventually, something’s gotta give and when it does, it could get real ugly, real fast. I’d watch for a move below offers lined up at 109.00 and the May low @ 109.02. If that breaks, we could see more follow through selling to drive the pair down quickly.
But once again, it all depends on the bond market right now.

EURUSD falls below support targets and makes a run

The EURUSD fell below the 200 bar MA on the 4-hour chart at 1.12268, the 100 hour MA at 1.1221 and 50% of the move up from Thursday’s low at 1.12179 (that was swing levels as well).  

Those break, turned buyers to sellers (and invited new sellers), and the price scooted to the next target at the 200 hour MA at 1.12049.  Traders traded, and leaned there.
What next?
Well, we trade between the 100 hour MA above at 1.1221 and the 200 hour MA below at 1.12049.  The next battle is on with sellers from above feeling ok and buyers against the 200 hour MA felling ok too.  
This is what happens in this type of uncertain market. There are lots of ups and downs (PS its a head and shoulders on the hourly too). Then you get a break, and the flow of funds swings (until the next target).  
Traders are trading.  So pick your spots and stay on your toes.