GBP/USD Hits Positive Reversal Target

• Daily: In last Friday’s Weekly Technical Update, it was noted that the GBP/USD developed a positive reversal (when the RSI low is lower or equal, but the price low is higher). The swing projection to 1.5610 was projected. The market reached 1.5637 already.
• I mentioned that this pair now enters a zone of resistance above 1.56. You can see in the daily that this is the zone between 50 and 61.8% retracement.

• 1H: The GBP/USD in the 1H chart also shows a rally following a positive reversal. The projection to 1.5625 was reached. This came after a bearish divergence was formed.
• This suggests that the momentum has slowed, but the bearish attempts are in the near-term, and not strong enough to reverse the trend.
• Now we are pushing into resistance again. Some traders find this to be a scalping opportunity, but for the intermediate term, the rally is still intact, and there are no signs of reversal.
• However, being that the market is testing resistance, the resistance zone above 1.56 should be monitored for topping action.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

Today, the Japanese yen fell across the board throughout the Asian and European session, and has so far held those gains in the US session. The GBP/JPY is breaking out of congestion as well as the EUR/JPY. There is a pullback in the USD/CAD, and there is a rally in the USD/CHF to establish a bottom. I will also follow up with developments in the EUR/GBP and XAU/USD Gold.

USD/CHF Establishing a Bottom

• 4H: Following up with yesterday’s update, “Assessing Possible Bottom“, indeed a rally emerged from the 50 period moving average in the 4H chart. The rally is strong, so the projected path of the rally from yesterday’s post should be revised.
• We could extend the current rally to 1.0630 and complete a 100% swing projection.
• If the rally continues, there is more resistance at 1.068/70 area. Then there is more resistance that could exist as the SMA 200 and 161.8% expansion.
• So basically, the pair is establishing a bottom but after such a strong decline in previous weeks, the market has a lot of resistance just above. The logical thing to expect is some declines from there as the market may still be bearish or at least ranging. However, if these levels break easily, that should be a very strong signal that the market is both cover shorts and putting on longs.
• One more note is that the RSI is rising above 60, a violation of bearish momentum. It is at least suggesting ranging action if not bullish.

• Daily: The daily chart shows the market coming out of a bottom after a bullish divergence. We see that unless the market breaks above 1.07, there is a negative reversal (RSI high getting higher while price high staying lower or equal). A break above eyes 1.09, 38.2% retracement of the entire downswing.
• The resistance may also be a factor of 50 period moving average  in the daily.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

GBP/JPY: An Impulse is Born Out of Congestion

• Daily: Yesterday’s interpretation of a positive reversal anticipated a rally after a correction. The market indeed continued to rally, and an impulse wave is born. I will look at the internals in the chart below, but first from the chart above, I want to note that the market broke above congestion resistance, but there is still resistance at 136.40 (50% retracement).
• A throwback may be a good test of whether the current bullish attempt is sustainable.
• The blue indicator on the bottom is the Choppiness index (14). When the index is high, or rising, the choppier and stronger the retracement. When this happens, to me the market is entering or is in a ranging mode. When the choppiness index declines and is low, it means the market has entered a trending mode. The trending mode is usually shorter in time than ranging mode, and so you see that the oscillations should be dominated by rises (I have not tested this empirically, feel free to check out the choppiness index in VT Trader).
• The main point is that the index is starting to turn down, meaning the market is starting to come out of the ranging mode it has been in since June.

• 4H: The rally is convincing the 4H time-frame, as we can clearly see an impulse wave developing. If so, we are in the terminal wave 5, and a correction should follow.
• Since the 136.40 level offers resistance, the market may pause there.
• Assuming that, a correction throwback ideally stops above 133.60, but can still extend to 133.00 and be considered wave II.
• Looking back at the daily, if the market does continue rallying, a target for the swing is the 140 area.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

EUR/USD Might be Developing the Last Wave of a Zig Zag

• Daily: The 1.30 resistance has cracked. The outlook may be changed since the market first tested the 1.30 level. However the bearish scenario still exists ahead of the short-term bullish outlook. An important resistance exists at 1.3250. The market may be respect this if this rally as a wave 4. If that is the case, we are in the last wave of a zigzag correction to be followed by wave 5, down towards 1.1880.
• However, if the market climbs above 1.3250, it is likely wave 5 was already complete, and we are in a major correction, and we may only be in the first leg of that correction. There may still be a decline to follow, but that should not reach 1.1880, and should be treated as a correction since the mode has switched to bullish.
• The weekly chart shows this entire decline in 2010 and where a stronger correction can extend to.

• Weekly: The weekly chart shows that the market has been rising sharply, and consistently over the past 8 weeks. The bullish scenario might extend further to 1.35/36 area, the previous consolidation zone. This will also test the 50 moving average in the red, and the 50% -61.8% retracement zone.
• The RSI should be at 60. I would say this is the test of long-term bullish strength. For now, intermediate term strength appears to be holding, and the long-term look is ranging for now.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

The first global session of this week started with some risk appetite. The US Dollar pretty much started to decline as soon as the week started as global equities rallied and thus it was not demanded as a safety currency. Japanese yen gained initially, but is struggling to keep those gains in the late European and early US session. I will briefly take a look at charts of EUR/USD, GBP/USD, USD/CAD, AUD/USD, GBP/JPY, EUR/JPY, and USD/JPY.

USD/CHF: Assessing Possible Bottom

• Weekly and Daily: Trying to find a bottom after a sharp decline is a dangerous endeavor. Traders liken it to “catching a falling knife”. Some say you will have “smelly hands” for trying to catch the bottom. Also, the weekly chart shows no real signs of reversal yet.
• With that  being said, let’s go ahead to see if we find any clues for a bottom in lower time-frames. Before that, I should note the RSI in the weekly is still above 40, after it was in very overbought levels. This did happen when the SMA50 was below SMA200, so really the situation is wide ranging action.
• The daily shows possible double bottom action if the market can rally and close above 1.0560. As always though, a throwback to confirm is necessary especially for a bullish outlook after a strong decline.
• The target for a rally if the 1.0560 is broken is 1.09. This is the 38.2% retracement of the decline from the 1.17 top, seen in the Daily chart.

• 4H: The 4H chart shows a consolidation that may have completed a and b, but c may not be complete. Sure there is resistance at 1.0560, but the wave form of c is incomplete and should see another rally in my opinion.
• In any case, I won’t try to force a count but let the market resolve the current consolidation.
• This basically helps me prepare for a breakout up top if there is one. Even a break of 1.0560 is not a bullish signal just yet until we see “c” complete and a subsequent decline to prove to be a throwback. Then, we can say we have established a bottom.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

USD/CAD Eyes 1.02 if Support Breaks

• Daily and 1H: In an update last week on the USD/CAD, I mentioned that the currency pair was ready to break below the congestion pattern, after completing 5 waves.
• We can still have waves 6 and 7 if the support holds. However, if the support fails, the near-term target is just below 1.02, then the parity level.
• The support in the 1H chart has already broken, and the RSI is attempting to break below 40. There is also a moving average crossover.
• These may already be signs that the market is heading towards the near-term target below 1.02.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

GBP/JPY Assessing Possible Bullish Signal

• 1H: The GBP/JPY started the week rallying towards 135.60 and was rejected there. There was a bearish divergence, and we see that materialize for about 100 pips.
• This brings the market back to the level it started this week and tests a rising trendline.
• The 133.80, 38.2% retracement level can be seen as a target in the near-term.
• However, there may be a bullish signal developing, if the market fails to get to this target.
• If the market stays above 134, the previous low, there would be a positive reversal with the RSI. ( the RSI low is lower, but the price low is higher). This suggests we should at least have one more capitulation move to break the 135.60 high.

• Daily: The GBP/JPY in the daily can be seen as trapped in a sideways channel roughly between 131 and 136.
• We can also count 5 waves within the channel/congestion. Basically the most recent upswing is the 6th wave.
• Now Elliott Wave Principles suggest there can be 5-wave or 7-wave triangles, or wedges. This can be considered such a pattern.
• Therefore, in the bigger picture, there are a couple scenarios just for the bullish scenario.
• One is that the current rally will continue, as suggested in the 1H chart, and a breakout will be strong, materializing into a rally to C, near 140.
• Or, there might be a wave 6, 7 before a rally takes place.
• The bearish scenario opens up for me if the market can close below 131.50. Looking at the orientation of the SMA200 vs. SMA50, we see that the overall mode is still bearish and this scenario is not out of the question.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

The Japanese yen ended the week lower after showing some strength in the middle of the week. For the EUR/JPY and GBP/JPY, the markets are still in ranging modes. The CAD and AUD are in the similar situation as well as the USD. Therefore, the weakness for the yen was broad based, but still not significant enough.