The USD/JPY awaits tomorrow’s jobs report

The Dollar has been strengthening during the whole week, supported by the strong fundamentals out of the US. It seems like the Greenback is taking a breather today, but we must keep in mind that tomorrow we have the Non-Farm Payrolls report, which is expected to show that the US economy has created 230 thousand new jobs during the month of July.

If the reading comes out in line or better than expected, then we may see the USD/JPY try to break above the 103.00 level where it has stall its rally for now, as shown on the daily chart below. Today´s daily candlestick has formed as a Doji and this is an indication that the pair is very undecided at the moment. This is most probably due to the fact that the markets usually go into a quiet mode before the NFP report.

Will the USD/JPY reach the 103.00 level?

The Dollar keeps gaining strength versus most of the major currencies, especially versus the Yen, after the better than expected Gross Domestic Product report out of the United States. The data shows that the US economy has been expanding at a sustainable rate and this may prompt the Federal Reserve to raise its interest rates.

On the daily chart below of the USD/JPY we can see that the price has been trending higher with a strong bullish momentum and it may try to touch the 103.00 level. On the previous visit of the price to that level, the pair bounced rapidly to the downside from there, but this time around we must be careful, because if the fundamentals out of the US keep coming out better than expected, then the pair may try to break above the 103.00.

Golden Cross – USD/CAD 4 Hour Chart

The “Golden Cross” is when the 50 or the 55 period moving average crosses above the 200 period moving average. On the 4 hour chart below of the USD/CAD, we can see that the 55 Exponential Moving Average (purple line) crosses above the 200 Exponential Moving Average (blue line). This is an indication that the bullish momentum may continue. However, the long entry point was at the pullback of the breakout of the price above the 1.0800 level. This is an entry signal from a pattern known as the Breakout and Pullback Formation.

At the moment we just have to wait and see if the price really reaches the 1.0900 level where it may find some good resistance.

The Kiwi gets closer to the 76.4% Fibo

The NZD/USD has been losing a lot of ground lately and it is getting closer and closer to touching the 76.4% Fibonacci Retracement level as shown on the daily chart below. On the same chart se can see that just below that Fibo level, we also have the round number 0.8500, which could also serve as a potential support level for the pair. Therefore, we must be attentive in case the price keeps dropping lower, because we may see a bounce to the upside from that zone.

The 200 EMA on the Weekly halts the Euro

The 200 period exponential moving average can at time behave as a very good dynamic area of support or resistance. That is why we are seeing on the weekly chart of the EUR/USD that the pair has reached its 200 EMA and it has stopped for now its decline there. The price may close for the week around the current levels, but we must be attentive to next week’s moves, because we could either see a breakout or a bounce from the current 1.3424 zone. If the price keeps dropping, then a visit to the 1.3400 level could be interesting. 

The GBP/USD is dropping like a rock

The Pound has been hurt badly by the Greenback and as we see on the Daily chart below of the GBP/USD, the pair has broken below the 1.7000 round number level and it looks like it is keeping its bearish momentum. Around that same zone we can also see the 55 Day Exponential Moving Average, which has not been able to hold the price for now. It the pair keeps dropping, then we should wait for confirmation of the breakout and a possible pullback to the same 1.7000 for a possible short entry. But in order to see this scenario develop, we are going to have to wait until next week.

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Broadening Triangle formation on the S&P 500

Today’s fundamentals out of the US came out better than expected with a higher reading on inflation and new home sales. The real estate market in the United States is expanding better than most economists expected and even May’s numbers were revised higher. This has caused the S&P 500 index to rally and break above the 1977.75 level which was its latest high as shown on the daily chart below.

On the same chart we can see the formation of a Broadening Triangle. It is called broadening triangle, because we can see that the triangle gets wider as time passes by. This chart pattern has a bullish implication and if we do see a breakout above the 1977.75 zone, then we may wait for the pullback to this same area for a possible long entry.

The Singaporean Dollar is close to breaking a key support level

The Singaporean Dollar has been strengthening versus the US Dollar and tries to break below the 1.2400 round number level. The pair has been visiting this zone for the last few trading days, but it has not been able to gain enough bearish momentum to break or to confirm a breakout below this level, as shown on the daily chart below of the USD/SGD. We must be attentive to a possible break out and confirmation of it in the form of two or three more bearish candles, then if we see a pullback to the same 1.2400 level we may get an opportunity to go short from there.

The EUR/USD reaches the 1.3500 level

Just as we anticipated it a few days ago, the Euro continued falling versus the Dollar for today and it has reached the 1.3500 level. At the moment, we can see on the 4 hour chart of the EUR/USD that the price has bounced to the upside from that level. Most probably the pair will close for the week at the current levels, but we must be attentive to next week’s moves, because we may get a continuation of the retracement or maybe the price falls back down to the 1.3500 level and tries to break it one more time.

Inverted Head and Shoulders pattern – 5 min – GBP/JPY

The Inverted Head and Shoulders pattern is a bullish reversal chart pattern, which means that if the price has been dropping and the pattern appears, the price will most likely change direction to the upside, once the pattern has been confirmed. The pattern is confirmed when the neckline is broken. In this case, the neckline is where the 173.00 level is.

Therefore, if we do see a breakout of the 173.00 level, the price may try to visit the 200 period Exponential Moving Average around the 173.30 level on the 5 minute chart.

The GBP/JPY is respecting the round number levels

On the 4 hour chart below of the GBP/JPY we can clearly see how the pair has made some very good bounces from the round number and psychological levels. Due to the fact that most traders place their entry or exit orders around these round number levels, these zones tend to act pretty well as support and resistance areas where the price bounces or changes direction.

The last bounce that the pair did was from the 174.00 level to the upside, which made it go back to its previous consolidation zone. We must be attentive to a possible visit to the 175.00 level, because the price may try to bounce from there to the downside. We could also see another visit to the 174.00 level, but as the price visits more times the same level, the probabilities of a breakout rise.

Yellen’s testimony strengthens the U.S. Dollar

Today we had the anticipated testimony by the FED’s chairwoman, Janet Yellen. Her comments were first perceived as dovish, due to some concern that she was placing on certain sectors of the economy like tech and social media stocks. Maybe those sectors are getting overvalued. But she also said that the U.S. economy is on the right track to recovery and if the labor markets keeps showing improvement some action may be taken. This was interpreted as a hawkish comment and made the Dollar take off versus most of its counterparts. The Euro, the Pound, and the Yen have all retraced their gains versus the greenback. Even emerging market currencies have fallen behind the Dollar.

But we still need to see how the FED’s decisions may influence the markets. It is true that the FED will have to raise its interest rates sooner or later, even if they need to wait another year to do so, but the Bank of England has to deal now with a rising inflation that was not expected and they may be tempted to take the lead ahead of the FED and raise their rates first. Therefore, we must be aware of a possible bullish continuation on the GBP/USD in the long run.

The USD/CAD pulls back and it is targeting the 1.0700 level.

The Canadian Dollar has been gaining strength today versus the greenback, as the Bank of Canada prepares to make its speech on Wednesday. Let us see how the central bank moves the USD/CAD, but for now it seems like it wants to retrace to the 1.0700 level as shown on the 4 hour chart below. That level could act as a very good support for the pair and make it stall or bounce from there. To the upside, the 200 EMA, blue line, around the 1.0756 level could be a good resistance for the pair. 

The USD/CAD confirms breakout of the 1.0700 level.

The Canadian Dollar has been one of the main currencies that has moved the most for today, due to the disappointing Canadian fundamentals, which have shown a significant contraction of the labor market in Canada. That is why we can see on the 4 hours chart below of the USD/CAD that the pair has broken above the 1.0700 level and has closed with two candles above that level. The breakout has been confirmed and what we can do now is patiently wait for the pullback to the same 1.0700 level.

A pullback to the 1.0700 level could give us a good opportunity to go long, but if the price continues going higher and visits the 200 Exponential Moving Average on the 4 hour chart, then the price may bounce from there to the downside, giving us a good opportunity to go short.

The EUR/USD drops like a rock from a key resistance level.

Yesterday we analyzed the possible bounce to the downside on the EUR/USD from the Fibo confluence around the 1.3652 level and the combination of the 55 and 200 EMAs on the daily chart. Today we can see on the 4 hour chart below that even though the price did no touch exactly the 1.3652 level, it did bounce to the downside from that zone. We did not expect the drop to be so significant, but it is trying to reach it last low at the 1.3580 level. Let’s see how further down it can keep dropping.

EMAs and Fibos confluence on the EUR/USD daily chart.

On the daily chart below of the EUR/USD we can see some key factors that could hold the price down around current levels at D, where the 55 and 200 Exponential Moving Averages are acting as resistance. A few pips above the D level, we can see a gray zone that includes the 61.8% Fibonacci retracement of B – C around the 1.3657 level and the 76.4% around the 1.3674 level. A possible visit to that zone may show us a change in direction or correction to the downside.

Looks like the AUD/USD is getting ready to take off.

On the 4 hour chart below of the Aussie versus the Green Back, we can see that the pair has stayed consolidated around the 0.9400 round number level. Even though the price has tried to drop on occasions during the last few 4 hour candles, we can see that the 0.9400 level has been a very important support for the pair. If the next two candles are bullish, then we may see a continuation of the bullish momentum and possibly a visit of the 0.9500 level. Let’s see if a continuation bullish pattern really develops from around the current levels.

Good bounce on the EUR/USD from the 61.8% Fibo.

Since last Friday we have been paying attention to the visit of the EUR/USD to the 61.8% Fibonacci retracement as shown on the daily chart below. Even though the price tried to break below that level at the beginning of today’s session, it started to rise from that level and gained a bullish momentum. If the price continues rising, then we may see a visit to the 200 Day Exponential Moving Average from where it may try to bounce back down. However, if the price comes back down from the current levels and break below the 61.8%, then we should pay special attention to the 76.4%, because a visit to that level could give us a good bounce to the upside.

The EUR/USD is at the 61.8% Fibonacci Retracement level.

The Fibonacci retracement levels can act as very reliable support or resistance zones on occasions and we could find good entries around these retracements. The most reliable Fibonacci percentages are the 61.8% and the 76.4%. On the daily chart below of the EUR/USD we can see that the pair had a good run up from the 1.3512 to the 1.3700 level. Once it got to the 1.3700 level it bounced to the downside and so far it has retraced 61.8% of the recent rally.

The EUR/USD may probably try to bounce to the upside during the next week from that 61.8% around the 1.3584 level. However, if the price continues going lower then we should pay special attention to the 76.4% Fibo level around the 1.3556, because this level is even more relevant than the 61.8% and we could see a good bounce to the upside from there.

We are awaiting a possible pullback on the AUD/USD.

The AUD/USD has dropped for today after the Non-Farm Payrolls report out of the United  States along with the unemployment rate came out better than expected. This has caused the Dollar to strengthen versus most of the major currencies. At the moment we can see on the 4 hour chart of the AUD/USD that the price has stayed consolidated below the 200 period Exponential Moving Average. If we see a pullback to the 200 EMA on the 4 hour chart, we may get an opportunity to go short from there, because that EMA may start acting as a resistance.

The GBP/JPY is heading towards its 7 month high around the 175.00 level.

We can clearly see on the weekly chart below of the GBP/JPY that the pair has been steadily climbing and it is very close to reaching the 175.00 level, which has been its highest high since December of last year. A possible visit of the price to this zone is very important, because we may see a bounce from there to the downside. Now that the price has broken above the 174.00 level, this same level could become support; therefore, if we see a pullback to the 174.00 level, we may get a good opportunity of a long entry around that zone expecting another bounce to the upside.

The AUD/USD stretches all the way to the 0.9500 level.

The Australian Dollar stays strong versus the US Dollar and reaches its next round number level at the 0.9500 zone. At the moment, the pair tries to stall at that level and it even has retraced a few pips. On the weekly chart below of the AUD/USD we can see that the pair has reached a very interesting zone of resistance.

About 41 pips above the 0.9500, we have the 200 period Exponential Moving Average on the weekly chart around the 0.9541 level, which can act as a very good resistance for this pair. Therefore, we must be attentive to a visit to this zone, because we may get very good opportunities to see a change of direction and possibly some really good short entries.