Good reversal on the USD/CAD

The USD/CAD continues pulling back as oil continues dropping. There is a negative correlation between the USD/CAD and oil, which is why the pair is rallying during the past few days. The Looney may try to reach the 200 day EMA, blue line, around the 1.3356 zone and maybe complete a pattern known as a breakout and pullback formation. From the 200 day EMA zone, the pair may try to bounce back down and try to reach the latest low that we see on the daily chart around the 1.3162 level. But a breakout above the 200 day EMA, may take the pair to the 55 day EMA, purple line, which could act as resistance. Above the 55 day EMA, the 1.3500 zone may also act as resistance, especially when that zone has acted as a congestion area in the past.

Consolidation continues on the Kiwi

The NZD/USD or Kiwi continues consolidating in between the 0.7200 level and the 0.7300 level as shown on the daily chart. The consolidation has formed what it appears to be a symmetrical triangle from where the price may actually breakout in any direction. The 55 day EMA, purple line, has continued crossing above the 200 day EMA around the 0.7054 level, reaching the 0.7100 level. The crossing of the EMAs has confirmed a pattern known as the golden cross, which has bullish implications in the midterm. Therefore, even if the pair continues consolidating above the 0.7200 level, it may break the 0.7300 to continue moving higher. A breakout of the 0.7300 level may take the pair to the 0.7400 zone. A breakdown of the 0.7200 level may cause the pair to pull back to the 0.7100 level where the 55 day EMA may act as support.

Shooting star on the GBP/JPY?

The shooting star pattern is a bearish reversal formation and it is all the contrary of the hammer pattern. It is called a shooting star, because it leaves behind a long upper shadow with a small real body at the bottom, which resembles a shooting star or a comet. The pattern is bearish due to the fact that the long upper shadow is showing us that the price was at some point at a high level and then it comes back when the sellers or bears take control of the market. The small real body at the bottom is showing us that the price has closed very near to the level where it opened. The real body of the candle can be of any color, what is important is that the price has come back very close to the zone where it opened the session. When the shooting star pattern is formed around an important resistance level, it has more probabilities of confirming itself. In this case, we can see that on the daily chart the shooting star candle is at the 200 day exponential moving average (blue line) and if the next candle is bearish then that would mean that the bears are still in control of the market and the price of the GBP/JPY may drop. In case of a bearish bounce from the current level, the 139.00 level may act as a support. To the upside, the most important levels that could act as resistance are the 143.00 level, the 145.00 level, or the 148.00 level.

Symmetrical triangle on the GBP/USD 15 minute

On the 15 minute chart of the GBP/USD we can see the formation of a symmetrical triangle, which has created by the high volatility on the Pound during today’s session. The symmetrical triangle usually works as a continuation pattern, depending on the direction of the trend coming into the formation. In this case, the trend is bullish coming into the symmetrical triangle, therefore there is a higher probability that the price of the GBP/USD may break to the upside. However, we cannot bet the house on that assumption, since the price may actually break in any direction. The high volatility on the Pound was created by the decision of the Bank of England to leave the current interest rate at 0.25%, but at the same time it has hinted on a possible rate hike during the next meeting. That is why we saw that initially the GBP/USD rose, but then it retraced to the downside and finally consolidates around the 1.2757 zone to form the symmetrical triangle. In case of a bullish breakout, the GBP/USD may try to go and visit the 1.2800 level. In case of a bearish breakdown, the pair may try to visit the 1.2700 level. We must be very attentive, because we may get an entry opportunity on this pair, either to the upside or to the downside.

High volatility on the EUR/USD, but no clear direction

The EUR/USD was very volatile during today’s session amid the US fundamentals and the FED’s decision. First during the day, the inflation data out of the US came out lower than expected, causing the EUR/USD to rally to the 1.1300 zone, but after the FED decided to raise its interest rates by 25 basis points to place it at a 1.25%, the Dollar rallies against its major counterparts and the EUR/USD drops again to the 1.1200 zone where it has been consolidating lately. The last five daily candles of the EUR/USD have a relatively small real body, which is an indication of indecision. Therefore, the pair may head in any direction. Below the 1.1200 level, its next support is at the 1.1100 level. To the upside, the 1.1300 level continues being its most important resistance so far.

Gold comes back to its 200 week EMA

Gold has formed what it appears to be a double top pattern on the 1295 zone from where it has bounced to the downside. The precious metal did not have enough strength to reach the 1300 level and to break it to the upside. Lately, gold has been very volatile while the Dollar tries to regain some of its lost ground, but once it got to the 200 week exponential moving average which coincides with the 55 day exponential moving average (purple line) at the 1256 level, it stalls its bearish pullback there. From this point on, gold may try to bounce to the upside, but if it breaks that zone to the downside, then its next support could be the 200 day exponential moving average at the 1243 level. Below the 200 day EMA, the next support is at the low of the 1214 level, followed by the low at the 1200.00 round number level. A breakdown of the low at the 1214 level would be confirming the double top formation, since that zone is the neckline or confirmation line of the pattern. To the upside, the highs at the 1295 level continue being its most relevant resistance.

Good drop on the GBP/USD

The Pound has been very sensitive to what may happen with the Brexit negotiations after the recent general elections in the United Kingdom, where none of the main political parties has managed to secure a majority in Parliament. That is why we have seen a lot of volatility on the GBP/USD and today we saw a very good drop that took the pair to Friday’s low around the 1.2635 zone as shown on the daily chart. If the GBP/USD bounces from this zone to the upside, then a double bottom formation may develop. But if the pair continues falling, then the closest support zone could be the 1.2600 level, even though the 1.2500 or the 1.2400 levels could also act as supports in case that the bearish trend remains in the short term. If the GBP/USD breaks above the 1.2700 level, then the price may consolidate around that level and the 1.2800 level. In order for the pair to go back to its bullish trend, the price must break above the 1.3000 level.