03/08/2015 : Trend Line Analysis

Introduction to Trend Line Analysis
Welcome to our newest feature; Trend Line Analysis. Our professional market technician showcases intraday / swing trade setups on a broad spectrum of FX currency pairs. The most effective way to use the setup are:
▪ If indicated price zone holds; consider partial profit taking between 20-40 pips before aiming for the maximum listed target.
▪ If the price zone fails to hold; we likely to see price moving against us. Fail means; the candle closing higher or lower to indicated price zone.

 

Last week big news event was the FOMC; where markets felt disappointed on no change on the interest rates but stays optimistic on rate hike to come giving boost to the USD;  which prior to the FOMC statement felt hard past 2 days of trading.

While we feel the USD is still within a range and needs to do something special to either break out of the range to the higher side or go for corrective drop; we have ISM and more importantly NFP to come this week which likely to steer some bigger moves on the USD and apparently a break to either direction just might be on the cards. Overall with rate hikes likely to be seen this year; USD is expected to perform better.

We will look into some setups on pairs for the week and while major USD pairs will be dependent largely on the direction USD will take; their crosses however can be look upon for some decent setups to run.

GBPCAD

We like to see a test of 2.0480-9X and a hold to enter shorts for an initial move to 2.041X with potential run to 2.0300 handle.

GBP without doubt has been the best performing pair among the major USD pair with GBPCAD / GBPAUD hitting newer yearly highs past week. Overall we don’t expect the uptrend on these pairs to be done but rather suspecting some relief drop to negate the Over-Bought conditions before march up resumes.

Hawkish sounding BOE has a large hand on the better performance put in by the GBP as compare to it’s counter parts; but it seems that GBP is finding difficulties on taking out 1.5700 handle and likely to start corrective drop if it fails to do so Monday – Tuesday.
Similarly GBPCAD is coming on to the prime looking resistance on the charts, suggesting we can see some drops before uptrend resumes.

Hence; going with the 2 hrs and the 4 hrs chart we finding resistance around 2.0480-9X zone for Monday and it looks decent on trend lines suggesting retraces off this level is highly likely.

GCAD 4 hrs - T2 looks like a good zone to try shorts on a test and a hold there
GBPCAD 4 hrs – T2  trend line looks like a good zone to try shorts on a test and a hold there
GBPCAD 2 hrs - Same as 4 hrs only extended on resistance
GBPCAD 2 hrs – Same as 4 hrs only extended on resistance

EURAUD

WE are interested in trying longs off 491X zone if we get a test to it and a hold for a possible move towards 1.5200 handle.

While EURO is still dealing with it’s demons in particularly Greece still able to capture headlines on debt related issues. AUD on the other hand has been hit hard by falling commodity prices along with dovish RBA and rates cuts. Though we don’t expect the RBA to announce rate cuts on Tuesday announcement but nevertheless there still looms possibility of further cuts in near future. RBA last statement suggested course on the interest rate would be data dependent and with slight improvement in the labor market; rate hike are likely to be left unchanged. Chinese manufacturing PMI is likely to provide some moves on the AUD earlier in the ASIA session.

With both pairs on defensive mode; it paves way for some ideal scenario considering swing trades; namely buying on decent supports and selling on decent resistance.

Hence; 491X comes in as a decent looking support to try longs for a move towards 1.5200 handle on bigger picture.

EURAUD 4 hrs - 491X looks decent support to try longs for 5050 with potential run to T2
EURAUD 4 hrs – 491X looks decent support to try longs for 5050 with potential run to T2

GBPJPY

We are using a 2 hr chart and have interest to see a test of T1 trend line and a hold to enter longs for an initial 50-70 pips with a potential for newer highs.

We feel there is plenty of upside to be seen on GBPJPY and as been suggesting past 2 weeks to use retraces to get in longs till we reach ideally to 196.10-20 zone.

Hence going forward; we feel 192.8X is a recent breakout trend line and if can get a retest to it; can be a decent swing point to go long considering the level holds out for a test around to 195 handle.

GBPJPY 2 hrs - Looking to buy a T1 test and a hold for a push higher to newer highs
GBPJPY 2 hrs – Looking to buy a T1 test and a hold for a push higher to newer highs

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