Dollar strength in yesterday’s trading meant that EURUSD fell out of the trend channel and our targets for USDCHF and USDJPY were hit. USDCAD had an up day but stayed within its consolidation range as the price of oil went up by nearly 2% on the back of good economic data from China. GBPUSD dropped to the channel low (around 1.2920) and has since consolidated there. Today we’ll have a couple of more notable speeches from central bankers: the ECB’s President Lagarde and RBA’s Governor Lowe. US PPI numbers are also due later on today. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

In yesterday’s Price Action Analysis video gave two target areas for the USDCHF, 0.9150 – 0.9170 and 0.9185 – 0.9220. The trade idea  was based on the market potentially turning higher. This happened and USDCHF provided us with a profitable trade entry.

A strong move higher took USDCHF took our target area, which stopped the move and hasn’t allowed the market to move any higher. It should be pointed out that that the first target area (or T1) is always the higher probability target area. Now additional buying needs to come into the market in order to take it to the next target. There is a descending trendline coinciding with the T1 area which could dampen some enthusiasm in the bull camp. For more analysis on this and other markets, go to tiomarkets.com/analysis and don’t forget to subscribe to TIOmarkets YouTube channel.

GBPUSD dropped all the way down to the channel low and has since moved outside the channel. All price channels and trendlines are just approximations of the trend, not exact boundaries for the price action (everyone draws the lines differently). Therefore, there are times when the price move outside the channel and then quickly returns back inside. If however, the price stays outside and doesn’t show signs of a quick recovery then the probability of a channel breakout taking place increases. If the USD strength seen yesterday, continues, then it’s likely to see cable moving to the first target area at 1.2845 -1.2867. This scenario would be negated if GBPUSD rallied back inside the rising channel.

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USDJPY hit our target one area and then fell back. We now have a higher low created by a bullish rejection candle pointing to trading opportunities on the long side. We are therefore looking for buy signals adobe 105.30 with the expectation that the price will now move beyond the reactionary (at 105.62) created yesterday. This idea is negated if the price drops outside the rising channel. Then we could see the 104.94 support coming into play.

Recent macroeconomic data releases

  • US ISM Non-Manufacturing PMI, 57.8, 56.3 expected
  • Australian Cash Rate, 0.25%, 0.25% expected
  • Canadian Trade Balance, -2.4B, -2.1B expected
  • FOMC Meeting Minutes
  • US Unemployment Claims, 840K, 820K expected
  • Canada Employment Change, 378.2K, 150K expected
  • Canada Unemployment Rate, 9%, 9.8% expected.
  • UK Claimant Count Change, 28.1K, 39.5K expected
  • US CPI, 0.2%, 0.2% expected
  • US Core CPI, 0.2%, 0.2% expected

Macroeconomic data releases today

  • ECB’s President Lagarde speaking
  • US Core PPI, 0.2% expected
  • US PPI, 0.2% expected
  • RBA’s Governor Lowe speaking

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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Janne Muta
Author

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