USD/JPY Narrowing Range Trading below 100-Day EMA

USD/JPY (daily chart as of October 7, 2015) has been trading in a narrowing range since late August (two bold red trend lines on chart). This narrowing range is right below the 100-day EMA (bold blue moving average line on chart), which has been serving as a significant support line since late March (red arrows on chart).

Note that this trading range also forms during a downward movement from the August 12 high of 125.27, which makes it a potential continuous pattern if the 100-day EMA remains as resistance and the lower border of the trading range breaches. 

If the pair breaks out above the 100-day EMA, it would invalidate the potential continuous pattern and price could trade higher to test the double top around 125.30. To the downside, if the pair breaks down below the lower border of the trading range, price could decline further to 116.10 level. 

Support levels:

S1: trading range lower border

S2: 118.50 (multiple lows)

S3: 116.10 (August 24 low)

Resistance levels:

R1: 100-day EMA

R2: 123.00 (July 27 low)

R3: 125.30 (August 12 high)

Upcoming event risks:

Thursday October 8, 7:00am – GBP MPC Official Bank Rate Votes

Thursday October 8, 8:30am – USD Unemployment Claims

Thursday October 8, 2:00pm – GBP BOE Gov Carney Speaks

Thursday October 8, 2:00pm – USD FOMC Meeting Minutes

Friday October 9, 8:30am – CAD Unemployment Rate

Saturday October 10, 2:45pm – CAD BOC Gov Poloz Speaks

GBP/USD under Pressure below 100-Day EMA

GBP/USD (daily chart as of September 15, 2015) broke down below the 100-day EMA (bold blue moving average line on chart) on August 26 with a long bearish candlestick. This 100-day EMA has been serving as major support/resistance line since late February (red arrows from 1 to 6 on chart). On August 27, the pair also broke down below the medium-term uptrend line connecting the lows since early May (bold red trend line on chart).

Note that a potential head-and-shoulders pattern has emerged, with the May 14 high and August 25 high as the shoulders, the June 18 high as the head (gray shapes on chart), and the medium-term uptrend line or the 100-day EMA as the neckline. Current price is trading below the 100-day EMA. 

If the 100-day EMA remains as resistance, the pair could decline further to test 1.5170 level again, and potentially 1.4975 area. The potential projected target of the head-and-shoulders pattern is around 1.4880 level (if 100-day EMA as the neckline) or 1. 4790 level (if medium-term uptrend as the neckline). 

If price breaks out above the 100-day EMA and the medium-term uptrend line, it would invalidate the potential head-and-shoulders pattern. The pair could trade higher to test 1.5680, and then potentially 1.5815 level again. 

Support levels:

S1: 1.5170 (multiple lows)

S2: 1.4975 (multiple highs)

S3: 1.4790/4880 (projected target of potential head-and-shoulders pattern)

Resistance levels:

R1: 100-day EMA or medium-term uptrend

R2: 1.5680 (multiple highs)

R3: 1.5815 (August 25 high)

Upcoming event risks:

Wednesday September 16, 4:30am – GBP Average Earnings Index 3m/y

Wednesday September 16, 8:30am – CAD Manufacturing Sales m/m

Wednesday September 16, 8:30am – USD Core CPI m/m

Wednesday September 16, 6:45pm – NZD GDP q/q

Thursday September 17, 2:35am – JPY BOJ Gov Kuroda Speaks

Thursday September 17, 3:30am – CHF Libor Rate

Thursday September 17, 4:30am – GBP Retail Sales m/m

Thursday September 17, 8:30am – USD Building Permits & Unemployment Claims

Thursday September 17, 10:00am – USD Philly Fed Manufacturing Index

Thursday September 17, 2:00pm – USD FOMC Statement & Federal Funds Rate

Thursday September 17, 2:30pm – USD FOMC Press Conference

Thursday September 17, 7:30pm – AUD RBA Gov Stevens Speaks

Friday September 18, 8:30am – CAD Core CPI m/m

EUR/USD Approaching 200-Day EMA Resistance

EUR/USD (daily chart as of August 12, 2015) has been trading higher since it hit the 1.0850 support level on August 4 (green arrow on chart). This is a confluence of support levels, including the support line connecting the March 13 low, April 13 low, and July 20 low (line 3 on chart).

Current price is testing the uptrend line connecting the March 13 low and May 27 low (line 2 on chart), which acted as a resistance line on July 27 (red arrow on chart). Note that current price is approaching a medium-term resistance line connecting the February 3 high, May 15 high, and June 18 high (line 1 on chart). As we can see that the pair is now trading in a larger triangle range between line 1 (or 200-day EMA) and line 3. 

Watch closely the price action against line 2 for the following trading sessions. If the pair clears this important resistance, it could trade higher to test the 200-day EMA and line 1. If line 2 remains as resistance, the pair could decline to test line 3 again. Note also that the 200-day EMA is turning flat, and approaching line 2 and line 1, which makes a potential resistance confluence.

Support levels:

S1: Line 3

S2: 1.0660 (April 21 low)

S3: 1.0460 (March 31 low)

Resistance levels:

R1: Line 2

R2: 200-day EMA and Line 1

R3: 1.1680 (January 21 high)

Upcoming event risks:

Thursday August 13, 8:30am – USD Retail Sales m/m and Unemployment Claims

Thursday August 13, Tentative – EUR Greek Government Debt Crisis Vote

Thursday August 13, 6:45pm – NZD Retail Sales q/q

Friday August 14, 2:00am – EUR German Prelim GDP q/q

Friday August 14, 8:30am – CAD Manufacturing Sales m/m

Friday August 14, 8:30am – USD PPI m/m

Friday August 14, 10:00am – USD Prelim UoM Consumer Sentiment

GBP/USD Narrow Range Trading above 100-Day EMA

GBP/USD (daily chart as of July 30, 2015) retreated from the high of 1.5910/25 level (on June 22), which was right above the Fibonacci 50% retracement level (around 1.5880), from the low of April 13 in 2015 to the high of July 15 in 2014. The pair then declined for three weeks until it hit the 100-day EMA level (bold blue moving average line on chart).

Price broke down below the 100-day EMA on July 8 (red arrow 4 on chart), but once again immediately rebounded with follow-through long bullish candlesticks. The pair formed a very long bullish candlestick right above the 100-day EMA on July 14, showing strong support at this important level. 

Current price is trading in a narrow range between 1.5680 and the 100-day EMA (gray rectangle shape on chart). Watch closely the price action against the 100-day EMA. If this moving average remains as support and the short-term barrier of 1.5680 is cleared, price could trade higher to test 1.5815, and potentially 1.5910/25 level again. 

To the downside, if price cannot hold the 100-day EMA and the RSI stays below 50, more downward pressure would be expecting for the following trading sessions. Price could decline to test 1.5330, and potentially 1.5170 level. 

Support levels:

S1: 100-day EMA

S2: 1.5330 (July 8 low)

S3: 1.5170 (June 1 low)

Resistance levels:

R1: 1.5680 (multiple highs)

R2: 1.5815 (May 14 high)

R3: 1.5880/5925 (Fibonacci 50% retracement level/June 18 high)

EUR/USD Trading in Large Triangle below 200-Day EMA

EUR/USD (daily chart as of July 7, 2015) has been trading in a large triangle since early February (between the bold red and blue trend lines on chart). It appears that current price is trading below the lower edge of the large triangle range. Watch closely the price action against this lower edge for the following trading sessions.

Note also that current RSI is approaching an uptrend line connecting the April 13 low and the May 27 low. If the RSI breaks down below this support line with follow-through confirmations, the pair could decline further to test previous lows around 1.0820, and then 1.0660, 1.0570 levels. 

To the upside, if the price can hold the lower edge of the large triangle range and the RSI uptrend line support remains intact, the pair could trade higher to test 1.1280 level, and potentially to challenge the upper edge of the large trading range. Note that the 200-day EMA is approaching the upper edge of the large triangle range, which makes a potential resistance confluence (gray circle on chart). 

Support levels:

S1: lower edge of the triangle range

S2: 1.0820 (May 27 low)

S3: 1.0660 (April 21 low)

Resistance levels:

R1: 1.1280 (June 29 high)

R2: upper edge of the triangle range or 200-day EMA

R3: 1.1680 (January 21 high)

Upcoming event risks:

Wednesday July 8, All Day – Eurogroup Meetings

Wednesday July 8, 7:30am – GBP Annual Budget Release

Wednesday July 8, 8:30am – CAD Building Permits m/m

Wednesday July 8, 2:00pm – USD FOMC Meeting Minutes

Wednesday July 8, 9:30pm – AUD Unemployment Rate

Wednesday July 8, 9:30pm – CNY CPI y/y

Thursday July 9, 7:00am – GBP Official Bank Rate

Thursday July 9, 8:30am – USD Unemployment Claims

Friday July 10, 8:30am – CAD Unemployment Rate

Friday July 10, 12:30pm – USD Fed Chair Yellen Speaks

AUD/USD under Pressure below 50-Day EMA

AUD/USD (daily chart as of June 16, 2015) has been under pressure below the 50-day EMA since late May. The pair had two attempts to break out of the 50-day EMA, but both failed (two gray rectangle shapes on chart). The first attempt occurred on March 23 and only lasted for three trading sessions. The second attempt occurred on April 28 and lasted for about 20 trading sessions under the pressure of 200-day EMA.

The 50-day EMA has been serving as an important resistance line since late October 2014 (red arrows from 1 to 8 on chart). Note that the pair is making higher lows after the first failed attempt to break out of its 50-day EMA. Note also that the RSI is forming lower lows, which is a potential positive reversal signal. If the pair breaks out of the 50-day EMA and the RSI rises above 50 level, price could trade higher to test the 200-day EMA again. 

To the downside, if the 50-day EMA remains as resistance, more downward pressure would be expecting for the following trading sessions. Price could decline to test the short-term uptrend line connecting the lows of April 2 and June 1 (bold red uptrend line on chart), and potentially to test again the 0.7530 level. 

Support levels:

S1: short-term uptrend line

S2: 0.7530 (April 2 low)

S3: 0.7450 (2009 May low)

Resistance levels:

R1: 50-day EMA

R2: 200-day EMA

R3: 0.8165 (May 13 high)

Upcoming event risks:

Wednesday June17, 2:00pm – USD FOMC Economic Projections, FOMC Statement, Federal Funds Rate

Wednesday June 17, 2:30pm – USD FOMC Press Conference

Wednesday June 17, 6:45pm – NZD GDP q/q

Thursday June 18, 5:15am – EUR Targeted LTRO

Thursday June 18, all day – EUR Eurogroup Meetings

Thursday June 18, 8:30am – USD Core CPI m/m, Unemployment Claims, Current Account

Thursday June 18, 10:00am – USD Philly Fed Manufacturing Index

GBP/USD Testing 100-Day EMA

GBP/USD (daily chart as of June 3, 2015) broke down below the 100-day EMA (bold blue moving average line on chart) on June 1, but immediately rebounded yesterday (red arrow 3 on chart) with a long bullish candlestick showing potentially strong support at this important level.

The most recent testing of this 100-day EMA occurred in early May (red arrow 2 on chart). The pair broke out above the moving average line on May 5 and reached a new high around 1.5805 since the April low. Note also that the RSI is making a lower low while the pair is forming a higher low, which is a potential positive reversal signal. 

GBP/USD failed to break out above the 100-day EMA on February 26 (red arrow 1 on chart). Watch closely the price action against the 100-day EMA. If this moving average remains as support and the RSI moves above 50, price could trade higher to test 1.5500-1.5550 area, and potentially 1.5805 level. 

To the downside, if price cannot hold the 100-day EMA, more downward pressure would be expecting for the following trading sessions. Price could decline to test 1.4950 area again. 

Support levels:

S1: 100-day EMA

S2: 1.5085 (May 5 low)

S3: 1.4950 (multiple highs and lows)

Resistance levels:

R1: 1.5500-50 (multiple highs)

R2: 1.5800 (May 14 high)

R3: 1.5880 (Fibonacci 50% retracement level)

Upcoming event risks:

Thursday June 4, 7:00am -- GBP Official Bank Rate

Thursday June 4, 8:30am – USD Unemployment Claims

Friday June 5, All Day -- OPEC Meetings

Friday June 5, 8:30am – USD Non-Farm Employment Change