Daily Technical Outlook

20 October, 2016

EUR/USD

The Euro remain weak in the short-term and as long as prices keep trading below 1.1060 peak, downside risks are likely to persist in the coming days.

Looking at the technical picture, the pair has showed a strong bearish engulfing candle last week, which may lead to further losses that can reach the weekly support located at 1.0910 level.

As of today, 1.1027 represent the hourly resistance zone for the Euro and traders should be aware that this level could be a strong barrier in case the single currency manage to bounce during ECB press conference scheduled in less than an hour from now.

The outlook still negative in the daily chart and prices are likely to break below 1.0950 near-term support on dovish comments from ECB, in the flipside , a hawkish tone can send the Euro higher into a short-lived correction, that can find resistance around 1.1005/30 area.

To summarize, the pair is bearish and can visit 1.0910 area as long as 1.1060 peak is intact.

GBP/USD

Cable turned neutral in the hourly chart, after prices managed to overtake 1.2270resistance zone. However, the outlook still bearish in the daily chart as long as a close above 1.2330 barrier is not happening.

In the coming hours, the focus should be on 1.2250/30 support zone as a break below it should put the pair under pressure again and we may see a re-test of 1.2197 former resistance, which may likely to turn support for the time being.

From an intraday perspective, 1.2297 is the level to watch for bulls as it represents the hourly bearish pivot in this pair. A breakout above it should add more bullish momentum to the pair and can clear the path for 1.2330 zone again; while a break below 1.2250/30 support zone as mentioned above should send cable towards 1.2197level.

AUD/USD

The Australian Dollar rallied during the U.S trading session yesterday and prices succeeded to reach a major resistance level, which stands at 0.7730.

For the time being, the pair remain clearly overbought in the hourly chart and looking at momentum indicators, a corrective wave can send prices lower towards 0.7640 support (former resistance) before to see strong buyers again.

From a wider angle, the Aussie still bullish and can extend its rally towards 0.7770 weekly resistance as long as 0.7570 low is in place.

In the opposite, a 4-hour close below 0.7540 support should weaken this bullish scenario, while a breakout above 0.7700 handle will confirm the bullish power in this pair.

USD/CAD

The pair traded in a choppy manner yesterday during the Canadian rate decision.

Bank of Canada decided to maintain its interest rates unchanged, which triggered a big sell-off in USD/CAD.

Prices retreated to a low of 1.3005, before to bounce back strongly above the 1.3100 handle, in addition, the pair has overtook its hourly resistance located at 1.3240 zone, reinforcing the bullish reversal scenario. Therefore, the pair is likely to trade sideways to higher today, in the direction of 1.3185/1.3200 area before to find resistance again.

1.3106 is seen as the bullish pivot in the short-term and only a breakdown below it can weaken the positive momentum seen yesterday.

In the daily chart, the pair is trading inside a wide range between 1.3300 level in the upside and 1.3000 psychological support in the downside. Consequently, we may continue to see an increase in volatility in this pair, until a clear break outside of this range bound, occur.

USD/JPY

The pair remain bullish for the time being as long as prices keep trading above 102.80 support.

However, it is important to note that the daily trend still negative and traders have to wait for a daily close above 104.50/60 zone to confirm an effective bullish reversal in the daily chart.

As we can see, sellers tried to push prices below 103.30 support yesterday, but failed as the pair succeeded to bounce from 103.15 level, keeping the downside potential limited for the time being.

As of today, we will watch 103.80/95 resistance zone carefully, as it represents a strong barrier for this pair and a daily close above it, should clear the path for a re-test of 104.60 peak in the coming days.

In the flipside, a daily close above 103.15 support, is likely to extend the decline towards 102.80 followed by 102.40 support in extension.

NZD/USD

After the big bounce seen in the kiwi since the beginning of this week, the pair has reached a key technical resistance located at 0.7260, which represent the 50% retracement of the entire cycle that comes from 0.7482 peak to 0.7031 low. Therefore, a pause in the bullish momentum may happen, and the pair may enter into a short-term corrective phase.

In the hourly chart, a move back towards 0.7180/70 support zone remain possible and can offer fresh buying opportunities for bulls, as the dominant trend still bullish as far as prices continue to trade above 0.7075 low.

In the other side, an hourly close above 0.7267 peak is needed to confirm another rally in the direction of 0.7306 resistance.

To conclude, the pair remain bullish in both the daily and the hourly chart, which keeps the downside potential limited.


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