Category Archives: NZDUSD

The Trading Room – 13th February, 2017

Today’s Trading Room looks at USDJPY, USD Index, NZDUSD, EURUSD and US Oil (by popular demand).

To learn what the Trading Room is about see last Trading Room analysis here.

USDJPY

TECHNICAL ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

For the long term, assume the trend remains up until proven otherwise. The long term 200 day moving average still has a positive slope, and the short and mid term averages are still above it.

For the mid term, price has seen a relatively deep pullback. The question will be: Is this over and will the upwards trend resume?

Price is at support just above 111 (horizontal support and resistance lines are drawn after looking back 3 years). Resistance is just above 114 and next about 116.

There is some bullish divergence with RSI, but RSI did not reach oversold for this pullback.

The risk here is that the pullback may move lower and RSI may develop double divergence with price before price turns up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

ELLIOTT WAVE ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

This wave count has excellent alternation and Fibonacci ratios. There are also some close Fibonacci durations for waves.

If intermediate wave (4) moves lower, it should find strong support at the lower edge of the best fit channel. Double zigzags are reasonably common structures. Triple zigzags (labelled W-X-Y-X-Z) are very rare. If intermediate (4) is correctly labelled as a double zigzag, then the probability that it is over here is very high.

VOLUME ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

Volume increased during the middle portion of the pullback, and now at the last low volume declined as price fell; the market fell of its own weight. This points to a tired trend. Price certainly could move lower here, but the probability of a low in place has slightly increased.

On Balance Volume is at support. If it breaks below the yellow line, that would be a bearish signal.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price has moved upwards since last analysis of this market.

The long term trend should be assumed to remain upwards until proven otherwise. This downwards movement should be assumed to be a pullback within a larger upwards trend.

Looking back at price behaviour in the last upwards wave from the left of this chart: price starts out slowly with choppy movement, generally trending, and it is not until the middle of the movement that Bollinger Bands widen and ATR shows a good increase. Then the trend quickly became extreme, yet price continued upwards while ADX steadily declined from about 45. So trends for this market can remain very extreme for long periods of time.

The current situation looks similar to that back in September 2016: ATR is declining as price moves up, Bollinger Bands are contracting, ADX is low and below both directional lines, and RSI is neutral. In the current day, Stochastics is also returning from oversold and exhibits single bullish divergence at last lows.

It is looking like USD index may be in the very early stages of the next wave upwards.

Unfortunately, neither BarChart nor Stockcharts provide volume data for the USD Index, so no volume analysis can be done.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

The structure of intermediate wave (3) and of primary wave 5 is incomplete. Price has found support and bounced up off the best fit channel. The short term yellow resistance line is breached. It is looking increasingly likely that USD index is beginning the next wave up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Since last analysis of this pair, which was very bearish, price has fallen and closed below the short term Fibonacci 13 day moving average. The long, red daily candlesticks look bearish, and the longer upper wicks on the first two are bearish.

RSI is now neutral and Stochastics is returning from overbought. There is room for this wave down to continue.

ADX was extreme. It has a long way down to go before it would again indicate a trend.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

The green support line has been fully breached.

The structure here is seen as a leading expanding diagonal. The fifth wave of minute wave v must be longer than minute wave iii to meet the rule regarding wave lengths for expanding diagonals. This gives the minimum target calculation.

A trend line is drawn about On Balance Volume, which has been tested at least three times before and is long held. It is now breached and OBV is coming up for a back test of resistance. If this line holds, it would be strengthened and more confidence would be had that price has turned.

The three red daily candlesticks in last week saw increasing volume. This supports downwards movement and adds confidence in a trend change here.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Support and resistance lines are added this week. Look for support next at 1.055.

This pair is not as clearly bearish as NZDUSD, but it does look like they may be turning downwards together. Look out for Bollinger Bands to widen as volatility returns to this market.

Stochastics is returning from overbought after exhibiting divergence there. If it reaches oversold while price reaches support, then this market will be carefully analysed for any weakness in downwards movement.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume remains bearish. A back test of resistance for both yellow trend lines has happened and OBV has turned down from both giving bearish signals.

The best fit channel has been breached. A one day throw back occurred right after the breach, but price may still curve up and around for a longer back test of resistance. That is the risk here to short positions.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

US Oil

TECHNICAL ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

US Oil entered a consolidation back in December 2016. Since then price has been fluctuating with typically choppy movement from resistance to support and back again. Resistance is about 54.15 to 54.35 and support is about 52.15 to as low as 50.70. During this long consolidation, it is now two upwards days that have strongest volume suggesting an upwards breakout is more likely than downwards.

On Balance Volume has last week given a strong bullish signal.

Prepare for an upwards breakout. This may happen this week.

A classic analysis target would expect price to travel at least the distance of the widest part of the consolidation after a breakout. That would expect a movement of about 4.53.

ELLIOTT WAVE ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge.

The Elliott wave analysis is overall very bearish for US Oil. This is an alternate wave count that is published here because it aligns with the classic technical analysis today.

This wave count expects essentially that any upwards breakout may be false and short lived.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

This analysis is published @ 06:27 p.m. EST on 12th February, 2017.

The Trading Room – 8th February, 2017

Introduction:

The Trading Room is a new idea that I want to test and develop over the next few months.

I find myself spending a lot of time writing and publishing analysis of Gold and the S&P500 (over at Elliott Wave Stock Market) when those markets are quiet and range bound and offer no good trading opportunities. This focus on inactive markets takes focus away from markets that are trending and do offer good trading opportunities.

What if the focus was on finding good trading opportunities over a range of markets rather than daily analysis of specific markets? What if the Trading Room can be the platform for publishing these good trading opportunities?

Therefore, this Trading Room approach will look over a range of markets to identify any possible trading set ups which may unfold now or over the next few days, and the focus will be on trading set ups and not on teaching and learning Elliott wave.

Analysis will be brief and to the point.

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Today’s Trading Room focuses on NZDUSD, EURUSD, USD, and GDX:

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

So far upwards movement should be assumed to be a counter trend movement, until proven otherwise. The prior wave down put ADX into extreme and upwards movement from the 3rd of January has brought ADX back down from extreme. There is again room for a trend to develop.

Single divergence with Stochastics on its own is not enough to indicate a high in place. A breach of a support line should be seen before entering short.

Stockcharts do not offer volume data for currencies, so this is analysed below with BarChart data.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

The best fit channel is slightly adjusted to be more conservative than the last published chart for EURUSD. If price can print a full daily candlestick below the lower edge of the yellow channel, that would offer further confidence in a trend change. When that trend line is breached, then it should offer resistance.

Stops may be set a little above the trend line offering a low risk high reward opportunity. Do not set stops too close to the line; allow the market room to move. Sometimes trend lines are overshot and this trend line is not perfect.

On Balance Volume has confidently breached a horizontal support line which offers strong technical significance. A retest of resistance at that line shows it holds. This is a strong bearish signal.

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

Classic technical analysis of this pair is very bearish. The long upper wick on this last daily candlestick is bearish. This trend is extreme; it will end sooner rather than later.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume has no trend line. Any trend line drawn would have too steep a slope to have reasonable technical significance.

If an expanding diagonal is unfolding, then minute iv must be either over now or very close indeed. There is almost no room left for it to move.

I have been analysing NZDUSD (because I’m a Kiwi) for years using Elliott wave and I will note that NZDUSD rarely offers good looking Elliott wave structures. Therefore, I place more weight in classic analysis of this pair than Elliott wave analysis. The Elliott wave analysis is supplementary.

I will wait for the green support line to be fully breached before going short here.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

There is not enough bullish indication here to go long yet. Upwards movement on this chart is a clear trend and downwards movement is choppy and overlapping, so downwards movement looks more like a counter trend movement. If that conclusion is correct, then USD should break out upwards.

The larger trend at the monthly chart level remains up and the 200 day moving average still has a positive slope.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

Neither Stockcharts nor BarChart have volume data.

The short term yellow resistance line has been breached. However, the long upper wicks on the last two daily candlesticks gives some cause for concern.

Price may be bouncing up from the lower edge of the best fit channel. With another upwards day moving further away from the trend line, a long position may be entered. A stop may be set just below the last low.

GDX

TECHNICAL ANALYSIS

GDX Chart Daily 2017
Click chart to enlarge.

Next resistance is at 26.0.

This chart is provided today mostly for members of Elliott Wave Gold and not because I see a trading set up here, because I don’t. (That doesn’t mean one does not exist, only that I don’t see it today).

Going long here risks entering at the end of the trend. ADX is nearing extreme and price has closed above the upper edge of Bollinger Bands now for the last four sessions.

Going short here is trying to pick a top. Before going short at least two of the following should be seen: a bearish candlestick pattern, a break of support by On Balance Volume, divergence with price from RSI while overbought, price to move below the short term 13 day moving average.

This analysis is published @ 02:59 a.m. EST.

NZDUSD Elliott Wave Technical Analysis – 16th November, 2016

Another possible opportunity may be coming up in another week or two for the NZDUSD pair, so it will be watched closely.

Continue reading NZDUSD Elliott Wave Technical Analysis – 16th November, 2016

NZDUSD Elliott Wave Technical Analysis – 11th May, 2016

Elliott wave and traditional technical analysis of NZDUSD.

New updates to this analysis are in bold.

Summary: NZDUSD may be beginning a new downwards trend. The target is 0.49809. Risk is at 0.70532.

ELLIOTT WAVE COUNT

NZDUSD monthly 2016
Click chart to enlarge.

Primary 3 should end when RSI indicates oversold and most likely not before. Currently RSI has returned just above oversold.

Primary 3 would reach 2.618 the length of primary 1 at 0.49809. The structure of primary 3 is incomplete.

The volume profile is no longer clear. During minor wave 3 down, the trend was clearly down and supported by volume. During minor wave 4 upwards, the rise in price was supported by volume but the last upwards month of April shows a decline in volume.

NZDUSD daily 2015
Click chart to enlarge.

Minor wave 4 may be complete as a double combination: flat – X – zigzag.

The best fit channel about minute wave y is breached and now price is throwing back to the lower trend line. Price may bounce off this line and move lower.

Within minor wave 5, no second wave correction may move beyond the start of its first wave above 0.70532.

TECHNICAL ANALYSIS

NZDUSD Technical Analysis 2016
Click chart to enlarge.

Price has breached a support line which has been tested at least three times and is long held. Price is turning up to test resistance at the line. It is likely that price would move lower from here.

From the last high on 3rd May as price falls volume rises. The fall in price is supported by volume so far, so it supports a downwards trend.

ADX indicates a downwards trend may be beginning. ATR does not yet agree; it is declining.

On Balance Volume is giving a strong bearish signal with a break below the green line.

Overall, the classic technical analysis picture supports the Elliott wave count.

This analysis is published @ 04:16 a.m. EST on 11th May, 2016.

NZDUSD Elliott Wave Technical Analysis – 4th February, 2016

Elliott wave and traditional technical analysis of NZDUSD.

New updates to this analysis are in bold.

ELLIOTT WAVE COUNT

NZDUSD monthly 2016
Click chart to enlarge.

Primary 3 should end when RSI indicates oversold and most likely not before. Currently RSI has returned just above oversold.

Primary 3 would reach 2.618 the length of primary 1 at 0.49809. The structure of primary 3 is incomplete.

The bigger picture indicates the trend should still be down. The structure is incomplete. So far within primary wave 3 each time price falls volume rises. January again saw a fall in price on increased volume. While the volume profile at the daily chart level is less clear, the monthly chart volume profile is more clear which gives confidence that the larger trend should still be down.

NZDUSD daily 2015
Click chart to enlarge.

Minor waves 1, 2, 3 and now 4 are complete within intermediate (3). Minor 4 did not complete as a triangle and morphed into a combination. There is perfect alternation with minor waves 2 and 4.

Minute ii has come up to touch the 2-4 trend line. This may present a good opportunity to join the trend at a good price with low risk.

Sometimes the Kiwi exhibits volume spikes at the end of its movements. It did this several times in this chart. This may be because the New Zealand economy is heavily reliant upon dairy which is a commodity, so the currency may have some commodity like behaviours (this is my theory only).

The volume spike today may indicate an end to this upwards movement as price finds strong resistance at the trend line.

With minute ii such a deep time consuming correction, it looks like minor 5 may be extending (another commodity like behaviour). The target for it to complete intermediate wave (3) will remain the same at 0.49809 which would expect a long extension.

TECHNICAL ANALYSIS

NZDUSD Technical Analysis 2016
Click chart to enlarge.

ADX today has turned up to indicate a new upwards trend. This does not support the Elliott wave count.

ATR is increasing, indicating a new trend.

This upwards movement has resolved RSI being oversold. It is not yet overbought. There is room for the market to rise.

As price rises for the last two days volume increases supporting the rise in price. Yet, sometimes the Kiwi exhibits a rise in volume with a rise in price for short term corrections and a volume spike at the end of a correction. This could be happening again (the session for the last daily candlestick may also not have finalised volume data; this spike may not be relied upon as it may disappear when the sessions data is final).

Overall, the regular technical analysis picture does not support the Elliott wave count as much as I would like for confidence. If the dark blue trend line is clearly breached, that would be a warning that the Elliott wave count may be wrong.

The strongest piece of analysis on this chart is the dark blue trend line. It is reasonably shallow and long held. It should offer strong resistance.

This analysis is published @ 05:20 p.m. EST.

NZDUSD Elliott Wave Technical Analysis – 11th January, 2016

Elliott wave and traditional technical analysis of NZDUSD.

New updates to this analysis are in bold.

ELLIOTT WAVE COUNT

NZDUSD monthly 2016
Click chart to enlarge.

Primary 3 should end when RSI indicates oversold and most likely not before. Currently RSI has returned just above oversold.

Primary 3 would reach 2.618 the length of primary 1 at 0.49809. The structure of primary 3 is incomplete.

NZDUSD daily 2015
Click chart to enlarge.

Within intermediate wave (3), minor waves 1, 2, and 3 are most likely complete. Minor wave 4 is now seen as an incomplete triangle.

There is no Fibonacci ratio between minor waves 3 and 1.

At 0.60604 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).

Minor waves 2 and 4 exhibit alternation: minor wave 2 was a deeper double zigzag and minor wave 4 is a more shallow triangle.

Minor wave 4 is breaching a channel drawn about this movement using Elliott’s first technique. The channel may be redrawn when the triangle is complete.

The triangle will only remain valid if price remains below the high of minute wave c within it. Minute wave e is most likely to end short of the a-c trend line, and it may not move above the end of minute wave c at 0.68824. If price breaks above this point, then minor wave 4 is morphing into a combination.

The structure of minor wave 4 is incomplete.

To the downside, if minute wave d of the triangle moves lower, then it may not move substantially below the end of minute wave b below 0.64292. A new low below that point would indicate that minor wave 4 is most likely over and the downwards trend has resumed.

TECHNICAL ANALYSIS

NZDUSD Technical Analysis 2016
Click chart to enlarge.

ADX is flattening off in recent days indicating the market is range bound not trending. This supports the Elliott wave count.

ATR agrees. It is flat to declining. This indicator at this time is clearer than ADX. The market is not currently trending.

As price rises, it comes on a decline in volume. As price falls, it comes on a rise in volume. This volume profile is bearish and supports the Elliott wave count in terms of overall expected direction.

When NZDUSD trends it tends to find resistance at the 21 day EMA. Currently, it is whipsawing about this EMA, typical of a consolidating market.

My only concern with the volume profile is volume is not overall declining as price moves sideways. An overall decline in volume would be expected, if a fourth wave triangle is unfolding. I expect surprises may be to the downside for this market at this time because the last fall in price came on an increase in volume.

At the daily chart level, RSI is not oversold.

This analysis is published @ 10:17 p.m. EST.

NZDUSD Elliott Wave Technical Analysis – 21st October, 2015

Elliott wave and traditional technical analysis of NZDUSD.

New updates to this analysis are in bold.

ELLIOTT WAVE COUNT

NZDUSD monthly 2015
Click chart to enlarge.

Primary 3 should end when RSI indicates oversold and most likely not before. Currently RSI has returned just above oversold.

Primary 3 would reach 2.618 the length of primary 1 at 0.49809. The structure of primary 3 is incomplete.

NZDUSD daily 2015
Click chart to enlarge.

Within intermediate wave (3), minor waves 1, 2, 3 and now most likely 4 are all complete.

There is no Fibonacci ratio between minor waves 3 and 1.

At 0.6184 minor wave 5 would reach equality in length with minor wave 1. At 0.60604 intermediate wave (3) would reach 1.618 the length of intermediate wave (1). This gives a rather large 120 pip target zone. When there is more structure within minor wave 5 (specifically when minute waves i through to iv are complete), then the target calculation may be added to at a third degree. At that stage, the goal will be to narrow the target range.

Minor waves 2 and 4 exhibit alternation: minor wave 2 was a deeper double zigzag and minor wave 4 is a more shallow flat.

The channel is drawn using Elliott’s technique. In this instance it appears so far to be working well to show where minor wave 4 has most likely ended. If price throws back to the upper edge of the trend line and finds resistance again about there, then the strength of the line would be reinforced and may then be more reliable.

The invalidation point is the start of minor wave 5 at 0.68977. If minor wave 5 has begun, then no second wave correction within it may move beyond its start. If the invalidation point is breached, the analysis is wrong. It may be minor wave 4 is continuing further.

The invalidation point is close by at this time, although this wave count is not confirmed. If the upper trend line holds, then this wave count indicates potentially a good risk / reward ratio.

TECHNICAL ANALYSIS

NZDUSD Technical Analysis 2015
Click chart to enlarge. Chart courtesy of StockCharts.com.

ADX still indicates an upwards trend is intact. The upwards sloping bright aqua blue trend line supporting this last rise in price has not been breached. The bright blue line needs to be breached for more confidence in the Elliott wave count.

ADX tends to be a lagging indicator. By the time it shows a new downwards trend that trend may be about halfway through, if the target is where it may end for a relatively short fifth wave.

The 21 day EMA seems to work reasonably well for the Kiwi. It may assist to show where price finds resistance. The Elliott wave count now expects price to move below the 21 day EMA. If that happens, it would provide further confidence in the wave count.

During the last correction it was a downwards day which has strongest volume. This is some small support for the Elliott wave count which expects a downwards wave to follow.

NZDUSD Elliott Wave Technical Analysis – 2nd September, 2015

Elliott wave and traditional technical analysis of NZDUSD.

ELLIOTT WAVE COUNT

NZDUSD monthly 2015

Primary 3 should end when RSI indicates oversold and most likely not before. My concern for any sell on NZDUSD at this time is RSI is indicating slightly oversold. This needs to be resolved before I’m prepared to enter another short.

Primary 3 would reach 2.618 the length of primary 1 at 0.49809. The structure of primary 3 is incomplete.

NZDUSD weekly 2015

I think the middle of primary 3 has passed. I expect to see a slowing of momentum. However, sometimes NZDUSD exhibits strong fifth waves (maybe due to the high reliance on Dairy as a commodity for the economy?). Because of this tendency and because there is more downwards movement ahead I’d like to find another entry point for another trade.

At 0.6064 intermediate (3) would reach 1.618 the length of intermediate (1). At 0.6025 minor 5 would reach equality in length with minor 1.

What seems clear at the monthly and weekly chart levels is primary 3 is incomplete.

NZDUSD daily 2015

Price is falling on increased volume. Minor 5 may have begun.

Minor 3 is 92 pips longer than 1.618 the length of minor 1. This is a big difference, but at 7.7% the length of minor 3 it is an acceptable variation.

Minor 2 was a deep 0.8 double zigzag and minor 4 was a very shallow 0.17 flat. There is perfect alternation and reasonable proportion, particularly for NZDUSD which doesn’t always have nice proportions.

The risk is minor 4 may not be over. It may not move into minor 1 price territory above 0.71766. This is way too far away to set a stop. In this next trade I may use the hourly chart to set a stop, and there I prefer a trend line rather than an Elliott wave invalidation point only because it’s usually less risk.

My last trade was exited when the bright aqua blue trend line was breached. That was my exit strategy and it was strictly adhered to.

NZDUSD hourly 2015

Minute ii was very deep. Minuette wave (ii) may end about the 0.618 Fibonacci ratio.

I will wait to see a complete corrective structure upwards before looking for an entry.

If this wave count is correct, then NZDUSD should move higher for a few days in another second wave correction. Once there is some structure within minuette wave (ii) I will draw a channel about it. I will wait for the channel to be breached and then wait for a throwback to the channel.

If at that time RSI oversold at the monthly chart level is resolved, then I may decide to enter another short. If RSI remains oversold I may wait, or I may reduce my position size to reduce risk.

TECHNICAL ANALYSIS

NZDUSD Technical Analysis 2015

ADX is indicating the resumption of a downwards trend, but this may be skewed by the price shock of 24th August. It would be wise to wait another 8 days until that data falls off ADX before taking ADX as a reliable indicator at this time.

Volume and On Balance volume both support the fall in price over the last seven days. Price remains below the 21 day Exponential Moving Average. The Elliott wave structure is incomplete.

I expect NZDUSD to keep falling, but short term it may move higher in a correction against the trend to resolve RSI overbought at the monthly chart level.