Weekly Chart
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A technical perspective on the weekly suggests that the pair has entered a grey area in which momentum and volatility suggest weakness of the uptrend, while the lack of actual resistances keep the channel-like motion north strong. Contradicting signals stemming from a channel on the weekly chart, a wedge on the daily chart and a two-month junior channel up on the four-hour chart also fail to induce some clarity. Nevertheless, we lean in favour of a continuation of the bullish market due to several technical aspects.
Firstly, a splendid opportunity of a reversal was rejected when the pair failed to conclusively break the neckline of a double top at 3.0578 even after stabilizing underneath. Secondly, the incomplete nature of the latest wave towards the upper boundary of the wedge at 3.1212 makes us believe that the pair could in fact be on its way to form a channel up pattern – a scenario supported by the junior channel up which gives us less reason for doubt than the wedge. Traditionally, the rate has executed a rebound from the defeated 3. 0537 level, distancing itself from the resistance turned support.
Trading above the green Ichimoku cloud, the pair remains strongly bullish with Tenkan sen consistently above Kijun sen.
What suggests directional risk to the downside is a set of technical aspects challenging the upward momentum. Firstly, the bottom line of the Andrew's Pitchfork has lost its strength to repeated violations even though the pair has returned inside of the bounds of the pattern now. Additionally, the lower bound of a Gann angle, although left unbroken, has experienced several attacks and it is unclear if it still holds its restrictive power. The Gann period mark suggests that the pair could put an end to the current short-term wave north and undergo an immediate downtrend which would likely result in a correction, but still holds power to break some levels of significance and let bears take over. An indistinctive bearish Harami/Spinning top adds slightly to the reversal.
Daily Chart
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On the large scale, we see 3.2400/2500 as a potential area of risk in March/April 2017, with 3.3266 coming up June/July. The 3.0400/0500 zone, set by the collective strength of a Fibonacci Fan Arc, Gann period and Gann angle suggests that it might become critical mid-December, in case the pair takes a road south.
With a set of upcoming US data likely to shake things up, it is hard to tell what effect the aggregate surprise reaction will bring. Non-farm Payrolls, Crude Oil Inventories, the FOMC Statement along with the Federal Funds rate will keep traders on their toes from 12:15 midday GMT until 18:00 GMT.
When it comes to the US payroll data, analysts at Morgan Stanley speculate that the actual numbers will overshoot the consensus expectation of a 175k gain with a reading of 205k. A rate hike, however, is discussed by economists to be extremely unlikely due to next week's elections that have spilled tension in already sensitive markets stemming from the high level of uncertainty of the result. This, however, suggests heavily that a hike could come in December when political factors are out of the picture while markets have preserved the conditions supportive of a hike. Last week's contradictory numbers on crude oil inventories that triggered a sell-off mid-week and a recovery shortly after have left analysts astonished on where expectation targets should lie.
Aggregate Technical Indicators
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