Daily Forex Market Preview, 02/09/2016
The US dollar closed bearish yesterday after the ISM manufacturing report showed an unexpected downside surprise. Following up from the doji pattern that formed on Wednesday, yesterday's bearish close could see a near-term pullback in the US dollar which we have been waiting for all week. Today's NFP report comes with significant risks which could sway short-term market sentiment.
EURUSD (1.1200): EURUSD closed bullish yesterday with prices seen testing 1.1200 resistance level. The hidden bullish divergence on the daily chart could indicate a near-term continuation subject to price clearing the 1.1200 resistance level. On the 1-hour chart, as noted yesterday, prices pulled back lower to form a higher low before posting strong gains to reach 1.1200. The 1-hour chart now shows a potential cup and handle pattern that could be formed if prices remain consolidated at the current levels unless price breaks out strongly higher. In any case, watch for a pullback towards 1.1175 - 1.1150, ahead of further gains to the resistance level of 1.1270 - 1.1281.
USDJPY (103.29): USDJPY barely managed to test 104.00 resistance before pulling back lower to the close the day at 103.23. Support is now seen near 102.00, which could form a higher low. Although USDJPY looks poised to the downside in the near term, the long term bias remains to the upside with a potential test towards 108.00. Also, note the potential head and shoulders continuation pattern that is forming. A break down below 100.00 could signal further downside in USDJPY on the daily chart.
GBPUSD (1.3282): GBPUSD managed to break out above 1.3200 yesterday after the manufacturing PMI surprised to the upside. Further gains could be seen pushing GBPUSD towards 1.3400. However, watch for a pullback towards 1.3200 - 1.3170, or a breakout above 1.33 currently which could keep the bullish momentum going.
XAUUSD (1314.01): Gold prices were seen trading near the 1315 - 1300 support zone that was identified. But the breakout from the rising median line signals further downside. Watch for a rally back to the 1331.30 - 1327.50 resistance level which could be tested in the near term. This is also validated by the bullish divergence seen on the 4-hour time frame.