Fundamental Analysis of NZD/USD for May 3, 2017

NZD/USD has been in a volatile bearish trend recently. Today was a very important day for NZD as New Zealand Employment report for Q1 was published, which revealed employment growth of 1.2%, stronger than the consensus for a 0.8% gain. The Unemployment Rate fell to 4.9% which was expected to be at 5.1%. However, despite upbeat reports NZD could not quite dominate USD. On the USD front, ADP Non-Farm Employment report showed 177k new jobs instead of the forecast for 178k. This helped USD to gain more strength against NZD recently. Along with the ADP report, we have ISM Non-Manufacturing PMI report which is due later today. The index is expected to be at 56.1 which previously was at 55.2. Crude Oil Inventories report is expected to log a -3.3M drawdown last week from at -3.6M on the previous week. Overall, USD is likely to dominate NZD in the coming days as USD is winning favor with investors. Despite positive economic data from New Zealand today, NZD failed to gain over USD and this does signal a further bearish movement in this pair.

Now let us look at the pair from the technical view. The price has already rejected the bulls with a greater proportion today. The pair is still going on its decline, heading for 0.6890 support area. The price is expected to hit the support of 0.6890. If the price breaks below 0.6890 with a daily close, then we will consider selling opportunities with a downward target at 0.6550. On the other hand, if the price bounces off from 0.6890 support and rejects the bears with a daily close, then we will be looking forward to buy with a target towards 0.70 resistance area.

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EUR/USD analysis for May 03, 2017

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Recently, the EUR/USD pair has been trading downwards. The price tested the level of 1.0906. According to the 5M time frame, I found broken trading range (accumulation), which is a sign that selling looks risky. The short-term trend is bullish. My advice is to watch for potential buying opportunities. There is also a hidden bullish divergence on the moving average oscillator. The first upward target is set at the price of 1.0935.

Resistance levels:

R1: 1.0935

R2: 1.0950

R3: 1.2965

Support levels:

S1: 1.0900

S2: 1.0885

S3: 1.0865

Trading recommendations for today: watch for potential buying opportunities.

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AUD/USD reacting nicely to our selling area, remain bearish

Price has bounced up perfectly and has reached our profit target once again. We prepare to sell below 0.7549 resistance (Fibonacci retracement, fibonacci extension, horizontal overlap resistance, descending resistance) for a drop to at least 0.7490 support (Fibonacci retracement, horizontal pullback support).

Stochastic (55,5,3) is seeing major resistance below the 97% level where we expect a drop from.

Correlation analysis: AUD/USD has a strong positive correlation with NZD/USD which expects a bearish move increasing our bearish scenario on this trade.

Sell below 0.7549. Stop loss at 0.7588. Take profit at 0.7490.

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AUD/JPY on major resistance, time to start selling

Price is now testing major resistance at 84.33 (Fibonacci extension, Elliott wave theory) and we expect a drop from this level to at least 82.83 support (Fibonacci retracement, Horizontal swing low support, Elliott wave theory).

Stochastic (55,5,3) is seeing major resistance below the 93% where we expect a drop from.

Correlation analysis: we suppose overall weakness in commodity currencies (AUD, NZD) while foreseeing further strength on JPY which goes well for the drop we expect on AUD/JPY.

Sell below 84.33. Stop loss at 85.26. Take profit at 82.83.

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Fundamental Analysis of USD/CAD for May 3, 2017

USD has been dominating CAD since the bounce off 1.3250 support level. On the USD front, ADP Non-Farm Employment report is due today, so the pair is expected to trade with some volatility. ADP Non-Farm Employment Change is expected to decrease at 178k which previously was at 263k. Besides, ISM Manufacturing Index report is also going to be published today which is expected to show a minor increase to 56.1 which previously was at 55.2. Apart from that, Crude Oil Inventories report is also going to be released which is expected to show a -3.3M fall which previously was at -3.6M. On the other side, Canada does not have any economic reports today, but tomorrow Canada's Trade Balance report is going to be posted which is expected to show a proficit value at 0.3B from the previous deficit of -1.0B. As USD has already gained a fresh impetus against CAD, the pair is expected to reverse downward to its mean before showing any further move.

Now let us look at the pair from the technical view. The price has shown a good amount of bullish rejection yesterday. Currently the price is still showing some bullish rejection intraday. The pair is expected to reverse back to the mean of 20 EMA which is at horizontal support of the 1.3600 area. If the price moves down to 1.3600 and we see any bearish rejection at the level, we will consider buy positions with a target towards 1.40 in the coming days.

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GBP/USD analysis for May 03, 2017

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Recently, the GBP/USD pair has been trading sideways at the price of 1.2940. According to the 4H time frame, I found a broken bullish flag in the background and successful re-test after the breakout, which is a sign that selling looks risky. Price also respects 50-simple moving average, which is another sign of strength. My advice is to watch for potential buying opportunities. The first upward target is set at the price of 1.3025.

Resistance levels:

R1: 1.2945

R2: 1.2965

R3: 1.2995

Support levels:

S1: 1.2885

S2: 1.2865

S3: 1.2830

Trading recommendations for today: watch for potential buying opportunities.

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Technical analysis of USD/CHF for May 03, 2017

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Overview:

  • The USD/CHF pair keeps trading downwards from the level of 0.9959. The bias remains bearish in the nearest term, testing 0.9882 or 0.9847 because there are no changes in my technical outlook. The bearish channel is still strong because the pair dropped from the level of 0.9959 which coincides with the ratio of the 50% Fibonacci retracement levels to the bottom around 0.9898. The price is still set below the area of 0.9959 and 0.9925. Today, the first resistance level is seen at 0.9925 followed by 0.9959, while daily support 1 is found at 0.9882. Besides, the level of 0.9925 represents a weekly pivot point for that it is acting as the minor support today. Amid the previous events, the pair is still in a downtrend, because the USD/CHF pair is declining from the new resistance line of 0.9959 towards the first support level at 1.9925. If the pair succeeds to pass through the level of 1.9925, the market will indicate a bearish opportunity below it. Sell below 1.9925 with the first target at 0.9882 and the next one at 0.9847. The bearish scenario suggests that the pair will stabilize below the area of 0.9959. On the other hand, if a breakout happens at the support level of 0.9959, the market will rise further to 1.0072.
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Technical analysis of NZD/USD for May 03, 2017

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Overview:

  • The NZD/USD pair is showing signs of strength following a breakout of the highest level of 0.6896. On the H1 chart, the level of 0.6896 coincides with 23.6% of Fibonacci, which is expected to act as a minor support today. Since the trend is above the 23.6% Fibonacci level, the market is still in an uptrend. But, major support is seen at the level of 0.6847. Furthermore, the trend is still showing strength above the moving average (100). Thus, the market is indicating a bullish opportunity above the mentioned support levels, for that the bullish outlook remains the same as long as the 100 EMA is headed upwards. Therefore, strong support will be found at the level of 0.6896 providing a clear signal to buy with a target seen at 0.6998. If the trend breaks the minor resistance at 0.6998, the pair will move upwards continuing the bullish trend development to the level 0.7053 in order to test the double top. However, if the NZD/USD pair fails to break through the resistance level of 0.6998 today, the market will decline further to 0.6847 again.
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Global macro overview for 03/05/2017

Global macro overview for 03/05/2017:

Good news from New Zealand's job market was released overnight. The first quarter of 2017 saw the unemployment rate decrease to 4.9% from 5.2%, while market participants expected a drop only to the level of 5.1%. Overall, employment increased 1.2% in the first quarter (5.7% on a yearly basis), following a downwardly revised 0.7% gain in the previous quarter. The workforce participation rate, which reflects the number of people employed or actively searching for work, rose to 70.6% in January-March. In conclusion, the job market seems to be quite all right and relatively stable, but there are other economic data like trade surplus and business confidence that support the overall positive economic projections for New Zealand.

Let's now take a look at the NZD/USD technical picture on the H4 timeframe. The market is trading in overbought conditions at the technical support of 0.6920. Moreover, the price has turned down sharply after hitting the cluster of local moveing averages around the level of 0.6955. If the technical support does not hold, then the next support for the bulls will be seen at the level of 0.6866, just above the recent swing low.

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Global macro overview for 03/05/2017

Global macro overview for 03/05/2017:

The ADP Employment report might be again a good proxy before the NFP Payrolls Friday data release. The global investors expect a decrease in a number of newly employed people in the USA, excluding workers in the farming industry, from 263k to 176k for the reported month. This is a sharply softer growth rate relative to the strong gain that ADP reported for March. That downturn looks troublsome, but it is worth to notice, that the official US government's estimate for private payrolls in April is expected to post a substantial rebound, rising 189k – double the gain versus a March increase. In conclusion, if the projections are correct, then the labor market is still in a relatively good shape and it is growing at a steady pace, but not in danger of overheating yet.

Let's now take a look at the US Dollar index technical picture on the daily time frame. After breaking below the golden trend line, the price is now at a critical level. The index is trading around the 200 DMA in a narrow horizontal range between the levels of 98.68 and 99.35. The gap (marked as a gray rectangle) still hasn't been filled yet, so any bullish rally towards the golden trend line from the downside and an eventual gap fill must occur in an impulsive fashion. Otherwise, the market will be in danger of extending the fall towards the next important daily support at the level of 95.89.

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Daily analysis of major pairs for May 3, 2017

EUR/USD: The EUR/USD pair has moved sideways so far this week in the context of an uptrend. There is a Bullish Confirmation Pattern in the market and a further bullish movement is possible until bears come in to push price lower. The bears are expected to resume their pressure this week or next.

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USD/CHF: The USD/CHF pair trended lower yesterday in the context of a downtrend. There is a Bearish Confirmation Pattern in the market, and a further bearish movement is possible until EUR/USD drops significantly. That is the only condition that can cause a meaningful rally on USD/CHF.

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GBP/USD: The Cable is now going northwards slowly and gradually. There is still a visible bullishness in the market and the distribution territories at 1.2950, 1.3000, and 1.3050 could be tested within the next few days. Short trades are not currently recommended. Rather, bearish corrections should be taken as opportunities to go long again.

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USD/JPY: This currency trading instrument is also making some bullish efforts. The supply levels at 112.50 and 113.00 may be tested, as price goes further upwards. At last, there would be a pullback in the market, which could threaten the current bullish bias, especially when price pulls back by about 250 pips.

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EUR/JPY: The EUR/JPY pair has been attempting to trend further upwards, following the gap-up that happened last week. The EMA 11 is above the EMA 56, and the RSI period 14 is above the level 50. However, price would eventually come down, because the outlook on JPY pairs is bearish for this month.

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USD/CAD intraday technical levels and trading recommendations for May 3, 2017

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Since April 2016, the USD/CAD pair has been trending upward within the depicted ascending channel.

In December 2016, a bullish breakout above 1.3300 (50% Fibonacci level) was expected to allow a further advance toward 1.3700-1.3750 (the upper limit of the depicted channel).

However, significant bearish rejection was expressed around 1.3580 (recently established top).

During the bearish pullback, the price level of 1.3300 (50% Fibonacci Level) failed to provide enough support to the pair.

This allowed a further bearish movement toward the price level of 1.2970 (61.8% Fibonacci level) where a valid BUY entry was offered in February 2017.

A few weeks ago, the bullish breakout above 1.3300 (50% Fibonacci Level) enhanced a further advance toward 1.3440 and 1.3580.

As long as, the USD/CAD pair maintains bullish trading above 1.3580 (confluence of prominent tops), expected bullish target would be located around 1.3950 (upper limit of the depicted channel and FE 100%).

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NZD/USD Intraday technical levels and trading recommendations for May 3, 2017

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In December 2016, the NZD/USD pair was trapped within the depicted price range (0.6860-0.6990) until a bullish breakout occurred.

A bullish breakout above 0.6960-0.7000 allowed the pair to head toward the price level of 0.7100 (the key level) which failed to provide sufficient bearish pressure on the pair.

Bullish persistence above 0.7100 allowed a further advance toward 0.7250-0.7350 (Sell-Zone) where the bearish price action was expected.

Bearish persistence below 0.7250 allowed a further decline toward 0.7100 then 0.6960 which failed to provide enough support for the pair.

That is why a further fall was expected toward 0.6860 (the lower limit of the depicted BUY zone) where a bullish position was suggested in previous articles.

Recently, a bullish breakout was achieved above the depicted key level (0.6960).However, the pair failed to express enough bullish momentum above 0.7050.

That's why, the NZD/USD pair became trapped within the depicted consolidation range (0.6860-0.6960) once again.

Note the depicted bullish 1-2-3 pattern remains valid as long as bullish fixation above 0.6900 is defended on a daily basis.

Bullish breakout above 0.6960 is needed to allow further bullish movement. Expected projection target for the pattern is located around 0.7250.

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Trading plan for 03/05/2017

Trading plan for 03/05/2017:

On May 3, the event calendar is heavy with economic releases. At first, market participants will get the UK Construction PMI data, then Flash GDP estimates from the Eurozone and after that the Unites States will post the ADP Non-Farm Employment Change data and the ISM Non-Manufacturing reading. Moreover, the Federal Reserve will announce its rate decision and publish the post-meeting statement today.

Analysis of GBP/USD for 03/05/2017:

The UK Construction PMI data is scheduled for release at 08:30 am GMT, and market participants expect almost unchanged reading at the level of 52.2 points. Construction figures are an important indicator of housing demand. The reading above fifty indicates expansion and any number below fifty is a sign of contraction.

Let's now take a look at the GBP/USD technical picture on the H4 timeframe. If the PMI data is better than expected, then bulls may attempt to rally towards the level of 1.3000, because this level still works like a magnet for the price. The key intraday support lies at 1.2859. Breaking this level in case of worse than expected data will push the price towards the next support at the level of 1.2772.

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Analysis EUR/USD for 03/05/2017:

The Flash GDP data from the eurozone is scheduled for release at 09:00 am GMT. Market participants expect a slight improvement from 0.4% to 0.5% for this month, possibly because they remember Mario Draghi's latest comments regarding the EU economy. He said, that the eurozone's economic trend is "increasingly solid". Nevertheless, even if the pace of growth holds at 0.5%, the news should be taken with a pinch of salt since it will confirm that the economy continues to recover, but it might soon get elusive just like a couple of years earlier.

Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The triangle technical pattern is seen around the top of the trading range at the level of 1.0950, so the market may breakout from the triangle any time now. The weekend gap is still not filled (marked as a gray rectangle), so if the break below occurs, then the gap is very likely to be filled.

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Market snapshot: Oil extended losses after inventory data

Crude oil prices broke below the golden trend line support at the level of 48.18 and now are trading close to the important technical support at the level of 47.08. The most importnat intraday resistance is found at the level of 48.18 and only a sustiained break above this level may signal a recovery with a projected target at 50.08.

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Ichimoku indicator analysis of USDX for May 4, 2017

The Dollar index continues to trade sideways. Price has no clear direction but I believe one more final push lower towards 98 is very possible. However a break above 99.35 could signal that an important low is already in.

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Blue lines - trading range

The Dollar index is trading below the Kumo. Trend is bearish on the 4-hour chart. Price is moving sideways for the last couple of days but I expect price first to make a break lower as a false breakdown and then reverse upwards.

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Red line - resistance

Black line - support

Green line - long-term support

The Dollar index is at a very important long-term support junction. Price is right on top of support levels. At least a short-term bounce towards the red trend line resistance is expected. However the form of the decline from 103.50 suggests that the entire corrective decline is more probable and the up trend towards 112 will resume once the triangle pattern is broken upwards.

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Daily analysis of USDX for May 03, 2017

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Daily analysis of USDX for May 03, 2017

Ichimoku indicator analysis of gold for May 3, 2017

Gold price is close to bottoming. Gold price has limited downside potential and could go as low as $1,245. I cannot see it lower than that area. Gold is expected to bounce strongly towards $1,300 and higher after the coming reversal.

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Blue lines - bearish channel

Green rectangle - support area

Gold price is inside the green rectangle support area. Price is below both the tenkan- and kijun-sen indicators. Trend is bearish for the short term. Short-term resistance is at $1,262. Next important resistance is at $1,272. Bulls need to break these levels to confirm a reversal.

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Black line -long-term resistance trend line

Blue line - long-term support trend line

Green line - medium term support trend line

Gold price is trading inside the Kumo. Trend is neutral. Price is above both the tenkan- and kijun-sen. Price is also above the green medium-term support trend line. I expect this trend line to hold and price bounce upwards strongly above the long-term trend line resistance.

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Elliott wave analysis of EUR/NZD for May 3 - 2017

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Wave summary;

The correction in wave [iv] is likely to be extending now, which means we are likely to see a small bounce towards 1.5865 before the final decline towards 1.5541 to complete wave [iv] and setting the stage for the next impulsive rally in wave [v] with an ideal target seen at 1.6655.

R3: 1.5900

R2: 1.5865

R1: 1.5804

Pivot: 1.5725

S1: 1.5644

S2: 1.5541

S3: 1.5463

Trading recommendation:

We bought EUR at 1.5686 and will place our stop at 1.5640. We will take profit at 1.5850.

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Elliott wave analysis of EUR/JPY for May 3, 2017

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Wave summary:

The rally from 114.82 in wave A is close to exhaustion. As long as minor support at 121.98 is able to protect the downside, we could still see a final spike higher to the ideal 123.21 target, but it's only a matter of time before wave A completes and wave B lower towards at least 120.02 and likely even closer to 119.02 takes over.

R3: 123.21

R2: 122.89

R1: 122.60

Pivot: 122.50

S1: 122.22

S2: 121.98

S3: 121.28

Trading recommendation:

We will sell EUR at 123.00 or upon a break below support at 121.98.

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Technical analysis of USD/JPY for May 3, 2017

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USD/JPY is expected to trade with bullish bias above 111.75. Although the pair retreated from 112.30 (the high of May 2), the pair is still trading above the key support at 111.75, which should limit the downside potential. Even though further consolidation cannot be ruled out, its extent is likely to be limited.

To conclude, above 111.75, look for a further rise to 112.30. A break above this level would trigger a new upside to 112.55.

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 112.30 and the second one at 112.55. In the alternative scenario, short positions are recommended with the first target at 111.55 if the price moves below its pivot points. A break of this target may push the pair further downwards, and one may expect the second target at 111.20. The pivot point lies at 111.75.

Resistance levels: 112.30, 112.55, and 112.85

Support levels: 111.55, 111.20, and 111.00

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Technical analysis of USD/CHF for May 3, 2017

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USD/CHF is expected to extend its downside movement. The pair is trading below the declining 20-period and 50-period moving averages, which play resistance role and maintain a downward bias. The relative strength index has been capped by a bearish trend line since May 1.

To sum up, as long as 0.9940 holds on the upside, a further drop to 0.9890 and even to 0.9875 seems more likely to occur.

Resistance levels: 0.9955, 0.9970, and 1.000

Support levels: 0.9890, 0.9875, and 0.9840

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Technical analysis of NZD/USD for May 3, 2017

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NZD/USD is expected to continue its upside movement. The pair has revealed higher highs and higher lows since May 1, which confirms the bullish outlook. The upward momentum is further reinforced by the rising 20-period and 50-period moving averages. The relative strength index advocates for a further advance.

Therefore, as long as 0.6925 is not broken, look for a further upside to 0.6970 and even to 0.6990 in extension.

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 0.6970 and the second one at 0.6990. In the alternative scenario, short positions are recommended with the first target at 0.6900 if the price moves below its pivot points. A break of this target may push the pair further downwards, and one may expect the second target at 0.6880. The pivot point is at 0.6925.

Resistance levels: 0.6970, 0.6990, and 0.7025

Support levels: 0.6900, 0.6880, and 0.6850

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Technical analysis of GBP/JPY for May 3, 2017

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GBP/JPY is expected to extend its upside movement. The pair posted a rebound and broke above the 20-period and 50-period moving averages, which play support roles and maintain the bullish bias. The relative strength index has just landed on its neutrality level at 50 and is turning up.

Therefore, as long as 144.55 holds on the downside, look for a further rise to 145.50 and even to 146.00 in extension.

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 145.50 and the second one at 146.00. In the alternative scenario, short positions are recommended with the first target at 144.05 if the price moves below its pivot points. A break of this target may push the pair further downwards, and one may expect the second target at 143.70. The pivot point is at 144.55.

Resistance levels: 145.050, 146.00, and 146.35

Support levels: 144.05,143.70, and 143.20

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Technical analysis of EUR/USD for May 03, 2017

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When the European market opens, some economic reports will be released such as German 10-y Bond Auction, PPI m/m, Prelim Flash GDP q/q, and German Unemployment Change. The US will also present several fundamental reports such as Federal Funds Rate, FOMC Statement, Crude Oil Inventories, ISM Non-Manufacturing PMI, Final Services PMI, and ADP Non-Farm Employment Change. So amid the tight economic calendar, the EUR/USD pair will move with medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.0988.

Strong Resistance:1.0982.

Original Resistance: 1.0971.

Inner Sell Area: 1.0960.

Target Inner Area: 1.0935.

Inner Buy Area: 1.0910.

Original Support: 1.0899.

Strong Support: 1.0888.

Breakout SELL Level: 1.0882.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of USD/JPY for May 03, 2017

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In Asia, today Japan will not release any economic data. However, the US will release a series of fundamental data such as Federal Funds Rate, FOMC Statement, Crude Oil Inventories, ISM Non-Manufacturing PMI, Final Services PMI, and ADP Non-Farm Employment Change. So there is a probability the USD/JPY pair will move with medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance 3: 112.61.

Resistance 2: 112.39.

Resistance 1: 112.17.

Support 1: 111.90.

Support 2: 111.63.

Support 3: 111.46.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Daily analysis of USDX for May 03, 2017

USDX is waiting for tomorrow's Fed interest rate decision, which is expected to keep rates unchanged. Currently, the index is holding at the support level of 98.83 and remains capped by the 200 SMA on H1 chart. One would expect a bearish continuation after that level gives up, while to the upside, a consolidation above the 200 SMA could expose the psychological zone of 100.00.

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H1 chart's resistance levels: 99.28 / 99.97

H1 chart's support levels: 98.83 / 98.42

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 98.83, take profit is at 98.42 and stop loss is at 99.24.

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Daily analysis of GBP/USD for May 03, 2017

GBP/USD remains alive in the bullish outlook, despite the the fact that a sideways range hasn't been broken in the short term. The support area of 1.2855 still gives a nice demand zone to enable the bulls to gather momentum. Thus, the upward bias is the preferred scenario and that's why we would like to see a break above 1.2957 in order to witness further gains toward the 1.3029 level.

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H1 chart's resistance levels: 1.2957 / 1.3029

H1 chart's support levels: 1.2855 / 1.2652

Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.2957, take profit is at 1.3029 and stop loss is at 1.2887.

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Trading Plan for EURUSD and GBPUSD for May 02, 2017

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Technical outlook:

The EURUSD pair continues to consolidate within a 100-pip trading range between 1.0850 and 1.0950 levels since a few days now. The pair has stalled at the Fibonacci 0.618 resistance as seen here, and a break below 1.0850 levels would confirm that the pair has reversed lower and a meaningful top is in place. The wave structure also indicates that intermediate waves (1) and (2) should be in place and wave (3) should resume any moment. Please note that if the above wave count holds to be true, the pair is expected to accelerate lower towards parity levels, before the trend reverses. Even if it does not drop from here, please watch out for a top around 1.1000 levels, which is the Fibonacci 0.786 resistance levels. Immediate support on the daily chart is at 1.0580 levels while interim resistance is seen at 1.0950 levels.

Trading plan:

Please remain short for now and look to sell on rallies. Stop above 1.2950 and target 1.0580 at least.

GBPUSD chart setup:

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Technical outlook:

The GBPUSD rallied intraday towards 1.2930 levels to hit the Fibonacci 0.618 resistance levels (not shown here) of the drop between 1.2965 and 1.2863 levels. Looking at the wave count, the pair seems to have already formed a top at 1.2965 levels by unfolding wave 5 into an impulse (5 waves) a labelled on the hourly chart here. By most probability, GBPUSD should be looking to push lower into 5 waves out of which waves 1 and 2 seem to be done already. Till the time prices remain below 1.2965 levels, bears should be in control and initial down target seems to be 1.2700/50 levels. Please note that the pair should be looking to drop at least towards 1.2000 levels if the above count holds true and prices remain broadly below 1.2965 levels going forward. Immediate support is seen at 1.2800 levels, while interim resistance is seen at 1.2965 levels.

Trading plan:

Please remain short for now and stop above 1.2965 levels, targeting 1.2700, 1.2500 and 1.2000 levels.

Fundamental Analysis:

Today's calendar seems to be light on major events, but Wednesday and Friday should see good volatility in the above two pairs. Shall be watching for the eurozone tomorrow and USD payrolls on Friday.

Good luck!

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