Top Trading Opportunities for 2017

Indecision ruled many of 2016 – as it had a year before. Global equities and a Dollar forged out extended ranges rather than extend a trends of before years. That relief was jarred however in a final entertain of a year. A buildup of vital eventuality risk from Brexit to a US Presidential choosing to a second Fed rate travel put markets behind in motion. Will regenerated trends reason loyal into a New Year or is sensitivity a usually holdover to count on? These are a DailyFX Team’s tip trade opportunities for 2017.

Top Trades:

  • John Kicklighter, Chief Strategist: GBP/JPY Combines a Depressed Pound and Risk Trends
  • David Song, Currency Analyst: Tracking Key Market Themes Beyond Monetary Policy
  • Jeremy Wagner, Head Trading Instructor: A Typically Quiet EUR/GBP May Provide an Outsized Move
  • Paul Robinson, Currency Analyst: NZDUSD, Gold/Silver Setting Up for More Losses Before Hitting a Low
  • Jamie Saettele, CMT, Senior Technical Strategist: Cyclical USDZAR Downswing May Be during Hand
  • Tyler Yell, CMT, Forex Trading Instructor: Awaiting Aggressive Bullish Bounce In Gold From Higher-Low
  • Ilya Spivak, Currency Strategist: Avoiding a Trump Trade Rollercoaster – Short EUR vs. GBP, JPY
  • Walker England, Forex Trading Instructor: Finding Potential Trading Opportunities in EUR/GBP
  • Christopher Vecchio, Currency Strategist: Short EUR/USD, Long USD/JPY
  • Martin Essex, Market Analyst and Editor: EUR/JPY Faces Rising European Troubles, Brighter Japanese Horizons
  • Michael Boutros, Currency Strategist: AUDJPY | Breakout during Initial Resistance- Constructive Above 80.60
  • David Cottle, Market Analyst: What if a Fed has Under-Gunned a Rate Hike Call?
  • James Stanley, Currency Analyst: Long EUR/AUD – Buy Support, Sell Resistance
  • Oliver Morrison, Market Analyst: British Pound Set for Further Gains on Japan’s Yen
  • Nick Cawley, Market Analyst: GBP Recovery Against EUR Likely on a Cards in 2017

John Kicklighter, Chief Currency Strategist:

GBP/JPY Combines a Depressed Pound and Risk Trends

There are a array of vivid elemental themes that will need to be addressed in 2017 from a market’s continual bonus of a Fed’s foresee to a arise of trade bounds in a change towards protectionism. However, many of these rude threats have conjunction a poignant askance between intensity and luck nor are they trustworthy to a transparent elemental trigger that can offer a reasonable clarity of timing for resolution. Given that trade is mostly a intelligent supervision of probabilities, it is vicious to find opportunities that can enclose a widest array of auspicious outcomes and a biggest width with a certain course. A enlarged GBP/JPY perspective appeals to me given it speaks to dual critical, heavily-skewed themes: Sterling vexed by Brexit doubt and an expansion of risk trends.

The Sterling member of this setup is comparatively straightforward. The UK’s banking has suffered an unmannerly devaluation with a country’s opinion to withdrawal from a European Union. This postulated basin reflects doubt and worst-case-scenario assumptions in a deficiency of transparent procedures to navigate a divorce. It is approaching that negotiations between a dual sides will be relocating and a United Kingdom’s economy will be worse off on a array of aspects, yet it is unequivocally doubtful to be a predicament state that is now labelled in. We will start to reassess a change of fear that suppresses a nation and banking in a initial entertain of 2017. Prime Minister Theresa May is due to lay out skeleton for traffic in a opening months, and – should she hang to a designed time line for invoking Article 50 – to start a procession during a finish of March.

The suppositional disposition behind a Pound offers adult a array of appealing opportunities (including EUR/GBP that sees a Euro display small discernible appreciation of a possess detriment in this divorce), yet GBP/JPY leverages that elemental eventuality by adding a second elemental thesis with a solitary skew: risk trends. As it stands, timing is unequivocally vicious to trade GBP/JPY. While a Sterling’s grant to this conditions is already grounded by suppositional excess, a Yen poses a near-term risk to a bullish view. All Yen crosses are rarely correlated to market-wide risk appetite. With a stream bearings, suppositional strech is impassioned opposite many resources and on many elemental measures. Below is a draft display a risk favorite SP 500 US equity index contra a simple ‘Risk-Reward Index’ (an total G-10, 10-year supervision bond produce divided by an FX sensitivity index).

Top Trading Opportunities for 2017

Data Source: Bloomberg. Prepared by John Kicklighter

A risk improvement is overdue, and a GBP/JPY is doubtful to shun a downdraft. That said, a flush is not going to find an additional of suppositional loiterers holding a enlarged position given a sell rate’s unusual low spin and a comprehensive miss of lift a span offers. After a unpleasant yet required risk flay however, a marketplace will be reduction fixated on jumping on a bandwagon of vale transformation and instead esteem genuine intensity for lapse on vexed assets. A deeply ignored Pound with a recuperating UK GDP and Bank of England not too distant off from normalizing routine will lay an appealing landscape for such appetite.

In a draft below, a candlestick array is GBP/JPY and a dark red line is GBP/EUR (EUR/GBP inverted). The technical seductiveness relations to other Yen and Sterling crosses is value holding a demeanour at, yet it is a elemental scenarios behind GBP/JPY that truly pronounce to a bullish intensity over a middle to long-term. That is because it is during a tip of my list for trade opportunities in 2017.

Top Trading Opportunities for 2017

Charts: Tradingview. Prepared by John Kicklighter

Jamie Saettele, CMT, Senior Technical Strategist:

Cyclical USDZAR Downswing May Be during Hand

Yearly Chart

Since a finish of a Bretton Woods era, USDZAR has some-more or reduction left true up. The usually critical peaks on this draft are 2001 and 2008, that are 7 years apart. Work retrograde in 7 year cycles and you’ll notice that 1987, 1980, and 1973 are concentration lows (1994 was nothing). 7 years after 2008 is 2015 (remember, we’re looking during yearly closes). The decrease from 2001 lasted 3 years and a decrease from 2008 lasted 2 years. It’s probable that 2016 is a initial year of another decline.

Top Trading Opportunities for 2017

‘Blow-off’ Tops

The tops in 2001, 2008, and 2015 are ‘blow-off’ tops. The ‘blow-off’ portions of a rallies start following breaks by a tip of a channel. Once a marketplace comes behind into a channel, a annulment is deliberate underway towards a indicate from that a blow-off allege originated. This indicate is tangible as a spin where cost final overwhelmed a support line. The circles on a draft imply a start points. The aim in this box is 10.9070.

Top Trading Opportunities for 2017

Similarities to Previous Tops; Especially 2001

USDZAR fell in 3 waves from Dec 2001 to Jun 2002 and afterwards rallied in 3 waves from Jun 2002 to Aug 2002. Weakness afterwards accelerated by 2004.

USDZAR fell in 3 waves from Oct 2008 to Jan 2009 and afterwards rallied in 3 waves from Jan 2009 to Mar 2009. Weakness afterwards accelerated by 2010.

USDZAR fell in 3 waves from Jan 2016 to Aug 2016 and has traded laterally for 4 months. It’s vicious that shorts are not determined until a enlarged tenure trendline is broken. A mangle subsequent a trendline and successive ‘check’ on a trendline from subsequent as insurgency would be even improved for entry.

Ilya Spivak, Currency Strategist:

Avoiding a Trump Trade Rollercoaster – Short EUR vs. GBP, JPY

Reality shamed self-satisfied prognosticators assured that UK electorate will opinion to stay in a European Union, that Hillary Clinton will win a US presidential election, and that OPEC will destroy to strike an outlay cut understanding nonetheless again. The highway brazen looks no reduction fraudulent and attempting to boundless where it competence lead seems no reduction foolish.

Much will count on how a Fed will conflict to a as-yet different impact of policies put brazen by a Trump administration. Will “big-league” mercantile impulse unequivocally crow adult growth, coax acceleration and steepen a on-coming rate travel path?

The markets seem to cruise so, yet no unequivocally one knows for sure. It is unfit to contend with certainty that a boost from infrastructure spending, taxation cuts and deregulation will not be homogeneous if a President-elect gives in to his protectionist streak. Pretending this is not a probability looks like sad thinking.

The US economy is a unaccompanied largest engine of tellurian direct and a US Dollar is a world’s undisputed breakwater currency, portion as a middle of sell for tighten to 80 percent of all transactions. That means that responding this doubt will set instruction for scarcely any benchmark item opposite a financial markets.

Crafting a clever plan for a year opposite this backdrop will meant avoiding trades that force investors to take bets on world-changing outcomes, during slightest for now. Instead, it seems advantageous to demeanour for opportunities that equivocate them altogether. Selling a Euro opposite a British Pound and a Yen seems to fit a bill.

Top Trading Opportunities for 2017

The Japanese section and a unaccompanied banking demeanour identical streamer into 2017. It competence spin out that waste opposite a Trump-ed adult US Dollar and an OPEC-driven wanton oil convene will finally speed adult cost expansion adequate to cruise scaling behind ECB and BOJ stimulus. Then again, it competence not.

In presumably case, both executive banks’ actions would be driven by a same account and competence spin out be a rinse on-net. The Euro will have to contend with extensive domestic doubt however as Germany and France conduct to a polls. Anti-establishment army have gained belligerent in both countries.

The past year ought to have taught investors not to bonus a hazard of populist revolt in once bastions of a Western station quo. This means worries about choosing outcomes in a heart of a Eurozone competence import on a Euro exclusively of how a big-picture tellurian account develops.

Another regard is a start of Brexit negotiations. The Euro soared opposite a Pound after a Leave debate emerged jubilant yet doubt about doing will roughly certainly cold expansion on both sides of a English Channel, definition that Sterling looks rather inexpensive relations to a Continental counterpart.

Top Trading Opportunities for 2017

Jeremy Wagner, Head Trading Instructor: A Typically Quiet EUR/GBP May Provide an Outsized Move

Focusing on a technical pictures, some cranky pairs competence advise in 2017. We wrote about Sterling final year (“More Than Irish Look for a Pot of Gold”) and it followed by as anticipated. This year, EUR/GBP is one that as a year progresses it competence set adult for another clever leg higher.

The pierce from Jul 2015 to Oct 2016 appears to be a 5-wave pierce to start a new trend. We know from Elliott Wave Theory that 5-wave moves to start a new trend typically have a partner in an swapping call of identical size. Therefore, as cost corrects this 2015-2016 trend higher, we will demeanour to identifying levels that competence support a improvement before to another leg higher.

Keep a Fibonacci retracement levels accessible on a draft from Jul 2015 to Oct 2016. The 61.8% retracement spin comes in nearby 0.7810. Coincidentally, a former insurgency line (purple dotted line) crosses nearby this same level. We know from support and insurgency training that former resistance, when broken, can act like new support in a future. Therefore, if cost corrects lower, we competence see a certain greeting nearby 0.75 – 0.78.

At that point, we will design another pierce aloft of identical distance as a Jul 2015 to Oct 2016 trend. That pierce was scarcely 2300 pips so we will demeanour for a miscarry aloft of approximately 1400 (61.8% of 2300) or presumably 2300 pips. That suggests upside targets nearby 0.92 and presumably 1.01.

Wait for cost to finish a improvement lower. If trade prints subsequent a Jul 2015 low of 0.69, afterwards another settlement is in a works.

Keeping with a Sterling theme, we will also be monitoring GBP/JPY and privately if a improvement develops. The structure of a improvement reduce in GBP/JPY develops will assistance set a tinge if we can design a prejudiced improvement or pierce to new lows. If a pierce develops as a 3 call visual move, afterwards GBP/JPY would be in a identical vessel as EUR/GBP in that another clever leg aloft competence lift it towards 160’s and presumably 175 after in a year.

Join Jeremy for a US Opening Bell webinars to keep adult to date on these trends and other Elliott Wave patterns he is following.

Top Trading Opportunities for 2017

Michael Boutros, Currency Strategist: AUDJPY | Breakout during Initial Resistance- Constructive Above 80.60

AUDJPY Weekly

Top Trading Opportunities for 2017

Prepared by Michael Boutros

Last year we highlighted a extended brazen median-line arrangement off a 2013 2014 highs while observant that, “The broader concentration stays weighted to a downside while subsequent this threshold (the tip parallel) with a mangle subsequent a Sep low-week annulment tighten during 85.47, targeting successive objectives during a 81.84-82.80 operation a 50% retracement of a allege off a 2008 low during 80.16. A vicious longer-term support section rest reduce at 72.05-74.20.”

Indeed this vicious support separator noted a low this year with a successive miscarry in cost imprinting a largest quarterly allege given 4Q of 2012. The span has stretched behind into pivotal near-term insurgency during 87.55/64 ahead of a yearly close- this spin is tangible by a 2016 open, a 50% retracement of a 2014 decrease and a median-line of a descending pitchfork fluctuating off a Feb low.

While a evident long-bias is vulnerable, a broader bottoming routine off before yearly operation lows competence be underway here and streamer into 2017 a opinion stays weighted to a topside while within this descending arrangement with halt support eyed during 81.58/97. Key connection support bullish cancellation rests usually reduce during a joining of a 52-week relocating normal a 2011 together around ~80.60 (also a start of a Q4 breakout). Bottom line: we’ll be looking to blur debility towards these levels early in a year with a crack above pivotal insurgency targeting successive topside objectives during 90.64-91.23 96.34.

Tyler Yell, Forex Trading Instructor: Awaiting Aggressive Bullish Bounce In Gold From Higher-Low

“Markets bottom when a final seller has solitary and markets tip when a final customer has bought.”

-Tom DeMark, DeMark Analytics

One of a clearly good ironies of a outcome of a U.S. Election was how wrong many marketplace participants were to design cost outcome of a probable Trump victory. After President-elect Trump announced feat in a early hours of Nov 9, 2016, a marketplace suddenly rallied in a full risk-on mode that lasted good into December.

Many traders suspicion Trump would means markets to go risk-off and that Gold and JPY would be a large customer of a Trump feat with both appreciating aggressively. However, given a Nov 9 intra-day high on XAU/USD usually north of $1,340/oz, a cost of Gold has depressed ~17% or scarcely $230s/oz by mid-December. Similarly, a Japanese Yen has enervated by 1,335 pips as of a time of this essay against, that is value a detriment of scarcely 14.6% in a month’s time.

While a marketplace changed aggressively opposite breakwater resources and currencies like Gold and JPY, a merchant should be on a watch for a stage sourroundings adult for a Bullish Gold pierce in early 2017. The categorical components that lead me to be on heightened watch for a Bullish Gold annulment are a high slope of a cost decrease and a perspective extremes developing. The cost of Gold has depressed into a 0.618%-0.786% retracement section of a Dec ‘15-July convene that saw a cost of Gold rising by ~ 32.2% or $330/oz from $1,046/oz to as high as $1,376/oz.

There appears to be no some-more hated item category going into 2017 than Gold as per a Daily Sentiment Index. DSI shows in mid-December there are 10% bulls in Gold (90% Bears streamer long-term holds or T-bonds and T-notes in second and third place with 11% and 12% respectively.

If we demeanour during a start of 2016, there were assertive calls for a cost of wanton oil to dump $10 a tub and a US dollar to pull ever aloft while equity markets were hated item class. Fast brazen to a finish of 2016 and a dollar did turnaround after descending 8% from a Jan high to early May low. The dollar rallied over 11% from a May low of 91.92. Oil rallied over 111% from Feb to Dec and competence be pulling divided on a bullish conduct and shoulders settlement that could spin towards $60 a barrel. The SP 500 rose by over 26% from a Feb low after descending 13.3% in a initial month of trade 2016.

This new hitch of marketplace story is value remembering as Gold could take a esteem for clever annulment alongside with Bonds as trade gets underway in 2017.

While there is euphoria going on with a diseased JPY EUR, a clever USD has some feeling that all is right in tellurian markets. However, we should sojourn on a watch in early 2017 that Gold could advantage from a mispriced euphoria. Considering Gold appears to be a many hated item in a future’s marketplace adds to a seductiveness that a dermatitis in 2017 to a upside in Gold competence have a lot of room to run higher. Gold’s younger digital hermit Bit-Coin (BTC/USD), that is another breakwater item has a bullish operation for 2016 of 440 USD with a bullish operation from low to high of 125%.

Other correlated resources to Gold are also in a clever bear marketplace that would need to retreat before entering a enlarged Gold trade in 2017.

Awaiting Bullish Cues:

Naturally, a downtrend does not automatically equal a shopping opportunity. Before interesting a enlarged view, we would like to see transformation and a repricing of markets on a information that can lead to a good trade. In a stream sourroundings with equities during all-time highs, Yen staying weak, and bond yields rallying, we will wait a right time for bullion to spin Gold course.

By a time we bullish Gold, a cost will need to be above a daily Ichimoku Cloud along with a lagging line also above a cloud (lagging line = cost from 26-periods ago). Also, given a stirrings going on in a marketplace with unequivocally impassioned bearish perspective and Haven resources being solitary off, euphoria in unsure resources alongside doubt in destiny tellurian trade and expansion intensity for equity earnings, Gold competence be sourroundings adult for an early 2017 convene in a identical proceed it rallied in H1 2016. If so, that’s a pierce we wish to take advantage of.

Top Trading Opportunities for 2017

Chart Created by Tyler Yell, CMT with TradingView

Christopher Vecchio, Currency Strategist:

Short EUR/USD, Long USD/JPY

Leave your preconceived notions in 2016: 2017 will be distinct any year in new memory. After a ‘wave’ choosing in that one celebration swept control of both halves of Congress as good as a Presidency, Republicans are in a unaccompanied position of being means to finish legislative gridlock in Washington, that should interpret into mercantile impulse for a US economy.

Regardless of ideology, whichever unaccompanied celebration has tended to be in control after a call choosing has followed mercantile easing strategies: a US check necessity grew by an normal of 0.4% of GDP during those 18 years. It seems that a Trump administration would defend a discount of using adult a constructional necessity as typically is a box during unaccompanied celebration control of a government. Deficit spending in a form of a large infrastructure spending bill, total with unconditional taxation reform, should infer to be significantly inflationary.

Higher acceleration expectations should interpret into serve gains for US Treasury yields (and was doing so in Q4’16 around steeper Fed rate travel expectations), that will be tremendously useful for a US Dollar in context of a stream sourroundings that a Euro and a Japanese Yen find a European Central Bank and Bank of Japan handling in: implementing assertive easing policies to keep rates during a short-end of a produce bend as low as possible, during any cost.

The ECB’s welfare in early-December to change how a QE module is undertaken can erode a market’s enterprise to reason Euros over a medium-term. With a welfare to buy 1-year debt, a ECB has signaled that it is fundamentally altering routine to be means to keep a front-end of European produce curves pinned to a floor. Between a ECB’s routine change and a Fed’s signaling for a faster gait of rate hikes, a German-US 2-year produce widespread has widened out significantly in a past few weeks, proof to be a pulling force behind EUR/USD weakness. Another 50-bps of widening in a German-US 2-year produce widespread (mirroring a pierce in Nov and Dec 2016) could see EUR/USD down towards 0.9500 in a initial half of 2017; we’ll demeanour for a exam of relation in Q1’17.

The same can be pronounced about what’s function with a Japanese Yen. In a rising produce sourroundings where a BOJ is pegging a JGB 10-year produce during or subsequent 0%, a Japanese Yen stands out to be a loser. Interest rate differentials (US-Japanese 10-year produce spreads) have changed neatly opposite a Yen, and seem staid to do so for a foreseeable destiny (three- to six-months). Another 100-bps widening in a US-Japanese 10-year produce widespread (mirroring a pierce in Nov and Dec 2016) could see USD/JPY strech a 2015 highs nearby 125.70 in Q1’17 before 130.00 after in a year.

The President-elect Trump reflation trade could very-well final into Q1 or Q2’17, despite in fits and starts, before difficulty emerges. We’ll wish to revisit a calls for brief EUR/USD and enlarged USD/JPY by mid-year. At some point, we’ll pass by a threshold where rising US yields are seen a weight for debt sustainability concerns, yet that substantially won’t occur until late-2017 or early-2018.

David Song, Currency Analyst:

Tracking Key Market Themes Beyond Monetary Policy

Long: AUD/JPY, Nikkei 225

The pickup in risk perspective has triggered a suggestive expansion opposite a vital tellurian benchmark indices, with a Nikkei 225 violation out a bull-flag arrangement carried over from 2015, while banking pairs such as AUD/JPY are highlighting a identical energetic all brazen of 2017.

Nikkei 225 Monthly

Top Trading Opportunities for 2017

After bouncing off of former trendline insurgency in a first-half of a year, Japan’s benchmark equity index competence serve retrace a decrease from behind in a 1990’s as a bull-flag arrangement starts to unfold. The check settlement instills a bullish opinion for a year brazen generally as a Nikkei 225 starts to carve a weekly array of aloft highs lows, and a ongoing easing-cycle during a Bank of Japan (BoJ) competence continue to seaside adult risk ardour as a executive bank ‘will continue expanding a financial bottom until a year-on-year rate of boost in a celebrated CPI (all equipment reduction uninformed food) exceeds 2 percent and stays above a aim in a fast manner.’

Despite a 7 to 2 separate during a final seductiveness rate welfare for 2016, a bar stays high for a BoJ to pierce a quantitative/qualitative-easing module (QQE) with ‘Yield Curve-Control’ as Governor Haruhiko Kuroda and Co. continue to expel a dovish opinion for financial routine and advise ‘inflation expectations have remained in a weakening phase.’ As a result, a topside targets for a Nikkei 225 will mostly be in concentration for 2017 as a upswing in marketplace perspective looks to insist on a behind of a rarely accommodative routine position during a BoJ.

AUD/JPY Weekly

Top Trading Opportunities for 2017

The arise in risk ardour also appears to have sparked carry-trade interest, with AUD/JPY highlighting a element change in marketplace function as it breaks out of a downward trending channel carried over from late-2014. A identical anxiety can be found in a Relative Strength Index (RSI) as a oscillator flashes a bullish trigger brazen of 2017. The pivotal developments welfare opportunities to buy-dips in a Aussie-Yen, and a Reserve Bank of Australia’s (RBA) routine meetings for a year brazen competence serve boost a seductiveness of a higher-yielding banking should a executive bank uncover a larger eagerness to gradually pierce divided from a easing-cycle.

After slicing a executive income rate to a uninformed record-low of 1.50% in August, a executive bank now underneath Governor Philip Lowe looks staid to keep a stream position over a entrance months as officials see acceleration ‘returning to some-more normal levels’ over a routine horizon. Despite concerns surrounding a region’s AAA-credit rating, a RBA competence adopt a some-more hawkish tinge in 2017 as ‘globally, a opinion for acceleration is some-more offset than it has been for some time,’ and a diverging trail for financial routine competence fuel larger seductiveness in AUD/JPY should Governor Lowe continue to speak down conjecture for reduce borrowing-costs.

With that said, pivotal themes over financial routine competence play a larger purpose in pulling sensitivity opposite a financial markets, and a change in marketplace function instills a bullish opinion for a Nikkei 225 and a AUD/JPY sell rate as a strech for produce looks to insist in 2017.

James Stanley, Currency Analyst:

Long EUR/AUD – Buy Support, Sell Resistance

Trying to foresee a year in advance, generally from a macro-economic point-of-view, can be formidable and maybe even disastrous. If you’d have pronounced final year that 2016 would see both a U.K. determining to leave Europe after a Brexit referendum, and a choosing of Donald Trump to a top-post in a United States, you’d substantially be flattering hard-pressed to find anyone that indeed believed you.

Next year could be equally or, maybe even some-more flighty than 2016; generally for Europe as we conduct towards choosing cycles in a pivotal regions of France and Germany. Combine this with continued-crisis in a banking section of Italy, and there are some unequivocally large doubt outlines for Europe subsequent year.

But what we do know is that a ECB is effectively tapering QE by shortening purchases after March; and a bank competence not have adequate ammunition to do another round. Also of seductiveness is a fact that a Euro has had a formidable time streamer reduce as we proceed a widely-watched relation figure on a U.S. Dollar. When a ECB initial announced QE in Jul of 2014, EUR/USD gathering all a proceed down to 1.0462. But after QE indeed began in Mar of 2015, EUR/USD remained upheld above this prior-low. It wasn’t until a Federal Reserve ramped-up hawkishness for 2017 that EUR/USD finally broke-below that support.

But not many currencies are as clever as a U.S. Dollar with a post-Election back-drop. Rather than looking to buy support on a Euro opposite a U.S. Dollar, that could foreseeably continue to strengthen for months ahead; long-Euro setups could be destined towards a Australian Dollar. Australia still has some room to cut rates, a new Central Bank conduct in Phillip Lowe, and a intensity for more-pressure (or weakness) to emanate from China.

But what creates a enlarged setup appealing is a risk-reward on a monthly chart. After sourroundings a fresh-high in Aug of final year during 1.6586, a span has spent many of a time given in some form of congestion. The past 3 months have seen support uncover adult during a 50% Fibonacci retracement of a many new vital move, holding a Aug 2012 low to that Aug 2015-high.

Stops on a position can be set to 1.3400, that would get a spin subsequent a 61.8% retracement of that many new vital move. Top-side targets could be sought during 1.4683 (to adjust stop to break-even), 1.5000 (major psychological level), 1.5273 (long-term Fibonacci level), 1.5500 (prior cost transformation swing), 1.6000 (major psychological level) and 1.6405 (another long-term Fibonacci spin + nearby 8-year high).

Top Trading Opportunities for 2017

Chart prepared by James Stanley

Paul Robinson, Market Analyst:

NZDUSD, intensity for a lapse to a long-term trend-line

NZDUSD was not kind to large design bears during many of 2016, yet there is reason to trust this could change in 2017 as transformation from a impassivity in Q4 competence be a commencement of a large leg lower. The low combined in Aug 2015 took Kiwi aloft for longer than many expected. Many marketplace participants, self-included, were looking for a downtrend that began in 2014 to resume during an progressing time.

The ceiling grub in Kiwi from a 2015 low morphed into a tangible channel, or bear-flag in this case. After being deserted nearby 7500 it’s now contrariety a bottom-side together of a pattern. An executive mangle of a arrangement will be deliberate with a clever shutting weekly bar underneath a reduce trend-line.

There are several targeted points of support along a proceed towards a large design target. Levels to watch embody a May ’16 low during 6673, trend-line from a 2009 low (~6475/6550), Jan ’16 low during 6348, a Aug ’15 low during 6197, afterwards a final aim arrives during a 2000 – stream trend-line. The trend-line clocks in around 5900 (+/- 50 points), or about 15% reduce from here.

Trading this theme: This is rarely contingent on a time-frame that one operates on, yet a suspicion on this finish is to wait for a reliable mangle and afterwards demeanour to retracements on a daily chart. Once broken, a rising trend-line will go from being noticed as support to resistance. In addition, seductiveness will be taken in any attempts to trade adult to a downtrend line off a 2014 high. It seems doubtful if a bearish perspective is scold it will trade that high, yet if Kiwi does it won’t criticise a opinion until it can successfully trade above a trend-line.

NZDUSD: Weekly

Top Trading Opportunities for 2017

Gold china demeanour headed lower, yet vicious support levels reason a key

Gold looks staid to continue unsatisfactory investors. The trend given a 2011 arise stays reduce and should pivotal levels on a downside destroy to hold, bullion could find itself continue circuitous reduce in fast fashion. There is poignant support in a 1050/00 region. If this section is broken, afterwards watch for transformation to accelerate. Before a large segment is tested, though, there is a trend-line of teenager stress that could be adequate to produce a bounce; it rises adult from a 2008 low to around a 1100 mark. Below that trend-line and by 1000 there isn’t anything estimable in a proceed of cost support until down to around 730/680 (2006 high/2008 low). That’s an assertive move, yet again, given a miss of vital cost support it could spin a reality. Other levels subsequent 1000 arrive during a bottom-side trend-line using reduce from a 2013 low (~975/60), along with pivots from 2009 during 905 and 865.

Trading this theme: In Q4, bullion pennyless a pivotal 1180/1200 segment fluctuating behind to 2013. A convene into that section (perhaps from a 2008 trend-line) will be noticed as a indicate of seductiveness to demeanour for debility to set in and potentially position for a pierce into a vicious 1050/00 support zone, or worse. If bullion drops into a 1050/00 area, counsel will be fitting from a short-side given a significance. This is a line-in-the silt for bullion bulls. Hold, afterwards a large convene competence develop, yet if it breaks afterwards things competence get ugly. It usually competence be what a bear marketplace needs to end, a final flush after several years of carrying lower.

Gold: Weekly

Top Trading Opportunities for 2017

Silver is apparently sourroundings adult likewise to gold, yet with a possess twist. Silver is now streamer behind to a trend-line in place given 2003, that will be a unequivocally vicious rhythm point. The spin is now around 14.50. A mangle subsequent there will transparent a trail to a late-2015 low during 13.65. Similar levels to bullion should it tumble subsequent a 2015 low are 12.46, 11.83, afterwards 0 poignant to a left until 8.45. The long-term trend-line looks approaching to be met soon, and either it can reason there or during a 2015 low could reason poignant long-term implications.

Silver: Weekly

Top Trading Opportunities for 2017

Kiwi and changed metals are rarely correlated, value observant for positioning purposes

The 52-week association between Kiwi and gold/silver is 70% and 86%, respectively. The long-term association between Kiwi and changed metals has been statistically significant, with a past dual years sporting a operation between 42% and 90%. If positioning on a same side in NZD and changed metals, traders will wish to be wakeful of this association for risk supervision purposes. Keep in mind, this is a long-term association and a shorter a time-frame we demeanour during a some-more sound there is in a correlation.

Walker England, Forex Trading Instructor:

Finding Potential Trading Opportunities in EURGBP

2016 hold some-more than a few twists and turns in a marketplace for traders. This is because it is always vicious to keep an eye on rising and ongoing technical trends. Ultimately anticipating a trend will assistance make a decisions to buy and sell easier, yet it can also assistance us know that pairs to aim for a arriving 2017 trade year. Currently a EUR/GBP is operative on retracing many of a 2016 gains after contrariety a multi-year 78.6% retracement value.

My welfare is to find opportunities to sell a EUR/GBP underneath a station 200 day relocating normal (MVA) that is now found during .8305. This value is now behaving as technical cost support for a pair, that advise that traders competence demeanour for a dermatitis subsequent this point. Not usually would this be a clever technical spirit that a trend is again branch bearish, yet it would also potentially systematise a 2016 pierce to .9270 as a reduce high in a many broader bearish pattern.

EUR/GBP Daily Chart Retracement Values

Top Trading Opportunities for 2017

Prepared by Walker England

As with any trade idea, there are always dual sides to any story. Traders should remember that there is always a probability that a EUR/GBP competence sojourn upheld for a 2017 trade year. In this scenario, traders competence select to undo any existent entrance orders to sell a EUR/GBP. If prices do increase, traders competence demeanour for a span to make a pierce on a before 2016 high during .9270. A pierce above this value would advise that a span is attempting to put in aloft highs and competence try a pierce on a multiyear 2009 high of .9804.

Martin Essex, Currency Analyst:

EUR/JPY Faces Rising European Troubles, Brighter Japanese Horizons

The entrance year looks approaching to be an annus horribilis for a Euro. The Italian banking complement stays in predicament and there are inhabitant elections in Germany, France, a Netherlands and maybe Italy – all events that could hint Euro weakness.

Add in record lows for two-year German bond yields – a benchmark for a Euro-Zone – and a intensity for formidable negotiations between a EU and a UK over Brexit, and it’s tough to see many support for a unaccompanied banking in a months to come.

While a apparent trade opposite this credentials would be to brief a Euro opposite a US Dollar, a problem with that is a markets’ doubt that a Federal Open Market Committee (FOMC) will broach a 3 US quarter-point interest-rate increases in 2017 that it approaching in Dec when it lifted a benchmark Fed Funds rate by 25 basement points (a entertain of a commission point) to a operation of 0.50% to 0.75%, implying a year-end rate operation of 1.25% to 1.50%.

Instead, a CME Group FedWatch tool, that is formed on CME Group 30-Day Fed Funds futures prices, that have enlarged been used to demonstrate a markets’ views on a odds of changes in US financial policy, shows a many approaching operation by Dec 2017 during 1.00% to 1.25%.

That, in turn, suggests a miss of interest-rate support for a Dollar and intensity banking weakness, utterly if excitability grows about a mercantile policies of US President-Elect Donald Trump.

By contrast, a Japanese Yen has copiousness going for it. For a start, it is seen by some as a haven– along with bullion and US Treasuries – to preserve in when markets are risk-averse, as they are approaching to be in 2017. Moreover, new Japanese mercantile indicators have been healthy and core acceleration competence have bottomed out. In addition, EURJPY has been climbing for a past 6 months, suggesting room for a correction.

Chart: EURJPY 1-Week (June 2014 – Dec 2016)

Top Trading Opportunities for 2017

While any tightening of Japanese financial routine is not on a cards, it’s critical that net suppositional brief Yen positions have reached their top spin given Dec 2015, according to information gathered by a US Commodity Futures Trading Commission. Any brief covering would approaching boost a Japanese currency.

On a other side of a coin, there’s copiousness of domestic eventuality risk brazen for a Euro. For a start, there’s a Brexit negotiations, that will approaching start during a finish of Mar and could be enlarged and tortuous.

Then there are a elections: in a Netherlands on Mar 15, followed by France in Apr and May, and afterwards Germany between Aug and October. In all three, far-Right – and mostly Euro-skeptic – politicians will mountain critical hurdles to a incumbents. In Italy, too, there could be an choosing in 2017 in another nation where populism is on a arise and, in addition, a banks are pronounced to be saddled with some-more than €350 billion of bad loans.

That said, there is copiousness of support for EURJPY around a August/September 2016 lows of 112.04/24 and afterwards during a Jul 2016 lows tighten to 110.94. Both those areas would have to be breached before any slip behind to a 100.00 levels final seen behind in 2012. On a upside, any mangle above a 140.50 highs reached in Jun 2015 could lead to a sharpish arise behind adult to a levels around 150.00 accessible in Dec 2014.

David Cottle, Currency Analyst

What if a Fed has Under-Gunned a Rate Hike Call?

Think behind to a finish of December, 2015. The US Federal Reserve had usually lifted seductiveness rates for a initial time in scarcely a decade. The post-crisis Fed Funds rate of 0.0-0.25% was finally history. And, a Fed approaching to make 4 some-more increases by 2016. The markets never utterly believed that. Sure enough, they were right.

For 4 rate hikes, review usually one.

Here we are during a finish of 2016. The Fed has usually lifted rates again. It expects to be doing a same, thrice, by 2017. And theory what? Markets don’t utterly trust it. Futures contracts advise usually dual hikes. However…It’s value indicating out that rate-hike cycles can final longer than anyone thinks. Nobody has seen one given 2004; experts with knowledge will be a lot rarer.

To take an apparent instance we competence go behind to 1973. Then there was a generally weaker US Dollar. Wage and pricing controls increasing inflation, and it took some fighting. Between Mar 1972 and Oct 1973 rates went adult from usually over 3% to some-more than 10%. Almost any hiking cycle given 1965 has endangered some-more concrete increases than those now envisaged by a Fed.

“Aha,” we competence now say. “But we live in a low-inflation world, we won’t need a same bulk of seductiveness rate rises to pierce acceleration expectations into line.” Good point. But story suggests acceleration can be harder to control than it seems. We’ve also had massive, inflationary mercantile stimulus, and rises for formerly pliable oil prices. We’re also reduction certain about financial delivery – a proceed executive bank decisions impact economies.

Ultra-low rates and income copy haven’t bought a expansion they were once suspicion able of. Might lifting rates also destroy as acceleration brake? Then there is President-elect Trump. If his debate tongue is to be believed, we can design a deliberately inflationary mercantile policy. Coming when US practice is already comparatively high, it’s not tough to see such a module pulling adult wages, and afterwards prices.

In short, a backdrop could be some-more inflationary than it has been for years. In that case, it creates clarity to be enlarged of a US Dollar and to sojourn long. It is substantially best to demonstrate this around banking pairs for that rate rises on a “non-dollar” side are reduction likely, like a Euro or a British Pound. Gold would come in for even some-more serious punishment than that already meted out. US Treasury yields would also have to arise many serve too.

There are transparent risks to this scenario. Trump competence be reduction expansionary once in power. European Union worries competence augur crisis. China’s lapse to form competence falter.But if all these can be avoided, we competence find that we get aloft US rates than a Fed now expects.

Oliver Morrison, Currency Analyst:

British Pound Set for Further Gains on Japan’s Yen

In a nutshell:A diseased Yen and flighty UK economy will approaching outcome in a stronger GBPJPY. GBPJPY is adult around 14% given a start of November, and looks set to continue creation gains in 2017.

Background: The Yen is weak, that is accurately where a Bank of Japan wants it. And small looks to be changing that. On Dec 19, a BoJ kept financial routine steady, withdrawal rates during reduction 0.1%, a welfare that enervated a Yen opposite a peers.

The BoJ did lift a comment of a economy for a initial time in a year, observant a economy is stability a assuage gait of recovery. But a Bank still has low acceleration expectations. Inflation stays nearby zero, roughly 4 years after a BoJ began outrageous financial stimulus.

This suggests a Bank is doubtful to change a easing routine subsequent year, that will keep a Yen weak. Most economists surveyed by Bloomberg don’t design any additional easing before Governor Haruhiko Kuroda stairs down in 2018.

The UK economy, meanwhile, keeps display conspicuous resilience after a startle opinion to leave a European Union in June. The Pound crashed to record lows in a issue of a referendum. But it’s staged a medium liberation opposite a horde of currencies in new weeks.

GBPJPY dipped 16.6% a day after a Brexit vote, yet has solemnly crept behind to pre-referendum levels as a risks of a ‘hard’ Brexit recede. Bearish bets opposite a Pound forsaken for a second week on Dec 13, according to a US Commodity Futures Trading Commission. If a Brexit routine is “orderly and smooth”, as Prime Minister Theresa May promises, a Pound will advantage some-more strength.

What are a pivotal levels? GBPJPY has been rising given a start of November. There is outrageous support around a 127.00 spin from October’s trade range. Resistance is during 152.50-163.50, that is a pre-UK referendum high achieved in Feb to May 2016. If these levels are breached, a subsequent pivotal section is a 195-191 operation strike between Jun and Aug 2015.

Risks to this trade:

  • Inflation catches land in Japan and heads towards a BoJ’s 2% target, streamer to a change in routine from a Bank.
  • Brexit risks finally seem in UK information prints, forcing seductiveness rates, and a Pound, down as a Bank of England moves to equivocate recession. Any indications a UK is streamer towards a ‘hard’ not ‘soft’ Brexit will import on a currency.
  • GBPJPY is traditionally volatile. Net suppositional brief Yen positions have reached their top spin given Dec 2015, according to a US Commodity Futures Trading Commission. Any brief covering would approaching boost a Japanese currency, yet hopefully, if you’re enlarged GBPJPY, usually in a brief term.

Nick Cawley, Currency Analyst:

GBP Recovery Against EUR Likely on a Cards in 2017

It has been a tough year for a British Pound with a Jun referendum opinion for a UK to leave a European Union causing argent to unemployment overnight in additional of 15% opposite a unaccompanied currency. EURGBP jumped from a pre-Brexit spin around 0.7600 to a spike high around 0.9200 and led to many commentators job for a span to trade during relation within a short-time frame. The British Pound also solitary off neatly opposite a US Dollar as investors shunned a UK brazen of a start of a country’s grave divorce record from Europe, approaching by a finish of Mar 2017.

While argent has remained during a reduce levels opposite a US Dollar, stirred in partial by a Federal Reserve’s welfare to travel rates and a odds of another 3 increases in 2017, a UK banking has pulled behind some of a waste opposite a unaccompanied banking as a diseased mercantile backdrop in a EU continues to import on a currency. And a flourishing waves of displeasure opposite Europe will do small to assistance a stream conditions as Europe faces 4 – Netherlands, Italy, France and Germany – potentially wily ubiquitous elections in 2017. Any shifts towards anti-EU parties and a destiny of a unaccompanied banking will come underneath heated scrutiny.

In a bound income market, a produce differential between a UK and Europe has also increasing in a final few months, helping GBP. The 2-year UK gilt now yields around 0.12% compared to -0.785% for a 2-year German homogeneous and this opening is approaching to grow as UK acceleration expectations continue to increase. The Bank of England recently highlighted that consumer cost acceleration is approaching to strike 2.8% in 2017, from an estimated 1.3% this year, as a effects of weaker argent filter through. This is above a BoE’s aim of tighten to 2% and will not be tolerated for enlarged by Governor Mark Carney. In contrariety a latest ECB forecasts see acceleration attack 1.3% subsequent year, still proceed subsequent a executive bank’s aim of tighten to 2%. The ECB recently embellished down and extended a bond shopping module until a finish of subsequent year during least, hinting that a executive bank is still endangered over a miss of cost pressures in a economy.

When a UK triggers Brexit, by a finish of subsequent Mar by a latest, a unconstrained rounds of rumours and ‘what-if’ articles over a UK/EU break-up will change to a some-more significant basis. And it is here that any transformation towards a ‘soft-Brexit’ – a many approaching position – will give argent an additional ceiling boost as both sides realize that coherence needs to be shown between dual of a largest tellurian economies. Neither side will advantage from a enlarged ‘hard-Brexit’ generally in Europe where expansion is still anaemic, while a UK will humour badly if a financial services attention is forced to pierce out of London due to a miss of entrance to European markets.

Will a Euro give behind some-more of a Brexit gains?

Top Trading Opportunities for 2017

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