Top Trade Setups in Forex on Friday
|The U.S. stocks closed relatively flat amid the busiest earnings release day of the quarter. The Dow Jones Industrial Average dipped 20 points (-0.1%) to 26813, while the S&P 500 added 4 points (+0.2%) to 3009, and the Nasdaq Composite was up 59 points (+0.7%) to 8179.
The U.S. Commerce Department reported that durable goods orders fell 1.1% on month in September (-0.7% expected). The Markit U.S. manufacturing purchasing managers' index posted 51.5 (preliminary) in October (50.9 expected, 51.1 in September). New home sales dropped to an annualized rate of 701,000 in September (702,000 units expected, 706,000 units in August). The Labor Department said initial jobless claims declined to 212,000 (215,000 expected) for the week ended October 19 from 218,000 in the prior week.
Later today, economists expect the University of Michigan Consumer Sentiment Index to be flat at 96 in October. U.S. government bond prices pared gains seen earlier in the session after disappointing data on durable goods orders were released. The benchmark 10-year Treasury yield settled at 1.768%, up from 1.761% Wednesday.
USD/JPY- Choppy Trading Continues to Play
The USD/JPY closed at 108.598 after placing a high of 108.752 and a low of 108.495. The overall movement for the pair remained Bearish that day. The pair continued to trade in a tight range of 108.50 and struggled to decide a significant direction on Thursday. USD/JPY has shown a movement of 50 pips since the start of the week.
Despite the Strength of US Dollar on Thursday due to stable macroeconomic release from the united states, the pair USD/JPY showed a downward trend on Thursday.
At 17:30 GMT, the Core durable goods for September came in as -0.3% against the expectations of -0.2%. The Durable Goods Orders came -1.1% against the expectations of -0.5%. The Unemployment claims for this week from the United States came in less than expected as 212K against the expectations of 216K.
At 18:45 GMT, the Flash Manufacturing PMI of the United States showed growth to 51.5, which was expected as 50.7. The Flash Services PMI came in as expected 51.0. However, the New home sales for September showed a decline to 701K from 710K expectations.
Supported by this higher than expected PMI, US Dollar Index jumped to its highest level in a week at 97.78. On the news front, Brexit remained under headlines on Thursday after the statement from PM Boris Johnson to call general elections on December-12 instead of working on the withdrawal bill of Brexit. This situation raised the fears of investors and led them to flee to safer asset JPY and gave a drop to USD/JPY.
USD/JPY- Daily Technical Levels
| Support | Pivot Point | Resistance |
| 108.39 | 108.55 | 108.81 |
| 108.12 | 108.97 | |
| 107.69 | 109.4 |
USD/JPY - Daily Trade Sentiment
The USD/JPY has been consolidating for quite a while now. It seems like traders are confused about whether to buy USD/JPY on weaker safe-haven appeal or to sell the USD/JPY on Fed rate cut sentiments. The MACD and RSI are neutral, while the 50 periods EMA is also not showing much momentum.
The USD/JPY continues to hold in the same trading region of 108.900 with immediate support at 108.550. On the lower side, the bearish breakout of 108.550 can extend bearish rally until 108.300 level.
AUD/USD – Fibonacci Retracement In-Play
The AUD/USD closed at 0.68181 after placing a high of 0.68574 and a low of 0.68108. The overall movement for the pair remained Bearish that day. The Australian Dollar initially tried to gain traction during the trading session on Thursday, but then it started to fall significantly on the back of strong US Dollar.
The US Dollar was strong across the board during Thursday because of higher than expected PMI and rose in Brexit uncertainties. The risk aversion sentiment caused an upward trend for US Dollars after the announcement of the general election of the UK on December 12 by PM Boris Johnson.
On data front at 3:00 GMT, the Flash Manufacturing PMI from Australia was dropped to 50.1 this month from the previous month's 50.3. The Flash Sales PMI of Australia also dropped to 50.8 from the previous 52.5.
The weak PMI from Australia weighed on AUD/USD on Thursday and caused a downward trend for AUD/USD. Meanwhile, the strong PMI from the United States further added in a downward direction in the late session on Thursday. At 18:45 GMT, the Flash Manufacturing PMI of the United States showed growth to 51.5, which was expected as 50.7. The Flash Services PMI came in as expected 51.0.
AUD/USD - Technical Levels
| Support | Pivot Point | Resistance |
| 0.684 | 0.6849 | 0.6862 |
| 0.6828 | 0.687 | |
| 0.6806 | 0.6892 |
AUD/USD - Daily Trade Sentiment
Recalling our previous forecast, the AUD/USD is trading precisely in line with our analysis. The pair is staying under selling pressure below 0.6880 area. On the technical side, the AUD/USD has already completed 38.2% Fibonacci retracement at 0.6830. The pair even place further selling until 0.6810.
A bearish breakout of 38.2% Fibonacci retracement level was supposed to extend bearish trend until 0.6800, the 50% Fibo level, but the new Doji candles changed investor's sentiment. Today, the AUD/USD may trade bullish above 0.6810 and bearish below 0.6840 level.
USD/CAD - Choppy Session Begins
The USD/CAD closed at 1.30694 after placing a high of 1.30926 and low of 1.30531. The overall movement for the pair remained unclear that day.
Rising Crude Oil prices made the Canadian Dollar to move in upward direction continuously and outperform its rivals on Thursday. And US Dollar also gained strength at the back of strong PMI data release that day.
The USD/CAD closed its market on Thursday at the same point it started due to consolidated movement. The pair followed its previous day movement backed by a rise in Crude Oil prices, which allowed commodity-linked Loonie to create a Bearish trend for USD/CAD. Crude Oil prices showed a gain of 0.27% on Thursday and traded at $56.12 per barrel.
However, after the release of PMI data from the United States in the late session on Thursday, the pair started to gain traction. At 18:45 GMT, the Flash Manufacturing PMI of the United States showed growth to 51.5, which was expected as 50.7. The Flash Services PMI came in as expected 51.0.
The release of PMI data from HIS Markit revealed that the manufacturing sector of the United States showed growth for October. Hence, the US Dollar Index rose to 97.67, and the pair USD/CAD also rose to the same extent it dropped by the increased Crude Oil prices. The movement of USD/CAD would be caused by crude oil prices and USD's performance on Friday due to a lack of macroeconomic release from both countries.
USD/CAD - Technical Levels
| Support | Pivot Point | Resistance |
| 1.307 | 1.3103 | 1.3125 |
| 1.3049 | 1.3158 | |
| 1.2994 | 1.3213 |
USD/CAD - Daily Trade Sentiment
The USD/CAD bearish trend continues to dominate the pair. The USD/CAD pair is trading within a bearish channel, which is extending resistance to the USD/CAD at 1.3080, along with a support level of 1.3020.
The bearish engulfing candle on the 4-hour chart is a good sign for sellers. Besides, the bearish engulfing has concluded the candle below 1.3080, which confirms the high odds of selling in the USD/CAD, while 1.3020 remains my bearish target.
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