Top 4 currency pairs to trade on Friday.

The volatility is back to the markets on the last day of November. Trading season is approaching to the last month of the year 2017, leaving just three weeks before the Christmas pause. One of the main drivers was is risk appetite. Safe havens like gold and bonds lose their shine, while high yield assets like stocks become more attractive despite historically high prices. Positive rumors from US Senate to pass the Friday vote for the Republican tax bill together with stronger-than-expected GDP release pushed US stock indices to fresh highs. DJIA leads the bullish run and the main reason is that big corporations would benefit more from the tax reform. Do you really think it was designed to help poor people or to protect the middle class?..

Thursday trading session was positive for the EURO, driven by the factors above together with economic reports beating expectations: German unemployment change (-18K vs -10K), Eurozone unemployment rate (8.8% vs 8.9%) and EU Consumer Price Index (+1.5% vs +1.4%). the last one is monitored by ECB very closely and if it will be able to pick up the momentum, we could see the regulator acting to tighten the monetary policy much more earlier than they predicted at the last meeting. EURUSD is back above 1.19, with further upside potential. Technically, hourly chart below has a flag continuation pattern, while fast RSI oscillator is far from overbought levels, leaving the space for northwards run. My buy-dips strategy for the week, posted below, works well so far.

   

USDJPY as the risk-appetite indicator, has the same fundamental supportive factors described above. Technically, there are two strong signals on H4 Ichimoku indicator below. First, the span is crossed and turned bullish. Second, the price managed to get out above the cloud. All the lines are in bullish mode as well, so I expect the pair to reach the range of two previous local highs between 113.19 and 113.85 today. A sustainable close of the week in this range could cause further upside surge next week. I guess, there is no need to remind you about attractiveness of EURJPY longs as the result of both EURUSD and USDJPY being bullish.

Sterling was among the leaders on Thursday. Fundamentally, there are rumors about EU and UK politicians seeing the light at the end of the Brexit tunnel. Some people would say that the GBPUSD run of 400 pips in last three weeks is a huge achievement. I’m not impressed, to be honest, cause I remember times when cable used to move 200 pips per day. Anyway, British Manufacturing PMI is in focus on Friday’s calendar and positive reading could give a lift for the pound to continue the run. From the technical point of view, I would stay away from buying GBPUSD on local top of the market. First reason is that daily RSI is in overbought territory. Secondly, the cable could have a double top (lower highs) formation in case if the price will not be able to close above previous high at 1.3593. Some would say that Bollinger Bands indicator points to higher prices by closing above the range. I would answer them that it loves false breaks and signals, look at the previous one on September the 15th.

 

I would consider aggressive longs of GBPJPY though. But not on top of the market of course. This pair is volatile, so there will be a pullback before continuation of the uptrend. Ichimoku cloud indicator shows me an attractive range of 151.21/61 to jump in. Small accounts should be cautious about trading this pair due to high volatility and cut potential losses 20-30 pips below 151.00. Those who can allow themselves to stay underwater for some time, should watch the range 149.71/150.20 to add longs. Targets? I do not see any significant resistance before 155.60, so it’s more than 400 pips to go north.

USDCAD is in focus for Friday trading. Canadian GDP and Employment reports are scheduled to release at 8:30 NY time. Expectations are rather modest: 0.1% and 10.0K respectively. I suppose such low expectations leave some room for an upside surprise, as we’ve already seen this year. If my guess was right, we would see a pullback down of the loonie to the zone 1.2750/2800. Technically, 1.2900 seems to be strong resistance level. MACD bearish divergence is not worked out yet. RSI14 is pointing to reversal.

Let the profit be with us!

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