Category: Forex Market Analysis

This section focuses on publications and analytical reports related to financial markets on a daily basis.

Main Features

Multiple asset-classes coverage
Neutral assessment of market conditions
Entry setups with relevant underlying price levels

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Forex Market Analysis

XAUUSD short idea, May 7th, 2018

XAUUSD

XAUUSD is currently resting right against an important angle that is acting as resistance (the 5×1 angle). Considering the square that we are trading in, we are trading significantly above the current 45-degree angle. A violent snap back (fast selloff lower) should be expected. Additionally, we are trading in a very textbook example of a bear flag. The continued strength of the dollar should continue to drive gold lower here and another leg down is certainly a strong probability. There is little risk associated with this trade and significant possible profit.

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Forex Market Analysis

The FED to have a Gradual Rate Hike

News commentary

In the last FOMC meeting, we can conclude that the FED intends to have a gradual rate hike followed by June & August.

It also mentioned the word “symmetrical” twice in the statement referring that it will be necessary to sustain the inflation at its target level at 2%

“Our great financial team is in China trying to negotiate a level playing field on trade! I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!”. Trump tweeted to calm down the atmosphere in the running trade war.

It’s not expected from the bank of England to increase the rate at its meeting on Thursday according to its previous weak data. Rate hike may be postponed to the next big meeting in August if there’s hawkish sentiment in Thursday speech.

The growth of Eurozone is running slow since the beginning of this year. The ECB will not be anticipating the end of its quantitative easing now. We might not witness any rate hike until 2019

Chart Analysis

USD/CHF

On the 4-hour chart, we can see that the price has reached a key resistance level  at 1.002

With breaking the lower trend line and divergence on RSI, A harmonic pattern is produced to enhance the reversal movement, followed by a pin bar; the price is expected to go down to 0.9815

 

USD/JPY

On the daily chart, the price bounced from the resistance 110 which is the same level of 50% Fibonacci level. The price had reversed from a broken upward trend line from the low of 2011 with the 200-day moving average. The pair confirmed the bearish bias after forming a harmonic pattern (AB=CD). With pin bar and engulfing candle, besides overbought on RSI. If the price could break the uptrend line from the low of 2018, we can see 107.5 level

AUD/NZD

On the daily chart, the price moved according to our analysis before bouncing from the support zone 1.0475-1.0545. Breaking also a descending trend line followed by a break of the descending channel. The price has formed four dojis above the key level 1.0645. The harmonic pattern improves the chance of a bullish continuation. Therefore, the price is assumed to visit 1.084.

 

©Forex.Academy

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Forex Market Analysis

USA VS China Trade, Inflation and Quarterly Results

 

Macroeconomic Outlook

Three references for the markets this week

1)      Trade relation between China and USA

  1. Last Friday it was agreed what it could be the beginning of talks that will take time
  2. Rather a constructive agreement than a bad one

2)      Inflation

  1. American inflation is the key variable this week
  2. It is expected to increase to 2.5% from previous 2.4%
  3. Currently is above the 2% target and this creates certain anxiety and can have some effect on bonds
  4. Might consider the option of a lower than expected inflation (<2.4%)
  5. Payrolls data, which was published on Friday, was 2.6% instead of 2.7% moving away from the 3% barrier
  6. The option of a lower inflation rate provides a less stressful outlook

3)      Quarterly Results

  1. Really good so far in the USA
  2. Partly because of the tax reform
  3. EPS had increased to an average of 24,8% when at the beginning it was expected to be around 17%
  4. Good so far too in Europe
  5. More European companies will publish results this week

Hence, bearing in mind a decent agreement between USA and China, the possibility of lower inflation and good corporate results, the markets should bounce and rise a little this week.

Furthermore, if the inflation turns out to be lower, it could be good for bonds and could contribute to a weaker US Dollar wich has increased significantly recently.

 

Technical Analysis

US Dollar Index

Daily Chart

It is possible to appreciate how the US Dollar Index, after tumbling for a couple of weeks, broke all the resistances and increased significantly. The most important resistances generated from its monthly bearish trend have been broken in one strong movement upward. Including, also, its 200-day EMA which is retesting right now. The only significant resistance that is facing now is at the 93.5 which will be the next target leaving some space for a longer run.

EURUSD

Daily Chart

After testing for the third time the bearish trend line on the top it dropped,  strongly breaking its two supports below it. Not only it fell after testing its resistance and breaking the upcoming supports but also, on Wednesday it broke below the third support which is currently retesting. This can be either a fake breakout or another shorting opportunity.

 

GBPUSD

Daily Chart

After breaking the support, which has been holding price during its bullish trend line, it is eyeing the next solid resistance which is at a level of 1.34 more or less. After breaking the 200-day EMA, it is taking a rest. It may either retest the recent support broken which is hard as the bullish trend was really steep or test the next resistance which is closer and extending the bearish move.

 

USDJPY

Daily Chart

The dollar broke both resistances after doing a fake breakout and bouncing back from the monthly support. It has created a small bullish trend in the short term where it can be holding on until it reaches its next target which is the monthly bearish trend, currently situated at a level of 111.5. Either that or starts going sideways for the next days until it breaks one of the monthly trends.

Crude Oil

Daily Chart

Recent geopolitical events and tensions in Syria have created volatility in the markets, and consequently, the price of oil has been on the rise. After holding to the bullish trend line and breaking above $65 it did a retest of the recent resistances it just broke above. Without more resistances ahead, it has just reached the expected target of $70 per barrel. There are not any significant resistance above which leaves the door open for a longer bullish run.

DAX

Daily Chart

It bounced back from the monthly bearish trend which was the strongest one and consequently in the recent run it has just broken both two bearish weekly resistances. Last Friday it closed above the last resistance which leaves the door open for a continuation, possibly at less slow pace, of the recent bullish trend formed from testing the resistances and breaking the supports.

©Forex.Academy

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Forex Market Analysis

FOMC, RBA, CAD meetings and more

 

 

News Events

USD

Federal Reserve officials left interest rates unchanged, declaring inflation is close to target without indicating any intention to be near, from their gradual tightening of monetary policy.

“Inflation on a 12-month basis is expected to run near to the committee’s symmetric 2 percent objective over the medium term,” the Federal Committee said in a statement on Wednesday in Washington. “The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.”

Officials may have signalled their desire to allow inflation to surpass their 2 percent goal slightly by alluding to the “symmetric” nature of their target.

The FOMC also indicated the frailty in growth in the 1st quarter, removing the remark in the in March report that the economic outlook had “strengthened in recent months.” They weighed that out by noting the strong growth in business investments.

The 10-year U.S. Treasury notes yield slipped moderately to 2.96 percent after the release of the statement, while the S&P 500 Index of U.S. stocks climbed to its highest level of the day.

The Federal Reserve may have relieved concerns about a faster pace of rate increases at this week’s FOMC meeting, but US inflation data could hold the current expectations of a fourth rate hike during 2018. Producer price figures on Wednesday will possibly show factory prices softening slightly in April. However, the CPI is anticipated to level further on Thursday. The market expectations about the annual rate of CPI  is for it to increase from 2.4% to 2.5% in April,  the highest since February 2017.

The US jobs report was disappointing, however, the Federal Reserve won’t consider it important. A June hike is still by far the most likely scenario.

The main thing now will be whether Trump staves off on tariffs on the extra USD100bn-worth of Chinese imports or not.  He might wish to put more pressure on China but might also hold fire as long as the talks proceed. He said on Thursday he’ll likely meet with Chinese President Xi Jinping soon.

Next week eyes will be on the speech of the Fed chairman Powell on Tuesday, PPI on Wednesday with the expectation of 0.2%, CPI & core CPI on Thursday, with the market expecting 0.3% and 0.2% respectively

AUD

It’s been a busy week at the Reserve Bank of Australia (RBA). On Tuesday, the bank announced its May interest rate decision, leaving the cash rate unchanged at 1.5% for a record-breaking 19th consecutive meeting. This announcement was followed up by a speech from RBA Governor Philip Lowe.

In his speech, Governor Lowe said the latest forecasts “should not contain any surprises, with only small changes from the previous set of forecasts issued three months ago”. However, that’s unlikely to stop markets from estimating what the changes mean, especially when it comes to the bank’s forecasting for consumer price inflation (CPI), the primary key in the outlook for interest rates.

The Australian dollar also draws down to multi-month lows this week before rebounding on higher than expected trade data. Also to watch out of Australia next week are business and consumer confidence gauges by the NAB and Westpac on Monday and Wednesday respectively, as well as the annual budget release on Tuesday, and housing finance numbers on Friday.

CAD

Canada’s economy bounced higher than economists forecasted in February, a reassuring sign the nation is fluttered to arise from a recent soft patch in growth. Gross domestic product grew 0.4 percent during the month following a 0.1 percent contraction in January.  Economists forecasted a 0.3 percent gain. The gains were attributed to stalled oil and auto production coming back on line. “The Canadian economy hit a pot-hole to begin the year, but February’s GDP reading suggests that it was only a temporary bump in the road,” Royce Mendes, an economist at CIBC Capital Markets, said in a note to investors.

Most economists are anticipating the economy to grow by less than 2 percent for a third straight quarter to start 2018. The Bank of Canada speculates first-quarter growth of 1.3 percent, and the same in the second quarter, and 2.0 percent for all of 2018. Better-than-expected monthly GDP growth was one of the factors supporting the currency. If Friday’s employment report shows other solid numbers, the Canadian dollar could find a fresh motivation to strengthen. It would also inflame expectations that the Bank of Canada could raise rates at its May or July meetings, especially after Governor Stephen Poloz appeared to have a more hawkish tone in a recent meeting. Next week, all eyes will be on the employment change with the expectation of 19.5K, and unemployment rate with expectations of 5.8% on Friday

USD/JPY

On the daily chart, the price bounced from the resistance 110 which is the same level of 50% Fibonacci level. The price had reversed from a broken upward trend line from the low of 2011 with the 200 moving average. The pair confirmed the bearish bias after forming a harmonic pattern (AB=CD), with pin bar and engulfing candle, besides overbought on RSI. If the price could break the uptrend line from the low of 2018, we can see 107.5 level

 

AUD/USD

On the daily chart, it was a long bearish rally moving in a downward channel. The price has bounced from the support zone 0.7535-0.75. A harmonic pattern (AB=CD) is set to provide the correction way too. Followed by oversold on RSI & price action formula, the price is supposed to retest 0.7635.

 

 

USD/CHF

The pair had an aggressive bullish rally over the past six weeks, reaching the key resistance of 1.004. The price had made its way up to shape a (AB=CD) harmonic pattern, with overbought on RSI. If the price could bounce back from this level, it’ll possibly be seen at 0.98

 

AUD/NZD

On the daily chart, the price moved according to our analysis before bouncing from the support zone 1.0475-1.0545, also breaking a lower trend line followed by a break of the descending channel. The price has formed four dojis above the key level 1.0645. The harmonic pattern improves the chance of a bullish continuation. Therefore, the price is assumed to visit 1.084.

 

 

CAD/JPY

On the daily chart, the price ranges between the resistance zone 85.55-86.05 & the support 84.35. The price had shaped a double top at the previous zone but touched the support with a hammer, which indicates a return back to the sideways movement. So, any break of this zone would take the price higher to 88.15, and any close beneath the support level would show 81.4 level.

 

 

USD/CAD

On the daily chart, the pair had a tighter movement last week with not one favour of any direction. The price reached the resistance area 1.2925-1.3 and couldn’t continue its bullish rally. This level is a high obstacle as it’s located at 61.8 Fibonacci too. The price is closely approaching the lower trend line from the high of 2015. So, if the price makes a reversal action, we can see a retest for its support zone 1.252-1.243

 

©Forex.Academy

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Forex Market Analysis

Dollar Index reaches its highest level since December 2017.

Hot Topics:

  • Dollar Index reaches its highest level since December 2017.
  • Indices return to the bullish path
  • EURAUD advances as forecasted.

Dollar Index reaches its highest level since December 2017.

The dollar index rose to 92.74 after the employment data from the United States, its highest level since December 2017. The unemployment rate fell in April to 3.9% from the 4.1% achieved in March, the lowest rate for more than 17 years. Technically, the greenback reached 92.74 and began to draw back forming a potential bearish 2B pattern.

The single currency reached the potential reversal zone, testing the support level at 1.19 from where it began to bounce. From this area, we will be monitoring long positions in the EURUSD.

The USDCHF made the same move as the dollar index, climbing to a new higher high, but it still did not touch the level of invalidation we have forecast in previous updates (above 1.0370). Short positions will be valued below the 0.9973 level, the invalidation level for short positions remains intact.

The cable, as in the case of the EURUSD pair, made a new low at 1.3488 developing a potential ending diagonal pattern. Once the breakout occurs it will be validated; we could begin to place long positions. In the meantime, we will remain alert to the movements that it carries out.

Indices return to the bullish path

The FTSE short position proposed yesterday has been invalidated when its price has been rejected at the lower edge of the rising wedge, drawing a bullish movement. For now, the index is in our potential reversal zone so we will maintain our neutral position.

The DAX 30 continued moving bullish in the current session with all eyes on the next psychological resistance at 13,000 points. The invalidation level is 12,400 pts.

 

 

EURAUD advances as forecasted.

The cross continues moving on the bearish trend we have been forecasting since January and out of which we have been profiting when we took short positions at 1.6084. It is time to move our stop-loss to break-even, and possibly, take partial profits.

 

©Forex.Academy

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Forex Market Analysis

Non-farm employment change

News Events

The last payrolls reading of 103k looked very disappointing, tomorrow’s forecast was set to 190K

This Job creation number is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. It is also considered to be a gauge to inflation for accelerating the rate.

Source: https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

“Our great financial team is in China trying to negotiate a level playing field on trade! I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!”. Trump tweeted to calm down the atmosphere in the trade war

On the other hand, Japan’s economic recovery has been impressive, as the economy has expanded for eight quarters in a row. However, the economy experienced a slowdown in the first quarter of 2018

 

The weak data has raised doubts on whether the Bank of England will increase its rates at next week’s rate meeting, with the possibility of a rate hike reaching 20%, compared to 90% at the beginning of April. Most economists expect the BoE to delay a rate hike until the second half of the year with August or November being the most likely months for a rate hike.

 

Trump announced this week that he had expanded exemptions on the tariffs for Canada and Mexico for another 30 days. The exemptions come at a perfect time, with the US, Canada and Mexico involve in negotiations a new NAFTA trade agreement. The talks have made significant progress, but the critical pact remains a stumbling block. It is likely that a tentative agreement will be repeated, perhaps later this month. The Bank of Canada has announced strong hints that it plans to raise interest rates later this year, but policymakers would like the NAFTA issue to be resolved before the next rate hike.

 

GBP/CHF

As mentioned before in our analysis at the beginning of the week, on the 4-hour chart, the price has shaped a double top reversal pattern bouncing from key resistance 1.3825. The price has then rebounded from the broken up channel, followed by breaking the upper trend line. A harmonic pattern (AB=CD) has boosted the downward possibility.

Also looking at a divergence in RSI, the price is supposed to continue its bearish movement to retest 1.346 then 1.334.

 

 

AUD/USD

On the daily chart, it was a long bearish rally moving into a down channel. The price has bounced from the support zone 0.7535-0.75. A harmonic pattern (AB=CD) is set to provide the correction way too, followed by oversold on RSI, the price is supposed to retest 0.7635.

 

 

EUR/CHF

On the 4 hour chart, the price closes under the key resistance 1.2. The pair began to weaken below this level forming a triangle which has been broken down. The 1.2  level is a combination of tighter resistance (as it was a protective limit from the SNB), the broken uptrend, and the high edge of the upper channel on the daily timeframe, followed by divergence on RSI.

The price is now located at the upper trend line from the low of  2018. If the price could go further with breaking it down, we may see 1.192 level, and then to 1.187.

 

©Forex.Academy

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Forex Market Analysis

EUR Moving Sideways, UK PMI Services Rebound, and DAX Bearish

Hot Topics:

  • UK PMI Services rebound from the lowest level for 21 months.
  • DAX is moving bearish as commented previously.
  • The Euro stagnates while waiting for employment data release of the United States.
  • EURCAD: Follow-up of the bearish cycle continuation.

UK PMI Services rebound from the lowest level for 21 months.

Business activity in the United Kingdom increased modestly in April reaching 52.8, bouncing from 51.7, the lowest level recorded 21 months ago. Chris Williamson, Chief Business Economist at IHS Markit, noted that “The economic growth rate remained decelerated moderately at the start of the second quarter.” Finally, he added that “the performance of the economy has continued to deteriorate”.

The FTSE 100 index has reacted downwards from our potential reversal zone, breaking down the rising wedge pattern, where we are already positioned short (Suggested in advance to our premium members).

The pound continues with the bearish bias consolidating below 1.36. We still expect sterling to make a new low in the area from 1.35 to 1.3481. The level of invalidation of the bearish bias is above 1.365.

DAX is moving bearish as commented previously.

The DAX 30 follows the bearish bias in a similar way the FTSE 100 did. This corrective move was also commented to our subscribers in our previous updates. We expect the German index to move down to the 12.622 pivot level, which by traditional technical analysis, should switch from resistance to support.

The Euro stagnates while waiting for employment data release of the United States.

The single currency is moving in a range between 1.195 and 1.20 pending the employment data that will be published tomorrow by the U.S. Bureau of Labour Statistics. The EURUSD pair could make a new lower low, likely near to 1.190, from where it could bounce up to 1.207.

The USDCHF is forming a double top pattern, which would be activated if it breaks below 0.995. By inverse correlation with the EURUSD pair, and considering that it still has space to make a new lower low, the Swiss currency could make a higher move as a buyer trap or 2B Pattern.

EURCAD: Follow-up of the bearish cycle continuation.

On April 20th we commented to our subscribers that the cross EURCAD had a new lower low to develop, whose target could be in the area from 1.54 to 1.5310. Today, we see that the cross has reached our forecasted area. Now we should start to take profits and wait for the price action to show a new trading opportunity.

EURCAD updated:

©Forex.Academy

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Forex Market Analysis

FOMC statement

 

FED Interest Rates

The Federal Reserve kept interest rates unchanged on Wednesday, as expected, but indicated that inflation was nearing its 2% target, lining up a further rate hike at its next meeting in June.

The dollar went down against other major currencies. Position adjustments were discouraged ahead of the statement on the expectations of more hawkish monetary policy.

The statement declared that inflation had approached the Fed’s 2% target, but there was no indication that it was accelerating. It also mentioned the word “symmetrical” twice in the statement, referring that it will not let inflation run above target just because it had previously run below target.

“The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate,”  said the Fed in its statement. “Inflation on a 12-month basis is expected to run near the Committee’s symmetric 2 percent objective over the medium term.”

A CIBC spokesman said that they expect the PCE to run a bit above the expected 2% target level, but they thought that policymakers appear to be trying to cool down expectations that such a surge would guarantee a faster pace on rate hikes.

Eyes will also be on Non-farm employment change which will be released on Friday

 

EUR/USD

On the daily chart, the price has cut its silence to eventually break the sideways movement with breaking through the upward channel & triangle. The existence of the descending trend line from the high of 2008 played a big role in this bearish way. The pair had no mercy with the support zone 1.2085-1.2155 to close below it. The price is now located on the 1.1911 support, together with its RSI in oversold condition.

If the price could bounce from this level breaking through the lower trend line as shown, it may reach the previous zone again. If the price continued going down, we may see the 1.173

 

GBP/USD

For the tenth day in a row, the price forms bearish candles, breaking through support zones. The price initially bounced from its resistance level at 1.4335, then closing under the wedge &  first zone 1.4055-1.396.

The price eventually broke through the second zone 1.373-1.3645 & the upward trend line from the low of 2017. The pair is now located at its 200-day moving average, also with its RSI in the oversold area. If the price reverses from this area, it could retest 1.373. If not, we can see that the way is wide open to 1.33

 

AUD/CAD

The pair had seven consecutive bearish weeks,  finally reaching its support zone at 0.9615-0.959. The pair bounced from the upward trend line from the low of 2015. The price also reached the broken descending trend line from the high of 2018, with its RSI in oversold condition.

If the price could break-up through the descending trend line from the high of April as shown, it could have its way back up to 0.971

 

©Forex.Academy

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Forex Market Analysis

Main European Indexes Reach Areas of a Potential Reversal

Hot Topics:

  • Main European indexes reach areas of a potential reversal.
  • Dollar maintains the upward trend after the Fed’s decision to keep the rate unchanged.

Main European indexes reach areas of a potential reversal.

The FTSE 100 is developing an ascending wedge pattern; the bullish movement has led the British index to reach a critical resistance at the 7,572.2 level, the area from which we expect it to begin making a corrective move, possibly down to the 7,326 pivot. Sales are considered if the price closes below the breakout candle at 7,523.

DAX 30. After the break on Tuesday, May 1st, the German index climbed above the resistance at 12,622.4, closing the session in the blue box that we have been watching since last week. This bullish movement that was developed in five waves could begin to correct in three waves, and from the end of this potential drop-down, we would start valuing long positions.

Dollar maintains the upward trend after the Fed’s decision to keep the rate unchanged.

The EURUSD continues its bearish trend consolidating below the 1.20 level; the Single Currency could fall from 1.1991 to 1.1833, where it could begin a bounce. Long positions are considered above the 1.2011 level.

The Pound has broken down the support level of 1.36, entering in the potential reversal zone, where we foresee that it could perform a lower low reaching the 1.3481 level. At this level, buyers may be waiting to place their long positions with a target around the 1.39 zone.

The Swiss franc is forming a top pattern around parity. It could form a spike, which we estimate should not exceed 1.03, where it should begin a corrective move. Our most conservative vision on short positions is once the price breaks-down below 0.9955 with a profit target at 0.9836.

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Forex Market Analysis

FOMC statement

Events of the day

Today, the key event will be the Fed’s decision on the interest rates. It is expected that the Fed will leave the interest rate at the previous level of 1.75%. At the same time, investors expect the Central Bank to take an aggressive attitude. it is recommended to pay attention to the comments of the Fed’s representatives, which can point to further rates of tightening the monetary policy. But that won’t prevent traders from focusing on each line of the central bank’s policy statement for clues into the size and speed of future interest rate increases.

The Fed raised rates for the sixth time last month and promised to continue pushing them higher as long as economic growth remains steady and inflation appears to be heading toward its 2% goal, which it has undershot for most of the recovery in a reflection of weak momentum and soft wage growth.

GOLD

On the daily chart, we can see that the price has reached a key support level at 1306.3 in its sideways movement, which is located at its 200-day moving average too.

 

On the 4-hour chart, the price is moving in descending channel bouncing from the lower edge followed by a divergence on RSI. A good entry is supposed to be taken place after breaking up this channel to target 1353

SILVER

On the daily chart, the price reversed from the support zone 16.1-16.3. The price also rebounded from the ascending trend  line from the low of 2015

 

On 4 hour chart, the price is about to break up the descending trend line as shown. Followed by divergence on RSI, the price is expected to retest 17.3

AUD/NZD

On the daily chart, the price moved according to our analysis before bouncing from the support zone 1.0475-1.0545. Breaking also a lower trend line followed by breaking the descending channel. The price has formed four dojis above the key level 1.0645. The harmonic pattern improves the chance of a bullish continuation, therefore, the price is assumed to visit 1.084.

 

©Forex.Academy

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Forex Market Analysis

GBPUSD Weekly Analysis (week of April 30th, 2018)

Update to original trade idea/signal on April 18th, 2018

GBPUSD

The GBPUSD pair continues to drive lower and break various trend lines and important harmonic value areas. The thrust down has been quite impressive but should not be expected. For over a year and a half, this consistent drive up has failed to provide any honesty and integrity in the move. The only way to find honesty and integrity in such a drive higher is for the previous value areas to be tested; and that has not happened.

Consider this: the most recent swing high made on the 17th of April and the swing low of this trend back on October 7th of 2016 has failed to even show a test of a 50% retracement. In fact, no swing high from that low has yielded a test of a 50% retracement. Some analysts would say that is evidence of a strong trend. No doubt! It is strong! But it’s also void of any honesty. And we will see that move happening soon. The 50% retracement in this swing is the 1.30 value area, that’s a whopping 1300 pips from the most recent swing high.

We are seeing more and more confirmations of a lower drive in the GBPUSD pair, and most importantly is the current price action that shows us trading below an extremely important uptrend line.

And a note to new traders: Be very careful trying to go long on this pair, especially if you are using oscillators to signal your long entries. Oscillators can remain AND DO REMAIN in overbought/oversold conditions for an exceptionally long time. 

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Purchasing Managers Index reports

News and events

Today both the UK and the US release Manufacturing PMI reports. The poor performance of the economy in the first quarter restrained expectations that the BoE will raise rates at the upcoming May rate meeting, as a consequence of a disappointing 53.9 manufacturing PMI.

Most analysts expect the BoE to hold rate hikes until the second half of the year, with August or November being the most likely months for a rate hike.

There is a rising sentiment that the Federal Reserve will raise interest rates four times this year, although Fed policymakers continue to project a total of three increases in 2018.

The European Central Bank last month forecasted a 2.4 percent growth this year. However, some economists worry that more structural factors are at play, which could dampen future growth.

A further factor is that the impact of the European Central Bank’s quantitative easing policy may have begun to fade away. Also asset purchases have been declining from €80bn a month in 2016 to €30bn.

Eyes will be on gov. Lowe speech after declaring the rate statement of reserve bank of Australia

And also the GDP of Canada followed by the speech of gov.poloz

EUR/CHF

On the 4 hour chart, the price closes under the key resistance 1.2

The pair began to weaken below this level forming a triangle which has been broken down. The 1.2  level is a combination of tighter resistance (as it was a protective limit from the SNB), the broken uptrend, and the high edge of the upper channel on the daily timeframe. Followed by divergence on RSI, the price is expected to go down to 1.192, and then to 1.187

AUD/USD

On the daily chart, it was a long bearish rally moving into down channel. The price has reached a support zone 0.7535-0.75, followed by 88.6% Fibonacci level. The down channel is considered a continuous pattern for getting back up again. A harmonic pattern is set to provide the correction way too. Followed by oversold on RSI, the price is supposed to retest 0.7635

 

GBP/CAD

The pair is moving in an upward channel on the daily chart,  reaching its lower edge. In the same level with the support zone 1.778-1.7645. The price is located too in the broken lower trend line from the high of 2018. Followed by a flag that enhances the bullish bias. So, the price is expected to get back up again to retest 1.8335

 

©Forex.Academy

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Forex Market Analysis

A brief outlook on major currencies

News summary

Governor Stephen Poloz declared before a parliamentary committee. Poloz was cautiously optimistic about economic conditions. He said that he expected the economy to be improved after a disappointing first quarter that inflation would push above BoC’s target of 2% later in 2018. The bank maintained the rate at 1.25% last week but is expected to raise rates in May. Policymakers would like to see the NAFTA negotiations’ outcome before making any rate moves. The talks have made significant progress, raising hopes that it will be announced an agreement soon.

Steady growth in the U.S and rising inflation expectations should have further gains in the dollar as investors are convinced that the Federal Reserve will use the May meeting to prepare the market for a June hike. Every U.S. policymaker who has spoken this month was in favour of more hawkish.

The latest economic data released show inflation pressures are rising and will lead the Federal Reserve to raise rates maybe four times this year, economists said.

as investors are heavily expected for hawkishness.

Economists disused predictions that the Bank of England will increase interest rates next month after two weeks of disappointing data and the doubts of Mark Carney following a weak first-quarter GDP report on Friday.

The European Central Bank and the Bank of England have studied the threats that Brexit causes to financial services.

The Bank of Japan left all its monetary policy settings on hold as had been universally assumed.

At a press conference a month or two back, Bank of Japan Governor Haruhiko Kuroda linked the end of Qualitative and Quantitative Easing (QQE) and the BoJ achieving its 2% inflation target sometime in 2019.

The Swiss franc remains highly valued. Inflation remains low. In this environment, the Swiss National Bank (SNB) is continuing t its expansionary monetary policy

 

EUR/JPY

On the 4 hour chart, the price has rebounded from the resistance 133.2 which is the same level of the 50% Fibonacci. There are many indicators that the pair is moving through, and bears are adding up. The price formed a reversal pattern (wedge), followed by breaking a lower trend line.

The price has shaped recently pin bar along with engulfing candle to enhance the bearish bias. So, it is expected to go down to 131.25 level

 

GBP/CHF

On the 4-hour chart, the price has shaped a double top reversal pattern bouncing from key resistance 1.3825. The price has, then, rebounded from the broken up channel, followed by breaking the upper trend line. A harmonic pattern (AB=CD) has boosted the downward possibility

In addition looking at a divergence in RSI, the price is presumed to go down to 1.3485 level

 

NZD/USD

On the 4-hour chart, we can see a strong bearish momentum until some walls appeared, to stand against them a little bit. The price has reached the support 0.7035 which is the same level of 61.8% Fibonacci. A lower trend line had been broken recently, which provides a little correction on the way. Looking at the divergence in RSI, the price is expected to retest 0.7155 level

 

EUR/GBP

On the daily chart, the price is moving sideways for the last six months

The pair had a false break down at the key support level 0.867, to get back up again with well price action (engulfing candle). The price has recently broken a downward channel which is considered a continuation pattern too. With divergence in RSI, the price is supposed to continue its sideways movement to reach 0.893

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Indices: Bull traders still could have space to go up?

Hot Topics:

Monitoring the indices alignment before a correction.
Euro group: weakness will continue against its main pairs.

Monitoring the indices alignment before a correction.
As we have said in

Hot Topics:

Monitoring the indices alignment before a correction.
Euro group: weakness will continue against its main pairs.

Monitoring the indices alignment before a correction.
As we have said in

Hot Topics:

  • Monitoring the indices alignment before a correction.
  • Euro group: weakness will continue against its main pairs.

Monitoring the indices alignment before a correction.

As we have said in previous daily updates, the markets are correlated, and big moves occur when they are all aligned. The FTSE 100 continues making a bullish extended cycle and is near to reaching critical levels for a reversal (7,500 to 7,600 area.)

In this session, for the fourth time, the DAX 30 couldn’t soar above the critical resistance level 12,622. It is likely that the German Index climbs up above the resistance before we expect it to fall.

Finally, as we can see, the NIKKEI 225 could still reach the area between the 22,620 to 22,800, before starting a corrective move. In conclusion, Indices still have space to see a new high, but we expect limited bullish moves.

Euro group: weakness will continue against its main pairs.

The Euro currency is developing a bearish move after the rally that started in 2017. The EURUSD pair continues the bearish cycle reaching the first blue box, testing the 1.2071 level. Before the Employment data release in the US, we expect a downward continuation to the zone between 1.1869 to 1.1815. From this area, it could start to bounce but it is too soon to foresee that move.

Looking at the Euro crosses, EURAUD is moving as we anticipated in our last Short-Term Pick (24th April), We expect the price to drop down to the region between 1.5748 and 1.5650. Invalidation level is at 1.6192.

EURCAD could not reach the 1.5811 zone; this situation makes us think that the bearish force could accelerate to our target level which is 1.54.

On the other hand in the money market, the USDCHF pair is still on an upward trend which is near to completing the bull cycle. In the zone between 0.9943 to 0.9993, the pair could make a new connector, then, start developing a bearish cycle.

The Pound has dropped to the 1.375 level, from where we expect the cable to start a bounce and make a consolidation move. The retracement could reach the area between 1.39 to 1.40. Invalidation level is at 1.4246.(c) Forex.Academy

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Forex Market Analysis

No change on interest rates in the ECB Meeting

News

Draghi stated that Eurozone area growth is “solid and broad-based”, then he continue saying that “the ECB didn’t discuss plans for its June meeting”. The ECB kept rates unchanged at its meeting earlier, while inflation has risen sustainably close to its target of 2%.

“The RBA is the furthest away from hiking rates amongst any industrialized countries,” said Michael Kushma, chief investment officer for global fixed income at Morgan Stanley in an interview in Singapore. “That could allow Australian bonds to continue to do well versus U.S. bonds and other Group-of-10 government bonds.’’

Rising U.S. yields and the expectations of rate hikes by the Federal Reserve this year have enhanced the dollar in recent sessions. Expectations of higher interest rates are making the dollar more attractive to investors.

The bank of Japan’s two-day meeting concludes tomorrow.  For all practical purposes, there is no chance of a change in policy. At last week’s G20 meeting Kuroda made it clear that an aggressive attitude is needed for some time. He was quoted in the papers saying, “There is still a long way to achieve the 2% inflation target, but risks are skewed to the downside.”

 

EUR/CHF

Swiss national bank was lately protecting CHF price at 1.2 Euro. Every time the price had reached this level it directly pulled the trigger. Until January 2015 when the SNB released the preservation of this level, which made the price suffered a downward movement of more than 2000 pips!. So, this key level became a strong resistance after being a secure support.

As we see on the daily chart, the price rebounded from this level. Along with reversing from the upper edge of the upward channel. Also, the price couldn’t effectively break the upward trend line connecting the lows of the August-17 to January-18 movement. With its RSI in overbought levels, the price is expected to go down to 1.1815-1.169

 

CAD/CHF

On the daily chart, the price rebounded from the lower trend line from the high of 2007. It’s the same level of the broken uptrend from the low of July 2017. With a combination of key resistance level at 0.7695, 61.8% Fibonacci, & B level of the harmonic pattern, besides forming a new harmonic pattern (BAT). Finally, the chart shows an overbought condition in the RSI, so the price is expected to move bearish to retest 0.75

 

 

EUR/AUD

On the daily chart, the price has reversed from the key resistance 1.614. This creates on the pair two reversal patterns: double top & wedge. It presented also pin bar & divergence in RSI, the price is expected to go down to the support zone starting with 1.585

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EURUSD after ECB press conference is moving as was planned.

Hot Topics:

  • ECB decides to keep the interest rate unchanged at 0%.
  • FTSE continues its way to reach new highs.

ECB decided to keep the interest rate unchanged at 0%.

The ECB in its April monetary policy meeting has decided to keep the interest rate unchanged. As we expected, in the past week, the Euro group has continued its weakness. In the EURUSD pair, our central vision continues being bearish at least till the 1.20 zone.

The inverse correlation continues acting between EURUSD and USDCHF. The bullish trend in the Swiss currency remains very sharp, and our eyes are placed in the 0.999 to 1.02 area, from where the pair could react to the downside.

DAX 30 stays on a sideways movement without enough volatility to advance above the pivot level 12,622. We expect a new low near to the blue box area before to the German Index sees new highs.

FTSE continues its way to reach new highs.

The FTSE 100 in today’s session moved mostly upward, struggling to reach a new high with no success.  Consider that it is still testing the 61.8% Fibonacci retracement level of the bearish move that started in the second half of January. A test in the blue region is expected before making a new bearish leg.

As we said in the previous Daily Update, the GBPUSD pair is making a sideways movement before continuing its bearish cycle. The invalidation level is 1.4261, and the cycle target is 1.3815.

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XAUUSD long term short signal

Monthly and Weekly charts essential for determining an intraday bias. In order to identify a bias, a thorough analysis must be done using as little analysis as possible. Simple is better when it comes to a long-term forecast (forecasting over a series of weeks or months).

Monthly Chart

This is an extremely bearish candlestick on the daily chart, a firm inverted hammer with excellent selling conditions on the Composite Index.

Weekly Chart

The weekly chart also shows some significant bearish sentiment ahead. Price is very near a pivot in time (red vertical line). More importantly, the 1326.24 value area is a natural middle harmonic, and XAUUSD has failed to trade above it on the current weekly chart. Additionally, the wedge that XAUUSD has been trading is becoming weak: the current price level in relation to both the Composite Index and the Composite Index and the RSI indicates a very high probability of that bottom wedge line being breached.

Near-term target: 1282.68 value area.

Long-term target of a return to the 1239.13 value area.

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EURAUD short Signal

Fantastic conditions have been met for a short signal on the EURAUD pair.

EURAUD

Price is currently a few days before a pivot in time (red vertical line). Price has also been in a firm short-term uptrend over the past 9 days, which itself is a little extended. There is a beautiful bearish candlestick on the daily chart. Additionally, the RSI and CI are in a mirrored structure, with the CI in extremely overbought conditions. Target area should be the 1.594 zone.

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April 25 – Global Stocks Slips as Bond Yields Rises above 3%

S&P 500 – Daily Outlook

The U.S. stock market index SPX is trading at 2,631.25, down -4.25 points and -0.17%. Recalling our previous update, the index was

S&P 500 – Daily Outlook

The U.S. stock market index SPX is trading at 2,631.25, down -4.25 points and -0.17%. Recalling our previous update, the index was


S&P 500 – Daily Outlook

The U.S. stock market index SPX is trading at 2,631.25, down -4.25 points and -0.17%. Recalling our previous update, the index was trading in an overbought zone below 2,680 before falling down. It has already completed 61.8% retracement, and it’s likely to face support above 2,616.


Support     Resistance
2619.84     2670.44
2604.21     2686.07
2578.91     2711.37
Key Trading Level: 2645.14


Nikkei – Daily Outlook

Japan’s Nikkei dipped -62.80 points to trade at 22,215.32 on Wednesday. Most of the selling trend began in response to a weakness in the Wall Street soured risk sentiment. While the investors focused remained on rising bond yields.

Technically, the index has formed a double top pattern up at 22,350 which is likely to hold Nikkei below 22,350. The 50 periods moving average is suggesting a bullish bias with a significant support at 21,850.


Support     Resistance
22184.88      22303.38
22148.28      22339.98
22089.03     22399.23
Key Trading Level: 22244.13

That’s pretty much it for now. I hope you are ready for some action tomorrow in the wake of ECB policy decision. European Central Bank is due to release the monetary policy with wide expectations of no change in minimum bid rate. However, the press conference will be a key market mover. Don’t forget to watch it.

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German government cuts its growth forecast for 2018

Hot Topics:

  • German government cuts its growth forecast for 2018.
  • FTSE 100 falls dragged by mining sector stocks.

German government cuts its growth forecast for 2018.

The German government reduced its forecast for 2018 growth to 2.3% from 2.4%. This growth correction happens after the IFO business confidence index was published, which has fallen for the fifth consecutive month in April. Despite the cut, the Economy minister Peter Altmaier said: “Germany is doing well economically. Actually, we are doing very well”.

In this context, DAX 30 is making a bearish corrective move, which could extend to the area between 12,180 and 11,930 pts before it continues its bullish trend. Invalidation level is below 11,792.4.

The EURUSD moved lower and lost its 1.22 level, looking for the 1.215 to 1.207 levels. We keep in mind the ECB Monetary Policy meeting where we don’t expect changes in the interest rate. In case the Euro rises above 1.224, our current bearish bias in the common currency will change to a bullish bias.

By inverse correlation, the USDCHF pair continues moving bullish, surpassing the maximum registered yesterday. The current situation makes us think that the Swiss currency could build a sideways pattern and be making a corrective move before continuing with its trend. The invalidation level is in 0.95774.

FTSE 100 falls dragged by mining sector stocks.

The FTSE 100 moves bearish in the last trading hour and drops more than 0.70% in the session, dragged mainly by the mining sector stocks, where metals have moved away from their annual highs. The leading British index could extend its falls to the 7,100 level, from where it could resume the upward trend. The invalidation level remains at 6,971.8.

The pound sterling has rejected the level of 1.40 thus forming the pivot level. After the fall recorded in the last trading session, we expect a recession to the area of 1.407 to continue the previous bearish movement with a target between 1.38 to 1.375. Invalidation level is located at 1.4246.

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US-China trade war eases

News comentary

US-China trade tensions ease as the US is set to send a delegation to Beijing for negotiations next week.

Details are still awaited from Trump on an Chinese imports subject to tariffs, but Trump is likely to hold fire for now while negotiations go on. This makes the dollar climbing higher

While the risk of a trade war is easing, the risk of a longer-lasting US-China tech war is on the rise.

The strength in the dollar this month is posing a major risk to trades from stocks to currencies to commodities

 

USD/CAD

On the daily chart, the price has reached supply area (1.243-1.252). which is also 61.8% Fibonacci. The price formed a flag that is considered a continuation pattern. After reaching its oversold zone in RSI & breaking the descending trend line connecting the highs it showed doji & engulfing candles, the price is expected to move up to the first target at 1.292

 

 

EUR/USD

On the daily, the price had broken the up channel continuing with penetrating down the triangle

Taking into account that the price has rebounded from the lower trend line from the high of 2008

These all make the probability of bears higher with the expectation of its price to reach 1.215-1.2085

 

 

GBP/USD

On the daily chart, the price has rebounded from the key resistance breaking the upper trend line & the support zone 1.406-1.3965

The price formed two reversal patterns with wedge & double top

With confirmation of divergence in RSI, the price is supposed to continue going bearish down to the next support zone 1.373-1.3645

 

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Time for a new Correction

Hot Topics:

  • Is it time for a new Indexes’ correction?
  • US Dollar can’t continue its rally against their main pairs.

Is it time for a new Indexes’ correction?

The FTSE closed the session near our blue box, the area from which we expected that the price would make a corrective movement at least down to 7,326.  It could even be down to the 7,000 pts level.

 

The DAX closed the session testing the 12,622 resistance, failing once again in its attempt to strike the resistance. The pattern left at the end of the session looks like a double top pattern. If the price breaks down at 12,465.5, the target level will be 12,294.

US Dollar can’t continue its rally against their main pairs.

The Euro stopped its correction despite the positive economic data in the US. Consumer confidence increased in April, at the same time, the New Homes Sales (MoM) in the US advanced 4% in March, the highest level for four months. We think the corrective move in the Euro has paused, waiting for the ECB Monetary Policy decision. As long as the price moves below 1.2476, our bias remains bearish.

 

The pound has dropped below the psychological level of 1.40 and is now making a pullback looking to recover the previous zone. We will wait and expect the beginning of its next move to take a position in the GBPUSD pair. Our primary vision is that price could make new lower lows, to reach even below 1.37 level.

 

The CHF climbed up to the 0.98 level from where it has been rejected. It is likely that the Swiss currency makes a new high in 0.9825 before starting a bearish correction. The target is between the 0.965 and 0.9720 zone at least. The invalidation level of the current bullish cycle is 0.9577.

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Daily Market Update: Bond Yields approach 3%

News

Dollar bulls looking for a breakout are finally finding support from U.S. interest rates as Treasury yields rise toward high levels since 2014. The yield on 10-year U.S. Treasury hits 2.99 percent.

Dollar bulls suddenly are breathing more easily, finding relief in Treasury yields that approached 3 percent for the first time in four years.

On the other hand, Australia CPI has reached 0.4% despite its forecast with 0.5%, which is not considered a benchmark of higher inflation.

EUR/USD

On the daily, the price had broken the up channel continuing with penetrating down the triangle

Taking into account that the price has rebounded from the lower trend line from the high of 2008

These all make the probability of bears higher with the expectation of its price to reach 1.215-1.2085

 

 

EUR/CHF

Swiss national bank was lately protecting the price at the level 1.2, every time the price had reached this level it directly pulled up the trigger

Until January 2015 when the SNB released the preservation of this level, which made the price suffered a downward move of more than 2000 pips!

So, this key level became a strong resistance after being a secure support.

As we see on the daily chart, the price rebounded from this level. Along with reversing from the upper edge of the up channel

Also the price has respected the broken up trend line

With overbought on RSI, the price is expected to go down to 1.1815-1.169

CAD/CHF

On the daily chart, the price rebounded from the lower trend line from the high of 2007

It’s the same level of the broken uptrend from the low of July 2017

With a combination of key resistance level at 0.7695, 61.8% Fibonacci, & B level of the harmonic pattern

Also with overbought in RSI, the price is expected to go bearish to retest 0.75

 

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April 23 – S&P500 & Nikkei Dips on Rising U.S Treasury Yields

 

 
S&P 500 – Technical Outlook
At the moment, the US stock market index SPX is trading right above a strong support level of 2,660, and a

 

 
S&P 500 – Technical Outlook
At the moment, the US stock market index SPX is trading right above a strong support level of 2,660, and a

 

 

S&P 500 – Technical Outlook

At the moment, the US stock market index SPX is trading right above a strong support level of 2,660, and a break below this level can drive more bearish in the market until 2,640. Whereas, on the upper side, the index is likely to face a resistance near 2,717.

Speaking of leading indicators, the RSI and Stochastics are holding below 20, signifying a potential for a retracement. However, the SPX seems to continue trading bearish below 2674 today.

Nikkei – Technical Outlook

During the Asian session, the Japanese stock market index Nikkei fell after the heavyweight stocks such as SoftBank and Terumo lost ground, compensating gains in financials, which roused after U.S. yields rose. Moreover, the financial stocks, that trades in the foreign bonds, soared dramatically following a rise in the U.S. yields.

Technically speaking, the NKY is trading in an upward channel which is supporting it near 21,975. The 50- periods EMA is suggesting a bullish trend whereas, the RSI is massively oversold. Nikkei is likely to stay bullish above 22,166 for a target of 22,240 and 22,351.

Good luck & have an awesome day!

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Markit PMI release: Eurozone growth stays lower, and the US rises solidly

Hot Topics:

  • Markit PMI release: Eurozone growth stays lower, and the US rises solidly.
  • Main European indexes closed with gains.

Markit PMI release: Eurozone growth stays lower, and the US rises solidly.

After the publication of Markit PMI data from both the Eurozone and the United States, we see two opposite sides of economic dynamism. On the one hand, the Eurozone economy remained unchanged in April compared to March, maintaining the sector index of 55.2; manifesting a sense of stagnation in economic growth. Chris Williamson, Chief Business Economist at IHS Markit, said: “The decline in January’s high is neither surprising nor alarming.”

On the other hand, in the United States, the private sector is showing signs of robust growth in both the Manufacturing industry and the Services sector. The Manufacturing PMI Index grew to 56.5 in April, the highest level in 43 months, above the 55.6 reported in March. Likewise, the service sector reported an increase in activity that reached 54.4 in April, compared to the 54 published in March, the highest level reached in two months.

The Euro has broken below the triangle pattern that was respected until last week. Currently, the pair is testing support at the psychological level of 1.22. We keep our bearish vision with the target between the 1,215 and 1,207 area.

 

The pound for its part, after having broken below 1.40, we expect a bearish continuation to the levels of 1.379.

 

The CHF, which is correlated inversely with the common currency, gives us signs of bullish continuity, being able to bring the price up to 0.9836 before making a corrective move.

Main European indexes closed with gains.

The FTSE 100 continues to advance in a rising wedge pattern towards the blue box area between the levels of 7,456.3 to 7,523. From this zone, it should react to form a potential new bearish leg.

 

The DAX 30 is again looking to overcome the 12,622 pivot level. If it does overcome it, the movement could reach over 13,000 pts.

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Weekly Update:markets on a positive evolution

Weekly Update / April 23rd – 27th

Macroeconomic Outlook

Last week closed positively since both indexes closed positively due mainly to:

  • Strong Quarterly Results from companies
  • Less relevance in regards to the risk factors that have been influencing the markets lately
Geopolitical tension has been reduced from:
  • That punctual attach from the USA over Syria
  • New tariff barriers have not been announced from both USA & China
  • The Technology sector has recovered following Netflix results

The increase in commodity prices which has induced a drop in bond prices

  • 7/8 basis points increased in both American and German bonds

We expect that markets to continue with a positive evolution from the past two weeks

  • Mainly because of a smaller relevance of geopolitical risks and more focus on the macroeconomics and business results
Macroeconomic Data
  • We do not expect them to be outstanding but solid enough to favour the financial markets
  • Relevant Macro Data

o   Consumer Confidence in USA

o   Business & Consumer Confidence + PMIs in the Eurozone

  • Will follow the trend from recent weeks

o   Won’t touch the highs attained during this year, but data will remain within fairy good levels which will confirm the expansive economic cycle that both USA and the Eurozone are enjoying.

o   USA GDP / Previous – 2.9% – Forecast – 2.2%

  • Normal to be weaker in the first trimester in USA and then recovers in the second one
  • Not a brilliant macro but good enough not to damage the markets

o   ECB Meeting on Thursday

  • Draghi will keep its expansive monetary policy due to
  • Protectionism
  • Strengthening from the Euro against the US Dollar
  • Triple P Strategy in a monetary policy that is giving good results
  • Persistent
  • Patient
  • Prudent
  • Hence, the macro environment can be a support for the upswing in financial markets along with the positive quarterly results reported from companies

o   Companies that have reported results from the S&P 500 so far have announced an increase in the profit per share of 18 %, higher than the 17% expected

o   Solid outlook from the biggest American banks last week

o   We expect this positive climate to hold this week

  • In USA big technologies company such as Alphabet, Google, Amazon or Facebook among others report results this week
  • Good results are expected

In summary, geopolitical risks (protectionism, trade wards…) cannot be forgotten. However, they hold less importance and focus this week on the good business results.  That will confirm the validity of the current cycle of economic expansion and will offer support for prices so that markets may remain in the bullish trend of the last weeks.

 

Technical Outlook

USD Index

Daily Chart

It is possible to appreciate how the USD Index is not only below the 200 EMA but also broke below the weekly support that has been retesting in the recent weeks and which has not been successful so far. In the short term is facing a bearish trend line caused by its recent devaluation.

It did not break the support which has been holding on for weeks, and now it is facing the key moment between a strong support and a strong resistance. We don’t mind where it breaks this week.  We’ll wait for a retest for confirmation.

USDJPY

Daily Chart

Moving into the USDJPY, it has just bounced from a monthly bullish trend after doing a fake breakout and consequently bouncing back. A bullish trend could be considered since there are not big resistances ahead except its 200 EMA and the recent bearish monthly trend. In the short term, there are two resistances not very strong but that may cause a small retracement. However, the monthly support is stronger than the resistance it is locked up between.

This week it opened on the edge right below the resistance, so a close on Monday above it may confirm the bullish trend line.

 

GBPUSD

Daily Chart

GBPUSD has taken a strong change of direction. From breaking up the resistance and having a clear path upwards to heavily break the support that once was a resistance, and opening the chance for a bearish trend. We´ll wait for a retest as confirmation of the downturn.

Crude Oil

Daily Chart

Recent political events, like the recent missile attack to Syria, have created volatility in the markets and consequently, the price of oil has been on the rise. After holding to the trend line and breaking above $65 it is possible to see a retest of the recent resistances it just broke above. Without more resistances ahead, our analysis hint for the next target at $70 per barrel.

So, as expected, on Tuesday it retested both supports it previously broke. Firstly, with the daily low it retested the down trend support and with the closing price second one. Here, it confirms the retest and instantly goes up leaving the door open to $70.

DAX

Daily Chart

Regarding technical, it just broke the resistance it was holding it from weeks. Now, after a clear retest, a bullish position can be taken.

 

© Forex.Academy

 

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Daily market update: Oil prices spikes up again

Overall

Oil prices kept surging on Thursday after Saudi Arabia announced that it would be happy to see prices hit between $80 and $100 per barrel. The comment was a sign that the oil giant will seek to expand its production cuts once the 2018 deadline hits. Oil has moved up 7% this year, and it is currently one of the best-performing commodities. Oil also finds strength Provided by middle east conflict

President Donald Trump may have a problem with oil prices being “very high” as he tweeted “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

On the other hand, U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China, this move could ease tensions between the world’s two largest economies

“North Korea has agreed to suspend all Nuclear Tests and close up a major test site. This is very good news for North Korea and the World – big progress! Look forward to our Summit” Trump said, as another good indicator to cool down the atmosphere between these two counties

 

OIL

On the daily chart, we can observe that a strong upward pattern is winning all the way. As the price had rebounded from the upper trend line, provided with breaking a pivotal resistance level at 66.1.

However, it has to be expected a correction for several reasons:

  • The price has reached the broken up channel from which it has reversed two times before.
  • It has reached also the up edge of another up channel besides a divergence on RSI
  • Forming a three drives harmonic pattern along with hammer candle & two doji

So, the price is supposed to slow the wheel a little bit to retest 66.1 to 63.45

 

 

US index

Us index has been intensively bearish on Daily frame, with a sideways movement during the last ten weeks.

There are perfectly well-noticed signs indicating that prices will be up active again.

Reversing from the support level at 88.35, bouncing from the upper trend line connecting the lows, and forming a double bottom, which is a reversal pattern, to give shape to a harmonic pattern (crab).

The price is facing a strong resistance test at the descending  trend line from the high of May 2017, also with the red resistance zone (90.45-91.65).

If the price successfully breaks these levels, we can see it climbing up to its next zone (92.55-93.9). as it’s 61.8% & 78.6% Fibonacci, B harmonic level, and turn down from the high of 2017

 

 

 

USD/CAD

On the daily chart, the price has reached supply area (1.243-1.252). which is also 61.8% Fibonacci. The price formed a flag that is considered a continuation pattern. After reaching its oversold zone in RSI & breaking the descending trend line connecting the highs it showed doji & engulfing candles, the price is expected to move up to the first target at 1.292

 

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April 23 – 27: Top 2 Setups to Watch This Week – Dollar Index & Nikkei In Focus!

In this update, we will discuss fundamentals & technical setups, that are worth watching during the coming week. On Friday, the US dollar climbed to a two-week high vs. a

In this update, we will discuss fundamentals & technical setups, that are worth watching during the coming week. On Friday, the US dollar climbed to a two-week high vs. a

In this update, we will discuss fundamentals & technical setups, that are worth watching during the coming week. On Friday, the US dollar climbed to a two-week high vs. a basket of currencies as risk-off sentiment wanes.

 

US Dollar Index – Double Top Resistance

The Dollar Index soared dramatically after breaking a trendline resistance level at 89.70. Most of the buyers entered the market for two reasons:

– Firstly, the single currency Euro fell sharply to a two-week low vs. the greenback as the European Central Bank (ECB) is due to release its monetary policy decision in the coming week (on April 26) and traders seem to price in the dovish monetary policy. A drop in Euro is driving more bulls to the US Dollar.

– Secondly, the investors switched their investments from pound to the greenback after the Sterling extended losses in the wake of dovish remarks from the head of the BOE (Bank of England).

 

Dollar Index – Forecast

Technically, the index is overbought (RSI above 70) and bulls are exhausted. We may see a retracement up to 90 and 89.75 before seeing another bullish wave in the dollar. On the upper side, Dollar index can face a solid resistance near 90.55 and 90.85.

Nikkei 225 – Shooting Star Pattern In Play

The Japanese stock market index Nikkei gave up 0.1% to 22,162.24. The index grew 1.8% this week, its fourth straight weekly gains. However, the markets remained muted on Friday as investors didn’t find any solid reason to trade the Nikkei. But they do have it for the coming week.

The BOJ (Bank of Japan) is scheduled to release the monetary policy report on April 27. Investors appear to save their shots before the release of the policy rate. BOJ is widely expected to keep the interest rates on hold at -0.10%.

Nikkei 225 – Forecast

The Japanese index Nikkei is trading below a double top resistance level of 22,380. The leading indicators RSI and Stochastics are moving in the overbought zone and signaling a potential for a bearish reversal. Moreover, Nikkei has formed a shooting star below 22,385 which is signaling a neutral sentiment of investors. The breakout of 22,385 can lead the index to next resistance level of 22,985 and 24,000. Whereas, the support remains at 20950.

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The Positive Data Reported in Canada could support a rate hike soon

Hot Topics:

  • The positive data reported in Canada could support a rate hike soon.
  •  The Greenback rally continues.
  • FTSE maintain the bull trend, DAX waits for ECB meeting?

Positive data reported in Canada could support a rate hike soon.

The consumer inflation (YoY) in March increased to the highest level in three years reaching 2.3%, climbing from the 2.2% reported in February. The Core Inflation (YoY) descended to 1.4% in March from the 1.5% in February. The higher oil prices have influenced inflation to rise. On the other hand, retail sales in February have increased to 0.4% from 0.1% reported in January. The Bank of Canada maintains a 2 percent inflation target; this scenario could signal an interest rate hike soon. In the last Monetary Policy meeting, the Bank of Canada decided to maintain the rate at 1.25%.

In the technical context, a correction for the Canadian Dollar group could show soon. In the EURCAD cross, we expect a bullish movement with a target placed in the 1.58 level before making new lows.

In the same way, GBPCAD is developing a bullish retracement process that could reach 1.805 – 1.81, the area from where it could make the bearish continuation of the main trend.

The Greenback rally continues.

For the fourth consecutive session, the US Dollar saw advances compared to its main competitors. The Euro has broken down its short-term consolidation structure but has been stopped by the lower trend-line of its long-term triangle pattern.

The Pound tested the 1.40 psychological level again, from where it is bouncing. We expect a retracement to a Fibonacci level before we decide to sell this pair.

The Swissy could visit the area between 0.9765 and 0.9836 before it makes a bearish cycle.

FTSE maintains the bull trend, DAX waits for ECB meeting?

The main European indices have closed with a mixed sentiment. The FTSE 100 closes the last trading session of the week climbing above the pivot level 7,326. We expect more upsides until the 7,450 – 7,520 area before it makes a bearish leg.

On the opposite side, DAX 30 could not climb up above the pivot level of 12,622. The German index could make a new bearish leg, likely to be around the 12,100 – 12,200 area before the ECB Monetary Policy Meeting and continue the bullish cycle.

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EURUSD forecast for week of April 22nd, 2018

EURUSD

I am using Renko to analyze the current price action of the EURUSD pair. Renko very clearly shows the price action by reducing the ‘noise’ that Japanese candlesticks can often cause in a consolidating market. We can easily observe that we are forming a wedge on the chart. The consistent series of lower highs and higher lows has been a continued trend since the beginning of the year. The key identifier for a breakout at this level will be where the oscillator levels are in relation to the location of price near these wedge lines.

I think it is important to observe the behavior of the RSI and price when the price is near the upper or lower band: prices reverse if the oscillator is near an overbought or oversold condition. However, the end of the trading day on Friday showed price coming closer to the bottom wedge line, but RSI was not exhibiting an oversold condition. Neither was it oversold. Due to the nature and behavior of this bottom wedge line, we can expect the price to bounce from this area, but the bounce should be limited. There is more weakness to higher prices than there is to lower prices. A break of the wedge should be expected during the next trading week, if there is not a break, expect a continued range trade between the two wedge lines.

EURUSD

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Daily market update: eyes on Canada CPI

News

Traders are going to focus on Canada CPI, which indicates much about inflation level. The forecast estimates are  0.4% while the previous result was 0.6%. Two days ago the bank of Canada released its overnight rate, and it remained at 1.25%,  fulfilling all economists expectations.

Inflation in Canada is close to 2% as temporary factors that have been weighing on this factor have largely dissipated.

On the other hand, The Swiss franc reached 1.20 euro for the first time since the Swiss National Bank removed its cap on the currency, with growing satisfaction of the nation’s policymakers who have been struggling an overvalued exchange rate for the past decade.

Speaking about the troubles between USA & Syria, Russian Missiles Alarm Israel, adding to a risk of a Next Syria Crisis. Russia warned that there would be consequences. Only one of them was spelled out: The Kremlin said it may supply its Syrian ally with state-of-the-art air defenses. All of these circumstances may enhance safe haven assets

USD/CAD

On the daily chart, the price has reached supply area (1.243-1.252). which is also 61.8% Fibonacci. The price formed a flag that is considered a continuation pattern. As its RSI reached an oversold zone, and with doji & engulfing candles showing up, the price is expected to move up to the first target at 1.292.

EUR/CAD

On the daily chart, the price has broken the down trend line from its 2018  lows. Now, the pair broke the descending trend line connecting its recent highs and bounced from the support zone between 1.566-1.553. This breakthrough might drive it to 1.61 level, the last March 2018 top.

CAD/JPY

On the daily chart, the price couldn’t go further up. after rebounding from the main resistance at 85.55. It’s a combination between demand level & 50% Fibonacci

After reaching the overbought area in RSI and forming pin bar, the price is expected to go down to retest 83.5

 

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US Dollar Climbs Against Its Pairs

FOREX WEEKLY FORECAST

Hot topics:

  • FTSE could make a new shoulder before it sees more upsides.
  • US Dollar climbs against its pairs.
  • ADP Nonfarm Employment in Canada raises.

The FTSE could make a new shoulder before it sees more upsides.

The FTSE 100 is turning bearish losing 0.09%, in the same way as principal indices. The 7,326 level is relevant resistance to be controlled. Nearest supports are 7,164 pts and 7,030 pts.FTSE
The German DAX is also moving bearish after reaching its highest level for eight weeks, falling 0.25%. The 12,622 level has been rejected for the second time and is now the key level to watch. Supports levels to be controlled are 12,125 pts and 11,892 pts.German DAX

US Dollar climbs against its pairs.

In the same way, as it has been our central vision for the Dollar Index, once released the Philly Fed Manufacturing Index, the greenback is rising. The common currency is breaking down following the scenario proposed in our previous updates. Our vision is that the price could fall to the 1.215 level.US Dollar climbs against its pairs
After making a fake breakout, the Pound has started a bearish move losing 1.43, and now is testing support at the 1.42 psychological level.Forex Weekly Forecast

The Swiss Franc is testing resistance in the 61.8% Fibonacci retracement reaching the 0.97 level. As long as the chief falls below the 0.9699 level, we expect that the price drops to 0.96126.Forex Forecast

ADP Nonfarm Employment rises in Canada.

The nonfarm employment change, released by Automatic Data Processing (ADP), increased by 42.8K from February to March. While there were losses in finance, information, and education, they were outpaced by significant growth in the construction industry, said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. The EUR-CAD cross is raising as a corrective move of the principal bearish cycle. As long as the cross reaches 1.58, new sellers can be expected to add to short positions with their target at 1.54.ADP Nonfarm Employment rises in Canada

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Daily market overview: New Zealand CPI rose

 

News headlines

The consumer’s price index rose 0.5% in the three months, while annual inflation was 1.1%

The result was higher than expected with 0.4%

The Reserve Bank has the mandate of keeping yearly inflation between one and three percent over the medium term.

However, inflation has remained weak, and the central bank has declared that the official cash rate is likely to stay at a record low 1.75 percent “for a considerable period.”

On the other hand, After yesterday’s data of the bank of England and today’s news with the result of retail sales of -1.2%, unlike expectation of -0.5%. These all have increased concerns that the BoE might not take another rate increase later in 2018. Disappointing employment and construction data earlier this month show uncertainty for a late 2018 rate increase

NZD/USD

On the daily chart, we can see that the price respected a strong resistance zone with a straight rebound. The pair is currently moving downward, inside a sidewchannelhann between 0.718 & 0.742. The next price target is aiming at its support level at 0.718 which is exactly its 200 moving average.

NZD/JPY

On the daily chart, the price bounced from a bunch of demand levels

It has reversed from a descending trend line connecting the highs, from the resistance 79.5, and the 50% Fibonacci level

A leading hammer candle started this bearish leg, and it’s expected to go further down, to 77.65.

 

GBP/USD

On the daily chart, the price had its straight bullish way to the demand 1.4335; then, it went down with two remarkable bearish candles.

The pair has made two decisive reversal pattern ( double top & wedge), With a false break-out of the upper trendline. The price is supposed to reach the supply area (1.3965-1.4055),  located below the lower trend line, that starts at its November 2017 low, too.

 

 


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Market Update: BoC Keeps its Overnight Rate Target Unchanged

BoC release

The bank of Canada has released its  overnight rate, keeping it at the same level with 1.25% As all economists had recently expected that rate to remain unchanged.

“Inflation in Canada is close to 2 percent as temporary factors that have been weighing on inflation have largely dissipated” (source: BoC release note).

The market has its own response to slipping of the Canadian dollar, as the decision was already priced in, so most of the traders started to open short positions.

UK Inflation

On the other hand, UK Inflation Drop Poses a Challenge For Bank of England. As CPI released with 2.5% despite its forecast with 2.7%

This diagram shows UK inflation

 

 

CAD/CHF

On the daily chart, the price has reached a well demand area. As it rebounded from the lower trendline connecting the highs, also from the broken upper trendline connecting the lows, and finally the resistance zone (0.7615-0.769)

The pair had its bullish rally to approach the B point of the harmonic pattern.

After reaching 61.8& Fibonacci & moving average 200, the price is expected to go down to meet 0.759 then 0.75

 

 

CAD/JPY

On the daily chart, the price couldn’t go further after rebound from the main resistance 85.55

It’s a combination of demand level & 50% Fibonacci

After reaching an overbought area in RSI and forming pin bar, the price is expected to go down to retest 83.5

 

 

 

EUR/GBP

On the daily chart, the pair has a tight movement for seven months. Between then levels 0.867 & 0.901

The price reversed from the support level after making a false break

With two bullish candles & oversold in RSI, we should wait until the lower channel is broken up to reach the next target at 0.879

 

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CAD slides in the aftermath of the BoC statement

In today’s meeting, Bank of Canada (BoC) left its interest rate unchanged, in line with expectations. It seems that overall approach of the BoC is wait-and-see, especially with respect to future hikes.

The statement notes that policy accommodation will still be needed in order to keep inflation on target while the Bank will continue to monitor economy’s sensitivity to higher interest rates.  In regards to projections, the Bank has cut Q1 GDP forecast to 1.3% from 2.5%, sees Q2 GDP at 2.5% while raising potential output growth to 1.8% in 2018-2020 period and 1.9% in 2021. In addition, the 2018 growth has been trimmed to 2.0% from 2.2% while for 2019 growth is boosted to 2.1% from the original 1.6%.

USD/CAD rose on the headline from 1.2550 to 1.2630 as the CAD hawks were not impressed with the content of the report. However, be caution since the price has already retreated 30 pips or so. As it can be seen in the chart below, the pair has moved way above  H1 100MA and touched 200 MA. In addition to the 200MA resistance on the hourly chart, the price has almost reached 38.2% Fibonacci retracement of the big leg down. If it is able to close above 1.26 tonight, we expect another leg higher to test at least 50% or even key 61.8% Fibonacci level. The diagonal trend line, currently at 1.2730, will also act as an obstacle for bulls.

 

All in all, our advice is to wait for the price to settle down before entering any trade.

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CPI in Great Britain

CPI in Great Britain

Consumer price index has risen 2.5% in annual terms. This was surprising because 2.7% was expected. Although the intention is to reach 2%, this rapid drop in the CPI could slow down the expected increases in the price of money scheduled for this year.

There is weakness in some sectors that demand a certain degree of confidence on the part of the consumer, such as the car sales that closed the first quarter with a deceleration of 5.2%. Other sectors such as employment, seem to give confidence because of the low unemployment rate so that we will have to see how the Brexit is resolved and the complex current scenario is clarified.

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Daily market overview: busy day

Events and Volatility

A rise in volatility is expected to take place today as many announcements are going to be published

Wednesday’s main focus will be the Bank of Canada’s monetary policy announcement. We don’t expect any policy change, but the price action on  Canadian dollar tells us that investors are anticipating positive comments from the BoC. A lot has changed since their last March’s meeting. Six weeks ago, they raised concerns about lower wage and household credit growth, but since then, oil prices hit a 3-year high, retail sales rebounded, the unemployment rate declined, job growth accelerated, housing market activity improved, inflation increased, and manufacturing activity expanded at a robust rate. Both U.S. President Trump and Canadian Prime Minister Trudeau have said they are close to reaching a NAFTA deal, and, according to Mexico’s Economy Minister, the negotiation team could meet again on Thursday in Washington to start working on their issues again, and hopefully move the process forward

On the other hand, economic sanctions appear to be a very effective tool for challenging rivals in the market. A couple of weeks ago, the U.S. pushed Rusal to the brink of survival by limiting its services, banning the maintenance of its dollar accounts, and prohibiting Americans from conducting any business with the company. Although these steps may be seen as an attempt to influence the Russian position in Syria, they also make sense from an economic viewpoint.

For the first time, the Minutes revealed that the RBA board explicitly recognizes  “it was more likely that the next move in the cash rate would be up, rather than down” (news.com). This may not seem significant since the RBA governor has been stating this for some time. Still, this is the first time the board has expressed its support for this kind of view and now confirms the RBA’s bent towards a tightening bias, in line with what we observe across the majority of G10 central banks.

GBP remains in play on Wednesday with U.K. CPI scheduled for release. Price pressures are expected to ease. Investors think that the Bank of England will raise interest rates next month but they need to see data validate that view before extending the pair’s gains.

 

GBP/USD

On the daily chart, the price had done a big effort to reach a pivotal level at 1.4335

there’s a special price action with a hammer, by forming a descending wedge

If a retracement is confirmed, then it might be a correction on its way to 1.409

 EUR/CAD

On the daily chart, the price has broken the down trendline from the low of 2018

The price is located at a very sensitive area, as it reached the lower trendline connecting the highs and the resistance zone between 1.566-1.553

Any breakthrough would expose it to 1.61 level, any continuation of the bears would retest 1.52 level

 

 

EUR/AUD

The price was moving in up channel on 4H until it has broken it last Friday

The pair needs a motivating momentum to go down further, so it retested the broken channel with rebounding from the lower trendline connecting the highs as it shown.

It is  also respecting the 200 moving average, and provided us with an AB=CD harmonic pattern.

The price is expected to visit 1.5825 again then to 1.574.

 

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GBP CPI

UK CPI

The United Kingdom CPI will be released today. As always, we expect a strong movement in the price of the pound sterling. It is usual for the price to swing when the data is announced. This is due to the fact that the volume usually goes down expecting new information, which makes it possible to move the price in the opposite direction to the trend, confusing the retail participants and for savvy traders to better position themselves.

As an example of past action on this kind of news,  we can see the GBPUSD chart on March 20. The price rose before the announcement and did not start reversing until a few minutes before the announcement, leaving all the bulls out of the game.

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EZ Economic Sentiment Plunges To Its Lowest Level Since 2016

Hot Topics:

  • EZ Economic Sentiment plunges to the lowest level since 2016.
  • Pound falls after unemployment rate release.
  • Dow continues advancing with all eyes on the 25,000 pts level.
  • Expecting the Crude Oil Inventories data release.
  • Limited down movement before BoC MP decision.

 

EZ Economic Sentiment plunges to the lowest level since 2016.

The Eurozone ZEW Economic Sentiment in March dropped to 1.9, the lowest level since July 2016. The ZEW President Achim Wambach said, “The reason for this downturn in expectations can mainly be found in the international trade conflict with the United States and the current situation in the Syrian war.” 

Once the sentiment data was released, the common currency reacted dropping 0.25%. As we have envisioned, the Euro dropped from the blue box.

In the European stocks market, the German index DAX 30 continued its rally closing the session with a gain of 0.99%. The index is moving in an ascending channel; the price could still reach new highs until the 12,702 – 12825 area before starting a potential corrective move.

At the same time, the Dollar Index climbed from 88.94, the 3 weeks lowest level, advancing to its short-term pivot of 89.36. The price still is bouncing from the Potential Reversal Zone (PRZ). Invalidation level is in 88.52 level.

 

Pound falls after unemployment rate release.

The unemployment rate in March fell 4.2%, the lowest level in more than four decades. The GBPUSD pair plunged 0.31% from the highest level of the year. On the technical side, the pound has made a false breakout reaching 1.4376 and falling sharply below 1.43. We are now expecting a setup as a 1-2-3 pattern before we look to sell the pair.

 

Dow continues advancing with all eyes on the 25,000 pts level.

In the middle of the big companies earnings release, Dow Jones continued advancing, breaking up our key resistance level of 24,625 closing the session with gains of 0.59%. Our central vision is bullish with the target placed at the 25,407 level.

As result of the market risk on sentiment, the USDJPY has moved above our invalidation level (106.61), bouncing in the Potential Continuation Section (PCS); closing the session at 107.0, maintaining the bullish bias with the target placed at 108.41 level.

 

Expecting the Crude Oil Inventories data release.

Today, the weekly Crude Oil Inventory data released by the EIA is expected. On the technical side, the price is making a bullish channel in five movements. We estimate that Crude Oil could reach the 67.86 – 68.75 area where sellers could enter in action with their targets placed at 64 $/barrel.

 

Limited falls before BoC MP decision.

The most expected release for this session is the interest rate decision from the Bank of Canada. The analysts’ consensus expects that the BoC will keep its rate unchanged at 1.25%. Our vision is that the loonie could make a new low to the 1.2499 level, where it could find new buyers with their target at 1.274.

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March 17th GBPUSD Anaylsis

GBPUSD (click to maximize resolution)

The GBPUSD pair has experienced some significant uptrend moves over the past seven trading days. Yesterday certainly saw the greatest gain over that seven day period. However, signs of weakness in this move have been apparent on many time frames. If we look at the current price action, we can see a very natural stopping point for this up move. The red vertical line and the red horizontal line represent a perfect square in time and price. Gann said that when time and price are squared, changes do happen. This confluence area happened at the 1.4375 value area, which is also a natural harmonic resistance area. The GBPUSD made several attempts to find support at the inner arc near the 1.432 value area, but ultimately it crossed below and has not been experiencing much support. The Composite Index and the Relative Strenght Index also show a shared structure and both are coming off of extremes indicating overbought conditions. The first target area where we may see support is the 1.4262 level.

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Market outlook update: The euro under some selling pressure

News Events

The Swiss Franc is within striking distance of what was once one of the most heavily defended boundaries in global markets. Policy makers may start to think about an eventual normalization to sustain its price.

The euro came under some selling pressure after a report showing that German economic sentiment deteriorated sharply again in April amid concerns over heightened international trade tensions.

On other hand, Great Britain average earnings index  came at 2.8% despite a forecast of 3.0%

Analysts say that today’s economic data could lead to an increased investor uncertainty because the Bank of England had already said that a rise in wage pressures would need to be seen before a rate hike is factored in as a tool to curb inflation.

 

USD/CHF

On the daily chart, the price returned to its bullish rally today as it hits an important resistance area at 0.9645

It has reached demand zone (0.9645-0.971)

We can observe that price reached, also, the downward trend line from the high of November 2017, and the upper edge of the rising channel

If the price could jump further, it may reach 0.9785 & 0.9845

 

GBP/USD

On the daily chart, the price had done a big effort to reach a pivotal level at 1.4335

Until now there’s a special price action with a hammer, by forming a descending wedge

If a retracement is confirmed, then it might be a correction to 1.409 on its way

EUR/USD

On the daily chart, the price has respected the zone, which is located at the broken up channel from the low October 2017, and the downward trend line from the high of 2008

A perfect hammer is on its way to being confirmed, to open the gate to retest the 1.2155-1.209 levels again

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Consolidation In The Crypto Market

Cryptocurrencies have been stagnant and without many big moves to either side. The reason for that is the uncertainty abbot what happens on the tax day. We see less movement

Cryptocurrencies have been stagnant and without many big moves to either side. The reason for that is the uncertainty abbot what happens on the tax day. We see less movement

Cryptocurrencies have been stagnant and without many big moves to either side. The reason for that is the uncertainty abbot what happens on the tax day. We see less movement in crypto because, whoever wanted to pull their money out before tax date, did already, and we now see only people that hold.

BTC/USD consolidating

After the recent spike due to positive fundamental news (approval of the Muslim community), Bitcoin has its momentum slowed down. It made an attempt over an 8230 Fibonacci retracement line of resistance, but failed and is now consolidating and going slightly downwards, with decreasing volume. The price range is currently between the 50 EMA and 100 EMA on the 1h time frame.

crypto consolidation

NEO/USD bouncing off the resistance line

As we have concluded in the last analysis, neo was in a tough spot, and the most likely thing that would happen to it was the bounce off the red resistance line (shown in the graph). That is exactly what happened to it. This is a big deciding point for NEO, as indicators are “fighting” for the range and the direction of the next movement. RSI just left overbought, volume is declining, and there is a major resistance on the upside, but there are also both EMAs as support, they crossed each other, signaling a bull trend. I am more inclined towards the bear side for a bit until all the indicators get in line.

NEO/USD bouncing off the resistance line

XRP/USD forming a triangle pattern

XRP has recently spiked, after the big announcement that regarded cooperation with Apple. When that happened, XRP spiked up and broke the $0.63 resistance line, which has now become support. It bounced off of it a couple of times, forming a perfect triangle pattern, with the expected breakout from the pattern around the 19th or 20th of April. It will most likely be an upwards move, but it can’t be said with certainty. EMAs and the support line form a “defense” against triangle patter break downwards, but ultimately, people will decide.

XRP/USD forming a triangle pattern

Final word

Markets are mostly consolidating since these are uncertain times fundamentally. Everyone is waiting for a catalyst, for a reason to re-enter the market. The next few days will determine the overall short-term trend of the market, so watch out for the swing trades for now. One thing is good, and that is the increasing volume in the general crypto market.

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Daily Market overview: Currency Devaluation Game

 

News Events

President Trump accused China and Russia of depreciating their currencies, breaking from his own administration’s view that no major trading partners are currency manipulators.

Trump took to Twitter on Monday to declare that China and Russia are playing what he called a “currency devaluation game” at a time when the U.S. Federal Reserve is raising interest rates. “Not acceptable!’’ Trump wrote.

The attack added fuel to the brewing trade dispute between the U.S. and China and drew swift criticism from Russia, which the White House recently imposed sanctions on and collided with over Syria. The Bloomberg Dollar Index moved down to its lowest level since March 26 after Trump’s tweet, while Treasuries fluctuated.

On the other side, the release of China’s GDP is 6.8 % after the forecast which was 6.8% too.

Eyes will be on US building permits on 12:30 GMT

 

EUR/USD

On the daily chart, as shown, there’s a consolidation area which narrows with time until presently reached 1.2395

With a breakout of the channel from the low of October 2017 which the price has rejected

So we overview a retest to this area that will be critical as it decides whether to fall back again or it was a false break

Also, the pair’s near the lower trend line from the high of 2008 and the resistance 1.2515

 

 

On 4H chart, the price is at a crucial point as it hit the broken up channel along with lower trend line (as shown)

If there’s any rebound from these level, bears will be ready to attack

 

USD/JPY

On the daily chart, the price has accomplished a correction to the 38.2% Fibonacci level which is located at the same resistance level 107.8

Last February, the pair had broken the upper trend line from the low of 2011, maybe it has not enough potential to retest it now

The price has formed a very decisive continuing pattern (flag), that maintain the bearish bias

On 1H frame, the price broke the lower trend line which is considered as wedge too (reversal pattern)

 GOLD

On the daily chart, Gold is struggling to break through the resistance level 1362.4

As we see, there are many tops that couldn’t make some bullish noise

As the price is walking through a rectangle, there is a possible correction waving ahead. 

On 1H frame, the price broke the trend line that connected the higher lows,  then broke up the rising channel  rebounding from the resistance 1348.9.

 

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Dollar Index Drops, Sterling jump to its max, Wall Street is moved up by Earnings

Hot Topics.

  • Dollar Index drops despite the increase in Retail Sales (MoM) in March.
  • Sterling strikes the highest level of the year for a second time.
  • Japanese Cabinet says the economy is “recovering moderately.”
  • Watching the Copper bullish cycle.
  • US Indexes climbs are boosted, aided by the companies earnings reports.

Dollar Index drops despite the increase in Retail Sales (MoM) in March.

The US economy continues showing strength signals about its economic growth. This time it was the retail sales report shift that advanced up 0.6% from February 2018 and 4.5% (YoY). Sales from the vehicle and parts dealers boosted 2% in March. Despite this good news, the US Dollar Index fell 0.40% touching its PRZ. While the price continues above the 88.52 level, we will consider the chance of a new bullish cycle.

The Euro, which represented more than 50% of the Dollar Index, closed the session with 0.41% gain. The pair still has almost 40 pips of space to reach its PRZ, previous to the ZEW economic sentiment data release. Meanwhile, the Index still could maintain its trading range. The invalidation level of the reversal scenario is above 1.2476.

 

Sterling strikes the highest level of the year for a second time.

The Pound is the best performing currency of the year with an advance of 6.24% (YTD). Not even the uncertainty driven by the Brexit negotiations or the negatives consequences of the severe weather conditions that have impacted some sectorial economic indicators have been enough to slow the Pound rally. In our last Daily Update, we saw a potential top and reversal pattern; our vision is that we could witness a 2B Pattern. In this case, we will be attentive to a breakout candle before to pulling the trigger.

 

Japanese Cabinet says the economy is “recovering moderately”.

The Cabinet Office of Japan described Japan’s economic growth as a “recovery at a moderate pace”. The private consumption and business investment in exports are “picking up”. Concerning the tariffs tensions between the US and China, the Cabinet economists see it as a risk factor they will observe closely. The USDJPY pair fell 0.31% to our PCS (Potential Continuation Section) as a bearish wedge pattern. If the price remains above 106.61, our vision continues to be bullish.The Pound/Yen cross is testing the second monthly resistance pivot level; however, it still could make new highs before a deeper correction. Our vision is that the cross could climb to the area between 155.8 – 157. Selling positions are considered only if the price breaks below the 152.95 level.

Watching the Copper bullish cycle.

Copper is developing a bullish cycle since January 2016. It is currently in an ascending expansive triangle pattern. In the long term, the red metal has “market debt” in the 3.44 level. In the short-term, as long as the price keeps above 2.98, the trend is bullish. If the price moves down to 3.01 – 3.03, copper could find new buyers at those levels, with their targets at around 3.20 – 3.21 and its extension in the 3.25 – 3.28 area.

US Indexes climbs are boosted, aided by the companies earnings reports.

This week,  the big companies started their quarterly earnings release. The optimistic analysts’ expectations came under the assumption that results are coming mainly from activities made before the tariffs conflict between the US and China. Dow Jones 30 closed the first trading session of the week with an advance of 0.44%. The Dow is testing the key level 24,620 and we are watching from our short-term picks. The invalidation level is below 24,090.

In the same way, Nasdaq 100 closed the session advancing 0.43%. The Technological Index is moving in an ascending triangle pattern. Mid-term, we expect that the price will hit the 7,090 level. The invalidation level for the bull market scenario is below 6,398 pts.

© Forex.Academy

 

Categories
Forex Market Analysis

Is The USD Poised To Drop Further?

The US Dollar remains under selling pressure versus the other major currencies, even if the Federal Reserve has decided to increase the Federal Funds Rate again in March. The greenback posted some gains against its rivals in the last weeks, but I’m afraid that the rebound has ended because the USDX is showing some exhaustion signs in the short term.

The Dollar could drop again as the dollar index has failed to stay higher and to make new highs. USDX is trading at 89.77 level and looks undecided on the short term. It is moving sideways, but the bearish bias remains intact as the rate is located much below some very strong resistance level.

USD increased significantly only versus the Yen and versus the Swiss Franc in the last days and remains to see if the pairs will have enough energy to make new highs. The USD needs a strong support from the United States economic data in the upcoming period to be able to dominate the currency market again. This scenario is less likely to happen.

us dollar drop

I’ve added the USDX’s Daily chart to show you why the USD could drop again and what are the other perspectives. The index has found strong support at the 50% Fibonacci line (descending dotted line). It has made several false breakdowns below this dynamic support. The minor rebound was natural and expected.

The dollar index moves in a range in the short term. It remains to see if this will be an accumulation or a distribution movement. Price failed to reach and retest the 91.01 static resistance and the first downtrend line (DT1) signaling a selling pressure. It seems like that the USDX is developing a Falling Wedge pattern on the Daily chart, but I’m not very confident that the price could make a valid breakout at this moment.

The failure to approach and reach the median line (ML) of the major descending pitchfork could send the rate towards the 50% Fibonacci line again. A further US Dollar drop will force the greenback to lose more ground versus all its rivals.

us dollar forecast

I’ve added another chart to show you what happened in the last weeks. Technically, the USDX is somehow expected to drop after the failure to stabilize above the 50% Fibonacci line (ascending dotted line). You can notice that the rate has failed to reach this line in the last attempt and now is expected to reach the lower median line (lml) again.

A valid breakdown below the lower median line (lml) will confirm a further drop and a USD’s further depreciation. Only a rejection from the lower median line (lml) or a false breakdown will announce another upside momentum.

Conclusion

The USD’s future will be decided by the dollar index in the upcoming period. USDX is narrowing, so we should wait for a breakout from this range to see the direction. The USD wasn’t too impressed with the US Retail Sales data today. The indicator increased by 0.6%, beating the 0.4%, but the dollar stays lower as the USDX plunged in the last hours.

Categories
Forex Market Analysis

Review for Dollar volatility

Daily events

U.S. Retail Sales Rebound in Sign Consumer Weakness is Transitory

U.S. retail sales rose by more than expected in March in the first gain in three months, suggesting consumer demand regained steam on the back of tax cuts and refunds.

Retail sales have strengthened to 0.6. after a forecast of 0.4%

Although the dollar has weakened against the currency basket, as Investors also remained cautious as the U.S. prepared to announce a fresh round of economic sanctions on Russia, related to its involvement in Syria’s use of chemical weapons.

 

EUR/USD

On the daily chart, there’s a bullish candle towards the 1.2465 level to approach the downtrend from the high of 2008

On 1H frame, the price is near the resistance area (1.2995-1.242) with breaking the triangle

Now we are at a very critical level as we reached strong demand zone

If the price rebounds with convincing price action, we can see 1.23 & 1.2265 levels again

Otherwise, the price breaks through we can see 1.27 level

GBP/USD

On the daily chart, there’s a rally through 1.433 level generating descending triangle

On 1H the price is also at a crucial level (such as EUR/USD). If the price breaks through, the 1.453 is waiting for us

Most likely that we will witness a correction to 1.42 level

 

US index

Categories
Forex Market Analysis

Opposing forces drive the markets in the upcoming week

Weekly Update

Regarding fundamentals, we are expecting opposing forces drive the markets in the upcoming week. Volatility has sparked bearing in mind the recent intervention of the USA in Syria. However, stock futures are up, and oil is down on hopes Syria attack a one-off.

Thus, we’ll focus on the most foreseeable variables. There are three variables that are mainly moving the markets

  • Protectionism
    • A less negative pressure in the short term as fears erase
    • Recent formal declarations by Chinese president rise expectations of a friendlier trade
    • There are still two months until Trump takes in action any tariff measure
  • Technology
    • Recent testimony by Mark Zuckerberg leaves good feelings and calms the markets
    • Relieves pressure on technology companies
  • Quarterly results
    • 2018 benefits are revised downwards
    • However, 1st quarter is expected to be robust with strong corporate volumes and margins which will be positive in the short term
Macro Data

This week there is no major macroeconomic event that will affect considerably the markets.

On Monday we have American Retail Sales which are expected to increase to 0.4% from the last- 0.1%. This can benefit the US Dollar. On Tuesday, the German ZEW Economic Sentiment can have some impact on the Euro and DAX. It is expected to decrease to -0.8 from 5.1. Finally, on Thursday, the American Manufacturing Index is released, and it is expected to decrease around one point.

In general, the macro outlook is more pessimist than positive. However, the previous three variables provide a more positive outlook and provide a better understanding than the macroeconomics events on how the markets will act this week. So that, we could expect a stabilization phase in the markets after the recent volatility. In general, slightly more positive than negative.

 

 USD Index

Weekly Chart

 

In the weekly chart, it is possible to appreciate how the USD Index is not only below the 200 EMA but also broke below the weekly support that has been retesting in the recent weeks and which has not been successful so far. In the short term is facing a bearish trend line caused by its recent devaluation.

During the first half of this week, there are not big news. However, on Wednesday, American Inflation numbers come out. It is forecasted that the core CPI will increase to 2.1% from previous 1.8%. Furthermore, on Friday, Moody’s published its USA rating, which right now has the highest rating possible with stable perspective. Hence, recent controversial policies from the American government making protectionism and a trade war a reality can alter the expectations for the mention economic events. In case the forecast does not vary the USD should not be hurt. However, an unexpected increase in the Core CPI and a rating downgrade from Moody’s can really hurt the Dollar.

Daily Chart 

The daily chart is similar to the weekly chart. The retest cannot break above the recently broken support and is facing more bearish pressure ahead. Nevertheless, it just formed double bottom pattern followed by a short-term bullish trendline. This week will be critical to know whether the bearish support is strong enough or it holds on to the current bullish trend.

EURUSD

Daily Chart

Regarding the EURUSD, it has been flat since February. Last month it broke its monthly bullish trend, and the consequently retest it.  From there, it has remained flat with no major fluctuations. However, with the recent uncertainties facing both the Eurozone and the USA it will not be surprising to see the EURUSD leaning towards a side. For now, it is holding at a strong resistance that dates back to September of 2017.  It is facing a couple of support and resistance which will help to know towards what side it will lean and leave the rectangle it is in now.

USDJPY

Daily Chart

Moving into the USDJPY, it has just bounced from a monthly bullish trend after doing a fake breakout and consequently bouncing back. A bullish trend could be considered since there are not big resistances ahead part from the 200 EMA and the recent bearish monthly trend. In the short term, there are two resistances not very strong, but that may cause a small retracement. However, the monthly support is stronger than the resistance it is locked up between.

GBPUSD

Daily Chart

GBPUSD seems to have no limits. At the beginning of the year, the Pound broke an important bearish trendline holding to its current bullish trendline. Moreover, last week just broke another key resistance. With no more important resistance ahead it has a clear path to keep up with the current upward trend. Maybe it is possible to do small retest as we saw with the previous one.

Crude Oil

Daily Chart

Recent political events, like the recent issue of the missile attack against Syria, have created volatility in the markets and consequently, the price of oil has been on the rise. After holding to the trendline and breaking above $65 it is possible to see a retest of the recent resistances it just broke above. Without more resistances ahead, analyst set that next target is $70 per barrel.

DAX

Daily Chart

Regarding technical, it is within a bearish trend that can be prolonged as there is still uncertainty in terms of politics and the recent macroeconomics event have not been reaching the forecasted ones. However, an improvement in the economic sentiment and political stability can help the DAX to break the ahead resistance and enter a bullish trend, leaving the current flat to bearish trend it is involved in now.

As commented at the beginning, on Tuesday the German ZEW Economic Sentiment is released. Hence, it can major point to decide whether it breaks the recent resistance and follows the daily bearish trend.

© Forex.Academy

Categories
Forex Market Analysis

market overview for US index & pairs

News

No need to say that that the hour talk now is about hitting Syria by US, France, & Great Britain

Of course, there’s a lot of action going on as U.S. tells UN it’s ready to hit Assad again, if necessary.

Also U.S. Eyes Russia Sanctions for Syria, U.K. Sees One-Time Hit.

UN Ambassador Nikki Haley, speaking Sunday on CBS’s “Face the Nation,” said U.S. Treasury Secretary Steven Mnuchin will announce new sanctions Monday that “go directly to any sort of companies that were dealing with equipment” related to Syrian leader Bashar al-Assad and his chemical weapons.

Oil prices, which already are above their three-year highs, may be about to jump further.

As Brent oil could spike to $80 a barrel if the U.S. and European Union reimpose sanctions on Iran, and as Western powers expand the scope of the Syrian civil war.

 

US Index

S&P500 behaviour has been intensively bearish on Daily frame, with a sideways movement during the last ten weeks.

There are perfectly well-noticed signs indicating that prices will be up active again.

Reversing from the support level at 88.35, bouncing from the uptrend’s  2018 low, and forming a double bottom, which is a reversal pattern, to give shape to a harmonic pattern (crab).

The price is facing a strong resistance test at the down trend lin from the high of May 2017, also with the red resistance zone (90.45-91.65).

If the price successfully breaks these levels, we can see it climbing up to its next zone (92.55-93.9). as it’s 61.8% & 78.6% Fibonacci, B harmonic level, and turn down from the high of 2017.

 EUR/USD

On 1H frame, we can see that the price broke the uptrend line provided by reversing from resistance zone (1.239-1.2425). The most important issue is that it approached the downtrend line traced from 2008 high.

The price draws a triangle that, if broken down, we can easily test the levels 1.23 then 1.226

 

 

GBP/USD

On 1H frame, the pair touched the resistance 1.428, with a megaphone pattern.

The price is expected to visit the 1.42 level to retest it. In case it breaks it, we can see it touching 1.415 and then 1.409

 

NZD/USD

The pair has faced its resistance level at 0.939 by breaking the uptrend line and rising reversal wedge. It’s supposed to retest the uptrend from the low of April at 0.732 then 0.727

Categories
Forex Market Analysis

What kind of trigger could boost the Dollar?

Hot Topics:

What kind of trigger could boost the Dollar?
Will the Eurozone continue to bring weaker economic data?
Could the UK CPI have reached their peak?
Fear of a

Hot Topics:

What kind of trigger could boost the Dollar?
Will the Eurozone continue to bring weaker economic data?
Could the UK CPI have reached their peak?
Fear of a

Hot Topics:

  • What kind of trigger could boost the Dollar?
  • Will the Eurozone continue to bring weaker economic data?
  • Could the UK CPI have reached their peak?
  • Fear of a new war or do we expect a new bearish leg?
  • A new higher high in oils is expected before it starts a corrective move.
  • Downward continuation limited before the BoC decision.

What kind of trigger could boost the Dollar?

The recent tensions originated by the strike made between the US, UK, and France on Syria and the reactions of Russia condemning the act could continue to increase the volatility in the markets. Another triggering factor could be the one originated by the US Retail Sales, which fell in February -0.1%. In March the analysts’ consensus is expecting an increase near to 0.4%. In technical terms, the greenback is still in a range and could be making a bottom formation. The control levels are 88.66 to 89.16. Invalidation level is below 88.1.

 

Will the Eurozone continue to bring weaker economic data?

This week the Germany and Eurozone ZEW economic sentiment reports were released. Particularly, the level of confidence fell to 13.4 in February from 29.3 reported in January. Probably it could be produced by a stational factor, like the weather conditions (winter time). In the panoramic chart, we are watching the current structure, as a corrective formation that could reach new lows in the 1.196 – 1.20 area. The invalidation level is above 1.2476.

 

 

Could the UK CPI have reached their peak?

In the last months, the British CPI apparently reached their peak, with a CPI of 3.1% (YoY) reported in the past year in November. Then in December and January, it achieved a 3.0%, but in February in line with other activity indicators, it has shown a decrease in the economic activity. It is probable that at these levels we are witnessing a stabilisation of the economic activity. In the same way, on the chart, we are watching a potential top pattern as a mother wave that could initiate a new bearish cycle with a target at the base of the sideways channel. The invalidation level is above 1.4345.

 

 

 

Fear of a new war or do we expect a new bearish leg?

The Japanese currency is moving in an ascending diagonal pattern in search for its long-term 108 level resistance. Despite the US attacks against Syria, the price continues moving according to our vision. We expect to find sellers once the price strikes the 108.2 – 108.4 area,  starting a new bearish leg.

The correlation between the Nikkei 225 and the USDJPY pair, bring us a clue about the moves that it could make. The first scenario is a breakout above 21,957 pts for a bullish continuation move, drawing the 22,764 – 23,050 area as a target. In the second scenario, if the price moves making a new bearish leg, we expect that move to reach the 20,660 zone, making a “mother wave”  and starting a new bullish cycle.

 

A new higher high in oils is expected before it starts a corrective move.

Last week the oils, Brent and WTI, reached their highest levels since 2014. For inverse correlation and as it was envisioned by us on January 12th, the Crude Oil VIX ETF reached the Potential Reversal Zone, where it might start a bullish cycle. In practical terms, once the WTI reaches the 67.8 – 68.7 area, it is likely that it begins a corrective move.

 

And concerning Brent Oil, we could see it at a new high, to 72.9 level,  before it starts a falling move.

Falls continuation is limited before the BoC decision.

Next Wednesday 18th the Bank of Canada (BoC) Monetary Policy Meeting will take place. The analysts’ consensus expects that the decision will maintain the interest rate at 1.25%. The price is making a downward cycle since March 19th, and our vision is that the Loonie might fall to the area between 1.245 – 1.254, where it could start an upward move, at least up to 1.274. The invalidation level for the ascending movement is 1.225.

 

 

Categories
Forex Market Analysis

Euro Plunges on Weak European Industrial Production data

Hot Topics:

Euro plunges by weak European Production Industrial Data.
The Pound is near to our control zone.
Bank of Japan’s Sakura Report: household spending and robust exports are aiding

Hot Topics:

Euro plunges by weak European Production Industrial Data.
The Pound is near to our control zone.
Bank of Japan’s Sakura Report: household spending and robust exports are aiding

Hot Topics:

  • Euro plunges by weak European Production Industrial Data.
  • The Pound is near to our control zone.
  • Bank of Japan’s Sakura Report: household spending and robust exports are aiding recovery.
  • Crude Oil is consolidating above $66.
The Euro plunges by weak European Industrial Production data.

Weak industrial production data in the Eurozone has triggered a 0.41% drop in the Euro, during today’s session, as we were expecting in the last Daily Update. Industrial production (YoY) fell from 3.7% in January to 2.9% in February, well below the mobile quarterly average of  3.97%.

The weak data published was mainly due to the reduction in the production of intermediate goods, capital goods, and durable and non-durable consumer goods. The common currency could go back to test the medium-term uptrend line. The support level to be controlled is 1.225 (For full resolution, click on the chart).

The German Index DAX 30 advances 1.08% within a tight upward channel, despite the weak European industrial production data.  In the case of overcoming the resistance at 12,476.8 pts, the price could take us to the 12,702.42 – 12,825.92 area.

In the case of the Dollar Index, which advanced 0.36%, we will wait to see how it behaves around 89.36 and 89.03 levels, from which we could validate a reversal of the uptrend. The invalidation level remains below 88.52.

The pound is near to our control zone.

The sterling closed the session yesterday with an advance of 0.37%, approaching the levels that we see as a potential reversal zone (PRZ) that could extend even below to 1.427. From the raised area, the pound could begin to develop that bearish move as a new bearish leg.

Bank of Japan’s Sakura Report: household spending and robust exports are aiding recovery.

In their quarterly report, the Bank of Japan (BoJ) concludes that six regions reported their economy had been expanding or expanding moderately, and three regions had continued to recover moderately.

In general terms, household income is increasing moderately as the labour market conditions had continued to tighten continuously. In this macroeconomic context, Kuroda reports that the BoJ will continue with the bonds purchase program to stimulate economic growth.

On the technical side, the USDJPY pair is gaining bullish momentum that could lead us to the 108.2 – 108.5 area. The relevant resistance level is 107.48; invalidation level is at 106.61.

 

Crude Oil is consolidating above $66.

After reaching its highest level since 2014, crude oil is consolidating close to the $66 level. Following the rally that took place on April 06th, we expect the consolidation to be relatively extensive, so we should wait for a more discernible scenario to take positions in favour of the prevailing trend.

The USDCAD/oil correlated pair is consolidating between 1.2544 – 1.2623, in the same fashion that Crude Oil is doing. By inverse correlation, we expect that the Loonie makes a reversal pattern between 1.2540 and 1.246. The invalidation level for the reversal move is below 1.2250.

Another energy commodity correlated with the USDCAD pair is Natural Gas, which is making a complex corrective structure that could make a new low between 2.522 – 2.260 before it finds buyers.