Category: Forex Market Analysis

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Forex Market Analysis

Dolar Index closes bearish helped by mixed CPI data

Hot Topics:

Dolar Index closes bearish helped by mixed CPI data.
EUR-USD is losing momentum.
Manufacturing Production (YoY) falls, and pound closes slightly upward.
BoJ – Kuroda keeps the promise

Hot Topics:

Dolar Index closes bearish helped by mixed CPI data.
EUR-USD is losing momentum.
Manufacturing Production (YoY) falls, and pound closes slightly upward.
BoJ – Kuroda keeps the promise

Hot Topics:

  • Dolar Index closes bearish helped by mixed CPI data.
  • EUR-USD is losing momentum.
  • Manufacturing Production (YoY) falls, and pound closes slightly upward.
  • BoJ – Kuroda keeps the promise of monetary policy.
  • Crude Oil climbs to the highest level since 2014.

Dolar Index closes bearish helped by mixed CPI data.

The index of the greenback yesterday closed down 0.04%, finding support at level 89.03 weighed down by mixed inflation data. On the one hand, Core CPI (YoY) rose to 2.1% in March from 1.8% registered in February. On the other side, the Consumer Price Index CPI (MoM) fell to -0.1% in March, while in February it recorded an advance of 0.2%. We continue to observe the lateral range in which the price is with a bearish bias. (Click on the chart for full resolution).


 

EUR-USD is losing momentum.

The pair of the single currency is losing momentum, in the fourth consecutive trading session, the euro advanced 0.10% finding resistance at 1.2395. In an interview with Reuters, the ECB lawmaker Ardo Hansson said that the ECB “needs to be patient and eliminate its stimulus very gradually.”

Although the ECB has kept the interest rate at low levels and has maintained its policy of buying bonds, lawmakers are debating that it is time to start cutting this policy. ECB legislator Ewald Nowotny, meanwhile, said he would have “no problem” in raising the deposit rate from -0.4% to -0.2% as a means to normalise monetary policy.

In this macroeconomic context, the euro is reaching a key area in the range 1.2412 – 1.245. Should not exceed the level 1.2476, the pair could make a new bearish leg. In the long term, we still have our eyes on 1.26 as the end zone of the EUR / USD bullish cycle.

Manufacturing Production (YoY) falls, and pound closes slightly upward.

Manufacturing Production (YoY) fell to 2.5% in February well below the consensus that estimated an advance of 3.3%. The sector that was most affected was the construction sector with a decline of 1.6% in February. The National Statistics Office attributes to a large extent these low figures to the effect of severe weather.

On the technical side, we are observing a possible corrective process that could begin to be developed from area 1.42 – 1.425 with a potential level of invalidation in over 1.4345 coinciding with the highest level of the year.

 

BoJ – Kuroda keeps the promise of monetary policy.

The Governor of the Bank of Japan, Haruhiko Kuroda, reiterated his optimistic view on the expansion of Japan’s economy, affirming that “With the improvement of the product gap and the medium to long-term inflation expectations observed, we expect that inflation will accelerate as a trend and go to 2 percent. ”

On a technical level, on the one hand, the USD-JPY is still in a limited lateral range between 106.64 and 107.49, the predominant bias is bullish and increases its probability of strength as it closes above 108. The level The invalidation of the bullish sequence is 105.66.

On the other hand, by a positive correlation concerning USDJPY, we see in the Nikkei 225 Index within a long-term bearish pattern developing an ascending diagonal formation, which in case of exceeding 21,957 could lead to exceeding 22,500 pts.

 

Crude Oil climbs to the highest level since 2014.

First, it was the turn of the Brent oil; now it is the turn of the Crude oil that has climbed to the highest levels since 2014, reaching 67.36 US $ / Barrel, while the Brent oil climbed to new highs reaching $72.69.

For the Brent Oil, although the trend is bullish, the closest resistance is $72.91, while the level of invalidation of the bullish cycle is below $67.

As with the Brent Oil, the Crude Oil is in a free climb up to $ 70.7 as long as it remains above the $64 level.

On the opposite side, by inverse correlation, the Loonie remains in free fall with a target at the base of the bullish channel, the impact zone could be between 1.2456 to 1.235.

 

 

 

 

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Forex Market Analysis

Volatility moves towards Europe

Hot Topics:

  • S. Core PPI (YoY) reaches the highest level since 2012.
  • Volatility moves towards Europe.
  • The pound rally continues due to the weakness of the dollar.
  • Jinping reduces risks of a Trade War.
  • Oil Brent reaches the highest level since 2014.

U.S. Core PPI (YoY) reaches the highest level since 2012.

The signs of strength in the economic growth of the United States continue, the Underlying Producer Price Index (YoY) reached 2.7% in the March period, the highest level since June 2012. The Core PPI (MoM) index, for its part, it reached 0.3% on the expectations of analysts who projected 0.2%. According to the Bureau of Labor Statistics, 70% of the increase in final demand is attributed to a rise of 0.3% in the prices of final demand services, in the same way, transport and storage services for final demand increased by 0.6 %. The increases in the level of inflation for producers are expected to have an impact on the Consumer Price Index, which will be published this Thursday.

Despite these positive macroeconomic data, the greenback index continues its strong depreciation, which has lost 2.83% in the year. Today is closing with -0.25% of loses. We are paying attention to the zone between 89.15 and the 61.8% of Fibonacci retracement level, where the Index has found support.

Volatility moves towards Europe.

The risks of the Trade War between the United States and China are disappearing more and more with the bilateral attempts to resolve the conflict in a friendly way. However, in Europe, the scenario that seemed full of geopolitical stability is changing. This Sunday 08, Viktor Orban won the elections in Hungary for the fourth time in a row. With an utterly autocratic speech, the nationalist Prime Minister proposes an anti-immigrant policy and open attacks towards the European Union. Hungary refuses to comply with the agreed European migration policy, that is, accept quotas of Syrian refugees, in the same way as the United Kingdom raised in one of its arguments against Brexit. It should be added that Mr Orban is not alone in this political tendency; he has found allies in power in Poland, the Czech Republic, Slovakia and Italy. All of them are willing to reject the obligation to accept refugees and respect the right of free movement.

The euro has closed with gains for the third consecutive session with a 0.29% of advance. The pair shows a bullish move in the middle of a sideways formation. In the last trading session, the price has found resistance at 61.8% of Fibonacci retracement

The pound rally continues due to the weakness of the dollar.

The pound continues for the third consecutive session in a bullish rally advancing 0.64% in the week and has gained 0.35% in the last trading session. All this occurs in the context of the weakness of the dollar despite the excellent macroeconomic data of the United States. The level of support to be controlled is 1.4145; the key resistance level is 1.42 as a psychological level.

Jinping reduces risks of a Trade War.

Chinese President Xi Jinping has promised to reduce import tariffs by alleviating the fear generated by the escalation of bilateral tensions between the United States and China. In a speech held at the Boao Forum, President Jinping promised to open the Chinese economy further, protect the intellectual property of foreign companies. These words filled the market with optimism, leading the indexes to move positively, the Dow Jones Index advanced 1.48%, while the yen reduced its attractiveness as a refuge, leading the USD-JPY to close with 0.41% of earnings.

The USD-JPY pair is forming an ascending diagonal pattern, which still has space to follow a rally, the closest resistance levels are 107.49 and 108, and the support level to control is 106.64.

The Dow Jones index, which is within a descending channel, the price is for the control support level at 24,037.3 and is developing a possible upward diagonal formation whose closest resistance is at 24,630, a level that coincides with the Upper part of the bearish channel. Bullish positions are valued as long as they do not fall below the 23,749.3 level.

Oil Brent reaches the highest level since 2014.

The euphoria of the reduction of the economic tensions between the United States and China due to the sayings of Jinping, not only has motivated to the indices but also the oils. The Brent has reached its highest level since 2014, reaching the $ 71.03. Crude Oil, on the other hand, approached two-week highs reaching $ 65.76. The oil rally and the Dollar weakness also benefited to the pair USD-CAD (by inverse correlation) which closed at lowest levels since February testing the psychological level 1.26 approaching the level of Fibonacci retracement 61.8% at 1.2583.

Our central view for this highly correlated group has been bullish; but we currently prefer to maintain a neutral position considering that once the oils reach specific levels in the long term for their structures, they should make a significant corrective movement that will allow us to join to the trend. As long as Brent does not reach the area between $ 71.26 and $ 72.91, and Crude Oil does not come close to $ 69 and $ 70, we do not expect a start of a significative correction.

In the case of the USD-CAD pair, once it reaches the base of the channel, it is expected that a bullish move could begin.

©Forex.Academy

 

 

Categories
Forex Market Analysis

U.S. Core PPI (YoY) reaching its highest level since 2012

Hot Topics:

  • S. Core PPI (YoY) reaches the highest level since 2012.
  • Volatility moves towards Europe.
  • The pound rally continues due to the weakness of the dollar.
  • Jinping reduces risks of a Trade War.
  • Oil Brent reaches the highest level since 2014.

U.S. Core PPI (YoY) reaches its highest level since 2012.

Signs of strength in the United States economic growth continue showing up. The Underlying Producer Price Index (YoY) reached 2.7% growth in March, the highest level since June 2012. The Core PPI (MoM) index, on the other hand, went up 0.3% fulfilling analysts expectations who projected 0.2%. According to the Bureau of Labor Statistics, 70% of the increase in final demand is attributed to a rise of 0.3% in the prices of final demand services, in the same way, transport and storage services for final demand increased by 0.6 %. The producers’ inflation rise is expected to have an impact on the Consumer Price Index, which will be published this Thursday.

Despite these positive macroeconomic data, the greenback index continues its strong depreciation, losing 2.83% for the year. Today the greenback is closing with a loss of -0.25%. We are paying attention to the zone between 89.15% and 61.8%  Fibonacci retracements, where the Index has found support.

Volatility moves towards Europe.

The risks of a Trade War between the United States and China are disappearing more and more, with the bilateral attempts to resolve the conflict in a friendly way. However, in Europe, the scenario that seemed full of geopolitical stability is changing. This Sunday 08th, Viktor Orban won the elections in Hungary for the fourth time in a row. With an utterly autocratic speech, the nationalist Prime Minister proposes an anti-immigrant policy and open attacks towards the European Union. Hungary refuses to comply with the agreed European migration policy, that is, to accept Syrian refugees quotas in the same way the United Kingdom did as one of its arguments for Brexit. It should be added that Mr. Orban is not alone in this political tendency; he has found allies in power in Poland, the Czech Republic, Slovakia, and Italy. All of them are willing to reject the obligation to accept refugees and respect the right of free movement.

The euro has closed with gains for the third consecutive session with an advance of 0.29%. The pair shows a bullish move in the middle of a sideways formation. In the last trading session, the price has found resistance at 61.8% of Fibonacci retracement.

The pound rally continues due to the weakness of the dollar.

The pound continues for its third consecutive session in a bullish rally advancing 0.64% for the week and gaining 0.35% in the last trading session. All this occurs in a context of a weakness of the dollar, despite the excellent macroeconomic data of the United States. The level of support to be checked is 1.4145; the key resistance level is 1.42 as a psychological level.

Jinping reduces risks of a Trade War.

Chinese President Xi Jinping has promised to reduce import tariffs by alleviating the fear generated by the escalation of bilateral tensions between the United States and China. In a speech held at the Boao Forum, President Jinping promised to open further the Chinese economy and protect the intellectual property of foreign companies. These words filled the market with optimism, leading the indexes to move positively, the Dow Jones Index advanced 1.48%, while the yen reduced its attractiveness as a refuge, leading the USD-JPY to close with 0.41% of earnings.

The USD-JPY pair is forming an ascending diagonal pattern, which still has space to rally. Its closest resistance levels are 107.49 and 108, and the main support level to watch out is 106.64.

 

The Dow Jones index moves within a descending channel, its price looks to control a support level at 24,037.3 and is developing a possible upward diagonal formation whose closest resistance is at 24,630, a level that coincides with the Upper part of the bearish channel. Bullish positions are valued as long as price does not break the 23,749.3 level.

 

 

Oil Brent reaches the highest level since 2014.

The euphoria produced by the reduction of the economic tensions between the United States and China due to Jinping’s latest public speeches, not only has motivated a good mood on the indices but also on oils. The Brent Crude has reached its highest level since 2014: $ 71.03. Wes Texas Crude Oil, on the other hand, approached its two-week highs at $ 65.76. The oil rally and the Dollar weakness also benefited the USD-CAD pair (by inverse correlation), which closed at its lowest levels since February, and testing the psychological level 1.26,  approaching the 61.8% Fibonacci retracement level at 1.2583.

 

Our central view for this highly correlated group has been bullish; but we currently prefer to maintain a neutral position considering that once oils reach specific long-term levels on their structures, they should make a significant corrective movement that will allow us to join the trend. As long as Brent does not reach the area between $ 71.26 and $ 72.91, and Crude Oil does not come close to $ 69 and $ 70, we do not expect a significative correction to begin.

In the case of the USD-CAD pair, once it reaches the base of the channel,   we expect the beginning of a bullish move.

 

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Forex Market Analysis

Tit-for-tat weighs heavy on the markets

A difficult week
It has been another difficult week in the markets, and this has been primarily down to the difficulty in assessing what the trade standoff between the US

A difficult week
It has been another difficult week in the markets, and this has been primarily down to the difficulty in assessing what the trade standoff between the US

A difficult week

It has been another difficult week in the markets, and this has been primarily down to the difficulty in assessing what the trade standoff between the US and China mean for the markets. The week started off with the market taking fright as additional tariff threats were voiced by the US, leading to a sharp sell-off in equity markets. However, much of that rhetoric was rowed back on leading to a significant bounce back actually making pre-fright highs before the SP500 started to sell off again.  This simply means that there is no overriding directional bias in either direction making this market very choppy and difficult to trade.

 

Gold

As a result, the Gold market responded by initially strengthening due to the fear related to the equity story but then reversed those initial gains and now trades right in the middle of significant support and resistance levels which can be clearly seen from the chart below, these significant levels are $1,357 and $1,310, so all eyes will be on these levels over the coming days and weeks to see what is next for the yellow metal.

Oil

The Crude-Oil market responded to these major global developments by initially selling off but then after seeing a bit of erratic price action we continued to see a continuation to the down side, closing the week below the $62 level.  However, from a technical perspective, the situation regarding the crude oil market is an interesting one.  We can see from the chart below that we have been in a consistent up trend since mid-June 2017, reaching a high of $66 towards the end of Jan 2018.  Since this time, this market has clearly struggled to break the $66, creating a double top end of March.  So over the last two weeks, this market has bounced back to its lower trend line.  The next few days will be interesting to see whether the support level holds and we see another attack at the $66 level or will this support level break, and we see prices pushing down to a potential structural failure below the $60 level which would put major pressure on this market to the downside.  At this crucial point, it’s hard to see whether buyers or sellers will win out.

 

So just to recap, over the course of the last 5 trading days, US officials made very strong statements about the need for trade tariffs to be introduced only for US officials to then row back on some of its rhetoric, as a result, market nerves were calmed, and Monday’s fear related move was subsequently reversed. The S&P rallied and then retraced, and the gold and crude oil markets came off.

US Dollar

The USD, however, has been impacted by recent events but to a lesser degree. As you can see, from the chart below, the dollar index has been in a period of consolidation since mid-Jan.  These, unfortunately, for the time being, are the market conditions in which we are trading the USD. The two major prices to keep an eye out for over the coming days and weeks is the 99.880 to the up side and 88.416 to the down side.  A move in either direction would be significant for this market.

 

EURUSD

EURUSD continues to trade within a range. Today’s weaker NFP numbers perhaps suggest that the pair might move higher next week given the fact too that from a technical perspective, the pair is trading closer to the lower end of its range as can be seen from the chart below.

 

USDJPY

USDJPY has been firmer this week, however, watch the key pivotal resistance area next week around 108.20. This was the breach that confirmed a bearish range breakout back in February.

 

 

The US Dollar paired earlier gains during Friday’s London session after data showed the US economy adding new jobs at less than half the pace economists had expected for the March month. The important Non-Farm Payrolls figure grew by just 103,000 during the recent month, which is down from 313,000 in February and far below the economist consensus for a reading of 188,000.

Separately, the unemployment rate held steady at 4.1% for the month when markets had been looking for a 10-basis point fall to 4.0%. Household incomes grew by 0.3% during the recent month, which is up from the 0.1% seen in February and in line with the consensus forecast of economists.

 

Price action largely noted limited volume in the week leading up the non-farm payroll figure but saw initial volatile swings before the USD began to weaken over the course of Friday afternoon and evening.

Trade of the week – Long GBP/USD

With the US caught up with trade issues with China causing confusion among other countries and added uncertainty across the US Dollar Forex Pairs, perhaps the best technical trade may look GBP support with better than forecast UK economic data.

With the GBP showing strength over the USD in April for the last 13 consecutive years running, speculators are now looking at this trend for the best potential buying opportunity. With good news for the pound with UK PMI slightly higher than expectations, Friday trading is seeing the pound trade up with a touch and bounce from the greater bullish trendline of 2017. The discussion now seems to favour the pound is seemingly defying the expectations of Brexit doom.

 

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Forex Market Analysis

Business survey of the Bank of Canada is optimistic

 

 

Hot Topics:

  • Business survey of the Bank of Canada is optimistic.
  • How much could it cost to Facebook, the loss of users confidence?
  • Dollar Index the weakness remains..

Business survey of the Bank of Canada is optimistic.

The results shown by the survey of the Spring Business Outlook published yesterday by the Bank of Canada (BoC) reflects the confidence of the business sector, which is supported by good prospects for sales in most regions and sectors. Considering the credit conditions that remain intact, respondents continue to maintain their intentions in the increase of investments, however, expect a slight adjustment in conditions.

On the technical side, the loonie is within a bearish wedge formation. The price is testing 50% of the entire previous bullish cycle. Added to this, it has also reached and broken the psychological level of the 1.27, which is acting as support at this time. Our vision is that between the 50% and 61.8% zone, it should begin to develop a bullish movement up to the area of 1.29 – 1.30. In the short term, the dominant trend is bearish. Bullish positions are valued above 1.2745.

How much could it cost to Facebook the loss of users confidence?

The social network created by Mark Zuckerberg is still in the midst of criticism. The Facebook scandal that began with Cambridge Analytica, where it was revealed that the private data of 87 million users were sold and used with the aim of manipulating the decisions of the users and that it was later shown that the private data of the most of 2 billion users are vulnerable. It has led his CEO to have to testify in front of the United States Congress. Senator John Neely Kennedy mentioned that he agrees to regulate Facebook. Senator John Thrune, meanwhile, said that “the biggest question that Mark Zuckerberg should answer is what Facebook is responsible for what happens on its platform, how it will protect users’ data and how it intends to stop harmful behaviours instead of being forced proactively.”

The problems for the social network are not limited to the attempt to regulate their activity and control of the privacy of information, or to the campaign with the hashtag #DeleteFacebook that has been promoted since the scandal was announced. The price is developing a bearish corrective structure that is testing the long-term trend line. On the other hand, the stock has been below the 200-day exponential moving average, changing the market sentiment to bearish. Structurally, we expect the price to reach $ 149 and could fall between $ 129 to $ 121 as the target level. The closest resistances are $ 162 and $ 167, while the most relevant supports are $ 149 and $ 145.

Dollar Index the weakness remains.

The index of the green ticket continues in a lateral range, with a clear resistance in 90.3, which has not yet been overcome. The key control areas are 89.5 and 89.1, levels that could act as pivots in the medium term. Our long-term vision remains bearish with pending objectives in the area of 87.6 – 86.5.

©Forex.Academy

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Forex Market Analysis

US Trade Balance Deficit Reaches the Highest Level Since December 2008

Hot Topics:

US Trade Balance deficit reaches the highest level since December 2008.
PMI Markit Composite of the Eurozone shows signs of a slowdown.
PMI UK Services falls to the

Hot Topics:

US Trade Balance deficit reaches the highest level since December 2008.
PMI Markit Composite of the Eurozone shows signs of a slowdown.
PMI UK Services falls to the

Hot Topics:

  • US Trade Balance deficit reaches the highest level since December 2008.
  • PMI Markit Composite of the Eurozone shows signs of a slowdown.
  • PMI UK Services falls to the lowest value since 2016.
  • Yen fails in its attempt to approach the 108.
  • Aussie developing the second leg.
  • Loonie moves sideways while waiting for the employment data.
  • Dow Jones closes bearish on new tariffs to China.
  • Crude Oil performs a pullback towards the $64 level.

US Trade Balance deficit reaches the highest level since December 2008.

February 2018 Trade Balance, has reached its highest level since December 2008, as indicated by the Department of Commerce. The deficit in goods and services for the year to date has increased by 22.7% ($ 21.1 billion) compared to the same period of 2017. Exports, meanwhile, have increased 5.9% ($ 22.4 billion) and imports have risen 9.1% ($ 43.6 billion).

On the technical side, the Dollar Index has reached the control area we mentioned in the last Daily Update. Now we have to wait for a confirmation of the reversal zone to look for continuity in the bearish positions against the dollar.

 

PMI Markit Composite of the Eurozone shows signs of a slowdown.

The Purchasing Managers’ Index (PMI) published by the agency Markit Economics, has reported a sharp fall in March, reaching 55.2 points, below February’s  57.1 pts. This lower PMI Index level is a sign of deceleration in new orders growth. This situation may be the result of a combination between the consequences of inclement weather in some regions of northern Europe and a limitation in the capacities of the supply-chain to meet the number of orders that have been accomplished in previous periods. Despite these pessimistic signals, as reported by the latest Daily Update, the Euro has drilled 1.2240 control support, at which we began to assess potential purchases that could take us to levels close to 1.235.

 

PMI UK Services falls to the lowest value since 2016.

The Service Purchasing Managers’ Index has sunk to its lowest registered value since 2016, reaching 51.7 pts compared to the 54.5 pts reported in March. This index value is worse than its quarterly moving average of 53.07 pts. As a result of this data, the cable has perforated the psychological support of 1.40, reaching 1.3965. This break-down has activated a Head-Shoulders pattern, which level of invalidation is above the 1.42 level. However, our long-term vision is in favour of long positions of the pound due to the weakness expected in the Dollar Index.

Yen fails in its attempt to approach the 108.

The weakness of the dollar has caused the yen to fail in its attempt for the USD-JPY to reach 108. In the midst of trade tension between the United States and China over tariffs, the yen exceeded 107, the key resistance that we were reporting in the last Daily Update reaching 107.44. The Japanese currency is developing a bearish leg to 107.01, a level that could act as support in the future. In today’s session, in where the US employment levels will be announced, we expect it to build enough volatility to validate if the pair manages to overcome the long-term resistance at 108.

 

Aussie developing the second leg.

The oceanic currency is developing a corrective structure that began at the 1.8135 high level, starting in January. The price is currently approaching a long-term bullish trend-line, and the bearish guidelines of the current formation give us a potential reversal zone between 0.7620 and 0.7573, the invalidation level is below 0.7501.

 

Loonie lateralizes while waiting for the employment data.

The Canadian dollar is consolidating in the range of 1.2745 – 1.28 pending the employment data from the United States and Canada that will be announced in the last trading session of the week. Our view is that the USD-CAD could make a limited bearish movement until 1.2715 to begin a bullish move as a potential second shoulder. Our long-term outlook for the pair continues to be bearish due to the inverse correlation with crude oil.

 

Dow Jones closes bearish for new tariffs to China.

The escalation of volatility due to tariffs between the United States and China continues. During this Thursday, President Trump has instructed the Trade Representative to consider the application of $100 billion in additional tariffs against China. In a statement, Trump said: “In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and if so, to identify the products upon which to impose such tariffs.” Once this statement was published, the Dow Jones index that started the bullish session collapsed more than 400 points testing 24,037 points. Our vision is a scenario in which the Dow Jones could perform a corrective process in the form of A-B-C, as long as the price does not close below 23,330 pts, we will maintain the view of bullish positions.

 

Crude Oil performs a pullback towards the $64.

Crude oil has retreated to the neckline of the Head-Shoulder pattern at $64.1 that has been activated with a profit target at $61.8. The falls could reach even $61.44, a level that could coincide with the base of the long-term uptrend line. The invalidation level of the long-term bullish scenario is $60.2.

©Forex.Academy

 

Categories
Forex Market Analysis

The Trade War could benefit South American Producers

DAILY UPDATE

Released: 5th April 2018.

Hot Topics:

  • The trade war could benefit South American producers.
  • The unemployment rate of European Union falls to 8.5%.
  • Climatic factor impacts on March PMI Construction.
  • The Bounce of the Stock Markets Boosts the Yen’s Crosses.
  • Indices rebound driven by possible bilateral talks between the United States and China.
  • The Canadian Dollar is showing an example of the alternation rule of the Elliott Wave theory.
  • Crude Oil Production falls to its lowest level in over a year.

The Trade War Could Benefit South American Producers.

Uncertainty due to the trade war between the United States and China continues. This time China has reacted by incorporating a 25% tariff on soybeans of US origin. It should be noted that China is the primary consumer of soybeans in the world. As a result of this increase in tariffs on American soy, it is estimated that China could turn to South American producers to meet the demand for the grain. Despite this pessimism in the economic context, the Dollar Index in the hourly chart is developing an inverted Head and Shoulder pattern as a bullish continuity configuration. The next control zone is in the range of 90.20 and 90.36, in case if we do not overcome the resistance of 90.36, we could see a potential retracement to the 89.15 area.

The Unemployment Rate of European Union Falls to 8.5%

The signs of recovery in the European economy continue. The unemployment rate of the European Union has fallen to 8.5% in February, down from 8.6% in January. According to the information provided by Eurostat, the labour market in the Eurozone has reached the lowest level since December 2008. This level of optimism has not been enough to push the Euro towards new highs. The single currency is within a range between 1.225 and 1.23, from where it could create a bottom around the levels 1.2213 and 1.224. A new bullish rally could start from here.

Climatic Factor Impacts on March PMI Construction.

The PMI of the Construction sector (MoM) plummeted sharply to 47 pts, compared to the 50.9 forecast, despite the weak data. It is the lowest level since July 2016, when it reached 45.9 pts in the context of the Brexit elections (June 23, 2016). The critical factor in the decrease in activity has been the climatic factor, remember that in March the worst snowfalls in recent years were recorded. Technically the pound is developing a pattern of Head-Shoulder, which could be contained in a more extensive setup of Head-Shoulders. This could lead to sterling up to 1.3922 in the first instance, and up to 1.3737 in the second instance. All this structure could correspond to a major degree lateral structure that takes us from the 1.373 area to reach new highs around 1.45.

The Bounce of the Stock Markets Boosts the Yen’s Crosses.

Yesterday, although tensions in the dispute of tariffs between the United States and China, the Bank of Japan (BoJ) disbursed 833 billion yen (about US $ 7.8 billion) in the purchase of Exchange-Traded Funds (ETFs). This level of expenditure is the highest level since September 2017, the month in which the BoJ spent 830 billion yen. This action earned the yen to start a turn in its trend; this can be seen both in the chart of the USD-JPY and EUR-JPY which have begun to show bullish patterns. For the USD-JPY pair, the closest key resistance level is 108; in the case of the EUR-JPY cross, the control level is 131.71, a level that if exceeded could lead to the price to exceed 133.5 with a maximum extension of 134.5 in the short term.

Indices Rebound Driven by Possible Bilateral Talks Between The United States and China.

Through his Twitter account, President Trump stressed that the United States is not in a trade war with China. The Trump administration indicated that it is willing to negotiate with China on the escalation of tensions between the two countries. The most significant problem as mentioned by the American President in his account on the social network is that the deficit in the American trade balance is $500 billion, which according to his words “When you’re already $500bn DOWN, you cannot lose.” With the fears of a commercial war between the Trump administration and the administration of Jinping, the indices began to recover confidence. They realised a V-turn pattern is taking the Dow Jones to close above the 24,000 pts in a day. It started lower in the global indexes. The level of resistance to control is between 24,800 pts and 24,982 pts, an area from where in case of breaking up, could take us to levels close to 26,000 pts. The key support levels are 24,034 and 23,330 pts, which coincide with the base of a bearish channel.

The Canadian Dollar is Showing an Example of the Alternation Rule of the Elliott Wave Theory.

The Loonie has made a false rut beginning a downward cycle. It is developing a long-term bullish channel as a long-term bearish formation and is reaching a zone of 1.31 and coinciding with the upper guideline of the channel. Once started, this bearish cycle has been developing five clear movements. In this case, we will highlight the corrective formations or consolidation. According to the Elliott Wave theory, the alternating rule states that after a simple corrective structure, a complex structure should be presented and vice versa. By looking at the time chart of the USD-CAD, we can see this application. The conclusion that this case leads us to is to suspect that a recession is approaching, and that could take the price to levels around the area of the complex corrective structure and then return to develop new minimums in the long term.

Crude Oil Production Falls to Its Lowest Level in Over a Year.

The production of crude oil from the countries belonging to OPEC has fallen to the lowest level in a year and a half. This is mainly due to the problems plagued by the policy of Venezuela, where production decreased by 100,000 barrels per day since February, reaching 1.51 million barrels per day according to the survey conducted by Bloomberg News. The overall level of the output of the 14 OPEC member countries fell by 170,000 barrels to 32.04 million barrels per day in March. OPEC has helped stop production as of January 2017 with the aim of boosting the price of oil, which has been currently consolidating above $60 a barrel. Structurally in the hourly chart, we observed a Head-Shoulder formation that did not reach the technical target bouncing upwards. As long as oil does not lose levels below $60.2, the dominant trend continues to be bullish.

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Forex Market Analysis

Trump Announces He Will Impose Tariffs On Steel And Aluminium Imports

Hot Topics:

  • EURUSD – Trump announces he will impose tariffs on steel and aluminium imports.
  • AUDUSD – Australian mining companies on alert for Trump tariffs.

Main currencies daily performance.

EURUSD – Trump announces he will impose tariffs on steel and aluminium imports.

The US President Trump has announced that he will impose tariffs on steel and aluminium imports as a step to protect the US industries. The duties to apply are 25% on steel and 10% on aluminium.

China reacted immediately and warned that they would reduce the imports of US soybeans, and The European Union has said that is considering taking action too. The New York Federal Reserve President William Dudley said that “raising the trade barriers would increase the risk of a ‘trade war’, which could damage the economic growth prospects around the world.”

On the technical side, when arriving at the second support of the weekly pivot (Weekly S2 1.21550), the Euro made a perfect reverse movement climbing more than 120 pips. We expect a bullish move for the single currency that can take it up to the weekly pivot level 1.23304, where it could begin to lateralise.

AUDUSD – Australian mining companies on alert for Trump tariffs.

After President Trump’s announcement to apply tariffs to imported steel and aluminium, the biggest beneficiaries will be the US production companies, which accused China, Russia and South Korea of unfair competition. On the other hand, one of the largest Australian mining companies, Rio Tinto, which exports mainly aluminium to the United States and Canada, will be affected by this measure unless Canada can dispute an exemption to Washington.

Technically, the AUD-USD pair entered a zone of potential reversal that coincides with a long-term bullish trendline, which concurs with the second level of weekly support. A new low at the weekly S3 level (0.76286), could give more strength to a reversal pattern.

 

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Forex Market Analysis

Mixed Performance in the Major Pairs

Hot Topics:

NZD – Kiwi falls 0.46% waiting for PPI data release.
AUD – Making a triangulation expecting RBA Minutes.
JPY – Nikkei rises and pull the USDJPY.

Main currencies

Hot Topics:

NZD – Kiwi falls 0.46% waiting for PPI data release.
AUD – Making a triangulation expecting RBA Minutes.
JPY – Nikkei rises and pull the USDJPY.

Main currencies

Hot Topics:

  • NZD – Kiwi falls 0.46% waiting for PPI data release.
  • AUD – Making a triangulation expecting RBA Minutes.
  • JPY – Nikkei rises and pull the USDJPY.

Main currencies daily performance.

NZD – Kiwi falls 0.46% waiting for PPI data release.

In the Oceanic Session, the Statistic New Zealand (Stats NZ) will release the Producer Price Index (QoQ). The analyst consensus expects a fall in the PPI input from 1% to 0.3%, and in PPI output from 1% to 0.4%. This PPI forecast is aligned with the last CPI (QoQ) that reached 1.6% in Q4, below the 1.9% registered in Q3.

In the pair NZDUSD, we are observing the minimum recorded in the last session, which coincides with the weekly pivot point (0.73538). If the Kiwi falls below the weekly pivot, we will look for short positions up to the first weekly support level (S1 = 0.72707), which is a potential profit of approximately 80 pips.

AUD – Making a triangulation while expecting RBA Minutes.

Today the minutes of the last meeting of the Board of the Reserve Bank were announced, they decided to keep the interest rate unchanged at 1.50%. The Aussie in the hourly chart is developing a triangulation structure; in case of falling below 0.78912, it could get to drop to 0.77943. On the contrary, if it breaks higher, the objective would be 0.80097.

 

JPY – Nikkei rises and pull the USDJPY.

In the first session of the week, the Nikkei 225 index rose by 0.48%, and by inverse correlation pulled the USDJPY pair. The decorrelation between both instruments was commented on in our Daily Abstract on February 16th, where we mentioned that “this divergence in the correlation between the Nikkei Index and the USDJPY should be eliminated again” to converge in favour of the major trend of the indexes.

In the short-term, we will maintain long positions if the USDJPY climbs above 106.906 with the objective at 108.26 and a maximum extension at 110.

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Forex Market Analysis

The Germany ZEW Economic Sentiment could mark optimism for the Euro and other stories

Hot Topics:

  • GBP – The Unemployment rate in historic lows.
  • AUD – Waiting for the minutes of the last meeting of the Reserve Bank Board.
  • EUR – The Germany ZEW Economic Sentiment could mark optimism for the Euro. 

GBP – The Unemployment rate in historic lows.

On Wednesday 21th, the unemployment rate will be released. The analyst survey consensus does not foresee changes in respect to the last month’s data of 4.3 percent, the lowest in four decades. On the same day, the Bank of England (BoE) will release its Annual Inflation Report to the Treasury Select Committee. The BoE’s Governor, Mark Carney will speak in the British Parliament on the Annual Inflation Report to the Select Committee of the Treasury.

The pound reached a new low below 1.3978 and as long as it does not exceed 1.434, there is a high probability that it will fall back to new lows with a maximum target of 1.3448, which would coincide with the long-term bullish guidance.

GBP-USD 4-hour chart (click on the image to enlarge)

 

AUD – Waiting for the minutes of the last meeting of the Reserve Bank Board.

On Tuesday 20th, in the overnight session, the Reserve Bank of Australia (RBA) will publish the minutes of the last monetary policy meeting, where the members of the Reserve Bank Board decided to keep the interest rate unchanged at 1.50%. Although members observe the growth of employment, and the unemployment rate has remained at a minimum, they conclude that inflation is still below the target goal of the RBA.

The AUDUSD pair could be developing a corrective structure in the form of A-B-C, which could lead to 0.765, once it reaches this area, it could again be a new connector of a higher degree leading to new highs.

AUD-USD 4-hour chart ( click on the image to enlarge)

 

EUR – The German ZEW Economic Sentiment could mark optimism for the Euro.

In January, the German Economic Sentiment Index ZEW reached its highest point in 8 months, marking 20.4 points, increasing the expectation in the economic environment for the first half of the year. For this month, the analysts’ consensus expects it to fall to 16 points. However, considering the last GDP (YoY) in Germany reached 2.3%, and in the Eurozone which reached 2.70% (YoY), we expect the ZEW index to continue at the same level as that registered in January.

The single currency could mark a new maximum that could reach 1.2646, thus completing a sequence of five movements. After this, we could expect a corrective move for the Euro. However, we should expect all pairs against the Euro to be “aligned” before starting a more profound corrective process for the euro.

EUR-USD 4-hour chart ( click on the image to enlarge)

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Forex Market Analysis

DAILY ABSTRACT – 16th February 2018

Hot Topics:

JPY – USDJPY decorrelated with Nikkei Index.
DOW – Dow Jones again exceeds 25,000 pts.
STOCKS – Netflix incorporates Ryan Murphy into their team.

 
MAIN CURRENCIES

Hot Topics:

JPY – USDJPY decorrelated with Nikkei Index.
DOW – Dow Jones again exceeds 25,000 pts.
STOCKS – Netflix incorporates Ryan Murphy into their team.

 
MAIN CURRENCIES

Hot Topics:

  • JPY – USDJPY decorrelated with Nikkei Index.
  • DOW – Dow Jones again exceeds 25,000 pts.
  • STOCKS – Netflix incorporates Ryan Murphy into their team.

 

MAIN CURRENCIES DAILY PERFORMANCE.

 

JPY – USD-JPY decorrelated with Nikkei Index.

The Yen <JPY> had the best performance against the Greenback <USD> in the day, advancing 0.78%, while the USD Dollar Index has fallen 0.47%. However, this week the Nikkei 225 <JPN225> has developed a lateralisation structure while most indices advanced, recovering losses last week. On the other hand, the USDJPY has continued to fall for the fourth consecutive session.

Our view of this divergence in the correlation between the Nikkei Index and the USDJPY is that it should be eliminated again by converging the correlation between both instruments in favour of the trend that indexes are presenting at a general level.

 

MAIN INDICES DAILY PERFORMANCE

 

DOW – Dow Jones again exceeds 25,000 pts.

The industrial index Dow Jones 30 <US30> has escalated and exceeded the psychological level of 25,000 pts, climbing to 25,258 pts (1.50%) in its fifth session of gains. The Nasdaq 100 <NAS100> technological index, meanwhile, has exceeded last week’s losses, advancing over 2 percent on the session.

In the technical scenario, we continue to see a bullish continuation, the levels to be controlled as resistance are 25,539.9 and 26,138.7 pts.

 

US STOCKS DAILY PERFORMANCE

 

STOCKS – Netflix incorporates Ryan Murphy into their team.

The online broadcast company announced on Tuesday night that it will incorporate producer Ryan Murphy to produce new series and original Netflix films. The agreement with the producer who currently works with 20th Century Fox has a cost $300 million, according to two people who know about the agreement. According to Ted Sarandos, the Netflix head of content, “Murphy has influenced the world’s cultural spirit, has reinvented genres and changed the course of television history.”

In the technical side, Netflix <NFLX> climbed 4.62%, bringing it close to historical highs, Goldman Sachs <GS> on January 23 updated its buy recommendation with a target of $250 to $315. If NFLX breaks above the resistance level of $286.81, the next resistance level is $300 as a psychological level. If it does not fall and consolidate below $236, we only consider bullish positions.

 

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Forex Market Analysis

LONG-TERM PICKS – Watching the PRZ in AUD-NZD

 

Instrument: AUD-NZD

Main Outlook: Bullish.

Forecast Timeframe: 2 to 3 weeks.

 

Summary.

The cross is developing a bearish structure that has reached the level of Fibonacci retracement F(61.8) 1.07181, from where we turn on alerts of the possible formation of a reversal pattern that could lead to new highs. Our objective level is 1.1363 and in the longer term the levels 1.17 and finally 1.21. The invalidation level is 1.0222.

 

Chart

 

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Forex Market Analysis

DAILY ABSTRACT – 15th February 2018

 
Hot Topics:

USD – CPI above the FED target increases the probability of a rate hike
EUR – Growth level of the Eurozone suggests that tapering could start soon

 
Hot Topics:

USD – CPI above the FED target increases the probability of a rate hike
EUR – Growth level of the Eurozone suggests that tapering could start soon

 

Hot Topics:

  • USD – CPI above the FED target increases the probability of a rate hike
  • EUR – Growth level of the Eurozone suggests that tapering could start soon

 

Main currencies daily performance.

USD – CPI above the FED target increases the probability of a rate hike.

In the session on Wednesday, the Consumer Price Index (CPI) and the Core Consumer Price Index (Core CPI) were published, discounting energy and food components. The CPI (YoY) index as of January climbed to 2.1%, above the 1.9% expected by analysts. The current level shows a consolidation in the strength of the level of consumption in the US economy; in this context, the probability of raising the interest rate in the next meeting of the Federal Open Market Committee (FOMC) increases.

 

Technically, we observe the continuation of the corrective movement that could reach the area from 88.66 to 88.44, the area from which it could form a higher grade connector (or mother wave), and begin to bounce. At the moment we maintain the neutral position in this index.

US Dollar Index 1-hour chart ( click image to enlarge)

 

EUR – Growth level of the Eurozone suggests that tapering could start soon.

The last Gross Domestic Product (GDP) (YoY) of the Eurozone published by Eurostat, has reached 2.7% for the second consecutive month, giving signs of stabilisation in the level of economic strength. In the same way, this confidence in the robustness of the economy of the Eurozone gives us indications that the tapering of the policy of quantitative easing could begin to begin very soon.

 

The single currency is developing a bullish structure that could bring the price to 1.2488, from where it could make a corrective move to 1.24190. While the EURUSD pair does not lose the 1.2275, the primary trend is bullish.

EUR-USD 1-hour chart (Click image to enlarge)

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Forex Market Analysis

DAILY ABSTRACT – 13th February 2018

 

Hot Topics:

  • GBP – Waiting for more falls in the Cable.
  • USOIL – Crude Oil is waiting for the issuance of the monthly report of the IEA.
  • DOLLAR – Observing a possible corrective movement.

 

Main currencies daily performance.

 

GBP – Waiting for more falls in the cable.

In a week full of inflation data, we started with the inflation of the United Kingdom. For the month of January, we expect a slight reduction in the CPI from 3.1% to 3.0% (YoY). The level of consensus is above the Bank of England’s (BoE) 2% objective, which at its last meeting of the Monetary Policy Committee, expects a slight downward turn, stabilised at the level projected in the coming months, around 3% in the short term.

Technically, we can see that the Cable is in the middle of a bearish structure that could take us to levels of 1.355 to 1.3448. The invalidation level of this bearish formation is 1.406.

 

GBP-USD 4-hour Chart ( Click image to enlarge)

USOIL – Crude Oil is waiting for the issuance of the monthly report of the IEA.

Yesterday, the monthly report of OPEC was released, where it expects the global demand of Crude Oil to grow to 98.60 mb/d (million barrels/day) in 2018, compared to the demand registered during 2017 that reached 97.01 mb/d. As for the world supply, OPEC estimates that during 2018 it will reach an average of 59.26 mb/d in non-OECD countries and 57.86 in the case of the OECD countries.

As you can see in the chart, we expect the price to reach $57 to start forming a reversal pattern that can take us to the medium-long term target area of $70.

OIL WTI 4-hour Chart ( Click image to enlarge)

DOLLAR – Observing a possible corrective movement.

The Dollar Index <DOLLAR> has developed two bullish impulse movements. From the current zone, we are expecting it to make a slight bearish move to complete a higher grade bullish structure that would take us to the first weekly resistance R1 at 90.823. We should not lose the point of view that the bias is bullish.

US Dollar Index 1-hour Chart ( Click image to enlarge)

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Forex Market Analysis

WEEKLY ABSTRACT – 12th to 16th February 2018

Hot Topics:

  • AUD – Employment data in the RBA spotlight.
  • USOIL – Expecting the IEA Monthly Report.
  • JPY – Observing the consolidation of economic growth.
  • US30 – Dow Jones bounces in the EMA (200).

 

This week the worst performance was for Crude Oil <USOil> which fell by 8.84%, just as we were predicting a few weeks ago. It would lose the support of $60 / barrel at the end of the session reaching our target profit level. We should also note that it was one of the most volatile weeks for indexes where the Dow Jones Index <US30> lost about 5% (equivalent to more than 1,200 pts.). In the currency market, we highlight the reversal of the Dollar Index <DOLLAR> that climbed by 1.39% in the week.

 

AUD – Employment data in the RBA spotlight.

Last week ended with reversals of 1.07% in the Aussie, in a week marked by volatility and the decision of investors to move away from the riskiest currencies. The consumption data and the rate decision by the RBA were not encouraging enough to boost the Australian dollar.

In this week, the labour market data will be released where it is expected that the unemployment rate remains unchanged; however, the analysts’ consensus expects a decrease in the level of employment change from 34.7K to 15.2K. The RBA keeps an eye on the level of employment to estimate future levels of inflation and thus assess future monetary policy decisions, which at the last Monetary Policy Meeting, they decided to keep unchanged at 1.5%.

In the technical aspect, we maintain a neutral position considering the advance of the bearish movement. We expect a limited fall to the area 0.774 to 0.763, from where we could begin to value long positions, a bearish acceleration as considerable as the previous one we see as a low probability. In the RSI we expect a second bullish divergence to be built as a sign of exhaustion.

AUD-USD 4-hour Chart ( Click image to enlarge)

USOIL – Expecting the IEA Monthly Report.

Crude Oil <USOil> last week fell 8.84%, helped by the volatility of the markets. This week the International Energy Agency (IEA) will publish its monthly report, which we hope will contribute to a new boost to the long-term trend.

Operationally, we closed our short positions that had a profit target of $59.75. We are currently evaluating the continuation of limited falls near to $57, a level where we expect to start to develop a bounce structure, in the long term we expect it to exceed $70. Before this, we must confirm that a corrective structure has been completed in the form of A-B-C.

OIL WTI daily chart ( Click image to enlarge)

JPY – Observing the consolidation of economic growth.

During the past week, along with the high volatility of the markets due to the correction of the stock markets, and the appreciation of the bond markets, the Japanese Yen has reached the base of the lateral structure that we have been monitoring since the issuance of our forecast for 2018 (issued in December 2017), reaching the minimum of 108,042.

For this week the publication of the growth level of the Japanese economy is expected. The analysts’ consensus estimates that it reaches 0.9% for the fourth quarter compared to 2.5% for the third quarter of 2017.

In the chart, we can see that the pair USD-JPY could make a final bullish move that reaches the area of 116.66, with a maximum extension of 119.45, from where we expect it to complete a higher grade connector, and then start a fall that could lead to a loss at the psychological level of 100.

USD-JPY  Daily Chart ( Click image to enlarge)

US30 – Dow Jones bounces in the EMA(200).

The last week has been the most volatile since 2016 for the stock indexes. The 30-year Note bonds have climbed to 3.14 pts and the Dow Jones index <US30> lost over 1,200 pts (over 5%). In structural terms, we expect a further fall in the bond markets, and by inverse correlation, as in the case of the USD-JPY, we expect a new bullish rally in the stock indices before a correction of greater magnitude.

TYX- 30-year Note Bond daily Chart ( Click image to enlarge)

On a technical note, it is worth noting the movement that developed the 30-year note <TYX> and the sequence that USDJPY is forming, are very similar.

Dow-30 daily Chart ( Click image to enlarge)

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Forex Market Analysis

DAILY ABSTRACT – 9th February 2018.

Hot Topics:

  • GBP – BoE decides to maintain the interest rate unchanged at 0.5 percent.
  • USOIL – Falls in a session of high volatility in the markets.
  • USDCAD – Waiting for employment data release.

 

Main currencies daily performance

 

GBP – BoE decides to maintain the interest rate unchanged at 0.5 percent

Bank of England’s (BoE) Monetary Policy Committee (MPC) members decided unanimously to maintain the interest rate unchanged at 0.5 percent.  MPC members see that the UK economy will grow “only modestly over the forecasted period.”

Inflation is expected to remain around 3% in the short term, attributed mainly to oil prices. Regarding the possibility of an increase in the interest rate, BoE Governor Mark Carney pointed out that the interest rate increase is likely to be realised soon. The BoE suggested as a possibility that it might be during the month of May.

Once the decision of the BoE was published, the Cable climbed up to 1.40 (resistance level R2) from where it made a reversal movement towards the pivot point. Structurally, in the short-term, we expect more falls towards the area of 1.355 – 1.345.

GBP-USD hourly Chart ( Click image to enlarge)

USOIL – Falls in a session of high volatility in the markets.

Oil has continued its downtrend. In a day marked by high volatility, crude oil closed with losses of 2.03%. In the United States stock market, the companies correlated with oil, Exxon <XOM> and Chevron <CVX> registered declines of -1.62% and -2.13% respectively.

In the currency market, the Canadian dollar fell -0.24%.

In our short-term view, we maintain a bearish bias down to the $60 – $59 zone, from which the crude could experience a technical rebound.

OIL WTI hourly Chart ( Click image to enlarge)

USDCAD – Waiting for employment data release.

The last emission of macroeconomic data of the week comes from the Canadian Dollar, where the unemployment rate will be released. The consensus of the analysts forecasts 5.8%, while the change of employment for the month of January should register a setback around -2K.

Our technical vision is that the Loonie could make a limited upward movement to the confluence zone between the weekly resistance level R3 and the Fibonacci level F(61.8) 1.2663. From there, it could initiate a bearish move with a target profit in the weekly pivot 1.2326. The invalidation level is 1.2808.

USD-CAD 4-hour Chart ( Click image to enlarge)

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Forex Market Analysis

Daily Abstract – 8th February 2018

Hot Topics:

  • NZD – RBNZ monetary policy meeting maintains the interest rate at 1.75 percent.
  • USOIL – Plunges after inventories data release.
  • GOLD – Falls driven by the dollar appreciation.

 

Main currencies daily performance.

 

NZD – RBNZ monetary policy meeting maintains the interest rate at 1.75 percent.

The RBNZ Monetary Policy Decision has decided to maintain the interest rate at 1.75%. In their statement, they say: “Equity markets have been strong, although volatility has increased recently”. Concerning the accommodative policy, RBNZ adds “Monetary policy remains easy, but is gradually becoming less stimulatory”. The members see “The growth profile is weaker in the near term, but stronger in the medium term”. Inflation in December “was lower than expected at 1.6%, due to weakness in manufactured goods”. The RBNZ statement ends signalling that “Monetary policy will remain accommodative for a considerable period, but policy may need to adjust accordingly”.

Technically the Kiwi maintains the bearish bias, as has been our central vision. We still expect continuity in the falls to the area of 0.71064 and 0.70634, an area from where we could begin to be alerted to evaluate potential bullish positions. For the moment we stay out of this pair.

NZD-USD hourly Chart ( Click image to enlarge)

USOIL – Plunges after inventories data release.

After the publication of the crude oil inventory data (1.895M actual vs estimated 3.189M), crude oil began to accelerate the bearish movement that has been developing since last week where we see a pattern of bullish failure. This fall could be in 5 waves; our conservative objective is at $59.75.

OIL WTI hourly Chart ( Click image to enlarge)

GOLD – Falls driven by the dollar appreciation.

Given the strength of the dollar, we expect more falls in gold. The zone that we propose as a control zone is in the bullish guideline which could act as a dynamic support level at $1251.26. We will be observing the development of the price movements to evaluate long-term bullish incorporations.

– First key support $1301.27.

– Second key support $1285.98.

Gold Daily Chart ( Click image to enlarge)

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Forex Market Analysis

DAILY ABSTRACT – 7th February 2018.

Hot Topics:

  • AUD – RBA maintains the monetary policy, unchanged at 1.5%.
  • NZD – Higher before employment data release.
  • DOW – Stocks bounces after the “Black Monday”.

Main currencies daily performance.

 

AUD – RBA maintains the monetary policy unchanged at 1.5%.

In the overnight session, in the last monetary policy meeting, the Reserve Bank of Australia (RBA) decided to maintain the interest rate unchanged at 1.5% as expected by the analyst’s consensus. In the decision statement, Governor Philip Lowe said: “The low level of interest rate is continuing to support the Australian economy”. Concerning inflation, Governor Lowe added: “Inflation is low, with both CPI and underlying inflation running a little below 2%. Inflation is likely to remain low for some time”.

Although we are out of this pair, our central vision for the Aussie is to expect continuity in the bearish positions, looking for an area for structural long positions in the medium term.

AUD-USD 30-min. Chart ( Click image to enlarge)

NZD – Higher before employment data release.

Kiwi advances 0.51% in the middle of the session expecting the employment data release. The consensus foresees that unemployment will be nearer to 4.7%, a little higher than the previous rate which was 4.6%. The employment change (QoQ) expected is 0.4%, lower than the last quarter, which reached 2.2%. Despite the analyst’s forecast, the unemployment rate is at its lowest level since 2009.

In technical terms, we look for continuity in the weakness in the Kiwi, which could bring the price to the weekly support area (Weekly S1), which also has a confluence of levels with the daily support S1 (0.7244) as the target area.

NZD-USD hourly Chart ( Click image to enlarge)

DOW – Stocks bounces after “Black Monday”.

U.S. stocks start the session with a bearish gap after the high volatility registered this Monday. Exxon XOM (-7.66%), Boeing BA (-8.09%) and Cisco CSCO (-8.72%) were the ones that recorded the highest losses at the opening. As the session progressed, the technical rebound of principal stocks began. Cisco CSCO (6.60%), Microsoft MSFT (5.76%), Goldman Sachs (5.68%), Visa V (5.57%), Boeing BA (5.51%) and Chevron CVX gaining (5.48%), standing out at the end of the day. In the FAANG group, Netflix NFLX was the best performer which gained 8.82% and Amazon AMZN with 6.13%.

The Dow Jones index, on the other hand, has rebounded from the EMA of 200 periods, closing the session at the Fibonacci level F(50%) of all the registered falls; the next resistance will be level F(61.8). We maintain a neutral vision until we see how the current structure develops.

Dow-30 daily Chart ( Click image to enlarge)

Categories
Forex Market Analysis

USOIL (WTI) – EXPECTING TO SELL THE SHOOTING STAR (UPDATED).

 

Instrument: USOIL (WTI)

Main Outlook: Bearish

Forecast Timeframe: 2 to 3 weeks.

 

Summary.

In the original Long-Term Pick, we proposed the level of $63 as the first profit target. Today, the USOil has reached our first profit, now is the time to move the SL to breakeven and let the trade run to the final profit target of $59.75.

Charts.

Figure 1: USOIL Original Scenario.(Click image to enlarge)

 

Figure 2: USOIL Updated. ( Click image to enlarge)

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Forex Market Analysis

Daily Abstract – 6th February 2018

Hot Topics:

  • USD – ISM Non-Manufacturing PMI helps to boost the Dollar.
  • DOW – Plunges more than 1,500 pts and erases 2018 gains. Are we starting a bearish market?

 

Main currencies daily performance.

USD – ISM Non-Manufacturing PMI helps to boost the Dollar.

The ISM Non-Manufacturing PMI (MoM) was released today. It reaches 59.9 in January, the forecasted level was 56.5 according to a Reuters survey. The ISM release shows a continuation of expansion in the services sector for more than 90 months. This optimistic scenario in the services sector has helped the Dollar which has increased for the second consecutive day (0.64%) reaching the 89.550 level.

 

The Dollar Index has exceeded the maximum registered on the 30th of January, activating a Trader Vic 1-2-3 pattern, which could lead to a short-medium term objective to the level of weekly R3 (90,645).

US Dollar Index 30-min. chart ( click on the image to enlarge)

DOW – Plunges more than 1,500 pts and erases 2018 gains. Are we starting a bearish market?

The U.S. stock markets plunged in a high volatility session; Dow Jones fell 5.5% erasing the yearly gains losing 2.43%, S&P 500 looses 1.95% in 2018. The worst performance during 2018 is in the European markets, the FTSE 100 today has closed with loses of 3.73%, accumulating loses of 8.21% during 2018; in the same way, the DAX 30 also drops 3.23% in the first session of the week, registering losses of 5.69% in the year.

Making a bit of history during the month of October 1987, the so-called “Black Monday” occurred, where the American stock market plummeted more than 20%. The media began to transmit the feeling of panic due to the collapse of the stock markets. We invite the reader to observe and reflect on this movement of the market.

 

October 1987 Dow-30 daily chart ( click on the image to enlarge)

 

The market’s history tends to repeat the same pattern.

Feb 2018 Dow-30 daily chart ( click on the image to enlarge)

Categories
Forex Market Analysis

WEEKLY FORECAST 5th – 9th February 2018.

Weekly Forecast Hot Topics:

  • NZD – Waiting for the optimism of the market to be replicated with the decision of the RBNZ.
  • AUD – No big expectations in the next monetary policy decision.
  • CAD – Continuity in the strengthening of the labour market.

Weekly performance

This week, the best performer was the Euro <EUR> (0.22%), pushed by the positive data on inflation and industrial activity. The worst performer was Aussie <AUD>,  its losses reach¡ng 2.22% due to weak inflation Australian data and the stronger US employment data. Those led to boost the Dollar <DOLLAR> (0.17%) and reverse the losses that were dragging in the week.

 

NZD – Waiting for the optimism of the market to be replicated with the decision of the RBNZ.

Last week the New Zealand Trade Balance (MoM) reported a historic surplus of $640M, the highest value since March 2015. The main factor contributing to this increase has come from dairy products exported to their principal trading partner, China.

This week, the leading data for the Kiwi will come from the employment indicators (QoQ) and the RBNZ interest rate decision. The unemployment figure is expected to increase slightly from 4.6% in October 2017 to 4.7%. As for the interest rate decision, no big surprises are expected, analysts expect the RBNZ to keep the interest rate at 1.75%.

Technically, we expect more downside moves for the Kiwi. In EURNZD we observe a bullish continuation that could reach 1.7174 before it starts a bearish sequence.

EUR-NZD 4-hour chart ( click on the image to enlarge)

AUD – No big expectations in the next monetary policy decision.

During the last trading period, inflation data (YoY) was published, which was expected to be equal to or higher than 2%. However, it did just reach 1.9%, baffling the market and removing the possibility of a new increase in the interest rate by the RBA.

For this week, the most expected event for the Aussie will be the monetary policy decision, in which no changes are expected in the current rate that is set at 1.5%.

On the technical level, we still expect weakness in the Aussie group before starting a new strengthening of the oceanic currency. In the EURAUD, we expect the price to reach the 1.6026 level, where it could complete a higher grade connector and start a new bearish cycle.

EUR-AUD daily chart ( click on the image to enlarge)

 

CAD – Continuity in the strengthening of the labour market.

This week will end with the publication of the Canadian employment data. Continuity in the strengthening of the labour market is expected, in the unemployment rate the estimated consensus is a slight increase that reaches 5.8%; however, current levels of unemployment are the lowest of four decades.

Technically, we continue to expect new lows for the Loonie, which could even lose the psychological support of 1.20, a large bearish cycle which started in January 2016.

USD-CAD daily chart ( click on the image to enlarge)

 

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Forex Market Analysis

Daily Abstract – 2nd February 2018

Hot Topics:

  • DOLLAR – BUILDING A SIDEWAYS STRUCTURE BEFORE U.S. EMPLOYMENT DATA RELEASE.
  • FAANG – APPLE, AMAZON AND ALPHABET CLOSE MIXED BEFORE QUARTER EARNINGS RELEASE.
  • CRYPTOS – BTC CONTINUES THEIR SELL-OFF.

 

Main currencies daily performance.

DOLLAR – BUILDING A SIDEWAYS STRUCTURE BEFORE US EMPLOYMENT DATA RELEASE.

We are starting the second month of the year, and as usual, in the first week of every month, the market is expecting the employment data release. Today, the Bureau of Labour Statistics in the US will publish the unemployment rate. It is expected to remain unchanged at 4.1%, while Nonfarm Payrolls’ expected increase is to 184K.

The Index has returned to the past week’s lower values, building a sideways structure. We expect that the volatility generated by the data release could define the market direction.

 

FAANG – APPLE, AMAZON AND ALPHABET CLOSE MIXED BEFORE QUARTER EARNINGS RELEASE.

Alphabet <GOOG> has closed with an advance of 0.8% before the last quarter earnings release, where GOOG has reported an EPS of 9.7 ($/sh.) vs 9.98 ($/sh.) estimated, and a Revenue of 32.32B vs 31.87B expected. Amazon <AMZN> has closed the session with 2.65% of losses after the closing bell. AMZN reported an EPS of 3.75 ($/sh.) vs 1.85 ($/sh.) estimated, and a Revenue of 60.45B vs 59.83B expected. Finally, Apple <AAPL> also closed with losses (0.22%), the earnings reported was an EPS of 3.89 ($/sh.) vs 3.85 ($/sh.) estimated, and a Revenue of 88.3B vs 77.25B expected.

 

CRYPTOS – BTC CONTINUES THEIR SELL-OFF.

As we are forecasting from the Potential Dead Cat Bounce Pattern article, and as has been published yesterday in our Daily Abstract, the crypto-currency Bitcoin is making new lower lows; our vision is that BTC will reach the 8,000 level. BTCUSD falls to November 2017 levels. So far this year, Bitcoin has lost approximately 58.9%.

 

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Forex Market Analysis

Daily Abstract – 1st February 2018

Daily Abstract’s Hot Topics:

  • DOLLAR – FOMC, Federal Reserve maintains an unchanged interest rate at the end of the Yellen age.
  • NZD – Kiwi the best currency performer of the session aided by the investors’ confidence in market conditions.
  • FAANG – AMAZON despite the bullish gap, closes lower  
  • FAANG – GOOGL and AAPL close mixed before the earnings release.
  • CRYPTOS – BTC tests the psychological 10,000 support.

 

Main currencies daily performance.

DOLLAR – FOMC, FEDERAL RESERVE MAINTAIN AN UNCHANGED INTEREST RATE AT THE END OF THE YELLEN AGE.

The Federal Open Market Committee (FOMC) members in their last meeting of the Yellen age have decided to maintain the interest rate unchanged at 1.50%. The labour market has continued to strengthen and economic growth has risen. This meeting has been the end of the Janet Yellen era as chair, next month the chair will be the Republican Jerome Powell, who has been confirmed by the Senate on January 24.

Our vision still considers a probability of turning bullish; if the index consolidates above the weekly pivot, our forecast will have more confidence in selling the Euro <EURUSD>. Additionally, we are positioned to sell the Euro from 1.250 level (see long-term pick EURUSD Watching the Weekly F38.2 )

US Dollar Index 1-hour chart ( click on the image to enlarge)

 

EUR-USD 30-min chart ( click on the image to enlarge)

 

NZD – INVESTORS’ CONFIDENCE IN MARKET CONDITIONS THE BOOST KIWI.

Favourable market conditions are boosting New Zealand’s agro-industry; the central factor has been the increase of the dairy products exports. Dairy products and their derivatives are the most relevant contributors to exports, about 95% of New Zealand dairy products are exported.

On the technical side, the Kiwi is making a consolidation structure; we expect if it breaks down, the target level is the confluence between Daily S2 and Weekly S1, the zone from the Kiwi could find buyers again.

NZD-USD 1-hour chart ( click on the image to enlarge)

 

FAANG – AMAZON DESPITE THE BULLISH GAP, CLOSES LOWER  

In the last session, Amazon <AMZN> opens higher by 1.53%, boosted by the project between Amazon and Berkshire Hathaway (the Warren Buffett’s company) to create a healthcare company with “reasonable costs”.

The chart shows us a clear bull trend. Bullish positions must be considered above the confluence between Daily R2 and Weekly R2, which could be working as strong resistance.

Amazon <AMZN> 1-hour chart ( click on the image to enlarge)

 

FAANG – GOOGL AND AAPL CLOSE MIXED BEFORE THE EARNINGS RELEASE.

Google <GOOG> has been the best performer of the session with a 0.88% advance, aided by the expectation before the earnings release, which will be after the closing market; the analyst consensus expects $31.87B of revenues and $9.98 earnings per share (EPS).

We expect that GOOG reaches the weekly R1 level ($1,191.32) during the session, a zone that could find sellers.

Google <GOOG> 1-hour chart ( click on the image to enlarge)

 

Another company that will release earnings, after the market closes, will be Apple <AAPL> which has closed with a -0.17% performance. The analyst expects $77.25B of revenues and $3.85 EPS.

In the AAPL case, it is probable that it will reach the 164.22 level, the zone from where it could find buyers to the weekly pivot point (173.60).

Apple <AAPL> 4-hour chart ( click on the image to enlarge)

 

CRYPTOS – BTC TESTS THE PSYCHOLOGICAL 10,000 SUPPORT.

In the last session and the past week, Bitcoin <BTCUSD> has been testing the psychological level $10,000; we expect that BTC plunges to $8,074 level as a continuation of the bearish cycle started on the 17th December 2017.

BitCoiun <BTC> 4-hour chart ( click on the image to enlarge)

 

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Forex Market Analysis

Weekly Forecast 22nd to 26th January 2018

Weekly Forecast’s Hot Topics:

  • JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.
  • DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS CONTINUED FALLING.
  • EUR – EURO EXCEEDS 1.25 HELPED BY THE DECLARATIONS OF DRAGHI.
  • AUD – EXPECTED VOLATILITY DUE TO INFLATION DATA RELEASE.

Asset Performance

This week, the best performer was Crude Oil <USOil> with a rise of 4.48%. WTI has reached the 66 US$/Barrel level, the highest since December 2014. Despite the deal between Republican and Democrats US Senators to stop the Government shutdown, the Dollar <DOLLAR> couldn’t take a breath and continued moving down 1.56% this week.

 

 

JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.

The Bank of Japan (BoJ) decided to keep the monetary policy and the economic stimulus unchanged. Kuroda has signalled that the BoJ might be nearing the start of policy normalisation: not so fast. The BoJ’s members voted 8-1 to keep its interest rates and asset purchases at current levels. Also, Kuroda said inflation expectations had stopped falling. The BoJ’s perspective is that the economy will grow 1.4% in the fiscal year starting in April, with an inflation of 1.4% over the same period.

The inflation data (YoY) excluding the food component, released this week has reached the 0.9%. The BoJ Governor Kuroda speaking at the World Economic Forum in Davos has said that “there are some indicators that wages and some prices have started to rise”. Also added that “there are many factors that made the 2 percent target difficult and time-consuming, but we are finally close”.

 

Technically, the USD-JPY is completing a sideways consolidation macro-structure. Our vision is to expect if the price falls to 108.16 to 107.18, where the yen could find buyers again.

USD-JPY daily chart ( click on the image to enlarge)

 

DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS CONTINUED FALLING.

This week the Republicans Senators has stricken a deal with Democrats for stop temporally the US Government shutdown for three days, the first shutdown since 2013. In this agreement, Democrats have accepted to vote for the bill while they will continue negotiating immigration legislation for “dreamers” (children that migrate illegally to the US). This agreement has as a deadline February 8.

The week has ended with the US GDP (QoQ) data release. The US economic growth a 2.6%, lower than the expected 3% in the fourth quarter. Although the fourth quarter GDP has been slowed, in 2017 the economic growth has gained momentum, from the 0.9% reported in March 2017.

Technically, the US Dollar Index has broken down the past week range to the 88.9 level. Our vision for the next week is a limited downward into the 87.85 to 87.1 area to make a potential reversal pattern to reach 91.03 level.

US Dollar Index daily chart ( click on the image to enlarge)

 

EUR – EURO EXCEEDS 1.25 HELPED BY DECLARATIONS OF DRAGHI.

This Thursday the common currency has raised over 1.25, the highest level since December 2014. In the last Monetary Policy Decision ECB Conference, President Mario Draghi has maintained the accommodative policy, and the interest rates will remain well beyond the end of the QE.

Regarding forex risk, Draghi signalled that “Now, we have downside risks relating primarily to geopolitical and especially foreign exchange markets. But by and large, the risks to growth are balanced.”

On the technical side, once the euro reached the weekly Fibonacci level F(38.2), has started to make a corrective move leaving to the pair to the 1.24235 level. Our central vision is that the euro could start a new bearish cycle, where our first target is 1.16845.

EUR-USD daily chart ( click on the image to enlarge)

 

AUD – EXPECTED VOLATILITY DUE TO INFLATION DATA RELEASE.

 

In the last week of the month, in Oceanic Session, the volatility expected will come from the Inflation (QoQ) data release. The analysts expect that the CPI (QoQ) will be 0.8% and (YoY) 2.0%. Under this context, the RBA could hike the Interest Rate in the next Monetary Policy Meeting scheduled on February 6.

 

As has been forecasted previously, our primary vision remains bullish for Aussie, where the long-term target is 0.8433, level from where the price could find sellers to begin to develop a major degree connector.

AUD-USD daily chart ( click on the image to enlarge)

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Forex Market Analysis

DAILY ABSTRACT for 30th January 2018

Daily Abstract’s Hot Topics:

DOLLAR – RAISES WITH ALL EYES ON THE FOMC MEETING.
NZD – NEW ZEALAND TRADE BALANCE (MoM) STRIKES A RECORD SINCE MARCH 2015.

 
Daily performance

Daily Abstract’s Hot Topics:

DOLLAR – RAISES WITH ALL EYES ON THE FOMC MEETING.
NZD – NEW ZEALAND TRADE BALANCE (MoM) STRIKES A RECORD SINCE MARCH 2015.

 
Daily performance

Daily Abstract’s Hot Topics:

  • DOLLAR – RAISES WITH ALL EYES ON THE FOMC MEETING.
  • NZD – NEW ZEALAND TRADE BALANCE (MoM) STRIKES A RECORD SINCE MARCH 2015.

 

Daily performance of main currencies

The Dollar dominated the first session of the week <DOLLAR> gaining 0.31% in a week that will be driven by the last Janet Yellen FOMC meeting. The Crude Oil registered the worst performance <USOil > that plunged -1.03%.

 

 

DOLLAR – RAISES WITH ALL EYES ON THE FOMC MEETING.

The dollar has started a bullish week where it has been dominant today. This week all eyes will be on the last meeting of Janet Yellen as Chair of the Federal Reserve. Although many analysts expect an increase in the interest rate, our view is that it will remain unchanged until March.

On the technical level, our vision continues to be bullish. In the short term, we expect a slight retracement and a new momentum that will lead to the level of resistance R1 in weekly temporality.

US Dollar Index 1-hour Chart ( click on the image to enlarge) kamagra online kaufen ohne rezept

NZD – NEW ZEALAND TRADE BALANCE (MoM) STRIKES A RECORD SINCE MARCH 2015.

The New Zealand Trade Balance (MoM) has reported a historic surplus of $ 640M, the highest value since March 2015. The main factor that has contributed to this increase has come from dairy products exported to China.

 

Our vision for the Kiwi is that the oceanic currency is completing a bullish structure to make way for a higher grade connector. The first target zone is 0.723.

NZD-USD 1-hour Chart ( click on the image to enlarge)

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Forex Market Analysis

WEEKLY UPDATE from January 22 to 26, 2018

 

Weekly Update’s Hot Topics:

JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.
DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS

 

Weekly Update’s Hot Topics:

JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.
DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS

 

Weekly Update’s Hot Topics:

  • JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.
  • DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS CONTINUED FALLING.
  • EUR – EURO EXCEEDS 1.25 HELPED BY DECLARATIONS OF DRAGHI.
  • AUD – EXPECTED VOLATILITY DUE TO INFLATION DATA RELEASE.

 

This week, the best performer was Crude Oil <USOil> with a rise of 4.48%. WTI has reached $66 (US)/Barrel, the highest level since December 2014. Despite the strikes deal between the Republican and Democrat US Senators to stop the Government shutdown, the Dollar <DOLLAR> cannot take a breath and continued falling 1.56% this week.

 

JPY – BOJ KEEPS THE MONETARY POLICY UNCHANGED, AND INFLATION CLOSE TO TARGET.

The Bank of Japan (BoJ) decided to keep the monetary policy and the economic stimulus unchanged. Kuroda (The Bank of Japan governor) has signalled that the BoJ might be nearing the start of policy normalisation: but not so fast. The BoJ’s members voted 8-1 to keep its interest rates and asset purchases at current levels. Also, Kuroda said inflation expectations had stopped falling. The BoJ’s perspective is that the economy will grow 1.4% in the fiscal year starting in April, with an inflation of 1.4% over the same period.

The inflation data (YoY), excluding the food component, released this week has reached 0.9%. Kuroda, speaking at the World Economic Forum in Davos has said that “there are some indicators that wages and some prices have started to rise”. Also added that “there are many factors that make reaching the 2% target difficult and time-consuming, but we are finally close”.

 

Technically, the USD-JPY is completing a sideways consolidation macro-structure. Our vision is, if we expect the price to fall to 108.16 to 107.18, the yen could find buyers again.

USD-JPY  Daily Chart ( click on the image to enlarge)

DOLLAR – DESPITE THE DEAL TO STOP THE SHUTDOWN THE GREENBACK HAS CONTINUED FALLING.

This week the Republicans Senators have struck a deal with the Democrats to temporally stop the US Government shutdown which lasted for three days, the first shutdown since 2013. In this agreement, Democrats have accepted to vote for the bill while they will continue negotiating immigration legislation for “dreamers” (children that migrate illegally to the US). This agreement has as a deadline February 8.

The week has ended with the US GDP (QoQ) data release. The US economic growth is at 2.6%, that is lower than the expected 3% in the fourth quarter. Although the fourth-quarter GDP has been slowed, in 2017 the economic growth has gained momentum from the 0.9% reported in March 2017.

 

Technically, the US Dollar Index has broken down in the past week to the 88.9 level. Our vision for the next week is a limited downward turn to the 87.85 to 87.1 area, and then for it to make a potential reversal pattern to reach 91.03 level.

US Dollar Index Daily Chart ( click on the image to enlarge)

 

EUR – EURO EXCEEDS 1.25 HELPED BY DECLARATIONS OF DRAGHI.

This Thursday the common currency has raised to over 1.25, the highest level since December 2014. In the last Monetary Policy Decision ECB Conference, President Mario Draghi has maintained the accommodative policy and the interest rates will remain well beyond the end of the QE.

Regarding forex risk, Draghi signalled that “now, we have downside risks relating primarily to geopolitical and especially foreign exchange markets. But by and large, the risks to growth are balanced.”

On the technical side, once the Euro reached the weekly Fibonacci level F(38.2), it has started to make a corrective move leading the pair to the 1.24235 level. Our central vision is that the Euro could start a new bearish cycle, where our first target is 1.16845.

 

EUR-USD  Daily Chart ( click on the image to enlarge)

AUD – EXPECTED VOLATILITY DUE TO INFLATION DATA RELEASE.

In the last week of the month in the Oceanic Session, the volatility expected will come from the Inflation (QoQ) data release. The analysts expect that the CPI (QoQ) will be 0.8% and (YoY) 2.0%. Under this context, the RBA (Reserve bank of Australia) could hike the Interest Rate in the next Monetary Policy Meeting scheduled on February 6.

As has been forecasted previously, our primary vision remains bullish for the Aussie, where the long-term target is 0.8433 level from where the price could find sellers to begin to develop a major degree connector.

AUD-USD  Daily Chart ( click on the image to enlarge)

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Weekly Forecast w/c 22nd January 2018

Weekly forecast’s Hot Topics:

  • DOLLAR – US GOVERNMENT SHUTDOWN STILL WITHOUT A DEAL.
  • EUR – WHAT TONE WOULD DRAGHI TAKE IN THE NEXT ECB MONETARY POLICY DECISION?
  • GBP – COULD IT BE MAKING A TERMINAL PATTERN?

Weekly Performance

The past week, the best performer was the Aussie with an advance of 1.18% supported mainly by the stronger employment change data released on Thursday 18th, where it was forecasted 9K and the change reported was 34.7K. The worst performer was the Loonie which fell -0.33% after the BoC decision that kept the interest rate at a 1.25%.

 

DOLLAR – US GOVERNMENT SHUTDOWN STILL WITHOUT A DEAL.

This week the US agenda will be driven by the Government shutdown and the deal expectation that the Republican Senate could achieve with Democrats. On the economic side, the main macroeconomic events will be from the housing market, in both Existing Home Sales and New Home Sales, a moderated decrease is expected.

Technically, the US Dollar Index is in a range between 89.99 and 90.8. RSI is showing bullish divergence signals. The price could make a new low to the 89.6 area before it starts a new bullish cycle.

EUR – WHAT TONE WOULD DRAGHI TAKE IN THE NEXT ECB MONETARY POLICY DECISION?

This Thursday 25th, the market volatility will be led by the Mario Draghi tone in the ECB Monetary Policy Decision Conference. Investors are expecting answers to the following questions: When will the first interest rate hike be? When will the QE end? What is his opinion about the strength of the Euro and the inflation level due to the climb in oil prices? Also, the market is expecting news about his successor in the ECB Presidency.

On the technical side, in the short term, the price remains bullish. Our vision is a limited appreciation of the common currency to 1.239 area for then start a new bearish cycle that could reach the 1.15 area.

 

GBP – COULD IT BE MAKING A TERMINAL PATTERN?

The Sterling has a gaining momentum as it approaches 1.40 level. In this area, we find the 2nd weekly resistance level (1.406); our vision is that in this area the pound could find resistance and start a corrective structure in the first instance to 1.384, and the second instance to 1.373 level.

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Forex Market Analysis

Daily Abstract 22nd January 2018

Daily Abstract’s Hot Topics:

USD – THE US GOVERNMENT SHUTDOWN ENDS AS SENATE MAKES A DEAL.
EUR – PRESIDENT MACRON TO BBC: FREXIT IS COMING?
JPY – ANALYSTS DON’T EXPECT

Daily Abstract’s Hot Topics:

USD – THE US GOVERNMENT SHUTDOWN ENDS AS SENATE MAKES A DEAL.
EUR – PRESIDENT MACRON TO BBC: FREXIT IS COMING?
JPY – ANALYSTS DON’T EXPECT

Daily Abstract’s Hot Topics:

  • USD – THE US GOVERNMENT SHUTDOWN ENDS AS SENATE MAKES A DEAL.
  • EUR – PRESIDENT MACRON TO BBC: FREXIT IS COMING?
  • JPY – ANALYSTS DON’T EXPECT CHANGES IN THE MONETARY POLICY.

 

Main currencies daily performance.

USD – THE US GOVERNMENT SHUTDOWN ENDS AS SENATE MAKES A DEAL.

The US government shutdown ends after the Senate Republicans and Democrats voted to approve a temporary funding bill. Democrats have accepted to vote for the bill while they will continue negotiating immigration legislation for “dreamers.” The agreement has until the 8th February deadline.

 

The Buck today has moved in a range expecting an agreement between Republicans and Democrats. The bias remains bearish.

EUR – PRESIDENT MACRON TO BBC: FREXIT IS COMING?

The French President Emmanuel Macron said to BBC that he would have “probably” voted to leave the EU if offered the choice in a referendum. This is not the first time that President Macron has spoken about the Frexit idea, on the 1st of May 2017, in the presidential campaign, he said that “we have to reform this Europe” or “we will have a Frexit.”

Despite the President Macron’s declarations, the Euro is still moving in a range between 1.221 and 1.227; probably the common currency is expecting for more volatility that could be helped by the German ZEW Economic Sentiment data release.

 

JPY – ANALYSTS DON’T EXPECT CHANGES IN THE MONETARY POLICY.

The BoJ (Bank of Japan) will release its statement on today’s Monetary Policy Meeting. The analysts do not expect changes on monetary easing despite recent signs of economic recovery, and the inflation target is below the BoJ target (0.6% real vs 2% target). Probably the Governor Haruhiko Kuroda could give signs of the reduction in the quantitative easing and the interest rate hike in the long-term.

 

Technically, the pair USDJPY is in a sideways structure. Our vision is that there will be a probability of a bearish continuation before a spike to 111 level for starting a downward cycle.

 

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Hot Topics – December 18 to 21, 2017

Hot Topics:

  • US DOLLAR – THE BEARISH BIAS DUE TO TAX REFORM CONTINUES.
  • GBP-USD – BREXIT NEGOTIATIONS AND ECONOMIC GROWTH DRIVES STERLING.

This past week presented significant advances for the New Zealand dollar with a 2.25% advance, due mainly to the weak inflation data (YoY) shown by the American economy (1.7% vs. 1.8% expected). The increase of the interest rate by the FOMC was not enough to reverse the advance of the Kiwi.

The worst performance of the week was exhibited by the British Pound with a -0.41% loss. The BoE decided to keep the interest rate at 0.5% in the context of an increase in unemployment for a second consecutive month, reaching 4.3%. On the other hand, inflation (YoY) scored a 3.1% advance, the highest level for almost six years; specialists believe that CPI is reaching a peak and that it could mainly impact the cost of the services sector.

 

 US DOLLAR – THE BEARISH BIAS DUE TO TAX REFORM CONTINUES

Dollar begins a bearish week in the context of uncertainty over the approval of tax revision legislation with the aim of making American companies more competitive.

The Republican Senator Bob Corker has expressed concern about the fiscal deficit that can result from the tax cuts. Despite having a position in favour of the tax review, doubts remain in the approval of the reform, in the same way that the Senate rejected the Trump Administration’s proposal to suppress Obamacare last July.

The Greenback has broken the bullish guidance that has reached S3; there is a possibility that it will develop a bullish reversal movement up to the weekly pivot level. You can find more information in our article Finding Trade Opportunities Using Pivot Points.

 

GBP-USD – BREXIT NEGOTIATIONS AND ECONOMIC GROWTH DRIVES STERLING.

Economic growth and negotiations for Brexit continue to be the primary drivers of the Sterling. On Wednesday, the governor of the BoE will address the Parliament in the context of the hearing of the Select Committee of the Treasury on the November Financial Stability Report.

The British Prime Minister, Theresa May, has assured the Parliament that she is looking for the Brexit transition to be completed within two years. The first phase of the Brexit negotiations has been on the rights of EU citizens in Britain. EU members have agreed to move to the second stage, which focuses on the transition and future commercial relations. The British Parliament has urged May to stand firm in the interests of the United Kingdom, such as a previous Prime Minister, Margaret Thatcher.

Technically, the Pound is developing a corrective structure, with a bias for bullish continuation. The RSI shows a bullish divergence; however, we expect a retracement towards the weekly pivot zone and then continue with the bullish movement in the medium-long term.

 EUR-USD – CORRECTIVE STRUCTURE IN DEVELOPMENT

The single currency is developing a corrective structure; the RSI has not yet shown evidence of rupture. We expect the price to make a bearish movement in five; that means, the euro could move up to R1 and then fall to S2, thus completing a five-wave sequence.

 

 USD-CAD – LOONIE CONTINUES IN A SIDEWAYS RANGE MOVEMENT.

The Loonie continues in a sideways range formation, waiting for data to act as a catalyst. Most probably, the previous movement will continue to R2 (1.30 level). The RSI is forming a triangular structure that is finding resistance at level 60. The bullish bias still prevails, with the average of 9 periods under the RSI.

 

 NZD-USD – A PENNANT THAT COULD BE A PAUSE OF A NEW RALLY.

Last week, the Kiwi was the best currency performer with a 2.25% increase against the USD. This week it is developing a pennant pattern, manifesting a pause with further continuity of the bullish movement. The RSI, on the other hand, is forming a corrective structure. We expect a false move towards the weekly pivot, and then, continuing the upward cycle to the zone of R2 (0.715).

 

 

 

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Forex Market Analysis

Outlook for 10.24.2017

EUR/USD
The US Dollar is hesitant as President D. Trump told reporters he is very close to a decision about who should chair the Federal Reserve, which includes current Fed

EUR/USD
The US Dollar is hesitant as President D. Trump told reporters he is very close to a decision about who should chair the Federal Reserve, which includes current Fed

EUR/USD

The US Dollar is hesitant as President D. Trump told reporters he is very close to a decision about who should chair the Federal Reserve, which includes current Fed Chair, Janet Yellen. It also weighs on the US currency the rumors about Trump’s plan to reform taxes.

On the Euro front, European Central Bank is expected to announce on Thursday a possible timetable for a reduction of its asset purchases, as economic data suggest the Eurozone might witness a higher than expected economic expansion in 2017. Reducing asset purchases might, likely, be accompanied with a continuation of low interest rated, as Eurozone inflation data seems to be stable

Sideways channel movement on the EUR/USD pair

The Euro 1-hour price has been trending down since Oct, 19 when it draws an almost perfect triple top (1). Yesterday it touched Oct, 18th lows and bounced from there, and piercing up the downward trendline

Overall, the EUR/USD pair seems to trade in a sideways channel, but its current price may allow for a profitable trade, with a target touching the upper trend line (fig.1).

GBP/USD

JP Morgan analysts are convinced that shorting the GBP is still the way to go

The GBP is, still, affected by the Brexit process, but no major news about it is expected today. Slower consumer expending and softening of economic sentiment press policymakers to keep interest rates unchanged, which weighs on the British currency.

Daniel Hui, a foreign exchange strategist at J.P. Morgan said that their conviction to short the GBP is still high because they felt UK rate hikes were “overpriced”, given the “weak starting point for UK growth” and the reality of a Brexit shock that keeps dominating the medium-term outlook.

There is evidence that today’s lows might be the start of a new up-leg that may carry GBP/USD prices up to, at least, the highs of this lateral channel

GBP/USD daily price is experiencing a sideways movement, after retracing more 70% of its upward movement from its lows in August 2017

Possible scenarios:

  1. Today’s lows (1.31653) might be the start of a new up-leg that may carry GBP/USD prices up to, at least, the highs of this lateral channel (1.32272), provided that prices cross over the downward trend line.
  2. If the price does not continue up and reverse near the BB mean, then the downward leg is continuing to its next floor, at 1.31, and a good reward to risk trade is possible at about 1.3177.

USD/JPY

Japan was in focus yesterday, as prime minister, Shinzo Abe is back in power

Japan was in focus yesterday, as prime minister, Shinzo Abe is back in power, after his victory this weekend, that drove the yen downward yesterday. Today, we see a bounce that set prices to test the highs of yesterday’s session. Tuesday, the Japanese currency, instead of focusing on Japan’s manufacturing PMI, slightly lower in October, it seems to pay more attention to interest rate differentials.

Mid-term, the USD/JPY is trading on a lateral price channel whose low is at about 107.7 and it’s high is at 114.34. Currently, the price, trading at 113.71, is moving closer to the top of that channel.

A short-term bottom at (1) in sync with the MACD signal crossover, marks the start of a new uptrend. The red 10-period BB is sloping strongly up, so prices are heading for a test of the recent highs at (3), and, potentially break them up.

The best possible action here is to scalp on a short timeframe, such as 15 min charts or shorter, being aware that we are at the highs of a mid-term channel. Long and short-swing trades must wait for a clear signal or news event

USD/CHF

The Swiss National Bank (SNB) is keeping an expansive monetary policy that drives Swiss CHF down

The Swiss National Bank (SNB) considers the CHF to be over-valued, so it is keeping an expansive monetary policy that is driving the Swiss currency down. The SNB policy of negative interest rates contributes to the downward currency trend.

To sum up, the Swiss economy is slowing down, its growth rate (+0.3%) is losing track compared to the one registered in the Eurozone (+2.3%) in the second 2017 quarter.

USD/CHF is at overbought but still strongly moving up

The USD/CHF weekly is on a sideways channel with a lower limit at 0.942, and an upper limit at 1.0365. Its current price – 0.9896- is at about the middle of this channel. On a daily and weekly basis, the price is in overbought territory.

Today the USD/CHF is trading strongly up, and its hourly chart is currently at overbought territory as well, with its price touching the 3rth Bollinger band (+3STD) (1). On such a strong trend, the best thing to do is wait for a price pullback to create a short-term support near the mean of the Bollinger bands (2) and set a long trade there.

AUD/USD

Tomorrow, Australia’s quarterly inflation data will be released.

The Aussie is under pressure as the soft Chinese housing data was weaker than expected. China is a major partner for Australia, and China’s economic health shakes Australian currency for the good and the bad. The Housing Price Index grew in China by 6.3%, after an 8.3% increase in August. Next Wednesday, Australia will release its quarterly inflation figures.

AUD/USD is currently in a downtrend

The AUD/CAD pair, on a weekly chart, is moving on a downward leg, in a sideways channel that started in Jan 2015. The channel has a slight upward bias.

On the daily chart, the AUD/USD pair is down-trending after drawing a double top (July and September 2017). Actually, the price is below the -1 Bollinger Band showing that the downtrend is still in place

The most probable scenario for the AUD/USD pair is to go down to at least 0.766, or, even deeper, to touch the lower weekly trend line (0.7518). The MACD crossover to the downside confirms the bearish bias of this currency pair

USD/CAD

USD continues to show strength against the Canadian currency. Tomorrow’s interest rate decision by the Bank of Canada will bring a confirmation (or denial) to the strong uptrend od this currency pair. The odds of a new rate hike are getting lower, after weak economic data ahead of the BoC meeting.

Canada Wholesale sales rose by just 0.5% in line with forecasts, although, it seems the market expected a bit more increment.

USD/CAD moving up with strength
The USD/CAD pair, on a weekly chart, is in the middle of a retracing trend, starting at the beginning of September, which has retraced 35% of the length of the downward move. Its daily chart shows the currency pair approaching the ceiling of a potential wide and sideways price channel. The other notable fact being, a price breakout through 1.25953, starting a new impulsive leg up.

NZD/USD

NZ Government to reform RBNZ process to set rates.

The Kiwi dollar is under pressure since the government announced its plans to reform the Reserve Bank of New Zealand. NZ Labor-led coalition said it will modernize the bank’s process for rate-setting and adapt it into a format that was more “growth-friendly”. Giving hints about expansionist monetary policy. Analysts say the RBNZ reform is already well priced by the market, and have downplayed its impact on interest rate expectations.

NZD/USD is currently at the bottom of a down-trending channel

On a daily chart, the NZD/USD pair is trending down on a channel that started on July, 27. Actually, the price is oversold, well below the -2 Bollinger Band. The price is near a mid-term support, so it’s in the process of bottoming out, as is clearly seen in its hourly chart.

A possible scenario for the next few hours is a retracement from here to test resistance points at about 0.695. If it stalls without breaking 0.6908, and MACD turns bearish the retracement is failing, and the downtrend might resume testing the lows made in May 2017.