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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