Capital Trust Markets Daily Market Commentary

[CapitalTrustMarkets]

GOLD breaks a critical trend line and moves lower

Commodities moved lower during the last week after the Fed’s announcement of reduction in bond purchases. The GOLD was down heavily, as the yellow metal sellers saw that as an opportunity for a down move. The failure to break above the $1390 level can be seen as crucial, as the mentioned level represents the last major swing high.

Technical Analysis
There is an important up-move trend line, which acted as a support since the $1208 low, as can be seen in the daily chart shown below. The trend line was breached during the last week, and there were three bearish candles created back-to-back on the daily chart. After the break, the buyers managed to push the price one more time, but failed around the broken trend line. The $1340 might now act as a critical barrier in the short term. A break and close back above the mentioned level may well open the doors for one more leg higher. On the downside, the $1310 is seen as an immediate support zone. It represents the 38.2% retracement level of the last up-move from the $1180 low to recent high. The 50 day moving average also lies just above the 38.2% fib level. So, this support area can be crucial, and buyers could emerge around the same area.

There is divergence noted on the RSI between the last two lows, which means if the buyers return around the current levels or around the 50 day MA, then the GOLD could trade higher in the days to come. However, the RSI has breached the 50 level, and has settled below, which is a bearish sign in the short term.

Importance of Triangle on Daily chart
There is a triangle forming on the daily chart, which might play a significant role in the medium term. The triangle support lies around the 50.0% fib retracement level, and the 100 day moving average is also moving along the triangle support line, as can be seen in the chart shown. It is also important to note that the recent failure at the highs was also around the triangle resistance line.

KEY SUPPORT AREA: 50 Day MA
MAJOR RESISTANCE ZONE: $1340


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Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

USD/JPY extends gains after China’s manufacturing PMI

USD/JPY extended gains on Monday as China’s manufacturing once again slowed down in March, raising questions about the growth of the world’s second largest economy. The pair is expected to test the channel resistance in near future, according to the technical analysis.

Technical Analysis

USD/JPY is being traded around 102.39 at 6:00 GMT in Asia. The pair is heading towards the upper trendline of the daily wedge as demonstrated in the following chart. The pair is expected to find a major hurdle near 103.14 that is the 50% fib level as well as the channel resistance. A daily closing above the channel should expose further rallies towards 104.30, the 76.4% fib level.

On the downside, the pair is likely to find support near 101.80, the 23.6% fib level, ahead of the channel support which is currently sitting in near 101.35. A daily closing below the channel is needed before further dips towards the $100.00 handle.

China’s Manufacturing PMI

HSBC Holdings today released the China’s manufacturing Purchasing Managers Index (PMI) for the month of March. The data once again came worse than expectations, showing 48.1 points reading for March compared with 48.5 in the previous month, analysts had predicted 48.7 points reading this time around. It is pertinent that a PMI reading below 50 indicates contraction in manufacturing activity while a 50+ reading shows expansion in manufacturing. Since China is one of the biggest trading partners of Japan, so the manufacturing slowdown in China tends to weaken the Japanese Yen (JPY).

Stronger Dollar

The dollar is expected to continue the bullish trend after the previous week’s hawkish monetary policy in which the US central bank once again reduced the stimulus and Fed chair Janet Yellen indicated the first rate hike as soon as the next six month period.

Conclusion

Breakout through the daily wedge should provide the pair a clear direction for medium to long term. Chicago Fed National Activity Index and US manufacturing PMI will also be very crucial for the pair.

 

[CapitalTrustMarkets]

Crude oil slowly rebounds despite Asian demand fears

Since testing the $99.00 level in Asian trade, crude oil futures for delivery in May rose to $100.03 in the European trading session.

The short term trend remains slightly bullish while higher swing highs and higher swing lows are being made, with today’s low of $99.00 marking the nearest support level. The general focus of the market is towards testing the closest resistance levels.

Selling pressure may start kicking in between $100.14 and $100.24. This is the first resistance area, a clear pivot zone formed between 6th March low and 21st March high.

Additional resistance lies further up at $100.41, marked by the 200 simple moving average on daily timeframe and the resistance of the current bullish channel; followed by $100.59, where the 200 simple moving average is located on the 4H timeframe.

Any bearish price action signals from the main resistance levels can result in yet another test of the support at $99.00, or even $98.55 - the support trendline for the current bullish channel.

 

[CapitalTrustMarkets]

EUR/JPY Technical Analysis – Sentiment Remains Neutral

Sentiment for EUR/JPY remains neutral after the pair put a stop to the uptrend and quickly entered a week long range. Between 140.44 and 141.96 the pair has been increasingly choppy, yet the upper and lower limits have been respected all too well each and every time they were tested.

The uptrend for February – March is still technically intact, with the two lows at 140.44 marking the most recent swing low. This recent range, however, points to bullish weakness as EUR/JPY failed to continue towards a higher swing high.

The 200 simple moving average on 4H has finally caught up with the support, adding further strength to this area. A bearish breakout would invalidate the uptrend opening the way down to 139.10, where the next support confluence is located.

If EUR/JPY bounces off of 140.44 it can be seen as a bullish signal, yet only a break above 141.90 will technically confirm the return of the bullish trend towards 143.75 and possibly even 145.66.

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Prepared by Alexandru Z., Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

EUR/USD Daily Technical Outlook

Technical outlook and chart setups:

1. The EUR/USD reacts at the trend line support as discussed and expected yesterday. The region of interest was 1.3800. As seen here, the pair has produced a morning star trade signal right at the trend line, and also past resistance turned support area. If this holds, bulls should further drag it up into the 1.4 region soon. Risk should be moved to 1.3750 now.

2. The immediate interim support is at 1.3750, followed by 1.3700/1.3640 and lower, while resistance levels are the 1.3870/80, followed by 1.3960 respectively.

3. The structure indicates that prices should remain above the 1.3750 mark for bulls to remain in control. A push through the 1.3900 region should be very encouraging. A breakdown of 1.3750 and 1.37 would change our perspective though.

Trading recommendations:

Remain long from around 1.3800, stop at 1.3750, and target open (at least 1.41).

 

[CapitalTrustMarkets]

GBP/USD Daily Technical Outlook

Technical outlook and chart setups:

1. The GBP/USD has reacted on the interim trend line support yesterday. But it has been on smaller timeframes; daily chart seen above has produced a doji and we still need a bullish appearance at 1.6470/1.65 levels to instil further confidence. At the moment prices are trading between 2 trendlines as seen here. Please note that the Fibonacci 0.618 support at 1.6470 still holds good.

2. Immediate support is at 1.6375 (the Fibonacci 0.786), followed by 1.6250, and 1.5850, while resistance levels are 1.6780 and 1.6820/30 levels respectively.

3. The structure indicates that bulls should remain well in control till the time prices are trading above 1.6250 supports. Please also note that the pair still remains in the buy zone of the interim line of support.

Trading recommendations:
Remain long from yesterday; stop at 1.6430, target open.

 

[CapitalTrustMarkets]

AUD/USD Daily Technical Outlook

Technical outlook and chart setups:
1. The AUD/USD pair seems to be wanting to break out of the falling trend line at the moment around the 0.9130/50 region as seen above. A successful break here would push prices further higher towards 0.9330 levels, which is the Fibonacci 0.618 resistance. A failure to break 0.9170 would keep the bearish setup intact. Recommendations are to hold short positions for now.

2. Immediate support is at 0.9000, followed by 0.8930/40, 0.8850 and 0.86/87 levels, while resistances are spread through 0.9170, followed by 0.9450 and higher up respectively.

3. The structure reveals that bears should remain in control below 0.9170 region and within the down trendline. Please note that prices are just above the Fibonacci resistance at 0.9080 for now. A trend line reaction should clear up the next probable move.

Trading recommendations:
Remain short for now, stop at 0.9200, and target open.

 

[CapitalTrustMarkets]

USD/CAD Daily Technical Analysis

Technical outlook and chart setups:

1. The USD/CAD uptrend story remains well intact on daily chart setups. Trading strategy remains, buying on dips for now. Prices are testing yesterdays’ lows at 1.1170/80 for now. This region is also re-enforced by the past resistance turned support as seen here. Recommendations are to initiate 50% long positions now, risk remains below 1.11.

2. Immediate support is at 1.1140/50 levels (backside of the intermediary consolidation), followed by 1.1020 and 1.0900/50, while resistance is at 1.1270/80 (intermediary) respectively.

3. The structure reveals that bulls should remain very much in control and continue to print higher highs and higher lows till 1.0900/50 support remain intact. Look to buy on dips from here on.

Trading recommendations:
Long 50% now, and remaining around 1.1130/50 region, stop at 1.0950, target open.

 

[CapitalTrustMarkets]

GBP/USD eagerly waits for UK inflation figures

GBP/USD closed yesterday above the channel support of the daily rising wedge, showing considerable bullish strength, ahead of Britain’s inflation data. The pair might end the ongoing correction wave if the data comes better than expectations.

Technical Analysis

The pair is being traded near the 1.6500 handle at 02:00 GMT. Support can be seen around 1.6476 which is the channel support as well as 61.8% fib level. A daily closing below the channel could push the pair into relatively deeper bearish trend opening doors for 1.6390, the 76.4% fib level, and then 1.6250, a historical support zone for the pair.

On the upside, resistance can be noted near 1.6537, the 50% fib level, ahead of 1.6690 that is the 23.6% fib level and then the channel resistance which is currently sitting in near 1.6753. A daily closing above the channel resistance could expose the fresh multi-year higher above the 1.6850 area.

Double Top Pattern

The pair recently formed a classic double top pattern on the daily chart. The neckline—the lowest point between the two tops—has also been broken around 1.6583 which is considered a confirmation signal for the price pattern. The pair should extend the downside movement at least up to 1.6250, according to the double top price pattern.

UK Inflation

The national statistics department of the UK is due to release today the Consumer Price Index (CPI) report for the previous month. According to the forecast of different economists, CPI—a key gauge for inflation—reduced to 1.7% in February compared with 1.9% in the month before. Similarly, core CPI--considerably more accurate measure for inflation—remained steady at 1.6% last month compared with the same reading in the month before. Generally economists take high inflation readings positive for an economy and vice versa. So if the UK inflation remains better than expectations in February then cable could end the current correction wave.

Conclusion

If the inflation data upbeats the expectations today, then a bullish reversal might be in play targeting the double top resistance for new multi-year highs. Otherwise, the 1.6250 support might again come under attack.

 

[CapitalTrustMarkets]

CB Consumer Confidence: Trading EUR/USD (March 25, 2014)

The US economy will release its CB consumer confidence figure for the month of March in today’s New York trading session. The report is slated to show an improvement from February’s 78.1 figure to 78.7, reflecting stronger consumer optimism.

This typically translates to higher consumer spending down the line, as an upbeat economic outlook tends to encourage individuals to spend instead of keeping their hands in their pockets. In the longer run, it can lead to better economic growth, as consumer spending comprises nearly 70% of the US economic activity.

For the previous release though, the CB consumer confidence figure fell short of expectations and triggered a quick dollar selloff back in February 25. This lasted until the end of the week, with EUR/USD climbing up to the 1.3800 major psychological resistance on Friday’s trading.

This goes to show that fundamentals is driving the US dollar price action for the meantime, as improved economic conditions would convince the Federal Reserve to carry on with its taper plans. On the other hand, weak economic data usually leads to a dollar selloff since it could lead Fed policymakers to be dovish.

The 4-hour chart of EUR/USD shows that the pair has pulled up to the 1.3800 area once more, after a quick dip below the support level in the previous week. This could be indicative of renewed buying pressure, despite the round of weak German manufacturing and services PMI figures released yesterday.

A strong CB consumer confidence reading could lead to renewed dollar strength, which would lead the 1.3800 mark to hold as resistance and confirm the reversal for EUR/USD. Bear in mind that this pair recently broke a short-term rising trend line, leading several traders to believe that a downtrend is underway.

A weak CB consumer confidence reading might lead to more gains for EUR/USD, as another decline could lead to weaker confidence in the US economic recovery.

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Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Aussie Retreats from Channel Resistance and 200 SMA

AUDUSD pair traded higher yesterday to register a new 2014 high above 0.9150. The Australian dollar continues to move upwards even after the sloppy manufacturing PMI for China. The buyers seem to be unfazed by the fact that the slowdown could affect the Australian economy in the medium term.

Technical Analysis
AUDUSD surged above 0.9120 post the US manufacturing PMI and Chicago Fed national activity. The pair climbed to create a new yearly high. However, the Aussie buyers were unable to sustain the gains. There is a confluence of resistances around the 0.9160 level. Two channel trend lines coincide nearby the same level and 200 day SMA also lies just below the 0.9150 level. This suggests the importance of failure to break the level. If the sellers give up, and pair manages to sustain advances above 0.9160, then it might pave the way for additional gains towards 0.9180 and 0.9210 levels.

Divergence on RSI
There is a divergence noted on the RSI between the last two highs. This is not an encouraging sign for the bulls, and it might act as a catalyst for a spike lower. On the downside, there are tons of support, starting with the 50 SMA on the 4 hour chart followed by the channel trend line at around the 0.9060 level.

KEY SUPPORT AREA: 0.9060
MAJOR RESISTANCE ZONE: 0.9160

G7 Meeting
There was an emergency meeting held yesterday at the official residence of Dutch Prime Minister Mark Rutte in The Hague. There was a statement released post the meeting, which highlighted the exclusion of Russia until it changes course in Ukraine. The impact of the meeting was mostly limited. The US dollar is largely unchanged following the event and traded in a range throughout the Asian session.


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Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

EUR/GBP bulls stop near 0.8400 for the second time

The area between 0.8390 – 0.8400 has been an important price pivot zone in the past, acting several times as support throughout 2013 and as resistance in late 2013 and 2014.

After testing 0.8400 last week EUR/GBP dropped 70 pips, only to quickly recover those losses. Seeing how the pair failed to dip below the most recent swing lows from the previous two weeks, the bullish momentum looked strong and many traders were preparing for a run over 0.8400.

The second test of the resistance has been met with a stronger bearish pressure, pointed out by a bearish engulfing pattern on the 4H timeframe while the daily stochastic was in the overbought area.

0.8330 is the first support and the current target for sellers. It should be noted that EUR/GBP is in a range between 0.8330 and 0.8400, at least technically, having made two swing highs and two swing lows at nearly identical levels. The second support further down, at 0.8285, marked by the 200 simple moving average on the 4H timeframe, is a valid target only after the range is invalidated towards the downside.

If this short term range will first break above 0.8400 and the 200-day MA, the next resistance lies at 0.8463, a very strong confluence formed by the 50% fibonacci retracement between the 0.8768 – 0.8157 and a strong pivot zone confirmed five times in the last year.

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Prepared by Alexandru Z., Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Silver looks set for bullish reversal

Silver yesterday closed with a shooting-star daily candle, showing considerable downside risk, after the Fed tapering decision and the manufacturing slowdown in China, the biggest buyer of silver. The white metal is headed towards a decisive junction near $19.70; the long term trend remains bullish amid Higher High (HH) and High Low (HL) in the previous wave.

Technical Analysis

The metal is being traded near $20.00 at 02:00 GMT in Asia. Resistance may be noted around $20.21 an ounce which is the high of yesterday as well as 61.8% fib level. A break above $20.21 shall threaten $20.58 that is the 50% fib level and 55 Daily Moving Average (DMA) and then the channel resistance as demonstrated in the following chart.

On the downside, the white metal is likely to take retracement from the $19.68-$19.75 support area that is the confluence of 61.8% fib level and channel support. A daily closing below the channel support shall attract new sellers, hence accelerating the downside movement below the $19.00 handle.

US Data

Today in the US session, Markit Economics is due to release the Services Purchasing Managers Index (PMI) of the US. According to median projection of different analysts, the services PMI increased to 54.2 points in March compared with 53.3 in the month before. Similarly, the Census Bureau of the US is also due to release the sales data for the durable goods. The sales jumped by 1% in February as compared to 1.1% decline in the month before, the forecast says. Better than expected US data will be considered bearish for Silver and vice versa.

Russia-West Standoff

The US and the European leaders have threatened more sanctions on Russia, boycotting the G-8 meeting which was due to held in Sochi. The crisis—being termed as the worst standoff since the cold war-- is getting more and more intense with the passage of time. Russian foreign minister last week warned of “grave consequence” on the sanctions from the West. There has been a history that investors adopt bullion as safe haven in the uncertain geopolitical situation.

Conclusion

Silver is expected to rebound from the channel resistance, halting the ongoing correction phase. The white metal might test the $22.15 resistance in short to medium term.

 

[CapitalTrustMarkets]

EURGBP struggles around 200 SMA, UK Retail Sales Eyed

EURGBP has climbed higher after forming a base at 0.8160. The pair nudged above the 100 and 50 day simple moving averages to trade higher. However, the rally stalled around 200 SMA. Yesterday, a series of events affected EURGBP, including the German Ifo business climate index, German business expectations, UK inflation data and ECB President Mario Draghi’s speech.

Impact from Draghi, Weidmann, Liikeanen and Makuch
European Central Bank officials warned the market on Tuesday that they will consider every possible step to protect the growth and low inflation. Mario Draghi in a lecture at Sciences Po University in Paris reiterated the possibility of additional measures if required, including new bank-lending programs and large-scale asset purchases, known as quantitative easing. He also mentioned that the central bank is keeping a close eye on the foreign exchange rate, as it plays an important role in growth.

Earlier, ECB's Weidmann mentioned that QE program remains an option and not out of the equation. Following his comments, the Euro was seen trading lower, as comments did not go down well with the buyers. Later, ECB's Makuch ignited further downside, as he said that he wouldn't oppose QE if essential. Moreover, ECB’s Liikeanen, in an article in the WSJ said that negative deposit rate is also an option to fight unreasonably low inflation.

Technical Analysis
EURGBP is facing a huge hurdle in form of 200-day simple moving average, trend line connecting major previous highs and 38.2% Fibonacci retracement level of the last leg lower from the 0.8766 high to 0.8160 low. The pair has failed a couple of times around 200 SMA, and formed a bearish candle pattern as well. So, the level to watch out in the short term is 0.8390. A break and close above would call for further gains towards the 50% retracement level, which also represents previous swing high.

On the downside, there are a couple of trend lines waiting to provide support to the pair. The most important support might be 100-day SMA around 0.8300 (November 7th low). A push below could open the doors for a test of the next bullish trend line around 50-day SMA. There is a minor divergence noted on RSI as well between the previous major highs suggesting the current bearish move might have legs in the short term.

UK Retail Sales
UK retail sales figures for February will be released tomorrow. This particular event might cause movements in the pair. The expectation is of improvement in the last month, and if the outcome does not disappoint, then EURGBP might find sellers post event.


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Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Technical Analysis for EURUSD for March 26, 2014

Technical outlook and chart setups:

1.The EUR/USD pair has tested the trend line support at 1.3750 and pulled back. 1.3700 remains key for bulls to remain in control here. The candle stick appeared looks like a doji (hammer) indicating that next move is probably higher from here on. A push through 1.39 levels would be very encouraging for bears. Recommendations are to remain flat if stopped out.

2.Immediate support is at 1.3700, followed by 1.3600, 1.3500 and lower, while resistance is at 1.3960/70 levels respectively.

3.The structure reveals that prices need to stay above 1.3700 for bulls to remain in play. The past resistance turned support zone has held till now but a push below would break the trend line support and also open doors for further downside.

Trading recommendations:
Remain flat for now. Stop triggered. Aggressive trade setup would be to go long again, stop at 1.3730, and target open.


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Prepared by Harsh Japee, Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Technical Analysis for GBPUSD for March 26, 2014

Technical outlook and chart setups:

1.The GBP/USD pair finally reacts with a bullish bounce right on the intermediary trend line support. A morning star candle stick signal is seen appearing after printing lows at 1.6465 levels. This indicates that the next move could be higher, but prices need to clear the 1.66 handle to instil further confidence. It is recommended to remain long for now. Risk remains at 1.6430.

2.Immediate support is at 1.6450/60 (intermediary), followed by 1.6250, 1.5850 and lower, while resistances are spread through 1.6780 and above 1.6800 respectively.

3.The structure reveals that bulls should remain in control till prices are above 1.6450/60. Furthermore a morning star signal has appeared on the trend line support and Fibonacci 0.618 convergence. Indications are bullish from here on.

Trading recommendations:
Remain long from yesterday; stop at 1.6430, target open.


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Prepared by Harsh Japee, Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Technical Analysis for AUDUSD for March 26, 2014

Technical outlook and chart setups:

1.The AUD/USD pair is breaking the resistance line as seen here. Prices are just entering the buy zone for now, indicating there may be further upside left. Also please note that immediate resistance has been taken out at 0.9167/70 as well. It is recommended to exit short positions. Aggressive trade setup would be to go long, risk remains at 0.9000 for now.

2.The immediate support is at 0.9000, followed by 0.8900/30 and lower, while resistance is now at 0.9450, followed by 0.9530 and higher respectively on the daily chart.

3.The structure reveals that bulls might just be taking back control to push prices further up towards a possible 0.9300/50 handle at least. Please note that 0.9340/50 is also confluence of Fibonacci levels (retracement of larger downswing and extension of counter trend).

Trading recommendations:
Exit short positions. Aggressive setup would be to go long, stop at 0.9000 and target open.



Technical Analysis for USDCAD for March 26, 2014:

Technical outlook and chart setups:

1.The USD/CAD pair is retracing further towards 1.1130/50 levels as seen here. Please note that this region should remain well supported due to resistance turned support line passing through. A bullish reversal here, would indicate that the next Bull Run is about to resume. For now, it is recommended to remain long and also add the remaining 50% long positions around 1.1150.

2.Immediate support is at 1.1020, followed by 1.0950, 1.0900 and lower, while resistance is at 1.1280, the recent swing highs respectively.

3.The structure reveals that support is expected around 1.1130/50 for now. A break lower would prove to be bearish and prices can test further lows at 1.1020.

Trading recommendations:
Remain long for now, stop at 1.0950, target open.


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Prepared by Harsh Japee, Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

GBP/JPY breaks short term triangle formation

The range that was forming on GBP/JPY last week started getting smaller in size, with lower swing highs and higher swing lows, eventually forming a triangle pattern. During the European session the pair flirted solely around the resistance of the triangle, and ahead of the US session a 4H bar formed completely outside the boundaries of triangle. Stochastics haven’t reached oversold territory yet, so the pair is making a push towards the resistance levels.

While prices remain below 169.70, the swing high from last week, price will continue to move slowly. Reversals around key resistance levels are possible while sentiment remains mixed and news announcements don’t favor any sides in particular.

Above 169.70, and later above 169.97 - the resistance confluence formed by the 200 simple moving average on the 4H timeframe and the 38.2% fibonacci resistance – sentiment will be bullish, opening the way higher towards 171.34.

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Prepared by Alexandru Z., Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Technical Analysis for March 27, 2014

EURUSD

Technical outlook and chart setups:

1.The EUR/USD pair is not able to sustain gains above 1.3800 since last two trading sessions. As seen here, the pair is re-testing its support line for now around 1.3780 levels. A break down here and below 1.3750 would bring back control to bears and downside should accelerate. It is recommended to remain long till prices remain above the 1.3750 mark.

2.Immediate support is at 1.3700, followed by 1.3600, 1.3500 and lower, while resistance is at 1.3960/70 levels respectively.

3.The structure reveals that prices need to stay above 1.3700 for bulls to remain in play. The past resistance turned support zone has held till now but a push below would break the trend line support and also open doors for further downside.

Trading recommendations:

Remain long above 1.3750, stop at 1.3730, and target open.






GBPUSD:

Technical outlook and chart setups:

1.The GBP/USD pair bounced from the intermediary support trend line yesterday, at 1.6460 levels. It is facing resistance at current levels around the 1.6600 handle (which is the back side of the outer trend line). A push through this zone is required for the bulls to stay in control. A bearish reversal here would encourage building short positions. It is recommended to reduce risk on long positions taken earlier.

2.Immediate support is at 1.6450/60 (intermediary), followed by 1.6250, 1.5850 and lower, while resistances are spread through 1.6780 and above 1.6800 respectively.

3.The structure reveals that bulls should remain in control till prices are above 1.6450/60. Still a push above the 1.6600 level is required to instil further confidence here. One can initiate short positions if prices drop below 1.6500/1.6460 levels.

Trading recommendations:

Remain long from yesterday; stop at 1.6500, target open.





AUDUSD:

Technical outlook and chart setups:

1.The AUDUSD pair is trading comfortably in the buy zone above the 0.92 handle for now. The decision to flip trades yesterday has proven good till now, and looks like this rally has still got some steam left. The minimum level to watch out on the top side is 0.9350, which is also the Fibonacci 0.618 resistance of the fall from 0.9750 to 0.8650 earlier. It is recommended to reduce risk on long positions taken and stay put.

2.The immediate support is at 0.9140/50, followed by 0.9000, 0.8900/30 and lower, while resistance is now at 0.9450, followed by 0.9530 and higher respectively on the daily chart.

3.The structure reveals that bulls should remain in control till at least till 0.9350 levels. Please note that 0.9340/50 is also confluence of Fibonacci levels (retracement of larger downswing and extension of counter up trend).

Trading recommendations:

Remain long, move stop to 0.9150, target at 0.9350





USDCAD:

Technical outlook and chart setups:

1.The USDCAD pair is quickly approaching the immediate support trend line at 1.1060/70 levels as seen here. Please also note that this is the last Fibonacci support handle at 1.1078, before the support at 1.1030/20 levels. A bullish bounce would be required here, for the upswing to remain intact. For now, it is recommended to hold the long positions.

2.Immediate support is at 1.1020, followed by 1.0950, 1.0900 and lower, while resistance is at 1.1280, the recent swing highs.

3.The structure reveals that prices should stay above the 1.1020/30 levels for the bulls to remain in control. A break of the support trend line and subsequent support would turn the intermediary structure in favour of bears.

Trading recommendations:

Remain long for now; move stop at 1.1010, target open.



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Prepared by Harsh Japee, Technical Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

USD/JPY slides down ahead of Japan’s inflation report

US Dollar (USD) extended downside movement against Japanese Yen (JPY) on Thursday despite an upbeat durable goods report yesterday, the focus has now been shifted to Japan’s National Consumer Price Index (NCPI) which is scheduled for release today.

Technical Analysis

USD/JPY is being traded near 101.85 at 3:15 GMT in Asia. Immediate support may be seen around 101.85, the 23.6% fib level, ahead of the channel support which is currently standing near 101.27. A daily closing below the channel support shall push the pair into deeper correction, opening doors for 99.42, the 50% fib level.

On the upside, the pair is expected to face hurdle near 102.49, the 38.2% fib level, before the 103.00 handle that is the channel resistance as demonstrated in the above chart. A daily close above the channel resistance will be required for further upside movement towards the 105.00 milestone.

Japan’s Inflation

The Statistics Bureau of Japan is due to release the inflation report today. The CPI –a main gauge for inflation—rose to 1.5% in February as compared to 1.4% in the month before, the median projection of various analysts says. Generally speaking, a high CPI reading is considered good for an economy and vice versa.

Durable Goods Report

Sales of durable goods in the US jumped unexpectedly by 2.2% last month as compared to 1.1% decrease in the month before, analysts were expecting an increase by 1% due to bad weather. The data showed the strength of growth in the world’s largest economy. USD/JPY however shrugged off the data and closed yesterday in the negative territory, indicating considerable downside risk.

US Growth Data

Today the commerce department of the US is scheduled to release the Gross Domestic Product (GDP) figure for the fourth quarter. The economy grew at 1.6% in the previous quarter as compared to 2.0% in the quarter before, the forecast says. The GDP however rose to 2.7% in last quarter as compared to 2.4% in the same quarter of the year before, the forecast added. Better than expected GDP report will be seen as bullish for USD/JPY and vice versa.

Conclusion

A breakout through the daily wedge will provide USD/JPY a clear direction. The pair might test the 100.00 handle if Japan’s inflation rises more than expectations.

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Prepared by Usman Ahmed, Chief Fundamental Strategist at Capital Trust Markets