Daily Market Analysis from Hotforex Broker

[HFM]

Date : 27th March 2015

EURGBP CORRECTING LOWER AND BREAKING SUPPORT LEVELS.

I suggested in my previous EURGBP analysis that as long as the market keeps on moving lower and there is no price based evidence to the contrary there is no hurry to close the short trades. I noted that an exception to this would be price hitting the 0.7022 support level which could well bounce the price higher and therefore is a logical target level. Price is in a downtrend and we should be looking to sell rallies as long as the approach works. However, once the 0.7022 target is hit the pair is at a major consolidation level and selling rallies might get trickier. The pair indeed hit the 0.7022 target level and rallied higher quite substantially. Selling rallies has definitely been trickier since then as price pretty much rocketed through the resistance level.

The pair is trading below a weekly low from February at 0.7340 after trying to penetrate the resistance area above the level. Now that EURUSD is reacting lower from a resistance EURGBP is moving lower as well. They key support levels are 0.7220 (weekly pivot candle high) and 0.7022 a historical support. Nearest resistance levels are at 0.7340 and 0.7405. Weekly close above the pivotal weekly candle high is a longer term bullish sign as this has not happened since October last year and could signal that the pair has a bottoming process ahead.

EURGBP, Daily

Run up higher was followed by a relatively narrow range candle in the upper Bollinger Bands two days ago. In yesterday’s trading price closed below previous day’s low suggesting a turn around. Stochastics is overbought and signalling a momentum change, thus supporting the bearish view. Today price has moved outside the rising trendline and March 18th daily high and 23.6% Fibonacci retracement level coinciding.

EURGBP, 240 min

Price has indeed broken the steeper trendline (grey line) and has now reached another that can be drawn by using the pivot points at A and B. There is a resistance level at 0.7318 that was created when the pair found support at the now violated trendline (grey). Next intraday support is at 0.7260 while the 61.8% Fibonacci level suggests support at March 19th low at 0.7150 (point B).

Conclusion:

Long term: Weekly close above the pivotal weekly candle high is a longer term bullish sign as this has not happened since October last year and could signal that the pair has a bottoming process ahead. This could lead to a double bottom or to price creating a higher low. Time (and price action) will tell. The range between 0.7022 and 0.7105 is definitely worth keeping an eye on should the price move that low. Buy signals inside this range would indicate demand at those levels.

Short term: Price has violated 23.6% Fibonacci level and a support level created by a daily high and a secondary trendline. Therefore it makes sense to look to sell the rallies intraday. This would give us an opportunity to follow price action resistance levels identified in the above charts, especially 4h chart, and see if market is acting weakly or strongly. I would look at levels below 61.8% Fibonacci level as target as they should attract buyers.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 30th March 2015

WEEKLY HAMMER AT SUPPORT SEND USDCAD HIGHER.

USDCAD (weekly) has been moving sideways since the beginning of February. The proximity of the year 2009 high has caused the sideways move. I suggested in my analysis at the time that USDCAD should move above the latest highs as US economy is stronger than the economy in Canada. The fact that USDCAD has maintained the support well and has now created a weekly hammer candle at the support supports my view. Bears might point out that Stochastics oscillator and RSI (7) have created lower highs and therefore signal that the momentum is waning. This however, is what happens each time price moves sideways. Therefore, oscillators do not tell us anything we wouldn’t know by reading price action. Nearest support and resistance levels are at 1.2409 and 1.2835. The year 2009 high at 1.3064 would be the next major resistance once price moves beyond the 1.2835.

USDCAD, Daily

Price action in the daily chart points to the upside. USDCAD has found support from the area near the 38.2% Fibonacci level and the lower Bollinger Bands. Last week Stochastics moved to oversold territory and the 50 day moving average catched up with the price. Friday’s close well above the hammer candle high was a bullish sign and created a hammer candle in the weekly chart as well.

USDCAD, 240

After being held back by the 50% Fibonacci level and a pivot high price is now breaking higher. This is very much in line with the bullishness in daily and weekly charts. The pair broken out of the wedge formation and projection from the formation points to the resistance zone between 1.2724 and 1.2760. Support levels are at 1.2621, 1.2531 and 1.2409.

Conclusion:
Long term technical picture is bullish as institutional buying has created a hammer candle at the support. The latest weekly low was also higher than the pivot low in the weekly chart from the mid February. Short term picture supports this as price has broken out of a wedge formation in the 4h chart and has closed above the Friday’s daily hammer candle. As the setup in the higher time frames is favourable I am looking for pullbacks to technical levels at 60 and 15 min charts. The range at 1.2724 – 1.2760 is my target for this price move.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 1st April 2015

USDJPY MAKES HIGHER DAILY LOWS.

USDJPY has been moving sideways since November last year and is now reacting higher from a support at 118.33. Since then the pair has briefly penetrated the November high and has created a series of higher weekly lows between 115.57 and the latest low at 118.33. This suggests that the pair should move higher once the consolidation period has ended. A trigger for this could be further monetary easing from the Japanese central bank. Even though the pair has reacted higher from support it is still relatively close to the support levels.

USDJPY, Daily

USDJPY moved down to 118.33 last week but the move rejected and created a hammer candle. Since then price has reacted higher as is usual after such a move and has now retraced back to this pivotal candle with reaction higher in today’s trading. Today’s low coincides with a 50 period SMA, the lower Bollinger Bands and a rising trendline. This suggests that the pair will move higher over the coming days. The nearest support is at 119.41 and the important resistance levels at 121.55 and 1.2202.

USDJPY, 240 min

After breaking out of a wedge formation the pair was consolidating for a while. This consolidation pattern created a support from which price has now reacted higher from. Now we have a hammer candle and some follow through but price is struggling with a minor resistance at 120. Stochastic oscillator is at 34 points and is about to cross over the signal line to the upside. The channel width points to an area between resistance levels at 121.09 and 121.50.

Conclusion:

USDJPY has been a bit sluggish to move higher over the last three to four days, even though we have had bullish signals and the market has been trading close a support. This raises some questions but as long as this pair stays inside the bullish channel (see the daily chart) and makes higher lows it is safe to assume that the pair will move towards my short term target area between 121.09 and 121.50. Price has found support from a 50 period SMA and a previous 4h resistance. Should there be retracements to this level I would look for buy signals with a target at 121.09. If there is no bigger retracement I will be looking to take benefit from smaller timeframe technical levels.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 2nd April 2015

UK CONSTRUCTION PMI BELOW EXPECTATIONS.

GBPAUD reached a historical resistance at 1.9697 (a spring 2009 low) in February and has since reacted lower from this level. Over the last two weeks the pair has been rallying strongly and is nearing the resistance area again. Fundamentals and the strong weekly trend support the bids in GBPAUD but price has rallied strongly and reached a potential resistance level. Therefore it pays to monitor the market more closely and time the entries at support levels in pullbacks.

Sterling has been trending higher against the Australian dollar as it is likely that the Reserve Bank of Australia will cut the interest rates either in April or May while the UK economy is rather strong. A recent editorial in The Australian that said “a cut in interest rates either next month or in May is a virtual certainty,”. A 25 basis points cut at the May policy review is likely, which would take the cash rate to a record low 2.0%.

Australian economy is slowing while the commodity prices have dropped significantly. Growth has slowed, with GDP rising 0.5% q/q in Q4, but slowing to a 2.5% y/y pace from +2.7% y/y in Q3. The RBA’s Index of Commodity Prices has tumbled. The index has fallen by 20.6% y/y in SDR terms through February, driven by lower prices for bulk commodities. At 72.5, the index is at its lowest level since December 2009, extending pullback from a 124.7 peak in July 2011. In addition, inflation has slowed, with CPI dropping to 1.7% y/y in Q4 from 2.3% y/y in Q3.

At the same time UK data improves and even though the elections cause a certain level of anxiety in the markets (no one likes uncertainty) the GBPAUD has been rather strong lately. Incoming UK data has been rather strong. The future data should be positive for sterling, though concerns of a hung parliament outcome at the May-7 general election are likely to crimp enthusiasm for the UK currency and assets, especially if the Scottish Nationalist Party ends up holding the balance of power. UK Markit manufacturing PMI survey came in at 54.3 in March, fractionally above our survey median for 54.3 and improving from February’s 54.1 reading. This is the third consecutive month of improvement, affirming that activity in the sector is reaccelerating after a soft patch in Q4 last year.

UK construction PMI was much worse than expected at 57.8 in March, down from February’s 60.1 and well below the Reuters median forecast for 59.5. The 2014 overall average was 61.8, so the data points to a drop-off in momentum. The decline in March was largely reflective of a slowdown in civil engineering activity growth, which the survey found may be related to uncertainty ahead of the too-close-to-call May-7 general election. Job creation also remained below 2014 levels. However, at 57.8 this still signals a robust level of activity while business confidence rose to a nine-year high. Sub-contractor charges rose at the fastest pace since the survey began in 1997. Overall, the strong outlook offsets the decline in the headline, and the slowdown in activity in some areas may pick up after the May election.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 3rd April 2015

EURUSD APPROACHING RESISTANCE AFTER NFP DISAPPOINTMENT.

The EURUSD rallied after the combination of a disappointing NFP release, and downward back revisions in the figures. The pair is approaching a resistance area created by a combination of technical factors. The resistance levels of 1.1052 and 1.1098 coincide with 50 day MA and the upper Bollinger Bands. This resistance has been tested twice and after the latest test EURUSD made a higher low. This suggests the pair will be trying to move higher from here. The next important daily resistance levels are closer to the 1.1460 which could well come into play now that the NFP release was such a disappointment.

The analysts expected an increase of 246k jobs but we got only 126k. The 126k U.S. March payroll rise with 69k in prior downward revisions and a 0.2% drop in hours-worked, combined with big goods-sector declines for payrolls and hours-worked lowered production estimates for March.

Price action at the resistance levels is going to be interesting to follow. If the pair corrects lower from it I expect the correction to be rather subdued. The surprisingly weak jobs figure means that now the Fed doves have further evidence of softening economy and a better case to postpone the rate hike. This is seen in the markets across the board as the USD is being sold against other currencies across the board.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 13th April 2015

EURAUD BOUNCING HIGHER FROM SUPPORT.

EURAUD, Weekly

The pair has been making lower highs and lower lows since December 2014 suggesting that the long term momentum is to the downside. Unless the pair creates a higher low at 1.3725 the weekly picture remains bearish. The 38.2% Fibonacci retracement coincides roughly with the recent pivot high while the 50% level is approximately at level with a pivot candle low (1.4476) from February this year. This suggests to me that the resistance area between 1.4340 and 1.4530 is strong and any near term price advances to the level are likely to be met with selling. Nearest important support levels are at 1.3725 and 1.3190.

EURAUD, Daily

With the trend to the downside and the pair at support the Stochastics is now oversold. Should today’s candle close above the Friday’s high we’d have both a price based bull signal and Stochastics closing above its 3 period MA (red line). There could be some resistance around the 1.4076 level as it has acted as a support and resistance in the past. Should the pair move beyond this level the next resistance area would be in the region of upper Bollinger Bands and the upper end of the regression channel.

EURAUD, 60 min

The pair has broken out of the descending regression channel and has since moved above recent reaction highs at 3849 and 3883. Now that EURAUD is retracing back to those levels I expect that there is a good chance market will find support at those levels.

Conclusion

Longer term picture is pointing to the downside as the pair makes lower highs and lower lows. This setup should therefore favour those looking to sell the rallies. Resistance levels between 1.4340 and 1.4530 could work out as short entry level should the market rally there. Short term traders could take advantage of a potential momentum reversal at 1.3849 and 1.3883 with a target at or near 1.4050. Look for momentum reversal signals to confirm the analysis.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 14th April 2015

GBPNZD RANGING ABOVE SUPPORT.

GBPNZD, Weekly

The pair has just recently moved higher from weekly support level 1.9379 while another one supported price at 1.9244 sent price higher in the beginning of January. For the last three to four weeks price has been bouncing between this support and a resistance created by a weekly low (at 2.000) from December last year. Stochastics is oversold and price action takes place near lower Bollinger Bands suggesting the pair should have more upside than downside potential. On the bearish side however I should mention the fact that the pair creates lower weekly highs suggesting selling pressure coming in at fairly close to the support. This is not a very bullish sign and could lead to further consolidation at support or eventually price breaking lower.

GBPNZD, Daily

Price is reacting lower from a resistance at 1.9700. This resistance is created by a daily pivot candle from April 7th and coincides with a 50% Fibonacci level at 1.9691. Stochastics are pointing higher and the RSI has created a higher low while the latest low at 1.9380 was roughly equal to the low from March this year. This bullish divergence supports the upside bias but the price needs to break above the current resistance in order to create a higher high. Should the pair keep on making lower pivotal highs the pressure against the support would increase and the support could break. It is therefore essential to follow the price action over the coming days.

GBPNZD, 240 min

The four hour picture shows in more detail how price has been reacting to the resistance and other technical factors. Price has broken out of the downward sloping channel but has then run into a resistance. After this the pair created a pivot from which it has now reacted lower but has been (over the last two complete bars) been supported by the channel high and a 50 period moving average. Stochastics, RSI and MFI have all rolled over confirming that there isn’t much upside movement or momentum over the last few bars. This suggests the best (low risk) buying opportunities would be at lower levels. As per usual it makes sense to be a buyer at a support and look for selling opportunities at resistances.

Conclusion

Long term picture (next four to six weeks) suggests that this market has more upside than downside potential as it is trading near an important support area and has been consolidating above it. However, should this sideways movement keep on for an extended period of time the probability that the market will move lower does increase. Also, I don’t like the fact that we have lower weekly highs. This kind of price action is not bullish as it suggests indecisiveness in this market. We would need to see price starting to build a series of higher lows and breaking above the previous weekly highs in order to get a confirmation for the upside biased long term view. The short term picture (from intraday to next few days) has a bullish element as it has broken out of the downward channel but price is currently trading just below a resistance level. As we should always look for selling opportunities at resistance levels and buying opportunities at supports I am keeping an eye on smaller time frame sell signals at 240 min Bollinger Bands and look for buy signals in the region of 1.9460 support.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 15th April 2015

WEEKLY CHART: GOLD’S LIKELY TO MOVE LOWER.

Gold, Weekly

In my latest Gold analysis from March 18th I wrote: These levels are exactly the levels that attracted buyers in Q4 2014 which suggests that there might still be some demand for Gold just below the current price. However, the psychology might have changed since December last year. Strong growth in the US labour market we have seen since then coupled with the rate hike expectations could lead to Gold breaking the support this time around. I am not taking a view that it will happen as support is support as long as it works. A close above yesterday’s high at 1159.30 would be a positive signal while a close above the 1165.70 resistance in would improve it even further. This would warrant buying intraday dips after over the coming few days with a target at 1190.

Now we’ve seen Gold closing moving higher from the support level and hitting my target at 1190. In addition, this market has moved beyond the target and turned lower at 1224.50 resistance. At the same time Gold created a bar with a narrow range between the open and closing prices hinting a move lower. This has since then materialised and Gold has moved lower this week. This is suggesting further moves lower in the coming two weeks or so. The next important weekly support is likely to be found near the lower weekly Bollinger Bands and 1131.50 to 1142 range. Long term picture is still bearish while in the medium term I expect Gold to move sideways between the above mentioned support and resistance levels.

Gold, Daily

In the daily picture Gold is trading close to the 50% Fibonacci level and the Stochastics are getting close to the oversold levels. This suggests that the move lower over the last few days could slow down a bit. Yesterday we saw a rally from the 50% Fibonacci level but there was no follow through. This 50% retracement level coincides with a pivot candle from the end of March and if price keeps moving sideways for a few days the lower Bollinger Bands will catch up with it creating another supportive element. However the weekly picture points to the downside and therefore we should see rallies higher met with selling and eventually see a move lower to 1141 and 1160 range.

Gold, 240 min

While the 50 period moving average is still pointing higher Gold has been creating lower highs and trending lower in a descending channel. Price is reacting from resistance levels, which suggests further moves lower. The fact that the bounce from 1183.70 support was weak and met with selling does increase probabilities that price will eventually work its way through the support. This however does not rule out price bouncing higher and retesting the resistance levels at 1198 and 1208. The latter coincides with upper Bollinger Bands and should price rally there we’d be looking for momentum reversal signals close to it. The same applies to the 1198 resistance. If price stays in the descending channel (minor time frame confirms with momentum reversals close to the channel top) then we obviously should take advantage of them.

Conclusion

Weekly picture points to lower prices and I expect Gold to move to the lower weekly Bollinger Bands and close to the support range at 1131.50 – 1142 where it should attract buyers again. It could very well be that over the coming weeks price moves sideways between the 1224 resistance and the aforementioned support level. Ranging market between these levels could provide opportunities for traders (with different time trade orientations) trading against both the major and minor resistances and support levels. Short term we are close to a support level and therefore I would like to see price rallying a bit before initiating short trades. We could see Gold retesting the resistance levels at 1198 and 1208. The latter coincides with the upper Bollinger Bands and should price rally there we’d be looking for momentum reversal signals close to it. The weekly Bollinger Bands and proximity of daily pivot high at 1160 could very well work as an ultimate swing trade target.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 16th April 2015

CRUDE LOOKS LIKE IT MIGHT BE BOTTOMING.

Crude oil and Inverted DXY, Daily

In my analysis from February 5th I suggested that the crude oil could be close to levels it might bottom out. At the time I wrote: The price of oil has collapsed with the strengthening dollar and has reached levels that were last seen in the later stages of the financial crisis in 2008. This suggests that the current levels are deeply oversold both fundamentally and technically. The world economy is certainly slowing down but it is in a better shape than it was in the first quarter of 2009 when the US crude oil futures dropped to $33.35. Therefore, it makes sense to expect crude oil to be relatively close to the levels it could find a bottom.

Now it does look like crude oil is indeed bottoming. Since January price has moved sideways and even shown some relative strength against the USD. As crude is priced in the US dollars any up moves in the US Dollar Index (DXY) should mean the price of oil goes down. However, since the end of January DXY has move higher while crude has moved sideways and has therefore showed some relative strength. As can be seen from the above chart with crude oil in black and inverted DXY in blue the strength of crude was really taken to new levels at the midway of March. Together with the fact that the crude oil has been trading levels close to the 2009 low suggests to me that we are witnessing bottoming action in the price of crude.

Crude oil, Weekly

Since forming a hammer candle in March the price of crude oil has been trending higher and making consecutive higher closes. Now price has moved well beyond the 53.60 resistance level. This confirms the bullishness and suggests that the price has bottomed. After such a long sideways move and relative strength against the DXY it is now more likely that price will find buyers if it retraces back to the support levels. Now that the Stochastics is indicating crude is getting overbought the next challenge for buyers is likely to be around the 23.6% Fibonacci level and the upper Bollinger Bands that are nearby. The most important support levels are at 53.60 and 46.53.

Crude oil, Daily

Price is trending higher in a channel and has with yesterday’s rally moved outside the upper Bollinger Bands. This suggests that the market is getting overbought in the short term. Stochastics are in the overbought territory supporting the indication from Bollinger Bands. Also, price is getting close to the channel top. The support at 53.60 looks like a logical retracement level and it coincides roughly with 23.6% Fibonacci level. I have not drawn the Fibs on the chart to maintain a better readability. Should the 53.60 support fail to hold, the next potential support level is at 50.25.

Crude oil, 240 min

Price has reacted with a shooting star candle and is now inside the upper Bollinger Bands. This suggests the corrective could be already underway. Stochastics support the idea as they are overbought and pointing lower.

Conclusion

Long term picture is bullish with the price of oil showing clear signs of market bottoming. In medium term, ie the daily trend crude is bound to move higher but might retrace first. The intraday picture is overbought and therefore bearish. I look for correction lower intraday and then keep an eye on 53.60 support region for buy signals.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 17th April 2015

DXY IS GETTING CLOSE TO SUPPORT.

DXY, Weekly

US Dollar Index (DXY) represents a basket of currencies in which the US dollar is valued. These include major currencies with different weights: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%) and CHF (3.6%). With euro having the highest weighting analysis made on DXY will have the greatest indication for EURUSD trading.

Since March this year momentum indicators have been moving lower reflecting the fact that price has not been making new higher highs anymore. Until recently Stochastics and RSI have been moving above the overbought threshold but now are pointing lower and have moved closer to neutral values. In a price chart that means the latest price action is taking closer to the middle of the recent range. DXY has been correcting lower this week and is now close to the 50% Fibonacci retracement level. This ties up with the indication from the oscillators. Price is also approaching an accelerated trendline support but has created a lower high which suggests that price could be moving sideways over the coming weeks.

DXY, Daily

Both Stochastics and RSI are close to oversold levels with the latter attempting to tick higher at the time of writing. Price has reached a pivot candle from April 6th and is fairly close to a rising trendline support. This suggests that the downside is getting limited and we should be looking for buy signals for the dollar at levels at or below the current price. Nearest support and resistance levels are 97.46 and 99.46 which also coincides with the upper Bollinger Bands. Should the 97.46 support not hold the DXY the next important support level can be identified in the 4h chart at 97. The 50 day MA is currently in the region as well with a value of 97.08. This increases the validity of the level.

DXY, 240

As DXY has been trending down over the last three days there has also been some wedging in the price. This suggests that there is some resistance for dollar moving lower, especially since price came to the low of 98.07 yesterday. At the moment the 61.8% Fibonacci resistance level has been acting as a resistance for rallies today. Price is moving closer to 97.46 support level which it has already almost touched once and bounced higher. Stochastics, RSI and MFI are oversold which supports the view that this market is near to buy levels. If the 97.46 doesn’t hold then the next support level at 97 should come into play but I am interested in price action based buy signals even between the levels.

Conclusion

In the longer term picture it is clear that the Fed speak turning dovish in March has taken steam out of the DXY rally and the index has been moving sideways. Price has created a lower high which suggests weakness and that DXY could be moving sideways over the coming weeks. But in a shorter term picture DXY is close to support levels and we should therefore be looking for buy signals the dollar. This obviously means looking for sell signals in markets like AUDUSD (close to a resistance), NZDUSD (also at resistance). At the same time USDJPY is at support. Should the price action confirm my analysis this could be a time to favour USD over other currencies. Later on today we will have the CPI numbers from US and this could cause some action should there be a strong deviation from analysis expectations.

You will find today’s economic calendar with the highest impacting events only. Please visit HotForex.com for full calendar.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 20th April 2015

GBPJPY REACTS LOWER FROM CHANNEL TOP.

GBPJPY, Weekly

The pair has been ranging between 175 support and 179.29 resistance over the last three weeks. At the same time Stochastic oscillator has moved to oversold territory and is trying to move higher indicating the downside momentum is weak and might be reversing. This is consistent with the pair being close to support. Additionally, the sideways move has caused the lower Bollinger Bands to draw closer to the current price action and the weekly price bar lows have been moving along the 1.5 Standard deviations Bollinger Band. Until two weeks ago the 50 week moving average has been able to send price significantly higher but now this market fluctuates on both sides of the average. This suggests that the market is less decisive than previously toughing these price levels.

GBPJPY, Daily

Since March 18th GBPJPY has been moving lower in a bearish channel with the March consolidation between 178.80 and 180.08 resisting attempts to move higher. On Friday the pair reacted from the trendline and upper Bollinger Bands creating a shooting star candle. Today we’ve seen some follow through with bears pushing the pair below Friday’s low. This suggests momentum is currently to the downside.

Daily pivot candle high from April 14th coincides with the lower daily Bollinger Bands and could slow the moves lower (at 176.40). Stochastics and RSI are not at overbought levels but they are at levels where they turned lower the last time, and that’s when price turned lower as well. Oscillators do not determine where the price moves to but in context that price is reacting lower from a descending channel top it supports the general idea of price potentially moving lower.

GBPJPY, 240

In the intraday chart GBPJPY can be seen moving below the rising trendline that supported price since April 14th. Price has since corrected lower and after bouncing from 38.2% Fibonacci level is now at the time fighting with a resistance just below the 23.6% Fibonacci level. At the time of writing the latest 4h candle just closed above 177.50 and we now have a hammer candle that indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades. Next support and resistance levels are at 176.55 (lower Bollinger Bands and a resistance turned into a support) and 178.20, a recent 4h pivot high.

Conclusion

The long term chart draws my attention to the nearby support level but also 50 week moving average and indecisive price action around it. Should price move lower from current levels buyers could be stepping in close to the recent (April 14th) low at 174.88 and if we see confirming price action then we could see a move to the descending trendline in the weekly picture. In a shorter term picture I am following minor time frames (60 min and lower) to see if price action confirms the bearish indications given by the daily time frame shooting star candle that occurs near channel top. At the time of writing this seems to be the case as price has reacted lower from a 50 period MA in an hourly chart but with the 4h hammer candle this market does give slightly mixed signals. With a bearish daily setup it makes sense to sell rallies at resistances if price action confirms the analysis. A 4h hammer candle indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades.

Please, find today’s high impact economic releases below. For full economic calendar visit HotForex.com.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 22nd April 2015

NASDAQ 100 FUTURES TRADING BELOW RESISTANCE.

Nasdaq, Weekly:

Nasdaq was the world’s first electronic stock market when it began trading in 1971. This is very fitting for a technology index that nowadays includes all the major technology names that have a global prescence. In HotForex MT4 platform this index can be traded under the name of USA 100. The biggest stocks in this index include technology names such as Apple, Microsoft and Google. As these stocks are investment driven (when businesses invest in computers, software and infrastructure these companies do well) their price behaviour can be seen as an indication of things to come for the whole of the stock market. Technology is also the heaviest weighted sector in the S&P 500 index which means that movements in technology shares and Nasdaq will have a significant impact on S&P 500. Let’s see how Nasdaq index has been trading lately and what can we learn from its movements.

Since the end of 2012 this market has been trending strongly higher gaining over 60% since the end of 2012. Currently this index is trading close to this year’s highs just below the upper weekly Bollinger Bands. Nasdaq has moved sideways since the end of February and has found support from general region of November 2014 high. This has created a sideways move that is fairly similar to the sideways range that lasted from November 2014 to the beginning of February 2015. This suggests to me that this market is not weak but is slowly working its way higher.

Nasdaq, Daily:

Index is trading at the recent highs and therefore at resistance. Recent high at 4441.50 was able to resist the move higher this morning and index reacted lower at the time of writing. Stochastics, RSI and Money Flow index are right at or very close to overbought levels which means that taking long positions at current levels would be too risky. Market is very thin this time of day as the US main trading session is still hours away. This can make market more volatile than usually. The nearest daily support level is at 4320 while the lower Bollinger Bands are between this and the next support at 4259.

Nasdaq, 240 min:

The 4h chart reveals how Nasdaq has been moving higher in an upward channel whit the lower end of the channel coinciding with a pivot support at 4327.50. Now that index has broken the small bearish wedge that had developed overnight the next significant support level is in the region of 4327.50 to 4350 that coincide with the Bollinger Bands and the channel low. Currently price has attracted some buying at 50 period moving average but this should be considered as a minor support and should we get a rally to 4423 resistance and then a turn around to again to the south there is a good chance price will penetrate this support and move to 4350 or so.

Conclusion

In the longer term picture this market is trading close to the year 2000 highs and therefore momentum can be expected to be weaker than it has been over the year 2014. The Q1 2015 trading gives us some indication of what the price action might be like over the rest of the second quarter. Index has been moving sideways and then has broken above the previous resistance levels without huge rallies. Instead the next range has developed just above the previous one. This means that the support levels are close and this market might not be ready to have major correction lower but move gradually higher. As technology is the biggest (heaviest weighted) sector in S&P 500 it is likely that this lack of technical weakness will turn into strength with S&P 500 as well. Now that Fed is more dovish and crude oil has likely bottomed the energy sector stocks are recovering giving additional support for the US stock market.

In short term Nasdaq is weak as it has not been able to move above the resistance level at 4441.50 but rather corrected lower. Even though there has been some buying at the 50 period MA the major support levels are near the rising trend channel bottom. I am looking for a move to 4350 and then follow minor time frames for buy signals. However, firs this market might rally a bit and test the 4423 resistance. Should we get a rally to 4423 resistance and then a reversal there is a good chance price will penetrate the 50 MA support and move to 4350 or so.

Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 23rd April 2015

COFFEE FUTURES REACTING LOWER FROM RESISTANCE.

Coffee, Weekly:

The last time I wrote about market moves in coffee the coffee futures were trading at 152.65 and based on the price action I suggested price should move lower and gave $145 and $125 as my downside targets. Since then target one was hit and price has moved as low as $128.80, close to the target II at $125. The first level was penetrated without any effort but then it turned into a resistance that has kept price capped for almost two months. Price of coffee found support at 161.8% Fibonacci extension level just above my target II at $125 and had a close outside the lower Bollinger Bands. Since then we’ve seen this market moving sideways inside the Bollinger Bands with roughly equal highs at $147. Price has made higher lows suggesting pressure is building against this resistance level.

Coffee, Daily:

The 50 period MA is still pointing lower while price of coffee struggles to close and stay above the $144.92 level. Stochastics are overbought and price has created a shooting star candle right at resistance which coincides with 100% Fibonacci extension level. Also, a regression channel drawn from the November 2014 high comes into play here. Price is trading right at the upper end of the channel adding to the bearish picture. The next important support levels are at 136.80 and 131.95.

Coffee, 240 min:

Price has been trending higher in a channel since the April 14th low. Now that price is moving lower again the lower end of the channel could provide some support as the 50 period MA and lower Bollinger Bands are relatively close to it. The rising trendline is currently at $140.45 while the 50 MA is at $139 and the 1.5 stdv lower Bollinger Band is at 139.12. In addition, there is a level that used to be a resistance roughly at $138.20. Stochastics are approaching the lower end of the range.

Conclusion

This two month sideways move suggests that supply and demand are now more balanced than at the time of my previous analysis on Coffee. Price moved almost to my target level at $125 but then turned around and has been challenging the $145 in several occasions. This could imply that the market participants wanted to cover their short positions before this important $125 support level and are now looking to take the market higher but the latest price action suggests there is still more weakness to come in Coffee. Short term picture is also negative as price has reacted lower from the resistance. I am therefore in a ‘sell rallies mode’ and look to benefit from the downside momentum. Here are my short term targets: target 1 at $138.20 and target 2 at $132. If price breaks below the sideways range a longer term downside target 1 is at $115.

Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 24th April 2015

TODAY’S CURRENCY MOVERS.

EURUSD, Daily

Earlier today THE Euro was the strongest currency against the US dollar with a gain of over 0.60%. This rally failed as EURUSD moved to a level where the upper Bollinger Bands and 50 day moving average coincided. Now the pair given up most of the gains and is hovering above yesterday’s close. The nearest daily support and resistance levels are at 1.0667 and 1.0900. If the pair closes below 1.0840, today’s candle will be a shooting star candle but there is some intraday 4h support at 1.0804 region (a previous resistance level) so price might fluctuate a bit more before finding direction.

Currency Pairs, Grouped Performance (% Change)

GBP has been rallying against the dollar since yesterday as the BoE minutes suggested the bank might be raising rates over the coming three year period. NZD has been weak RBNZ since assistant Governor John McDermott said yesterday the bank will ensure that the monetary policy is stimulatory to support output growth above potential and help lift inflation back to target. He said that at present they are not considering any increase in interest rates.

Main Macro Events Today

Eurogroup leaders’ gathering: no great expectations in terms of breakthrough on Greece.

The German Ifo index jumped to 108.6 in April: stronger than expected current conditions reading and rising confidence in the manufacturing sector, while retail sentiment fell back somewhat.

US March Durable goods orders: strong headline print on durables, the ex-transport component disappointed.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[fxapex]

EURUSD has been trading low and there are chances that the prices might go down as the result of the resistance more selling will take place in the market.

 

[HFM]

Date : 27th April 2015

USD GAINING SLIGHTLY AGAINTS THE MAJOR CURRENCIES.

EURUSD, Daily

The pair found support from the 1.0804 intraday support and rallied a little bit higher on Friday before failing to penetrate the 1.0900 resistance. Now that we have the FOMC meeting coming this week it might well be that market participants aren’t prepared to make strong directional commitments before they’ve seen the Fed press release. Therefore getting through this resistance might be a bit difficult before this release. The 50 day SMA and upper Bollinger Bands are right above the resistance level and Stochastic Oscillator is overbought with the nearest daily support level currently at 1.0667. At the time of writing EURUSD is trading at 1.0828 support level. There isn’t much in terms of economic releases today. This could lead to subdued trading conditions in USD pairs.

Currency Pairs, Grouped Performance (% Change)

USD is up against the majors but there are no single big movers in the USD pairs this morning. The same applies to most of the currency pairs with AUDCHF being an exception with 50 basis points move. After rallying strongly GBP has been slightly weaker against all the others but AUD. Sterling has been benefitting from the recent growth in the UK economy and now that the Fed has turned dovish it is attracting money. After the last week’s BoE minutes market participants expect the BoE to be among the first banks to raise rates while most central banks are looking to drive their currencies lower with loose monetary policies and quantitative easing. US data is expected to be soft in the second quarter as well which suggests that the will be no Fed rate hikes in the June meeting. Market participants look forward to Fed’s mid-week press release for further clues on how the Fed sees the US economy developing. It is likely that the tune will stay carefully dovish but there probably will be no further clarity for the timing of the timing of rate hikes.

Main Macro Events Today

German April import price inflation rose to -1.4% y/y: The previous figure was -3.0% y/y, weaker EUR is pushing prices higher.

US Markit Services PMI (April)

RBA’s Governor Glenn Stevens Speech

Japan Large retailers’ Sales (March)

Japan Retail Trade (y/y) (March)

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 27th April 2015 (Second Analysis)

EURNZD DAILY SHOOTING STAR AT RESISTANCE.

EURNZD, Weekly

EURNZD has been trending lower for the whole of the 2015 but last week rallied significantly on the back of comments from assistant Governor John McDermott. He said last week that the bank will ensure that the monetary policy is stimulatory to support output growth above potential and help lift inflation back to target. He also pointed that “At present, the Bank is not considering any increase in interest rates. Before considering any tightening in monetary policy we would need to be confident that increased capacity utilisation and labour market tightness was generating, or about to generate, a substantial increase in inflation”.

This rally brought EURNZD to a resistance where a weekly pivotal close and 23.6% Fibonacci levels coincide. The pair has reacted lower on Friday after moving briefly above the Fibonacci level. Stochastics are moving higher from oversold levels after diverging for over the weeks before last. Nearest weekly support and resistance levels are at 1.3883 and 1.4290, while the next major resistance is at 1.4547.

EURNZD, Daily

The pair created a shooting star candle last Friday as it reacted lower from April 7th pivot candle and has since been moving sideways near Friday’s lows. Stochastics is very close to overbought levels and the 50 simple moving average is not that far away from the latest high and the same applies to the upper Bollinger Bands as well. Also, this move was a contra-trend move that took the pair to the upper end of the bearish price channel. Therefore it’s not a surprise that this market is reacting lower.

EURNZD, 240 min

Stochastics are turning higher from levels close to the oversold levels. This coincides with price reacting higher from a pivot support level close to the 1.4200. While one hour chart shows RSI diverging and turning higher the 4h chart suggests we could have a 4h hammer candle when in a bit more than one hour’s time. The current 4h candle would need to close above the mid-way of the current 4210 and 4264 range. This would indicate market participants trying to take the pair higher. However, upside is quite limited by the technical factors listed in the daily time frame analysis. The support area between 1.4014 and 1.4055 is a likely level to cause some buying and could therefore act as a target.

Conclusion

Judging from the technical picture upside in this market is limited. Price is trading close to a descending price channel high and it has already reacted lower from the channel top. The longer term trend is lower and Thursday’s rally was contrary to the main momentum. This suggests we should see weakness over the coming few days. Currently price has found some support from a pivot high (see 4h chart) which could turn into a short term strength but at the moment there isn’t much upside momentum either. This market is in a sell the rallies mode and support area between 1.4014 and 1.4055 is a likely level to cause some buying and could therefore act as a target.

Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 28th April 2015.

TODAY’S CURRENCY MOVERS.

EURUSD, Daily

Yesterday the US Flash Services PMI came in at 57.8 in April, erasing much of the 2.1 point rise to 59.2 in March. It compares to 55.0 in April a year ago. This moved EURUSD up by 70 pips before the pair reacted lower from the upper 1.5 stdv Bollinger Band. Yesterday’s daily candle was a relatively narrow one as market participants are hesitant before the FOMC meeting that starts today. EURUSD is still trading below resistance levels (meaning the DXY trades above support). Next minor daily support at 1.0820 and resistance at yesterday’s daily high at 1.0934. As EURUSD is trading at resistance I don’t expect a lot of strength but rather subdued trading that could turn into weakness ahead of the FOMC meeting.

Currency Pairs, Grouped Performance (% Change)

While USD is trading sideways at support one currency stands out of the crowd. This morning AUD has been strong against all the other currencies while at the time of writing the EUR has been relatively weak. After a quick overview of AUD paired charts it seems like Aussie dollar is trying to push through resistance levels. CAD is the weakest of the lot against the AUD and charts suggest that AUDCAD is in late stages of building a smallish bottoming formation. Last week’s candle was a hammer and even though the pair is at resistance there is a higher low in the four hour chart. This indicates AUDCAD is trying to push higher. Should the attempt be successful, the preferred way to trade the long side is to enter after pullbacks.

Main Macro Events Today

Japan retail sales: dropped more than expected in March compared to last year. Total sales declined 9.7% y/y versus a revised 1.7% y/y slide previously.

UK Gross Domestic Product: Consensus estimate points to a y/y decline of 0.4% at 2.6% while last previous figure was 3.0%

US April consumer confidence: the headline figure should reveal an increase to 104.0 (median 102.5) from 101.3 in March.

FOMC Meeting: The US Fed meets on Tuesday and Wednesday. While no policy changes are expected, the focus will be on the statement and the nuances in the forward guidance language that we doubt will provide any clarity on timing of the first rate hike.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 28th April 2015 (Second Analysis)

AUDCAD REACTING HIGHER FROM SUPPORT.

AUDCAD, Weekly
The pair has over the past two to three weeks been testing a support area between 0.9402 and 0.9482. This test was successful and the last week’s hammer candle now points to higher prices. Moves below the 1.5 stdv Bollinger Band were rejected by the market and we there has been no close below this band since December 2014. This suggests buying interest in this pair at levels below current price action. There is some resistance ahead though, as the 23.6% Fibonacci retracement level (at 0.9578) coincides with the high of last week’s candle while February low at 0.9590 is not far above it.

AUDCAD, Daily

Since April 20th the pair has been making higher daily lows and AUDCAD is now approaching resistance level created by the last week’s high and descending trendline. Stochastics is also getting close to levels it turned lower (together with price) the last time. I expect this will slow the pair down and could even cause it to correct lower. Nearest major support level is at 0.9467 while the next resistance level is at 0.9576. The 0.9636 resistance level coincides with the upper daily Bollinger Bands and has the 50 day MA hovering above. This suggests the level could very well work as a target for swing trades.

AUDCAD, 240 min

Price has moved beyond a resistance level at 0.9544 but has since hit the descending trendline. Stochastics and RSI are overbought and price is trading between the upper 1.5 and 2.0 stdv Bollinger Bands. The important support and resistance levels are pretty much the same as in the daily picture. There is some support at 0.9544 but it is fairly close to a higher time frame resistance levels and therefore should be judged as a minor support.

Conclusion

AUDCAD is still the strongest currency today against the major peers but has many resisting technical factors right above the current price. In short term picture this market is overbought as evidenced by the oscillators in 240 min chart and price trading at upper Bollinger Bands. This suggests that those wanting to trade this market on the long side should be careful right now and look to enter trades after pullbacks at support levels. Should there be a good sized pullback to the proximity of current levels of 50 period MA in 4h chart (0.9493) we should look for buy signals as per my teaching at webinars. Obviously being the strongest of the lot AUD can keep on rising against CAD without giving us a low risk entry but buying at a resistance is a high risk strategy. If there is a possibility to buy in proximity of a decent support (eg at 0.9500) the 0.9636 could be a reasonable Target 1 for swing trades. My Target 2 is at the next daily resistance level at 0.9700.

Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

 

[HFM]

Date : 29th April 2015.

TODAY’S CURRENCY MOVERS.

EURUSD, Daily

U.S. consumer confidence defied April gains in all other major confidence measures with a drop to 95.2 from a slightly revised 101.4 (was 101.3) in March, while cycle high was at 103.8 January. This measure was impacted by the recent bounce in gasoline prices and the petro-sector recession. This helped the USD to move lower and EURUSD higher into the resistance area. EURUSD is now trading above the 50 day SMA and inside the upper Bollinger Bands. Current price action takes place in proximity of the level (1.1035) that was able to turn the pair lower. Nearest support and resistance levels are at 1.0848 and 1.1035. EURUSD is moving higher for the 5th day in a row, which means that we are getting closer to the point where this market will correct lower. Therefore, price action around the release of FOMC statement should be monitored closely. This is the fourth time the market moves this high and towards the 1.1035 resistance after creating a higher low on April 13th. This lowers the probabilities of price reacting lower from the same resistance level. Therefore we should be careful and not take it granted that the market will turn lower from the same levels again. It could rally higher before reacting lower again. We should trade what we see, not what we expect.

Currency Pairs, Grouped Performance (% Change)

This morning GBP has been strong and AUD weak. Sterling has advanced most against the Australian dollar and New Zealand dollar while Australian dollar’s weakness has been evident across the board. This has a lot to do with the yesterday’s AUDUSD rally taking the pair to proximity of important resistance level at 0.8033. GBPAUD hit support yesterday at 1.9100 and is now reacting higher from the level. AUDCAD hit my 0.9636 target yesterday and is now reacting lower from the Bollinger Bands above it. AUDCHF has also reached a daily pivot and is ranging in intraday time frames.

Main Macro Events Today

NZ Business Confidence: Strong economic growth and low inflation expectations kept confidence at elevated levels even though the measure declined from 35.8% to 30.2%

US Advance GDP q/q: The first quarter GDP growth is likely to be 0.8% in its first release (the Q4 2014 growth was at 2.2%). Market risk is to the downside as weaker report could delay Fed’s first rate hike.

FOMC Statement: The Fed has indicated that it will stay data dependent. September is the first likely date for a rate hike.

Federal Funds Rate: No changes expected.

RBNZ Interest Rate Decision and Monetary Policy Statement: On April 22ndRBNZ Assistant Governor John McDermott said the bank will ensure that monetary policy is stimulatory to support output growth above potential and help lift inflation back to target. He said that at present they are not considering any increase interest rates.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.