ThirdBrainFx Market Commentary

[ThirdBrainFx]

Market Commentary - February 7, 2014

The UK’s Office for National Statistics released the month over month manufacturing production figure which came out way lower than the expected 0.6%, at 0.3%. Since this economic indicator measures the changes in total inflation-adjusted value of output produced by manufacturers, Forex traders try to predict future interest rate decision by analyzing the output produced by manufacturers.

During the afternoon, the unemployment rate of both, the United States and Canada were published by the US Bureau of Labor Statistics and the Statistics Canada, respectively. The US unemployment rate came out at 6.6%, slightly lower than previously expected 6.7%. The Canadian unemployment rate also came out better than expected, 7.0% against previously forecasted 7.1%.

USDCAD Outlook

The recent decline in the Canadian dollar against most of the major currencies was a bit surprising.The USDCAD pair broke all important levels to trade higher. The pair traded as high as 1.1220. The pair is now retracing some of the recent gains. It is now testing the 50% Fibonacci retracement level of the last major run up from the 1.0841 to 1.1220 level. This level is acting as a strong support for the pair, as can be seen in the 4 hour chart shown below.

There is a small wedge forming around the same levels, as plotted in the chart below. The support of the wedge lies at around the 1.1051 level, which is just above the 50% retracement level. There are several supports on the way down for the pair. After this level, 50% fib level may provide support followed by the previous swing level of 1.0940. Before that the 61.8% fib level may also play its part.

A break of the wedge lower may trigger further losses for the pair towards the 1.0950. The RSI is also trading below the 50 level, and struggling to break it. This is another bearish sign, which one needs to take care of. If the pair breaks up, and the RSI breaches the 50 level, then there are chances that the pair might test the previous high again.

On the upside, if the pair breaks the wedge resistance at around the 1.1120 level, then it might open the door for a re-test of the previous high at around the 1.1220 level. A break above would call for further gains in the pair in the short to medium term. There are no directional signs from the MACD as of writing.

EURUSD Outlook

EUR/USD rallied more than 100 pips yesterday as the European Central Bank (ECB) downplayed sustained low inflation across Eurozone, the pair closed at 1.3588, just ahead of a key 50% fib level resistance.
At the moment of writing in Asian session, Euro is being traded at 1.3586 against the greenback. Immediate support may be noted around 1.3477, low of January 31, ahead of 1.3435 which is a very significant 76.4% fib level, a close below 1.3435 will be seen as very bearish.

On upside, immediate resistance can be noted around 1.3593, 50% fib level, ahead of 1.3665, that is 38.2% fib level and the only notable resistance,and then 1.3738, which is swing high of previous wave. A break above 1.3738 will turn bias into bullish.

Yesterday, ECB kept benchmark interest rate unchanged at 0.25% and policymakers shrugged off sustained low inflation in Eurozone. Mario Draghi said that his team would wait until March, if they didn’t observe any signs of improvement in growth and inflation, then they might mull over some other monetary policy instruments such as negative deposit rate as well as quantitative easing. These comments provided a lot relief to investors and consequently skyrocket movement was seen in EUR/USD and other Euro crosses.

Meanwhile, a report by the US labor department showed that jobless claims declined more than expectations with 331K reading. However, a separate report about the US trade balance posted a downbeat reading of $38.70 billion deficit. USD was seen under pressure after mixed data which also helped Euro in upside movement.

 

[Shooting_Star]

I agree 1.3728 now looks very important and good point for shorting euro

 

[ajpipsmaker]

I agree 1.3728 now looks very important and good point for shorting euro

Shooting star mate, the EURUSD is shooting higher
Very strange, in my opinion.
The pair after the horrible NFP figures is climbing higher.
Today, the pair tried to overtake the 1.3650/60 level.
The move failed as of now.
However, if there is one more attempt, then it may break the same level, and trade higher.
I will be kicking myself if that happens.
I do not like Euro rising today

 

[Shooting_Star]

I dont consider Friday job data to be horrible. In fact, the overall job data was taken as bullish. Reason is that we saw very similar downbeat nonfarm payrolls and upbeat jobless rate in December, and Fed reduced QE by $10 billion. So,this time around data is relatively better than December, hence increasing chances of more tapering. IMO

 

[ThirdBrainFx]

Market Commentary - February 10, 2014

There were not many important economic data releases today. Hence, the volatility level in the Forex market was relatively low. At GMT 7:45 AM, the French Industrial Production (month-over-month) were released by the National Institute of Statistics and Economic Studies. This economic indicator measures the changes in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. This month the French industrial production went down by 0.3% compared to previously estimated -0.1%.

At GMT 5:50 PM, the Bank of Canada’s governing council member Mr. John Murray is about to speak at the Chamber of Commerce, in Sudbury.

GBPUSD Outlook

GBP/USD ended last week with a classic hammer candle on weekly chart, originating from 50% fib level, that shows good signs of bullishness, the pair is likely to extend correction up to 1.6555-80; bias will however remain bearish due to Lower Low (LL).

Cable fell as low as 1.6250 last week but rebounded as the Bank of England (BoE) kept benchmark interest rate unchanged and US non-farm payrolls disappointed. At the moment of writing, the pair is being traded near 1.6413.Immediate resistance can be noted around 1.6450, which is 50% fib level of recent move, ahead of 1.6500 that is 61.8% fib level and psychological level. Above 1.6500 handle, final major resistance, ahead of previous wave swing high, can be seen near 1.6555, 76.4% fib level. Cable is very likely to resume downtrend before 1.6624, hence printing another Lower High (LH), which will confirm bearish bias. Conversely, a break above 1.6624 will once again turn bias into bullish.

On downside, immediate support can be noted near 1.6359 i.e. 38.2% fib level before 1.6250-60 zone that is 50% fib level and double top resistance-turned-support. Below 1.6250-60, another major hurdle for beers is noted around 1.6165 which is 61.8% fib level. A break below 1.6250 will cause Lower Low (LL), hence confirming the bearish bias about cable.

On Friday, a report by the US labor department showed that non-farm payrolls rose slower than expectations; however jobless rate slumped to a new five-year low level during last month. January labor market results were somewhat same as compared to December, so another tapering in bond purchase might be expected on next policy meeting.

USDJPY Outlook

The US dollar was on the back foot on the last Friday after the disappointing Nonfarm payrolls data. The USDJPY pair was down around 80-100 pips in a short time. However, the pair recovered most of the loses going into the weekend. Earlier during the week, the pair traded lower towards the 100.80 level. The pair failed to test the very important physiological level 100.00.

The pair found buyers around the same area, and traded higher. The pair is currently testing the 38.2% Fibonacci retracement level of the last major down move from the 105.43 to 100.74 level. A break above this fib level may call for a test of the 50% retracement level in the short term. There is an important down-move trend line, as can be seen in the daily chart shown below.

The trend line is coinciding around the 61.8% fib retracement level, as highlighted in the chart. So, I think the 103.80/90 level is very crucial for the pair in the medium term. The pair might struggle to break this level, and then trade higher.

On the downside, the 102.00 level may act as a support for the pair. A break of this level may call for a test of the 101.20 level. Any further break may ignite a pressure selling, and may take the pair towards the very important 100.00 level. The RSI is below the 50 level, and may find it difficult to close above the same in the short term. So, watch all these levels very carefully.

 

[ThirdBrainFx]

Market Commentary – February 11, 2014

Today is a bank holiday in Japan and Japanese banks will be closed in observance of National Foundation Day. Since banks are the key to international transactions, there was limited movement in the Forex market during the Asian session, regardless most brokers being open for business around the world.

At GMT 12:30 AM, the National Australia Bank released the NAB Business Confidence figure which came out way better than last month’s 6, at 8. The NAB’s business confidence index measures the level of a diffusion index based on surveyed businesses, excluding the farming industry. As businesses are quick to react to changing business climate, investors pay attention to their confidence level.

At GMT 3:00 PM, the Federal Reserve chairperson Janet Yellen will be testifying on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC. Since she has the most influence over the US central bank’s policy regarding setting interest rates, investors around the world pay keen attention to what she has to say in order to predict the future interest decisions of the Federal Reserve.

AUDUSD Outlook

The AUDUSD pair is trying to break the all-important 0.9000 level.Earlier, in the Asian session, the Australia’s home loans, house price index, NAB business confidence and NAB business confidence data were released. The outcome was more on the positive side, as the house price index registered a gain of 3.4%. This is helping the AUDUSD to trade higher.

The pair has breached the 61.8% Fibonacci retracement level of the last major down-move from the 0.9085 to 0.8659 level. This suggests that the pair might target the full 100% extension in the short to medium term. However, there is a major hurdle for the pair at around the 0.9000/20 level. The pair has to close above the mentioned level to gain any further upside momentum.

There is a channel forming, as can be seen in the 4 hour chart shown below. The pair as of writing is testing the channel resistance, and struggling to take it out. A breach of the channel to the upside may call for a test of the 0.9080 level. Any further gains may push the pair towards the key swing level of 0.9120.

On the downside, the 0.8950/60 is seen as the immediate support for the pair. A breach of this level may push the pair towards the 0.8910/20 level, which may now act as a strong support to the pair. This level has acted as a resistance and support several times. So, we need to watch all these levels carefully in the short term. The RSI is coming closer to the extreme levels, which is an early sign of warning.

Silver Outlook

Silver on Monday once again faced rejection at historical resistance zone near $20.15-$20.20, however the white metal is again going to test the same resistance and it appears that bulls are desperately trying to print a Higher High (HH) above $20.58 which will confirm bullish bias about bullion.

At the moment of writing Silver futures are being traded at $20.13. Immediate resistance may be seen around $20.15-$20.20, a tough horizontal resistance zone for white metal and 38% fib level. A break above that resistance area shall target $20.58, high of January 14 and swing high of previous wave; even a minor move above this level will confirm bullish bias and may expose $20.84, 50% fib level.

On downside, immediate support may be noted near 19.81, 55 Daily Moving Average (DMA), ahead of $19.65, 23% fib level, and then $19.00 handle, psychological level and swing low of previous wave. A break below $18.98 will turn bias into bearish due to Lower Low (LL).

Commodity Channel Index (CCI) has entered into overbought territory on daily chart that shows reversal might be in play very soon. Relative Strength Index (RSI) is retreating after hitting overbought territory on four-hour timeframe; however it is almost neutral on daily timeframe. Divergence is not being noted with MACD on any timeframe.

It is pertinent that China, the largest consumer of Silver and other commodities, came back on Monday after one-week lunar year vacations, so precious metals are also enjoying physical buying support from the Asian nation.

 

[Shooting_Star]

In long term, I think Silver is very bullish irrespective whatever situation prevails in China or the US, reason is its unusually low price. The current price of silver is less than its mining cost, miners have already started closing down silver production, this will result in supply and demand gap and ultimately price will tend to rise.

 

[sanjusharmaDHP]

In long term, I think Silver is very bullish irrespective whatever situation prevails in China or the US, reason is its unusually low price. The current price of silver is less than its mining cost, miners have already started closing down silver production, this will result in supply and demand gap and ultimately price will tend to rise.

I also believe that the SILVER is heading higher.
However, there are some major hurdles for the SILVER on the upside.
Starting at around the 20.30/40 level. There are tons of resistances around the same level.
So, it might struggle to take this out.
On the other side, if SILVER manages to break higher, then we can certainly hope for a test of 21.00 in the short term.

BTW thanks for sharing your view

 

[Shooting_Star]

Yup I too think so, short-to-medium term future appears bullish for both Gold and Silver due to supply concerns, big mines have already stopped new mining projects for Gold and Silver as they are now nomore feasible due to very low price

 

[ajpipsmaker]

Well, interesting conversation. I would love to be a part of it.
I am staying away from the GOLD and SILVER for some time.
One of the main reasons to do so is because I think they both are reaching important levels.
We can see a lot of sellers returning from the current levels.
However, it's high time now. The GOLD and SILVER cannot just go on failing from the important levels. They have to decide at some point of time.
I believe that in Q2 we can witness 1480 in GOLD.
I may be wrong, but my gut feeling says so.

 

[ThirdBrainFx]

Market Commentary – February 12, 2014

Earlier this morning, the CGAC released the Chinese trade balance figure, which measures the difference in value between imported and exported goods during the previous month. The Chinese trade balance was expected to come out at 24.2 billion, instead the actual figure came out way better, at 31.9 billion.

At GMT 10:30 AM, the Bank of England released its inflation report on the economy which include a projection for inflation and economic growth for next two years. The inflation report indicated that the Bank of England is likely to keep the UK’s lending rate at historically low 0.5% for at least another year. This news pushed the Cable to appreciate against all major currencies, across the board. For example, the GBPCHF climbed up around 200 points since the release.

NZDUSD Outlook

The NZDUSD pair has breached the all-important 0.8300 swing level, and the pair is currently trading above the 0.8320 level. Earlier, in the Asian session, the Chinese imports, exports and trade balance data were published. The outcome was more on the positive side, as both imports and exports registered a gain of more than 10.0%. This is helping the NZDUSD to trade higher.

The pair has breached the 61.8% Fibonacci retracement level of the last major down-move from the 0.8431 to 0.8050 level, and has also broken an important confluence resistance at around the 0.8300/10 level. There is a possibility that the pair might now test the equal legs of the last move down. The 0.8410/30 may be the next target for the bulls in the short to medium term.

There is a channel forming, as can be seen in the 4 hour chart shown below. The pair as of writing is testing the channel resistance at around the 0.8350 level, and struggling to break the same. A breach of the channel resistance may clear the way for the pair for a test of the last highs. A break above the last high may push the pair towards the 0.8480 level, which represents a major volume close level of October 2013.

On the downside, the broken resistance level at around the 0.8300/10 may provide support to the pair in the short term. Any break higher lower may push the pair towards the 0.8240/50 support zone. Until the pair is trading above the mentioned levels, we can expect more upside in the coming days. The RSI is coming closer to the extreme levels, which may cause a small pullback in the pair.

EURUSD Outlook

EUR/USD pulled back yesterday with a shooting star daily candle originating from 50% fib level which shows considerable downside risk, the pair was closed below 55 DMA.

At the moment of writing, Euro is being traded near 1.3636 against the greenback with immediate resistance being noted around 1.3648, 55 DMA, ahead of 1.3678, 50% fib level. A break and daily close above 1.3678 will prompt further upside movement up to 1.3727, 61.8% fib level. Bias for EUR/USD will remain bearish as far as price is below 1.3737, swing high of previous wave.

On downside, support may be seen around 1.3618, 100 DMA, ahead of 1.3571 that is 23.6% fib level and then 1.3476 i.e. swing low of previous wave. A break below 1.3476 will result in Lower Low (LL), hence confirming the bearish bias for EUR/USD.

Commodity Channel Index (CCI) is near overbought territory that signals potential reversal in near future. Relative Strength Index (RSI) shows neutral reading that means long moves might be in play on either side. Divergence is not being with MACD on any time frame.

Yesterday, Federal Reserve’s new chairperson, Janet Yellen assured that she would stick to her predecessor’s policy of gradual tapering in monthly asset purchase program, these remarks triggered volatility in financial markets and dollar climbed against Euro. A little earlier than her speech, text version of Yellen remarks was out in media that stated; “tough growth in the US picked up significantly, but recovery in labor market is still far from over.” Market took these remarks as dovish and in turn Dollar fell during early US session.

 

[Shooting_Star]

I think EURO has now reached to a final resistance level and now its time for pullback, lets see

 

[ThirdBrainFx]

Market Commentary - February 13, 2014

This morning, the Australian Bureau of Statistics released the employment change in the economy that measures the number people gained employment during the last month. The figure came out at -3700 against previously forecasted at 15,300, a huge decline indeed. The Bureau of Statistics also released the unemployment rate for the economy, which came out at 6% against forecasted 5.9.

Later in the day, the American Census Bureau will release the change in the total value of sales at the retail level, excluding automobiles, known as month over month, core retail sales data. The usual retail sales figure includes automobile sales. However, the car sales are often very volatile that makes the retail sales fluctuate heavily. Since the core retail sales data exclude car sales data, it tends to represent more accurate picture of the economy.

The US Department of Labor will also release the weekly unemployment figure. This figure is considered to be the most earliest economic data. This week, the unemployment change is forecasted to come out at 331K, which is the exact same figure from last week.

EURNZD Outlook

The EURNZD pair is fighting hard to say above the previous major support level at around the 1.6230 region.The pair is also seen flirting with the 61.8% Fibonacci retracement level of the last up-move from 1.5912 to 1.6995 levels. The recent comments from the ECB officials are weighing on the Euro in the short term, and as a result most of the Euro pairs are trading lower Intraday.

There is also an up-move trend line, as shown in the daily chart below. This trend line also acted as a support for the pair. So, there is a confluence of supports around the 1.6220/30 level. The pair again failed at around the 1.6560 level, and traded lower. A breach of the mentioned confluence level may trigger larger losses for the pair, and it might target the full 100% extension, which is at around the 1.5910 level. However, before that the key psychological level of 1.6000 may come into play as a support.

If the pair manages to bounce from the current levels, then we can see the pair trading above the 1.6420 level again.A breach of this level may again push the pair towards the major barrier at around the 1.6560/80 region. The RSI is struggling to take out the 50 level, which is not a good sign. If it manages to break and close above the same, then we can expect some more gains for the pair in the short to medium term.

USDCHF Outlook

USD/CHF yesterday faced rejection around channel resistance and since then the price has been carrying on downside movement, it appears that downside breakout through daily triangle might be in play very soon.

Price has been moving in sideways since last few days; however a breakout shall provide clear direction on either side. The pair is being traded around 0.8984 at 5:25 GMT in Asia. Immediate resistance can be noted near upper channel of triangle which is currently near 0.9023. A break and daily close above channel resistance shall expose 0.9070, 38.2% fib level, ahead of 0.9155 which is swing high of last major upward wave.

On downside, immediate support is being noted around lower channel of triangle that is currently near 0.8946, a downside breakout through daily triangle shall accelerate bearish momentum hence targeting 0.8882 which is 76.4% fib level, ahead of 0.8800, psychological level and swing low of last major downward wave.

Both Relative Strength Index (RSI) and Commodity Channel Index (CCI) are hovering around neutral territory which means the pair is currently directionless as we mentioned earlier. Signal line of MACD is also flat with very small histogram readings as shown in above chart, this also indicate lack of clear direction.

Today we have a few major economic reports scheduled for release that include Germany’s harmonised consumer price index for January, ECB monthly report, US retail sales data for January, initial jobless claims and Yellen speech. Since USD/CHF has good negative correlation with EUR/USD, so volatility could be expected in former pair amid Eurozone releases.

 

[sanjusharmaDHP]

USDCHF for me is in an uncertain world just like the EURUSD. They both don't know where to go from here I am just kidding. They both are stuck in a range for some time. Let's see whether they can come out of that.

I was looking at the hourly chart of the USDCHF, I found a trend line, which is holding the downside for the pair. It acted as a support for the pair. Few hours back, the pair again bounced from the same trend line. On the upside, the confluence of 55 and 100 moving average may act as a barrier for the pair. See the chart attached.

 

[ThirdBrainFx]

Market Commentary – February 14, 2014

Earlier today, the Chinese National Bureau of Statistics released the year over year consumer price index, which came out at 2.5% against previously forecasted 2.4%. This economic indicator measures the change in the price of goods and services purchased by consumers, which indicates inflation level in the economy.

Later in the afternoon, the Statistics Canada will release the month over month manufacturing sales figure that measures changes in the total value of sales made by manufacturers in the economy. Since manufacturers are quickly affected by market conditions, changes in their sales can be an early signal of future activity level in the economy.

The University of Michigan will be releasing the Prelim Consumer Sentiment at 2:55 PM. This is an index that measures level of a composite based on consumer survey. The UoM asks 500 consumers to respond and rate the relative level of current and future economic conditions to figure out the consumer sentiment about the economy. Consumer spending has a big impact on the overall economic growth and investors pay keen attention to this index.

Gold Outlook

Gold price has jumped more than $20 an ounce during past 24 hours after downbeat US data and China’s growth optimism, the precious metal is however likely to resume correction from current levels, according to price action analysis.

At the time of writing this article, the yellow metal is being traded near $1305, the highest level since November. Immediate hurdle can be seen around $1307, channel resistance and 200 Daily Moving Average (DMA), ahead of $1318, 76.4% fib level. A sustained move above channel resistance might result in renewed bullish momentum, hence targeting $1352 or even beyond that level.

On downside, support can be noted at $1292, 61.8% fib level, ahead of $1271 which is 50% fib level, and then channel support (currently around $1263). A daily close below channel support could expose $1250 support area and then $1244, 50% fib level of the most recent move.

Retail sales in the US during January slid down by 0.4% and followed a revised 0.1% drop in a month before, a report released by the US commerce department revealed yesterday. Moreover, the number of people, claiming unemployment incentives, ticked up by $8,000 to 339,000 last week, a separate report by the US labor department showed. Analysts were expecting no change in retail sales and a decline by 1,000 in jobless claims. On Wednesday, Chinese authorities said that countries exports jumped by 10.6% in January, fueling growth optimism about the Asian nation. Economists had predicted only 2% increase in exports amid lunar vacations. China is the biggest consumer of bullion.

EURCHF Outlook

The EUCHF pair has been hit by the recent poor data for the US. The safe heavens are gaining bids for the last several days now. The pairs like USDCHF, USDJPY and EURCHF are trading lower. Also, the commodities like GOLD and SILVER are trading higher. I think the EURUCHF still remains supported on dips. However, the pair is again reaching a crucial junction, in my opinion.

Recently, the pair formed a channel, as shown in the 4 hour chart. The pair has breached this channel, and currently trading lower. Now, this can be considered as a critical break, as the pair is approaching crucial support region at around the 1.2200-1.2180 levels. The 1.2180 is a very important level. It would be interesting to see whether the pair manages to hold this or not. A breach of this level may call for further losses for the pair may be towards the 1.2120 level.

If the pair manages to bounce from the 1.2180 support level, then it would be a good sign. However, the pair will face a lot of resistance on the way up. Starting with the broken channel support area at around the 1.2220/30 levels. Only a break and close above these levels may put the pair back in the positive zone. The RSI is coming closer to the extreme levels, which suggest that there might be a relief for the pair in the short to medium term.

 

[ajpipsmaker]

At the time of writing this article, the yellow metal is being traded near $1305, the highest level since November. Immediate hurdle can be seen around $1307, channel resistance and 200 Daily Moving Average (DMA), ahead of $1318, 76.4% fib level.

The GOLD has been brutal in the recent days. I am very surprised with the move. However, I was prepared for this to a very good extent. The real force behind this move is the consistent poor data for the US in the recent times.

Technically, as you mentioned the $1318 level is crucial. However, the pair has breached an important channel resistance, and it may continue to trade higher from here on. I think the GOLD is eyeing $1350 level, as can be seen in the chart below. I may be wrong here, but I think this level is crucial for the yellow metal.

 

[ThirdBrainFx]

Market Commentary - February 17, 2014

There were plenty of economic data released during the weekend. The most important was the retail sales figure from Statistics New Zealand, which came out at 1.2% against previously forecasted 1.7%. The retail sales data is considered to be a primary gauge of consumer confidence as it measures the changes in the total value of inflation adjusted sales at the retail level.

The Australian Bureau of Statistics released the new motor vehicle sales data at GMT 12:30 AM. This economic indicator measures changes in the number of new cars and trucks domestically sold during the past month. As this data is a vitally related to consumer sales, and correlate to the sign of consumer confidence, investors keep a keen eye on the figure to predict future economic activity.

USDCHF Outlook

The USDCHF pair has been hit by the recent greenback and the risk-on sentiment. The pair failed above the 0.9080 level, and traded lower. The pair is again trading below the key 0.8980 swing level. The fall in the US dollar in the recent days has been consistent, and it has failed to gain any sort of ground against most of the major currencies.

Looking at the daily chart of USDCHF, the pair has breached 61.8% Fibonacci retracement level of the last major up-move from the 0.8798 to 0.9155 level. The pair has been trading just below the key fib support level, which means that the pair might eye the full 100% extension at around the 0.8800 level. If the pair is unable to rebound from the current levels, then we may witness some more losses for the pair in the short to medium term. There is also a down-move trend line, which is acting as a major hurdle for the pair. Until the pair is trading below this trend line, then bearish bias is favored for the pair.

On the downside, a breach of 0.8800 level may call for a new lows in the pair. On the upside, 0.9000 level may act as a barrier for the pair. A break above this level might call for a test of the down-move trend line. The RSI is below the 50 level, and has struggled to trade above the same for quite some time now, which means the pair might remain under pressure for time.

EURUSD Outlook

The EURUSD broke the downward sloping equidistant channel since late December, last year. It tested the upper trend line on February 11, but failed to close above, and ended up forming a bearish pin bar on the daily time frame. However, a day later, on February 13, the EURUSD managed to close above the trend line and reached the resistance zone around the 1.3700 level.

For last few days, this pair is consolidating around this resistance zone. Meanwhile, the MACD has crossed above the 0 line, and the MACD signal line is about to cross over 0, towards positive value. If the EURUSD observe further bullish buying pressure, it may move towards the next resistance zone, around the 1.3795 level.

 

[sanjusharmaDHP]

If the EURUSD observe further bullish buying pressure, it may move towards the next resistance zone, around the 1.3795 level.

I think the EURUSD is nearing a critical resistance zone at around the 1.3770/80 level. This area represents a major overlap junction where the sellers are expected to return. There is also an up-move channel formed by the pair on the 4 hour chart, as shown below. The channel resistance level coincides with the mentioned area. So, we can say that there is a confluence of resistances around the same region.

Only a break and close above the 76.4% fib level will increase the bullish pressure on the pair. And, then the buyers might try to push the pair towards the 1.3890 level again. So, I am watching this level very closely in the short term.

 

[ThirdBrainFx]

Market Commentary - February 18, 2014

This morning, the Reserve Bank of Australia released the monetary policy meeting minutes, and it had a positive effect on the Australian dollar. Most AUD basket of pairs spiked up within first hour. Particularly, the AUDUSD moved up around 60 pips during the first hour.

The ZEW released its German economic sentiment index, which measures the level of a diffusion index based on surveyed German institutional investors and analysts. Last month, the ZEW's German economic sentiment was at 61.7. However, this month, it came out way low at 55.7.

Later during the afternoon, the Bank of Japan also released its monthly monetary policy statement. Since it is considered to be among the primary tools that central banks use to communicate with investors, these policy meeting minutes usually have substantial impact on the market.

USDCAD Outlook

The USDCAD pair has managed to retrace some of the recent losses.The pair after creating a high at around the 1.1220 level has moved lower towards the major support at around the 1.0940/50 level. This level is very important in the short to medium term, as it represents a major volume close. So, the pair might struggle to break this support level.

There is a clear triangle formation on the 4 hour chart for the pair, as can be seen below.The pair is on a verge of a break, in my opinion. We may witness a swing move for the pair in the coming hours. The pair is consolidating in a very narrow range just ahead of the break. On the upside, I think a break above the 1.1000 level may push the pair higher again, as this is a critical resistance zone for the pair, as highlighted in the chart below. The RSI and MACD both are flat, in my opinion. A break above 50 in RSI would be a bullish call in the short term.

On the downside, as mentioned earlier, the 1.0930/40 is very crucial and a break below this level may push the pair towards the 1.0850 level. This can be an important break, and I think that if follow through below the triangle support and swing areais strong enough, then it might be seen as a bearish formation. In this case, the 1.1220 level might be termed as an important top in the medium term. So, I think coming hours are very critical for the pair, as it might decide the trend for the pair in the short term.

AUDUSD Outlook

The AUDUSD is currently trading near the 0.9070 resistance level. This pair has tested this resistance level few weeks back. If the AUDUSD price bounce from here, it will end up forming a double top reversal pattern.

The AUDUSD has formed a MACD divergence on the daily time frame. After breaking the long standing downward sloping trend line, it quickly bounced and formed a new upward sloping trend line after the divergence was formed. If the AUDUSD can penetrate and close a above the 0.0970 resistance level in the next few days, this pair will find next major resistance at the 0.9275 area.

 

[sanjusharmaDHP]

I think the EURUSD is nearing a critical resistance zone at around the 1.3770/80 level. This area represents a major overlap junction where the sellers are expected to return.

Thanks for sharing your views man. It was very useful for me. Especially the chart which you have shared saved me and stopped me from doing a blunder. I was planning on buying the EURUSD yesterday at the current level. However, I stopped after I look into the chart you shared.

I have also plotted the same trend line on my chart as well, as shown below. Now, I am also monitoring this trend line very closely. BTW do you think that the pair can manage to break higher above this trend line? Or do you think the pair might continue to trade lower from the current levels? Please share your views. Thanks a lot.