ThirdBrainFx Market Commentary

[ThirdBrainFx]

Market Commentary – March 13, 2014

The Australian Bureau of Statistics released the employment change figure during the early hour of the day, at GMT 12:30 AM. This economic indicator measures the changes in the number of employed people during the previous month. Since job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity, investors consider this data to be of vital importance. The forecast for the Australian employment change figure was set at 15,300, but the actual figure came out way better than expected, at 47,300.

The Australian Bureau of Statistics also released the unemployment rate which remained at 6.0%, same as last time.

At GMT 1:10 AM, the Chinese year-over-year industrial production change figure was released by the National Bureau of Statistics. This economic indicator measures the changes in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. As the production is the dominant driver of the economy, investors consider this data to be a leading indicator of economic health.

At GMT 12:30 PM, the US Census Bureau will be releasing the core retail sales figure (m/m), which measures the changes in the total value of sales at the retail level. This data is similar to the retail sales data but it excludes the automobile industry due to being too volatile. The forecast for the US core retail sales was set at 0.2% increase, and the actual figure came out better than expected, at 0.3%.

At the same time, the US Department of Labor released the most important fundamental data of the week, the US unemployment claims figure. This economic indicator measures the number of individuals, who filed for unemployment insurance for the first time during the past week. Last week, the US unemployment figure came out at 324,000, and the forecast for this week was set at 334,000. However, the actual figure came out way better, at 315,000.

NZDUSD Outlook

It didn’t take long after our last analysis for NZDUSD to rally above January 14th swing high, closing strong above the resistance for a clean break.

Although there was some bearish price action on the 4H chart late last week, followed by a few days of consolidation above 0.8431, there wasn’t much to it. Once sellers tested the broken resistance level, buyers successfully turned into support (with a little help from 200 Simple Moving Average on the 1H timeframe) and there was no looking back. A huge bullish engulfing bar price action pattern, formed on all timeframes between 1H and Daily, eventually took NZDUSD up to our analysis target of 0.8542, and above.

Towards the upside, the next resistance to come into play is located at 0.8584. This is an old long term trend line based on the highs of 2011 and 2013, marking the resistance of a huge triangle formation. It remains to be seen if the market will react to it in any way. Further up, 0.8675, the 4th November 2013 swing high, can be construed as another target if the rally continues at this pace.

Towards the downside all resistance levels should be watched as potential support levels. Selling is indicated only if price responds negatively after touching known resistance levels, or if a bearish price action pattern appears on the 4H timeframe and higher.

One of our top performing automated strategies, MorningBull, has already opened several long position with the NZDUSD. If the NZDUSD reaches its target price around the 0.9070 level, then the NZDUSD's profits will represent over 200 points of profits altogether. Right now, the MorningBull strategy has over 440 points of unrealized profits on this pair. For further information regarding our automated strategies, please visit our website.

EURCHF Outlook

The demand for the safe havens increased overnight, as there was some risk-off theme, which dominated the market yesterday. The currencies such as CHF and JPY again gained some attraction, and as a result the USDCHF and EURCHF pairs traded lower Intraday. The EURCHF is struggling to hold some ground for the last several weeks now. The pair was again seen under some pressure, and traded as low as 1.2150 level.

The pair has an important channel, as can be seen in the daily chart shown below.The pair once tried to break the same to the downside, but failed and again traded higher. Now, the pair is again heading back towards the channel support area, and more importantly the 1.2120 support level. This is a critical support zone for the pair, and any daily close below this level may result in a test of at least 1.2080/60 support area in the medium term. Any further downside momentum should be very hard, as we still have the SNB’s peg level at 1.20 level.

On the upside, the previous swing level at around the 1.2180/90 is seen as the first hurdle for the pair, which also coincides with the down-move trend line on the daily chart. If the pair manages to break and close above this trend line, then further gains can be seen in the short to medium term. Remember, the channel resistance area is the major swing zone for the pair, and the pair might need a solid reason for it to break.

 

[sanjusharmaDHP]

It didn’t take long after our last analysis for NZDUSD to rally above January 14th swing high, closing strong above the resistance for a clean break.

The rally and break look real. However, there are a lot of uncertainties in the market at present, and buying a risky currency like the NZD at the higher levels may turn risky. However, if turns out well, then the rewards will be great. So, a good risk/reward situation. I was long NZDUSD ahead of the RBNZ interest rate decision. I closed that long just after the release in around 80 pips gain. I was expecting a recovery in the pair, and the pair did recover from the highs, and is currently trading lower. The 0.8510 level is very critical, in my opinion. I am keeping a close eye on that level, and if the price suggests a bounce, then I will consider going long at that level.

 

[ThirdBrainFx]

Market Commentary – March 14, 2014

At GMT 8:15 AM, the Swiss Federal Statistical Office released the month-over-month Producer Price Index (PPI), which measures the changes in the price of goods and raw materials purchased by manufacturers. When manufacturers pay more for goods, usually the higher cost is passed on the consumers. Hence, investors consider the PPI as a leading indicator of inflation in the economy. Last month, the Swiss PPI (m/m) came out at 0.0%, and this month the forecast was set at 0.3%. However, the actual figure came out at -0.4%, indicating lower price points for manufacturers which may add deflationary pressure on the economy.

At GMT 12:30 PM, the US Department of Labor also released its Producer Price Index (PPI). The forecast for the US PPI (m/m) was set at 0.2%, and the actual figure came out at -0.1%.

During the afternoon, at GMT 1:55 PM, the University of Michigan released its Prelim consumer sentiment, which measures the level of a composite index based on a survey of about 500 consumers. In the survey, respondents are asked to rate the relative level of current and future economic conditions of the US economy. Hence, investors treat this data as a leading indicator of consumer spending, as financial confidence leads to more spending that drives the majority of overall economic activity in the country.

GBPUSD Outlook

Cable has been moving in a relatively small down-trending channel for a month now, with the angle of the channel small enough to consider this move a consolidation. Daily and 4H MACD are showing increasing weakness, so we are getting closer to the moment where GBPUSD will either continue the uptrend or make a deeper bearish correction.

The most recent bearish swings have been held back by the 200 Simple Moving Average on the 4H chart, presently at 1.6586. In this location we also spot the 38.2% Fibonacci retracement between 1.6251 low and 1.6821 high, and of course the channel support is in the vicinity. The last attempt to break towards the downside ended up with a 4H bullish pin bar, followed by a 100 pip rally. A 4H bar close below the 200 Simple Moving average might trigger a larger correction, with a first potential target at 1.6469.

Towards the upside, while the support holds ground, the channel resistance at 1.6770 must be crossed for us to see a bullish continuation towards 1.7000-1.7040.

One of our top performing automated strategies, MorningBull, has already opened several long position with the GBPUSD. If the GBPUSD reaches its target price around the 1.6765 level, then the GBPUSD's profits will represent over 600 points of profits altogether. For further information regarding our automated strategies, please visit our website.

EURCAD Outlook

The horrible run of the Canadian dollar continues, as the currency kept on declining against most of the major currencies.The EURCAD also continues to rise in the medium term. However, after the dovish comments by the ECB President Mario Draghi, the Euro collapsed yesterday. The EURUSD was down more than 100 pips, and EURCAD was also down, but managed to hold the drop at a critical level.

The pair has an important channel, as can be seen in the 4 hour chart shown below.The pair once breached the same to the downside, but we can take it as a false break, as the pair again bounced back inside the channel. Yesterday, the pair after the slide found support right at around the channel support and the 50.0% Fibonacci retracement level of the last leg up from the 1.5123 level to 1.5500 level. This is an important area, as the pair spiked sharply from this zone. A break and close below this support area might call for further losses in the pair, and it might test the previous low of 1.5123 as well in that case.

On the upside, the previous swing level at around the 1.5400 holds the key for the pair. If the buyers manage to take the pair higher above this resistance zone, then one can witness a re-test of the 1.55 swing high in the short term. The RSI is back below 50, and currently struggling to close above it, which is a warning sign, in our opinion.

 

[ajpipsmaker]

Cable has been moving in a relatively small down-trending channel for a month now, with the angle of the channel small enough to consider this move a consolidation. Daily and 4H MACD are showing increasing weakness, so we are getting closer to the moment where GBPUSD will either continue the uptrend or make a deeper bearish correction.

There are high chances that the pair might continue to trade higher in the coming days. However, I think the pair is at a very critical juncture. The pair has failed to gain the upside momentum a couple of times, and one says that "what cannot go up must go down". So, the coming days are very important for the pair, and if the pair fails again to go up, then it will go down for sure. My money is on the upside, as the wedge forming on the hourly chart looks for a bullish break, in my opinion. I am keeping a close eye on this wedge in the short term, and will take positions accordingly.

 

[ThirdBrainFx]

Market Commentary – March 17, 2014

Today, there were plenty of moderately important data releases that moved the market. During the first hour of the day, at GMT 12:30 AM, the Australian Bureau of Statistics released the month-over-month new motor vehicle sales figure, which measures the changes in the number of new cars and trusts sold in the domestic Australian market. Investors consider this data to be a leading economic indicator as rising demand for expensive durable goods shows that consumers are confident in their future financial position. Last month, the new motor vehicle sales in Australia went down by 4.0%, and this month it rebounded just in the positive zone, at 0.1% increase.

GMT 10:00 AM, the Eurostat released the year-over-year core CPI, which measures the changes in the price of goods and services purchased by consumers, excluding food, energy, alcohol, and tobacco. Investors pay more attention to the core CPI data as it represents the less volatile items in the basket. The forecast for this month’s core CPI (y/y) in the Eurozone was set at 1.0%, which is 20% more than last time, and the actual figure came out at 1.0% meeting the forecast.

At 12:30 PM, the Statistics Canada released the foreign securities purchases figure. This economic indicator measures the total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month. Foreigners need to convert foreign currency into Canadian dollars to purchase Canadian securities. Hence, this indicator is an important indicator of the supply/demand dynamics of Canadian dollar in the foreign exchange market. Last month, foreigners decreased their securities purchase by 4.28 billion, and the this month the figure rebounded to 1.09 billion.

Later in the afternoon, German Central Bank’s (Deutsche Bundesbank) President Jens Weidmann is due to speak about external imbalances in the euro area, in Kiel. Expect the market to become volatile during his speech.

EURJPY Outlook

In our last analysis, we were mentioning that EURJPY should become more predictable if it drops below 138.70-138.90 area, where we spotted an important cluster of support. In the end the support held just fine, with EURJPY continuing this recent uptrend. After confirming the resistance in the 141.23 area one more time and dropping back to test the trend line, the pair rallied over 460 pips in one swift move to reach 143.76. This rally extended above 61.8% and 76.4% Fibonacci levels and the numerous previous tops in the 142.90 area, so last week’s drop was not a rejection off of any particular technical levels.

As of right now, EURJPY has found support on the bullish trend line based on the most recent swing lows. It’s also important to underline how the previous tops around 141.23 have not turned into support this time. This means seller could easily overcome this support and continue lower this week. All we need is a break and close below the trend line and 140.42, and 138.70-138.90 area becomes the next support to be targeted.

Towards the upside, above the trend line and preferably above 141.23, the uptrend is favored by a long shot. Without any technical levels that were respected, the current high at 143.78 and the 145.64 are the most notable resistance levels to be watched.

One of our top performing automated strategies, MorningBull, has already opened several long position with the EURJPY. If the EURJPY reaches its target price around the 145.70 level, then the EURJPY's profits will represent over 200 points of profits altogether. Right now, the MorningBull strategy has over 1,860 points of unrealized profits on this pair. For further information regarding our automated strategies, please visit our website.

USDCHF Outlook

The US dollar was again a loser during the previous week, especially against the Swiss Franc. The USDCHF pair declined, and created a new low, as the demand of the safe havens increased during the previous week. The pair has been consistently declining for the past few weeks, and there are no signs as yet for a relief rally. The pair can still continue trading lower in the short term. One need to be very careful in the coming days, as some very important economic events are lined up during this week.

The pair has an important down-move trend line, as can be seen in the 4 hour chart shown below. The pair has to break this trend line in order to gain any upside momentum. There are few resistances at around the 08720 and 0.8740 levels. If the pair manages to close above these levels, then the pair could trade higher in the short term. After a break, the 0.8820/40 level is important, and one can expect sellers to return around this region.

If the pair fails to gain any upside momentum, and trades lower, then the previous low at around the 0.8700 level will be the key. If the buyers fail to defend this level, then the pair might trade lower and create a new low in the medium term. The RSI and MACD are still in the negative territory, and there are no signs of bullishness as yet. A break of 50 level in RSI can put the pair in positive zone in the short term.

 

[ThirdBrainFx]

Market Commentary – March 18, 2014

Earlier today, at GMT 12:30 PM, the Reserve Bank of Australia released the monetary policy meeting minutes. Since it provides a detailed record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates, investors carefully watched the event.

At GMT 10:00 AM, the ZEW released its German economic sentiment, which measures the level of a diffusion index based on surveyed German institutional investors and analysts. This month, the German ZEW economic sentiment was forecasted to come out at 52.8, and the actual figure came out much lower, at 46.6.

During the afternoon, at GMT 12:30 PM, the US Census Bureau released the building permits figure, which is an annualized number of new residential building permits issued during the previous month. Since obtaining a permit is among the first steps in constructing a new building, investors consider this economic data to be an excellent gauge of future construction activity. This month, the forecast for the new building permits figure were set at 0.97 million, and the actual figure came out much better, at 1.02 million.

At the same time, the US Bureau of Labor Statistics released the month-over-month core consumer price index (CPI) figure. This economic indicator measures the changes in the price of goods and services purchased by consumers during the previous month. However, the core CPI data exclude food and energy prices as those are volatile in nature. Last month, the US core CPI came out at 0.1%, and this month it remained unchanged.

EURUSD Outlook

The Euro buyers keep on pushing the EURUSD pair higher every time the pair moves lower. Despite the dovish comments from the ECB President Mario Draghi, the Euro has been bid across the board. The EURUSD pair is stuck in a narrow range, and is looking for a substantial fundamental for the next move. There is no denial of the fact that there are chances in the short term for a test of the 1.40 level. If the current consolidation is for a leg higher, then we can see a test of 1.40 in the coming days.

The pair has an important up-move channel, as can be seen in the 4 hour chart below. This is not a classic one, but the wave counts, major highs and major lows are considered while plotting this one. The pair should respect this channel in the short term. The pair has a clear resistance at around the 1.3940 and 1.3960 levels. If the pair manages to break these levels, then it can open the doors for another leg higher. The RSI is getting closer to the 80 level, which is not a perfect sign for a break to the upside. So, one need to be very careful while buying the pair in the short term.

If the pair fails to gain any upside momentum, and trades lower, then there is an important support region at around the 1.3880 and 1.3860 levels, as highlighted in the chart shown. A break of these levels might push the pair towards the channel support area, where one can expect buyers to return after a consolidation.

CADJPY Outlook

CADJPY failed to stay above the support at 92.45, which lead to a test of the daily uptrending channel, where 91.18 was tested both on Friday and on Monday before price rallied back up, showing no intentions to break below the daily channel.

The short term went as high as 92.23, not even touching the previous support or the 200 Simple Moving Average on the 4H timeframe. After a tiny bearish pin bar on the 4H chart, price started coming down again. It’s important to notice how in the last two weeks the pair has been making consistently lower swing highs and swing lows. So even if the price is in a bullish channel on the daily chart, on the 4H timeframe isn’t in a bearish configuration.
Towards the downside CADJPY is likely to visit 91.18 again, followed by 90.78. Any dips below 90.78 can and probably will trigger massive sell-offs, both in the short term and the long term.

Towards the upside, CADJPY can either offer a bullish rejection around 91.18, or it will become bullish again if the current two week bearish trend is broken – which will occur if the pair rises above 92.23 and the current bearish trendline. 92.43-92.50 represent another good resistance, but above that 94.00 should be the ultimate target.

One of our top performing automated strategies, MorningBull, has already opened several short position with the CADJPY. If the CADJPY reaches its target price around the 85.60 level, then the CADJPY's profits will represent over 2400 points of profits altogether. For further information regarding our automated strategies, please visit our website.

 

[sanjusharmaDHP]

The Euro buyers keep on pushing the EURUSD pair higher every time the pair moves lower. Despite the dovish comments from the ECB President Mario Draghi, the Euro has been bid across the board. The EURUSD pair is stuck in a narrow range, and is looking for a substantial fundamental for the next move.

I think the next leg would be down in the pair. The pair is currently testing the 1.3880 support level, which is very critical in the short term. If the pair cracks this support, then it might slide back to around 1.3820 level. On the other hand, if it bounces sharply, then a retest of 1.3950 level is very likely. The pair has annoyed me a lot, and I am staying sideways until some solid trading signs emerge. I might consider going long on dips, but not sure as of writing. I will prefer to wait for some more time before acting. The pair needs to break the range shown in the chart.

 

[ThirdBrainFx]

New Zealand Trade Balance May Push the NZD/CAD Price Out of its Current Narrow Range

Although Monday would be a bank holiday in some of the major economies around the world, including the United States, there are some major data releases scheduled in the coming few days to move the global Forex markets.

On Monday, at GMT 10:45 p.m., the Statistics New Zealand will release the national trade balance figure, which measures the difference in value between net import and export of products and services over the previous month.

Since export demand is directly correlated to the currency demand of the New Zealand Dollar, Forex market participants consider the trade balance to be a very important fundamental indicator.

In the end of April, the trade balance figure of New Zealand came out at 631 million and the forecast for May is currently set at 105 million.
Later in the week, on Wednesday, at GMT 2:00 p.m., the Bank of Canada (BOC) will release the overnight rate, which measures the interest rate that major banks and financial institutions in Canada uses to borrow and lend funds between themselves.

Overnight interest rates are the main factor in the valuation of any fiat currency and Forex traders often analyze all other fundamental indicators in order to predict future monetary policy and rate decisions. Hence, any substantial change in the BOC overnight rate can create unprecedented volatility in the global Forex market.

The Bank of Canada kept its overnight interest rate at 0.75% since January 2015 and the forecast for May is that the BOC will keep it at 0.75% for the time being.

NZD/CAD Outlook

The NZD/CAD has remained in a steady uptrend since November 2014 and formed two well-respected upward sloping trend line in the process.

However, on April 13, 2015, the NZD/CAD price broke below the intermediate uptrend line and subsequent bearish momentum pushed the price to as low as 0.8810 by May 12, 2015.

After the NZD/CAD found support around the long-term uptrend line, it formed a bullish pin bar. The pin bar broke upwards on May 13 and pushed the price above the resistance zone around 0.8950. Since then, the NZD/CAD has traded within a narrow range between 0.8900 and 0.9030.

As the trade balance of New Zealand is forecasted to come down to 105 million, it may add further bearish momentum to the NZD/CAD price. However, the NZD/CAD will find two strong support just below the current range’s low, the long-term trend line and an additional psychological support level around 0.8750.

If the NZD/CAD price penetrates below the 0.8840 level, there is a high chance that the price may fall towards 0.8750. On the other hand, if the NZD/CAD price closes above the 0.9030 level, it may attract additional bullish momentum which would push the price towards the resistance around the 0.9150 level.

Under the circumstances, there are two potential trades with the NZD/CAD, base on which side of the range the price will break out.

Long Trade Setup:
Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.25 lots (mini)
For Account Size: US$ 5,000, position size should be 1.3 lots (mini)
For Account Size: US$ 10,000, position size should be 2.5 lots (mini)

Pending Buy Stop Entry: 0.9040
Stop Loss: 0.8940
Take Profit: 0.9150

Short Trade Setup:
Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.3 lots (mini)
For Account Size: US$ 5,000, position size should be 1.5 lots (mini)
For Account Size: US$ 10,000, position size should be 3 lots (mini)

Pending Sell Stop Entry: 0.8830
Stop Loss: 0.8910
Take Profit: 0.8750

 

[ThirdBrainFx]

AUD/NZD Reached Our Bullish Target, May Move Further Up

On Tuesday, at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) will release the official cash rate, which is the interest rate that the financial institutions and banks in Australia charge for loans made between themselves.

Forex traders consider the official cash rate set by the RBA to be the most important factor in the valuation of the Australian Dollar against other major currencies. Most currency strategists analyze all other fundamental economic data just to predict future monetary policy and cash rate of the RBA. Hence, any unexpected change in the RBA’s cash rate can create substantial volatility in the global Forex market on Tuesday.

In May, the RBA reduced its cash rate from 2.25% to 2.00% and the forecast for June is that the RBA will keep its 2.00% cash rate unchanged.

On Tuesday, the New Zealand based Global Dairy Trade (GDT) will also release its price index, which measures the changes in the average price of dairy products sold during auctions in New Zealand.

Since the dairy industry has a large contribution to the New Zealand’s economy, any large change in the GDT price index can act as a leading indicator of the country’s trade balance with other countries. This is primarily because an increase in the price index would signal higher export income for local dairy producers.

The GDT price index is released every two weeks, and on May 19, the index reading decreased by 2.2%. Since the GDT price index has fallen since March, there is a good chance that this week’s index reading would also suggest a further decrease in the price of dairy products.

AUD/NZD Outlook

As the AUD/NZD price broke the downtrend line on April 24, we forecasted on May 4, that the pair would move as high as 1.0800. Our prediction came true on May 12.

Since reaching the 1.0840 level, the AUD/NZD found strong resistance and failed to close above this level in the last several weeks. During this time, the AUD/NZD tested this resistance level twice, and both times the attempt resulted in bearish price action that pushed the price lower.

However, on May 28, the AUD/NZD formed a bullish pin bar, which broke on Friday and pushed the price towards the psychological resistance around 1.0800 level once again.

It is worth noting that during the last downward swing, the AUD/NZD has already broken below the sharp uptrend line, which was formed after the pair broke above the long-term downtrend line on April 24. Hence, there is still a possibility of further bearish movement.

In contrast, the fundamental outlook has not changed, the GDT price index has continued to fall over the past month and the reduction in cash rate last month by the Reserve Bank of Australia should boost economic activity and help sustain the current uptrend of the AUD/NZD.

Given the mixed circumstances, the AUD/NZD price may continue to trade within a range between 1.0500 and 1.0800. However, if it penetrates above the 1.0840 level and a bullish price pattern bar appears around this level, we would once again recommend Forex traders take a long position with the AUD/NZD.

On the other hand, if the AUD/NZD price goes towards the 1.0500 level, and show any bullish price action, it may offer another opportunity to buy the pair with a better risk to reward ratio.

Hence, there are two possible buy orders for the AUD/NZD.

Long Trade Setup - 1:

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.3 lots (mini)
For Account Size: US$ 5,000, position size should be 1.5 lots (mini)
For Account Size: US$ 10,000, position size should be 3.0 lots (mini)

Pending Buy Stop Entry: 1.0870
Stop Loss: 1.0780
Take Profit: 1.1045

Long Trade Setup - 2:

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.15 lots (mini)
For Account Size: US$ 5,000, position size should be 0.75 lots (mini)
For Account Size: US$ 10,000, position size should be 1.5 lots (mini)

Pending Buy Limit Entry: 1.0520
Stop Loss: 1.0325
Take Profit: 1.0800

 

[ThirdBrainFx]

GBP/NZD is Trading Near Uptrend Line after Reaching Our Profit Target

On Wednesday, at GMT 8:30 a.m., the UK’s Office for National Statistics will release the month-over-month manufacturing production data, which measures the changes in the total value of all output produced by the manufacturing sector in the country.

Since the manufacturing sector contributes up to 80% of the total industrial production capacity in the United Kingdom, Forex traders consider the manufacturing production data to be an important fundamental indicator of the overall economy.

In May, the UK’s manufacturing production increased by 0.4% and the forecast for June is currently set at a reduced growth rate of 0.1%.

Later in the night, at GMT 9:00 p.m., the Reserve Bank of New Zealand (RBNZ) will release the official cash rate for next time period, which is the interest rate that banks and other large financial institutions in New Zealand use to lend overnight funds among themselves.

Forex traders consider the official cash rate of a country to be the most vital factor in its currency valuation against other fiat currencies. In fact, most of the currency strategists consider all other fundamental economic data in order to predict future monetary policy and overnight cash rates. Hence, a substantial change in the official cash rate in New Zealand can create unprecedented volatility in the global foreign exchange market.

For the last several months, the RBNZ has kept its official cash rate at 3.50% and the forecast for the next period is that they would leave it at 3.50% for the time being.

GBP/NZD Outlook

As we forecasted on May 19, the GBP/NZD reached our profit target around 2.1525 by May 29. Currently, the GBP/NZD price is trading above this resistance level and the uptrend line, around 2.1550.

Given that this week, the official cash rate from RBNZ is forecasted to remain at 3.50% and the UK’s manufacturing is set to decrease to a 0.1% growth, overall the fundamentals for this pair is neutral.

However, depending on the fundamental direction, if the actual figures come out differently, it can push the bar much higher or start a retracement. Since the GBP/NZD had been in an uptrend for the last several weeks, it would be recommended that Forex traders only consider placing long orders until the price does not close below the uptrend line.

Long Trade Setup:

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.17 lots (mini)
For Account Size: US$ 5,000, position size should be 0.85 lots (mini)
For Account Size: US$ 10,000, position size should be 1.7 lots (mini)

Pending Buy Stop Entry: 2.1720
Stop Loss: 2.1380
Take Profit: 2.2325

 

[ThirdBrainFx]

USD/CAD Appears Bearish Amid Lower than Expected Empire State Manufacturing Index Rea

At 12:30 p.m., the Statistics Canada released the month-over-month manufacturing sales data, which measures the changes in the total value of sales made by national manufacturers over the past month in Canada.

As manufacturers are the first to get affected by changing market conditions, any sudden shift in the manufacturing sales can indicate future corporate economic activity, including expenditure, job creation, and capital investments. Hence, Forex traders consider the manufacturing sales data to be an important leading indicator of the Canadian economy.

In May, the Canadian manufacturing sales (m/m) figure increased by 2.7% and the forecast for June was set at a decrease of 1.3%. However, the actual data suggested that manufacturing sales have gone down as much as 2.1% over the past month.

At 12:30 p.m., the Federal Reserve Bank of New York also released its empire state manufacturing index reading, which measures the level of a diffusion index by surveying 200 manufacturers in the state of New York.

The survey asks respondents to rate the relative level of overall business conditions in New York. Since New York’s economy has a large contribution to the overall US economy, Forex market participants consider the empire state manufacturing index for New York to be an important signal of the overall US economy.

Last month, the empire state manufacturing index reading came out at 3.1, and the forecast for June was set at 5.8. The actual index reading, however, came out way below the forecast, at negative 2.0, indicating deteriorating conditions.

USD/CAD Outlook

Since the USD/CAD broke below the long-term upward sloping trend line on April 5, the momentum had remained largely bearish. After the USD/CAD price reached the 161.8% Fibonacci extension level of the range between 1.2350 and 1.2836 in the end of April, it retraced back towards the 61.8% retracement level of this range in June.

However, the USD/CAD price formed a double top pattern on June 5, and resumed the downtrend over the last week and closed below the important resistance level around 1.2350. Today, the USD/CAD price once again was rejected around 1.2350, and currently it is trading near the 38.2% Fibonacci level of the last upward swing towards 1.2563.

As the empire state manufacturing index reading came out way lower than the forecast, the fundamental outlook for the USD/CAD is would be bearish over the next few days. Under the circumstances, if the USD/CAD price breaks below last week’s low, at 1.2200, it is likely to travel further south this week.

TRADING ADVICE

Short Trade Setup:

Money Management Advice

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.28 lots (mini)
For Account Size: US$ 5,000, position size should be 1.4 lots (mini)
For Account Size: US$ 10,000, position size should be 2.8 lots (mini)

Orders

Pending Sell Stop Entry: 1.2190
Stop Loss: 1.2365
Take Profit: 1.1960

 

[ThirdBrainFx]

EUR/USD Uptrend is Capped by Significant Resistance at 1.1435

On Monday, at GMT 2:00 p.m., the US National Association of Realtors released the existing home sales figure, which measures the changes in an annualized number of residential buildings, which were sold over the previous month. However, the existing home sales figure does not include newly constructed homes in order to provide an accurate picture of secondary market sales of homes.

Forex traders consider the existing home sales figure to be an important leading indicator of the overall economic health of the United States. This is primarily because sale of an existing home tend to create a wide ranging positive domino effect in the economy. Such as, often new mortgage is taken by the new owners of the house and home renovation projects create jobs.

In May, the existing home sales figure came out at 5.04 million and the forecast for June was set at an improved figure, at 5.27 million. However, the actual figure came out much better than what the market analysts were expecting, at 5.35 million.

Later in the week, on Tuesday, at GMT 7:30 a.m., the Markit will release the German flash manufacturing PMI, which measures the level of a diffusion index by surveying 500 purchasing managers from the Germany’s manufacturing industry.

The large number of survey respondents of the survey makes it one of the most important fundamental indicators of the German manufacturing sector. Since purchasing managers are asked to rate the relative level of business conditions such as employment, production, new orders, price levels, and inventory situation, Forex traders can often measure the overall economic health of Germany by closely studying the flash manufacturing PMI reading.

Last month, the German flash manufacturing PMI reading came out at 51.1 and the forecast for June is currently set a slightly improved reading, at 51.5.

EUR/USD Outlook

Although the EUR/USD has been on a steady downtrend since the end of June 2014, it has been showing signs of a change in the prevailing trend since March 2015. In fact, after reaching as low as 1.0462 on March 15, the EUR/USD price has moved up considerably and formed two uptrend lines in the process.

The EUR/USD upward movement has been limited by the strong resistance zone around 1.1435. Last week, the EUR/USD price was once again rejected around this resistance zone.

As the existing home sales in the United States increased significantly over the past month, it indicates a strong economic climate in the country. In contrast, the forecast for the German flash manufacturing PMI is set at an insignificant increase. Hence, the fundamental outlook for the EUR/USD this week would be bearish.

However, if the EUR/USD price penetrates above 1.1460 and closes above this level on the daily timeframe, it would certainly signal additional bullishness. In that case, it may move towards the 161.8% Fibonacci extension level over the next few weeks.

TRADING ADVICE

Long Trade Setup:

Money Management Advice

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.15 lots (mini)
For Account Size: US$ 5,000, position size should be 0.75 lots (mini)
For Account Size: US$ 10,000, position size should be 1.5 lots (mini)

Orders

Pending Buy Stop Entry: 1.1470
Stop Loss: 1.1195
Take Profit: 1.1845

 

[ThirdBrainFx]

GBP/AUD Appears Bullish Amid Expectation of Improving Current Balance

On Tuesday, at GMT 8:30 a.m., the UK’s Office for National Statistics will release the current account figure, which measures the difference of value between net import and export of goods, services, income flows, and unilateral transfers over the past quarter.

Although the trade balance figure represents the difference between import and export, the current account figure provides a clearer picture regarding the currency demands as it includes other data such as unilateral transfers. Hence, Forex traders consider the current account figure to be a more important indicator of the UK’s economy.

In the first quarter of 2015, the UK’s current account balance came out at -25.3 billion and the forecast for the second quarter of 2015 is currently set at a slightly improved figure, at -23.7 billion.

Later on Wednesday, at GMT 1:30 a.m., the Australian Bureau of Statistics will release the month-over-month building approvals figure, which measures the changes in the number of new building approvals issued over the past month.

As it requires a building approval in order to start construction of a new building, the building approvals figure acts as a leading indicator of future construction activity in the Australian economy. Hence, Forex traders pay close attention to the building approval figure.

On June 1, the Australian building approval figure decreased by 4.4%. However, over the last one month it seems to have rebounded and the forecast for the building approvals in June is currently set at an increase of 1.1%.

GBP/AUD Outlook

After breaking above the psychologically important resistance zone and a Big Round Number (BRN) around 2.000, the GBP/AUD continued its bullish trend over the last two weeks. Last Friday, the pair penetrated above the last up fractal and retraced to 61.8% Fibonacci level of the last downward swing towards the intermediate uptrend line.

Given that the UK’s current account balance is expected to improve over the second quarter of 2015, it would likely create additional bullish momentum in the foreign exchange market.

Hence, it would be recommended that Forex traders consider taking a long position at the market price as long as the GBP/AUD price remains below 2.0567.

TRADING ADVICE

Long Trade Setup:

Money Management Advice

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)
For Account Size: US$ 1,000, position size should be 0.13 lots (mini)
For Account Size: US$ 5,000, position size should be 0.65 lots (mini)
For Account Size: US$ 10,000, position size should be 1.3 lots (mini)

Orders

Pending Buy Stop Entry: 2.0567
Stop Loss: 2.0369
Take Profit: 2.0765

 

[ThirdBrainFx]

NZD/USD Downtrend May Continue amid Forecast of a Declining Trade Balance

Today, at GMT 10:00 p.m., the New Zealand Institute of Economic Research (NZIER) will release its business confidence index, which measures the level of a diffusion index by surveying 2,500 businesses, including manufacturers, builders, wholesalers, retailers, and various other service providers in the country.

Forex traders consider the NZIER business confidence index to be an important leading indicator of the New Zealand’s economy as businesses are the first to react to the changing economic conditions and a change in their collective perspective regarding the economy can signal future economic activity in the country.

During the last reporting period, in April, the NZIER business confidence index reading came out at 23 and any figure above 23 would indicate a bullish New Zealand dollar over the next few months.

Later on Tuesday, at GMT 12:30 p.m., the US Bureau of Economic Analysis will release the national trade balance figure, which measures the changes in the difference in value between net import and export of goods and services over the past month.

Since the export demand from New Zealand is directly correlated with the demand for the New Zealand Dollar, an improving trend balance signals bullish NZD in the global foreign exchange market. Therefore, Forex market participants consider the trade balance to be a leading fundamental indicator of the New Zealand Dollar’s strengths.

Last month, in June, the New Zealand trade balance figure came out at -40.9 billion, and the forecast for July is currently set at a slightly lower figure, at -42.8 billion.

NZD/USD Outlook

Since forming a Double Bar High Lower Close (DBHLC) pattern on April 29, the NZD/USD has been on a steady downtrend. As the uptrend line was broken, the pair climbed do from around 0.7500 to as low as around 0.6600 over the last two months.

As the New Zealand’s trade balance figure is expected to go further down this month, the fundamental outlook for the NZD/USD price would be bearish over the next few days. Hence, it would be recommended that Forex traders consider placing a short order once the NZD/USD price penetrates below last week’s low, at 0.6645.

TRADING ADVICE

Short Trade Setup:

Money Management Advice

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.2 lots (mini)
For Account Size: US$ 5,000, position size should be 1.0 lots (mini)
For Account Size: US$ 10,000, position size should be 2.0 lots (mini)

Orders

Pending Sell Stop Entry: 0.66400
Stop Loss: 0.67400
Take Profit: 0.6505

 

[ThirdBrainFx]

AUD/CHF Forms DBHLC Patterns and Appears Bearish

Tomorrow, at GMT 1:30 a.m., the National Australia Bank Limited (NAB) will release their business confidence index, better known as the NAB Index. It measures the level of a diffusion index, which is created by surveying 350 Australian businesses that asks the respondents to rate the relative level of the current Australian business conditions.

Forex traders and market analysts consider the NAB business confidence index to be an important leading indicator of the Australian economy. This is primarily because the businesses tend to react to changing market conditions very quickly. Since the NAB surveys businesses, their index reading reflects any optimism or pessimism of a range of businesses in Australia.

For the last two months, in May and June, the NAB business confidence index reading came out at 3 and 7, respectively. Although there is no market forecast for July at the momentum, if the trend continues, it would likely to come around or above 7.

Later in the morning, at GMT 7:15, the Swiss Federal Statistical Office will release the monthly producer price index (PPI), which measures the changes in the price of products and raw material to produce finished goods by Swiss manufacturers over the previous month.

The PPI acts as a measure of future consumer inflation in the country because manufacturers pay more to buy raw material, that extra cost is passed to the consumers in the end. Hence, Forex traders consider the Swiss PPI to be a leading indicator of consumer inflation in the country.

Last month, the Swiss PPI declined by 0.8% and the forecast for July is currently set at a modest increase of 0.2%.

AUD/CHF Outlook

Since the massive price decline amid the removal of EUR/CHF peg on January 15, the AUD/CHF has remained mostly bearish over the last two quarters and formed a downtrend line in the process.

Since the end of May, the bearish momentum has declined and the AUD/CHF price mostly remained within a tight range between the 0.7100 and 0.7290 levels.

However, on July 3, the price finally closed below the 0.7100 level and the retracement towards this level was rejected by forming a bearish pin bar on July 6. Also, the AUD/CHF price has failed to penetrate above the 0.7100 level since July 3. This is evidence of a strong resistance forming around the 0.7100 level in the last two weeks.

Last week, on Friday, the AUD/CHF price had a bearish bar, where the high of the bar was near to the high of the Thursday bar. Which effectively makes it a Double Bar High Lower Close (DBHLC) pattern.

Since last week’s low aligns perfectly with the 161.8% Fibonacci extension level of the last range, a penetration below this level would trigger additional bearish momentum in the market. Furthermore, the forecast for a rebounding Swiss PPI is indicating a more bearish fundamental outlook for the AUD/CHF as well.

In that scenario, it would be recommended that Forex traders consider taking a short position with the AUD/CHF with a profit target around the 261.8% Fibonacci extension level.

TRADING ADVICE

Short Trade Setup:

Money Management Advice

Position Size Suggestion based on 2% of Equity using the Percentage Risk Model (PRM)

For Account Size: US$ 1,000, position size should be 0.12 lots (mini)
For Account Size: US$ 5,000, position size should be 0.6 lots (mini)
For Account Size: US$ 10,000, position size should be 1.2 lots (mini)

Orders

Pending Sell Stop Entry: 0.6945
Stop Loss: 0.7110
Take Profit: 0.6760