Mkt Digest July 3: The end of bad days for Dollar may be elusiveHey guys,
Its' been raining all the day so put your likes on this to save me from melancholy ;)
So today we got a manufacturing PMI in the euro area signaling a rise to the highest since 2011, as European factories increase the demand for labor to absorb the growing number of orders. The index of purchasing managers from IHS Markit rose to 57.4 points in June against 57.0 in May, with the economic recovery affecting almost all regions, from Germany to stagnating Greece. And in the latter, positive dynamics are observed for the first time since August of last year, convincingly proving the region-wide character of economic expansion.
A positive report is a brick in the foundation on which investors base their long positions on the euro. After fairly bullish comments by the ECB President Mario Draghi at the ECB's forum last week, the consumer price inflation figures which outstripped estimates allowed for euro upsurge. The growing demand for labor continues to drive unemployment into a corner that has fallen to an 8-year low. And the growth in sales of retailers in Germany reached 4.8% in May compared to the same period last year.
The FOREX market draws a rather deceptive picture of the euro. The common currency declined against its main opponent, the US dollar, by half a percent on Monday, thanks to the comments of Fed Chairman Yellen predicting no crisis for the US near future. Now EURUSD will see a "fight of bullish sentiments," but given the two increases this year and the difficulties in the domestic political arena, the Fed mood may deteriorate much more likely than the ECB. Comparing the "stability" of rhetoric in both Central Banks, we tend to believe that the European economy has a little more potential for exploits, allowing the ECB's optimism to be more resilient.
Now regarding the greenback. On Friday, we saw a stable Core PCE at 1.4%, with a forecast of 1.4%. Household income accelerated growth, while real spending slowed, indicating a slight slowdown in consumption. However, such a conclusion was leveled with the confidence index from the University of Michigan, which turned out to be slightly higher than the forecasts. With the current rhetoric of the Fed, the absence of negative deviations from the forecasts will be enough to expect a third rate hike this year.
Data helped the dollar to rebound, but from a technical point of view, the correction from a 9-month low seems logical. And the dollar almost equally grew against the major currencies of opponents, which further indicates this movement as the closure of profitable shorts. The celebration of the Independence Day in the US may also have its market effect, with the early closing of trading. The yield of US and European bonds suspended growth, after an impressive selloff of bonds last week.
Oil prices are stable after last week's growth, as the reduced number of drilling rigs in the US did not allow the negative to penetrate the market, OPEC continues to look for ways-exits how to curb the output of countries outside the agreement, such as Libya and Nigeria.
Yellen
USD/JPY IDEA- Something to consider after Yellen statement. Couple scenarios to consider here depending on the tone and remarks made by Yellen regarding monetary policy. Currently USD has been moving up but the move will only continue if Fed chair Yellen reinforces her comments made 2 weeks ago when they decided to raise rates again and stated they were still on track and serious about another rate hike in 2017 either in September or most likely December even though the economic data has not supported this.
I would expect her to repeat these kinds of hawkish comments that would keep USD on the rise, however if she decides to change course and takes back what she said 2 weeks ago and makes more dovish statements raising rates only when economic data supports it USD could take a big hit as the data hasn't been great.
Dollar & Yellen.After the fat lady/man song yesterday, we have seen a strong correction from the "flash crash". Even though the US dollar is steady ( has fallen a little today)...gold remans in a tight band between 1250.50 and 1253 has done for past 4 hours or so. To me this clearly suggests that investor are waiting . Waiting for Yellen's speach. However Yellen is not expected to say anything new, but rather to confirm what has already been said. It is more the hawkish nature of her words that people will be watching.
Furthermore gold has recovered from yesterday with no reason .I think this is due in part to an over correction .Once Yellen has spoken, we may see a more stable trend form one way or another as investors relax and find there feet in what has been a volatile market over the past 2/3 weeks. Since the 7th of this month, after every large correction there has been a fall of 10-25 dollars. So it is my thought that after Yellen's speech we will see a drop towards the trend line at 1235.It may not be a large drop, due her simply reiterating.
It seems most traders and indeed technical analysis are split as to what we could expect after she has spoken. My aim would be to sell short from 1252 to the trend line or at lest to 1240. Before my target bull long 1229-1235 to 1265.
A:Uptrend to 1265
B: Downtrend to 1235.
My money is on B.
EURUSD - A fall in imminent?With all the news and risk events that took place yesterday - a worse than expected CPI and retail sales, followed by a hawkish Yellen - some traders might have experienced some losses due to the 180 degrees change in sentiment; while some may have been left confused on the outlook of the US Dollar.
We shared this analysis on the US Dollar Index before all the news two days ago, and nothing changes, the analysis is still valid.
As for EURUSD, we believe that a fall in imminent. I'm not saying that it will fall immediately, nor that it is 100% guaranteed that it will fall. We are simply forecasting that there is a high probability that we will see a fall in EURUSD soon. Here's the rationale -
1) A RSI divergence is forming
2) Price action is inching up slowing, showing lack of momentum
3) Price has hit the minimum target for a wave 3 structure
4) Price seems to be forming a diagonal structure (wedge pattern)
Again, just my 2 cents perspective on the market. Always remember to trade according to your own plan and manage your risk.
US Dollar - Make or break this weekThe US Dollar (DXY) is in a decision point area where we see two high probability scenarios -
1) A reversal to the upside
2) A massive break down to the bottom
The 96.00 level will be the key for the Dollar Index.
For now, we are expecting the 1st scenario to have a higher probability of happening; and with the number of risk events from the US side this week, especially the FOMC meeting, we might get an answer within the week.
Trade your plan and always manage your risk.
USDJPY Epic Descending Triangle Breakdown ImminentOANDA:USDJPY has consolidated for a few days already and failed to retake the 112 level.
With a series of lower highs, the supply resistance level is slowly going down to meet with the Weekly 200MA support.
Its possible it might find support at the Daily 200MA level as it was able bounce off it from the previous downleg.
In my opinion it might still test the 111 level one more time before the support finally breaks.
Entry: 111.044
Profit: 108.215
Stop: 111.325
Any feedbacks are appreciated!
Who killed Dollar Index despite stronger Sentiments and draggingdespite showing you fundamental analysis which also favoring downside in Dollar Index and upside in gold.I have marked the Killer of USD index in technical because we understand pattern but not the soul fundamental behind that pattern.
So guys no worry FOMC hike rate or not the DXY going nowhere but only downside.
Wish you best of luck trade safe and be safe.
Kinds and Regards,
Dipak Z
Dow breaks out of triangle and bounces off 100 day MAThe dow recent broke out of a triangle formation and bounced off the 100 day moving average. Note the two red arrows This set of conditions occurred back in November during the trump rally. Will another fundamental event come along to continue this leg? Looking for diagonal support at line B, D and the 100 day MA
USDJPY Between 200MAs and a broken channel April 17-21OANDA:USDJPY just had a breakdown not only breaking the weekly 200MA but also the lower support channel but nothing goes in one direction in the markets so I expect a pullback before another move downwards.
The price is currently between the daily and weekly 200MA so I expect sideways action with a slight bullish bias in the short term. It will be
Daily Fibonacci:
OANDA:USDJPY bounced right at the 50% mark at 108.11 so bulls should have a relief bounce for a few days.
4H Timeframe view:
Unless news or events comes that will cause the risk off to end or strengthen the dollar I expect consolidation between the daily 200MA support and the broken lower channel that should act as resistance. Its also possible that there might be a spike upwards till the weekly 200MA but I dont expect it to break as there should be a lot of overhead resistance on that area.
I still expect OANDA:USDJPY in the long term especially with its correlations have broken their respective supports reinforcing the trend.
Nikkei Daily:
US 10-Year Daily:
Entry: 109.4-110
Stop: 110.6
Profit: 101-103
Any feedbacks are appreciated!
EURUSD Riding the Trump BounceOANDA:EURUSD bounced off the lower channel with the help of Trump showing a nice reversal to the upside.
Daily Timeframe View:
The channel is still intact so the upper channel trendline is the next logical target from here. OANDA:EURUSD is also currently above the daily 50MA and the 4H 200MA so it might consolidate and even provide support before the next run up.
Entry: 1.06619
Stop: 1.0645
Profit: (tg1) 1.0840 (tg2) 1.092
Any feedbacks are appreciated!
XAUUSD Double Top Pullback April 3-7 Trading PlanOANDA:XAUUSD looks like it got rejected once again by the Wall of Trump resistance and needs one more pullback in my opinion
4H Timeframe View:
It broke below the 20MA/50MA and looks like a hammer was formed which indicates a possible top formation
Short: 1249.240
Stop: 1254
Target 1: 1234
The 200MA at the 4H Timeframe might provide decent support so I might take partial profits on this location
Target 2: 1229
20DMA/50DMA are converging on this area so it might provide stronger support compared to the first target
Target 3: 1225
The daily support trendline should be here so it needs to consolidate/bounce on this area if OANDA:XAUUSD is winding for a strong bull move
Any feedbacks are appreciated!
USDJPY Nothing Goes Down Forever April 3-7 Trading PlanOANDA:USDJPY looks like its bouncing back up after a severe downmove forming a nice channel.
4H Timeframe View:
It was able to pullback and even retest the 20MA in the 4H timeframe so it will be great if it touches the 50MA(yellow line) and hold above it for a confirmation of the short term uptrend.
Long: 111.342
Stop: 111
It might still pullback to test the 50MA on the 4H so its better to be safe to put the stop a few pips just below it
Target 1: 112.9
The 20DMA/50DMA even the 4H 200MA are converging on this area so its reasonable that it might have difficulties breaking through this level so I might take partial profits on this area just in case
Target 2: 113.8
If it doesn't get rejected on the level with a cluster of MAs then the next logical target will be the upper channel
Any feedbacks are appreciated!
USDJPY Inverted Cup and Handle Again? March 20-24 Trading PlanFX:USDJPY broke the 50DMA once again and looking bearish in my opinion. The breakdown and downtrend is also supported by the moving averages on the hourly timeframes.
Don't have any big positions as I expected it to retest the 114 breakdown level but it didn't happen
4H Timeframe View:
FX:USDJPY tried to break the 200MA but it failed and continued its downtrend breaking the 113 support
1H Timeframe View:
Looks like its consolidating after the 113 breakdown but I wouldn't discount a possible pullback to retest the 113 level and it would be a great short level if the downtrend continues.
Preferred Entry: 112.9-113
Stop: 113.3
Profit: 111.6
But there is also a possibility that it would stay on this level until it once again breaks down. If that was the case then we can simply wait for either the 20MA(red line) or the 50MA(yellow line) on the 1H timeframe to reach the price and short it at the level if it doesnt break above it.
If the 111.6 profit target is reached, we can take partial profits or move stops to profit as its possible FX:USDJPY will bounce on this area as it has done multiple times in the past or finally break that daily support
Any feedbacks are appreciated!
Make XAUUSD Great Again! March 20-24 Trading PlanOANDA:XAUUSD has broken out of the downtrend after the 1260 rejection and with hourly timeframe moving averages confirming the trend change. Bulls are still in the game and it looks like it will have another try against the Wall of Trump resistance.
No big positions as of yet as I expected a pullback that didn't materialize and it consolidated for 2 days straight after the FOMC breakout.
4H Timeframe View:
OANDA:XAUUSD is sitting just right above the 200MA and its looking to be a firm support for the next upmove
1H Timeframe View:
OANDA:XAUUSD is forming higher lows after the FOMC breakout which suggests buyer strength. The 1230 level/20DMA is still acting as a resistance but as long as the current momentum continues it will be great to take a long position if there will be a short pullback to the 1206-1207 level and if the said level holds.
Preferred Entry: 1226-1227.5
Stop: 1223
Profit 1260
Just in case the level doesn't hold, we can look for a pullback till the 1219-1220 and take a long position if it holds.
Preferred Entry: 1219-1220
Stop: 1216
Profit 1260
Any feedbacks are appreciated!
XAUUSD VS The Wall of Trump and Moving Averages The Last Stand!My previous trade banking on a daily reversal failed so looks like FX_IDC:XAUUSD is on a last stand as the 50MA daily support(1210) needs to hold if bulls have any chance of turning the trend around.
Its possible the downward momentum may continue till Non-Farm Payroll release on friday.
Entry: 1225.45
SL: 1227.5
TP: 1210
Any feebacks are appreciated!
USDJPY Possible Daily 50MA Rejection and the Handle formationFX_IDC:USDJPY looks like it got rejected by the daily 50MA courtesy of Janet Yellen. As long as the bearish momentum continues, its possible that we may retest the daily low once more completing the handle before NFP/FOMC.
Entry: 114.241
SL: 114.5
TP: (tp1) 113.5 (tp2) 112.7 (tp3) 111.6
Any feedbacks are appreciated!
XAUUSD VS The Wall of Trump and Moving Averages Round 2: HAMMER!FX_IDC:XAUUSD now has a bullish daily hammer courtesy of Janet Yellen after being rejected from 1260 level. If the bullish momentum continues then FX_IDC:XAUUSD might have the weapon it needs to break that wall and the cluster of moving averages but it needs to get back to the fight.
Entry: 1229.02
SL: 1227(Moved to 1229.5)
TP: (tp1) 1246 (tp2) 1251 (tp3) 1260
Any feedbacks are appreciated!
EUR/USD - LONGUpon the announcement of a most likely rate hike I believe we will see some pricing into the market based on the technicals present right now.
We have strongly rejected 1.05000 support and formed a double bottom, and appear to be breaking out of the 4H TL.
I will re-visit this trade after the weekend and on market open on Sunday!
Hope everyone had a good week. For more trading related content head over to my instagram - tag in my BIO.