ThirdBrainFx Market Commentary - page 3
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Well, I think the plan of getting long at higher levels might be wrong mate. Better search for possibilities to buy dips. I was waiting for a down move in the AUDUSD to around 0.810/20 level. I finally got one. I have a very small long running with a trailing stop.
I have a slight different view on the AUDUSD pair. You have plotted an up-move trend line, and I am following a down-move trend line. There is a down-move trend line, which has held the AUDUSD pair a number of times. The recent failure at around the 0.8990 level also came around the same trend. I think as long as the pair is trading below this trend line, then it remains in the bearish tone. The sellers will not give up easily in the short term, in my opinion. However, I somehow agree to an extent with you that buying dips should be favored.
Market Commentary – February 28, 2014
Earlier in the morning, the Eurostat released the changes in the price of goods and services purchased by the European consumers on a over year over basis, known as the CPI flash estimate. Eurostat bases this estimate on energy prices and EU member states that report early CPI data, and investors pay keen attention to this change in order to predict the inflation in the economy. Last month, the CPI flash estimate (y/y) came out 0.8%. This month, the forecast was set at 0.7%. However, the actual figure came out same last month, 0.8%.
More bad economic news came out for Canada during the afternoon. The Statistic Canada reported that Canadian month over month GDP went down by 0.5% last month, while the forecast was set at a decline of only 0.2%. The GDP measures changes in the inflation-adjusted value of all goods and services produced by the economy and investors are keen to keep an eye on the growth of the economy.
At GMT 3:00 PM, the US National Association of Realtors will be publishing the month over month pending home sales figure. This economic indicator measures the changes in the number of homes under contract to be sold, but still awaiting the closing transaction. However, this figure excludes new constructions. Last month, the pending home sales went down by 8.7%, and this month it is expected to bounce back with a 2.9% increase.
EURJPY Outlook
After finally breaching 140.00 big round number on Wednesday, yesterday morning EUR/JPY has dropped just a little over 140 pips, only to recover those losses in the second half of the day. This resulted in a bullish price action pattern on the daily chart, a bullish pin bar.
This bullish price action signal on the daily chart was never activated thought, as EUR/JPY reached 140.18 where the 200 Exponential Moving Averages on both 1H and 4H offered some type of resistance. The pair is in a downtrend on the smaller time-frames, making lower swing highs one after another. There is no easily identifiable channel, this previous swing highs are among the only chart indicators that will point out where and when this downtrend will be over.
The most recent swing high of 140.18 is the current resistance. If EUR/JPY gains enough momentum to rise above this level then 141.25 will be the next immediate target.
Towards the downside, EUR/JPY should become more predictable if it drops below 138.70-138.90. This area coincides with 50% fibonacci retracement on February’s upswing and a multitude of lows confirm the strength of this support level.
One of our top performing automated strategies, MorningBull, has already opened several long positions with the EURJPY, since last week. Earlier this morning, those four positions represented over 190 points in profit with the EURJPY pair. If the EURJPY close above the 141.00 resistance, it will find additional bullish momentum which may take the pair towards 142.40, where total profit for the EURJPY alone will reach around 750 points. For further information regarding our automated strategies, please visit our website.
EURNZD Outlook
In an analysis for the EURNZD pair shared some time back, we highlighted the importance of an up-move trend line on the daily chart. The same trend line is again coming into play, as the pair is testing the trend line and support area. The EURNZD pair has been declining for the past few days, as the demand for the New Zealand dollar has increased in the recent times. The New Zealand dollar was also seen gaining ground against the currencies such as AUD and GBP.
The pair as of writing is flirting with the up-move trend line, as can be seen in the daily chart below. The pair is also finding bids around the 61.8% Fibonacci retracement level of the last leg higher from the 1.5912 low to 1.6995 high. A break of the trend line and fib support level might take the pair lower towards the swing area at around the 1.6220/30 levels. A breach of this level might call for a full test of 100 extension in the short to medium term.
On the upside, initial resistance lies at around the 50.0% retracement level, followed by the key swing area at around the 1.6500 level. The RSI has breached the 50 level, and bending its back towards the 30 level, which is a negative sign in the short term. The MACD has also started diverging towards the bearish slope, which points bearish pressure for the pair. So, we need to monitor the trend line very closely, and act accordingly.
Market Commentary – March 3, 2014
The G7 meetings are taking place today via satellite, where the main topic of discussion will be the Ukraine crisis and a range of other economic issues. G7 meetings are attended by finance ministers and central bankers from 7 industrialized nations - Canada, Italy, France, Germany, Japan, the UK, and the US. The meetings are closed to the press but officials usually talk with reporters throughout the day. Expect the market to become extremely volatile without any scheduled event due to the uncertainty over the Crimean issue. You can follow up about it on our in-depth analysis of the situation at our website.
At GMT 1:45 AM, the Markit released the HSBC’s Chinese final manufacturing PMI figure, which measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. Last month, the HSBC final manufacturing PMI came out at 48.3, and this month the actual figure came out at 48.5.
Later, at GMT 9:30 AM, the Market also released the UK’s manufacturing PMI figure, which also measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. The forecast for the UK’s manufacturing PMI was set at 56.9, and the actual figure was spot on!
At GMT 2:00 PM, the European Central Bank President Mario Draghi is due testify before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels. Since he has the most influence over the ECB’s interest rate decision, expect the market to become volatile during his testimony.
GBPUSD Outlook
The GBPUSD pair traded in a channel for quite some time, and was unable to break the channel. However, later the pair found some buyers, and then managed to breach the down-move channel, as can be seen in the 4 hour chart shown below.After the break, the pair tested the broken channel resistance a couple of times, but the same acted as a support and pushed the pair back up.
The pair has now back above the 23.6% Fibonacci retracement level of the last leg up from the 1.6250 low to 1.6823 high. This suggests that the pair might test the previous high in the coming sessions or days. However, the recent gap opening in favor of the US dollar points some consolidation or retracement in the short to medium term. The pair on the downside might find support around the same 23.6% fib level followed by the 38.2% Fib level. We think that the 1.6650 level is a key support level in the short term, and buyers may re-emerge from this area.
On the upside, initial resistance lies at around the previous high at around the 1.6820/30 levels.A break of this region will call for a new yearly high. After the break, the bulls might eye the 1.6890 level, and any further strength may take the pair towards the 1.7000 figure. We need to see how the pair reacts to this crucial resistance zone.
One of our top performing automated strategies, MorningBull, has already opened several long positions with the GBPUSD, since last week. If the pair reaches 1.6890 region, the GBPUSD's profits will represent almost 600 points of profits altogether. For further information, please visit our website.
AUDCAD Outlook
This year’s rally has reached a major road-block in the last two weeks, when the pair touched October’s swing high at 1.0045. Altough the actual high was 1.0058, no bars closed above the resistance so this ended up being considered a double top reversal pattern.
The double top reversal pattern was further confirmed by negative divergence with MACD, a bearish engulfing price action bar on the Daily chart and a small bullish correction of the Daily engulfing bar that bounced perfectly from 61.8% fibonacci at 1.0017. In total there were four bearish signals. Even without the aid of hindsight, most were obvious as they happened.
Following these bearish signals, AUD/CAD dropped towards the nearest support level 0.9829, a massive pivot zone based on the numerous highs and lows that coincide with this level, which was touched today in the early hours of trading activity. 0.9829 is also confirmed by the 200 Simple Moving Average on the 4H timeframe. Furthermore, a strong fibonacci confluence is located here, 50% retracement between 0.9590-1.0058, respectively 61.8% between 0.9694-1.0058.
The strength of the support merits a bullish correction, which based on the bounce we are seeing is very likely. The major trend will not be completely bearish until price has completely crossed and closed below 0.9829, so even selling of rallies should be treated very carefully; as there’s always the possibility of a range between the 0.9829 support and the resistance at 1.0045.
Towards the downside, if 0.9829 is breached we will likely see another quick drop towards 0.9725, the nearest pivot zone that was respected by the market in recent months. An even further target, very probable for the coming weeks, is located at 0.9590.
Towards the downside, if 0.9829 is breached we will likely see another quick drop towards 0.9725, the nearest pivot zone that was respected by the market in recent months. An even further target, very probable for the coming weeks, is located at 0.9590.
I see only range trading for the AUDCAD for some time now. The pair has a massive support at around the 0.9800/20 levels, and at the same time the pair has a monster resistance at around the 1.0010/00 levels. So, the pair has to clear one of them for a directional move. The RSI is below 50 on the 4 hour chart, and I think a break above this level may call for a short term bullish trend for the pair. A failure may push the pair back towards the support zone. I will be waiting for a break in the pair.
Precisely what happened, a 120 pip rally ensued. I think this rally is great to short AUD/CAD now. 50% retracement from top to bottom in last two weeks and a decent bearish price action on 1h and 4h timeframes. The only hurdle is we'll once again run into the support where I have to pay attention if price bounces off of it again.
I'm not interested in buying while AUD/CAD is below 1.0000, since this area has been particularly prone to range movements rather then anything else. So for now I'll just hunt the bearish signals and sell the rallies
Nice analysis!
I'm not interested in buying while AUD/CAD is below 1.0000, since this area has been particularly prone to range movements rather then anything else. So for now I'll just hunt the bearish signals and sell the rallies
Nice analysis!I have a bearish scenario in mind. I was looking at the 4 hour chart of AUDCAD, and I noticed a down-move trend line, as can be seen in the chart attached. There is also a resistance at around the 0.9950 level. This level coincides with the down-move trend line. So, I think one can consider selling around these levels. The stop can be placed above the trend line. And, if you are looking forward to playing complete range, then I think the stop should be a bit higher. I am waiting for proper price action for an entry. Let's see what happens in the coming sessions.
Market Commentary – March 4, 2014
In the early morning, the Australian Bureau of Statistics released the month over month building approvals figure, which measures the changes in the number of new building approvals issued during the previous month. It's an excellent gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. Last month, the Australian new building approval went down by 1.3%, and this month the forecast was set at only at 0.7% increase. However, the actual figure came out at way better, at 6.8% that surprised everyone.
Regardless, the Reserve Bank of Australia left its cash rate unchanged, at 2.5% for the time being. At GMT 3:30 AM, the RBA released the rate statement, which is among the primary tools the RBA Reserve Bank Board uses to communicate with investors about monetary policy. RBA Governor Glenn Stevens mentioned that domestic housing prices “have increased significantly” and that justifies keeping the current rate unchanged for the time being.
At GMT 9:30 AM, the Markit released the UK’s construction PMI figure, which measures the level of a diffusion index based on surveyed purchasing managers in the construction sector. This is considered to be a leading indicator of economic health as businesses reacts quickly to changing economic climate. Last month, the UK’s construction PMI came out at 64.6, and this month it came out at 62.6, lower than the forecasted 63.6.
AUDJPY Outlook
In our last analysis on AUD/JPY , we pointed out how the pair might adopt a range behavior while prices remain between the resistance at 92.97 and the support pivot at 91.03 – 91.16. Since then, AUD/JPY has done just that, confirming the validity of the support one more time and later failing to form a triple top.
Last week, a very consistent bearish move eventually pierced through the support, only to see a quick come-back within the range to 91.62, where a short term price pivot zone was formed. This rally also looked like a Pin bar on the Daily chart, yet there was absolutely no follow-up on the second day, invalidating the possibility for that bullish rally to continue AUD/JPY has now stabilized below 91.00 and the current 1h and 4H bars have tested this level which has successfully acted as resistance. On the 1H timeframe, at the same level a bearish trendline offers additional resistance for this bearish swing. If price returns above this level the entire range can come into play again.
Below 90.04 the lows from late January and early February might be targeted, in the 88.23-88.42 region.
One of our top performing automated strategies, MorningBull, has already opened a short position with the AUDJPY. However, as the price bounced today, it has also opened several hedging positions to cover the unexpected surge in the AUDJPY amid better than expected new building permits data. If the pair reaches the 92.50 region, the AUDJPY's profits will represent almost 300 points of profits altogether after discounting the one short position. For further information regarding our automated strategies, please visit our website.
EURCHF Outlook
The EURCHF has been brutally hammered by the CHF buyers in the last couple of weeks. The pair has failed time and again to find buyers, even from the lower levels.The ongoing Ukraine crisis is one of the sole reasons for the safe haven’s strength, including the EURCHF. The pair on Monday opened with a gap lower, as the CHF gained bids across the board.
There was a down-move channel for the EURCHF, as can be seen in the weekly chart shown below. The pair breached the same channel, and traded lower. Now, the pair is coming closer to major support levels in the medium to long term. The 1.2100/10 is a major hurdle for the pair to the downside. There are many supports on the way down up to 1.2020/40 level. Remember, the SNB will be keeping a close eye on the CHF strength, as the 1.20 peg level is still intact by the central bank. However, before that I see the 1.2060 level as a critical swing area for the pair, and the pair might find heavy bids around the mentioned level.
On the upside, initial resistance lies at around the broken channel support area. The broken channel might act as a resistance for the pair. Once the pair manages to break and close inside the channel again, then we can expect some buyers to return. The 1.2160/80 is a major hurdle for the pair to the upside. I think we may witness range trading for quite some time before a major move.
I have a bearish scenario in mind. I was looking at the 4 hour chart of AUDCAD, and I noticed a down-move trend line, as can be seen in the chart attached. There is also a resistance at around the 0.9950 level. This level coincides with the down-move trend line. So, I think one can consider selling around these levels. The stop can be placed above the trend line. And, if you are looking forward to playing complete range, then I think the stop should be a bit higher. I am waiting for proper price action for an entry. Let's see what happens in the coming sessions.
There was a very small rally higher, towards 0.9967 where that trendline is. There's also 61.8% confluence with the trendline, and price respected this and came back down quickly after. On the 4 hour chart that rejection bar ended as a bearish pin bar, yet there was no follow through and it didn't activate. I'm still bearish on AUD/CAD based on these reasons, but more confirmations would be great for these sell signals so I could also enter a position now and then
Market Commentary – March 5, 2014
Earlier today, at GMT 12:30 AM, the Australian Bureau of Statistics released the quarter over quarter Australian GDP figure, which basically measures the changes in the inflation-adjusted value of all goods and services produced by the economy. The forecast for this quarter’s GDP growth rate was set at 0.7%. However, the actual figure came out better than expected, at 0.8%.
At GMT 1:15 PM, the US based Automatic Data Processing, Inc will release its non-farm employment change figure which represents the changes in the number of employed people during the previous month, excluding the farming industry and government. Last month, the ADP’s non-farm employment change figure came out at 175K, and this month the forecast is set at 159K.
Within few hours, at GMT 3:00 PM, the Bank of Canada (BOC) will release its overnight interest rate. This is the rate at which major financial institutes borrow and lend overnight funds between themselves in Canada. Hence, investors are keen to notice this rate. The BOC has kept its overnight rate at 1.0% for last few months, and analysts are expecting the BOC to keep it same this month as well.
EURGBP Outlook
Since our last analysis, EURGBP broke above the 50% retracement between 0.8157 and 0.8349, only to bounce back down after reaching the 61.8% retracement level. Support was quickly found at 0.8190, above the range resistance.
The long term wedge is still intact, as is the current range between 0.8166 and 0.8349. On top of that, to show even more indecision and to put range traders on the bench as well, in the last two weeks EURGBP has been slowly forming an even smaller range. A series of lower swing highs from February all land on the same resistance trendline, and for support we see a higher swing low as well. To be more precise, this forms a triangle pattern.
As price is getting squeezed in a smaller and smaller range, approaching the tip of the triangle, a breakout is sure to ensue very soon. Outside the triangle, above 0.8266 bulls will aim towards 0.8333, the resistance of the daily wedge, and ultimately towards 0.8349. On a bearish break of the triangle, there is little to no distance until price meets the support of the range at 0.8166.
One of our top performing automated strategies, MorningBull, has already opened several long position with the EURGBP. If the EURGBP reaches the next resistance level around the 0.8340 region, the EURGBP's profits will represent over 400 points of profits altogether. For further information regarding our automated strategies, please visit our website.
USDJPY Outlook
The USDJPY is climbing for the last couple of sessions, as the tensions from the Ukraine started to ease.However, the pair is still trading in a broad range, and needs a strong catalyst for a break either higher or lower. There are some key economic releases scheduled for the US in the coming days. So, we can expect some swing moves, and possibly a break for the USDJPY pair.
There is a wedge forming on the 4 hour chart for the pair, as can be seen in the chart shown below. The pair has failed a lot of times on the upside, and precisely around the 38.2% Fibonacci retracement level of the last down move from the 105.43 high to the 100.74 low. The pair spiked higher above the 102.50 level a couple of times, but was unable to gain momentum after the break. After the 38.2% fib level, a major hurdle lie at around the 102.90/103.00 levels. A break above might call for a test of the 61.8% fib level at around the 103.60 level.
On the downside, initial support lies at around the 23.6% fib retracement level, followed by the previous swing level at around the 101.10/20 levels, which also coincides with the wedge support level. A break and close below would take the pair towards the last low or maybe even lower. The RSI is above 50 on the 4 hour chart, which is a positive sign in the short term.
One of our top performing automated strategies, MorningBull, has already opened several long position with the EURGBP. If the EURGBP reaches the next resistance level around the 0.8340 region, the EURGBP's profits will represent over 400 points of profits altogether. For further information regarding our automated strategies, please visit our website.
I am glad to know that you guys are also long EURGBP. I am also looking to enter long trades in the short term. However, as shared in the chart, I am waiting for the wedge trend line and resistance combination to be breached before entering into a buy trade. I think the 50% retracement level of the last down move at around the 0.8252 is a major resistance for the pair. The trend line also meets around the same levels. So, a break and close above this level can be a good call to enter buy trades. I am waiting for the break in the short term.