ThirdBrainFx Market Commentary - page 4
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Market Commentary – March 6, 2014
In the first hour of the day, the Australian retail sales (m/m) and trade balance figure was published by the Australian Bureau of Statistics. While the retail sales measures the changes in the total value of sales at retail level; the trade balance figure represents the difference in value between imported and exported goods and services during the reported month. The Australian retail sales was forecasted to come out at 0.7%, but the actual figure came out much better than expected, at 1.2%. On the other hand, the trade balance figure also came out better than expected at 1.43 billion against previously forecasted 0.11 billion.
At GMT 12:00 PM, the Bank of England will release the official bank rate for the month. It is the interest rate at which banks lend balances held at the BOE to other banks. The BOE is expected to keep its official bank rate at 0.50%, same as last month.
Within 15 minutes, the European Central Bank will release its minimum bid rate which is the interest rate on main refinancing operations that provide the bulk of liquidity to the European banking system. The ECB is expected to maintain its current bid rate of 0.25% over the next time period.
At 1:30 PM, the US Department of Labor will be releasing the weekly unemployment claims figure, which measures the number of individuals, who filed for unemployment insurance for the first time during the previous week. This week, the US unemployment claims figure is forecasted to come out at 336,000 against last week’s 348,000.
NZDUSD Outlook
In the technical outlook from last week, we underlined how NZDUSD was flirting with the 61.8% Fibonacci retracement level of the last down-move from the 0.8391 peak to 0.8241 low. The pair succesfully rejected and dipped 63 pips, only to find support at 0.8281, where a confluence formed by a bullish trendline, the 200 Simple Moving Average on 4H timeframe and the 61.8% Fibonacci retracement between 0.8281 to 0.8344 kept sellers in check.
At that point the pair had formed an ascending triangle which ultimately broke towards the upside. After breaching the previous high and making failed first attempt to reach 0.8431, early this week NZDUSD dipped once again and found support on the previous resistance at 0.8344. This is now the key support level for this bullish move and may well be tested again at the first real signs of bullish weakness.
The last two trading sessions have seen NZDUSD flirting with 14th January swing high of 0.8431, a very strong resistance line. While MACD is showing a weak divergence on the 1H and 4H timeframes, price action has failed to provide any significant bearish signals.
For the bullish trend to continue, we must see a 4H bar close above 0.8431, preferably the daily bar to be on the safe side. Above the current resistance, there is not much that can hold the price until it reaches 0.8533-0.8542.
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 0.8530 level, then the NZDUSD's profits will represent over 600 points of profits altogether. For further information regarding our automated strategies, please visit our website.
EURUSD Outlook
The EURUSD pair during the last week found support just above the 38.2% Fibonacci retracement level of the last down move from the 1.3892 peak to 1.3476 low. The pair bounced sharply from the 1.3640 level, and traded as high as 1.3823, which is just above the 76.4% retracement. One important thing to note here is that the 1.3810/20 is a critical resistance zone, and the pair has failed more than a couple of times around the same levels.
There is a triangle forming on the daily chart for the pair, as can be seen in the chart shown below. The pair as of writing is testing the triangle support area.A break below the triangle support would be very crucial for the pair, as it could trigger further losses in the pair. A break below might take the pair towards the 1.3680 level, and any further damage could push the pair towards the last swing low at around the 1.3640 level.
Remember, there is an uncovered gap just around the 1.3800 figure. On the upside, initial resistance can be seen at around the 76.4% retracement level, followed by the previous high at around the 1.3725 level. A break higher might take the pair towards the 1.3890 peak. The RSI is well supported above the 50 level, and the MACD is also not showing any signs of weakness. This suggests that we can witness a bounce in the short term for the pair.
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 0.8530 level, then the NZDUSD's profits will represent over 600 points of profits altogether. For further information regarding our automated strategies, please visit our website.
Very good call, I must say. I was also on the long side. However, I was not long from the lower levels, but I was waiting for a trend line to break in order to enter a long trade. Earlier today, the pair did break the trend line and traded higher, as can be noted in the chart shown below. I entered a long trade on the break, and just now booked 40 pips. I think we need to be careful from here on, as the pair is heading towards the critical resistance zone at around the 0.8500/10 level. We might witness a pullback from these levels.
Very good call, I must say. I was also on the long side. However, I was not long from the lower levels, but I was waiting for a trend line to break in order to enter a long trade. Earlier today, the pair did break the trend line and traded higher, as can be noted in the chart shown below. I entered a long trade on the break, and just now booked 40 pips. I think we need to be careful from here on, as the pair is heading towards the critical resistance zone at around the 0.8500/10 level. We might witness a pullback from these levels.
You all guys are champ. I am the only one who missed the train. Actually, I was keeping a close eye on the EURUSD, and that is the reason why I never paid attention to the NZDUSD pair. This is a nice break for the pair. The bulls must have been enjoying this ride. However, the pair is now coming closer to the previous major swing area at around the 0.8540 level. I think we can witness a slight pullback from the current levels, but one cannot be sure, as we have the US NFP round the corner. Any bad miss in the numbers may cause another round of selling in the US dollar. The EURUSD pair is also very interesting. Do take a moment to look at the chart below.
Market Commentary – March 7, 2014
At GMT 1:30 PM, a range of major economic data was simultaneously released by the American and the Canadian authorities. The Statistics Canada released three economic data, the employment change, trade balance and unemployment rate. On the other hand, The US Bureau of Statistics released the non-farm employment change, trade balance and unemployment rate figure.
While both of the US and Canadian employment change figure represent change in the number of employed people during the previous month, the US non-farm figure excludes the farming industry. The Canadian employment change figure was forecasted to come out at 16,900 but the actual figure came out way worse, a negative 7,000. The US non-farm employment change figure was forecasted to come out at 151,000, but the actual figure came out better than expected, at 175,000.
The trade balance figure for both economies represented the difference in value between imported and exported goods during the reported month. Since export and currency demands are directly correlated, investors are keen to keep track of this figure. The Canadian trade balance came out at -0.2 billion against the forecasted-1.6 billion, and the US trade balance came out at -39.1 billion against the same.
The unemployment rate figure represents the percentage of the total work force is unemployed and actively seeking employment in the respective economies, during the previous month. The US unemployment rate came out 6.7% against the forecasted 6.6%, and the Canadian unemployment rate came out at 7.0% against the same.
NZDJPY Outlook
In last week’s analysis, we underlined the range on NZDJPY and the scale of the price pivot zone in the 85.58-85.73 region. Late last week there was a very tiny attempt to make a bullish run above this level, which eventually ended with a bearish engulfing bar on the 4H timeframe and a bearish pin bar on the daily chart.
This week, however, the struggle around the pivot zone was much weaker, as buyers completely took over and never looked back once price stabilized and closed above 86.00 on Wednesday. On Thursday there was only one way, and that was up, until the previous highs from January were reached.
While we can observe that the last four 4H bars have closed above this resistance and generally flirted with this area without backing down, after such a bullish rally – yesterday being almost twice the daily average true range - it was expected from NZDJPY to take a small breather. This relaxation will most likely continue until the US session begins and the major data announcements such as the NFP are released.
While MACD is very strong, the daily timeframe still shows a negative divergence, so it will be very interesting to see if the market will actually stabilize above 87.36 today. There is a ton of free space above the resistance, so targets are extremely hard to pinpoints towards the upside.
Towards the downside, if a run above 87.36 fails, there is no better target than the previous price pivot zone. A re-test of this area can provide is always welcome, since fresh buyers will be found at these levels.
As the NZDJPY is about to close the daily candle with a bearish pin bar, one of our top performing automated strategies, MorningBull, has opened already opened four short positions with target price of around 81.40. If the NZDJPY bounce off the resistance zone at this level, these four positions will yield over 2400 pips altogether.
USDCAD Outlook
The Canadian dollar finally gained some bids in the last two days. However, this cannot be considered as a strength in the Canadian dollar.This is more of a US dollar weakness, which can be seen across the board, as the AUDUSD and NZDUSD also climbed higher. The USDCAD pair is trading a touch lower after setting an intermediate top at around the 1.1193 level.
There is a triangle forming on the 4 hour chart for the pair, as can be seen in the chart shown below. The pair has breached the triangle support, and as of writing is trading above the 76.4% Fibonacci retracement level of the last leg up from the 1.0909 low to 1.1193 high. The broken triangle support might now act as a resistance for the pair in the short term. A break and close below the 76.4% fib level may take the pair towards the full 100% extension level. Any further weakness might call for a test of 1.236 extension of the last leg higher.
The RSI is around the extreme levels, and has started heading back above the 30 level. If the bulls manage to push the pair back above the broken triangle, then it is likely that the 1.1050 level could be tested in the short term. And, if the bullish momentum continues, then the pair can re-establish the bullish trend in the medium term. The MACD is still under divergence. So, we need a convincing move for this to be valid.
Market Commentary – March 10, 2014
Although there was no major economic data releases were due today, still there were some pretty important data that came out from agencies around the world.
The Chinese new loans figure came out at GMT 8:03 AM, which measures the value of new yuan-denominated loans issued to consumers and businesses during the previous month. Since borrowing and spending are positively correlated, investors keep an eye on the new loans taken out by both the consumers and businesses to understand the confidence level in the economy. The forecast for the Chinese new loans were set at 730 billion, and the actual figure came out at only 645 billion.
At GMT 8:15 AM, the Swiss Federal Statistics Office released the year over year retail sales figure, which measures the changes in the total value of inflation-adjusted sales at the retail level, excluding automobiles and gas stations. It is considered to be the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The forecast for the Swiss retail sales was set at 2.7%, and the actual figure came out at only 0.3%.
At GMT 2:15 PM, the Bank of England’s Deputy Governor Mr. Charles Bean will be speaking at the North East Chamber of Commerce Presidents Club, in Darlington. As he is a voting member of the Monetary Policy Committee (MPC), investors pay keen attention to what he has to say in order to predict future direction of the economy.
AUDUSD Outlook
The Australian dollar finally traded higher during the last week.The fundamental data which was released in the Australia came better than expected, and as a result the pairs like AUDUSD took advantage of it. The buyers emerged heavily for the pair, as the pair traded above the key levels during the previous week. As of writing, the pair is under correction or we can call it a retracement. The last Friday’s NFP release has stalled the rally in the pair.
There is an up-move trend line, as can be seen in the 4 hour chart shown below. This trend line is very crucial for the pair. The 50% retracement level of the last leg higher from the 0.8887 low to 0.9132 peak sits at around the 0.9008 level. This is also coinciding with the trend line. So, the 0.9000 level becomes a key swing area for the pair, and buyers can re-emerge around the same area. If the pair manages to bounce from the mentioned levels, then the pair might re-test the previous week’s high again.
The RSI after hitting the extreme levels is falling back towards the 50 level. It is interesting that all technical levels are aligning around the same 0.90 support region. A break below may push the pair down towards the 0.8950 support level. Any further weakness would call for a full test of 100% extension in the short term.
Gold Outlook
Since our last analysis on Gold, the uptrend has continued, albeit at a considerably slower pace. Two more bullish swings have pushed the price up to $1354.6. The bullish swings were smaller and smaller in size, outlining that this bullish trend may be running out of steam sooner rather than later.
MACD has made smaller and smaller tops as price went higher, forming a stronger divergence with each swing. On the last attempt to break the current resistance at $1354.6, Gold failed short of the target and formed a double top formation, immediately followed by a very large bearish engulfing bar on the 4H chart. This can be construed as a possible early reversal signal.
The uptrending trendline from the previous two lows sits at $1330, where 50% fibonacci retracement and several lows from last week offer support. It should be noted that there is a second possible support sitting at $1325, where a confluence between 61.8% fibonacci retracement and the recent pivot zone can represent another opportunity for the bulls to take control. If both support levels are breached and price stabilizes below them, $1307 will become the next support area to be tested.
Towards the upside, the bullish trend is favoured only on a break of $1354, which opens the way towards $1374 and eventually $1400 area.
The Australian dollar finally traded higher during the last week.The fundamental data which was released in the Australia came better than expected, and as a result the pairs like AUDUSD took advantage of it.
I was also expecting a nice move up in the pair. The pair seemed to gain a lot of bids in the short term. However, the recent disappointing Chinese numbers are weighing on the pair. The pair is trading lower today, and looks set to test the 0.9000 figure in the short term. Thanks for sharing the analysis man. I was using an automated strategy to gain from the rise in the AUDUSD pair. You are right, the 0.9000 level is the key for the pair, as can be seen in the chart shown below.
Market Commentary – March 11, 2014
In the hourly hour of the day, the National Australia Bank Limited released its business confidence figure, which basically measures the level of a diffusion index based on surveyed businesses. However, the NAB excludes the Australian farming industry from this index. This is often considered as a leading indicator of Australian economic health, as businesses react more quickly to changing economic environment than the consumers or the government.
At GMT 9:30 AM, the UK’s Office for National Statistics released the month over month manufacturing production figure, which measures the changes in the total inflation-adjusted value of output produced by manufacturers. Since manufacturing makes up almost 80% of the total industrial production, and tend to dominate the market impact, it is considered as a leading economic indicator by the investors. Last month, the UK’s manufacturing production 0.4%, and this month it also increased by 0.4% against previously forecasted 0.3%.
At GMT 2:00 PM, the US Bureau of Labor Statistics will be releasing the JOLTS jobs openings figure, which measures the number of job openings during the reported month, excluding the farming industry. Last month, the JOLTS figure came out at 3.99 million, and this month the forecast is set at 4.02 million.
EURGBP Outlook
Since our last analysis, EURGBP broke outside the triangle formation we spotted, rallying above trend line resistance and the 200 Simple Moving Average on 4H timeframe. The long term wedge also broke a day later on the Daily chart.
The resistance based on January’s highs at 0.8348, combined with 61.8% Fibonacci retracement between 0.8466 and 0.8157, was the main target for this breakout. The pair respected this level yesterday, but there seems to be little to no bearish pressure at this point. This can suggest the overall bullish tendency is still present, and we could see a continuation above 0.8348 this week.
Above 0.8348, the daily trend will be bullish, since the most important previous lower highs in the downtrend will be broken. With MACD positive and looking strong, the daily targets are the 200 Simple Moving Average, currently at 0.8426, and the next major resistance at 0.8466.
Failure to break above 0.8348 can lead to a dip towards the 0.8250 area, where bulls are likely to come back into play.
One of our top performing automated strategies, MorningBull, has already opened several long position with the EURGBP. If the EURGBP reaches its target price around the 0.8464 level, then the EURGBP's profits will represent over 600 points of profits altogether. For further information regarding our automated strategies, please visit our website.
AUDNZD Outlook
The New Zealand dollar has been trading higher for the last several days now, and not only against the USD, but also against the currencies like the AUD. The AUDNZD pair is trading lower, and has vanished most of the recent gains. One of the core reasons for the strength in the New Zealand dollar is that the Reserve Bank of New Zealand is expected to raise the interest rates in the upcoming meeting. So, one can expect some more strength in the coming days.
There is a triangle forming for the pair on the 4 hour chart, as can be seen below. The pair as of writing is testing the triangle support. The pair is trading below the key 61.8% retracement level of the last move higher from the 1.0492 low to 1.0945 high. If the pair breaks the triangle support, then a test of the 76.4% fib level is likely in the short term. A break below may push the pair towards the previous swing level of 1.0565 level, followed by the full test of the 100% extension.
The RSI is getting close to the extreme levels, but the MACD is under a major divergence.So, another leg lower is possible in the short term, and one must be very careful trading the New Zealand dollar pairs in the short to medium term. If the AUDNZD pair manages to trade higher from the current levels, then the 1.0730/40 area is a major resistance for the pair.
Since our last analysis, EURGBP broke outside the triangle formation we spotted, rallying above trend line resistance and the 200 Simple Moving Average on 4H timeframe. The long term wedge also broke a day later on the Daily chart.
You are correct. The pair did break higher. I was monitoring a down-move trend, as can be seen in the daily chart shown below. I went long on the break. This is a critical break, in my opinion. I am expecting further gains in the pair in the short to medium term. I am looking for at least a test of 0.8450 level in the medium term. From this level, we can expect a nice pullback in the pair. I am still holding my long position, and will look to trail the SL in the coming session.
Market Commentary – March 12, 2014
Earlier today, the Australian Bureau of Statistics released the month over month home loans figure, which measures the change in the number of new loans granted for owner-occupied homes. Since most homes are financed, so it provides an excellent gauge of how many qualified buyers are entering the market. The home loan figure was forecasted to come out at 0.8%, and the actual figure came out way below, at 0.0%.
At GMT 8:00 PM, the Reserve Bank of New Zealand will announce its official cash rate for the next period. The official cash rate is the interest rate at which banks lend balances held at the RBNZ to other banks, and it is the a vital figure for any investor who is considering holding New Zealand dollar. At the end of January, the RBNZ left the official cash rate at 2.50%. However, as the economic activity is picking up in the country, this time around, the RBNZ might consider increasing the rate to 2.75%.
Often, investors already price the changes in the interest rate prior to the announcement. What they really consider reviewing is the monetary policy statement from the Reserve Bank of New Zealand. In this report the RBNZ is mandated to include details on how they will achieve their inflation targets, how they propose to formulate and implement monetary policy during the next five years, and how monetary policy has been implemented since the last statement's release. The policy statement will be released at the same time, when the RBNZ will announce the official cash rate.
EURUSD Outlook
The EURUSD pair has been trading higher since the last week after the ECB interest rate decision. The ECB decided not to make any changes in the existing policies, but in fact they upgraded the growth forecast for the Euro zone. This lifted the EURUSD, and the pair traded to a new yearly high above the 1.3900 level. However, the pair failed to maintain gains above the 1.3900 level, and traded lower. Yesterday, the pair traded as low as 1.3833.
The pair has breached an important triangle, as can be seen in the daily chart shown below.The pair as of writing is testing the same broken triangle resistance zone, which is acting as a support in the short term. The 1.3820/10 area is crucial for the pair, as it was a strong barrier earlier, and may now act as a strong support to the pair.A break and close below this level might take the pair towards the 1.3750/40 level, which is the next possible support.
On the upside, the previous swing level at around the 1.3880/90 is seen as the first hurdle for the pair, followed by the recent high at around the 1.3910 level.A break above this level may ignite one more rally in the pair, and it may then possibly test the all-important 1.40 figure in the medium term. The RSI and MACD both are flat, which points consolidation in the coming sessions.
CADJPY Outlook
In February and early this month, CADJPY has formed a bullish uptrending channel on the daily chart, albeit the bullish angle is not steep at all. The last swing high has touched the daily 200 Exponential Moving Average, the 38.2% fibonacci retracement between 99.14 and 90.78 and the resistance of the current bullish channel. A bounce was expected facing such a strong support on a large timeframe.
The pair has now fallen back to 92.45, where the resistance from two weeks ago has now turned into support. It should also be noted the 50% fibonacci retracement between 90.78 swing low and 94.09 swing high is in this area, together with the 200 Simple Moving Average on both the 1H and 4H timeframes.
If the support area around 92.45 holds and price action further confirms this view, a bullish continuation is very likely. 94.00 - 94.10 resistance will be touched again in this instance and probably broken, with 95.95 being the longer term target for the bulls.
Towards the downside, a valid break of the support area could mean yet another test of the channel support, currently sitting at 91.21. For sellers, any bullish price action signals along the way should be treated with extremely cautious, since the overall tendency of CADJPY is bullish.
You are correct. The pair did break higher. I was monitoring a down-move trend, as can be seen in the daily chart shown below. I went long on the break. This is a critical break, in my opinion. I am expecting further gains in the pair in the short to medium term. I am looking for at least a test of 0.8450 level in the medium term. From this level, we can expect a nice pullback in the pair. I am still holding my long position, and will look to trail the SL in the coming session.
I was also surprisingly long the EURGBP pair. However, the only difference was that I was monitoring a small down-move trend line, as drawn in the daily chart attached below. My long trade was triggered on the break of this trend line. The strength in the Euro is very surprising to me, as I do not see any major reason for the Euro crosses to trade higher. I think mostly the technical indicators are driving the Euro higher. I think we should be very careful from here on in the short term. The 0.8380 level is very critical for the pair in the medium term.