Market Condition Evaluation based on standard indicators in Metatrader 5 - page 126

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Sergey Golubev, 2015.09.09 18:03

Goldman Sachs about Next Week's FOMC: 'the first hike is not likely to come until December' (based on efxnews article)

Goldman Sachs made some forecast concerning USD related to the FOMC meeting which will be held next week on Thursday:

  1. "With an all-important FOMC meeting coming up next week, focus on the USD factor may increase once again. That has not typically been helpful for EM FX in recent years. But given our US Economics team’s view that the first hike is not likely to come until December and given the very sharp sell-off in EM FX in recent days, some stabilisation is certainly possible in the event of a dovish outcome."
  2. "This would argue for some near-term caution in chasing the rapid moves of recent days. However, such a reprieve is likely to prove temporary, in our view, because the underlying external and internal adjustments are not complete, and we continue to see room for EM FX weakness versus the USD to extend in the medium term."

Just to remind about next week's FOMC metting:

2015-09-17 19:00 GMT (or 21:00 MQ MT5 time) | [USD - FOMC Statement, Federal Funds Rate]

  • past data is 0.25%
  • forecast data is 0.50% or 0.25%
  • actual data is n/a according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)
if hawkish > expected = (for USD in our case)

[USD - FOMC Statement] = It's the primary tool the FOMC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.

[USD - Federal Funds Rate] = Interest rate at which depository institutions lend balances held at the Federal Reserve to other depository institutions overnight. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.


 

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Sergey Golubev, 2015.09.10 08:43

Credit Agricole for EUR/USD: 1.12 by the end of Q3, 1.06 by the end of the year, and 1.04 by the end of Q1 of 2016 (based on efxnews article)

Credit Agricole made an other forecast for EUR/USD: 1.12 by the end of Q3, 1.06 by the end of the year, and 1.04 by the end of Q1 of 2016. It means that old forecast (made few day ago) was updated for 1.12 target for this pair by the end of September. This correction was made because of fundamental factors changed: Credit Agricole is expecting dovish ECB (ECB Meetings) and hawkish Fed (FOMC).


Just to remind the general rules for fundamental news events concerning the speeches:

  • EUR: if dovish > expected = good for currency (for USD in our case).
  • USD: if hawkish > expected = good for currency (for USD in our case).

That means that Credit Agricole is expecting more bearish for EUR/USD in the medium term forecast:

  • "We revise our near-term forecasts for EUR to the upside to account for the latest China-induced risk selloff. We expect the positive correlation between risk aversion and EUR to keep the single currency supported in the near term."
  • "The resilience should be evident against USD given that the Crédit Agricole CIB economists have pushed their Fed lift-off call from September to October 2015. Going into year-end and into 2016 we expect the policy divergence trade to reinstate itself, however."
  • "Strong EUR coupled with slowing global growth and lower commodity prices should increase the risk that the ECB QE will continue beyond September 2016, making the EUR an even more attractive funding currency."
  • "All that should bring EUR NEER back down to its recent lows over the forecast horizon. We lower our medium-term outlook for EUR/USD in view of the persistent policy divergence between the dovish ECB and hawkish Fed."
  • "We now target EUR/USD at 1.12 by the end of Q3, 1.06 by the end of the year, and 1.04 by the end of Q1 of 2016."

 

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Sergey Golubev, 2015.09.11 05:55

USD trading strategy going into next week's FOMC meeting - Morgan Stanley (based on efxnews article)

Morgan Stanley estimated thew probability for Fed hike in September vs December meetings, and it was stated that a 30% chance only of a hike in September, so there is more chance to expect this events in December this year. And in this case, it may be more opportunity for EUR and JPY with related to USD: those pairs may be in bullish condition during the September 17th meeting for example.

Thus, there are 3 basic scenarios concerning Fed hike:

Base-Case: December. "The Fed has entered its pre-meeting silent period, which means there are no speakers on the agenda to move market expectations of the first hike before the September 17th meeting. Comments from the Fed thus far suggest the central bank wants to make the first hike as well flagged as possible and avoid surprising the market. With markets pricing in less than a 30% chance of a hike in September, it therefore is unlikely that the Fed will hike now. Indeed, our US economists have maintained their view for a December hike."

Get It Done: "A hike next Thursday would lead to accelerated EM weakness, in our view. Current account surplus and net foreign asset-supported FX such as EUR and JPY may rally should the Fed hike; these currencies have developed an increasingly tight inverse relationship with the performance of risky assets."

Or Wait: "The Fed delaying action would be in line with current market pricing. In this scenario, USD would likely soften somewhat and the Fed would remain data-dependent in the statement and in the Chair’s press conference. Nonetheless, USD dips still represent buying opportunities as the reason for USD strength is mainly USD-supportive repatriation flows."


 

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Sergey Golubev, 2015.09.11 16:35

Any USD downside should stay limited from the current levels - Credit Agricole (based on efxnews article)

  • "Risk sentiment remains unstable ahead of this weekend’s data out of China and next week’s FOMC monetary policy announcement."
  • "It seems to become a stronger notion that the Fed will consider higher rates next week, irrespective of more muted price developments and intact uncertainty as related to Asia. This is also reflected in Bloomberg consensus expectations, according to which a lift-off is favoured next week. If so, the greenback should remain supported versus for instance the JPY. This is especially true as rate markets price in a probability for the Fed to tighten of only 30%."
  • "However, even if the Fed will remain on hold, as forecasted by our economists, central bank Chairwoman Yellen should consider a more hawkish rhetoric during the press conference in order to prepare the market for a lift off in October. This in turn suggests that any USD downside should stay limited from the current levels."
  • "All of the above suggests too that EUR/USD upside should prove limited, even if the pair continues to benefit from weak sentiment."

 

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Sergey Golubev, 2015.09.13 17:59

EUR/USD Forecast Sep. 14-18 (based on forexcrunch article)

EUR/USD managed to enjoy a nice recovery, ending the week on a positive note. Is it set for more gains? The big event of the week in Europe are the ZEW survey and inflation data. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

Talk from the ECB on QE wasn’t news for the euro and didn’t really have a negative effect. Data-wise, we had little in the way of surprises, but the strong German trade balance reminded us that the euro is bid. In the US, we had some good JOLTs news but disappointing consumer confidence ahead of the big event: the all important Fed meeting coming now. Will the mounting tension result in an explosion of the pair?

  1. Industrial Production: Monday, 9:00. Industrial output in the euro-area disappointed with a slide of 0.4% in June. With German production falling short of predictions for July, a bounce of only +0.3% is on the cards.
  2. French CPI: Tuesday, 6:45. Prices in the continent’s second largest economy dropped by 0.4% in July. The publication for August feeds into the final euro-zone data published later in the week. A rise of 0.4% m/m is expected for August.
  3. German ZEW Economic Sentiment: Tuesday, 9:00. This early survey from ZEW has been on the fall in the past 5 months, yet the score remained positive, reflecting optimism. For the month of September, another fall from the 25 points listed in August is likely, given the global gloom: a score of 18.3 is on the cards. The all European number will likely fall as well from 47.6 seen in August to 42.1 points.
  4. Trade Balance: Tuesday, 9:00. Germany’s huge trade surplus shapes the figure for the full euro-zone. A positive figure of 21.9 billion was seen in June and a similar result is on the cards for July: 21.4 billion.
  5. Employment Change: Tuesday, 9:00. This quarterly official figure lags the unemployment rate, but is still of note. A rise of 0.1% was seen in Q1 and a repeat is predicted for Q2.
  6. Final inflation figures: Wednesday, 9:00. The preliminary inflation data for August showed a poor 0.2% y/y gain in prices, far below the ECB’s “2% or a bit below” target. Also when excluding volatile items, Europe has seen a meager 1% rise in prices. The data will likely be confirmed.
  7. ECB Economic Bulletin: Thursday, 8:00. The European Central Bank has already lowered its forecasts and President Mario Draghi dragged down the euro in a masterful act. Nevertheless, this deeper insight provides a broader view into the ECB’s state of mind.
  8. Current Account:  Friday, 8:00. Similar to the trade balance, also the wider current account measure shows a huge surplus. A positive 25.4 billion in June beat expectations, and narrower surplus of 21.3 billion is expected now.

 

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Sergey Golubev, 2015.09.14 07:53

Morgan Stanley made weekly forecast for EUR in fundamental/technical mixed way expecting bearish EUR (based on efxnews article):

"We remain bearish on EUR over the medium term but see reason for some support in the near term. EURUSD continues to be inversely correlated with risk appetite. This suggests that as global volatility remains high and risk appetite weak then there is reason to see EUR supported. Draghi sounded very dovish at the recent ECB press conference so, should the voices from the central bank suggest more aggressive monetary action, then this would be a risk factor to our near-term view."


From the technical point of view - EUR/USD is located below 100-SMA/200-SMA for ranging within 1.1713 key resistance and 1.0807 key support levels for crossing symmetric triangle pattern for the trend to be continuing. Intermediate support level as the nearest bearish target is 1.0925, and the key bearish target is 1.0807. The situation with EUR/USD may be described on the following way:

  • market rally to be continuing, or
  • the bearish trend to be re-started.
We think the direction of EUR/USD movement for this week depends entirely on the fundamental news events such as Federal Funds Rate for example.

 

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Sergey Golubev, 2015.09.14 13:53

EUR/USD: Levels & Targets by United Overseas Bank (based on efxnews article)

United Overseas Bank estimated the nearest bullish target for EUR/USd as 1.1475 with 1.1250/55 as the bearish reversal level.

  1. "The break above 1.1255 late last week has shifted the outlook for EUR to bullish with a target of 1.1475."
  2. "In order to maintain the current nascent momentum, any pull-back should not move back below the break-out level of 1.1250/55."


This situation is mostly related to intra-day trading: as we see from H4 chart - the EURUSD is on bullish trend with 1.1379 as the next target; and the reversal bearish target is 1.1253. It means the following:

  • if the price breaks 1.1379 resistance level from below to above so the bullish trend will be continuing with 1.1475 as the next target in this case;
  • if the price breaks 1.1253 support level so the price is started to be reversed to the bearish market condition with the secondary ranging: price will be located between 100-SMA and 200-SMA.

 

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Sergey Golubev, 2015.09.14 18:32

Trade Ideas For EUR/USD and GBP/USD by UBS Group (based on efxnews article)

UBS Group made a trading forecast for EUR/USd and GBP/USD for today and tomorrow:

EUR/USD: "traded bid last week and ended with a short squeeze. Flows were mixed but demand improved as the weekend got closer so it seems that the market is happy to play the pair from the short side, although conviction is low. All eyes are on the FOMC meeting this week, and activity could be limited until then."


GBP/USD: "Cable has found good support around the 200-day moving average and with the positive tone from the BoE last week, this bounce should continue. This is a busy week for data, with CPI, earnings, unemployment, and retail sales due. Buy dips, with a stop below 1.5350, for a test of 1.5500 and 1.5550."



 

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Sergey Golubev, 2015.09.15 07:44

EUR/USD Tech Review: 'correcting the to 1.11' by Nomura; 'it isn’t very clear' by Goldman Sachs (based on efxnews article)

Nomura made a forecast for EUR/USD stated about correction for this pair to 1.11 :

  • "It is complex correction that is expected to complete via 2 a-b-c rallies, currently the latter stages of the second a-b-c are unfolding. A rally from near 1.13 to 1.14 can complete the larger wave-B."
  • "S/t, support via old pivots and an uptrend line is between 1.1300/1288, more critical support below is 1.1254. Resistance is 1.1340 and then the recent pivot high at 1.1374."


By the way, Goldman Sachs noted that the setup in EUR/USD isn’t very clear:

  • "A complete correction should retrace within wave 4 territory and near 38.2% of the preceding trend. In this case the high at 1.1713 is near enough to 38.2% at 1.18 and actually exceeds the 4 th wave (1.1533-1.1099). Moreover, an ABC extension from the March low targets 1.1818 (again, near enough?)."
  • "At this point it seems reasonable to take a neutral stance until further signal develops."


Anyway, as we see from daily chart - the price is located near above 200 day SMA with 1.1372 resistance level to be ready for two scenarios to be implemented:

  • bullish trend will be continuing by breaking 1.1372 resistance with 1.1713 as the next bullish target, or
  • the price will be reversed to the bearish trend by breaking 1.11/1.10 support levels.

 

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Sergey Golubev, 2015.09.15 18:06

2015-09-15 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Retail Sales]
  • past data is 0.7%
  • forecast data is 0.3%
  • actual data is 0.2% according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Retail Sales] = Change in the total value of sales at the retail level. It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

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EURUSD M5: 30 pips price movement by USD - Retail Sales news event:



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