Technical Analysis: The Next Big Levels in EURUSD, GBPUSD and USDCAD by Goldman Sachs

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Press review

newdigital, 2015.04.15 13:35

Dovish ECB to Fuel Bearish EUR/USD Outlook- 1.0500 in Focus (based on dailyfx article)

Trading the News: European Central Bank (ECB) Interest Rate Decision

The fresh batch of rhetoric coming out of the European Central Bank (ECB) may heighten the bearish sentiment surrounding the EUR/USD should President Mario Draghi endorse a dovish outlook for monetary policy

However, we may see growing speculation for a ‘taper tantrum’ in the euro-area should Mr. Draghi adopt a more upbeat tone for the region and talk down expectations for more non-standard measures as the recent developments coming out of the monetary union beat market forecasts.

Nevertheless, we may get more of the same from the ECB amid the series of positive data prints coming out of the euro-area, and the single-currency may face a more meaningful correction over the near-term should the central bank implement a more hawkish twist to the forward-guidance for monetary policy.

Bearish EUR Trade: ECB Stays on Course & Talks Down ‘Taper Tantrum’

• Need red, five-minute candle following the policy announcement to consider a short EUR/USD trade.
• If market reaction favors a bearish Euro trade, sell EUR/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from cost; need at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is met, set reasonable limit.

Bullish EUR Trade: Governing Council Adopts Improved Outlook

• Need green, five-minute candle to favor a long EUR/USD trade.
• Implement same strategy as the bearish euro trade, just in the opposite direction.

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Press review

newdigital, 2015.04.15 16:42

• past data is 0.75%
• forecast data is 0.75%
• actual data is 0.75% according to the latest press release

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

[CAD - Overnight Rate] = Interest rate at which major financial institutions borrow and lend overnight funds between themselves. 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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"The Bank of Canada today announced that it is maintaining its target for the overnight rate at 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.

Total CPI inflation is at 1 per cent, reflecting the drop in consumer energy prices. Core inflation has remained close to 2 per cent in recent months, as the temporary effects of sector-specific factors and pass-through of the lower Canadian dollar have offset the disinflationary forces from slack in the economy.

The Bank expects global growth to strengthen and average 3 1/2 per cent per year over 2015-17, in line with the projection in the January Monetary Policy Report (MPR). This is in part because many central banks have eased monetary policies in recent months to counter persistent slack and low inflation, as well as the effect of lower commodity prices in some cases. At the same time, economies continue to adjust to lower oil prices, which have fluctuated at or below levels assumed in the January MPR. Strong growth in the United States is expected to resume in the second quarter of 2015 after a weak first quarter".

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USDCAD, M5, 2015.04.15

MetaQuotes Software Corp., MetaTrader 5

USDCAD M5: 97 pips price movement by CAD - Overnight Rate news event

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newdigital, 2015.04.15 17:13

EURUSD ECB Support and Resistance Update (based on dailyfx article)

• EURUSD opens in a range despite News
• Range resistance it’s at 1.0702
• A break below S4 support has bearish implications

The EURUSD has opened the day moving towards support in early London trading. However, despite the ECB holding its banking rate announcement today, the pair has yet to breakout. Currently price is found near range support at the S3 Camarilla pivot near 1.0606. In the event that price remains supported, traders will begin to look for a bounce in price towards levels of resistance, including the R3 pivot found today at a price of 1.0702.



Despite price opening inside of a 96 pip range, statements from the ECB still have the ability to progress price to a breakout point. A EURUSD decline below the S4 pivot at 1.0557 would suggest a return to USD strength and raise the possibility of the creation of future lower lows. Conversely, if price moves back through its trading range, and breaches the R4 pivot at 1.0751, this would open the market for a potentially broader bullish move.

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newdigital, 2015.04.16 06:28

EUR/USD: Temp Bounce; Parity Call Still Intact For Q3 (based on efxnews article)

President Draghi continued to distance himself from verbally jawboning the EUR, continued to rule out another rate cut, continued to say the ECB is rule-based when asked how long they can support Greece, said he saw no signs of a bond bubble, and continued to avoid saying anything to suggest tapering is a concept they have even thought about at this stage, notes TD.

"So overall, the ECB continues to be optimistic on the impact of its measures and likes the improvement it is seeing in the data and lending surveys, but not enough to significantly shift their overall message. There was no mention of a review to broaden the assets eligible for SSA purchases, but this may still follow in the non-policy meeting later this month," TD adds.

"Overall, this provided minor support to both fixed income (no bubble means buy bonds) and EURUSD (uncertain passthrough of weaker currency to inflation means maybe weaker EURUSD doesn’t help), TD argues.

"Nothing here changes our view that bunds should continue to trade in a range capped at around 30bps for the next 3-6 months and EURUSD should trade below parity by 2015Q3," TD projects. 

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newdigital, 2015.04.16 18:06

EURUSD Attempts Post News Breakout (based on dailyfx article)

• EURUSD opens in a 73 pip range
• Range resistance sits at 1.0720
• A decline exposes support at 1.0647

The EURUSD has opened the trading day range bound, with the pair moving between its R3 and S3 Camarilla pivot points. Price has traversed this 73 pip range twice thus far, with price currently trading above its R3 pivot which is found today at 1.0720. Despite being range bound for most of the session, traders should continue to watch the R4 pivot found at 1.0755. Price has already attempted to break this value once this morning on worse than expected initial jobless claims data. A breakout above this value would suggest the potential for higher highs for the EURUSD.

In the event that price trades back below its R3 pivot, it opens the possibility of another move back towards values of support. Currently range support sits at a price of 1.0647 at the S3 pivot. A continued decline below the S4 pivot at a price of 1.0611 would suggest a larger reversal on the creation of a lower low.

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newdigital, 2015.04.17 06:22

EUR/USD: BNP say Greek deal unlikely by April 24, see a May deal to avoid default (adapted from forexlive article)

• Negotiations have ground to a halt
• The Greek government has until 20 April to present economic and fiscal reforms
• Eurogroup meeting of finance ministers on 24 April
• Recent comments by EU officials suggest an imminent deal to unlock the last tranche of Greece's bailout funds still looks unlikely
• The Eurogroup meeting on 11 May is now being touted as the date of a potential deal on Greece
• Greece facing about EUR 0.2bn in interest payments to the IMF on 1 May and a EUR 0.8bn IMF loan redemption on 12 May
• We continue to expect the Greeks to make a last-minute U-turn to secure a deal in the not-too distant future

But ...

• it is impossible to rule out a worst-case scenario in which a deal is not reached ... Greece does not pay the IMF and the Greek government decides to hold a referendum on the terms of an EU bailout and/or membership of currency union
• If the outcome of a referendum were positive (ie, with the majority of Greeks agreeing to the terms of a bailout deal and/or a continuation of euro membership), this could potentially help Mr Tsipras to reshape Syriza, or form a coalition with pro-European, reform-friendly parties, such as Pasok or To Potami
• This would be positive for the country's future relationship with the EU, but the implications of capital controls for sentiment and growth would be negative, at least in the short term, creating new problems, such as even greater funding needs.

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newdigital, 2015.04.17 09:01

Technical Analysis for EURUSD - Elliot Wave view from Morgan Stanley (based on forexlive article)

15-year chart saying:

• Having accelerated to a low of 1.0463, going out of the lower end of the multi-year trend channel, EURUSD didn't remain there for very long and has since rebounded to a high of 1.1036.
  
• However the longer term bearish picture remains and so, should the downside momentum return, we watch for breaks of the following key levels: 1.0463, 0.9613 then 0.8565.

The analysts comes in to a 2-year timeframe:

• EURUSD is still within a 5th wave structure of the larger Cwave.
  
• The 5th wave has formed a substructure, which we would expect to complete around parity. However we expect some volatility before getting there.
  
• A move above the 1.1052 level would mean that there is a larger 4th wave forming, suggesting a move towards 1.15 before the longer term downtrend continues.

10-day chart:

• EURUSD has begun to form an impulsive structure from the high of 1.1036.
  
• Currently in a 4-th wave correction, we look for the rebound to sell.
  
• We put a stop just above the 1.10 high since a move above here would be out of the top end of the recent range and we would have to reassess our trading strategy at this point.

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newdigital, 2015.04.17 10:47

Trading the News: U.S. Consumer Price Index (CPI) (based on dailyfx article)

• U.S. Consumer Price Index (CPI) to Retain Slowest Pace of Growth Since 2009.
• Core Rate of Inflation to Hold at Annualized 1.7% for Second Month.

The U.S. Consumer Price Index (CPI) may prop up the greenback and spark a near-term decline in EUR/USD should the inflation report highlight sticky price growth in the world’s largest economy.

Why Is This Event Important:

Despite signs of a slower recovery, the Federal Open Market Committee (FOMC) may continue to prepare U.S. households and business for higher borrowing-costs as Chair Janet Yellen remains confident in achieving the 2% inflation target over the policy horizon.

How To Trade This Event Risk

Bullish USD Trade: U.S. Headline & Core CPI Highlight Sticky Price Growth

• Need to see red, five-minute candle following the release to consider a short trade on EUR/USD.
• If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish USD Trade: Consumer Price Index Falls Short of Market Forecast

• Need green, five-minute candle to favor a long EUR/USD trade.
• Implement same setup as the bullish dollar trade, just in reverse.

Potential Price Targets For The Release

• Long-term outlook for EUR/USD remains bearish, but the failure to push back below the 1.5000 handle may continue to foster range-bound prices over the near-term.
  
• Interim Resistance: 1.0970 (38.2% expansion) to 1.0990 (50% retracement)
• Interim Support: 1.0487 (3/13 close) to 1.0515 (50% expansion)

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Press review

newdigital, 2015.04.17 15:45

• past data is 0.2%
• 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 AUD in our case)

[USD - CPI] = Change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

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U.S. Consumer Prices Rise 0.2% For Second Straight Month In March

While the Labor Department released a report on Friday showing another modest increase in U.S. consumer prices in the month of March, prices rose by slightly less than economists had anticipated.

The Labor Department said its consumer price index edged up by 0.2 percent in March, matching the increase seen in February. Economists had expected the index to rise by 0.3 percent.

The continued increase in prices was partly due to another notable increase in energy prices, which rose by 1.1 percent in March after climbing by 1.0 percent in February.

The gasoline index showed its biggest increase since February of 2013, surging up by 3.9 percent, while the fuel oil index also jumped by 5.9 percent.

However, the increase in energy prices was partly offset by a drop in food prices, as the food index fell by 0.2 percent in March after rising by 0.2 percent in February.

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How to Start with Metatrader 5

newdigital, 2014.01.16 13:24

Just very good article found about creating News Trader EA for MetaTrader 5: