ThirdBrainFx Market Commentary - page 2
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Update - Feb 21
Hi Guys,
Sorry about the mistake, the correct chart for Feb 21 EURGBP is:
There is a trend line around the same level, which has acted as a resistance more than a couple of times for the pair. This trend line is coinciding with the precious swing level around the same level.
It is a very interesting chart. However, you are following a down-move trend line, and I am following an up-move trend line. You can have a look at the chart I have attached below. This up-move trend line has acted as a support for more than four times. This is a critical trend line, in my opinion.
I will look to buy dips and around the same trend line. There is also a support at around the 102.00 figure. This confluence area is key, in my opinion. A break and close below will trigger further losses for sure in the pair.
Market Commentary – February 24, 2014
Today, there was only a handful of important economic data release. During the early morning, the Ifo Institute for Economic Research published its German Business Climate index, which measures the level of a composite index based on surveyed manufacturers, builders, wholesalers, and retailers. The forecast for this month’s German Ifo business climate was set at 110.7. However, the actual value came out at 111.3.
At 10:00 AM, the Eurostat released the year-over-year CPI figure which measures the changes in the price of goods and services purchased by the European consumers. The CPI effectively measures inflation rate in the economy. This month, the CPI (y/y) was expected to come out at 0.7% amid concern over deflation in the Eurozone by the European Central Bank. The monetary policy to reduce interest rate few months ago seems to be working as the CPI actually came out better than expected, at 0.8%.
USDCAD Outlook
In the last analysis posted for the USDCAD, we highlighted the importance of a wedge created on the 4 hour chart. During the last week, the pair broke the same wedge to the upside, and traded higher. The follow through after the break was very strong as expected. The bulls gave no chance to the bears to take control of the situation after the break.
After the break, the pair was initially capped by the confluence zone of the 50.0% and 61.8% Fibonacci retracement level of the last major down-move from the 1.1223 to 1.0907 levels. The pair has now managed to clear the 61.8% retracement level, and now may be eyeing the next key swing level at around the 1.1170/80 levels. A breach of this level may take the pair higher towards the last high. There are chances that the pair might set a new high after the break. The RSI is at the extreme levels, and there are chances of a consolidation or a pullback from the current levels in the short term.
On the downside, initial support lies at around the 50.0% retracement level, and previous support region at around the 1.1050/60 levels. A break of this level may take the pair below the 38.2% fib level at around the 1.1010/00 levels. We need to be very careful from here on as the bears might be setting up for a trap in the short to medium term.
AUDUSD Outlook
As per last week’s AUD/USD analysis, the 0.9070 resistance proved to be the crucial. All in all, the market made three attempts towards this level. The pair failed to breach the resistance on all occasions. On the daily timeframe, the double top reversal pattern correctly hinted to what was about to happen: yet another 140 pips correction.
If we observe closely, the correction was neat, with all lower swing highs being bound by a bearish trendline off of which anyone could pick the swing highs and go short. The corrective swing stopped on the 200 Exponential Moving Average on the 4H timeframe, priced at 0.8936. This location was also crucial, allowing AUD/USD to retain some bullish potential in the future. 10-20 pips lower, and the most recent swing low in February’s uptrend would have been broken, leaving no doubt that a deeper correction is in play.
In the early hours of trading the pair has once again dipped to 0.8936, creating a double bottom and, as a direct result, a descending triangle chart pattern. As a direct result the direction will be neutral while price remains inside this triangle formation.
Immediately below 0.8936, AUD/USD will be bearish again, with potential to reach the pivot zone around 0.8830.
Towards the upside, the trendline resistance – or the last swing high that actually touched the resistance, 0.8986 - must be broken in order to have any chances at reaching 0.9070 again.
Market Commentary – February 25, 2014
Earlier today, at GMT 9:30 AM, the British Bankers' Association released the mortgage approvals figure, which measures the number of new mortgages approved for home purchase by BBA-represented banks during the previous month. The BBA mortgage approval figure came way better at 50,000 against previously forecasted 47,900. As a result the GBPUSD has been trading with certain bullish momentum today.
Later in the afternoon, the Conference Board Inc will release their CB consumer confidence index, which measures the level of a composite index based on surveyed households. Last month, the CB consumer confidence figure came at out at 80.7, and this month the forecast is set at 80.2.
GBPUSD Outlook
The GBPUSD is trading around critical levels.The pair after setting a high at around the 1.6820 area has declined towards the key swing level of 1.6600.The 1.6600 level hasd acted as a resistance numerous times, and now the sellers are finding it very hard to break the same. The 38.2% retracement level of the last leg up from the 1.6250 to 1.6825 levels also sits around the same zone. There was a false spike lower yesterday, but the pair managed to bounce sharply from the mentioned zone.
The pair has also formed a down-move channel, as can be seen in the 4 hour chart shown below.This channel is very critical, as a break above or below may call for a swing move for the pair. There was also a false break to the upside, but the pair was unable to close above the channel, and fell back inside the channel again. There are many fundamental events lined up for the UK in the coming days, and we can expect a break of this channel. A break up might call for a test of the previous high in the short to medium term.
On the downside, initial support lies at around the 50.0% retracement area at around the 1.6530/40 levels. A break of this zone may take the pair below towards the 61.8% fib level at around the 1.6470/80 levels.
One of our top performing automated strategies, MorningBull, has already opened several long positions with the GBPUSD, since last week. Earlier this morning, those four positions represented almost 200 points in profit with the GBPUSD pair. If the channel is broken within next few days, the GBPUSD will gain enough bullish momentum to reach towards the 100% retracement level of the previous downward move, around 1.6820, as illustrated in the chart above. This will represent almost 600 points of profits altogether. For further information, please visit our website.
GBPJPY Outlook
After a decently sized 1100 pip bearish correction in January, down to 163.84 (38.2% fibonacci on the 147.08-174.81 swing), the first week of February started off with a double bottom reversal pattern and a bullish Pin bar price action pattern on the weekly chart. GBP/JPY remained bullish until the moment it reached 171.84. The only resistance in this area appears to be that of the bearish trendline from January’s major highs.
The resistance is sitting at 171.71, confirmed by two highs and the bearish trendline from January. Both times price went up to this resistance, +150pips sell-offs quickly followed. The support, marked at 169.20, has also been confirmed on more then two times. Based on this we can deduce GBP/JPY’s current direction is neutral.
Towards the downside, a range break below 169.20 can lead to a large bearish potential. The bearish correction might resume it’s course towards 164 and later towards 161 (50% fibonacci).
All bearish scenarios will be invalidated if the resistance of the range at 171.71 is crossed and price stabilizes above it. If this happens, the bulls are unlikely to stop before reaching January 2nd high at 174.81.
Nice analysis man. I am rather watching a very simple chart for the GBPJPY pair. The only think I am keeping an eye on is an up-move trend line, as can be noted from the attached 4 hour chart. The pair has bounced a time and again from this trend line. However, I feel that the pair is on a verge of breaking this trend line in the short term. And, once the pair breaks this trend line, then we might see a pressure selling in the pair. Let's see how the pair goes from these levels.
I am having such a hard time seeing a valid breakout above 171.71. The daily chart looks prone for more bearish waves. There are no signals yet, lol, I'm talking strictly how the waves look. This range would work wonders if it's broken towards the downside. Knowing me, it will probably break long just to spite me.
Market Commentary - February 26, 2014
Bank of England (BOE), Monetary Policy Committee (MPC) member, Ben Broadbent is due to deliver a speech titled "Prospects for the UK Economy: Achieving Balanced and Sustainable Growth" at the Institute of Directors, in London. Expect the market to become volatile as investors may try to guess the direction of the MPC as MPC members vote on where to set the nation's key interest rates.
When Mr. Broadbent will be speaking, the UK's Office for National Statistics will be releasing the second estimate of the quarter over quarter GDP. This economic indicator measures the changes in the inflation-adjusted value of all goods and services produced by the economy. This quarter, the forecast for the second estimate of the GDP (q/q) is set at 0.7%, same as last quarter.
During the afternoon, the US Census Bureau is set to publish the new home sales figure. This figure is an annualized number of new single-family homes that were sold during the previous month. Since sale of a new home triggers a wide-reaching ripple effect in the economy, investors keep an eye on this figure to predict future direction of the future economic growth patterns.
NZDUSD Outlook
In an analysis earlier, we highlighted the importance of an up-move channel for the NZDUSD pair on the 4 hour chart. The pair traded in an up-trend for quite for some time to test a critical resistance area at around the 0.8390 level.However, the pair failed around the same level, and traded lower. The pair also broke the same up-move channel, as can be seen in the 4 hour chart shown below.
The pair fell around 100 pips after the break. However, the pair found support at around the 0.8240/50 levels. Since then, the pair is trading sideways for some time. The pair is flirting with the 61.8% Fibonacci retracement level of the last down-move from the 0.8391 peak to 0.8241 low. A 4 hour close above this level may take the pair higher, and then it might even test the previous high.The RSI is above the 50 level, which is a positive sign in the short term.
On the downside, initial support lies at around the 50.0% retracement area at around the 0.8315/10 levels. A break of this area may take the pair below towards the 0.8280/60 support zone. Remember, the 0.8200/10 is a major hurdle for the pair towards the downside, as the pair has held the same support numerous times. The MACD has started diverging, which is another positive sign, in our opinion. One can expect some more sideways action before a move up or down.
One of our top performing automated strategies, MorningBull, has already opened several long positions with the NZDUSD, since last week. Earlier this morning, those four positions represented over 250 points in profit with the NZDUSD pair. If the NZDUSD close above the 1.8343 resistance, it will find additional bullish momentum which may take the pair towards 0.8390, where total profit for the NZDUSD alone will reach around 500 points. For further information regarding our automated strategies, please visit our website.
NZDJPY Outlook
After a strong bullish trend that has been going on since August 2013, in late January NZD/JPY corrected 50% of the bullish move, or 600 pips worth, and immediately bounced back up after touching 200 Simple Moving Average offered by the daily chart.
More recently, similarly with the rest of the yen pairs, it has been stuck in neutral. Fortunately for us, what NZD/JPY lacks when it usually ignores fibonacci levels, it makes up by respecting pivot zones all too well.
Towards the upside, if we pick a thin line then we get a clear resistance at 85.73, but if we widen the area to 15 pips then we can observe just how massive of a pivot zone this area is. At least seven times in the last three months 85.58-85.73 has worked out well as resistance or support. The 4h 200 Simple Moving Average underlined the pivot area as well since mid-January. A bullish break and close above 85.73 will put a big target on 87.36 and above, as the main daily trend should gain back some strength.
This series of lower highs, between 85.58 and 85.73, hint to general weakness in the uptrend. If the resistance holds, towards the downside we have another pivot zone at 83.93 which can be considered the support in this range-like period. A break and close below the support opens the way towards 82.80, 81.40 respectively.
I agree with you on this one. I was also looking at the NZDJOY pair chart, and noted few things, which I would like to share with you guys. I clearly see a 100 pips range for the pair between the 84.70 to 85.70 zone. The 84.70 is acting as a support for quite some time now, and on the other hand, 85.70 is acting as a resistance. However, I see more bearish pressure, than bullish, the resistance zone is critical, and there is a down-move trend line around the same zone. I will definitely look to play a breakout.
Market Commentary – February 27, 2014
At GMT 12:30 AM, the Australian Bureau of Statistics released the national private capital expenditure figure for the quarter, which came out way worse, at -5.2%, against previously forecasted -1.0%. This data measures the changes in the total inflation-adjusted value of new capital expenditures made by private businesses.
The US Department of Labor is going to publish the unemployment claims figure for the week during the afternoon, at GMT 1:30 PM. This figure represents the number of people who filed for unemployment insurance for the first time over the past week. Since employment is a key concern for the US Federal Reserve, and its interest rates are often guided to keep the economy at full employment, investors are keen to follow this figure. This week, the forecast for the unemployment claims figure is set at 333K against last week’s 336K.
Shortly after the unemployment claims figure data hits the market, the US Federal Reserve chair Janet Yellen is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC. As head of the central bank, which controls short term interest rates, she has more influence over the nation's currency value than any other person. Hence, the market may become extremely volatile during her speech.
USDCHF Outlook
The recent strength in the CHF is noticeable across the board. The two pairs which are trading lower for the last couple of weeks are USDCHF and EURCHF. The strength in the CHF can be clearly seen in the EURCHF pair, as the pair is trading lower, and near critical support levels. The USDCHF is also trading around critical support levels, and there are chances that the pair might consolidate for some time in a range.
We have been following a down-move trend line, which can be clearly seen in the daily chart shown below. The pair has failed several times around the same trend line. Yesterday, the pair gained some momentum to the upside, but failed just below the trend line. The pair is currently flirting between the 61.8% and 76.4% Fibonacci retracement level of the last leg higher from the 0.8798 low to 0.9155 peak. There is no denial that the pair can trade lower from the current levels, and test the previous low.
On the upside, the 0.8930/40 region is the immediate resistance zone for the pair. The pair has struggled time and again around the same resistance area. After this, the major resistance lies around the trend line confluence area at around the 0.8950/60 levels. A break and close above the trend line might ignite a bullish move in the pair. So, we need to watch this trend line in the short to medium term for a break.
One of our top performing automated strategies, MorningBull, has already opened several long positions with the USDCHF, since last week. Earlier this morning, those four positions represented over 90 points in profit with the USDCHF pair. If the USDCHF close above the 0.8928 resistance, it will find additional bullish momentum which may take the pair towards 0.9032, where total profit for the USDCHF alone will reach around 650 points. For further information regarding our automated strategies, please visit our website.
Gold Outlook
Since the start of the new year, Gold has put on quite a bullish show, gaining close to 14% in two months. Up until now there have been little to no bumps along the way to slow the appetite for gains. Up until now…
On the daily chart, Gold has reached 61.8% on the last bearish swing that lasted between August ($1433) and January ($1182). This week’s current high of $1.345,38 also matched a price pivot zone that goes back to the first half of 2013. To further confirm how strong this resistance area is, Gold reacted strongly yesterday, eventually forming a bearish engulfing bar on the daily chart, which can be construed as a reversal signal. On the 4H chart MACD also shows negative divergence, pointing out some weakness in the current uptrend.
Towards the downside, to match the resistance around $1345, it should be noted that $1325 is the resistance from the last few weeks which is now turning into support. Furthermore, the 1hour chart 200 Simple Moving Average has caught up with the price, adding additional support around this pivot zone. And lastly, $1322 is approximately 61.8% between $1307 and $1345.
As long as gold doesn’t drop heavily below $1321 the uptrend might continue in spite of weakness warnings in the uptrend. $1360 and $1375 are the first two resistance levels that come up, with $1433 a distant third.
Towards the downside, $1307 is the close support level. If broken as well, the slide will continue on to target $1278.
Towards the upside, the trendline resistance – or the last swing high that actually touched the resistance, 0.8986 - must be broken in order to have any chances at reaching 0.9070 again.
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 think the pair might struggle to overtake the 0.8960 resistance zone. This level also coincides with the broken trend line, as can be seen in the chart below. That's why I have a trailing stop with an order again at 0.8912.