Market Condition Evaluation based on standard indicators in Metatrader 5 - page 114

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Sergey Golubev, 2015.06.29 20:45

Danske Bank 'Buy SEK, NOK, CHF And Sell NZD, USD, CAD for this week' (based on efxnews article)

  • This week the scorecard recommends buying SEK, NOK and CHF, and selling NZD, USD and CAD (see suggested weights in portfolio in table below). 
  • The recommendation to  buy the Scandies and the Swissie derives largely from last week’s dire performance (i.e. a mean reversion argument) and fits neatly with the likelihood that risk-off sentiment will dominate markets at the start of what looks set to be a chaotic week for Greece. NOK is also favoured due to positioning and the risk premium component.
  • While the  scorecard suggests selling USD  this week  due to  technicals, last week’s price action and still stretched positioning, we note in relation to the latter component that IMM data actually suggests that there should be room to add  to longs in USD as we are still some way off the highs for the year, see  IMM Positioning: Still decent room for USD longs to be added.
  • Last week’s signals resulted in a  close to 2%  gain.  The short EUR position  in particular performed well due to the sell-off in EUR crosses this morning as Grexit risk has intensified.



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Sergey Golubev, 2015.06.30 07:32

Bank of America Merrill Lynch for EURUSD: Monetary Policies Vs Greece (based on efxnews article)

FED, ECB, Greece:

"The Greek Referendum will drive headlines for the near-term. We believe that divergence of monetary policies is a more powerful EUR driver than Greek risks. In this context, the timing of the first Fed rate hike (September is our call) and the ECB’s tone (the market misread the ECB’s message to get used to volatility) are more important for the euro than Greek headlines. Whilst Greek headlines and deadlines are clearly urgent, and the market implications in our view both important and not priced in the short-run, ultimately the evolution of monetary policy is in our mind more important," BofA argues.

"We remain bearish EUR/USD, but the uncertainty around the Fed is not bolstering our conviction levels. The euro’s reaction to Greek headlines has been puzzling, sometimes weakening in response to positive headlines for a deal. In part, this is because the USD is oversold. It can also be that the market does not believe that a deal will fully address Grexit risks, which in turn suggests that the ECB is likely to keep QE to be able to address periphery risks and push against a rates sell-off. This could explain the negative correlation between European equities and the Euro recently. Our view remains that tail risks in Greece are negative for the Euro," BofA adds.


Forecasts:

"We have marked-to market our Q3 EUR/USD projection, but keep our end-year projection to 1.00. This assumes that US data will improve in H2, the Fed will start hiking rates in September, the ECB will push against the recent sell-off in rates, inflation will remain below the ECB’s target path, and the market will start expecting the ECB to continue with QE after September 2016," BofA projects.

"At the same time, we expect the Fed to push against any strengthening of the USD that goes beyond what data would justify. We do not expect Grexit in our baseline, but believe that Greek risks will continue weighing on the Euro, with Grexit risks increasing as long as Greece remains in a grey zone," BofA adds.


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Sergey Golubev, 2015.06.30 08:36

Trading the News: U.K. Gross Domestic Product (GDP) (based on dailyfx article)

An upward revision in the U.K. 1Q Gross Domestic Product (GDP) report may heighten the appeal of the British Pound and spur a near-term advance in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.

What’s Expected:


Why Is This Event Important:

Signs of a stronger recovery may spur a growing dissent within the Monetary Policy Committee (MPC) as board member Martin Weale sees scope to raise the benchmark interest rate as early as August, and we may see a growing number of BoE officials adopt a hawkish tone over the coming months should the fundamental developments coming out of the U.K. boost the outlook for growth and inflation.

However, the slowdown in building activity along with the softening in private-sector credit may lead to a lackluster GDP print, and fears of a slower recovery may drag on the British Pound as it gives the central bank greater scope to retain its wait-and-see approach throughout 2015.

How To Trade This Event Risk
Bullish GBP Trade: U.K. Economy Expands Annualized 2.5% or Greater

  • Need to see green, five-minute candle following the GDP report to consider a long trade on GBP/USD.
  • If market reaction favors a long sterling trade, buy GBP/USD with two separate position.
  • Set stop at the near-by swing low/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 GBP Trade: 1Q GDP Falls Short of Market Expectations
  • Need red, five-minute candle to favor a short GBP/USD trade.
  • Implement same setup as the bullish sterling trade, just in reverse.
Potential Price Targets For The Release
GBPUSD Daily



  • After carving a higher-high in June, will retain a constructive outlook for GBP/USD as long as the RSI retains the bullish momentum carried over from back in April.
  • Interim Resistance: 1.5929 (June high) to 1.5940 (61.8% expansion)
  • Interim Support: 1.5550 (50% retracement) to 1.5570 (38.2% retracement)
Impact that the U.K. GDP report has had on GBP/USD during the last release

Period Data Released Estimate Actual Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
4Q F
2014
03/31/2015 08:30 GMT 2.7% 3.0% +8 +45

MetaTrader Trading Platform Screenshots

GBPUSD, M5, 2015.06.30

MetaQuotes Software Corp., MetaTrader 5

GBPUSD M5: 28 pips price movement by GBP - GDP news event

GBPUSD, M5, 2015.06.30, MetaQuotes Software Corp., MetaTrader 5, Demo



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Sergey Golubev, 2015.06.30 19:30

Bank of America Merrill Lynch about Non-Farm Payrolls on Thursday (based on efxnews article)

  • "The employment report is likely to show another solid month of job creation in June. We look for job growth of 220,000, a slowdown from the 280,000 pace in May but consistent with the recent trend.
    As a result, the unemployment rate will likely lower to 5.4% from 5.5%. With the continued tightening in the labor market, we think average hourly earnings (AHE) will increase a “strong” 0.2%, allowing the yoy rate to hold at 2.3%."
  • "Within the components of the establishment survey, we expect private payrolls of 215,000 with the government only adding 5,000. Similar to last month, we expect the goods side of the economy to reveal weaker job creation, consistent with the softer trajectory of industrial production and capital expenditures. Moreover, we have yet to see the end of job cuts in the energy-related sectors. That said, there should be some support from greater construction hiring given the improvement in homebuilding. On the services side, we look for broad-based expansion in jobs with particular gains in leisure and hospitality and overall business services."
  • "The household survey, which provides the data on the unemployment rate, should also show solid job growth. The three-month average has been a bit softer than nonfarm payrolls, with growth of only 166,000, but the six-month average has been consistent at 244,000. A wildcard is the change in labor force participation. After a sharp gain of 0.11% in May, we look for little change in June, given the volatile nature of the series. Smoothing through, the labor force participation rate has been essentially moving sideways since last fall, suggesting that a cyclical gain has managed to offset the secular downward pull."

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Sergey Golubev, 2015.07.01 11:43

Skandinaviska Enskilda Banken - intraday outlook for EURUSD, USDJPY and USDCAD (based on efxnews article)

EURUSD. 'One day older and none the wiser. The market fell back to mid-body levels and stayed there. Outside 1.1110-1.1245 is needed to end a micro-term stalemate, but we guess this could come with the next headline about Greece.'

USDJPY. 'A key ref at 122.04 was yesterday violated, but bears could ask more of dubious price action around the 122-handle. Dynamic support in the bullish "Cloud" ("Kumo") could inspire some buyers to step back in, but resistance at 123.23 & near the 124-mark should temper any attempt to rally the market back towards key resistance at 124.38\47. Extension below 121.85 would target 121.16/07 next.'

USDCAD. 'The market used the high end of the short-term {Fibo­ adjusted) "Cloud" as support and a spring for extension higher. The 1.2563 "Double-top" is one step closer now and none of our short-term indicators indicate a stretch in the displayed timeframe perspective. Prior 1.2423 resistance is thought to act supportive now. Current intraday stretches are located at 1.2375 & 1.2560. A protective sell-stop on short-term longs could be lifted to breakeven (@1.2360).'


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Sergey Golubev, 2015.07.01 18:26

Credit Suisse - A “Yes” victory at the 5 July referendum would allow markets to refocus on policy divergence, with negative implications for EUR (based on efxnews article)

"The breakdown in negotiations between the Greek government and its international creditors over the weekend has suddenly cast the possibility of an imminent Greek default in the spotlight, and in the hands of the people of Greece, as they prepare to vote on the extension of the (now expired) bailout program on Sunday 5 July.

Several days into this new chapter of the Euro peripheral saga, and following a missed IMF payment by Greece, markets appear to believe that the likelihood of a systemic outcome is low.


While we do not necessarily disagree with this view, we favor a cautious approach to positioning. Specifically, we see a distinct possibility that conditions of broad uncertainty might persist in the event of a victory of the “yes” vote on Sunday. 

A “Yes” victory at the 5 July referendum would allow markets to refocus on policy divergence, with negative implications for EUR. In the meanwhile, both the likelihood of a potentially systemic event and overall market uncertainty have increased.  

A victory of the “Yes” camp would cause the former to subside, but could have a less than proportionate impact on the latter, in our view.  The prospect of lingering uncertainty would keep demand for "safe haven" currencies supported, especially USD and GBP."


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Sergey Golubev, 2015.07.02 11:34

Trading News Events: U.S. Non-Farm Payrolls (based on dailyfx article)

Another 230K rise in U.S. Non-Farm Payrolls (NFP) along with a downtick in the jobless rate may heighten the appeal of the greenback and trigger a near-term sell-off in EUR/USD should the data put increased pressure on the Federal Open Market Committee (FOMC) to remove the zero-interest rate policy (ZIRP).

What’s Expected:


Why Is This Event Important:

A further improvement in the labor market may boost bets for a Fed rate hike in 2015 as the U.S. economy approaches ‘full-employment,’ and we may see a growing number of central bank officials adopt a hawkish tone for monetary policy as Chair Janet Yellen remains confident in achieving the 2% inflation target over the policy horizon.

However, the rise in planned job cuts along with the ongoing slack in business outputs may drag on hiring, and a dismal NFP report may prop up the euro-dollar exchange rate going into the holiday weekend as it raises the risk of seeing a further delay in the Fed’s normalization cycle.

How To Trade This Event Risk

Bullish USD Trade: U.S. Adds 230K Jobs or More; Unemployment Slips to 5.4%

  • Need red, five-minute candle following the NFP print 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: Employment Report Falls Short of Market Expectations
  • 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
EURUSD Daily



  • Long-term forecast remains bearish for EUR/USD amid the divergence in the policy outlook, but the pair may continue to consolidate within the wedge/triangle formation from earlier this year as the pair holds above the May low (1.0818).
  • Interim Resistance: 1.1510 (61.8% expansion) to 1.1532 (February high)
  • Interim Support: 1.0970 (38.2% expansion) to 1.1000 (50% retracement)
Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month

PeriodData ReleasedEstimateActualPips Change
(1 Hour post event )
Pips Change
(End of Day post event)
MAY 2015 06/05/2015 12:30 GMT 226K 280K -199 -151

EURUSD M5: 179 pips price movement by USD - Non-Farm Employment Change news event:



MetaTrader Trading Platform Screenshots

GBPUSD, M5, 2015.07.02

MetaQuotes Software Corp., MetaTrader 5

GBPUSD M5: 78 pips price movement by USD - Non-Farm Payrolls news event

GBPUSD, M5, 2015.07.02, MetaQuotes Software Corp., MetaTrader 5, Demo



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Sergey Golubev, 2015.07.02 12:06

Citibank about levels for EUR/USD to watch into Greek Referendum (based on efxnews article)

"We doubt that sufficient progress may be achieved in the next few days to suspend the referendum.

Any negotiation after the referendum is likely to shift to the approval of a third bailout programme, potentially to cover financing needs up to 2016-17.

The NO lead is likely to shrink further, as capital controls become increasingly disruptive, doubts about PM Tsipras negotiating strategy rise and intra-party tensions within Syriza become increasingly apparent."



'EUR/USD may range trade between 1.0955-1.1277, with downside bias.'


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Sergey Golubev, 2015.07.03 07:02

2015-07-03 02:45 GMT (or 04:45 MQ MT5 time) | [CNY - HSBC Services PMI]

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

[CNY - HSBC Services PMI] = Level of a diffusion index based on surveyed purchasing managers in the services industry. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.

==========

NZDUSD M5: 23 pips price movement by CNY - HSBC Services PMI news event:



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Sergey Golubev, 2015.07.03 09:41

Skandinaviska Enskilda Banken - Long-Term Tech Outlook for EURUSD, USDJPY, AUDUSD and USDCAD (based on efxnews article)

EURUSD: "The market has distanced a long-term overstretch and support at a lower trendline, both likely restricting the maneuverable area below in the short-term timeframe perspective. Should a recent 1.1468 high be taken out. there would be an increased possibility for correctional extension towards 1.1640\1.1830 or even 1.2040 before (down) trend forming forces regains the initiative again."


USDJPY: "The stretch is after all having some impact since the market failed to make further upside progress last month. The monthly candle printed may look insignificant at first sight, but it's a potential bearish prelude, but for it to bite, time spent below 122 is needed - then with a short- medium­ term aim at 118.50/115.55."


AUDUSD: "From a long-term technical point of view not much changed last month. The descending yearly exponentially weighted moving average band (0.8130\0.8500) should continue to cap any attempt to rally the market. Loss of support at 0.7540 would target 0.7010 next."


USDCAD: "An inter-month dip was well responded to last month. Conditions remain bullishly convincing and below 1.30 there is no long-term stretch, so upside medium-term extension should be expected over summer, more after the recent break through short-term resistance at 1.2563. Gains through 1.3070 would target 1.3410\70 next. Loss of medium-term support at 1.1920 would however be reason to review a bullish stance."