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Mysticforex
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Everything posted by Mysticforex
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Did Last Week's Data Give Us Any Clues For The Euro's Direction? It was a busy week for economic data from both Europe and the US, compressed into a holiday shortened week. The initial market judgement is that the constructive US NFP report was a far more decisive input than the Draghi's promise to take future measures, should last month's monetary changes fail to ignite an EU recovery.
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Introduce Yourself Here - Don't Be Shy!!
Mysticforex replied to trading4life's topic in Beginners Forum
Parihan, Welcome to Traderslaboratory. As you read the threads and the forums, do not be afraid to ask questions. -
Technically, the 100.75 barrier remains a key support for the pair and the longer the base holds the more likely the pair is to break to the upside as foundation holds. A break below the 100.75 level however opens the possibility of a run through 100 while a take out of 102.00 creates a much more bullish bias in the pair.
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Today’s break above the key 1.7063 resistance level in GBP/USD is significant because it takes the currency pair clearly above the 1.7044/49 resistance level that marked the high in 2009 and the low in 2005. The risk of a rise to 1.7332, the 50% Fibonnaci retracement of the 2007 to 2008 decline has increased materially as a result and only a break below 1.6950 would mitigate that possibility.
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While not a fundamental factor it should be noted Jean-Claude Juncker was voted to be the new European Commission President. PM Cameron strongly opposed Juncker but Chancellor Merkel rounded up the votes. Juncker is a strong believer in centralization of power in Brussels, and expansion of the EU. He has been party to austerity, the depression economics that has crippled much of Europe. In the recent EU elections there was a massive vote against the expanding power of the EU in both France, Italy and Britain. The voters have been ignored by the tone-deaf EU leadership. This battle is not over.
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USD/CAD is approaching the key support level at 1.0600 and a break there could push the pair to a test of the 1.0500 level. A hold however could spur a short covering rally back to 1.0800.
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I would be a seller of USD/JPY if we see 10050, about 25 pips below the yearly lows. If it is going to happen anytime soon it will be next week's NFP.
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All of the highs in EUR/JPY over the past 2 weeks have remained below moving average and trendline support, which is a sign that the breakdown remains intact. However in order for EUR/JPY to make a run for its 2014 low, it needs to break below 137.70. As long as it holds above this price point, consolidation is more likely.
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The drop in GBP/JPY suggests that the pair has put in a double top at the 174.00 level and may correct all the way to 170.00 over the next several weeks. The pair has some support at 172.00 but a break there could open a deeper test of 170.00. Meanwhile only a break above 175.00 negates the bearish bias in the pair.
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The British pound sold off sharply against the Swiss Franc today on the back of disappointing comments from BoE Governor Carney. The head of the U.K. central bank failed to express a strong degree of hawkishness in today’s testimony before the U.K. Parliament. Rather than harden the BoE’s commitment to tighten monetary policy, Carney said there’s scope to absorb more slack before rates are increased and the MPC wanted to see market expectations adjust to data, which he suggested was the primary reason why the recent rate comments were made. With overextended long positions, the lack of unambiguously hawkish comments triggered profit taking in the British pound and unfortunately we think the sell-off could continue ahead of Carney’s speech on Thursday. In all likelihood, the BoE will fall short once again, leading to a deeper correction in GBP/CHF.
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When a market gets too crowded on one side, the risk of a reversal increases. The bull story has been touted to the world. Where do the new buyers come from? What happens if the pair just meanders side ways. Some longs may get tired of the position and want out. Or what if the fundamental numbers released in Britain fall short of expectations? In the long run there seems a possibility of much higher sterling, but first, we need some long liquidation, a cleansing of the market in my opinion. Selling close to the 1.70 handle with an appropriate money management stop looks interesting. The target is the 1.67/1.6750 area.
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EUR/GBP has found strong support in front of 7950 and that remains the key level in the pair. A break below opens up a run towards .7800 while only a break above the .8100 figure relives the bearish bias.
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EUR/CAD From a technical perspective, the next wave in EUR/CAD’s downtrend has already begun with the break of the 200-day SMA at 1.4735. The currency pair has been hovering around this moving average for the past week and finally broke through it with Friday’s reports. There has also been a major head and shoulders pattern forming that broke earlier this month but the move did not really gain momentum. Now that the 200-day SMA has broken, we believe it creates a major downside opportunity. There is no support at this stage until the 2014 low near 1.4400 and more significantly the 38.2% Fibonnaci retracement of the August 2012 to March 2014 rally at 1.4230. The downtrend would be negated if EUR/CAD rises back above 1.48.
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Two weeks ago, the European Central Bank announced a series of measures to ease monetary policy and in doing they shifted the medium term outlook for the euro. Although the currency had been on a downtrend since early May, investors did not aggressively short euros until the central bank’s June 5th announcement. Not only did the ECB increase support to the economy but they also expressed their willingness to do more, making them one of the most dovish G7 central banks. Two weeks forward, EUR/USD stabilized above 1.35 as investors realized that even if the central bank is open to increasing stimulus, they won’t be doing so for at least another 2 months. As a smart central bank, they will want to see how the economy responds to the latest measures before taking further action. However even though that may be the case, next week’s busy Eurozone economic calendar is an important test for the euro because investors will be looking to the data to provide confirmation on the need for additional easing.
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Introduce Yourself Here - Don't Be Shy!!
Mysticforex replied to trading4life's topic in Beginners Forum
Tradealot, welcome to TradersLaboratory. Don't be afraid to ask questions. -
The main resistance zone for the GBP/USD is between 1.7040-50. While the currency pair broke through this zone today, it ended the North American trading session right near it, which means that it has not experienced a clean break. Technically, we really need to see GBP/USD close above 1.7050 to open the door for a stronger move to its next resistance level near 1.7350, the 50% Fibonacci retracement of the 2007 to 2009 decline. We think this will happen eventually but if GBP/USD fails to close above 1.7050 in the next 24 hours, a deeper retracement is possible for before a stronger move higher.
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The Forex Market is driven by Fundamentals. You measure and plan with Technicals. Trading without one or the other is like having one hand behind your back. As time goes by you will find you are better at one than the other, go with your strength.
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When you’ve got a central bank artificially intervening in the currency market, technical levels carry less significance. As shown in the daily chart of EUR/CHF, the currency pair is trading between a number of key Fibonacci retracement levels but the main levels to watch are the March 3rd low of 1.2105 and the April high of 1.2250. We don’t expect EUR/CHF to break either one of these levels in the short to medium term.
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After falling to take out the 13500 level, the EURO has been trying to make a comeback. Some of the euro rally was probably the result of USD selling in front of the Feds monthly meeting. After the meeting Fed Chairman Yellen expressed reserved optimism. The US economy was making gains, in her opinion,, and the tapering of their monthly bond purchases would drop another $10B to 35B per month. Still, she conceded interest rates would remain low, and any rate increases were unlikely until the summer of 2015.
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Taking a look at the daily chart of AUD/NZD, the latest decline has taken the currency pair below the 38.2% Fibonacci retracement of the January to June rally. The next level of support is at 1.0767 and if this level along with the swing low of 1.0750 is broken, there is no support until 1.07. If AUD/NZD rallies break back above 1.0835, there is a chance of a stronger recovery up to the February high of 1.0945.
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Technically the 7950 level remains key support in EUR/GBP and a break there could open a run towards the 7800 figure. On the upside a retake of 8000 could signal a spike bottom and a possible move back to 8100.
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Talk of an earlier rate hike by Bank of England Governor Carney drove GBP/CHF to its strongest level since November 2012. We believe that the renewed clarity in U.K. monetary policy will drive the currency pair even higher towards 1.55. Thursday afternoon Carney surprised the market by saying the central bank could raise rates sooner than the markets expect and the start of rate increases from the BoE is getting nearer. Previously the central bank refused to give into rate hike expectations, leading to a correction in the pound but now they feel that the strength of the housing market warrants vigilance because growth has been stronger and unemployment has fallen faster than they anticipated. The prospect of accelerated BoE easing should lead to further gains in GBP/CHF. There are no shortages of U.K. event risk next week and given Carney’s recent comments, traders will be looking for the BoE minutes to contain a more optimistic tone. The Swiss National Bank meets in the coming week and for the most part with EUR/CHF trading near the lower end of its recent range, the central bank will most likely remind investors that they are committed to avoiding excessive CHF strength.
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Here in the U.S. we used to have Johnny Cash, Bob Hope, and Steve Jobs. Now we have no cash, no hope, and no jobs. PLEASE don't let Kevin Bacon die !
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Taking a look at the weekly chart of EUR/NZD, the latest decline has taken the currency pair below the 61.8% Fibonacci retracement of the 2012 to 2013 rally. While 1.55 could serve as psychological resistance, the more significant technical resistance is at 1.5450, a level that the currency pair bottomed at in December 2012 and again in March 2013. Below that is the November swing low at 1.5393. Resistance is up at 1.5850.
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The kiwi/yen pair is the quintessential carry trade candidate in the forex market as the spread differential between the two currencies in expected to expand. Yet the pair has been in a slow drift downward and may now tip below the 86.00 level. The key reason is concern by the market that the RBNZ may choose to temper its tightening policy given the slowdown in demand for the country's prime export - milk. With New Zealand economy showing some signs of exhaustion of growth the monetary authorities in New Zealand may choose to halt the rate hike cycle for now. Meanwhile the yen has been surprisingly strong as US yields remain contained and some risk aversion sentiment is starting to creep in to the market. Tonight's RBNZ decision may be the key to the pair path for the near term. If the central bank sounds dovish the pair could tumble through the 86.00 level in a flash.