Market analysis and trade recommendations by FBS

[riki143]

GBP/USD: outlook for Sep. 12-18
9/12/2016

Last week economic data from the United Kingdom were mixed. On the one hand, services PMI showed the biggest gain in 2 decades. On the other hand, manufacturing production, a key indicator, suffered in July from a bigger-than-expected decline of 0.9%.

Britain will release inflation data on Tuesday, labor market figures on Wednesday and retail sales on Thursday. The forecasts are mixed. On Friday the UK won’t attend European Union summit for the first since it joined in 1973.

The Bank of England will meet on Thursday. The regulator is expected to keep the interest rate unchanged taking a “wait-and-see” approach after slashing growth forecasts and increasing monetary stimulus in August. Traders will pay great attention to the meeting minutes to see how the central bank evaluates the UK economy after Brexit vote, given that the nation’s economic figures tend to be better than expected. Last month the BOE signaled a possibility of further monetary easing this year, so it will be interesting to know whether they changed their mind or not. For now, most economists expect British central bank to lower the benchmark rate once again this year. Also don’t forget that the market’s attitude towards the US dollar will also have an impact on the pair.

GBP/USD formed last week a bearish candle with a long upper shadow – a bearish signal. It looks like the pair formed a temporary top at 1.3445. The pair closed on Friday below the important 1.3300 mark and looks vulnerable for decline to 1.3180/50 (bottom of the daily Ichimoku Cloud, 50-day MA). Below this level the next support will be at 1.3085. Resistance is at 1.3375 and 1.3445.

More:
https://new.fxbazooka.com/analytics/10424

 

[riki143]

USD/JPY: outlook for Sep. 12-18
9/12/2016

Traders continue trying to guess whether the Bank of Japan will add to its aggressive monetary stimulus. So far the representatives of Japanese monetary authorities spoke much about the necessity of further monetary easing, but gave no hints that the BOJ will act this month. The lack of strong hints on easing limits USD/JPY on the upside.

Japanese core machinery orders, the leading indicator of capital spending, rose by 4.9% in July, though a decline was expected. Other data releases from Japan this week include BSI manufacturing index on Tuesday and revised industrial production on Wednesday. The most important events for USD/JPY will be in the US economic calendar. Also pay attention to China’s industrial production due on Tuesday – the release will be important for the market’s risk sentiment. Better Chinese figures increase investors’ appetite for risk and decrease demand for the yen and vice versa. Monday started with risk aversion for investors and lower USD/JPY because of lower stocks.

USD/JPY keeps trading below 2016 resistance line. Still the pair managed to close last week significantly above the minimums. Support is located at 101.20 ahead of 99.75. Resistance lies at 103.65 (bottom of the daily Ichimoku Cloud, trend line resistance) ahead of 104.15. These levels should be attractive for short positions.

More:
https://new.fxbazooka.com/analytics/10425

 

[riki143]

AUD/USD: outlook for Sep. 12-18
9/12/2016

Last week the Reserve Bank of Australia left the benchmark interest rate unchanged at 1.50% and didn’t express concerns with current levels of Australian dollar’s exchange rate. Australian dollar rose on the news, but failed to stay near highs.

AUD/USD formed a bearish candle last week with a long upper shadow and closed below 100-week MA – a signal that Australian currency will likely test lower levels. Demand for Aussie was hit by the markets risk aversion and expectations of hawkish comments from the US Federal Reserve’s members. Support lies in the 0.7485 area (100-day MA) and at 0.7395 (200-day MA, 2016 support line). The break below the latter will make the selloff intensify.

Australia will release NAB business confidence on Tuesday and labor market data on Thursday. Representatives of the Reserve Bank of Australia will speak on Monday and Wednesday. In addition, China August data on industrial production on Tuesday. After a slowdown in July, investors will be looking for signs of stability in the world’s second-largest economy. Good figures will support Aussie, while lower data, on the contrary will be a reason to sell the currency.

More:
https://new.fxbazooka.com/analytics/10426

 

[riki143]

EUR/USD: "Window" waiting for bears
9/12/2016

There’s a support by the 55 Moving Average. Also, we’ve got a “Shooting Star” and a “Harami” patterns, which both have been confirmed enough. Therefore, it’s likely to have another test of the nearest support levels. As we can see on the Daily chart, today’s candle try to confirm the previously formed “Shooting Star”. So, the market is likely going to reach the 34 and 55 Moving Averages.

The last “Doji” pattern has done a great job, so we’ve got a “Three Black Crows” pattern here. In this case, the price is likely going to continue falling down toward the nearest “Window”.

More:
https://new.fxbazooka.com/analytics/10427

 

[riki143]

USD/JPY: "Window" could bring bullish pattern
9/12/2016

There’s a “Harami” at the local high, which has been confirmed enough. Also, there isn’t any reversal pattern so far, which makes possible an achievement of the nearest “Window”. If we see any bullish pattern in this “Window”, there’ll be an opportunity to have a local upward correction.

The last “Evening Star” pattern led to the current decline, but it’s likely to see any kind of bullish pattern on the closest “Window”. If so, bulls will likely try to deliver a correction in the direction of the nearest Moving Averages.

More:
https://new.fxbazooka.com/analytics/10428

 

[riki143]

Stock market: a whiff of trouble or real trade signal
9/12/2016

U.S. stocks on Friday suffered the worst slide since the UK’s unexpected decision to exit the European Union, with the S&P 500 falling 2.45%.Technically, S&P dropped below 50-day MA. The line is currently in the 2164 area and acts as resistance. Support is located at 2100 (psychological level) and 2090 (2016 support line).

The popular explanations for the current decline involve uncertainty surrounding the US elections; hawkish comments from several Federal Reserve officials concerning possible hike in interest rates; sluggish economic growth and pessimistic expectations about future cash flows coming from overcautious investors.

Does it mean that the aforementioned bearish tendency is long-term and the recession in the US economy is inevitable? I would tend to doubt it. The recent decline may merely indicate that share prices were grossly overvalued: S&P 500 currently trades at 25 times earnings, its highest multiple in seven years, while average P/E ratio over the past 140 years equals 15.6. In other words, stocks have risen too much and diverged from fundamentals. In addition, investors are becoming too pessimistic about the economic growth of the US economy, or they’re trying to somehow shield themselves from possible losses having raised bumps during the financial crisis of 2008. More economic news and more data concerning productive capacity of US companies will be needed to tell whether this market signal is the real thing, or just a false warning. One thing is clear: these wobbles in stock market is a good opportunity for investors to take a hard look at their portfolios and maybe reconsider their investing strategies.

More:
https://new.fxbazooka.com/analytics/10429

 

[riki143]

How bond yields influence forex market?
9/12/2016

Let’s talk about so-called “I owe you” documents – bonds. Imagine, an entity (such as governments, municipalities) needs a whaling sum of money in order to cover its growing expenses so it decides to borrow some from commercial banks or even individuals like you. If you lend some money to these unfortunate entities, they will give you a bond in return (it serves as a black spot for them, an ominous reminder of their debt). In a predetermined term, an official entity will have to pay it back with a certain yield. Bond yield can also be referred as an interest paid to the bondholder.

There is a negative relation between bonds prices and bond yields. When bond prices rise, bond yields fall and the other way round.

Now, you’re probably itching to find out what does this all has to do with the forex market? Arm with patience, we are reaching the point.

Bond yields actually is an excellent indicator of the strength of a nation’s stock market, which increases demand of the nation’s currency. The US bond yields reflect on the performance of the US stock market, thereby influencing the demand for the American currency.

During market distress periods, people usually tend to shift their assets from their stock investments to more secure ones (commonly known as safe havens) – the US government bonds, for example. This search for safety drives the US bond prices higher and the US dollar appreciates, whereas the bond yields depreciate. A rising yield is known to be a dollar bullish, and a falling yield is a well-known dollar bearish. And here you have it, this relationship between the yield of the bonds, and the general trend of the currency.

More:
https://new.fxbazooka.com/analytics/10430

 

[riki143]

EUR/USD & German ZEW Economic Sentiment: Upside momentum for the Euro?
9/13/2016

Today at 09:00 GMT we'll know the German ZEW Economic Sentiment and that data is expected to have major movements in the EUR pairs, as the analysts are expecting an increase from 0.5 to 2.5. Following the Brexit's outcome, ZEW economic sentiment in Germany had a strong fall, but later it went back to the positive area. Last release was below the forecasted and we'll see if there could be any surprises in the number.

The technical analysis for EUR/USD at H4 chart is still calling for an upside continuation, still respecting the bullish trend line projected from the August 27th lows. Also, the pair has been finding dynamic support on the 200 SMA. The support zone of 1.1143 can provide rebounds in coming days and if the data comes above the expectations, that level shouldn't be tested and a rally towards the 1.1353 level is a likely scenario.

More:
https://new.fxbazooka.com/analytics/10431

 

[riki143]

USD/JPY: bears slowed down at the double bottom
9/13/2016

On the USD/JPY daily chart the double bottom has been formed near the level of 100,35 (it's a Fibonacci ratio of 61,8% of the last upward wave). If the bears in the near future are able to storm this support, the risks of quotes existing from the downward long-term channel will rise.

On the hourly chart of USD/JPY the rebound from the level of 50% of CD-wave pattern "Shark" activated the 5-0 pattern. Subsequent breach of the support at 101.3, is usually considered to be a trade signal. Graphical configuration will be canceled if quotes rise above $ 103.66 (78.6%).

Recommendation: SELL 101,3 TP 100 SL 101,9

More:
https://new.fxbazooka.com/analytics/10432

 

[riki143]

NZD/USD: the ground crumbles from QIWI's feet
9/13/2016

On the NZD/USD daily cart there was a rebound from the important level of 0,743 (it is a Fibonacci ratio of 78,6% from the last downward mid-term wave + the upper level of the upward channel). If bulls are not able to overcome this level, it will be evidence of their weakness. The breach of the support at 0.7205 level activates the "Shark" pattern with target at 0.7 (88.6%).

On the NZD/USD hourly chart has worked a "head and shoulders" pattern. Retest of the neckline will create prerequisites for the continuation of the peak towards 0.7205 (target at 224% by AB = CD). Near the current diagonal resistance there is an important level of 0,736 (23.6% Fibonacci of the last upward wave).

Recommendation: SELL 0,736 TP1 0,7205 TP2 0,7 SL 0,743.

More:
https://new.fxbazooka.com/analytics/10433

 

[riki143]

EUR/USD: bulls going to test nearest resistance
9/13/2016

We’ve got a “V-Bottom” pattern, so there’s a local consolidation in progress. Therefore, the market is likely going to rise towards an area between the levels 1.1270 – 1.1282 in the short term. If we have a pullback from these levels, there’ll be an opportunity to see a decline in the direction of a support at 1.1220 – 1.1196.

There’s a consolidation along the Moving Averages on the one-hour chart. If we see a pullback from the nearest support level, the pair is likely going get a resistance at 1.1270 – 1.1282 during the day. At the same time, if bulls be stopped here, there’ll be a chance to have a decline towards a support at 1.1198 – 1.1181.

More:
https://new.fxbazooka.com/analytics/10434

 

[riki143]

GBP/USD: "Flag" points to possible intraday upward movement
9/13/2016

Bears faced a support on the 34 Moving Average, so we’ve got a “Double Bottom” pattern here. In this case, bulls are likely going to reach a resistance at 1.3370 – 1.3417 soon. Considering the previously formed “V-Top” pattern, there’s an opportunity to have a decline towards a support at 1.3302 – 1.3277 afterwards.

The price found a resistance at 1.3351, so we’ve got a local consolidation. Also, we’ve got a “Flag” pattern, so the market is likely going to reach a resistance at 1.3396 – 1.3423. Nevertheless, if a pullback from this area be on the table, we should keep an eye on the next support at 1.3334 -1 .3318 as a possible bearish target.

More:
https://new.fxbazooka.com/analytics/10435

 

[riki143]

Key option levels for Tuesday, September 13th
9/13/2016

EUR/USD

Main trend Short-term period Medium-term period
Neutral Bearish
Changes in the open interest + 102 614 ? + 21 765 ?
Closest resistance levels 1.1302; 1.1328; 1.1342; 1.1361
Closest support levels 1.1226; 1.1203; 1.1176; 1.1144
Trading recommendations
Baseline scenario Short EUR/USD below 1.1226, with target points at 1.1203 and 1.1176
Alternative scenario Moving above 1.1302 can be considered as a signal to Buy the pair, with target at 1.1328 and 1.1342

GBP/USD

Main trend Short-term period Medium-term period
Bullish Bearish
Changes in the open interest + 2 421 ? + 1 431 ?
Closest resistance levels 1.3374; 1.3397; 1.3422; 1.3458
Closest support levels 1.3287; 1.3269; 1.3249; 1.3225
Trading recommendations
Baseline scenario Long GBP/USD above 1.3374, with target points at 1.3397 and 1.3422
Alternative scenario Moving below 1.3287 can be considered as a signal to Sell the pair, with target at 1.3269 and 1.3249

USD/JPY

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest + 1 073 ? + 1 595 ?
Closest resistance levels 102.28; 102.47; 102.69; 102.94
Closest support levels 101.30; 101.10; 100.91; 100.63
Trading recommendations
Baseline scenario Short USD/JPY below 101.30, with target points at 101.10 and 100.91
Alternative scenario Moving above 102.28 can be considered as a signal to Buy the pair, with target at 102.47 and 102.69

USD/CAD

Main trend Short-term period Medium-term period
Bullish Bullish
Changes in the open interest + 548 ? + 770 ?
Closest resistance levels 1.3077; 1.3099; 1.3132; 1.3177
Closest support levels 1.2990; 1.2967; 1.2935; 1.2893
Trading recommendations
Baseline scenario Long USD/CAD above 1.3077, with the target points at 1.3099 and 1.3132
Alternative scenario Moving below 1.2990 can be considered as a signal to sell the pair, with target at 1.2967 and 1.2935

EUR JPY GBP CAD

More:
https://new.fxbazooka.com/analytics/10436

 

[riki143]

EUR/USD: euro can’t determine its direction
9/13/2016

Technical levels: support – 1.1220; resistance – 1.1245

Trade recommendations:

1. Buy — 1.1260; SL — 1.1240; TP1 — 1.1320; TP2 – 1.1380.

2. Sell — 1.1210; SL — 1.1230; TP1 — 1.1150; TP2 – 1.1110.

Reason: the prices are in the Cloud; a new dead cross of Tenkan-sen and Kijun-sen; narrowing bullish Ichimoku Cloud.

More:
https://new.fxbazooka.com/analytics/10439

 

[riki143]

GBP/USD: correction into the Cloud
9/13/2016

Technical levels: support – 1.3270, 1.3200; resistance – 1.3360.

Trade recommendations:

1. Buy — 1.3290; SL — 1.3270; TP1 — 1.3360; TP2 — 1.3420.

Reason: a bullish Ichimoku Cloud; a dead cross of Tenkan-sen and Kijun-sen but there is a support of Tenkan-sen.

ore:
https://new.fxbazooka.com/analytics/10440

 

[riki143]

USD/JPY: the Bulls are don’t want to capitulate
9//13/2016

Technical levels: support – 101.50; resistance – 101.90.

Trade recommendations:

1. Buy — 102.00; SL — 101.80; TP1 — 102.75; TP2 — 103.50.

Reason: a bullish Ichimoku Cloud; a new golden cross of Tenkan and Kijun; a strong support near by 101.50.

More:
https://new.fxbazooka.com/analytics/10441

 

[riki143]

CAD/CHF approached support level 0.7420
9/13/2016

CAD/CHF approached support level 0.7420
Next sell target - 0.7360
CAD/CHF has been falling steadily in the last few trading sessions – following the earlier downward reversal from the resistance zone lying between the resistance level 0.7600 (previous buy target set in our earlier forecast for this currency pair), upper daily Bollinger Band and the 61.8% Fibonacci correction of the previous downward impulse from April.

The pair is currently trading close to the support level 0.7420 (low of the previous (b)-wave). If the price breaks below the support level 0.7420 - CAD/CHF can then fall further to the next sell target at the pivotal support level 0.7360 (low of the previous impulse wave 1).

More:
https://new.fxbazooka.com/analytics/10442

 

[riki143]

CAD/JPY falling inside minor impulse wave
9/13/2016

CAD/JPY falling inside minor impulse wave
Next sell target - 77.00
CAD/JPY continues to fall inside the minor impulse wave 5 - which stared earlier - when the pair reversed down from the resistance zone lying between the round resistance level 80.00, upper daily Bollinger Band and the 38.2% Fibonacci correction of the previous downward impulse from the end of June. The downward reversal from this resistance zone created the daily Japanese candlesticks reversal pattern Evening Star.

CAD/JPY is expected to fall down further in the active minor impulse wave 5 toward the next sell target at the strong support level 77.00 (which stopped the previous minor impulse wave 3 at the start of August).

MOre:
https://new.fxbazooka.com/analytics/10443

 

[riki143]

Cracking reversal patterns for maximum profit
9/13/2016

One of the greatest advantages of reversal patterns is their ability to quickly alert the trader to the fact that he or she is on the wrong side of the market. Once traders managed to recognize their errors, they take defensive actions in order not to come off a loser. The trickiest part of the technical analysis is to recognize the shapes of these patterns on price charts and to define your price objectives accordingly. That’s why we decided to arm you with knowledge of these patterns.

Before a study of the forecasting implications of the reversal patterns, let us define what these reversal patterns are. Reversal patterns are formations which appear on price charts and help you realize that an important reversal in trend is taking place. Next, I suggest to take a look at some preliminary points to a study of the reversal patterns.

1. A major prerequisite for any reversal pattern is the existence of a prior trend. You must admit that market before reversing has actually to have something to reverse.

3. There should be a breach of a continuous trend line.

3. Topping patterns are usually shorter in terms of duration and more volatile than bottoms ones. The trader can usually make more money a lot faster by catching the short side of a bear market than by trading the long side of a bull market. Well, yes, unfortunately, everything in life is a matter of tradeoff between reward and risk. The greater risks are usually compensated by greater rewards and vice versa. Therefore, topping patterns are less risky, but at the same time they are less rewarding.

4. The greater the size of the pattern, the greater the potential for the ensuing price move.

5. Bottoms usually have wider price ranges and take longer to build.

Now we are ready to take a next step on our thorny way of cracking reversal patterns. Let's look at first at on of the best known reversal patterns - head and shoulders. It is usually formed at the end of the uptrend.

The pattern consists of a head (the second and the highest peak) and 2 shoulders (lower peaks) and a neckline (a horizontal/vertical line which connects the lowest points of the two troughs and represents a support level). The pattern is confirmed when the prices broke below the neckline once they formed a second shoulder. To identify your price objectives, you should take the vertical distance from the head point to the neckline and then project that distance from the point where the neckline is broken. Assume that the top of the head is at 50 and the neckline is at 20, so the vertical distance will be 30. That 30 points should be measured downward from the level at which the neckline is broken. There you’re, your price objective is built.

The inverse head-and-shoulders pattern is the exact opposite of the head-and-shoulders. It occurs at the end of a downtrend and indicated bullish reversal.

The triple tops and bottoms are slight variation of the major head-and shoulders pattern. The main difference is that the three peaks at this patterns are at the same level.

A more common reversal pattern is the double top or bottom. The main characteristics of this pattern are similar to that of the head and shoulders and triple tops/bottom ones expect that only two peaks appear instead of three.

More:
https://new.fxbazooka.com/analytics/10444

 

[riki143]

EUR/USD: consolidation going to continue
9/13/2016

There’s a consolidation above the 55 Moving Average. Also, we’ve got a bullish “Harami” at the local low, so the market is likely going to test the nearest resistance once again. If we see a pullback from this level, there’ll be an opportunity to have another decline. As we can see on the Daily chart, here’s a “Shooting Star”, which has been confirmed. Under this circumstances, bears are likely going to reach the 34 Moving Average.

We’ve got a strong resistance by the 21 and 55 Moving Averages. Moreover, there’s a “Hammer” at the local low, but its confirmation is a quite weak. Therefore, the pair is likely going to test the nearest support for the second time, which could turn out to rise towards the closest resistance. If we see a pullback from this level, there’ll be an open door for an achievement of the lower “Window”.

More:
https://new.fxbazooka.com/analytics/10445