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Market analysis and trade recommendations by FBS

USD/JPY: bulls faced with pin-bar
10/26/2016

On the USD/JPY daily chart, "bull" showed weakness having failed to consolidate above the previously reached high. As a result counterattack, "bearish" pin bar has been formed. Breakout of the support line at the minimum of the pin-bar (at 104.06) will tell us about the continuation of correction. There could be a restoration of the upward trend if quotes move above the $ 104.9 level.

Screenshot_2016_10_26_07_59_57.png


On the USD hourly chart, break of the lower border of the upward trading channel will increase the risks of formation of a wave from 4-5 expanding wedge pattern. If quotes return to the support line at 103.15, the "bears" will have a chance to continue the correction in the direction of the 102 mark.

Screenshot_2016_10_26_08_00_14.png


Recommedations: shift SL on shorts to the 104,55 mark (breakeven point),

SELL 104,05 SL 104,6 TP1 103,15 TP2 102

More:
https://fxbazooka.com/analytics/11042
 
Morning brief for October 26, 2016
10/26/2016

Aussie hopped today having reached the 0.7708 resistance line on the better-than-expected inflation data. Consumer prices rose 0.7% in the last quarter, but the annual headline inflation remained at an anemic 1.3%. The quarterly increase could diminish the likelihood of a rate cut at the upcoming meeting of Reserve Bank of Australia. But with persistently low annual inflation rate hardly reaching bank’s 2-3% target, the prospect of interest rate cut is still on the table in the longer-term.

NZD/USD added some additional points having decided to keep pace with Aussie. We will see what happens next with this pair after the trade balance release is published later today.

There were some toing and froing on the 4H timeframe chart of USD/JPY. The pair moved lower in the Tokyo morning, tracking down towards the 104 mark before adding 40-odd points, then it was rising again. There wasn’t any significant news that could disturb smooth cruising of this pair. Today, however, the pair can experience some moves after the US new home sales data come to the surface. The market expects a slight drop in sales which could cause USD depreciation in relation to other currencies.

Oil prices lower today with rising production in Nigeria, wrangling among producers about a planned output cut, stiff Iraqi refusal to participate in any deal that could curb its present oil production and imminent impeachment of Nicolas Maduro (Venezuelan President). Oil prices may fall even further today if the Energy Administration Agency crude inventories figures do increase, as forecasts predict so.

The EUR/USD currency pair is trading sideways near the 1.0877 level preparing for the range of great events (the US elections, FOMC and ECB meetings) that could fuel its long-lasting flat movement. All we can do at the present moment to return volatility to the EUR/USD chart is to cry “hallo”.

More:
https://fxbazooka.com/analytics/11043
 
EUR/USD: small local "Flag"
10/26/2016

26-10-2016-EUR-H4.png


The last bearish “Flag” was broken yesterday. However, the price came back to the previous levels, so there’s an opportunity to see an upward correction. At the same time, the nearest support at 1.0847 could be tested once again. If so, bulls are likely going to reach a resistance at 1.0911 – 1.0951.

26-10-2016-EUR-H1.png


The price faced a support at 1.0847, which led to form a “V-Bottom” pattern, so we’ve got a consolidation under the 34 Moving Average. Also, we’ve got a local “Flag”, so the market is likely going to reach the 55 Moving Average soon. If a pullback from this line happens, bears will probably try to test the nearest support.

More:
https://fxbazooka.com/analytics/11044
 
GBP/USD: intraday "Pennant"
10/26/2016

26-10-2016-GBP-H4.png


The lower side of the last “Wedge” pattern has been broken. The price faced a support at 1.2089, which led to the current upward correction. Therefore, bears are likely going to move on, cause we haven’t got any confirmed reversal pattern so far.

26-10-2016-GBP-H1.png


We’ve got a “V-Bottom” pattern, which was a departure point for the current bullish correction. Also, there’s a “Pennant”, so bulls are likely going to test the 89 Moving Average during the day. If a pullback from this line happens, there’ll be an opportunity to have another decline.

More:
https://fxbazooka.com/analytics/11045
 
Scaling in trading approach
10/26/2016

Neither traders nor high-profile analysts can say for sure which way the prices will go. If traders knew, they would commit all their funds at the top or the bottom of the technical chart in order not to lose a chance of snatching great sum of money, and did make big profits from their lots. Unfortunately, we are not prophets who possess psychic powers, we are humans, so, it’s beyond our abilities to make such predictions. What we do have, though, is our rational mind and gut feeling that could give us some clues on how the quotes will move further.

Imagine you have a really great idea on how to trade a certain currency pair, but you don’t want to risk the whole sum of money you possess because you’re not a hundred percent sure in your guess. So, in this situation, you may apply a more cautious way of trading called “scaling in”. It suggests you smooth your risks by entering the market in pieces instead of putting the entire position on just in one entry. So, you simply should take an early, partial or quarter position based on your assumptions of a further price move and wait to see how your assumption play out. If you are better off after the first try, you can continue to place your bets putting aside some money for the next trading sessions.

To use this trading approach accurately you should plan out your entries, divide the money you possess into shares and assign them to several bets. Don’t go overboard if you got lots of money after the first try. Markets are vicious, they can play a low-down trick with you and leave you without pants. “Scaling in” approach is designed for rational, prudent and tactical traders, who trade not just for pleasure, but also for making money from their bets.

Example: in the situation presented on the picture, you divide your bet into 4 pieces. You start with the 0.8900 point, and if the trend continues, you open the next long position at the upper level (at 0.8950) with the same bet. Then, you continue to place new orders similar to your first ones (at 0.9000, at 0.9050) until the end of the trend.

%5E3F043C89678AFA7259E4F6859E2C78EB18E23F02C5931BAC61%5Epimgpsh_fullsize_distr.png


More:
https://fxbazooka.com/analytics/11046
 
EUR/USD: in correction to Kijun
10/26/2016

Technical levels: support – 1.0890; resistance – 1.0945.

Trade recommendations:

1. Sell — 1.0945; SL — 1.0965; TP1 — 1.0890; TP2 – 1.0860.

Reason: dead cross of Tenkan-sen and Kijun-sen, but narrowing channel of Tenkan-Kijun; bearish character of Ichimoku Cloud; the prices are inside the channel Tenkan-Kijun.

01-eurusdh4(49).png


More:
https://fxbazooka.com/analytics/11047
 
AUD/USD: trades going to positive zone
10/26/2016

Technical levels: support – 0.7670, 0.7650; resistance – 0.7710, 0.7760.

Trade recommendations:

1. Buy — 0.7670; SL — 0.7650; TP1 — 0.7710; TP2 — 0.7760.

Reason: bullish Ichimoku Cloud; cancelled dead cross of Tenkan-sen and Kijun-sen; a strong support of the Cloud.

03-audusdh4(41).png


More:
https://fxbazooka.com/analytics/11048
 
USD/JPY: consolidation in channel Tenkan-Kijun
10/26/2016

Technical levels: support – 104.00/05; resistance – 105.20, 105.70.

Trade recommendations:

1. Buy — 104.10; SL — 103.90; TP1 — 105.20; TP2 — 105.70.

Reason: bullish Ichimoku Cloud and rising Senkou Span A and B; golden cross of Tenkan-sen and Kijun-sen.

04-usdjpyh4(49).png


More:
https://fxbazooka.com/analytics/11049
 
Key option levels for Wednesday, October 26th
10/26/2016

USD/JPY

USDJPY(50).png


Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest - 341 ? + 215 ?
Closest resistance levels 104.13; 104.38; 104.56; 104.81
Closest support levels 103.90; 103.64; 103.41; 103.12
Trading recommendations
Baseline scenario Long USD/JPY above 104.13, with the target points at 104.38 and 104.56
Alternative scenario Moving below 103.90 can be considered as a signal to sell the pair, with target at 103.64 and 103.41

USD/CAD

USDCAD(46).png


Main trend Short-term period Medium-term period
Bullish Bullish
Changes in the open interest + 98 ? + 254 ?
Closest resistance levels 1.3364; 1.3385; 1.3425; 1.3479
Closest support levels 1.3312; 1.3287; 1.3252; 1.3203
Trading recommendations
Baseline scenario Long USD/CAD above 1.3364, with the target points at 1.3385 and 1.3425
Alternative scenario Moving below 1.3312 can be considered as a signal to sell the pair, with target at 1.3287 and 1.3252

More:
https://fxbazooka.com/analytics/11050
 
EUR/USD: "Inverted Hammer" resulted in a correction
10/26/2016

2610eurusdh4.png


We’ve got a “Tweezers” and an “Engulfing” at the local low, which both have been confirmed enough. If a pullback from the 21 Moving Average happens, there’ll be an opportunity to have a local downward correction. However, bulls will probably try to reach the 55 Moving Average afterwards. As we can see on the Daily chart, there’re a “Doji” and a “High Wave” patterns, so it’s likely to have a bullish correction towards the nearest resistance level.

2610eurusdh1.png


There’s an upward correction, which is taking place on the one-hour chart. Previously, an “Inverted Hammer” was formed at the local low. So, the market is likely going to get a support on the 34 Moving Average during the day. If a pullback from this line happens, there’ll be an option to have a bullish movement in the direction of the 144 Moving Average.

More:
https://fxbazooka.com/analytics/11051
 
Goldman Sachs is bearish on GBP
10/26/2016

The pound dropped a 31-year low against the greenback in October. According to Goldman Sachs, sterling has further room for depreciation. You will probably ask why. There are several reasons:

The UK currency is still overvalued by around 10 % despite its tremendous downfall that happened after June referendum. The UK will need further depreciation of the pound to bring its current account to equilibrium. Due to sterling’s precipitous downfall in October, the UK’s current account deficit has shrunken from 6% to about 3.3% of GDP. It is still not enough to reach a 1.5% target. To fulfill it, the pound should be 20 – 40% lower from its pre-referendum levels.
The political uncertainty concerning the conditions of Brexit still weights on the pound.
There is a possibility that the Bank of England can recourse to quantitative easing and rate cuts. Chancellor Philip Hammond of the House of Commons said on Tuesday that he sees no reason of rejecting central bank’s request for easing measures and that they might be needed to support the UK economy in the nearest future.
Yesterday the UK currency picked up a little primarily due to Carney’s deliberate performance and his attempts to reassure on QE, his own future as a Head of Bank of England, and worries over the Bank’s independence. Now the pound is somewhere at 1.2205, having all chances to slide down once again, if we rely on the Goldman Sachs’s forecasts. Any disturbed economic data from US (the US New home Sales data for September, for example, that should show a slight decrease in the number of home purchases), however, could offer some support to the cable in the short-term.

More:
https://fxbazooka.com/analytics/11052
 
USD/JPY: "Engulfing" stopped bulls
10/26/2016

2610usdjpyH4.png


We’ve got an “Engulfing” pattern at the local high, so the price is declining. In this case, bears are likely going to reach the 34 Moving Average in the short term. As we can see on the Daily chart, here’s a “Shooting Star”, but this pattern hasn’t been confirmed yet. So, bulls are likely going to reach the upper “Window” once again. If a pullback from this level happens, there’ll be an option to have a downward price movement.

2610usdjpyH1.png


There’re an “Engulfing” and a “Belt Hold”, which both have been confirmed enough. It’s likely that the price is going to test the “Window” once again. If a pullback from it happens, bears will probably try to deliver a correction.

More:
https://fxbazooka.com/analytics/11053
 
Oil prices lost their footing at $50 per barrel
10/26/2016

Oil prices dropped today as American Petroleum Institute (API) data released yesterday showed that the US crude inventories rose by 4.8 million barrels. Official Energy Information Administration (EIA) data is going to be published later in the session. Forecasts indicate a significant increase in the US stockpiles; this could send quotes towards $49.73 (October 3 low) or $49.00 (38.2% Fibo level) from its present $49.88 level.

Donald Morton, senior vice president at Herbert J. Sims & Co., a high-profile expert who runs an energy-trading desk, believes that the quotes may fall down to $46 a barrel in the near-term if concerns over the feasibility of the oil freeze deal continue to rise. “Bearish” outlook for oil could be confirmed technically. There is a double-top reversal pattern at the end of the upward trend. From this, we may conclude, that there could be a significant downfall towards $47.83 (near the 50% Fibo level).

Concerns about a prolonged global glut refueled as Iraq refused to participate in any deal that could curb its current production. The oil prices have been rising since September 28 when OPEC nations reached an accord to curb output in November 30 in the course of the meeting in Vienna. Now the prospects of the cut in oil production are fading away as more squabbles among oil-exporting countries are coming to light.

kl.png


More:
https://fxbazooka.com/analytics/11054
 
GBP/USD ahead of UK GDP Q3: Time to unleash the bears?
10/27/2016

Today starting at 08:30 GMT we’ll see a series of data releases from the United Kingdom, as we could see a more clear view about the Brexit impact in the national economy. Preliminary GDP, which gauges the gross demand product in the third quarter, is expected to see a decline from 0.7% to 0.3%, and the yearly-basis reading can be unchanged. The latest GDP release was positive for the UK, as we saw a better-than-expected number (0.7% vs. 0.6%).

Our technical view for GBP/USD at H1 chart is sideways, as the pair has been very volatile in the recent days. Currently, it’s edging higher above the 200 SMA and it can test the 1.2280 level in coming hours, only if we see a reading better-than-expected for GDP, while a negative scenario can produce a pullback and GBP can crawl lower towards the 1.2100 psychological level in a first degree.

GBPUSDH1(8).png


More:
https://fxbazooka.com/analytics/11059
 
AUD/USD: bulls showed a slack
10/27/2016

On the AUD/USD daily chart, after the 0.769 target on long positions was fulfilled, there was a sharp collapse in prices. A pin bar pattern has been formed. The successful test of its low can cause Aussie to fall further down the lower boundary of the upward trade channel. "Bulls" failed to attack the neckline of the "Head and shoulders" inverted pattern.

Screenshot_2016_10_27_08_19_07.png


On the AUD/USD hourly chart, there was a rollback towards 78.6% Fibonacci retracement level from the CD wave, followed by the realization of the 5-0 pattern. If "bulls" manage to keep the quotes above the lower boundary of the upward trading channel (0,762-0,7625), they can restore the "bullish" trend. Alternatively, if "bulls" fail to do so, the correction towards the 0.756 level will continue.

Screenshot_2016_10_27_08_19_21.png


More:
https://fxbazooka.com/analytics/11060
 
USD/CHF: franc is scared of uncertainty
10/27/2016

On the USD/CHF daily chart, the formation of the doji and two pin bars indicates uncertainty. The buyer has indicated its presence at the level of 0.9905, sellers were able to defend their position near the mark of 0,996. Target 127.2% in the "Perfect Butterfly" inverted pattern wasn't fulfilled.

Screenshot_2016_10_27_08_26_13.png


On the USD/CHF hourly chart, the "Head and shoulders" pattern can be formed. If it is formed, there could be a break of the lower boundary of the upward trade channel and of the neckline followed by correction towards 0,985. Alternatively, a successful test of resistance line at 0.9965 will increase the risks of the uptrend recovery.

Screenshot_2016_10_27_08_26_28.png


Recommendations:

BUY 0,9965 SL 0,991 TP 1,007

SELL 0,9905 SL 0,996 TP 0,98.

More:
https://fxbazooka.com/analytics/11061
 
GBP/USD: prices still below Senkou Span A
10/27/2016

Technical levels: support – 1.2170, 1.2200; resistance – 1.2230/50.

Trade recommendations:

1. Sell — 1.2230; SL — 1.2250; TP1 — 1.2130; TP2 — 1.2100.

2. Buy — 1.2260; SL — 1.2240; TP1 — 1.2330; TP2 — 1.2360.

Reason: bearish Ichimoku Cloud and falling Senkou Span A and B; canceling dead cross of Tenkan-sen and Kijun-sen and the lines are horizontal; the prices are under a Cloud.

02-gbpusdh4(33).png


More:
https://fxbazooka.com/analytics/11062
 
AUD/USD: bears attacked Senkou Span B
10/27/2016

Technical levels: support – 0.7620, 0.7600; resistance – 0.7650, 0.7680.

Trade recommendations:

1. Buy — 0.7640; SL — 0.7620; TP1 — 0.7710; TP2 — 0.7760.

2. Sell — 0.7620; SL — 0.7640; TP1 — 0.7560; TP2 — 0.7520.

Reason: bullish Ichimoku Cloud; golden cross of Tenkan-sen and Kijun-sen, but the prices are under the lines; a support of the Cloud.

03-audusdh4(42).png


More:
https://fxbazooka.com/analytics/11063
 
USD/JPY: on support of Tenkan
10/27/2016

Technical levels: support – 104.40, 104.20, 103.70; resistance – 105.20, 105.70.

Trade recommendations:

1. Buy — 104.50; SL — 104.30; TP1 — 105.20; TP2 — 105.70.

Reason: bullish Ichimoku Cloud and rising Senkou Span A and B; golden cross of Tenkan-sen and Kijun-sen; the prices are fixed on Tenkan-sen.

04-usdjpyh4(50).png


More:
https://fxbazooka.com/analytics/11064
 
Morning brief for October 27, 2016
10/27/2016

USD/JPY has risen since yesterday having reached the 104.468 mark. Earlier today we heard Bank of Japan Governor H. Kuroda speaking. He claimed that BOJ is not going to change the present -0.1% interest rate and its zero percent 10-year government bond yield target. It’s high time BOJ held off on easing for a while, according to H. Kuroda. He also rejected an idea of buying foreign-currency denominated bonds, that could weaken the yen. Later today, we will parse the latest inflation and labor market data coming from Japan, that should not bring big changes to the chart.

NZD/USD remained almost unchanged in the course of the session. Yesterday the pair dropped a little as we got NZ trade balance data with a dip in exports and widening the deficit.

The US dollar has shown a certain degree of strength across the board almost in all major currency pairs (in relation to EUR, CHF, GBP). Expectations for a December rate hike by the Fed remained intact. Later today, we will be watching closely the latest data on US durable goods, jobless claims and pending home sales. The forecasts show improvements, so the greenback may gain momentum once again.

Aussie was the biggest loser in the Asian session. Today we got a worse-than-expected data on import prices.

Crude oil prices surged from yesterday edging back above the $50 mark as US inventory data went ahead of expectations. The US EIA said that crude inventories fell by 553K barrels in the week, while the market expected a significant gain. However, growing doubts over OPEC's ability to reach an accord on a production cut at the end of next month trim the growth of oil prices.

Today’s focus will be on the third-quarter preliminary GDP data coming from the UK. The numbers are expected to offer support for GBP. Now, the pair is still hovering around the 1.2217 level. There were no big changes from yesterday.

More:
https://fxbazooka.com/analytics/11065
 
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