Market analysis and trade recommendations by FBS

[riki143]

Morning brief for January 19
1/19/2017

Today’s Asian session was a bit dull following the significant US dollar boost overnight. Chair Yellen was on the wires yesterday speaking of the Fed’s monetary policy near-term projections. Ms. Yellen hinted at a gradual increase in interest rates as the US is near maximum employment and inflation is creeping towards its goal. She didn’t put all cards on the table, however, steering away from mentioning the timing of the next hikes. The good thing is that the Chair admitted that dawdling on the rate increases risks a “nasty surprise”. That’s the last one was so hawkish as if we returned to Volcker’s 1970 – 1980s.

EUR/USD was rather steady at around 1.0635 on the session. Today’s focus will be on the ECB meeting and Draghi’s press conference. The latter one should bring some significant moves to the technical chart if only Draghi comes down handsomely and reveals ECB’s expectations on further policy developments. The market doesn’t expect any changes from the central bank and believes that the ECB will be prone to justify its December decision to scale back the pace of the bank’s purchasing program.

GBP/USD regained its bullish momentum having edged to 1.2277 from its recent dip at 1.2250. The pound skyrocketed after Theresa May painted a rosy future for the UK outside the EU, then it retraced. Yesterday the UK currency got a new boost from the better than expected UK labor market report for December showing a rather strong earnings growth and a bit less employment attrition. It seems that the market has a positive take on the after-Brexit plan. The US Supreme Court rule on whether PM May can legally begin the Brexit process without parliamentary approval will be delivered on the 24th of January. If the ruling is in favor of the lawmakers, May’s plans to trigger Article 50 in March might be ruined.

AUD/USD moved higher to 0.7525 during the session on a rather good Australian employment report (employment change was +13.5K, the unemployment rate increased to 5.8% from previous 5.7%).

USD/CAD retraced from its recent spike at 1.3260 to 1.3250. The main factors that contributed to the USD/CAD surge - Yellen’s hawkish speech and the BoC press conference where the central bank’s Governor Poloz kept the prospect of another rate cut alive.

More:
https://fxbazooka.com/analytics/12100

 

[riki143]

EUR/USD: bulls are losing their strength
1/19/2017

On the EUR/USD daily chart, bulls and bears are fighting for the important level located at 1,064. To restore the "bullish" short-term trend bulls need to consolidate higher and update January's high. Alternatively, a breakout of the diagonal support in the form of the lower boundary of the rising trading channel (1,058) will increase the risk of the restoration of the long-term "bearish" trend.

On the EUR/USD hourly chart, failure of the buyers to keep the quotes above the psychologically important level of 1.07 tells us about their weakness. Return of the quotes to support at 1.058 will lead to the formation of the expanding wedge pattern and will allow us to form shorts.

Recommendation: SELL 1,058 SL 1,0635 TP1 1,047 TP2 1,023.

More:
https://fxbazooka.com/analytics/12102

 

[riki143]

GBP/USD: 50% level waiting for bears
1/19/2017

The main trend is still bearish. The price faced a resistance at 1.2432, which led to form a “V-Top” pattern, which has been confirmed. Therefore, the market is likely going to continue falling down towards an area between the 34 Moving Average and the level 1.2198. If a pullback from these levels happens, there’ll be a chance to have another bullish price movement.

We’ve got a “Double Top”, so the price went down. It’s likely that bears are going to reach the 89 Moving Average in the short term. If a pullback from this line happens, bulls will probably try to deliver an upward correction, so we should keep an eye on the nearest resistance at 1.2347 – 1.2387 as a possible intraday target.

More:
https://fxbazooka.com/analytics/12105

 

[riki143]

Don't miss the ECB meeting
1/19/2017

Later today at 14:45 (MT time) the ECB will announce its rate decision for the first time this year, then there will be a press conference at 15:30 (MT time) with its Q&As that should bring some moves to the chart.

Most analysts don’t expect significant changes in the ECB monetary policy stance despite the strengthening economic survey indicators (accelerating manufacturing activity, firming confidence indicators and steady consumption) and heightened inflation rate. The latter one reached a 3-year high last month but failed to hit the ECB’s 2% target. Many believe that the recent inflation gains are due to the rising energy prices, and not to domestic economic factors.

It seems that cautious ECB doesn’t want to part with its old friend – quantitative easing program. The market expects ECB to argue that its ultra-loose monetary policy is still needed to keep the Eurozone economic recovery on course. Financial pundits recognize this fact and make the following bets.

Morgan Stanley remains short on EUR/USD saying that the risk of rising populism in Europe on the back of the upcoming elections should be a significant undertone for EUR. The present inflation indicator is not trustworthy: while EMU inflation shows signs of rising, real yields may decline and drag the euro down.

UOB expects EUR/USD in 1.0500 to 1.0715 in the near term saying that the first ECB meeting is likely to be a non-event than a crucial event. BNPP remains positioned for EUR/USD downside.

FX BAZOOKA analytical team will keep you informed and post the highlights of the press conference and the central bank’s meeting as soon as the situation unfolds.

More:
https://fxbazooka.com/analytics/12107

 

[riki143]

Key option levels for Thursday, January 19th
1/19/2017

EUR/USD

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest + 116 454 ? + 96 632 ?
Closest resistance levels 1.0692; 1.0716; 1.0740/51; 1.0783
Closest support levels 1.0662; 1.0641; 1.0610; 1.0566; 1.0539
Trading recommendations
Baseline scenario Short EUR/USD below 1.0662, with target points at 1.0641 and 1.0610
Alternative scenario Moving above 1.0692 can be considered as a signal to Buy the pair, with target at 1.0716 and 1.0740


GBP/USD

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest - 2 315 ? - 2 081 ?
Closest resistance levels 1.2350; 1.2379; 1.2398; 1.2421
Closest support levels 1.2277; 1.2257; 1.2225; 1.2204
Trading recommendations
Baseline scenario Short GBP/USD below 1.2277, with target points at 1.2257 and 1.2225
Alternative scenario Moving above 1.2350 can be considered as a signal to Buy the pair, with target at 1.2379 and 1.2398

USD/CAD

Main trend Short-term period Medium-term period
Bearish Bullish
Changes in the open interest + 298 ? + 2 133 ?
Closest resistance levels 1.3271; 1.3303; 1.3348; 1.3403
Closest support levels 1.3221; 1.3200; 1.3160; 1.3129
Trading recommendations
Baseline scenario Short USD/CAD below 1.3221, with the target points at 1.3200 and 1.3160
Alternative scenario Moving above 1.3271 can be considered as a signal to Buy the pair, with target at 1.3303 and 1.3348

More:
https://fxbazooka.com/analytics/12108

 

[riki143]

AUD/USD: bulls are want to go higher
1/19/2017

Technical levels: support – 0.7520; resistance – 0.7610, 0.7660.

Trade recommendations:

1. Buy — 0.7540; SL — 0.7520; TP1 — 0.7610; TP2 — 0.7660.

Reason: expanding bullish Ichimoku Cloud and the rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen and rising Tenkan-sen; the market is on the support of Tenkan-sen and Kijun-sen.

More:
https://fxbazooka.com/analytics/12109

 

[riki143]

USD/JPY: Dollar tested the Cloud’s resistance
1/19/2017

Technical levels: support – 113.80; resistance – 114.50.

Trade recommendations:

1. Sell — 114.50; SL — 114.70; TP1 — 113.80; TP2 — 113.10.

Reason: bearish Ichimoku Cloud but its diapason is narrowed; a dead cross of falling Tenkan-sen and Kijun-sen; the prices are tested the Cloud’s resistance.

More:
https://fxbazooka.com/analytics/12110

 

[riki143]

Donald Trump’s inauguration day
1/19/2017

Donald Trump will be sworn in as the 45th President of the United States on Friday, Jan 20.

Schedule of the day

The inauguration ceremony will start at 11.30 am local time (6:30 pm MT time). After the oath, Mr. Trump will give an inaugural speech. Later there will be a lot of celebrating: a parade with about 8,000 participants and 3 balls.

What will Trump say?

According to Trump’s team, the President-elect has written his inauguration address draft himself. However, don’t expect the new President to speak about the economic policy. The speech will likely contain some very general ideas and principles. For example, John F Kennedy urged Americans to “ask not what your country can do for you – ask what you can do for your country” in his inaugural speech. Trump’s predecessor, Barack Obama, mentioned Abraham Lincoln’s ideals of renewal, continuity and national unity to stress the need for shared sacrifice and a new sense of responsibility to answer America’s challenges at home and abroad.

Monday will be Day 1 in Trump’s America

In his recent interview with the Times of London, Trump said that although he will be inaugurated on Friday, the first day of his administration will be Monday. Earlier Trump’s spokesman had announced that there would be 4 or 5 executive actions taken on “Day One”. Yet, as we are talking about Trump, who’s known for his unpredictability and flamboyant behavior, the small doubt of when to expect important announcement – on Friday or Monday – still exists.

Impact on Forex market

As you can see from the presented above, Trump's inauguration itself will unlikely provide any new information for Forex traders. The event will take place during the final part of the trading day on Friday and probably won’t contain any substantial things. Remember that Trump’s first news conference on Jan. 11 disappointed those who wanted to know more about his plans.

Although we don’t expect much from the upcoming events on Friday, traders are still likely to act nervously. As a result, be ready for the increased volatility during the US trading session on Friday.

All in all, the markets have already made all the possible trading on Trump’s pre-election promises. In the medium- and long-term much will depend on whether these promises are followed by action. The lack of the promised fiscal stimulus will prevent the USD from gaining much, and the greenback will continue drifting lower until the Federal Reserve raises its interest rate.

More:
https://fxbazooka.com/analytics/12111

 

[riki143]

EUR/USD: bulls going to test resistance
1/19/2017

We’ve got a “Morning Star”, which has been confirmed enough. So, there’s an opportunity to have a local bullish price movement towards the nearest resistance. If a pullback from this level happens, bears are likely going to test the 34 Moving Average.

There’s a bullish “Tweezers”, which has a confirmation. Also, we’ve got a “Three Methods” pattern, so bulls are likely going to test the closest resistance during the day. At the same time, this level could be a departure point for another decline.

More:
https://fxbazooka.com/analytics/12112

 

[riki143]

USD/JPY: "Three Methods" pushing the price higher
1/19/2017

The price reached the 34 Moving Average, so we’ve got an “Engulfing” pattern on this line. If it confirms, the price is likely going to test the 55 Moving Average, which could be a departure point for another bullish price movement.

The last “Three Methods” pattern led the current upward price movement. At the same time, we’ve got a “Harami” at the local high, but this pattern hasn’t been confirmed yet. Therefore, the pair is likely going to consolidate in the short term. However, bulls will probably try to test the next resistance level afterwards.

More:
https://fxbazooka.com/analytics/12113

 

[riki143]

Complete guide to Brexit process
1/19/2017

Current state of affairs

GBP/USD spearheaded on Tuesday after Theresa May painted a rather rosy future for the UK outside the EU. Ms. May’s aims in the forthcoming Brexit negotiations have finally been set out. The UK prime minister emphasized that she wants a clean separation from the EU on the friendliest terms possible – meaning close trade cooperation, smooth and orderly transitional arrangements, and a vast, but not total exemption of the UK from the budget contributions to the EU. In addition, she assured the public that Parliament would get a vote on the eventual deal.

The reaction of the FX market participants was favorable, the pound got a significant boost.

Clarification on May’s plans

Keep businesses, public sector and everybody informed on the Brexit process.

Ms. May in her speech eliminates uncertainty – “I can confirm today that the Government will put the final deal that is agreed between the U.K. and the E.U. to a vote in both Houses of Parliament before it comes into force.” So, through this announcement Ms. May excludes the potential legal challenges and shows that the Brexit will occur anyways.

The UK Government doesn’t seek membership in the Single Market because it would preserve the freedom of movement of people and contradict the UK’s desire to stem immigration flows from the EU. Instead, the UK seeks the greatest possible access to Single Market through a very ambitious Free Trade Agreement. So, if May manages to strike this deal, the UK will reap numerous benefits: it will preserve trade relationships with its EU partners and the UK won’t need to contribute huge sums to the EU budget.

One of the main imperative of Ms. May’s speech: Britain will search for new trading partners from outside the EU willing to rediscover its role as a great, global, trading nation.

Ms. May promised to renegotiate the EU Customs Union. If she succeeds in doing so, then the UK will obtain access to the EU Single Market and will be free to trade with the rest of the world on its own terms.

The UK will seek continuation of the UK collaboration with its European partners on major science, research and technology initiatives.

To achieve the smoothest and the most orderly transitional arrangements possible that would suit the UK and the EU.

Remaining legal hurdles

Theresa May’s right to trigger Article 50 is legally challenged. The question is still open whether Government needs to consult Parliament before invoking the aforementioned article or not. The High Court ruled that May didn’t possess a unilateral right to start up a continuous process of the EU-UK negotiations. Now, it is the Supreme Court’s to decide whether the UK’s Government can legally begin the Brexit process without parliamentary approval or not. The judges are to release their final decision on January 24 at 11:30 (MT time).

A ruling forcing Ms. May to consult Parliament before triggering Article 50, could give her political counterparts last chance to reject the prime-minister’s plan to leave the single market.

After “Brexit”: transitory process in details

Once Article 50 is triggered, the UK will be given 2 years to negotiate its withdrawal from the EU. The terms of the UK’s exit will have to be discussed in the European Council comprised of 27 leaders. To come into force the draft leading to the UK separation with the EU should get an approval from at least 20 countries with 65% of the population. Then it should be ratified by the European Parliament. At the end of 2 years, negotiations can be extended further. If there is no agreement on the extension of the negotiation, the UK will no longer comply with the EU treaties

More:
https://fxbazooka.com/analytics/12114

 

[riki143]

Gold: bulls took a rest
1/20/2017

On the daily chart of gold, there is a fight for the important level located at 1,205. Everything depends on the outcome of this bear-bull fight. If bulls manage to win, the quotes may rise. In contrast, prices may move in the opposite direction in case of bears' win. So, an update of January peak can lead to the continuation of the rally towards 1,230 and 1,255.

On the hourly chart of gold, quotes went beyond the ascending trading channel. If the resistance previously acting as support is tested, a "Head and shoulders" pattern will be formed.

Recommendation: SELL $1195 SL 1210 TP1 $1170 TP2 $1150.

More:
https://fxbazooka.com/analytics/12120

 

[riki143]

AUD/USD: bulls are tough with bears
1/20/2017

On the AUD/USD daily chart, bulls managed to regain their initiative after a small rollback. Until the quotes fall below 0.75 level, the buyers will remain their control of the pair. They are determined to push the Australian dollar up towards 0.771. There is a "Shark" inverted pattern.

On the AUD/USD hourly chart, bears are trying to return to the boundaries of the rising triangle. If they fail, then a rebound from the 0.7565 level will be a signal for the formation of longs. In contrast, a break of support at 0.7535 can lead to the correction.

Recommendation: SELL 0,7535 SL 0,76 TP 0,745.

More:
https://fxbazooka.com/analytics/12121

 

[riki143]

Morning brief for January 20
1/20/2017

All traders will be on tenter-hooks ahead of the US President-elect Donald Trump’s inauguration. You should be extremely wary and cautious these days as Donald Trump is preparing to sign several executive actions that can be implemented without the input of Congress. There might be lots of swings and troughs across the trading desk as traders attach great importance to the aforementioned event. There shouldn’t be any protectionist rhetoric in Trump’s inauguration speech, any specifications on president’s policy projections, but investors’ anxiety will likely be a drag on the dollar.

EUR/USD rose in the course of the last trading session as Fed’s Chair Janet Yellen surprised traders with a less hawkish tone in her speech than she had on Wednesday. What can we say, women are all like her; they blow and cold. The euro extended its gains recouping its yesterday’s losses generated after European Central Bank president Mario Draghi downplayed the significance of the recent boost in the inflation rate.

USD/JPY rose to 114.85 on the weakening of the yen. Earlier today Japanese finance minister Aso said that the government is going to mobilize policy tools to accelerate Abenomics and thereby help BOJ to hits 2% inflation target.

USD/CAD missed some points in the early hours of the Asian probably on the rising oil prices. The latter ones got a boost after cuts agreed by producers took their effect. Today’s focus will one Canadian inflation and retail sales data coming at 15:30 (MT time).

AUD/USD was toing and froing in the course of the recent session. First, it reached 0.7590 level first and then scaled back to 0.7560. China’s fourth-quarterly economic data was OK. Chinese GDP beat market’s expectation having propped by higher government spending and record bank lending. Many analysts, including financial pundit George Soros, believe that China’s economic growth is doomed for deceleration as country’s trade with its major trading partner – the US – is put at risk.

GBP/USD continues its rally that started on Tuesday after Theresa May held promise for the UK future after Brexit.

More:
https://fxbazooka.com/analytics/12122

 

[riki143]

EUR/USD: bulls going to test the next resistance
1/20/2017

The price faced a support on the 34 Moving Average, so we’ve got a “V-Bottom” pattern here, which led to an achievement of the nearest resistance at 1.0697. Therefore, bears are likely going to test a support at 1.0655 – 1.0594 in the short term. If a pullback from this area happens, there’ll be an opportunity to have an upward movement towards a resistance at 1.0719 – 1.0745.

We’ve got a “V-Bottom”, so the price achieved a resistance at 1.0664 – 1.0697, which led to the current consolidation. Also, there’s a “Double Top” pattern, which has been confirmed. In this case, the market is likely going to reach the 34 Moving Average line, which could be a departure point for a bullish price movement in the direction of the closest resistance at 1.0719 – 1.0745.

More:
https://fxbazooka.com/analytics/12123

 

[riki143]

GBP/USD: consolidation going to move on
1/20/2017

Bears faced a support on the 55 Moving Average, so we’ve got a “Triple Bottom” pattern here, which helped bulls to reach a resistance at 1.2387. Therefore, bears are likely going to test the 34 Moving Average in the short term. Considering a possible pullback from this line, there’s an opportunity to have another bullish price movement afterwards.

There’s a “Triple Bottom” pattern, so the price achieved a resistance at 1.2347. In this case, the pair is likely going to reach an area between the 55 Moving Average and the level 1.2277. At the same time, there’s an option to have an upward movement towards a resistance at 1.2414 – 1.2432 later on.

More:
https://fxbazooka.com/analytics/12124

 

[riki143]

AUD/USD outlook for January 23-27
1/20/2017

Aussie spiked to 0.7590 in the course of the past week mainly on the relative weakness of the US dollar. Janet Yellen was the main troublemaker. Her recent comments on the future of the Fed’s monetary policy sent the greenback lower on Friday. Australian employment report released on Tuesday was a mixed bag as it indicated a modest increase in the number of jobs created and, at the same time, a heightened unemployment rate. Upbeat China’s gross domestic product allowed Aussie to rise further.

Next week the US dollar will be a major mover of the AUD/USD currency pair as there won’t be any significant events and data releases from Australia. Monday’s morning will herald a new era for the USA as soon as Donald Trump gets into power and signs his first executive orders. This can send the US dollar lower. Trump’s effect should influence the pair through the whole week.

A number of fundamental factors that we’ve just specified may send Aussie higher towards 0.7660, 0.7650 (78.6 Fibo retracement level formed from the November 8 high) and 0.7780. On the downside, there are several supports located at 0.7500 (100-day MA), 0.7470 (the upper border of Ichimoku cloud), 0.7380 (near the 50-day MA) and 0.7273.

More:
https://fxbazooka.com/analytics/12126

 

[riki143]

GBP/USD outlook for January 23-27
1/20/2017

GBP/USD experienced the tremendous uplift in the course of the past week after prime minister Theresa May assured the public that the UK will reap lots of benefits after the country’s separation with the EU. The pound was rising throughout the week and ended it with impressive gains.

Next week traders’ focus will be on the UK’s Supreme Court ruling scheduled for January 24. It should clarify whether Government needs to consult Parliament before triggering Article 50 or not. If the court decides that Ms. May doesn’t possess a unilateral right to invoke the aforementioned article, the sterling may get a significant boost and rise further. The US dollar’s outlook is bearish. The greenback risks to tilt downside as the first Trump’s orders come into force.

The technical picture for GBP/USD has become bullish. The current GBP strength has room to extend higher towards the nearest resistances located at 1.2400 (50-day MA), 1.2535 (100-day MA) and 1.2715 levels (23.6 Fibo level traced from June 24 high). In the most unlikely, but still probable scenario, the quotes can fall towards the supports located at 1.2245 (January 19 low) and 1.2010 (January 17 low).

More:
https://fxbazooka.com/analytics/12127

 

[riki143]

Key option levels for Friday, January 20th
1/20/2017

EUR/USD

Main trend Short-term period Medium-term period
Bullish Neutral
Changes in the open interest + 149 834 ? - 10 885 ?
Closest resistance levels 1.0682; 1.0708; 1.0733/45; 1.0778
Closest support levels 1.0633; 1.0603; 1.0583; 1.0560
Trading recommendations
Baseline scenario Long EUR/USD above 1.0682, with target points at 1.0708 and 1.0733
Alternative scenario Moving below 1.0633 can be considered as a signal to Sell the pair, with target at 1.0603 and 1.0583

USD/JPY

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest + 517 ? + 1 584 ?
Closest resistance levels 115.42; 115.77; 116.00; 116.25
Closest support levels 114.42; 114.09; 113.91; 113.69
Trading recommendations
Baseline scenario Short USD/JPY below 114.42, with target points at 114.09 and 113.91
Alternative scenario Moving above 115.42 can be considered as a signal to Buy the pair, with target at 115.77 and 116.00

More:
https://fxbazooka.com/analytics/12128

 

[riki143]

EUR/USD: "Three Black Crows" arrived
1/20/2017

We’ve got a “Shooting Star”, which has been confirmed. Therefore, the market is likely going to get a support on the nearest “Window” in the short term, which could be a departure point for a local upward correction. However, bears will probably try to test the 55 Moving Average afterwards.

There’re a “Shooting Star” and a “Three Black Crows”, which both have been confirmed enough. In this case, the pair is likely going to reach a support on the 89 Moving Average shortly. If a pullback from this line happens, there’ll be a chance to have a bullish correction.

More:
https://fxbazooka.com/analytics/12129