Market analysis and trade recommendations by FBS

[riki143]

Key option levels for Wednesday, March 1st
3/1/2017

EUR/USD

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest -No Data- -No Data-
Closest resistance levels 1.0562; 1.0598; 1.0616; 1.0636; 1.0667
Closest support levels 1.0531; 1.0492; 1.0447; 1.0399
Trading recommendations
Baseline scenario (High risk of reversal) Long EUR/USD above 1.0562, with target points at 1.0598 and 1.0616
Alternative scenario Moving below 1.0531 can be considered as a signal to Sell the pair, with target at 1.0492 and 1.0447
USD/JPY

Main trend Short-term period Medium-term period
Bullish Neutral
Changes in the open interest -No Data- -No Data-
Closest resistance levels 113.75; 114.34; 114.97; 115.62
Closest support levels 112.80; 112.51; 112.18
Trading recommendations
Baseline scenario Long USD/JPY above 113.75, with target points at 114.34 and 114.97
Alternative scenario Moving below 112.80 can be considered as a signal to Sell the pair, with target at 112.51 and 112.18
USD/CAD

Main trend Short-term period Medium-term period
Bearish Bullish
Changes in the open interest -No Data- -No Data-
Closest resistance levels 1.3317; 1.3364; 1.3434; 1.3515
Closest support levels 1.3289; 1.3259; 1.3217; 1.3151
Trading recommendations
Baseline scenario Short USD/CAD below 1.3289, with the target points at 1.3259 and 1.3217
Alternative scenario Moving above 1.3317 can be considered as a signal to Buy the pair, with target at 1.3364 and 1.3434

More:
https://new.fxbazooka.com/analytics/12685

 

[riki143]

In the run-up to the BoC rate announcement
3/1/2017

To raise, or not to raise - that is the question

The Bank of Canada is poised to deliver its interest rate decision at 17:00 MT time.

Market participants don’t anticipate any significant changes from the BoC, neither they expect great swings/troughs from loonie, because:

- Governor Stephen Poloz has recently pointed out that Canada’s economy is weaker relative to the US (a good signal for investors not to price in interest rate hikes in the nearest future).

- Policy makers are still worried about trade with Canadian major partner – the US. There are still some fears that Donald Trump may impose a border adjustment tax.

- Although Canadian economy has noticeably evolved in recent months (labor market in particular – recent report on the job creation was very strong; it posted a record half-year performance in just over 14 years), there are evidences that some consumers have become more cautious (a starting point for the deceleration of economic growth – drop in the consumer purchasing activities). A trade surplus Canada experienced in recent two months mainly due to surging commodity prices, not structural changes in the Canadian exports.

- There are plentiful uncertainties not allowing the BoC to slash/raise interest rates. Most of them can be referred to Trump’s Presidency.

- The major central banks normally set their interest rates in accordance with the Fed. So, in the countdown to the FOMC March meeting, the Bank of Canada will unlikely introduce any significant changes to its present monetary policy stance.

Although the listed factors allow the BoC not to change its present easing monetary policy, we must admit that the recent macroeconomic releases are making it harder for the Bank of Canada to maintain its dovish approach. The next step from the bank’s part will probably be a rate increase, but not until 2019.

The technical outlook for the USD/CAD is bullish. The pair has recently spiked to 1.3330 area (its January high) as the USD strengthened from the hawkish comments of Fed’s officials. It may extend its gains to 1.3360, 1.3390/13380 resistance lines if the BoC's statement is dovish. As the RSI line moved in the overbought area we may expect some short-term corrections towards the nearest supports at 1.3300, 1.3250/1.3215 (50-day MA).

More:
https://new.fxbazooka.com/analytics/12686

 

[riki143]

Review on Nassim Taleb's book
3/1/2017

As the old saying goes: “A promise is a promise”. In our article about Nassim Nicolas Taleb, we promised to cover his writings in our “Book review” section. So, let it be the day of our reckoning.

The Black Swan is about the crucial impact of highly improbable events (black swans) and human’s tendency to find simplistic explanations for the occurrence of these events. Taleb believes that people are limited in their thinking; they make their assumptions based on what they see or know. According to him, “nerdy people” (Taleb’s term for forecasters) can only work within the parameters of the Gaussian bell curve, sigma, ordinary randomness which are all inadequate for prediction of great deviations and thus ignore the occurrence of “black swans.” Having only these analytical tools at hand, they tend to see bell curves everywhere downplaying the importance of the exogenous shocks, noises (black swans). Another cohort of people strongly believes in the predictive powers of the nerdies and readily pay them lots of money for their fallacious predictions. It’s a bit unfair, will you agree? Shouldn’t we abuse these charlatans and swindlers left and right draining our pockets? According to Mr. Taleb, we should. Here is the recipe for the success of his book. People like reading someone criticizing scholars and academics, calling market analysts and mass media idiots and morons, deflating artsy-fartsy egos. All these things can be found in Mr. Taleb’s book.

I won’t lie to you, I liked this book for the author’s style, his contemplations, for his beautiful metaphors and outstanding examples, references to proverbial wisdom and philosophical treatise of the brightest minds of humanity. If you like well-reasoned, constructive criticism, I am sure you will like this book too. But after you read “The Black Swan” from the title-page to colophon, a small unpleasant taste might remain. You would ask why. Because after criticism, the reader expects a new solution of the problem, a new way of dealing with a certain issue. That’s something, I didn’t get in Nassim Taleb’s writing or maybe missed somehow. If I am wrong, please, write us and open my eyes to Taleb’s veiled “holy grail” of dealing with randomness. I am curious to know. So far, Nassim Taleb managed to predict the occurrence of several black swans (the financial crash of 1987, the global financial crisis 2007 – 2008).

DOWNLOAD THE BOOK

More:
https://new.fxbazooka.com/analytics/12687

 

[riki143]

EUR/USD: bears broke "Window"
3/1/2017

The 55 & 89 Moving Averages acted as a resistance, so we’ve got an “Engulfing”, a “High Wave” and an “Inverted Hammer”, which all have been confirmed. Therefore, the market is likely going to test the nearest resistance, which could be a departure point for a local bullish correction.

The price broke the local “Window”. Also, there’s a possible “Three Methods” pattern, so we could have a new local low during the day. However, bulls are likely going to test the broken “Window” afterwards.

More:
https://new.fxbazooka.com/analytics/12688

 

[riki143]

USD/JPY: correction is coming
3/1/2017

There’s a bullish “Engulfing”, which has been confirmed. Considering that there isn’t any reversal pattern, the market is likely going to test the nearest resistance. If a pullback from this level happens, bears will probably try to test the 55 Moving Average.

The nearest “Window” acted as a support, so the price is likely going to reach the upper side of the closest resistance area. If any bearish pattern arrives later on, there’s be an opportunity to have another test of the “Window”.

More:
https://new.fxbazooka.com/analytics/12689

 

[riki143]

Trade signals from BofA Merrill
3/1/2017

Analysts from BofA Merrill suggest you going short on EUR/AUD as there is a combination of three bearish signals on the weekly technical chart: a bearish crossover of the moving averages, a breakdown of the long-term uptrend, and a broad triangle top pattern.

The bank’s target equates to spot reaching 1.3450 level. The nearest supports are located at 1.3490, 1.3450. There might be an oversold recovery. So, in the longer term, you should consider selling, especially if prices reach the 1.4000 – 1.4100 resistance area.

More:
https://new.fxbazooka.com/analytics/12690

 

[riki143]

EUR/USD: wedge is about to end
3/1/2017

There’s a wedge, which is taking place on the four-hours chart. The price is going to test the lower side of this pattern and 4/8 MM Level. If we see a pullback from these levels, there’ll be an opportunity to have a local bullish correction.

Wave (iv) formed a zigzag with a triangle in wave b. Therefore, the price is declining in wave (v) of . The main intraday target is -1/8 MM Level, which could be a departure point for wave [ii].

More:
https://new.fxbazooka.com/analytics/12691

 

[riki143]

GBP/USD reached sell target 1.2400[/]B]
3/1/2017
GBP/USD reached sell target 1.2400
Next sell target – 1.2200

GBP/USD continues to fall after the earlier breakout of the key support level 1.2400 (previous sell target, which reversed the earlier waves (1), 1 and (b), as can be seen from the daily GBP/USD chart below). The breakout of the support level 1.2400 accelerated the active minor impulse wave 3, which belongs to the intermediate impulse wave (3) from the start of February.

GBP/USD is expected to fall further to the next sell target at the support level 1.2200 (target price calculated for the completion of the active minor impulse wave 3).

More:
https://new.fxbazooka.com/analytics/12693

 

[riki143]

USD/CAD rising inside intermediate impulse wave (3)
3/1/2017

USD/CAD rising inside intermediate impulse wave (3)
Next buy target - 1.3380

USD/CAD continues to rise inside the active intermediate impulse wave (3), which started earlier from the key support level 1.3020 (which also reversed the previous corrective waves (A) and (C), as can be seen from the daily USD/CAD chart below). The price earlier broke above the pivotal resistance level 1.3200 (which stopped the previous impulse wave (1)).

USD/CAD is expected to rise in the active impulse wave (3) toward the next buy target at the resistance level 1.3380 (the top of the previous intermediate correction (B)).

More:
https://new.fxbazooka.com/analytics/12694

 

[riki143]

AUD/USD: bulls gave a head start
3/2/2017

On the AUD/USD daily chart, bulls have decided to postpone the campaign towards the target 113% in the "Shark inverted pattern. To come up with this idea again they need to push the prices above 0.7703. At the present moment, the most likely scenario is a development of the correction in case of the successful test of the support at 0.764.

On AUD/USD hourly chart, the expanding wedge pattern has been realized. A return of quotes towards 50% and 61.8% levels of CD-wave allowed opening of the short position. A successful test of the support at 0.764 will increase the chances of the realization of the target 113% in the "Shark" pattern.

Recommendation: hold the recently formed shorts (SELL 0,77 SL 0,7755 TP 0,76, SELL 0,7665 SL 0,772 TP 0,7535).

More:
https://new.fxbazooka.com/analytics/12698

 

[riki143]

USD/JPY: yen looses its strength
3/2/2017

On the USD/JPY daily chart, bulls managed to push quotes beyond the descending trading channel. As a result, the chances of the uptrend recovery and implementation of the 88.6% target in the "Shark" inverted pattern have increased. But, first, buyers need to consolidate above the level of 114.03.

On the USD/JPY hourly chart, the target 113% in the "Shark" inverted pattern has been fulfilled. After this the probability of rollback in the direction of 50% level of the CD wave and transformation of the pattern in 5-0 normally increases.

Recommendations: BUY 113,55 SL 113 TP1 115 TP2 115,65, BUY 112,95 SL 112,4 TP 114,6.

More:
https://new.fxbazooka.com/analytics/12699

 

[riki143]

AUD/USD: aussie going to SSB
3/2/2017

Technical levels: support – 0.7640, 0.7600; resistance – 0.7700/20.

Trade recommendations:

1. Buy — 0.7640; SL — 0.7620; TP1 — 0.7700; TP2 — 0.7720.

Reason: narrow bullish Ichimoku Cloud; a dead cross of Tenkan-sen and Kijun-sen, but the lines are horizontal; prices are on the support of Senkou Span B.

More:
https://new.fxbazooka.com/analytics/12700

 

[riki143]

USD/JPY: on the way to 3-W highs
3/2/2017

Technical levels: support – 113.190; resistance – 114.50.

Trade recommendations:

1. Buy — 113.90; SL — 113.70; TP1 — 114.50; TP2 — 115.00.

Reason: narrowing bearish Ichimoku Cloud with rising Senkou Span A; a cancelled dead cross of Tenkan-sen and Kijun-sen and the rising lines; the prices are supported by the Cloud.

More:
https://new.fxbazooka.com/analytics/12701

 

[riki143]

Morning brief for March 2
3/2/2017

Another Fed officials repeated the proverbial mantras about their readiness to raise rates. This time there were New York Fed president Bill Dudley and FOMC member Lael Brainard speaking from the rostrum. Usually, Brainard tends to be more dovish on the rate decisions. In the early hours of this session, however, she started singing a tune of her predecessors having said that the US is almost ready for rate hike “soon” given improved global outlook and accelerating growth the US. Market-implied probabilities for a March rate hike shift from 50% to 80%. This may result in market's disappointment, if US payrolls report coming on March 10 shows that earnings growth is not starting to pick up. USD bulls will have to limit their appetites for a March hike. Additional drag/lift for the greenback can be offered by the US administration next week that should provide us with more comprehensive details on its tax plans.

The US dollar has strengthened further (one would think, it has already risen to mush). The euro declined to 1.0530 in the absence of positive news from the Eurozone and Fed's officials working hard. Technically, 1.0500 is rather strong support. If it is broken, the euro will enter a bearish phase. Today’s focus will be on the Eurozone inflation data that should be released at 12:00 pm MT time.

GBP/USD extended its losses having slid to 1.2275 in the Asian session. A bit disappointing manufacturing PMI added to political nerves that have already started pressuring the currency again as we are within a whisker of legal Brexit. Keep an eye on today’s construction PMI figures. If they come short of market’s expectations, the pair may be sent lower towards 1.2200.

Australian trade balance data that was released earlier today was not in line with market’s expectations. AUD/USD slipped some additional points and fell below 0.7660. The economic calendar for this currency pair is rather light only US unemployment rate release coming at 15:30 MT time. The technical outlook for the pair shifted from bullish to the neutral one. The prices may shoot in any directions. The rebound from the present levels to 0.7700/0.7710 area could be followed by the retracement towards the previous supports at 0.7625/0.7605 levels.

Kiwi has weakened further against the USD having slid to 0.7130. In the early hours of the session, the RBNZ Governor Wheeler were speaking, but the market’s reaction to his comments was subdued.

USD/CAD spiked to 1.3345 overnight. The Bank of Canada maintained its interest rate target at 0.5%. Brent oil futures skidded to $56.15 from yesterday’s high at $57.05 having become an additional headwind for the loonie. Today you should focus on the Canadian GDP monthly update that should be released at 15:30 MT time.


More:
https://new.fxbazooka.com/analytics/12702

 

[riki143]

EUR/USD: support waiting for bears
3/2/2017

The last “Triple Top” pattern led to decline, so the price faced a support at 1.0520. Nevertheless, the market is likely continue falling down towards the next support at 1.0493. If any bullish pattern arrives later on, there’ll be an opportunity to have an upward correction.

Bears found a support at 1.0520, so the price is testing the nearest Moving Averages. Also, there’s a “V-Top”, so the market is likely going to decline in the direction of the next support at 1.0493 during the day. If a pullback from this level happens, bulls will probably try to test a resistance at 1.0569 – 1.0578.

More:
https://new.fxbazooka.com/analytics/12703

 

[riki143]

GBP/USD: "Double Top" led to bearish rally
3/2/2017

The price faced a support at 1.2260. However, bears are likely going to continue pushing the market lower, so we should keep an eye on a support at 1.2231 – 1.2198 as a possible intraday target.

There’s a consolidation, which is taking place on the one-hour chart. Meanwhile, bears are likely going to test the nearest support at 1.2231 – 1.2198 during the day. If a pullback from this area happens, there’ll be an opportunity to have a bullish correction towards the closest resistance at 1.2315 – 1.2347.

More:
https://new.fxbazooka.com/analytics/12704

 

[riki143]

Key option levels for Thursday, March 2nd
3/2/2017

GBP/USD

Main trend Short-term period Medium-term period
Neutral Bearish
Changes in the open interest + 1 175 ? + 547 ?
Closest resistance levels 1.2296; 1.2330; 1.2362; 1.2404
Closest support levels 1.2280; 1.2254; 1.2227; 1.2188
Trading recommendations
Baseline scenario (High risk of reversal) Long GBP/USD above 1.2296, with target points at 1.2330 and 1.2362
Alternative scenario Moving below 1.2280 can be considered as a signal to Sell the pair, with target at 1.2254 and 1.2227

AUD/USD

Main trend Short-term period Medium-term period
Bearish Bearish
Changes in the open interest + 242 ? + 1 317 ?
Closest resistance levels 0.7672; 0.7713; 0.7753; 0.7801
Closest support levels 0.7659; 0.7634; 0.7594; 0.7548
Trading recommendations
Baseline scenario Short AUD/USD below 0.7659, with the target points at 0.7634 and 0.7594
Alternative scenario Moving above 0.7672 can be considered as a signal to Buy the pair, with target at 0.7713 and 0.7753

More:
https://new.fxbazooka.com/analytics/12706

 

[riki143]

USD looks bullish... for now
3/2/2017

The market seems bullish on the US dollar as the expectations of the Fed’s rate hike increase. According to the CME Group FedWatch tool, the odds of the US rate hike on March 17 equal to 66.4%. According to other counts, the possibility is as high as 80%.

Traders have started to believe that the US central bank will raise interest rates after hawkish comments from the FOMC members (William Dudley, John Williams, Lael Brainard). Although Donald Trump didn’t go into details in his speech to the Congress, he still emphasized his intentions to conduct spending and fiscal stimulus. For the time being this is enough to convince investors in a favorable background for the US economic growth.

US 2-year Treasury yields rose yesterday above 1.30%, the highest level since August 2009.

The recent American data were rather positive. ISM manufacturing PMI rose to two and a half year high in February. There’s potential for the market to price in the higher possibility of March rate hike. For that we need the “yes” from Janet Yellen this Friday (March 3) and for the US labor market figures on March 10 to be strong.

Note, however, that the main strength of the US dollar can materialize before the Fed’s meeting. After that, the greenback may become vulnerable. Firstly, if the Fed doesn’t deliver a rate hike, markets, which have priced in the rate hike, will start selling the USD. Secondly, if there’s an actual rate hike, US stocks (currently at record highs) may slide. This, in turn, may negatively affect the USD.

The US dollar index rose has managed to overcome the resistance of the 50-day MA (now acting as support at 101.22). Resistance is at 102.00 ahead of 102.80.

Gold was rejected from $1260 because of stronger USD but managed to find support around $1240. Given political uncertainty in Europe, the asset still looks strategically attractive in the medium term.

USD/JPY recovered from last week’s lows in 111.60 area. Resistance is at 114.65/80. Note that this month analysts expect heavy repatriation of Japanese funds from abroad to Japan. This will increase demand for the yen and curb the bullish potential of the pair.

More:
https://new.fxbazooka.com/analytics/12707

 

[riki143]

Brexit: full-scale attack on Theresa May
3/2/2017

It is a really tough period of time for the UK PM Therese May working to the point of exhaustion to meet her Brexit deadlines. She has to ward off numerous attacks from different fronts and not to bend under her counterparts’ verbal strain.

The recent battle in the UK Parliament is lost

Theresa May has recently suffered her first parliamentary defeat on the amendment that protects the right of EU nationals to remain living in Britain once the country is no longer a member of the UK. Ms.May wanted all the EU citizens to leave the UK after Brexit. The UK parliament voted against her suggestion. Having said, that securing the legal status of European citizens working in the UK is a critical priority for businesses that can face with labor shortages.

Scottish assault

Theresa May has to fight not only in the corridors of Brussels but also at home. Now, she is bracing up for rebuffing attacks of Scotland’s First Minister Nicola Sturgeon to call a second referendum on the independence of her homeland. That can coincide with the formal notification of leaving the EU. Sturgeon’s narrative is that Scotland may have no choice but to go its own way unless Ms. May softens her plan to leave the European Union and its single market. Most of the Scots voted to remain in the EU last June. The 2014 referendum on independence lacking a low number of votes to bring the UK-Scottish separation on the table. Many believe that this time, the Scots manage to reclaim their independence from the UK.

European front

Earlier this year, the UK banking bigshots failed to obtain a special passporting regime that could allow 5,500 financial firms based in the UK to sell their services across the EU after the UK withdrawal from EU membership. Paris, Luxemburg, Germany, Dublin, Madrid are actively bidding to take business away from the UK financial capital – London. Many banks start realizing their relocation plans. And if that happens, the impact will be felt not only by the city itself as two-thirds of the country’s employees working in the financial sector are located outside the capital, and more than half of the 176 bln pounds that the financial industry contributes to the British economy comes not from London.

The British pound dropped to its 6-week low in the course of the week as weaker-than-expected economic releases added to political nerves that have started to pressure on GBP in the countdown to triggering Article 50. It seems that it will extend its losses upon the actual EU-UK separation. But the main question is still open: when Ms. May will send the country’s request to leave the EU?

Mind-boggling process of choosing the time for the Brexit summit

The timing for launching the UK’s negotiations with the EU is still undecided. Many British ministers voiced their displeasure of sending the divorce letter close to March 25, when EU leaders traditionally meet in Rome to celebrate 60 years when the bloc’s founding treaty was signed (Paris treaty 1957). Then, there will be Easter holidays in Europe followed by the French two-round presidential election on April 23 and May 7. That will certainly complicate any summit to be held later than April 7.

Theresa May would probably gain royal assent on the start of Brexit as early as March 15. After the Scotts started discussing their referendum, UK prime minister might be willing not to invoke Article 50 until Scotland’s ruling nationalists finish a party conference on March 18 not allowing Nicola Sturgeon to press a case for the UK-Scotland separation on the basis of Scottish rejection of the Ms. May hard line in Brexit talks.

More:
https://new.fxbazooka.com/analytics/12708

 

[riki143]

EUR/USD: bulls beg for mercy
3/3/2017

On the EUR/USD daily chart, "bears" for the second time in the last two weeks faced with the important psychological level of 1.05. If it is tested, the target 88.6% in the AB = CD pattern will be implemented. The trend is still downward, so it makes sense to form shorts on pullbacks or breakouts of the support.

On the EUR/USD hourly chart, the "bulls" can launch the counterattack from the 1.044 level. There is a target in the AB = CD pattern, and the Three Indians pattern. The nearest resistance levels are located near the 1.055 and 1.058 levels.

Recommendations:

SELL 1,055 SL 1,0605 TP1 1,044, TP2 1,038,

SELL 1,058 SL 1,0635 TP1 1,044 TP2 1,038.

More:
https://new.fxbazooka.com/analytics/12716