Market analysis and trade recommendations by FBS

[riki143]

Key option levels for Tuesday, March 14th
3/14/2017

EUR/USD

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest - 2 483 621 ? - 1 577 361 ?
Closest resistance levels 1.0667; 1.0686; 1.0708
Closest support levels 1.0633; 1.0600; 1.0580; 1.0558
Trading recommendations
Baseline scenario Short EUR/USD below 1.0633 (or from 1.0667), with target points at 1.0600 and 1.0580
Alternative scenario Moving above 1.0667 can be considered as a signal to Buy the pair, with target at 1.0686 and 1.0708
GBP/USD

Main trend Short-term period Medium-term period
Bearish Bearish
Changes in the open interest + 21 ? + 217 ?
Closest resistance levels 1.2180; 1.2212; 1.2240
Closest support levels 1.2134; 1.2106; 1.2074 (?ritical); 1.2039
Trading recommendations
Baseline scenario Short GBP/USD below 1.2134 (or from 1.2159), with target points at 1.2106 and 1.2074
Alternative scenario Moving above 1.2180 can be considered as a signal to Buy the pair, with target at 1.2212 and 1.2240
USD/CAD

Main trend Short-term period Medium-term period
Neutral Bullish
Changes in the open interest + 171 ? + 52 ?
Closest resistance levels 1.3457; 1.3483; 1.3521; 1.3576
Closest support levels 1.3419; 1.3364; 1.3326; 1.3277
Trading recommendations
Baseline scenario Long USD/CAD above 1.3457, with the target points at 1.3483 and 1.3521
Alternative scenario Moving below 1.3419 can be considered as a signal to Sell the pair, with target at 1.3364 and 1.3326
More:
https://new.fxbazooka.com/analytics/12849

 

[riki143]

EUR/USD: "Double Top" stopped bulls
3/14/2017

The price faced a resistance at 1.0732, so we’ve got a “Double Top”, which pushed the pair towards a support at 1.0640. Therefore, the market is likely going to continue falling down in the direction of the next support at 1.0594 – 1.0588. If a pullback from this area happens, there’ll be an opportunity to have an upward correction.

There’s a “Double Top”, so the price is consolidating. Also, there’s a “Pennant”, so bears are likely going to test a support at 1.0614 – 1.0597 during the day. Considering a possible pullback from these levels, bulls will probably try to test a resistance at 1.0655.

More:
https://new.fxbazooka.com/analytics/12850

 

[riki143]

GBP/USD: angry bears
3/14/2017

Bulls faced a resistance at 1.2260, so we’ve got two “Thorns” in a row. In this case, the market is likely going to continue falling down towards the next support at 1.2106 – 1.2084. If we see a pullback from this area, there’ll be an opportunity to have an upward correction.

There’s a “Double Top”, which has been confirmed. All Moving Averages have been broken. In this case, the price is likely going to continue moving down. The main intraday target is a support area between the levels 1.2106 – 1.2084.

More:
https://new.fxbazooka.com/analytics/12851

 

[riki143]

Oil prices: never-ending war for market share
3/14/2017

The past week was really disastrous for oil prices. Brent oil futures dropped to $51 on Friday. At the present moment, prices are trading a little bit higher ($51.20), but the last week pressure is still in force.

The price crash was a result of unbridled expansion of US oil industry. Baker Hughes said on Friday that American drillers added oil rigs for an eighth consecutive week. US crude inventories are chockablock with oil according to recent weekly updates; OPEC members started to backpedal on their pledges to drain the global oil glut. No wonder, prices slumped to their three-month low these days.

As you see there are different definitions of compliance. Different sources show us a variety of numbers. OPEC itself has not disclosed how it measures compliance, and because the deal is very complicated and mind-boggling, calculating the actual level of compliance not as easy as pie. This doesn't allow us to objectively assess the actual level of compliance and make predictions for the further direction of the price.

Oil prices are predominantly led by fundamental factors, rather than technical ones. So, with the market still digesting build-up in the US inventories and increasing number of US rigs, oil prices will likely remain under pressure for a quite prolonged period of time.

More:
https://new.fxbazooka.com/analytics/12852

 

[riki143]

How to measure market sentiment
3/14/2017

Market sentiment is a generalization of the overall dominating emotion of the majority of traders, investors. It determines the current trend of the market, as well as helps to identify the future path of the quotes and build a savvy trading strategy. As a rule of thumb, if the majority of the market wants to sell a certain currency, the market sentiment is deemed to be bearish; if most of the market participants want to buy the currency, the market sentiment is bullish. Market sentiments are fickle as the wind. They tend to change based on constant incoming news flow, economic release. Understanding the current market sentiment and exploiting it accordingly is a cornerstone for success in financial world. Here arises a big question mark. How to know/to measure dominant market sentiment?

Well, there are two well-proved ways of gauging market sentiments. With one of them you are already familiar – watching news reports. About another one, you might read for the first time in this article.

I am having in mind the Commitment of Traders report.

The COT report provides compiled, exhaustive open interest information about futures market. It is released by the Commodity Futures Trading Commission every Friday at 15:30 EST. You can get access to this report clicking this link: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

It is a very useful trading information that can potentially maximize your profits because skimming through the report you can understand what the other market participants are thinking about the current state of affairs. Then, based on the information you’ve received, you can easily plan the entry and exit points. The only handicap of this sentiment tool is the time lapse between the reporting and release (three-day difference). But even with this flaw you still can get the general idea of the price directions in different currency crosses, aren’t you?

This is how the COT report looks like

You should focus your attention on the data presented in the columns titled as “asset/manager institutional”, “leveraged funds”, “other reportable”. These groups of market participants include those who use currency for speculative purposes. Also, you can take into consideration the data presented in the column “non-reportable”. These market players are retail traders. When a particular currency is trending up against the US dollar, a net long position is registered. A short long position is registered when the currency is trending down against the greenback. The tables and charts presented on the COT official website are really clumsy. Let’s say, they are not user-friendly. Many banks present the same information in a more attractive way in their weekly forecasts. The novice traders tend to omit these useful sources of information while reading the banks’ forecasts. So, next time, you look through them, pay attention to this COT info. It is really valuable for position sizing.

Of course, the COT data itself is not sufficient to generate entry and exit signals, but it may give us warning signals of a possible reversals in the spot forex market.

More:
https://new.fxbazooka.com/analytics/12853

 

[riki143]

EUR/USD: bears came back
3/14/2017

The nearest “Window” acted as a resistance, so we’ve got an “Engulfing” pattern, which has been confirmed. So, if a pullback from the 144 Moving Average happens, there’ll be an opportunity for a local correction. However, bears will probably try to deliver a new local low afterwards.

The price achieved the “Window”, but there isn’t any reversal pattern so far. In this case, if a pullback from this level be on the table, then bulls are likely going to deliver an upward correction.

More:
https://new.fxbazooka.com/analytics/12854

 

[riki143]

USD/JPY: bearish "Harami"
3/14/2017

The last “Harami” led to the current decline. Also, there’s a “High Wave”, which has been confirmed enough. Therefore, the market is likely going to test the nearest resistance in the short term.

We’ve got a local bearish “Harami”, which has a confirmation. However, if the closest “Window” acts as a support, bulls will probably try to deliver a new intraday high.

More:
https://new.fxbazooka.com/analytics/12855

 

[riki143]

GBP/CHF broke support level 1.2340
3/14/2017

GBP/CHF broke support level 1.2340
Next sell target - 1.2120

GBP/CHF continues to fall after the recent breakout of the support level 1.2340 (former strong support level from January and February). The breakout of the support level 1.2340 accelerated the active minor impulse wave 3, which is a part of the intermediate impulse wave (3) from the start of December. The price earlier corrected up to test the broken price level 1.2340 – after which GBP/CHF reversed down sharply.

GBP/CHF is expected to fall toward the next sell target at the next strong support level 1.2120 (low of the previous sharp minor impulse wave 1 from January).

More:
https://new.fxbazooka.com/analytics/12856

 

[riki143]

GBP/USD reached sell target 1.2200
3/14/2017

GBP/USD reached sell target 1.2200
Next sell target - 1.1000

GBP/USD continues to fall inside the intermediate impulse wave (3) – which earlier reversed down from the resistance level 1.2200 (former support level and the sell target set in our previous forecast for this currency pair). The breakout of the support level 1.2200 led to the intensification of the bearish pressure on this currency pair.

With the daily Momentum approaching yearly lows - GBP/USD is expected to fall to the next sell target at the key support level 1.2000 (low of the previous intermediate impulse wave (1) from January).

More:
https://new.fxbazooka.com/analytics/12857

 

[riki143]

EUR/USD: bearish impulse
3/15/2017

There’re a wedge in wave and a zigzag in wave [ii]. So, the market is likely going to decline in the short term. The main intraday target for bears is 5/8 MM Level.

We’ve got an impulse in wave (c) of [ii], which has been ended on 7/8 MM Level. Under this circumstances, we’re likely going to have an impulse in wave (i). So, bears will probably try to test 2/8 MM Level.

More:
https://new.fxbazooka.com/analytics/12859

 

[riki143]

USD/CHF: franc is wandering in the channel
3/15/2017

On the USD/CHF daily chart, the "bears" failed to send the quotes below the support at 1.0045. At the present moment, there is a struggle for an important level of 1.01. A successful test of this level can lead to the continuation of the rally towards 1.016 and 1.0245. In contrast, the pullback can lead to the breakout of the lower boundary of the upward trading channel and the transformation of the "Shark" pattern into 5-0.

On the USD/CHF hourly chart, an expanding wedge pattern can be formed. To form its, the "bears" should send the quotes below the support at 1.001. The key resistance is located near the 1.016 mark.

Recommendations:

SELL 1,001 SL 1,0065 TP 0,986,

BUY 1,016 SL 1,0105 TP 1,0245 TP2 1,0295.

More:
https://new.fxbazooka.com/analytics/12861

 

[riki143]

EUR/USD: how euro can train Dragon
3/15/2017

On the EUR/USD daily chart, the "bears" are trying to return quotes to the limits of the downward trading channel. If they succeed, the prices will return to support at 1.0495. In contrast, the spike of the euro above 1.0635 can potentially lead to an update of the March high and continuation of the rally towards 1.082.

On the EUR/USD hourly chart, the "Dragon" pattern has been formed. If buyers manage to test the resistance at 1.066 and 1.068, the rally will continue. In contrast, the quotes'decline towards the middle of the trading channel 1.05-1.0625 will increase the risks of implementation of the "Fakeout-Shakeout" pattern.

More:
https://new.fxbazooka.com/analytics/12862

 

[riki143]

EUR/USD: euro supported by Cloud
3/15/2017

Technical levels: support – 1.0620, 1.0600; resistance – 1.0660, 1.0700.

Trade recommendations:

1. Buy — 1.0620; SL — 1.0600; TP1 — 1.0700; TP2 – 1.0760.

Reason: expanding bullish Ichimoku Cloud, rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen; the prices are on a strong support of 4H-Cloud.

More:
https://new.fxbazooka.com/analytics/12863

 

[riki143]

AUD/USD: aussie testing Cloud’s resistance
3/15/2017

Technical levels: support – 0.7540, 0.7500; resistance – 0.7640, 0.7610.

Trade recommendations:

1. Sell — 0.7560; SL — 0.7580; TP1 — 0.7500; TP2 — 0.7460.

2. Buy — 0.7580; SL — 0.7560; TP1 — 0.7640; TP2 — 0.7670.

Reason: bearish Ichimoku Cloud, but rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen with rising Tenkan-sen; the prices are trying to enter into the Cloud.

More:
https://new.fxbazooka.com/analytics/12864

 

[riki143]

Morning brief for March 15
3/15/2017

A range of huge sessions is coming up for the market with the FOMC rate announcement along with projections for the US economy followed by Chair Janet Yellen’s news conference a half-hour later. It seems that the case for quarter-hike is already a baked pie, so, pay closer attention to what Ms. Yellen will say. Also, today the suspension of the US debt limit expenses. Most analysts believe that it will be shifted to the later date. If Treasury officials fail to a reach a new deal in upcoming months, there won’t be any hikes in the nearest future as USD might become extremely expensive in terms of both interest rates and the XCCY basis swap.

The British pound slid overnight to 1.2105 after we got the news that UK Parliament had finally passed the bill giving PM Theresa May the ability to formally start the Brexit process (the Article 50 will likely be triggered before March 27) and news about the resignation of the BoE Deputy Governor as he failed to disclose the conflict of interest. The prices are consolidating in the quite broad 1.2100/1.2300. A break below 1.2100 would demark the start of a bearish phase. Meanwhile, the pound has time to rise to 1.2250, especially if the Fed is moderate in its hawkishness.

Aussie ticked higher in the Asian session. AUD/USD moved to 0.7570. The RBA officials have recently voiced their intention to tighten macro-prudential measures; also, they said that there won’t be any additional cuts this ear. For the time being, the risks are tilted to the upside. The nearest resistance can be found at 0.7595. If the atlas USD shrug, the pair will drop towards the supports at 0.7530/0.7505 levels.

USD/CAD dipped to 1.3460 on the session. Brent oil futures jumped to $51.70 earlier today having partially recouped their losses (yesterday’s low was at $50). The collapse of oil prices followed after the release of the OPEC report that stated that Saudi Arabia increased oil production in February on the jitters that it might lose its market share. The economic calendar promises as to deliver the US CPI and retail sales. The EIA Oil Market Report for March has the potential to move oil prices higher.

EUR/USD is trading in the range of 1.0590/1.0715 this week. Dutch parliamentary elections have taken the central stage this week. The Polls close at around 10 pm MT time Thursday and we will likely get the results throughout the day. We will particularly be interested in how Geert Wilders’ Eurosceptic Freedom Party does. The recent polling gives the Freedom Part 15.7% of the vote which would give it 20-24 seats. If the far-right politicians get something higher the euro might suffer some losses. Today’s economic calendar for the Eurozone is extremely light. So, the focus will be shifted to the US with FOMC meeting and a bunch of economic releases coming soon.

More:
https://new.fxbazooka.com/analytics/12865

 

[riki143]

Key option levels for Wednesday, March 15th
3/15/2017

EUR/USD

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest + 19 557 ? + 61 973 ?
Closest resistance levels 1.0660; 1.0693; 1.0721; 1.0740
Closest support levels 1.0628; 1.0600; 1.0571; 1.0553
Trading recommendations
Baseline scenario Short EUR/USD below 1.0628 (or from 1.0660), with target points at 1.0600 and 1.0571
Alternative scenario Moving above 1.0660 can be considered as a signal to Buy the pair, with target at 1.0693 and 1.0721
GBP/USD

Main trend Short-term period Medium-term period
Bearish Bearish
Changes in the open interest - 12 ? + 248 ?
Closest resistance levels 1.2242; 1.2273; 1.2316; 1.2342
Closest support levels 1.2189; 1.2159; 1.2135; 1.2098
Trading recommendations
Baseline scenario Short GBP/USD below 1.2189, with target points at 1.2159 and 1.2135
Alternative scenario Moving above 1.2242 can be considered as a signal to Buy the pair, with target at 1.2273 and 1.2316
USD/CAD

Main trend Short-term period Medium-term period
Bullish Bullish
Changes in the open interest + 54 ? - 23 ?
Closest resistance levels 1.3470; 1.3492; 1.3512; 1.3543
Closest support levels 1.3444; 1.3394; 1.3349; 1.3291
Trading recommendations
Baseline scenario Long USD/CAD above 1.3470, with the target points at 1.3492 and 1.3512
Alternative scenario Moving below 1.3444 can be considered as a signal to Sell the pair, with target at 1.3394 and 1.3349

More:
https://new.fxbazooka.com/analytics/12867

 

[riki143]

Banks' forecasts ahead of the FOMC meeting
3/15/2017

After Friday’s US job market report investors priced in 100% probability of a hike at the FOMC meeting scheduled for March 15, 8:00 pm MT time. Fed Chair Janet Yellen in her last speech made it clear that she wouldn’t be against interest rate increase as long as the US economy progressed as expected. If we take a look at the economic data, we will see that inflation on the rise, sentiment holding firm, core spending is growing, stock prices peaked to their highest levels. So, it’s now or never, dear FOMC officials.

Assuming the high probability of Fed’s hikes, the markets’ focus will on the future monetary policy projections of the Federal Reserve. The market pricing in a 12% chance of the second rate increase in May and 67% in June. But what’s interesting is that market participants are not really concerned about the exact timing of a next hike; they are mostly preoccupied with the number of hikes to be delivered this year.

Ahead of the FOMC rate announcement, there will be one of the top-tier releases – CPI, core CPI and retail sales. Many top-notch analysts that they might become market triggers since the rate hike is already well priced in (the FOMC meeting might be a non-event).

Banks’ forecasts

Most of the bank analysts expect a more aggressive Fed tomorrow saying that with Trump’s presidency the times of old cuddly Federal Reserve are gone.

Bank of America Merrill Lynch FX strategy

The Fed officials have already sent lots of signals to assure market participants in their true intentions. So, the strategists believe that FOMC meeting will be a non-event. The main focus will be on the Summary of Economic Projections and the press conference.

Bank’s analysts expect a substantial shift higher in the dots and hawkish wording of the summary offering a fierce support to the greenback. In contrast, Chair Yellen’s speech will be balanced and not favoring further USD appreciation, according to them.

Nordea bank forecast

Bank’s analysts hold expectations of a 25 bp increase in the Fed’s benchmark; the rate hike is well priced in by the markets; the focus will on the Fed’s projections for the future. The Fed will likely emphasize a gradual pace of the rate hike.

TD analysts

They don’t expect substantial support to the USD; there will be only modest one. Also, they said that they prefer fading the recent gains on the major USD counterparts (EUR, CAD, GBP).

Nomura

The hike is priced in by the market participants. The bank analysts are hawkish on USD if there is no dots downgrade.

Danske

Analysts note that we are entering the period of fiscal uncertainty as the suspension of the US debt limit expires tomorrow. So, the Fed’s officials will be hesitant to raise interest rates without e new deal on the extension of the government debt freeze.

More:
https://new.fxbazooka.com/analytics/12868

 

[riki143]

EUR/USD: "V-Bottom" launched bullish correction
3/15/2017

The Moving Averages acted as a support, so we’ve got a “V-Bottom” pattern. Therefore, the market is likely going to test a resistance at 1.0678 in the short term. If a pullback from this level happens, there’ll be an opportunity to have a decline towards a support at 1.0588 – 1.0578.

There’s a “V-Bottom” pattern, which has been confirmed, so the price is consolidating. In this case, bulls are likely going to achieve the nearest resistance between the levels 1.0655 – 1.0666 during the day. If we see a pullback from this area, bears will probably try to test a support at 1.0588 – 1.0578.

More:
https://new.fxbazooka.com/analytics/12869

 

[riki143]

GBP/USD: bears taking a rest
3/15/2017

Bears faced a support at 1.2106, so we’ve got a “V-Bottom” pattern. Therefore, the pair is likely going to test the closest resistance at 1.2198. If a pullback from this level happens, there’ll be an opportunity to have another decline.

There’s a “V-Bottom”, so the price reached a resistance at 1.2168. However, bulls are likely going to reach the next resistance at 1.2198, which could be a departure point for a decline towards a support at 1.2106 – 1.2084.

More:
https://new.fxbazooka.com/analytics/12870

 

[riki143]

EUR: Dutch parliamentary election guide
3/15/2017

The Dutch will go to the polls today to cast their votes for the parties that will rule the country for the next 4 years. The outcome of the Dutch election is expected to be a bellwether for Europe; they might set a pattern for other key elections across the EU starting with the first round of the French presidential election.

Clash of the titans

The two heavy favorites of the election race are liberal Mark Rutte and far-right leader of the Freedom Party Geert Wilders.

The former one is the incumbent prime Minister who touted the country’s economic stability under the People’s Party for Freedom and Democracy.

The later one is branded as a Dutch Trump for his goldilocks hair, freakish hairstyle and his tough talk against migrants and Islam professors.

The issues at stake

The election debates are centered on the problems of immigration, help for refugee and asylum seekers, membership in the EU, crime, and security. Geert Wilders is advocating for leaving the EU, curbing migration flows and prohibiting projection of Islam’s values. It seems that Mark Rutte caught up the strategy of his opponent and pushed himself a bit to the right saying that the immigrants not willing to assimilate in the country should behave normally or leave the Netherlands.

What are the scores of the two candidates according to the latest polls?

Geert Wilders is neck to neck with the Mark Rutte according to the last polls. The anti-islam, anti-EU leader Wilders has been riding high on a wave of populism, but then gave in some votes to his major counterpart. The latest poll predicted that Wilder’s Party for Freedom is three seats less (in total 22-23 seats) than Rutte’s People’s Party for Freedom and Democracy.

The latest prediction from the Dutch Poll Indicator

Source: peilingwijzer.tomlouwerse.nl

Could Geert Wilders become the next PM if he manages to win the race?

It’s unlikely, simply because Geerts Wilders hasn’t got allies in the Parliament. Dutch parties made it clear; they would not collaborate with Wilders unless he drops his radical anti-immigration views (which is the centerpiece of his political manifesto).

What will be the euro’s reaction?

As it has been already said, the recent polling puts Wilders’ party at 15.7% of the vote which gives it approximately 20 – 24 seats in the parliament – anything higher will likely start to pressure the euro and lead to some changes in the views of how Le Pen would go in the French Presidential election.

More:
https://new.fxbazooka.com/analytics/12871