Market analysis and trade recommendations by FBS

[riki143]

AUD/NZD: BULLS BREAK WEDGES
09:59 05.07.2017

On the AUD/NZD daily chart, there is a rollback towards 61.8% from the wave 4—5 of the Expanding Wedge pattern. The failure of the Bears to keep quotes below the convergence zone 1.0507 – 10512 will tell us about their weakness and might lead to the development of the correction towards the long-term downward trend. In contrast, a fall of quotes below 1.0397 and 1.0377 will increase the risks of continuation of the downward rally.

On the AUD/NZD hourly chart, the rise of quotes towards 61.8% and 78.6% levels from the CD wave of the Shark pattern will allow the Bulls to restore the short-term trend.

More:
https://fbs.com/analytics/articles/aud_nzd:_bulls_break_wedges_2004

 

[riki143]

EUR/JPY: BULLS ARE GOING TO ATTACK ONCE AGAIN
10:00 05.07.2017

On the EUR/JPY daily chart, there is an uptrend. Bulls failed to test the resistance at 128.9 (61.8% from the XA wave of the Bat pattern). A successful retest will increase the risks for the realization of the targets in junior and senior AB=CD patterns. They form the convergence zone 129.95 – 130.4.

On the EUR/JPY hourly chart, after the long rise, the pair stepped into the consolidation range of 127.5 – 128.9. A break of its lower border might lead to the development of the correction. In contrast, a successful test of the upper border will lead to the restoration of the rally.

More:
https://fbs.com/analytics/articles/eur_jpy:_bulls_are_going_to_attack_once_again_2005

 

[riki143]

EUR/USD: "V-TOP" PATTERN
11:00 05.07.2017

The consolidating between the levels 1.1365 - 1.1340. Also, we've got a "V-Top" pattern, so the market is likely going to decline towards the nearest support at 1.1307 - 1.1287. If a pullback from this area happens, there'll be an option to have an upward price movement in the direction of the next resistance at 1.1365 - 1.1398.

There's a consolidation, which is taking place near the 34 Moving Average. However, the pair is likely going to achieve the nearest support at 1.1307 - 1.1287 in the short term. Considering a possible pullback from these levels, bulls will probably try to reach the closest resistance at 1.1376 - 1.1398.

More:
https://fbs.com/analytics/articles/eur_usd:_"v_top"_pattern_2007

 

[riki143]

GBP/USD: "DOUBLE TOP" PATTERN
11:04 05.07.2017

The pound is consolidating along support at 1.2926. Also, there's a "Double Top" pattern, which has been confirmed. In this case, the market is likely going to decline towards the nearest support at 1.2887 - 1.2860. At the same time, if a pullback from this area happens, bulls will have a green light to reach resistance at 1.2964 - 1.2976.

The price is moving up and down between the Moving Averages. It seems like bears are ready to reach the next support at 1.2871 - 1.2860. However, if we see a pullback from these levels, there'll be an opportunity to have an upward price movement towards resistance at 1.2947 - 1.2964.

More:
https://fbs.com/analytics/articles/gbp_usd:_"double_top"_pattern_2008

 

[riki143]

GOLD MARKET OVERVIEW
11:44 05.07.2017

Gold prices dropped sharply this Monday to $1218 (the lowest level in 2 months). The relative strength of the USD and stronger equities and higher yields kept traders away from precious metal.

The rally in equities and yields has started last week following a hawkish shift in tone among key central banks. The heads of major banks admitted that they need to change their dovish postures and partially withdraw monetary stimuli prematurely, before the extreme hike in inflation rates. This spurred a global-wide selling in government bonds and delivered a sudden jolt higher to yields. The Federal Reserve has already started to put into life their plans by lifting its benchmark interest rates, signaling the start of the QE wind down.

On Tuesday, the bullion ticked higher after the Reserve Bank of Australia failed to show its intention to remove some monetary accommodation any time soon. The Aussie and some of the government yields were sold quickly upon the publication of the board’s statement. If other central banks fail to deliver on their recent promises (changing their dovish postures to hawkish ones) as well, the gold prices will start rising again. The Bank of Canada is coming up next to deliver its rate and monetary policy statements (on June 12). A “no change” decision will be disappointing for Loonie buyers but probably the balm for the bullion traders.

Another trigger for gold prices was the escalation of the conflict in the Korean peninsula. Gold is a well-known safe-haven asset that tends to appreciate in times of crises, political and military disturbances. North Korea successfully tested its new ballistic missile capable of carrying a larger and heavier nuclear warhead. South Korean and American troops have recently fired their own missiles into the waters off South Korea to demonstrate their deep strike precision capability. A de-escalation of tensions between the two Koreas will probably divert traders from buying non-risky but low-return assets.

The prime minister of Japan Abe seeks to discuss this conflict with Russian and Chinese leaders at G-20 summit (which starts on Friday) and force them to make an effort to appease North Korea.

In the recent session, the gold ticked lower once again. Now it is trading near 1222.50. From here it may slide lower towards the supports at $1215 (two-month low) and at $1197 (March 15 low). The immediate resistance can be found at $1235. Its break will allow us to touch $1250 level.

More:
https://fbs.com/analytics/articles/gold_market_overview_2009

 

[riki143]

EUR/USD: DEVELOPING WAVE (III)
13:35 05.07.2017

There's a pullback from 3/8 MM Level, so the price is declining in wave . The main intraday target is 0/8 MM Level, which could be a departure point for an upward correction.

Wave (ii) may have been finished, so there's a developing wave (iii). Previously, bulls have formed wave [v] of C. In this case, the market is likely going to continue moving down towards 0/8 MM Level during the day.

More:
https://fbs.com/analytics/articles/eur_usd:_developing_wave_(iii)_2014

 

[riki143]

IRON ORE MARKET DYNAMICS MAY HURT AUSSIE
13:36 05.07.2017

Aussie dropped to 0.7595 in the recent session from the Monday’s opening price of 0.7680. The Reserve Bank of Australia released a neutral statement on Tuesday without even a partly hawkish tilt the market participants waited since the last week central bankers’ meeting.

We expect Aussie to slide even lower as there is a risk of iron ore prices falling lower in the longer term.

Iron ore futures were under pressure during almost three months, then, at the end of the second quarter, they managed to return into bull-market territory mainly on a surge driven by mills in China making additional purchases to replenish stockpiles, with high-quality ore in demand. They almost hit $65 level on June 29 which is the highest price since May 4. According to the Metal Bulletin Ltd., iron ore prices increased more than 20% from this year low of $53.36 posted just a couple of week ago.

Daniel Gardwell, a leading economist at Australia & New Zealand Banking Group Ltd., explained the recent surge as follows: trading activity had increased significantly as buyers returned to the spot market after the long period of sitting on the sidelines.

Nevertheless, in the near term, some banks expect some weakness in iron ore futures given the surging supply. The top producers are expected to boost their exports 3.2% to 301 million tons this quarter, according to the estimates of Sanford C. Bernstein & Co.

Goldman Sachs Group Inc. says the price is heading lower and Citigroup Inc. sees it dropping to the $40s on the back of increased production, rising stockpiles, even if China’s steel production will hold at its current high levels in the upcoming months. Peter O’Connor, an analyst at Shaw & Partners, believes that iron ores prices will slide towards $55 by the end of this year that is iron ores’ marginal cost of production.

More:
https://fbs.com/analytics/articles/iron_ore_market_dynamics_may_hurt_aussie_2015

 

[riki143]

EUR/USD: BULLISH "HIGH WAVE"
16:09 05.07.2017

The price is still declining, so the last "Three Methods" pattern is still on the table. Also, there isn't any reversal model so far. In this case, the market is likely going to continue moving down towards the lower "Window".

We've got a bullish "High Wave", but confirmation of this pattern is a quite weak. Therefore, the market is likely going to test the 55 Moving Average, which could be a departure point for another decline towards the 144 MA.

More:
https://fbs.com/analytics/articles/eur_usd:_bullish_"high_wave"_2018

 

[riki143]

USD/JPY: PRICE FIXATED ABOVE THE "WINDOW"
16:11 05.07.2017

The price fixated above the "Window", so we've got bullish patterns like a "High Wave" and a "Hammer". Under this circumstances, bulls are likely going to continue pushing the pair even higher.

There's a "Shooting Star", which has been formed at the last high. So, the market is likely going to test the nearest "Window" during the day. If any bullish pattern arrives afterwards, there'll be an opportunity to have a new local high

More:
https://fbs.com/analytics/articles/usd_jpy:_price_fixated_above_the_"window"_2019

 

[riki143]

USD/CHF REACHED SELL TARGET 0.9550
17:08 05.07.2017

USD/CHF reached sell target 0.9550
Next buy target - 0.9750
USD/CHF has been rising in the last few trading sessions – following the earlier upward reversal form the support area lying between the powerful support level 0.9550 (which has been reversing the price from last August and which was set as the sell target for this currency pair) and the lower daily Bollinger Band. USD/CHFis expected to rise to the next buy target at the next resistance level 0.9750 (which reversed the previous minor correction in June).

More:
https://fbs.com/analytics/articles/usd_chf_reached_sell_target_0.9550_2020

 

[riki143]

GBP/USD FALLING INSIDE INTERMEDIATE IMPULSE WAVE (3)
17:09 05.07.2017

GBP/USD falling inside intermediate impulse wave (3)
Next sell target - 1.2750
GBP/USD continues to fall inside the intermediate impulse wave (3), which started earlier from the strong resistance zone lying between the round resistance level 1.3000 (which also stopped the previous primary ABC correction ? in the middle of May) and the upper daily Bollinger Band. The downward reversal from this resistance zone created the daily Japanese candlesticks reversal pattern Evening Star. Given the overbought daily Stochastic - GBP/USD is expected to fall to the next sell target at the next support level 1.2750.

More:
https://fbs.com/analytics/articles/gbp_usd_falling_inside_intermediate_impulse_wave_(3)_2021

 

[riki143]

MORNING BRIEF FOR JULY 6
08:46 06.07.2017

The US dollar suffered losses overnight following a bit divided FOMC meeting minutes which disappointed investors expecting confirmation of Janet Yellen’s hawkishness. There were several rather than just a few members who expressed their concerns that inflation rates might not pick up to the extent that it would justify a further normalization of monetary policy. Fed’s official failed to express an undivided opinion on when to start balance sheet run-off. Some wished it happened in August – September, others asked for deferral pointing out at easing financial conditions. A formal announcement will probably come at the Fed’s July meeting.

Mixed minutes didn’t result in an extreme USD depreciation, though. Traders remain focused on Friday’s labor market report with quite strong data (latest ISM report indicated that manufacturing jobs are currently on the rise). The euro stabilized against the USD. It holds firmly around 1.1340 for the third day now. In the past few sessions, we see some improvements in the Eurozone official data (upgraded German manufacturing and service sector activities, higher PMI indices (expect Italian PMI) and a rebound in retail sales). The positive data flow undoubtedly strengthened the currency’s resilience to the greenback’s assaults.

Today traders should focus on the ADP employment survey – a major pre-NFP report, and more importantly the ISM non-manufacturing survey. Also, we will receive the ECB account of the last monetary policy meeting at 2:30 pm MT time. We don’t expect it becomes a tailwind for the euro given the biased commentaries from various ECB’s officials. Most likely, it will show that not everyone in the central bank recognized the need to reduce monetary policy stimulus.

Aussie added a few points in the Asian session on the big Australian surplus announcement but failed to hold its gains and bounced back to 0.7600. But we cannot take the following dip for the start of the bearish reversal. Most likely it is a continuation of the post-RBA’s consolidation phase. AUD/USD will likely trade sideways within the range of 0.7535 – 0.7680 in the upcoming sessions.

USD/CAD moved higher in Tokyo morning as a drop in oil prices capped the recent Bank of Canada’s inspired rally of the Loonie. Brent and WTI futures fell following comments from Russia that it doesn’t want deeper production cuts. In today’s spotlight – Canada’s building permits and trade balance data coming at 3:30 pm MT time.

Sterling is trading at 1.2940 in the broad consolidation range of 1.2820 – 1.3030. A break of its upper border will allow the GBP to hit higher levels. But this might happen only if today’s economic data out of the US is below the market’s expectations. There are no UK releases scheduled for today. The focus will on tomorrow’s industrial production and trade balance reports that might disappoint traders given the lower PMI we got earlier.

More:
https://fbs.com/analytics/articles/morning_brief_for_july_6_2034

 

[riki143]

EUR/USD: THERE MIGHT BE A REBOUND
09:36 06.07.2017

On the EUR/USD daily chart, there is a correction towards the upward near-term trend. If Bulls manage to consolidate above the level of 1.344 (78.6% from the downward near-term wave), the risks of the continuation of the rally towards the target 127.2% in the Crab pattern will increase. A downfall of the euro towards the area of 1.1255 – 1.129 can be used for opening long positions.

On the EUR/USD hourly chart, a downfall of quotes towards the lower borders of the short-term and near-term trading channels followed by the rebound will allow us to find the most beneficial entry point.

More:
https://fbs.com/analytics/articles/aud_usd:_aussie_supported_by_cloud_2003

 

[riki143]

USD/CHF: FRANC STUMBLED ACROSS DOJI-BAR
09:39 06.07.2017

On the USD/CHF daily chart, the formation of doji-bar with the long upper shadow tells us about the Bulls’ weakness. Bears are ready to restore the downward trend towards target 224%, 127.2% in the AB=CD and Crab patterns. But before this, they need to test the support at 0.9636 (88.6% from the XA wave).

On the USD/CHF hourly chart the inability of Bulls to push quotes beyond the borders of the downward trading channel and return of quotes to the borders of the upward trading channel will tell us about their weakness.

More:
https://fbs.com/analytics/articles/usd_chf:_franc_stumbled_across_doji_bar_2038

 

[riki143]

EUR/USD: CONSOLIDATION BETWEEN 34 & 55 MA

The 34 Moving Average has acted as support, so the price is consolidating. Also, there's a "V-Top" pattern, which has been confirmed. Therefore, the market is likely going to test the nearest support at 1.1307 - 1.1287 in the coming hours. If a pullback from this area happens, there'll be an opportunity to have an upward price movement towards the closest resistance at 1.1356 - 1.1398.

The price is consolidating between 34 & 55 Moving Averages. It seems like bulls are ready to achieve the next resistance at 1.1354 - 1.1365. However, if we see a pullback from these levels, bears will have a green light to deliver a decline in the direction of support at 1.1287.

More:
https://fbs.com/analytics/articles/eur_usd:_consolidation_between_34___55_ma_2040

 

[riki143]

GBP/USD: "V-BOTTOM" PATTERN
11:01 06.07.2017

Bears faced support at 1.2887, so there's a "V-Bottom" pattern, which pushed the price to the nearest resistance at 1.2947. Moreover, bulls are likely going to reach the next resistance at 1.2964 - 1.2976. Considering the previously formed "Double Top", bears will probably try to achieve support at 1.2926 - 1.2887 afterwards.

The price is consolidating near the 89 Moving Average, so bulls are likely going to test the nearest resistance at 1.2964 - 1.2976. If a pullback from this area happens, there'll be an option of having a decline towards the 89 Moving Average.

More:
https://fbs.com/analytics/articles/gbp_usd:_"v_bottom"_pattern_2041

 

[riki143]

THE US STOCK MARKET OVERVIEW
11:31 06.07.2017

US equities ended mostly higher yesterday in the post-holiday trade buoyed by gains in technology, healthcare in and financial shares. A recent drop in oil prices dragged energy stocks a bit lower but failed to divert the composite indices from their overall bull rally.

S&P500 is currently moving within the consolidation range of $2405 – 2450. Until the lower border of the range is still intact we expect it moving sideways.

Nasdaq ticked a few points higher today to $6150. It has a room for further extension towards $6343 (its all-time high). On the downside, there is a solid support at $5995 (18 May low).

A divided FOMC meeting minutes released overnight also helped the US shares to climb higher. The minutes indicated that some members are concerned with the inflation picking up in disaccord with the Fed’s monetary policy stimulus removal. As for the discussion on when to start the process of balance sheet wind down, the Fed is divided. Some suggest it can start as early as September, others are not willing to pre-commit to a start date this early. So, in the future, tepid economic data (a miss on the tomorrow’s NFP, e.g.), as well as inflation rate below the Fed's cherished target, may have a bearing on the Fed’s plans to hike one more time this year and to commence a balance sheet run-off. This would be extremely positive for the US equities as lower interest rates make them more attractive than saving money in a bank or holding government bonds.

While in the short-term there might be some retracements in the US equities, in the near-term we expect them to rise higher as soon as second quarter earnings data is published. Some analysts project surprisingly strong releases. The early results from the reporters like Nike, Oracle and Darden were truly impressive. Profits from the companies that have already posted their earning are up nearly 12% from the second quarter results of last year. These early indications might not be sufficient to be extremely bullish on the US equities though. Earning season has not really started yet. It won’t commence until July 14, when JPMorgan and Wells Fargo start reporting their profits, but we might be encouraged at least by this early reporting and wait for even better prints.

More:
https://fbs.com/analytics/articles/the_us_stock_market_overview_2042

 

[riki143]

EUR/USD: 4/8 MM LEVEL ACTED AS RESISTANCE TWICE
12:06 06.07.2017

The price has been declining in wave since a pullback from 3/8 MM Level was formed. The main bearish target is 0/8 MM Level, which could be a departure point for an upward correction.

4/8 MM Level has acted as resistance twice. In this case, wave ii of (iii) may have been ended, so bears are likely going to deliver wave iii of (iii) in the coming hours. Therefore, we should keep in mind 1/8 MM Level as an intraday target.

More:
https://fbs.com/analytics/articles/eur_usd:_4_8_mm_level_acted_as_resistance_twice_2043

 

[riki143]

GBP/USD: POUND TESTED CLOUD’S SUPPORT
14:25 06.07.2017

Technical levels: support – 1.2960, 1.2900; resistance – 1.3010.

Trade recommendations:

Buy — 1.2950; SL — 1.2930; TP1 — 1.3010; TP2 — 1.3050.
Reason: bullish Ichimoku Cloud, but falling Senkou Span A; a correctional dead cross of Tenkan-sen and Kijun-sen; the market is supported by the Cloud.

More:
https://fbs.com/analytics/articles/gbp_usd:_pound_tested_cloud’s_support_2048

 

[riki143]

USD/JPY: DOLLAR IS IN CONSOLIDATION
14:26 06.07.2017

Technical levels: support – 113.00, 112.40; resistance – 113.60.

Trade recommendations:

Sell — 113.20; SL — 113.40; TP1 — 112.40; TP2 — 112.10.
Reason: narrow bullish Ichimoku Cloud; a golden cross of Tenkan-sen and Kijun-sen with rising Tenkan-sen; the prices are under the strong resistance on daily timeframe.

More:
https://fbs.com/analytics/articles/usd_jpy:_dollar_is_in_consolidation_2049