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High Impact Weekly Commentary | Gdmfx | Technical

Discussion in 'Forex Daily News & Outlook' started by GDMFX, Jun 23, 2014.

  1. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: EURO LACKS DIRECTION. POUND REACHES MULTI-YEAR HIGH



    EUR/USD
    Forex Technical Analysis: The week that just ended was filled with mixed data releases and price action was extremely choppy, with a lot of sharp whipsaws as a result. The week was bullish nonetheless and price closed higher, above 1.3585.

    [​IMG]

    Technical Outlook
    The long term uptrend has ended once the bullish trend line was broken last month but the bears have reached a barrier at 1.3500 (1.3480) and lately the pair lacks clear direction. The daily range is very low compared to how this pair usually moves and clear intraday trends are rarely seen, but considering the fact that downwards momentum has stopped, we anticipate a climb above1.3680.

    Fundamental Outlook
    The week ahead starts with German and French Manufacturing data releases scheduled Monday and continues Tuesday with the German Ifo Business Climate and American Consumer Confidence. These are important and leading indicators of economic health and consumer spending, with the potential to heavily influence their respective currencies.

    Wednesday’s headline is the release of the US Durable Goods Orders; these goods are more expensive than normal ones because they have a life expectancy of at least three years and a higher number of orders suggest a thriving economy and increased production activity as manufacturers will work to fill the orders.

    Thursday lacks major announcements and the last important event of the week is released Friday in the form of the German Consumer Price Index which accounts for a big part of the entire Euro Zone inflation and can have a strong impact on the Euro.


    GBP/USD
    The Pound continued to strengthen last week, breaking a multi-year high; Fed’s comments regarding a low interest rate which will be maintained for a considerable amount of time weakened the US Dollar and generated another bullish week.

    [​IMG]

    Technical Outlook
    The high established last week at 1.7063 will most likely act as resistance in the future and support is located at 1.6996, followed by the bullish trend line seen on the chart above. The Relative Strength Index on a Daily time frame has reached overbought territory and this increases the chance of a drop below the mentioned levels. Mark Carney will deliver two important speeches this week and the pair’s direction will be heavily influenced by them.

    Fundamental Outlook
    Tuesday the Governor of the BOE, Mark Carney will speak in London at the Treasury Committee Hearing and Thursday he will make another public appearance by participating at a Press Conference regarding the BOE Financial Stability Report which is released at the same time. Both these events will probably have a huge impact on the pair and we are likely to see important developments this week.



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  2. GDMFX

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    FOREX TECHNICAL ANALYSIS: ECB PRESS CONFERENCE AND US NON-FARM PAYROLLS – INGREDIENTS FOR A BREAKOUT



    EUR/USD
    Forex Technical Analysis: The pair just finished a ranging week when price was confined between support and resistance and economic data didn’t have a strong impact; price movement was less than 80 pips for the entire week from high to low.

    [​IMG]

    Technical Outlook
    Last week price slowly crawled upwards and 1.3500 support wasn’t threatened. The bullish push lacks strength and it looks like it won’t be able to break 1.3680 resistance if it gets there so we anticipate a bounce lower. However, if the bulls find the strength to break the mentioned level, the next barrier is located at 1.3785 which will be a high probability turning-point, especially if the Relative Strength Index will indicate an overbought condition at the time. To the downside, 1.3500 remains the main level of interest.

    Fundamental Outlook
    Monday’s main event is the Euro Zone Consumer Price Index which as we know is the main inflation gauge and shows the change in prices paid by consumers for goods and services. The ECB aims to keep inflation just under 2.0% so the current value of 0.5% is considered too low and further decreases can severely weaken the Euro.

    Tuesday the US Manufacturing PMI will be released, showing the opinions of purchasing managers regarding economic health and business conditions in the Manufacturing sector. Wednesday Fed Chair Janet Yellen will speak at the International Monetary Fund in Washington DC and as we know, speeches of heads of central banks can create huge volatility so caution is recommended if trading at the time.

    Thursday will be the week’s most important day as the European Central Bank will announce the Interest Rate and Mario Draghi will hold a Press Conference explaining the reasons behind the Rate decision and will possibly offer hints about future monetary policy direction. The same day the US Non Farm Payrolls will be released, showing the change in the number of new jobs created, excluding the farming sector. It is considered the most comprehensive measure of employment in the United States and it is almost always a strong market mover.

    Friday the United States celebrate Independence Day so US banks will be closed and no economic data will be released. This is also the reason why the Non Farm Payrolls are not announced Friday, but a day earlier.


    GBP/USD
    The Pound had a mixed week as BOE Governor Mark Carney adopted a hawkish stance during his speech and reversed a previous move below 1.7000.

    [​IMG]

    Technical Outlook
    The pair is close to the multi-year high located at 1.7063 and the Relative Strength Index is hovering close to the 70 level which indicates an overbought condition of the market. On top of this, the bullish momentum seems dampened and a bearish retracement might be in order unless positive economic data is posted by the United Kingdom. The first major support is located at 1.6750 but such a move is probably too much to happen during a single week considering that lately the pair lacks strong movement. Resistance sits at 1.7063 and a break would renew the uptrend, bringing in more buyers.

    Fundamental Outlook
    Three indexes will be released this week by the United Kingdom: Tuesday we have the Manufacturing Purchasing Managers’ Index, followed Wednesday by the Construction PMI and Thursday by the Services PMI. All three are leading indicators of economic health focused on their respective sectors and they usually have a hefty impact on the Pound, depending on the figures posted. The important US events will have a direct impact on the pair’s movement throughout the week.

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  3. GDMFX

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    FOREX TECHNICAL ANALYSIS: A LACKLUSTER ECONOMIC SCENE TRANSLATES INTO RANGING PRICE ACTION



    EUR/USD
    Forex Technical Analysis: During the week that just ended ECB President Mario Draghi reiterated that interest rates will remain low for an extended period of time and the employment situation in the United States showed signs of improvement. As a result the pair moved lower for almost the entire week.

    [​IMG]

    Technical Outlook
    Last week we saw the bears in control of the pair and price bounced off 1.3680 resistance; the pair is starting to show stronger movement but it is still confined between the resistance we just mentioned and the support located at 1.3500. A break of either one of these two levels would most likely put an end to the ranging period and would generate an extended move in that direction. Although last week belonged to the bears, our bias is neutral until a breakout occurs.

    Fundamental Outlook
    Economic data is scarce this week and this might generate slow, ranging movement. Monday lacks important news releases while Tuesday the only notable event is the German Trade Balance which will show the difference between imported and exported goods; usually this indicator has a mild impact on the market.

    Wednesday the FOMC will release the Minutes of their latest meeting and more often than not, the US Dollar is highly affected because traders will gain insights into the reasons which stood behind the latest interest rate decision and the pace of the bond purchases. Hints about future monetary direction are usually revealed within the Meeting Minutes document.

    Thursday the ECB will release their Monthly Bulletin, containing an economic outlook from the Bank’s viewpoint and more information about economic conditions. The French Industrial Production numbers come out the same day, but both events are considered to have just a medium impact on the Euro. The last day of the week doesn’t hold any special reasons for volatility as no major indicators are released.


    GBP/USD
    United Kingdom’s Manufacturing and Construction PMIs posted better than expected values last week, further strengthening the Pound and taking the pair to new multi-year highs. The US Non Farm Payrolls release created just a brief retracement lower.

    [​IMG]

    Technical Outlook
    Although the Pound is showing tremendous strength lately and the British economy continuously shows signs of improvement, we believe that a bearish pullback is in order. For a long time the pair has been moving upwards, without retracements and the Relative Strength Index is showing a clear overbought condition, moving well above the 70 level. The main levels to watch are 1.7180 as potential resistance and 1.7000 as support.

    Fundamental Outlook
    Tuesday the UK will announce the Manufacturing Production numbers which represent about 80% of the entire Industrial Production and have the potential to further strengthen or to weaken the Pound depending on the reading shown. The same day, an estimate of Great Britain’s Gross Domestic Product will be released.

    Thursday will probably be the week’s most important day for the Pound as the Bank of England will announce their Interest Rate decision. Although no change is anticipated, the event will most likely generate strong and potentially irregular movement. As always, the American indicators released throughout the week will have a direct impact on the pair’s direction.
     
  4. GDMFX

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    FOREX TECHNICAL ANALYSIS: THE TESTIMONIES OF DRAGHI, YELLEN AND CARNEY SET THE STAGE FOR A RETURN OF VOLATILITY



    EUR/USD
    Forex Technical Analysis: For the entire last week the pair didn’t have clear direction and strong movement, mostly due to the lack of major economic releases. The week had a 75 pip range from top to low and no important levels were broken.

    [​IMG]

    Technical Outlook
    The last important technical event was the bounce lower seen at 1.3700 but last week the bears couldn’t continue the momentum generated by that rejection seen at resistance and price moved in a narrow range. This type of movement doesn’t offer a lot of insight about future direction and for the time being, the first level to watch is the minor support at 1.3585 which may trigger a bounce back up into 1.3700 but a break will make 1.3500 the first target.

    Fundamental Outlook
    The week begins with an important event scheduled Monday: ECB President Mario Draghi will testify about monetary policy in Strasbourg before European Parliament’s Committee on Economic and Monetary Affairs. This speech is considered a high impact event and the market is likely to respond with strong volatility.

    Tuesday’s headlines will be held by the German ZEW Economic Sentiment survey and the US Retail Sales. The same day, Fed Chair Janet Yellen will testify in Washington before the Senate Banking Committee. The topic of the discussion will be the Semiannual Monetary Policy Report and strong movement is expected. Wednesday she will testify again on the same matter, but before the House Financial Services Committee; again, caution is recommended because the US Dollar will be highly affected.

    Thursday’s main event will be the release of the European Consumer Price Index which is the main gauge of inflation and lately has been closely watched by market participants and by the ECB as well because its current value (0.5%) is far from the desired target of just below 2.0%. The last important event of the week is scheduled Friday in the form of the US Consumer Sentiment which is a leading indicator of consumer spending, which in turn, represents a major part of overall economic activity.


    GBP/USD
    As expected by almost all market participants and analysts, the Bank of England kept the interest rate at a record low (0.50%) last week and no other events shook the market, thus we had a sideways week.

    [​IMG]

    Technical Outlook
    The pair is trapped between 1.7180 resistance and the minor support created at 1.7090. It seems the Pound has reached a top and the overall sentiment is starting to shift towards the short side as high prices are hard to sustain. Supporting this view is also the fact that the Relative Strength Index is starting to descend, coming from an overbought condition so we anticipate a move south this week but the first barrier is of course the current level (1.7090). If bears manage to break it, the first lower target will be 1.7000.

    Fundamental Outlook
    The most important day of the week for the Pound will probably be Tuesday when UK’s Consumer Price Index is announced and BOE Governor Mark Carney will testify on the Financial Stability Report at the House of Commons Treasury Committee Hearing. Both events have the potential to trigger massive moves. Another important Pound-affecting event is scheduled Wednesday in the form of the Claimant Count Change which shows how many people claimed unemployment-related social help during the previous month. The indicator acts as a gauge of economic health: in a thriving economy, jobs are easier to come by. As always, the pair’s movement will be directly affected by the US events released throughout the week.
     
  5. GDMFX

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    FOREX TECHNICAL ANALYSIS: US DOLLAR SHOWS SIGNS OF RECOVERY. SUPPORT THREATENED​



    EUR/USD
    Forex Technical Analysis: During the week that just ended, the US Dollar showed signs of recovery on the back of a hawkish attitude of Fed Chair Janet Yellen; however, the US economic data showed mixed readings and the pair’s descent wasn’t spectacular.

    [​IMG]

    Technical Outlook
    Price reached the important support located at 1.3500 and at the moment, rejection can be observed: Friday’s candle can be considered a pin bar (which indicates bullish pressure) and we can also notice a double bottom pattern which is another reason to believe that price will have a tough time breaking the current level of support. First resistance is located at 1.3585 while the next support is located at 1.3295. The way price behaves around the current level will probably dictate the next short-term direction.

    Fundamental Outlook
    Monday the political and economical scene is quiet for both the United States and Europe but an important American indicator is released Tuesday: the Consumer Price index. The indicator tracks changes in the price paid by consumers for the products they purchase and basically acts as a measure of inflation, with the ability to strengthen the US Dollar if a high reading is posted.

    Wednesday we have another quiet day as far as fundamentals are concerned and Thursday’s main events will be the French and German Manufacturing PMIs, both leading indicators of economic health, derived from the opinions of purchasing managers from their respective countries.

    The German IFO Business Climate will be released Friday, showing the opinions of about 7,000 German businesses regarding the current economic conditions and a 6-month outlook. The United States will announce the Durable Goods Orders (goods with a life expectancy of at least 3 years), an indicator which is considered important for future production activity: if the orders increase, the producers will have to increase their activity to fill them.


    GBP/USD
    Last week the pair remained confined between 1.7180 and 1.7060 but bulls made an attempt to break resistance, which resulted in a bounce lower. Support was pierced but the week ended above it.

    [​IMG]

    Technical Outlook
    Although we have a new multi-year high printed at 1.7191, the resistance zone created around 1.7180 wasn’t broken and price is now testing support. Neither bulls nor bears are in control of price direction but this week we anticipate a move outside the horizontal channel created by 1.7180 and 1.7060. The first level of interest to the downside is 1.7000 (if 1.7060 is broken) while to the north 1.7180 remains a strong barrier.

    Fundamental Outlook
    The first major event for the Pound is scheduled Wednesday when the votes on the latest BOE interest rate decision are announced. This is an opportunity for market participants to see if the MPC members’ opinions regarding the interest rate are starting to diverge; on their last meeting, all members voted to keep the interest rate unchanged and for this release, the same is expected.

    Thursday the UK will announce the change in the value of Retail Sales which account for a major part of the economy and thus have a high impact on the Pound. The last important event of the week comes Friday in the form of Preliminary UK Gross Domestic Product. The GDP is considered an economy’s main performance gauge and the Preliminary version tends to have the greatest impact. As always, the US events mentioned earlier will have a direct impact on the pair’s movement throughout the week.
     
  6. GDMFX

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    FOREX TECHNICAL ANALYSIS: UNITED STATES IN THE SPOTLIGHT: INTEREST RATE AND NON FARM PAYROLLS DECIDE DIRECTION



    EUR/USD
    Forex Technical Analysis: Last week the bears regained control of the pair and managed to clearly break the support zone created between 1.3520 and 1.3480 as the US economy showed signs of recovery.

    [​IMG]

    Technical Outlook
    The bearish momentum is likely to continue now that important support is broken. However, the pair shows an extended move south and a bullish correction is a high probability scenario, especially considering the oversold condition of the Relative Strength Index on a daily chart as well as on a four hour chart. The first level of support is located at 1.3400 followed by 1.3295 and resistance now sits at 1.3480.

    Fundamental Outlook
    The week ahead will be mostly influenced by US economic releases, starting Monday with the US Pending Home Sales (shows the change in the number of houses under contract to be sold once the final transaction is complete) and continuing Tuesday with the US Consumer Confidence. This indicator acts as a leading indicator of consumer spending because usually people tend to spend more when they are confident in the economic situation of their country.

    Wednesday is again filled with important US events: a report regarding the jobs situation will be released by a privately owned company, trying to mimic the Government issued Non Farm Payrolls data which comes out 2 days later. The Advance version of the American Gross Domestic Product (an economy’s main performance gauge) will be released the same day and probably the most important event will be the Interest Rate decision which comes out later in the day. The announcement will be accompanied by a FOMC Statement which will outline the reasons behind the rate decision.

    Thursday attention shifts towards Europe for the release of the Euro Zone Consumer Price Index which acts as ECB’s target for inflation. Friday the most important US jobs-related report comes out: the Non Farm Employment Change (also known as the Non Farm Payrolls). The report tracks changes in the number of employed people, is released monthly and is considered a major market mover as more jobs suggest a thriving economy and future increases in consumer spending.


    GBP/USD
    The Pound was weakened by the value of the British Retail Sales which didn’t meet expectations last week and on top of that, BOE’s Meeting Minutes were more dovish than market participants anticipated. Throughout the week, the bears dominated price action and support was broken.

    [​IMG]

    Technical Outlook
    The pair moved below 1.7063 support and even surpassed the psychological level at 1.7000. The current direction is likely to remain unchanged until 1.6920 is touched but if that happens, we expect corrections to the upside in the form of bullish moves. Although the long term uptrend is weakened, the bulls still have underlying strength which may be manifested this week. Immediate resistance is located at 1.7000, followed by the zone around 1.7060.

    Fundamental Outlook
    We have a very slow week ahead as the United Kingdom scheduled very few economic releases: Tuesday the value of Net Lending to Individuals is announced but the most important event for the Pound will be the release of the Manufacturing PMI which is scheduled Friday. Throughout the week, the focus will be mainly on US events which will probably have a tremendous impact on the pair’s movement.
     
  7. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: ECB PRESS CONFERENCE AHEAD. DRAGHI OFFERS CLUES ABOUT MONETARY POLICY AND PRICE DIRECTION



    EUR/USD
    Forex Technical Analysis: The US Dollar benefited last week from a surprising growth of the American Gross Domestic Product, but later in the week almost all gains were erased by a disappointing reading of the NFP. As a result, the week closed near its opening price.

    [​IMG]

    Technical Outlook
    The Relative Strength Index is moving out of oversold territory and price quickly returned above the level at 1.3400 after piercing through it earlier in the week. An encounter with the resistance at 1.3480 is very likely to happen this week, given the strong bullish momentum generated by last week’s events, but a move above this level will only happen if it’s backed by fundamental events. Immediate support is still located at 1.3400, followed by 1.3295.

    Fundamental Outlook
    Monday lacks major events for both the Euro and the US Dollar but Tuesday the greenback will be affected by the release of the Non Manufacturing PMI, an index based on the opinions of purchasing managers outside the manufacturing sector.

    Wednesday is again a slow day in terms of fundamental events and Thursday will be the most important day of the week for the Euro as the interest rate is announced (no change anticipated) and the ECB will hold a Press Conference, discussing the rate decision and offering hints about future monetary policy. ECB President Mario Draghi will also answer journalists’ questions during the conference and this is usually the time when the highest volatility is experienced. This will be the last high-impact event of the week as Friday no major indicators are released.


    GBP/USD
    For the entire week that just ended the bears were in control of the pair and important levels of support were broken. The Pound is starting to lose its appeal and the long term uptrend is severely weakened.

    [​IMG]

    Technical Outlook
    We expect the bearish momentum to continue, but before that happens, we are likely to see bullish corrections, probably during the first part of the week. The Relative Strength Index is sitting below the 30 level, indicating an oversold market and favoring moves to the north; on top of that, for almost three weeks the pair has been traveling straight down and usually, this type of movement calls for a retracement to the upside. First resistance sits at 1.6920 while support is located at 1.6750.

    Fundamental Outlook
    The United Kingdom will release the Construction and Services PMIs Monday and Tuesday respectively, followed Wednesday by the Manufacturing Production numbers. Better numbers for all three indicators usually strengthen the Pound as they indicate a thriving economy and optimism regarding business conditions. The Bank of England will announce Thursday the interest rate decision but no change is anticipated from the current value of 0.50%. However, any hints about future rate increases will open the door for speculation and will probably create strong moves.
     
  8. GDMFX

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    FOREX TECHNICAL ANALYSIS: US DOLLAR LOSES STEAM AS BULLISH RETRACEMENTS ARE IN ORDER



    EUR/USD
    During last week’s ECB Press Conference, President Mario Draghi mentioned that rates will remain low for an extended period of time in the Euro Zone and the Euro took a brief dive but later in the week, it erased all losses, resulting in a weekly candle which suggests indecision.

    [​IMG]

    Technical Outlook
    The pair is printing lower lows on a Daily chart while the Relative Strength Index is making higher lows, a behavior which is known as regular bullish divergence and indicates that a move higher will follow. However, the pair is in a medium term downtrend and this makes moves to the downside very probable once the upside correction is complete. We anticipate a touch of 1.3480 – 1.3500 zone this week, followed by moves to the downside.

    Fundamental Outlook
    The first notable event of the week occurs Tuesday in the form of the German ZEW Economic Sentiment, a survey based on the opinion of German analysts and professional investors, focused on a 6-month economic outlook.

    Wednesday the US Retail Sales come out, showing the change in sales made at retail level compared to last month’s value. Consumer spending accounts for the major part of overall economic activity in the United Sates (more than two thirds) and the retail sales make up for the biggest part of such spending, hence the importance of the indicator.

    The German Preliminary Gross Domestic Product is announced Thursday, showing the overall performance of the German economy which is the backbone of the Euro Zone and the last major event of the week will be the release of the American Producer Price Index scheduled Friday. The indicator tracks changes in price charged by producers for their goods and services and has inflationary implications because a higher producer price will be eventually passed on to the consumer.


    GBP/USD
    During the first 2 days of last week, the pair completed a bullish retracement and last 3 days belonged to the bears who managed to print a new low. UK’s interest rate remained unchanged, showing that economic recovery is not yet as strong as needed for a rate increase.

    [​IMG]

    Technical Outlook
    The uptrend line drawn from November 2013 is broken for some time now but the Relative Strength Index reached oversold territory for a second time in a short while and this week we anticipate bullish moves which will most likely clear this condition of the indicator. The first support is located at 1.6700 and so far price doesn’t show that it will reverse before touching it but be aware of any such signs during the early stages of the week. First resistance is located at 1.6920 and the uptrend line could also provide resistance if touched from below.

    Fundamental Outlook
    Wednesday will be the busiest day for the Pound as several events take place: the Claimant Count Change is released, showing the change in the number of unemployed people and BOE Governor Mark Carney will hold a Press Conference, discussing the Inflation Report which is released the same day. The Report includes BOE’s view on inflation and economic expectations for the next 2 years and combined with the Press Conference, has the potential to be a major market mover for the Pound.

    The economic week finishes Friday with the release of the Second Estimate of the British Gross Domestic Product which is a gauge of overall economic performance. As always, the US events will directly influence price movement throughout the week.
     
  9. GDMFX

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    FOREX TECHNICAL ANALYSIS: US DOLLAR BULLS TRY TO MAINTAIN THEIR CONTROL



    EUR/USD
    Last week the pair ranged between support and resistance, a behavior generated by the mixed economic data which was released throughout the week. No significant advances were made by either side and the week was mainly characterized by reversals on the lower time frames.

    [​IMG]

    Technical Outlook
    For this week a breakout is imminent; either 1.3330 support or 1.3400 resistance will be broken and price will most likely continue in the direction of the break. The next important zones are located at 1.3480 as resistance and 1.3295 as support and we are likely to see a break of these zones as well. The medium term downtrend is in a consolidation pattern and the next direction will be decided by the fundamental aspect.

    Fundamental Outlook
    The first major event of the week is the release of the American Consumer Price Index scheduled Tuesday and considered one of the main gauges of inflation. Wednesday the FOMC Meeting Minutes will be released, showing the way the members voted on the interest rate and possibly offering hints about future monetary policy.

    Thursday the French and German Flash Manufacturing PMIs are released, showing the opinions of purchasing managers regarding business conditions in the manufacturing sector. The same day the Philly Fed Manufacturing Index is released, offering hints about the state of the manufacturing sector in the district of Philadelphia. The economic week finishes Friday with speeches of Fed Chairwoman Janet Yellen and ECB President Mario Draghi who will speak at the Jackson Hole Symposium.


    GBP/USD
    The Pound weakened severely last week, following a disappointing Inflation Report and a dovish speech of Governor Mark Carney who reiterated the fact that rates will not be increased for an extended period.

    [​IMG]

    Technical Outlook
    Despite the recent sell off, the pair is having trouble moving away from the support level at 1.6700. Also, the Relative Strength Index has moved again in oversold territory, increasing the chances of bullish corrections. The first potential resistance is located at 1.6845 while next support sits at 1.6550; also, the current level is not yet broken decisively and could still provide some sort of support.

    Fundamental Outlook
    United Kingdom’s Consumer Price Index is released Tuesday and Wednesday the Minutes of the latest BOE Meeting are made public. These will contain a breakdown of the members’ votes on the interest rate and details about the reasons which determined the votes. Usually the minutes have a high impact on the Pound if they contain hints about the next interest rate increase.

    The last important event for the Pound is the release of the British Retail Sales scheduled Thursday; sales made at a retail level represent a major part of the entire economic activity, hence their high importance. Throughout the week, the pair’s direction will be directly influenced by the US economic releases.
     
  10. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: EUROPEAN INFLATION TAKES CENTER STAGE AS THE EURO SLIDES LOWER​



    EUR/USD
    Forex Technical Analysis: The US Dollar strengthened significantly last week as the FOMC Meeting Minutes showed optimism regarding the labor market and overall economic recovery. European data didn’t bring any positive surprises and this allowed the bears to take the pair lower.

    [​IMG]

    Technical Outlook
    The huge drop experienced last week clearly shows that strength and market control belong to the bears. The level at 1.3295 which was previously support was broken and retested successfully during the week and now the first level of importance to the south is located at 1.3200, followed by 1.3100. The downtrend is strong and new lows are a probable scenario but retracements to the upside are anticipated. These possible bullish corrections may find resistance at 1.3295 followed by 1.3330.

    Fundamental Outlook
    The week begins with an important German survey: the IFO Business Climate. The release is scheduled Monday and has a high importance due to the large sample of 7,000 businesses which are asked to rate the current level of economic conditions and to provide an outlook for the next 6 months. The US New Home Sales are released the same day, offering insights into the American housing market which is always regarded as an important matter.

    Tuesday the focus remains on the Dollar as the US Durable Goods Orders (goods with a life expectancy of more than 3 years) and the Consumer Confidence survey are released. Wednesday is a slow day in terms of economic news releases but Thursday the most important gauge of German inflation is released: the Consumer Price Index (Preliminary version). Germany’s economy accounts for a major part of the entire Euro Zone economy and its inflation has a hefty impact on the Euro’s performance, making this release a high impact one. The same day the United States will announce the Preliminary version of the Gross Domestic Product which is the main gauge of an economy’s performance and has a strong impact on the currency.

    The economic week concludes Friday with the release of the Euro Zone Consumer Price Index which is expected to move the market strongly because inflation has been sliding lower despite the ECB’s efforts to counter this fact. For the time being, Euro Zone inflation is far away from the ECB target and the lowest in almost 5 years.


    GBP/USD
    Last week we saw United Kingdom’s inflation slide lower, weakening the Pound while the Dollar strengthened, generating a bearish week. Bank of England’s Meeting Minutes showed that some members of the MPC feel there is need for a rate increase but this only generated a brief strengthening of the Pound.

    [​IMG]

    Technical Outlook
    The current bear run is in clear need of a “breather” as price has been traveling south for an extended period of time without any significant retracement. The Relative Strength Index is deep in oversold territory for the fourth time since the drop begun and this favors a correction to the upside. If this retracement occurs, the first resistance is located at the zone around 1.6700, a place where the pair could resume downwards motion. The support at 1.6550 is the first barrier in front of falling prices, followed by 1.6460.

    Fundamental Outlook
    The Pound has a slow week ahead as UK Banks are closed Monday celebrating the Summer Bank Holiday and the only other notable events are the British Bankers’ Association Mortgage Approvals released Tuesday and the Nationwide House Price Index announced Friday. As always, the US events will have a direct impact on the pair’s movement.
     
  11. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: ALL EYES ON THE ECB PRESS CONFERENCE AND AMERICAN NON FARM PAYROLLS



    EUR/USD
    Forex Technical Analysis: For almost the entire week, the Euro ranged without strong movement but the last day of the week was the most active as Euro Zone inflation dropped and the single currency weakened significantly.

    [​IMG]

    Technical Outlook
    The 14-period Relative Strength Index on a Daily chart shows an oversold condition of the market but the bears still push the pair lower, heading for the next support located at 1.3100. If the pair gets there, we will probably see the selling pressure fade away, mostly because the medium term downtrend needs a bullish pullback. The first resistance is located at 1.3200 and the week’s price action will be heavily influenced by the fundamental aspect.

    Fundamental Outlook
    The week’s first day lacks major economic releases as the US banks will be closed in celebration of Labor Day. Tuesday the American Manufacturing PMI is released, offering insights into the opinions of purchasing managers regarding the state of the manufacturing sector. Wednesday the Euro Zone Retail Sales numbers come out but this is considered a medium-impact indicator because the main European countries have already announced their retail sales.

    Thursday is one of the most important days of the week ahead as the ECB will announce their interest rate decision and ECB President Mario Draghi will hold a press conference that usually generates huge volatility and strong movement. The week’s final market mover is released Friday in the form of the American Non Farm Payrolls which is considered the main gauge of employment in the US and also a leading indicator of consumer spending. Overall we have an important week ahead, for both the US Dollar and the Euro and we are likely to see important market developments.


    GBP/USD
    The Pound had a very slow week, mostly because no major economic indicators were released by the United Kingdom, but the technical aspect played an important role as the pair reached strong support which slowed the bearish momentum.

    [​IMG]

    Technical Outlook
    Last week we saw that bearish movement was hindered by 1.6550 support but the pair didn’t show a proper retracement and the current move may continue upwards. A stronger move to the upside is still expected but for the time being the bulls don’t exhibit enough strength so we might see another dip below 1.6550. The next important support is located at 1.6460 while first major resistance is represented by 1.6700.

    Fundamental Outlook
    The Manufacturing PMI will be released Monday, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. All three are surveys derived from the opinions of purchasing managers and are considered leading indicators of economic health for their respective sectors.

    Thursday the Bank of England will announce the interest rate which is not expected to change but usually volatility is generated by the release and we recommend caution if you will be trading at the time. Friday lacks major new announcements for the Pound but the pair will be heavily influenced by the US Non Farm Payrolls.
     
  12. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: SLOW ECONOMIC SCENE TRANSLATES INTO RANGING PRICE ACTION.​


    EUR/USD
    Forex Technical Analysis: The huge surprise offered by the ECB in the form of a new rate cut triggered a major selloff which was definitely last week’s central event and will probably influence this week’s price action as well. The weekly candle was strong bearish and a new yearly low was printed.

    [​IMG]

    Technical Outlook
    As seen in the picture above, the Relative Strength Index on a Weekly chart shows that the pair is trading in oversold territory. Daily and four-hour charts show the same condition and this makes us believe that pullbacks are a high-probability scenario. If this comes true, the first level which could act as major resistance is located at 1.3100 since 1.3000 was a less important support before being broken. The next major support is located around 1.2750 but before (and if) it is touched, a retracement must occur.

    Fundamental Outlook
    The week ahead is slow in terms of economic releases and this makes us believe that we won’t see massive moves similar to last week’s price action. Monday’s only notable indicator is the German Trade Balance which shows the difference in value between imported and exported goods but usually has a mild impact on the Euro unless surprising numbers are posted. Tuesday we have another slow day when only the French Trade Balance can trigger some volatility but the indicator is known to be even less important than the German one.

    Wednesday no major indicators are released and Thursday the German Final CPI comes out. The “Final” version is far less important than the “Preliminary” version but considering the lack of events this week, it could generate some volatility.

    Friday will be the busiest day of the week as the US Retail Sales numbers are released. Sales made at a retail level represent the main part of consumer spending which in turn accounts for about two thirds of overall economic activity, thus the event is considered a huge market mover. Later in the day the University of Michigan will release a survey with regard to consumer sentiment which is a leading indicator of future consumer spending.


    GBP/USD
    The Pound continued to weaken last week and the bears gained momentum on the back of US Dollar strength. Also, a poll showed increased support for Scottish independence and a possible separation from the United Kingdom.

    [​IMG]

    Technical Outlook
    Price is nearing the key level at 1.6250 and if this level is touched, we anticipate a bounce higher. The bears had a tremendous run and clearly controlled the pair for an extended period of time; this control is likely to continue but profit taking combined with the oversold condition of the Relative Strength Index and the importance of the support ahead are likely to push the pair higher. The first potential resistance is located at 1.6460 but a break of support could bring in more sellers.

    Fundamental Outlook
    Tuesday the British Manufacturing Production is released and BOE Governor Mark Carney will speak publicly in Liverpool. Better than expected manufacturing data and a hawkish Carney will probably set the stage for bullish moves. Later the same day, an estimate of the British Gross Domestic Product is released and can generate strong moves as this is the main gauge of an economy’s performance.

    Wednesday the Inflation Report Hearings take place. BOE Governor Mark Carney and other Monetary Policy Committee members will testify on inflation and economic outlook before the Treasury Committee of the Parliament. Strong moves are expected, depending on Carney’s attitude and answers, thus caution is recommended. As always, throughout the week, price action will also be influenced by the American releases.
     
    #12 GDMFX, Sep 8, 2014
    Last edited: Sep 8, 2014
  13. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: A HISTORIC WEEK AHEAD – SCOTTISH INDEPENDENCE TAKES CENTER STAGE



    EUR/USD
    Forex Technical Analysis: The fundamental scene was slow during the week that just ended and as a result, price action lacked the volatility seen throughout the last period. Also, after 8 bearish weeks, we saw the first victory of the bulls, although it was a minor one.

    [​IMG]

    Technical Outlook
    The week ended with price being higher than it opened but the buyers couldn’t make substantial advances and the Relative Strength Index on a Weekly chart is still trading in oversold territory. Last week’s candle shows bullish pressure (long lower wick) and these facts make us believe that we will see a climb into 1.3000 or even 1.3100. To the downside, 1.2750 is a key level which acted as strong support in the past and is likely to stop bearish movement if it will be touched.

    Fundamental Outlook
    The German ZEW Economic Sentiment is the week’s first notable event. This survey, scheduled Tuesday, shows the opinions of about 275 German professional investors and analysts regarding the current economic situation and a 6-month outlook. The same day, the American Producer Price Index is announced, showing the change in prices charged by producers for their services and goods. The indicator has inflationary implications because a higher producer price will be eventually passed on to the consumer.

    Wednesday the United States will take center stage as the FOMC will announce the Interest Rate, a Statement will be released and a Press Conference will take place. This cluster of events is likely to generate strong moves and high volatility so caution is recommended.

    Thursday Fed Chair Janet Yellen will deliver a speech in Washington DC, via satellite but throughout the day, the world’s eyes will be focused on the Scottish Independence vote which will most likely generate irregular movement. Friday lacks major events and we are likely to have a slow, ranging day.


    GBP/USD
    Bearish momentum slowed down last week and the bulls finally managed to close the week higher than it begun. Price action was heavily influenced by the polls regarding the Scottish Independence, a matter that will be finally settled this week when the results of the referendum are released.

    [​IMG]

    Technical Outlook
    The pair is currently testing the important level at 1.6250. This level acted as both support and resistance in the past and it proved to be well respected by price but the latest gap generated a clear move below it. However, it will be hard for the pair to move past this level for the second time without some sort of rejection, stall or re-test (if broken). A clear move above will make 1.6460 the next bullish target while a bounce lower will open the door for a move into 1.5900 with the first barrier being last week’s low.

    Fundamental Outlook
    The main event for the Pound will be the Scottish Independence vote scheduled Thursday. If the Scottish people will decide in favor of a separation from the United Kingdom, the Pound will suffer and we are likely to see huge downside movement but no matter the result, volatility will be high and caution is recommended.

    Other important events are the British CPI scheduled for release Tuesday, the MPC Meeting Minutes (Wednesday), which will show a breakdown of the members’ votes regarding the interest rate and the British Retail Sales scheduled Thursday. Overall, we expect a week with strong movement which will be heavily influenced by the Referendum; as always, the US events will have a direct impact on the pair’s direction.
     
  14. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: UNITED KINGDOM’S UNITY REMAINS INTACT



    EUR/USD
    Forex Technical Analysis: Last week the US Dollar was strengthened by a hawkish attitude of Fed Chair Yellen while the European Central Bank decided to set the target for their Long Term Refinancing Option (LTRO) at 82.6 Billion Euros, a fact which was perceived as bearish and triggered another selloff.

    [​IMG]

    Technical Outlook
    The week belonged to the bears as a new low was printed and the downtrend was resumed. The first level of importance to the downside is located at 1.2750 and it seems this level is the pair’s next destination now that 1.3000 was re-tested from below successfully. However, the Daily Relative Strength Index didn’t move clearly out of oversold territory for a long period and this increases the possibility of bullish moves but the pair is in a clear downtrend and we favor more downside movement overall.

    Fundamental Outlook
    Monday ECB President Mario Draghi will testify before the European Parliament’s Economic and Monetary Committee regarding monetary policy, an event which will be surrounded by volatility and possibly strong movement depending on his attitude and answers.

    The French and German Flash Manufacturing PMIs will be Tuesday’s main events while Wednesday’s headlines are the German IFO Business Climate and the American New Home Sales. Traders’ attention will then shift to the US Durable Goods Orders (goods with a life expectancy of more than three years) which are released Thursday. At the same time the Core version (which excludes from calculation transportation items) is released. Better numbers for any of the versions may strengthen the US Dollar because they suggest future increased economic activity as producers will have to work harder to fill the extra orders.

    Friday the United States will release the Final version of the Gross Domestic Product but this tends to have the lowest impact of the three versions (Advance, Preliminary and Final). However, since the GDP is an economy’s main performance gauge, the market will react to surprising numbers.


    GBP/USD
    The Scottish people voted “No” last week on a potential separation from the United Kingdom so the 307-year old union will remain intact for now. The result triggered Pound strength and was the week’s main British event.

    [​IMG]

    Technical Outlook
    The pair broke 1.6460 and came close to 1.6550 resistance on the back of Pound strength generated by the Scottish vote but soon after, the Dollar erased some of the gains. Overall we had a bullish week but if price will return below 1.6250, we are likely to see a move in close vicinity of 1.6060. To the upside, resistance still sits at 1.6460 followed by 1.6550 as these levels were just pierced and price failed to close above them.

    Fundamental Outlook
    The week ahead is characterized by a lackluster fundamental scene, a fact which makes us believe that we will see price slow down a bit, especially now that Scottish turmoil has settled. Tuesday the British Bankers’ Association will release the Mortgage Approvals numbers and Thursday the Confederation of British Industry will release a survey regarding Realized Sales. These are medium-impact indicators and we don’t expect them to create strong movement but the pair’s direction will be directly influenced by the US events mentioned earlier.
     
  15. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: ALL EYES ON THE EUROPEAN CENTRAL BANK RATE AND AMERICAN EMPLOYMENT DATA



    EUR/USD
    Forex Technical Analysis: Last week the US Dollar reached a 21-month high against the Euro, continuing to drag the pair lower on the back of strength generated by speculation that the Fed will move to raise interest rates before other Central Banks do.

    [​IMG]

    Technical Outlook
    An important support level was broken last week, showing the clear difference in strength between the Euro and the Dollar. The first support is now located at 1.2660, followed by 1.2280 but the Relative Strength Index on a Weekly chart shows a clear oversold condition and this increases the chance of bullish retracements. Keep in mind that the RSI is not a clear signal to go long as it can stay in oversold territory for a relatively long period and we may easily see another bearish week. To the upside, 1.2750 will probably turn into resistance.

    Fundamental Outlook
    We have an important week ahead, with the first major event being the release of the German Preliminary CPI scheduled Monday. As this is the main gauge of inflation and the German economy is a pillar of the entire Euro Zone, we expect volatility at the time of the release. Euro Zone’s CPI Estimate will be released Tuesday and the same day a survey regarding American Consumer Confidence comes out.

    Wednesday’s headline will be the ADP Non Farm Employment Change, a private report which tries to mimic the Government report issued 2 days later. Thursday will be the most important day of the week for the Euro as the ECB will announce the interest rate and Mario Draghi will hold a press conference discussing the rate decision and the economic situation of the Euro Zone. This is almost always a reason for strong and sometimes irregular movement so we recommend caution if trading during the Conference.

    The US Dollar will be strongly influenced Friday by the Non Farm Employment report which is considered the most important data regarding the American job market and almost always generates big swings.


    GBP/USD
    The bears managed to take price lower last week, a behavior mostly generated by US Dollar strength, not by Pound weakness. An important level was touched and we expect some bullish reaction here.

    [​IMG]

    Technical Outlook
    During the previous weeks a bullish retracement was completed and it seems now the downtrend will continue. For that to happen, the current level at 1.6250 must be broken decisively; even if last week closed below it, the move cannot be considered a true break because price is still very close to the level and a retest was not seen. To the upside, the first barrier is located at 1.6460.

    Fundamental Outlook
    Three important indexes are released this week by the United Kingdom: the Manufacturing PMI comes out Wednesday, followed Thursday by the Construction PMI and finishing the week Friday with the Services PMI. For these indicators, purchasing managers from the manufacturing, construction and services sectors will be asked to give their opinions on the health of each sector. The surveys act as leading indicator of economic health and usually have a big impact on the Pound. As always, the pair will be directly influenced by the important US events mentioned earlier.
     
  16. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: PRICE ACTION SLOWS DOWN ON THE BACK OF A QUIET FUNDAMENTAL SCENE



    EUR/USD
    Forex Technical Analysis: Last week’s price action made it clear that the European economy is in need of further stimulus while employment levels in the United States rose more than anticipated, adding fuel to an already strong US Dollar.

    [​IMG]

    Technical Outlook
    The current selloff is one of the longest seen in recent years as price is falling since July without even a slight retracement on the Weekly charts. It is true that some bullish retracements were seen on the daily charts, but nothing significant and this raises questions about where price will stop. The first support ahead is located at 1.2440 and the Relative Strength Index is deep in oversold territory so we might see some bull power here. However, last week we warned that another bearish week is possible even though the RSI is oversold and the market dropped; the same applies for this week but the fundamental scene lacks huge releases so we might be in for slower price action.

    Fundamental Outlook
    Monday there are no important American indicators and the Euro will only be affected by a medium-impact release: German Factory Orders. This is a leading indicator of production as more orders placed with manufacturers would suggest that activity will have to increase to fill these orders.

    Tuesday we have another slow day in terms of economic releases for both the Euro and the Dollar but Wednesday we expect more action as the FOMC will release the Minutes of their latest Meeting. The document will offer insights into the reasons which influenced the members’ latest vote regarding interest rates and may also contain hints about a potential rate hike.

    Thursday the G20 (Group of 20) meetings start and ECB President Mario Draghi will speak in Washington DC about the recent European situation. As always, his speeches are reasons for increased volatility and caution is recommended. Friday the G20 meetings will continue but other than that, no major economic or financial releases are scheduled.


    GBP/USD
    British economy showed signs of slowing down last week as economic data disappointed somewhat and the US Dollar continued to strengthen, resulting in a bearish week and broken support.

    [​IMG]

    Technical Outlook
    Now that 1.6060 is broken, the pair is heading towards the important zone around 1.5900 which acted as strong support in the past. For the entire 2014 the pair traded above 1.6000 and the move below this psychological support is an important victory for the bears but we must note the oversold condition of the Relative Strength Index which increases the chances of a bullish bounce if price will touch 1.5900. First major resistance sits at 1.6250 while immediate resistance is located at 1.6060.

    Fundamental Outlook
    British Manufacturing Production data will be released Tuesday and the same day a Gross Domestic Product estimate will be announced. Both indicators have the potential to strengthen the Pound if their value will be higher than forecast and vice versa for lower numbers. Thursday the Bank of England will announce their interest rate decision but no change is expected from the current 0.50% so we don’t expect a lot of volatility. Thursday and Friday the pair’s movement will be affected by the G20 Meetings.
     
  17. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: THE US DOLLAR IS STARTING TO LOSE ITS APPEAL



    EUR/USD
    Forex Technical Analysis: Last week was dominated by the bulls on the back of a disappointing value of the US Retail Sales which showed the American economy may be losing steam. The US Dollar suffered the consequences and the pair traveled upwards, breaking resistance.

    [​IMG]

    Technical Outlook
    The resistance at 1.2750 was broken decisively last Wednesday but price returned for a re-test during the next two days and the week closed near the mentioned level which turned into support. The pair created a weekly high at 1.2886 which will act as resistance in the future but if the current level at 1.2750 is broken to the downside, the next target will be represented by 1.2620. Given the huge distance traveled to the downside by the pair during the last months, we might see a longer retracement to the upside but on the other hand, a downtrend is still in place and we could see a move below 1.2750.

    Fundamental Outlook
    The first notable event of this week is the release of the US Existing Home Sales scheduled Tuesday. The indicator shows the annualized number of houses sold during the last month and usually it has a medium impact on the US Dollar. Probably the most important event for the Dollar will be the release Wednesday of the American Consumer Price Index which is a measure of overall inflation. The CORE version, which excludes food and energy from calculation, is released at the same time and this is sometimes considered more important because food and energy can fluctuate a lot, thus distorting the main data.

    The French and German Manufacturing Purchasing Managers’ Indexes are released Thursday; these act as leading indicators of economic health and can have a positive impact on the Euro if better numbers are posted. The last event of the week is the release of the US New Home Sales, scheduled Friday. The indicator usually has a higher impact than the Existing Home Sales but this depends a lot on the difference between forecast and actual.

    GBP/USD
    British inflation dropped more than anticipated last week and this weakened the Pound severely but soon after, disappointing US Retail Sales data took the pair north on the back of Dollar weakness.

    [​IMG]

    Technical Outlook
    Last Tuesday the important support at 1.5900 was touched and price soon bounced higher, moving above 1.6060 resistance so we can notice the bulls are starting to make their presence known. However, because we are in a downtrend, it is very possible to see another attempt to break 1.5900 but as long as the pair remains above 1.6060, we believe there are strong chances of a move close to 1.6250.

    Fundamental Outlook
    The Bank of England will announce Wednesday the breakdown of the votes on the latest Interest Rate decision. This is a good way of seeing if some of the members of the Monetary Policy Committee have changed their stance regarding a potential rate hike and usually volatility is created only if the forecast doesn’t come true.

    Thursday the British Retail Sales are announced and we saw what a tremendous impact this indicator can have on a currency so caution is recommended. The last major Pound affecting event comes Friday: the release of the Preliminary Gross Domestic Product which is considered the most important version of the three (Preliminary, Second Estimate and Final). As always, the pair will be directly affected by the US events scheduled during the week.
     
  18. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: PRICE ACTION SHAPED BY EUROPEAN INFLATION AND AMERICAN MONETARY POLICY



    EUR/USD
    Forex Technical Analysis: The week that just ended was characterized by mostly bearish price action which was generated by technical reasons but also by a better than expected American CPI and speculation that ECB may implement more stimulus to spur economic growth.

    [​IMG]

    Technical Outlook
    Last week price started to move in line with the main trend, marking the end of a bullish retracement. The level at 1.2750 was broken to the downside and 1.2620 support was tested but managed to reject the first break attempt seen Thursday. However, this week we expect the downside pressure to prevail and the bears to break the mentioned support, taking price towards 1.2500. To the upside, first resistance is located at 1.2750 followed by the high created at 1.2886.

    Fundamental Outlook
    The European Banks stress test results made public Sunday will have an important impact on price action throughout the week but aside from that, the pair will be influenced by several other events. Monday the German IFO Business Climate survey, which uses a sample of 7,000 businesses in order to gauge optimism regarding current and future business conditions, will be released.

    Tuesday the US Dollar will be affected by the US Durable Goods Orders and the Consumer Confidence survey (which acts as a leading indicator of consumer spending). Wednesday will probably be the most active day for the US Dollar as the US Federal Funds Rate is announced and the FOMC will release a statement outlining the economic and financial reasons which stood behind the decision.

    Thursday two important indicators come out: the German Preliminary Consumer Price Index which has a hefty impact on overall European inflation and the US Advance Gross Domestic Product. Friday’s most notable event is the release of the European CPI Flash Estimate which is the main gauge of inflation in the Euro Zone and usually has a strong impact on the currency.


    GBP/USD
    The Pound had a mixed week as it was affected by a disappointing value of the British Retail Sales but some of the losses were erased Friday on the back of a value of the GDP which matched the forecast and was perceived as bullish.

    [​IMG]

    Technical Outlook
    The last weekly candle is a Doji (candle with long upper and lower wicks and a very small body), which suggests market indecision. Our bias is neutral from a technical perspective and we consider the fundamental aspect to be this week’s main price mover. The major levels to watch are 1.6250 as resistance and 1.5900 as support while minor resistance sits at 1.6180 and potential support at 1.6060.

    Fundamental Outlook
    The week ahead lacks major UK releases but the pair will be heavily influenced by the United States events. However, notable British events are the CBI Realized Sales released Monday and the Net Lending to Individuals, announced Wednesday.
     
  19. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: INTEREST RATES AND EMPLOYMENT DATA – INGREDIENTS FOR AN ACTION PACKED WEEK



    EUR/USD
    Forex Technical Analysis: The Fed ended their stimulus program last week and although this was anticipated, the event still generated huge US Dollar strength, putting the bears in control of the pair’s direction. An important role in last week’s descent was also played by the disappointing Euro Zone inflation numbers.

    [​IMG]

    Technical Outlook
    The pair remains under pressure and we expect the downside to prevail this week as well but we must note the oversold condition of the Relative Strength Index and the immediate support located at 1.2500. These factors could trigger moves to the upside, with 1.2620 being the first resistance. Even if the RSI is trading in oversold territory, it is angled downwards, suggesting that another push lower could be made this week; the next support is located at 1.2280 but a touch of this level will depend on the fundamental events scheduled this week.

    Fundamental Outlook
    The first notable event of the week is the Monday release of the American Manufacturing PMI, a survey of purchasing managers which acts as a leading indicator of economic health and optimism. Tuesday the US Trade Balance is released (difference between imported and exported goods) and Wednesday the first US employment data will come out in the form of the ADP Non Farm Employment Change which is a report released by a privately owned company.

    The focus will shift towards the Euro Thursday for the Interest Rate decision and the ECB Press Conference. Although no change is expected for the Interest Rate, Mario Draghi’s comments and attitude will surely generate some volatility and strong movement.

    The final event of the week is scheduled Friday and it’s the most important American employment data: the US Non Farm Employment Change (also known as Non Farm Payrolls). The report shows how many new jobs were created during the previous month and has a tremendous influence on the greenback as more jobs suggest that consumer spending may increase in the near future.


    GBP/USD
    The United Kingdom didn’t release major news last week but US Dollar strength generated by the Fed decision to end the QE program took the pair lower after a bounce at resistance.

    [​IMG]

    Technical Outlook
    Last week was bearish but the important support at 1.5900 may hinder further downside movement. Adding to this, the Relative Strength Index is hovering close to the 30 level on a Weekly chart, a thing which suggests oversold and thus increases the chances of bullish movement. Although there are some bullish signs, if 1.5900 support is broken, the move may extend into 1.5750 which is the next weekly support.

    Fundamental Outlook
    The British Manufacturing PMI is Monday’s main event for the Pound, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. These are leading indicators of economic health for their respective sectors thus higher numbers than anticipated will have a positive impact on the Pound. Thursday the Bank of England will announce the interest rate, with no change anticipated but any speculation about a possible change could greatly affect the pair so caution is recommended. Throughout the week price action will be directly affected by the US releases as well.
     
  20. GDMFX

    GDMFX Content Contributor

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    FOREX TECHNICAL ANALYSIS: OVERSOLD CONDITION CALLS FOR BULLISH MOVEMENT



    EUR/USD
    Forex Technical Analysis: The pair just finished another week controlled by the bears on the back of Euro weakness generated by Mario Draghi’s renewed commitment to use additional stimulus measures if the risk of deflation persists. On the other hand, the US Dollar was negatively affected by the NFP release and some of the pair’s losses were erased Friday.

    [​IMG]

    Technical Outlook
    During the week the pair broke 1.2500 support but Friday we saw bullish action and the weekly candle now has a long wick which suggests indecision. The Relative Strength Index on a weekly chart is below the 30 level, indicating an oversold condition but it is still pointing downwards and the pair is in a strong downtrend so we expect further bearish action. If the pair will remain below 1.2500, the first potential support is located at 1.2360 followed by 1.2280.

    Fundamental Outlook
    There are no important economic releases Monday and the same is true for Tuesday when US Banks are closed, celebrating Veterans Day. Euro Zone’s Industrial Production numbers are released Wednesday and Thursday the main event will be the American Unemployment Claims but this is often overlooked by market participants because it is an indicator which is released every week.

    Friday a more important indicator is released by the United States: the Retail Sales. The importance of this indicator comes from the fact that sales made at a retail level account for a hefty part of the entire economic activity and a higher value suggests a thriving economy. The same day the Euro Zone Gross Domestic Product is announced, showing the overall performance of the European economy.


    GBP/USD
    The British economy posted worse than expected numbers overall and the Pound weakened against the US Dollar for another week. Price rebounded higher during the last day of the week on the back of US Dollar

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    Technical Outlook
    The pair is headed towards the support at 1.5750 and we expect a bounce higher once and if price gets there. The Relative Strength Index is just crossing the 30 level downwards on a weekly chart but it has been hovering close to this level for a long while so a touch of support combined with an oversold condition of the indicator will probably push the pair higher.

    Fundamental Outlook
    Wednesday is the busiest day for the Pound as the Claimant Count Change is announced and Bank of England Governor Mark Carney will hold a press conference discussing the Inflation Report released the same day. This Report contains the Bank of England’s economic outlook and inflation forecast for the next 2 years and usually has a high market impact so caution is recommended. As always, the US events will have a direct impact on the pair’s movement throughout the week.
     
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