Special Focus On AUDUSD

September 15, 2014 in Forex Analysis

AUDUSD: Halts Weakness, Looks To Recover Higher.

AUDUSD: With the pair halting its past week sell off during Thursday trading today, we envisaging a corrective recovery higher in the days ahead. Support lies at the 0.8983 level. A cut through here will turn attention to the 0.8950 level and then the 0.8900 level where a violation will set the stage for a retarget of the 0.8850 level. On the upside, resistance resides at the 0.9108 level where a breach will aim at the 0.9150 level. Above that level will set the stage for a run at the 0.9200 level with a cut through here resuming its broader uptrend towards the 0.9250 level. All in all, the pair faces further downside risk.

audusd_analysis_2fxa

USD/JPY – Is 110 still a dream or becoming a reality?

September 3, 2014 in Forex Analysis

It was December 28, 2013 i.e. over 8 months back when we had indicate that the year 2014 should see USD/JPY to target 110.00. Well, the pair failed to move beyond 105.44 and had fallen to 100.75. The psychological support of 100.00 ranges had come at rescue but since then the currency pair had been range bound. The maximum it achieved was 104.13 since then. It has been 8 months of classical support and resistance of two major psychological levels, namely 100.00 and 105.00. The long wait ultimately paid off and the price-action did not only break above the resistance of 104.13 but took out 105.00 to go as high as 105.33.

USD/JPY breaks out of the range to indicate returning bullish sentiments - Weekly chart

Consumption tax dilemma and other economic factors

One of the major change during 2014 was the consumption tax hike from 5% to 8% in Japan. This hike was the first hike since 1997 i.e. 17 years. Anxieties were in place before the decision and remained in place after the decision also. Everything going expensive by 3% had to affect the consumption and hence economy. On the other side the plans that there would be another hike of consumption tax during 2015 may counter the effect to some extent, especially for major purchase decisions as the date for the next hike gets closer. If consumers know that prices are going to go up further then they would tend to make any large purchasing decisions sooner. Such a scenario might have added to the strength of the Japanese yen to bring USD/JPY down but a delay in the decision to implement the tax hike should keep downward pressure on the yen.

Let’s have a look on the the effects on the strength of the Japanese yen after the previous hike of the consumption tax during 1997. The following chart indicates that the Japanese yen had in fact strengthened, instead of weakening, after the hike of 1997 and USD/JPY had fallen sharply before it went up very strongly to go as high as 144.77. We had covered this fact in the previous update which we have mentioned above.

This time the effect of the change in tax did not really affect the strength of the yen and the pair had kept it self in a range. As reported by Reuters yesterday that the Prime Minister Abe has been advised to delay the next hike. The economy certainly did not show bullishness since the tax was increased on April 1st, 2014.

USD/JPY price action after the previous consumption tax increase.

Let’s have a look on the recent economic releases from Japan:

1) Year-over-year overall household spending declined by -5.9% in July. The result was worse than the data of June where the decline was -3.0%.

2) July 2014 also saw a decline in national consumer price index from previous 3.6% to 3.4% on year-over year basis.

3) Unemployment increased from 3.7% to 3.8%.

4) Preliminary data indicated that the industrial production went drastically down to -0.9% on year on year basis in July. June had shown an increase of 3.1%.

5) Year-over-year change in the retail trade was positive. The retail trade grew by 0.5% in July against a drop of -0.6% in June.

6) Housing starts saw a drop of -14.1% in July as compared to the same month of 2013. This is showing an increase in negative momentum as the month of June had a drop of -9.5%.

7) The growth in the capital spending in quarter 2 was down to 3.0% from quarter 1’s 7.4%.

8) August 2014 saw a drop in the vehicle sales. The change was -5.0% as compared to the vehicle sales in August 2013.

What to expect from USD/JPY

From pure price-action point of view and also considering the break of 105.00 psychological level for the second time, it is expected that this time the price will sustain over 105.00 to go for further gains.  The previous move to 105.44 had completed the 61.8% retracement of the fall from 124.16 to 75.36. If it was just a case of upward consolidation then the price-action should have reversed back. However the continuous support over 100.00 and another break over 105.00 suggests that the uptrend has not ended.

USD/JPY Historical chart showing that pair had broken over 61.8% retracement for the fall from 124.16.

The increase in the unemployment rate, the drop in the industrial production and other weak economic reports from Japan also go in the favor of this outlook. While saying this, we will expect the the resistance to hold for sometime in the range of 105.44 to 105.60. If this resistance holds then some correction will be expected first but we expect any downward moves to be limited to 104.13, which should now turn into support. With 104.13 support in place, a break over 105.60 should target 107.20/107.40 next and then 110.00 psychological level. As we had mentioned during December 2013, we expect USD/JPY to target 110.00 level in coming months.

1997, the year of previous consumption tax hike, was a different period. The uncertainties about the economy were too so high. Even the tax increase had made people helpful that it would help the economy and hence JPY strengthened initially before the realities struck and the yen went down rolling. The current situation is different. People are afraid of any change which increase the cost of living and they would try to cut down the cost. The rate hike and the possibilities of another hike should keep at least the retail sales in check and that would go against the yen but will help the Japanese exports. Considering we will not expect any strong upward trend for USD/JPY beyond 110.00.

Currency Speculators increased US Dollar bets to highest level since February last week

August 3, 2014 in Forex Analysis

By CountingPips.com

cot-levels

The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large trader and speculators increased their bullish bets in favor of the US dollar for a second consecutive week and euro positions fell to their lowest level since 2012.

Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar long position totaling $20.24 billion as of Tuesday July 29th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly change of +$6.12 billion from the $14.12 billion total long position that was registered on July 22nd, according to the calculation by Reuters that totals the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

The aggregate US dollar position has now continued to be on the bullish side for the twelfth straight week as the overall bullish level marked its highest standing since February 4th when bullish bets equaled $20.72 billion. The weekly gain of $6.12 billion in dollar bets also represents the highest weekly rise since May 13th when bets advanced by $6.54 billion.

 

cot-standings-weekly

Major Currency Weekly Levels & Changes:

Overall changes on the week for the major currencies showed that large speculators bet in favor of the Canadian dollar, Australian dollar and the New Zealand dollar while there were weekly decreases for the euro, Japanese yen, British pound sterling, Swiss franc and the Mexican peso.

This latest COT data is through Tuesday July 29th and shows a quick view of how large speculators and for-profit traders (non-commercials) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro.

Notable changes on the week for the Major Currencies:

  • Euro positions continued to deteriorate sharply last week and pushed euro positions over the -100k level. Now the euro spec level is at the most bearish since April of 2012
  • British pound sterling positions fell for a fourth straight week to the lowest level since March 11th as the GBPUSD exchange rate dropped under 1.7000
  • Japanese yen bets declined last week as bearish positions rose back up to -73,069 contracts. USDJPY exchange rate has bounced to trade over the 102 major level
  • Swiss franc bets fell for a 2nd straight week and to the most bearish level (-11,764 contracts) since June 11th 2013
  • Canadian dollar positions continued to improve for a seventh straight week and remains at the highest level since February 12th 2013
  • Australian dollar and New Zealand dollar net positions edged just slightly higher last week after previous week declines

Please see individual currency charts and more data below.




Weekly Charts: Large Speculators Weekly Positions vs Currency Spot Price

EuroFX:

eurofx

Last Six Weeks data for EuroFX futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 291244 55062 112565 -57503 4332
07/01/2014 291488 52665 113441 -60776 -3273
07/08/2014 294381 51595 110860 -59265 1511
07/15/2014 310661 59506 122352 -62846 -3581
07/22/2014 339706 58142 146965 -88823 -25977
07/29/2014 356865 56562 164637 -108075 -19252



British Pound Sterling:

gbp

Last Six Weeks data for Pound Sterling futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 254369 98098 48347 49751 -2845
07/01/2014 255911 99929 43517 56412 6661
07/08/2014 254788 86614 44975 41639 -14773
07/15/2014 255115 85983 47213 38770 -2869
07/22/2014 241155 71792 44295 27497 -11273
07/29/2014 237411 75370 50460 24910 -2587



Japanese Yen:

jpy

Last Six Weeks data for Yen Futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 148257 10325 81548 -71223 -3185
07/01/2014 156480 18739 77425 -58686 12537
07/08/2014 157710 11174 77549 -66375 -7689
07/15/2014 155127 8385 71333 -62948 3427
07/22/2014 162029 11979 65895 -53916 9032
07/29/2014 172210 7828 80897 -73069 -19153



Swiss Franc:

chf

Last Six Weeks data for Franc futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 33599 9069 14441 -5372 -8892
07/01/2014 35221 9731 16991 -7260 -1888
07/08/2014 35053 9136 15949 -6813 447
07/15/2014 35007 8799 15061 -6262 551
07/22/2014 38359 9642 17022 -7380 -1118
07/29/2014 44022 8665 20429 -11764 -4384



Canadian Dollar:

cad

Last Six Weeks data for Canadian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 103193 40595 45915 -5320 16213
07/01/2014 111438 44755 42060 2695 8015
07/08/2014 128555 58245 47950 10295 7600
07/15/2014 129787 60353 44732 15621 5326
07/22/2014 129188 62078 41497 20581 4960
07/29/2014 122619 56459 33768 22691 2110



Australian Dollar:

aud

Last Six Weeks data for Australian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 101998 65612 32149 33463 6434
07/01/2014 114918 76598 37719 38879 5416
07/08/2014 101860 66705 30102 36603 -2276
07/15/2014 105209 70881 31138 39743 3140
07/22/2014 109341 72170 33377 38793 -950
07/29/2014 106836 69348 29742 39606 813



New Zealand Dollar:

nzd

Last Six Weeks data for New Zealand dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 31415 24855 18703 6152 2419
07/01/2014 33455 26563 17578 8985 2833
07/08/2014 36123 26750 12334 14416 5431
07/15/2014 32879 26570 11117 15453 1037
07/22/2014 32728 26028 10896 15132 -321
07/29/2014 30531 23552 8263 15289 157



Mexican Peso:

mxn

Last Six Weeks data for Mexican Peso futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/24/2014 128333 84943 15974 68969 -106
07/01/2014 129425 85387 15825 69562 593
07/08/2014 126231 82777 13966 68811 -751
07/15/2014 131108 86707 17070 69637 826
07/22/2014 142254 98823 19689 79134 9497
07/29/2014 145184 100551 23436 77115 -2019



*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.




Article by CountingPips.comForex Apps & News

Gold Rallying On Back of US Dollar Gains

July 21, 2014 in Trading with Other Commodities

The gold price has rallied strongly in recent weeks to hit a high of $1322 per ounce in recent weeks. Renewed demand from Jewellers and producers together with increased global political tensions have caused the yellow metal to rally from lows at $1193. However despite recent gains the metal still remains far from the recent highs of 2011 when it looked certain to hit $2000 per ounce.

Give the metals fall from grace over the past 24 months the question as to whether the current rally can be sustained is one that is on many traders lips.

gold

Why Investors Like Gold

Long before the Forex markets the world traded and valued its good and materials in gold. This historical sentiment that surrounds this metal perpetuates, and even in today’s world of FIAT currencies, gold is still seen by many as the ultimate store of wealth. Fear of inflation and the devaluation in paper currencies sees money move into this market. As global uncertainties increase, so too does the demand for gold.

How Much Has The Price Changed?

The price of gold has risen sharply in recent years as the metal has awoken form a long term bear market. The beginning of  new bull market can be traced back to 2001. The preceding 10 years saw the price barely move. However since this time the price of Gold in USD has since risen from a low of $385 per ounce to a peak of  $1889 at the start of 2011.

A long or Call trade on the gold price would have yielded high gains for the savvy investor.

Can The Current Rally Be Sustained?

Following falls from the high set in 2011, the Gold price has looked firmly in the grip of the bears. However the bigger picture may look brighter for trading gold. Maintaining a price above $1300 looks constructive and a push and a break back above $1400 may provide the impetus for a more sustained price rally.

From a chart perspective price action looks to be forming an inverse head and shoulders pattern. A move towards $1400 would provide support to this view.  Gold certainly seems to have found a floor at the current level. With further support from a rising USD and increasing political unrest and financial worries, it could be set for further gains.

USD/CAD Outlook – The Pair Is Near Some Resistances

July 14, 2014 in Chart Alert

During the previous USD/CAD outlook update, we had indicated that the price was hitting a mid-term trend-line support and that we could expect some upward gains, including the possibilities of a near-term bottoming. The support was witnessed within a couple of days of posting that outlook. Let’s have the new chart with the current price-action.

USD/CAD weekly chart with support trend-line

USD/CAD weekly chart - support at trend line.

The upward gains looks small on the weekly chart but a look on a shorter-time-frame charts will indicate that the gains were substantial:

USD/CAD 4 hourly chart - the upward jump

As mentioned in the previous post referred above, we still remain in favor of further gains by USD/CAD. However, the price-action is near some resistance levels and some caution may be required.

Immediate possible resistances

USD/CAD and expected resistances

As indicated in the above USD/CAD daily chart, the currency pair was in a sideways mode for 4 days during the later part of June. The resistance during this range bound moves was in the range of 1.0749 to 1.0760. Some resistance is expected in this range again. Eventually a break of this resistance is expected but immediately after that the 55-day EMA may come as another resistance. The current 55-day EMA is at 1.0777 and hence resistance may be faced in the range of 1.0775 to 1.0790. One previous two occasions the resistance was witnessed slightly above the 55-day EMA. In fact this resistance will also be supported by the resistance of the lower edge of the very thing daily Ichimoku cloud.

Possible resistance of daily Ichimoku cloud

USD/CAD daily ichimoku cloud resistance

While we are talking aboy Ichimoku cloud, let’s have a look on another time-frame. The following USD/CAD chart is with the weekly Ichimoku cloud. Interestingly the very next resistance of Tenkan-line is falling near 1.0800 and the next one i.e. the upper edge of the cloud is also almost at the same level i.e. in the range of 1.080 to 1.0820.

USD/CAD weekly Ichimoku cloud resistance

Outlook – What to expect if the above resistances fail?

USD/CAD retracement levels for expected gains.

In case USD/CAD manages a break over 1.0825 and sustains over that level then it will be expected to target 38.2% retracement of the fall from 1.1278 to 1.0620. This level is at 1.0871. The interesting points to be observed are that 38.2%, 50% and 61.8% retracements are very close to some of the strong resistances previously witnessed. This combination makes those levels as quite strong resistances. Considering this a lot of caution will be required if the upward momentum continues to complete the mentioned Fibonacci retracement levels.

Currency Speculators increased bullish US Dollar bets for 1st time in 4 weeks

July 13, 2014 in Forex Analysis

By CountingPips.com

usd-cots

The latest data for the weekly Commitments of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and speculators slightly added to their US dollar bullish bets last week for the first time in four weeks.

Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar long position totaling $10.34 billion as of Tuesday July 8th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly change of +$1.69 billion from the $8.65 billion total long position that was registered on July 1st, according to the calculation by Reuters that totals the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

The aggregate US dollar position had fallen for three straight weeks before last week’s turnaround. The overall dollar standing has now remained on the bullish side for nine consecutive weeks after crossing from bearish to bullish on May 13th.

Major Currency Weekly Levels & Changes:

cot-standings

Overall changes on the week for the major currencies showed that large speculators bet in favor of the euro, Swiss franc, Canadian dollar and the New Zealand dollar while there were weekly decreases for the British pound sterling, Japanese yen, Australian dollar and the Mexican peso.

This latest COT data is through Tuesday July 8th and provides a snapshot of how large speculators and for-profit traders (non-commercials) were betting in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro.

Notable changes on the week for the Major Currencies:

  • Canadian dollar positions continued higher after turning bullish (for the first time since February 2, 2013) on July 1st. CAD bets have increased four straight weeks as Canadian dollar strength has pushed the USDCAD exchange rate under 1.0700
  • Euro bearish positions edged lower last week. Bearish bets are hovering near -60,000 contracts for a 5th week and potentially signaling this could be a near term bottoming in bearish positions
  • British pound sterling positions saw bullish bets fall sharply last week off of the highest level of the year
  • Japanese yen short positions rebounded last week & went back over -60,000 contracts. The USDJPY has been under the 102 level for a third straight week
  • Australian dollar net positions edged lower last week after overall bullish positions reached a new high level since April 2013 the previous week
  • New Zealand dollar positions advanced for a third week as the NZDUSD exchange rate continues to trade higher and above 0.8750 last week

Please see individual currency charts and more data below.




Weekly Charts: Large Speculators Weekly Positions vs Currency Spot Price

EuroFX:

eurofx

Last Six Weeks data for EuroFX futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 280747 57109 90134 -33025 -16392
06/10/2014 331636 43739 100924 -57185 -24160
06/17/2014 285489 51405 113240 -61835 -4650
06/24/2014 291244 55062 112565 -57503 4332
07/01/2014 291488 52665 113441 -60776 -3273
07/08/2014 294381 51595 110860 -59265 1511



British Pound Sterling:

gbp

Last Six Weeks data for Pound Sterling futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 239604 79476 44502 34974 -330
06/10/2014 271602 85202 49360 35842 868
06/17/2014 250231 100434 47838 52596 16754
06/24/2014 254369 98098 48347 49751 -2845
07/01/2014 255911 99929 43517 56412 6661
07/08/2014 254788 86614 44975 41639 -14773



Japanese Yen:

jpy

Last Six Weeks data for Yen Futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 171804 12578 86796 -74218 -15182
06/10/2014 201094 11893 94055 -82162 -7944
06/17/2014 153007 17832 85870 -68038 14124
06/24/2014 148257 10325 81548 -71223 -3185
07/01/2014 156480 18739 77425 -58686 12537
07/08/2014 157710 11174 77549 -66375 -7689



Swiss Franc:

chf

Last Six Weeks data for Franc futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 48936 11907 13919 -2012 1860
06/10/2014 52445 9615 12645 -3030 -1018
06/17/2014 32259 15296 11776 3520 6550
06/24/2014 33599 9069 14441 -5372 -8892
07/01/2014 35221 9731 16991 -7260 -1888
07/08/2014 35053 9136 15949 -6813 447



Canadian Dollar:

cad

Last Six Weeks data for Canadian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 130275 32519 55250 -22731 -921
06/10/2014 125832 30303 54411 -24108 -1377
06/17/2014 132209 34582 56115 -21533 2575
06/24/2014 103193 40595 45915 -5320 16213
07/01/2014 111438 44755 42060 2695 8015
07/08/2014 128555 58245 47950 10295 7600



Australian Dollar:

aud

Last Six Weeks data for Australian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 110911 56811 35284 21527 5679
06/10/2014 128984 62141 33894 28247 6720
06/17/2014 99400 61078 34049 27029 -1218
06/24/2014 101998 65612 32149 33463 6434
07/01/2014 114918 76598 37719 38879 5416
07/08/2014 101860 66705 30102 36603 -2276



New Zealand Dollar:

nzd

Last Six Weeks data for New Zealand dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 30066 22400 4869 17531 -413
06/10/2014 32946 20401 3546 16855 -676
06/17/2014 28467 21671 17938 3733 -13122
06/24/2014 31415 24855 18703 6152 2419
07/01/2014 33455 26563 17578 8985 2833
07/08/2014 36123 26750 12334 14416 5431



Mexican Peso:

mxn

Last Six Weeks data for Mexican Peso futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
06/03/2014 162647 105666 19650 86016 2715
06/10/2014 200202 106566 16363 90203 4187
06/17/2014 135017 91227 22152 69075 -21128
06/24/2014 128333 84943 15974 68969 -106
07/01/2014 129425 85387 15825 69562 593
07/08/2014 126231 82777 13966 68811 -751



*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.




Article by CountingPips.comForex Apps & News

USD/CAD: 14 years Price-Action in a Nutshell – Is A Near-Term Bottom In Place?

July 9, 2014 in Chart Alert

USD/CAD had dipped to 1.0620 and seems to be finding some support since then. The price-action during past 6 days has been failing to dip below 1.0600 to enter the psychological ranges of 1.0500. Let’s see what else has been going with the currency pair and what can we expect during the coming days.

USD/CAD daily chart

USDCAD daily chart - July 9 2014

Past 22 months’ price-action of USD/CAD has seen a support trend-line emerging. The recent fall has touched that trend-line again and hence a short-term or possibly even a near-term bottoming can not be rules out. If this support continues then we can see the pair to see some gains in the coming days. Please check the following weekly chart with the support trend-line since early September 2012:

USD/CAD weekly chart with support trend line

Well, the support of the trend-line does not seem to be alone in the making. This support coincided with the support of the lower edge of the weekly Ichimoku cloud. Do check the following USD/CAD weekly chart with Ichimoku cloud:

USD/CAD with weekly Ichimoku cloud

The previous bottom for USD/CAD was at 0.9405. The upward move since then had taken the currency pair to 1.1278. The recent move to 1.0620 has not really completed the 38.2% Fibonacci retracement as that level is 1.0562. However, the recent moves may be considered almost as the completion of that retracement as the difference is just 58 pips.

USD/CAD almost completes 38.2% retracement

USDCAD weekly chart with Fibonacci retracements

Even if the trend-line resistance fails, a very strong support can be expected slightly below it, near 1.0562. This is not just because of the support of the retracement level but because of the psychological support of 1.0500 ranges.

While we are on it, let’s also have a look on the overall historical price-action of USD/CAD.

USD/CAD historical chart

As the above monthly chart shows, during the first week of February 2002, USD/CAD had hit a high of 1.6193. From there a long-term downtrend had started, which had taken the currency pair to as low as 0.9056 on November 1st, 2007. The recovery from this low had completed the 38.2% retracement but had missed the 50% retracement by going half way towards it. Practically speaking, the moves beyond the 38.25 retracement were very short-lived. The pair had then fell from 1.3063 to 0.9406. The fall was rather sharp but support had come well before a retest of the previous low of 0.9056. The subsequent move had completed the 38.2% retracement of this second leg of the fall. A resistance near the 38.2% level was well expected and that resistance saw the recent leg of downward moves.

What to expect?

The support of 0.9406, which was well over the previous 0.9056 suggests that a bottom may already be in place at 0.9056. The lows have been continuously getting higher and on the other hand recently the price-action had tried to break above the high of past almost 5 years.

USD/CAD breaks above the resistance

The high for USD/CAD during August 2009 was 1.1124 and after almost 5 years the pair tried to break above it repeatedly to touch 1.1278. Yes, we can say that the gains could not sustain, but it was a break of that resistance nevertheless.

Considering all these facts, we remain in favor of upside for USD/CAD technically and at least for near-term. As mentioned above that even if some further downward moves take place, another support should be seen very soon and in 1.0540 to 1.0558 region.

Now, lets take a look on some other charts as well, mainly different time-frames of Ichimoku cloud as we have covered other things more or less.

USD/CAD with monthly Ichimoku cloud

USD/CAD with monthly Ichimoku cloud

The above monthly Ichimoku cloud chart shows that the previous attempt of recovery had failed below the upper edge of the daily Ichimoku cloud, when the price had gone as high as 1.3063 and had fallen strongly to 0.9406. However the recent gains had at-least tried to break above the could. The movement could not sustain but for 3 months there was an attempt of breaking over. The monthly candle is still well above the support level of Kijun line, while the Tenkan line stays well above the kijun line, bullishly. The Kijun-line support is at 1.0495 but we would expect a support well above that, as mentioned above.

USD/CAD with the daily Ichimoku cloud

USD/CAD with daily Ichimoku cloud - Break of resistance after a month.

The above USD/CAD daily Ichimoku cloud chart shows that the currency pair has broken out of the resistance of Tenkan-line, first time, after a month. The current price is again at Tenkan-line level and a support here is expected. Combine this support with the above mentioned support of the mentioned trend-line and we get a feeling for the possible positive outlook for USD/CAD.

FX Daily Dose – July 3, 2014

July 3, 2014 in FX Daily Dose

Forex daily dose - July 3, 2014Forex Daily Dose- July 3, 2014: The FxDailyDose presents a quick snapshot of the price-action of The currency pairs which are in focus for today. This covers the immediate outlook, considering the overall picture. Please note that the daily outlook is for mainly for the currency pairs in focus and we may add or remove some of the currency pairs accordingly.

Do not hesitate in contacting us if you wish to know about our view for any specific currency pair.



USD/JPY

Neutral

 

 

USD/JPY chart - July 3, 2014

USD/JPY has been finding the support continuously over 101.00 except two occasions when it had touched 100.75 during February 2014 beginning and then in May 2014 when it went down to 100.82. The failure to retest 100.75 indicates that the psychological support of 100.00 in very much in play and a bottom may already be in place. However, the current price-action is very close to the 55-day EMA, which is at 101.93. This keeps us neutral. Today’s non-farm payroll data and unemployment report from the U.S. should be able to give some direction to USD/JPY. The unemployment is expected to remain same at 6.3% but the non-farm data is expected to be slightly lower than the last release. However the ADP employment change had shown a better than expected results and there is a possibility that the non-farm results may come better. We stay neutral for the currency pair till the results for these economic releases come tonight. On the upside, a break over 101.93 should find another strong resistance near 102.16 first and then 102.37. Upside will be favored only if the pair can break over 102.37 decisively. On the downside support is expected to hold over 101.40.

EUR/USD

Neutral

EUR/USD chart - July 3, 2014

EUR/USD had touched after recovering from 1.3503. This move has completed the 38.2% retracement of the fall from 1.3993 as we had mentioned at “EUR/USD Caught Between Uncertainties Of Fundamentals And Technical Factors“. We strongly believe that the currency pair already has it’s near-term bottom in place at the recent 1.3503 and further gains are favored. However, we will stay neutral today till the ECB interest rate decision at 11:45 GMT and the non-farm payroll data from the U.S. comes out at 12:30 GMT. In fact the total focus is at ECB interest rate decision as ECB had announced to keep the interest rate at 0.15% or even lower for an extended period of time. The same is covered on the update linked above. Any further rate cut today may take EUR/USD for some deeper dives below 1.3500. However, if the interest rate is kept same then though the non-farm payroll data may cause some volatile moves, but even then we will expect further gains towards 1.3748 or more. On the downside the first level of support is expected in the range of 1.3605 to 1.3610. Please check the short-term price-action channel in the above chart.

USD/CAD

possibilities of upward moves by CAD/JPY

USD/CAD chart - July 3, 2014

USD/CAD went as low as 1.0626 but then there has been a loss of momentum. The bearish shadows have nod disappeared but the current price action is touching a mid-term support trend-line which has been place since September 2012. Please check the weekly chart as shown above. Considering this we expect some upward consolidation. This outlook also finds it’s strength from the psychological aspects of 1.0500 ranges. Any dip below 1.0600 takes the currency pair in that psychological zone and hence some consolidation is expected even if another fall takes place subsequently. We would expect this consolidation to continue towards the resistance zone of 1.0730 to 1.0745. In case of resistance, even if USD/CAD falls below 1.0626, a very strong support will be expected above January 2nd’s 1.0588 to limit the fall.

USD/INR

Bearish

USD/INR - July 3, 2014

USD/INR had failed at 60.54 during the recent attempt for recovery. The subsequent efforts above 60 again failed at 60.22 and 60.21 respectively. The highs have been getting lower and recently the pair fells to as low as 59.46 before losing some of the downward momentum. We expect some more recovery if support over 59.40 holds. However we expect the recovery to be limited to the resistance zone of 59.80 to 59.95 to bring another fall. USD/INR is especially expected to be in downward pressure till the Indian budget announcement during the next week. Post budget direction will of course depend on the outcome of the budget but considering the bullish moods and expectations, we expect the currency pair to weaken further towards 58.90 or more in the coming days.

EUR/GBP

Bearish

EURGBP - June 3, 2014

EUR/GBP continues to be under strong bearish shadow. The current price action is at the level of the mid-term support trend-line and hence possibilities of some upward corrections can not be ruled out. However, considering the fact that the recent attempt of the recovery from the trend line’s has already failed once at the 5-week EMA, we favor the fall to continue. A decisive break of this support should take EUR/JPY towards the support zone of 0.7925/0.7930 first and then possibly below. This outlook will remain in place as long as the price-action stays below 0.8033. Any break of that resistance may extend the gains towards 0.8065/0.8070 resistance.

EUR/AUD

possibilities of upward moves by EUR/AUD
EUR/AUD - July 3, 2014

EUR/AUD seems to have lost the downward momentum, even though the currency pair is not out of the bearish shadows yet. In case there is no further interest rate cut by ECB today, we expect an upward correction towards 1.4740 to 1.4760 resistance zone. This outlook will remain in place as long as the price-action stays above the expected support level of 1.4382.

You may also check the periodic outlook updates at the following pages:

  1. EUR/USD outlook
  2. USD/JPY outlook
  3. GBP/USD outlook
  4. USD/CHF outlook
  5. AUD/USD outlook
  6. EUR/JPY outlook
  7. GBP/JPY outlook
  8. AUD/JPY outlook

EUR/USD caught between uncertainties of fundamentals and technical factors

June 30, 2014 in Forex Analysis

EUR/USD had touched 1.3651 on June 25th and had found strong resistance at 55-day EMA. Let’s have a look on the technical side as well as the fundamentals to see what can we expect in the coming days.

A view of technical side

The currency pair tried to recover but since then the 55-day EMA has been proving a strong wall of resistance. However, the recent bottom at 1.3503 and the price-action subsequent to that suggested that a near-term bottom may already be in place. The subsequent attempts to go down were all failed to retest 1.3503. Shall we say the magic of the psychological level of 1.3500?

EUR/USD daily chart with exponential moving averages as on June 30 2014.

Let’s also have a look on the point and figure chart of EUR/USD as well:

EUR/USD Daily Point and Figure chart - ForexAbode

The daily point and figure chart shows that the pair had broken the support of the short-term support line. This fact goes in the favor of further drop.

However, considering the continuous support over 1.3500 psychological level and the almost completion of the double-top chart pattern keeps us in favor of further upward consolidation.

EURUSD completed double top pattern

A view of fundamentals

Last week’s economic releases were more or less neutral. The only releases which had some weight were the annualized gross domestic product for Q1 from U.S.A. and to some extent the durable goods orders. Both these releases had a bearish shadow for the US dollar. The annualized GDP figures came as -2.9% against the previous growth of 2.6%, while the expectations were for a drop to -1.7%. The results were quite bearish. Similarly the durable goods orders in May 2014 fell by -0.1% against the expected growth of 0.4%, which was in-line with the previous data.

While the above results favored gains for EUR/USD but the hesitation seems to be more because of the upcoming events.

What to look and worry for?

Consumer Price Index reports scheduled from euro-zone today at GMT 9:00

The preliminary CPI report is expected to show slight improvement from previous 0.5% change to a change of 0.6%. The CPI-Core is also scheduled to be released at the time. The previous change was 0.7%. Any good results from this should become the initial driver to take the pair a bit up. However, poor CPI results will add to the technical resistances to keep the pair in check.

What to worry about?

Overall the market will be keenly looking for the ECB rate decision on July 4th. Governing Council of the ECB communicated that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time. This statement leaves the doors open for the guess-work whether the rates may be lowered again from the current 0.15%. The recent price-action has suggested that the cut to 0.15% has now lost any bearish effect and the effect of that is neutralized. However, any further immediate cut may hit the euro hard and in such case the currency pair may go down to look for a new low.

The GDP report from the euro-zone will be released on July 3rd i.e. one day before the interest rate decision and that too may bring some volatility but overall the focus will remain on the interest rate decision.  Please note that Non-farm employment data from the U.S. will also come out on Friday, July 4th.

What to expect?

Considering everything, if the interest rate is not cut by ECB and if the non-farm report does not come out very strong, we would expect further gains for EUR/USD. The resistance at 1.3677 may prove to be a bit critical and with the above, if that resistance fails then further gains can be expected, first towards the Fibonacci 38.2% retracement of the fall from 1.3993 and then possibly towards 1.3748 and more.

EUR/USD daily chart with Fibonacci retracement levels.

Overall we expect the pair to remain in an expended sideways mode for sometime, between the psychological levels of 1.3500 and 1.4000, in case the interest rates are kept same.

Forex: COT Currency Speculators US Dollar bets decline for 1st time in 6 weeks

June 22, 2014 in Forex Fundamentals and News

By CountingPips.com

cot-values

The latest data for the weekly Commitments of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and speculators decreased their US dollar bullish bets after a run of five straight weekly increases.

Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar long position totaling $12.19 billion as of Tuesday June 17th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly change of -$3.76 billion from the $15.95 billion total long position that was registered on June 10th, according to the Reuters calculation that totals the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

The aggregate US dollar position, despite the weekly decline, remained on the bullish side for a sixth consecutive week. The dollar position had fallen over to a bearish position on April 15th and remained there for four weeks into May before turning bullish on May 13th.

Overall changes on the week for the major currencies showed that large speculators bet in favor of the British pound sterling, Japanese yen, Swiss franc and the Canadian dollar while there were weekly decreases for the euro, Australian dollar, Mexican peso and the New Zealand dollar.

 

weekly-standings

Notable changes:

  • Euro positions continued to decline for a sixth week to the lowest overall level since May 28th 2013
  • British pound sterling positions increased sharply and net bullish positions rose to the highest level of the year
  • Japanese yen short positions declined after 3 weeks of rising short positions, USDJPY currency pair has been ranging around the 102 level
  • Swiss franc positions rebounded slightly to an overall bullish position for the first time in four weeks
  • Australian dollar net positions fell slightly for the week after impressive run up that has seen just four weekly declines since March 11th

 

* All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro. Please see charts and data below.




Weekly Charts: Large Speculators Weekly Positions vs Currency Spot Price

EuroFX:

eurofx

Last Six Weeks data for EuroFX futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 268142 84383 86558 -2175 -34726
05/20/2014 268199 75013 84233 -9220 -7045
05/27/2014 274051 70753 87386 -16633 -7413
06/03/2014 280747 57109 90134 -33025 -16392
06/10/2014 331636 43739 100924 -57185 -24160
06/17/2014 285489 51405 113240 -61835 -4650



British Pound Sterling:

gbp

Last Six Weeks data for Pound Sterling futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 230333 71168 39413 31755 -8891
05/20/2014 237637 80009 46919 33090 1335
05/27/2014 238440 78438 43134 35304 2214
06/03/2014 239604 79476 44502 34974 -330
06/10/2014 271602 85202 49360 35842 868
06/17/2014 250231 100434 47838 52596 16754



Japanese Yen:

jpy

Last Six Weeks data for Yen Futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 164707 17471 82178 -64707 -3979
05/20/2014 164819 18681 72468 -53787 10920
05/27/2014 162820 16999 76035 -59036 -5249
06/03/2014 171804 12578 86796 -74218 -15182
06/10/2014 201094 11893 94055 -82162 -7944
06/17/2014 153007 17832 85870 -68038 14124



Swiss Franc:

chf

Last Six Weeks data for Franc futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 45282 16951 10145 6806 -6378
05/20/2014 48803 17387 12368 5019 -1787
05/27/2014 48284 11559 15431 -3872 -8891
06/03/2014 48936 11907 13919 -2012 1860
06/10/2014 52445 9615 12645 -3030 -1018
06/17/2014 32259 15296 11776 3520 6550



Canadian Dollar:

cad

Last Six Weeks data for Canadian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 121632 26986 53023 -26037 5563
05/20/2014 121268 26500 53034 -26534 -497
05/27/2014 129989 32581 54391 -21810 4724
06/03/2014 130275 32519 55250 -22731 -921
06/10/2014 125832 30303 54411 -24108 -1377
06/17/2014 132209 34582 56115 -21533 2575



Australian Dollar:

aud

Last Six Weeks data for Australian dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 107302 50147 33020 17127 8490
05/20/2014 107613 50130 30668 19462 2335
05/27/2014 109139 52071 36223 15848 -3614
06/03/2014 110911 56811 35284 21527 5679
06/10/2014 128984 62141 33894 28247 6720
06/17/2014 99400 61078 34049 27029 -1218



New Zealand Dollar:

nzd

Last Six Weeks data for New Zealand dollar futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 30932 23806 4466 19340 -1353
05/20/2014 30556 22486 4892 17594 -1746
05/27/2014 30649 22034 4090 17944 350
06/03/2014 30066 22400 4869 17531 -413
06/10/2014 32946 20401 3546 16855 -676
06/17/2014 28467 21671 17938 3733 -13122



Mexican Peso:

mxn

Last Six Weeks data for Mexican Peso futures

Date Open Interest Long Specs Short Specs Large Specs Net Weekly Change
05/13/2014 149209 86137 17515 68622 20738
05/20/2014 154795 92730 15464 77266 8644
05/27/2014 157626 101808 18507 83301 6035
06/03/2014 162647 105666 19650 86016 2715
06/10/2014 200202 106566 16363 90203 4187
06/17/2014 135017 91227 22152 69075 -21128



*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.




Article by CountingPips.comForex Apps & News

USD/JPY – Further upside is favored

June 8, 2014 in Chart Alert

This USD/JPY update follows the previous post titled “USD/JPY Should See Some More Gains But Caution Needed“. The previous post had indicated gains towards 102.75 resistance. The currency pair had moved that way and touched 102.79 before retreating back and then jumping again. Let’s look into the charts to see what they indicate. We will also touch upon the fundamentals a bit.

USD/JPY and 200-day moving average

USDJPY daily chart with 200 day moving average - June 8 2014

The pair had broken over the 200-day moving average resistance but could not sustain. Last Friday’s resistance came just below that. However when we are talking about this resistance which may possibly sustain, let’s take a look on the significance of the recent supports.

USD/JPY chart with daily Ichimoku cloud - June 8 2014

The above chart shows that though the effort to break above the daily Ichimoku cloud’s upper edge was practically failed, the pair found a strong support over the lower edge of the cloud. This facts indicate that USD/JPY’s fight to gain further has not ended as yet.

USD/JPY daily chart with exponential moving averages - June 8 2014. The chart indicates positive outlook.

The support also came at 55-day EMA as the above chart is indicating. In-fact the 55-day EMA is also supported by 22-day EMA currently, as both are at the same level. The weekly closing was well over the weekly exponential moving average i.e. the 5-day EMA.

USD/JPY and previous resistances - daily chart - June 8 2014. Previous resistances seem to have turned into support.

The recent support at 102.11 also suggests that the previous resistance zone might have turned into support as the above 8-hourly chart indicates. In fact we prefer 4-hourly chart but this is to cover more price-action.

What else is in the favor of expecting further gains?

Daily MACD remains above the signal line and with quite convincing bullish gap.

USDJPY with MACD - June 8 2014. The MACD remains bullish.

Last week’s candle’s body was the largest during past 7 weeks. The price-action had also broken over the short-term resistance line and remains well over it.

USDJPY weekly chart with trend lines - June 8 2014

A look on the fundamentals and what to expect

Last month i.e. April 2014’s non-farm payrolls were revised from 288K to 282K. The market consensus for May 2014’s NFP were for 218K. The drop of USD/JPY had already factored that drop in the payrolls. The final release came out slightly weaker at 217K. However, on the other side the markets were expecting the unemployment rate in the U.S. to rise from 6.3% to 6.4%. The unemployment rate did not rise and remained same. The overall effect goes in the favor of the U.S. dollar. Please note that you can find the up to date revised NFP data at the above indicated post as well as at “Up-to-date non-farm payroll data since 1939

Coming Monday Asian morning session will see the GDP data releases from Japan. The quarter over quarter GDP for Q1 is expected to see a strong jump to 1.4% from the previous 0.2%. The annualized GDP figures are expected to rise from 0.3% to 5.6%. The expected figures for both these economic releases are quite optimistic. If the results come even slightly disappointing then the USD/JPY should jump quite strongly towards 103.01 resistance first and then possibly towards 104.00.

On the other side any break below 102.11 will start making the above outlook neutral. However in such case also we will expect a strong support at 101.80/101.82. This zone represents the support of the Kijun-line of daily Ichimoku cloud. If that support fails then the focus will turn back towards downside.

Basics of Online Stock Trading

June 5, 2014 in Investing, Trading with Other Commodities

In recent years, positive trends in consumer credit activities have helped create major shifts in the tendency to place retail investment trades online, rather than on the floor of a traditional stock exchange.  There is a wide variety of ways to start doing this.   Already, there is a large and growing number of regulated brokers that offer access to all of the major asset classes with trading platforms that can be managed through PCs and mobile devices.

Positioning for Market-Moving Events

The nuts and bolts of online trading are relatively easy to grasp.  Trades can be placed with quick efficiency, then stop losses and profit targets can be executed as a means for conservatively managing your market positions.  But there are deeper factors that must be understood before any real money is put on the line.  For example, markets tend to become more volatile and unpredictable when a major data or news event has been released and traders are forced to re-position.  But there are also ways of approaching the market so that you are less likely to be caught off-guard when market start to move more quickly.  Given the fast-paced (and often automated) nature of financial markets

One of the best ways to position yourself for market-moving events is to monitor an upcoming forex economic calendar.  This will give you an idea of when a macro data release or important central bank meeting is scheduled.  In daytrading, it is generally it is a good idea to have smaller exposure during these circumstances because there is less predictability in the market.  For those with longer term strategies, position sizing is less impacted by the day-to-day fluctuations in market valuations.  But, in most cases, it is best to adopt options strategies as a means for protecting yourself against abrupt changes in the market.

Focusing on Sector Activities

Last, it is generally a good idea to have a firm understanding of how each asset sector relates to one another.  Most people tend to have some understanding of the way the stock market works, but pay less attention to how things like forex market and precious metals can influence the broader financial environment.  For precious metals, this means that a stock investor might want to monitor the activity in the SPDR Gold Trust ETF (NYSE:GLD) or the iShares Silver Trust ETF (NYSE:SLV).  In forex markets, it is a good idea be aware of the developments in the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP).

For stock traders, more options are in place.  You can always trade an ETF that tracks the activity of a global benchmark, like the SPDR S&P 500 Trust ETF (NYSE:SPY).  Alternatively, online stock traders will also have the opportunity to trade in individual company names like Apple, Inc. (NASDAQ: AAPL) and Google, Inc. (NASDAQ: GOOG).  But all of these asset types influence one another, and we can see one example in the gold chart shown below.3.PNG

For example, consider the impact of a rising gold price.  This trend was accompanied by a downtrend in the US Dollar, as investors sold Dollars for gold in anticipation of rising inflation.  For these reasons, it is generally a good idea to have a sense of where gold prices are so that you can make a suitable gold forecast for the period ahead.