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Weekly Commentary | Gdmfx | Technical

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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Nov 21, 2016 1:12 pm

WEEKLY ANALYSIS: DOLLAR SMASHES THROUGH SUPPORT, THANKSGIVING DAY IN SIGHT


EUR/USD

For the entire last week the US Dollar dominated and the pair dropped below 1.0600. Since the U.S. Presidential Election result was known, the pair didn’t have any bullish days and the sellers remained in total control.

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Technical Outlook

The huge drop that started with the U.S. Presidential Election will probably continue in the long term but for the time being, the pair is oversold as indicated by the Relative Strength Index and the Stochastic. This means that a retracement has increased chances of occurring and it will be signaled by the oscillators exiting oversold territory. The first possible resistance is located at 1.0710 but the level was last touched a long time ago so a more important level may be 1.0850 because this is the latest level where price showed a strong reaction. To the downside, 1.0525 is the first support.

Fundamental Outlook

The first major event of the week is scheduled Monday: the testimony of ECB President Mario Draghi before the European Parliament, In Strasbourg. The topic is the European Central Bank's Annual Report and the financial markets are likely to be influenced by Draghi’s attitude.

Tuesday we have a thin economic calendar, with the U.S. Existing Home Sales being the only notable release. The indicator offers insights into the U.S. housing market, with higher numbers being beneficial for the US Dollar. Wednesday the FOMC will release the Minutes of their latest Meeting; this document offers insights into the reasons that determined the latest rate decision but can also reveal hints about a possible December rate hike. If this is the case, the US Dollar will be strongly affected.

Thursday U.S. banks will be closed, celebrating Thanksgiving Day and no indicators will be released. The holiday will probably affect volatility so it’s very likely to have a choppy trading session. On the Euro side the only notable release is the German IFO Business Climate, a survey of about 7,000 businesses, focused on economic conditions and expectations for the next 6 months. The week ends with a slow day, without major economic releases.


GBP/USD

British economic data released last week was mixed, with disappointing inflation numbers but better than expected Retail Sales. However, the pair didn’t seem affected much by the economic numbers and the sellers moved price lower.

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Technical Outlook

After a failed attempt to break the 50 period Exponential Moving Average to the upside, the pair reversed and moved below 1.2480. This makes 1.2090 the first notable support and puts short term control in the hands of the bears. As long as the pair is trading below the 50 EMA and below 1.2480, we favor the short side, aiming for 1.2090, but a move above the mentioned resistance zone would invalidate such a scenario.

Fundamental Outlook

The Pound has a lackluster week ahead, with only a few notable indicators: Tuesday the Public Sector Net Borrowing numbers are released, showing the difference between spending and income for government and public corporations. Friday the Second Estimate version of the British Gross Domestic Product is released, but although the GDP is considered a high impact indicator, this version is less important than the Preliminary, which was already released. Nonetheless, higher values show a stronger economy and possibly a stronger currency.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Nov 28, 2016 1:10 pm

WEEKLY ANALYSIS: BUCKLE UP, IT’S NFP WEEK AGAIN!


EUR/USD

Weekly Analysis: During last week the pair reached the support at 1.0525, with the most active day being Wednesday when the FOMC Minutes hinted that a rate hike may come relatively soon. Support is still holding but control belongs to the bears.

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Technical Outlook

The pair has reached a very important support at 1.0525, with the Relative Strength Index and Stochastic both in oversold territory. Also, price traveled a long distance without a proper retracement and all this may indicate that a bullish pullback is needed before bearish movement can resume. We must keep in mind that the pair is in a downtrend so we cannot exclude the possibility of a quick break of 1.0525; if this is the case, the next barrier and target will be 1.0462, which is the lowest point reached since 2015.

Fundamental Outlook

The week opens Monday with an important testimony delivered by ECB President Draghi before the European Parliament's Economic Committee, on the topic of Brexit consequences and economic outlook from ECB’s perspective. High volatility may be experienced during the event, thus caution should be used.

Tuesday we have two important U.S. releases: the first is the Preliminary version of the Gross Domestic Product, followed by the Consumer Confidence survey. The GDP is an economy’s main gauge of performance and consumer confidence is a leading indicator of consumer spending, so both of them can strengthen the greenback in case higher numbers are posted.

Wednesday we take a first look at Eurozone inflation with the release of the Flash Estimate Consumer Price Index but also at United States jobs data, with the release of the ADP Non-Farm Employment Change. Thursday’s headline is the release of the U.S. Manufacturing PMI, a survey of purchasing managers regarding business and economic conditions in the manufacturing sector and the week ends Friday with the most important U.S. jobs data: the Non-Farm Payrolls. The indicator is known for its high impact so we expect strong moves and we recommend caution.


GBP/USD

Early last week we saw a strong move up but after that, the pair started to move sideways and remained in a tight range, just below the 50 days Exponential Moving Average.

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Technical Outlook

Usually after a period of tight sideways movement, the pair tends to shoot strongly to one side or the other. We have two important barriers: on one hand there’s the 50 days EMA combined with 1.2480 as resistance and on the other hand we have the bullish trend line seen on the chart above as support. A clear break of either resistance or support will probably trigger an extended move in that direction but until that happens, we can expect the pair to continue to move in a range.

Fundamental Outlook

Wednesday the Bank of England will release their Financial Stability Report, which is an assessment of current economic conditions as well as risks to financial stability and can offer hints about future monetary policy. The impact is different with each release but can generate strong movement for Pound pairs.

Thursday the Manufacturing PMI is released, followed Friday by the Construction PMI. These are leading indicators of economic health, derived from the opinions of purchasing managers from the respective sectors but usually the impact is strong only if the actual reading shows a big difference compared to analysts’ forecast. As always the U.S. events will have a direct and strong impact on the pair.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Dec 05, 2016 1:17 pm

WEEKLY ANALYSIS: DOLLAR WEAKENED BY DISAPPOINTING NFP, EURO IN LIMBO AHEAD OF ECB RATE ANNOUNCEMENT


EUR/USD

Weekly Analysis: For the entire last week the pair showed choppy movement, with sudden changes of direction. The week ended higher than it started but the downtrend is still intact.

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Technical Outlook

After the touch of 1.0525 support the sellers lost their steam and the pair started to move north but it’s clear that overall there’s still bearish pressure. The Stochastic and Relative Strength Index have exited oversold territory and are moving upwards, supporting an extended move that will encounter the first resistance at 1.0710. If that level is surpassed, the next target may be 1.0800 zone and the 50 period Exponential Moving Average. As long as these resistances are holding, our view is bearish and we expect a move lower after a touch of one of the mentioned zones.

Fundamental Outlook

We have a slow week ahead compared to the previous, with only a few important releases: Monday the Eurogroup Meetings take place, attended by personalities from the EU member states. Tuesday the ECOFIN Meetings, attended by Finance Ministers from the EU member states will be the main event but both assemblies may go mostly unnoticed by the market.

Wednesday is a lackluster day and Thursday action picks up with the ECB Interest Rate announcement, which is followed shortly by the usual Press Conference during which ECB President Mario Draghi delivers a prepared statement and answers journalists’ questions. The press conference is almost always a reason for increased volatility and irregular movement.

Friday the US Dollar takes center stage with the release of the University of Michigan Consumer Sentiment, a survey that acts as a leading indicator of consumer spending.


GBP/USD

Last week was an important one for the Pound as it finally managed to climb above 1.2480 resistance and above the Moving Average. This marks the end of the ranging period and possibly calls for further upside.

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Technical Outlook

The 50 days Exponential Moving Average was surpassed last week for the first time in a long while (it was breached before but price returned immediately below it) and now price is trading above previous resistance (1.2480). All this makes us anticipate a move into 1.2855 zone and a continuation of the breakout but we don’t exclude a drop to test the recently broken level as well as the 50 EMA. If these barriers reject price, this will solidify the medium term control of the bulls.

Fundamental Outlook

Similar or the Euro and US Dollar, the Pound has a lackluster week ahead, with only two notable releases: Monday we have the Services PMI, a survey of purchasing managers regarding business and economic conditions in the service sector and Wednesday the Manufacturing Production comes out. The latter shows changes in the total value of goods produced by the manufacturing industry and can have a positive impact on the Pound if it posts higher numbers because this would suggest increased economic activity.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Dec 12, 2016 7:01 am

WEEKLY ANALYSIS: EURO APPROACHES HISTORICAL LEVELS. POSSIBLE FED RATE HIKE ON THE HORIZON


EUR/USD

Weekly Analysis: Last week we experienced interesting price behavior, with the pair climbing fast but dropping the entire distance back to where it started by the end of the week. Most of the Euro weakness was generated by Mario Draghi’s press conference and his comments which were perceived as dovish.

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Technical Outlook

The resistance at 1.0850 and the 50 days Exponential Moving Average were breached last week but soon after, price returned below these technical levels and now the pair is testing the key support at 1.0525. If 1.0525 is broken, the next target is 1.0460, a level that was last tested in 2015 and before that, in 2003 so we can say that the bears will score a major victory if they manage to break the level. The latest impulse is bearish but last week’s price action was hectic so a clear prediction is hard to make. If 1.0460 is touched, we expect small bounces to occur but the Fed rate decision will play a major role for the next direction.

Fundamental Outlook

The German ZEW Economic Sentiment survey released Tuesday is the only major indicator of the first 2 days of the week but Wednesday action intensifies with the release of the U.S. Retail Sales and more importantly, the FOMC will announce their decision regarding the interest rate. Some analysts expect a rate increase but even if this is not the case, the event will surely create strong movement. Half an hour after the rate is announced, Fed Chairwoman Janet Yellen will hold a press conference, discussing the rate vote and answering journalists’ questions.

Thursday we take a look at U.S. inflation with the release of the Consumer Price Index (CPI), which is another reason for increased volatility and the week ends Friday with the Final version of the Eurozone CPI. Although this is the least important out of the three versions, the Euro is likely to respond strongly to the data. The U.S. Building Permits are the last indicator of the week, released Friday as well.


GBP/USD


Last week the pair reached a high at 1.2775 then dropped 200 pips lower to end the trading week at 1.2575. The 50 days Exponential Moving Average is not broken but the bears control short term action.

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Technical Outlook

The pair’s behavior last week was bearish but the key support represented by the 50 days EMA and the level at 1.2480 wasn’t broken. A bullish trend line also supports price so we have three major elements that stand in front of falling price and the possibility of a push up shouldn’t be overlooked. On the other hand, a break of this confluence zone will show that the selling pressure is high and would make our bias for the week bearish.

Fundamental Outlook

The first Pound-affecting release of the week is scheduled Tuesday in the form of the British Consumer Price Index, the main measure of inflation. The indicator usually has a high impact on the Pound’s direction, with higher numbers strengthening it. Wednesday’s highlight is the release of the Claimant Count Change, an indicator which shows changes in the number of people who asked for unemployment related benefits during the previous month.

Thursday we take a look at British Retail Sales numbers and the Bank of England will announce the interest rate (no change expected). At the same time the MPC Members’ votes are released, as well as a Monetary Policy Summary that contains details of the reasons that determined the rate decision. Friday we don’t have major indicators and as always, the U.S. releases will have a direct and possibly strong impact on the pair.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Dec 19, 2016 2:11 pm

WEEKLY ANALYSIS: EURO-DOLLAR AT HISTORICAL LOWS. PRICE VOLATILITY STILL NOT AFFECTED BY END OF YEAR TURMOIL


EUR/USD

Weekly Analysis: The Fed hiked the interest rate last week and hinted towards three more increases over the course the next year. The US Dollar strengthened considerably as a result and the pair broke 2015’s lowest price, located at 1.0462.

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Technical Outlook

Last time the pair traded at such low levels was in the year 2003 so we can say that last week the pair has reached a historical low at 1.0366. Now price is testing the previously broken level at 1.0460, which may turn into resistance and reject price lower; if this is the case, we expect to see a move below 1.0366, otherwise the next destination is 1.0525 zone. Overall the bias is bearish and the Dollar is in control but bullish pullbacks are not out of the question; also keep in mind that Christmas is approaching and this will probably have an impact on the market.

Fundamental Outlook

The week ahead is very slow in terms of economic releases, probably because the winter holidays are approaching. However, there are a few releases worth mentioning and keeping an eye on: Monday the German IFO Business Climate survey will show the opinions of about 7,000 businesses about economic conditions and outlook for the next 6 months. The large sample is what makes this survey important but the release doesn’t create strong movement all the time.

Wednesday we take a look at the U.S. house market with the release of the Existing Home Sales and Thursday will be the busiest day of the week: the Durable Goods Orders come out, as well as the Final Version of the U.S. Gross Domestic Product. The GDP is an economy’s main gauge of overall performance but the Final version is the least important so we may see a mild impact. The last release of the week is the U.S. New Home Sales, scheduled Friday.


GBP/USD

The US Dollar was boosted by the Fed decision and of course, this was the highlight of last week. The Bank of England also announced their rate decision but no changes were made so the event didn’t generate strong movement.

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Technical Outlook

The bullish trend line seen on the Daily chart above was broken last week, as well as the Moving Average and the level at 1.2480. These are all signs that price may continue lower, towards the bottom of the range, at 1.2090. However, this is a long distance that will not be traveled during the course of one week unless surprising developments take place. Our bias is bearish but a quick move above the three elements mentioned before (trend line, EMA and 1.2480) would probably start a ranging period.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound has a light economic calendar, with the only important releases being the Public Sector Net Borrowing, scheduled Wednesday, the Current Account (value difference between imported and exported goods), scheduled Friday and the Final GDP the same day. All these are considered medium-impact indicators but they can generate volatility if the actual number shows a big difference compared to the forecast.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Dec 26, 2016 11:45 am

WEEKLY ANALYSIS: FINAL TRADING WEEK OF 2016


EUR/USD

Weekly Analysis: Last week the pair’s movement was affected by end of year volatility and we expect this to continue throughout the week that just started. So far support is holding and rejecting price higher but price lacks the necessary steam to blow through resistance.

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Technical Outlook

After starting last week on a bearish note and piercing through 1.0366 support, the pair retraced higher and is now testing 1.0460 resistance. Both oscillators are showing bullish divergence (price is making lower lows while the indicators are only showing a higher low) and this is a warning that further upside may follow. Keep in mind that it’s only a warning, not a clear signal and the pair is in a downtrend so we cannot exclude the possibility of a move below 1.0366 support. Probably price action will be choppy and affected by Christmas and the changing of the year.

Fundamental Outlook

This entire week will be affected by the Winter Holidays and by the changing of the year so the economic calendar is light and volatility will be affected. Monday German banks will be closed in observance of Boxing Day, Italian banks due to St. Stephen's Day and U.S. banks are also closed in celebration of Christmas Day.

Tuesday the U.S. Consumer Confidence survey is released, showing the opinions of about 5,000 households regarding current and future economic conditions. Wednesday the U.S. Pending Home Sales will affect the US Dollar, but the effect should be limited because this is considered an indicator with medium impact even under normal circumstances. Thursday and Friday we don’t have anything major on the economic calendar but the approaching of New Year’s Eve will trigger irregular movement and alternating periods of high and low volatility, thus caution is recommended.


GBP/USD

The pair completed another bearish week and moved clearly below the 50 days Exponential Moving Average but towards the end of the period, price slowed down, probably affected by the Winter Holidays.

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Technical Outlook

This is the last week of the year, so volatility will be irregular and price action choppy. It’s very likely for the pair to remain between 1.2480 and 1.2090, with a bearish bias as long as price is trading below the 50 period Exponential Moving Average. The last few days have been bearish but candles are small and lack momentum, indicating that we may see a small push up this week. The environment is risky, thus caution is recommended.

Fundamental Outlook

Monday and Tuesday UK banks will be closed in observance of Boxing Day and Christmas Day respectively, so price action will be heavily affected. The rest of the week lacks important releases and we expect irregular, possibly sideways movement.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Jan 02, 2017 4:06 am

WEEKLY ANALYSIS: THE NEW YEAR KICKS OFF WITH A BANG: FED MEETING MINUTES AND NON-FARM PAYROLLS


EUR/USD


Weekly Analysis: As expected, the last week of 2016 was governed by low liquidity and irregular price action. The quick climb is mostly attributed to these factors, not necessarily to fundamental or technical reasons. This type of behavior will likely extend to the week that just started.

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Technical Outlook

The pair has reached the 50 days Exponential Moving Average and bounced lower, erasing some of the Euro gains. As mentioned above, the low liquidity characteristic for end of year has played an important role in the move and we cannot predict if it will continue through the 50 EMA or bounce lower through 1.0525 and 1.0460. We expect the first part of the week to be affected by irregular price action and the second part to be more robust.

Fundamental Outlook

Monday U.S. banks are closed, celebrating New Year’s Day, thus no major indicators will be released and volume will be low. Tuesday action picks up with the release of the German Preliminary Consumer Price Index, an indicator that is considered the main gauge of inflation; the same day we take a look at the health of the U.S. Manufacturing sector with the release of the Manufacturing PMI survey.

Wednesday’s highlight is the release of the FOMC Meeting Minutes, a document that offers insights into the reasons that determined the Fed latest rate hike and Thursday we take a first look at the U.S. jobs market with the release of the ADP Non-Farm Employment Change. Probably the most important event of next week takes place Friday with the release of the U.S. Non-Farm Payrolls, a report that shows how many new jobs were created during the previous month. This is widely considered the most important U.S. employment data and usually has a very strong impact in the US Dollar.


GBP/USD

The pair remained below the 50 days Exponential Moving Average for the entire last week, with choppy movement and low liquidity; the last three days were the most active but a clear direction did not emerge.

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Technical Outlook

As long as the pair is trading below the 50 period Exponential Moving Average, our view is bearish but we acknowledge the fact that price may move erratically, at least during the first part of the week, due to low liquidity. The levels to watch are 1.2480 (1.2500) as resistance and 1.2090 as support and we slightly favor a move lower after a bounce at resistance but only if the 50 EMA will remain above price. Caution is still recommended throughout the week.

Fundamental Outlook

UK banks will be closed Monday, celebrating New Year’s Day and action picks up Tuesday with the release of the Manufacturing Purchasing Managers’ Index (PMI), followed Wednesday by the Construction PMI and Thursday by the Services PMI. These are surveys of purchasing managers from the respective sectors, which act as leading indicators of economic health and optimism. The impact is usually moderate but differs from release to release. As always, the pair will be directly impacted by the U.S. indicators scheduled during the week.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Jan 09, 2017 1:57 pm

WEEKLY ANALYSIS: RESISTANCE TESTED. DOWNTREND IN TROUBLE?


EUR/USD

Weekly Analysis: The week that just ended was governed by sharp reversals and overall choppy but volatile movement. The pair breached support and then jumped higher to touch the 50 days Exponential Moving Average, where it reversed again.

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Technical Outlook

The support zone around 1.0366 rejected price higher again but the pair seems to have found resistance at the 50 days Exponential Moving Average and is now trying to move below 1.0525. As long as price remains below the 50 EMA, our view is still bearish but we must note that 1.0366 is a strong support zone that couldn’t be broken on several attempts, so the downtrend may be coming to an end if the bears cannot break this key support soon.

Fundamental Outlook

The week ahead is slow in terms of economic announcements; the first notable release is scheduled Tuesday in the form of the U.S. JOLTS Job Openings, an indicator that shows the number of job openings, without taking into consideration the farming industry. It acts as a leading indicator of employment but its impact is often muted.

Wednesday is another slow day, without major data coming out, while Thursday the only notable indicator that can have an impact on the pair is the U.S. Unemployment Claims.

The busiest day of the week will be Friday, with three important releases: the U.S. Core Retail Sales (measures changes in the value of sales made through retail outlets, excluding automobiles), the Producer Price Index (shows changes in the price charged by manufacturers for their goods) and the University of Michigan Consumer Sentiment survey that tries to gauge consumers’ confidence in current and future economic conditions and acts as a leading indicator of consumer spending.


GBP/USD

Last week the pair showed bullish behavior but once the 50 days Exponential Moving Average was touched, the direction changed and most of the Pound gains were erased.

Image

Technical Outlook

The bearish bounce seen at the 50 days EMA may be an indication that the bulls have ran out of steam and that an extended move lower may follow. Our view remains bearish as long as the pair is trading below 1.2480 resistance and below the EMA, and we anticipate a move closer to 1.2090 this week. A break above the two elements that were just mentioned, would open the door for a move into 1.2855 during the weeks to come.

Fundamental Outlook

Similar to the other two currencies, the Pound has a lackluster week ahead, with only two notable indicators, both released Wednesday. The first is the Manufacturing Production, a report that shows changes in the total value of goods produced by the manufacturing sector and the second is the NIESR Gross Domestic Product Estimate, which shows changes in the estimated total value of output generated by the economy during the previous 3 months. Other than these two indicators, the pair will be mostly influenced by the technical aspect and by the U.S. announcements.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Jan 16, 2017 1:42 pm

WEEKLY ANALYSIS: KEY POINTS FOR THE WEEK AHEAD: WEF MEETINGS, ECB INTEREST RATE AND U.S. INFLATION


EUR/USD

Weekly Analysis: The pair ended the week higher than it started it, mostly because the US Dollar was weakened by U.S. President-Elect Trump’s speech delivered last Wednesday. Throughout the week, price action was choppy and showed sharp reversals.

Image

Technical Outlook

After a perfect touch of 1.0460 support, the pair rallied and broke the 50 period Exponential Moving Average. Now it is testing 1.0650 resistance but as we can see from the chart above, the last three Daily candles show long wicks and this is a sign of indecision, which was mostly generated by the way that market participants interpreted President-Elect’s speech on Wednesday. If the US Dollar weakness will continue, we will probably see an extended move above 1.0650 and closer to 1.0800 zone, otherwise price will drop through the 50 EMA and into the support zone between 1.0525 and 1.0460. From a longer term perspective the pair is still in a downtrend, which was severely weakened by the multiple failed attempts to break the support zone around 1.0366.

Fundamental Outlook

Monday U.S. banks will be closed in observance of Martin Luther King Day and there are no major releases on the Euro side either, so we expect a slow, possibly ranging session. Tuesday the World Economic Forum (WEF) Annual Meetings start in Davos, attended by personalities from the political and financial scene from around the globe (over 90 countries); the event may generate volatility on the market but of course the actual impact will depend on the matters discussed so we cannot anticipate it. The Meetings will continue throughout the entire week, thus caution is recommended.

Wednesday we take a look at U.S. inflation with the release of the Consumer Price Index, an indicator that shows changes in the price paid by consumers for the goods and services they purchase, and Thursday the focus shifts towards the Euro for the ECB interest rate announcement and the usual press conference that follows. The rate is not expected to change but as always, this event should be treated with caution because volatility may surge, especially during the part of the press conference when ECB President Mario Draghi answers journalists’ questions. The trading week ends Friday without any major event, other than the WEF Meetings.


GBP/USD

Last week the pair established a new low at 1.2037 but retraced higher soon afterwards and price action continued to be choppy from then on. For now price is still in a range, without a clear bias.

Image

Technical Outlook

The support zone around 1.2090 was breached but not broken and direction is not clear, as indicated by the sideways movement and the long tails of the candles. However, price is making lower lows and lower highs and these are the characteristics of a downtrend but until 1.2090 is clearly broken, we will consider the pair in a range, capped by the mentioned support and the 50 period Exponential Moving Average to the upside. A clear break of either one of these elements will increase the chance of an extended move in that direction.

Fundamental Outlook

The week ahead holds three major releases for the Pound: Tuesday the CPI will offer insights into British inflation and Wednesday we take a look at the jobs situation in the U.K. with the release of the Claimant Count Change, an indicator that shows changes in the number of people who asked for unemployment related benefits. The last major release of the week is scheduled Friday in the form of the British Retail Sales, which account for a major part of the entire economic activity. U.K. representatives will attend the WEF Meetings throughout the week, thus caution is recommended.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Jan 23, 2017 1:42 pm

WEEKLY ANALYSIS: MARKETS RESPOND TO DONALD TRUMP’S FIRST WEEK AS U.S. PRESIDENT. BREXIT STILL A HOT TOPIC


EUR/USD

Weekly Analysis: Last week Donald trump became the 45th President of the United States, assuming office on January 20, 2017. The pair had a bullish week overall, with US Dollar weakness and remained above the Daily Moving Average.

Image

Technical Outlook

Even if the bears are making attempts to take the pair lower, the buyers quickly erase them and price ends up higher. This was the case last week when it appeared that the 50 days Exponential Moving Average will be broken to the downside but then price quickly reversed and started to move north, so the bias remains bullish and we expect to see a move close to the resistance around 1.0800. As an alternate scenario, a quick drop below the 50 days EMA would open the door for a touch of 1.0525 support and would make the short term bias bearish.

Fundamental Outlook

Monday is a slow day, without major announcements but Tuesday action picks up and we take a look at the health of the German Manufacturing and Services sectors with the release of the respective PMIs. The same day the United Kingdom’s High Court will decide whether the government can initiate or not Article 50 without the approval of the parliament. This will surely affect the Euro as well, not only the Pound so we recommend caution.

Wednesday’s highlight will be the German IFO Business Climate, a survey that tries to gauge the opinions of about 7,000 businesses about economic conditions and a 6-month outlook, while Thursday’s only notable release is the U.S. New Home Sales. Action picks up Friday again with the release of the U.S. Advance Gross Domestic Product and Durable Goods Orders, both important indicators for the American economy and with the potential to strongly affect the US Dollar in the short to medium term.


GBP/USD

The Pound strengthened last Tuesday when UK Prime Minister Theresa May delivered a hawkish speech regarding the conditions of the Brexit but the pair remained in a range for the rest of the week.

Image

Technical Outlook

After a small dip below 1.2090 support, the pair climbed and is now trading very close to the 50 days Exponential Moving Average, with a bullish bias. For this week we expect a move into 1.2480 but from a longer term perspective the pair is still in a downtrend and the 50 EMA is not yet clearly broken, so another move below 1.2090 should not be counted out. The Brexit situation will also play a major role for this week’s price direction.

Fundamental Outlook

This week we have only two major events for the Pound: the first is the EU Membership Court Ruling, scheduled Tuesday, and has the potential to be a significant market mover, so extra caution should be used. The second event is the British Preliminary Gross Domestic Product, scheduled Thursday and showing the overall performance of UK’s economy. As always, the U.S. events released throughout the week will have a direct impact on the pair as well.
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