Greg’s Weekly Analysis W/C 13th November 2017

Fundamentals: We had the RBA meeting from Australia however it didn’t shed any light for change in monetary accommodation, no major change in guidance took place coupled with the cautious tone on growth outlook while inflation is expected to gradually increase over the 2018. The UAD weakened on the release of the statement which was in line with mild USD strength and a commodity decline from China. The USD had its own worries with tax plan now showing that the much awaited rate cut was pushed further to 2019 instead of 2018 in the proposed bill.

Technicals: The Australian dollar had a non-eventful week. Price action has moved sideways in a tight range making it hard to position ourselves whether short or long. Technicals are suggesting further downside but this recent sideways action could end up in a spike to the upside before it breaks further down, nonetheless more evidence is needed to commit to trades.

Fundamentals: We could see no change the eurozone as much of the services data came in line with expectations or slightly adjusted. Lot of investors are ready to bet on the eurozone mainly equities in case the US fails to deliver on tax as well as in regards to gradual increases of rates. Although the dollar was not able to strengthen to new highs it has not erased the prospect of it. Any pullback on the DXY that pushed G10 currencies to better value is an opportunity to buy the dollar until the DXY remains above the 93.00

Technicals: After much sideways and undecisive price action, the euro rallied slightly to the upside proving that our anticipation holds true with the euro finding value once more. If the price rejects around the 1.1700 level we can once more sell the euro from based on high probability for the downside as well as high reward to risk.

Fundamentals: The pound had its fair share of spotlight which has resulted in almost no relevant price movements, making it impossible whether we are looking a strengthening or weakening of the single currency. Until Brexit negotiations are in place and no breakthourgh occurs we can expect the pound to be driven by the USDollar. Theories are pushed left and right with some financial advisors seeing the pound at 1.40 in the next 6-12 months and some calling for parity and below, nonetheless as soon as breakthroughs occur we can brace ourselves for heavy volatility and positioning by the market.

Technicals: Same with the Pound as other USDollar pairs, trading has been largely choppy with unexpected spikes that show no clear direction. Our stance remains on the pound which is the waiting of further price action formation and clarity of buyer and seller commitment before we decide which side to join for profit.

Fundamentals: The Canadian dollars correlation seems to fade with USoil while Oil recorded new highs and soared the Canadian just barely strengthen even with good employment prospects, that largely has to do with the Central Bank not looking to adjust rates for the time being, given that the USDollar is making a value run to form a pullback, and if it remains in the drivers seat we would be able to but the pair as soon as next week depending on the volume and volatility of the pair.

Technicals: The Canadian dollar respected the weekly deceleration and candle formation and declined towards the area we are looking to buy it back from, another push down would see prices at the 1.2600 level which is the previous breakout zone as well resistance turned support scenario, if that occurs next week we’ll be able to buy the pair once confirmation is clearly visible.

Fundamentals: We’ve come to see a weak NZDollar for the past couple weeks since Labour took power in the NZ Government and formed a coalition with the green party. The currency plummeted based on labours politics which has a protectionist tone and would ban outside investors who want to establish businesses or purchase property, however the economic situation does not look bad right now, only it would if these things are implemented which is why the RBNZ was less dovish than the market expected and NZD experienced a slight rally as the central bank raised inflation forecast.

Technicals: The NZD retraced from the lows into a bullish wedge which looks very much as a value retrace with the exception of not providing enough value to sell form just yet. If price managed to spike up to the 0.7000 level and then from rejection based price action we’ll be able to sell the pair to the previous lows and support.

Fundamentals: The Yen continues to strengthen based on USDollar weakness but on its own it has no major strength, the Nikkei 225 the Japanese shares index sold off from its all time highs while the currency barely managed to gather strength. As long as the FED is on course for further rate hikes the policy divergence between the FED and the BoJ remain, however no one should be surprised by JPY short term strength before reversals to the upside.

Technicals: Another week, another yen uncertainty, price fell to intra-day lows from the highs of the 114.300 price level building a case for larger pullback as the weekly triple top pattern is contained below the resistance price. Selling doesn’t offer great reward to risk but of managed correctly a slight 2:1 position can be taken if the 4H charts clearly confirms a lower high. Buying the pair is feasible once major support is seen on the daily.

Equities have sold off from their record highs such as the Nikkei including the DAX and DOW as well. While sell offs can be taken on intra-day for quick shorts with limited profit targets, it only plausible to do based on intra-day timing and from intraday retraces to value such as pivot point that are accompanied by candle and price patterns.

The dax declined sharply and while short term traders see this as a trend reversal the evidence is not there just yet, a trend reversal would be in full effect once these indices retraces and form lower high on the higher timeframes of the daily and weekly charts.

Similarly the dow declined as well and for those who want to be in the medium or longer term diversifying into equities, holding trades from anywhere between 1 to 4 weeks seems feasible once the higher timeframes find support and they start trending to the upside once again.

Comments are closed.