Greg’s Weekly Analysis W/C 27th November 2017

AUDUSD:
Fundamentals: To say that the Australian currency is showing strength would be an overstatement, however we can’t deny that the rally is largely attributed to the USDollar and its weakness due to the latest FOMC statement. If the USDollar index keeps posting new lows on the higher timeframes the likes AUD will start forming highs as a risk on sentiment would emerge.

Technicals: The aussie failed to retest the round number 0.7500 support instead it rebounded from the 0.7550. If the support holds and price starts forming higher lows on intra-day we could see a volatile rally and intra-day positioning will be feasible. I order to call the aussie in a full bullish rebound and upside reversal, we would need to see prices above the 0.7700 level closing on the higher timeframes such as the daily and weekly.

EURUSD:
Fundamentals: The FOMC meeting minutes along with FED Chair Yellen struck a dovish tone regarding inflation and its lack of improvement. This turned investor fearful once again as the FED is slowly losing credibility with the monetary tightening. The case for a stronger dollar is that next year the FED looks to raise rates 3 to 4 times however they will hardly be able to do so if inflation doesn’t improve or worse posts lower numbers. Meanwhile in the eurozone services and manufacturing show improved numbers and many are criticising the ECB President calling for ending QE sooner than its expected around the end of the 2018.

Technicals: After much some range trading and sideways price action the euro rallied above the 1.18500 on the last day of the trading week. This shows us that the weekly and daily resistance has broken above and price closed confirming a new daily high. The next resistance stands at 1.2000 from where price could fall however until then any retest of the old resistance of 1.18500 becoming support has to be viewed with a bullish bias.

GBPUSD:
Fundamentals: The pound is facing difficult times due a massively uncertain government and its future, failure upon failure to strike a deal with the EU, all while time is running out and the economy is suffering with the lowest consumer confidence and a lower gdp growth forecast for next year, all this made the UK economy to slip down to the worlds 6th largest economy falling out of the top 5. If the USDollar doesn’t rebound and weakness will be the name of the game going into the year end, than on the back of the USD weakness the GBP will strengthen but it is no way a reflection of the single currencys’ strength. If inflation fails to pick up and the decline continues below the 2.8% the pound will have a difficult time rallying even in the face of a weak USD.

Technicals: The pound slightly rallied to the upside barely breaking above the 1.33000 resistance, if a higher low on the daily will emerge we could consider intra-day buys with limited targets, however we shouldn’t be surprised if rallies are quickly met with rejection.

USDCAD:
Fundamentals: The Canadian dollar behaved overall fundamentally weak in the last 4-6 weeks, however we have analysts who are predicting another rate increase from the BoC, needles to say with a declining USDollar due to lack of inflation and credibility in the FED, the chance for a stronger Canadian dollar against the USDollar is mounting. If price fails to hold on to the 1.2600 level in the coming days and weeks we will have to adjust our bias to a bearish one on the pair.

Technicals: Despite having a clear bullish reversal signal on the monthly timeframes the pair failed to rally over and over again and even formed a daily lower high before trying to push below the 1.27000. Coming from our previous analysis a value area to buy from remains the 1.2600 price level but we do need to wait for supreme confirmation of buyers wanting to commit to drive prices to the highs.

NZDUSD:
Fundamentals: The NZD strengthen largely due to the USD weakness however we could expect the NZD to behave as a risk on currency especially if the FED and USdollar is unable to find support. Economically the NZD is attractive and the large sell off occurred on a unexpected political outcome which puts the RBNZ in a tough spot being neutral, but the fact that a rate hike is not ruled out in the 2nd half of 2018 could be attractive for investor in a environment of USDollar weakness.

Technicals: Much like its bigger sibling the AUD the NZDollar rebounded from its lows of the 0.6800. The rally did occur due to the USDollar selling off however if this upside can be maintained there’s no reason not to start looking for intra-day long positioning based confirmation of higher lows and higher highs.

USDJPY:
Fundamentals: One of the most interesting pairs as the USDollar sold off, the yen powered up and offered a value pullback to a price which in case of USDollar strength would be very attractive to buyers. Case on point is that despite the Dollar sell off, the yen could be only currency that weakens in even if the Dollar weakens the same time, that’s due to the QQE tightening cycle of the BoJ and the possible rate hikes of the FED. This pair could be the only pair that rallies in 2018 if the FED and inflation turn dovish.

Technicals: As the dollar sold off it gave way for our longer prediction for a pullback to value in the pair. The pullback occurred as price sold off to the 111.00 price level, rejected it in form of a pinbar candle and at the 50% Fib pullback. Next week if the intra-days hold onto these levels and confirm we’ll be able to pull the trigger on a long position.

FTSE:
After pulling back to a value price level and rejecting with confluence the FTSE did rally however it was met with resistance every time it tried to form a new high. Until price remains above the 7360 price level we can keep our bullish stance and if price maintains its trading above the 7400 we could even consider long positions.

DAX:
Very similar scenario on the DAX with and same pattern of failing to maintain new highs before sellers stepping in but because price is still above the 12900 established support our bias remains bullish

DOW:
The dow has shifted from forming daily highs after daily highs as price has been stalling around the 23500 price level. Buying the index is out of question due to price hovering around all time highs, selling is feasible only on intraday and only on supreme price action confirmation in the form of lower high and candlestick pattern formations.

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