Greg’s Weekly Analysis W/C 2nd October 2017

Fundamentals: The main driver of the weakness in the aussie dollar was its US counterpart. The weakness is more likely welcomed by the RBA who signalled that the single currency being too high will hurt future outlook. The USDollar found support among investors while the AUD wasn’t seen as risk on. The RBA might further talk down the currency on its’ next meeting and with the increased probability of the FED raising rates in December, the pair is set for new lows in the coming weeks, retraces to value are always expected but the bearishness should prevail on the higher timeframes given that no major shift takes place.

Technicals: The aussie sold off based on the weekly and daily signals as expected. Traders turned bearish and with them the trend is now set to reverse do the downside on the higher time frames. If price action retraces from the lows and ends up rejecting along with a lower high formation on the daily we can look for new sell opportunities.

Fundamentals: Further strength in the weakness of the euro to new daily lows has somewhat shifted the expectations of new highs based on the ECB Presidents Draghi announcing QE tapering in October. Just as the strength was ahead of its time, the reversal seems to do the same action and with the currency having no imminent upside against a rebounding USDollar, market participants are positioning themselves for the lows that might last anywhere between couple weeks to months.

Technicals: As anticipated the euro broke below its support line and closed the week below the 1.18500. By the end of the week we could spot a retrace from the lows which gives clue that the euro if retracing to find value from at the breakout zone and form a lower high. If price rejects and forms the lower high with bearish price action we’ll be able to take a sell position as soon as markets are open.

Fundamentals: The BoE along with BoE Gov carney have turned surprisingly hawkish given that inflation was above the banks target for the last year. A rate hike could be imminent by the end of the year but many believe that inflation has yet to peak at 3% before it head lower and normalises, which means that having a rate hike would hurt the economy more than help it. Many analysts criticize the BoE along with FED that the preferred measure of inflation the so called Phillips Curve is faulty and does not track inflation based on unemployment coming down, this can be seen by the sluggish consumer spending. Going ahead

Technicals: Although with slow volume the pound is fulfilling the pullback that was much awaited. The pair seems untradeable until its finds value in the form of higher low and a possible reversal to the upside. If that occurs we can plan to for a possible long position once confirmation is visible

Fundamentals: The USdollar strengthened against the Canadian currency as well, especially that the BoC talked down its currency reminding that they do not desire an overly strong currency. Coupled with the USD strength we could see a rebound from the lows, it will reside on the USD to drive price action and establish whether we see a reversal to the downside come next week or if pullback will be just about providing value and reaching new highs.

Technicals: The Canadian dollar is forming some mixed signals, we have a bullish wedge which is acting as a bullish trend formation on the lower timeframes, yet by the end of the week the daily price action rejected the 1.2500 resistance as well as the 50 ema. Depending on how the week opens we have 2 scenarios, one of them is selling the rejection and the second is waiting for the pullback to finish forming a higher low and if that confirm we’ll be able to buy with a confirmed higher low on the daily !

Fundamentals: Along with the aussie the RBNZ meeting is much awaited for further guidance regarding monetary policy but for now the risk on sentiment on the antipodean, commodity based currencies have faded.

Technicals: The new zealand dollar sold off after rejection of the bullish wedge that was merely a pullback rejection the 0.7400 price level. The reversal to the downside might further confirm by forming lower highs on the daily which will be the best way to position ourselves for a sell for the highest reward to risk.

Fundamentals: The strength of the USD is shining through in comparison with the Japanese currency and a reversal dominating with USD strength could be seen. The divergence between the two central banks is back on track with FED Funds rate hike probability increasing from 25% to 75% in less than 2 weeks. Any strength  in the yen should be monitored as a means to provide value to buy back the pair on increased reward to risk.

Technicals: The yen pair pulled back but not enough to confirm a high probability buy positions and the higher low didn’t reject the support zone nor Fibonacci pullback levels. Going ahead we can wait for another pullback to show or sell into the pullback with limited reward to risk

The FTSE rallied to the upside but didn’t manage to close above the 7400 price level. The bullish price is action is relevant and daily price closed above the 50 ema. Next week if intraday 4s confirm further buying the index has good probability for intra-day profits.

The DAX broke through the resistance above the 12700 level and any retrace that rejects the breakout price will possibly attract buyers that will take the index higher.

The Dow slightly pulled back only to pair back the losses by the end of the week. Buying the market is feasible on a larger pullback to value and selling it based on intra-day lower highs and candle patterns will provide entries to the downside.

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