FOREX TECHNICAL ANALYSIS: US DOLLAR LOSES STEAM AS BULLISH RETRACEMENTS ARE IN ORDER
EUR/USD
During last week’s ECB Press Conference, President Mario Draghi mentioned that rates will remain low for an extended period of time in the Euro Zone and the Euro took a brief dive but later in the week, it erased all losses, resulting in a weekly candle which suggests indecision.
Technical Outlook
The pair is printing lower lows on a Daily chart while the Relative Strength Index is making higher lows, a behavior which is known as regular bullish divergence and indicates that a move higher will follow. However, the pair is in a medium term downtrend and this makes moves to the downside very probable once the upside correction is complete. We anticipate a touch of 1.3480 – 1.3500 zone this week, followed by moves to the downside.
Fundamental Outlook
The first notable event of the week occurs Tuesday in the form of the German ZEW Economic Sentiment, a survey based on the opinion of German analysts and professional investors, focused on a 6-month economic outlook.
Wednesday the US Retail Sales come out, showing the change in sales made at retail level compared to last month’s value. Consumer spending accounts for the major part of overall economic activity in the United Sates (more than two thirds) and the retail sales make up for the biggest part of such spending, hence the importance of the indicator.
The German Preliminary Gross Domestic Product is announced Thursday, showing the overall performance of the German economy which is the backbone of the Euro Zone and the last major event of the week will be the release of the American Producer Price Index scheduled Friday. The indicator tracks changes in price charged by producers for their goods and services and has inflationary implications because a higher producer price will be eventually passed on to the consumer.
GBP/USD
During the first 2 days of last week, the pair completed a bullish retracement and last 3 days belonged to the bears who managed to print a new low. UK’s interest rate remained unchanged, showing that economic recovery is not yet as strong as needed for a rate increase.
Technical Outlook
The uptrend line drawn from November 2013 is broken for some time now but the Relative Strength Index reached oversold territory for a second time in a short while and this week we anticipate bullish moves which will most likely clear this condition of the indicator. The first support is located at 1.6700 and so far price doesn’t show that it will reverse before touching it but be aware of any such signs during the early stages of the week. First resistance is located at 1.6920 and the uptrend line could also provide resistance if touched from below.
Fundamental Outlook
Wednesday will be the busiest day for the Pound as several events take place: the Claimant Count Change is released, showing the change in the number of unemployed people and BOE Governor Mark Carney will hold a Press Conference, discussing the Inflation Report which is released the same day. The Report includes BOE’s view on inflation and economic expectations for the next 2 years and combined with the Press Conference, has the potential to be a major market mover for the Pound.
The economic week finishes Friday with the release of the Second Estimate of the British Gross Domestic Product which is a gauge of overall economic performance. As always, the US events will directly influence price movement throughout the week.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: EUROPEAN INFLATION TAKES CENTER STAGE AS THE EURO SLIDES LOWER
EUR/USD
Forex Technical Analysis: The US Dollar strengthened significantly last week as the FOMC Meeting Minutes showed optimism regarding the labor market and overall economic recovery. European data didn’t bring any positive surprises and this allowed the bears to take the pair lower.
Technical Outlook
The huge drop experienced last week clearly shows that strength and market control belong to the bears. The level at 1.3295 which was previously support was broken and retested successfully during the week and now the first level of importance to the south is located at 1.3200, followed by 1.3100. The downtrend is strong and new lows are a probable scenario but retracements to the upside are anticipated. These possible bullish corrections may find resistance at 1.3295 followed by 1.3330.
Fundamental Outlook
The week begins with an important German survey: the IFO Business Climate. The release is scheduled Monday and has a high importance due to the large sample of 7,000 businesses which are asked to rate the current level of economic conditions and to provide an outlook for the next 6 months. The US New Home Sales are released the same day, offering insights into the American housing market which is always regarded as an important matter.
Tuesday the focus remains on the Dollar as the US Durable Goods Orders (goods with a life expectancy of more than 3 years) and the Consumer Confidence survey are released. Wednesday is a slow day in terms of economic news releases but Thursday the most important gauge of German inflation is released: the Consumer Price Index (Preliminary version). Germany’s economy accounts for a major part of the entire Euro Zone economy and its inflation has a hefty impact on the Euro’s performance, making this release a high impact one. The same day the United States will announce the Preliminary version of the Gross Domestic Product which is the main gauge of an economy’s performance and has a strong impact on the currency.
The economic week concludes Friday with the release of the Euro Zone Consumer Price Index which is expected to move the market strongly because inflation has been sliding lower despite the ECB’s efforts to counter this fact. For the time being, Euro Zone inflation is far away from the ECB target and the lowest in almost 5 years.
GBP/USD
Last week we saw United Kingdom’s inflation slide lower, weakening the Pound while the Dollar strengthened, generating a bearish week. Bank of England’s Meeting Minutes showed that some members of the MPC feel there is need for a rate increase but this only generated a brief strengthening of the Pound.
Technical Outlook
The current bear run is in clear need of a “breather” as price has been traveling south for an extended period of time without any significant retracement. The Relative Strength Index is deep in oversold territory for the fourth time since the drop begun and this favors a correction to the upside. If this retracement occurs, the first resistance is located at the zone around 1.6700, a place where the pair could resume downwards motion. The support at 1.6550 is the first barrier in front of falling prices, followed by 1.6460.
Fundamental Outlook
The Pound has a slow week ahead as UK Banks are closed Monday celebrating the Summer Bank Holiday and the only other notable events are the British Bankers’ Association Mortgage Approvals released Tuesday and the Nationwide House Price Index announced Friday. As always, the US events will have a direct impact on the pair’s movement.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: SLOW ECONOMIC SCENE TRANSLATES INTO RANGING PRICE ACTION.
EUR/USD
Forex Technical Analysis: The huge surprise offered by the ECB in the form of a new rate cut triggered a major selloff which was definitely last week’s central event and will probably influence this week’s price action as well. The weekly candle was strong bearish and a new yearly low was printed.
Technical Outlook
As seen in the picture above, the Relative Strength Index on a Weekly chart shows that the pair is trading in oversold territory. Daily and four-hour charts show the same condition and this makes us believe that pullbacks are a high-probability scenario. If this comes true, the first level which could act as major resistance is located at 1.3100 since 1.3000 was a less important support before being broken. The next major support is located around 1.2750 but before (and if) it is touched, a retracement must occur.
Fundamental Outlook
The week ahead is slow in terms of economic releases and this makes us believe that we won’t see massive moves similar to last week’s price action. Monday’s only notable indicator is the German Trade Balance which shows the difference in value between imported and exported goods but usually has a mild impact on the Euro unless surprising numbers are posted. Tuesday we have another slow day when only the French Trade Balance can trigger some volatility but the indicator is known to be even less important than the German one.
Wednesday no major indicators are released and Thursday the German Final CPI comes out. The “Final” version is far less important than the “Preliminary” version but considering the lack of events this week, it could generate some volatility.
Friday will be the busiest day of the week as the US Retail Sales numbers are released. Sales made at a retail level represent the main part of consumer spending which in turn accounts for about two thirds of overall economic activity, thus the event is considered a huge market mover. Later in the day the University of Michigan will release a survey with regard to consumer sentiment which is a leading indicator of future consumer spending.
GBP/USD
The Pound continued to weaken last week and the bears gained momentum on the back of US Dollar strength. Also, a poll showed increased support for Scottish independence and a possible separation from the United Kingdom.
Technical Outlook
Price is nearing the key level at 1.6250 and if this level is touched, we anticipate a bounce higher. The bears had a tremendous run and clearly controlled the pair for an extended period of time; this control is likely to continue but profit taking combined with the oversold condition of the Relative Strength Index and the importance of the support ahead are likely to push the pair higher. The first potential resistance is located at 1.6460 but a break of support could bring in more sellers.
Fundamental Outlook
Tuesday the British Manufacturing Production is released and BOE Governor Mark Carney will speak publicly in Liverpool. Better than expected manufacturing data and a hawkish Carney will probably set the stage for bullish moves. Later the same day, an estimate of the British Gross Domestic Product is released and can generate strong moves as this is the main gauge of an economy’s performance.
Wednesday the Inflation Report Hearings take place. BOE Governor Mark Carney and other Monetary Policy Committee members will testify on inflation and economic outlook before the Treasury Committee of the Parliament. Strong moves are expected, depending on Carney’s attitude and answers, thus caution is recommended. As always, throughout the week, price action will also be influenced by the American releases.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: A HISTORIC WEEK AHEAD – SCOTTISH INDEPENDENCE TAKES CENTER STAGE
EUR/USD
Forex Technical Analysis: The fundamental scene was slow during the week that just ended and as a result, price action lacked the volatility seen throughout the last period. Also, after 8 bearish weeks, we saw the first victory of the bulls, although it was a minor one.
Technical Outlook
The week ended with price being higher than it opened but the buyers couldn’t make substantial advances and the Relative Strength Index on a Weekly chart is still trading in oversold territory. Last week’s candle shows bullish pressure (long lower wick) and these facts make us believe that we will see a climb into 1.3000 or even 1.3100. To the downside, 1.2750 is a key level which acted as strong support in the past and is likely to stop bearish movement if it will be touched.
Fundamental Outlook
The German ZEW Economic Sentiment is the week’s first notable event. This survey, scheduled Tuesday, shows the opinions of about 275 German professional investors and analysts regarding the current economic situation and a 6-month outlook. The same day, the American Producer Price Index is announced, showing the change in prices charged by producers for their services and goods. The indicator has inflationary implications because a higher producer price will be eventually passed on to the consumer.
Wednesday the United States will take center stage as the FOMC will announce the Interest Rate, a Statement will be released and a Press Conference will take place. This cluster of events is likely to generate strong moves and high volatility so caution is recommended.
Thursday Fed Chair Janet Yellen will deliver a speech in Washington DC, via satellite but throughout the day, the world’s eyes will be focused on the Scottish Independence vote which will most likely generate irregular movement. Friday lacks major events and we are likely to have a slow, ranging day.
GBP/USD
Bearish momentum slowed down last week and the bulls finally managed to close the week higher than it begun. Price action was heavily influenced by the polls regarding the Scottish Independence, a matter that will be finally settled this week when the results of the referendum are released.
Technical Outlook
The pair is currently testing the important level at 1.6250. This level acted as both support and resistance in the past and it proved to be well respected by price but the latest gap generated a clear move below it. However, it will be hard for the pair to move past this level for the second time without some sort of rejection, stall or re-test (if broken). A clear move above will make 1.6460 the next bullish target while a bounce lower will open the door for a move into 1.5900 with the first barrier being last week’s low.
Fundamental Outlook
The main event for the Pound will be the Scottish Independence vote scheduled Thursday. If the Scottish people will decide in favor of a separation from the United Kingdom, the Pound will suffer and we are likely to see huge downside movement but no matter the result, volatility will be high and caution is recommended.
Other important events are the British CPI scheduled for release Tuesday, the MPC Meeting Minutes (Wednesday), which will show a breakdown of the members’ votes regarding the interest rate and the British Retail Sales scheduled Thursday. Overall, we expect a week with strong movement which will be heavily influenced by the Referendum; as always, the US events will have a direct impact on the pair’s direction.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: ALL EYES ON THE EUROPEAN CENTRAL BANK RATE AND AMERICAN EMPLOYMENT DATA
EUR/USD
Forex Technical Analysis: Last week the US Dollar reached a 21-month high against the Euro, continuing to drag the pair lower on the back of strength generated by speculation that the Fed will move to raise interest rates before other Central Banks do.
Technical Outlook
An important support level was broken last week, showing the clear difference in strength between the Euro and the Dollar. The first support is now located at 1.2660, followed by 1.2280 but the Relative Strength Index on a Weekly chart shows a clear oversold condition and this increases the chance of bullish retracements. Keep in mind that the RSI is not a clear signal to go long as it can stay in oversold territory for a relatively long period and we may easily see another bearish week. To the upside, 1.2750 will probably turn into resistance.
Fundamental Outlook
We have an important week ahead, with the first major event being the release of the German Preliminary CPI scheduled Monday. As this is the main gauge of inflation and the German economy is a pillar of the entire Euro Zone, we expect volatility at the time of the release. Euro Zone’s CPI Estimate will be released Tuesday and the same day a survey regarding American Consumer Confidence comes out.
Wednesday’s headline will be the ADP Non Farm Employment Change, a private report which tries to mimic the Government report issued 2 days later. Thursday will be the most important day of the week for the Euro as the ECB will announce the interest rate and Mario Draghi will hold a press conference discussing the rate decision and the economic situation of the Euro Zone. This is almost always a reason for strong and sometimes irregular movement so we recommend caution if trading during the Conference.
The US Dollar will be strongly influenced Friday by the Non Farm Employment report which is considered the most important data regarding the American job market and almost always generates big swings.
GBP/USD
The bears managed to take price lower last week, a behavior mostly generated by US Dollar strength, not by Pound weakness. An important level was touched and we expect some bullish reaction here.
Technical Outlook
During the previous weeks a bullish retracement was completed and it seems now the downtrend will continue. For that to happen, the current level at 1.6250 must be broken decisively; even if last week closed below it, the move cannot be considered a true break because price is still very close to the level and a retest was not seen. To the upside, the first barrier is located at 1.6460.
Fundamental Outlook
Three important indexes are released this week by the United Kingdom: the Manufacturing PMI comes out Wednesday, followed Thursday by the Construction PMI and finishing the week Friday with the Services PMI. For these indicators, purchasing managers from the manufacturing, construction and services sectors will be asked to give their opinions on the health of each sector. The surveys act as leading indicator of economic health and usually have a big impact on the Pound. As always, the pair will be directly influenced by the important US events mentioned earlier.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: DOWNTREND LOSES STEAM. NEW LOWS STILL A DISTINCT POSSIBILITY
EUR/USD
Forex Technical Analysis: Last week we had the first significant bullish move in a long time on the back of both technical and fundamental reasons. However, the second part of the week belonged to the bears as the US Dollar regained its strength.
Technical Outlook
Last week’s strong price action pierced through two resistance levels: 1.2660 and 1.2750 but the Weekly candle closed below these levels. At the moment we can see a long upper wick and this is a sign of rejection and underlying US Dollar strength. The Relative Strength Index is starting to move upwards, coming out of oversold territory, a thing which suggests that we might see more upside movement. The signals are pretty mixed but keep in mind we are in a downtrend and this increases the chances of a new low.
Fundamental Outlook
US banks will be closed Monday, celebrating Columbus Day and Europe doesn’t release any major indicators but the Eurogroup Meetings take place and this may be a reason of volatility. The German ZEW Economic Sentiment survey is Tuesday’s main event while Wednesday is a busier day: ECB President Mario Draghi will speak at a Conference organized by the European Central Bank and the US Retail Sales come out, together with the American Producer Price Index.
The Philly Fed Manufacturing Index is released Thursday while Friday’s main event will be a speech of Fed Chair Janet Yellen. The final event of the week is an American Consumer Sentiment survey released by the University of Michigan.
GBP/USD
Bank of England decided to keep the interest rate unchanged and the week was bullish but some downside action was seen during the last two days. The Pound is starting to gain against the greenback but a downtrend is still in place.
Technical Outlook
During the first part of the week price came close to the major resistance at 1.6250 but the bulls ran out of steam before this level could be seriously threatened. At the moment, downside movement is rejected by the support at 1.6060 and bullish divergence is present on a Daily chart (lower low on price – higher low on RSI). These factors increase the chances of a move into 1.6250 resistance but there is still a lot of US Dollar strength and a break of 1.6060 will make 1.5900 the next destination.
Fundamental Outlook
The British Consumer Price Index, which is the main inflation gauge, is released Tuesday, followed Wednesday by the Claimant Count Change which shows the change in the number of unemployed British people. These are the only notable events for the Pound this week but the pair’s direction will be influenced by the US releases as well.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: THE US DOLLAR IS STARTING TO LOSE ITS APPEAL
EUR/USD
Forex Technical Analysis: Last week was dominated by the bulls on the back of a disappointing value of the US Retail Sales which showed the American economy may be losing steam. The US Dollar suffered the consequences and the pair traveled upwards, breaking resistance.
Technical Outlook
The resistance at 1.2750 was broken decisively last Wednesday but price returned for a re-test during the next two days and the week closed near the mentioned level which turned into support. The pair created a weekly high at 1.2886 which will act as resistance in the future but if the current level at 1.2750 is broken to the downside, the next target will be represented by 1.2620. Given the huge distance traveled to the downside by the pair during the last months, we might see a longer retracement to the upside but on the other hand, a downtrend is still in place and we could see a move below 1.2750.
Fundamental Outlook
The first notable event of this week is the release of the US Existing Home Sales scheduled Tuesday. The indicator shows the annualized number of houses sold during the last month and usually it has a medium impact on the US Dollar. Probably the most important event for the Dollar will be the release Wednesday of the American Consumer Price Index which is a measure of overall inflation. The CORE version, which excludes food and energy from calculation, is released at the same time and this is sometimes considered more important because food and energy can fluctuate a lot, thus distorting the main data.
The French and German Manufacturing Purchasing Managers’ Indexes are released Thursday; these act as leading indicators of economic health and can have a positive impact on the Euro if better numbers are posted. The last event of the week is the release of the US New Home Sales, scheduled Friday. The indicator usually has a higher impact than the Existing Home Sales but this depends a lot on the difference between forecast and actual.
GBP/USD
British inflation dropped more than anticipated last week and this weakened the Pound severely but soon after, disappointing US Retail Sales data took the pair north on the back of Dollar weakness.
Technical Outlook
Last Tuesday the important support at 1.5900 was touched and price soon bounced higher, moving above 1.6060 resistance so we can notice the bulls are starting to make their presence known. However, because we are in a downtrend, it is very possible to see another attempt to break 1.5900 but as long as the pair remains above 1.6060, we believe there are strong chances of a move close to 1.6250.
Fundamental Outlook
The Bank of England will announce Wednesday the breakdown of the votes on the latest Interest Rate decision. This is a good way of seeing if some of the members of the Monetary Policy Committee have changed their stance regarding a potential rate hike and usually volatility is created only if the forecast doesn’t come true.
Thursday the British Retail Sales are announced and we saw what a tremendous impact this indicator can have on a currency so caution is recommended. The last major Pound affecting event comes Friday: the release of the Preliminary Gross Domestic Product which is considered the most important version of the three (Preliminary, Second Estimate and Final). As always, the pair will be directly affected by the US events scheduled during the week.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: PRICE ACTION SHAPED BY EUROPEAN INFLATION AND AMERICAN MONETARY POLICY
EUR/USD
Forex Technical Analysis: The week that just ended was characterized by mostly bearish price action which was generated by technical reasons but also by a better than expected American CPI and speculation that ECB may implement more stimulus to spur economic growth.
Technical Outlook
Last week price started to move in line with the main trend, marking the end of a bullish retracement. The level at 1.2750 was broken to the downside and 1.2620 support was tested but managed to reject the first break attempt seen Thursday. However, this week we expect the downside pressure to prevail and the bears to break the mentioned support, taking price towards 1.2500. To the upside, first resistance is located at 1.2750 followed by the high created at 1.2886.
Fundamental Outlook
The European Banks stress test results made public Sunday will have an important impact on price action throughout the week but aside from that, the pair will be influenced by several other events. Monday the German IFO Business Climate survey, which uses a sample of 7,000 businesses in order to gauge optimism regarding current and future business conditions, will be released.
Tuesday the US Dollar will be affected by the US Durable Goods Orders and the Consumer Confidence survey (which acts as a leading indicator of consumer spending). Wednesday will probably be the most active day for the US Dollar as the US Federal Funds Rate is announced and the FOMC will release a statement outlining the economic and financial reasons which stood behind the decision.
Thursday two important indicators come out: the German Preliminary Consumer Price Index which has a hefty impact on overall European inflation and the US Advance Gross Domestic Product. Friday’s most notable event is the release of the European CPI Flash Estimate which is the main gauge of inflation in the Euro Zone and usually has a strong impact on the currency.
GBP/USD
The Pound had a mixed week as it was affected by a disappointing value of the British Retail Sales but some of the losses were erased Friday on the back of a value of the GDP which matched the forecast and was perceived as bullish.
Technical Outlook
The last weekly candle is a Doji (candle with long upper and lower wicks and a very small body), which suggests market indecision. Our bias is neutral from a technical perspective and we consider the fundamental aspect to be this week’s main price mover. The major levels to watch are 1.6250 as resistance and 1.5900 as support while minor resistance sits at 1.6180 and potential support at 1.6060.
Fundamental Outlook
The week ahead lacks major UK releases but the pair will be heavily influenced by the United States events. However, notable British events are the CBI Realized Sales released Monday and the Net Lending to Individuals, announced Wednesday.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: INTEREST RATES AND EMPLOYMENT DATA – INGREDIENTS FOR AN ACTION PACKED WEEK
EUR/USD
Forex Technical Analysis: The Fed ended their stimulus program last week and although this was anticipated, the event still generated huge US Dollar strength, putting the bears in control of the pair’s direction. An important role in last week’s descent was also played by the disappointing Euro Zone inflation numbers.
Technical Outlook
The pair remains under pressure and we expect the downside to prevail this week as well but we must note the oversold condition of the Relative Strength Index and the immediate support located at 1.2500. These factors could trigger moves to the upside, with 1.2620 being the first resistance. Even if the RSI is trading in oversold territory, it is angled downwards, suggesting that another push lower could be made this week; the next support is located at 1.2280 but a touch of this level will depend on the fundamental events scheduled this week.
Fundamental Outlook
The first notable event of the week is the Monday release of the American Manufacturing PMI, a survey of purchasing managers which acts as a leading indicator of economic health and optimism. Tuesday the US Trade Balance is released (difference between imported and exported goods) and Wednesday the first US employment data will come out in the form of the ADP Non Farm Employment Change which is a report released by a privately owned company.
The focus will shift towards the Euro Thursday for the Interest Rate decision and the ECB Press Conference. Although no change is expected for the Interest Rate, Mario Draghi’s comments and attitude will surely generate some volatility and strong movement.
The final event of the week is scheduled Friday and it’s the most important American employment data: the US Non Farm Employment Change (also known as Non Farm Payrolls). The report shows how many new jobs were created during the previous month and has a tremendous influence on the greenback as more jobs suggest that consumer spending may increase in the near future.
GBP/USD
The United Kingdom didn’t release major news last week but US Dollar strength generated by the Fed decision to end the QE program took the pair lower after a bounce at resistance.
Technical Outlook
Last week was bearish but the important support at 1.5900 may hinder further downside movement. Adding to this, the Relative Strength Index is hovering close to the 30 level on a Weekly chart, a thing which suggests oversold and thus increases the chances of bullish movement. Although there are some bullish signs, if 1.5900 support is broken, the move may extend into 1.5750 which is the next weekly support.
Fundamental Outlook
The British Manufacturing PMI is Monday’s main event for the Pound, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. These are leading indicators of economic health for their respective sectors thus higher numbers than anticipated will have a positive impact on the Pound. Thursday the Bank of England will announce the interest rate, with no change anticipated but any speculation about a possible change could greatly affect the pair so caution is recommended. Throughout the week price action will be directly affected by the US releases as well.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
FOREX TECHNICAL ANALYSIS: OVERSOLD CONDITION CALLS FOR BULLISH MOVEMENT
EUR/USD
Forex Technical Analysis: The pair just finished another week controlled by the bears on the back of Euro weakness generated by Mario Draghi’s renewed commitment to use additional stimulus measures if the risk of deflation persists. On the other hand, the US Dollar was negatively affected by the NFP release and some of the pair’s losses were erased Friday.
Technical Outlook
During the week the pair broke 1.2500 support but Friday we saw bullish action and the weekly candle now has a long wick which suggests indecision. The Relative Strength Index on a weekly chart is below the 30 level, indicating an oversold condition but it is still pointing downwards and the pair is in a strong downtrend so we expect further bearish action. If the pair will remain below 1.2500, the first potential support is located at 1.2360 followed by 1.2280.
Fundamental Outlook
There are no important economic releases Monday and the same is true for Tuesday when US Banks are closed, celebrating Veterans Day. Euro Zone’s Industrial Production numbers are released Wednesday and Thursday the main event will be the American Unemployment Claims but this is often overlooked by market participants because it is an indicator which is released every week.
Friday a more important indicator is released by the United States: the Retail Sales. The importance of this indicator comes from the fact that sales made at a retail level account for a hefty part of the entire economic activity and a higher value suggests a thriving economy. The same day the Euro Zone Gross Domestic Product is announced, showing the overall performance of the European economy.
GBP/USD
The British economy posted worse than expected numbers overall and the Pound weakened against the US Dollar for another week. Price rebounded higher during the last day of the week on the back of US Dollar weakness.
Technical Outlook
The pair is headed towards the support at 1.5750 and we expect a bounce higher once and if price gets there. The Relative Strength Index is just crossing the 30 level downwards on a weekly chart but it has been hovering close to this level for a long while so a touch of support combined with an oversold condition of the indicator will probably push the pair higher.
Fundamental Outlook
Wednesday is the busiest day for the Pound as the Claimant Count Change is announced and Bank of England Governor Mark Carney will hold a press conference discussing the Inflation Report released the same day. This Report contains the Bank of England’s economic outlook and inflation forecast for the next 2 years and usually has a high market impact so caution is recommended. As always, the US events will have a direct impact on the pair’s movement throughout the week.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.
