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Forex Technical Analysis: The race for the year’s high may begin.

EUR/USD
Forex Technical Analysis: Last week’s main event was represented by the US FOMC Meetings which generated a massive rise for the pair on the back of US Dollar weakness. This weakness is attributed to the fact that the Fed decided not to taper the $85 billion stimulus.

Technical Outlook
The important level of 1.3400 was broken last week and now price is sitting on 1.3520 which was pierced but the pair soon returned to it. Although our bias is bullish, we must note the fact that the pair is showing rejection off this zone: a daily pin bar was created Thursday last week and the Relative Strength Index is in overbought territory on a Daily chart. Although these are all bearish factors, we consider the bulls will manage to retain control over the pair and push price higher. The next major resistance is located at 1.3710 which is also this year’s highest point.

Fundamental Outlook
The week starts strong with Monday’s release of the French and German Manufacturing Purchasing Managers’ Indexes abut more importantly, Mario Draghi will testify in Brussels about the state of the economy. His speech has the potential to be a real market mover and possibly the most important event of the upcoming week.

Tuesday’s most notable events are the German Ifo Business Climate and the US Consumer Confidence. Wednesday the US Durable Goods Orders are released. The indicator tracks the change in demand for goods with a life expectancy with more than three years and it’s a leading indicator of production because if more orders are placed, the producers will have to increase their activity to fill the orders. The US New Home Sales are announced the same day; higher numbers indicate a better economic situation because usually people don’t purchase new homes in times of economic instability or contraction.

Thursday the US Pending Home Sales are releases, showing the change in the number of houses that are about to be sold but await the final, closing transaction. Friday the ECB President Mario Draghi will speak in Milan, but the event is likely to have a lower impact than his Monday speech.


GBP/USD
The pair experienced a substantial rally during the first part of the last week but Thursday the UK Retail Sales came our much worse than anticipated and the Pound gave back some of the previous gains.

Technical Outlook
The retracement lower begun once price hit 1.6170 resistance, with the Relative Strength Index showing overbought condition on a daily chart. Although we are biased towards the upside, we also acknowledge the fact that price had a strong bullish movement for the entire month so it may be time for a bigger retracement. A good place for price to resume the uptrend may be the minor level of 1.5960; if that level is broken, the next important support is located at 1.5850.

Fundamental Outlook
Tuesday the BBA Mortgage approvals are announced, offering an insight into UK’s housing market but the most important UK event of the week is the Current Account scheduled for release Thursday. The indicator shows the difference between imported and exported goods and better than expected numbers may strengthen the Pound, especially if the difference is substantial. United Kingdom’s Gross Domestic Product is released the same day and it has the potential to be the week’s most important event for the Pound because it is the most extensive measure of economic activity.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Forex Technical Analysis: Key resistance ahead. Is there any steam left?

EUR/USD
Forex Technical Analysis: The economic data released by the Euro Zone and the United States last week was mixed and this translated into ranging price action, with a lot of reversals and no clear control from either the buyers or the sellers.

Technical Outlook
For the entire week the bulls tried to break the resistance located at 1.3520 but didn’t manage to accomplish that and at the moment price is showing rejection signs off this level. We have an almost perfect double top at 1.3570 (which is a bearish pattern), the uptrend line drawn from the beginning of the month was broken and Friday’s candle has a long upper wick which is another sign that price may be headed south. The most important levels to watch are 1.3710 (the year’s high), the current level of 1.3520 and the support located at 1.3400.

Fundamental Outlook
Ahead of us is a week full of important events: Monday the Euro Zone Consumer Price Index is announced, followed by Tuesday’s US Manufacturing Purchasing Managers’ Index. The most important Euro Zone event of the week is Wednesday’s Interest Rate decision accompanied by the ECB Press Conference where President Mario Draghi will speak and answer audience questions. Later that day, FED Chairman Ben Bernanke will also speak at a Conference titled “Community Banking in the 21st Century”, in St. Louis.

Thursday the US will release the usual Unemployment Claims and the ISM Non-Manufacturing PMI which is a leading indicator of economic health based on the opinions of about 400 purchasing managers. The most important US event of the week is scheduled Friday in the form of the US Non Farm Employment change. This is the most anticipated indicator related to the jobs situation and usually has a huge impact on the market.


GBP/USD
Throughout the last week the United Kingdom released mostly better than expected data and this contributed substantially to the bullish movement. Positive comments made Friday by Mark Carney further strengthened the Pound and pushed the pair higher.

Technical Outlook
The pair is approaching 1.6170 resistance again and the momentum belongs to the buyers. Although last week was definitely controlled by the bulls, this doesn’t mean that 1.6170 will be broken but a move above this level would expose the key resistance located at 1.6300. The first support is located at 1.5960, followed by the more important one at 1.5850.

Fundamental Outlook
The week is characterized by the release of three Purchasing Managers’ Indexes: Tuesday we have the Manufacturing PMI, followed Wednesday by the Construction PMI and Thursday by the Services PMI. Each survey is a leading indicator of health regarding its respective economic sector and better than expected values are usually beneficial to the Pound. The US events mentioned earlier will have a direct impact on the pair as well.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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The Forex Market: The beginning of a reversal?

EUR/USD
The Forex Market: Last week begun with the buyers being in control of the pair but Friday we saw some activity coming from the sellers’ side and price started to move towards the previous major support.

Technical Outlook
The latest move south nullified most of the Euro’s gains over the last week and generated a Pin bar on a weekly chart. Pin bars are candles which show rejection and a potential reversal but 1.3710 which is a very important level may act as a magnet and attract price close to it. To the down side the first major support is represented by 1.3520 and a move below it may generate additional bearish strength, opening the door for a touch of 1.3400.

Fundamental Outlook
The financial week starts Monday with a medium impact indicator: the Euro Zone Sentix Investor Confidence. The German Factory Orders come out Tuesday, offering insights into the German Production sector. The US Non Farm Employment change will possibly be released Tuesday as well but at the moment, the exact date and time are not known due to the US Government partial shutdown. We will keep you updated and announce when exact information is available.

Wednesday the German Industrial Production numbers are released and the always important FOMC Minutes which contain details regarding their latest Meeting and the reasons which influenced the members’ votes on the Federal Funds Rate.

Thursday the ECB Monthly Bulletin is released, containing similar information to the FOMC Minutes but regarding the ECB’s latest Interest Rate decision. The US Unemployment Claims are announced the same day and ECB President Mario Draghi will speak at the Economic Club of New York. As always, his speech may generate strong moves and we recommend caution if trading at the time. Friday’s most important events are the German Consumer Price Index and University of Michigan’s Consumer Confidence.


GBP/USD
Last week the Pound experienced the strongest drop in a long while. The weakness was mostly generated by the Manufacturing, Construction and Services PMI’s which failed to meet analysts’ expectations of increase.

Technical Outlook
The pair was overextended for some time and it looks like the move above 1.6170 was the final push before a trend reversal. At the moment the momentum favors the bears and the first support located at 1.5960 will probably be broken early in the week. The next target is the level located at 1.5850 but a move into that area depends on the fundamental events scheduled for the week.

Fundamental Outlook
Wednesday morning the United Kingdom will release the Manufacturing Production which has a high market impact due to the fact that Manufacturing makes up about 80% of the entire Industrial Production. Thursday the Official Bank Rate and the Asset Purchase Facility are released; these two are the most important UK events of the week and will most likely generate strong moves.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Forex Technical Analysis: A critical week for medium term trend

EUR/USD

Forex Technical Analysis: After a slow start, last week’s volatility picked up in its second part and the bears managed to take the pair lower on the back of US Dollar strength generated by speculation that US lawmakers may reach an agreement regarding the debt crisis.

Technical Outlook

Last week’s most important level was 1.3520 which appeared to be broken to the down side initially, but price returned above it showing signs of rejection. At the moment price is trying to slide below it and the level will hold special importance for this week’s price action as well. A break lower would bring price into the support zone created between 1.3450 – 1.3560. If this zone is surpassed, the next major support is located at 1.3400. To the upside, 1.3650 represents the first important level but a move into that territory is less likely.

Fundamental Outlook

Monday the Eurogroup meetings take place in Brussels, attended by the Eurogroup President, Finance Ministers and the President of the ECB. A range of financial issues will be discussed, including support and stabilization mechanisms for the Euro. The same day, the Euro Zone Industrial Production values will be released. The event may bring the Euro higher if better than expected numbers are posted.

Tuesday’s most important event is the release of the German ZEW Economic Sentiment which is a well respected survey based on the opinions of German analysts and investors who are highly informed due to the nature of their jobs. The ECOFIN meetings take place the same day.

The only important economic indicator released Wednesday is the Euro Zone Consumer Price Index. Its importance comes from the fact that this indicator is used by the ECB as an inflation target.

The first important US event of the week is the release of the Philly Fed Manufacturing Index which is scheduled for Thursday. The same day the change in US Unemployment Claims is announced. No major data releases are scheduled for Friday.


GBP/USD

Last Wednesday the pair experienced a major sell-off as the UK Manufacturing Production came out a lot worse than anticipated, severely weakening the Pound. The UK Interest Rate remained unchanged and the event didn’t create a lot of volatility.

Technical Outlook

Last week’s movement brings the momentum in favor of the bears and lower prices are to be expected. After breaking 1.6000 to the down side, price re-rested it and bounced lower, confirming the fact that this level is now resistance. Our bias is bearish and we consider the next target to be 1.5850, followed by 1.5720. A move above 1.6000 is not out of the question but the probability is lower.

Fundamental Outlook

The UK Consumer Price Index comes out Tuesday, the same day as the Producer Price Index, two important economic indicators which have a lot of weight for the pair’s next direction. The Claimant Count Change is announced Wednesday, offering insights into UK’s jobs situation; the unemployment situation is closely related to consumer spending (people without jobs tend to spend less). UK’s Retail Sales numbers are released Thursday; this indicator is the primary gauge of consumer spending which represents the majority of overall economic activity.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Forex Technical Analysis: The Bulls have the Year’s high in sights.

EUR/USD

Forex Technical Analysis: Last week’s highlight was the US debt crisis and the solution that was reached to end a 16 day government shutdown. However, the turmoil is likely to have a negative impact on future economic growth and investors believe the Fed will not taper the stimulus program, a fact which weakened the US Dollar.

Technical Outlook

The result of this Dollar weakness was seen last Thursday in the form of an almost 170 pip rise which was continued Friday. The pair broke the resistance located at 1.3650 and is now sitting near the major resistance level of 1.3710 which coincides with this year’s highest peak. A break of the year’s high would generate additional bullish strength which will probably push prices even higher but due to the importance of this level, we don’t anticipate it to be broken in the first attempt. The first important level to the down side is located at 1.3650.

Fundamental Outlook

The first event of the week is the release Monday of the US Existing Home Sales which is the first in a series of housing market indicators. The most important US release of the week is the Non Farm Employment Change scheduled for Tuesday. This is the most important gauge of employment in the United States and its release was previously suspended due to the government shutdown.

Wednesday lacks important economic releases for the Euro or Dollar and Thursday’s headlines are the release of the German Manufacturing Purchasing Managers’ Index (important and leading indicator of economic health focused on the Manufacturing sector) and the US New Home Sales.

The economic week finishes Friday with the release of the German Ifo Business Climate and the US Durable Goods Orders. Both indicators are correlated with optimism and higher numbers strengthen the currency.


GBP/USD

The Pound strengthened throughout last week due to a better Consumer Price Index and better Retail Sales numbers. On top of that, the US Dollar weakened and as a result the bulls scored a major victory, taking price about 340 pips higher throughout the week.

Technical Outlook

Last week’s massive rally took price in the resistance zone located around 1.6170 but it appears this level stopped the bullish momentum. Friday’s daily candle is showing rejection in the form of a long wick on its upper side and this level will probably be the most important of the week. Although the momentum belongs to the bulls, moves lower in the form of a retracement are not out of the question.

Fundamental Outlook

The minutes of the latest Meeting of the Bank of England will be released Wednesday and will contain the details of the members’ votes regarding the Interest Rate and the Asset Purchase Facility. Friday the UK Gross Domestic Product will be released and although its main components are known in advance, this indicator still remains the most important gauge of an economy’s progress and can have a high impact on the pair. The US events mentioned earlier will have a direct impact on price movement.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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