Daily Market Analysis from HotForex

HotForex

Active Trader
Oct 9, 2013
368
0
32
Traders Buy the USD as the US Core CPI Came in at +0.2%



After a couple weeks of low volatility the EURUSD moved lower yesterday driven by the US inflation figures. The core CPI (change in the price of consumer goods and services excluding food and energy) rose by 0.2% instead of 0.1% expected by the economists. The CPI that includes the more volatile items (food and energy) fell by 0.7%, most since 1998. This is explained by the substantial fall in Crude Oil prices. The Fed policy makers focus on the Core CPI and therefore markets reacted to the higher than expected figure and bought the dollar as they concluded this will encourage the Fed to raise interest rates this year. However, economists believe that the effects of lower energy prices and a strong dollar will work their way to the Core CPI and cause low reading in the near future.

EURUSD has been really tame since the last time I wrote analysis on it. The weekly picture has not changed much as the downtrend still prevails and there is a shooting star candle indicating that the price will stay in the downtrend. The combination of resistance level at 1.1460 and the 23.6% retracement level held the pair down. The current support and resistance levels nearest to the current price are 1.1098 and 1.1460.



EURUSD, 240 min

Now that the EURUSD has been moving sideways the daily and 4h charts are so similar that I will only comment on the latter. Price is currently resting at a pivot candle high at 1.1203 and the Stochastics are well into the oversold territory while price has moved inside the Bollinger Bands. This suggests that there should be an intraday rebound higher probably to the nearest resistance level at 1.1287. This level coincides with the 50% retracement level drawn from the Wednesday’s high to the latest low yesterday.

Conclusion:

This market is still in a downtrend which means that the support levels are more likely broken and resistance levels honoured. However, the price is now relatively close to the weekly low and sitting at a 4h pivot candle. In addition the price is outside the daily lower Bollinger Bands and the 4h Stochastics are oversold. Therefore a move higher should be in the cards. This should however, be only an intraday rebound as we resistance levels and a sideways range above. Should this move take place I would be looking to benefit from the weekly trend by selling short at the resistance levels, providing the lower time frame charts confirm the idea.


Join me on Live Analysis Webinar on Tuesday 3rd of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
 

HotForex

Active Trader
Oct 9, 2013
368
0
32
Gold Trades Sideways At Key Support Level

View attachment 657

Lately many market participants have been focusing on this week’s jobs report from the US. This Friday the US Bureau of Labour Statistics releases the Non-Farm Payroll report, the most important piece of macro data before the next Fed meeting. This report is seen as an important indicator on when the Fed might start hiking the interest rates. Some participants expect the rate hike happen in June while most are looking to September as potential starting point for the Fed’s rate hike cycle. However, some prominent analysts believe that the Fed will be patient and start the rate hikes next year. Higher interest rates support the dollar and historically Gold has not done that well during the periods of rising dollar. At the same time demand for physical Gold is solid in Asia. India alone is consuming 800 to 1000 tons of Gold annually and imports to the country are increasing. In addition, China’s interest rate cuts in November 2014 and last Saturday are an indication that the Peoples Bank of China has moved into an easing cycle. This is a factor supporting demand for Gold in China.

The price of Gold reached the medium term ascending trendline a bit more than a week ago and has since been trading between the support at 1200 and a weekly low from the beginning of February. This level also coincides with the 50% Fibonacci retracement level. Gold is getting oversold in terms of Stochastics and I am looking for a move higher over this week or latest the next week.

View attachment 658

Gold, Daily

The resistance level at 1220 coinciding with the 50% Fibonacci level has held the price down while the 1200 area has supported price. Price is ranging sideways which is quite common after downtrend is broken and the market participants fight over the future direction of the gold price. At the moment we have a higher low in place (from yesterday) which indicates that buyers are ready bid for Gold between 1190 and 1200. There is further support from a daily pivot candle from January 2nd this year and the lower Bollinger bands (currently at 1179 and 1188).

View attachment 659

Gold, 240 min

Levels outside the lower Bollinger bands and a pivot candle from 24th February have been attracting buyers lately. There was an attempt to take the price higher last week and price was making higher lows and higher highs until the resistance at 1223 proved too much for the buyers. There was rejection candle yesterday (a candle with a long shadow below). This confirms the idea of 1190 to 1200 being an important range for buyers.

Conclusion:

Price is now at key levels and I am looking for a move higher from this support. In the recent past it has taken two to three weeks for the price Gold to turn from support levels. Therefore should there be a rally in not so distant future. But as the market participants are looking at this Friday’s jobs release from the US as a potential indication on when Fed might be raising rates the price of Gold might be moving sideways until Friday. Should Friday’s NFP figures be a disappointment, the likelihood of Fed raising rates early would be smaller and this should support the price of Gold. Levels close to or inside the 1190 – 1200 support range should be monitored for price action based buy signals. If you want to learn about price action based trading signals, just join me to educational and live analysis webinars.

Join me on Live Analysis Webinar on Tuesday 10th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat! The webinar starts in:

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.