Fresh Technical Analysis from IFC Markets

[IFC Markets]

Unforeseen reversal / USDCAD : 2014-10-17
​

Good afternoon, dear traders. Today at 14:30 CET we expect the release of two macroeconomic indicators: Building Permits, USA and Core CPI, Canada. The first index expresses the number of new housing building permits issued by the government last month. It allows assessing the real estate potential growth, and also secondary demand goods and technology sector. Positive data permits expecting a momentum for domestic consumption and production in the USA. The second indicator shows the change in prices of goods and services in Canada with the exception of the most volatile components: food and energy. The Core CPI defines inflation rate which affects the Bank of Canada monetary policy. The CPI release may lead to a significant boost of the Canadian dollar against its most liquid competitors, including the US dollar. Both indices are expressed on a monthly basis and influence considerably the investment expectations.

Today we consider again the USD/CAD currency pair on the H4 chart. The price broke the H4 trend line downward: it is the first bearish signal. It should be pointed out that RSI-Bars oscillator also broke the trend line in the direction of the red zone, forming a gap. ParabolicSAR confirms the investor sentiment change. And the last confirming sign that we need is the DonchianChannel bias reversal, which is possibly expected to happen after the fractal support breach at 1.12248. This mark can be used for placing a pending sell order. Stop loss is to be placed at 1.13615. This resistance is confirmed by the fractal and Parabolic historical values.

After position opening, Trailing Stop is to be moved after the Parabolic values, near the next fractal peak. Updating is enough to be done every day after the formation of 5 new H4 candlesticks, needed for the Bill Williams fractal formation. Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position-Sell
Sell stop-below 1.12248
Stop loss-above 1.13615​

 

[IFC Markets]

Business confidence remission

Business confidence remission
Today at 1:30 (CET) NAB Business Confidence index was released. It indicates the level of business optimism in Australia. This diffusion index is calculated every month by the National Australia Bank, based on a survey of more than 300 companies. The indicator allows estimating the investment climate improvement in the country, consumer spending and unemployment rate. This month the Business Confidence index has fallen 4 points vs. 5 points last month. Consequently, AUD/USD price dynamics was immediately affected. We may expect a further depreciation as the US dollar strengthens after the QE completion.

Here we consider the AUD/USD currency pair on the H4 chart. The price is moving within the D1 and H4 trends: the bearish trends coincide. At the moment we can witness a new trend formation, which will be intensified after the breakout of the fractal support at 0.85317. In the short-run, the current trend is confirmed by the candlestick pattern "absorption" (marked in yellow on the chart). We can also see there has already been the intersection of the Parabolic historical values and the trend indicator reversal in the direction of the red zone. The support level significance is also confirmed by the lower boundary of DonchianChannel. RSI-Bars oscillator verifies the current trend, but the final confirmatory signal is expected after the level breach at 39.7701%. In our opinion, it will happen when the price crosses the mark at 0.85317, which can be used for placing a pending sell order. Stop Loss is recommended to be placed above 0.86873. This mark is strengthened by the upper boundary of DonchianChannel, Bill Williams fractal and Parabolic historical values.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position Sell
Sell stop below 0.85317
Stop loss above 0.86873

 

[IFC Markets]

Technical Analysis GBPUSD : 2014-11-12

Mark Carney’s speech ​

At 11:30 (CET) the Bank of England Governor Mark Carney will be giving his speech today. He will be discussing the BOE quarterly Inflation Report. The report is focused on inflation expectations and the actual economy state. An excessive currency expansion may cause changes in the regulator’s monetary policy, e.g. the base interest rate hike. On the contrary, a deflation risk triggers the monetary policy easing. Therefore, today we expect a possible volatility momentum of the British currency, after the situation over the last quarter becomes clear.

Here we consider the GBP/USD currency pair on the H4 chart. The price keeps moving in the daily bearish trend, but at the same time we can see the H4 trend line breakout in the direction of the green zone. The signal is strengthened with the neckline intersection of the bearish graphic model “head and shoulders”. We could have considered this position as an opportunity for opening a buy order, if we are not taking the D1 trend line proximity into account. It limits the potential motion compared to the possible risks. For this reason we can turn to the reflecting pattern called "Hound of the Baskervilles", which will be formed if the price breaks the support level at 1.57951. This level can be used for placing a pending sell order. It is confirmed by Parabolic historical values, Bill Williams fractal and the lower boundary of DonchianChannel. There is a high probability that this mark intersection would cause a strong bearish momentum. Currently, the price gives the first signs of a downward uncertain movement. You should pay attention to the "shooting star" candlestick pattern (marked in yellow on the chart). Besides, the formation of a new low of the RSI-Bars oscillator signal confirms the future price reversal. Conservative traders are recommended to wait for the oscillator support level breakout at 32.9498%, which will precede the main price down movement.

The preliminary Stop Loss can be placed above 1.59522. This level is confirmed by the fractal and the upper boundary of DonchianChannel (13). After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.
Position Sell
Sell stop below 1.57951
Stop loss above 1.59522

 

[IFC Markets]

Technical Analysis PCI : 2014-11-14

Anti-dollar index​

Today we consider the currency anti-dollar index &VSUSD_Index composed on the basis of the Personal Composite Instrument - PCI technology. The currency index is designed to show the USD fluctuations against other segment of the Forex market. As a systematic FX market indicator we will use a portfolio of the most liquid currencies traded against USD: [EUR(12.7%)+JPY(14.5%)+GBP(17.5%)+CHF(19.1%)+AUD(18.1%)+CAD(18.1%)]/USD. The price of each currency is expressed in USD. The weights are defined according to the currency liquidity relative to the volume of international bank circulation. Get more details and the online index chart by clicking on the anti-dollar index page &VSUSD_Index.

Note that &VSUSD_Index reaction on the US fundamental economic events is the most obvious and sustainable: the index forms a stable trend channel, meanwhile it is less susceptible to the fundamental events of other currencies. Let us remind you that today Core Retail Sales is to be released in the US. The indicator is released by the US Census Bureau every month and indicates the relative change in the retail sales volume of all the goods (except for cars), which amounts to 20% of the total volume. CRS is the monthly measurement indicator of all goods sold by retailers based on the retail stores sampling of different types. The index defines the consumer confidence and demand, and therefore, it can affect significantly investor preferences. Currently, &VSUSD_Index is waiting for new fundamental signals, and it is still in a state of uncertainty.

Here we consider the daily closing/opening price chart of the given instrument. It was composed in NetTradeX trading platform. We can see that the price crossed down the moving average (13), and it is preparing for a fractal support breakout at 0.96916. Parabolic confirms the price trend, the same as the RSI-Bars oscillator signal. The W1 trend is under the bearish influence, so we don’t have any doubt in the most probable direction of the further price movement. It should be noted that the downtrend coincided with the breakout of the lower triangle side. The upper side of the triangle is formed by the bearish pattern “double top”. The support level at 0.96916 can be used for placing a pending sell order. Stop Loss is recommended to be placed above 0.97674. This mark is strengthened by the exponential moving average, which acts as a dynamic resistance line. Conservative traders are recommended to wait for the oscillator breakout confirmation at 25% to confirm the bearish price momentum.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position - Sell
Sell stop - below 0.96916
Stop loss - above 0.97674

 

[IFC Markets]

Technical Analysis USDCHF : 2014-11-17

Pending Draghi’s speech
Today we expect Mario Draghi to speak before the Committee on Economic and Monetary Affairs at 15:00 (CET) in Brussels. Investors are willing to listen for the ECB President’s comments regarding the low inflation rate and the EU economic slowdown. The main danger for the EU economy is still the possibility of deflation with a consequenе reduction of revenue and output profitability. Mario Draghi’s speech may affect the volatility of the most liquid currency pairs which are exposed to the EU monetary policy.

Here we consider the USD/CHF currency pair on the H4 chart. The price is still moving in the daily uptrend, but there is a number of alarming signals of the trend fading out. First of all, they include the lower triangle side breakout, which coincides with the bearish candlestick pattern “absorption” (marked in yellow on the chart). Secondly, the price is drifting in the lower part of the price channel. Finally, RSI-Bars oscillator signal indicates the bearish divergence and broke the lower boundary of the sideways channel at 34.9337%. The bullish backtrack is possible only after a significant market restructure. Note the necessary condition for this: the upper triangle side breakout at 0.96876. It will result in the Parabolic trend indicator reversal in the direction of the green zone, and the intersection with the upper Donchian Channel boundary. Conservative traders are also recommended to wait for the breakout of the oscillator resistance level at 57.8749%, which would erase the bearish divergence. The price level at 0.96876 can be used for opening a pending buy order with Stop Loss placed below the last fractal low at 0.94410. The proposed Stop Loss level is confirmed with the D1 trend line intersection, Parabolic historical values and also the lower Donchian Channel boundary.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position-Buy
Buy stop-above 0.96876
Stop loss-below 0.94410

 

[IFC Markets]

Technical Analysis GBPUSD : 2014-11-19

US Building permits​

Today at 14:30 (CET) we expect the release of Building Permits issued monthly by the US government. The indicator allows estimating the growth potential of the US real estate sector, secondary demand goods and technology sector. The increase in indicator performance is expected today, compared with the past month data (1.04 million). Should the forecast become real, investors would feel more confident, and as a result, the US dollar would strengthen against other liquid currencies, including the British pound.

Here we consider the GBP/USD on the H4 chart. The price is still drifting downwards, while remaining in the bearish H4 channel. Parabolic trend indicator confirms the bearish bias: its historical values are moving along the upper Donchian Channel boundary, therefore intensifying its significance. There is no contradiction on the part of RSI-Bars oscillator, which continues hitting new lows. Conservative investors should wait for a confirmatory signal: the RSI support breakout at 26.3819%. In our opinion, it would happen before or coincide with the key price level breaking at 1.55855. This mark is confirmed by Bill Williams fractal and lower boundary of Donchian Channel. Stop Loss may be placed near the fractal high at 1.57404, coinciding with the current Parabolic value.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position-Sell
Sell stop-below 1.55855
Stop loss-above 1.57404

 

[IFC Markets]

Technical Analysis USDCAD : 2014-11-21

Core price index and Canadian dollar

oday at 14:30 (CET) we expect the release of Core CPI which reflects the inflation trend of the Canadian economy. The index is published by the Statistics Canada and measures a change in the price of goods and services, excluding the 8 most volatile items. This indicator determines the inflation rate, which in turn affects the monetary policy and the interest rate established by the Bank of Canada. The Bank’s Governing Council takes the inflation expectations into account to limit the excessive pace of its growth due to the policy tightening. The rate hike leads to investment funds inflow in the country’s economy: this is the reason why CPI release may have a significant impact on the Canadian currency rate against its most liquid competitors.

technical-analysis-charts-usd-cad
Let’s consider the USD/CAD currency pair on the H4 chart. The price is moving in the daily bullish trend. We assume that the current retracement is about to be completed. One of the graphic signals of bearish strength is the pattern called “double bottom” (marked in red on the chart). It allows choosing the critical level for placing Stop Loss at 1.12587. Moreover, this level is confirmed by Parabolic historical values and the lower boundary of Donchian Channel. We should wait for the H4 trendline breakout to get the signal confirmation for opening a buy order. This breakout is supposed to coincide with the fractal level breach at 1.13718 and Parabolic upward reversal. The significance of this mark is also verified by the upper boundary of Donchian Channel. Conservative traders should wait for the resistance crossing of the RSI-Bars oscillator at 61.0597% to confirm the buy position opening.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position-Buy
Buy stop-above 1.13718
Stop loss-below 1.12587

 

[IFC Markets]

Technical Analysis USDCHF : 2014-11-26

Unemployment Claims, US​

Today at 14:30 (CET) we expect the release of two US economic indicators: Core Durable Goods Orders m/m and Unemployment Claims over the past week. The first indicator has long-term impact on the market. It is released monthly by the US Census Bureau. It does not include transportation items: orders for cars and airplanes. Change in the total value of new purchase orders placed with manufacturers for durable goods allows evaluating the outlook for production development and the attraction of long-term investment. The second indicator, Unemployment Claims, is based on the weekly data and shows the local labor market conditions. The data is published in a weekly report by the Department of Labor. The index allows estimating the domestic demand dynamics and the consumer loan potential for the US economy stimulus. In our opinion, the greatest volatility is expected today from the US currency relative to other liquid instruments.

Here we consider the USD/CHF currency pair on the H4 chart. The price is preparing to move in the direction of the green zone, as evidenced by the Donchian Channel reversal. The fractal support level at 0.95637 is crossing the daily bullish trend line, which makes this mark suitable for reliable risk mitigation of a long position. A pending buy order can be placed above 0.97183, which is also confirmed by Parabolic historical values and the Bill Williams fractal. Conservative traders are recommended to look for the RSI-Bars resistance level breakout at 62.9730%. This signal must confirm the opening of a pending order.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.
Position Buy
Buy stop above 0.97183
Stop loss below 0.95637

 

[IFC Markets]

Technical Analysis PCI : 2014-12-04

Crude oil hedge
Under conditions when budget revenues depend on energy prices the national currency is subordinated to market volatility. For example, the correlation between the Russian ruble and BRENT futures for the last month was 80%, virtually eliminating the influence of other factors. Among the "commodity currencies" a national currency of Russia showed the minimal resistance to the uncertainty of oil market. From the beginning of this year BRENT has lost 30% while Russian ruble – about 43%. The values are comparable. Additional 13% can be attributed to the sanctions and economic blockade of Russia. Until the last moment there was no certainty about the reaction of the OPEC to oil supply growth. There is still no certainty about the level of shale projects profitability that can stop the decline of the oil market. How to eliminate the effect of energy uncertainty for the national currency and how to hedge risks?
Lets consider a spread instrument [CAD+MXN+NOK+RUB]/BRENT, composed on the basis of PCI technology. This instrument is based on the quotation of commodity currencies (Canadian dollar, Mexican peso, Norwegian krone and the Russian ruble) against BRENT futures – we use the FX cross-rate. Weights of the basic portfolio are selected based on the vulnerability of the exporter trade balance to the energy market conditions. The table below presents the share of budget revenues; based on revenue from oil export for BRENT value of $ 71 per barrel (the price does not affect the relative weights). We used data from the International Energy Agency.
Currency The share of oil exports in budget revenues,%
RUB-43
NOK-15
MXN-13
CAD-6
The weights of basic portfolio are chosen in proportion to the underlying listed shares: CAD - 3.75%, MXN - 8.35%, NOK - 9.85%, RUB - 28.05%. The remaining 50% of the capital account for BRENT futures. Operation of spread purchase corresponds to the opening of a long position of the portfolio [CAD + MXN + NOK + RUB] and a short position of BRENT. The daily chart of the instrument, based on the open/close prices is composed in NetTradeX platform and presented in the figure below.

The instrument is ideal for working within the channel as part of a mean reversion strategy. A range of 13 days and the exponential moving average within the BollingerBands channel are used. Position is opened at the intersection of the candle body with a channel border (red oval) and closed at the touch of a moving average (solid circle). Restriction risk dotted line is defined based on the distance between the current border of the channel and the moving average value at the moment of opening. Of the ten featured deals only one is unprofitable, and the loss is limited by a stop. The ratio of profit /loss is greater than one, depending on market volatility.
This strategy allows avoiding the risk of falling liquidity that exists when following the trend in "thin" market of commodity currencies. The second advantage is that the results of trade are determined only by the fundamental relationship between the trade balance and oil exports. The structure of budget has a high inertia and weights of the basic portfolio may stay constant for many years. Uncertainty of crude oil market is much less important in this approach: the chart shows the absence of numerous dangerous gaps, and only a weak ten percent increase in the period of high volatility (since September 9).

For more information about the mechanism of portfolio transactions, you can read in the section of our website "Quick Guide: PCI" .

 

[IFC Markets]

Technical Analysis AUDUSD : 2014-12-10

RBNZ Rate Statement

Today we consider AUD/USD currency pair on the H4 chart. The price is moving within the limits of D1 and H4 downtrend channel: bearish trend is observed for all the timeframe scales. Donchian Channel (13) is also demonstrating a negative bias, confirming the trend. At the moment there are no signs of a steady direction looking at the RSI-Bars oscillator: a local overbought level is formed at 53.7114%, which was confirmed three times by the indicator signal. We believe that the formation of a new high below this level will be preceded by the intersection of a fractal price support level at 0.82183. Having reached this level, we would get confirmatory signals: Parabolic values would indicate a bearish slope and Donchian channel would be destroyed. Stop Loss is recommended to be placed above 0.83743, strengthened by the Bill Williams fractal, Parabolic historical values and Donchian Channel upper boundary.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position-Sell
Sell stop-below 0.82183
Stop loss-above 0.83743

Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.

 

[IFC Markets]

Technical Analysis GBPUSD : 2014-12-11

Core Retail Sales
Today at 14:30 CET two key indicators of the US economy are to be released: Core Retail Sales and Unemployment Claims. The first indicator is released monthly by the US Census Bureau and, therefore, it is of interest for position trading. CRS shows a relative change in the total value of sales at the retail level, excluding automobiles, which account for 20% of the total volume. The index defines the consumer confidence. Less important indicator, Initial Claims, is projected on the basis of previous NonFarm performance. The data is published weekly by the Ministry of Labor. The indicator allows evaluating the domestic demand dynamics and the potential of consumer lending for the US economy stimulation. We assume that the release of both indicators would result in significant volatility of the US dollar against the most liquid instruments.

Here we consider GBP/USD currency pair on the H4 chart. The price is moving sideways, which is expected to finish with the support breakout at 1.56418 in the D1 trend direction. It occurs at the same time with the Parabolic downside reversal and the Donchian Channel bias change. Conservative traders are also recommended to get a confirmatory signal on the part of the RSI-Bars oscillator. At the moment, the oscillator line has approached the local resistance level at 73.8228% and is ready for reversal. The completion of bullish trend should be expected after the breakout at 49.5445%. Partially, Take profit may be possibly placed at 1.55355. Stop Loss is better to be placed at the fractal resistance 1.57587. This mark is confirmed by the upper Donchian Channel boundary.

Currently, the volume of futures and options traded on the Chicago Mercantile Exchange has increased significantly up to 180 000 contracts and even higher. You can monitor this data by clicking here. This indicates high liquidity of the currency ahead of a new volatility momentum. The probability of false breakouts in such conditions is low.
After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.
Position-Sell
Sell stop-below 1.56418
Stop loss-above 1.57587

 

[IFC Markets]

Technical Analysis GBPUSD : 2014-12-16

Expecting red zone
Here we consider GBP/USD currency pair on the H4 chart. As oil prices keep falling, we observe the US dollar strengthening against the most liquid currencies. The British pound is not an exception. The price is moving within the limits of D1 and H4 downtrend channel: bearish trend is observed for all the timeframe scales. The trend is confirmed by ParabolicSAR values, which cross the trendline and fractal resistance level. Donchian Channel is also indicating the bearish bias. There is no contradiction on the part of the RSI-Bars oscillator. At the moment, it approached the local support level at 35.3912%. We expect that this level would be crossed when the price breaks the support level at 1.55972. This mark can be used for opening a pending sell order. Stop Loss is better to be placed at the Bill Williams resistance fractal 1.57589, which is strengthened by Parabolic historical values and the bearish pattern “double top” (marked in red ellipse on the chart). We can see that the pound has been drifting sideways for almost a month. It increases the probability of volatility surge and the consolidation completion.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position - Sell
Sell stop - below 1.55972
Stop loss - above 1.57589

 

[IFC Markets]

Technical Analysis EURUSD : 2014-12-17

Correction completion
Here we consider EUR/USD currency pair on the H4 chart. As oil prices keep falling, we observe the US dollar strengthening against the most liquid currencies. Euro is not an exception. The price is moving within the limits of D1 downtrend channel: four-hour price rebound is expected to be completed. The price approached ParabolicSAR values which cross the trend line and the fractal resistance level. Meanwhile, Donchian Channel is indicating the bullish bias, but we expect the situation to be changed after the support level breakout at 1.24105. It will coincide with RSI-Bars oscillator intersection at 50.3743%. At the moment, it has approached the local support level. The price support level can be used for opening a pending sell order. Stop Loss is better to be placed at the Bill Williams resistance fractal 1.25740, which is strengthened by the D1 trend line and the upper Donchian Channel boundary.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position - Sell
Sell stop - below 1.24105
Stop loss - above 1.25740

 

[IFC Markets]

Technical Analysis EURUSD : 2014-12-22

Tendency continuation

Let’s consider an H4 chart of EUR/USD instrument. As oil prices keep falling and FED reports have positive decline, we observe the US dollar strengthening against the most liquid currencies. European currency is not an exception as well. The price keeps moving in frame of H4, D1 tendencies – the scale synchronization is observed. A signal of trend indicator ParabolicSAR slides along a four-hour trend line, thus confirming the bearish direction. The slope of the Donchian channel is also directed toward the red zone. The only alarm at the moment is a breakdown of the RSI-Bars trend line. The signal can be false only if the 19.3150% support intersection occurs. Most likely, that at this moment the price overcomes a fractal mark of 1.22147, which can be used for pending order opening. At the same time an intersection of Donchian Channel lower boundary is expected. Risks can be limited above the resistance 1.23061, which coincides with the trend line H4 and the historical values of Parabolic.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal maximum. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position - Sell
Sell stop - below 1.22147
Stop loss - above 1.23061