Market news and trade recommendations by FBS

[riki143]

EUR/USD: outlook for December 5-9
12/5/2016

Last week EUR/USD managed to stay above the multiyear support in the 1.0500 area. This support is really strong and some big change in fundamental factors is needed to make the euro go lower.

On Monday bears once again pulled EUR/USD to 20-month low as Italians voted against the constitutional reform on the referendum. Prime Minister Matteo Renzi is now going to resign, so there’s political uncertainty ahead for the nation. Italian banking sector is in particular danger. At the same time, the single currency was supported by the speculation that despite the fact that the European Central Bank may announce an extension of its quantitative program beyond March 2017, it will signal that QE is ultimately going to end. Although the euro area’s inflation accelerated to 0.6% in October, that’s still below the ECB’s 2% target. Such levels of inflation will allow the ECB to continue monetary stimulus. The market is already pretty ready to QE extension, so the negative impact from that on the euro is limited. At the same time, the confirmation that the ECB sees the end of bond purchases ahead is bullish for the euro.

EUR/USD may be traded either in a range between 1.0680 and 1.0550. Longer-term short positions are possible only if we get confirmation of the pair’s break below 1.0500. If the currency manages to recover above 1.0680 next levels to watch are at 1.0740 and 1.0770/1.0800.

More:
https://fxbazooka.com/analytics/11583

 

[riki143]

GBP/USD: outlook for December 5-9
12/5/2016

The UK will release some economic data this week, although the figures probably won’t have a big impact on the Bank of England’s monetary policy, which is not expected to change in the coming months.

Political factors will be more important for the sterling. The UK Supreme Court is about to make a decision that could delay Prime Minister Theresa May’s plans to exit the EU. If the Court dismisses the government’s appeal, May won’t be able to trigger the Brexit process in March 2017. This would be positive for the pound. In addition, pay attention to the discussion on Britain’s access to the European single market. The positive talk will help the currency.

As large speculators partially close their bearish positions on the pound, GBP/USD may experience more growth this week. The pair has already managed to overcome 55-day MA, which is currently acting as support in the 1.2500 area. The bullish view provides an opportunity for extension to 1.2800 (100-day MA), 1.2850/60 (trendline resistance). The next resistance is at 1.2960.

More:
https://fxbazooka.com/analytics/11584

 

[riki143]

EUR/USD: flat in wave 2
12/5/2016

There’s a possible flat in wave 2, which is taking place on the four-hours chart. So, there’s an opportunity to have a bearish impulse in wave . If -2/8 MM Level turns out to be broken, we’re going to have another levels indication.

We’ve got a bullish impulse in wave [c] of 2. If the price finds a lodgement under 7/8 MM Level, there’ll be an opportunity to have a bearish movement. The intraday target is 6/8 MM Level.

More:
https://fxbazooka.com/analytics/11585

 

[riki143]

Is it right time for buying gold?
12/5/2016

Gold dropped to $1,162 overnight despite the growing threat of political instability in Europe (in the light of the recent outcome of Italian referendum). The yellow metal has been falling since Trump’s win on the expectations that the newly elected US president could introduce expansionary fiscal policies and spur the inflation rate growth accompanied with multiple interest rate increases. The investors moved their assets away from the safe-havens because of the rising stocks, high US yields. In the near term, strong US dollar and expectations of the Fed’s rate hike will continue to weigh on the gold prices.

There is an upside factor, however. The gold prices may rise next year due to the limited supply of gold. Because of the significant drop in gold prices this year, many producers decided to cut spending on the exploration of new gold mines. According to the Mark Bristow, chief executive of London-listed Randgold, the large undersupply is inevitable unless some major discoveries of high-grade ore bodies are made, but this is a remote possibility.

The technical picture for the gold is still bearish. So, it’s not the best time for sales. The nearest supports lie at $1,125.75 and $1,097.3 (the lower border of Ichimoku cloud). On the upside, there are several resistances located at $1,188, $1,211,65 (23,4% Fibo retracement level from the July 11 high).

More:
https://fxbazooka.com/analytics/11586

 

[riki143]

AUD/JPY rising inside sharp (C)-wave
12/5/2016

AUD/JPY rising inside sharp (C)-wave
Next buy target – 86.00
AUD/JPY has been rising sharply in the last few trading sessions inside the minor impulse wave 5. This impulse wave belongs to the sharp intermediate upward impulse (C), which is a part of the long-term upward ABC correction ? from June. The active impulse wave 5 started earlier – when the pair reversed up from the strong support level 81.40 (previous strong resistance level and the buy target set in our preceding report for this instrument).

AUD/JPY is likely to rise further in the accelerated impulse waves 5 and (C) in the direction of the next buy target at the pivotal resistance level 86.00 (which stopped the previous intermediate correction (2) in April, as can be seen below).

More:
https://fxbazooka.com/analytics/11587

 

[riki143]

EUR/JPY reached buy targets 120.00 and 122.00
12/5/2016

EUR/JPY reached buy targets 120.00 and 122.00
Next buy target - 124.20
EUR/JPY continues to rise after the recent breakout of the resistance levels 120.00 and 122.00 (both of which were set as the buy targets in our previous forecast for this currency pair). The price earlier reversed up sharply from the aforementioned price level 120.00 – acting as support now after it was broken. The upward reversal from the support level 120.00 accelerated the active C-wave of the intermediate ABC correction (2) from June.

EUR/JPY is expected to rise further in the direction of the next buy target at the resistance level 124.20 (top of the earlier correction 2 and the forecast price for the completion of the active C-wave).

More:
https://fxbazooka.com/analytics/11588

 

[riki143]

AUD/USD before RBA Interest Rate Decision: A bullish momentum is coming?
12/6/2016

Today at 03:30 GMT will be published the Australian (RBA) interest rate decision, where the markets are widely expecting an unchanged number at 1.5%. Central bank’s officials had been noting that current cash rate is reflecting the overall Aussie’s economy growth and didn’t bring some hints about further cuts or hikes in their latest meeting’s minutes. Also, RBA’s members said in the past that inflation target could be reached at the time.

Our technical analysis for AUD/USD at H4 chart is showing a strong support found around the psychological zone of 0.7300 and now, Aussie is looking to break the resistance level of 0.7489 ahead of the interest rate decision. If the statement comes in very optimistic, the pair could cling up towards the 0.7562 level, where is located the 200 SMA. However, a pullback at the current stage can lead the pair to test the bullish trend line formed since November 21st lows.

More:
https://fxbazooka.com/analytics/11589

 

[riki143]

Morning brief for December 6, 2016
12/6/2016

EUR/USD dropped to 1.0502 yesterday after the outcome of the Italian referendum had been announced. Then, the euro managed to stabilize and jumped above 1.0790 overnight as investors judged the selloff was overdone. There were some more news flows from the Eurozone countries. French PM Valls threw his hat into the Presidential ring to raise the chance of the left-wing Socialist party in the election in April. Also, there were Fed speakers on the wires yesterday. All-time cautious NY Fed’s Bill Dudley said that he favors a tighter monetary stance. Today traders will focus on German factory orders, the results of ECOFIN meetings, the US trade balance data, revised nonfarm productivity and factory orders.

USD/JPY rose above 114.80 level on rising 2-year and 10-year US bond yields and strong US data releases. Labor Market Conditions Index (Yellen’s favorite one) was stronger than expected. The US non-manufacturing ISM for November was upbeat as well.

AUD/USD barely changed after the RBA cash rate announcement. The RBA board decided to leave rates on hold at 1.5%. This decision was well priced in by the market, so, there were some insignificant wobbles in the chart, nothing more. The RBA Governor Philip Lowe claimed that the bank will continue to scrutinize the macroeconomic releases to make some amendments to its present monetary policy or to leave it unchanged at the next meeting on February 7.

Kiwi slumped below 0.7095 on the Asian session. Yesterday we got an announcement that New Zealand PM John Key is going to resign. Today we will be waiting for global dairy trade index that can influence the movement of NZD.

USD/CAD edged up on the session. Pay attention to trade balance data and Ivey PMI both coming from Canada at 3:30 pm GMT+2 and at 5:00 pm respectively.

GBP/USD continues its rally. At the present moment, the pair is trading above 1.2749 level. Today’s economic calendar for the UK is empty. There are no data releases from the UK that can influence the pound.

More:
https://fxbazooka.com/analytics/11590

 

[riki143]

USD/CHF: bears is waiting for correction
12/6/2016

On the USD/CHF daily chart, after a short consolidation, there was a long-awaited correction towards the uptrend. The outlook for this currency pair is still bullish, so, the rollbacks can be used for the opening of long positions.We may wait for the upward movement if target 161.8% in the "Crab" inverted pattern is fulfilled.

On the USD/CHF hourly chart, "bears" are gathering momentum for an attack on the diagonal support in the form of the lower boundary of the upward trading channel. If the support is tested successfully, it will increase risks of implementation of 88.6% and 113% targets in the "Shark" pattern.

Recommendations:

BUY 1,0015 SL 0,9960 TP 1,02,

BUY 0,996 SL 0,9905 TP 1,02.

More:
https://fxbazooka.com/analytics/11591

 

[riki143]

EUR/GBP: bulls started counterattack
12/6/2016

On the EUR/GBP daily chart, there is a correction towards the "bearish" medium-term trend. The "Crab" pattern may determine the potential for the downward movement. Its targets are located at 0.8175 (113%), 0.8017 (127.2%) and 0.763 (161.8%). Despite successes of buyers, sellers remain their control over the pair. In such circumstances, traders can use the strategy of selling on the rise of the prices.

On the EUR/GBP hourly chart, bulls' counterattack made quotes to go out from the downward trading channel. At the present moment, prices move towards the target 88.6% in the "Crab" inverted pattern.

Recommendation: SELL 0,856 SL 0,8615 TP 0,8175.

More:
https://fxbazooka.com/analytics/11592

 

[riki143]

EUR/USD: Euro retuned into the Cloud again
12/6/2016

Technical levels: support – 1.0690; resistance – 1.0790.

Trade recommendations:

1. Buy — 1.0690; SL — 1.0670; TP1 — 1.0790; TP2 – 1.0840.

Reason: bearish mood of Ichimoku Cloud and rising Senkou Span A; cancelled dead cross of Tenkan-sen and Kijun-sen and the lines are horizontal; the prices are in the Cloud.

More:
https://fxbazooka.com/analytics/11594

 

[riki143]

What will happen with the euro after the ECB meeting?
12/6/2016

Morgan Stanley’s strategists believe that the ECB will keep rates on hold at this week’s meeting, but can expand its QE purchase program. But they consider different scenarios with various responses from the euro.

Potential scenarios and the reaction of the euro.

1. QE purchases extension for 6 months after March. This expansion is well priced in by the market participants, so, it wouldn’t be surprising for markets. The reaction of EUR/USD should be restrained. To extend purchases and leave an expectation in the market that they could extend again, the ECB should introduce some changes to its present program. Which kind of changes?

- The ECB may announce that it is not going to use the capital key to allocate purchases. This option will be positive for periphery countries of the Eurozone, but bad for the German bund. The reaction of the euro should be positive in this case. The ECB may not express itself explicitly, it can only hint that it is going to be flexible (in this case the euro’s reaction won’t be stormy). If the ECB is more explicit, the euro may react with some moves.

- The ECB can recourse to buying bonds below the deposit rate. This decision will be negative for the euro.

- The ECB may commit itself to changing the maximum limit on buying per issuer. This approach should be bullish for German bund curve. EUR/USD will fall, if there is a larger decrease in bund yields than US Treasury yields.

- The ECB may address the scarcity of bonds. If there is a rise in short end rates (it would dissipate fears over the bond scarcity), the euro may gather momentum.

2. The ECB announces the cut of its interest rate. This scenario is not expected by the market. If it is realized, EUR/USD should fall significantly.

3. ECB decides to extend its QE purchases by more than 6 months beyond March. This option is not expected by the market. EUR/USD will be poised to weakening.

4. ECB doesn’t change its policy stance. This approach will cause German bunds to rise substantially and push EUR higher.

5. ECB extends corporate bond purchases, but not government bond. Basically, in this case, the ECB will commit to the tapering of the bond purchasing program. This scenario is unlikely, and if it’s realized, it will be positive for EUR.

The ECB meeting will be held on Thursday, December 8.

More:
https://fxbazooka.com/analytics/11596

 

[riki143]

AUD/USD: on Tenkan’s support
12/6/2016

Technical levels: support – 0.7450; resistance – 0.7490.

Trade recommendations:

1. Buy — 0.7450; SL — 0.7430; TP1 — 0.7490; TP2 — 0.7540.

Reason: bearish Ichimoku Cloud, but the rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen; the prices are in the Cloud.

More:
https://fxbazooka.com/analytics/11595

 

[riki143]

Key option levels for Tuesday, December 6th
12/6/2016

EUR/USD

Main trend Short-term period Medium-term period
Bullish Neutral
Changes in the open interest + 3 969 ? - 18 790 ?
Closest resistance levels 1.0795; 1.0819; 1.0838; 1.0862
Closest support levels 1.0747; 1.0712; 1.0686; 1.0655
Trading recommendations
Baseline scenario Long EUR/USD above 1.0795, with target points at 1.0819 and 1.0838
Alternative scenario Moving below 1.0747 can be considered as a signal to Sell the pair, with target at 1.0712 and 1.0686

GBP/USD

Main trend Short-term period Medium-term period
Bullish Bearish
Changes in the open interest + 481 ? + 457 ?
Closest resistance levels 1.2777; 1.2802; 1.2833; 1.2871
Closest support levels 1.2727; 1.2694; 1.2650; 1.2580
Trading recommendations
Baseline scenario Long GBP/USD above 1.2777, with target points at 1.2802 and 1.2833
Alternative scenario Moving below 1.2727 can be considered as a signal to Sell the pair, with target at 1.2694 and 1.2650


USD/JPY

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest + 314 ? + 492 ?
Closest resistance levels 113.82; 114.14; 114.39; 114.73
Closest support levels 113.48; 113.28; 112.97; 112.57
Trading recommendations
Baseline scenario Long USD/JPY above 113.82, with the target points at 114.14 and 114.39
Alternative scenario Moving below 113.48 can be considered as a signal to sell the pair, with target at 113.28 and 112.97



USD/CAD

Main trend Short-term period Medium-term period
Neutral Bullish
Changes in the open interest + 359 ? + 302 ?
Closest resistance levels 1.3280; 1.3308; 1.3362; 1.3435
Closest support levels 1.3236; 1.3201; 1.3142; 1.3067
Trading recommendations
Baseline scenario Long USD/CAD above 1.3280, with the target points at 1.3308 and 1.3362
Alternative scenario Moving below 1.3236 can be considered as a signal to Sell the pair, with target at 1.3201 and 1.3142

More:
https://fxbazooka.com/analytics/11597

 

[riki143]

EUR/USD: Moving Average acted as a resistance
12/6/2016

We’ve got a “Double Bottom”, which has been confirmed enough. Also, the 89 Moving Average has acted as a resistance. Therefore, the market is likely going to reach the nearest support area at 1.0708 – 1.0685 in the short term. If a pullback from these levels happens, there’ll be an opportunity to have another upward price movement.

The price break the Moving Averages, so we’ve got a “V-Top” pattern here. In this case, bears are likely going to reach a support at 1.0708 during the day. Considering a possible pullback from this level, bulls will probably try to reach a resistance at 1.0815 – 1.0850 afterwards.

More:
https://fxbazooka.com/analytics/11598

 

[riki143]

GBP/USD: unstoppable bulls
12/6/2016

The price is rising. Also, we’ve got a resistance at 1.2770, so the market is likely going to decline towards a support at 1.2672. If a pullback from this level happens, there’ll be an opportunity to have another upward movement towards a resistance at 1.2770 – 1.2795.

The price is still consolidating along a resistance at 1.2734. Therefore, the market is likely going to decline in the direction of the nearest support at 1.2703 – 1.2672. At the same time, bulls will probably try to achieve a resistance at 1.2770 – 1.2795 afterwards.

More:
https://fxbazooka.com/analytics/11599

 

[riki143]

EUR/USD: bearish "Harami"
12/6/2016

We’ve got a “Shooting Star” at the local high, but this pattern hasn’t been confirmed yet. Therefore, the market is likely going to get the nearest support line, which could be a departure point for another upward movement. As we can see on the Daily chart, we don’t have any reversal pattern so far. In this case, the pair will probably test the 21 Moving Average later on.

There’s a “Harami” at the last high, which has been confirmed enough. Also, we’ve got a “Three Methods” here, so the market is likely going to continue moving up until any bearish pattern arrives.

More:
https://fxbazooka.com/analytics/11600

 

[riki143]

USD/JPY: local "Engulfing"
12/6/2016

The 21 Moving Average acted as a support. Moreover, we’ve got a “Harami” pattern, but its confirmation is a quite weak. So, bears are likely going to move on. As we can see on the Daily chart, here’s a “High Wave” pattern, so there’s an opportunity to have a local bearish correction.

We’ve got a local “Engulfing” pattern. If it confirms, bears will probably try to deliver a new low.

More:
https://fxbazooka.com/analytics/11601

 

[riki143]

EUR/USD: wave 2 ended
12/6/2016

It seems like wave 2 ended in a form of a flat, so we’ve got a bullish impulse in wave [c]. If the price finds a lodgement under 0/8 MM Level, there’ll be an opportunity to have another bearish impulse in wave . The nearest intraday target is -1/8 MM Level.

As we can see on the one-hour chart, wave (v) of [v] finished near +1/8 MM Level. The price is declining, so we could have wave (i) in progress. In this case, we should keep an eye on 6/8 MM Level as the nearest bearish target.

More:
https://fxbazooka.com/analytics/11602

 

[riki143]

Consequences of the Italian referendum
12/6/2016

The euro managed to recover from early losses following the uncanny NO vote to the changes in Italian constitution. Polls showed that an overwhelming majority regarded the referendum as a chance to express dissatisfaction with the Renzi’s government performance. PM Matteo Renzi will have to resign now. Italy will face a new election which could finish with preposterous win of the populist, far-right Five movement party. What does it mean for Italia and Eurozone?

As we can see market managed to digest the negative outcome of the referendum. There was no clamoring for havens. Investors managed to go through this Tumplike, Brexitlike shock. But the question is still open whether the European monetary union manages to survive an era of populist politicians and diverging economies or not. Many strategists believe that the currency union is strong enough to pass through the avalanche effect of the populist wins, as Europeans appreciate the benefits of the single currency. Despite multiple pledges to return national currencies, they will unlikely be able to bring their plans into an effect. Take a look at the left-wing Syriza party which took control of Greece in 2015 promising its electorate to return to the drachma. Yet Greece stomached capital controls, numerous bailouts and didn’t leave the euro area.

However, the rise to power of the populist Five Star Movement may not lead to “Grexit” and Eurozone crumbling, the consequences of the recent referendum still can bring some troubles. Many observers believe that Renzi’s defeat worsens the problems of Italy’s banking system, and particularly of its most tittering, crisis-prone bank, Monte dei Paschi di Siena (MPS). The government has solicited institutional investors to recapitalize it, but many had made investment conditional on a Yes vote. So, as you can see there will be unlikely any bail-out for MSC from the government. MPS can be nationalized now, or rescued under new European Union rules that would hit investors in the pockets who hold MPS’s subordinated debt.
So far, the euro has already survived one of the ground-shaking events that we’ve identified in our previous article. Next year will pose some more tests for the euro area. There will be elections in Germany, France and the Netherlands. So, it is probably too early discard the risk of the Eurozone breakup. Time will show, and we, from our side, will keep our fingers crossed for the euro.

More:
https://fxbazooka.com/analytics/11603