Technical Analysis by Alpari

[Alpari]

Pound on Balance Point
Hourly
The fall of the pound has stopped by the trend line. On Monday the pair spent the day between the U1 and D1. The pound couldn’t strengthen, just as the euro couldn’t. The day closed by passing the LB.
Yesterday the SNB made a currency intervention on the market so as to hinder the strengthening of the franc. Due to this the euro jumped from a 1.0954 minimum. Why the currency was growing in the evening, only God knows. Greece is on the edge of a default and the European officials couldn’t care less. They have readied themselves for a Grexit. I’m sticking with a side-ways movement today. Greece is still at the center of attention. On Thursday the USA is publishing its labor market report. Now to the Daily.

Daily
Yesterday I believed that the pound’s daily indicators were contradictory. They are. The pound closed with a small plus since the market opening was with a gap. The stochastic is signaling a growth of the pound.

Weekly
The UK pound will remain trading above 1.57. Taking into account how the euro/dollar yesterday closed a 1.5 figure gap and managed a rebound of 300 points by the end of the day, all without fundamental reason, the risks of the pound returning to 1.5868 have increased.

Vladislav Antonov, Alpari

 

[Alpari]

Euro Ready to Stray from LB. July 01
Hourly
Yesterday’s Trading:

Yesterday was anything but simple, but my expectations for the euro and pound rang true. The euro stuck above 1.11 on hearing that Greece declined to pay up the IMF. By the close of trading in the US, the euro/dollar was trading at the LB : 1.1140.

The International Monetary Fund confirmed that Greece did not pay the 1.55 billion euros that it owes and that the fund had received a request to extend the credit payment deadline. Greece now does not have the right to further IMF funds due to it not settling its debt within the deadline.

Greece has proposed that it could conclude a two-year deal with the European Stability Mechanism (ESM) and restructure its debts. The Greek government has promised to use ESM funds only to repay debt.

So has Greece defaulted? The IMF is avoiding the word default and is instead calling it a delay in payment. On 10th July Greece will have to settle further 2 billion euro treasury bill. It’s unlikely they’ll pay up.

Greece has prepared another set of proposals regarding its debt. The Eurogroup president J. Dijsselbloem has announced that any new proposal by the Greeks will be considered by the Eurozone finance minister on 1st July.

The euro is fluctuating in a wide range. But why isn't it falling? Traders are gearing up for a situation where the Fed will put off an interest rate rise if the Greek situation has a negative effect on the US economy.

The market is ignoring the macroeconomic data. The US consumer confidence index for June was 101.4 (forecasted: 97.5, previous: reassessed from 95.4 to 94.6).

The June index for US business activity from the Association of Managers in Chicago was 49.4 (forecasted: 50.3, previous: 46.2).

Main news of the day:

• At 10:50 EET, France – June PMI for the manufacturing sector;
• At 10:55 EET, Germany – June PMI for the manufacturing sector;
• At 11:00 EET, Eurozone – June PMI for the manufacturing sector;
• At 11:30 EET, UK – June PMI for the manufacturing sector;
• At 12:30 EET, Bank of England’s financial stability report;
• At 15:15 EET, US - June publication of changes in employment figures from the ADP;
• At 16:45 EET, US - June PMI for the manufacturing sector;
• At 17:00 EET, US - June ISM manufacturing index.

Market Expectations:

Today PMIs for the manufacturing sector are out. Greece has tired everyone out, so I’m starting to consider the market is readying for the payrolls. Due to a US national holiday, the payrolls will be on Thursday.

Technical Analysis:

• Intraday target: maximum: 1.1175 (in Europe), minimum: 1.1075 (on American session), close: in the region of 1.1110;
• Intraday volatility for last 10 weeks: 137 points.

The euro/dollar is trading at the LB line. With this pattern the euro could drop immediately, but I'm looking at a fall via a rebound to 1.1175. I don’t see the euro growing against the USD or other currencies with the current Greek situation.

Conclusion:

Greece overran the IMF payment and now doesn't have access to further funds. On Thursday the USA is publishing a labor market report. For now, everyone is forgetting about Greece until Monday. When the referendum has been held, Greece will once again be in the focus. According to the forecast, I’m expecting a fall to 1.1075 and a close in the region of 1.1110.

Daily

On Tuesday the euro/dollar closed down by the LB line. I don't see anything interesting at the moment that could be the key for understanding the direction of the euro. Now to the Weekly tab.

Weekly

The sellers partially won back losses, but the situation is still uncertain. Greece won’t pay, nor is it agreeing to creditor demands, meanwhile the euro isn’t falling. All that’s left is to wait for the referendum and a solution to the Greek situation.

Vladislav Antonov, Alpari

 

[Alpari]

Dollar Trading Up on Euro and Pound. July 01

Trades in Europe opened going in different directions. At the start of trading, the euro/dollar was down to 1.1094 and the pound/dollar had risen to 1.5732. After a publication in the Financial Times about how Alexis Tsipras is ready to accept the creditors conditions, the euro/dollar pair returned to 1.1170.

Nobody bothered with the details of it. If after prolonged negotiations the Greek prime minister agrees with the creditors’ conditions, this means buy euro. Solid logic and the principal reaction to the article. But still, what about the referendum which is still on the cards?

The euro/dollar was at 1.1170 for a little while. By 14:44 EET the euro was trading at 1.1104. Some are still heading for the hills from yesterday’s news whilst the media is churning out fresh news on Greece by the minute. There’s only one aim of this: to get the market rocking.

Traders have ignored the strong PMI data from Italy, France and Germany:

The Italian index for business activity in the manufacturing sector fell from 54.8 to 54.1 (forecasted: 54.4).

The French index for business activity in the manufacturing sector grew from 49.4 to 50.7 (forecasted: 50.5).

The Germany index for business activity in the manufacturing sector grew from 51.1 to 51.9 (forecasted: 51.9).

The Eurozone index for business activity in the manufacturing sector was unchanged at 52.5 (forecasted: 52.5).

As for the British pound, a fall on the currency renewed after M. Carney gave a speech and a weak PMI. Manufacturing growth in the UK unexpectedly slowed in June. The index for business activity in the manufacturing sector in the UK fell from 51.9 (reassessed from 52.0) to 51.4 (forecasted: 52.5)

Now everyone is waiting for the American data on employment values from the ADP to come out, as well as the ISM business activity index from the ISM about the manufacturing sector. Strong data before the payrolls will lend a hand to the dollar. Weak data will see the market correct itself or go into a sideways trend until Thursday.

Vladislav Antonov, Alpari

 

[Alpari]

Short-term Trading Idea FX AUD/USD – Bear Speculation: Expected Fall in the Rate to Lower Limit of Expanding Formation

Trading opportunities on currency pair: due to the falling price of iron ore and weak stats from Australia and China, the Australian dollar is really under pressure. It is believed the new week will bring a fall in the Aussie to the 0.7380 lower limit of the expanding formation. If it passes this level, it will move lower towards 0.7280. A break in the trend (H0.8162-H0.7847) will cancel out a scenario for its fall.

On Friday the Australian dollar fell throughout the market. Due to this, the 25th May, 2015 target of 0.7532 was reached. The sellers managed to break the lower limit of the 0.7532-0.7625 range and strengthen beneath the 0.7532 minimum from 2nd April. By doing this the sellers opened the road up to 0.7380. If the fall in the AUD/USD hastens next week, the target will shift to 0.7280.

The Australian dollar did a U-turn downwards on Wednesday due to a growth in the dollar and a fall in the price of iron ore, The cost of iron ore in China fell from Monday to Friday by 11% to 55.26 dollars per ton. This is the biggest weekly fall since April, according to Bloomberg.

In June the export deliveries of iron ore sent from Port Headland in Australia reached a maximum. Information about the growth in export volumes had a negative effect on the price of iron ore and the Australian dollar.

In China the decline in the steel industry is gathering pace. Demand for the metal is down. Goldman Sachs believes that the prices of iron ore will again fall below 50 dollars a ton. The cost of iron ore dropped to a 10-year minimum of 47.08 a ton on 2nd April this year.

On Friday the pressure on the AUD/USD came from weak retail sales growth in Australia. In May, retail sales increased by only 0.3% although they were expected to rise by 0.5%. The sales indicator for April was reassessed downwards to -0.1%, whilst they had initially said that it would be unchanged.

The fall in the Australian currency was also affected by the HSBC’s business activity index for China’s service industry. In June the index was 51.8 points against a previous of 53.5 and forecasted 53.8. China is Australia’s main trading partner, so any negative news from China has a real effect on the Australian dollar.

This week’s key event for the Aussie is the RBA giving an announcement. Other than the meeting, on Tuesday a May credit report for the private sector will be out, on Thursday some data on May external trade will be released and on Friday we will get to have a look at retail sales figures for May.

Have a look at my last idea from 29th June. The AUD/USD didn’t break the lower limit of the channel from a 0.7597 minimum immediately. Preliminarily, the rate is looking to return to 0.7737. From there the dollar will start its rally.

It’s really important how the market opens after the Greek referendum. For the moment I’m proposing that the Aussie is to fall to the 0.7380 lower limit of the expanding formation.

So what to expect if the rate drops lower? Firstly, look at the other pairs with the Australian dollar. The fall should stop on all pairs. Secondly, one can take the wave from 0.8162 to 0.7597 and stick it to a maximum of 0.7847. As a result we get a new target of 0.7280 (rounded up).

Vladislav Antonov, Alpari

 

[Alpari]

Short-term Trading Idea FX AUD/SGD – Bear Speculation: Developing on 29th June Idea

Trading opportunities on currency pair: Friday’s AUD/SGD rate departed from the triangle and fell to 1.0107. There’s not much left to parity and the 1.0053 target. As soon as the lower limit of the A channel has been passed, I’ll be expecting a drop in the rate of the AUD/SGD to 0.9680.

Things have fallen in such a way that the Australian dollar saw a significant reduction in its value against all pairs on Friday. Due to this I decided to do my trading ideas on three pairs which involve the Australian dollar: AUD/SGD, AUD/USD, AUD/NZD. Very interesting graphs have formed across these pairs.

Due to the falling price of iron ore and weak stats from Australia and China the Australian dollar is really under pressure. Take a look in the idea on the AUD/USD: in it I explain the reasons for the fall of the Aussie.

Only last week, on 29th June, did I do an idea on the AUD/SGD. The price has been in a triangle for over 20 days. The triangle has an extending of the trend figure and so I expect a depart of the price downwards to 1.0053. On Friday the sellers successfully passed the 1.0242-1.0292 support zone. The AUD/SGD fell to 1.0098. The price stopped 54 points short of the target.

This week’s key event for the Aussie is the RBA giving an announcement. Other than the meeting, on Tuesday a May credit report for the private sector will be out, on Thursday some data on May external trade will be released and on Friday we will get to have a look at retail sales figures for May.

Market participants’ mood towards the Australian dollar could change after the RBA convenes on Tuesday. However, for a start it’s worth looking at how the market opens after the Greek referendum. If the dollar closes down, the AUD will be dragged up with the other key pairs.

For the moment I expect the AUD/SGD to fall to 1.0053. If the lower limit of the A channel will be passed, I’ll be waiting for a drop in the rate to 0.9680. So why 0.9680? Because it’s the 161.8% fibo level from the A channel.

If we take the 161.8% fibo from the upper line of the A channel, a target on a parallel line is right beneath it at 0.9607. As a result, two price levels are formed: a horizontal fibo level and a slanted level on the channel. I marked this zone out with a triangle.

The CCI indicator is in the -100 zone. A further fall in the price of iron ore could see the Australian dollar remain under pressure.

Vladislav Antonov, Alpari

 

[Alpari]

Short-term Trading Idea FX AUD/NZD – Bear Speculation: Pinbar Formed

Trading opportunities on currency pair: due to the falling price of iron ore and weak stats from Australia and China, the Australian dollar is really under pressure. On the weekly a pinbar (reverse candle) has formed. A fall lower than 1.1130 leads me to believe there’ll be a weakening of the Aussie to the 1.0835-1.0916 zone.

My idea from 18th May didn’t come off. The AUD/NZD rate broke from the trend and 1.0916 resistance, but on 7th June the line was broken. By renewing a maximum of 1.1428, the weekly candle closed with a pinbar. It’s a reverse candle, but that doesn’t always come off.

The Australian dollar is suffering from the fall in the price of iron ore, whilst its New Zealand counterpart is suffering due to a fall in the price of milk. Taking the positive weekly indicators into account, I reckon that a bear divergence is forming on on the CCI and AC indicators. If this divergence comes to fruition, a fall lower than 1.1130 leads me to believe there’ll be a weakening of the Aussie to the 1.0835-1.0916 zone. Any fall further than that is questionable.

Vladislav Antonov, Alpari

 

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[Alpari]

Euro Finds Balance Point at 1.1030

Hourly
Yesterday’s Trading:

On Monday the euro/dollar renewed after a fall to the balance line and closed the day at 1.1055. Traders of the euro are waiting for the ECB’s verdict on the ELA program and the results of the EU summit regarding the Greek problem.

The situation for the euro is precarious since the IMF has decided not to provide Athens with more credit. The head of the fund, Christine Lagard, explained the impossibility of offering more credit according to the organization’s rules, however she did suggest an offer of technical support. The bank holidays in Greece have been extended for another few days.

Main news of the day:

• At 9:00 EET, Germany is publishing its data on manufacturing order purchases for May;
• At 11:30 EET, the UK will release statistics for changes in manufacturing production and industrial production for May;
• At 17:30 EET the US and Canada are publishing their external trade figures for May;
• At 19:00 EET, June GDP data changes for the UK will come out from NIESR;

Market Expectations:

The euro is still under pressure whilst there’s no new commentary from the EU summit.

Technical Analysis:

• Intraday target: maximum: Asia opening, minimum: 1.0958 (in US), close: 1.10;
• Intraday volatility for last 10 weeks: 139.7 points.

The euro/dollar has corrected by 45 degrees from a 1.1091 maximum. The buyers couldn’t fully close the gap. I’m inclined to believe there’ll be a roll back to 1.1055. From here I’m waiting for the euro to fall to the 112th degree – 1.0958.

Daily
The euro/dollar jumped from the trend line, but the tendency for a fall is still there. Now to the Weekly tab.

Weekly
After the referendum, the market situation is unchanged. The euro/dollar is trading at 1.1029. The weekly indicators are showing a break in the trend line. Due to this, I’m sitting in the bear camp.

Vladislav Antonov, Alpari

 

[Alpari]

Pound Trying to Break from Daily Trend Line

Hourly
The UK pound does not cease to astound me. On Friday it was down before the Greek referendum and on the back of strong statistics, yesterday it grew to 1.5627 from nothing. I don’t even want to try and understand what’s going on with these anomalies. Although, I do understand that things don’t happen for nothing. Saying that though, I have no explanation for this behavior.

The pound/dollar is trading at 1.5593. According to the price pattern, I should forecast a growth to 1.5665 after a slide to the LB. However my line is going downwards. I can’t explain this either. I must be adjusting my forecast, keeping in mind the weekly indicators which are saying the pound is on its way down. According to the forecast, I’m looking at a fall for the pound to around 1.55.

Daily
The pound/dollar is continuing to trade by the trend line. On Monday the pound jumped away from it, but it’s a little early to say if this movement was a recoil. To confirm this, yesterday’s maximum needs to be broken.

Weekly
The stochastic and the CCI are indicating a fall for the pound. My target is 1.5385.

Vladislav Antonov, Alpari

 

[Alpari]

Pound Reaching For the Support Around 1.54

Hourly

The pound is continuing to surprise me. Greece and the troika are messing with trader’s minds and the pound is falling even with positive statistics coming out of the UK. I don’t see any logic in the pound’s behavior. It makes sense that the dollar is rising throughout the market, but watch for how the euro will jump when the Greek problem is sorted (if it gets sorted) and how, in this instance, the pound will flop.

The target according to my forecast was reached and reached quickly. The pound/dollar dropped to the lower limit of the MA channel and is now correcting itself. As you can see from the forecast, today I’ve gone for a correctional movement towards the LB. According to the forecast, the minimum will be updated. However this may not be the case, since positive statistics on the pound have been ignored over the past few days. The trend line is broken on the daily: a signal to sell the pound. Although today I’m waiting for a correction after yesterday’s crash.

Daily

The pound/dollar has broken the trend line. For the next two days I’m sticking with a target of 1.5350.

Weekly

The indicators are facing downwards, so the downward tendency will become stronger.

Vladislav Antonov, Alpari

 

[Alpari]

Pound/Dollar Stabilizing at 1.54

Hourly

After the decision from the Bank of England that came out yesterday, the pound didn’t quite hit the forecasted maximum that was expected of it. However, fluctuations did take place as expected. There’s not much news out today. Friday is the day. Some will decide to close their positions before Sunday’s EU summit. Two Monday’s in a row the market has opened with an upward dollar gap.

So what can we expect from the pound today? I first of all wanted draw your attention to the W shaped pattern with a 1.5488/1.50 target. Then I thought about what could happen if there’s no positive outcome from the Greek summit on Sunday. As a result of all this, on Monday we’ll see another downward facing gap.

Due to this I’m considering a GBPUSD growth to 1.5430 (forming a troika from 1.5329) and then with a drop in the rate to 1.5357. For me, this is ideal. The pound has been trading by the support line on the daily.

Daily

The pound is attempting to break from the support, but it hasn’t managed it yet. The buyers are afraid of buying pound against the weekly indicators in expectation of the upcoming EU summit. For the moment, I’m sticking with a target at 1.5169.

Weekly

The weekly candle is closing down at the moment. If it closes down, next week I’ll be considering a fall for the pound to 1.5169.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Fundamental Analysis

All Eyes on Q2 UK GDP

Hourly

On Monday the UK pound was under pressure before the trading session opened in the States. The euro/pound cross wouldn’t let it rise. Due to a fall in the dollar and a correction on the pound/dollar cross, it rebounded to the 90th degree.

On Tuesday at 11:30 EET some preliminary Q2 GDP data for the UK will be out. I’m inclined to believe that the GDP values will be no better or worse than expected. This is why I’ve got my eyes on a growth. If the GDP assessment disappoints traders, the pound will shed 100 points or more. This indicator has a powerful effect on the rate of the currency.

Daily

Seller activeness is low at the moment due to the upcoming FOMC meeting. The buyers are trying to take the rate back to 1.5675 on the back of the general fall of the USD. This is the first target for the pound if it’s to rise in the future. The stochastic has made a U-turn upwards around the 20% level. The weekly indicators are doing the opposite by shoving it downwards. Conditions for turbulence and high volatility have been created.

Weekly

The weekly indicators are facing down. The price is under the trend line. The 1.5169 target is still on the cards whilst the buyers haven’t strengthened above 1.5675.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Consolidation Expected Until American Session

Hourly

Preliminary GDP data from the UK and weak US consumer confidence allowed the GBPUSD to close with a growth on Tuesday. Today I made a forecast for up to the American session. I didn’t bother extending the forecast line since at 21:00 the US Fed will make clear its monetary policy decision and make an announcement. I reckon that the pair will return to the LB.

Daily

Seller activeness is still low at the moment. Perhaps we’ll see more dynamism after the FOMC meeting. Whilst the sellers are sleeping, the bulls are knocking the rate up to 1.5675 (15th July maximum).

Weekly

The weekly indicators are facing down. The price is under the trend line. The 1.5169 target is still on the cards whilst the buyers haven’t strengthened above 1.5675.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Pound Caught at LB

Hourly

Despite a rise to the 1.5675 resistance (see daily graph), the pound/dollar has returned to the LB line. The FOMC meeting took place and now the focus has shifted to US GDP. I’m expecting a depart to the 45th degree on the European session and a fall to 1.5550 after the American stats are out. That’s how I see it.

Daily

Seller activeness was low before the FOMC meeting and so the buyers managed to take the rate up to the 1.5675 resistance (15th July maximum). By renewing the maximum, the pound cheapened to 1.5592 (current rate).

For me, the situation is still uncertain since one can see the forming of a triangle and a W shaped pattern with an upward distortion. In the first case the buyers will be hit and in the second it’s the sellers that will take the heat.

Weekly

On the weekly graph we can see a three-week flat. We just need to wait for a break in the 1.5450-1.5686 limits.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Euro Readying for Fall to 1.0860

Hourly

Yesterday’s Trading:

The key event of Thursday was the release of the US’ Q2 GDP report. The data came out a little worse than expected, but significantly better than the previous value. The GDP in the country had grown by 2.3% and Q1 growth was reassessed from -0.2% to 0.6%.

A new method of calculation was applied when coming to these values and, as a result, previous values were reassessed. It turned out that between 2011 and 2014, the US GDP growth was overstated by 0.3% and on average stood at 2%. The average for growth in 2014 was 1.5% against the earlier value of 1.9%.

The number of applications for unemployment benefit applications was 267,000 against an expected 270,000.

The EURUSD dropped to the D3 and the 157th degree from where it rebounded to the 45th degree.

Main news of the day:

• At 9:00 EET, Germany is publishing June retail sales (0.5%);
• At 12:00 EET, the Eurozone is publishing its July CPI (0.2% MOM and 0.8% YOY);
• At 15:30 EET, Canada will release May GDP values (0.1%);
• At 16:45 EET, the USA will release its Chicago July business activeness index (50.5);
• At 17:00 the Reuters/Michigan July consumer confidence index will be out (94.0).

Market Expectations:
The expectation that the Fed would announce a rate hike for September is still there and is still lending support to the dollar. There’s not much data out this Friday. However, the data that is out could shake up market volatility.

Technical Analysis:

Intraday target: maximum: 1.0950 (at Europe opening), minimum: 1.0860 (at American session, close 1.0880);
Intraday volatility for last 10 weeks: 134 points (4 figures).

The hourly indicators which I’m using are set. The euro slid to 45 degrees. The MA line is heading downwards. All the conditions are in place for a continued fall to 1.0860. If the euro/dollar closes below 1.0945, the weekly will see the forming of a pinbar (a signal for the euro dropping further).

Daily

The euro/dollar has broken from the daily LB and is currently approaching the dotted line set at close price. So what is it doing here? A close below the line will open up a road to 1.0770 for the euro. A snap through it won’t be considered as a real break. A bear phase has been developing since June, so it’s easier for the sellers to control the buyers. Only a close above 1.1130 will change the market powers that be. Now to the Weekly.

Weekly

The trend line still hasn’t been touched. The sellers have won back their losses and are in the positive with regards to the closing price of last Friday. If the euro/dollar closes below 1.0945 than a pinbar will form. I’ve marked this out on the graph. In this case it’s worth waiting for a fall to 1.0770 (see daily graph).

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Short-term Trading Idea FX AUD/USD – Bear Speculation: Following Correction, Await Further Fall in Rate

Trading opportunities on currency pair: the price of iron ore is still low. The stock market situation in China is still uncertain. The big speculators are racking up their short positions and cutting their long ones. The RBA could drop their rates again to 0.25% at some point in the next 2 months. Under these conditions, I expect the AUD/USD to drop to 0.6829. The lengthways downward impulse should be like other ones with a maximum of 0.8162 and 0.7847 (see graph below).

Today I have again done an idea on an Aussie dollar pair since, during my holiday, price levels on its pairs were reached.

The last idea I did on the AUD/USD was on 6th July, 2015. Back then I expected a fall of the Aussie to the 0.7380 lower limit of an expanding formation and then for it to head to 0.7280 due to the reaction in the price of iron ore and weak stats from Australia and China.

At first the AUD/USD rate dropped to 0.7371. Then after an eleven-day consolidation, the Australian dropped to 0.7234. The two targets were reached, so what now can we expect from the Aussie dollar?

The rate of the Aussie is still under tremendous pressure due to the low price of iron ore and Chinese stock market uncertainty. Ore last week was slightly up due to a recovery in the price of steel. It’s expected that the steel manufacturers will start to use their port ore reserves.

In my opinion, the recovery of prices will be unsustainable. According to Bloomberg: according to assessments made by the world’s largest shipbroker, Clarksons Platou Securities Inc., iron ore could drop to 35 dollars a ton in the second half of the year due to a growth in port ore reserves. Goldman Sachs Group Inc. agrees with this, believing that iron ore will fall in price over the next four quarters.

Last week the iron ore reserves in Chinese ports stood at 82.5 million tons. According to an assessment made by Australia & New Zealand Banking Group Ltd., these reserves could increase to 95 million tons in September.

Saturday saw China publishing their business activity index. The July PMI in the manufacturing industry fell by 0.2% to 50.0. At the same time, the index grew from 53.8 to 53.9 in the service sector. China is Australia’s main trading partner, so any negative news from China has a real effect on the Australian currency.

In just a week the SHANGHAI COMPOSITE index fell by 10% to 3663.73. Over the last 3 months this fall is by 17.5%. The Chinese government is continuing in its attempts to stabilize the stock market. There are too many factors which point to a further reduction in the Australian dollar.

On Friday the AUD/USD lifted to 0.7366 after US inflation data came out. This says something about the significant reduction in the growth rate of Q2 labor force costs. The buyers didn’t manage to hold on to their positions at their weekly maximums. By the US trading session close, the AUD/USD had returned to 0.7301.

The Australian dollar is moving within a downward channel since May and the recent consolidation looks like a gasp for air before it heads down once more. Taking into account that traders are reacting to US stats, there are risks of an upward correction. Afterwards I expect a break through the 0.7204-0.71 zone.

Furthermore, according to a weekly commission report on commodities future trading (CFTC – Commodity Futures Trading Commission) from 31st July, with growing public interest the big traders are continuing to increase short positions and reduce long ones on the Australian dollar.

Long positions have been cut by 4,819 contracts to 46,572 and short ones have increased by 4,062 to 96,318 contracts. The number of pure short positions is at 49,746 contracts. Smaller speculators are buying and selling the Aussie dollar (more of the latter than the former). My target for the end of August is 0.6829.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Short-term Trading Idea: FX GBP/AUD – Bull Speculation: Expect Further Trend Growth

Trading opportunities for currency pair: The pound has been strengthening on the back of expectations that the Bank of England will soon put up its base rate. The Aussie dollar is suffering from the low price of iron ore. Due to this I expect the GBP/AUD to grow along the trend to 2.1967 by the 15th August.

In an idea from 22nd June I considered a far reaching growth along the trend from 2.0420 to 2.1106. At the moment the rate stands at 2.1388 against a 2.1528 maximum. Taking into account that the Aussie is suffering from the low price of iron ore and weak Chinese statistics, coupled with the Bank of England planning to put up its rates by the end of this year or start of the next, it’s pretty logical to suggest that the growth on the GBP/AUD will continue.

The GBP/AUD stopped at 223.6% from a fall from 2.0026 to 1.8826. I reckon that the pound will correct to 2.1332/50 and growth will resume to 2.1967 (261.8% from 2.0026 to 1.8826).

If we make a projection from the 1.8663 and 2.0026 peaks, the line meets the 261.8% level by 15th August. This is the exact date calculated. The target is 2.1967.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Short-term Trading Idea FX AUD/NZD – Bull Speculation: Hammer Formed

Trading opportunities for currency pair: The New Zealand central bank is readying itself to drop its base rate. Due to this, it’s likely we’ll see a growth from the AUD/NZD to 1.13 by the end of August.

Before my holiday I did a review on the AUD/NZD. In it I assessed the likelihood of a fall in the AUD/USD on a pinbar to the 1.0835-1.0916 zone. Last week the 1.0895 target was reached. The idea came to fruition.

On Wednesday 29th June, the AUD/NZD broke from 1.0895. The jump happened after the RBNZ’s governor gave a speech. In his speech, Graeme Wheeler announced that a drop in the base rate is needed for stimulation of economic growth and inflation.

Due to low export prices for commodities and the expected worsening foreign debt situation, over the next two years the NZRB will need to force its currency rate down. In connection with this, I’ve set a fall for the NZD against the AUD.

The Aussie isn’t doing any better. It’s suffering because of low iron ore prices and weak Chinese stats. Last week’s candle closed with a hammer. The break was clean from the support. There’s reason to believe that the price will return to 1.13. If the price of iron ore starts to recover, growth in the AUD/NZD will hasten. The line forecasts which I’ve drawn show how the Aussie could strengthen against the New Zealander. For the moment, this idea sees me looking at a growth to 1.13.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Downward Euro Correction If Downward Risks Are Sustained

Hourly

Yesterday’s Trading:
The euro/dollar spent Monday by the LB. After dropping to 1.0941, the euro recovered to 1.0988 after the release of US ISM data. As the data showed, the US ISM in the manufacturing sector was down to 52.7 in July against June’s 53.5 (forecasted 53.5). The employment component fell to 52.7 (forecasted – 54.7, previous 55.5) and in doing so had an effect on the index as a whole. New orders rose from 56.0 to 56.5. Markit’s July PMI stood at 53.8, meeting expectations and equaling the previous value.

Main news of the day:
• At 11:00 EET, the UK is publishing its July business activity index in the construction sector (strong effect on pound and on the euro via the euro/pound cross);
• At 12:00 EET, Eurozone producer inflation data is out;
• At 17:00 EET, the US is publishing its July manufacturing order volume changes.

Market Expectations:
This week trader attention is focused on Friday when there will be a publication of US labor market data and the Bank of England will convene. The Bank of England is due to set out its interest rate decision, publish minutes from the meeting and release an inflation report.
Taking the importance of the data coming out at the end of the week into account, the market needs to stay in a sideways trend until Thursday. On Tuesday there are few macroeconomic events planned, so I’m expecting a growth for the euro to the 67th degree (1.1010) in the second half of today.

Technical Analysis:
• Intraday target: maximum: 1.1010 (Europe opening), minimum: 1.0932 (current Asian), close: 1.0968;
• Intraday volatility for last 10 weeks: 130 points (4 figures).
After a five-day fall from 1.1114 to 1.0964, the euro has formed a complicated bull divergence structure on the CCI and the stochastic. Taking the lack of news into account, I’d risk saying that the euro will recover to 1.1010 on Tuesday. It will look to close around the LB. I already wrote above that time needs to pass with things as they are until Thursday.

Daily

The daily candle for Monday formed inside Friday’s range. Friday’s minimum was 1.0920. If we see a break southbound, we’re looking at a fall to 1.0890: it’s unlikely to fall further than that since the ISM came out weak, not to mention employment values being down. Now to the Weekly.

Weekly

On the weekly graph I have no comment to make as yet. We need to wait for a break in last week’s range.

Vladislav Antonov, Alpari

 

[Alpari]

Alpari: Technical Analysis

Dollar Trading Down Against Many Currencies

Following the end of a meeting, on Tuesday morning the Reserve Bank of Australia decided to leave their monetary policy unchanged. The base rate for the country remains at 2%. The governor of the central bank is not excluding further loosening of monetary policy if the economic situation worsens. In just seven hours, the AUD/USD rate rose by 100 points to 0.7384.
The Aussie gave cause for optimism to buyers in other currency pairs. The pound/dollar rose all the way to 1.5617 before the release of UK stats. The British let us know that business activity fell in June and with this news the pound/dollar cross fell by 39 points to 1.5568. It’s not all bad for the pound though as it is looking to return to 1.5625. The July business activity index in the construction sector stood at 57.1 (forecasted: 58.4, previous: 58.1).
The pound/dollar is still trading in Monday’s range, whilst the euro/dollar has risen from a minimum of 1.0932 to 1.0981. The euro is deriving strength from its crosses. I believe that the eurobulls will make it to 1.1010 with consummate ease. Although, they need to make it before 17:00 EET. This is when the US is publishing its July manufacturing orders. Strong data could send the euro back to 1.0950. In this case it’ll be possible to close at the balance point 1.0975/80.

Vladislav Antonov, Alpari