daily market outlook

[jebat66]

Global macro overview for 16/03/2016:

The American Petroleum Institute report regarding its inventory levels of US crude oil, gasoline and distillates stocks revealed lower than expected build in inventories. The market participants expected the gain of 3 400K barrels this week, down from 4.400K barrels last week, but the number revealed was 1 500K barrels only. Oil prices are also being carefully monitored by the Federal Reserve and other central banks, as developed economies continue to grapple with ultra-low inflation levels, fueled by the collapse in oil prices. In conclusion, this is somehow encouraging sign of increased short-term demand for oil, but it is still not enough to tame the oversupplied global oil market

Let's now take a look at the technical picture of the crude oil on the daily chart. The market was rejected at the 39.50 resistance level and then, broke out below the golden trend line signaling a possible short- term bull trend exhaustion. Nevertheless, it is still trading above the 21,50 and 100 daily moving average, so the bulls might take the control again any time soon. Only a sustained and clear break out below the support at the level of 36.08 would change the situation as more favorable for bears.

 

[jebat66]

Wave summary:

We have moved closer to important support at 1.6470 which should protect the downside for a new rally above 1.6715 and, more importantly, above resistance at 1.6874 confirming a rally towards 1.7220 and higher.

A break below 1.6470 will not invalidate the bullish bias, but merely delay the expected upside rally. Only a break below important support at 1.6197 will invalidate the bullish outlook.

Trading recommendation:

We are long in EUR from 1.6595 with a stop placed at 1.6460. If you are not long in EUR yet, then buy near 1.6470 and use the same stop at 1.6460 or buy a break above minor resistance at 1.6874.

 

[jebat66]

USD/JPY is expected to trade in a lower range as the key resistance is at 113.05.Overnight U.S. stocks settled higher, cheered by the Federal Reserve's dovish rate outlook. Commodities and energy shares were also boosted by a surge in oil prices. The Dow Jones Industrial Average rose 0.4% to 17325, the S&P 500 increased 0.6% to 2027, and the Nasdaq Composite was up 0.8% to 4763.

Nymex crude oil surged 5.8% to $38.46 a barrel, gold gained 2.5% to $1262 an ounce, while the benchmark 10-year Treasury yield declined to 1.940% from 1.961% in the previous session.

The Federal Reserve, as expected, kept interest rates unchanged while projecting two more quarter-point interest rate increases by the end of 2016, down from four as projected in December.

As a result, the U.S. dollar fell broadly against most other major currencies, with the WSJ Dollar Index losing 0.8% to 87.76, the lowest level since October. EUR/USD gained 1.0% to 1.1222, GBP/USD rose 0.8% to 1.4257, USD/JPY declined 0.5% to 112.57, while AUD/USD was up 1.2% to 0.7548. With an additional boost from rising oil prices, the Canadian dollar surged against the greenback, with USD/CAD plunging 1.9% to 1.3095 and closing below the 200-day moving average again. The pair plunged to 112.29 overnight before posting a rebound. Currently it remains capped by the key resistance at 113.05. And the bearish bias is also maintained by the descending 20-period (30-minute chart), which has crossed below the 50-period one. Meanwhile the intraday relative strength index remains below the neutrality level at 50. As long as 113.05 is not surpassed, the pair should return to the first downside target at 111.85 and decline further toward 111.60.

Trading Recommendation:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 111.85. A break of this target will move the pair further downwards to 111.60. The pivot point stands at 113.05. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 113.45 and the second target at 113.80.

Resistance levels: 113.45, 113.80, 114.15

Support levels: 111.85, 111.60, 111.05

 

[jebat66]

Wave summary:

The important short term resistance at 126.70 has protected the upside nicely and we will now be looking for renewed weakness to below support at 125.05 confirming more downside pressure towards 123.01 and below to 122.06 and 119.90.

Only an unexpected break above 126.70 will delay the expected downside pressure for a move closer to 127.45 before heading down again.

Trading recommendation:

We are short in EUR from 126.79 with a stop placed at 126.75. If you are not short yet, then sell upon a break below 125.57 and use the same stop at 126.75.

 

[jebat66]

USD/CHF is expected to extend its downside movement. After yesterday's sharp decline, the pair is now in a downtrend, capped by its falling 20-period and 50-period moving averages. The relative strength index is negative, but is close to its support at 30. Even though a technical rebound cannot be ruled out at the current stage, its extent should be very limited by 0.9845. To conclude, as long as 0.9845 is not surpassed, a break below 0.9745 would trigger a drop towards 0.9715.

Trading Recommendations:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.9745. A break of this target will move the pair further downwards to 0.9715. The pivot point stands at 0.9845. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 0.9915 and the second target at 0.9940.

Resistance levels: 0.9915, 0.9940, 0.9995

Support levels: 0.9745, 0.9715, 0.9675

 

[jebat66]

NZD/USD is expected to trade in a higher range. The pair jumped above its previous resistance at 0.6705, which now acts as support. The upside potential has been opened towards 0.6805. In addition, the immediate trend is up, and the momentum is strong, as the relative strength index broke above its neutrality area at 50, and is well directed now. Hence, as long as 0.6705 is not broken, the pair is likely to advance to 0.6805 and 0.6850 in extension.

Trading recommendations:

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 0.6805 and the second one at 0.6850. In the alternative scenario, a short position is recommended with the first target at 0.6660 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 0.6620. The pivot point is at 0.6705.

Resistance levels: 0.6805, 0.6850, 0.69

Support levels: 0.666, 0.6620, 0.6570

 

[jebat66]

USD/CAD is expected to trade with a bearish bias. After yesterday's sharp decline, the pair has clearly reversed down, and is likely to post a new drop towards 158.70. The relative strength index is badly directed. Even though it is now within its "oversold" area below 30, it hasn't yet showed any reversal signals. The 20-period and 50-period turned down as well, which should confirm a negative outlook. To sum up, as long as 161.05 is not surpassed, look for further downsides to 158.70 and 157.50 in extension.

Trading Recommendations:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 158.70. A break of this target will move the pair further downwards to 157.50. The pivot point stands at 161.05. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 161.85 and the second target at 162.85.

Resistance levels: 161.85, 162.85, 163.40

Support levels: 158.70, 157.50, 156.90

 

[jebat66]

CHF/JPY seems to establish a bearish trend after breaking below the ascending Fibonacci channel and then breaking below the 161.8% retracement line.

The first corrective wave after the 161.8% trendline breakout shows a few potential downside targets, one being S2 (114.10) - 261.8% and another S3 (113.60) - 361.8% retracement which also corresponds with the 361.8% retracement of the Fib channel.

Consider selling CHF/JPY on any pullbacks towards R1 (115.40) or on a breakout of S1 (114.90). The stop loss should be above R1, with the final target at the S3 (113.60) area.

Support: 114.90, 114.10, 113.60

Resistance: 115.40

 

[jebat66]

USD/JPY has been range trading for an extended period of time if we look at the 1H timeframe. The price has been crossing a 200 Moving Average a number of times showing no signs of a trend.

But the recent price action shows that the pair started to produce lower lows and lower highs suggesting that bears could be starting to take over. In addition, the ascending Fibonacci channel breakout confirms the bearish scenario, where, after the breakout, the price found resistance and the lower trendline of the channel. The Fibonacci retracement applied to the first corrective wave after the channel breakout is pointing to a few potential downside targets, one being 261.8% and another 361.8% accordingly.

Consider selling USD/JPY on any pullbacks towards R1 (11.75) resistance or on the S1 (112.45) breakout. The stop loss should be just above the high produced near R1. The final target is the S3 (111.50) area.

Support: 112.45, 112.00, 111.50

Resistance: 112.75

 

[jebat66]

Recently, EUR/NZD has been moving downwards. The price tested the level of 1.6590. In the H4 time frame, I found support level at the price of 1.6500, which is successfully held . According to the 30M time frame, I found that the head and shoulders formation is confirmed. Besides, I noticed a successful breakout of the neckline in a high volume. Watch for buying opportunities on the dips. The key take resistance level (take profit level) is set at the price of 1.6850.

Fibonacci Pivot Points:

Resistance levels:

R1: 1.6640

R2: 1.6690

R3: 1.6765

Support levels:

S1: 1.6840

S2: 1.6435

S3: 1.6355

Trading recommendation for today: Watch for potential buying opportunities on the dips.

 

[jebat66]

Since our last analysis, gold has been trading downwards. The price tested the level of $1,253.45. Strong resistance level is set at the price of $1,282.80. According to the M15 time frame, I found a confirmed head and shoulders formation (bearish formation). We got a successful breakout of the neckline in a high volume. Besides, the volume on the right shoulder decreased, which is a good sign for further downward movements. I placed Fibonacci expansion to find a potential downward target. The first take profit level is set at the price of $1,242.40 and the second take profit level is set at the price of $1,235.00.

Daily Fibonacci pivot points:

Resistance levels:

R1: 1,267.35

R2: 1,270.70

R3: 1,276.00

Support levels:

S1: 1,256.50

S2: 1,253.00

S3: 1,247.70

Trading recommendations for today: be careful when buying gold, watch for selling opportunities on rallies

 

[jebat66]

A bullish breakout above the previous consolidation zone between 1.2400 and 1.2800 was performed on July 15 (shown on the weekly chart).

A significant bearish rejection was observed around 1.3450. Hence, another consolidation range was established from 1.3450 down to 1.2800.

On December 7, a bullish breakout above 1.3450 (the upper limit of the recent consolidation range) enhanced the bullish side of the market. Hence, a bullish visit to the resistance level of 1.4120 (Fibonacci Expansion 100%) was executed.

Bullish persistence above 1.4150 enhanced the bullish side of the market towards 1.4650 (141.4% Fibonacci expansion) where an evident bearish rejection was expected (bearish engulfing weekly candlestick).

The level of 1.4120 (Fibonacci Expansion 100%) stood as a significant key level to be watched for further price reactions.

Although the price zone of 1.3170-1.3250 was expected to offer bullish support for the USD/CAD pair, temporary bearish breakdown of the same price zone is currently being manifested on the daily chart.

This price zone corresponds to the depicted weekly uptrend line and the upper limit of the previous consolidation range (prominent breakout level).

On the other hand, the price level of 1.2975 (61.8% Fibonacci level) stands as a prominent support level to be watched for significant bullish rejection.

Otherwise, bearish breakdown below 1.2975 (61.8% Fibonacci level) will allow a quick bearish decline to occur towards the price levels of 1.2770 and 1.2550.

 

[jebat66]

Overview:

The NZD/USD pair will continue rising from the level of 0.6759 today. So, support is found at the level of 0.6759, which represents the 78.6% Fibonacci retracement level in the H1 time frame. Therefore, the NZD/USD pair is continuing with a bullish trend from the new support of 0.6759. The current price is set at the level of 0.6800 that acts as a daily pivot point seen at 0.6800. Equally important is that the price is in a bullish channel. According to the previous events, we expect the NZD/USD pair to move between 0.6759 and 0.6871. Thus, strong support will be formed at the level of 0.6759 providing a clear signal to buy with the targets seen at 0.6871. If the trend breaks the support at 0.6871(first resistance), the pair will move upwards continuing the development of the bullish trend to the level 0.6900 in order to test the daily resistance 2. In the same time frame, resistance is seen at the levels of 0.6900 and 0.6950. However, in case you bought at the level of 0.6759, then the stop loss should always be taken into account for that it will be reasonable to set your stop loss at the level of 0.6670 (below the support 2).

 

[jebat66]

Overview:

The USD/CHF pair dropped sharply from the level of 0.9721 towards 0.9662. Now, the price is set at 0.9700. In the H1 chart, the resistance of the USD/CHF pair is seen at the levels of 0.9730 and 0.9802. It should be noted that volatility is very high for that the USD/CHF pair will be still moving between 0.9660 and 0.9802 in coming hours. Moreover, the price spot of 0.9660 remains a significant support zone.Therefore, there is a possibility that the USD/CHF pair will move upwards, and the structure does not look corrective. In order to indicate the bullish opportunity above 0.9660, buy above 0.9660 with the first target at 0.9721 in order to test top's bottom. Additionally, if the USD/CHF pair is able to break out the bottom at 0.9721, the market will rise further to 0.9802 in order to test the resistance. Also, it should be noticed that the major resistance is seen at the level of 0.9910 which coincides with the weekly pivot point.

Intraday technical levels:

Major resistance:0.9802
Minor resistance:0.9721
Intraday pivot point:0.9683 (weekly pivot is seen at 0.9910)
Minor support:0.9665
Major support:0.9619

 

[jebat66]

Global macro overview for 18/03/2016:

Despite the expanded stimulus program from the European Central Bank, the Swiss National Bank kept the interest rates on hold at the level of -0.75%, together with 3-Month Libor lower and upper target ranges at the levels of -1,25% and -0,25%, respectively. This decision might have very negative consequences because the ECB "bazooka program" launched this Wednesday may eventually put the Swiss currency under upward pressure versus the euro. In conclusion, the extended period of negative interest rates might weaken the demand for the franc by making it less attractive for investors from overseas. Even if negative rates are also intended to support economic growth by encouraging banks to lend more to consumers and businesses, the recent extension of QE program from the ECB might be more damaging than helping the Swiss economy in the longer run.

Let us now take a look at the EUR/CHF daily time frame. We can see a steady rise of the market after the peg removal event over a year ago. Currently, it looks like the market will be continuing its slow uptrend towards the 1.2000 level as long as the golden trend line is not violated. The next resistance for bulls is seen at the level of 1.1048 and the next support is seen at the level of 1.0808.

 

[jebat66]

Global macro overview for 18/03/2016:

Yesterday, the Bank of England left the interest rate on hold at the level of 0.50%, together with unchanged asset purchase facility at the level of 375B pounds. The BoE members voted unanimously 9 to 0 in favor of unchanged interest rates. It was the second month in a row when policy makers were unequivocal on the decision, after Ian McCafferty abandoned his rate hike vote in February referring to a weaker outlook for wages. Moreover, according to the Monetary Policy Committee meeting minutes, despite the global headwinds, policy members are still convinced that in the near future interest rates should be increased, not decreased, so negative interest rates are not taken into account currently. There is one more thing worth of noting here: uncertainty over the outcome may result in slowing the economy during months ahead of the vote, the BoE policy members said. In conclusion, The BoE meeting minutes mark the first time when officials have explicitly expressed their concerns over looming referendum risks acting as a further drag on growth amid already challenging global environment.

Let us now take a look at the daily time frame of the GBP/USD pair. The market has clearly broken out above the golden trend line and now is trying to extend the bullish momentum even further by testing the recent swing high at the level of 1.4668. The next resistance is seen at the level of 1.4578 and the next support is seen at the level of 1.4438.

 

[jebat66]

A bullish breakout above the previous consolidation zone between 1.2400 and 1.2800 was performed on July 15 (shown on the weekly chart).

A significant bearish rejection was observed around 1.3450. Hence, another consolidation range was established from 1.3450 down to 1.2800.

On December 7, a bullish breakout above 1.3450 (the upper limit of the recent consolidation range) enhanced the bullish side of the market. Hence, a bullish visit to the resistance level of 1.4120 (Fibonacci Expansion 100%) was executed.

Bullish persistence above 1.4150 enhanced the bullish side of the market towards 1.4650 (141.4% Fibonacci expansion) where an evident bearish rejection was expected (bearish engulfing weekly candlestick).

The level of 1.4120 (Fibonacci Expansion 100%) stood as a significant key level to be watched for further price reactions.

Although the price zone of 1.3170-1.3250 was expected to offer bullish support for the USD/CAD pair, temporary bearish breakdown of the same price zone is currently being manifested on the daily chart.

This price zone corresponds to the depicted weekly uptrend line and the upper limit of the previous consolidation range (prominent breakout level).

On the other hand, the price level of 1.2975 (61.8% Fibonacci level) stands as a prominent support level to be watched for significant bullish rejection.

Otherwise, bearish breakdown below 1.2975 (61.8% Fibonacci level) will allow a quick bearish decline to occur towards the price levels of 1.2770 and 1.2550

 

[jebat66]

Overview:

Recently, EUR/NZD has been moving sideways around the price of 1.6600. At the H4 time frame, I found defined trading range between the price of 1.6475 (support) and the price of 1.6865 (resistance). Support level at the price of 1.6475 is successfully held. So, we may expect re-test of resistance. Anyway, watch for a potential breakout of trading range to confirm further movement.

Fibonacci Pivot Points:

Resistance levels:

R1: 1.6610

R2: 1.6645

R3: 1.6700

Support levels:

S1: 1.6840

S2: 1.6435

S3: 1.6355

Trading recommendation for today: Sideways market, watch for a potential breakout of trading to confirm further direction.

 

[jebat66]

Overview:

Amid the previous events, the GBP/USD pair is still moving between the levels of 1.4360 and 1.4513. In overall, we still prefer the bullish scenario as long as the price is above the level of 1.4349. Currently, the price is moving in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. The price is still above the moving average (100). Furthermore, if the GBP/USD pair is able to break out the top at 1.4513, the market will rise further to 1.4647. On the other hand, if the price closes below the strong support of 1.4349, the best location for a stop loss order is seen below 1.4283, hence, the price will fall into a bearish trend in order to go further towards the strong support at 1.4186 to test it again. The level of 1.4186 will form a strong support at the H1 time frame. Additionally, if the pair fails to pass through the level of 1.4186, the market will indicate a bearish opportunity below the level of 1.4186. So, the market will decline further to 1.4052 in order to return to the double bottom.

 

[jebat66]

The EUR/USD pair is trading around the area of 1.1280 - 1.1233. Today, the level of 1.1223 represents a weekly pivot point at the H1 time frame. The pair has already formed minor resistance at 1.1308 and the strong resistance is seen at the level of 1.1388 because it represents the weekly resistance 1. So, major resistance is seen at 1.1388, while immediate support is found at 1.1223. If the pair closes below the weekly pivot point of 1.1223, the EUR/USD pair may resume it movement to 1.1103 to test the weekly support 1. From this point, we expect the EUR/USD pair to move between the levels of 1.1308 and 1.1103. Equally important, the RSI is still calling for a strong bearish market. As a result, sell below the weekly pivot point of 1.1223 with targets at 1.1103 and 1.1057 in order to form a double bottom. On the other hand, stop loss should always be taken into account, accordingly, it will be of beneficial to set the stop loss above the last bullish wave at the level of 1.1400 because the strong resistance has been already found at 1.1388.

Intraday technical levels:

R3: 1.1673
R2: 1.1508
R1: 1.1388
PP: 1.1223
S1: 1.1103
S2: 1.0938
S3: 1.0818