LiveForexTrading.info is pleased to provide you expert analysis and forecasting for the upcoming week from our resident analyst "Sharp Shooter"

Sunday, October 27, 2013

Trade Recommendations: WC 28 October 2013



GBPUSD



GU started the week opening at  161699, moving steadily in a tight range between 161560 and 161803, before breaking out higher on the 22nd Oct to a high of 162118. This then led to GU reaching a new high of  161560 on the 23rd October which met with resistance, resulting in a sell off from the top to a low of 16189. This then saw GU make another move to the upside, reaching a high of  162224, which upon forming an inverted pinbar, led to  another sell off back to 161370. However, once again, this was short-lived with GU finding support and bouncing back within range to 162461 following after the decline. 

With this high a target for the sellers, GU again made its way back to towards the mid 161 range finding support at 161499 and closing the NY session at 161652.  In regards to upcoming price movement, the weekly chart does suggest the potential for GU to extend higher and  a break over the 162 price level will be key in determining if this will be the set direction. However this is not the same view on the smaller time frames which, actually show GU ending the  week towards  the lower end of its range spectrum closing the NY session at 38%.  This suggests a possible move lower may come first.



Level to Watch:

161838

What to look for:

BUY: 162239 (break above)
SELL: 161726 (break below)
A break above 162239 will promote another bullish attempt north, having first cleared 162468 (previous day high). This will then place the following targets in view: 162301, 162677 and 163190.

Alternatively, a break below 161726 will see 161497 (previous day low) as the first test of support. Breaking this level will then expose the following targets: 161439 followed by 160099 and then 160620.

Bullish Levels:

T1: 162301, T2: 162677, T3: 16319

Bearish Levels

T1: 161439, T2: 160099, T3: 160620

Potential
Catalysts:

Consumer Credit, Mortgage Approvals, Net Lending to Individuals (29 Oct), Nationwide Housing Prices (31 Oct), Markit Manufacturing PMI (1 Nov)

EURUSD



EU started the week at 136828 resuming the tight from the previous week. This continued into the  new week with the 22nd October finally seeing GU finally break the range with a prominent breakout candle, following by  a sequence of bullish candles to a top of  137918. Price then maintained at the highs locked in a tight consolidation that saw price dip slightly to finding support at 137425.  Once reaching the 138 price level,  a heavy reluctance set in which saw all attempts for price to break out, meet with sellers, resulting in the containment of price at current levels moving into the next day with an advancement to a new high of  138300. This then led to the break down with the formation of a bearish marubozu taking price to a low of  137787 and then back north to the 138 price level where EU closed the NY session. 

Currently, EU remains quite high, however  a further move higher  cannot be ruled out given the bullish momentum behind the Euro, which is currently suspending the pair at the top of its range. However, with concerns voiced from European officials regarding the detrimental effects of the appreciating currency on recovering European economies, this may help in capping further movement  north at the higher key levels in the near future. 




 Level to Watch:

 137927

What to look for:

BUY: 138181 (break below)
SELL: 137738 (break below)
A break above 138181 will see the first test        of resistance at 138318 (previous day high). Breaking above this level will see an extension of the bullish run in line with with a long entry above the previous high. This
will then open up to the following targets: 138270 followed by 138560 and then 138862.

Alternatively, a break below 137875 (23%) will see the first test of support at 137738. Breaking below this price will set the following targets: 137633, followed by 137326 and then 137050.


Bullish Levels:

T1: 138270, T2: 138560 T3: 138862

Bearish Levels

T1: 137633, T2: 137326 T3: 137050

Potential Catalysts:

GER Retail Sales (28 Oct), GER Retail Sales (29 Oct), GER Unemployment Rate, GER Unemployment Change (30 Oct),
Consumer Confidence, Business Climate, Services Sentiment, CPI, Harmonised Index of Consumer Prices, GER Gfk Consumer Confidence Survey, Consumer Price Index - Core, Unemployment Rate (31 Oct)






AUDUSD



AU started the week at 96698, also resuming the consolidation from the previous week, continuing in a  tight consolidation. The 22nd October saw AU break out to the topside, reaching a high of 97302 before meeting with rejection, bringing AU back to the 97 price level. The 22nd October saw  AU re-attempt another move higher, which saw AU advance slightly to a top of  97575, meeting with rejection and leading to a decline back to 96310.  AU then managed one last attempt north, breaking above the 76% level to 96703, which faced rejection at DR1 (96639). From here, AU proceeded with a decline back to 96207 (DP) where it paused before breaking through and finding support at 95713, closing the NY session at 95816. 

With AU closing the NY session at the lows, there is a good possibility that a re-test and rejection of 96113 (76%) will see AU capped from further gains with a view to target the lower levels towards 95. However breaking above the 76% level, will inspire another attempt and re-test above 96. We have a speech from the RBA Governor due early this week which may provide some inspiration for upcoming intra-day price movement.




Level to Watch:

 95967

What to look for:

BUY: 96236 (break above)
SELL: 96715 (break below)
A break above 95967 will promote a bullish setup with an entry above 96236. This will then open up the following targets: 966468, followed by 96727 and then 97120. Breaking above 97 will then see AU extend the daily trend with targets above the 97400 area.

Alternatively, a break through 95838(23%) will see the first test of support at 95715. Breaking this level will then target the following levels: 95669 followed by 95172 and then 94658.

Bullish Levels:

T1: 96468, T2: 96727, T3:97120

Bearish Levels

T1: 95669, T2: 95172, T3: 94658

Potential Catalysts:

RBA Governor Speech (28 Oct), HIA New Home Sales (MoM), Building Permits (31 Oct), CNY Manufacturing PMI (1 Nov)




USDJPY




UJ commenced the week in positive form, opening at 97859, climbing steadily to 98236 before pulling back slightly to 98159. From here, it continued to range with uncertainty until  breaking out higher, reaching a top of 98359. This then saw price hover at the highs moving into the 22nd October until an attempt to break lower resulted in UJ reaching and rejecting a low of 97853 but bouncing quickly back to 98197. Printing a bullish candle, UJ attempted to follow through to the upside, however this notion was quickly abandoned with the formation of an engulfing bearish candle. This provided  the first signal of weakness, which then led the way to a decline, finding initial support at 97128,  pausing momentarily and forming a short consolidation until finally breaking lower to 96936 where final support was found. From here, UJ then took a short step back up  to 97374 where it  closed the NY session with a final price of 97359. 

With the US dominating the economic calendar this week, we should see some movement on this pair. Key events to focus on include: USD Fed Interest Rate, USD Pace of Treasury Purchase Program,, Pace of MBS Purchase Program, Fed Monetary Policy Statement and Press Conference 




Level to Watch:

97389

What to look for:

BUY: 97688 (break above)
SELL: 96936 (break below)

A break above 97389 will see 97511 (76%) as the first point of resistance. A break above 97688 (previous day high) will promote a bullish setup which will open up to to the following targets: 97593, 97815 and then 980567.

Alternatively, a break through 97398 (DP) will see the first test of support at 97113 (23%) and breaking this level will open the following targets: 97094, followed by 96923 and then 96721.

Bullish Levels:

T1: 97591, T2: 97812, T3: 98037

Bearish Levels

T1: 97094, T2: 96923, T3: 96721

Potential Catalysts:

USD Industrial Production (MoM), USD Pending Home Sales (YoY), USD Dallas Fed Manufacturing Business
Index (28 Oct), USD PPI (YoY), USD Retail Sales, USD Business Inventories, USD CB Leading Indicator
(MoM), USD Consumer Confidence, USD Fed Interest Rate, USD Pace of Treasury Purchase Program,, Pace of
MBS Purchase Program, Fed Monetary Policy Statement and Press Conference (30 Oct), Initial Jobless
Claims, Chicago Purchasing Manager's Index (31 Oct), Markit Manufacturing PMI, ISM Prices Paid and ISM
Manufacturing PMI (1 Nov)



Please note that all trade set ups provided in this post are suggestions only and no responsibility will be taken for any loss of money in the FX markets. If you have any feedback or comments, please feel free to leave a comment or email
liveforextradingmarketanalysis@gmail.com.



Sunday, October 20, 2013

Trade Recommendations: WC 21 October 2013



Please find below the trade recommendations for this week. Given that the majors are sitting at quite high levels, my preference is to see a retracement from the highs during the early sessions and assess price movement from the lower levels while still maintaining breaks at the higher levels as entry criteria for continuation of current bull tends.

Last week was dominated by USD weakness following the US events and the ratings downgrade and it is possible that we may see some stability or support for the USD this week,  given that the US data is now back on the calender and the majors who have taken full advantage of the opportunity to advance, opening this new week poised at the highs. On my radar in particular is AU,  as  the pair continues in its quest to seek a top while drawing closer to higher key breaking areas. I will be especially observant over Monday/Tuesday given that the  NFP figure will be released tomorrow and CPI figures in the days ahead, which indicate  a weaker figure. However in addition, AU has  aggressively  advanced within 8  consecutive candles and in any event will be due for a pullback.
   

GBPUSD








GU started the week at 159702, finding support at a  low of  158939 on the 16th October.  From here, GU reversed to the upside upon an 80+ pip break out as it continued on its bull run taking price back over 161, where it consolidated before extending higher to 162246. Meeting with rejection at this level, GU proceeded with an extended decline back below 162, settling around the the mid 161 area. 

The release of stronger CPI figures on the 15th Oct re-ignited a bout of confidence,  which saw price move back towards 160 from 159141. However, this was offset by the release of  mixed economic data later in the week, which included the Claimant Count reflecting a positive change at -41.7k vs. -25k (forecast) and average earnings which were lower at 0.7% vs. 1.2% (previous figure). Meanwhile,  the unemployment rate reflected no change at 7.7%. This brought strength to the Pound, which when combined  with current USD weakness, prompted GU to reject a further decline and instead climb steadily to a  strong finish to the week.


Level to Watch:
162049
What to look for:

BUY:  162246 (break above)
SELL: 161900 (break below)

A break above 162246 will promote another bullish move north, placing the following targets in view: 162740, 162888, 163910. Breaking above 163910 will expose 164199.

Alternatively,if GU breaks below 161900, This may promote a retracement  or move lower with the first test of support at 161609 (23%). Breaking this level will expose the following targets: 16091 followed by 159920, 159640 and 158181.


Bullish Levels:
T1: 162740,  T2: 162888, T3: 163910
Bearish Levels
T1: 159920,  T2: 159640, T3: 158181
Potential Catalysts:
Public Sector Net Borrowing (22 Oct), BOE Minutes, BOE MPC Vote Hike, BOE MPC Vote, BBA Mortgage Approvals (23 Oct), GDP (YoY) (Q3), GDP (QoQ) (Q3)



 


EURUSD






EU commenced the week stronger opening at 135592,  making a high of 135973 before retracing back towards the mid 135 range where price consolidated before breaking lower in a bearish  3 candle move to a low of 134789. EU paused briefly around these low levels, before re-aligning back with the open. However, this prompted another attempt lower, which met  with the same support level forming a double bottom. This then led the way to a bull run that saw confirmation once breaking above 135669. From here,  EU extended its ascension towards 137, reaching a high of 135035, before falling back below the round figure.

To date, 13710 has acted as a strong rejection level that has contained EU previous from further progression higher. The lst attempt at this level can be seen on the 1st February which saw  price reject from a top of 137104. This led to an impressive decline down to 127442. Currently, though the Euro zone has shown economic improvement over the last few months, it still qualifies as being within its "infancy" of its recovery, with economic progress expected to remain at a slow pace. A such, it is more than likely that any advancement higher will more than likely be due to USD weakness, with the 13710 area still holding its position as a strong resistance level. A break above here, may see further movement north, however this will has a high probability of being be short-lived.


Level to Watch:
136960
What to look for:

BUY:  136588 (retracement lower first  
      followed by break above)   
SELL: 136550 (break below)

Given that EU is currently trading near a very prominent resistance level (13710), I am hesitant in recommending a bullish play from current levels. Therefore, an intra-day setup would be a much safer option. If EU pulls back to 136693 with price action supporting a rejection around this level,  there may be a nice long opportunity back to 136930.This target will either contain further upside movement or promote another bullish attempt. Therefore only after rejection of  the low as well as  breaking above the 76% level, should you look for an extended bullish play with an entry above 137035. Breaking above this level will then place the following targets in view: 137494, 137620 and 138.


Alternatively,  a break below 136693 (23%) will see the first test of support at 136303. Breaking below this price will set the following targets: 135627, 135340 and 134411. Breaking below the last well, will see an extended decline to: 1333976, 122837 and 133735.

Bullish Levels:
T1: 137494, T2: 137620   T3: 138000
Bearish Levels
T1: 135627,  T2: 135340  T3: 134411
Potential Catalysts:
10 YR Bond Auction, Consumer Confidence,  (23 Oct), European Council Meeting, Markit Manufacturing PMI, Markit PMI Composite (24 Oct), European Council Meeting, GER IFO Expectations, GER Current Assessment (25 Oct)    




   




AUDUSD




No relief for AU this week as it opened the week lower, only to steadily progress higher throughout the week with yet a strong finish of 96736 at the close of the last NY session. Riding upon the prevailing USD weakness which was amplified by the ratings downgrade later in the week, AU extended its correction towards the 97 price level, despite the preference and commentary provided by the RBA.

As such, this places AU in a position to possibly extend higher than current levels, however with NFP due long with CPI figures in the latter part of the week, AU may possibly just consolidate or retrace lower ahead of economic data, especially given the weaker CPI forecast. So far AU has already provided a decent correction from the low 88 region, which therefore, places AU on watch for rejection upon further advancement higher. Domestic data will be important in determining direction, however will share the spotlight with the USD, who still have centre stage. This week, UJ opened at 98305 which upon a dip to 98092, reversed north, reaching a high of 98696 before retreating back within range at 98363. A break of this level then saw UJ find new support at the 23% level, which boosted UJ to 98999, forming a double top just under the 99 price level. This then led to a prominent decline from  98999 to 97551, with price  ending the week consolidating around the lows at 97790.

The US has so far delivered a series of non supportive events  for the USD. From the postponement of tapering in September, to the Fiscal Crisis and then there was the US government shutdown. The lack of key US economic data also didn't help the situation for the USD either. If there was even any plan to seek momentary relief, this was  shot down further by the announcement of the first US ratings downgrade issued late last week. However, with the US government back to business as usual and key US economic data now on the economic calendar, there is the potential to see some favourable changes this week. 


Level to Watch:
98010
What toa   look for:

BUY:  98152 (break above)
SELL: 97693 (break below)


A break above 98010 will promote bullish momentum level with a long entry above 98152. This will open up to the following targets: 98584, 98778 and 99 (psychological level). Breaking above 99 will expose 99514 and 100066.

Alternatively, a break through 97693(23%) and 97551 will see UJ target the following levels:97161, 96948 and 96616.


   

Bullish Levels:
T1: 98584, T2: 98778, T3: 99  T4:99514  
Bearish Levels
T1: 97161, T2: 96948, T3: 96616
Potential Catalysts:
Home Loans (14 Oct),  RBA Meeting Minutes, Westpac Leading Index (15 Oct), NAB Business Confidence (17 Oct) 

Please note that all trade set ups provided in this post  are suggestions only and no responsibility will be taken for any loss of money in the FX markets. If you have any feedback or comments, please feel free to leave a comment or email liveforextradingmarketanalysis@gmail.com.

Sunday, October 13, 2013

Trade Recommendations: WC 14 October 2013



  

GBPUSD








GU opened the week at 16020, making its way to a high of 161234 ahead of the release of the first installment of domestic data which was forecasted to show an improvement across all of its economic figures. However, the results of weaker figures, surprised the markets, triggering a major sell off after the creation of a double top at the highs.

This then saw the pair drop dramatically by nearly 200 pips from 161197 to a new low of 159224. Following this, was the announcement by the BOE in regards to the Interest Rate Decision and Asset Purchase Facility, which once again showed no change.   This provided a small bound of relief from its stagnant position, pushing GU back to 159973 from a low of 159133. However, this was short lived as sellers, stepped in  upon its approach to 160, pushing price back towards the mid range, closing the NY session at 159524.




Level to Watch:
159825
What to look for:

BUY:  160009 (break above)
SELL: 159228(break below)

A break above 160009 will promote another bullish attempt to the topside and a break above this level will bring the following targets into view: 160401, 160821 and 161238.

Alternatively,if GU breaks below 159825, look for an entry below at 159228. A continuation below this level will see the following targets come into play: 159072, 158664 and 158230.


Bullish Levels:
T1: 160401,  T2: 160821, T3: 161238
Bearish Levels
T1: 159072, T2: 158864, T3: 158230
Potential Catalysts:
CPI, PPI, DCLG House Price Index, Retail Price Index, (Oct 15), Claimant Count Change, Average Earnings (Oct 16), Retail Sales (Oct 17)




 


EURUSD





EU started week in positive form, opening the Asia session stronger at 135637. However, price remained locked in consolidation until the 9th October when  EU finally broke down, falling from a high of 136041 to a low of 134850 , where support was eventually found. EU once again attempted to continue the downtrend, however support was found upon its approach towards the mid 134800 region. This then took price back up towards 135810, which subsequently met with rejection, taking price back towards the 76% level (135322). EU settled at 135400 towards the  close of the NY session.

With the ECB once re-iterating a subdued outlook for the Euro zone economy, this does support the ECB's view for a slow recovery. However in the meantime, EU along with the other majors will continue to look at the developments  in the US, in order to direct its more immediate move. Look for re-tests in this upper region, along with any sign of weakness for short opportunities. Should EU continue with a move higher, this will still keep the pair within a corrective view.



Level to Watch:
135660
What to look for:

BUY:  135810 (break above)
SELL: 135173 (break below)

A break above 1355660 will see EU attempt another move higher into the 136 area. This may be a potential topping area should a catalyst present itself.A break above 135810 will open up the following targets: 136010, 136286 and 136774.

Alternatively,  a break through  135347 (DP) will see 135323(23%) as the next support level. A confirmed break through the 23% level, will promote further bearish momentum and expose the following levels:  134985, 134442 and 133956.

Bullish Levels:
T1: 136010, T2: 136286   T3: 136774
Bearish Levels
T1: 134985,  T2: 134442  T3: 133956
Potential Catalysts:
Eurogroup Meeting, Industrial Production (Oct 14),  EcoFin Meeting, ZEW Survey (Oct 15), CPI (Oct 16)    




   




AUDUSD




Once again it was a top week for AU  who once again defied  the odds with a strong finish at the very end.  However, this follows the significant drop made during the week, in response to a weaker employment change figure, which saw AU fall from the mid 94 area to a low of 93887. However, this was short lived once buyers came on to the scene, pushing AU back to the highs post data. Locked in a top consolidation around 94712, AU closed the NY session at 94640.

The current resilience of the AUD, does suggest further upward movement towards a top, with the 95 area being the first point of resistance. With the RBA  meeting minutes due later this week along with a few other economic data figures, the AUD is bound to react to its  domestic  data and new commentary issued by the RBA.


Level to Watch:
94723
What to look for:

BUY: 948500 (break above)
SELL:94300 (break below)

AU needs to test 94723. If this level breaks, then a long entry at 948500 will confirm bullish moment and bring the following targets into view: 95004, 95396 and 95969.

Alternatively, a break through 94435(DP) will see AU attempt a move lower with the  next support level at 94458 (23%). A break through 94340 will open up the following targets: 94070, 93500 and 93120.


Bullish Levels:
T1: 95004,  T2: 95396 , T3: 95969
Bearish Levels
T1: 94070,  T2: 93500,  T3: 93120
Potential Catalysts:
Home Loans (Oct 14), RBA Meeting Notes, Westpac Leading Index (Oct 15), NAB Business Confidence (Oct 17), RBA Speech (Oct 18)








USDJPY




UJ opened  the week at  97197, starting the week with a decline to 9655. From here UJ  then engaged in steep uptrend, taking price from a low of 96556 to a high of 98587. The pair offered very little pullback as it rallied alongside the US indexes  who closed the week in positive territory. 

With the US continuing to sort out its Fiscal Crisis, the USD remains on tentative alert in preparation for the announcement of an outcome. The low of 96556. DS3 became the turning point in the prevailing downtrend, which upon reaching this level, saw UJ reverse its position back north in line with current market sentiment. A continuation of its bullish form this week will be dependent on the upcoming developments from the US government.  


Level to Watch:
98427
What to look for:

BUY:  98587 (break above)
SELL: 98000 (break below)


A break above 98427 will promote bullish momentum level with a long entry above 98587. This will open up to the following targets: 

Alternatively, a break through 97387 (DP) will see the first test of support at 97071 at the 23% level (current position) with a break through this level exposing the
following targets: 96928, 96454 and 960183
   

Bullish Levels:
T1: 98971, T2: 99400, T3: 100225
Bearish Levels
T1: 97695, T2: 96870, T3: 96422
Potential Catalysts:
Industrial Production (Oct 15), MBA Mortgage Applications, Housing Market Index, Fed Beige Book (Oct 16), Building Permits, Housing Starts, Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, JPY Foreign Bond Investment, JPY Foreign Bond Investment in Stocks (Oct 17), BOJ Speech, CB Leading Indicator (Oct 18)

Wve updates and tweets on currencies, market outlook, potential intra-day trade setups and more.

Please note that all trade set ups provided in this post  are suggestions only and no responsibility will be taken for any loss of money in the FX markets. If you have any feedback or comments, please feel free to leave a comment or email liveforextradingmarketanalysis@gmail.com.

Monday, October 7, 2013

Market Analysis: WC 7 October 2013






Last week saw some strong movement among the majors with the Pound finally surrendering its position as the performance leader with its  declined from a top of 162595 down to 160 towards the end of the week.  This is of course, while playing "Freaky Friday" with the AUD, who stood as last week's winner, maintaining its resilient stance above its counterparts. This week poses as an important week for AUD, with the Unemployment Rate and Unemployment change due in the coming days. Most certainly, this could be the catalyst to push AU towards the direction of parity, where it currently seems poised  go, whilst holding above 94.  Looking at the other markets, the US indexes rose in the earlier part of the week while interestingly, the US debt situation has recently attracted the attention of  bargain investors taking advantage of current US stock prices.  With all eyes on the US as they continue with their deliberation, the financial markets remain on standby and ready to respond.



GPBUSD



GU opened the week at 161404, continuing the ascension in the previous NY session from a bottom of 160616 and reaching 161722 before pausing at current levels. This then led to a retracement  back to the open of 161404 in preparation for a continuation to the topside. Reaching a high of 162596, price consolidated around the highs for the next few hours which then saw GU move back to 161639. Finding support at 160, GU made another attempt back north reaching a high of 162507, which saw price maintain around 16219 (76% level) moving into the next trading session. This formed a  top consolidation, with price pausing briefly at  161743, before  breaking lower and finding refuge at 161539 (previous day’s low), as indecision set in, having broken through 162000. GU then proceeded lower towards 161187 (DS1), creating more ambitious targets as price continued its decline to 160970 (DS2) breaking the psychological 161 level and reaching a low of 160323. This tsaw price move back to 160779 and once again meet with rejection, sending GU back south with its sights set on 160323 (DS3). GU then proceeded to power through DS3, reaching a low of 160046, closing the NY session slightly higher at 160570.

The British Pound resumed the opposite side of the stage this week, having been the strongest performer last week to this week being the weakest performer, as poorer PMI figures provided the catalyst for profit taking and a move back to 160 by the end of Friday's NY session.  This followed the positive start to the week that saw an increase in Mortgage Approvals from 61.350k (forecast) to 62.226,  prompting the move higher to reaching a new top of 162596. However the bullish momentum was stumped with the release of  PMI figures on the 2nd and 3rd October, showing a  reduction in Manufacturing PMI from 57.2 to 56.7 (forecasted to improve  to 57.3) and a poorer Construction PMI figure which printed a weaker figure of of 58.9 vs. 59.1 (also forecasted to reflect an improvement of  59.2). In response, the Pound weakened across the board,  resulting in a sell off against all of its counterparts respectively.

Turning to the outlook of the British economy, the poor PMI figures were like a stone in its path as it halted the streak  of its most recent output of consistent positive data. Therefore, like the earlier GDP figure, this has not greatly impacted the current positive view of the British economy and the direction of its recovery. In other area of the economy,  the construction industry (as seen with previous PMI figures) has shown great a steady incline of growth, that has led to speculation for  GDP growth in the upcoming third quarter.  However, alongside this  as mentioned last week, are speculative concerns regarding a housing bubble given that the UK's housing sector has shown an increase of 0.5% from August, with housing prices higher by 2.4%. The month of August represented the highest issue of loans since February which is a positive.  In regards to this, Mark Carney has made a point of addressing the general public of their financial commitments in respect to affordability and the consideration of increasing  interest rates once the economy  has recovered to a suitable level.

Looking at the charts, GU created a double top at 162596 (Weekly high) with the first  summit to 162595 on the 1st  October and the  reversal carried out on the second rejection of the move to the top on the 2nd October. This was inspired by weaker  PMI  figures which shifted the momentum,  providing the catalyst to change directions, while promoting profit taking. With GU having advanced over 200 pips since the 24th September, a pullback or correction of some sort was imminent as the market looked to off load an accumulated stack of buy orders given the weaker domestic data and in light of the  looming debt ceiling which still holds much uncertainty. However as we enter a new week, hopes of a resolution roll into the next few days while  the US continue trying to resolve their issues.

This new week, GU  opens higher at 160454 under the 23% level (160454). With the BOE announcing their Interest Rate decision and any changes to their Asset Purchasing Facility program  on October 10, it is possible to see GU remaining subdued until the approach of critical date, which may be the  catalyst to instigate another major move in GU. A break above 160807 will see 161366 (76%) as the next test point which may contain GU  within its current downtrend. If this is the case, look for rejection and a move back through 160807 with support at 160454. However, if GU breaks above 161366, this may provide a long opportunity to re-test higher corrective levels. Above 161774, the next resistance level to watch is 163148. Continuing north from DP, the higher targets lie at: 161597, 163148 and 163956. Should price break through 160454, this will open GU to an extended fall to the following targets: 159237, 158480 and 156877.







EURUSD




EU opened the week around 40 pips lower than its NY close (just under 135) and remained range bound between (134803 and 135058) before breaking out higher with a bullish marubozu (low of 134938 and high of 135509).  From here,  EU created a higher base around 135270 before continuing higher as a bullish 3 candle step saw EU meet with the range top in preparation for another breakout. This then saw  sellers upon its approach to 136. Rejection was seen at 135867, pushing price down to 135434, where it stayed until descending lower to 135270. From here, EU then placed a target on 135 reaching a low of 135070 just above the round figure. Price consolidated here at the lows as it decided on its next move. This saw EU  break out back higher in a spectacular fashion, creating prominent bullish candle (low of 135041 and high of 135828) leading to a push higher and  breaking  above 136 as it reached  a high of 136066, before retreating back just under 136. 

Having tested 136, EU continued to consolidate around 135928 (23%) as it proceeded with a slow ascension north, reaching a high of 136458 which immediately met with rejection with the next candle. This saw price retreat back  below to the 76% level (136294), where it remained contained within a tight range  between 136156 and 136307 moving into the last day of the trading week. However the 23% level was only a resting point for EU, which after 5 hours saw EU finally break lower  through DS1 (135810) and  continue  down to  DS2 (135440) touching a low of  135379, before settling at the lows round 13553, closing the NY session at 135549.

In regards to events, the Monetary Policy Conference provided good insight into economic view held by the ECB, who highlighted that inflation still remained low, with  credit activity "subdued" and unemployment still sitting at a high level. As such the ECB  expect for Interest Rates being kept on hold for "an extended period of time" especially in light of  global economic conditions which as they stand, will not lend favourably to assisting with the improvement of timing for the eurozone economic recovery.   Also last week, developments  in the Italian political arena  saw Italy's Prime Minister Enrico Letta win the confidence vote, keeping his coalition in tact.

Short term money market still remain on "watch" for the  ECB,  who have stated that will be   prepared to do whatever is necessary to align  money market rates with price stability. Though this does not hold the same level of attentiveness for the appreciation of the Euro,  which the ECB acknowledges but does not put forward a priority concern. While economic growth is expected to  continue improving at a "slow pace", this means thatwe will unlikely see changes in monetary policy in the near future, though, this still does not rule out a rate cut if it necessary. But with rates t a low level, this not only  assists with money market rates but will also be more beneficial for its current position as it continues with its recovery amongst global uncertainty and lower global demand. This of course,  combined with managing its own internal problems in the areas of political, social and financial. One potential issue that has received some recognition is the state of the banking sector and its ties to  potential further bailouts, along with the  exhaustion of borrowing capacity by sovereign states.

When  looking at EU over a longer time period, we can see that the formation of a bull run from  the 5th September, instigated from a  low of 131040, leading to a higher consolidation area  around  the 13281 price point on the 12th September. Opening the next week around 60 pips higher, showed that USD weakness was still in action, giving EU the opportunity to continue its bull trend, which was further bolstered by the breakout  initiated on the 18th September  in response to the FOMC tapering announcement which s saw EU surge to a high of 135409. It is from this date, that we saw EU locked in a steady range type movement within the confinement of the lower to  mid 135 region. Only upon the ECB announcement of  maintaining rates on hold at 0.5%, did EU find the additional momentum to reach above 136 to a high of 136458 on Friday. Interestingly, when looking a price movement patterns, the recent breakdown from the high 136 area on Friday brought  price back in line with  DS2  (around 135549), aligns with the tops of the previous peaks formed throughout the month of September.  

The recent rise in EU  can be attributed to its response to the output of positive domestic data and recent events discussing the progressive developments in the Eurozone,  extending from the  optimism brought forward upon the earlier announcement of the Eurozone's "exit" from its recession. This of course being the key turning point for  the recent price movement in the EU. However a reality check may be pending upon comments made by the ECB indicating that  the Eurozone still has work to do and is not expecting a robust or change in its outlook in the near future, nor over improvements regarding the timing of its recovery. This is not only due to expectations and forecasts within the domestic economy  but also in consideration of the current  global environment which has no positive influence in encouraging a stronger or speedier recovery. This not only references  the US but also the  emerging markets.

In regards to my levels, a break above  135800 will see the first test of resistance at 136093. Another attempt above 136 cannot be ruled out if the US disappoint with developments in their own domestic affairs especially and a sudden bout of weakness takes over whilst anticipation over a resolution is expected to bring relief. However, I still see any movement north as corrective and favour an opportunity to short.  If EU does break above 136093, the first test will be 136194. Breaking above this will open up to a re-test of 136313, followed by 136870 and then 137290 (or around the 137 figure). Alternatively,  a break through  135800 (DP) will see 135599 (23%) as the next support level. A confirmed break through the 23% level, will promote further bearish momentum and expose the following levels:  135108, 134720 and 134050.




AUDUSD







AU opened the week at 93078, continuing on from the last NY session which closed at 93113. The start of the Asia session saw AU’s movement quite subdued, breaking through 93 first and reaching a low of 92802 before moving back higher in line with the open, where it ranged for half of the Asia session before breaking higher reach to test above 93 reaching a high of 93344. This then saw AU pull back slightly to 93110 in preparation for another attempt, reached a slightly higher mark at 93539. However the approach of this mid 93 area, saw sellers enter upon this second attempt, leading to steady decline  back to the open which prompted a further push south, penetrating 93 and reaching a low of 92875, just  7.3 pips from the previous low.  Closing the candle at 92960, this produced a potential bearish continuation but was rejected with the next candle, which saw buyers intervene at 92966,  shortly leading to a breakout and producing a bullish 3 candle move, taking AU above 94  to a  high of 94227. 

Creating top consolidation around this area, AU touched a new high of 94346, before breaking lower producing a bearish candle (high of 94259 and low of 93849), followed by a consolidation that continued into the next day. AU then broke lower from the range, falling from 94080 down to 93682, which followed through with a further decline reaching a low of 93370, where it found support. From here, AU began its travel back north, aligning back at the 23% level (93778) and continuing higher, meeting back in line with the previous range at 93920. This then saw price consolidate just under 94 for much of the day as it struggled to break the range in either direction. Moving into the 4th October, AU started to edge slightly higher, reaching the 76% level (94032) where price maintained briefly  before breaking higher, producing a break out candle  from 94001 with a high of 94234. This then paved the way for a continuation north to a high of 94471, followed by a small retracement to 94218 before a re-attempt higher saw AU meet with resistance at 94582, creating a double top  that led to a small retracement back to  DR2 where price finally settled with a final price of  94348.

No doubt that the RBA has been recognised for its commendable job in containing the impact of global conditions while addressing the internal factors that have contributed to the decline in the Australian economy.  This brings us back to 2008, when Australia was the first country to post out of a recession from the GFC – not that Australia was even truly in a recession - not in the sense that the other advanced countries were.  Though part of this can be attributed to temporary changes such as the  restructuring of the workforce as well other initiatives acted out by the RBA in preparation for a possible negative impact on the domestic economy. Once again, we have seen this action take hold as global uncertainty resurfaces, and  efforts are exerted to minimize any adverse effects that may ricochet from global uncertainty. However, even given the stronger disposition,  as the domestic  economy starts to show improvements,  much like the other advanced countries working towards economic growth and stability, the RBA will look not only at domestic performance but at the current global economic position as well.  

So far, previous cash rates have factored in the current global situation in an effort to offer a type of protection for the economy. This  level of caution will be adjusted  accordingly, however, this will be based upon  further reassurance in both areas, that will be factored into a building a case for the eventual raising of the cash rate. Expanding on this, the RBA see 2014 to hold more promise of improvements in both the global economic arena and domestic economy. This does lend to the idea of a possible rate rise to come in the future and Australia to be the first.

In regards to the outlook,  domestic growth is expected to  remain under par in the near term future  largely due to the decline in the mining sector, while a depreciating currency is still preferred, to assist with the economic recovery.  Earlier adjustments to monetary policy have been noted to be producing a positive outcome in the areas of investment and recent economic data such as the AIG Manufacturing PMI printing stronger figures for the first time in 2 years, along with improvements in retail sales, consumer confidence have contributed to a positive outlook for Australia. Taking this into consideration along with the view of a potential rate rise in 2014 has sparked recent buying interest in the AUD  and until today has seen AU stand defiantly towards the upper region of its recent price range.  However looking at things objectively and more "near-term", the RBA are not looking to make any move towards changes in monetary policy without the demonstration of further consistent economic data supporting stronger evidence of economic growth.  This is of course also taking into consideration the position of the global economy at that time as well.

Looking at AU on the daily chart, we can clearly see the pair in the midst of a correction, having broken above the top of 92955, which currently sees price now aligning with  the previous pullback in the long term downtrend. As such, this retracement does  present a nice top formation should price reject from current levels, however moving higher,  the mid 95  - 97  also sets up as a possible topping area.  Moving to the 4 hour chart, we see a completed bullish retracement back to the previous point of break instigating the fall from 94502 to a low of 92802. It is possible for AU to continue trading with the parameters set up on the 4 hour chart while on stand by  with US developments otherwise  this week does present the  potential for the currency pair to advance with support from the Unemployment Rate and Unemployment change due later this week. However, until then, it is likely to see AU either stay subdued at currently levels or sell off slightly prior to the announcement. Both figures are forecasted to produce a positive outcome (with the Unemployment rate unchanged), therefore,  pre-announcement  market sentiment looks in favour of AU long, seeking a top at the higher key levels for now. This of course can change if the US come to the table.

In regards to my levels,  a break above 94416 (76%)  will promote bullish momentum and bring the following targets into view:94706, 95097, 95629.  Alternatively, should a  break lower through 94178 (DP), will see 94043(23%) tested for support. Breaking this level will expose 93797, 93280 and then 92877. If AU does make a run for the 95 - 97 area, this would be a good candidate for a topping area.






 

USDJPY





UJ opened the week at 97639 having tested the bottom, and breaking out higher printing a bullish marabozu (low of 97653 and high of 98122)  that saw price push higher to 98315 where price consolidated before attempting to a move north reaching a high of 98720. This immediately met with rejection  with the next candle sending UJ all the way back to a low of  976365 where price found support.  From here, UJ then bounced back up from this level to a high of 98290 that followed with price maintaining its position around current levels contained within a range between 97749 – 98120 before  finally breaking lower on the 2nd October  to a low of  97137.

UJ then attempted a small bounce back to 97562   which then saw price retrace back to the 38% (97282). Holding as support, UJ then made another attempt to the topside reaching a high of 97863 that immediately rejected with the next candle, sending UJ declining from a high of 97863 to a low of 96923, breaking 23% (97145). Having pierced 97, UJ found support around this round number which then  followed price consolidating around the 23% before attempting a small rise, taking UJ above 50% level (97394) with a final close at 97448.

In the latest release issued by the BOJ, it was stated that Japan's  economy (3rd largest) is growing at a moderate pace. Recent data has also pointed to improvements in the domestic economy such as the rise in  CPI rose, along with other improvements such as business confidence and foreign investment. As such, the BOJ kept Interest Rates on hold at 0.1% last week, standing by the affirmation that the Japanese economy was indeed recovering and thus there was no further need to ease policy. In addition, this also saw the approval of the corporate  sales tax increase,  which earlier in the week, raised concerns over its impact on the appreciating Yen. However,  the BOJ have now moved forward with the decision to  go ahead as planned,  keeping in mind the 2% inflation target which will continue to be monitored. In regards to the global outlook, Japan is also closely monitoring the movements in the US as well as the emerging markets and exporting economies which may potentially have an impact on their own economy and their recovery.

Moving on to the US, all eyes are on the US shutdown which still continues to take the spotlight.  With October 17  approaching, there is anticipation for some sort of resolution or development to be announced in the coming days. Until then, UJ stands very weak while Yen continues  to act as a safe haven currency against the USD. Developments in the US or a favourable resolution will see this quickly change, but until then, it is likely to UJ contained within range until an appropriate catalyst is presented.  

Looking at the charts,  the 4 hour chart still shows movement within a downtrend. However with the daily still showing UJ locked within a range, it is very possible to see UJ  move north should the USD receive strength. This is a big week for US economic data which  includes last week's postponed NFP figure due out on Oct 11. Currently the 1 hour shows UJ sitting at DS1 which is also around the previous day's low at 96946. Movement between this level and 97390 would be a good range to intra day trade while UJ stays in the lower band of this price movement. Breaking above 97349 could see UJ move north towards 98, though I am weary of USD strength without a proper catalyst in place and see that any push higher may just result in price remaining contained while uncertainty looms.  Any surge among its counterparts will need to be inspired by domestic events, while the US deliberate over their Fiscal Budget. A bounce from the 23% level (97071) could produce a nice intraday 30 -40 pip return, while breaking lower,  will bring  targets within the 96 price range into view.

In regards to my levels,  with price at current levels, a break above  97474 will promote bullish momentum level, opening up to the following targets: 97865, 98353 and 98841. Alternatively, a break lower through 97387 (DP) will see the first test of support at 97071 at the 23% level (current position) with a break through this level exposing the following targets: 96928, 96454 and 960183





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