USDJPY - Keep a eye on the long term chart

The BoJ's ultra loose monetary policy continues to weaken the Yen and risk appetite across the board is increasing off the back of positive global economic sentiment economic as well as improving job market data, reducing the demand for 'safe haven' currencies.  

The positive job data will also inevitably bring us back to the FED tapering debate and when the market expects this to happen but most analysts aren't forecasting this to happen till March time though some are erring on the earlier side, potentially even in Jan or Feb.  This should lead to strength coming back into the USD, though we also have to bear in mind that the Republicans & Democrats still have to thrash out a Debt ceiling deal in February which is always a bit of a pantomime so might see some volatility around these upcoming months.

AUDUSD - Chinese data is not helping the bulls

We had some interesting Chinese data overnight with YoY exports gaining 12.7%, smashing the 7.1% forecast which was mainly driven by stronger shipments to the US and EU.  Imports however were only up 5.3%, failing to reach the estimate of 7.6%, which could put the AUD under further pressure. Weaker global commodities prices are also continuing to wane on this currency and more work might be required from the RBA in order to turn the local economy around as well.

AUDUSD - Bounced off strong support

The AUDUSD had a good attempt on the 0.9300 level but it proved too strong to break moving our focus back on the upside resistances which are at 0.9425, 0.9525 and 0.9700 currently.

I'm still in a bearish mindset on this and see as these levels as opportunities to short the currency however.  Looking at the fundamentals, there is growing concern over tightening financial conditions in China, Australia's largest exporter, as the chinese repo rate hit 5.45% on 15th Nov, fuelling some speculation that the worlds second largest economy's growth could be cooling.

GBPUSD - Broken neckline, but waiting for BoE inflation data

Following on from my last post on the 23Oct, we have seen a confirmed rejection of the 1.6250 level, making a 2 month low yesterday, breaking the neckline of the double top chart formation.  I would expect this weakness to persist on the short term and for the pairing to trade back down towards the 1.5700/1.5750 support area, from a technical point of view.

The quarterly BoE inflation is due later today so the market will be very much subdued before this publication at 10.30am GMT.

EURGBP - Bear channel still intact

Given that I haven't yet commented on the EURGBP I'll start off with the long term charts and increase granularity as I go along.

On the LT charts we can see that we are in a corrective wave pattern from the aggressive price action from the end of 2007-2008.  The Fibo levels have proven to be good support levels along the way at 38.2% (0.8537), 50% (0.8159) and at 61.8% (0.7781) which have all now been met.

AUDUSD - Gann Fan proving too much for the bulls

The currency pairing has had a very good recovery since its August low and managed to reach the 50% Fibo retracement of the April-August down move.  Bearish comments from RBA members and tightening Chinese financial conditions are putting a downer on the recent strength.  We are also starting to see some USD strength back as well as the US job data is improving once again and the expectations of the FED tapering are starting to build.  The next RBA meeting is on the 19th November which may suggest what is in store for the AUD.

DowJones - Are we poised for a move higher

It was a strong day for US equities on Friday and we could be on course for a breakout.  Financial stocks led the way after bullish job market data gave rise to expectations that the economic recovery is back on track and that interest rates may rise sooner than previously thought.  I must add that we do need a follow through at the beginning of next week to confirm this move however.

EURUSD - Rethink after yesterday's surprise cut

Yesterdays surprise rate cut from the ECB to a record 0.25% caught a fair few out, shown with a viscous sell off immediately after the announcement, but did it manage to recover later in the day to settle back above the 1.3400 mark.

We have convincingly broken out of the trend channel but now seeing some support from the 100day SMA and 38.2% Fibb retracement level / previous high at 1.3420 level.  Given the combination of these, this could prove to be a strong support so needs to be watched closely.

EURUSD - Under pressure

Its been a heavy week for the Euro after an very impressive recent run.  After lower than expected inflation data released earlier this week, it has promoted people's view that the ECB could be about to loosen their monetary policy and cut interest rates next week in their meeting on the 7th November, in order to stimulate the eurozone growth.

USDJPY - Rangebound

Symmetrical triangle continues to form on the USDJPY, with the range tightening so a breakout of the chart pattern is looking more likely as it approaches the apex.  Bystanders are patiently waiting for further action from the BOJ mentioned in the post on 13/08/13. Range trading is the best option for now whilst waiting for a breakout.  On a breakout of the chart pattern on the upside would give it a projection of 108.00

DowJones - Retesting all time highs

Disappointing US jobs data is keeping equities well bid as expectations that the tapering of the FED stimulus package is not going to happen quite as soon as people had previously expected.  Combine this with an impressive earnings season for US stocks and you can understand the strength seen recently.

Were having a 3rd attempt to break the 15,700 level which is proving to be a strong resistance level with double/triple top chart formation developing.  A failure on the upside will result on the focus back on the support area around 14,850/14,700 and the 2008 high of 14,167.  A break on the upside could propel the index up to around the 16,825 on the 138.2% Fibonacci projection.

Brent - Testing supports

This is the 3rd consecutive day of losses on the Brent contract but we might see some support come back in around the 106.50/106.00 area.  After testing the 117.00 level due to the escalation in the Syrian crisis, the risk premium has been slowly reduced as the western intervention seems less likely now.   The technicals aren't giving us a clear story at the moment, but taking step back and looking at a longer term view, we are still in a slow uptrend as we still have a couple trendlines intact.

AUDUSD - Hitting heavy traffic

 Since my last post the AUDUSD as performed very well reaching the upside target of 0.9700.  This is the 50% retracement of the April-August down move as well as the bottom of the sideways trend channel of 2011 / 2012.  Both events could offer strong resistance to further up moves so this level should be watched closely.  On a  confirmed break on the upside, that would give the green light that we have re-entered the previous sideways trend just mentioned and see a swift run up back to the 1.020 level.

GBPUSD - At a pivotal point

Well today we're rejecting the 1.6200 level once again, as the currency pairing is really struggling to sustain the gains above this level.  The USD has suffered severe weakness following the failure for the FED to reduce the buying back scheme, contrary to market expectations, and the palaver over the US debt ceiling and government shutdown.  But this begs the question after all these recent setbacks are we due for a recovery??

AUDUSD - Looks Strong but for how Long?

Well the AUDUSD has seen a good recovery in the run up to, and post government elections.  But is simply changing governments enough to sustain the recent gains?  Change is often for the better, but there are plenty who are still sceptical of its recent run and believe that a lower exchange rate is still needed in order to rebalance the local economy, not just a change in government.

Brent - Starting to fail

We had strong upside rejection yesterday breaking the first trend line.  This down move was  pretty violent and resulted in the MACD crossing down off the back of it.

Looks like we could be forming a Double Top chart pattern, if so a break of the neckline of 112.24, would give downside target of 108.00.  But till then we will have to sit on the fence as we may see a temporary recovery after yesterdays move.   The Maribuzo line is worth noting as a key resistance to watch out for at 114.45.  So long as this holds we should expect lower numbers yet to come.  Other key levels to be aware of are indicated on the chart.

Charts sourced from ig.com

DowJones - Nice recovery but where next?

 

Equities saw a good recovery yesterday after the prospect emerged that the western intervention in Syria could be resolved without dropping any bombs.  We are seeing further follow through again today.

We are trading back above the 15000 mark on the Dow Jones Ind. Av.  and more importantly above the high made on the 26th August at 15054 which should give the bulls some encouragement.  On the upside, we could see some resistance however around the 100 & 50day MAs given the strength they displayed as a supports at 15161 and 15256 respectively.

Brent - Preparation is Key

I dont think it comes to many people's surprise that Brent looks bullish, as well yes it does, but I think it might be worth talking objectively about this commodity and pointing out target levels.   Given its recent up move has been on a risk premium being priced in to the contract (Syria - Middle East contagion, Egypt - Suez canal closure), it can also be wiped out just quick as it was priced in.

USDJPY pushing higher

On the USDJPY we broke out of the down trend channel a couple of weeks ago and tried to break out, but what might have caught people out was by retesting the previous down trend line.  This held however last week and we saw a strong rejection of this level.  Since then, we have rallied back pretty convincingly to back above the 99.00 level.

MACD crossed over the 0 line confirming the up move.

DowJones - are we heading south too?

Weak close for the DowJ last night, closing below the resistance level of 14825, we need more downward pressure today however to confirm the follow through.  A further move south and all eyes will be on the previous significant low at 14570 level and the Elliotticians on 38.2% Nov12-Aug13 retracement at 14440.  The ultimate test would be for it to try the bottom of the trend channel support at approx. 14200  Watch for a close back above 15050 because we may start to change our tune.

'Fiscal cliff' is a dirty word once again

The fiscal cliff is rearing its ugly head once again as the Obama administration has warned that the current debt cap could be reached by mid-October, rather than the mid-November originally forecast.  The markets could be in for a bumpy road ahead, or the next couple of months at least, as we'll most likely watch the Democrats vs Republicans play chicken with the US economy once again!

If we looked back how the markets reacted in the run-up to the past votes both in 2011 & 2013 we might have an idea of how people might react in the run-up to the event, as well as looking at what happened straight afterwards.

FTSE100 - Are we in for a bigger correction still?

We saw divergence on the momentum indicator and a cross on the MACD leading to sell off, we have since seen a brief recovery back to the 6520 level, but appears to have been rejected so our focus is back on the low made on 22/08/13 at 6351.  Charts confirm this price action as the indicators still look negative so we may look to test the bottom of the long term up channel around the 6150 / 6200 before seeing any significant buying interest.

AUDUSD - Retesting lows sub 0.9000

 The AUDUSD has sold off gain this morning and is back under the 0.9000 level after having flirted with the idea of staying above the 20Day MAs but once again was rejected.  We had a bounce off the previous downtrend line but failed to break above the 0.9050 / 0.9070 so are retesting the previous lows.  MACD and other trending indicators are not working terribly well on the daily charts it has to be noted, so am watchful of the Parabolics.

AUDUSD - Good trading opportunity, IF Non-farm disappoint

Well, the the the first time in quite a long time the AUD doesn't look so bad.  In my last post 08/08/13 AUDUSD we mentioned the resistance from the down trendline and 20day SMA & EMA might prove too much, but I have to admit I think it might just have succeeded. Yesterday's price action was a very key day for the bulls, bouncing off both the moving averages as well as the 38.3% retracement from the 5th - 9th August rally at 0.9075 level.  The candlestick was encouraging too with a bullish engulfing pattern displayed.

USDJPY - break out on the cards IF positive Non-farm data

Following on from my last note 13/08/13 USDJPY looks like were hovering around the top of the channel and more importantly, above the 98.00 support level.  Not sure if we will see too much movement ahead of the Non-farm payrolls later today at 1.30pm (GMT) though, but on a positive number we are poised to break out on the down channel and 20day SMA, confirming the cross on the MACD.  A negative number could push us back down and could retest the 96.60 level again.

USDJPY - Is the Yen soon to be under attack again?

After Japan's recent economic results the BoJ is back in focus, and we're starting to hear a little noise surrounding the Yens recent recovery against the western currencies.  We've seen a good 700point rebound in it from its recent lows, but the question is now, is it sustainable?

Sales tax hikes are due to increase from 5% to 8% by April 2014 in order to tackle the monstrous government deficit that the country is currently in an ageing population (on the 09/08/13 the government debt passed the 1 Quadrillion Yen mark for the first time ever, thats 15 zeros after the 1 to you and me!).  This should really put a dampener on consumer expenditure and with business investment on the decline some people are questioning whether the PM is actually going to follow through with the original plan.

EURUSD - back to watching the 1.3300 level again!!!

The EURUSD is a bit more interesting today.  It reached its target on Thursday 1.3400 exactly, and then rejecting it almost immediately trading back down to 1.3300 today.  We're back to watching that level again, a close above or below could indicate which direction it will head tomorrow.  We've got divergence on Momentum indicator once again (highlighted in light blue lines).  Keep an eye out of the MACD, as we could be in for a cross down if we start printing lower numbers.

Brent - An improving oil v equities correlation?

Looks like we've got good oil / equities correlation because we can draw some good similarities in chart patterns between Brent / FTSE100 and S&P500 daily charts.  Just like the other charts, we're testing the neckline of a Double Top formation on the daily chart and have bearish MACD and a downtrend in the RSI.  Also note, that we have been having some good afternoon recoveries shown by a lot of long lower shadow candles, so be weary of any morning sell offs and remember to wait for a confirmation on the close, to avoid being chopped.

S&P500 - Still warning flags out for the short term time horizon

Firstly we have to remember and keep in the back of our minds is that the S&P500 is still in a bull channel and Long term uptrend; but like the FTSE100, and like I mentioned last week, the indicators are implying that we may still be in for some lower numbers to come.  We're currently seeing long-shadowed / small-bodied candlesticks and a rangebound price behaviour, but given the time of year we should try to avoid reading into this too much.

FTSE100 - becoming a victim of the Summer lull

The FTSE100 was lacklustre last week, my view hasn't changed drastically as the MACD still in bearish mode and momentum downtrend holding.  The bulls should be a bit more encouraged however, by the recovery seen on Thursday and confirmation of the bearish rejection on the Friday.  For the time being we are very much stuck in the 6650 - 6550 range waiting for a breakout on either side, till then will be sitting on our hands.

AUDUSD - Is this just another pullback, just like all the other times?

We had a very good recovery of the currency rallying back 250points, but has anything really changed.  It is worth mentioning and highlighting the relationship with the price action to the 20 Day SMA and EMA. They've previously its acted as a nice resistance on the currency, and struggled to hold its gains above this level the days following.  We're approaching the potential (yet to be 3point confirmed) downtrend line.

WTI looks strong but is it running out of steam?

I do enjoy seeing the technical analysis work quite brilliantly at times. Perfect example of this shown by the breakout of the ascending triangle.  Height of the shape gives the projection plus level of breakout, so $10+$98=$108, which is exactly the level the rally stopped at! Phew at least some of the jibber I come out with is marginally useful.  

Brent looking weak, but might have a bumpy road ahead

Brent looks like it might try to push lower, but it may be running into some heavy traffic first as we have some support levels just ahead. We are currently seeing the up trend line under pressure, and just below that we have the bottom of one and top of another sideways trend channel resistances as well as the Elliot wave's 38.2% retracement all dotted within the $105.00-$105.80 range.  A break and close below these levels would give the green light for the targets $102.00 and $99.80.

GBPUSD is on the move after Carney's speech

All eyes were on Carney today delivering his speech at the quarterly inflation report which seemed to inspire some confidence back into the GBP.  We've been watching the 1.5400 level for sometime now and have breached it already today shortly after, but now lets see if it can hold it.  If we can, we should see a rally up to the 1.5600 level.  The Bollinger bands could slow the rate of assent though and its hovering around the top band like a bad smell.  A failure to hold, on the move up could see a correction back down to the 1.5200.

USDJPY under pressure on the near term....

Looks like the Symmetrical Triangle that I wrote about yesterday that was forming is now being broken (the curse of the commentator!#?) Tech indicators are confirming down move this and suggesting that we could be going further lower  before heading back higher.  Elliott 3 wave correction (A,B,C) still intact so our MT & LT views still remain as before. I must note a big sell off could start to change this view however.

Elliott ruling the waves for the USDJPY

 The USDJPY is starting to look interesting again. Taking a step back, the recent 2013 rally took the currency to the 38.2% retracement and previous cycle lows very nicely indeed and we've seen somewhat of a consolidation since then as we saw a lot of resistance at these levels.  The downtrend line is still valid but has yet to be tested properly.

Apple (APPL) on the move again

Apple is trying its best to recover to its former glory, as its been trading in a sideways range for the past 6 months, sitting nicely between $390 and $460, which just so happens to be the Fibb retracements of 50% and 38.2% of the 5year rally to its peak.  This behaviour gives us a lot of confidence in the numbers for this share.  Thus on the nearer term we are testing the $460 level, and close above $465 should kick the share price up to $510 mark.

S&P500 looks good, but minor cause for concern persists.....

The S&P500 still looks strong and the longer term investor doesn't have any real reason to worry too much.  The only thing to watch is, just like the FTSE100, there is divergence occurring in Momentum Indic. vs price action and the fact that we are towards the top of the trend channel.  Despite these factors the SMAs are still all inline and positive looking, and all bullish trendlines are intact.  So we should be too surprised if there is a pullback or consolidation soonish around the 1650/1620 area.  If there is a breach below, we would need to have a reassess of the situation.

Is the FTSE100 running out of momentum?

Interesting charts when you look at the FTSE100 this morning. We've got divergence occurring on the Momentum indictor and but still holding (just) on the uptrend line.  I cant help but feel that were going to have a pullback on after the consolidation.  Looks to me that we might head back down and test the 6550 level again on a break of the trend line or possibly down to the 6450 Fibb retracement.

EURUSD - Triangle is still forming!

The EURUSD continues to form a symmetrical triangle, with people sitting on the sidelines to see where we will go next, as we continue to gravitate towards 38.2% level.  The Fibb study works well as both the 38.2% and 50% retracements hold nicely generating quite a bit of activity at these levels so this is definitely worth bearing in mind moving forward.

Is something finally going to go the Aussie's way?!?

The aussie is looking interesting and had quite the pullback in the long term daily chart.  But looks to me like we'll be running into some heavy traffic around the .8700 level and see some buying interest back into the market.  This might stem from both the Elliotticians getting excited about the 38.2% retracement being met combined with the fact that we've slipped nicely back into range seen pre and post financial crisis.