HotForex.com - Market Analysis

Since the International Monetary Fund (IMF) lowered its estimation for global growth for 2015, the equity markets have seen a sizeable correction. Last week, before the correction in stock indices was reversed, over $3.2 trillion was momentarily wiped out from the value of the global stock market. In addition to this, various worries ranging from the spread of the Ebola virus to the Federal Reserve (Fed) tightening its monetary policy, added to the general feel of the investment world as we’ve known it over the last four to five years, coming, if not to and end, at least close to it. This translated into strength in Gold which is often viewed as a safe haven when global threats arise or when the Fed expands its balance sheet. It is clear from the charts that when things got jittery, money flowed out of the other markets, but not from gold. Instead, gold gained after it touched a long term support level. According to the Financial Times, flows into gold investment funds hit an eight week high in the week to October 15^th. At the same time the comments from the St. Louis Fed president Mr. Bullard have left the door open for further expansion of the Fed’s balance sheet. Based on all of the above, it is safe to assume that gold prices will be either sustained above the latest weekly low (support level at 1183) or trend higher over the coming months.
For recent and upcoming economic reports see: HotForex Economic Calendar
Gold, weekly
Over the last two and a half weeks gold has been moving higher from an important support level (blue horizontal line). While the most important weekly resistance levels (red horizontal lines) are far away from the current market price, we should pay attention to the Fibonacci cluster levels on the above chart (black horizontal lines). Based on several major highs in the recent sideways move in 2013 and 2014, as well as the latest market low, it is possible to draw several Fibonacci retracement levels. Because there is no single right way of choosing the low/high points for the analysis, different people draw the Fibonacci levels from different price points. Fibonacci cluster analysis provides us the areas important to the majority of analysts by eliminating all the other levels and focusing on those that cluster together. This analysis provides us with the following areas of importance in Gold. Support (area below current price) 1215 – 1220 and Resistance (area above price): 1260 – 1268. The third area of importance for Fibonacci analysts is where the price currently fluctuates. This area coincided with the weekly low from June this year. Price action below this weekly low is likely to be range bound and the range best visible (and tradeable) in the smaller time frames (4h and 1h). I base this view on what happened the last time gold was moving up from the same support level and prices reached the previous weekly pivot low (in January this year). Then, Gold moved sideways for three weeks before breaking above the resistance area created by the mentioned weekly pivot low.
Gold, 4h
In the above chart we have the same levels in a 4h chart. Price has been moving fairly steadily without strong extensions outside the Bollinger Bands, but some weariness in momentum is visible as the latest directional move hasn’t been strong enough to take gold to the upper end of the channel. This indicates that even though buyers have been able to work their way through the Fibonacci cluster at the weekly low, they are confronted with further supply at these levels.
If price breaks lower from here, potential supporting areas are the 4h Bollinger Bands that coincide with the daily low from Friday 17^th and the penetrated resistance (see above chart) which has already proven itself as an area where buyers are willing to step in. It is worth noting that this level (a supporting Fibonacci cluster at 1215 to 1220) is roughly the area of former resistance from September this year and should the price move back there this would be a potential support and worth keeping an eye on.

Gold, 1h
Price is currently hovering at the lower 1h Bollinger bands while it moves sideways just above one of the Fibonacci cluster levels drawn earlier, but seems to be slipping lower. If gold can’t close above the descending red trend line but keeps on drifting lower, I would look at the 4h (240 min.) Bollinger Bands as potential support or first target for short trades. If momentum analysis (e.g. in 15 and 5 min. charts) confirms that this area of potential support is likely to hold, then long entries could be considered at or around the level.
Conclusion: Keeping in mind that we are at price levels where psychology has changed substantially in June (the market turned from bearish to bullish right at current levels). This might mean that immediate upside is limited and that the market needs to dip lower to gather strength for another attempt to break through the above resistance. This is not very clearly visible in price action yet, but as I pointed out earlier the latest move higher in the 4h chart isn’t as strong as those before it. Therefore, it makes sense to prepare for the possibility of gold breaking lower and be ready to take long trades at potential support levels. However, if current minor support at Bollinger Bands and close to the level of rising trend line holds, it would be advisable for traders to act accordingly and follow the direction of the rising trendline in their trading.

The Bank of England’s MPC meeting yesterday (Oct. 22^nd) voted 7:2 against rate hikes. This was expected by the analysts and the same members, Weale and McCafferty, voted for a 0.25% hike as the last time. The rate stayed the same at 0.5%. Members voting against the rate hike were concerned about weak wage growth and couldn’t justify a rate hike in the current low inflationary environment. The UK Consumer Price Index (CPI) has been trending lower since October 2011 and is currently at 1.2, well below the BoE’s Q3 inflation expectations of 1.8%. This allows the Central Bank to have an ultra loose monetary policy without worrying excessively about price stability. Members of the committee were also concerned about a rate hike exposing UK to economical shocks and the slow down in the euro area being contagious. In light of recent weak data (low CPI and jobless claims for September falling less than expected), it may well be that those voting against rate hikes in the November meeting will have even stronger majority.
Today and tomorrow the focus will be on Friday’s Preliminary Gross Domestic Product (GDP) figure for the UK. This is the first release of the 3 versions of UK GDP. They are released a month apart – Preliminary, Second Estimate, and Final. The Preliminary release is the earliest and tends therefore to have the biggest impact on Pound Sterling.
The UK economy grew by 0.9% in the second quarter. Slightly beating expectations (0.8%) and was in line with Q1′s GDP reading of 0.8%. At that time, the IMF also upgraded its annual GDP forecasts for the U.K., which was then one of the better performers among the major economies. A weaker growth rate pace is projected for Q3, as manufacturing and services activity has slowed during the period. The analysts’ expectation for the Q3 GDP reading is 0.7%. A strong deviation (in either direction) from this figure is likely to translate into a stronger than average move in Pound Sterling pairs.

For recent and upcoming economic reports see: HotForex Economic Calendar

GBPUSD, weekly: has been trending lower, now hovering at 50% Fibonacci retracement level (measured from July 2013 low to July 2014 high). Has bounced from proximity of weekly support at 1.5855. Weekly support: 1.5855 – 1.5875 and weekly resistance 1.6252 coincides with 38.2% Fibonacci level. Stochastic oscillator is oversold but showing some bullish divergence (Stochastics has moved higher while price has moved lower). This suggests to me that the downside is limited as the market is turning and probabilities are on the long side once the intra-day charts signal the timing for longs is correct. Weekly and daily pictures give us the frame work and an understanding of what kind of process the price is going through. Intra-day charts provide us with timing tools.

GBPUSD, daily: This weeks high (1.6185) coincided with a Fibonacci cluster 1.6170 – 1.6197. These clustering levels are measured from the highs in the down move to the latest low. The fact that several Fibonacci levels and a weekly high coincide at same levels emphasizes the importance of, not only Fibonacci cluster analysis but also the level as a resistance. Another cluster above this one is at 1.6250 – 1.6274, a level where the Bollinger Bands are at the moment as well. Supporting Fibonacci cluster (blue lines) is roughly at the same level with the always so important 50% retracement (measured from July 2013 low to July 2014 high). In addition, the pair has just broken out of bullish wedge formation three days ago and has now retraced to the trendline that used to limit its move higher. This too is a sign to look for long opportunities in shorter time frame charts.

GBPUSD, 1h: The most interesting area to consider long trades is the potential support area (1.5940 – 1.5965) provided by the daily Bollinger Bands and the October 16^th low. At the time of writing, price is still creating lower lows and highs and seems to be edging lower. This might well be due to the uncertainty caused by the coming GDP update on Friday. If there will be no major negative surprise (the UK GDP figure is close to expectations) the above mentioned support levels could provide day trading opportunities with the 21^st October low being the first target. Above that potential target levels would be 1.6180 and 1.6220.
Conclusion: Based on the above analysis GBPUSD is currently at levels that favour long trades. We have a market that is close to a support after long move lower, and it is showing signs of momentum change: bullish wedge and breakout with a divergence in Stochastics. The downside seems to be limited as downside momentum is waning and probabilities are therefore on the long side. We should keep in mind though that intra-day signals should be closely monitored in order to increase chances to get the timing for longs right. In addition, it is unlikely that this market will make major moves before the preliminary GDP publication tomorrow. If there is no intra day momentum reversal signal and the price keeps on moving lower, this setup is negated and traders should act accordingly.

As the traders who read my articles are aware by now I do not favour an idea of basing one’s analysis and trades on price action in a single time frame chart. New traders are often fascinated by the constant action visible in the 1 minute or 5 minute time frames. This is the same crowd that loves trading platforms with flashing lights, blinking windows and buzzing buzzers. The more eye candy and action, the better. I’ve been there and done that, so I can’t blame them. But, believe me, after watching price action for over 16 years, I’ve got no need for such hyper activity any longer. I am only interested in knowledge and information that has quality, validity, and hopefully, also some predictive value.


The main problem with the lowest time frame charts is the thing called noise. Noise can be defined as unwanted signals that obscure the real signals and therefore harm the quality of your analysis. In other words, 1 minute charts for instance, have so many spikes, ranges, mini trends, hammers, shooting stars, breakouts and false breakouts that these “setups” are only going to wear you out – and drain your trading account. You are free to try out, but unless you are extraordinarily lucky it’s likely that you will, sooner or later, become physically, mentally and financially exhausted. If you recognise some (or all) of these symptoms, take a step back and start again with (multiple) higher time frame charts and do some analysis that adds value to your trading career.

Another major problem with single time frame analysis is the fact that you are constantly out of touch with what is really happening in the market that you are trying to trade. How can that be true? Let’s give it some thought. First, what logical reason would there be to assume that the price action in, for example, a 5 minute chart would give us any relevant clues on what the big market operators, such as banks or hedge funds are focusing on. Their operations generally last longer than the time period a newbie trader typically focusses on (when watching his small time frame charts). These market participants are those that have the power to really move the markets and I have not yet heard of any central bank action or other major currency operation that would be completed intra day.

For instance, when a big company buys another from abroad for billions of dollars, this deal needs a currency transaction in order to be completed. The buyer needs to exchange the local currency to the currency of the target country. The FX market is the biggest market in the world, but selling or buying billions does mean that the position has be accumulated over a few days. Obviously the traders try to complete the buy operation in such a way that they don’t push the prices higher. If we do our analysis properly, we can find the levels that are meaningful for the big operators as well. These levels are likely to be important daily and weekly highs and lows, not minor one or five minute levels.

In addition, if one limits his or her view into a single time frame chart, the understanding of the current process and context at which this price action is taking place is kind of difficult (if not impossible) to grasp. With a process I mean for instance a situation where price is bouncing off from a higher time frame support level or it has reached a major resistance level and the momentum is waning. Should a trader focus only on a 5 minute chart or 1h chart for that matter, he or she would be likely to keep on shorting the bounces next to a major support. In other words, shorting even though price has reached a level that is likely to attract institutional buying. These shorts have much fewer probabilities on their side than those opened close to a major resistance level after there is confirmation that prices are indeed likely to turn lower. The old adage goes: buy low and sell high, but we need the bigger time frame to understand what the low and high actually mean.

The Federal Reserve statement cited “solid job gains and lower unemployment rate” and suggested that there is a positive trend in labour resource utilisation: “a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing”. The Fed continues to lean on its verbal arsenal rather than real action, such as QE. The first case of such verbal action was two weeks ago when Mr Bullard appeared on Bloomberg and suggested that there should be more QE. This appearance coincided with the US stock market being at major technical support; the stock market rallied from the level after his comments.
Now the Fed seemingly hopes to support the equity market by being bullish about growth in the USA. Even though the statement included a promise to keep the borrowing costs low for a “considerable time”, a wording that they have used frequently in the recent past, it is likely that interest rates will rise eventually and the Fed needs all the verbal bullishness it can muster. This in fact is the only option the Fed has if it wants to keep steering off from Quantitative Easing.
In Japan the Bank of Japan governor Kuroda is scheduled to appear before the parliament today and tomorrow will be the Bank of Japan press conference. Markets are not expecting new QE announcements from Japan tomorrow as only three of 32 economists surveyed by Bloomberg News this month predicted that policy makers would expand asset purchases at a meeting on Friday. According to Bloomberg the central bank buys about $64 billion of bonds each month...

Read the full article at HotForex Blog - www[dot]blog[dot]hotforex[dot]com

According to the minutes of the monetary policy meeting of the Board of Reserve Bank of Australia from 4^th November, the bank decided to leave the interest rate unchanged at 2.5%. This decision was influenced by the worries related to what the bank described as “considerable uncertainty to the outlook for the Chinese property market and the broader implications for the Chinese economy”. This is understandably a major worry to Australia as China is the most important trading partner for the Australians. The GDP (Gross Domestic Product) growth was expected to stay below the trend during the years 2014 and 2015 with some acceleration expected in 2016. Low interest rates support the economic activity, but the spare capacity in the labour force mean that inflationary pressures stay low. The Australian dollar is still overvalued in light of most estimates and according to the bank “the exchange rate was offering less assistance than would normally be expected in achieving balanced growth in the economy”. Based on the above, the Reserve Bank of Australia, like so many other central banks, would like to see their currency at lower levels. This means that they are not likely to increase interest rates in the foreseeable future. Still, compared to Europe the Australian economy is so much more robust and therefore a better bet from an investment point of view. This and the interest rates differential means that the Australian dollar is likely attract more money than the euro in the long run. However, at the moment we have a short to medium term technical setup that seems to favour the euro.

EURAUD, Weekly
In September the pair found buyers at a historical support from 2011 that coincided with a rising trend line. Since EURAUD has now created a higher low at the beginning of November I am betting that it will eventually move higher. The pair is currently trying to push through a resistance area between 1.4592 and 1.4706. If we will see a move lower from this resistance, I expect the weekly high of 1.4440 (see the daily chart below) to provide support and help to create a new higher low in EURAUD. This in turn would support the view that the pair is indeed going to move higher. Once this resistance area has been penetrated, the next target is a weekly high at 1.5022.

EURAUD, Daily
Daily chart supports the picture gained from the weekly. The Stochastic Oscillator is entering into overbought territory and EURAUD has reached the resistance area and seems to be creating a shooting star. However, it has also created a slightly higher low above the support at 1.4223 suggesting some underlying strength. At the moment the pair is still in a range mode and therefore might provide opportunities at both ends of the range. At the time of writing we have signs of momentum reversal and we should obviously trade accordingly as long as the pair stays in the range.

EURAUD, 240 min
EURAUD has countered resistance and we are seeing momentum reversal happening. The first potential level for short exits and long entries would be either the weekly high at 1.4440 or the 1.4376 intraday support. This level has recently been acting both as a support and as a resistance. Again, look for hammers to confirm your entries and exits at these levels. Obviously the low end of the range at 1.4223 is another key area.
Conclusion:
EURAUD has now created a weekly higher low at the beginning of November and I am betting that it will eventually move higher. The pair is currently trying to push through a resistance between 1.4592 and 1.4706 but has encountered resistance and is forming a daily shooting star. If there is a move lower from this resistance I would expect the weekly high of 1.4440 or the 1.4376 intraday support to give the price a new higher low and help it to move higher. We have had some short signals at current levels (the resistance). Should the price move lower I will be focusing on potential buy signals at the weekly high of 1.4440 or at the intraday level of 1.4376. As my medium term bias is on the long side I would be more careful with the short trades and trade the long side with an expectancy of longer lasting moves.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Warum haben sie es nicht in denn Englischen Teil geschrieben?

This week started with a big rally in the price of gold even though the news that Swiss voters rejected the proposal to buy more physical Gold should have sent the price lower. The upsurge in the price of Gold from 1141 to 1221 (a move of 7%) has been credited by analysts with the price of Crude Oil surging higher at the same time. With the price of Crude Oil being an important component in inflation measurements an up move in the price of oil would therefore create a need to hedge against inflation, which is what Gold is widely thought to be.
However, the fact that this move in the price of Gold took place after it was confirmed that the 7% annual demand increase for physical Gold by the Swiss central bank is not going to happen is an important indication that the market participants are now willing to step in and buy Gold futures (paper gold).
This brings the paper market in Gold more in line with reports that there is actually a global shortage of Gold. According to McAlvany Financial Group, a firm specializing in physical precious metals markets, gold buyers in Far East are currently paying premium prices for physical Gold. This means that buyers are not only willing to pay the market price for their physical Gold but actually add some on top. At the same time central banks, such as China are buying physical gold and others are repatriating their gold reserves that have been stored abroad. Global Research, a research center for globalization; published an article this week saying that “Netherlands has moved 122 tons of gold worth $5 billion from New York, and similar demands are now being made in France. Last year, Germany asked to have 680 tons of gold repatriated, which is mostly kept in the United States, but some also in the United Kingdom and France. Berlin receives only 5 tons, with the promise to get the rest back by 2020.”
According to Global Research ““And even those 5 tons Germany got back was not the same they had given to the Fed, those were newly cut bars. So it does mean that the Fed clearly did not have anywhere near the gold necessary to send back to Germany. Because it was most probably either leased to the market or sold – this is what central banks are doing – they are lending gold to the market or selling gold in order to push the price of gold down,” Egon von Greyerz said stressing that there is a tremendous shortage of physical gold in the world.” One day when the people who hold paper gold ask for delivery, there will not be any physical gold to deliver.

Gold, Monthly
Gold is at historical support (provided by a monthly pivot candle high from February 2010. The monthly candle for November was a narrow range candle with open and close only $4 apart. This indicates that supply and demand were in balance in November and now this balance could be tipping over to favour the demand side, at least temporarily. This price action coincided with the monthly Bollinger Bands which also limited the move lower and was then followed by a strong rally in the price of Gold higher after the news from Switzerland (the Swiss rejected the law to increase the country’s Gold reserves) caused the market to gap open slightly lower than the close on Friday. If market rallies strongly after news that on face value is negative for Gold, then we have reason to conclude that the market participants are collectively ready to defend (to buy) the recent lows of 1230 – 1240 and they see Gold representing value even if the additional boost of demand from Switzerland is not going to be there.
We still have this market trending lower in the technical sense as it still has lower highs and lower lows. However, the monthly narrow range candle at Bollinger bands suggests that we might have a turning point at hand and Gold could move higher towards the upper end of the down sloping trend channel. There is bullish divergence in RSI even though Gold has been moving lower for four months since July this year, therefore it might well be the time for a move higher after so many downward months.
Longer term Fibonacci levels are clustering at three different areas. The supporting cluster is between 1045 and 1090, while clusters between 1270 and 1306 and again at higher levels between 1383 and 1406 are likely resistance areas in the longer term picture. I have left these levels off the chart to keep it more readable.
The resistance area (1204 to 1226) above the current price action is created by monthly lows and closing prices from this and last year. This level obviously needs to be cleared before Gold can advance sustainably but the fact that we now have a narrow range candle with Bollinger Bands right below and a very positive price reaction to negative news increases possibilities of this happening. However, should the price stay below this level for a one more week it would negate the bullish indications we now have had and increases possibilities of supporting demand eroding at the 1230 to 1240 support area.

Gold, Weekly
Trend the weekly Gold price is lower both in short to medium term and longer term as well. The medium term weekly trend lower is defined by descending regression channel from the pivot in July this year. Currently the price is close to the lower end of long term downtrend channel and a historical monthly pivot candle as well as both monthly and weekly Bollinger Bands near the current lows. These technical factors limit the immediate downside and have in November translated into a narrow range candle (or a Doji as it is also known) with a rising RSI line (bullish divergence). On the upside the weekly pivot high at 1226 from November has acted as a resistance and sent the price to the current levels. The latest high (1221) that was just 3 dollars shy of the low of this pivot candle. The medium term down sloping regression channel top is also close which could mean that Gold needs to have more sideways fluctuation before more upside can be gained.

Gold, 240 min
Price is fluctuating above a recent 4h pivot (green arrow) and below the pivot high from Monday. The 1191 used to be a level that supported price earlier and it acts as a support again. The price being between two pivots has created a very narrow range which on a daily chart looks like a pennant (flag) formation. If this pennant is resolved to the upside it gives us a target of about 1280, a former support level from July and August this year. If Gold corrects lower, look for buy signals at or near to the 1159.50 support created by the 4h pivot.
Conclusion:
Gold is close to an important support with several technical factors supporting the price. If the current narrow range is resolved to the downside (which looks likely to me based on the current market action), the pivot low between 1141 and 1159.50 is a potential support and should be monitored as an exit level for shorts and entry level for long trades. Look for hammers and bullish wedges in 15 and 60 min timeframes to confirm the momentum reversal. If the DXY, US dollar index moves strongly to the upside the bullishness of the above technical indications is negated and it is more likely that the price of Gold will move below the recent lows.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Janne Muta
Chief Market Analyst
HotForex

Zitat von Paola

This week started with a big rally in the price of gold even though the news that Swiss voters rejected the proposal to buy more physical Gold should have sent the price lower. The upsurge in the price of Gold from 1141 to 1221 (a move of 7%) has been credited by analysts with the price of Crude Oil surging higher at the same time. With the price of Crude Oil being an important component in inflation measurements an up move in the price of oil would therefore create a need to hedge against inflation, which is what Gold is widely thought to be.
However, the fact that this move in the price of Gold took place after it was confirmed that the 7% annual demand increase for physical Gold by the Swiss central bank is not going to happen is an important indication that the market participants are now willing to step in and buy Gold futures (paper gold).
This brings the paper market in Gold more in line with reports that there is actually a global shortage of Gold. According to McAlvany Financial Group, a firm specializing in physical precious metals markets, gold buyers in Far East are currently paying premium prices for physical Gold. This means that buyers are not only willing to pay the market price for their physical Gold but actually add some on top. At the same time central banks, such as China are buying physical gold and others are repatriating their gold reserves that have been stored abroad. Global Research, a research center for globalization; published an article this week saying that “Netherlands has moved 122 tons of gold worth $5 billion from New York, and similar demands are now being made in France. Last year, Germany asked to have 680 tons of gold repatriated, which is mostly kept in the United States, but some also in the United Kingdom and France. Berlin receives only 5 tons, with the promise to get the rest back by 2020.”
According to Global Research ““And even those 5 tons Germany got back was not the same they had given to the Fed, those were newly cut bars. So it does mean that the Fed clearly did not have anywhere near the gold necessary to send back to Germany. Because it was most probably either leased to the market or sold – this is what central banks are doing – they are lending gold to the market or selling gold in order to push the price of gold down,” Egon von Greyerz said stressing that there is a tremendous shortage of physical gold in the world.” One day when the people who hold paper gold ask for delivery, there will not be any physical gold to deliver.

Gold, Monthly
Gold is at historical support (provided by a monthly pivot candle high from February 2010. The monthly candle for November was a narrow range candle with open and close only $4 apart. This indicates that supply and demand were in balance in November and now this balance could be tipping over to favour the demand side, at least temporarily. This price action coincided with the monthly Bollinger Bands which also limited the move lower and was then followed by a strong rally in the price of Gold higher after the news from Switzerland (the Swiss rejected the law to increase the country’s Gold reserves) caused the market to gap open slightly lower than the close on Friday. If market rallies strongly after news that on face value is negative for Gold, then we have reason to conclude that the market participants are collectively ready to defend (to buy) the recent lows of 1230 – 1240 and they see Gold representing value even if the additional boost of demand from Switzerland is not going to be there.
We still have this market trending lower in the technical sense as it still has lower highs and lower lows. However, the monthly narrow range candle at Bollinger bands suggests that we might have a turning point at hand and Gold could move higher towards the upper end of the down sloping trend channel. There is bullish divergence in RSI even though Gold has been moving lower for four months since July this year, therefore it might well be the time for a move higher after so many downward months.
Longer term Fibonacci levels are clustering at three different areas. The supporting cluster is between 1045 and 1090, while clusters between 1270 and 1306 and again at higher levels between 1383 and 1406 are likely resistance areas in the longer term picture. I have left these levels off the chart to keep it more readable.
The resistance area (1204 to 1226) above the current price action is created by monthly lows and closing prices from this and last year. This level obviously needs to be cleared before Gold can advance sustainably but the fact that we now have a narrow range candle with Bollinger Bands right below and a very positive price reaction to negative news increases possibilities of this happening. However, should the price stay below this level for a one more week it would negate the bullish indications we now have had and increases possibilities of supporting demand eroding at the 1230 to 1240 support area.

Gold, Weekly
Trend the weekly Gold price is lower both in short to medium term and longer term as well. The medium term weekly trend lower is defined by descending regression channel from the pivot in July this year. Currently the price is close to the lower end of long term downtrend channel and a historical monthly pivot candle as well as both monthly and weekly Bollinger Bands near the current lows. These technical factors limit the immediate downside and have in November translated into a narrow range candle (or a Doji as it is also known) with a rising RSI line (bullish divergence). On the upside the weekly pivot high at 1226 from November has acted as a resistance and sent the price to the current levels. The latest high (1221) that was just 3 dollars shy of the low of this pivot candle. The medium term down sloping regression channel top is also close which could mean that Gold needs to have more sideways fluctuation before more upside can be gained.

Gold, 240 min
Price is fluctuating above a recent 4h pivot (green arrow) and below the pivot high from Monday. The 1191 used to be a level that supported price earlier and it acts as a support again. The price being between two pivots has created a very narrow range which on a daily chart looks like a pennant (flag) formation. If this pennant is resolved to the upside it gives us a target of about 1280, a former support level from July and August this year. If Gold corrects lower, look for buy signals at or near to the 1159.50 support created by the 4h pivot.
Conclusion:
Gold is close to an important support with several technical factors supporting the price. If the current narrow range is resolved to the downside (which looks likely to me based on the current market action), the pivot low between 1141 and 1159.50 is a potential support and should be monitored as an exit level for shorts and entry level for long trades. Look for hammers and bullish wedges in 15 and 60 min timeframes to confirm the momentum reversal. If the DXY, US dollar index moves strongly to the upside the bullishness of the above technical indications is negated and it is more likely that the price of Gold will move below the recent lows.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Janne Muta
Chief Market Analyst
HotForex

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In Canada the central bank’s focus is on employment and the recent figures don’t encourage the Bank of Canada to raise rates even though the inflation figures have lately been positive. The employment change reported last Friday was -10.7K instead of positive expectation of 5.3K. This compares quite badly to the same period a year earlier with employment increasing by 146K. On the southern side of Canada’s border the US employment figures are developing above expectations. Non-Farm Payrolls increased by 321.000 instead of 231.000 jobs expected by analysts and the average hourly earnings came in last Friday at 0.4% instead of 0.2% expectations. At the same time the analysts are expecting the Fed to drop their “low rates for considerable time” language soon. It is expected that the Fed will raise rates in six months’ time should this happen. The Bank of Canada’s governor Poloz speaks this Thursday (11^th December). He is known to be dovish and the markets are expecting that after the last Friday’s employment figures he will continue with dovish statements. All this is likely to support USDCAD which is still trending higher.

USDCAD, Weekly
The market has been trending higher since June and the pair has pushed through a pivot high that was accompanied with a very long term 50% Fibonacci level (calculated from March 2009 peak to July 2011 low). USDCAD is now approaching levels of a weekly pivot from July 2009 (61.8% Fibonacci retracement level at 1.1674 coincides with this pivot). In terms of nearest support and resistance levels, the proximity of the low of the pivot at 1.1544 is likely to cause some resistance while the peak from March this year (at 1.1278) is a major support.


USDCAD, Daily
The pair is trending steadily in a channel with a recent breakout from a triangle formation. The width of this formation points to the weekly resistance level of 1.1544 and suggests that we need to pay attention to price action at this resistance area. It could be a good target level for short term trades after the pair pulls back a bit. Stochastics Oscillator is getting to the overbought territory suggesting that the price move is nearing levels that we should not consider as entry levels for long trades. Rather it would make sense to buy retracements back to support levels. Pull backs close to the weekly support of 1.1278 should be monitored closely for momentum reversal signals in smaller time frame charts. The 23.6% and 38.2% Fibonacci retracement levels coincide with two other technical levels. The 23.6% retracement is roughly at level with the two recent peaks when considered on closing basis (focusing on daily closing prices rather than the high values) while the 38.2% Fibonacci level coincides with a pivot in a four hour chart.


USDCAD, 240 min
If the momentum stays strong the market can find support at higher levels (closer to the current price). However, should we get moves to the lower levels such as 1.1278 it the risk of further corrections after our entries would be smaller. We should obviously feel therefore more confident deeper pull backs closer to the major support level at 1.1278.
Conclusion
USDCAD is in an uptrend but approaching a higher time frame historical resistance area that has potential to cause this market to correct closer to the lower end of the up trending channel. We are looking for long opportunities at the levels identified in different timeframes. The fundamentals favour this trade idea with the US economy being stronger than the Canadian. Look for corrections to the support levels and then intraday momentum reversal signals before entering long trades.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Janne Muta
Chief Market Analyst
HotForex

Janet Yellen promised that the Fed would keep the interest rates low, or at least that it would not rush to hike the rates. This helped the stocks to rally to levels that we are interested in selling should the price action justify that. We are already seeing momentum reversal and it seem that this is a low risk area to take a contrarian view to the latest rally. Yes, the US economy is doing better than the rest of the world but a quick rally to levels that in the recent past have not been attractive enough for investors to keep buying could very well be followed by a technical correction lower. Let’s see what the charts are telling about the current market activity.






S&P 500, Weekly


After a long term trend higher the S&P 500 futures market is experiencing a higher volatility with the price taking back the ground lost during the previous week’s sell off. This move has taken the market to a weekly pivot high between 2063 (open) and 2079 (high). This looks like a return move, meaning that the chances are it gets sold right at the current levels. This weekly pivot high has been an area that I have called a no demand zone earlier this month and judging from the price action in the four hour chart we might get another move lower from here.




S&P 500, Daily:


The Stochastics Oscillator is getting into the overbought territory and the daily candle looks like it is forming into a shooting star. This will happen if the price cannot close much higher than the current levels. If the market cannot penetrate this (weekly pivot) resistance level but moves lower from here, then the risk of price actually moving much further down increases. The potential support levels are as follows: 2011.25, 1961 and 1883.25.




S&P 500, 240 min


The 240 min chart has already a Doji candle (open and close near to each other) with the Stochastics about to roll over. Both of these signal momentum slowdown and quite possibly momentum reversal taking place. With the price being close to a recent market high, inside a weekly pivot high and very close to a long term (weekly) channel top, I would not be looking to buy at these levels. Rather it makes sense to sell against the recent intraday highs with a view of taking partial profits when price approaches the former intraday resistance (now a potential support) at 2011.25. This is the very same level that provided us with two nice short setups until on the third attempt the price went through. This could be the target one for short trades opened at the current levels.




S&P 500, 60 min


We have already had a 60 min Shooting Star inside this weekly pivot high. This implies that the momentum reversal is actually taking place. There is some minor support at the current levels which might mean that there will be another attempt to take the market slightly higher intraday. This could provide a great short entry level at (or inside) the 60 min pivot candle, therefore my preference would be to short between 2068 and 2073.75 with the first target near to the previous resistance at or around 2011.25, and should the price action justify then I would look to close the rest of the shorts at either 1961 or close to the daily pivot from 15th November at 1883.25.


Conclusion:


Price is inside a recent weekly pivot high and close to the long term channel top. This has been a no demand zone in the past. The 240 and 60 min charts have signs of momentum reversal. I would look to short against the current levels with an aim to close some the short positions at or close to 2011.25 or should there be no signs of momentum reversing, then the next target would be at 1961 or area close to the 1883.25 pivot.


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Low Energy Prices Pressuring Corn




Weak US exports and falling energy costs have reduced the appeal for renewable fuels which are largely made from grains and oilseeds. According to the U.S. Energy Information Administration, ethanol stockpiles have had risen by 751,000 barrels to 18.85 million barrels by 2nd January. This was the largest weekly rise in nearly two years. Corn prices have been coming down since the beginning of the year as low oil prices mean that demand from ethanol manufacturers is reduced. According to industry analysts, it is unlikely that ethanol manufacturers and blenders will be able to pay close to $4 for corn. This has put a damper on price. Furthermore, the recent rise in the price of corn is likely to encourage farmers to increase the acreage of corn. This would lead to an increase in supply over the year 2015 and put pressure on corn prices.






Corn, Weekly
Price rallied 30% from the September low and has since hit a resistance at around 415’6, which was a weekly support in the Q4 2013. The price has reacted lower from the resistance and sits now at a minor support at 392. The outside reversal bar in the weekly picture took the market lower by almost 6% in one week and suggests that the corn price will be under pressure in the coming weeks. The Stochastics, MFI and RSI are rolling over from overbought levels.




Corn, Daily


The daily chart reveals how there was a rally from the 392 support, but the rally couldn’t penetrate the bottom of the rising regression channel. This created a lower high and confirmed that the uptrend is over. A lower high after the price has had a strong move lower from a resistance level tells about the balance of supply and demand being in favour of the bears. The levels close to the 38.2% Fib level (at around 380) could be significant support as it was a resistance in August 2014 and price pivoted at this level on 18th of August last year. When price moved higher from this level the last time (4th December), a pivot candle was formed and was followed by a gap opening higher. The current daily support at 392 coincides with the Bollinger Bands and the 23.6% Fibonacci level, but in the light of the price moving so strongly down from resistance and creating a lower high, it seems unlikely that the support will hold.


Conclusion:


The potential increase in the acreage and the low energy prices suggest that Corn will be under pressure. The technical picture is weak with the price reaction lower from a resistance and creating a lower high in the daily chart. The first target level for short trades is at around 380, close to the 38.2% Fibonacci retracement level. This view would be negated by market moving above the latest weekly high 417. I look forward to seeing you in the webinars where I will teach you how to take advantage of trading opportunities that occur daily in Corn and other markets.


Those wanting to learn how to trade professionally open an account with HotForex and gain access to my past and future educational webinars. Over the course of the webinars I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Click HERE to register and be early to secure a seat!


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Verbal QE has been weighing on Euro


The EURUSD has reached a support area that has been psychologically important in the past. The level acted as a resistance in 1998 and in 2003 and in 2005 the level turned a downtrend in EURUSD to an up move that lasted for more than two years. This could mean that chances for immediate and extensive moves lower are now limited. The last time EURUSD reached a historical weekly pivot it moved sideways for three weeks before breaking lower. The trend is still down and there is no reason in the charts to turn bullish with Euro. In addition, the economic problems in the euro area together with the verbal QE from Mr. Draghi are likely to drag the EURUSD even lower.


EURUSD, Monthly


The EURUSD is at a support area that has been psychologically important in the past. The level acted as a resistance in 1998 and in 2003. In 2005 the level turned a downtrend in EURUSD to an up move that lasted for more than two years. The pair has created lower highs since 2007 and has now moved below an important support area that was able to turn the market higher in three separate occasions.


EURUSD, Weekly


The weekly trend is down but is has extended outside the regression channel. This means that the trend is now more vulnerable for retracements. The 1.1795 level that has provided support is a weekly pivot high from November 2005. With Stochastics and RSI firmly oversold and price at a historical weekly support extensive and immediate downside could be limited.
EURUSD, D


EURUSD, Daily


The daily short term daily trend is down with price inside the regression channel. Price has retraced back to a daily low from 5th January at 1.1868. The oscillators are oversold. The last time Euro was able to move against the prevailing trend it lasted for two days, if the current resistance holds now it is likely that the Euro will at least test the recent lows but there is a likelihood that the problems in the euro area together with the verbal QE from Mr. Draghi will drag the EURUSD even lower.


EURUSD, 240 min


The price has moved out from the descending regression channel to resistance that coincides with the 20 period Bollinger Bands. The resistance is created by pivotal low at 1.1868. Now that price has moved to the level momentum is drying up with Stochastics being ready roll over and 4h bar ranges becoming very narrow. We have a daily resistance at 1.1868, but a weekly support at around 1.1795 is still relatively fairly close. Oscillators are overbought as price moves sideways at the upper Bollinger Bands. There is also a cluster of Fibonacci levels that coincide with the current resistance level and another between 1.1934 and 1.1949. I have left the levels off to increase the readability.


EURUSD, 60 min


A minor uptrend that has reached the 1.1868 and shows signs of weakening. Now the price is about to create a shooting star at the resistance which indicates price will move lower from here.


Conclusion:


The EURUSD has reached a support area that has been psychologically important in the past. The level acted as a resistance in 1998 and in 2003 and in 2005 the level turned a downtrend in EURUSD to an up move that lasted for more than two years. This could mean that chances for immediate and extensive moves lower are now limited. The last time EURUSD reached a historical weekly pivot it moved sideways for three weeks before breaking lower. The trend is still down and there is no reason in the charts to turn bullish with Euro. In addition, the economic problems in the euro area together with the verbal QE from Mr. Draghi are likely to drag the EURUSD even lower. In the intraday chart (240 min) price has moved out from the descending regression channel to a resistance that coincides with the 20 period Bollinger Bands. The resistance is created by pivotal low at 1.1868. Momentum is drying up with Stochastics being ready roll over and 4h bar ranges becoming very narrow. In a 60 min time frame we can see that as the minor uptrend has reached the resistance it shows signs of weakening (a lower high). In the process price also created a shooting star candle at the resistance. This indicates that price will move lower from here. Traders looking to short against the 1.1868 resistance should monitor the levels around 1.1795 for Momentum Reversal Signals to exit short trades as the weekly support possibly provides temporary support to the market.


For those who would like to learn how to trade professionally, please join me at my free trading webinars. Over the course of the series, I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Visit HotForex website to register and secure your seat!


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

It is common that market is soft whenever a higher time frame Doji candle forms after a sizeable move higher. This has happened in several occasions over the last seven years and the investors should pay attention. For traders however, this means usually more opportunities as the lower time frames tend to have more price fluctuation. We have plenty of economic releases today from the US, which should help the traders in that regard and cause more volatility in the market. We have import and export data, business inventories, Fed Beige Book, Crude Oil Stocks Change but the most interesting and the publication of Retail Sales data, an event that has potential to move the markets the most. The analysts are expecting the figure to come in at -0.1%, which is considerably lower than the previous 0.7%. A strong deviation from the expectations should move the market significantly and create more opportunities to trade the market.





S&P 500, Monthly


Trend wise the market is still inside the rising regression channel, even though it has had one move outside of it in October last year. The last completed candle from December is an interesting one. The long term stock market Bulls don’t really want to see something like this developing in the world’s most important stock market, especially not combined with a plunge in the price of copper (down almost 5% today). The December candle is what’s known as a Doji, a candle with open and close near to each other. When such a candle appears after an uptrend we know one thing: the demand and supply were in balance. In other words the bulls were not in control anymore. The last time a similar monthly candle appeared after a long uptrend was in October 2007. Then the candle marked the end of the previous bull market. Is it likely that the Monthly Doji candle will again turn the market lower? The importance lies in the price action over the coming two months. If we get lower lows and lower highs followed with increasing volatility, then the probabilities of uptrend being over are much higher. We don’t yet know if this will be the case, but what we know is that the market usually corrects lower after these kinds of candles after the market has been trending higher.


The RSI has been overbought since the beginning of year 2013, which is what often happens in a strong uptrend. Now RSI is breaking below a level of 66.58 that has supported the index in August 2013 and January 2014. The RSI has also diverged from the S&P500 with lower highs while the stock market has been moving higher. This is known as bearish divergence. The nearest monthly S/R levels are at 1961.50 and 2088.75 and a couple of Fibonacci levels cluster at 1845 – 1832. This is not much of a cluster but the fact that they coincide with a monthly low from October makes the level between 1813 and 1845 significant.





S&P 500, Monthly


Trend wise the market is still inside the rising regression channel, even though it has had one move outside of it in October last year. The last completed candle from December is an interesting one. The long term stock market Bulls don’t really want to see something like this developing in the world’s most important stock market, especially not combined with a plunge in the price of copper (down almost 5% today). The December candle is what’s known as a Doji, a candle with open and close near to each other. When such a candle appears after an uptrend we know one thing: the demand and supply were in balance. In other words the bulls were not in control anymore. The last time a similar monthly candle appeared after a long uptrend was in October 2007. Then the candle marked the end of the previous bull market. Is it likely that the Monthly Doji candle will again turn the market lower? The importance lies in the price action over the coming two months. If we get lower lows and lower highs followed with increasing volatility, then the probabilities of uptrend being over are much higher. We don’t yet know if this will be the case, but what we know is that the market usually corrects lower after these kinds of candles after the market has been trending higher.


The RSI has been overbought since the beginning of year 2013, which is what often happens in a strong uptrend. Now RSI is breaking below a level of 66.58 that has supported the index in August 2013 and January 2014. The RSI has also diverged from the S&P500 with lower highs while the stock market has been moving higher. This is known as bearish divergence. The nearest monthly S/R levels are at 1961.50 and 2088.75 and a couple of Fibonacci levels cluster at 1845 – 1832. This is not much of a cluster but the fact that they coincide with a monthly low from October makes the level between 1813 and 1845 significant.





S&P 500, Daily


The daily trend is sideways as I suggested some months ago. The price moved briefly to new highs in the end of December but has since formed a lower high and is now possibly forming a bullish hammer candle. The levels below the pivotal high from September last year (2014.50) seem to attract buyers as evidenced by the last rally from the current levels. However, that was followed by a lower high which dampens the bullishness of the current picture. The 38.2% Fibonacci retracement together with Bollinger Bands supported the price in the previous daily pivot low and now the price is fairly close to the same levels and trying to create a higher low. This indicates that the bulls are looking to take this market to test the 2060.75 resistance. If that is cleared and held (a higher low above the level) the picture becomes much more positive. This is negated if the last week’s low is taken out.





S&P 500, 240 min


Stochastics indicate some bullish divergence and the last complete candle is a bullish hammer. This suggests that the current levels could be a new base for a move higher. The price action however over the last hour has not exactly been explosive to the upside. That is due to the fact that the market participants are waiting for the economic releases.


Conclusion:


The long term picture is getting weaker with a monthly Doji candle appearing. The market now would need a higher high with an ability to main the new highs should the bearish indications in a monthly Doji were to be negated. The weakness indicated by the Doji candle should lead to increased volatility in smaller time frame charts and provide the traders with more opportunities in both directions (long and short). In the daily and 4h charts the price is now close the previous pivot low and we therefore should be looking for short term long trades. The four hour hammer candle confirms the trade idea but there has been no follow through as the market waits for the economic releases. We should be looking for signals to go long at or close to the January 6th pivot low.


For those who would like to learn how to trade professionally, please join me at my free trading webinars. Over the course of the series, I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Click HERE to register and secure your seat! https://www.hotforex.com/en/trading-...ml?refid=37217


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Markets move sideways before the ECB meeting tomorrow https://blog.hotforex.com/markets-mo...ting-tomorrow/


A lot of the European Central Bank (ECB) QE program is already priced in to the EURUSD but the fact remains that the European economies are in mess when compared to the US. Some commentators have suggested that the reason ECB has delayed its QE program is not in fact the Germans, but the fact that they themselves don’t believe the QE would have a significant impact on European economies. It is true that the problems in the euro area are structural, i.e. relating to labour laws and inflexible policies coupled with the aging European population. All of this combined results in degrading competitiveness in the euro area. The Chinese economy (an important export area for EU countries and Germany especially) is slowing down and in addition to this, it is unlikely that bringing lending rates even lower via QE will result in a significant enough increase in lending that would translate into economic growth. The only measurable impact of the QE has already been seen in the value of euro. The lower the value of the euro against the other currencies, the better the chances that European countries, that depend on exporting will benefit.







EURUSD


In the previous EURUSD analysis I wrote that it is likely that the problems in the euro area together with the verbal QE from Mr. Draghi will drag the EURUSD even lower than the latest lows at the time. I expected some sideways move before that taking place but the removal of EURCHF peg by the Swiss National Bank (SNB) accelerated the decline.


The weekly pivot low at 1.1639 from November 2005 has acted as a resistance both on Friday last week and Monday this week. Even though the price has been moving sideways it is forming a descending triangle, a bearish formation. The current sideways move that forms the triangle is a reaction to huge market move caused by the SNB actions last week. It is common that the markets take a breather after fast and furious moves.


The nearest daily support and resistance levels are at 1.4600 and 1.1639, with the next resistance levels being at 1.1754 and 1.1870. The 1.1754 level coincides roughly with 23.6% Fibonacci retracement level (measure from November 2014 weekly high to the latest low). The next significant weekly resistance level is the weekly pivot low from July 2013 at 1.2042 which coincides with the 50% Fib retracement level. These levels could come into play should the ECB decide not to move forward with the QE program. At the moment the trend is down and we should keep on selling rallies until we have evidence the trend has changed.





EURUSD, 240 min


Price is moving sideways in a narrow range and is likely to do so until the results of tomorrow’s ECB meeting are published. Today should be pretty much flat as the market participants don’t want to commit to any view before an important meeting.


Conclusion:


We don’t know what kind of volatility we will have tomorrow but it makes sense to seek for shorting opportunities (momentum reversal signals) at daily and weekly levels identified in this analysis and stay away from the middle of the ranges. Outside of the QE considerations it remains a fact that the US economy will be in a much better shape than Europe. We therefore should have no reason to be bullish on EURUSD. The only reason that could flip this equation on its head would be a new QE program from the US and at the moment there are now signs of it happening.




For those who would like to learn how to trade professionally, please join me at my free trading webinars. Over the course of the series, I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Click HERE to register and secure your seat! https://www.hotforex.com/en/trading-...ml?refid=37217


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Syriza Election Victory Did Not Push Euro Lower


Syriza has promised to renegotiate the terms of their debt with the European lenders and is calling for a Europe where tax revenues from northern countries, such as Germany, would be used in Greece to fund the government. This sets Syriza and the new Greek government at a collision course with Germany and other wealthier nations in Europe and could eventually cause Greece exiting the Euro.
The market reactions to news are always interesting and telling. I find it significant that EURUSD, although it is still in a downtrend, has not moved significantly lower on the news Syriza winning the Greek elections. Rather it is ticking higher after the smallish initial drop. This suggests that market participants think that the probabilities of Greece leaving Euro area are now higher. This would be bullish for the currency as it would open the door for other weak economies possibly abandoning the single currency. Euro area would then consist of stronger economies, a reason for the currency to appreciate in value in the long run. Obviously, we have the first ECB QE program just starting and this should mean the pressure on Euro will stay on for quite a while but it does not exclude Euro rallying from time to time and this would give us opportunities against the weaker currencies.


Market reactions are important as was proven with my analysis with Gold. A positive reaction to a news item that should have been negative for Gold hinted that it was time to buy the yellow metal, regardless all the negative fundamental analysis available at the time. This proved to be exactly the right time to buy Gold. Now, this same logic when combined with technical analysis could provide us with a trade opportunity in Euro against weaker currencies.





EURAUD, Weekly
After falling for five weeks the pair found support at a weekly pivot low from September 2014 and reacted higher from the general area close to the pivot. This encourages us to look for buy opportunities in EURAUD. The overall trend is sideways and the pair has moved to the lower Bollinger Bands which most of the time means that the momentum might be reversing. Oscillators confirm the setup by being well into oversold territory. Support and resistance levels: 1.3967 and 1.5022. There is also some resistance 1.4223 which could lead to further sideways move between 1.3967 and 1.4223.





EURAUD, Daily
The daily trend is down but the price has reached a weekly support area and moved sideways above it for the last week. This resulted in a Doji candle signaling a rejection of the 1.3967 level and indicates an attempt to turn this market higher is at hand. Oscillators point sideways after a period of bullish divergence. Weekly support level is below at 1.3967 and the nearest daily resistance level is at 1.4408.





EURAUD, 240 min
Although the longer term trend in this time frame is down we’ve seen sideways movement over the last week. The spikey rejection candle at the 3967 support indicates institutional buying at these levels. Oscillators are pointing higher and should there be moves down to the Bollinger Bands (currently at 4082 and 4040) I would be looking to go long at those levels. The first resistance area at 4329 to 4408 coincides with the upper Bollinger Bands and probably slows the upside momentum down.


Conclusion:
Judging from the weekly chart this pair is at support and has potential to move quite a lot higher as the next weekly resistance area is at 1.5022 once the 4h and daily resistance levels are cleared out. There is a rejection candle in the daily and 4h charts, which suggest that the reversal of downtrend is taking place. In addition, the fact that Greek election was won by a radical left wing party increases the probabilities for Greek exit from Euro which would be bullish event for Euro. I am looking at 1.4372 as my first target, then 1.4780 as target two and then target three at 1.5020. There is some resistance 1.4223 which could lead to further volatility between 1.3967 and 1.4223 and could therefore provide us with long entry opportunities at the lower end of the range.You are welcome to utilize my analysis in your trading providing it agrees with your own market observations and analysis.


I will be presenting a Live Analysis Webinar tomorrow. So if you want to learn how to find, analyse and trade above kind of setups you most warmly welcome to join me! Click HERE to register and secure your seat!


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Apple posted record breaking results yesterday after US markets closed. The company sold 74.4 million iPhones and 21.4 million iPads in the last quarter. The earnings per share ($3.06 vs. $2.60) were even better than the most optimistic expectations from Wall Street analysts. This lifted the stock by 5% in the aftermarket trading. The rise might have been even higher, but for the worries of investors, who are reported to have started having concerns about the impact of strong dollar in future earnings.


Since my last analysis, the financial sector rallied a bit from the rising trend line but then fell back again from resistance. Utilities and healthcare stocks are overbought when compared to the rest of the market, while technology stocks fell back down to the support after rallying since my last report. The energy sector broke out of the wedge formation and the industrials look to me as if they’d be ready to move higher.


All this gives slightly mixed signals. As the dividend paying healthcare, utilities and consumer staples are still very much overbought in relation to the S&P500 index (both in one and three month periods), it suggests that market participants are still safety oriented and hesitant about the future trend. No wonder the market has been in a sideways mode. At the same time the small caps (Russell 2000 index) have been stronger than the S&P over the last week, which means that some of the risk appetite is coming back into the market.





S&P 500


In the weekly picture the index is still inside the uptrending regression channel but has moved sideways since I suggested this in November last year. This also the same period of time that the safe have sectors (Utilities, Health Care and Consumer Staples) have been sucking money from other riskier sectors. We now have another higher weekly low from last week, which is technically an encouraging sign and a support level relatively close at 2014.50. This is also a new potential pivot low in the daily time frame.





S&P 500, 240 min


The four hour picture reveals a sideways move with lower highs below the 2060 target area. This target was hit after my latest analysis and the market has since formed a lower high suggesting that we could see another move lower to the 2026.50 and 2014.50 support area. Should the correction be deeper the next support level is at 1997.50.


Conclusion:


I am still positive on this market eventually moving higher but first we might see some volatility or sideways move accompanied a test (or tests) of the support area between 2026.50 and 2014.50. I would be interested in long entries inside this support range and should we get the signals to go long, then the target levels I am looking at are: Target 1 at 2062 and Target 2 at 2088.


For those who would like to learn how to trade professionally, please join me at my free trading webinars. Over the course of the series, I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Click HERE to register and secure your seat!


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

EURUSD at a resistance level, but potential support is near
https://blog.hotforex.com/eurusd-at-...pport-is-near/
Now that the Dollar Index (DXY) has reacted lower from a historical resistance area and EURUSD (the heaviest component in the DXY) has created a narrow range bar in the weekly time frame we have potential in EURUSD for a larger than usual corrective move against the trend. The narrow range candle signals that supply and demand where in balance last week, something that doesn’t sit well with those holding on to their shorts. We’ve also had the pair moving outside the trend channel that used to contain the move. This increases the likelihood that we will get a larger than usual contra trend move. Oscillators are oversold but edging higher with price crossing above the lower Bollinger Bands. Fibonacci levels (23.6%, 38.2% and 61.8%) coincide with the resistance levels I have identified in the chart.





EURUSD, Daily


I wrote on Monday after the Syriza election victory in Greece: “I find it significant that EURUSD, although it is still in a downtrend, has not moved significantly lower on the news Syriza winning the Greek elections. Rather it is ticking higher after the smallish initial drop… Market reactions are important as was proven with my analysis with Gold. A positive reaction to a news item that should have been negative for Gold hinted that it was time to buy the yellow metal, regardless all the negative fundamental analysis available at the time. This proved to be exactly the right time to buy Gold. Now, this same logic when combined with technical analysis could provide us with a trade opportunity in Euro against weaker currencies”. The price action on that day resulted in a hammer bar and the price has moved higher ever since, proving once again that the market reaction to the news is more important than the news itself. Price has reached a resistance level at 1.1540 and Stochastics is getting into overbought area. This has stalled the advance. We have a support level at 1.1368 and the next resistance area coinciding with the 50% Fibonacci level is at 1.1755, fairly close to the upper Bollinger Bands.





EURUSD, 240 min


Price moved outside the regression channel before Greek elections and has now made an over shoot in the opposite direction. A shooting star candle at the 1.1540 resistance indicates selling pressure but there has not been much downside momentum after the candle was created. Stochastics indicate that the momentum is reversing. The nearest support level is at 1.1368.


Conclusion:


The narrow range candle in the weekly time frame signals that supply and demand where in balance last week, something that doesn’t sit well with those holding on to their shorts. We’ve also had the pair moving outside the trend channel that used to contain the move. This increases the likelihood that we will get a larger than usual contra trend move.


EURUSD is overbought in terms of Stochastics in the 4h chart and signals that there is potentially a momentum reversal taking place. However, the downside momentum after the shooting star candle has been sluggish. This could be explained by the 1.1368 support being relatively close. Price can turn lower from here but the shorts trades are likely to be short lived with a daily support area being so close. This might put off some market participants and limit the downside potential from these levels. The 1.1755 is likely to be a better level for high probability trades as several technical factors coincide in the proximity of this level.





Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

The price of oil has collapsed with the strengthening dollar and has reached levels that were last seen in the later stages of the financial crisis in 2008. This suggests that the current levels are deeply oversold both fundamentally and technically. The world economy is certainly slowing down but it is in a better shape than it was in the first quarter of 2009 when the US Crude Oil futures dropped to $33.35. Therefore, it makes sense to expect Crude Oil to be relatively close to the levels it could find a bottom.





Crude Oil, Daily 2009


Over the last 30 years it has taken in average 2 to 3 months for oil to bottom out after a major downside move. It would therefore be safe to assume that the bottoming process will provide us with plenty of opportunities to join the long side, or to scale into long positions thus lowering the timing related risks. In terms of price velocity the downward move seen over the last few months has been similar to the one seen in 2008. When this downside move finally ended the market moved sideways for a period of time allowing low risk entries at Bollinger Bands.





XLE, Daily


I mentioned some time ago in my S&P 500 analysis that the energy sector etf is forming a bullish wedge and that this would be confirmed by a breakout. Now the breakout has happened and we have a higher low in place. This obviously signals that the market participants are turning bullish on energy related stocks, a clear indication that they believe that the downside in oil is in their view limited.





Crude Oil, Weekly


The price of oil is close to the 2009 lows but is still inside a weekly downward trend channel. The latest reaction from a resistance level that coincided with the channel top was relatively strong. However, this kind of volatility is typical when prices get close to levels where the trend might turn. Last week the price closed inside the lower 1.5 stdv Bollinger Band for the first time since September 2014. The nearest support and resistance levels are at 43.58 and 53.60.





Crude Oil, Daily


Price has broken out of the descending regression channel and created a higher high. If we now get a higher low the bullish indication is rather strong but even a roughly equal low would mean that the buyers are gaining control in this market. Volatility has definitely increased which is not only evidenced by the higher high but also by the Stochastic indicator it has not been in overbought territory since July last year.





Crude Oil, 240 min


Price has retraced to 61.8% Fibonacci level that coincides with a descending trendline. Stochastic is oversold and the price is reacting higher from the lower Bollinger Bands.


Conclusion:
The increase in volatility at levels that are close to the bottoming formation from 2009 is a reason to pay attention to the price action in Crude Oil in the near future. This is confirmed by the bullish breakout in the US energy sector shares ETF (XLE). If this turns out to be the range in which the market bottoms then the best levels to be a buyer are those that are close to the bottom of the range. However, the fact that so many technical tools indicate support for Crude Oil in the 4h time frame we could look for intraday buy signals in the general area of current price action.




Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.


Janne Muta
Chief Market Analyst
HotForex

Read the Analysis here - https://blog.hotforex.com/gbpusd-mov...-weekly-highs/


The pair has moved briskly past three weekly highs this week. The move comes after it formed what looks to be a higher weekly low now that the pair has closed above the resistance levels. This is the first time GBPUSD has been able to close above so many weekly highs since the downtrend began in July last year. Even though the weekly candle is still inside the regression channel such strength signals a turnaround in this pair. This is even more likely as the move comes from levels that were able to stop the decline and turn the market into an uptrend in 2013. Stochastics are edging higher and the support and resistance levels are: 1.4954 weekly low and 1.5541 weekly low in proximity of the 23.6% Fibonacci level.





GBPUSD, Daily


The pair has broken out of the descending regression channel. I tweeted yesterday that GBPUSD was at resistance and looking weak. The reasoning behind this was that the candle from day before was a shooting star candle and the hourly chart yesterday showed signs of momentum reversal just below the 1.5269 resistance and the daily Bollinger bands. These indications proved to be wrong and the price shot higher through the resistance. All this put together indicates that the market is pretty firmly in the hands of the bulls. The former resistance levels are now likely to be supports. The current support and resistance levels identified from the daily chart are: 1.4988, 1.5096, 1.5224, 1.5269 and 1.5487 1.5541. The 38.2% and 61.8% Fibonacci levels coincide with 1.5269 support and 1.5487 resistances. Stochastics are getting into the overbought area.





GBPUSD, 60 min

The hourly trend is higher with price at the upper end of the bull channel. The 1.5269 coincides with the lower end of the channel and with the Bollinger Bands. In addition, the 23.6% Fibonacci level is also in the proximity of the channel bottom. The other potential levels are the Fibonacci retracements and the 1.5096 support level should there be a deeper retracement. It always pays to look for momentum reversal signals once price comes back to the levels.


Conclusion:
With such a show of strength the only logical conclusion is to look for buying opportunities until we have price action based evidence to the contrary. Retracements to support levels should be monitored for momentum reversal signals. Levels that have several technical factors supporting the trade idea are always more likely to provide us with good trade entries. In this regard the 1.5260 to 1.5270 region is interesting but should today’s US Non-Farm Payroll figure deviate strongly from the expectations then we could see increased volatility and the lower levels could come into play. For successful swing entries I would be looking the 1.5487 to 1.5541 the target area.


Janne Muta
Chief Market Analyst
HotForex


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

NFP Release Not Enough to Excite the Stock Markets https://blog.hotforex.com/nfp-releas...stock-markets/


The weekly trend in S&P500 is still contained in the bullish regression channel and the weekly support level has formed roughly to the area of the previous pivot high. Financial sector ETF (XLF) has rallied from the rising trendline. This is important as the markets rarely rise without the support from the banking stocks. Friday’s reaction to Non-Farm Payroll figures wasn’t very encouraging as the S&P 500 closed lower and so did the XLF. The support at 1961 to 1974 area has been holding well which will add pressure to the resistance level at 2063 area. In an uptrend it is more likely that a resistance level will give in and the support levels hold. Other key sectors such as energy (XLE), industrials (XLI) and basic materials (XLB) look technically sound in the weekly picture. The utilities sector (XLU) lost 4,12% on Friday suggesting that the run for the safety is now over as the long only funds move money from safety oriented investments to higher beta (more riskier) stocks. Many sectors have risen a lot over the last few days so we might well have a reaction lower from the current levels.





S&P500, Daily


Sideways move has been pretty well defined with the support at 1974 and resistance at 2062.50. Friday’s candle was a no demand candle at resistance and indicates a move lower from the current levels. The daily Bollinger bands coincide with the resistance level and the overbought Stochastics support bearish indication by the no demand candle.





S&P500, 240 min


The short term trend higher from the 1974 support was reversed at resistance and we are looking at support levels that could stop the decline. There is support at 2025 region where a pivot low and the daily Bollinger bands coincide. The pivot low is at 2020.75 and the 1.5 stdv Bollinger band is currently at 2028. This area also has the 50% Fibonacci level at 2021 which together with the other technical factors suggests that this region is a potential support level. Should this level not hold, then the support at 1974 area would come into play.


Conclusion:
The long term technical picture in the US stock market is still healthy but in the short term picture we still have signs of indecision (range bound trading). Friday’s market reaction to better than expected employment figures wasn’t brilliant but at the same time we have money moving away from dividend paying safety stocks (utilities sector) into banks, basic material related stocks and energy stocks which means that the risk appetite is increasing. The overall picture is therefore slightly mixed. This means that the market remains as a traders’ market with opportunities at technical support and resistance levels. The daily no demand candle from Friday indicates that the levels above the current market price have resistance and we should therefore see a move lower today. The levels with most potential are those at the edges of this sideways move. However, the levels inside the range can provide opportunities as well. Just look for price based confirmation to confirm the analysis before taking trades.


You are warmly welcome to join me to a Live Analysis Webinar tomorrow at 12:30 GMT. Book your seat here! - https://www.hotforex.com/en/trading-...ml?refid=37217




Janne Muta
Chief Market Analyst
HotForex


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.