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FOREX TECHNICAL ANALYSIS: INTEREST RATES AND EMPLOYMENT DATA – INGREDIENTS FOR AN ACTION PACKED WEEK

EUR/USD

Forex Technical Analysis: The Fed ended their stimulus program last week and although this was anticipated, the event still generated huge US Dollar strength, putting the bears in control of the pair’s direction. An important role in last week’s descent was also played by the disappointing Euro Zone inflation numbers.


Technical Outlook

The pair remains under pressure and we expect the downside to prevail this week as well but we must note the oversold condition of the Relative Strength Index and the immediate support located at 1.2500. These factors could trigger moves to the upside, with 1.2620 being the first resistance. Even if the RSI is trading in oversold territory, it is angled downwards, suggesting that another push lower could be made this week; the next support is located at 1.2280 but a touch of this level will depend on the fundamental events scheduled this week.

Fundamental Outlook

The first notable event of the week is the Monday release of the American Manufacturing PMI, a survey of purchasing managers which acts as a leading indicator of economic health and optimism. Tuesday the US Trade Balance is released (difference between imported and exported goods) and Wednesday the first US employment data will come out in the form of the ADP Non Farm Employment Change which is a report released by a privately owned company.

The focus will shift towards the Euro Thursday for the Interest Rate decision and the ECB Press Conference. Although no change is expected for the Interest Rate, Mario Draghi’s comments and attitude will surely generate some volatility and strong movement.

The final event of the week is scheduled Friday and it’s the most important American employment data: the US Non Farm Employment Change (also known as Non Farm Payrolls). The report shows how many new jobs were created during the previous month and has a tremendous influence on the greenback as more jobs suggest that consumer spending may increase in the near future.

GBP/USD

The United Kingdom didn’t release major news last week but US Dollar strength generated by the Fed decision to end the QE program took the pair lower after a bounce at resistance.


Technical Outlook

Last week was bearish but the important support at 1.5900 may hinder further downside movement. Adding to this, the Relative Strength Index is hovering close to the 30 level on a Weekly chart, a thing which suggests oversold and thus increases the chances of bullish movement. Although there are some bullish signs, if 1.5900 support is broken, the move may extend into 1.5750 which is the next weekly support.

Fundamental Outlook

The British Manufacturing PMI is Monday’s main event for the Pound, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. These are leading indicators of economic health for their respective sectors thus higher numbers than anticipated will have a positive impact on the Pound. Thursday the Bank of England will announce the interest rate, with no change anticipated but any speculation about a possible change could greatly affect the pair so caution is recommended. Throughout the week price action will be directly affected by the US releases as well.
 
Written by: Bogdan Giulvezan

2015.02.16 :Forex Technical Analysis: Broken resistance marks the end of sideways movement?

EUR/USD

Forex Technical Analysis: Last week the economic data which came out of the United States was disappointing and this allowed the Euro to climb against the US Dollar but the week had only one day when the pair moved strongly and overall price action was slow.



Technical Outlook
Price is still confined in a tight range created by 1.1300 support and 1.1500 resistance. Considering the fact that last week only one day had decent movement and price was mostly flat, we expect a clean break-out this week but the direction will depend mostly on the fundamental aspect. The 50 day Exponential Moving Average is still angled downwards and price is trading below it but this doesn’t exclude a bullish breakout so for the week ahead keep an eye on 1.1500. A break of this level will probably generate an extended move into 1.1640 while a break of 1.1300 will make 1.1100 the next weekly target.

Fundamental Outlook
Monday the Eurogroup meetings take place and US banks will be closed, celebrating Presidents’ Day so there are increased chances of irregular volatility. Tuesday the main event is the release of the German ZEW Economic Sentiment which is a survey of about 275 German professional investors and analysts, focused on a 6 month outlook regarding German economic growth.

Wednesday is an important day for the US Dollar as the FOMC Meeting Minutes come out, offering insights into Fed’s latest meeting and possibly hints about future monetary policy direction. Thursday economic releases are scarce, with U.S. Manufacturing data being the only notable indicator, while Friday, France and Germany will announce their Manufacturing PMIs which act as leading indicators of economic health.

GBP/USD

The Bank of England increased economic growth forecasts and this coupled with weak U.S. data generated a rally above resistance. However, for the better part of the week price ranged.



Technical Outlook
The pair moved above 1.5260 resistance and above the 50 day Exponential Moving Average, making the medium-term outlook bullish. We anticipate a climb into 1.5550 resistance zone but a break of this level is less likely considering that the pair is in a clear downtrend. If during the week the Relative Strength Index will reach overbought levels, the chances of bearish moves will increase.

Fundamental Outlook
British inflation data comes out Tuesday in the form of the Consumer Price Index, followed Wednesday by the Claimant Count Change which will show how many people applied for unemployment related social help. The same day the Official Bank Rate votes come out, showing if some of the MPC members changed their stance on the interest rate value. The final British release of the week comes Friday in the form of the Retail Sales; the indicator shows the change in the total value of sales made at retail outlets and is considered a high impact release.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

Source of article from the best forex broker.

2015.02.23 :Forex Technical Analysis: Price action driven by the testimonies of high-ranking officials

EUR/USD

Forex Technical Analysis: Last week Greece and the Eurogroup finally found a solution to the debt problem, although it seems to be just a short term fix. Surprisingly enough, the market did not react strongly to the news and the pair didn’t manage to break its range



Technical Outlook
Monday more discussions related to the Greek debt issue are expected so the market can still become volatile and we recommend caution. The horizontal channel created between 1.1500 and 1.1300 is still the most important technical pattern for short term price action and a breakout is imminent; once this happens, the pair can find support at 1.1100 or resistance at 1.1640. The 50 day Exponential Moving Average will also offer some resistance but considering price’s latest behaviour, if we see a breakout, this could easily move past the EMA. Our view at the moment is neutral anticipating a break of support or resistance.

Fundamental Outlook
Monday’s important event is the release of the German IFO Business Climate which in a survey derived from the opinions of about 7,000 businesses regarding economic conditions. Its large sample is what makes it important and usually triggers a strong impact. Tuesday Fed Chair Janet Yellen will testify on the Semi-annual Monetary Policy Report. This is part of a 2-day testimony which will continue Wednesday.

ECB President Mario Draghi will also testify Wednesday before the European Parliament on the ECB Annual Report 2013. Both the testimonies of Yellen and Draghi are considered high-impact events and strong volatility is expected. Thursday the U.S. Consumer Price Index is released, showing fluctuations in inflation and at the same time we will find out the Durable Goods Orders change.

Friday two more important indicators are released: the German CPI and the U.S. Prelim Gross Domestic Product. The former shows the state of German inflation, while the latter is considered the main gauge of U.S. economic performance, thus strong movement is likely to be generated.

GBP/USD

The pair remained above its 50 day Exponential Moving Average but no major advances were made. The strongest moves occurred when British employment data came out better than anticipated but the rest of the week was rather slow.



Technical Outlook
We expect the current move to continue until the zone around 1.1550 is reached, but the bulls seem to lack strength and the Stochastic oscillator has already touched its 80 level, indicating overbought. This could mean that if price crosses the 50 period Exponential Moving Average to the downside, it could easily go through the support located around 1.5260, opening the door for an extended move towards 1.4950.Although price action was bullish last week, we favour the downside, especially if 1.5550 is touched and the Relative Strength Index becomes overbought, agreeing with the Stochastic.

Fundamental Outlook
The British Bankers’ Association will release the Mortgage Approvals Wednesday. The indicator offers insights into the British house market but its impact fluctuates depending on the difference between the anticipated number and the actual one. The Second Estimate Gross Domestic Product is released Thursday showing the anticipated value of the British GDP; although this is an estimated number, the accuracy is usually high and so is the impact on the Pound. Of course, the U. S. events will have a direct impact on the pair’s movement.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

Source of article from the best forex broker.

2015.02.25 :Forex News: The marathon of testimonies continues. Volatility expected

EUR/USD

Forex News: Janet Yellen’s testimony yesterday triggered mixed up and down movement as she mentioned that the Fed is expecting inflation to rise to 2% but a rate hike is unlikely to happen during the next two Fed meetings. The range was not broken.



Technical Outlook
The pair is still trading inside the horizontal channel created by 1.1440 resistance and 1.1270 support, with the 50 period Exponential Moving Average and the 2 oscillators moving almost flat on a four hour chart. If price approaches support again and fails to break it, we anticipate a move into 1.1440 resistance but given the sideways movement seen lately, our view remains mainly neutral.

Fundamental Outlook
Today at 3:00 pm GMT Fed Chair Yellen will testify again, this time before the House Financial Services Committee. The speech and the questions she will receive are likely to generate strong and even mixed market reaction so we recommend caution. At 4:30 pm GMT ECB President Mario Draghi will testify before the European Parliament on the ECB Annual Report 2013. All his public speeches can easily create volatility but price direction is usually determined by his attitude and answers.

GBP/USD

The British Inflation Report hearings went mostly unnoticed yesterday and the strongest movement was seen at the time of Yellen’s testimony.



Technical Outlook
The resistance at 1.5460 is still holding but so is the minor support at 1.5420. A move outside this 40 pips range is very likely to occur today and considering that price made several unsuccessful attempts to break resistance, we consider that the chances of a bullish break have decreased. If the pair can move below 1.5420, we expect a touch of the support at 1.5340.

Fundamental Outlook
The British Bankers’ Association will release today at 9:30 am GMT the Mortgage Approvals. This indicator offers insights into the British house market and usually higher numbers than the forecast 36.2K are beneficial for the Pound. Half an hour later BoE Governor Mark Carney will deliver a public speech at the launch of the One Bank Research Agenda but the impact on the currency market is likely to be mild.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 5-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

Source of article from the best forex broker.

Hello there, I have a question, can you help me, please? What moving averages are better to use for technical analysis?