Andrew’s Update for Friday + Trading Tools
Good morning Asia and the rest of the world, I wanted to add another daily review for you guys who have asked me to write some more thanks. I wanted to remind all of you to add me on your openbook profiles and you will receive live video links to the etoro youtube channel to watch these market reviews also. I will include a link to yesterdays review and will be looking at today’s economic calendar and discussing DRAGHI’s speech yesterday, wow this week was a very eventful trading week good luck today with your trading.
Here is a video showing the eToro Trading Tools while discussing the current trends. Please enjoy, like, and subscribe to the channel for great market info.
The euro fell against 13 of its counterparts after the ECB press conference, as Mario Draghi, the European Central bank president, said that the risk to the region’s growth remains on the “downside”. It was announced that the central bank had kept its benchmark rate at a record-low 0.75%. The Bank of England announced today that it will retain 0.5% key interest rate. The bank also held its target for quantitative easing at 375 bln pounds. The pound strengthened for a second day after future bank of England Governor Mark Carney rejected speculation he would expand stimulus. The yen weakened to 94 per dollar for the first time since May 2010. It could fail to find the level of 94.50, next target crossing bullish USD/JPY in the short term. As for the other reports, expected weekly jobless requests, also at 8:30, the results in recent weeks had positively influenced the markets. Already in Asia on Friday morning, the foundations of monetary policy announcement from the Reserve Bank of Australia could generate a new low of the Aussie, which presents very bearish trend in the near term. Also expected, the trade balance in China. The Chinese economy depends much on the Western world, so a good trade balance of the Asian giant will give a new breath to the world at large.
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EUR/USD bearish outlook
The euro was trading at 1.3543 this morning in the American session. We have drawn a line from a low of 1.30, projecting an uptrend. The pair is trading above this line. It has already had three attempts to break this channel this morning. If you look at the chart below, the momentum indicator is showing a bearish signal, which will be confirmed with the break in the line trend. So we recommend selling below 1.3485, because at that level there is the daily fractal, and if the euro closes the day below this level, it is likely that for the next few days there is a correction to the level of 1.3250, the next fractal. Therefore, we recommend selling the pair only if it the requirements are fulfilled.
GBP/USD sell below EMA 200
The British pound is bouncing above the 1.5614 fractal. The data of monetary policy by the Bank of England gave a bullish move to the pair. But the pair continued downward pressure, although we have seen three times it was touching the level of 1.5630 and 1.5644. If the pair breaks it, the way will be clear until the next 1.5440 fractal. Therefore, we recommend sell, if there is a pullback to the level of the 200 day moving average periods (blue), above the 1.5614 fractal, you can buy with caution, as it is likely that this pair continues rebounding.
Comex gold recovered from earlier weakness after comments from Chicago Fed President Charles Evans, says George Gero, vice president and precious metals strategist with RBC Capital Markets Global Futures. The metal initially fell with the euro after a press conference by European Central Bank President Mario Draghi. However, as of 11:50 a.m. EST, the Comex April contract up $1.50 to $1,680.30 an ounce. Gero says remarks from Evans were construed to mean quantitative easing will continue for some time. The Chicago Fed president described the Fed’s bond-buying program as an “energy bar” for the economy and said it will continue until Fed officials are certain the labor market has improved.
Despite dropping to 1651.0, there was no following through selling in gold and it turned sideway since then. Nonetheless, with 1697.8 resistance intact, choppy fall from 1798.1 is still in favor to continue. Below 1651.0 will target 1626.0 low and below. Meanwhile, above 1697.8 will will suggest that the choppy decline from 1798.1 has completed already and should turn near term outlook bullish for a retest on 1800 psychological level.
In the bigger picture, price actions from 1923.7 high are viewed as a medium term consolidation pattern. There is no indication that such consolidation is finished, and more range trading could be seen. In any case, downside of any falling leg should be contained by 1478.3/1577.4 support zone and bring rebound. Meanwhile, break of 1792.7/1804.4 resistance zone will argue that the long term up trend is possibly resuming for a new high above 1923.7.
In the long term picture, with 1478.3 support intact, there is no change in the long term bullish outlook in gold. While some more medium term consolidation cannot be ruled out, we’d anticipate an eventual break of 2000 psychological level in the long run
Andrew E Martinho
Asian Pacific Rim Region Manager @ eToro.com
LinkedIn: Andrew E Martinho