Market analysis and trade recommendations by FBS

[riki143]

Why the US vice-presidential debates matter
10/4/2016

Vice-presidential debates usually are given scant media attention compared to the presidential ones. However, we encourage you not to skip the broadcasting at 1 am GMT. The event might not match the fireworks and the entertainment value given to us by D. Trump and H. Clinton, but it does matter for both domestic and international audiences. Here comes the main question – why? Let me elaborate on that.

First, it is because of extremely high influence of the last three vice presidents – Joe Biden, Dick Cheney and Al Gore. The first one was vigorously advocating the last year’s nuclear deal with Iran and it was propelling the congressional ratification of the Trans-Pacific Partnership trade deal. Gore’s influence can be traced in the many international agreements he managed to negotiate working in the Bill Clinton’s administration (think for instance of the 1997 Kyoto Protocol). Cheney should be blamed for the US-led invasion of Iraq in 2003. The new vice president nominees – Republican Mike Pence and Democrat Tim Kaine – will certainly inherit their powers. Both candidates have a vast experience as governors; both may affect the foreign policy of the country.

Second, let’s be honest, H. Clinton at her 68 and her counterpart D. Trump at his 70 are not young even for the presidential post that demands a good background/vast experience in running big companies or certain departments. If the elected president dies (God forbid!), the vice-president will have to take his/her place for a while. And this reveals the rationale of the Trump’s and Clinton’s decision to appoint much younger running mates (Pence is 57 and Kaine is 58).

And the last reason why these debates are so important and worth your attention is that the position of vice-president has always been perceived as a transitional office to the presidency. Maybe, these debates will be a sort of a window to the US future. Meanwhile, the running mates can support the present candidates in the upcoming presidential debates scheduled for this Sunday. Kayne will try to build off Clinton’s victory at the first presidential debate, whereas Pence will articulate its policy vision and will be pointing out at Hillary’s weaknesses and controversial episodes of her service as Senator and Secretary of State.

For these reasons we encourage you at least to skim the main takeaways after the debates and see the results. We don’t expect that vice-presidential debates will cause high volatility in markets, but the degree of pressure will certainly increase.

More:
https://new.fxbazooka.com/analytics/10741

 

[riki143]

GBP/NZD broke major support level 1.7750
10/4/2016

GBP/NZD broke major support level 1.7750
Next sell target - 1.7270
GBP/NZD today broke through the major support level 1.7750 (which stopped the three previous impulse waves - ?, (1) and 1, as can be seen from the daily GBP/NZD chart below). The breakout of the support level 1.7750 is expected to accelerate the active impulse wave 3, which belongs to the intermediate impulse wave (3) of the primary downward impulse ? from the middle of July.

GBP/NZD is expected to fall down further toward the next sell target at the support level 1.7270 (forecast price calculated for the completion of the active impulse wave (3)). Sell stop-loss can be placed above the aforementioned price level 1.7750.

More:
https://new.fxbazooka.com/analytics/10742

 

[riki143]

USD/JPY & ADP Non-Farm Employment Change: Is a pullback coming soon?
10/5/2016

Today at 12:15 GMT will be released the numbers from ADP Non-Farm employment change and markets are looking to price a decline from 177,000 jobs to 166,000 jobs, and this data could give us some hints of what we can expect in the next US NFP release due to this Friday. We should remind that last month's reading was in the line with expectations, so we'll see if this data can bring us a surprise before the Friday's event.

Our technical analysis for USD/JPY at H4 chart is extremely bullish, as the pair managed to gain momentum during Tuesday's session and now, we're expecting to see a breakout above the resistance level of 102.96, in order to extend the rally towards the 103.68 zone. However, as the overall situation in the pair is very overbought, a pullback to the support level of 102.42 in a first degree is highly likely to happen.

More:
https://new.fxbazooka.com/analytics/10749\https://new.fxbazooka.com/analytics/10749[/URL

 

[riki143]

EUR/USD: rising to the Cloud
10/5/2016

Technical levels: support – 1.1190; resistance – 1.1220, 1.1250

Trade recommendations:

1. Buy — 1.1210; SL — 1.1190; TP1 — 1.1300; TP2 – 1.1330.

Reason: a dead cross of Tenkan-sen and Kijun-sen, but the lines are horizontal; Ichimoku Cloud have a bearish character, SSB and SSA are horizontal.

More:
https://new.fxbazooka.com/analytics/10750

 

[riki143]

AUD/USD: trading in the Cloud
10/5/2016

Technical levels: support – 0.7600, 0.7630; resistance – 0.7650, 0.7690.

Trade recommendations:

1. Buy — 0.7620; SL — 0.7600; TP1 — 0.7700; TP2 — 0.7750.

Reason: a new correctional dead cross of Tenkan-sen and Kijun-sen; a bullish Ichimoku Cloud; a strong support near 0.7600.

More:
https://new.fxbazooka.com/analytics/10751

 

[riki143]

USD/JPY: the Bulls are very active
10/5/2016

Technical levels: support – 102.20; resistance – 103.50

Trade recommendations:

1. Buy — 102.20; SL — 102.00; TP1 — 103.00; TP2 — 103.50.

2. Sell — 103.50; SL — 103.70; TP1 — 102.80; TP2 — 102.20.

Reason: a bullish Ichimoku Cloud; the prices are in the positive region; a golden cross of Tenkan-sen and Kijun-sen; a strong resistance near 103.50.

More:
https://new.fxbazooka.com/analytics/10752

 

[riki143]

USD/JPY: the end of the long-term bearish trend
10/5/2016

On the USD/JPY daily chart, a breakout of the upper boundary of the downward trade channel has become a signal of the end of the bearish trend.There is a great probability that the US dollar will continue its rally. The first target of the Gartley pattern is located near the 105.8-106 marks. There is also a level of 78.6% Fibonacci retracement from the XA wave. The levels of 103.5 and 104.45 should be used as interterm target.

On the hourly USD/JPY chart, the breakout of the upper boundary of the downward trade channel followed by the successful test of the resistance line at 101.9 will allow us to open long positions. At the present time, the main strategy is to buy at the rebounds towards the support line located at the 102.7 and 102.2 levels.

Recommendations: hold long position, SELL 102,2 SL 101,65 TP1 103,5 TP2 104,45

More:
https://new.fxbazooka.com/analytics/10753

 

[riki143]

AUD/USD needs a new driver
10/5/2016

On the daily chart AUD/USD is trading in 0.7610-0.7700 area (23.6% Fibo of the last long-term bullish wave/?high of the second part of September). When the pair leaves this range, medium-term prospects of Australian currency will become clearer.

On H1 the break of support at 0.7609 will make the pair form a reversal "Head and Shoulders" pattern. If the pair falls below 0.7586, AB=CD pattern will be activated. It's 161.8% target lies near 0.7525. On the othe hand, increase beyond 78.6% of the last descending wave (0.767) will strengthen the case for resumption of the bullish trend.

Recommendation: SELL 0.7609 SL 0.7664 TP1 0.7525 TP2 0.751 BUY 0.767 TP 0.7615 TP 0.78.

More:
https://new.fxbazooka.com/analytics/10754

 

[riki143]

EUR/USD: bulls going to reach resistance
10/5/2016

The price is moving up and down between the downtrend line and the support area’s upper side. Therefore, the market is likely going to reach a support at 1.1196 – 1.1181 in the short term. If a pullback from these levels happens, there’ll be an opportunity to have a local upward movement in the direction of a resistance at 1.1256.

There’s a “Double Top” pattern, which has been confirmed. So, the price is likely going to decline towards a support at 1.1190 – 1.1181. However, if a pullback from this area happens, bulls will probably try to achieve a resistance at 1.1241 – 1.1250.

More:
https://new.fxbazooka.com/analytics/10755

 

[riki143]

GBP/USD: two "Pennants" in a row
10/5/2016

https://new.fxbazooka.com/img/articles/10756/5-10

-2016-GBP-H4.png

The last upward trend has been broken, so the price is

likely going to reach the nearest support at the

downtrend line. If a pullback from this area happens,

there’ll be an opportunity to have a bullish correction

towards a resistance at 1.2795.

https://new.fxbazooka.com/img/articles/10756/5-10

-2016-GBP-H1.png

We’ve got a “Pennant” pattern, so bears are likely

going to get a support on the channel’s lower side. At

the same time, if we see a pullback from here, bulls

will probably try to approach the nearest resistance at

1.2773 – 1.2795.

More:


https://new.fxbazooka.com/analytics/10756

 

[riki143]

GBP/CHF broke support level 1.2490
10/5/2016

GBP/CHF broke support level 1.2490
Next sell target - 1.2200
GBP/CHF recently broke the support level 1.2490 (which stopped the previous impulse waves 3, (C) and (c), as can be seen from the daily GBP/CHF chart below). This support level is also the lower border of the wide sideways price channel inside which the pair has been trading in the last 3 months. The breakout of the support level 1.2490 is likely to accelerate the active intermediate correction (2).

GBP/CHF is likely to fall further in the direction of the next sell target at the support level 1.2200. Sell stop-loss can be placed at half the daily ATR (Average True Range) above the aforementioned price level 1.2490.

More:
https://new.fxbazooka.com/analytics/10758

 

[riki143]

EUR/GBP broke strong resistance level 0.8700
10/5/2016

EUR/GBP broke strong resistance level 0.8700
Next buy targets - 0.8900 and 0.9000
EUR/GBP has been rising steadily in the last few trading sessions inside the minor impulse wave (v) – which belongs to wave 3 from the start of September. The price earlier broke sharply through the strong resistance level 0.8700 (which stopped the previous minor impulse wave 1 in the middle of August) – which intensified the bullish pressure on this currency pair.

EUR/GBP is expected to rise further in the active impulse waves (v), 3 and (3) (which are a part of the primary impulse ? from May) toward the next buy targets at the resistance levels 0.8900 and 0.9000.

More:
https://new.fxbazooka.com/analytics/10759

 

[riki143]

Will ECB taper its QE or not? Let’s figure it out!
10/5/2016

Bloomberg must be tired of the long-lasting absence of front-page splashes and decided to turn everybody’s attention to itself. Yesterday it came up with an extraordinary report citing unnamed ECB officials who said that the ECB is planning to taper its QE asset-buying program. This rattled Tuesday’s markets, sent yields to their highs and resulted in the sheer fall of gold prices. The euro experienced an upsurge versus dollar once the news came out.

We couldn’t confirm the veracity of this report. From M. Draghi’s words that we heard at the last press conference, we can conclude that the ECB would rather extend its QE program when it is expired than taper it. No wonder why the ECB is going to do so; the economic recovery of Eurozone countries is hardly looming on the horizon; there are clear signs of subdued inflation. In one word, it seems that there is no rationale for such fundamental changes of monetary policy. That’s why many investors expect the monetary stimulus to be extended and even enlarged and that’s why the Bloomberg’s report made a stir in financial markets. Nobody could even think of this turn of event.

You might ask then why would anybody believe this report. Well, there is a reason to wind down the QE program. It is considered to be a threat to banks’ margins. The most basic measure of a lender’s profitability is the gap between what it charges borrowers and the interest it has to pay depositors. But only few depositors are now receiving any interests from their saving accounts, and it’s difficult for banks to attract new clients with low or negative rates. Maybe, in the midst of the Deutsche Bank scandal and rising doubts about its feasibility to deal with it on its own, the ECB decided to somehow facilitate the work of banks by tapering its QE program. It could be so. But now we cannot be a hundred-percent sure, that it will actually happen, as we didn’t hear any official announcements from the “named” ECB officials.

As a result, it’s yet to be seen whether the single currency is able to sustain bullish momentum. EUR/USD met resistance at 1.1230 (near-term resistance line) ahead of last week’s high near 1.1280.

More:
]URL=https://new.fxbazooka.com/analytics/10761]https://new.fxbazooka.com/analytics/10761[/URL]

 

[riki143]

EUR/USD: "Harami" points to local correction
10/5/2016

We’ve got a couple of bullish “Hammers” at the local lows. However, it’s likely to have a local bearish correction in the short term. If we see a pullback from the nearest support line, there’ll be an opportunity to have another upward price movement. As we can see on the Daily chart, yesterday’s candle has a huge shadow, so bulls are likely going to move on.

There’s a bearish “Hammer” at the local high, but this pattern hasn’t been confirmed yet. Therefore, the market is likely going to test the closest support line during the day.

More:
https://new.fxbazooka.com/analytics/10762

 

[riki143]

USD/JPY: "Window" acted as a support
10/5/2016

It’s likely that we have a “Three Methods” pattern, so bulls are likely going to move on towards the upper “Window” in the short term. As we can see on the Daily chart, we haven’t got any reversal pattern so far. In this case, it’s likely to see the market even higher soon.

The last “Window” has acted as a support, so we’ve got a bullish “Hammer”. So, the pair is likely going to continue rising during the day until any reversal bearish pattern arrives.

More:
https://new.fxbazooka.com/analytics/10763

 

[riki143]

EUR/USD: wave E on the way
10/5/2016

There’s a double zigzag in wave E of (Y), which is taking place on the four-hours chart. Yesterday wave [x] was formed, so we’ve got a pullback from 1/8 Murrey Math Level (P=200). Therefore, wave [y] of E is likely going to move on towards 6/8 MM Level.

As we can see on the one-hour chart, wave [x] took a form of a zigzag. Considering the second pullback from 8/8 MM Level in a row, wave (a) is likely ended. So, bears are likely going to deliver wave (b) during the day. However, there’s an opportunity to have bullish wave (c) of [y] afterwards.

More:
https://new.fxbazooka.com/analytics/10764

 

[riki143]

Oil prices are rising, but how long it will last?
10/5/2016

Oil price rose towards the highest level since June, as market players are waiting for the fresh weekly information on U.S. stockpiles of crude and refined products. The report will be released by the Energy Information Administration (EIA) later this day. Yesterday the American Petroleum Institute said that US oil inventories unexpectedly fell by 7.6 million barrels. This piece of information has become a trigger for the oil prices.

Brent rose by 7% last week after the OPEC announced the outline of a deal to cut the oil production. Now it continues its rally towards the new highs ($52 per barrel). How long will it last? Will the oil producers manage to hold the prices at their present rates?

Many analysts are skeptical about the success of Algiers pact. They believe that we will enter in other bearish zone as oil glut persists. Current increase in oil prices may spur the US incentives to introduce more drilling rigs. About their intentions we will know on Friday as Baker Hughes releases its rig count data.

Russia, the largest exporter outside OPEC, is reluctant to fulfill its promises to freeze the oil production. In spite of the tremendous fall in oil prices in 2014, Russian oil industry is still healthy, and the production is gaining momentum. Another large oil producer Kasakh Kashagan is also willing to get its piece of cake from the oil market. Regularly enough we hear announcements about the discoveries of the new oil deposit (for example, today we got a short note about 6 billion barrels discovered under Arctic waters).

So, here comes a logical question. How this rising supply could actually put up prices? For me, it’s a brain teaser. With a persistent oil glut, it is easier to believe in the failure of the agreement on the freeze of oil production, rather than wait for another period of price hikes.

More:
https://new.fxbazooka.com/analytics/10765

 

[riki143]

Forex trading plan for October 6
10/5/2016

USD

US dollar was well-supported on better-than-expected economic data and hawkish comments from the Federal Reserve’s speakers. Richmond Fed President Jeffrey Lacker said that the central bank should tighten policy to stem a likely higher inflation. Chicago Fed President Charles Evans expects one rate hike by the end of the year. The possibility of December rate hike is increasing.

American currency now combines 2 things – positive yields and safety. The fact that IMF lowered US growth forecast for 2016 from 2.2% to 1.6% didn’t affect the greenback much.

ADP employment report showed that American economy gained 154K jobs in September. That’s below 166K forecast and the previous month reading of 175K. However, traders will put more weight to American nonfarm payrolls due on Friday than to today’s figures. US ISM services PMI jumped to 57.1 and factory orders showed a small gain vs. an expected contraction. These data should give US dollar another boost.

EUR/USD

The single currency reversed its Tuesday declines and jumped from 1.1140 above 1.1200 on Bloomberg report that the European Central Bank is thinking about tapering of its quantitative easing program by 10 billion euros a month. So far the ECB made no official decision on the future of 80-billion-euros a month QE program that is set to expire in March 2017. This idea was rejected by the ECB representative. For now, the speculation looks more likely an attempt to manipulate the market.

EUR/USD met resistance at 1.1230 and may slide lower correcting the recent gains. The overall dynamic sis expected to be sideways, mostly within the week’s ranges. Support is at 1.1180 and 1.1100. Further resistance is at 1.1255. Watch German factory orders and the ECB monetary policy accounts on Thursday.

GBP/USD

British pound sank to 3-decade minimum below 1.2700 versus its US counterpart setting a new post-Brexit low. Brexit plans have become more distinct: the nation will start talks with the EU at the beginning of 2017 and the exit will happen 2 years later. Prime Minister Theresa May signaled the UK is prepared to surrender membership of Europe’s single market. Investors are worries about British exporters and the UK banking sector. An industry report warned that Brexit could cost British banks and associated businesses almost 40 billion pounds in lost revenue. Britain’s PMIs exceeded expectations, even the services one. Strong services reading may "cast doubt" on the likelihood of another Bank of England November rate cut. However, so far the positive figures failed to overcome the negative pressure of the market’s pessimism.

GBP/USD breached important support levels at 1.2950 and 1.2790 and this worsens the medium-term outlook. Yet, the pair is now oversold and will likely try to recover to 1.2765 and 1.2840. Below 1.2700 next support levels on the downside are at 1.2600 and 1.2500.

USD/JPY

USD/JPY broke above the downtrend since May and is approaching the 100-day moving average at 103.75. Next resistance will be at 104.30 (September high). Support is located in 102.00 area (50-day MA). New buyers will likely appear if the pair goes down to test that support.

AUD/USD

The RBA held yesterday but it didn’t add much to AUD/USD. Upbeat retails sales (+0.4%) helped the currency stay above 0.7600. However, the pair’s being pulled down by stronger US dollar.

Resistance for AUD/USD is at 0.7650 and 0.7700. Australia will release trade balance figures early on Tuesday.

Commodities

Brent rose to $51.85 a barrel, while WTI rose to $49.50 a barrel. According to the American Petroleum Institute, inventories dropped by 7.6 million barrels last week. The market is looking forward to official data later on Wednesday. Gold (XAU/USD) is trying to recover a bit after it lost more than $5 on Tuesday. The precious metal suffered because of speculation that the ECB will taper policy and the Fed will raise interest rates. XAU/USD is still vulnerable for further decline to 1257.50 (200-day MA).

EUR JPY AUD GBP

More:
https://new.fxbazooka.com/analytics/10766

 

[riki143]

For your info: major crude oil benchmarks and their properties
10/5/2016

From day to day you are hearing that oil price went in one or another direction, experienced a downfall or rose significantly. But, in fact, there is no universal oil price, because this energy source varies from one region to another. There are different types of crude oil – some of them are more attractive to consumers than others. For example, sweet crude oil (the one which contains a negligible amount of sulphur) is more valuable for refiners and gasoline producers than highly acidic one (“sour” oil). Light crude oil (with low density) is usually preferred to its high-density homologue. Consumers are also concerned with the location of the oil deposits. The oil extracted in the geopolitically and financially stable region is usually appealing to the customers, especially if it is located near the delivery points suitable for trade.

Because of all these nuances, there are many types of oil, which cost differently. Well, not just many, there are dozens of different types of crude oil with their particular physical characteristics. However, the price of the most of them is pegged to one of the primary benchmarks.

Brent, produced in the North Sea, is one of the most widely used crude oil benchmarks. Roughly 2/3 of all crude contracts around the globe reference Brent blend. The crude is light and sweet that makes it perfect for the refining and diesel fuel, gasoline. In addition, it is water-borne, so, it can be easily transported to distant locations with minimal costs.

Americans prefer to use another benchmark – West Texas Intermediate (WTI). It is extracted from wells in the US and transported from the delivery point – Cushing, located in Oklahoma – by pipeline. It is usually sold in batches of variable size. The WTI is very light and very sweet, but its supplies are land-locked which makes the shipment of this oil to the remote regions relatively expensive.

The next important benchmark is called Dubai/Oman. As it can be seen from the title, it is extracted in the Middle East. It has a slightly lower grade, because it is much heavier than WTI and Brent, and because it has a special sulfur content. This oil is produced mainly for the Asian markets.

More:
https://new.fxbazooka.com/analytics/10767

 

[riki143]

EUR/USD: euro decided to leave the triangle
10/6/2016

On the EUR/USD daily chart, "bears" tried to attack the diagonal support (the lower boundary of the descending trade channel) two times in a row, but failed to break it through. A breakout of resistance line at 1,127 will create prerequisites for the northward movement of quotes. On the contrary, a successful attack of the support line at 1,113 will activate the target 88.6% of the Bat pattern.

On the EUR/USD hourly chart, the pattern of expanding wedge has been formed. If the euro returns to the level of 23.6% Fibonacci retracement of the wave 4-5, it will be a signal for opening shorts. On the contrary, a successful test of resistance line at 88.6% will allow us to open longs.

Recommendations:

BUY 1,124 SL 1,1175 TP 1,1365

BUY 1,127 SL 1,1215 TP 1,1415

SELL 1,116 SL 1,1225 TP 1,104

SELL 1,113 SL 1,1195 TP 1,1

More:
https://new.fxbazooka.com/analytics/10768