Market analysis and trade recommendations by FBS

[riki143]

Morning brief for December 7, 2016
12/7/2016

AUD/USD slumped to 0.7417 after Q3 GDP data indicated the biggest decline in over 5 years. Many analysts expect it to rebound in Q4 pointing at surging metal prices.

NZD/USD changed only a little on the session. The pair is trading below 0.7125. We will hear RBNZ Governor Wheeler speaking at 10:00 pm GMT+2. His speech should bring some moves to the chart.

EUR/USD moved higher to 1.0725 on the Asian session. The US dollar is still one of the strongest currencies as market cherishes a thought of the Fed’s rate hike. The euro is on the razor’s edge as the ECB is expected to announce an extension of QE on Thursday. Today’s focus is on the US JOLTS job openings.

USD/JPY took a few baby steps towards 114.20. There should some more JPY weakening versus USD. Earlier this morning we had BOJ deputy Governor Iwata on the wires who said that BOJ will continue its powerful monetary easing actions via asset purchases and interest rates.

GBP/USD fell below 1.2660 in the course of the session. The pound managed to stabilize earlier. Brexit minister David Davis indicated recently that the government could consider paying to the EU to remain access to the single market. This announcement pushed GBP higher. At the present moment, the market is waiting for the Supreme Court’s decision on whether the government needs an approval of Parliament before triggering Article 50. Strategists believe that if parliament wins the case it may delay Brexit beyond 2017 March. Today you should keep an eye on the UK manufacturing production.

USD/CAD edged up to 1.3290 on the session. Today, the Bank of Canada will announce its decision on the interest rate at 5:00 pm GMT+2. It is expected to remain on hold at 0.5%. We see more USD/CAD upside going forward driven by the Fed hike, tepid pace of Canadian growth and uncertainty over US-Canada trade relationships. The oil prices will unlikely offer support to loonie; the OPEC’s push should fade away soon.

More:
https://fxbazooka.com/analytics/11609

 

[riki143]

EUR/USD: "Breakaway Gap" going to act as a support
12/7/2016

We’ve got a “Double Top”, which has been formed under the 89 Moving Average. Therefore, the market is likely going to decline towards a support area at 1.0655 – 1.0594 in the short term. If a pullback from these levels happens, there’ll be an opportunity to have another bullish movement in the direction of the next resistance at 1.0815 – 1.0850.

The 34 Moving Average acted as a support, so the price is consolidating. Also, we’ve got a “Flag” pattern, so bears are likely going to reach a support at 1.0666. At the same time, if we see a pullback from this level, bulls will probably try to test a resistance at 1.0795 – 1.0815.

More:
https://fxbazooka.com/analytics/11610

 

[riki143]

GBP/USD: "Double Top" led to decline
12/7/2016

The price faced a resistance at 1.2770, so we’ve got a “V-Top” pattern here. In this case, the market is likely going to decline towards a support by the trend. If bears be stopped here, there’ll be an option to have another bullish movement, so we should keep an eye on a resistance at 1.2770 – 1.2795 as a possible intraday target.

There’s a “Double Top” pattern, which has been confirmed. Meanwhile, the 55 Moving Average is acting as a support, but the price is likely going to continue falling down in the direction of the 89 Moving Average. If a pullback from this line be on the table, bulls will have a chance to deliver a new high.

More:
https://fxbazooka.com/analytics/11611

 

[riki143]

EUR/USD: correction may continue
12/7/2016

Technical levels: support – 1.0690, 1.0640; resistance – 1.0790, 1.0830/40.

Trade recommendations:

1. Buy — 1.0690; SL — 1.0670; TP1 — 1.0790; TP2 – 1.0840.

2. Buy — 1.0730; SL — 1.0710; TP1 — 1.0790; TP2 – 1.0840.

Reason: bearish mood of Ichimoku Cloud and rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen and the rising Tenkan-sen; the prices are on the support of Tenkan.

More:
https://fxbazooka.com/analytics/11613

 

[riki143]

AUD/USD: bulls have lost its positions
12/7/2016

Technical levels: support – 0.7430; resistance – 0.7490.

Trade recommendations:

1. Buy — 0.7450; SL — 0.7430; TP1 — 0.7490; TP2 — 0.7540.

Reason: bearish Ichimoku Cloud and falling Senkou Span B; a golden cross of Tenkan-sen and Kijun-sen, but the prices breaking down the Tenkan’s support.

More:
https://fxbazooka.com/analytics/11614

 

[riki143]

USD/CAD: forecasts from banks ahead of the BOC meeting
12/7/2016

Today, the Bank of Canada will announce its decision on the interest rate at 5:00 pm GMT+2. The market expects the BOC to keep policy rates on hold at 0.5%. The focus will be on the tone of the board’s statement.

The recent data releases are half-and-halfer. Q3 GDP outpaced the BOC’s October forecasts, driven by the increase in exports from Q2 and relatively strong household consumption. The business sentiment is still weak, however. This will likely make the board’s members cautious about a strong upsurge in manufacturing in the upcoming quarters. Labor data is rather strong.

The Merrill Lynch analysts expect a sustained move higher in USD/CAD towards the end of the year driven by the following factors: a faster pace of Fed hikes because of Trump’s expansionary fiscal policies; a tepid pace of Canadian growth; heightened uncertainty with respect to Canadian trade with the USA. Surging US yields will probably be the main hurdle for the BOC’s cuts in the nearest future. The CAD may be supported, however, in the near-term, if oil prices continue their rally.

BofA Merrill USD/CAD targets are following: at 1.36 by the end of the year; at 1.38, 1.40, 1.41, 1.43 by the end of Q1, Q2, Q3 and Q4 of 2017 accordingly.

Nomura analysts believe that the BOC will leave its policy rate at o.5 %. They point at Stephen Poloz’s recent comments. The BOC Governor said Canada’s data little changed since the October meeting, suggesting the Communique is likely to be little changed.

Credit Agricole says that CAD has become really vulnerable to significant interest rate differentials (the divergence existing between the monetary stances of BOC and Fed). So, they believe that this will keep USD/CAD close to 1.35 into the year-end remaining rather bearish outlook for oil prices in the near-term.

More:
https://fxbazooka.com/analytics/11615

 

[riki143]

EUR/USD: wave started
12/7/2016

We’ve got wave 2, which has formed a flat pattern. So, there’s an opportunity to have a bearish impulse in wave in the short term. In this case, the price is likely going to break -1/8 MM Level soon.

As we can see on the one-hour chart, wave (v) of [c] is truncated. Also, there’s a downward impulse in wave (i). Therefore, bears are likely going to deliver wave (iii) during the day. The main intraday target is 4/8 MM Level.

More:
https://fxbazooka.com/analytics/11618

 

[riki143]

Fifth element and Power Ranger swing trading strategies
12/7/2016

Fifth element

The main advantage of the fifth element strategy is that tells you ahead of time when the entry price will be, so you should spend lots of time in front of the screen waiting for the right to snatch a whaling sum of money.

Key Ingredients:

Timeframe – H1, H4.

Trading tools – fast EMA 12, slow EMA 26, MACD SMA 9

Currency pairs – EUR/USD, USD/JPY, GBP/USD. USD/CHF, USD/CAD. AUD/USD, NZD/USD.

Strategy concept

MACD histogram indicates the direction and momentum of the market. If the MACD histogram switches from negative to positive, this is a signal of the possible upward shift in momentum. You should wait for 5 positive bars on the histogram to confirm the momentum before going long on the fifth bar (that’s why this strategy is dubbed “fifth element”; it’s not after Luc Besson’s film). If the MACD histogram switches from positive to negative, this means that you should open short positions (the rule of the fifth bar remains in force).

Long trade setup

Wait until the MACD histogram goes from negative to positive.
Wait for 4 positive bars to appear on the histogram before entering the market long on the opening of the fifth bar.
You should place the stop loss at the last low of the histogram.
You have 2 profit targets with risk to reward ratios – 1:1 and 1:2 accordingly. For example, the risk of you trade is 150 points, and the reward is 300 points if both targets are fulfilled. The risk to reward ratio is 1:2, which yields a tidy 6% return if we take a 3% risk.

Power Ranger strategy

The strategy works with the hourly and 4-hourly chart.

Trading tools – we use stochastic for this strategy with the following settings:

%K period = 10

%D period = 3

Slowing = 3

Price field = high/low

MA method = simple

Levels 20 and 80

Reminder – stochastic is an indicator that measures overbought and oversold conditions in the market.

Currency pairs – EUR/USD. USD/JPY, GBP/USD, USD/CHF. USD/CAD, AUD/USD, NZD/USD

The basic concept of the strategy is that a range should be formed after the market stops trading. Stochastic helps us to identify a possible range formation. We also should pay attention to the current market momentum to tell us whether we should go long or short. If the market is moving up, we may go long in the range. The entry point can be found with the help of Stochastic (it should be below level 20 - in the oversold area). If the market is moving down, we should go short in the range. The entry point can be found in the overbought area (above level 80) of the Stochastic indicator. The power ranges strategy has two profit targets – the first one should be taken within the range. The second target is located beyond the range in anticipation of a breakout.

Long trade setup

Identify an uptrend line
Take a look at the stochastic for %K and %D to go below level 20 (oversold area).
Find support and resistance of the range. You may enter long when stochastic steps into the oversold area (above 20 level)
You should place your first profit target at the 75% mark of the range. The stop loss should be set at a risk to reward ratio of 1:2. After calculation, the stop loss must be placed below the support level. If not, the trade is considered invalid.
Beware! It doesn’t mean that you go long whenever the stochastic is in the oversold region or go short whenever the stochastic is in the overbought region. You should identify momentum before entering the market.

More:
https://fxbazooka.com/analytics/11619

 

[riki143]

Key option levels for Wednesday, December 7th
12/7/2016

EUR/USD

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest -No data- -No data-
Closest resistance levels 1.0733; 1.0749; 1.0782; 1.0807
Closest support levels 1.0707; 1.0684; 1.0640; 1.0609
Trading recommendations
Baseline scenario Short EUR/USD below 1.0707, with target points at 1.0684 and 1.0640
Alternative scenario Moving above 1.0733 can be considered as a signal to Buy the pair, with target at 1.0749 and 1.0782

USD/JPY

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest -No data- -No data-
Closest resistance levels 114.08; 114.26; 114.44; 114.73
Closest support levels 113.83; 113.61; 113.25; 112.79
Trading recommendations
Baseline scenario Short USD/JPY below 113.83, with the target points at 113.61 and 113.25
Alternative scenario Moving above 114.08 can be considered as a signal to Buy the pair, with target at 114.26 and 114.44

USD/CAD

Main trend Short-term period Medium-term period
Neutral Bullish
Changes in the open interest -No data- -No data-
Closest resistance levels 1.3300; 1.3319; 1.3365; 1.3435
Closest support levels 1.3259; 1.3217; 1.3149; 1.3070
Trading recommendations
Baseline scenario Long USD/CAD above 1.3300, with the target points at 1.3319 and 1.3365
Alternative scenario Moving below 1.3259 can be considered as a signal to Sell the pair, with target at 1.3217 and 1.3149

More:
https://fxbazooka.com/analytics/11620

 

[riki143]

EUR/USD: local "Harami"
12/7/2016

We’ve got a “Shooting Star” and a “Tower”, which both have been confirmed. So, the current bearish correction is likely going to move on towards the nearest “Window”. As we can see on the Daily chart, here’s a “Harami” at the local high, so bears are likely going to deliver a new local low. At the same time, there’s an opportunity to have another upward movement in the direction of the 21 Moving Average.

The price is consolidating, but we have a “Harami” at the last high, so the market is likely going to test the Moving Averages. If a pullback from these line happens, bulls will probably try to reverse the price movement into an upward direction.

More:
https://fxbazooka.com/analytics/11621

 

[riki143]

USD/JPY: bearish "Tower"
12/7/2016

The 13 & 21 Moving Average acted as a support, so there’s a bearish “Engulfing”, but this pattern hasn’t been confirmed yet. Therefore, the market is likely going to decline towards the nearest support. If a pullback from this level happens, there’ll be an opportunity to have another bullish movement. As we can see on the Daily chart, there isn’t any bearish pattern so far. In this case, bulls are likely going to move on.

We’ve got a “Tower”, a “High Wave” and a “Two Crows”, which all have been confirmed enough. Under this circumstances, the 55 Moving Average is likely going to act as a support, which could be a departure point for another bullish rally.

More:
https://fxbazooka.com/analytics/11622

 

[riki143]

GBP/CAD reversed from resistance zone
12/7/2016

GBP/CAD reversed from resistance zone
Next sell target – 1.6400
GBP/CAD continues to decline – after the recent downward reversal from the resistance zone lying between the round resistance level 1.7000, upper daily Bollinger Band, resistance trendline of the wide daily down channel from January and the 38.2% Fibonacci correction of the previous downward impulse from June. The downward reversal from this resistance zone stopped the previous minor ABC correction 2.

GBP/CAD is expected to fall further to the next sell target at the support level 1.6400 (which stopped the B-wave of the previous ABC correction (2) in November).

More:
https://fxbazooka.com/analytics/11623

 

[riki143]

EUR/GBP reversed from support zone
12/7/2016

EUR/GBP reversed from support zone
Next buy target - 0.8600
EUR/GBP recently reversed up sharply from the support zone lying between the support level 0.8350 (which also earlier reversed the previous minor correction 4 at the start of September), the lower daily Bollinger Band and the 50% Fibonacci correction level of the previous sharp upward impulse wave (C) from the end of May.

The upward reversal from the aforementioned support zone stopped the previous minor impulse waves (iii) and 3, which belong to the intermediate (C)-wave from the start of November. EUR/GBP is expected to rise further to the next buy target at the resistance level 0.8600.

More:
https://fxbazooka.com/analytics/11624

 

[riki143]

EUR/USD & ECB interest rate decision - Next step: parity zone?
12/8/2016

Today’s ECB meeting at 12:45 GMT will be the last of the year, but also, it will be one of the most important, ahead of next week’s Federal Reserve meeting. The central bank has been keeping unchanged the interest rates but at the same time, according to Mario Draghi’s words, it keeps the doors opened to further stimulus and that could get materialized in today’s meeting. Some analysts are expecting that the ECB will extend it’s QE program.

Our technical analysis for EUR/USD at H4 chart is showing a recovery ongoing and it’s heading towards the 200 SMA. If the meeting comes in with hawkish words for Eurozone’s economy, the pair may attempt a breakout above the resistance level of 1.0859, while some negative words or drastic measures could weigh on the Euro and it could consolidate below the 1.0600 psychological level.

More:
https://fxbazooka.com/analytics/11625

 

[riki143]

AUD/USD: bulls are dreaming of revenge
12/8/2016

On the AUD/USD daily chart, a breakout of the resistance at 0.749 can activate the "Bat" inverted pattern followed by the return of quotes to the lower boundary of the last upward trading channel. There is 88.6% target of the "Bat" pattern. The outlook for this pair is still "bearish", so the sales on the rebounds are relevant.

On the AUD/USD hourly chart, quotes are moving within the upward trading channel. The roll back from its upper boundary or unsuccessful test of the resistance at 0.757 (target 161.8% in the AB = CD pattern) will be the signal for the opening short positions.

Recommendations:

SELL 0,7545 SL 0,761 TP 0,74,

SELL 0,757 SL 0,7625 TP 0,75.

More:
https://fxbazooka.com/analytics/11626

 

[riki143]

EUR/USD: euro waits for a rollercoaster ride
12/8/2016

On the EUR/USD daily chart, there is a correction towards the downtrend. A breakout of the upper boundary of the bars, formed on December 5-6, will increase the risk of rollback towards 1,093. This mark corresponds to the 38.2% Fibonacci retracement level formed from the last downward wave.

On the EUR/USD hourly chart, an expanding wedge reversal pattern has been formed on the basis of the "Three Indians". A successful test of the resistance at 1,08-1,0815 will pave the way towards the 1.091-1.093 convergence area (50% Fibo level from the last downward wave and target 224% in the pattern AB = CD).

Recommendations:

BUY 1,0815 SL 1,076 TP 1,0925,

SELL 1,0925 SL 1,098 TP1 1,077 TP2 1,05.

More:
https://fxbazooka.com/analytics/11627

 

[riki143]

Morning brief for December 8, 2016
12/8/2016

The euro popped up with aplomb above 1.0770 from an early trough at 1.0750. The ECB decision followed by the press conference will be the main story over the next hours. Buckle up for a ride in EUR/USD. The ECB is expected to extend its asset-purchasing program. So, there is a downside risk in this currency pair, if market’s wagers on further easing are realized.

"So, what is the program for today? "

USD/JPY slid down below 113.30. Japanese economic releases were half-and-halfer. We got an upbeat current account data earlier this morning followed by weak Q3 GDP and final GDP price index readings. But as we’ve already noticed, the yen didn’t pay much heed to these disappointing headlines. Later on the session, we will receive the unemployment claims release from the US.

AUD/USD retreated in the early hours of the Asia session mainly due to the weak Australian trade balance release for Q4 (there was a tangible miss, much wider than expected). Also, we got some distortion in the Chinese trade balance data. At the present moment, the pair is trading along 0.7495 level having partially recovered its losses due to the gains that got bulk commodities overnight.

NZD/USD moved higher through the session (above 0.7208 mark). There was some upbringing news from the diary giant Fonterra; it was said that farmer payout this season will total $6.40 kg of milk solids. There won’t be any significant news that could thrill the land under Kiwi’s feet. So, you may switch to another, more volatile currency pair.

USD/CAD slumped below 1.3215. Brent futures made a baby step in the northern direction having added 3 cents to reach $53.03. Today’s focus will be on Canadian building permits and new houses price index.

More:
https://fxbazooka.com/analytics/11628

 

[riki143]

GBP/USD: in correction to the Cloud
12/8/2016

Technical levels: support – 1.2550; resistance – 1.2670, 1.2730.

Trade recommendations:

1. Sell — 1.2670; SL — 1.2690; TP1 — 1.2600; TP2 — 1.2550.

Reason: bullish Ichimoku Cloud and horizontal Senkou Span A and B; a cancelled golden cross of Tenkan-sen and Kijun-sen; a strong resistance of Tenkan-sen and Kijun-sen.

More:
https://fxbazooka.com/analytics/11629

 

[riki143]

AUD/USD: going to Senkou Span B
12/8/2016

Technical levels: support – 0.7460; resistance – 0.7490, 0.7540.

Trade recommendations:

1. Buy — 0.7460; SL — 0.7440; TP1 — 0.7490; TP2 — 0.7540.

Reason: bearish Ichimoku Cloud and rising Senkou Span A; a golden cross of Tenkan-sen and Kijun-sen and rising Kijun-sen; the prices are breaking out strong resistance of 0.7490.

More:
https://fxbazooka.com/analytics/11630

 

[riki143]

What will happen with the euro after the ECB meeting?
12/8/2016

Morgan Stanley’s strategists believe that the ECB will keep rates on hold at this week’s meeting, but can expand its QE purchase program. But they consider different scenarios with various responses from the euro.

Potential scenarios and the reaction of the euro.

1. QE purchases extension for 6 months after March. This expansion is well priced in by the market participants, so, it wouldn’t be surprising for markets. The reaction of EUR/USD should be restrained. To extend purchases and leave an expectation in the market that they could extend again, the ECB should introduce some changes to its present program. Which kind of changes?

- The ECB may announce that it is not going to use the capital key to allocate purchases. This option will be positive for periphery countries of the Eurozone, but bad for the German bund. The reaction of the euro should be positive in this case. The ECB may not express itself explicitly, it can only hint that it is going to be flexible (in this case the euro’s reaction won’t be stormy). If the ECB is more explicit, the euro may react with some moves.

- The ECB can recourse to buying bonds below the deposit rate. This decision will be negative for the euro.

- The ECB may commit itself to changing the maximum limit on buying per issuer. This approach should be bullish for German bund curve. EUR/USD will fall, if there is a larger decrease in bund yields than US Treasury yields.

- The ECB may address the scarcity of bonds. If there is a rise in short end rates (it would dissipate fears over the bond scarcity), the euro may gather momentum.

2. The ECB announces the cut of its interest rate. This scenario is not expected by the market. If it is realized, EUR/USD should fall significantly.

3. ECB decides to extend its QE purchases by more than 6 months beyond March. This option is not expected by the market. EUR/USD will be poised to weakening.

4. ECB doesn’t change its policy stance. This approach will cause German bunds to rise substantially and push EUR higher.

5. ECB extends corporate bond purchases, but not government bond. Basically, in this case, the ECB will commit to the tapering of the bond purchasing program. This scenario is unlikely, and if it’s realized, it will be positive for EUR.

The ECB meeting will be held on Thursday, December 8.

More:
https://fxbazooka.com/analytics/11596