Market analysis and trade recommendations by FBS

[riki143]

GBP/USD: Moving Average acted as a support
12/15/2016

There’s an upward “Wedge”, which was broken yesterday. The 89 Moving Average acted as a support. Therefore, the pair is likely going to rise in the short term, so we should keep an eye on the nearest resistance at 1.2584 – 1.2619 as a possible intraday target. If a pullback from this area happens later on, there’ll be an opportunity to see another decline towards a support at 1.2476 – 1.2418.

The last “Tripe Top” pattern led to massive decline, which was stopped by a support at 1.2507. So, the price is likely going to test the closest resistance at 1.2584 during the day. If we have a pullback from this level, bears will have a chance to push the price even lower.

More:
https://fxbazooka.com/analytics/11726

 

[riki143]

EUR/USD: bearish wave (i) arrived
12/15/2016

Wave [iii] has started, so we’ve got a new low here. Previously, wave 2 ended in a form of a flat. So, wave [iii] of 3 is likely going to be continued in the short term. The main intraday target is 0/8 MM Level.

As we can see on the M30 chart, we’ve got a double zigzag in wave [ii]. Also, there’s a bearish impulse in wave (i) of [iii]. In this case, the price is likely going to form wave (ii) during the day. If a pullback from 1/8 MM Level happens afterwards, there’ll be an opportunity to have another decline in the direction of -2/8 MM Level.

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https://fxbazooka.com/analytics/11727

 

[riki143]

Key option levels for Thursday, December 15th
12/16/2016

EUR/USD

Main trend Short-term period Medium-term period
Bearish Neutral
Changes in the open interest + 24 684 ? + 135 224 ?
Closest resistance levels 1.0614; 1.0660; 1.0698; 1.0725
Closest support levels 1.0455; 1.0431; 1.0405; 1.0377
Trading recommendations
Baseline scenario Short EUR/USD below 1.0455, with target points at 1.0431 and 1.0405
Alternative scenario Moving above 1.0614 can be considered as a signal to Buy the pair, with target at 1.0660 and 1.0698

GBP/USD

Main trend Short-term period Medium-term period
Neutral Bearish
Changes in the open interest - 20 ? + 180 ?
Closest resistance levels 1.2661; 1.2690; 1.2727; 1.2754
Closest support levels 1.2544; 1.2515; 1.2498; 1.2478
Trading recommendations
Baseline scenario Short GBP/USD below 1.2544, with target points at 1.2515 and 1.2498
Alternative scenario Moving above 1.2661 can be considered as a signal to Buy the pair, with target at 1.2690 and 1.2727

USD/JPY

Main trend Short-term period Medium-term period
Neutral Neutral
Changes in the open interest + 846 ? + 1 180 ?
Closest resistance levels 117.72; 117.98; 118.29; 118.61
Closest support levels 115.22; 114.23; 113.65; 112.94
Trading recommendations
Baseline scenario Long USD/JPY above 117.72, with the target points at 117.98 and 118.29
Alternative scenario Moving below 115.22 can be considered as a signal to sell the pair, with target at 114.23 and 113.65

USD/CAD

Main trend Short-term period Medium-term period
Bullish Bullish
Changes in the open interest + 329 ? - 105 ?
Closest resistance levels 1.3284; 1.3324; 1.3353; 1.3390
Closest support levels 1.3179; 1.3142; 1.3116; 1.3087
Trading recommendations
Baseline scenario Long USD/CAD above 1.3284, with the target points at 1.3324 and 1.3353
Alternative scenario Moving below 1.3179 can be considered as a signal to Sell the pair, with target at 1.3142 and 1.3116

More:
https://fxbazooka.com/analytics/11728

 

[riki143]

Banks' overview of the Fed's rate decision]
12/16/2016

The Federal Reserve finally awakened from its sound sleep and did raise its interest rates for the first time in 2016. The board hiked the target range by 25bp to 0.50%-0.75% from 0.25%-0.50% previously. Summary of economic projections indicated a triple hike in 2017. Yellen took a rather cautious tone in the course of the press conference saying that the SEP implies only gradual rate hikes with a careful eye to the state of the US economy and actual actions of the government.

CIBC

The statement was hawkish enough to raise market’s expectations over the multiple hikes in the upcoming years. Strategists forecast three rate increases in 2017 and two in 2018 as the Fed turned out to be more preemptive in its anticipation of the expansionary fiscal policy.

Barclays

The FOMC found its new monetary stance accommodative to the present state of the US economy, contributing to a further strengthening of the labor market conditions and maintenance of targeted inflation rate.

In the summary of economic projections, the Fed mentioned the probability of a triple rate hike in 2017. The Fed turned out to be more hawkish than the market had expected. Having admitted the Fed’s hawkishness”, Barclays dents the market’s enthusiasm saying that these hikes are possible if only Trump does manage to fulfill its pledges (cut taxes, enacts tariffs and other trade restrictive policies in the first months of his presidential term.

SEB

The US dollar spearheaded on Wednesday after the FOMC meeting. The strategists note that the Fed’s economic projections did the main job, as the rate hike decision had been fully priced in ahead of the meeting. The median of the dot plots is now suggesting key rates at 2.1 % by the end of 2018. The inflation target should be reached in 2018 according to the Fed’s projections. The unemployment rate is expected to be below the NAIRU (Non-Accelerating Inflation Rate of Unemployment) for a rather long period of time.

Yellen’s press conference balanced the hyper-hawkish summary of economic projections. The chairwoman said that some FOMC participant hadn’t incorporated the change in fiscal policy in their projections; that it is too early to assess the effects of the anticipated fiscal stimulus. Yellen admitted that the actual Fed’s response to any policy changes is still unknown.

Bank of America Merrill Lynch

Strategists note that the dots changed indeed, but the Fed’s economic forecasts remained almost the same with stronger growth and slightly lower unemployment rate. The statement was hawkish; nobody questions it, but at the same time it maintained a bit cautious tone. The Fed will continue to weigh the risks before undertaking any further tightening measures. The analysts’ forecasts are following: only one hike in 2017 and triple hike in 2018. Barclays believes that the Fed’s monetary stance will continue to support USD in 2017.

SocGen

The bank continues to bet on just 2 hikes in 2017 given the remaining uncertainty with respect to fiscal policy.

Danske Bank

Analysts believe that the USD will extend its gains in the near-term having propped up by the US economic growth and rate expectations against rates-sensitive currencies such as the JPY.

More:
https://fxbazooka.com/analytics/11729

 

[riki143]

EUR/USD: bears free to push the market even lower
12/16/2016

We’ve got a “Hammer”, but his pattern hasn’t been confirmed yet. Therefore, the market is likely going to decline in the short term. As we can see on the Daily chart, there’s a bearish “Engulfing”, which hasn’t been confirmed, so bears will probably try to push the market even lower.

The price has broken the minimum from 29.11.2015, so a confirmation for the last bullish “Doji” was canceled. In this case, the price is likely going to continue falling down until any reversal pattern forms.

More:
https://fxbazooka.com/analytics/11732

 

[riki143]

USD/JPY: bulls reached the "Window"
12/16/2016

The price is still rising, so we don’t have any reversal pattern so far. However, the market reached the upper “Window”, so there’s an opportunity to have a bearish pattern. If so, the pair is likely going to form a local downward correction towards the nearest support. As we can see on the Daily chart, there’s a “Three Methods” pattern, so bulls are probably going to move on.

The last “Three Methods” has done such a great job, so we have a new high on the one-hour chart. At the same time, if we see any reversal pattern, bears are likely going to test the closest support.

More:
https://fxbazooka.com/analytics/11733

 

[riki143]

GBP/USD falling inside minor (c)-wave
12/16/2016

GBP/USD falling inside minor (c)-wave
Next sell target – 1.2350
GBP/USD continues to fall inside the minor (c)-wave which started earlier from the resistance zone lying between the pivotal resistance level 1.2720 (which also stopped the previous impulse wave 3), upper daily Bollinger Band and the 50% Fibonacci correction level of the previous sharp downward impulse from September. The downward reversal from this resistance zone created the daily Japanese candlesticks reversal pattern Evening Star.

GBP/USD is expected to fall further to the next sell target at the support level 1.2350 (which stopped the (B)-wave of the active primary ABC correction ? from October).

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https://fxbazooka.com/analytics/11734

 

[riki143]

EUR/USD broke long-term support level 1.0500
12/16/2016

EUR/USD broke long-term support level 1.0500
Next sell target - 1.0370
EUR/USD today broke through the powerful support zone surrounding the major long-term support level 1.0500. This support zone was strengthened by the lower support trendline of the wide daily down channel from May. The breakout of this support zone accelerated the active C-wave of the intermediate ABC correction from the start of May.

EUR/USD is expected to fall further to the next sell target at the next support level 1.0370 (target price calculated for the completion of the active C-wave). Sell stop-loss can be placed above the aforementioned resistance level 1.0500.

More:
https://fxbazooka.com/analytics/11735

 

[riki143]

Some forecasts ahead of the BOE meeting
12/15/2016

On Thursday at 7 am 12:00 GMT+2 the Bank of England will announce its interest rate decision. Many strategists believe that the BoE will maintain its current monetary stance unchanged in line with consensus forecasts and market pricing. The focus will be on the minutes as there won’t be a press conference and updated inflation report. At the November meeting, the BOE shifted from an easing bias to a neutral bias saying that the bank is ready to respond in either direction.

Today we got upbeat inflation data from the UK. The year-to-year CPI rate rose to 1.4% from 0.9%. The core rate ticked up to 1.4% in November. Average weekly earnings are expected to be steady. There shouldn’t be any changes in the unemployment rate as well (it is currently at its cyclical low level of 4.8%). The number of jobless claims is expected to decrease (positive impact on the currency). Signs of strong wage and price growth, strong labor data may push the board to shift its monetary outlook to the hawkish side. Despite strong economic data, the BOE will unlikely recourse to tightening at this meeting because of the elevated political uncertainty over the “Brexit” process. Go through the highlights of the BOE Governor Mark Carney speech tomorrow. The main topic of his speech has nothing to do with the BOE's monetary policy, but we would recommend to keep it in focus. Who knows, maybe Carney gives us some clues on Thursday's interest rate decision.

On Thursday, the pound may experience some additional pressure. The leaders of EU countries minus Theresa May for the first time will discuss the process of negotiation with the UK. The communique of the meeting should formalize how the EU members conduct themselves in the next 2 years. So, this document may send some wobbles to the technical charts with GBP. If the EU countries will adopt a tough stance toward the UK, the pound may be seriously hit.

More:
https://fxbazooka.com/analytics/11692[/U}RL]

 

[riki143]

Gold price moves lower
12/16/2016

On the daily chart of gold, a breakout of the lower boundary of the trading channel allows traders to open short positions. Prices move in the direction of 161.8% target in the Butterfly pattern. It corresponds to the $1,090 mark. The outlook for the gold is still bearish, so traders should consider selling on the rise.

On the hourly chart of gold, if target 261,8% is fulfilled, there can be a rollback towards $1,143-1,144. There is 88,6% target in the Bat reversal pattern.

Recommendations: hold shorts formed from $1160,

SELL $1144 SL $1165 TP $1095.

More:
https://fxbazooka.com/analytics/11736

 

[riki143]

USD/CHF: bulls move higher
12/16/2016

On the USD/CHF daily chart, prices continue their rally. A rollback towards 1.012 allowed opening long positions. Crab pattern is still relevant. There are intermediate targets near the 1.037, 1.049 и 1.077 marks. Steadiness of the uptrend doesn't raise doubts, so, the rollbacks or breakout of the previously formed maximums can lead to the opening of the new long positions, or to the extension of the previously opened ones.

On the USD/CHF hourly chart, the main support is located near the 1.0195 mark. The return of quotes to this support followed by the rebound from it will be a signal for the opening of the long positions.

Recommendations: hold longs formed from the 1,012 level, BUY 1,0195 SL 1,014 TP 1,037.

More:
https://fxbazooka.com/analytics/11737

 

[riki143]

Morning brief for December 16
12/16/2016

EUR/USD edged up to 1.0425 in the early hours of the Asian session after hitting 1.0366 overnight. USD was flexing its muscles after the Fed raised the interest rate and projected triple hike in 2017. The conclusion of the EU summit was treated lightly by the market (there were no evident price movements). Eurozone final annual CPI and US housing market data will take center stage today.

USD/JPY spiked to 118.65 yesterday. In the course of the Asian session, it rollbacked to 118.25. News agencies offered some support to the weakening yen. The Wall Street Journal said that the BOJ might be willing to recourse to tightening next year to eliminate the detrimental effect of crucial divergence between the US Treasury yields and Japan’s 10-year government bonds. Bloomberg published opinions of high-profile analysts saying that Japan’s newly introduced policy program should finally shake the country’s economy out of a pattern of expansion and contraction. Higher oil prices, the weaker yen and positive boost in the Japanese equity market should point to a better outlook for inflation in 2017.

GBP/USD slumped to 1.2375 yesterday after the BoE Monetary Policy Committee members maintained the interest rate at 0.25% and said that they may respond in either direction (recourse to easing/tightening) to reach 2% inflation rate target. This morning the pound managed to recoup some of its losses having surged above 1.2420.

Both Aussie and Kiwi rose vs. the US dollar. USD/CAD failed to break resistance at 1.3340 and went lower to 1.3320 on the rising oil prices. Brent oil futures rose after Kuwait (one of the OPEC members) notified customers that it is going to cut supplies from January in accordance with the recently signed production cut deal. Today’s focus will be on Canada’s foreign securities purchases report.

More:
https://fxbazooka.com/analytics/11738

 

[riki143]

EUR/USD: "Thorn" set up bullish correction
12/16/2016

The price faced a support at 1.0340, so we’ve got a “Thorn” pattern, which led to the current upward correction. So, the market is likely going to reach the nearest resistance at 1.0506 – 1.0552 in the short term. If a pullback from this level happens, there’ll be an opportunity to have another decline towards the next support at 1.0419 – 1.0340.

We’ve got a consolidation, which is taking place under a resistance at 1.0461. Also, there’s a “V-Bottom”, so bulls are likely going to get a resistance at 1.0506. Considering a possible pullback from this level, bears will probably try to achieve a support at 1.0365 – 1.0340 later on.

More:
https://fxbazooka.com/analytics/11739

 

[riki143]

GBP/USD: "V-Bottom" stopped bears
12/16/2016

Bears faced a support at 1.2384, so we’ve got a local upward price movement. In this case, the market is likely going to test the closest resistance at 1.2476 – 1.2498. If we have a pullback from this area, there’ll be a chance to see a decline in the direction of the next support at 1.2384 – 1.2358.

The price is consolidating under a support at 1.2384. Moreover, we’ve got two reversal patterns such a “V-Bottom” and a “Double Bottom”. Under this circumstances, the pair is likely going to reach a resistance at 1.2485 – 1.2507. If bulls be stopped here, bears will probably try to return into the market, so we should keep an eye on the next support at 1.2384 – 1.2358 as a possible intraday target.

More:
https://fxbazooka.com/analytics/11740

 

[riki143]

GBP/USD: outlook for Dec. 19-23
12/16/2016

GBP/USD slumped to 1.2370 on the broad strengthening of the US dollar. The Fed raised its interest for the first time this year. In contrast, the Bank of England kept its benchmark unchanged and suggested that it could ease or tighten its monetary policy going forward. The main drag, however, was the bank’s projections of the moderate rise in the inflation rate. The data flow from the UK was very strong, but it didn’t help the pound to hold its positions.

Next week, keep in focus the UK current account data and quarterly final GDP. On Thursday, traders will be watching for the US unemployment claims, core durable orders, and final GDP. On Friday, keep an eye on the US new home sales release and consumer sentiment index published by the University of Michigan.

As we approach into a rather volatile quarter for the Brexit process, the sterling may weaken further. A breach of the significant support at 1.2545 put an end to the GBP growth and shifted our outlook for the currency pair to bearish. The next supports on the pound’s way to the bottom located at 1.2375, 1.2300 (November 18 low) and at 1.2250. Numerous legal hurdles towards the triggering of Article 50 and upbeat economic releases coming from the UK may help the pound to recoup its losses. The nearest resistances can be found at 1.2470, 1.2490, and 1.2580 (the lower boundary of the Ichimoku cloud on the H4 timeframe).

More:
https://fxbazooka.com/analytics/11743

 

[riki143]

AUD/USD: outlook for Dec. 19-23
12/16/2016

AUD/USD dropped in the course of the past week as the Fed raised its interest rate and projected three hikes in 2017. Australian labor market data released on Thursday was mixed. Job figures were ahead of the market’s expectations, at the same time, the number of unemployed people increased by 0.1% in November.

Aussie will be under pressure next week. On Monday, traders will focus on Australia mid-year budget update as it may lead to a downgrade in the country’s AAA rating. There is a great split among the currency analysts. Some strategists believe that a credit rating cut may send Aussie lower, others expect a relatively small reaction saying that this factor is not a currency driver. We would also recommend you to go through the Reserve Bank of Australia meeting minutes coming the same day as the budget update.

The technical outlook for AUD/USD is still bearish unless Aussie manages to reclaim the 0.7450 level within a few days. A breach of the 0.7330 support may send the pair lower towards the 0.7300, 0.7260 levels. A boost in commodity prices may help AUD to rise towards the nearest resistance lines located at 0.7360, 0.7400 and 0.7450.

More:
https://fxbazooka.com/analytics/11744

 

[riki143]

EUR/USD: wave [iii] going to be continued
12/16/2016

There’s a flat in wave 2, which led to form a bearish impulse in wave . Therefore, wave [iii] is likely going to be continued. The main intraday target is -1/8 MM Level, which could be a departure point for a bullish correction.

We’ve got wave [ii], which brought a double zigzag. Also, there’s a downward impulse in wave (i). It’s likely that wave (ii) is going to end during the day. If we see a pullback from 6/8 MM Level, there’ll be an opportunity to have a bearish impulse in wave (iii).

More:
https://fxbazooka.com/analytics/11745

 

[riki143]

EUR/USD: "Piercing Line" led to correction
12/16/2016

There’s an upward correction, which is taking place on the four-hours chart. The main intraday target is the middle of the last huge black candle. If a pullback from this level happens, bears are likely going to deliver a local low. As we can see on the Daily chart, here’s a bullish “Harami”, which points to an opportunity to have a local correction.

The last “Piercing Line” led to a bullish correction. Considering a confirmation of this pattern, the market is likely going to achieve the nearest resistance line, which could be a departure point to another decline.

More:
https://fxbazooka.com/analytics/11746

 

[riki143]

US dollar: outlook for Dec. 19-23
12/16/2016

In line with expectations, the US Federal Reserve raised its benchmark rate by 25 basis points to 0.50-0.75% range. According to the central bank’s new economic projections, it will raise rates 3 times in 2017. Fed funds futures now show investors are pricing in a 25% chance of tightening at the Fed’s March meeting, and a 75% probability for a June rate increase.

The market is focused at policy divergence between the Fed and other central banks. This divergence is fueling demand for the greenback. American 10-year Treasury yield rose to the highest level since September 2014, while US dollar index reached 14-year high at 103.57. The next level to watch on the upside is 104.00. Support is located in the 102.00 area and at 101.50. The pullbacks to the downside will represent buying opportunities for the greenback.

Next week pay attention to existing home sales and crude oil inventories on Wednesday, durable goods orders, final GDP and unemployment claims on Thursday, as well as new home sales on Friday. All in all, these releases shouldn’t affect the market’s favorable attitude to the US currency.

More:
https://fxbazooka.com/analytics/11747

 

[riki143]

EUR/USD: outlook for Dec. 19-23
12/16/2016

EUR/USD fell victim to the renewed negative pressure. The pair tested levels below 1.0400. The decline was triggered by the overall strengthening of the US dollar after the Federal Reserve signaled it expected 3 rate hikes in 2017. Such policy of the American central bank is in sharp contrast with the European Central Bank’s decision to prolong its asset purchases through 2017 a week earlier, though with the monthly amount starting in April.

Data from the euro area were rather favorable. The region’s economy maintained its growth momentum in December and there were signs of a pickup in inflationary pressures. A composite PMI held at the highest level of this year in December and above the 50 mark that signals industry expansion.

The oversold euro will likely try to correct to 1.0500/1.0550, but the bears will keep dominating the market now when they’ve sensed that the pair doesn’t stand firm on the ground. The next resistance is at 1.0650. Decline below 1.0400 will open the way down to 1.0275.

The most important data release of the next week will be German Ifo business climate on Monday. Other events will be of lower importance: German PPI and current account, consumer confidence on Wednesday, ECB economic bulletin on Thursday and German Gfk consumer climate on Friday.

More:
https://fxbazooka.com/analytics/11748