Fundamental Analysis of USD/CHF for January 24, 2019

Trading 24 jan 2019 Commentaire »

USD/CHF has been quite volatile and corrective at the edge of 0.9950 area recently from where it is expected to move lower in the coming days. Amid the government shutdown in the US and downbeat economic reports, USD is expected to extend weakness against CHF in the coming days.

US economic growth is set to be affected by the longest government shutdown. Its negative impact will follow. The probability of recession in the US in the next 12 months is assessed at 20% like last month. The chance of recession in next two years is around 40%. According to Michael Morgan, the overheated economy in the US and unstable inflation rates alongside monetary policy tightening may undermine momentum in not-too-distant future. Recently US Existing Home Sales report was published with a decrease to 4.99M from the previous figure of 5.33M which was expected to be at 5.27M and HPI remained unchanged at 0.4% which was expected to decrease to 0.3%. Today US Unemployment Claims report is going to be published which is expected have a negative result of an increase to 219k from the previous figure of 213k, Flash Manufacturing PMI is expected to decrease to 53.5 from the previous figure of 53.8, Flash Services PMI is expected to decrease to 54.0 from the previous figure of 54.4, and CB Leading Index is expected to decrease to -0.1% from the previous value of 0.2%.

On the CHF side, recently Swiss National Bank Governor Andrea Maechler stated that negative interest rates and a readiness to intervene in the foreign currency markets are still needed to ward off a rise in the franc that would trigger deflation in Switzerland. SNB wants the Swiss currency to be weak. They have observed that when the Franc goes strong, inflation goes negative. SNB Officials agree that negative rates are difficult, but it is needed for the stability of the economy and their investment strategy recently worked very well, thus promising good economic prospects.

Meanwhile, CHF is currently quite optimistic amid the hawkish rhetoric of SNB officials whereas USD is struggling for gains amid the government shutdown which is increasing the economic slowdown risk day by day. In the future weaker USD is expected in the pair.

Now let us look at the technical view. The price is currently pushing lower after certain correction at the edge of 0.9950 area from where it is expected to push lower towards 0.9850 and later towards 0.9700 area in the future. As the price remains below 1.00 area with a daily close, the bearish bias is expected to continue.

SUPPORT: 0.9700, 0.9850

RESISTANCE: 0.9950, 1.00

BIAS: BEARISH

MOMENTUM: VOLATILE

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Wave analysis of EUR / USD for January 24. Euro shows a willingness to grow

Trading 24 jan 2019 Commentaire »

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Wave counting analysis:

On Wednesday, January 23, trading ended for EUR / USD by 25 bp increase. According to Fibonacci, this growth including the unsuccessful attempts to break through the levels of 38.2% and 23.6%, suggest that the pair is ready to build a new upward wave, presumably 5, as part of the uptrend trend. If this is true, then the increase in quotations will continue with targets located about 16 figures. At the same time, a breakthrough of the minimum of the assumed wave 2 will lead to the complication of the entire wave marking.

Sales targets:

1.1345 - 38.2% Fibonacci

1.1315 - 23.6% Fibonacci

Shopping goals:

1.1599 - 161.8% Fibonacci

1.1677 - 200.0% Fibonacci

General conclusions and trading recommendations:

The pair allegedly completed the construction of wave 4, in s. The main scenario is the increase within wave 5. I recommend to make purchases with a protective order under the minimum of wave 2, c, with targets located near the estimated marks 1.1599 and 1.1677, which corresponds to 161.8% and 200 0% Fibonacci.

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Indicator analysis. Daily review for January 24, 2019 for the pair EUR / USD

Trading 24 jan 2019 Commentaire »

On Wednesday, as expected, the was moved up.

Trend analysis (Fig. 1).

On Thursday, up to % rates, the price will move down in the side channel. The first lower target 1.1346 is the support line (red thin line).

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Fig. 1 (daily schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - up;

- volumes - down;

- candlestick analysis - up;

- trend analysis - up;

- Bollinger lines - down;

- weekly schedule - up.

General conclusion:

On Thursday, up to% rates, the price will move down in the side channel. The first lower target 1.1346 is the support line (red thin line).

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Wave analysis of GBP / USD for January 24. Brexit no longer interferes with the pound sterling

Trading 24 jan 2019 Commentaire »

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Wave counting analysis:

On January 23, the pair GBP / USD rose 110 bps. Thus, the current wave counting still involves the construction of an uptrend trend. But now, it is more complex in its internal structure. However, the wave pattern does not look quite convincing and may require add-ons. If you get important news from the UK on Brexit, this can be reflected in strong movements on the chart, which can break wave markings. So far, I expect growth to 32 figure.

Shopping goals:

1.3168 - 100.0% Fibonacci

Sales targets:

1.2716 - 38.2% Fibonacci (formal goal)

1.2609 - 23.6% Fibonacci (formal goal)

General conclusions and trading recommendations:

The wave pattern on the instrument has undergone certain changes and now involves the construction of a complex uptrend trend. The main thing is that the execution of this option contributed to the news background from the UK. Now, I recommend buying with targets located near the estimated mark of 1.3168, which corresponds to 100.0% Fibonacci.

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Indicator analysis. Daily review for January 24, 2019 for the pair GBP / USD

Trading 24 jan 2019 Commentaire »

Trend analysis (Fig. 1).

On Thursday, the trend work upwards with the first top target 1.3100 - a rolling level of 76.4% (yellow dotted line). Then lower work is possible.

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Fig. 1 (daily schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - up;

- volumes - down;

- candlestick analysis - down;

- trend analysis - up;

- Bollinger lines - down;

- weekly schedule - up.

General conclusion:

On Thursday, the trend work upwards with the first top target 1.310 - a rolling level of 76.4% (yellow dotted line) then lower work is possible.

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Trading plan for 24/01/2019

Trading 24 jan 2019 Commentaire »

The rest of the currency market is relatively calm. EUR / USD is trading within the range of 1.1370 / 90; USD / JPY has edged up to 109.70. GBP / USD remains strong at 1.3060 due to the optimism that the risk of unordered Brexit can be ruled out.

There is little activity on the stock market, as investors are hesitant about the prevailing uncertainty surrounding political themes in the US and China. Chinese Shanghai Composite is growing by 0.4 percent, and Japanese Nikkei225 is down 0.1 percent.On the commodity market, crude oil loses 0.5% and the climate was dominated by the information that the EU is looking for ways to circumvent trade sanctions imposed by the US on Iran.

On Thursday, the 24th of January, the event of the day is ECB Interest Rate Announcement scheduled for 12:45 pm GMT, but the global investors should keep an eye for PMI Services, PMI Composite and PMI Manufacturing data from France, Germany, and Eurozone. The same kind of data will be published in the US as well.

AUD/USD analysis for 24/01/2019:

The Australian job market data released overnight were better than expected. The Unemployment Rate has decreased to the level of 5.0% from 5.1% (against 5.1% expected) and the Employment Change data (tracks the number of the employed in Australia) were released at the level of 21.6K, which was lower than a month ago figure of 39.1k, but better than expected number of 17.3K. However, the details of the report were not so successful because the employment structure indicated a strong increase in part-time work, and the drop in the unemployment rate came from a lower participation rate as well.

The percentage of individuals in the labor force who are without a job but actively seeking one. A lower Unemployment Rate is generally better on the economy. Not only does it mean that resources are being fully utilized, but it also results in higher consumer spending as there are more workers receiving paychecks. This might help to create higher inflationary pressure and in the result - a more probable interest rate hike in the future.

Let's now take a look at the AUD/USD technical picture after the decision was made. After the initial rally towards the technical resistance at the level of 0.7175, the market has broken clearly below the technical support at the level of 0.7113 and currently is on its way towards the next technical support at the level of 0.7070. The negative and weak momentum supports the bearish outlook despite the oversold market conditions.

Please notice, the bulls have lost the fight of the lower channel boundary line around the level of 0.7125 as well, which additionally signifies the importance of the recent breakout to the downside.

Sinking Aussie drags a neighbor behind him - NZD is the second weakest currency in majors. NZD / USD reverses yesterday's increases and goes down to the level of 0.6770 at the time of writing.

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Forecast for GBP/USD on January 24, 2019

Trading 24 jan 2019 Commentaire »

GBP/USD

On Wednesday, the British pound became the market driver. The Labour Party's statement, on readiness to support the agreement with the EU in order to avoid withdrawing from the bloc without a deal, inspired investors with optimism. On the one hand, it is surprising why the opposition did not adhere to this position before the decisive vote, on the other hand, our scenario about the supposed change of opinion by the Labour Party begins to be realized. Now we are waiting for the execution of the decisive scenario - the fall of the British pound after the decision to withdraw from the EU with the deal. The basis of this movement will serve as an understanding of the economic moment - the British economy will not receive benefits after leaving the EU.

Today, market leadership can go to the euro. At 12:30 London time, Mario Draghi will speak at a conference on the ECB meeting. His speech is expected to be neutral. Yesterday's purchases of the pound took place at volumes above the average, so even if the euro declines, we do not expect a sharp drop in the pound. The situation of the British pound is convenient to take a waiting position, sliding down the line supporting the price channel of the daily timeframe. Fixing under the line (below 1.3028) will allow the price to return to the support of the Krusenstern line of the daily chart (1.2845).

In the absence of a transition of leadership to the euro on the ECB meeting, the British pound may continue to grow in the target range of 1.3216 / 57, determined by the highs of October 12 and September 26.

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EUR/USD: plan for the European session on January 24. Euro buyers pulled the market to their side

Trading 24 jan 2019 Commentaire »

To open long positions on EURUSD you need:

A good report on consumer confidence in the eurozone helped buyers to get above the range of 1.1376 yesterday, and as long as trade is conducted above this level, the demand for the euro will continue. The formation of a false breakdown in this area will be a signal to buy in order to update the upper limit of the side channel in the area of 1.1411, but the main task will be the breakdown of this area with access to the highs of 1.1451 and 1.1526. Much will depend on the press conference of ECB President Mario Draghi, which is scheduled for the afternoon. In case of a return below the level of 1.1376, you can take a closer look at long positions from the lower limit of 1.1339.

To open short positions on EURUSD you need:

The bears are required to return below the middle of the channel of 1.1376, which will lead to a larger sale of the European currency in the region of the lower border of 1.1339, but its main task will be its breakthrough with the renewal of the low in the regions of 1.1307 and 1.1272. Given the fact that Mario Draghi is unlikely to announce an increase in interest rates in the near future, we can expect a decline in the euro, and the formation of a false breakdown in the resistance area of 1.1411 will be an additional signal for opening short positions.

Indicator signals:

Moving averages

Trade is conducted in the area of 30-day and 50-day moving averages, which indicates the formation of the lateral nature of the market.

Bollinger bands

The volatility of the Bollinger Bands indicator is low, which does not give signals to enter the market.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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Technical analysis for EUR/USD for January 24, 2019

Trading 24 jan 2019 Commentaire »

EUR/USD has bounced off 1.1330 towards 1.14 but remains below it. This is not something bulls want to see. Bulls want to see price recapturing key resistance levels like 1.14. On the other hand the bearish short-term trend remains intact. Bears remain in control.

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Red dots - maximum strength 1 hour resistance

Blue dots - medium strength 1 hour support

EUR/USD has stopped making lower lows and lower highs and since it made a low at 1.1336 it shows signs of a reversal. No reversal confirmation yet in the 1-hour chart but a break above 1.14 would be something bulls want to see. Support is found at 1.1360 and a break below it will open the way for a move towards the lows or even provide new lows. Key resistance for the longer-term trend remains at 1.1480. A daily close above this level will increase the chances of breaking above the January high. Until then bears consider any bounce as a selling opportunity.

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Technical analysis for Gold for January 24, 2019

Trading 24 jan 2019 Commentaire »

Although Gold price remains in an upward sloping channel, there is no sign from bulls that the pull back and correction from $1,300 is over. Bulls need to be very cautious at current levels and as long as price is below $1,292.

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Purple lines - bullish channel

Green area- line in the sand for bullish trend

Gold price has short-term resistance at $1,292. Breaking above it will increase the chances of moving past $1,300 towards $1,320. Support is at $1,276 (channel support) and if broken we expect price to at least move towards $1,270. Next support is at $1,260 where we find the 38% Fibonacci retracement of the rise from $1,196. Breaking below it will open the way for a test of the major support area at $1,243 shown by the green rectangle. If this area fails to hold, then the bullish view for a move above $1,300 is canceled. For now short-term traders favor the bearish side as it has a better risk reward ratio.

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