If you come along to our forex webinars you will always hear David & I explain the importance of the fundamental news & how easy it is to be ambushed by 'events'. But I must admit so far it's been absolutely relentless & it's only Wednesday!
Coming up we have Aussie retail sales & Trade Balance - both very important numbers, and so far it's been a buy of the Aussie except against the euro - a trade we've been following. Of the two releases - the Trade Balance number has been negative since July last year, and whilst February's number was encouraging, coming in at -0.44b against a forecast of -0.85b, the subsequent releases have been dire.
Tonight's headline number is -2.17b against a forecast of -1.32b, in fact a further deterioration, and with AUD/USD having moved strongly higher yesterday as a result of USD weakness. it's no surprise to see a doji on today's daily chart, which by coincidence is...
The EUR/NZD has delivered some excellent trading opportunities across all the timeframes this morning to the short side, following the recent heavily bearish sentiment towards the New Zealand dollar which has seen it weaken against all the major currencies. Indeed longer term the NZD is now looking increasingly oversold, so we may see this trend reflected on the slower timeframe charts in due course.
This morning's move was signalled initially with a move below the volume point of control (VPOC) on the 30 minute chart ( the yellow line), a move that was duly supported with rising volume and confirming the bearish sentiment. In addition, the transition in the trend monitor indicator from blue to red also confirmed this reversal, coupled with a pivot high indicator prior to the move through the VPOC. Since then, momentum to the downside has increased with volumes also rising sharply and confirming the wide spread down candle as we approach a potential area of support...
UK retail sales have given GBP a real boost higher & it's occupying six top spots on the currency matrix. Number was a great improvement & market has temporarily forgotten the negative CPI number.
What's interesting is at 8.00 am at the London open, there was a huge buy of cable off an important order board level at 1.5520 with retail sales then just adding the momentum.
Cable is also benefiting from USD pull back from its recent bullish move higher. The 4hr currency strength indicator is particularly revealing as the USD has been overbought for some time, but is now moving lower. The move higher in the London session has now moved to test the VPOC level in the daily chart, and we are now waiting to see if this afternoon's US data can help to push the GBP/USD through this key level. This is denoted on the chart with the yellow line.
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Without wishing to downgrade this evening's FOMC minutes, which will no doubt result in the usual volatile market moves, stop hunting & general shenanigans, the main FED event takes places on Friday at 6.00 pm London time. This is when Janet Yellen is due to give an important speech about the US economic outlook, and so one to watch.
Meantime USD strength has continued overnight across the majors and into this morning, with German PPI helping to give the eurodollar a shove lower. Other items of note this morning include the MPC (Monetary Policy Committee) of the BOE playing their standard formation (football parlance) of 0-0-9. In other words 9 defenders, no midfield & no strikers.
For FED watchers FOMC Member Evans has been speaking in Munich and has been simply repeating his call for a delay in raising interest rates. No moves expected as he is re-iterating his well known stance as a dove. This is why we need to know where...
Despite it being a holiday across most of Europe for Ascension Day - it's quite lively out there at the moment. We've also just had an unscheduled comments from Mark Carney (not shown on Forex Factory), but came up on Forex Live feed. Greek Fin Min Varoufakis also speaking & even mentioning the word 'reform'.
Meanwhile on the charts it's been more selling of USD which is propelling euro & gbp higher with volatility candles on faster time frames. For cable 1.5788 is a key level being tested up to and including the daily chart. Have reading how a lot of traders are looking to short cable since it went over 1.5550, but it's just not co-operating & the principle reason is the USD which continues to be sold off.
It's only in the EUR/GBP that we have seen some serious GBP selling.
This is an aspect of forex trading David & I will be covering in tomorrow's forex webinars - the importance...
Here in UK election day is almost here & we can expect reactions as soon as the exit polls start posting as well as the actual results. Heaven only knows what is going to happen. So far GBP has been fairly well behaved - moving more as a result of USD & EUR.
Meanwhile in Asia - AUD has employment data to contend with. On 4hr CSI we have seen the AUD pull back & is also showing the NZD as hugely oversold, but as mentioned many times before a currency can stay stubbornly over stretched for a considerable time. And in the case of the Kiwi where it is still falling on the weekly and daily charts it is likely to stay down on the 4 hr chart. Of course AUD/USD is the one to watch, but expect to see moves in the AUD/NZD cross with some interesting volume/price action now developing in the slower timeframes, and with the NZD (...
In a relatively quiet day of trading in the forex markets with both the UK and Japan closed for public holidays, it's been the Canadian dollar which has moved significantly during the session, and picking up the longer term bearish tone once again. In early trading, the pair moved in a tight range, before finally breaking through the platform of support in the 1.2145 area and continuing lower to currently trade at 1.2095 at the time of writing. The price action has now continued lower with the volume point of control indicator (VPOC indicator MT4) remaining firmly in place above in the 1.2110 area on the 30 minute chart, and signalling further downside momentum in due course.
The trend monitor has remained firmly red throughout the trading session, and with the currency strength indicator to the left confirming further strength for the CAD and weakness for the USD, the volume point of control (VPOC) is likely to move to the next...
Cable selling off sharply on the back of poor GDP figure falling to a low of 1.5176, but recovering sharply and back over key support at 1.5220, and with USD continuing to look weak no reason why it cable can't continue higher. It has already touched 1.5260 & beyond this price level we are then looking at 1.53 and beyond.
This afternoon we have the CB consumer confidence release at 2.00 pm London. USD weakness has also played its part in these moves.
USD index is now the one to watch - running into the release and also ahead of tomorrow's FOMC....
Ahead of the German ZEW data this morning, markets are positioning for a move in the euro dollar, with the euro now heavily oversold and the US dollar equally over bought in the faster timeframes. Using the currency strength indicator in multiple timeframes provides a fast and visual picture of currency strength and weakness, with the euro (the gold line) now deeply oversold from the the 5 minute to the 30 minute timeframe, and preparing to reverse the longer term bearish sentiment ahead of the news. Apart from the ZEW, the only other ongoing euro news is of course Greece which continues to weigh on the single currency.
Finally remember that any market or currency can remain over extended for some time, and as always patience is the key coupled with the price action on the charts. The currency strength indicator is always the starting point to identify potential strength and weakness in an individual currency. Then it's time to consider...
Ahead of the manufacturing production number the British pound has been particularly lively in the past couple of hours with 6 volatility candles alone being triggered on Cable on the 3 min chart.
For Cable, yesterday's rally which saw the pair bounce off support in the 1.4760 region was a move more akin to a 'dead cat bounce' as once the pair hit the major resistance at 1.4840 at the start of the US session opened the floodgates for some heavy duty selling. This took cable down 1.4684 before it finally managed to find some support as the market moved into Asia.
A number of reasons have been suggested for this move, including the tensions and uncertainty surrounding the upcoming UK election, and as highlighted yesterday, we are seeing a major sell off in UK gilts. In the face of such uncertainty It appears foreign investors would much rather move their money into US Treasuries and Asia, and Japanese investors in particular...
