EURAUD Outlook – Week Commencing 29th August 2016

What Happened

EURAUD has been an interesting pair to watch over the past couple weeks. Price has declined breaking the weekly bullish TL, tested major support as well as bouncing off 200-day moving average on weekly time frame. Failing to close below these is good indication for a bull run.

Recently, we’ve seen the AUSSIE DOLLAR decline, as China’s manufacturing news has been disappointing. This has enabled the EURO to gain momentum and start a bull run. 2 weeks ago price re-entered the weekly bullish TL and made new daily highs.. Last week price retested the recently broken bearish TL and ended the day as a strong bullish Doji.

What’s Next?

In the coming week, china are due to release manufacturing data which is forecasted to be disappointing which could act as a catalyst and allow the EURO to continue its bull run. If we go down to the hourly time frames we see that price has made lower highs and lower lows. Therefore, we will not enter our long trade until we see a reversal with higher highs to confirm the bull run has started. We first expect price to test the red resistance zone. Once this is broken price will continue up to test the weekly bearish TL at 1.58300.

EURUAD Long 29th August

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euro and dollar gold image

EURUSD Outlook – Week Commencing 29th August 2016

Bullish Dollar

Last week, Yellen stated that positive US reports have opened up the idea of a rate hike in September and we will need to see more positive US reports for the rate hike to be confirmed.

This acted as a huge catalyst on Friday allowing the US Dollar to break TL on most pairs. As it stands the Dollar is looking bullish with investors waiting for US reports to solidify expectations of a rate hike. The next big report will be the US non-farm payroll, scheduled to be released on 02/09/2016. This report is forecasted to be lower than the previous month but a higher than expected result will definitely provide the right catalyst and help the dollar continue its bull run.

What’s Next?

On Friday, price broke the bullish TL on EURUSD after testing (for the 4th time) and failing to break the red resistance zone (1.135 to 1.14). In the coming week we expect price to retest the recently broken TL and continue down to the 1.1038 level as speculation for a September rate hike increases. If price declines further, breaking the daily TL and closing below the Blue support zone (1.0935), we think rice will continue to fall to 1.07.

EURUSD Short 29th August

GBPUSD Outlook – Week Commencing 29th August 2016

Bullish Dollar

Last week, Yellen stated that positive US reports have opened up the idea of a rate hike in September and we will need to see more positive US reports for the rate hike to be confirmed.

This acted as a huge catalyst on Friday allowing the US Dollar to break TL on most pairs. As it stands the Dollar is looking bullish with investors waiting for US reports to solidify expectations of a rate hike. The next big report will be the US non farm payroll, scheduled to be released on 02/09/2016. This report is forecasted to be lower than the previous month but a higher than expected result will definitely provide the right catalyst and help the dollar continue its bull run.

What Next?

On Friday, price broke the bullish TL on GBPUSD after retesting and failing to close above the 71% fib line. In the coming week we expect price to retest the recently broken TL and continue down to the 1.29000 level as speculation for a September rate hike increases. (See image below for more details)

Screen Shot 2016-08-28 at 14.26.31

 

 

euro and dollar gold image

Weekly Forex Recap July 2nd-8th

This weeks events summarised for July 2nd to 8th

A brief breakdown of the weeks key events.

  • US – Non farm pay rolls were unexpectedly higher at 287K. With Janet Yellen stating the FED if focused on GDP and the Labour market this news will likely stoke speculation of a rate increase for Q4 2016.
  • US – Job growth has slowed from the average of 229K in 2015 to 172K for 2016. This however can be explained by the US approaching full employment.
  • US – Jobless claims were down to an average of 265K their lowest in the past 2 months. The US is fast approaching what some would claim to be full employment fulfilling a key mandate of the FED. Unemployment is now down from 17.1% in 2010 to 9.6%. Wages have risen 2.6% vs the same period last year with US consumers also earning 2.3% more than the same period last year.
  • US – The all important ISM services index rose from 52.9% to 56.5% nearly 4 points above the 53.3% estimate. This survey was in conflict with the Markit Services index which was just about above 50 with participants expressing concern for the year ahead. We advise caution when factoring surveys into trading decisions.
  • US – The trade deficit increased from 37.4B to 41.1B which makes sense given factory orders fell by 1% month on month and are down 3.4% vs 2015.
  • Japan – Abenomics is failing to deliver the strong reform Japan needs with labour cash earnings down by 0.2% month on month, a lot lower than the 0.5% estimate. This is likely due to loose rules around part-time workers and generally poor pay security for the bulk of Japan’s workforce who are not on full-time contracts.
forex news forecast

July 10-16 Forex Trading Opportunities

Forex Trading Opportunities for the Week Ahead July 10th – 16th

Forexsnapshot lead economic analyst Elliot Myers breaks down 5 trading opportunities he likes for the week ahead. Check out his TradingView to keep up to date with his analysis.

US Dollar Buy Opportunity

What’s happening?

Price action is approaching a historic area of buying pressure and is due to enter the lower end of the price range.

What’s the opportunity?

Buying on a fall into the lower end of the range will present the opportunity of gains as price navigates back to the higher end of the range.

How should you trade?

Buy on an exhausted candle around 11950 or slightly above with stops below 11930 and a target of 12050 or slightly below this level for up to 100 pips of profit.

XAU/USD Forexsnapshot

Wait for price to fall before buying

Gold SEll OPPORTUNITY

What’s happening?

Gold is on a 7 week bullish run and is approaching a historic level of resistance at the 1400.00 level. Global risk sentiment is likely to push gold above 1400.00 however price action is highly likely to retrace down at a test of 1400.00.

What’s the opportunity?

Price action is likely to fail to breach 1400.00 and retrace down towards 1340.00 before re-testing 1400.00. An initial sell at a failed breach of 1400.00 and a buy for the re-test of 1400.00 are the two opportunities for a good amount of pips from both trades.

How should you trade?

Sell around the 1390.00 level and take profit at 1340.00. Buy at exhausted sell candles around 1340.00 with a profit target of 1400.00, alternatively you could hold the buy as price is likely to breach 1400.00 due to global risk off sentiment.

Gold Forex Selling Opportunity

Wait for a failed test of 1390.00 before selling

EUR/USD SELL OPPORTUNITY

What’s happening?

Brexit has weakened the outlook of the Euro and the weaker Eurozone and UK have made the US more attractive. The Euro is facing a test of the key 1.10000 level and a fall below this level will open speculation of a fall to 1.09000 where price fell on news of Brexit.

What’s the opportunity?

The Euro is under pressure and sell opportunities are the more likely to yield a positive result. The stronger than usual non farm pay rolls only adds to the appeal of the dollar against the Euro.

How should you trade?

Sell on the 20 day moving average which has capped price action consistently over the last few weeks. You can also sell on any attempt for price to head upwards of 1.11000 and we have highlighted the key sell zone with a yellow box.

EURUSD Forex Selling Opportunity

Sell at the 20 day moving average

USD/JPY SELL OPPORTUNITY

What’s happening?

Brexit has caused global risk off sentiment and as such investors have flocked to the Yen. The government and Bank of Japan have sent mixed messages about intervention in the FX markets and so still the Yen rises against the Dollar. We expect this rise to continue and no intervention until the Yen Dollar hits 99.000.

What’s the opportunity?

To take advantage of risk off sentiment and to buy the Yen against the Dollar at any failed attempt of the Dollar trying to break the 20 day moving average of a key level such as 101.000.

How should you trade?

Sell at any failed breach of the 20 day moving average or on an exhausted bullish candle within the yellow zone just below 101.00.

Dollar Yen Forex Sell Opportunity

Global risk off sentiment will boost the yen

GBP/USD SELL OPPORTUNITY

What’s happening?

Brexit and political instability have caused the pound to nose dive against the dollar. The pair is yet to find a floor and as such continued selling is advised until the political situation improves.

What’s the opportunity?

Selling at any failed attempt of the pound to advance against the dollar, with no Prime Minister to deal with Brexit until October expect further decline from this pair.

How should you trade?

Sell at any failed breach of the 20 day moving average which has frequently capped price action.

GBP USD Forex Sell Opportunity

Political uncertainty will keep the Pound weak

Brexit Impact

The Economic Impact of the UK leaving the European Union

The Economic Impact of the UK leaving the European Union

The Brexit vote has created political and economic uncertainty around the world. We have forecast the impact of brexit on global markets below.

Global growth will be modest in 2016 and we forecast global real GDP growth of 2% while in 2017 we expect a modest upturn to 2.2% – previous global estimates had real GDP at 2.4% in 2016 and 2.7% in 2017. Volatility in global markets will prolong over the 2 plus years the UK negotiates its exit terms stifling global investment, job creation and business expansion globally.

The UK economy is likely to grow by 1.3% in 2016 down from some forecasts of up to 1.8%. between 2017 – 2020 growth is likely to be sub 1% as the uncertainty of exit terms prevent investment and rattle confidence in the UK market.

We predict US growth will decline down from 2.2% to 1.7% in 2016. In 2017 US growth should remain on course for 2.2% – 2.5% growth.

The Federal Reserve is unlikely to raise interest rates in 2016 and US growth is likely to range around 1.9%. Turning to 2017 the US is likely to grow 2.4% and the Federal Reserve is expected to raise rates by at least 50 basis points in the winter depending on GDP and the global outlook.

The Bank of Japan may cut interest rates further into negative territory in 2016 depending deflationary factors caused by Brexit. The Bank is also politically motivated to intervene in currency markets to prevent sharp rises in the yen that harm the Japanese export economy. Growth for both 2016 and 2017 is likely to range between 0.2% and 0.4%.

The dollar will strengthen against the Euro as investors seek safety in the greenback. We forecast EUR/USD $1.07 by the close of 2016 and $1.05 by the close of 2017 with parity ($1.00) a possibility going into 2018-19 if UK exit terms don’t inspire markets.

Sterling will decline sharply against the dollar and we estimate $1.32 by the close of 2016. There are likely to be further declines going into 2017-18 to $1.24 and further declines in 2018-19 to $1.22 depending on how the terms of exit for Britain.

Oil prices will be knocked by global uncertainty and we forecast $41 a barrel by the close of 2016. Prices are likely to pick up in 2017-18 to $52 a barrel depending on other factors such as a cut in supply and deeper OPEC cooperation to manage prices.

Brexit

The Impact Of Brexit On The UK

The Impact Of Brexit On The UK

Our view:

Brexit is a terrible outcome for investors and businesses. Years of uncertainty, immediate political instability and the lack of the clear plan for the UK’s exit has further compounded the situation.

While the UK may well recover in the decades ahead there is no doubt that investment and growth will take sharp declines which will cost jobs and impede social mobility and infrastructure investment.

What we advise:

Investment in safety assets such as gold and government bonds are likely to see positive returns in the months ahead. The world is engulfed in uncertainty and capital is highly likely to seek safety until the full impact of Brexit is known.

 

We have explained the effect of Brexit against key areas of concern for investors

Capital Investment:

The call for the referendum in 2013 reduced investment in the UK and the fallout from the leave vote will further impede domestic and foreign investment due to uncertainty.

Banking:

UK investment banks hold prized EU passports that allow them to act as the global financial bridge for foreign investment into Europe. Many European countries envy the City of London and are likely to do what they can to weaken it to attract investment into their countries.

Trade:

Losing free access to the European market will spook businesses and see many international firms relocate some or all operations from the UK to an EU member state.

Pensions and Savings:

Depending on the strategy of the fund some citizens may see savings and pension pots shrink. UK-based funds may have higher costs accessing the European market if the UK exits the single market which will reduce the returns for investments.

Asset Classes:

A flight to safety is more than likely with equities and currencies seeing capital move away to safer options like gold and government bonds. The FTSE 100 and Sterling are likely to see months of decline as the full impact of an exit vote unravels.

UK Government:

The Moodys ratings agency has downgraded the outlook for the UK and it is likely as the full impact of the exit is realised that the UK will lose is AAA rating. This will increase the costs of borrowing on international markets for the UK government which likely means the government will have to embark on austerity to reduce spending costs in response to an increase in the cost of borrowing.

United Kingdom Unity:

Scotland is seeking an independence referendum while Ireland has declared interest in the reunification of the north. While is isn’t likely that the UK will break apart in the immediate future this cannot be written off for the longer term future especially in the case of Scotland.

Global Outlook

The effect of Brexit is global and the world was already in a period of declining growth. Global growth will likely decline for the coming years as the EU, UK and the rest of the world come to terms with the impact of the exit.

picture of money

How To Trade The UK Interest Rate Decision

How To Trade The UK Interest Rate Decision

Today’s announcement from Mark Carney has created a golden opportunity to profit on the EURO/GBP forex pair.

The pair pushed towards to the weekly trend line (picture below) and a break of this line (0.76985 level) will open up the next major resistance (0.78036) and above this the (0.80487 level).

We recommend waiting for a daily close above this level given that the trend line and analysis are from a weekly view. It’s important to enter on a time frame with relevant oversight of the market so a 5 minute chart entry for example won’t do.

We will be entering on a close above the trend line on a daily view and are aiming for the (0.78036) handle as our first target. Stop loss will be the lower major support at (0.75586). Beyond (0.78036) we are targeting a break above (0.80487) however we do expect there to be significant resistance at this level and will be happy to cash out and sell the market given the opportunity.

Stay tunes to our future posts on this development and good luck!

EURGBP Weekly View

EURGBP Weekly View

 

euro and dollar gold image

Forex Trade Of The Day EUR/JPY

Forex Trade Of The Day EUR/JPY

EUR/JPY

EURJPYDaily

The bias is bearish however entry should be on a break of the lower diagonal trend line for any gains from the downside. If selling pressure eases then a break of the upper trend line will open up gains to the upside. Our downside target is 126.910 while our upside target is 129.037 (Fib 38.2%).