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Morning brief for December 13

12/13/2016

 

EUR/USD retraced from the yesterday’s high of 1.0650 to 1.0630 and hung up there waiting for the Fed’s rate review. Today’s focus will be on German ZEW economic sentiment which is going to be upbeat according to the consensus forecast. The release will be followed by the US import prices.

 

We will know tomorrow whose side Yellen is on

 

the-fed-will-remain-patient.jpg

 

GBP/USD continues to trade in a choppy manner. Yesterday the pair made a big swing to 1.2695, then fell to 1.2670. Later today we will get the data on the UK inflation. It may dislodge the pound from its lofty perch as CPI is expected to rise in November.

 

USD/JPY ticked up in the course of the Asian session. Higher yields and anticipation of the rate hike are lifting the dollar. Now the pair is meandering in the narrow range of 115.25 – 114.70. There is no news from Japan; the pair is poised to trade sideways for a while, as the strong upward momentum is waning out.

 

AUD/USD slid down to 0.7490 as we got a bit disappointing data reports from Australia. Business conditions decreased from +6.6 points to +5.3, while business confidence popped from +4.3 points to +5.0 (the gauge indicate a rise, but it’s still below the average). Chines Industrial production data was upbeat. Investment went in line with expectation. Aussie reacted with a green blip and then continued to fall.

 

NZD/USD spiked to 0.7205 yesterday, but this sign of sudden strength fizzled out eventually.

 

Brent crude oil futures fell down to $55.60 after surging on Monday to their 1.5-year high on the back of a weekend output cut agreement signed by OPEC and non-OPEC producers.

 

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EUR/USD: bears have won

12/13/2016

 

Technical levels: support – 1.0590; resistance – 1.0695.

 

Trade recommendations:

 

1. Sell — 1.0690; SL — 1.0710; TP1 — 1.0590; TP2 – 1.0560.

 

Reason: bearish narrow Ichimoku Cloud; a dead cross of Tenkan-sen and Kijun-sen; all lines of Ichimoku Indicator are horizontal; strong resistance of Kijun-sen and Senkou Span A.

 

01-eurusdh4(65).png

 

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GBP/USD: on the Cloud’s support

12/13/2016

 

Technical levels: support – 1.2670, 1.2625; resistance – 1.2730.

 

Trade recommendations:

 

1. Buy — 1.2630; SL — 1.2610; TP1 — 1.2730; TP2 — 1.2750.

 

Reason: narrowing bullish Ichimoku Cloud; a cancelled dead cross of Tenkan-sen and Kijun-sen; a strong support of Tenkan-sen and Kijun-sen and the Cloud’s upper border.

 

02-gbpusdh4(51).png

 

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AUD/USD: trading in the Cloud will continue

12/13/2016

 

Technical levels: support – 0.7470; resistance – 0.7525.

 

Trade recommendations:

 

1. Sell — 0.7525; SL — 0.7445; TP1 — 0.7470; TP2 — 0.7440.

 

Reason: bullish Ichimoku Cloud and falling Senkou Span B; a weak golden cross of Tenkan-sen and Kijun-sen; the prices are under the resistance of Senkou Span B.

 

03-audusdh4(61).png

 

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Key option levels for Tuesday, December 13th

12/13/2016

 

EUR/USD

 

EURUSD(83).png

 

Main trend Short-term period Medium-term period

Bearish Neutral

Changes in the open interest + 15 307 ? + 119 816 ?

Closest resistance levels 1.0686; 1.0725; 1.0757; 1.0780

Closest support levels 1.0627; 1.0605; 1.0575; 1.0556

Trading recommendations

Baseline scenario Short EUR/USD below 1.0627, with target points at 1.0605 and 1.0575

Alternative scenario Moving above 1.0686 can be considered as a signal to Buy the pair, with target at 1.0725 and 1.0757

 

GBP/USD

 

GBPUSD(76).png

 

Main trend Short-term period Medium-term period

Neutral Bearish

Changes in the open interest + 12 ? + 61 ?

Closest resistance levels 1.2731; 1.2757; 1.2791; 1.2814

Closest support levels 1.2666; 1.2646; 1.2615; 1.2587

Trading recommendations

Baseline scenario Short GBP/USD below 1.2666, with target points at 1.2646 and 1.2615

Alternative scenario Moving above 1.2731 can be considered as a signal to Buy the pair, with target at 1.2757 and 1.2791

 

USD/JPY

 

USDJPY(76).png

 

Main trend Short-term period Medium-term period

Bullish Neutral

Changes in the open interest + 264 ? + 372 ?

Closest resistance levels 115.50; 115.93; 116.33; 116.58

Closest support levels 114.05; 113.28; 112.79; 112.20

Trading recommendations

Baseline scenario Long USD/JPY above 115.50, with the target points at 115.93 and 116.33

Alternative scenario Moving below 114.05 can be considered as a signal to sell the pair, with target at 113.28 and  112.79

 

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Some forecasts ahead of the BOE meeting

12/13/2016

 

image(22).jpg

 

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. 

 

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EUR/USD: bearish "Tweezers"

12/13/2016

 

1312eurusdh4.png

 

There’s a resistance by the nearest “Window”, so we’ve got a bearish “Harami”. If this pattern confirms, bears are likely going to deliver a local downward correction. As we can see on the Daily chart, we’ve got a bullish “Engulfing” pattern, so there’s an opportunity to have an upward correction in the short term.

 

1312eurusdh1.png

 

We’ve got a “Tweezers” and a “Doji”, but a confirmation of these patterns is a quite weak. In this case, the market is likely going to test the nearest support area. If we see a pullback from it, bulls will probably try to break the last high.

 

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USD/JPY: "Engulfing" points to local decline

12/13/2016

 

1312usdjpyH4.png

 

There’s a bearish “Harami”, which has been confirmed enough. However, the 13 Moving Average acted as a support. So, bears are likely going to test the nearest resistance once again. If any bearish pattern arrives afterwards. there’ll be an opportunity to have another decline. As we can see on the Daily chart, here’s a “Shooting Star”, but this pattern doesn’t have a confirmation. Therefore, a bearish correction is going to start soon.

 

1312usdjpyH1.png

 

We’ve got a “Harami” on the 34 Moving Average. Considering a confirmation of this pattern and a bearish “Engulfing”, the market is likely going to test the closest support line. If a pullback happens afterwards, bulls will have a chance to deliver another upward price movement.

 

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EUR/USD: wave [ii] going to end

12/13/2016

 

Image20161213154827001.png

 

We’ve got a bearish impulse in wave . Previously, wave 2 formed like a flat. Therefore, there’s an opportunity to have wave [ii] in the short term. At the same time, if the price finds a lodgement under -1/8 MM Level afterwards, bears are likely going to deliver wave [iii] of 3.

 

Image20161213154827002.png

 

As we can see on the one-hour chart, we’ve got a bullish impulse in wave (a). Therefore, when wave (B) ends, the market is likely going to rise in wave © of [ii]. The main intraday target is 3/8 MM Level.

 

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GBP/JPY broke resistance level 146.10

12/13/2016

 

GBP/JPY broke resistance level 146.10

Next buy target – 150.00

GBP/JPY today broke above resistance level 146.10 (which stopped the previous minor impulse wave (i) at the start of this month).  The price earlier broke through the resistance level 145.00 (which was set as the buy target in our earlier forecast for this currency pair). The breakout of these two resistance levels continues the active minor impulse wave (iii) – which started recently from the pivotal support level 142.50 (top of the previous A-wave from July).

 

GBP/JPY is expected to rise further in the direction of the next buy target at the resistance level 150.00 (forecast price calculated for the termination of the active long-term ABC correction ? from July).

 

GBPJPY_-_Primary_Analysis_-_Dec-13_1455_

 

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EUR/NZD falling inside minor impulse wave (iii)

12/13/2016

 

EUR/NZD falling inside minor impulse wave (iii)

Next sell target - 1.4600

EUR/NZD continues to fall inside the minor impulse wave (iii), which belongs to the wave 3 from October (which is itself a part of the intermediate impulse wave (3) from July). The active impulse wave 3 earlier broke though the powerful support zone lying between the support levels 1.5000 and 1.5100 (which have been steadily reversing the price from July). The breakout of this support zone led to the recent breakout of the next support level 1.4860.

 

EUR/NZD is expected to fall further in the active impulse waves (iii) and in the direction of the next sell target at the support level 1.4600. Sell stop-loss can be placed above 1.4860.

 

EURNZD_-_Primary_Analysis_-_Dec-13_1510_

 

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EUR/USD & December's Fed Meeting: A rate hike is coming finally...

12/14/2016
 
Today is the D-Day for the Federal Reserve, as the central bank will meet to take an interest rate decision and markets had been pricing a rate hike by approximately 25 basis points, according to latest analysts’ surveys. Also, Fed Watch’s tool has a near 100% of chances for a rise un the interest rates, which should also help to fuel the US dollar across the board, despite the higher expectations about that hike. In the worst-case scenario, the Fed can keep on hold the rates.
 
Our technical analysis for EUR/USD at H4 chart is showing a very clear bearish structure ahead of the meeting, but with a strong demand zone placed around 1.0538. If the pair manages to rebound above that area, which is unlikely to happen with a rate hike, we could expect a testing of the 200 SMA around 1.0769. In the most-expected scenario, EUR/USD can attempt a breakout below 1.0538, in order to reach the support level of 1.0404.
 
EURUSDH4(39).png
 
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EUR/GBP: bears regained their control over the market

12/14/2016

 

On the EUR/GBP daily chart, correction towards 0.856 can be used for opening short positions. A breakout of the support located near the December low (0.829) can lead to the continuation of the downward movement in the direction of the target 161.8% in the "Crab" pattern (0.76). The levels of 0.8175 and 0.82 are intermediate targets.

 


 

On the EUR/GBP hourly chart, "bears" continue to control the market's situation. At present, the 5-0 pattern is almost formed. Rollbacks towards 38.2%, 50%, and 61.8% levels can be used for opening short positions.

 

Screenshot_2016_12_14_08_24_00.png

 

Recommendation: hold shorts formed from  0,856, SELL 0,8445 SL 0,85 TP 0,8175. 

 

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EUR/USD: will euro catch the Crab?

12/14/2016

 

On the EUR/USD daily chart, bulls attacked once again to develop correction. If this attack, as the previous one, fails, the successful test of support at 1,051 will signal about the continuation of the downward movement towards the target 161.8% in the "Crab" pattern (0.985). The 1.039 and 1.023 levels can serve as short-term supports.

 

Screenshot_2016_12_14_08_23_13.png

 

On the EUR/USD hourly chart, there is a transformation of the "Shark" pattern into the 5-0 pattern. Correction towards 50% or 61.8% of CD wave, can be used for opening short positions. 

 

Screenshot_2016_12_14_08_23_32.png

 

Recommendations:

 

SELL 1,074 SL 1,0799 TP 1,05,

 

SELL 1,07 SL 1,0755 TP1 1,05 TP2 1,039,

 

SELL 1,051 SL 1,0565 TP1 1,039 TP2 1,023 TP3 0,985. 

 

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EUR/USD: in correction to Kijun-sen

12/14/2016

 

Technical levels: support – 1.0590, 1.0630; resistance – 1.0695.

 

Trade recommendations:

 

1. Sell — 1.0690; SL — 1.0710; TP1 — 1.0590; TP2 – 1.0560.

 

Reason: bearish narrow Ichimoku Cloud; a dead cross of Tenkan-sen and Kijun-sen, but the rising Tenkan-sen; strong resistance of Kijun-sen and Senkou Span A.

 

01-eurusdh4(66).png

 

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GBP/USD: pound corrected to Kijun

12/14/2016

 

Technical levels: support – 1.2640/50, 1.2625; resistance – 1.2730.

 

Trade recommendations:

 

1. Buy — 1.2650; SL — 1.2630; TP1 — 1.2730; TP2 — 1.2750.

 

Reason: bullish Ichimoku Cloud with rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen; a strong support of Tenkan-sen and Kijun-sen; rising Tenkan-sen.

 

02-gbpusdh4(52).png

 

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AUD/USD: bearish trend is coming

12/14/2016

 

Technical levels: support – 0.7470; resistance – 0.7500, 0.7525.

 

Trade recommendations:

 

1. Sell — 0.7500; SL — 0.7520; TP1 — 0.7440; TP2 — 0.7340.

 

Reason: bullish Ichimoku Cloud, but there is a falling Senkou Span B; a weak golden cross of Tenkan-sen and Kijun-sen; the prices are under the resistance of Senkou Span B.

 

03-audusdh4(62).png

 

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EUR/USD: "Thorn" stopped bulls

12/14/2016

 

14-12-2016-EUR-H4.png

 

There’s a local consolidation inside the resistance area. Therefore, the market is likely going to reach the next resistance on the 89 Moving Average. If a pullback from this line happens, bears will probably try to test a support at 1.0655 – 1.0594.

 

14-12-2016-EUR-H1.png

 

The price is consolidating between a resistance at 1.0666 and a support at 1.0603. So, the pair is likely going to reach the 34 Moving Average during the day. If we see a pullback from this line, there’ll be an opportunity to have another bullish movement towards a resistance at 1.0666 – 1.0697.

 

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Morning brief for December 14

12/14/2016

 

EUR/USD edged up above 1.0635 in the course of the Asian session having propped by the widening spread between US and German 2-year yields. All eyes on the FOMC meeting. The outcome will be announced at 9:00 pm GMT+2. Chair Janet Yellen’s press conference will be half an hour later.

 

%D0%91%D0%B5%D0%B7%D1%8B%D0%BC%D1%8F%D0%

 

USD/JPY spiked to 115.30 on the latest session as the Bank of Japan was very active today in selling JGBs. Later today we will receive a great many of the US statistical releases on the retail sales, PPI, capacity utilization rate and monthly gauge of the industrial production. They should send some wobbles to the market ahead of the meeting.

 

BOJ sells JGBs to push down the long-bond yields 

 

BN-PZ157_jexpec_J_20160926003522.jpg

 

GBP/USD little changed in the past hours of the Asian session. Having made a big swing, prices returned to the Ichimoku cloud on the 4H timeframe. At the present moment prices a moving along 1.2650. Later today we will receive significant releases from the UK that could influence the BOE decision tomorrow. They may afford a short-term support to the pound as the readings are expected to be strong. In the New York session, however, USD should pare its losses after the announcement of the Fed’s rate statement. Also, we remind you of the BOE Governor Carney’s speech scheduled for 2:15 pm. Although it shouldn’t bring lots of movements to the chart, it is better to go through its highlights just to be sure that nothing important is missed.

 

AUD/USD slumped to 0.7480 on the disappointing headlines of the Australian consumer sentiment release. NZD/USD was little higher on the session.

 

Gold price ticked up to $1160 on the Asian session. The yellow metal prices should go lower after Fed announces its rate as they are denominated in USD. So, a stronger dollar makes gold more expensive for other nations to purchase, demand for gold decreases and send gold prices lower.   

 

Oil ran fell to $55 following a reported rise in US crude inventories and an estimate that OPEC may have produced more crude in November than previously thought.

 

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GBP/USD: bulls going to test "V-Top"

12/14/2016

 

14-12-2016-GBP-H4.png

 

We’ve got a “V-Top” pattern, which has been confirmed. In this case, the market is likely going to decline towards a support near the uptrend. Considering a possible pullback from this level, there’s an opportunity to have an upward movement in the direction of the nearest resistance at 1.2703 – 1.2770.

 

14-12-2016-GBP-H1.png

 

There’s a confirmed “Double Top”, which led to an achievement of the 55 Moving Average. Therefore, the price is likely going to decline, so we should keep an eye on the 89 Moving Average as a possible intraday target. If a pullback from this line happens, bulls will probably try to test a resistance at 1.2703 – 1.2726. 

 

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Banks' projections ahead of the FOMC meeting

12/14/2016

 

The FOMC meeting is one of the highly-anticipated events of the year. The Fed is widely expected to raise its interest rate by 25bp.The hike is already priced in, so many banks don't expect significant moves from the US dollar. They suggest focusing on the central bank’s signals regarding the future of the Fed's monetary policy in the upcoming months. 

 

Banks Opinion

Goldman Sachs

 

The bank expects the FOMC to raise its benchmark by 25bp followed by the strengthening of USD. Chair Yellen will probably say that the Fed’s monetary stance is not on a pre-set, that it will be adjusted to the upcoming US economic data. 

 

Danske 

 

The Fed’s hike was already priced in. The main question is how many hikes to expect next year from the Fed. Danske’s forecast is two hikes in 2017 and 3 hikes in 2018. 

 

BofA Merrill 

 

The rate hike is largely expected, so the focus will be on the statement and the press conference. The banks’ strategists think that the FOMC statement and summary of economic projections will be hawkish. The US dollar is poised to trading higher. The short-term gains of the greenback could be tempered by Yellen’s tone. She will likely adopt a cautiously optimistic tone, reiterating the gradual pace of hikes. USD is at risk of appreciation. The inflation rate will probably move higher. BoFA Merill notices that the recent increase in inflation rate and USD strengthening can be attributed to the US factors and not foreign central bank easing measures. The Fed may see this as a positive sign.  

 

SEB

 

SEB suggests traveling to the past to see how the US dollar reacted to the Fed’s rate hike in December 2015. USD weakened before the rate announcement, continued to weaken in the first hour after the hike announcement. Then, it strengthened against almost all major currencies (except CAD and JPY) and extended its gains the day after the FOMC meeting. The futures implied probability for a hike was 76% in 2015, now it is greater – 93%. So, the rate increase this year is more discounted by markets in comparison to 2015. 

 

Barclays

 

FOMC meeting will unlikely offer a great boost to USD; it may instead encourage profit-taking on long USD positions especially in the pairs where USD is the most expensive. Strategists expect Chair Yellen to balance the FOMC decision to raise rates with a rather dovish tone at the press conference. She might be willing to test the potential benefits of running an economy working at full blast. Positioning and seasonal factors will likely weaken the USD into year-end. 

 

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Key option levels for Wednesday, December 14th

12/14/2016

 

EUR/USD

 

EURUSD(84).png

 

Main trend Short-term period Medium-term period

Bearish Neutral

Changes in the open interest + 41 847 ? + 83 741 ?

Closest resistance levels 1.0676; 1.0713; 1.0746; 1.0770

Closest support levels 1.0603; 1.0574; 1.0537; 1.0490

Trading recommendations

Baseline scenario Short EUR/USD below 1.0603, with target points at 1.0574 and 1.0537

Alternative scenario Moving above 1.0676 can be considered as a signal to Buy the pair, with target at 1.0713 and 1.0746

 

USD/JPY

 

USDJPY(77).png

 

Main trend Short-term period Medium-term period

Bearish Neutral

Changes in the open interest + 382 ? + 404 ?

Closest resistance levels 115.15; 115.37; 115.55; 115.96

Closest support levels 114.27; 113.51; 113.02; 112.73

Trading recommendations

Baseline scenario Short USD/JPY below 114.27, with the target points at 113.51 and 113.02

Alternative scenario Moving above 115.15 can be considered as a signal to buy the pair, with target at 115.37 and  115.55

 

USD/CAD

 

USDCAD(71).png

 

Main trend Short-term period Medium-term period

Neutral Bullish

Changes in the open interest + 137 ? + 173 ?

Closest resistance levels 1.3127; 1.3163; 1.3184; 1.3210

Closest support levels 1.3065; 1.3038; 1.3019; 1.2968

Trading recommendations

Baseline scenario Long(?) USD/CAD above 1.3127, with the target points at 1.3163 and 1.3184

Alternative scenario Moving below 1.3065 can be considered as a signal to Sell the pair, with target at 1.3038 and 1.3019

 

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EUR/USD: zigzag in wave [ii]

12/14/2016

 

Image20161214130404001.png

 

We’ve got a flat in wave 2, which led to form a bearish impulse in wave . Considering a possible ending of wave [ii], bears are likely going to deliver wave [iii] of 3 in the short term. If -2/8 MM Level be broken, we’ll have a new levels indication.

 

Image20161214130404002.png

 

There’s a zigzag in wave [ii]. Previously, a bearish impulse in wave was formed. In this case, wave (i) is likely going to be continued during the day.

 

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EUR/USD: bullish "Doji"

12/14/2016

 

1412eurusdh4.png

 

There’s a bearish “Harami” on the 34 Moving Average. So, 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 upward price movement. As we can see on the Daily chart, we’ve got an “Engulfing” at the local low. If this pattern confirms, bulls are likely going to push the pair even higher.

 

1412eurusdh1.png

 

We’ve got a “Tweezers” and a “Shooting Star”, which both have been formed on the nearest “Window”. Also, there’s a “Doji” at the last low. Therefore, the price is likely going to test the closest resistance once again. Considering a possible pullback from this level, there’s a chance to have another decline soon. 

 

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USD/JPY: bears going to deliver new local low

12/14/2016

 

1412usdjpyH4.png

 

We’ve got an “Engulfing” pattern, which has been confirmed. Also, the 13 Moving Average is acting as a support. In this case, the market is likely going to test the nearest support, which could be a departure point for another bullish price movement. As we can see on the Daily chart, here’s a “Shooting Star”, but this pattern remains unconfirmed. Therefore, there’s an opportunity to have the second test of the closest resistance.

 

1412usdjpyH1.png

 

There’s a “Last Engulfing” pattern, which has a strong confirmation. Under this circumstances, the pair is likely going to decline in the direction of the nearest support level during the day.

 

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