Forex Knowledge 19 MARCH 2014 currency Report.
EQUITIES
The global markets are in a mixed mode as it waits for the conclusion of the US FOMC meet today and the first Fed policy statement from Janet Yellen.
Nikkei (14361.19, -0.35%) has achieved our initial target of 14400 and may fall further to our next target support of 14000. A break below 14000 may accelerate the decline to 13750 and then 13200.
Shanghai (2009.85, -0.76%) bears dominate firmly as long as it stays below 2040-50 and reversal will come only on a break above 2080. A break below 1980-75 may take it to 1950-45.
Nifty (6516.65, +0.19%) lost nearly all of its initial gains after hitting a new life high at 6575. As long as the short term support zone of 6480-60 is unbroken, the bullish momentum remains intact. On the other hand, a break below 6460 may activate a week-long corrective phase. The preferred direction of the market should be clear in the next 2 sessions.
Dow (16336.19, +0.55%) is holding above our support of 15900 and may consolidate between 15900 and 16600 for some time before launching the next move. The major uptrend will be threatened only on a break below 15500.
COMMODITIES
There is no major movement in the commodity market. Oil market seems bullish in the near term.
Gold (1357.71) has bounced a bit from the 13-day MA while Silver (20.86) is trading below crucial resistance near 20.98. Gold-Silver ratio (65.053) is in an upward rally targeting 66-66.5 in the near term. This signals that there could be further decline in Silver towards 20.5 whereas Gold may remain ranged with smaller movements. Immediate support near 1350.9-1351 is seen for Gold.
Copper (2.9450) has managed to sustain above 2.90 levels in the past 3-4 sessions but the bulls doesn? seems to gather strength at this moment. A rise above 3 is essential to indicate any upmove. For now we may see ranged moves within the 2.90-3 regions.
Brent- Nymex spread (7.72) saw a sharp fall from resistance near 10 in line with our expectation and may now test support near 6.9-7.00 region. Brent (106.63) is testing crucial long term support on the weekly and may bounce back towards 108-109 levels.
Nymex WTI (98.41) is ranged for now and may rise towards 100 in the near term. Note that it is testing immediate support near 98.23. Overall it is in a long term uptrend.
CURRENCIES
Dollar Index (79.37) has been trading between our support at 79.10 and resistance of 80. A break above 79.70-80 may bring a trending rally but a break below 79.10 might be decisively bearish in the long term.
The Euro (1.3928) has turned rangebound too between 1.3830 and 1.3970. The major support of 1.3830 was not breached but to generate upward momentum, the bulls must take Euro above 1.3980 and 1.4070. Otherwise, more of consolidation can be seen.
Dollar-Yen (101.34) is struggling near the lower end of the broader range of 101-104. The short term direction depends on the support of 101-100.75 now as a break below may take Yen to 99-98.75 but holding above it may continue the range bound price action.
The Euro-Yen Cross (141.12) remains in an uptrend without any serious momentum The bullish view to 144-145 survives as long as it holds above the major support area of 139-138 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.
Pound (1.6601) is in a correction of its major uptrend now in the form of a bullish flag pattern. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.65-1.6470 may be bought into.
Aussie (0.9113) has reached a very important time-price confluence zone and the bulls must break above 0.9150-0.92 by the current week to confirm an intermediate term reversal or else a sharp fall may take it back towards 0.87.
Dollar-Rupee (61.19) opened sharply lower only to find buying at the old support zone of 60.90-80 to end the day unchanged. Holding above 61, it may continue to rise towards the resistance of 61.55-60 once more. Weakness will set in below 61
INTEREST RATES
The FOMC Meeting concludes tonight and markets are eagerly waiting to see Janet Yellen continue to taper. The US 10Yr (2.67%) remained stable in the range of 2.65-2.70%. The 10-5Yr yield differential (1.13%) has dropped further and is testing support at current levels on the weekly charts. A bounce from the support may take it 1.20% and we may see the 10Yr rising again to target 2.75%.
The German 10Yr (1.57%) was also stable, while above 1.55%, may see a rally to 1.65%. The 10Yr Bund - Bond Spread (-1.10%) is in the range of -1.18% to -1.05%.
The Japan 10Yr (0.62%) is range bound between 0.60-0.65%. A movement beyond this range will give further direction. The US-Japan 10Yr spread (2.05%) is moving in complete correlation to Dollar-Yen (101.34), testing support at current levels just as Dollar-Yen struggles near the support at 101-100.75.
India's 10Yr GOI (8.81%) has moved past our target of 8.80%. Above 8.80% we may see a rise to 8.90% and maybe even 9.00%.
EURUSD turned to the upside to confirm stability above 1.3890 resistance, now
good support. Trading above this level keeps chances for the upside move
intact.
Linear Regression Indicators are positive and that supports the upside move within the channel shown on graph. Only a breakout below 1.3810 risks failing our expectations for today we will depend on stability above 1.3845 to keep intraday positive expectations valid.
Support: 1.3895, 1.3845, 1.3810, 1.3770, 1.3740
Resistance: 1.3945, 1.3970, 1.4005, 1.4080, 1.4150
Recommendation Based on the above, long the pair around 1.3900 targeting 1.3945, 1.4005 then 1.4080 and stop-loss below 1.3810
The negative crossover on Linear Regression Indicators 34 & 55 deepened
however all attempts for the breakout below 1.6600 support with daily closing
below it so far failed. This limits the effect of the negative crossover on
LRIs.
Nevertheless, AROON is slightly biased lower and MACD is moving to the downside and that makes us remain on the bearish side waiting for the daily closing below 1.6600. Therefore, we prefer to remain on the sidelines for now to confirm the move.
Support: 1.6600, 1.6580, 1.6545, 1.6515, 1.6470
Resistance: 1.6625, 1.6670, 1.6700, 1.6740, 1.6785
Recommendation Based on the above, we prefer to remain on the sidelines waiting for more confirmations For traders capable and willing of enduring higher risk based on negativity on indicators, short the pair below 1.6670 targeting 1.6580, 1.6515 then 1.6470 and stop-loss above 1.6740
Over daily basis, we can see USDCHF stable above 127% Fibonacci correction
around 0.8700, stability above which is accompanied with stability above the
breached descending resistance –now support- that is trending lower with
time.
Stability above 0.8700 is positive and makes us favor more upside attempts, however negativity on Linear Regression Indicators require a breach of 0.8755 to confirm the upside move. Only a breakout below 0.8680 will weaken the upside move.
Support: 0.8700, 0.8680, 0.8650, 0.8620, 0.8580
Resistance: 0.8755, 0.8800, 0.8840, 0.8860, 0.8900
Recommendation Based on the above, buy the pair above 0.8720 targeting 0.8755, 0.8800 then 0.8900 and stop-loss below 0.8620
The pair is trading positively away from 101.35 supporting the upside move in
the coming session, targeting 102.70. The pair finds support from positivity on
RSI and a breakout of 101.35 then 100.70 will cancel the positive expectations
and push the pair to test 100.15.
Support: 101.30, 101.00, 100.70, 100.50, 100.20
Resistance: 101.70, 102.00, 102.30, 102.70, 103.00
Recommendation Based on the above, buy the pair above 101.35 targeting 102.00 then 102.70 and stop-loss below 100.70
EQUITIES
The global markets are in a mixed mode as it waits for the conclusion of the US FOMC meet today and the first Fed policy statement from Janet Yellen.
Nikkei (14361.19, -0.35%) has achieved our initial target of 14400 and may fall further to our next target support of 14000. A break below 14000 may accelerate the decline to 13750 and then 13200.
Shanghai (2009.85, -0.76%) bears dominate firmly as long as it stays below 2040-50 and reversal will come only on a break above 2080. A break below 1980-75 may take it to 1950-45.
Nifty (6516.65, +0.19%) lost nearly all of its initial gains after hitting a new life high at 6575. As long as the short term support zone of 6480-60 is unbroken, the bullish momentum remains intact. On the other hand, a break below 6460 may activate a week-long corrective phase. The preferred direction of the market should be clear in the next 2 sessions.
Dow (16336.19, +0.55%) is holding above our support of 15900 and may consolidate between 15900 and 16600 for some time before launching the next move. The major uptrend will be threatened only on a break below 15500.
COMMODITIES
There is no major movement in the commodity market. Oil market seems bullish in the near term.
Gold (1357.71) has bounced a bit from the 13-day MA while Silver (20.86) is trading below crucial resistance near 20.98. Gold-Silver ratio (65.053) is in an upward rally targeting 66-66.5 in the near term. This signals that there could be further decline in Silver towards 20.5 whereas Gold may remain ranged with smaller movements. Immediate support near 1350.9-1351 is seen for Gold.
Copper (2.9450) has managed to sustain above 2.90 levels in the past 3-4 sessions but the bulls doesn? seems to gather strength at this moment. A rise above 3 is essential to indicate any upmove. For now we may see ranged moves within the 2.90-3 regions.
Brent- Nymex spread (7.72) saw a sharp fall from resistance near 10 in line with our expectation and may now test support near 6.9-7.00 region. Brent (106.63) is testing crucial long term support on the weekly and may bounce back towards 108-109 levels.
Nymex WTI (98.41) is ranged for now and may rise towards 100 in the near term. Note that it is testing immediate support near 98.23. Overall it is in a long term uptrend.
CURRENCIES
Dollar Index (79.37) has been trading between our support at 79.10 and resistance of 80. A break above 79.70-80 may bring a trending rally but a break below 79.10 might be decisively bearish in the long term.
The Euro (1.3928) has turned rangebound too between 1.3830 and 1.3970. The major support of 1.3830 was not breached but to generate upward momentum, the bulls must take Euro above 1.3980 and 1.4070. Otherwise, more of consolidation can be seen.
Dollar-Yen (101.34) is struggling near the lower end of the broader range of 101-104. The short term direction depends on the support of 101-100.75 now as a break below may take Yen to 99-98.75 but holding above it may continue the range bound price action.
The Euro-Yen Cross (141.12) remains in an uptrend without any serious momentum The bullish view to 144-145 survives as long as it holds above the major support area of 139-138 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.
Pound (1.6601) is in a correction of its major uptrend now in the form of a bullish flag pattern. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.65-1.6470 may be bought into.
Aussie (0.9113) has reached a very important time-price confluence zone and the bulls must break above 0.9150-0.92 by the current week to confirm an intermediate term reversal or else a sharp fall may take it back towards 0.87.
Dollar-Rupee (61.19) opened sharply lower only to find buying at the old support zone of 60.90-80 to end the day unchanged. Holding above 61, it may continue to rise towards the resistance of 61.55-60 once more. Weakness will set in below 61
INTEREST RATES
The FOMC Meeting concludes tonight and markets are eagerly waiting to see Janet Yellen continue to taper. The US 10Yr (2.67%) remained stable in the range of 2.65-2.70%. The 10-5Yr yield differential (1.13%) has dropped further and is testing support at current levels on the weekly charts. A bounce from the support may take it 1.20% and we may see the 10Yr rising again to target 2.75%.
The German 10Yr (1.57%) was also stable, while above 1.55%, may see a rally to 1.65%. The 10Yr Bund - Bond Spread (-1.10%) is in the range of -1.18% to -1.05%.
The Japan 10Yr (0.62%) is range bound between 0.60-0.65%. A movement beyond this range will give further direction. The US-Japan 10Yr spread (2.05%) is moving in complete correlation to Dollar-Yen (101.34), testing support at current levels just as Dollar-Yen struggles near the support at 101-100.75.
India's 10Yr GOI (8.81%) has moved past our target of 8.80%. Above 8.80% we may see a rise to 8.90% and maybe even 9.00%.
Linear Regression Indicators are positive and that supports the upside move within the channel shown on graph. Only a breakout below 1.3810 risks failing our expectations for today we will depend on stability above 1.3845 to keep intraday positive expectations valid.
Support: 1.3895, 1.3845, 1.3810, 1.3770, 1.3740
Resistance: 1.3945, 1.3970, 1.4005, 1.4080, 1.4150
Recommendation Based on the above, long the pair around 1.3900 targeting 1.3945, 1.4005 then 1.4080 and stop-loss below 1.3810
Nevertheless, AROON is slightly biased lower and MACD is moving to the downside and that makes us remain on the bearish side waiting for the daily closing below 1.6600. Therefore, we prefer to remain on the sidelines for now to confirm the move.
Support: 1.6600, 1.6580, 1.6545, 1.6515, 1.6470
Resistance: 1.6625, 1.6670, 1.6700, 1.6740, 1.6785
Recommendation Based on the above, we prefer to remain on the sidelines waiting for more confirmations For traders capable and willing of enduring higher risk based on negativity on indicators, short the pair below 1.6670 targeting 1.6580, 1.6515 then 1.6470 and stop-loss above 1.6740
Stability above 0.8700 is positive and makes us favor more upside attempts, however negativity on Linear Regression Indicators require a breach of 0.8755 to confirm the upside move. Only a breakout below 0.8680 will weaken the upside move.
Support: 0.8700, 0.8680, 0.8650, 0.8620, 0.8580
Resistance: 0.8755, 0.8800, 0.8840, 0.8860, 0.8900
Recommendation Based on the above, buy the pair above 0.8720 targeting 0.8755, 0.8800 then 0.8900 and stop-loss below 0.8620
Support: 101.30, 101.00, 100.70, 100.50, 100.20
Resistance: 101.70, 102.00, 102.30, 102.70, 103.00
Recommendation Based on the above, buy the pair above 101.35 targeting 102.00 then 102.70 and stop-loss below 100.70
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