GBP/USD – As you can see the from daily chart above. We are in a downtrend movement on GBP/USD. We’ve found good support in the area of1.372933 to 1.376455 witches carried us up to the inerdowntrend line of a high for the week of 1.392999. Over the course of Thursday evening and Friday, we failed to break past these highs and saw an interday from to the low of 1.37813 and picked up support there to touch to the inerdowntrend line once again. On Tuesday we have the Annual Budget Release and we have more news for GBP & USD over the course of the week. By the looks of it, we are in a downtrend towards the support of 1.36169.
If you take a look at the daily GBP/USD chart you may see overall we are in an uptrend. But you might notice we have to touch the ‘mean’ price before we see a continuation in this uptrend…
EUR/USD – Well as we can see from the chart below EUR/USD is once again in range territory. And just like GBP/USD we seem to hit the ‘mean’ price before a continuation to the tops. The levels that we have seen on EUR/USD on the 1st March. Have acted as good support for EUR/USD and imply a range trade over towards the mean price and then a break to the lower side to create a ‘buyers pool’ for another attempt at the highs.
USD/JPY – This is interesting. It’s finally broken out of the downtrend but hit resistance on of the main uptrend lines that you can see on the chart. I do suspect USD/JPY to push towards the 108 handle and even for 109 depending on how the USD data this week is presented. I do only see this being a retrace and not a “dollar strong story”. A key area that I’m keeping an eye on is the 107.866933 area. (red line on the chart below) If we break this it could imply the push to the 109.768 and could spark a sell-off on GBP/USD and EUR/USD.
The area of 1.376455 to 1.372902 (bottom blue area of picture) is either going to act as major support to keep us above the 1.37 handle to range trade towards the outer trend line or we’re going to see it act as major resistance if we break it to see us a push to to the outtrend line.
GBP/USD – We have some big news on Friday for GBP as May speaks. There could be a lot of resistance to trade this week due to her speaking on Friday. We may see a small trend appear over the course of the week due to there no big influx of volume as we wait for her speech.
This has caught my eye on the H1 chart on GBP/USD. I expect to see candles like this on the M1 to M15 chart but on a H1 chart. This sparks red flags in my mind. This could be a set up for a major push past the high of 1.43422 or could be the indication of someone scalping with the ease of low volume (it happened on a Friday)
As you can see from the GBP/USD daily chart we are in the mid-range territory. So my suspicions of this being an attempt at breaking that recent high of the above handle of 1.43 could be a possibility. If we get a continuation of this uptrend during the weekdays and are close to the 1.41460 by Thursday I could see us pushing in an attempt at the 1.43442 resistance area. Now if we see a downtrend push and we break the interday support of 1.39057 that we saw on Friday then that to me could suggest that GBP traders are not confident in what May’s speech will include.
EUR/USD – ECB President Draghi Speaks at 2pm GMT on Monday.
As we can see on EUR/USD daily chart we’ve formed a triple top. To me, this instantly suggests that we are in range trading territory. We’ve managed to keep support above the main support zone of 1.22060 to 1.22750. This could suggest depending on how the ECB speech goes we could see another attempt at the mid-range resistance of 1.242883. A break of the mentioned support zone could see us down to 1.206723 support.
USD/JPY – If we see EUR weakness from the ECB speech and also GBP weakness due to many traders holding back until we get more information from Mays speech on Friday. We could see the dollar gaining some beginning week strength. We have found a major support zone on USD/JPY
as you can see 105.540 acted as major support for USD/JPY. We’ve had an attempt of the 108 area and we failed. But it’s expected from a volume beginning week push. Retrace is always expected at key resistance levels. If we do see EUR & GBP weakness we could see this support acting as a push to the main resistance of 109.768. A Fail to brake this level could see a possible range traded down trend like we’ve seen over the past month down to 104.286688 area.
Its a Saturday night (yes I’m doing analysis on weekend. Gota stay ahead of the game) and I’ve looked at my chart that compares GBP vs EURO, USD & JPY (That is the chart you can see above) and if I look correctly we’ve had a nice double top formation that was a perfect example of when to sell.
Now if we follow the flow of the chart we can see that since around the middle of August we had a nice break out to the upside and then we had a very slow downtrend to find some support. But take note of what we did next we decided to range before we see a breakout in around December to take for them highs and then we ranged again and then we went for a breakout for another high setup. Now we’ve formed a double top witch to me normally implies we need a pullback to generate a nice buying pool so we can take a go at the high again.
The main reason I could see us ranging is due to the pattern formation on this chart. Also, the dollar seems to be finding support here and there with dollar squeezes and due to Brexit and how that is treating GBP. GBP seems to be on a knife edge and any bad news about Brexit can easily turn a nice interday uptrend into a sell-off.
So with the dollar squeeze and euro gaining some traction via Brexit talks and bad news we could see a range trade set up. I won’t be posting levels on G/U or E/G or G/J until the market opens on Sunday night. Want to see what levels present them selfs from the market open.
Some simple support and resistance lines for GBP/USD. From looking at the chart and how we’ve been trading in the past we could see a drop below the 1.37290 handle before we start to see a range trader confirmation.
As you may be able to identify from the chart above GBP/USD has a habit of range trading before there is a decision this, of course, is largely due to the dollar index also range trading as there isn’t any clear direction indication.
We can use past history to give us some indication of how events will turn out.
Range Trading – If we keep seeing dollar squeezes with Euro weakness then cable should be able to keep its ground and we will identify within the range
Break For Lower Levels – If a dollar squeeze turns into good dollar support and momentum and we see euro strength due to Brexit negotiations not going the way they should this could spark a big G/U sell-off down to the mean level (SMA 100).
Break For Higher Levels – If we see a repeat of how the dollar has been acting (ranging before the dollar index breaks down) and we have good Brexit negotiation news then we could see a spark for the high level of 1.45. Even if we see bad Brexit negotiations we could still see G/U head towards 1.45/46 just down to the dollar weakness.
We’ve got FOMC today. Bloomberg cover 6 things to watch out for. You can read this below.
Here are some levels that have been presented them self today.
GBP/USD: 1.41203 has been seen as a good interday support zone. We could see a uptrend towards the week high of 1.42126. If we see the level of 1.42125 and it becomes a support zone this could be another push for the 1.43 handle.
EUR/USD: is fighting with the weeks high at the moment. 1.23974 has accted as the interday support zone. it’s also the daily piviot point. If 1.24600 acts as a support we could see E/U taking another go at the month high of 1.25374
USD/JPY: Is on a downtrend at the moment. Support has been found at 108.275 with a week resistance of 109.199. If U/J can’t brake the week resistance of 109.199 i could see a downtrend towards the 107.327 level.
The Federal Open Market Committee meeting this week is likely to reinforce the baseline expectation of three hikes this year thanks to a more upbeat outlook for the U.S. and global economies, and somewhat diminished concern about “lowflation.”
- Rather than be deterred by the headline miss on the first estimate of fourth-quarter gross domestic product growth reported Jan. 26, Fed officials are likely to welcome the data’s relatively strong internals, particularly those regarding investment and consumption. Indeed, the latest numbers will be seen as adding to a more general string of solid economic reports, both for the U.S. and for the rest of the world.
- This synchronized pickup in global growth, along with increased comfort with the inflation dynamics, will solidify the previous baseline guidance of three 25-basis-points hikes in 2018, with the first likely to take place in March. The recent depreciation of the dollar also contributes to this outlook. Indeed, compared with last year, market and Fed expectations for the annual path of rate hikes are on track for a much earlier convergence.
- Although some observers and market participants may also be tempted to alter the balance of risks to the upside — that is, to expect four rather that two hikes in the event the current baseline fails to materialize — the Fed will see the two-sided risks as balanced for now.
- There is unlikely to be anything new or notable about the balance-sheet reduction plan. The previously announced timeline won’t be revised or even highlighted in any major way. Meanwhile, more general exploratory discussions about frameworks and targets are likely to proceed gradually, with the aim of ensuring continued effective baseline management and exploring contingencies, resilience and reactions in the event of unanticipated adverse shocks.
- With a successful steady-as-it goes monetary policy in the U.S., more attention will need to be devoted to the economic and market impact, including on U.S. interest rates and other market valuations, of the actions likely to be taken this year by the Bank of Japan and the European Central Bank in response to better-than-anticipated developments in their economies. But Fed deliberations on these matters are unlikely to be publicized in any notable fashion.
- Finally, this will be Chair Janet Yellen’s last FOMC meeting, and she is likely to receive lots of accolades from her colleagues. Working collaboratively and effectively with other Fed governors and regional presidents, she has engineered an ongoing “beautiful normalization” — that is, a gradual, cautious and sequential exit from years of unconventional monetary policies that has neither disrupted markets nor derailed growth. The new Fed chair, Jerome Powell, is well placed to build on and successfully extend this achievement.