11/11/2019
EURUSD
Strongly bearish was the previous week for EURUSD. The resistance zone of 1.1170 – 1.1180 was too strong to break for the pair (price reached up to 1.1175) and through a rally of bearish days the week closed at 1.1020, very close to weekly lows of 1.1016. Especially on last Tuesday we had the US PMI announcement (much better than the expected), USD became stronger and EURUSD lost 1.11 for good. Even if news from Europe were not disappointing, the good news regarding USA – China trade war gave more boosting to USD, pushing the pair to the area of 1.10 as we saw above. There’s a scenario that both parts have the will to roll back the tariffs in different phases if course a final agreement is achieved. EURUSD is in a critical crossroad: either we’ll have a bearish breakout of 1.10 which will open the road for 1.09 (which seems the most possible scenario) or there will be a bullish reaction which will set the pair into the channel of 1.10 – 1.1180 again. According to the 1st scenario, we’ll open sell positions, only if the 1.10 is lost, looking for targets of 1.0950 at the first place and maybe 1.09
This Monday is a public holiday for USA (Veterans Day) and for many other European countries (Remembrance day for victims of Α’ and Β΄ World Wars) but on Tuesday there is the ZEW Survey for the Economic Sentiment in Germany and Eurozone, on Wednesday there’s the German Harmonized Index for Consumer Prices, the Eurozone Industrial Production and the Consumer Price Indices in USA. Also, on this Wednesday, PresidentTrump gives a speech at Econ Club of New York. On Thursday we have the German GDP announcement and the estimation converge to a new light recession and Eurozone’s GDP but the most important news of the day is that Jerome Powell of FED, testifies in Congress about the financial and the monetary policy. Finally, on Friday there’s the important speech of Poloz (Bank of Canada) in San Francisco, the Consumer Price Indices for Eurozone and the US Industrial Production.
GBPUSD
Bearish with losses more than 1% was the previous week for GBPUSD and for the first time after a long time, the source of pair’s volatility and trend was not the Brexit but the Bank of England. It was announced in Monetary Policy Committee that there are serious thoughts for rates cut while Mark Carney stated that all the uncertainty and the problems that have been developed due to Brexit have created a negative outlook for the country’s economy which does not seem quite different from the characteristics of a recession. GBPUSD opened at 1.2927 but during the week it lost even 1.28, closing at 1.2777 last Friday. In other respects, England is moving towards elections and Boris Johnson and his part lead the polls. There are serious concerns for a return to the area of 1.25 but there are also serious probabilities for an uptrend scenario because it is expected that the Bank of England announcements have already been digested by the markets. We favor the 2nd scenario and we expect a price return to the area of 1.29 which will be the target of our buy positions and we don’t exclude attempts for 1.30 again.
In any case, this week requires special attention because there are really important announcements and news for the British economy. On Monday will be announced many macros such as the Industrial Production, the Trade Balance and British GDP. On Tuesday will be announced the Unemployment Rate and the Average Earnings, on Wednesday there is a series of announcements such as the Retail Sales Index and Consumer Price Index and on Thursday will be announced the Retail Sales for October.
USDJPY
After the likely and the imminent agreement between USA and China, USDJPY rebounded with profits close to 1% so we took the target of our buy positions easily. The pair closed above 109, at 109.24, not far away from the weekly highs at 109.48. The economic news from USA were quite encouraging while on the other hand the Bank of Japan keeps on having intentions for a loosely monetary policy. It’s possible to have ups and downs on the relationships between USA and China the following days mostly through geopolitical and prestige games of governments and persons. Up top now, a possible agreement abjuration is not visible.
Early on Monday morning we had the announcements for Machinery Tools Orders and Trade Balance in Japan and the results were worse than the anticipations but USDJPY is testing again the area of 109. If a serious breakout of 109 does not take place, it is expected for the pair to continue its uptrend and maybe the resistance of 109.80 will delay its direction to 110. The main target of our buy positions will be the price of 109.80
The rest of the important news for the Japanese economy include the Producer Price Index on Wednesday, the Japanese GDP on Thursday and the Industrial Production on Friday.
EURJPY
After the strong uptrend that started at 4/10/2019 and ended at 18/10/2019, EURJPY remains in a sideways channel that could not escape during last week. The volatility keeps on decreasing and the pair closed with small loses, about 45 pips. The weekly close though, was above 120, at 120.39. The protests in Hong Kong in combination with a general sentiment of uncertainty push the traders and the investors to safe haven assets such as JPY, which seems to take credits in the beginning of the current week. It’s possible enough that a bearish breakout of 120 and a confirmation through a breakout of the resistance at 119.80 could mean the inception of a bearish trend for the pair which may lead the price to the area of 119 again. If the risk mood has a come-back then very soon we will find EURJPY above 121 again, looking at 122. We will try the first case by taking sell positions below 120, targeting the price area of 119.30.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
EURGBP
EURGBP continued its sideways movement into the channel of 0.8570 – 0.8680 which wraps the pair from the beginning of last month in between the Brexit uncertainty and the details and announcements from Europe. Our trading decision for small & opportunistic trades to both buy and sell directions was correct. Last week’s close was at 0.8625, only just 10 pips below the weekly open and during last week we saw prices below 0.86, at0.8585. Technically, such a price squeeze most of the times has a result a price explosion to a certain direction since investor and traders must somehow, sometime decide what to do. If this happens during the current week then there is a string probability of 0.86 that is why we will open sell positions with target the price area of 0.85. Alternatively, we could have one more week of sideways movements for the pair into the tight aforementioned channel.
News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.
USDCAD
A good uptrend with good profits close to 0.70% we had last week for USDCAD. During the week we didn’t see prices below 1.31 (weekly low was at 1.3115) and the pair managed to breakout 1.32 (weekly high at 1.3236) and to remain at these levels (weekly close at 1.3227). The disappointing results from the Canadian job markets on Friday combined with other negative announcements earlier last week (Imports, Exports and PMI) had as a result the weakening of CAD while the USD strength due to positive news from USA – China trade war had also a serious role. The rise of the oil prices could not help CAD which had its biggest drop on Friday where it lost about 0.40%. It was the day that the bullish breakout of 1.32 took place. The uptrend momentum seems very strong for the pair and it’s very possible for the price to test the strong resistance of 1.3340. This price zone will be the main target for our buy positions this week.
This Monday is a public holiday in Canada (Remembrance Day) while on Thursday there is the New Housing Price Index and on Friday there is the important speech of Timothy Lane (Bank of Canada) and the Existing Home Sales.
USDCHF
As we expected, the drop of USDCHF was temporary and the prices close to 0.9830 was a bottom for the pair which recovered breaking 0.99 at the first place and approaching 1:1, closing finally at 0.9972. USDCHF seems to return back to its physical position, flirting with 1:1, steadily above 0.99. Now the stakes is to see if last week’s momentum is able to push USDCHF enough, in order to break this level for good or if it will keep moving between 0.99 and 1. Without excluding anything, news from USA strengthen USD further and so it’s not impossible to see this notorious breakout and persistence above 1:1 taking place this week. We’ll try buy positions above 1:1, targeting 1.0080 and sell positions if we see a bearish decline below 0.9930.
This sounds like a very quiet week for the Swiss economy regarding news and financial announcements. On Thursday there is the Producer and Import Prices and in the same day there is the important speech of Andrea Maechler (Swiss National Bank).
AUDUSD
Quite bearish week for AUDUSD which did not manage to keep 0.69, closing at 0.6861 with very low volatility. The volatility of the pair had a peak in the mid-August period and since then it decreases constantly. The RBA session last week was catalytic since there were concerns that a rate cut would have serious impact in the Australian economy and in the trading sentiment. Furthermore, the protests in Hong Kong make things even worst by increasing the sense of uncertainty. All this news seems to override the positive mood, developed by an upcoming agreement between USA and China regarding trade war and so AUD remains weak. The scenario of testing the support of 0.6815 is now very possible and a bullish reaction cannot make prices exceed the strong resistance of 0.6930. Most likely we’ll see the pair’s prices to swing between the borders of this channel. Our strategy for this week is range trading between 0.6815 and 0.6930.
On Monday we have the announcement of Direct Foreign Investments in China, on Tuesday we have the announcement of the Business Confidence from the National Bank of Australia, on Wednesday the Westpac Consumer Confidence by the Faculty of Economics and Commerce Melbourne Institute, on Thursday there’s the important speech of Michell Bullock (Bank of Australia) in a panel in Sidney, in the same day the Industrial Production and the Retail Sales of China are announced which will be followed by a press release from Chinse National Bureau of Statistics and finally on Friday there’s the important speech of Guy Debelle of RBA in Sidney.
SP500
SP500’s rally continued for one more week. The index had profits close to 0.75% but the weekly close was below the psychological resistance of 3,100 points, at 3.090 points. The bulls remained for a fifth week in a row, since this rally started from the price area of 2,930 points. All five weeks were clearly bullish and now all the traders and the investors are looking to a breakout of 3,100 points which will give new oxygen for further rise to the index. This will be our selection for the current week: long positions with target in the price area of 3,1390 points. Of course, we need to pay special attention because any possible profit taking will lead SP500 to important price retracements.
DAX30
Super bullish week for DAX30 passed by with profits close to 2.10%. The castle of 13,000 was conquered from last Monday, the bulls carried on with tension all the days and the weekly close was at 13,264 points while on Thursday we saw even an approach of 13,300 points. We consider the markets reactions at these levels as overoptimistic and maybe we’ll see important pullbacks and retracements for the index this week. In any case, it seems that the levels of 13,000 points are fixed and safe for the moment. Technically speaking, DAX30 on a daily chart is in overbought levels since the end of last month. Our sell positions for this week will have as a main target the area of 13,100 points.
FTSE100
Positive was the last week for FTSE100 which had profits circa 0.90% but the volatility keeps on decreasing. It’s obvious that the traders and investors are in a pause and hold mode due to Brexit progress but on the other hand the uptrend from the beginning of October (where Index put 7,000 points to the test), is very obvious as well. The weekly close was at 7.381 points while during last Thursday the Index exceeded even 7,400 points with a weekly high at 7,432 points. Since last Thursday though, we had a strong bearish reaction which carried on during the Friday and maybe this is a sign for a further correction below 7,300, maybe close to 7,250 points which will be the target for our sell positions this week.
Gold
We lived one of the most bearish weeks of all times for gold last week. The drop was close to 3.60% and even the beginning of the week had prices close to $1,514, during last Tuesday the level of $1,500 collapsed and despite a bullish attempt on Wednesday, the strong bearish trend became more tense on Thursday and Friday and so gold closed at $1,459. Weekly losses were circa $55 due to a global market calm down which increased the risk mood. On the other hand, the strong USD due to good news from the trade war had also its role to the gold’s drop. The question is simple: is this drop the end of the long-term gold’s uptrend that started from summer of 2018 or we’ll see the gold prices to regain prices above $1,480 and sideways movements into the channel of $1,480 – $1,515? None of the above scenarios seem more possible than the other for the moment so we’ll wait and see.
US Oil
US Oil expanded its profits last week and it had important performance close to 1.80%. The weekly open was at $56.35 and the weekly close at $57.32 but during last Wednesday and Thursday we had attempts of approaching the prices of $58. A continuous persistence above $56.60 will be a signal for buyers to win the battle with main target the price area of $58 but the most possible version is that these levels are very difficult to be kept and maybe we’ll see oil prices looking at $55 again. Aramco’s IPO keep on dominating in the market news but before this giant has better prices Saudi Arabia needs to stop the further weakening of oil’s prices. There are also rumours and concerns that there will be a slowdown in demand and for a further production cut from OPEC. Fundamentally, this creates more uncertainty and that is why the volatility keeps on decreasing. We’ll prefer sell positions this week, looking for profits in the area of $55.
Bitcoin
Bitcoin which is by far the most important cryptocurrency in the world with capitalization over $150 bn, had a light drop last week and a low volatility. It is the third week in a row with a light drop after the strong bullish week between 21/10 and 27/10 that drove Bitcoin above $10,000 again. During the weekend there were some bullish reactions but today so far, the day is clearly bearish. On the other hand, the uptrend that started from the end of October has not be cancelled yet. Probably this will happen if we’ll have a bearish breakout of the support at $8,600. In the world of cryptos, the very low volatility usually leads to a price explosion and in a new trend. All we have to do is to wait and see if this trend will be developed in the current week. A bearish breakout of $8,600 will revert the trend and the levels of $8,000 will be very visible while a recover above $9,000 will fix and empower the uptrend and the price area of $10,000 will be very possible. We remind and underline that the average daily range of Bitcoin nowadays is slightly above $400.
