Daily Market Forecast by Capital Trust Markets

[CapitalTrustMakrtes]

Hello Fellow Traders and Forum Members,

We are a team of Market Analysts, Traders and Technical Strategists at Capital Trust Markets. We intend to post daily market analysis and opinion based articles on this forum in hopes of sharing our insight and thoughts with our fellow trading community. We plan to share around 6-10 high quality and plagiarism-free articles daily, so it will be great if we could get a dedicated thread. Our articles will consist of signals, forecasts, technical analysis, fundamental analysis and trend identification.

Capital Trust Markets is a fully regulated and compliant online Forex Brokerage, offering a flawless trading environment to traders of all types. The world class trading infrastructure - backed up by advanced trading tools and cutting edge trading software and technology - is combined with award winning customer support to provide a highly successful blend of customized trading solutions.

Best Regards,

Capital Trust Markets Team

 

[CapitalTrustMakrtes]

Gold appears vulnerable, eyes $1307

Gold closed yesterday with a large bearish engulfing candle below the major 76.4% fib level resistance which shows considerable downside risk. The yellow metal is expected to continue the slide up to $1307 an ounce or even below amid Fed tapering optimism.

As of this writing, the yellow metal is being traded near $1360. Resistance may be noted near $1374, the 76.4% fib level, ahead of $1392 which is the swing high of the current wave. A break and daily closing above the $1392 shall accelerate the bullish momentum, opening doors for new multi-month highs above the $1400 milestone.

On the downside, the precious metal is likely to find support near $1336 that is the 61.8% fib level support before $1307 which is a short to medium term pivot zone for the metal. A daily closing below the pivot zone could accelerate the downside movement exposing fresh lows below $1300 handle.

FOMC Meeting

The Federal Open Market Committee (FOMC) monetary policy meeting is going to take place in Washington from March 18-19. Analysts are unanimous that the Federal Reserve will keep the cash rate steady at 0.25% on Wednesday. The central bank, however, may reduce the monthly bond purchases by $10 billion to $55 billion after more than expected increase in February nonfarm payrolls. If the bank announces tapering on the third consecutive month, it could spur huge bearish momentum in gold.

US Inflation Data

The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) figures today. According to the average forecast of various economists, the CPI—a main gauge for inflation—reduced to 1.2% in February from 1.6% in January. Similarly, analysts have predicted a steady 1.6% reading in the CPI excluding energy & food prices-- relatively more accurate measure for inflation-- for the previous month. Generally speaking, high CPI readings (close to 2%) are considered good for an economy. So if the CPI data comes better than expectations, then it could cause strong bearish pressure in gold and vice versa.

So selling the precious metal around above $1360 could be a good strategy, the target should be at least $1307.

 

[CapitalTrustMarkets]

AUDJPY set to gain further traction above 93.40

The AUDJPY pair after a triple correction recently has jumped higher, and it looks like the pair has formed a base for one more leg higher. The recent economic data for the Australia was supportive of the gains in the Australian dollar despite the disliking of the Reserve Bank of Australia. The central bank’s verbal intervention won’t help if the buyers keep on pushing and buying the Australian dollar.

Technical analysis
There is a triangle forming on the 4 hour chart for the AUDJPY pair, as can be seen in the chart shown below. The AUDJPY pair has found support time and again around the triangle support area. However, on the upside, there was a break noted, as highlighted in the chart, but the AUDJPY failed to sustain this break and traded back inside the triangle. We can consider this as a false break, as after that the AUDJPY pair again found resistance around the same triangle trend line.

The AUDJPY after the recent slide found support at around the 50% Fibonacci retracement level of the last leg higher from the 88.27 low to 94.46 high nearby the 91.38 level. An interesting thing to note here is that the same level coincides with the triangle support area. So, the bounce was very critical. It looks like the pair is forming a classic ABC pattern, and if that turns out be true, then we can witness one more run to the downside before a leg higher.

Triangle Break?
There are high chances that the pair might break this triangle in the coming days. The break to the upside is more probable, but as mentioned the price action and pattern suggests one more dip in the AUDJPY pair, which can present a buying opportunity in the short term. There is no denial that the AUDJPY pair can even break the triangle on the downside if the buyers give up around the triangle support area.

Trade Ideas
I am personally looking for one more dip to enter a long trade. A dip close to the triangle support would be perfect to complete the ABC dive. Stop for this one can be below the 91.00 figure. On the other hand, one can also consider entering a long trade on the break and close above the triangle resistance zone. However, the risk reward in that situation could be less.

KEY SUPPORT LEVELS: 92.10 and 91.30
MAJOR RESISTANCE LEVELS: 93.00 and 93.50

 

[CapitalTrustMakrtes]

Carney Takes Center Stage As Traders Eye UK Unemployment Data


At 13:45 EST on Tuesday afternoon, Bank of England (BoE) Governor will take the stage at the Annual Mais Lecture in London to deliver his latest speech. The situation in Ukraine continues to weigh on market sentiment, but there is still room for some event driven volatility across the majors. What will the speech contain, and how might it affect the value of the Sterling (GBP)?

The primary theme of the speech is the restructuring of the BoE. As the markets opened on Tuesday, Mark Carney announced the addition of two new deputy governors to the central bank's roster, both of which will sit on the Monetary Policy Committee. These two appointments however, are just the beginning of what Mark Carney refers to as a "root-and-branch" review of the entire UK central banking system. On the face of it, this seems far enough removed not to have too much of an effect on the value of the GBP. There could be some fallout however, as it may well delay any interest rate hike.

Primary theme aside, forex traders will be watching Mark carney closely for any hint as to the future of monetary policy in the UK. The Governor has gone to great lengths to point out that he will not raise interest rates above their current historic low at 0.5% "for some time."

He has alluded to a number of overarching forces that are conspiring to hold rates low, including European economic weakness, the UK balance sheet and the aforementioned shake up of eh banking system.

Having said this, in August last year, he stated that he would consider raising interest rates id unemployment dipped below 7%. The UK unemployment rate is set for release on Wednesday, March 19, and at last count, it was 7.1%. Analysts forecast a small rise to 7.2%, but any positive surprise would draw attention to the 7% threshold and hint at a potential future hike.

It is this contradiction that has traders excited heading into the speech. If there is even the slightest hint of hawkishness to its tone, traders will likely jump on the bullish bandwagon and strengthen the GBP. In this scenario, look for volatility in the GBPUSD. The pair is currently trading just shy of key support at 1.6586, having dipped throughout Tuesday morning on mixed US data. If Mark Carney can manage expectations, and avoid a hawkish tone, look for a close at support and consolidation heading into Wednesday's unemployment data. If anything he says suggests he may be stay true to the 7% rule however, look for bullish momentum to carry the pair towards an initial target of 1.6652.

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Written by Samuel Rae – Currency Strategist at Capital Trust Markets

 

[CapitalTrustMakrtes]

GBP/USD eagerly awaits BoE, Fed monetary policies, 1.6478 eyed

GBP/USD yesterday found support near the 50% fib level as inflation in the US fell more than expectations. The pair extended gain on Wednesday ahead of the Bank of England (BoE) and the Federal Reserve monetary policy decisions. Cable might test the 1.6478 support in near future if the Fed reduces the stimulus on the third meeting in a row.

Technical Analysis

As of this writing, cable is being traded near 1.6600. Resistance can be seen near 1.6688, the 23.6% fib level and the high of the shooting star daily candle, ahead of 1.6764 which is the channel resistance of the rising wedge formation. A daily closing above the wedge shall open doors for the new multi-year highs above 1.6850.

On the downside, the pair is expected to find support around 1.6538, the 50% fib level, ahead of 1.6478 which is the channel support of rising wedge on the daily chart. A daily closing below the wedge shall push the pair into relatively stronger bearish trend, opening doors for 1.6390, the 76.4% fib level and then 1.6250, a historical resistance-turned-support for the pair.

BoE Monetary Policy

BoE is due to release the minutes from the monetary policy meeting today. Hawkish comments from the policymakers may spur huge rallies in cable. Investors will be eyeing BoE stance on the first rate hike after RBNZ landmark decision to increase the cash rate from 2.50% to 2.75%. Moreover, the central bank will also announce the Monetary Policy Committee (MPC) decision on the benchmark interest rate. According to the unanimous forecast of different analysts, all nine members of the committee are likely to vote for the unchanged rate.

Fed Monetary Policy

The two-day Federal Open Market Open Committee (FOMC) meeting is going to conclude today in Washington. The Federal Reserve will announce the decision of FOMC policymakers on the interest rate and the stimulus. Analysts have predicted no change in the cash rate however the bank may reduce the QE by $10 billion.

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Prepared by Usman Ahmed, Chief Currency Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

US Dollar breakout inevitable as Investors await FOMC

The US dollar buyers are in pain for the last several weeks now. The US dollar has consistently declined after setting a high at around the 81.30 level. Most majors, including the EURUSD and GBPUSD are on the rise and trading around multi year highs. This week also the US dollar is trading in a range, as the market is eyeing the fed interest rate decision. The investors seem to be nervous, as there are mixed projections of whether the Fed will reduce the bond purchases again in the upcoming meeting or not. Let’s look at some of the things that could impact the US dollar.

In line CPI data
Yesterday, at GMT 12:30 PM, the US inflation data was published by the US Bureau of Labor Statistics. The outcome was mostly in line with the expectations, as for all urban consumers CPI increased 0.1 percent in February on a seasonally adjusted basis as expected by the market. However, over the last 12 months, all items CPI increased 1.1 percent before seasonal adjustment, missing the expectations of 1.2%. I do not believe that this outcome will change the mood of the fed members. So, inflation at the moment is floating in line with the fed’s expectations.

FOMC Impact
The Fed rate decision is lined up later during the day. The market is broadly expecting another $10B reduction in the bond buying program. So, there are three possible scenarios:
First - $10B cut – USD positive, and the pairs to watch for a rollover are EURUSD and NZDUSD
Second – No taper – USD negative – Watch for a spike in GBPUSD.
Third - $5B reduction – Mild reaction possible, mostly USD negative – USDJPY could bounce.

Unavoidable break in the USD
The US dollar is shaping up for a big move in the coming days for sure, as can be seen in the US dollar Index chart shown below. There is a contracting triangle forming on the 4 hour chart. The resistance lies at around the 79.50 level, and support lies at around the 79.20 level. Considering the events lined up, one can expect a breakout. An upside swing could take the USD all the way back up to 79.90 level.

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Prepared by Aayush Jindal, Chief Technical Analyst at Capital Trust Markets

 

[CapitalTrustMarkets]

All Eyes On GDP As the Kiwi Targets 2013 Highs

At 17:45 EST on Wednesday, 19, Statistics New Zealand will report the GDP figure for the final quarter of 2013. The figure comes after the notoriously hawkish Reserve Bank of New Zealand (RBNZ) lived up to its reputation and hiked the nation's official cash rate to 2.75%. The hike boosted the Kiwi through the upper channel of a flag-esque formation to year-long highs versus its US counterpart, and the NZDUSD now sits just shy of 2013 highs of 0.8675, reached during March last year.

With the ongoing situation in Crimea, risk-off assets such as the Kiwi generally struggle, but the rate hike looks to have helped it buck tradition. The question now is, can the GDP figure help sustain the momentum?

Consensus hints at final quarter growth deceleration, with expectations slated at 0.9% growth versus growth of 1.4% for third quarter 2013. As ever, a deceleration in itself would likely not pare the pair's recent gains. A downside miss however, might spark a sentiment turnaround and initiate a sell-off. Further to this, the aforementioned highs will likely serve up some strong resistance and add an element of technical downside pressure to the mix.

The more interesting scenario is one in which the figure exceeds expectations. As reports flooded out of Crimea on Tuesday evening that shots had been fired and military officers wounded and killed, global markets looked on to gauge the severity of the situation. As mentioned, geopolitical, and now military, unrest will often cause a mass asset reallocation towards safe haven assets such as gold and the Japanese Yen. A New Zealand GDP release at 1.0% or above will serve up a situation in which a fundamental risk-off sentiment will compete with a positive outlook for the New Zealand economy; in other words, it could translate to some heavy volatility.

March 2013 highs offer an initial target and, beyond that, the July 2011 highs at 0.8843. Bear in mind however, that to reach these targets the pair will have to overcome global sentiment, something much easier said than done.

Adding to the already volatile mix of NZD fundamentals is the Wednesday's announcement that China will now trade Yuan openly for NZD. China is New Zealand's third largest export market, but previously a conversion between the two currencies required an third party currency, usually the USD. The decision therefore, should serve to streamline, and in turn boost, trade between the two nations. After calls of an economic slowdown in China throughout last week, the benefit to New Zealand may not be immediately apparent, but it may factor in to the overarching directional bias in the short-medium term.

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Prepared by Samuel Rae – Currency Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

A Yearlong USDCHF Falling Wedge Could Complete On A Dovish SNB Tone

SNB Chaiman Speech

Thomas Jordan, Chairman of the governing board of the Swiss National Bank (SNB) is set to deliver his latest speech at the University of Bern today, at 13:45 EST. The speech comes just ahead of Thursday's Libor rate announcement and the SNB monetary policy assessment release. Jordon is notoriously candid when it comes to these types of engagements, rarely alluding to near-term monetary policy, despite the hordes of traders willing him to do so. There are sometimes however, small clues as to his current perception of the Swiss economy, from which monetary policy decisions can be inferred. For this reason, expect some volatility in the USDCHF as we head into the US afternoon session.

The Bullish USDCHF Scenario

The pair is currently trading around 0.8740, just shy of key support at 0.8622. For the better part of a year, the USDCHF has formed something of a falling wedge, with just a few breaks of the pattern but never a close outside. Traditionally, this reversal pattern serves up a bullish bias on completion; with the validation being a close above the upper trendline. While Jordan's speech will likely be insufficient to boost the pair towards that level, it may catalyze some upside momentum ahead of Wednesday's rate decision and policy report, which if compounded by the two releases, could send the USDCHF towards its target breakout level around 0.87745. With ECB rate cuts slated for as early as next month, there is a high chance that the Jordan, and the SNB, may hint at following suit. Consensus expects Thursday's announcement to hold rates steady at <0.25% (effectively zero) but the potential for April/May negative rates remains. A dovish tone in either release could therefore go some way towards validating the pattern.

The Bearish USDCHF Scenario

While traditionally a reversal pattern, a downside break (especially on the higher timeframes) can serve to switch the falling wedge's bias to bearish. With the USDCHF trading so close to the lower trendline ahead of Jordan's speech and Thursday's key releases, this situation has to be considered. It is unlikely that the SNB will raise rates, especially in the wake of disappointing retail sales and producer price index releases last week. In addition, The Zentrum fur Europaische Wirtschaftsforschung (ZEW) revealed its six month economic outlook index for Switzerland to be 19.0, missing expectations at 25.0 and a previous release of 28.7. Having said this, a hawkish tone that hints at the SNB refusing to follow the ECB in its rate policy could raise expectations of a lift from the current rate floor.

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Prepared by Samuel Rae - Currency Strategist at Capital Trust Markets

 

[CapitalTrustMakrtes]

Gold on Wednesday slumped more than $30 an ounce following the Federal Reserve’s decision to reduce the Quantitative Easing (QE) and Yellen’s remarks on the first rate hike. The precious metal gave the yesterday closing below the 61.8% fib level as well as the channel support of the daily upward slope.

Technical Analysis

The yellow metal is being traded around $1331 an ounce at 2:45 GMT in Asia. Resistance may be noted near $1337 that is the confluence of 61.8% fib level and channel support turned resistance. A break and daily closing above the old channel could push the metal again into bullish momentum, opening doors for $1373 and then the $1400 milestone.

On the downside, the metal is expected to find support around $1307 an ounce that is the 50% fib level and then $1300 that is the 200 Daily Moving Average (DMA) and the psychological level. A daily closing below the $1300 handle might be targeting $1278 which is the confluence of 100 DMA and 38.2% fib level.

Fed Tapering

Fed yesterday kept the benchmark interest rate unchanged at 0.25% but reduced the monthly asset purchase program by $10 billion to $55 billion, a sign that the economy is growing steadily without the stimulus. It is pertinent that the minutes from the Fed January meeting showed the policymakers were planning to scrap the entire QE by the end of October this year through successive tapering.

First Rate Hike

Fed chair Janet Yellen yesterday said the central bank could increase the interest rate as soon as the next six months, the remarks which were totally surprising and against the Fed forward guidance stance. Commodities, currencies and bonds fell sharply after the Yellen remarks. The same trend is likely to continue today or may be even throughout the next week.

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Prepared by Usman Ahmed, Chief Currency Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Canadian dollar crushed post series of events

The Canadian dollar is trading around multi-year lows against most of the major currencies. The USDCAD pair jumped to four-year high yesterday after the Fed interest rate decision. The pair traded above the 1.1260 level. There was a series of events, which hammered the Canadian dollar. The highlight was the speech from Poloz, who cautioned the investors that the economic growth in the Q1 could be on the soft side.

Increase in Wholesale Sales
On Wednesday, at GMT 13:30 PM, the Canadian Wholesale sales data was published by the Statistics Canada. The expectation was of a 1.0% rise in the wholesale sales. However, the outcome missed the expectations by 0.2%, and registered an upswing of 0.8%. Remember, this is an advance from the previous reading, and overall gain in January. So, I do not think that the data was bad at all. The statement also highlighted that “the Wholesale sales rose 0.8% to $50.0 billion in January, following a decline in December. Gains were recorded in all subsectors except motor vehicle and parts. Excluding this subsector, wholesale sales rose 1.4%”. It is worth noting that the sales were up in five provinces in January. The gains were mainly driven by the agricultural supplies industry, chemicals, allied product industry and the recyclable material industry. One more key thing to note from the release is that the inventories also rose 1.4% to $62.3 billion in January.

Highlights of BOC’s Governor Stephen Poloz speech
On Tuesday, in a speech in Halifax Nova Scotia, the Bank of Canada’s Governor Stephen Poloz said that he cannot rule out a rate cut in the medium term. The main reason for such a statement was the concern of downside risk for the CPI rate. His word of caution was enjoyed by the Canadian dollar bears, as the Canadian dollar fell sharply against most of the major counterparts. It’s hard for me to believe that they will actually deliver a rate cut in the near future. I think it’s more of a verbal intervention to push the Canadian dollar further. I still remember when the Mark Carney was the Governor, he never tried to push the Canadian dollar down. Nevertheless, the Canadian dollar sellers might soon get a reality check in the near future, in my opinion.

Fed’s tapering
One more event, which affected the USDCAD was the fed interest rate decision. The Fed decided to taper again in March and reduced the QE pace from $65B to $55B.
Fed Pace of Treasury Purchases - $30 billion
Fed Pace of MBS Purchases - $25 billion

Technical Analysis
The pair after breaking an important triangle on the monthly chart headed higher. The pair is now coming closer to an important resistance zone, in my opinion, as can be seen in the chart shown below. There is a monster trend line around the 1.1300 level, and not to forget that the pair is testing the 50.0% Fibonacci retracement level of the last major down move from 1.3063 high to 0.9420 low. A break and close above the trend line and resistance zone would call for a larger wave up in the medium term.

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Prepared by Aayush Jindal, Chief Technical Analyst at Capital Trust Markets

 

[CapitalTrustMakrtes]

EUR/USD yesterday closed below the daily trendline support after the announcement of monetary policy from the Federal Reserve, hence breaking the two-month old upward slope channel. The pair is expected to extend retracement towards 1.3721 or even 1.3630, according to the technical analysis.

Technical Analysis

EUR/USD is being traded near 1.3831 at 4:45 GMT in Asia. The pair is likely to face immediate hurdle near 1.3840 that is the trendline resistance. A daily closing above the trendline will push the shared currency into bullish trend, targeting 1.3950 and then the 1.4000 milestone

On the downside, the pair is expected to find support around 1.3780-3800 that is the 38.2% fib level and strong horizontal support area. A daily closing below 1.3780 shall expose 1.3750, the 50% fib level, and then the 1.3640-60 region that is the confluence of trendline support and 61.8% fib level.

US Job Data

Today US labor department is due to release the weekly jobless reports. According to the forecast of different analysts, the number of people of who applied for the unemployment incentives in the US rose to 327K during the week ended on March 14 compared with 315K in the previous week. Similarly, continuing jobless claims –the total number of people claiming jobless incentives—were standing at 2.855 million during the week ended on March 07. Generally speaking, high jobless claims signal high unemployment thus considered negative for an economy and vice versa.

US Housing Market Figures

National Association of Realtors (NAR) is due to release today the existing home sales change report for the month of February. According to the median projection of analysts, homes sales in the US jumped by 0.8% last month as compared to 5.1% decline in the previous month. In absolute term, the existing home sales declined to 4.60 million compared with 4.62 million in the month before, the forecast added. Better than expected US data will be seen as bearish for EUR/USD and vice versa.

Bank Stress Test Info

Board of Governors of Federal Reserve System are due to release today the information on major banking institutions’ capabilities to cope with stress situations. The report plays major role in the policy making.

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Prepared by Usman Ahmed, Chief Currency Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

GBPJPY setting up for a critical break, caution ahead

The Japanese Yen traded lower yesterday after the Fed interest rate decision. The GBPJPY pair also took the advantage of the ride, and climbed higher. However, most of the gains were limited due to the collapse of the sterling. The GBPUSD pair moved lower Intraday despite better than expected labor data, which was released yesterday. There is no economic release scheduled for the UK in the coming two days. So, mostly the GBPJPY pair will be driven by the market sentiment.

Technical Analysis
The GBPJPY has a monster triangle forming, as highlighted in the 4 hour chart shown below. Yesterday, the pair attempted a break it to the upside, but failed and moved lower again. The 169.50 is a critical resistance level, which coincides with the triangle trend line. A break and close above the triangle and resistance level might open the door for more upside towards the 171.00 level. The 171.00 handle is very crucial, as the pair has failed a number of times around the same region, as can be seen in the chart.

Crucial Ride
One important thing to note here is that the pair recently bounced from the 61.8% Fibonacci retracement level of the last leg higher from the 163.80 low to 173.50 high. This bounce came from a very technical level, which suggests that more upside is feasible in the short to medium term.

Trade Ideas
I think we should wait for a break before acting. The pair can break in any direction. However, the technical indicators point a break higher, but one should never commit to one side of the market. The RSI has breached the 50 level, and looks set to close above it, which is a positive sign. If the pair breaks higher and closes above the triangle, then one can enter a long trade with a target of around 170.20. A break lower might push the pair down towards the 76.4% fib at around the 166.16 level.


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Prepared by Aayush Jindal, Chief Technical Analyst at Capital Trust Markets

 

[CapitalTrustMarkets]

The Ins and Outs Of Market Sentiment

The ability to gauge sentiment, and apply it to your trading, is a key component of long-term success in the markets. Many traders however, gloss over the concept when they first get started in the industry. Here's what you need to know.

The Relationship Between Traders and Investors

First, it is important to understand the difference between a trader and an investor. Investors generally have a portfolio of assets, which can include currencies, stocks, commodities or anything else that has the potential to appreciate in value. They reallocate capital within this portfolio to balance risk and reward, with the goal of making money.

A trader on the other hand, will have a certain amount of capital, and will temporarily buy assets using a small amount of their account. Once the asset appreciates or depreciates by a particular amount, they will sell the asset for a profit or a loss.

Market sentiment is the force that influences an investor's capital reallocation, and traders try to pre-empt sentiment to profit from the effect that this reallocation has on the markets.

Two Types of Sentiment

There are two types of sentiment, risk-on and risk-off. In a risk-on environment, investors generally look to maximize their potential reward. They do this by buying stocks, high yielding currencies such as the Australian Dollar, and industry driven commodities such as copper. In a risk-off environment, investors try to minimize risk through the purchase of safe haven assets, such as gold and the Japanese Yen.

An Example

Traders use fundamental analysis to help them gauge sentiment, buying high yield assets in times of risk-on sentiment and buying low risk assets in times of risk-off sentiment. The chart below illustrates this in the context of the February/March 2014 situation in Crimea.

As the chart shows, each time the tension escalated, the Japanese Yen strengthened against the Australian Dollar, driving down the AUDJPY. Conversely, when Putin pulled his troops out of Crimea, risk-on sentiment returned and the Australian Dollar regained its value.

An Important Point

It is important to remember many factors dictate the value of an asset, and the Crimean situation is just one example. However, if a number of these factors hint at the same bias, they can be powerful indicators of likely future direction. For instance, between March 8 and March 14, China released a spate of disappointing data that hinted at a slowing economy. China buys nearly 40% of Australia's exports, so a slowdown in China could severely damage Australian output. This compounded the bearish momentum in the AUDJPY form March 7 highs above.

A Closing Remark

All said, while it can seem as if there are far too many factors to keep track of in the global markets, the reality is that many of them come together to dictate sentiment. As a result, it is not necessary to buy and sell on every single data release or geopolitical event, rather aggregate these factors and use the aggregation to help you determine which assets investors are likely to favor.

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Prepared by Samuel Rae - Chief Currency Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

AUDNZD to break through the congestion zone above 1.0620

The Australian dollar collapsed against the New Zealand dollar earlier during the week. However, the recent fed tapering has ignited a pressure on the risk correlated currencies, and the New Zealand dollar is the one which is overbought at present compared to the Australian dollar. This is the reason why there are chances that the AUDNZD pair could recover some of the lost ground in the days to come.

Range Break?
The pair after setting a base at around the 1.0540 level has traded higher. The pair as of writing is testing a critical range resistance at around the 1.0620 level, as can be seen in the 4 hour chart shown below. This level also represents the 38.2% Fibonacci retracement level of the last major down-move from the 1.0757 high to 1.0540 low. There is also an up-move channel forming, as highlighted in the chart. The same level is coinciding with the channel resistance as well. So, a lot of things lining up for a break.

Hurdles ahead
If the pair manages to come out of the congestion zone, closes above the resistance zone and trades higher, then the pair can climb towards the 61.8% fib level of the recent run. In fact, the more important level to keep a close eye on is the 1.0730 level. This level represents the previous swing level of Feb 12th 2014. So, this level holds a lot of importance, and one can expect sellers to return around this zone. The RSI is heading towards the 70 level, which is not a good sign for a breakout.

If the pair fails to break the range resistance, and moves lower again, then the range bottom at around the 1.0540/20 levels would come into play again. A break below this support zone would be very bearish in the medium term for the pair.

Trade Ideas
If the pair closes above the resistance zone, then one can consider buying with a tight stop of 20-30 pips.

KEY SUPPORT LEVELS: 1.0580 and 1.0540
MAJOR RESISTANCE LEVELS: 1.0620 and 1.0730

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Prepared by Aayush Jindal, Chief Technical Strategist at Capital Trust Markets

 

[CapitalTrustMakrtes]

Silver directionless after Fed tapering, Yellen remarks; breakout eyed

Jitters from the Fed tapering and Yellen remarks on the rate hike kept Silver under pressure yesterday and the same trend is likely to continue today. The white metal will however remain directionless as far as the price is hovering within the daily triangle formation.

Technical Analysis

As of this writing, silver is being traded around $20.34 an ounce. Immediate resistance can be noted at $20.37, the 100 Daily Moving Average (DMA), ahead of $20.58 that is a confluence of the 50% fib level and 55 DMA. A break above $20.58 shall expose the $21.00 handle which is a confluence of 38.2% fib level and 200
DMA and then $21.45 that is the channel resistance.

On the downside, support may be noted near $19.71 i.e. the 76.4% fib level and the channel support. A daily closing below the channel could aggravate the downside momentum, opening doors for the $19.00 handle.

HSBC Manufacturing PMI

On Monday, HSBC Holdings is due to release the Manufacturing Purchasing Managers Index (PMI) of China for the month of March. The PMI had remained well below the projections during the previous three months. A manufacturing PMI reading below 50.0 shows contraction in manufacturing activity and vice versa. Since the Asian nation is the biggest consumer of Silver, so downbeat PMI reading will be considered bearish for the white metal and vice versa.

Stronger Dollar

The tapering decision from the Federal Reserve and Yellen’s remarks on earlier than expected rate hike spurred huge bullish momentum in the dollar on Wednesday. The same trend was realized yesterday and might continue throughout the course of the next week. Not to mention commodities are considered negatively correlated to the dollar.

Conclusion

A breakout through the daily triangle will provide clear direction to the price. Keeping in view the overall fundamental scenario, selling on a daily close below the channel support might yield good results.
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Prepared by Usman Ahmed, Chief Fundamental Strategist at Capital Trust Markets

 

[CapitalTrustMarkets]

Daily Technical Analysis

USDCAD
Technical outlook and chart setups:

1. The USDCAD pair has been remained in an uptrend at least since April-May 2013, and has remained well supported by the longer term trend line. A fresh high was printed at 1.1270/80 levels last week before pulling back. The pair remains in the buy zone of intermediary support line as well and Fibonacci supports begin from 1.1130/40 levels. Recommendations remain buying on dips for now.
2. Supports are spread through 1.1140/50 levels (backside of the intermediary cone consolidation), followed by 1.1020 and 1.0900/50, while resistance is at 1.1270/80 (intermediary) respectively.
3. The structure reveals that prices should continue to print higher highs and higher lows till 1.0900/50 support remain intact. Look to buy lower towards 1.1140/50 levels.

Trading recommendations:
Look to go long around 1.1130/50 region, stop at 1.0950, target open.

USDJPY
Technical outlook and chart setups:

1. The USDJPY pair has remained in a meticulous uptrend since Sep-Oct 2012 as seen on the weekly chart setup here. The longer term support trend line is passing through 80.00 levels while the short term trend line support is seen around 100.50 levels. The pair needs to remain above 100.50 levels, for bulls to remain in control. Recommendations are to remain flat for now.
2. Intermediary support is at 100.50/80 levels, followed by 96.50, 93.80 and lower while resistance is spread through 104.00 (intermediary) and 105.50 respectively.
3. The entire structure reveals that bulls should remain in control till prices are above 100.50/80 mark. A push lower, and consequently the intermediary support line break may open doors for a larger pullback towards 94.00 and even lower. It may be too early, but an inverted head and shoulder formation maybe under way.

Trading recommendations:
Remain flat for now. Watch out for a break of 100.80.

NZDUSD
Technical outlook and chart setups:

1. The NZDUSD pair is in a rising wedge (increasing supports and constant resistance) since May 2012; major supports being 0.74, 0.7680 and 0.8050; according to the weekly view. Rising wedge normally break on the north side, but for now an engulfing bearish signal has appeared on the Daily chart, indicating that immediate move may be lower from here. Minimum expectations are the 0.84 and 0.83 levels from here on.
2. Immediate support is at 0.8420/30, followed by 0.8250 and 0.8050, while resistance is at 0.8680/90 respectively.
3. The entire structure reveals that NZDUSD may be heading lower for a while, towards 0.84/0.83 levels, before the next rally could resume that could finally break out consolidation above 0.8700.

Trading recommendations:
Initiate short positions around 0.8580/90, stop at 0.8650, target at 0.8300.

 

[CapitalTrustMarkets]

USD/JPY extends gains after China’s manufacturing PMI

USD/JPY extended gains on Monday as China’s manufacturing once again slowed down in March, raising questions about the growth of the world’s second largest economy. The pair is expected to test the channel resistance in near future, according to the technical analysis.

Technical Analysis

USD/JPY is being traded around 102.39 at 6:00 GMT in Asia. The pair is heading towards the upper trendline of the daily wedge as demonstrated in the following chart. The pair is expected to find a major hurdle near 103.14 that is the 50% fib level as well as the channel resistance. A daily closing above the channel should expose further rallies towards 104.30, the 76.4% fib level.

On the downside, the pair is likely to find support near 101.80, the 23.6% fib level, ahead of the channel support which is currently sitting in near 101.35. A daily closing below the channel is needed before further dips towards the $100.00 handle.

China’s Manufacturing PMI

HSBC Holdings today released the China’s manufacturing Purchasing Managers Index (PMI) for the month of March. The data once again came worse than expectations, showing 48.1 points reading for March compared with 48.5 in the previous month, analysts had predicted 48.7 points reading this time around. It is pertinent that a PMI reading below 50 indicates contraction in manufacturing activity while a 50+ reading shows expansion in manufacturing. Since China is one of the biggest trading partners of Japan, so the manufacturing slowdown in China tends to weaken the Japanese Yen (JPY).

Stronger Dollar

The dollar is expected to continue the bullish trend after the previous week’s hawkish monetary policy in which the US central bank once again reduced the stimulus and Fed chair Janet Yellen indicated the first rate hike as soon as the next six month period.

Conclusion

Breakout through the daily wedge should provide the pair a clear direction for medium to long term. Chicago Fed National Activity Index and US manufacturing PMI will also be very crucial for the pair.

 

[CapitalTrustMarkets]

Technical Outlook

EURJPY 24th March 2014:

Technical outlook and chart setups:



1. The EURJPY pair has remained in an uptrend since June-July 2013, printing higher highs and higher lows. The run-up has been stalled at 145.50, before pulling back recently. The trend line support is seen at 139.00 levels for now. A break below 139.00 would prove to be potentially bearish. At this moment, it is recommended to remain flat. Aggressive trade setup is to initiate short positions, risk remains above 144.00.
2. Immediate intermediary supports are spread through 139.00, followed by 136.50, 134.00, 131.00 and lower, while resistance is at 144.00 (intermediary), followed by 145.50 respectively.
3. The structure reveals that bears might want to push prices below 139.00 and further looking at the weekly chart. Although, keeping the long term uptrend into consideration, 136.50 should break to confirm a meaningful bearish setup.
Trading recommendations:
Remain flat for now. Aggressive trade setup is to initiate short positions, stop at 144.00, and target open.

GBPJPY 24th March 2014:


Technical outlook and chart setups:



1. The GBPJPY has remained in an uptrend since 120.00 levels now and a major resistance block at 163.00 has been cleared recently by bulls on the weekly chart view. At the moment, prices remain supported at 168.70/80 levels (trend line). However, a break here, would open up doors towards 160.00/50 levels. It is recommended to remain flat for now and wait for a reaction at the trend line.
2. Intermediary support is at 164.00, followed by 160.00 (trend line), 158.00, 156.50 and lower, while resistance is at 173.60, followed by 174.80 respectively.
3. The structure reveals that GBPJPY bulls shall remain in control till prices are above 164.00 levels. But it is still suggestive to wait for confirmative push above 170.00 before committing longs.
Trading Recommendations:
Remain flat for now. Look for further evidence to commit.


EURAUD 24th March 2014:


Technical outlook and chart setups:



1. The EURAUD pair has been printing higher highs and higher lows since 1.15 levels forming an inverse head and shoulder reversal on the weekly charts. At the moment, it looks like a meaningful correction is due, and hence recommendations are not to commit on the long side. Prices are supported at a past resistance turned support around 1.5 levels for now. A break below the trend line and further below 1.5 would prove to be extremely bearish.
2. Immediate intermediary support is at 1.5, followed by 1.44, 1.41 and lower, while resistances are spread through 1.55 and 1.58 respectively.
3. The structure reveals that 1.5 needs to hold for bulls to remain in control. Please also note that prices are right at the trend line support around 1.5180, and a break down would be encouraging for bears. A possible head and shoulder reversal could be shaping up with 1.55 being defined as the right shoulder and 1.58 and head. Prices need to remain below 1.58 though.
Trading recommendations:
Remain flat for now. Look to sell on a possible break of trend line.


Crude Oil 24th March 2014:


Technical outlook and chart setups:



1. As seen here on the weekly chart, Crude remains in a broader trading range, with increasing supports (75.00, 77.00, 85.00 and 91.00) and constant resistance (110.00/111.00); since June 2012. Recently, prices bounced off the support at 91.00 levels and rallied through 105.00 before pulling back again. At the moment, prices seem to be bouncing off the 96.50 levels; please note that Fibonacci 0.618 support is also around the same region. Also, an engulfing bullish signal has appeared on daily charts.
2. Immediate intermediary support is at 97.00/96.50, followed by 91.00 and lower, while resistance is at 103.00, 105.00 and 110.00 respectively.
3. The structure reveals that a test of 96.50 levels is still possible before bulls resume the next leg high. Trade strategy should be to buy on dips for now. 91.00 levels remain key for bulls to remain in control.
Trading recommendations:
Initiate 50% long positions, and remaining 50% around 96.50, stop at 94.00, and target open.


Gold 24th March 2014:


Technical outlook and chart setups:



1. A daily chart view has been presented here that shows potential double bottom formed at around $1,180.00 levels. The rally since then has taken out major resistances at $1,361.00 and $1,375.00 respectively. A meaningful pullback/recovery could be under way at the moment towards possibly $1,250/60 levels before the next Bull Run resumes. Prices are been supported by the rising trend line at the moment and a break would be required to confirm further lower side.
2. Immediate support is the $1,300.00/10.00 region, followed by $1,280.00/70, 1,230.00/40.00 and lower, while resistances are spread through $1,388.00, followed by $1,395.00 and higher respectively.
3. The structure reveals that Gold has turned back from $1,388.00 levels in a pull back / retracement mode for the time being. Trading strategy should remain to buy on dips.
Trading recommendations:
Remain flat for now. Look to buy lower.



Silver 24th March 2014:



Technical outlook and chart setups:



1. Silver is pulling back for the time being, after printing highs at $22.30 levels recently. Please note that Fibonacci 0.618 support is at $20.00 levels and also the past resistance turned support region at current levels. A bullish reversal here should be bought with minimum upside targets of $23.00 and higher.
2. Immediate support is at $20.00, followed by $19.00, $18.70 and lower, while resistances are spread through $21.70/80, followed by $22.30, $23.00 and higher up respectively.
3. The entire structure reveals that Silver could have possibly turned bullish after breaking the resistance trend line as seen here. Furthermore, a bullish bounce at sub $20.00 levels would bring back bulls in control and push prices higher towards $23.00 and $24.00.
Trading recommendations:
Initiate long positions at $20.00, stop at $19.25, and target open.

 

[CapitalTrustMarkets]

EUR/AUD Daily Technical Outlook

Technical outlook and chart setups:

1. The EUR/AUD pair is seen to be breaking below the March – April 2013, trend line support for now around 1.5100/1.5200 region, at the moment. Prices took out support at 1.5 levels earlier, then pulled back towards 1.55 (the Fibonacci 0.618 resistance) before reversing. A trendline break further would confirm a head and shoulder reversal towards potential 1.36 levels from here on. Recommendations are to initiate short positions in 50% capacity now. Risk remains at 1.55.

2. Immediate intermediary support is at 1.5, followed by 1.48, 1.44 and lower, while resistance is at 1.55 (intermediary), followed by 1.58.

3. The structure reveals that a potential head and shoulder is underway towards 1.36 levels from here on. A break below 1.5 would push prices aggressively lower.

Trading recommendations:
Sell 50%, stop at 1.55, target at 1.4460 and 1.3600.

Prepared by Capital Trust Markets.

 

[CapitalTrustMarkets]

Daily Crude Oil Technical Outlook

Technical outlook and chart setups:

1. A daily chart snapshot has been presented here today. Broadly Crude still remains in a rising wedge with immediate support at 90.0/91.00 levels and resistance between 110.00/112.00. At the moment prices have bounced off Fibonacci 0.618 support around 96.50 levels. It is recommended to remain long and also look to add further on dips towards 96.00 levels. As seen above the initial target remains 110.00 for now. Risk can be below 94.00.

2. Immediate support is t sub 96.00/50 levels (Fibonacci 0.618 support), followed by 94.00 and 92.00, while resistance is at 104.50 (intermediary), followed by 108.00 and 110.00 respectively.

3. The structure reveals that bulls might continue to hold control till prices remain above 94.00 for now. Buying on dips should remain the trade mantra for now.

Trading recommendations:
Remain long from yesterday, and buy further around 96.50, stop at 94.00, and target open.