Trend analysis for week beginning April 6th

Apr 7 • Is The Trend Still Your Friend • 1843 Views • No Comments

trend-analysisThe week begins with the ANZ job adverts from Australia, Japan’s leading indicators are predicted to come in at 114.2%. Thereafter attention turns to Europe with Swiss CPI expected in at 0.2%, and German industrial production expected in at 0.3% month on month. The Sentix investor confidence index for Europe is expected in at 14.2. Consumer credit in the USA is predicted to have risen by circa $14.1 bn for the month.

Tuesday sees the NAB business confidence survey published which could affect the value of the ASX indices and the value of the Aussie versus its major peers. Japan’s BOJ issues a monetary policy statement and will later in the day hold a press conference to discuss its policy announcements. France’s trade balance is expected to come in at -€5 bn, retail sales from the Swiss should report a rise of circa 1% year on year. Manufacturing production for the UK is predicted to have grown by 0.3%, industrial production for the UK is predicted to have grown by the same value month on month. Housing starts in Canada are predicted to come in at 193K, with building permits to have fallen by circa 2.3% on the month. In the UK a prediction will be made for the GDP of the UK, predicted to come in at 0.8% for the quarter. In the USA the JOLTS business jobs openings are published. Later in the USA the Fed Member Plosser will speak.
Wednesday we start with the Westpac consumer sentiment index expected in above the previous reading of -0.7% previously. Home loans in Australia are predicted to have come in at 1.7% up. Germany’s trade balance is expected in at €18 bn positive. The UK’s trade balance is predicted in at £-9.3 bn. The USA will hold a ten year bond auction and the Fed’s minutes will be published.

Thursday sees Australia’s inflation expectation published and the unemployment rate which is expected to remain at 6.1% with 7.3K extra jobs created. China’s trade balance is expected in at 0.9 bn. The ECB will publish its monthly bulletin whilst French Industrial production for the month is predicted to come in up 0.2% month on month. The UK is predicted to keep interest rates at a record low with quantitative easing at the level of £375 billion. The BoE’s MPC will follow up the decision with a statement. Unemployment claims in the USA are predicted in at 314K for the week with import prices up 0.2% month on month in the USA. The USA will conduct a thirty year bond auction whilst the Federal budget balance is predicted to come in at -$76.5 bn.

Friday sees Japan holding a meeting revealing its monetary policy minutes whilst China’s CPI is expected to print at 2.5% annually. Japan holds a thirty year bond auction. The USA PPI is predicted to come in at 0.1% month on month with core PPI at 0.2%. The preliminary university of Michigan reading is expected in at 81.2 .

Technical analysis for the week

EUR/USD began its break to the downside on March 19th. Since which time the pip gain has been significant for traders short the security. Currently PSAR is negative and above price which has recently breached the 100 and 50 SMA and the lower Bollinger band. The MACD and the DMI are negative and making lower lows using the histogram visual, the stochastics are yet to cross on the adjusted 10,10,5 setting. The ADX is at 20 and the RSI at 41. Traders short would be advised to do so until a major shift of sentiment had perhaps been indicated by the PSAR turning positive and appearing below price.

AUD/USD broke to the upside on March 5th since which time to pip gain for traders long this security has been considerable. Having breached the 200 SMA on March 26th price has continued to accelerate to the upside. Price is above all the major SMAs, the PSAR is positive and below price, both the MACD and DMI are positive and making higher highs, ADX is at 26 with the RSI at 68 and both stochastic lines are in the overbought zone. The later three indicators could be a forward warning that this momentum move has lost its energy and is beginning to tire. Traders who have benefited from this huge momentum move need to ensure they’ve locked in pips by way of trailing their stops.

USD/JPY broke to the upside on March 28th. Presently, price on the daily time frame has taken on the appearance of an inconclusive doji. PSAR is below price, both the MACD and DMI are positive but failing to make higher highs. Price is above all the major SMAs and had breached the upper Bollinger band earlier in the week. The ADX is at 15 with the RSI at 56. The stochastic lines are yet to cross but are close to the overbought zone. Given the appearance of the doji traders would be advised to proceed with great caution and to move their stops accordingly perhaps by use of the PSAR which is positive. The PSAR turning negative could be the point at which traders stop and consider reversing their sentiment.

The DJIA is currently exhibiting the signs of indecision as illustrated by the pronounced doji on Friday on the daily time frame.  Price is above all the major SMAs, PSAR is positive and below price whilst the upper Bollinger had been breached earlier in the week. The DMI and MACD are positive but failing to make higher highs. The stochastic lines are yet to cross and are short of the overbought area. ADX is at 14 whilst the RSI reading is at 54. Traders long need to exercise caution given the severe sell off late in Friday’s trading session. The use of trailing stops is essential to lock in the points gained if taking the trade since price broke to the upside in late march.
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