Trend trading analysis week beginning December 1st
Sunday-Monday morning is a relatively quiet opening for high impact news events, capital spending in Japan is predicted to rise by 3.1%. The HSBC final manufacturing PMI for China is expected to come in at 50.5. There is a raft of Australian data published overnight/early morning, with building approvals being the standout piece of data which is expected to fall to -4.3% from a positive 14.4% the previous month. Company operating profits are published for Australian companies. New Zealand’s overseas trade index is expected in at 3.0%.
Monday (day) sees a busy day for high impact news events with several Manufacturing PMIs published courtesy of Markit Economics. Both Europe’s and the UK’s final Manufacturing PMIs are published, Europe’s expected in at 51.5 and the UK at 56.5. Fed chairman Ben Bernanke gives one of his last speeches and press conferences before retiring at the end of the year, whilst the USA publishes its ISM manufacturing prices, and manufacturing PMI expected in at 55.2 a fall from 56.4.
Later in the evening Australian retail figures are published with the print expected in at 0.4%, up from the previous month’s 0.8%. Australia’s current account is predicted to rise to -$11.2 bn negative. Further Aussie data concerns the incredibly important cash rate decision with the expectation that the rate of 2.5% remains intact. The accompanying RBA statement will be looked upon for any clues as to further forward guidance from the RBA including potential monetary easing.
China’s manufacturing PMI is published with the expectation that the print will be circa the previous month’s figure of 56.3.
Tuesday sees the publication of several key economic data, including Spanish unemployment data expected in at 44.3K below the 88K the previous month. In the UK the Halifax house price ides is expected to rise by 0.8% month on month, whilst the construction PMI is expected in at 59.3. Total vehicle sales in the USA might give an indication of the overall consumer sentiment and the existing appetite for new credit. Australia’s GDP is expected in at 0.7% up from 0.6% the previous month.
Wednesday there’s a raft of PMIs published early morning, Spanish and Italian final services PMIs with Europe’s final services PMI also published expected in at 50.9. The UK services PMI is expected in at 62.1. There are OPEC meetings all day Wednesday, naturally these could have a positive, or negative impact on the price of oil. Retail sales for Europe is expected in at +0.2% from the -0.6% negative the previous month. Europe’s revised GDP growth is expected in at 0.1%.
The USA ADP employment numbers are expected to show an improvement of circa 185K jobs created for the month. Canada’s trade balance is expected in up to $0.7bn, the USA’s is expected in at $40.3 bn. The bank of Canada will publish its decision on its rate setting, expected to stay at 1.00%. Further USA news comes in the form of new home sales expected in at circa 432K, whilst the USA PMI for non-manufacturing is expected in at 55.4. Crude oil inventories completes the day for USA high impact news releases with the beige book data also published. Australia’s trade balance completes the day for news events.
Thursday witnesses the UK’s BoE MPC publish its interest rate policy decision and the details of its monetary easing policy decision expected to remain the same at 375bn. The statement covering the decisions will be of keen interest to investors. The UK’s chancellor will give his autumn finance statement. Europe’s ECB will publish its rate decision, expected to stay at 0.25%.
Canada reports its building permits and the IVEY PMI expected in at 60.2, whilst the USA publishes its preliminary GDP figures expected in at 3.1%, with unemployment claim numbers at circa 322K for the week. The USA publishes its factory orders, predicted down by 0.7%.
Friday sees Japan’s leading indicators published, France’s trade balance is expected in at €-5.1bn, Germany’s factory orders are expected to fall by -0.4%. Canada’s unemployment number is expected to rise to 7.0%. Non-farm jobs created are expected in at circa 184K, with the USA unemployment expected in at 7.2%. Personal spending in the USA is expected in up 0.4%, whilst the preliminary university of Michigan survey of consumer sentiment expected in at 76.2. Later on Friday sees FOMC member Evans hold court, with the BOJ governor Kuroda holding court later in the evening. Late Friday evening-early Saturday morning China’s trade balance is published..
Swing trading technical analysis for several major pairs, indices and commodities…
This section of our analysis concentrates on the current swing/trend trading status of several major currency pairs, indices and commodities using several of the most commonly preferred indicators. We focus on the daily chart only using Heikin Ashi candles to observe price action. We use PSAR, Bollinger bands, DMI, MACD, RSI and ADX. The stochastics are the only adjusted setting, the indicator adjusted to a slower reading of 10,10,5. We look for key looming round numbers and psyche numbers, whilst using key moving averages such as 20,50,100, 200.
EUR/USD continued its bullish trend for the majority of the preceding week. PSAR is below price, which is above the middle Bollinger band, whilst price is approaching the upper band. Price has breached the 50 SMA, is above the 20 SMA with the next key round number being 13600. The DMI and MACD are positive printing higher highs using the histogram visual. The RSI is at 55, ADX at 19. The stochastic lines are in the overbought zone. The Heikin Ashi candles over preceding days were closed with shallow bodies and upper shadows. Traders would be advised to stay long until several or all of the afore mentioned indicators turn bearish.
AUD/USD has continued its bearish highly defined channel sell off that began to develop from October 24/25th. PSAR is above price, the middle Bollinger has been breached. Price has breached the major SMAs to the downside. MACD and DMI are negative printing lower lows on the histograms. RSI is at 34, with ADX at 33, suggesting that the trend is still strong with this movement. Stochastics have reached the oversold area. The most recent Heikin Ashi candle is developing into a doji suggesting that indecision may be enveloping the market where this security is concerned. Traders should have locked in considerable pips during this move and would be advised to tread with caution given the major interest rate decision the RBA is due to make later this week.
USD/JPY began the first leg of its bullish momentum move circa October 10th, since which time the pip gain has been considerable. Currently PSAR is below price; the upper Bollinger band is being threatened, whilst the week’s preceding daily candles were closed with upward shadows. Price is above all the key significant SMAs. The DMI and MACD are positive and making higher highs using the histogram visual. The RSI is at 73, ADX at 24, whilst the stochastic lines are in the overbought zone with readings over 90 on the adjusted setting of 10,10,5. Traders would be advised to stay long until several of the most commonly used indicators turn bearish, perhaps the PSAR turning negative being an indication that traders should close their long trade and await further indications to short the security.
The DJIA broke to the upside on circa October 10th, since which time the points gained have been considerable, from 14,800 to circa 16,100. Price is above all the critical moving averages; PSAR is below price, whilst price has breached the upper Bollinger band. The MACD and DMI are positive and making higher highs. RSI is at 69 and ADX at 33. The stochastic lines are in the overbought area with readings above 90 on the adjusted setting. Traders long the DJIA need to be mindful of the key handles to the upside which will present as each major key psyche level is reached given that the DJIA is in uncharted territory potentially setting new highs. Traders looking for a reason to close their long trades should perhaps look towards the PSAR reversing sentiment and appearing above price.
WTI oil continued it bearish channel sell off due to the Iranian nuclear pact being provisionally agreed and USA stocks for oil looking healthy in the preceding week’s data. Price has breached all of the key moving averages including the 20 SMA. PSAR is above price, the lower Bollinger band is in danger of being breached, the DMI is bearish, however the MACD is positive without making higher highs. The RSI is at 39, with ADX at 40 suggesting that the trend is strong in this current movement. Stochastics are currently indecisive with both being circa 43, midway between oversold and overbought. At circa 93 dollars per barrel oil has fallen from circa 112 per barrel since late August. Traders short WTI oil would be advised to stay short until several or all indicators have turned bullish. Perhaps the PSAR turning positive being a key signal to lose the current short trade.
Spot gold continued its sell off during the preceding week. However PSAR appeared below price encouraging traders short to close their short trades. Both DMI and MACD are negative whilst making higher lows on the histogram visual. RSI is at 38, with ADX at 40 suggesting that the current trend could be strong. Both stochastic lines are in the oversold zone. The middle Bollinger has been breached to the upside. The latest Heikin Ashi candle is a doji suggesting market indecision were this security is concerned. Traders should monitor the position carefully given the volatile nature of spot gold in the current climate. Traders may wish for further confirmation before committing to a long position, similarly those considering shorting the security should be looking for a minimum of the PSAR to reverse its sentiment before consider it further short opportunities.
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