Fundamental and technical trend analysis for the week beginning November 17th

Nov 18 • Is The Trend Still Your Friend • 2214 Views • Comments Off on Fundamental and technical trend analysis for the week beginning November 17th

trend-analysisMonday sees the publication of Europe’s balance of payments and current account details, the current account is scheduled to come in at €18.3 bn, up from the previous month’s figure of €17.4 bn. In the afternoon’s trading session the USA NAHB housing index is published, scheduled to print at 56, up one point from the previous 55.

There are two FOMC members who will take the stage during the day, presumably to discuss the ongoing taper rumours and perhaps be quizzed on the situation regarding Janet Yellen’s nomination as Ben Bernanke’s successor as Fed chairperson. One interesting aspect of Yellen’s appearance in front of a treasury select committee hearing recently was her admission that the USA economy isn’t as robust as many market commentators would have us believe. $4 trillion USA dollars to buy circa 0.25% growth is the current estimation put out into the mainstream media by those not hoodwinked by the rise of the DJIA indicating a healthy economy.

In the evening Australia’s economy takes centre stage, with the publication of the Conference Board index expected to print positive after the previous month’s -0.2% figure. The minutes from the latest monetary policy committees meeting is published with many analysts looking for clues regarding a shift in policy and a reduction in interest rates currently at 2.5%, currently out of step with many other developed economies who have still pursued a ZIRP.

 

Tuesday sees the publication of the ZEW German sentiment index and the ZEW Europe sentiment index. Both indices are expected to rise, Germany’s up to 54.6 and Europe’s up to 63.1. Two more FOMC members are due to speak, Dudley and Evans, whilst treasury secretary Lew is due to speak, the man who ‘knocked heads’ together over the debt impasse. Later in the evening Ben Bernanke holds court.

New Zealand’s PPI is published with the expectation of a number similar to the 0.6% of the previous month. Japan’s trade balance is expected in at -0.88 trillion, with the all industries activity expected in at 0.5% up.

 

Wednesday sees the publication of Germany’s PPI, expected in at 0.1% up for the month and the BoE MPC publishes its voting over the current quantitative easing programme and rate setting, expected to have been unanimous. Inflation details for the USA are published, with the CPI expected in up 0.1% on the month, RPI up 0.1% with CPI flat. USA existing home sales are expected in at 5.21 million per annum, a slight fall expected due to seasonal activity slowing down moderately. The FOMC recent meeting minutes are published, prior to that FOMC member Bullard speaks. The governor of Canada’s central bank Poloz speaks, China’s HSBC flash manufacturing index is published, expected in at 50.9, whilst Japan’s monetary policy statement is published as the BOJ conducts a press conference.

 

Thursday sees the publication of Germany’s and France’s flash manufacturing and service PMIs together with Europe’s which is expected to print at 51.6 for manufacturing and 51.9 for services. The RBA governor of Australia holds court on Thursday, whilst the UK’s public net sector borrowing is published expected slightly up in at £10.1 bn. USA PPI is expected in at -0.1% whilst unemployment numbers are expected in at 333K, slightly up from the previous week. Flash manufacturing data is expected to print at 52.6. Europe’s consumer confidence is expected in at -14.1 with the Philly manufacturing index for the USA expected in at 15.1, down from 19.8 the previous month.

 

Friday we receive the data concerning Germany’s final GDP figure expected in at 0.3% up, with the German IFO index expected in at 107.9. Friday also sees a raft of info. regarding Canada; core CPI data is published expected in flat, with CPI up 0.2%. Retail sales is predicted in up 0.5% for the month. Jolts job openings are published in the USA, it measures the number of job openings during the reported month, excluding the farming industry.

 

Technical analysis for major currency pairs, indices and commodities.

The technical analysis will consist of analysing the securities listed by using many of the most popular indicators such as: PSAR, Bollinger bands, MACD, DMI, ADX, RSI, whilst looking for price action using Heikin Ashi candles on the daily time frame, monitoring key simple moving averages such as the 200 SMA and 50 SMA and referencing key psyche and looming round numbers.

 

EUR/USD threatened to break to the upside for several days during the preceding week after the sell off had occurred post the reduction by 0.25% of the base rate by the ECB. However, the sentiment momentum wasn’t conclusive enough to cause a breakthrough with very few of the indicators turning positive. PSAR is above price, the MACD and DMI are both negative although making higher lows, RSI is at 46, still short the median line, whilst the ADX is indicating a strong trend at 32. Stochastic lines have crossed on an adjusted setting of 10,10, 5. The last 3 daily HA candles were closed with small shadows to the upside, price is very close to the 50 SMA and the middle Bollinger band. Traders who have been short since circa October 29th would be best waiting for further confirmation via several of the key indicators turning bullish, perhaps the PSAR and DMI and MACD.

 

AUD/USD has fallen considerably since circa October 24th, coinciding with the RBA stating that up to $200 bn of monetary easing will be used if and when the RBS deems necessary. Currently PSAR is above price, DMI and MACD are negative, although making higher lows. The lower Bollinger was breached earlier in the preceding week, RSI is at 43 with ADX at 30. Stochastic lines have crossed on the adjusted setting of 10,10,5 but still close to the oversold zone. Looking towards the HA daily candles Friday closed with a doji suggesting indecision and a natural balance between sellers and buyers. Traders short would be advised to have locked in their pips profits by way of trailing stops, long trades would be advisable should the PSAR appear below price and several other indicators turn bullish.

 

USD/JPY, since the break out to the upside from October 29th the pip gain has been considerable. PSAR is below price, MACD and DMI are positive, making higher highs using the histogram visual, whilst the RSI is at 62 and the ADX has fallen to 14. Both stochastic lines are in the overbought zone, whilst the upper Bollinger band has been breached to the upside. The HA bar of Friday is closed with a significant body and shadow to the upside. Traders would be once again advised to lock in their current profits and perhaps consider closing their current long position should PSAR or other indicators turn bearish. With such a considerable move traders would be best advised to avoid short trades until several indicators turn negative.

 

The DJIA has continued its bullish run since October 10th. Since this date the points gain has been considerable, circa 1,000 points, 15,000 to circa 16,000. PSAR is below price, MACD and DMI are positive on to histogram visual and making higher highs. ADX is at 30 indicating a strong trend, RSI is at 70, stochastic lines are crossed and are close to the overbought territory. The upper Bollinger band has been broken to the upside on the daily time frame. The HA candles during the week have been closed with Friday’s candle closed with a small shadow to the upside. Traders who have been long since early October must have locked in considerable points gained by way of using stops. Given the huge swing to the upside traders would be advised to await several indicators turning bearish before contemplating a trade to the downside.

 

WTI oil reached a three month low during the preceding week. The accelerated sell off from early October has been significant, price now beginning to threaten breaking through the next crucial psyche level of $90 per barrel. Currently PSAR is above price, MACD and DMI are negative, although not making lower lows. Stochastics have crossed, but still firmly lodged in the oversold zone. The middle Bollinger band has been breached to the upside. Should oil recover then perhaps the 50 SMA, or the key psyche level of $100 per barrel would be in sight. However, currently until several indicators turn positive it’s difficult to justify a reason for taking a long trade.

 

Spot gold appeared to recover slightly from the deep sell off experienced during the preceding week. PSAR is above price, DMI and MACD are negative but making higher lows, RSI is at 42, ADX at 23. Stochastic lines on an adjusted setting are in the oversold zone looking to break out. The middle Bollinger line looks in sight to the upside for a potential breach, with the 50 SMA being an obvious target. The HA candles are inconclusive, adding belief that the downward momentum of gold sell off is reaching a point of exhaustion. Traders short should be looking to observe several indicators turning bullish before stopping and reversing.

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