Our weekly trend/swing trading analysis consists of two parts; firstly we analyse the fundamental policy decisions and news events for the coming week. Secondly we use technical analysis in an attempt to determine any potential trading opportunities. Traders reading our key calendar events for the week should note the predictions, as any deviation, from that predicted by the economists polled, can result in major currency pair movements, depending on the consequential shifts in sentiment caused if the data comes in above, or below expectations.
Tuesday sees wholesale sales in Canada published, with the anticipation that the figure comes in at a circa 0.7% rise month on month. HPI for the USA is predicted to come in at 0.6% up for the month. Consumer confidence in Europe is anticipated to come in at -9, with existing home sales in the USA expected to come in at an annual rate of 4.57 million. The Richmond manufacturing index is anticipated to have recovered from -9 to a zero reading.
Wednesday sees CPI from Australia published, predicted to come in at 0.8%, the HSBC manufacturing index for China is expected in at 48.4, flash manufacturing PMI for Germany is predicted to come in at 53.9, with services PMI scheduled to come in at 53.5. France’s flash Manufacturing index is expected in at 51.9 with services in at 51.5. Europe’s flash manufacturing PMI is predicted to come in at 53 with services at 52.7. The UK’s BoE MPC will reveal its voting to keep the base interest rate and the quantitative easing programme static with the vote expected to have been unanimous. Public net sector borrowing for the month is expected to have risen to £8.7 bn for the last month.
From Canada retail sales are anticipated to have risen by 0.5%, from the USA the reading for flash manufacturing PMI is predicted to come in at 56.2. New home sales in the USA are expected in at 455K. From New Zealand we’ll receive the decision on the base rate expected to come in at 3.00% rising from 2.75%. The RBNZ will publish a statement regarding their interest rate decision.
Thursday sees the business climate reading from the IFO for Germany expected to come in at 110.5. The ECB president Mario Draghi will deliver a speech, whilst Spain will launch a ten year bond debt auction. In the UK the CBI will publish its realised sales expectations, predicted to come in at 18. From the USA we’ll receive core durable goods orders expected to come in at 0.6% up. Unemployment claims are expected in at 309K for the past week. Durable goods orders are anticipated to come in at 2.1% up.
Friday sees Tokyo’s core CPI published with the anticipation that the reading will come in at 2.8%. All industries activity from Japan is expected to come in at -0.5%. From the UK we receive the latest data on retail sales, expected to come in at -0.4% for the month. BBA mortgage approvals in the UK are predicted to come in at 48.9K. Flash services PMI for the USA is expected to come in at 56.2 whilst the university of Michigan Consumer sentiment report is expected to deliver a reading of 83.2.
Technical analysis detailing potential trades on several major currency pairs, indices and commodities
Our swing/trend trading technical analysis is comprised using the following indicators which are all left on their standard setting, with the exception of the stochastic lines which are adjusted to 10, 10, 5 in an attempt to ‘dial out’ false readings. All our analysis is conducted on the daily time frame only. We use: PSAR, Bollinger bands, DMI, MACD, ADX, RSI and the stochastics. We also use the key moving averages of: 21, 50, 100, 200. We look for key price action developments and observe key handles/looming round numbers and psyche levels. For the daily bars the Heikin Ashi method is preferred.
EUR/USD broke to the upside on April 8th, currently PSAR is positive and below price, the MACD and DMI are both positive, but failing to make higher high when using the histogram visuals for both indicators. Price is above all the major SMAs however the 21, 50 and 100 SMA are clustered indicating that price could break to the downside as momentum to the upside has potentially failed. The middle Bollinger band has been breached to the downside whilst several of the daily Heikin Ashi candles of last week failed to indicate direction to the upside or downside. The RSI is at 50 whilst the ADX is at 13. The stochastic lines have crossed to the upside, but are short of the overbought territory. Traders currently long would be advised to stay so until perhaps the PSAR has indicated a reversal in sentiment by turning negative. Thereafter traders would be advised to wait for extra indicator confirmation before committing to the downside. 13800 could prove to be the critical level for this security over coming days.
AUD/USD broke to the upside early in March, currently PSAR is below price and positive, the DMI is positive and making lower highs. The MACD is negative. The stochastic lines have crossed to the downside and have exited the overbought area. The RSI is at 59 and the ADX is at 37. Price is above all the main SMAs and threatening to breach the 21 SMA whilst the middle Bollinger band has been breached to the downside. The Heikin Ashi candles late in the week were inconclusive with a bias to the downside. Traders who are currently long, who have been so since this security broke to the upside in early March, will have locked in their profits by way of trailing stops. Thereafter, traders looking for an indication of a reversal in sentiment on the Aussie, could look towards the PSAR to reverse as a reason to stop and then reverse their trade direction. Given the length of the current trend traders might also be advised to wait for the DMI to also become negative before taking short opportunities.
USD/JPY broke to the downside on April 7th, however price has lost the majority the gains witnessed as the security sold off sharply for several days after the break to the downside. Currently the PSAR is above price, the MACD and DMI are positive, but making lower highs. Price is threatening to break through the 21 and 50 day SMAs. The stochastic lines are yet to cross and are short of the oversold area. The RSI is at 49 whilst the ADX is at 17. Looking at the Heikin Ashi candles towards the end of last week the Aussie is threatening to break to the upside and reverse sentiment to bullish. Traders might be advised to wait for the DMI and MACD to become positive and the PSAR to appear below price before fully committing once again to long trades.
The DJIA broke to the upside on April 15th. Currently price is above all the critical SMAs. PSAR is below price and positive whilst the last Heikin Ashi candles of last week were closed, full bodied with upward shadows. The DMI and the MACD are both positive and making higher highs using the histogram visual. The stochastic lines are mid territory and indicating that (on the adjusted setting) they are about to cross. The RSI is at 54 and the ADX is at 11. Traders currently long would be advised to stay so until as a minimum the PSAR turns negative and several of the other indicators in our cluster guide take on bearish tendencies.
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