Weekly Chart Analysis – 11th April 2016

Weekly Chart Analysis – 11th April 2016

Weekly chart analysis covers EURUSD, GBPUSD, AUDUSD.

The report looks at the daily and intraday charts to gauge the price action behaviour.

Weekly Market Risk Events:

Monday, April 11th @ Tentative: - USD - Fed Announcement
 
Tuesday, April 12th @ 9:30 am: - GBP - CPI y/y
 
Wednesday, April 13th @ Tentative: - CNY - Trade Balance
Wednesday, April 13th @ 1:30 pm: - USD - Core Retail Sales m/m
Wednesday, April 13th @ 1:30 pm: - USD - PPI m/m
Wednesday, April 13th @ 1:30 pm: - USD - Retail Sales m/m
Wednesday, April 13th @ 3:0 pm: - CAD - BOC Monetary Policy Report
Wednesday, April 13th @ 3:0 pm: - CAD - BOC Rate Statement
Wednesday, April 13th @ 3:0 pm: - CAD - Overnight Rate
Wednesday, April 13th @ 4:15 pm: - CAD - BOC Press Conference

Thursday, April 14th @ 2:30 am: - AUD - Employment Change
Thursday, April 14th @ 2:30 am: - AUD - Unemployment Rate
Thursday, April 14th @ 10:0 am: - EUR - Final CPI y/y
Thursday, April 14th @ 10:0 am: - EUR - Final Core CPI y/y
Thursday, April 14th @ 12:0 am: - GBP - MPC Official Bank Rate Votes
Thursday, April 14th @ 12:0 am: - GBP - Monetary Policy Summary
Thursday, April 14th @ 12:0 am: - GBP - Official Bank Rate
Thursday, April 14th @ 1:30 pm: - USD - CPI m/m
Thursday, April 14th @ 1:30 pm: - USD - Core CPI m/m
Thursday, April 14th @ 1:30 pm: - USD - Unemployment Claims

Friday, April 15th @ 3:0 am: - CNY - GDP q/y
Friday, April 15th @ 3:0 am: - CNY - Industrial Production y/y

Price charts and Daily setupsEURUSDEURUSD: 30min - 4h - Daily view

There was no much reaction to this week’s FOMC minutes. EURUSD after climbing above 1.14, stalled and traded within a narrow range. Looking at the Fed Watch, traders downgraded all probabilities of FED rising interest rates this year. We are now below or close 50% for all FOMCs this year. Having said that, FED is calling an emergency meeting today. This could potentially be a game changer for US Dollar.

According to zerohedge.com
With everyone's focus sharply attuned on anything to do with the Fed's rate hike policy, many will probably wonder why yesterday the Fed announced that this coming Monday, April 11, the Fed will hold a closed meeting "under expedited procedures" during which the Board of Governors will review and determine advance and discount rates charged by the Fed banks.
As a reminder, the last time the Fed held such a meeting was on November 21, less than a month before it launched its first rate hike in years.

As mentioned in this week’s Commitments of Traders there is a significant change in sentiment among speculators. They have expanded their long exposure in EURO FX future and reduced their short positions. This could be a beginning of a big move up in EURUSD. The long bias is not confirmed yet. We need to see more long contracts added and a rising open interest. The price would have to breach the resistance at 1.1450.

Looking at the technical picture. EURUSD, after climbing toward major resistance at 1.14 area, range traded within tight zone (1.1325 – 1.1420). It closed the week without any clear direction. I would expect this market to retrace from 1.1450 and make a move towards 1.1, before testing the resistance again. From the other hand, the price could just go through the current levels making new highs.
This can be distorted by the meeting later on today.

Bulls
The current narrow range formed on EURUSD presents a great opportunity for both bulls and bears. Traders would have to wait for the price to break out from the narrow range at either side, retrace towards the support or resistance and enter the positions in the direction of the prevailing trend.
For bulls, this scenario would involve the price to break above 1.1430. The price after making new highs is likely to retrace towards 1.1430 – former resistance and now support. Long positions could be established there.

Bears
Bears would apply the same principle. If EURUSD breaks below the lower band of the trading range, 1.1340 in this case, the price, after forming new local swing, is likely to come back and test the former support and now resistance at 1.1330. This is a good level for bear to enter short positions.
I will stay bullish to flat in this market. Today’s FED meeting could cause crazy price action.
I advise to stay away from trading US Dollar crosses until we know the outcome of the meeting.

 

EURUSD Daily View

EURUSD
30 min -1h view

GBPUSDGBPUSD: 30min - 4h - Daily view

Cable remains bearish. This was further confirmed by this week’s Commitments of Traders report. Speculators added over 7K more short positions to their portfolios. The price has made another leg down and closed the week at 1.4120.
This level is a major support that GBPUSD had been responsive to few times in the recent past. This is also a lower band of the trading range indicated be the short-term chart below.
We might see a bounce from here or an aggressive move down toward double bottom at 1.3850

BULLS
As mentioned last week, cable has traded towards lower band

I expect cable to range trade. The pair could continue toward lower band of the triangle (see screenshot below). 10.4120 could prove to be a good entry for bulls. I advise to get on the smaller time frame and seek a reversal patter first.

The above analysis stands valid this week. We might see the bounce from these levels.

BEARS
If GBPUSD breaks below the recent support of 1.4050, the pair could decline toward the double bottom at 1.3850.
Once 1.4050 is broken, bears should wait for the price to come back and re-test the same level again. Short positions could be entered there.
GBPUSD will be subject to any volatility caused by today’s FED meeting.

 

GBPUSD Daily View

GBPUSD
15-30 min view

AUDUSDAUDUSD: 30min - 4h - Daily view

As I mentioned before, I am strongly bullish in this market. This is firmly confirmed by Commitments of Traders report. My strategy will be buying on pull backs.
Aussie printed another high this week. The pair reached 0.7740 before coming off the multiyear levels. AUDUSD was printing lower prices throughout the week and closed at 0.7550 on Friday. There is a strong support at 0.7500. Aussie reacted to it few times in the recent past. The breach of this level and pull back would present good short entry.
As a bull in this market, I am of the opinion that the downside will be limited and long positions should be considered on pullbacks.

BEARS
As mentioned above, if the support of 0.7500 is broken to the downside, bears should wait for the price to come back and re-test this level again. Shorts could be entered here. I think the downside is limited and bears should establish small profit targets.

BULLS
If the price decline below 0.7500, bulls should wait for any bullish reversal as an opportunity to enter long positions.
Bulls could use Fibonacci levels to establish levels of support and entry.
The 38.2% levels sit at 0.7390. This could prove to find some bid from bulls.

 

AUDUSD Daily View

AUDUSD
15-30 min view

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