GBPUSD Update, Price to Trade Higher Before Turning Lower

December 23, 2015 Forex Analysis

GBPUSD, Daily

The GBP has seen losses over the last 7 trading sessions in the aftermath of the markets’ knee-jerk reaction to the U.S. Fed rate hike last week. The pound continues to trade with a weakening bias against both the dollar and the euro.

The GBPUSD reached my initial target at 1.4890 and also my second target at 1.4813 to reach a low near the 1.4800 area, during yesterday’s session (See my December 14 and December 21 post).

At the time of writing, the GBPUSD is bouncing off the 1.48 level and trading up around 70 pips in a “technical bounce”, even though the U.K. Q3 GDP has been unexpectedly revised lower, which is seen as negative for the GBP.

I still believe that traders should be on alert and seek periods of GBPUSD strength, as an opportunity to resell the pair near the upper end of the longer term downward slopping trend channel, ideally between the 1.50 – 1.51 areas for a 1.4730 (March 2015 Low) target price support area spotted on the weekly chart.

Janne Muta

Chief Market Analyst

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jmuta Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.

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EURUSD UPDATE, 1.1060 IN SIGHT

December 23, 2015 Forex Analysis

EURUSD, Daily

EURUSD moves higher as German consumer confidence improves, and U.S. Q3 GDP growth falls slightly from 2.1% to 2.0%. EURUSD looks to be in recovery mode after dipping to a low near the 1.0520′s last week. The major trend still remains bearish; however there remains room for a price attempt towards a key resistance spotted around the 1.1060′s.

Janne Muta

Chief Market Analyst

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GBPUSD Update, Pound Remains a Sell into Strength Play

December 21, 2015 Forex Analysis

GBPUSD, Daily

The GBPUSD pair continued to grind lower at the start of the week after remarks from BoE MPC Martin Weale, highlighting that “the factors pushing down inflation have become a bit more prolonged”. Price has since recovered from the early sell-off and is currently trading higher for the day. The fundamental outlook, in my view, supports that the GBP will continue to weaken vs the USD for some time to come and that traders should be ready to resell the pair on bounces.

Technically, the GBPUSD remains within a bearish channel over the mid term. I would be on alert for entering new short sales during periods of strength with any price bounce off the current levels (1.4920) to stop near the 1.5110 area, provided that price fails to break below the 1.4860 zone. Otherwise, my short term GBPUSD view supports sell positions near the 1.4955-1.50 area for a 1.4813 target.

Janne Muta

Chief Market Analyst

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AUDUSD Update, Aussie Remains Vulnerable

December 17, 2015 Forex Analysis

AUDUSD, Daily

AUDUSD remains under pressure as the AUD remains vulnerable to the global commodities prices and the high demand for the U.S. Dollar, in the wake of the recent U.S. interest rate hike. Technically, I have been calling for the AUDUSD to drop in my recent reports. Since price has made a clean break of the 0.7080 key support; this has opened up the prospects for a long term downtrend to take shape for a medium term price target near the 0.7070’s

Janne Muta

Chief Market Analyst

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2016 – FINALLY, THE RETURN TO NORMALIZATION, I’LL BUY THE USD ON DIPS!

December 17, 2015 Forex Analysis

Finally, after almost 10 years, the U.S. economy is strong enough to handle higher interest rates after nearly a decade of financial crisis emergency life support by the Fed.

Key Points:

The Fed raised rates by 25 basis points yesterday;
This was followed by a statement that said more rate hikes are on the way;
Rate increases will be at a “gradual pace”;
The Fed will remain “data Dependent”.

The above key points give me enough support to buy US dollars on weakness, provided the data stream does not fall off a Cliff.

What do USD traders do from here?

The trading strategy, as we move forward the post rate hike, in my opinion, is to keep an eye on the U.S. economic data stream (Economic Calendar) and as long as the data is relatively positive, buy the USD on weakness.

Trade safe friends.

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

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How Tonight’s U.S. Fed Rate Decision Will Affect You

December 16, 2015 Forex Analysis

The effects of today’s U.S. FOMC Interest Rate Decision will be felt far and wide across the global financial markets. It is expected that for the first time in 9 years, the U.S. Fed will open the door for gradual interest rate increases. If we see the start of a Fed rate liftoff cycle today, the immediate focus will be on when the next rate hike will come. We expect that the Fed will try to tone down the event with some points of cautiousness regarding the health of the U.S. economy. However traders see it, we all have to adjust to a world of higher U.S. borrowing cost.

Traders will now have to adjust expectations of a stronger U.S. dollar world. Once the door is kicked open and the Fed begins the next interest rate cycle, the effects will reach all market participants, from traders to small homeowners. The fact that this event will affect all those who borrow in USD means that commodity prices such as Oil will also continue to be heavily affecting those who are not market traders. Stock markets will also be affected; since in the sort term, the rate hike will be viewed as a boost of confidence which may propel an already robust stock market even higher.

As a broker, we are expecting that our client trading volumes will increase, as our clients will seek out new market opportunities as a result of the changing market conditions created by this historic moment given that the U.S. starts to move past the era of cheap money and into a new ear of growth and prosperity.

I wish all traders good luck and successful trading as we move forward and into the New Year.

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

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GBPUSD Update, Downside Pressure Remains

December 14, 2015 Forex Analysis

GBPUSD, Daily

The GBP is under pressure ahead of this week’s U.S. FOMC interest rate decision that could provide continued uplift for the USD against the GBP. I would expect some GBPUSD choppy trading as we move closer to Wednesday since also on tap we have some key U.K. data that, if disappoints, could support a Bank of England interest rate hike delay, which in turn could provide some further support for GBPUSD short sellers. I would expect the GBPUSD to remain biased to the downside against the USD in the current macro environment with my technical medium term price targets for the GBPUSD at 1.4955 (S1) with a possible test of the April 20th lows near 1.4890 (S2).

Janne Muta

Chief Market Analyst

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USDJPY Rattled by the macro data

December 10, 2015 Forex Analysis

USDJPY, Weekly

USDJPY has dropped below the previous trading range and has since bounce higher from another range near 121.00. Japanese core machinery orders data yesterday showed a jump of 10.7% m/m in October. The market consensus had been for a 1.5% decline, and the data follows a 7.5% m/m gain in September. In y/y terms, orders are up 10.3%. The data are encouraging, and follows a big upward revision in Japan’s Q3 GDP this week, to +1.0% y/y from the -0.8% originally reported, which shows that the country didn’t fall into a technical recession after all. The data has softened the possibility for the BoJ expanding its QQE policy in January, which is the prevailing market expectation.

In the weekly picture USDJPY has broken below a rising trendline and since made a return move to it. Price failed to move above the trendline after which it corrected lower. This creates a third lower high in the weekly picture since June this year and signals that this market is getting bearish. The nearest weekly resistance level is at 122.25 while a weekly high from September at 121.24 acts as the nearest support.

USDJPY, 240 min

The bounce from the 121.24 support suggests that the price could rally to previous support area at 122.60 – 122.80. This area is likely to be a resistance now. This area coincides roughly with the 30 and 50 period moving averages. We will be looking for sell signals should the price rally to this area. My targets are 121.50 (T1) and 120.62 (T2).

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

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GBP is attracting buyers

December 9, 2015 Forex Analysis

AUDGBP, 240 min

The pound has found its feet after underperforming over the last several sessions. UK think tank NIESR helped as it issued, yesterday afternoon in London, an upward revision to its UK GDP estimate for the three months to November, now expecting 0.6% growth versus 0.5% previously. That would mark a tick higher from the official 0.5% growth clip seen in Q3. NIESR is also anticipating the BoE to hike the repo rate by 25 bp in February, which is well ahead of most forecasters and with (as the FT highlights) sterling markets factoring just 11% odds for such a move as soon as February.

AUDGBP has fallen to a 0.4765 support after turning lower around 0.4900. In addition to being at support the pair is trading outside the descending regression channel which suggests that the move by the latest down candle has taken the market too far down too fast. In addition the RSI is firmly in the oversold territory. This turns the focus to the area between 0.4791 and 0.4825 and we should be looking for short entry signals should the pair rally there. My targets for a successful short entry are at 0.4721 (T1), 0.4670 (T2).

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

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GBPJPY trading at support

December 8, 2015 Forex Analysis

GBPJPY, 240 min

Sterling has been underperforming today, guided lower by a big miss in the UK RBC retail sales figure, which unexpectedly fell 0.4% y/y in the headline like-for-like measures. However, now the UK October production came in above forecasts in rising 0.1% m/m and 1.7% y/y. That’s above our survey’s median forecasts for 0.0% m/m and 1.2% y/y growth. September data were also revised higher, to 0.0% m/m from -0.2% and to 1.5% y/y from 1.1%. The narrower manufacturing output measure disappointed, however, at -0.4% m/m and -0.1% y/y, though September data were revised higher. The ONS stats office reported that there were expansion “in three of the four main sectors, with mining and quarrying output being the largest contributor.” Mining and quarrying rose by 8.5%, which explains the outperformance of the industrial output measure relative to manufacturing. The forecast-beating headline only had a fleeting and minor positive impact on the pound, which has subsequently fall to intraday lows against both the dollar and the euro.

Technically I like GBP against JPY for a short term long trade from current levels. The GBPJPY pair has broken above two trend lines and is currently trading near a pivotal support and outside the lower Bollinger Bands. Stochastics is oversold while the last 4h candle is currently a narrow range candle that indicates a turnaround in this pair. My target for a quick intraday trade is at 185.45.

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”