Weak Gold Reacted Lower As China Bought Less Gold Than Expected

July 20, 2015 Forex Analysis

Gold, Weekly

Gold traded slightly below a major support level at 1130.40 on Friday and then moved even lower in Globex session at 2:30 am London time this morning. Price of Gold is down by 1.58% at the time of writing after Gold futures market was hit hard when it was at its weakest. Gold was trading at 1125 at the time when suddenly trading volumes increased by over 100% relative to average volumes over the past few hours. This aggressive selling during the hours when the market is at its thinnest took Gold down to a next major support level at 1080.

I warned about Gold’s long term weakness in my two previous reports. In June 8^th report I pointed out that price action in Gold since the US Dollar index (DXY) started topping has not supported the Relative Strength idea. A market that has true relative strength bounces sharply higher when factors constraining its move higher are removed. This never happened in Gold even though the restraining factor of DXY strength was removed for a while. In my June 22^nd report I pointed out several bearish indications in the long term technical picture: lower highs, a lower pointing 50 period SMA together with downward sloping trend channel and the fact that lack of momentum is indicating lack of serious long interest in this market.

This morning’s move took Gold down to a historical support from 2010 and very close to the lower end of the price channel. This bounced the price sharply higher while nearest resistance level is relatively close at 1130.40. The 23.6 Fibonacci retracement level at 1135.60 coincides with this resistance. The next resistance area is approx. at 1142.

Gold, Daily

News that China has been much more moderate buyer in gold than it was thought to be contributed to the fall. For the first time in six years China unveiled how much gold it had accumulated since 2009. While markets had assumed that the Chinese government had been buying gold at a rate of approximately 40 tonnes per month the real number was just slightly above 8 tonnes. This added to the bearishness as one big buyer was much less active than was suggested by the analysts.

After trending lower in a regression channel the price of gold has now made an extended move to the downside. The levels near the long term channel bottom attracted some serious buying as gold has rallied over three percent from today’s low. The nearest significant resistance level is at 1130.40 while next resistance is at 1146. The 1130.40 resistance coincides with the channel low. The 1080 level at today’s low is obviously the nearest support level in the daily time frame.

Gold, 240 min

As price has moved so quickly lower there isn’t much to comment in terms of technical analysis. Also, the four hour picture is not significantly different from the daily chart. Price has rallied from a support and is now trading close to the mid-range of the previous candle. The lower 2 stdv Bollinger Band has limited the move higher and the price of gold has reacted slightly lower from the band over the last two hours. The nearest 4h resistance level is at 1129.60 while the support level is at 1080.

Conclusion

The long term weakness that was visible in price action has now materialized in a form of a sharp move lower through weekly support levels at 1130 and 1141.70. These broken supports together with a former daily support at 1146 are now a likely resistance area. Long term picture stays weak and suggests lower prices for gold but in short term we should see 1080 support holding and market testing the 1130 – 1146 resistance area. If price moves to this resistance area we should monitor price action for potential signs of momentum reversal at levels identified in this report. Obviously price move can turn inside this range and not at the exact levels but the principle stays the same: we should see price action based confirmation before considering short positions.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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.

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

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

DOWNTRENDING AUDCAD HAS RALLIED TO RESISTANCE AREA

July 17, 2015 Forex Analysis

AUDCAD, Weekly

AUDCAD has been moving lower in a wide trend channel after failing to penetrate at parity in the beginning of the year. Downtrend is clearly taking place as we have lower highs and lower lows but at the same time we need to acknowledge that this movement is taking place close to a longer term range low. AUDCAD has been ranging from 0.9205 in 2013 to 1.0349 in 2014 and the move we’ve seen since April this year has been taking place at lower end of this range. Therefore the longer term downside potential is limited and this pair could break out from the downtrend before breaking below the long term range bottom. This view is supported by the fact that the latest reaction low did not touch the channel low.

This week the pair has rallied strongly from lower Bollinger Bands and a support area near 0.9331. AUDCAD is now approaching top of downward sloping price channel which suggests that the short term upside is getting limited. This area also coincides with a weekly resistance level at 0.9664 and a 38.2% Fibonacci level at 0.9648. This resistance also lines up with a level that used to support price on closing basis in February this year. The nearest weekly support level is at the latest low at 0.9376 while the next significant weekly support level is at 0.9331.

AUDCAD, Daily

Price has been rallying higher for four consecutive days and is currently trading at July 1^st. pivotal candle low. Several technical factors coincide around the current price level: channel top, upper Bollinger Bands and a pivot high from July 1^st. These factors together suggest that price could turn lower from here. Additionally, Stochastics Oscillator is trading above the overbought threshold adding to the indication that this down trending market is quite overbought and therefore vulnerable at the current levels.

Price action today shows some signs of weakness as the pair is trading near opening price after a rally higher was rejected. However, it is still too early make conclusions based on today’s candle as trading action over the rest of the day is likely to change the form of this price bar significantly.

The next significant daily support level coincides with 50% Fibonacci retracement level at 0.9515 while the nearest significant daily resistance level is at 0.9664.

AUDCAD, 240 min

The pair built a small base between July 6^th and 14^th and has since rallied almost the distance equivalent to the base width. The pair is at the time of writing AUDCAD is still finding support from a minor support level at 0.9584 and tries to rally higher. However, Stochastics is overbought and shows signs of slowing momentum as it is very close to moving below its signal line.

Conclusion

AUDCAD has been ranging from 0.9205 in 2013 to 1.0349 in 2014 and the move we’ve seen since April this year has been taking place at lower end of this range. Therefore the longer term downside potential is limited and this pair could break out from the downtrend rather than breaking below the long term range low. This view is supported by the fact that the latest reaction low did not touch the channel low.

However, as long as we have a down trending market at a resistance, it makes sense to look for shorting opportunities. In short term, the pair is trading at resistance while still inside a downward trend channel. This suggests a move lower from current levels is more likely than a breakout from the channel. Look for momentum reversal signals between 0.9594 and 0.9664. If short trade signals take place and are successful then my targets are T1: 0.9515 and T2: 0.9475.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

S&P 500 IN POTENTIAL TURNAROUND AREA

July 16, 2015 Forex Analysis

S&P 500, Weekly

Yesterday Fed Chair Yellen largely mirrored the recent FOMC statement and her own speech last week expressing cautious optimism about the expected rebound in U.S. growth, amid frustration about the continued low level of inflation. She cited global risks to this mostly healthy appraisal, and reiterated that it is not the lift-off but the policy path and pace of tightening that really matters. She expects a gradual tightening pace that still keeps policy accommodative.

Yellen’s speech didn’t move the markets that much yesterday. In fact, Nasdaq Composite (-0.12%), Dow Jones Industrial Average (-0.02%) and S&P 500 (-0.07%) finished the day almost unchanged but slightly in the red. Financial sector, up by 0.84%, was rising strongly while Utilities gained 0.49% in absolute terms. Technology remained unchanged after hitting a resistance level the day before. Semiconductor sector ended the day down by 0.50% after a period of weakness. Even though semiconductor sector etf (SMH) is now at support and could therefore have a technical rally, the preceding weakness in semiconductor stocks is not a sign of a healthy market. Weakness in the technology sector etf (XLK) suggests the same. S&P 500 e-mini future (ES) has since yesterday’s close moved to the resistance area (2111.50 – 2134) I pointed out in my previous report.

S&P 500, Daily

Yesterday investors reacted positively after Bank of America (+3.21%), PNC (+0.84%) and US Bancorp (+3.76%) reported earnings. While US Bancorp’s earnings were in line with expectations the others exceeded them. Big US companies reporting today include ADV Micro Device, Charles Schwab, Citigroup, Ebay Inc., Goldman Sachs and Google.

ES has now advanced to the 2111.25 resistance level as expected. Market is overbought as per Stochastics Oscillator, while RSI and MFI are still below their overbought thresholds. ES is trading at descending trendline and close to the upper daily Bollinger Bands. Therefore, market is near to a potential turn around level but based on the recent price action it seems likely that it will push further in to the resistance area. Support and resistance levels: 2078 and 2134.

S&P 500, 240 min

ES has been trading higher as expected but is now at resistance. The width of the short term bottom indicates that the market will move to a bit higher. Resistance at 2122 coincides with the projection and is a pivotal high June 22^nd. Stochastics has diverged from price indicating that momentum is slowing down and potential turning point is getting close. The next important support level is at 2078, while the weekly high from May at 2134 is the most important resistance level after 2122. In very short term, the nearest supporting pivotal level is at 2107.75 (short red line).

Conclusion

Yellen’s determination to raise rates is not supportive for the stock market that has been used to easy and cheap money. This together with the fact that US stock market is trading at very high levels with high valuations means that market participants aren’t eager to take the stocks into new highs. Price rallied over the last two days but now it’s trading at resistance. Area between 2111.50 and 2134 is an important weekly resistance. Market is likely counter substantial supply inside this range. This should bring ES back down to 2073 – 2080 range.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

THE NEW CURRENCY MOVERS CHARTS TOOL NOW AVAILABLE IN TRADERS’ BOARD

July 15, 2015 Forex Analysis

The New Traders’ Board Page And Currency Movers Charts Tool

An all new Traders’ Board page is now public at Hotforex.com. We launched a new tool called Currency Movers Charts to serve You better. It displays both overnight and five day percentage changes in the major currencies against the other majors. Now you can, with just a glance, see how money is flowing between different currencies in Forex markets. With this tool you can identify the currency that’s currently attracting money at and over the last five days’ period while Currency Movers Charts also reveals which currency money is flowing out from.

EURNZD, 240 min

At the time of writing EUR is attracting money from other currencies while NZD and JPY have been losing some. The strongest performer intraday is EURNZD. In longer term picture the pair is trading at historical resistance created by a pivot in early 2014. Momentum is slowing down and should lead to a reversal. In intraday timeframe however the pair has rallied from a 4h support level and is currently trading just below a 50 period SMA but is moving higher from the downsloping trend channel top. The pair has some space above before it hits resistance at the previous day’s high at 1.6535.

AUDJPY, 240 min

AUDJPY is also interesting as it was the best performer earlier this morning. Over the last few days the pair has risen to a gap caused by the Greek drama couple of weeks ago. This could lead to a correction lower but because the pair is trading relatively close to 2015 weekly lows the downside is likely to be limited. Additionally, last week’s candle was a pinbar suggesting institutional buying between 89.00 and 91.20. Therefore, retracements back to 90.40 – 90.80 could provide us with low risk entries to this market. Look for momentum reversal signals to confirm the idea.

Five Day % Change

Another way of using Currency Movers Charts is identify strongly moving currencies over a period of time . GBP has been strong over the last five days with the biggest gains against the JPY. At the same time JPY has been the currency that has lost most against the other currencies over the same period. This indicates that market psychology has changed and participants have been moving away from safe havens into more riskier assets. This gives us insights on how markets feel about the future and how market participants have been positioning themselves.

GBPAUD, Weekly

GBP strength has been very evident lately but the GBPAUD has had a real bull run. The pair has been rising for 11 consecutive weeks. The fact that this has taken the pair to a historical resistance at 2.0948 and regression channel high gives us a reason to look for reversal signals as the pair might have moved too far and is getting close to a point were it will correct lower. Look for signs of momentum reversal in daily time frame. Weekly high from February (at 2.0028) is a likely long term target for shorts after the sell signals appear.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

S&P 500 Tries To Rally After Wedge Breakout

July 14, 2015 Forex Analysis

S&P 500, Weekly

US stock market corrected lower as expected and then found support in the region of lower Bollinger Bands and 50 period SMA. This move brought Stochastics to levels where it has turned higher from in the past. Last week’s candle was a rejection candle that suggests institutional buying in area of the lower Bollinger Bands. This week’s move above the last week’s high confirms the idea and suggests higher prices. However, there are resistance levels fairly nearby. The first one was hit yesterday as market closed the gap formed in the end of June. The next resistance level in the weekly picture is the low of a pivotal high from May at 2111.50.

Over the last month US stock market has been favouring safety stocks such as Utilities over the more risky financial stocks. Utilities are up by 1.71% when the baseline is the S&P 500 while the Financials have fared 0.23% worse than index. Other sectors with safe haven status, Consumer Staples and Health Care, are up 3.67% and 2.08% respectively. The indication here is that market participants have been careful and risk averse. This is likely to lead to a faltering of this rally at 2111.50 – 2134.00 resistance area and to a market that is range bound between the aforementioned resistance and the latest pivotal candle.

S&P 500, Daily

The earnings season has started in the US with some big names publishing their earnings today. Johnson & Johnson, JP Morgan Chase, Wells Fargo & Co and Yum! Brands are reporting today. The fact that season has just started should mean that we have plenty of volatility ahead in the individual stocks and should the results vary strongly from the expectations volatility would be likely to spill over to index as well.

S&P 500 index e-mini future (ES) has rallied to a spot where several technical factors coincide. The 50 period SMA, price gap and 61.8% Fibonacci retracement level all coincide at the current level. Usually a cluster of technical factors at certain level adds to the relevance and importance of the level but with a support nearby this level isn’t likely to attract strong short selling. This is evident by the sideways move we’ve seen today. The next important resistance level is at 2111.25 while the nearest daily support is at 2078 where the base high and 38.2% Fibonacci level roughly coincide.

S&P 500, 240 min

Stochastics, RSI and Money Flow index are all firmly in the overbought territory while price is trading near a level that used to support price at 2099. Nearest support level is at 2075. Width of the short term bottoming formation points to the next resistance level at 2122. Stochastics is overbought and suggests that the advance might slow down before the move can continue. Sideways move in a smaller time frame (e.g. 60 min) would indicate that the move higher will take place.

Conlclusion

Long term picture in S&P 500 index is somewhere between neutral to the slightly bearish. Market is still technically in an uptrend but is showing signs of weakness: bearish wedge and a breakout from the wedge. I still don’t expect ES to move into new highs but rather see it testing the 2111.50 – 2140 resistance area and then moving sideways between the latest pivotal candle and the aforementioned resistance area. My short term ES target for the current rally is at 2110. Trades should be always opened at pullbacks and should there not be any it’s better to wait for one rather than trade at low probability spots. Look for longs at supports and shorts at resistance levels.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website:http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

USDCAD Below Resistance But For How Long?

July 10, 2015 Forex Analysis

USDCAD, Weekly

In the previous report I suggested that USDCAD should sell a bit before it can move higher. The pair found support at Fibonacci cluster and has since then moved strongly higher. USD benefited from the fact that the time of potential rate hike is getting nearer and CAD suffered from the drop in Crude Oil prices. This move has taken USDCAD to a resistance formed by the mid-March high at 1.2835. The pair is now trading at weekly upper Bollinger Bands and has reacted slightly lower today.

As per 50 week SMA this market is still in an uptrend but Stochastics and RSI (7) are pointing to this market being close to overbought territory. This combined with the fact that price is trading right under a major resistance level suggests that we should now see a pause and a correction lower. The nearest important weekly support level is at 1.2563, a weekly pivot high from the beginning of June. The long term bullishness should still prevail after this corrective mover lower.

USDCAD, Daily

Stochastics oscillator is rolling below the overbought threshold after market hit a resistance at 1.2780. With market being close to a major resistance level this signal bears more validity. I expect therefore CADUSD to retrace and move to 1.2633 support, while there is also support at 1.2563 coinciding roughly with 38.2% Fibonacci retracement. The next significant level of support can be found at 1.2400 as it coincides with 61.8% Fibonacci level at 1.2380.

With crude oil probably being weak due to extra supply following a likely deal over Iran nuclear program it makes sense to expect further weakness in CAD. On the other side of the equation we have strong expectation that the Fed will raise rates later on this year, which is getting closer by the day. Therefore my expectation is that after a corrective move lower USDCAD will push into new highs.

USDCAD, 240 min

After hitting the resistance price has been drifting lower for the last two days. This has led the price action outside the 2 stdv regression channel which is bearish in this context. There has been some support from the lower Bollinger Bands but still this market has been making lower highs.

Conclusion

Long term trend is still higher according to weekly 50 period SMA. However, this market is now overbought and close to a resistance level. This shows up in the daily time frame as loss of momentum. All this suggests that the market should correct lower and the nearest daily support area is at 1.2633 with the next near 1.2563 level. With crude oil probably being weak due to extra supply following a likely deal over Iran nuclear program it makes sense to expect further weakness in CAD. On the other side of the equation we have strong expectation that the Fed will raise rates later on this year, which is getting closer by the day. Therefore my expectation is that after a corrective move lower USDCAD will push into new highs. Should this take place my target is 1.3680.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

AUDUSD, Copper and Hang Seng Index At Turn Around Point

July 9, 2015 Forex Analysis

Copper, Daily

Three markets that have a fundamental link between them are AUDUSD, Copper and Chinese Stock market. As my regular readers remember I have been warning about Hang Seng index topping as there was a rumour that institutions had been liquidating their Chinese stock positions. Today there is no doubt about this rumour being true as we have seen the recent strong decline. However, now that this market has declined so much so quickly it makes sense to assume that Hang Seng is close to levels where downside is limited and market can move higher. This is evidenced by multi asset class analysis as well. Both Copper and AUDUSD have attracted buyers yesterday and today.

The price of Copper has been falling since my last report in May and hit an important support level at 2.40 day before yesterday. This is a level that has historically been able to send the price of copper significantly higher and yesterday’s reaction together with Hang Seng (closed up 5.46%) was promising. Stochastics pointed higher even though price made a lower low and yesterday’s candle was a pin bar. Price has moved above 2.55 resistance today and after such a long decline I expect copper will eventually move close to the upper end of the declining weekly trend channel. Resistance levels are likely to cause fluctuations but eventually we should see the price of copper reaching 2.77 resistance level.

AUDUSD, Daily

AUDUSD started to move lower at the same time with the price of Copper turning lower and has now moved below 0.7533 support. For the last two days the pair has moved sideways which signals balance between buyers and sellers. Stochastics is oversold and at the time of writing the pair is reacting higher from an intraday support level. This move could turn into a swing trade with a target at 0.7533 resistance. Yesterday’s low was only 100 pips away from a major support level at 0.7266. This support was created in 2009 when price penetrated this resistance and moved since then significantly higher. Nearest resistance at 0.7533 is likely going to be penetrated as price action in Copper points to higher prices. Should my projection for Copper prices turn out to be correct and there is no central bank action that disturbs the AUDUSD correlation with Copper, the red metal targets at 0.7740 and 0.7840 could be feasible.

Hang Seng Composite index, Weekly
Chinese shares saw an 8% intraday drop yesterday as investors panicked and exited stocks that many of them had bought with borrowed money at much higher prices. Index found support below a support level at 3124. Market panic creates buying opportunities as after such a sizeable drop in prices stocks are likely to attract buyers at or near support levels. Today’s daily close was above previous day’s high so we therefore have significant show of strength after long fall in prices. This suggests that index is bouncing higher from levels that have significant buying interest.

Conclusion

With Copper and Chinese Stocks reacting strongly higher from a significant support level it is likely that AUDUSD will follow and move higher over the coming days. Chinese stock market has been manipulated by the central bank on the way up and then again on the way down. Therefore Chinese stock indices might be prone to excessive behaviour and therefore lack the indicative value that Copper market has. Following these three markets together we should be able to gain better understanding on market sentiment and judge price behaviour better. We will pay close attention to price action in all of these asset classes but especially when they trade near support and resistance levels.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

USDJPY At Resistance Before US Payrolls

July 2, 2015 Forex Analysis

USDJPY, Daily

USDJPY has rallied from 121.85 – 122.08 support identified in one of the recent Live Analysis Webinars. Those attending the webinar had an excellent opportunity pick up a decent gain. Now the pair is trading just below a horizontal resistance at 123.64 and at the upper end of a bullish wedge. The next important resistance level lies at 124.44.

Please, remember that due to US holiday tomorrow, the Non Farm Payroll data is released today and as per usual is likely to increase volatility after release. In general Forex market participants have remained largely noncommittal into the US payrolls report and Sunday’s referendum in Greece.

A big conundrum is that Greek PM Tsipras is seeing the vote as a chance to get a better deal with creditors, but Eurozone officials see it as a vote on Eurozone membership. S&P Ratings is estimating 60% odds of Grexit. Elsewhere, USDJPY lifted to a four-day peak of 123.59, and subsequent dips have remained shallow. AUDUSD logged a three-day low at 0.7598, though the Aussie saw fresh highs against the underperforming NZD, which has been affected by fresh RBNZ rate cut calls from market economists and NZ milk production downgrades. USDCAD logged an 11-week peak at 1.2663.

US Payroll Expectations:

June nonfarm payrolls are expected to increase by 230k, with a 210k private payroll gain.
Forecast risk: upward, as depressed claims readings should provide some tail wind.
Market risk: downward, as substantial weakness could impact the timing of rate hikes.
The unemployment rate is expected to tick down to 5.4% from 5.5% in May.
The workweek is expected to hold at 34.5 for a fourth month.
Hourly earnings are expected to grow 0.1% which would leave a 2.2% y/y rise.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

Update on Greece

June 29, 2015 Forex Analysis

The euro is under pressure in early-week trade as Greece’s talks with the Eurogroup broke down over the weekend, and the ECB refused to top up ELA assistance. Greece has consequently imposed capital controls and announced a referendum for next Sunday, which will determine whether the electorate has the stomach to exit the euro. Finally, after five years, the Greek drama is coming to a definitive head. Polls suggest that the people of Greece would rather compromise to stay in the euro than exit, but markets will remain on tenterhooks this week ahead of the referendum. Some key US data are also due this week, culminating with the release of the June payrolls report on Thursday (Friday is a holiday in the States). EURUSD hit a four-week low at 1.0953 after closing Friday at 1.1166, subsequently recovering above 1.1000. Recoveries will likely remain muted affairs, though incoming polls out of Greece will have potential to create volatility this week.

EURUSD is trading higher and tries to close the gap. Not suprisingly EUR is down against all the currencies but at the time of writing there is no sense of panic spreading across the FX markets. This is evidenced at the time of writing by EURUSD trading higher after the gap opening. Asian, European and US equity futures markets are down and Gold is trading higher by 0.4%.

EURUSD remains bearish as it is difficult to anticipate what the political players will do and how it impact markets. Over the next few days we should see trading opportunities for technical traders that know how to take advantage of nervous markets and volatility. EURUSD has a resistance level not far above current price action at 1.1130 which in the light of what’s happening with Greece suggests that EURUSD will trade lower after the return move is over. The June 1st candle seems to be the first pivotal support area and I expect this support hold today unless new suprising news items come up.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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

S&P 500 Index Ranging And Wedging

June 26, 2015 Forex Analysis

S&P 500, Weekly

US stock market has been performing very sluggishly for the most part of this year. It is still technically in an uptrend but when compared to returns in previous years S&P 500 index has really been moving sideways. This suggests that hedge fund money has been more interested in Japanese and European stock markets that with adequate currency hedges can produce better returns. Another issue is the USD that still is at relatively elevated levels. This hurts the earnings of those US corporations that make a significant part of their profits outside the US. If the US Fed raised the rates in this environment, the dollar would be likely to move even higher and hurt the US stock market and through the diminished wealth effect do the same to consumer sentiment and spending. Some 70% of the US GDP comes from personal spending.

Since the beginning of May S&P 500 e-mini index future (ES) has been tied between a support created by a Fibonacci retracement cluster at 2057 and 2070 and a resistance created by a weekly pivot candle range (2111.50 – 2134.00). The 1.5 stdv Bollinger bands also coincide with these levels and have helped the market to stay between the boundaries. Price has moved outside the bearish wedge over the last two weeks and has now moved back inside the formation. This week the resistance was challenged but price corrected lower again.

S&P 500, Daily

ES has been trading inside a rising regression channel since mid-January but has not been able to move to the channel top after initial rally in February. This is a sign of weakness but this market is not ready to sell off yet as it has not been breaking supports and making lower lows.

Over the month of June index has been trading between pivotal support at 2061.25 and resistance at 2121.25. It is at the time of writing reacting lower from this resistance level after Stochastics moved to overbought levels and are now rolling lower with the price. Upside is limited by both the historical resistance and Bollinger Bands but also by the black regression line.

Move to lower Bollinger Bands at 2080 looks likely. Several technical factors coincide close to this area: 1) rising trend channel bottom 2) horizontal support level and 3) the Bollinger Bands. This is likely to attract buyers at those levels but before price can move there it needs to penetrate some supports and this usually causes small rallies that can be utilised as short entry opportunities.

S&P 500, 240 min

Price was wedging strongly as it approached the resistance at 2121.25 while Stochastic Oscillator diverged from price by making lower highs (price made higher highs). Now that price has broken out of the bearish wedge ES is breaking supports and respecting resistance levels as evidenced by the violation of 2111.25 support and then failing to move above it again. Price is trading at 50 period SMA and lower Bollinger Bands which could mean that this market provides us with other opportunities to sell the rallies. Nearest significant support and resistance levels are at 2072.75 and 2111.25.

Conclusion

Long term picture in S&P 500 index is somewhere between neutral to the slightly bearish. Market is still technically in an uptrend but is showing signs of weakness (bearish wedge). I don’t expect ES to make new highs but rather see it moving sideways until it’s ready to have a correction to support near 2000 mark. Short term ES might rally a bit I am seeing resistance in 2112 – 2117 range which should be enough to turn it lower. In such a case my target levels in the downside are T1: 2100 and T2: 2082.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our TopForex Brokers official website: http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

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