16 minutes ago | October 23rd, 2014 15:08:26 GMT

Forex Technical Trading: NZDUSD tumbles on the back of lower CPI

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The New Zealand  CPI was weak (1% YoY vs 1.2% estimate) and it has sent the NZDUSD sharply lower. The 1% level is the lowest since June 2013.  The RBNZ thinks the currency is high and the lower CPI may be a showing that effect.

Trade data tonight will be an influence.  The trade balance has been negative now for 2 months. The expectation is for another down this month at -625M (Exports are expected to be 3.5B while imports are expected at 4.2B).

The NZDUSD is back below 50% and also below trend lines and 61.8% at 0.78352. Risk.

The NZDUSD is back below 50% and also below trend lines and 61.8% at 0.78352. Risk.

From a technical perspective, the 0.7873 is the 50% of the move up from October low to October high. This should be line in the sand type level now.  Patient sellers should find sellers here.  Closer resistance now comes in at the 0.7835 which is 61.8 and also where trend line come together.   Hard to sell new lows after the big trend like move today, but technicals from the chart above are not bullish (need to get back above the 0.78352 level) and the buyers are the ones still feeling the pain.

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24 minutes ago | October 23rd, 2014 15:00:07 GMT

October 2014 KC Fed manufacturing index 3 vs 12 prior

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  • Composite 4 vs 6 prior

“Regional factory growth remained sluggish in October, weighed down by weak production in agriculture related sectors. However, firms’ capital spending plans remained solid.” Said KC Fed VP Chad Wilkerson

Follows in line with the other manufacturing data and there’s some interesting, though not very enthusiastic comments from respondents.

US KC Fed mfg comments 23 10 2014

 

US KC Fed composite index 23 10 2014

US KC Fed composite index 23 10 2014

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38 minutes ago | October 23rd, 2014 14:46:34 GMT

10 year bond selling. Gold selling. Stocks buying. Funds being reallocated.

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The 10 year bond is up to 2.27%. This is up from 2.24% at the start of the NY session.  Last week it fell below 2% on the Ebola scare.

Gold is falling sharply (down over 1% in trading today). See post at  Technical Trading Analysis: Gold falls to week lows

The beneficiary is the stocks  Dow is up 225 or 1.37%. The S&P is up 24 points or 1.28% and the Nasdaq is up 65 points or 1.49%.

It sure seems like there may be some reallocation going on as fund managers feel the squeeze from the volatile markets last week.

US stocks up strongly.

US stocks up strongly.

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54 minutes ago | October 23rd, 2014 14:30:49 GMT

Technical Trading Analysis: Gold falls to week lows

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Gold is off around 1% today and is testing the 38.2% of the move up from the October lows. Earlier today, the pair made a break below the 100 hour MA (blue line) and trend line support. The 200 hour MA (green line) was also breached in the sharp fall today.

Gold falls to 38.2 support level.

Gold falls to 38.2 support level.

 

The 38.2% level comes in at 1227.55 and the price low has extended to 1227.19. The current price is back above the 38.2% level at 1.228.67. Another break of the 38.2% should solicit more selling but for the time being the support holds the line.

Looking at the 5 minute chart, the trend move lower has accelerated the trend (moved below the channel support). The risk should be against the underside of the broken trend line at 1229.80.  Other resistance at 1230-1231.63 where the 38.2-50% of the last trend lower is found. If sellers are loving the push lower, this area should hold. The buyers are the ones feeling the pain on this trend move lower.

The trend move lower accelerating now. Risk is the underside of the trend line up to the 50% at 1231.63.

The trend move lower accelerating now. Risk is the underside of the trend line up to the 50% at 1231.63.

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1 hour ago | October 23rd, 2014 14:21:01 GMT

Forex Technical Analysis: USDJPY pushes to new highs on strong stock gains

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The USDJPY has pushed to new highs in early NY trading continuing the trend that accelerated in the London session.   The strong stocks seem to be kicking the pair into high gear.  The Dow is up 227 points or 1.38%. The Nasdaq is up 64 points (1.47%) and the S&P is up by 23.10 (1.20%) The push higher today has sent the price back above the topside trend line that contained the pair until the September move to new 6- year highs. That level comes in at 107.63.

The USDJPY moved back above the old trend line at 107.63 on the weekly chart.

The USDJPY moved back above the old trend line at 107.63 on the weekly chart.

Also at the 107.63 is the 50% of the move down from the 110.07 high to the low reached at the height of the Ebola scare last week at 105.19 (and stock market fall – see hourly chart below). Needless to say, this level is a key support level.   The move today was all started on the break of the 107.37 ceiling that has contained the price action this week.

The USDJPY is breaking to new highs and looks toward the next target at 108.20

The USDJPY is breaking to new highs and looks toward the next target at 108.20

The high has just extended up to 108.10 despite weaker Market PMI data  The next target is approaching at the  108.208 which is the 61.8% of the move down from the high. The low to high trading range is 104 pips currently. The average over the last 22 trading days is 96. Compared to other major pairs, the USDJPY is outperforming on that front as the other major pairs are below their averages. The JPY crosses are also fairing well today (see chart below). The higher trading range with the resistance approaching may give the pair a cause for pause.  Traders may lean against with stops above as a trade. However, overall, traders who are long on the breaks higher today area the big winners.

The  JPY pairs are the most active in trading today.

The JPY pairs are the most active in trading today.

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1 hour ago | October 23rd, 2014 13:45:05 GMT

October 2014 US Markit manufacturing PMI flash 56.2 vs 57.0 exp

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  • Prior 57.5
  • New orders 57.1 vs 59.8 prior. Lowest since Jan
  • Output 58.0 vs 59.6 prior. Lowest since March

The headline is the lowest since July. That’s taken the wind out of the current USD/JPY rally, but for how long? We’ve seen manufacturing weakening all month since the Empire State report so this fall is not unexpected. For all the good reasons I pointed out in my yen post here’s a reminder that there is a very big area that’s looking like it’s starting to underperform. Still, theses numbers are coming off a high point and are still well into expansion so no real alarm bells needed here just yet.

US Markit manufacturing PMI flash 23 10 2014

US Markit manufacturing PMI flash 23 10 2014

Up next is one of my favourite numbers, the Eurozone consumer despondency index. Happiness is expected to fall further to -12 from -11.4

 

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1 hour ago | October 23rd, 2014 13:35:27 GMT

USD/JPY tickles 108 as economic fears subside

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The thing with sentiment is that it changes like the wind. From last week’s crap out on rate and slowdown worries, all is right with the world today. Earnings have been strong, jobs remain strong, inflation isn’t tanking, all the ducks are lining up again as to why America is recovering. Who’s going to fight it?

USD/JPY has poked its nose above 108 to 108.02 and has fallen back 10 pips. It’s hard to see it stopping here for long before another run up, particularly if stocks confirm the futures pricing with a strong cash open.

Above 108 we face minor resistance at 108.15 then stronger at 108.40/45 then 108.75/80.

USD/JPY H4 chart 23 10 2014 2

USD/JPY H4 chart 23 10 2014

Now look for support to come in at 107.70/75, 107.60 and 107.35/40.

As I’m typing stocks are opening and the S&P opens up 9 points to 1936, Dow +31 at 16493, Nasdaq +44 at 4427

2 Comments

1 hour ago | October 23rd, 2014 13:33:29 GMT

Forex Technical Trading: GBPUSD more bearish after lower Retail Sales

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The GBPUSD is lower on the day after lower than expected Retail Sales were worse than expectations.  From a technical analysis perspective, the price was able to keep a lid on the Asian session rise against the 200 hour MA (green line in the chart below).

GBPUSD on the hourly showing resistance against the 200 hour MA but support near 1.6000.

GBPUSD on the hourly showing resistance against the 200 hour MA but support near 1.6000.

The price fall was able to breach the 1.6000 level and trend line support (see hourly chart above), but the price could only get to the 1.5993 level before rebounding. There were no closes below the 1.6000 level.   Disappointing break for the sellers.  If you forgot, the 1.60000 level is not only a nice round number, but is also the 50% of the move up from the 2013 low to the 2014 high.  The 1.6016 level is the 200 week moving average this week and the price is also back above that level now. A move below this level will be eyed as step one for the sellers if they are to push this pair lower (my hunch).

Overall, the selling above buying below, gives a bunch of mixed technical signals today:

Bullish:

  1. The price is above 1.6000 (no closes on hourly below that key level)
  2. The price is back above the 1.6016 – 200 week MA level
  3. The price is back above the broken trend line (failed break).

Bearish:

  1. The price held below the 200 hour MA (at 1.6052 now)
  2. The price is below the close at 1.60496
  3. The price is staying below the 200  bar MA (green line on the 5 minute chart)
Sellers against the 200 bar MA on the 5 minute chart.  Trading near midpoint of the days range.

Sellers against the 200 bar MA on the 5 minute chart. Trading near midpoint of the days range.

Neutral:

  1. The price is trading at the days midpoint (50% at 1.6026).

The closest level to lean against is the 200 bar MA on 5 minute chart. The price tested that twice and held twice.  The price is lower and  just below the 50%.  As a result, my bias right now  is down off the more dovish BOE and data today and these technicals.  The trade is to hold below the 200 bar MA (risk). If it works can see a potential move back toward the 1.6000 key support, with the next break expecting not to fail. IF wrong, it  says the traders remain unsure.  I would stay away until there are better clues from the price action.

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