HFM Posted March 13, 2015 Author Report Share Posted March 13, 2015 Date : 13th March 2015 CADJPY TRADING IN A RANGE AFTER A SHOOTING STAR CANDLE. CADJPY has weakened substantially since November last year and has over the last weeks bounced higher from a support at 91.78. The support is loosely defined by the lower Bollinger Bands and a pivot candle from March 2014. Last week price reacted lower from a weekly low creating a shooting star candle and confirming a resistance level at 96.74. A couple of weeks ago the pair bounced from 94.17 forming a support level. CADJPY, Daily There was a shooting star last week in the daily chart as well. CADJPY has since then moved sideways between resistance at 96.74 and a rising trendline. The resistance coincides roughly with 38.2% Fibonacci level (drawn from December 2014 high to the January 2015 low) and upper Bollinger Bands. Bollinger Bands are narrowing which indicates that the pair is nearing a breakout but to which direction? The last two days indecision is clearly visible in the chart. Stochastic Oscillator is close to being oversold and is about to cross over its signal line. This together with the rising trendline encourages the bulls but the above shooting stars and resistance that are relatively close dampens the enthusiasm. CADJPY, 240 min The pair has been making lower highs and breaking support levels since the move to 96.74 was rejected. Fluctuations created a triangle that was resolved to the downside and provided one shorting opportunity on a rebound as the pair tested the lower end of the triangle and failed to penetrate it. Since then we have had a new lower low and lower high as the pair has been moving towards the lower end of the range. Projection from triangle points to 50% Fibonacci level (near 94.17 support). Should that support fail the next interesting support level is at 93.03 as it coincides with a 261.8% Fibonacci extension. I have left the extension levels off from the chart to improve readability. Conclusion: Trading in the middle of the range is always tricky while the easiest money is made at the edges and the pair is currently trading pretty much in the middle of the range. However, the weekly and daily shooting stars at 96.74 resistance level indicate willingness to sell the CADJPY at those levels while the lower highs and lower lows in 4h chart suggest that the pair should be testing the 94.17 level in not so distant future. This far the 38.2% Fibonacci level and the rising trendline have prevented the price moving lower. In addition there was bullish divergence in the Stochastic Oscillator at the time the pair bounced higher from the trendline. The intraday picture therefore has both bullish and bearish elements while the weekly shooting star points to lower prices from current levels. The wide range candle from the beginning of February indicates that demand between 91.78 and 94.17 was strong. Quick moves into this area should be therefore met by willingness to bid the pair higher. Should such a quick move happen I would be interested in long signals at or near to the 93.03 support. I will be monitoring the levels close to the upper daily Bollinger Bands (at around 96.20) and the shooting star high. Join me on Live Analysis Webinar on Tuesday 17th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat! Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 16, 2015 Author Report Share Posted March 16, 2015 Date : 16th March 2015 COPPER’S RELATIVE STRENGHT DUE TO CHINA. Copper is in a long term bear channel and moved in February to a level that has supported price in the past. This was also the first time since year 2008 that Money Flow Index moved into overbought zone in Monthly timeframe. In February 2007 price touched 2.40 level and moved higher over the next two years. Now there was another bounce from the same level and the price of Copper is on the rise for the second month in a row. The nearest resistance level is approx. at 2.72 while the next major resistance is at 2.88. Copper, Weekly Copper (an industrial metal) has been stronger performer than precious metals since the latest US Jobs report came in with a surprisingly high number and strenhgtened the US dollar. While Gold and Silver have declined by almost 3% since March 5th Copper has at the time of writing gained 1.1%. However, the US rate hike expectations mean the US dollar strengthens and buying power amongst non-USD based investors decreases for dollar based assets such as Copper. This combined with slowing economic growth in China slows down the Copper bulls and has caused the price to fluctuate below resistance levels. On the other the hand price has held up and even edged higher as market participants believe that easier lending conditions should improve demand in China, the biggest consumer of Copper globally. The price of copper has made two weekly lower highs since touching the 2.72 resistance level (a former support from June 2010) while the MFI (7) is overbought and Stochastics are close to the same levels and hinting that the momentum is waning. This could lead to further fluctuation between the 2.59 support and a high of 2.73 from couple of weeks ago. Other support levels are 2.55 and 2.40, a high and low of the January pivot candle high and low. Copper, Daily The price of copper is near to the upper Bollinger Bands and Stochastics is getting overbought. Price has just recently bounced from a support at 2.59 forming yet another higher low. This was technically a good sign as it confirmed the level that used to resist price moves higher is now a support. The fact that this level now coincides with the lower daily Bollinger Bands makes it more significant support area. Conclusion: Fundamental factors that both support the price of Copper and resist its move higher translate into a ranging market, price action that honours the technical levels at both ends of the range. Levels near to 2.59 support level used to resist moves higher and are now providing support while the move to 2.72 resistance was rejected. This suggests that short term traders should look for trade opportunities at or close to these levels while longer term position traders might want to consider longs closer to the 2.40 support and shorts closer to the 2.88 resistance levels. This is the likely range copper futures over the coming weeks and months as major news stories or surprises on either the US Federal Reserve’s rate policy or Chinese consumption of Copper they might provide the trigger to move the price of Copper to these levels. Chinese premier Li Keqiang commented that the government will be ready to support the Chinese economy should the slowdown in growth affect employment and incomes. He wasn’t specific on the measures the government might use but a hope of economic stimulus in China should support the price of Copper. Against this backdrop traders might want to be buyers near support levels rather than trying to find shorts. This view would be negated if the US Fed indicated that it would hike rates more than expected. However, it is likely that the Fed will be cautious in raising rates. Join me on Live Analysis Webinar on Tuesday 17th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat! Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 19, 2015 Author Report Share Posted March 19, 2015 Date : 19th March 2015 US FED DOVISHNESS CAUSED EURUSD TO SPIKE. EURUSD is now trading at 1.0640 support. Yesterday the pair moved all the way back to 1.1040 after the US Fed Chair Yellen took a more dovish stance on the economy. She removed patience from the vocabulary but indicated that strong dollar and slowing export growth are risks for the economy. According to Janet Yellen the change in forward guidance did not alter the timing of the first tightening and that a hike in April remained unlikely. The tone of the statement also suggested a June hike is not likely to happen, especially since the FOMC downgraded its assessment of the economy in the opening paragraph. According to them “economic growth has moderated somewhat” thanks in part to slowing export growth. The Fed also seemed less confident that inflation pressures are transitory, which will continue to be “monitored closely.” The policy paragraph now states that rates will rise when the Fed sees “further improvement in the labor market and is ‘reasonably confident’ that inflation will move back to its 2 percent objective.” It is interesting how no one paid attention to the headline inflation while oil prices were high. The focus was on CPI as it allowed the central banks to maintain the easy money policies. Now, suddenly it is the headline figure that seems to be in central banks’ focus. In the light of this the current wording in the Fed’s policy paragraph gives them more freedom in terms of continuing with the zero rates policy. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 25, 2015 Author Report Share Posted March 25, 2015 Date : 25th March 2015 EURUSD: A DAILY SHOOTING STAR POINTING TO DOWNSIDE. EURUSD has risen over the last two weeks after the Fed Chair Yellen said in her statement that there are worries over the export growth in the US economy due to the strong dollar. Yesterday’s new home sales and CPI figures could didn’t help the pair to push through the resistance at 1.1040. The dollar rallied in the aftermath of the warmer U.S. inflation report, quickly sold off from there, then dragged itself up through the remainder of the morning session. EURUSD fell to 1.0936 from 1.0995 after the CPI data, before climbing to session highs of 1.1029, and then falling to session lows of 1.0890. U.S. new home sales rebounded 7.8% to 539k in February, much better than expected and the strongest since April 2008. Back months were revised with January boosted to 500k from 481k previously, while December’s 482k was nudged down to 479k. The February overall-CPI was 0.2% (median 0.2%), while the core index was 0.2% (median 0.1%). Year over year growth accelerated to unchanged from -0.1% and the core y/y growth held at 1.7%. January’s was the slowest pace of y/y growth since -0.2% in October ’09. Energy prices grew 1.0%, with a 2.4% gasoline price increase. Food prices were 0.2% after after remaining unchanged last month. The monthly chart reveals an important trendline support in the region of the recent bounce from 1.0459. This could be a supporting element that keeps the pair from plummeting to parity for some time, especially so if the Fed continues using dovish language in their statements. Important weekly support level in the weekly chart is at 1.0459 while the resistance levels are at 1.1098 and 1.1460. EURUSD, Daily A daily shooting star candle suggests the pair will move lower today. High Stochastics value supports the view. If the market rallies today levels closer to yesterday’s high would be attractive shorting levels.Support area from 1.0460 to 1.0620 is a reasonable target but it would make sense to close the short trades as price approaches the level at some 20 pips higher. EURUSD, 240 min The pair has moved sideways above the 1.0883 support and over the last two candles below the ascending trendline. The 4h Bollinger Bands (currently at 1.0988 and 1.0240) would be preferable shorting levels but should the support break before price rallies, then smaller timeframe price action should be used to enter the short trades as per my teaching in the webinars. EURUSD, 60 min The resistance (red line) at 1.0938 has been resisting moves higher this morning while EURUSD has made higher lows above the lower Bollinger Bands. This suggests that pressure is building against the 1.0938 minor resistance level and price might well rally towards the potential sell area at 4h Bollinger Bands. Conclusion: Price reacting lower from a resistance and creating a Shooting Star candle indicates weakness. However, price trading at support and creating higher lows suggests that price might well move higher today and provide an opportunity to look for short signals at 4h Bollinger Bands. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 25, 2015 Author Report Share Posted March 25, 2015 Date : 25th March 2015 GERMAN MARCH IFO JUMPED TO 107.9. German March Ifo jumped to 107.9 (median 107.3) from 106.8 in the previous month. The higher than expected reading was boosted by a sharp rise in the expectations index, which came in at 103.9, after 102.5 in February. The current conditions indicator improved to 112.0 from 111.3. The diffusion index, which gives the balance of positive and negative answers shows improvements in all sectors, with the exception of the construction industry, where sentiment turned even more negative, despite the sharp rise in house prices. The March reading meant the Ifo improved to 107.1 in Q1 from 104.5 in Q4 last year. German growth this year is set to come in much stronger than anticipated, and the fact that economic momentum was already strong ahead of the ECB’s QE start means there is some risk of overheating in the German economy. Wages growth is set to pick up and in the long run this will cut German competitiveness and weigh on the medium term outlook and the Bundesbank will need to keep a close eye on the property market. EURUSD reaction was subdued and the pair stayed between two intraday support and resistance levels (1.0937 and 1.0968) with a high at 1.0974. This level coincides with rising trendline and the upper Bollinger Bands in 60 min timeframe. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 26, 2015 Author Report Share Posted March 26, 2015 Date : 26th March 2015 S&P 500 AT SUPPORT AFTER 4.67% DROP IN SMH. The US stock market declined for a third day in a row yesterday. Dow Jones Industrial Average lost 1.62% while Nasdaq and S&P 500 declined by 2.37% and -1.46% respectively. This has impacted the Asian and European markets today with Nikkei 225 futures in the red by 1.54% Dax futures down by 2.01% at the time of writing. US equity volatility index VIX shot higher yesterday. VIX moved up to 15.44 as NASDAQ -1.6% was sucking the S&P 500 into negative territory. VIX is well up from the previous session lows 12.59. In proximity of the mid-March range index will be hitting the daily Bollinger Bands. S&P 500 e-mini futures, daily RSI is indicating that the weekly S&P trend is getting weaker. Momentum has slowed down since December last year and this has led to RSI creating lower highs while the S&P e-mini futures (ES) made and all-time high in February. ES has now created a lower weekly high and retraced back to the 50% Fibonacci level at 2040. S&P 500 e-mini futures, daily ES created a lower high just below the weekly pivot candle and is currently trading at the daily Bollinger Bands and 50% Fibonacci level. This level also coincides with a daily pivot candle from March 13th. Stochastics is getting oversold but a lower high at 2100 is a sign of weakness and could mean that this market moves lower before finding support. S&P 500 e-mini futures, daily Here’s another look at the daily chart with a perspective a bit further away. With ES not being able to move above the February high price has created a bearish wedge is currently moving outside the wedge formation. If current support at 2032 breaks it could mean that the trajectory has changed and we will have a new less steep trend channel that defines the moves over the coming weeks. This would bring the grey trendline into play. Also, should the price stay below the black trendline technical picture would deteriorate substantially. Semiconductor Sector ETF (SMH), Daily Analysis on US sectors reveals that over the last 10 trading days professional money has been moving away from Financials and Industrials and into Utilities and Health Care stocks. This of course is a bearish fact suggesting that the long only fund managers see the market being weak and feel the need to do what they can to minimize the market impact as they cannot hedge their positions with derivatives. The massive drop in the Semiconductor stocks after a lower high in the index ETF supports this view. However, the support area is getting also relatively close suggesting that the market is not likely to continue in a free fall but will find support over the coming few days. As futures have declined today it is possible that these stocks will open fairly close to the support levels. Picture in the technology and industrials sector ETFs is somewhat similar indicating that they have a bit further to fall before they meet potential support levels. S&P 500 e-mini futures, 240 min The down move paused at the rising trendline but the selling pressure prevailed. ES is now approaching the 2032 low with oscillators deeply in the overbought territory and has reacted higher from the support level. Conclusion: At the time of writing ES is trading at a support level and it remains to be seen if the traders are willing to seriously bid for the market here. Support levels usually lead to at least some sort of rallies but there needs to be follow-through after the initial reaction. In that sense nearby resistance levels can be problematic as they tend to invite selling. There is a resistance level at 2052 while the violated trendline is at 2050. In addition, the 4.67% drop in the Semiconductor stocks could make the market participants careful today. The wedge formation is pretty much violated after today’s move lower. Only if we see a strong rally higher and a close inside the formation is the technical picture salvaged. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 27, 2015 Author Report Share Posted March 27, 2015 Date : 27th March 2015 EURGBP CORRECTING LOWER AND BREAKING SUPPORT LEVELS. I suggested in my previous EURGBP analysis that as long as the market keeps on moving lower and there is no price based evidence to the contrary there is no hurry to close the short trades. I noted that an exception to this would be price hitting the 0.7022 support level which could well bounce the price higher and therefore is a logical target level. Price is in a downtrend and we should be looking to sell rallies as long as the approach works. However, once the 0.7022 target is hit the pair is at a major consolidation level and selling rallies might get trickier. The pair indeed hit the 0.7022 target level and rallied higher quite substantially. Selling rallies has definitely been trickier since then as price pretty much rocketed through the resistance level. The pair is trading below a weekly low from February at 0.7340 after trying to penetrate the resistance area above the level. Now that EURUSD is reacting lower from a resistance EURGBP is moving lower as well. They key support levels are 0.7220 (weekly pivot candle high) and 0.7022 a historical support. Nearest resistance levels are at 0.7340 and 0.7405. Weekly close above the pivotal weekly candle high is a longer term bullish sign as this has not happened since October last year and could signal that the pair has a bottoming process ahead. EURGBP, Daily Run up higher was followed by a relatively narrow range candle in the upper Bollinger Bands two days ago. In yesterday’s trading price closed below previous day’s low suggesting a turn around. Stochastics is overbought and signalling a momentum change, thus supporting the bearish view. Today price has moved outside the rising trendline and March 18th daily high and 23.6% Fibonacci retracement level coinciding. EURGBP, 240 min Price has indeed broken the steeper trendline (grey line) and has now reached another that can be drawn by using the pivot points at A and B. There is a resistance level at 0.7318 that was created when the pair found support at the now violated trendline (grey). Next intraday support is at 0.7260 while the 61.8% Fibonacci level suggests support at March 19th low at 0.7150 (point B). Conclusion: Long term: Weekly close above the pivotal weekly candle high is a longer term bullish sign as this has not happened since October last year and could signal that the pair has a bottoming process ahead. This could lead to a double bottom or to price creating a higher low. Time (and price action) will tell. The range between 0.7022 and 0.7105 is definitely worth keeping an eye on should the price move that low. Buy signals inside this range would indicate demand at those levels. Short term: Price has violated 23.6% Fibonacci level and a support level created by a daily high and a secondary trendline. Therefore it makes sense to look to sell the rallies intraday. This would give us an opportunity to follow price action resistance levels identified in the above charts, especially 4h chart, and see if market is acting weakly or strongly. I would look at levels below 61.8% Fibonacci level as target as they should attract buyers. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted March 30, 2015 Author Report Share Posted March 30, 2015 Date : 30th March 2015 WEEKLY HAMMER AT SUPPORT SEND USDCAD HIGHER. USDCAD (weekly) has been moving sideways since the beginning of February. The proximity of the year 2009 high has caused the sideways move. I suggested in my analysis at the time that USDCAD should move above the latest highs as US economy is stronger than the economy in Canada. The fact that USDCAD has maintained the support well and has now created a weekly hammer candle at the support supports my view. Bears might point out that Stochastics oscillator and RSI (7) have created lower highs and therefore signal that the momentum is waning. This however, is what happens each time price moves sideways. Therefore, oscillators do not tell us anything we wouldn’t know by reading price action. Nearest support and resistance levels are at 1.2409 and 1.2835. The year 2009 high at 1.3064 would be the next major resistance once price moves beyond the 1.2835. USDCAD, Daily Price action in the daily chart points to the upside. USDCAD has found support from the area near the 38.2% Fibonacci level and the lower Bollinger Bands. Last week Stochastics moved to oversold territory and the 50 day moving average catched up with the price. Friday’s close well above the hammer candle high was a bullish sign and created a hammer candle in the weekly chart as well. USDCAD, 240 After being held back by the 50% Fibonacci level and a pivot high price is now breaking higher. This is very much in line with the bullishness in daily and weekly charts. The pair broken out of the wedge formation and projection from the formation points to the resistance zone between 1.2724 and 1.2760. Support levels are at 1.2621, 1.2531 and 1.2409. Conclusion: Long term technical picture is bullish as institutional buying has created a hammer candle at the support. The latest weekly low was also higher than the pivot low in the weekly chart from the mid February. Short term picture supports this as price has broken out of a wedge formation in the 4h chart and has closed above the Friday’s daily hammer candle. As the setup in the higher time frames is favourable I am looking for pullbacks to technical levels at 60 and 15 min charts. The range at 1.2724 – 1.2760 is my target for this price move. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 1, 2015 Author Report Share Posted April 1, 2015 Date : 1st April 2015 USDJPY MAKES HIGHER DAILY LOWS. USDJPY has been moving sideways since November last year and is now reacting higher from a support at 118.33. Since then the pair has briefly penetrated the November high and has created a series of higher weekly lows between 115.57 and the latest low at 118.33. This suggests that the pair should move higher once the consolidation period has ended. A trigger for this could be further monetary easing from the Japanese central bank. Even though the pair has reacted higher from support it is still relatively close to the support levels. USDJPY, Daily USDJPY moved down to 118.33 last week but the move rejected and created a hammer candle. Since then price has reacted higher as is usual after such a move and has now retraced back to this pivotal candle with reaction higher in today’s trading. Today’s low coincides with a 50 period SMA, the lower Bollinger Bands and a rising trendline. This suggests that the pair will move higher over the coming days. The nearest support is at 119.41 and the important resistance levels at 121.55 and 1.2202. USDJPY, 240 min After breaking out of a wedge formation the pair was consolidating for a while. This consolidation pattern created a support from which price has now reacted higher from. Now we have a hammer candle and some follow through but price is struggling with a minor resistance at 120. Stochastic oscillator is at 34 points and is about to cross over the signal line to the upside. The channel width points to an area between resistance levels at 121.09 and 121.50. Conclusion: USDJPY has been a bit sluggish to move higher over the last three to four days, even though we have had bullish signals and the market has been trading close a support. This raises some questions but as long as this pair stays inside the bullish channel (see the daily chart) and makes higher lows it is safe to assume that the pair will move towards my short term target area between 121.09 and 121.50. Price has found support from a 50 period SMA and a previous 4h resistance. Should there be retracements to this level I would look for buy signals with a target at 121.09. If there is no bigger retracement I will be looking to take benefit from smaller timeframe technical levels. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 2, 2015 Author Report Share Posted April 2, 2015 Date : 2nd April 2015 UK CONSTRUCTION PMI BELOW EXPECTATIONS. GBPAUD reached a historical resistance at 1.9697 (a spring 2009 low) in February and has since reacted lower from this level. Over the last two weeks the pair has been rallying strongly and is nearing the resistance area again. Fundamentals and the strong weekly trend support the bids in GBPAUD but price has rallied strongly and reached a potential resistance level. Therefore it pays to monitor the market more closely and time the entries at support levels in pullbacks. Sterling has been trending higher against the Australian dollar as it is likely that the Reserve Bank of Australia will cut the interest rates either in April or May while the UK economy is rather strong. A recent editorial in The Australian that said “a cut in interest rates either next month or in May is a virtual certainty,”. A 25 basis points cut at the May policy review is likely, which would take the cash rate to a record low 2.0%. Australian economy is slowing while the commodity prices have dropped significantly. Growth has slowed, with GDP rising 0.5% q/q in Q4, but slowing to a 2.5% y/y pace from +2.7% y/y in Q3. The RBA’s Index of Commodity Prices has tumbled. The index has fallen by 20.6% y/y in SDR terms through February, driven by lower prices for bulk commodities. At 72.5, the index is at its lowest level since December 2009, extending pullback from a 124.7 peak in July 2011. In addition, inflation has slowed, with CPI dropping to 1.7% y/y in Q4 from 2.3% y/y in Q3. At the same time UK data improves and even though the elections cause a certain level of anxiety in the markets (no one likes uncertainty) the GBPAUD has been rather strong lately. Incoming UK data has been rather strong. The future data should be positive for sterling, though concerns of a hung parliament outcome at the May-7 general election are likely to crimp enthusiasm for the UK currency and assets, especially if the Scottish Nationalist Party ends up holding the balance of power. UK Markit manufacturing PMI survey came in at 54.3 in March, fractionally above our survey median for 54.3 and improving from February’s 54.1 reading. This is the third consecutive month of improvement, affirming that activity in the sector is reaccelerating after a soft patch in Q4 last year. UK construction PMI was much worse than expected at 57.8 in March, down from February’s 60.1 and well below the Reuters median forecast for 59.5. The 2014 overall average was 61.8, so the data points to a drop-off in momentum. The decline in March was largely reflective of a slowdown in civil engineering activity growth, which the survey found may be related to uncertainty ahead of the too-close-to-call May-7 general election. Job creation also remained below 2014 levels. However, at 57.8 this still signals a robust level of activity while business confidence rose to a nine-year high. Sub-contractor charges rose at the fastest pace since the survey began in 1997. Overall, the strong outlook offsets the decline in the headline, and the slowdown in activity in some areas may pick up after the May election. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 3, 2015 Author Report Share Posted April 3, 2015 Date : 3rd April 2015 EURUSD APPROACHING RESISTANCE AFTER NFP DISAPPOINTMENT. The EURUSD rallied after the combination of a disappointing NFP release, and downward back revisions in the figures. The pair is approaching a resistance area created by a combination of technical factors. The resistance levels of 1.1052 and 1.1098 coincide with 50 day MA and the upper Bollinger Bands. This resistance has been tested twice and after the latest test EURUSD made a higher low. This suggests the pair will be trying to move higher from here. The next important daily resistance levels are closer to the 1.1460 which could well come into play now that the NFP release was such a disappointment. The analysts expected an increase of 246k jobs but we got only 126k. The 126k U.S. March payroll rise with 69k in prior downward revisions and a 0.2% drop in hours-worked, combined with big goods-sector declines for payrolls and hours-worked lowered production estimates for March. Price action at the resistance levels is going to be interesting to follow. If the pair corrects lower from it I expect the correction to be rather subdued. The surprisingly weak jobs figure means that now the Fed doves have further evidence of softening economy and a better case to postpone the rate hike. This is seen in the markets across the board as the USD is being sold against other currencies across the board. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 13, 2015 Author Report Share Posted April 13, 2015 Date : 13th April 2015 EURAUD BOUNCING HIGHER FROM SUPPORT. EURAUD, Weekly The pair has been making lower highs and lower lows since December 2014 suggesting that the long term momentum is to the downside. Unless the pair creates a higher low at 1.3725 the weekly picture remains bearish. The 38.2% Fibonacci retracement coincides roughly with the recent pivot high while the 50% level is approximately at level with a pivot candle low (1.4476) from February this year. This suggests to me that the resistance area between 1.4340 and 1.4530 is strong and any near term price advances to the level are likely to be met with selling. Nearest important support levels are at 1.3725 and 1.3190. EURAUD, Daily With the trend to the downside and the pair at support the Stochastics is now oversold. Should today’s candle close above the Friday’s high we’d have both a price based bull signal and Stochastics closing above its 3 period MA (red line). There could be some resistance around the 1.4076 level as it has acted as a support and resistance in the past. Should the pair move beyond this level the next resistance area would be in the region of upper Bollinger Bands and the upper end of the regression channel. EURAUD, 60 min The pair has broken out of the descending regression channel and has since moved above recent reaction highs at 3849 and 3883. Now that EURAUD is retracing back to those levels I expect that there is a good chance market will find support at those levels. Conclusion Longer term picture is pointing to the downside as the pair makes lower highs and lower lows. This setup should therefore favour those looking to sell the rallies. Resistance levels between 1.4340 and 1.4530 could work out as short entry level should the market rally there. Short term traders could take advantage of a potential momentum reversal at 1.3849 and 1.3883 with a target at or near 1.4050. Look for momentum reversal signals to confirm the analysis. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 14, 2015 Author Report Share Posted April 14, 2015 Date : 14th April 2015 GBPNZD RANGING ABOVE SUPPORT. GBPNZD, Weekly The pair has just recently moved higher from weekly support level 1.9379 while another one supported price at 1.9244 sent price higher in the beginning of January. For the last three to four weeks price has been bouncing between this support and a resistance created by a weekly low (at 2.000) from December last year. Stochastics is oversold and price action takes place near lower Bollinger Bands suggesting the pair should have more upside than downside potential. On the bearish side however I should mention the fact that the pair creates lower weekly highs suggesting selling pressure coming in at fairly close to the support. This is not a very bullish sign and could lead to further consolidation at support or eventually price breaking lower. GBPNZD, Daily Price is reacting lower from a resistance at 1.9700. This resistance is created by a daily pivot candle from April 7th and coincides with a 50% Fibonacci level at 1.9691. Stochastics are pointing higher and the RSI has created a higher low while the latest low at 1.9380 was roughly equal to the low from March this year. This bullish divergence supports the upside bias but the price needs to break above the current resistance in order to create a higher high. Should the pair keep on making lower pivotal highs the pressure against the support would increase and the support could break. It is therefore essential to follow the price action over the coming days. GBPNZD, 240 min The four hour picture shows in more detail how price has been reacting to the resistance and other technical factors. Price has broken out of the downward sloping channel but has then run into a resistance. After this the pair created a pivot from which it has now reacted lower but has been (over the last two complete bars) been supported by the channel high and a 50 period moving average. Stochastics, RSI and MFI have all rolled over confirming that there isn’t much upside movement or momentum over the last few bars. This suggests the best (low risk) buying opportunities would be at lower levels. As per usual it makes sense to be a buyer at a support and look for selling opportunities at resistances. Conclusion Long term picture (next four to six weeks) suggests that this market has more upside than downside potential as it is trading near an important support area and has been consolidating above it. However, should this sideways movement keep on for an extended period of time the probability that the market will move lower does increase. Also, I don’t like the fact that we have lower weekly highs. This kind of price action is not bullish as it suggests indecisiveness in this market. We would need to see price starting to build a series of higher lows and breaking above the previous weekly highs in order to get a confirmation for the upside biased long term view. The short term picture (from intraday to next few days) has a bullish element as it has broken out of the downward channel but price is currently trading just below a resistance level. As we should always look for selling opportunities at resistance levels and buying opportunities at supports I am keeping an eye on smaller time frame sell signals at 240 min Bollinger Bands and look for buy signals in the region of 1.9460 support. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 15, 2015 Author Report Share Posted April 15, 2015 Date : 15th April 2015 WEEKLY CHART: GOLD’S LIKELY TO MOVE LOWER. Gold, Weekly In my latest Gold analysis from March 18th I wrote: These levels are exactly the levels that attracted buyers in Q4 2014 which suggests that there might still be some demand for Gold just below the current price. However, the psychology might have changed since December last year. Strong growth in the US labour market we have seen since then coupled with the rate hike expectations could lead to Gold breaking the support this time around. I am not taking a view that it will happen as support is support as long as it works. A close above yesterday’s high at 1159.30 would be a positive signal while a close above the 1165.70 resistance in would improve it even further. This would warrant buying intraday dips after over the coming few days with a target at 1190. Now we’ve seen Gold closing moving higher from the support level and hitting my target at 1190. In addition, this market has moved beyond the target and turned lower at 1224.50 resistance. At the same time Gold created a bar with a narrow range between the open and closing prices hinting a move lower. This has since then materialised and Gold has moved lower this week. This is suggesting further moves lower in the coming two weeks or so. The next important weekly support is likely to be found near the lower weekly Bollinger Bands and 1131.50 to 1142 range. Long term picture is still bearish while in the medium term I expect Gold to move sideways between the above mentioned support and resistance levels. Gold, Daily In the daily picture Gold is trading close to the 50% Fibonacci level and the Stochastics are getting close to the oversold levels. This suggests that the move lower over the last few days could slow down a bit. Yesterday we saw a rally from the 50% Fibonacci level but there was no follow through. This 50% retracement level coincides with a pivot candle from the end of March and if price keeps moving sideways for a few days the lower Bollinger Bands will catch up with it creating another supportive element. However the weekly picture points to the downside and therefore we should see rallies higher met with selling and eventually see a move lower to 1141 and 1160 range. Gold, 240 min While the 50 period moving average is still pointing higher Gold has been creating lower highs and trending lower in a descending channel. Price is reacting from resistance levels, which suggests further moves lower. The fact that the bounce from 1183.70 support was weak and met with selling does increase probabilities that price will eventually work its way through the support. This however does not rule out price bouncing higher and retesting the resistance levels at 1198 and 1208. The latter coincides with upper Bollinger Bands and should price rally there we’d be looking for momentum reversal signals close to it. The same applies to the 1198 resistance. If price stays in the descending channel (minor time frame confirms with momentum reversals close to the channel top) then we obviously should take advantage of them. Conclusion Weekly picture points to lower prices and I expect Gold to move to the lower weekly Bollinger Bands and close to the support range at 1131.50 – 1142 where it should attract buyers again. It could very well be that over the coming weeks price moves sideways between the 1224 resistance and the aforementioned support level. Ranging market between these levels could provide opportunities for traders (with different time trade orientations) trading against both the major and minor resistances and support levels. Short term we are close to a support level and therefore I would like to see price rallying a bit before initiating short trades. We could see Gold retesting the resistance levels at 1198 and 1208. The latter coincides with the upper Bollinger Bands and should price rally there we’d be looking for momentum reversal signals close to it. The weekly Bollinger Bands and proximity of daily pivot high at 1160 could very well work as an ultimate swing trade target. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 16, 2015 Author Report Share Posted April 16, 2015 Date : 16th April 2015 CRUDE LOOKS LIKE IT MIGHT BE BOTTOMING. Crude oil and Inverted DXY, Daily In my analysis from February 5th I suggested that the crude oil could be close to levels it might bottom out. At the time I wrote: The price of oil has collapsed with the strengthening dollar and has reached levels that were last seen in the later stages of the financial crisis in 2008. This suggests that the current levels are deeply oversold both fundamentally and technically. The world economy is certainly slowing down but it is in a better shape than it was in the first quarter of 2009 when the US crude oil futures dropped to $33.35. Therefore, it makes sense to expect crude oil to be relatively close to the levels it could find a bottom. Now it does look like crude oil is indeed bottoming. Since January price has moved sideways and even shown some relative strength against the USD. As crude is priced in the US dollars any up moves in the US Dollar Index (DXY) should mean the price of oil goes down. However, since the end of January DXY has move higher while crude has moved sideways and has therefore showed some relative strength. As can be seen from the above chart with crude oil in black and inverted DXY in blue the strength of crude was really taken to new levels at the midway of March. Together with the fact that the crude oil has been trading levels close to the 2009 low suggests to me that we are witnessing bottoming action in the price of crude. Crude oil, Weekly Since forming a hammer candle in March the price of crude oil has been trending higher and making consecutive higher closes. Now price has moved well beyond the 53.60 resistance level. This confirms the bullishness and suggests that the price has bottomed. After such a long sideways move and relative strength against the DXY it is now more likely that price will find buyers if it retraces back to the support levels. Now that the Stochastics is indicating crude is getting overbought the next challenge for buyers is likely to be around the 23.6% Fibonacci level and the upper Bollinger Bands that are nearby. The most important support levels are at 53.60 and 46.53. Crude oil, Daily Price is trending higher in a channel and has with yesterday’s rally moved outside the upper Bollinger Bands. This suggests that the market is getting overbought in the short term. Stochastics are in the overbought territory supporting the indication from Bollinger Bands. Also, price is getting close to the channel top. The support at 53.60 looks like a logical retracement level and it coincides roughly with 23.6% Fibonacci level. I have not drawn the Fibs on the chart to maintain a better readability. Should the 53.60 support fail to hold, the next potential support level is at 50.25. Crude oil, 240 min Price has reacted with a shooting star candle and is now inside the upper Bollinger Bands. This suggests the corrective could be already underway. Stochastics support the idea as they are overbought and pointing lower. Conclusion Long term picture is bullish with the price of oil showing clear signs of market bottoming. In medium term, ie the daily trend crude is bound to move higher but might retrace first. The intraday picture is overbought and therefore bearish. I look for correction lower intraday and then keep an eye on 53.60 support region for buy signals. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 17, 2015 Author Report Share Posted April 17, 2015 Date : 17th April 2015 DXY IS GETTING CLOSE TO SUPPORT. DXY, Weekly US Dollar Index (DXY) represents a basket of currencies in which the US dollar is valued. These include major currencies with different weights: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%) and CHF (3.6%). With euro having the highest weighting analysis made on DXY will have the greatest indication for EURUSD trading. Since March this year momentum indicators have been moving lower reflecting the fact that price has not been making new higher highs anymore. Until recently Stochastics and RSI have been moving above the overbought threshold but now are pointing lower and have moved closer to neutral values. In a price chart that means the latest price action is taking closer to the middle of the recent range. DXY has been correcting lower this week and is now close to the 50% Fibonacci retracement level. This ties up with the indication from the oscillators. Price is also approaching an accelerated trendline support but has created a lower high which suggests that price could be moving sideways over the coming weeks. DXY, Daily Both Stochastics and RSI are close to oversold levels with the latter attempting to tick higher at the time of writing. Price has reached a pivot candle from April 6th and is fairly close to a rising trendline support. This suggests that the downside is getting limited and we should be looking for buy signals for the dollar at levels at or below the current price. Nearest support and resistance levels are 97.46 and 99.46 which also coincides with the upper Bollinger Bands. Should the 97.46 support not hold the DXY the next important support level can be identified in the 4h chart at 97. The 50 day MA is currently in the region as well with a value of 97.08. This increases the validity of the level. DXY, 240 As DXY has been trending down over the last three days there has also been some wedging in the price. This suggests that there is some resistance for dollar moving lower, especially since price came to the low of 98.07 yesterday. At the moment the 61.8% Fibonacci resistance level has been acting as a resistance for rallies today. Price is moving closer to 97.46 support level which it has already almost touched once and bounced higher. Stochastics, RSI and MFI are oversold which supports the view that this market is near to buy levels. If the 97.46 doesn’t hold then the next support level at 97 should come into play but I am interested in price action based buy signals even between the levels. Conclusion In the longer term picture it is clear that the Fed speak turning dovish in March has taken steam out of the DXY rally and the index has been moving sideways. Price has created a lower high which suggests weakness and that DXY could be moving sideways over the coming weeks. But in a shorter term picture DXY is close to support levels and we should therefore be looking for buy signals the dollar. This obviously means looking for sell signals in markets like AUDUSD (close to a resistance), NZDUSD (also at resistance). At the same time USDJPY is at support. Should the price action confirm my analysis this could be a time to favour USD over other currencies. Later on today we will have the CPI numbers from US and this could cause some action should there be a strong deviation from analysis expectations. You will find today’s economic calendar with the highest impacting events only. Please visit HotForex.com for full calendar. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 20, 2015 Author Report Share Posted April 20, 2015 Date : 20th April 2015 GBPJPY REACTS LOWER FROM CHANNEL TOP. GBPJPY, Weekly The pair has been ranging between 175 support and 179.29 resistance over the last three weeks. At the same time Stochastic oscillator has moved to oversold territory and is trying to move higher indicating the downside momentum is weak and might be reversing. This is consistent with the pair being close to support. Additionally, the sideways move has caused the lower Bollinger Bands to draw closer to the current price action and the weekly price bar lows have been moving along the 1.5 Standard deviations Bollinger Band. Until two weeks ago the 50 week moving average has been able to send price significantly higher but now this market fluctuates on both sides of the average. This suggests that the market is less decisive than previously toughing these price levels. GBPJPY, Daily Since March 18th GBPJPY has been moving lower in a bearish channel with the March consolidation between 178.80 and 180.08 resisting attempts to move higher. On Friday the pair reacted from the trendline and upper Bollinger Bands creating a shooting star candle. Today we’ve seen some follow through with bears pushing the pair below Friday’s low. This suggests momentum is currently to the downside. Daily pivot candle high from April 14th coincides with the lower daily Bollinger Bands and could slow the moves lower (at 176.40). Stochastics and RSI are not at overbought levels but they are at levels where they turned lower the last time, and that’s when price turned lower as well. Oscillators do not determine where the price moves to but in context that price is reacting lower from a descending channel top it supports the general idea of price potentially moving lower. GBPJPY, 240 In the intraday chart GBPJPY can be seen moving below the rising trendline that supported price since April 14th. Price has since corrected lower and after bouncing from 38.2% Fibonacci level is now at the time fighting with a resistance just below the 23.6% Fibonacci level. At the time of writing the latest 4h candle just closed above 177.50 and we now have a hammer candle that indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades. Next support and resistance levels are at 176.55 (lower Bollinger Bands and a resistance turned into a support) and 178.20, a recent 4h pivot high. Conclusion The long term chart draws my attention to the nearby support level but also 50 week moving average and indecisive price action around it. Should price move lower from current levels buyers could be stepping in close to the recent (April 14th) low at 174.88 and if we see confirming price action then we could see a move to the descending trendline in the weekly picture. In a shorter term picture I am following minor time frames (60 min and lower) to see if price action confirms the bearish indications given by the daily time frame shooting star candle that occurs near channel top. At the time of writing this seems to be the case as price has reacted lower from a 50 period MA in an hourly chart but with the 4h hammer candle this market does give slightly mixed signals. With a bearish daily setup it makes sense to sell rallies at resistances if price action confirms the analysis. A 4h hammer candle indicates lack of downside momentum and suggests traders should choose carefully where to initiate short trades. Please, find today’s high impact economic releases below. For full economic calendar visit HotForex.com. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 21, 2015 Author Report Share Posted April 21, 2015 Date : 21st April 2015 HOW TO FIND HIGH PROBABILITY TRADES? In my analysis from April 15th I wrote: We could see Gold retesting the resistance levels at 1198 and 1208. The latter coincides with the upper Bollinger Bands and should price rally there we’d be looking for momentum reversal signals close to it. As we now know, Gold turned at the resistance and provided us with a great shorting opportunity! Join me in today’s Live Analysis Webinar and learn how to identify similar opportunities over the coming few days. I will teach you how to analyse the markets successfully and how to read price action when entering and exiting your trades. Twice a month we gather together to a Live Analysis Webinar to study the markets and recent price action. In these sessions I share my thoughts and analysis on currency pairs and teach our traders to understand what is important when looking for high probability trade setups. This is a great opportunity to watch and learn from what I share and get your questions answered. We’ve had excellent feed back from our traders on these sessions. I am convinced that you will benefit greatly by investing an hour of your time with the rest of us. Please, follow the link below and book your seat. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 22, 2015 Author Report Share Posted April 22, 2015 Date : 22nd April 2015 NASDAQ 100 FUTURES TRADING BELOW RESISTANCE. Nasdaq, Weekly: Nasdaq was the world’s first electronic stock market when it began trading in 1971. This is very fitting for a technology index that nowadays includes all the major technology names that have a global prescence. In HotForex MT4 platform this index can be traded under the name of USA 100. The biggest stocks in this index include technology names such as Apple, Microsoft and Google. As these stocks are investment driven (when businesses invest in computers, software and infrastructure these companies do well) their price behaviour can be seen as an indication of things to come for the whole of the stock market. Technology is also the heaviest weighted sector in the S&P 500 index which means that movements in technology shares and Nasdaq will have a significant impact on S&P 500. Let’s see how Nasdaq index has been trading lately and what can we learn from its movements. Since the end of 2012 this market has been trending strongly higher gaining over 60% since the end of 2012. Currently this index is trading close to this year’s highs just below the upper weekly Bollinger Bands. Nasdaq has moved sideways since the end of February and has found support from general region of November 2014 high. This has created a sideways move that is fairly similar to the sideways range that lasted from November 2014 to the beginning of February 2015. This suggests to me that this market is not weak but is slowly working its way higher. Nasdaq, Daily: Index is trading at the recent highs and therefore at resistance. Recent high at 4441.50 was able to resist the move higher this morning and index reacted lower at the time of writing. Stochastics, RSI and Money Flow index are right at or very close to overbought levels which means that taking long positions at current levels would be too risky. Market is very thin this time of day as the US main trading session is still hours away. This can make market more volatile than usually. The nearest daily support level is at 4320 while the lower Bollinger Bands are between this and the next support at 4259. Nasdaq, 240 min: The 4h chart reveals how Nasdaq has been moving higher in an upward channel whit the lower end of the channel coinciding with a pivot support at 4327.50. Now that index has broken the small bearish wedge that had developed overnight the next significant support level is in the region of 4327.50 to 4350 that coincide with the Bollinger Bands and the channel low. Currently price has attracted some buying at 50 period moving average but this should be considered as a minor support and should we get a rally to 4423 resistance and then a turn around to again to the south there is a good chance price will penetrate this support and move to 4350 or so. Conclusion In the longer term picture this market is trading close to the year 2000 highs and therefore momentum can be expected to be weaker than it has been over the year 2014. The Q1 2015 trading gives us some indication of what the price action might be like over the rest of the second quarter. Index has been moving sideways and then has broken above the previous resistance levels without huge rallies. Instead the next range has developed just above the previous one. This means that the support levels are close and this market might not be ready to have major correction lower but move gradually higher. As technology is the biggest (heaviest weighted) sector in S&P 500 it is likely that this lack of technical weakness will turn into strength with S&P 500 as well. Now that Fed is more dovish and crude oil has likely bottomed the energy sector stocks are recovering giving additional support for the US stock market. In short term Nasdaq is weak as it has not been able to move above the resistance level at 4441.50 but rather corrected lower. Even though there has been some buying at the 50 period MA the major support levels are near the rising trend channel bottom. I am looking for a move to 4350 and then follow minor time frames for buy signals. However, firs this market might rally a bit and test the 4423 resistance. Should we get a rally to 4423 resistance and then a reversal there is a good chance price will penetrate the 50 MA support and move to 4350 or so. Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
HFM Posted April 23, 2015 Author Report Share Posted April 23, 2015 Date : 23rd April 2015 COFFEE FUTURES REACTING LOWER FROM RESISTANCE. Coffee, Weekly: The last time I wrote about market moves in coffee the coffee futures were trading at 152.65 and based on the price action I suggested price should move lower and gave $145 and $125 as my downside targets. Since then target one was hit and price has moved as low as $128.80, close to the target II at $125. The first level was penetrated without any effort but then it turned into a resistance that has kept price capped for almost two months. Price of coffee found support at 161.8% Fibonacci extension level just above my target II at $125 and had a close outside the lower Bollinger Bands. Since then we’ve seen this market moving sideways inside the Bollinger Bands with roughly equal highs at $147. Price has made higher lows suggesting pressure is building against this resistance level. Coffee, Daily: The 50 period MA is still pointing lower while price of coffee struggles to close and stay above the $144.92 level. Stochastics are overbought and price has created a shooting star candle right at resistance which coincides with 100% Fibonacci extension level. Also, a regression channel drawn from the November 2014 high comes into play here. Price is trading right at the upper end of the channel adding to the bearish picture. The next important support levels are at 136.80 and 131.95. Coffee, 240 min: Price has been trending higher in a channel since the April 14th low. Now that price is moving lower again the lower end of the channel could provide some support as the 50 period MA and lower Bollinger Bands are relatively close to it. The rising trendline is currently at $140.45 while the 50 MA is at $139 and the 1.5 stdv lower Bollinger Band is at 139.12. In addition, there is a level that used to be a resistance roughly at $138.20. Stochastics are approaching the lower end of the range. Conclusion This two month sideways move suggests that supply and demand are now more balanced than at the time of my previous analysis on Coffee. Price moved almost to my target level at $125 but then turned around and has been challenging the $145 in several occasions. This could imply that the market participants wanted to cover their short positions before this important $125 support level and are now looking to take the market higher but the latest price action suggests there is still more weakness to come in Coffee. Short term picture is also negative as price has reacted lower from the resistance. I am therefore in a ‘sell rallies mode’ and look to benefit from the downside momentum. Here are my short term targets: target 1 at $138.20 and target 2 at $132. If price breaks below the sideways range a longer term downside target 1 is at $115. Trade these levels only should the price action confirm my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level. Janne Muta Chief Market Analyst HotForex Disclaimer: 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 purchase or sale of any financial instrument. Link to comment Share on other sites More sharing options...
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