Signal For Monday 23rd October 2017

Overall there is strength in the GBP and USD 

Overall there is weakness in the CAD, JPY, NZD, CHF and AUD


Trading Directions I am favouring for the next 24 hours


Buy Trades – GBP/JPY, USD/JPY, USD/CHF, USD/CAD, GBP/CHF, GBP/CAD, GBP/AUD, GBP/NZD

Sell Trades – EUR/USD, NZD/USD, AUD/USD 

Signal For Friday 13th October2017

Overall there is strength in the NZD, AUD, GBP

Overall there is weakness in the EUR, CHF, with minor weakness in the CAD


Buy Trades – GBP/CHF, GBP/CAD, AUD/USD, AUD/CAD, AUD/CHF, NZD/USD, NZD/CAD, NZD/CHF

Sell Trades – EUR/GBP, EUR/NZD, EUR/AUD

Signal For Wednesday 11th October 2017

Overall there is strength in the EUR, GBP and CHF

Overall there is weakness in the USD, NZD and JPY 


Trading Directions I am favouring for the next 24 hours


Buy Trades – EUR/USD, EUR/JPY, GBP/USD, EUR/CAD, CHF/JPY, EUR/NZD, GBP/NZD 

Sell Trades – USD/CHF

Signal For Monday 9th October 2017

Overall there is minor strength in the EUR, CAD and JPY

Overall there is weakness in the NZD, GBP and AUD


Buy Trades – EEUR/NZD, EUR/AUD

Sell Trades – GBP/JPY, AUD/JPY, GBP/CAD, AUD/CAD

Signal For Friday 17th March 2017

Overall there is strength in the CHF, EUR, GBP 

Overall there is weakness in the NZD, AUD, CAD, minor weakness in USD


Buy Trades – EUR/AUD, EUR/CAD, EUR/NZD. GBP/AUD, GBP/CAD, GBP/NZD, CHF/JPY

Sell Trades – AUD/CHF, CAD/CHF, USD/CHF, NZD/CHF

Signal For Thursday 16th February 2017

Overall there is strength in the NZD, AUD and EUR

Overall there is weakness in the USD, GBP, CAD and JPY 


Buy Trades – EUR/USD, EUR/CAD, AUD/USD, AUD/JPY, AUD/CAD, AUD/CHF, NZD/USD, NZD/JPY, NZD/CAD, NZD/CHF

Sell Trades – GBP/AUD, GBP/NZD, EUR/AUD, EUR/NZD

Signal For Tuesday 7th February 2017

Overall there is strength in the JPY and NZD 

Overall there is weakness in the CAD, EUR and AUD 


Buy Trades – NZD/CAD

Sell Trades – EUR/JPY, EUR/NZD, EUR/CHF, CAD/JPY, CAD/CHF, GBP/JPY, AUD/JPY, AUD/NZD, USD/JPY

Signal For Tuesday 17th January 2017

Overall there is minor strength in the GBP, JPY and USD 

Overall there is minor weakness in the CAD, EUR and CHF


Buy Trades – USD/CAD

Sell Trades – None

Signal For Monday 16th January 2017

Overall there is minor strength in the NZD 

Overall there is weakness in the GBP, EUR, USD and CHF


Buy Trades – NZD/USD, NZD/CHF

Sell Trades – None

Signal For Friday 13th January 2017

Overall there is strength in the AUD and NZD 

Overall there is weakness in the GBP


Buy Trades – EUR/GBP

Sell Trades – GBP/USD, GBP/JPY, GBP/AUD, GBP/NZD, GBP/CHF

Signal For Thursday 12th January 2017

Overall there is strength in the AUD and NZD 

Overall there is weakness in the USD, EUR, GBP, CHF, JPY and CAD



Buy Trades – AUD/USD, AUD/JPY, AUD/CAD, AUD/CHF, NZD/USD, NZD/JPY, NZD/CHF, NZD/CAD

Sell Trades – EUR/AUD, EUR/NZD, GBP/AUD, GBP/NZD 

Signal For Wednesday 11th January 2017

Overall there is strength in the AUD, JPY and GBP 
Overall there is weakness in the NZD, EUR, CHF and CAD


Buy Trades – GBP/NZD, GBP/CHF, AUD/NZD, AUD/CAD, AUD/CHF
Sell Trades – EUR/USD, EUR/JPY, EUR/AUD, CHF/JPY, NZD/USD, NZD/JPY

Gold, Yen Primed for USD Volatility around Jackson Hole

Talking Points:

- The economic docket is light until Thursday with the release of U.S. Durable Goods, but the Jackson Hole Economic Symposium, beginning on Thursday, will likely dominate the headlines as a ‘who’s who’ of Global Central Bankers gather in Wyoming to pontificate around monetary policy.

- Of recent, Fed chiefs have transmitting a hawkish read towards future policy moves, but markets don’t seem to be buying this as expectations for a hike in September remain low at ~15%, and December at 39.9%. Will Ms. Yellen prod these higher by echoing this hawkish sentiment?

- If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking for an even shorter-term indicator, check out our recently-unveiled GSI indicator.



The next couple of days could present somewhat of a lull for markets with no high-impact data to be released until Thursday; but this may not last for too long with the Jackson Hole Economic Symposium scheduled to kick-off on August 25th, with a widely-awaited speech from the Chair of the Federal Reserve, Ms. Janet Yellen, set to take place on Friday. Considerable focus will likely be steered towards whether or not Ms. Yellen signals that the Fed may be looking to hike rates at their next meeting in September, or perhaps even December. And while this wouldn’t come out of left field as we’ve heard three such instances from three different Fed members over the past week, markets are still of the belief that no rate hikes will be happening anytime soon. Odds for a hike in September are currently sitting at 15% while December is at 39.9%.

So the stage is set for heightened volatility, particularly in US Dollar markets as traders attempt to read the Fed’s intentions for near-dated meetings regarding potential rate hikes. On the charts below, we look at two of the more interesting price action setups as we approach the Jackson Hole Economic Symposium.

Gold

Gold prices have seen massive benefit this year as rate hike expectations out of the Fed have shuddered-lower. And this comes fresh on the heels of a down-trend that lasted for over four years, driven by the longer-term trend of strength in the Greenback as markets attempted to price-in the inevitable ‘tapering’ of QE and the eventual prospect of ‘normalization’ of interest rate policy. But those aims for normalization haven’t worked out too well so far: The Fed spent much of last year attempting to prepare markets for a single rate hike, and they didn’t get this launched until December. But when they posed that hike, they also accompanied the move with the expectation to hike a full four times in 2016. So this was somewhat like jumping straight in the deep-end of the pool after coyly dipping your toes in the water because it was far too cold.

Within short order of that hike, markets convulsed as the litany of risk factors prodded risk aversion around the world. Six weeks into the New Year and the Fed began to relent, beginning with Chair Yellen’s twice-annual testimony in front of Congress, and this led to another three months of Dovish Fed commentary that continued to drive rate expectations and the U.S. Dollar lower; benefitting Gold prices massively as the yellow metal rallied 26.2% so far on the year.

But this hasn’t been a linear move: In May the Federal Reserve talked up the prospect of a rate hike in June, and this drove USD Strength after three months of weakness; denting Gold prices by more than $100 throughout the month. But as has become usual, bad data for the month of May reversed these rate-hike hopes, and the U.S. Dollar moved back into its downtrend, prodding Gold prices higher.

As we approach the Jackson Hole Symposium, Gold prices are working on a symmetrical wedge formation that’s been building for the past six weeks. Should Ms. Yellen echo this hawkish sentiment that we’ve seen from William Dudley, Dennis Lockhart and Stanley Fischer, this could create USD strength, pulling Gold prices down to longer-term support levels that could be attractive for ‘bigger picture’ long stances.

The Yen

The Yen is another market that’s seen considerable volatility this year, and this one isn’t entirely at the drive of the Federal Reserve. Last year we looked at the Japanese Yen as the ‘safe haven vehicle of choice’ as pressures from China continued to build. After three-plus years of QE had been unable to turn the deflationary tides in Japan and as the BoJ bought-up an increasingly larger share of the Japanese Government Bond market, it appeared as though the bank might be running out of ammunition; at least with their current policies. This has driven USD/JPY from the ¥125.00 area last August all the way down to the critical psychological level of ¥100.00.

This is a gigantic change for Japanese exporters, and for an economy that’s already struggling with decades-worth of deflationary momentum, this could present much more than just a temporary economic issue to tackle. After Shinzo Abe’s Conservative party won a super-majority in the upper-house of Japanese parliament last month, expectations began to increase for more economic action out of Japan; with some hopes even going so far as to expect the initiation of the highly-theoretical ‘helicopter money.’ But when the Bank of Japan underwhelmed at their policy meeting later in the month, those hopes got priced-out of the market as the Yen rallied towards prior highs (lows in USD/JPY).

As we approach the Jackson Hole Economic Symposium, USD/JPY finds itself sitting right on psychological support at the ¥100-handle. This market could be especially attractive in the event of USD-weakness, as that could proffer a break of the psychological ¥100.00 level, and this could offer attractive entries for longer-term position-based setups.

But should Ms. Yellen strike the hawkish tone that her colleagues have been sharing over the past week, this could give a bounce off of this support level as traders price-in USD strength in combination with an expectation for an eventual increase in Japanese stimulus.

Daily Analysis EURUSD , GBPUSD , USDJPY and XAUUSD

EURUSD Daily Analysis

EURUSD (1.132): The price action in EURUSD yesterday closed in a fake break out from the inside bar with prices seen settling back above the inside bar’s low of 1.1284 and also filling the gap formed on Monday’s open. On the 4-hour chart, the price is seen retracing the losses, but so long as a lower high is formed, the bias remains for a test to 1.120. The Stochastics on the 4-hour chart is signaling a potential bearish divergence with a lower high as well, validating this view. Watch for a close below 1.130, which could trigger declines to 1.1240 and eventually to 1.120.

USDJPY Daily Analysis

USDJPY (100.31): Despite opening with a gap, USDJPY closed bearish yesterday with prices seen trading near the 100.00 price level. As noted yesterday, 100.50 minor resistance remains a key level that needs to be breached for USDJPY to see any upside in prices. The next main resistance level at 102.00 remains to the upside. The Stochastics on the 4-hour chart is confirming the consolidation within the falling wedge pattern, and thus any potential upside is seen only above 100.50 – 101.00 resistance level. Below 100.00, USDJPY could be seen posting fresh declines with 99.00 the next immediate level of interest.

GBPUSD Daily Analysis

GBPUSD (1.314): GBPUSD has been flat for the past three daily sessions, trading within 1.32 and 1.30 levels. However, resistance near 1.32 – 1.317 remains a strong level that needs to be cleared for any valid gains to remain in place. In the near term, GBPUSD is most likely to remain range bound with a breakout of 1.32 or 1.30 likely to keep the momentum going.

Gold Daily Analysis

XAUUSD (1337.20): Gold prices tested a new 2-week low yesterday to 1331.86 before recovering modestly. Still, the price action on the daily chart marks a bearish bias following the failure to break above 1350 – 1360 resistance zone. On the 4-hour chart, gold prices remain flat, but support is seen at 1327.50 while resistance at 1340 is likely to cap any gains to the upside. There is also a potential symmetrical triangle formed on the H4 chart, which confirms the bearish bias to 1327.50 followed by 1315.00.

Gold Prices Chop At Support, but Beware Jackson Hole

Talking Points:

-Gold Technical Strategy: Gold prices continue consolidating near-resistance; under-side of wedge being tested.
-The longer-term bullish structure of Gold is still in-tact; but as FOMC officials are talking-up higher rates, this could bring a deeper retracement before top-side plays become attractive.
-If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator.

In our last article, we looked at the wedge formation that had developed in Gold prices after the bullish advance of August stalled below the July high. And connecting that July high to the August high gave a down-ward sloping trend-line that made up the top-side of a symmetrical wedge formation that continues to hold. Given the drivers behind Gold’s price action this year, this wedge-formation near resistance made sense. Gold prices have seen considerable pops-higher on the year as FOMC rate hike expectaitons have gotten kicked further-and-further into the future. And when the Fed does get more aggressive or hawkish, as we saw in May as many members of the bank talked up the prospect of higher rates, Gold prices get hit as investors buy USD in preparation for a ‘potential’ rate hike.

And this is somewhat of the issue with long-Gold scenarios at the current juncture. The July FOMC meeting saw the bank make a hawkish-tweak to their statement, very similar to what was seen at April’s FOMC meeting. And just like we saw in April, the market’s reaction to this ‘less dovish, slightly more hawkish’ statement was one of disbelief as markets continued to expect the Federal Reserve to stay loose and passive. But in the weeks following that April meeting and throughout May, and happening again this August following the July FOMC meeting, we’ve seen follow-thru with multiple Fed members talking up the prospect of higher rates. Last week, we heard from Mr. William Dudley and Mr. Dennis Lockhart, and already this week we’ve heard similar such comments from Vice Chairman Mr. Stanley Fischer. As these comments have come-in, Gold prices have continued to test deeper support levels with a bounce off of the bottom-portion of that symmetrical wedge this morning.

Given the Jackson Hole Economic Symposium on deck for later in the week in which we’ll hear much, much more from many Central Bankers including a keynote speech from Chair Yellen herself, and there is a significant amount of opportunity for even more hawkish commentary on U.S. rate hikes. Such a scenario could bring additional strength into the U.S. Dollar and weakness to Gold prices; but longer-term this could be a beneficial occurrence.

To be sure, we’re not saying that the Fed will be raising rates in September. Rather, it looks as though the Federal Reserve wants to keep markets ‘on their toes’ by assuring that they’re ready to hike rates when the underlying data is strong enough to allow it; but this may be well into 2017 before that actually happens. Instead, we’re looking to play a ‘redux’ of the May scenario, in which a hawkish Federal Reserve drives a deeper retracement in Gold prices so that longer-term positions could be sought near ‘bigger picture’ levels of support.

On the chart below, we look at three such zones of support that could become attractive in a strong-USD type of scenario; allowing for longer-term bullish entries in Gold.