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15/04/2014: Trading outlook ahead of the US session


It has been a fairly quiet morning for traders. The ongoing tensions in the Ukraine have just trained some of the positive sentiment from yesterday. Initial dollar strength was then retraced and in the past hour or so has returned again. This is a similar story to the equity markets which drifted lower through the morning to subsequently recover the losses. The big mover of the day has been gold which has sharply weakened throughout the morning.

UK CPI inflation was in line with expectations at 1.6% on the year, while the German ZEW Economic Sentiment missed expectations at 43.2 (46.3 expected). Traders will now be looking towards the US CPI inflation data at 13:30BST, with an expectation of a 1.4% for the year.

EUR/USD is still with the legacy of this intraday head and shoulders top pattern which completed below $1.3830 and implies $1.3765. I would still look at rallies as a chance to sell.

GBP/USD jumped with the announcement of in-line UK inflation of 1.6%. However I believe this is a chance to sell and I have subsequently gone short. The falling 55 hour moving average remains the basis of resistance at $1.6727. Momentum indicators have unwound and with the head and shoulders top neckline around $1.6716 this still looks to be a chance to sell.

USD/JPY had an early dip as the dollar strength was pared, but the support of the rising 55 hour moving average (currently 101.68) once more held the correction at 101.66. The potential for further recovery is on with hourly momentum indicators in more positive configuration now. The risk is a weak print on the US CPI.

Gold has sharply broken the uptrend channel, but there is support around $1300 and an intraday low has just been left at $1302.14. I would stand aside to see how strong the support is around these levels as the near term momentum is quite poor currently and there could be further downside pressure in due course.

Indices are recovering once more. The FTSE 100 having dipped close the the 6549 support which would have broken the intraday base pattern, has formed a low at 6553 and is now pushing higher once more. A move back above 6594 would now be considered another bullish upside break, but in a choppy session this move would need to improve conviction of backing the move. The DAX has yet to complete any base pattern and as yet is merely in a consolidation band 9214/9313. Momentum is improving but much needs to be done to improve the outlook near term.


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