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20/05/2014: Weekly Trading Notes


KEY DRIVERS

  • Equity markets failed at the key breakouts and are now under corrective pressure
  • Safe haven bonds (Treasurys and Bunds) continue to be bought by investors suggesting concern over equities
  • Dollar Index is showing signs of pushing higher again; ECB is apparently preparing a package of easing measures

 

EUR/USD

  • Euro remains under pressure around $1.3700
  • Key support at $1.3647
  • 144 day moving average is the basis of support c. $1.3700.
  • This is a key moment for the Euro – if it breaks decisively under the 144 day ma this would signal a medium/longer term shift towards bearish.
  • A two day close below $1.3670 confirms a large top pattern (which would imply $1.3375)
  • Watch for the flash Eurozone PMIs on Thursday!

GBP/USD

  • Stronger UK inflation should have pulled Cable significantly higher but has not really done so.
  • A 2 week top pattern continues to imply $1.6660 which coincides with the 89 day moving average on the daily chart which has supported the big corrections in recent months.
  • Neckline resistance at $1.6840 with $1.6774 and $1.6903 also key highs.
  • Watch for BoE and FOMC meeting minutes tomorrow!

USD/JPY

  • Flight into safe havens is pulling the rate lower.
  • Consistent pressure on 101.30  has broken and 100.74 the key February low is now open
  • 102 being a pivot level remains a resistance and selling into rallies is the way to play.
  • Watch for BoJ overnight!

Indices

  • Looking corrective now, but Wall Street still seems to be stronger than Europe
  • S&P 500 has broadly traded sideways in past month – small cap stocks are still badly underperforming.
  • FTSE 100 brief 14 year high at  6895 but now the correction is gathering pace – next support 6767
  • DAX has been better supported than FTSE in recent days – needs to hold support around 9367

Gold

  • Incredibly uncertain, converging trend lines.
  • Support band $1275/$1280.
  • Resistance band $1300/$1305.
  • Very slight bearish bias on technical indicators but nothing major.
  • Still susceptible to Ukraine news.

 

Watch out for:

Wednesday 21st May

  • Japan – Monetary policy & press conference
  • UK – BoE meeting minutes
  • UK – Retail Sales
  • US – FOMC meeting minutes

Thursday 22nd May

  • China – Flash manufacturing PMI
  • Eurozone – Flash manufacturing PMIs
  • European Parliamentary Elections (Thursday and Friday)
  • UK – GDP 2nd reading
  • US – Existing Home Sales

Friday 23rd May

  • Eurozone – German Ifo
  • Canada – CPI
  • US – New Home Sales

 

Next week

Monday 26th May

  • Bank Holidays – US, UK

Tuesday 27th May

  • US – Durable Goods Orders
  • US – Consumer Confidence

Thursday 29th May

  • Bank Holiday – Germany, France, Switzerland
  • US – Gross Domestic Product (Preliminary/2nd reading)
  • US – Pending Home Sales

Friday 30th May

  • Canada – GDP
  • US – University of Michigan Sentiment (revision)

 


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