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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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Research Risk Warning

At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.