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27/08/2014: Trading outlook ahead of the US session

Since the early moves were made in the forex markets this morning, the European session has been devoid of any real movement of note. The temptation on days such as today would be to shut up shop and come back tomorrow, but we must hope that the US session may provide us with some more direction this afternoon.

There is almost no economic data of any note (aside from the usual Wednesday announcement of US oil inventories) so in the absence of any geopolitical shocks, this could be one of the most uneventful trading days of the last few weeks. Volumes remain subdued and traders looking for volatility are likely to be struggling today. Perhaps the market is taking a pause for breath in front of a day packed with potential headlines tomorrow, but in the meantime it is fairly quiet with S&P 500 index futures calling for a 1 point gain at the open.

However, the recent dollar strength has seen a slight retracement today, and some of the moves on the forex pairs from this morning could easily represent a chance to trade. EUR/USD has jumped into the initial resistance band $1.3180/$1.3215 and in the context of rallies over recent weeks, this band should be the limit before the sellers return. I am still expecting the euro to at least hit the $1.3100 support of the September 2013 low. This would also be in keeping with the Dollar Index hitting its September high at 82.6 yesterday.

DXY   27082014

Cable is another dollar pair that looks to be moving into an area ready to sell again. The resistance at $1.6600 has held back attempted rallies in recent days and again this should prove to be the limit. I have been looking for a rally to sell into and this could be the one. I am still expecting a retest of the March low at $1.6460.

Also I mentioned the Dollar/Swiss this morning and the slight dip is looking to form support above the old breakout support at 0.9140. Intraday momentum indicators have unwound and the hourly chart looks ready to build support again. I am looking for an initial upside target of 0.9200 but then on towards the key November high at 0.9250.

Much beyond that, it is as you were for European equities and gold. I have spoken previously about the pivot resistance at 9600 on the DAX and this seems to be acting as a barrier today. Furthermore the FTSE 100 is also struggling today at the resistance of 6834. Both of these are key levels that nee to be breached for the bulls to consider themselves as gaining the upper hand once again. The gold price is just looking to consolidate above $1280, but is still stuck under the overhead resistance that comes in around $1290. I see that in the absence of any further geopolitical shocks, the gold price is in a downward drift for now.

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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.