Price & Time: EUR/GBP and the Much Hyped Negative Flow

EUR/GBP nearing a low

EUR/USD fails again at Gann resistance

GOLD still unable to gain much traction on the upside

Focus Chart of the Day: EUR/GBP

The currency markets have been abuzz about an EU subsidy payment to UK farmers and its potential negative impact has weighed on EUR/GBP for the better part of a week now. The payment is reportedly worth upwards of 3 billion Euros and will price at either the ECB or London fix today. Such flow chatter is quite common in the FX markets around quarter end, but this particular one has been really hyped. The obvious expectation once this payment is out of the way is for a bounce (as traders cover) and with cross testing and holding important Gann support at .8345 this morning this is clearly a possibility. However, the real surprise move for most would be for the cross to continue to come under pressure after the payment. With an important cyclical turn window eyed around the latter part of the week a move back under .8345 would not come as a total surprise to us before a more important low is reached. Any strength over .8400 would confirm that a low is likely already in place.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

• EUR/USD probed above the 7th square root progression of the year’s low at 1.3545 on Friday, but again failed to manage a daily close above
• While over the 1st square root progression of the September high at 1.3445 our near-term trend bias will remain positive
• A close over 1.3545 is needed to reinvigorate the upside and expose upside attractions at 1.3600 and above
• The next couple of days are a clear cycle turn window in the rate
• A daily close below 1.3445 would signal that some sort of top is in place and focus lower

EUR/USD Strategy: Like the long side while over 1.3445.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3335	*1.3445	1.3500	*1.3545	1.3600

Price & Time Analysis: AUD/USD

• AUD/USD has come under stready pressure since failing two weeks ago at the 38% retracement of the year’s range in the .9515 area
• Friday’s close below the 2nd square root progression of the month-to-date high at .9330 has shifted our near-term trend bias to negative
• The 38% retracement of the August to September advance at .9270 is a clear near-term pivot with a daily close below needed to extend the decline towards key supports at .9230 and .9165
• Some minor cycle turn windows are seen tomorrow and at the end of the week
• Only a daily close over a Gann resistance cluster at .9430 would turn the technical outlook more positive

AUD/USD Strategy: Looking to sell Aussie on strength.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	0.9235	*0.9270	0.9315	0.9330	*0.9430

Price & Time Analysis: GOLD

• XAU/USD has moved only moderately higher since finding support at the 1x2 Gann angle line of the year’s closing low at at 1293 a couple of weeks ago
• The lack of upside momentum is somewhat disturbing, but while above 1293 our near-term trend bias will remain higher
• The 5th square root progression of the year’s low near 1350 is important near-term resistance with a daily close above required to confirm the start of a more important push higher
• Today is a minor cycle turn window
• A daily close below 1293 would turn us negative on the metal

XAU/USD Strategy: Like holding only a reduced long position while above 1292

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
XAU/USD	*1292	1316	1336	*1350	1377

Source: http://dld.bz/cRxqm

Forex Strategy Video: A Trading Strategy for the Majors Next Week!

 

 

• EURUSD, GBPUSD, USDJPY and AUDUSD all offer up heavy event risk and prime technical setups

• The coming week may offer the market conditions needed to generate breakouts with follow through

• A technical drive, fundamental catalyst and ability for trend are key to medium-term trades

The attractive technical setups from pairs like EURUSD, GBPUSD and AUDUSD will finally meet the market conditions necessary to generate breakouts with actual follow through. Tight congestion has weighed traders' patience but that oasis of quiet will pass with a heavy economic docket - with event risk that can stoke isolated volatility and jumpstart more meaningful trends - and a market prepared to reverse an extreme low in activity. In today's Strategy Video, we discuss the potential on EURUSD, GBPUSD, AUDUSD and USDJPY.

 

Source: http://dld.bz/cRpnM

US Dollar Rewind: Tight Range Remains Towards End of the Week!

US Dollar Index remains in a 55-point range

Carney comments send greenback lower

A look back at the past week of Forex trading using movements in the US Dollar Index:

US Dollar 4-Hour 08:00 09/20 to 08:00 09/27 EST

Looking back at the last week of movements in the US Dollar Index, the lack of volatility continues to surprise many traders in the context of escalating US related stories. Following an initial paring of most the index’s losses after the September’s no taper surprise, the greenback index entered a 55 point range over the past week. Building stories like the possible upcoming government shutdown, the question of a taper in October, and the nomination of a replacement for outgoing Fed Chief Bernanke have failed to leave the US Dollar with any definite direction.

US Dollar rallied at the end of last week, further rising on Fed’s Bullard’s comments that the Fed may taper as soon as October. However, the US Dollar erased those gains at the start of the new week, partially because of a rise in the Chinese manufacturing PMI, which sent the greenback lower against the Aussie.

On Tuesday, a disappointing German IFO Business Climate survey sent the US Dollar higher against the Euro, and the index reached closer to the range top. But, on Wednesday, those gains were erased, including a decline in the greenback against the Pound, following a better than expected UK CPI sales number.

Finally, earlier in today’s trading, BoE Governor Carney’s comments that there is no need for more QE sent the Pound higher against the US Dollar.

 

Source: http://dld.bz/cRhPm

USD Continues to Build Base- JPY to Falter on Slower Inflation.

- USDOLLAR Continues to Face Range-Bounce Prices; Fed Rhetoric in Focus

- Bullish USDJPY Setup Continues to Take Shape; Topside Targets on Tap

Index	Last	High	Low	Daily Change (%)	Daily Range (% of ATR)
DJ-FXCM Dollar Index	10570.49	10576.11	10532.92	0.30	82.18%

USDOLLAR Daily

• USDOLLAR Propped Up by Ongoing Talks of Taper
• Interim Resistance: 10,582 (23.6 expansion) to 10,589 (50.0 retracement)
• Soft Support: 10,469 (June low)
• Relative Strength Index Breakout Highlights Bullish Outlook

Release	GMT	Expected	Actual
Initial Jobless Claims (SEP 21)	12:30	325K	305K
Continuing Claims (SEP 14)	12:30	2818K	2823K
Gross Domestic Product (Annualized) (2Q T)	12:30	2.6%	2.5%
Personal Consumption (2Q T)	12:30	1.9%	1.8%
Gross Domestic Product Price Index (2Q T)	12:30	0.8%	0.6%
Core Personal Consumption Expenditure (QoQ) (2Q T)	12:30	0.8%	0.6%
Pending Home Sales (MoM) (AUG)	14:00	-1.0%	-1.6%
Pending Home Sales (YoY) (AUG)	14:00	6.3%	2.9%
Fed's Jeremy Stein Speaks on Monetary Policy	14:10
Kansas City Fed Manufacturing Activity (SEP)	15:00	8	2
Fed's Narayana Kocherlakota Speaks on U.S. Economy	16:15

It certainly seems as though market participants are still waiting on a fundamental catalyst to move as the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) preserves the range-bound price action from earlier this week, but the greenback appears to be coiling up for a move higher as it continues to build a short-term base during the final days of September.

Despite the mixed batch of data coming out of the U.S. economy, Richmond Fed President Jeffrey Lacker argued that the FOMC should taper ‘a third of the way each time’ as the committee moves away from its easing cycle, while Fed Governor Jeremy Stein warned that the central bank needs to ‘reduce uncertainty’ surrounding its exit strategy amid growing speculation of seeing the first taper at the October 29-30 meeting.

In light of the limited reaction to the slew of U.S. data prints from earlier this week, it seems as though we will need to keep a close eye on the news wire as we still have more Fed officials scheduled to speak over the remainder of the week, and the fresh batch of central bank rhetoric may have a greater impact in driving USD price action ahead of October as market participants weigh the outlook for monetary policy.

USDJPY Daily

• USDJPY Preserves Bullish Trend; Continues to Carve Higher Low
• Relative Strength Index Stuck in Consolidation Pattern; Waiting for Break
• Interim Resistance: 0.9920 (23.6 expansion) to 0.9940 (50.0 expansion)
• Interim Support: 0.9750 (38.2 retracement) to 0.9770 (38.2 expansion)

The greenback rallied across the board, led by a 0.50 percent decline in the Japanese Yen, and the bullish trend in the USDJPY should continue to take shape amid the deviation in the policy outlook.

Over the next 24-hours of trading, Japan’s Consumer Price report may also prop up the dollar-yen should the print limit the scope of seeing the Bank of Japan (BoJ) achieve its 2 percent target for inflation, and Governor Haruhiko Kuroda may come under increased pressure to implement more non-standard measures especially as the new government remains on track to raise the sales tax for the first time in fifteen years.

 

Source: http://dld.bz/cRdkZ

Stronger USD Recovery on Tap amid Upward Revision to 2Q GDP!

- U.S. 2Q GDP to Be Revised Higher from Preliminary Print

- Personal Consumption to Climb 1.9% Versus 1.8%

Trading the News: Final U.S. Gross Domestic Product

Another upward revision in the 2Q U.S. Gross Domestic Product (GDP) report may spur a more meaningful recovery in the dollar as it dampens the Fed’s scope to retain its highly accommodative policy stance.

What’s Expected:

Time of release: 09/26/2013 12:30 GMT, 8:30 EDT

Primary Pair Impact: EURUSD

Expected: 2.6%

Previous: 2.5%

Forecast: 2.5% to 2.8%

Why Is This Event Important:

Indeed, the limited reaction to the U.S. data prints from earlier this week certainly suggests market participants are waiting on a larger fundamental catalyst to move on, and a positive development may foster a bullish setup for the reserve currency amid the ongoing discussion at the Fed to taper the asset-purchase program.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (AUG)	-2.6%	1.7%
ISM Non-Manufacturing (JUL)	53.1	56.0
ISM Manufacturing (JUL)	52.0	55.4

The pickup in business outputs paired with the ongoing recovery in the housing market may prompted a bigger-than-expected rise in the growth rate, and the FOMC may be more inclined to implement its exit strategy next month should the data raise the outlook for growth.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Confidence (SEP)	79.9	79.7
Advance Retail Sales (AUG)	0.5%	0.2%
Change in Non-Farm Payrolls (AUG)	180K	169K

Nevertheless, the slowdown in private consumption along with the persistent slack in the labor market may drag on the growth rate, and a dismal print may prompt the Fed to further delay the taper in an effort to encourage a stronger recovery.

How To Trade This Event Risk(Video)

Bullish USD Trade: 2Q GDP Expands 2.6% or Greater

• Need red, five-minute candle following the release to consider a short EURUSD trade
• If the market reaction favors a bullish dollar trade, establish short EURUSD with two position
• Place stop at the near-by swing high/reasonable distance from entry with at least 1:1 risk-to-reward
• Move stop to breakeven on remaining position once initial target is reached; set reasonable limit

Bearish USD Trade: Growth Rate Misses Market Forecast

• Need green, five-minute candle following the release to look at a long EURUSD entry
• Implement same setup as the bullish USD trade, just in opposite direction

Potential Price Targets For The Release

• Marks Fifth Failed Attempt to Close Above the 1.3530-40 (61.8% Fib expansion)
• Relative Strength Index Tracking Lower Following Bearish Break
• Interim Resistance: 1.3530-40 (61.8% Fibonacci expansion)
• Interim Support: 1.3360 (38.2% Fibonacci expansion) to 1.3380 Pivot

Impact that the U.S. GDP report has had on USD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
1Q F 2013	06/26/2013 12:30 GMT	2.4%	1.8%	+7	-15

1Q F 2013 U.S. Gross Domestic Product

The final 1Q GDP print showed an unexpected downward revision in the growth rate as the economy expanding 1.8% during the first three-months of 2013, while Personal Consumption increased 2.6% versus an initial forecast of 3.4%. The dismal development dragged on the dollar, with the EURUSD rallying into the 1.3050 region, but the reaction was short-lived as the pair ended the day at 1.3010.

 

Source: http://dld.bz/cQSjG

USD Traders Eye Upward Revision to 2Q GDP- AUD Correction Over!

- USDOLLAR Retains Range-Bound Price Action Ahead of Final 2Q GDP

- Australian Dollar Continues to Underperform; Fails to Preserve Bullish Trend

Index	Last	High	Low	Daily Change (%)	Daily Range (% of ATR)
DJ-FXCM Dollar Index	10562.33	10573.08	10543.45	0.18	56.69%

USDOLLAR Daily

• USDOLLAR Propped Up by Ongoing Talks of Taper
• Interim Resistance: 10,582 (23.6 expansion) to 10,589 (50.0 retracement)
• Soft Support: 10,469 (June low)
• Relative Strength Index Breakout Highlights Bullish Outlook

Release	GMT	Expected	Actual
Durable Goods Orders (AUG)	12:30	-0.3%	0.62%
Durable Goods Orders ex Transportation (AUG)	12:30	1.1%	12.39%
Non-Defense Capital Goods Orders ex Aircrafts (AUG)	12:30	1.6%	162.49
Non-Defense Capital Goods Shipments ex Aircrafts (AUG)	12:30		1.0%
New Home Sales (AUG)	14:00	423K	0.0
New Home Sales (MoM) (AUG)	14:00	7.4%	79.7
Fed’s William Dudley Speaks on Fed History	22:00

It looks as though the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) will retain the range-bound price action ahead of the final 2Q GDP report, which is expected to show an upward revision in the growth rate to 2.6 percent from 2.5 percent, and a positive development may ultimately trigger a topside break on the greenback as it raises the Fed’s scope to taper its asset-purchase program at the October 29-30 meeting.

Indeed, the limited market reaction to the slew of U.S. data from earlier this week suggests FX traders are waiting to move on a larger fundamental catalyst, and we will also need to keep a close eye on the news wires as we still have a group of Fed officials scheduled to speak in the coming days.

The fresh batch of central bank rhetoric may also prop up the reserve currency amid the ongoing discussion at the Federal Reserve to implement the exit strategy later this year, and the dollar may continue to coil up for a move higher as the central bank remains largely on track to move away from its easing cycle.

AUDUSD Daily

• AUDUSD Breaks Out of Bullish Trend; Lower High in Place
• Bearish RSI Momentum Taking Shape; Foreshadows Further Weakness
• Interim Resistance: 0.9500 (38.2 retracement) to 0.9510 (1.618 expansion)
• Interim Support: 0.9270 (100.0 expansion) to 0.9290 Pivot

Three of the four components advanced against the greenback, led by a 0.39 percent rally in the British Pound, while the Australian dollar continued to underperform against its major counterparts, with the AUDUSD breaking out of the bullish trend carried over from the previous month.

The downside break in the Relative Strength Index reinforced our bearish outlook for the higher-yielding currency, and it looks as though the near-term correction in the AUDUSD has come to an end as a new downward trend appears to be taking shape. In turn, we will look for opportunities to ‘sell rallies’ in the AUDUSD, with our initial target coming in around the 0.9290 pivot.

 

Source: http://dld.bz/cQH65