Forex News Analysis by LiteForex

GBP/USD: the pound stopped strengthening

Current trend

Last week the pair continued to grow and today reached the level of 1.3548 (Murrey [6/8]). By now it has been corrected to the level of 1.3488 (Murrey [5/8]) but may resume growth as the general background is negative for USD. Investors were disappointed that the Senate stopped the discussion of the tax reform and moved the vote from Thursday to Friday. The market is also unstable due to the news about possible dismissal of the US Secretary of State Rex Tillerson due to his recent conflict with President Trump.
On the other hand, the pound is supported by strong data on the UK industrial PMI. In November the indicator grew from 56.6 to 58.2 points which is the best value since 2013. Correction may continue if strong data on ISM industrial PMI are released from the USA. However, the indicator is expected to fall (from 58.7 to 58.4 points).

Support and resistance

Right now the pair is trading around 1.3488 (Murrey [5/8]) and is trying to move upwards. The key level for the “bulls” seems to be 1.3549 (Murrey [6/8]). Breaking through it will open the way for further growth of the pair to 1.3610 (Murrey [7/8]) and 1.3670 (Murrey [8/8]). The consolidation of the price below 1.3488 will lead to further reduction to 1.3427 (Murrey [4/8], middle line of Bollinger Bands) and 1.3366 (Murrey [3/8]). Technical indicators provide for correction. Stochastic is directed downwards, and MACD histogram started to fall in the positive zone and broke down the signal line.

Support levels: 1.3488, 1.3427, 1.3366.
Resistance levels: 1.3550, 1.3610, 1.3671.

Trading tips

In the current situation buy positions may be opened above the level of 1.3550 with targets at 1.3610, 1.3671 and stop-loss at 1.3510.
Sell positions should be opened below the level of 1.43888 with targets at 1.3427, 1.3367 and stop-loss at 1.3520.

FTSE: technical analysis

FTSE, D1

On the daily chart, the instrument is trading in the lower Bollinger band. The price remains just below its moving averages that start turning down. The RSI is growing, having failed its strong support just above the border of the oversold zone. The Composite is testing from below its longer MA.

FTSE, H4

On the 4-hour chart, the instrument is growing to the upper line of the Bollinger Bands. The price remains below the EMA65, EMA130 and SMA200 that are directed down. The RSI is growing, having broken out its longer MA. The Composite turned up as well, having failed its longer MA.

Key levels

Support levels: 7285.0 (August lows), 7200.0 (September lows), 7130.0 (October 2016 highs).
Resistance levels: 7450.0 (March highs), 7516.0 (July highs), 7545.0 (August highs).

Trading tips

The price keeps trading in a long-term sideways channel remaining near the middle of it.
Short positions can be opened from the level of 7285.0 with targets at 7200.0, 7130.0 and stop-loss at 7345.0. Validity – 3-5 days.
Long positions can be opened from the level of 7450.0 with targets at 7516.0, 7545.0 and stop-loss at 7410.0. Validity – 3-5 days.



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EUR/USD: the pair is waiting

Current trend

During the current week the pair is trading near the level of 1.1840 (Murrey [1/8]) but is unable to move below it because it is supported by the middle line of Bollinger Bands. In the near future the price may remain within the range of 1.1800-1.1850 although potential of reduction to 1.1718 (Murrey [0/8]) remains. Still, investors are unlikely to take risks before Friday releases from the US labor market (the indicator is about to reduce from 260K to 200K).

Moreover, market is unstable due to the uncertain situation with the US state debt limit. The Congress has to agree on its increase before Friday, otherwise the financing of governmental structures will be reduced, and some of them may stop working.
Today attention should be paid to November employment data by ADP that are considered an early indicator for federal statistics. The indicator is expected to drop from 235K to 185K causing the growth of the price and the weakening of the US currency.

Support and resistance

Technical indicators show possible continuation of the fall. Stochastic is directed downwards, and MACD histogram has crossed the signal line from above. Still, one may speak about the opening of short positions only after the price consolidates below the middle line of Bollinger Bands. In this case it may go down to 1.1718 (Murrey [0/8]) and 1.1657 (Murrey [-2/8] for H4). In case the price consolidates above 1.1840, growth may continue to 1.1962 (Murrey [2/8]).

Support levels: 1.1800, 1.1718, 1.1657.
Resistance levels: 1.1840, 1.1900, 1.1930, 1.1962.

Trading tips

Sell positions may be opened from the level of 1.1800 with targets at 1.1718, 1.1657 and stop-loss at 1.1850. Buy positions should be opened from 1.1870 with target at 1.1962 and stop-loss at 1.1840.

XAU/USD: Fibonacci analysis

Current trend

In the H4 chart the price has been showing a downward trend for the second week in a row. By now it has tested the level of 1255.70 and, according to MACD histogram that is increasing in the negative zone and Bollinger Bands directed downwards, it ready to continue reduction. In case of reversal the price may be corrected to the middle line of Bollinger Bands at 1266.00 (correction by 23.6%).

D1 chart is more interesting. The price has broken out the lower border of the horizontal channel (around 1265.00) within which it has been trading since September. By now the quotes have potential for further reduction to the gathering of corrections at 1242.00 (50,0% for W1, 76,4% for D1). However, to do so they would have to break through the upward fan. The key area for the “bulls” is 1265.00 (gathering of 38.2% correction for W1 and 61.8% for D1). In case the price returns to the side channel, growth may continue to 1279.50 (correction 50.0% for D1, middle line of Bollinger Bands) and 1297.00 (gathering of corrections 23.6% for W1 and 38.2% for D1). Indicators show mixed signals. MACD histogram is growing in the negative zone. Bollinger Bands start to diverge confirming the formation of the downward trend. However, Stochastic has entered the oversold area which may cause the formation of a buy signal.

Trading tips

Sell positions should be opened below the level of 1255.00 with target at 1242.00 and stop-loss at 1262.00.

Alternative scenario

Buy positions may be opened if the price consolidates above the level of 1265.00 with targets at 1279.50, 1297.00. Stop-loss should be placed around 1257.00

GBP/USD: general review

Current trend

Today the pair rose to the level of 1.3515 after the UK and the EU entered into intermediary agreements. According to them, the UK has to grant special rights to 4 mln EU citizens living in its territory, pay 40 to 60 mln euro for withdrawal, and eliminate excessive control at the border of North Ireland. Now the parties may start discussing the trading agreement, but it promises to be even more complicated. Before that Theresa May pointed out that she would try to enter into a free trade contract with the EU under privileged conditions, but it is still unclear what the UK government is ready to trade for it. The absence of clearance may put pressure on the UK businesses and therefore the pound. During the day GBP was also supported by positive statistics: the volume of industrial output in October grew by 3.5%, and the volume of processing industry – by 3.9%.

Right now the pair is being corrected, but the price may reverse if the data from the US labor market released today is weak. The number of workplaces is expected to drop from 261K to 200K. Similar data by ADP released earlier confirmed the negative trend (the indicator reduced from 235K to 190K).

Support and resistance

Right now the price is testing the level of 1.3427 (Murrey [4/8], middle line of Bollinger Bands), and in case it is broken down, may continue to decrease to 1.3366 (Murrey [3/8]) and 1.3305 (Murrey [2/8]). In case the level of 1.3488 (Murrey [5/8]) is broken out, the price may continue to grow to 1.3550 (Murrey [6/8]) and 1.3610 (Murrey [7/8]). Technical indicators show the continuation of the fall. Stochastic is leaving the overbought ares, and MACD histogram is reducing in the positive zone.

Support levels: 1.3427, 1.3366, 1.3305.
Resistance levels: 1.3488, 1.3550, 1.3610.

Trading tips

In the current situation sell positions may be opened below 1.3427 and the middle line of Bollinger Bands with targets at 1.3366, 1.3305 and stop-loss at 1.3465.
Buy positions may be opened above 1.3488 with targets at 1.3550, 1.3610 and stop-loss at 1.3455.

EUR/USD: general review

Current trend

The pair opened the week with upward correction continuing to act on the mixed November data from the US labor market. The number of nonfarm payrolls was above expectations (228K) but still reduced compared to the previous value (244K). Moreover, hourly growth of salary failed to reach the forecast levels and made up 0.2%. Generally, these data should not have an impact on the decision of the Fed’s members to increase the interest rate again during its December meeting, but it may be of importance in the long run.
The last Fed’s meeting this year is scheduled for this week and will be interesting for the investors not only because of the long-awaited decision on the interest rate but also due to follow-up statements, a press conference, and inflation and economic growth outlooks. In November the market received a number of negative signals indicating possible slowdown in the tightening of the monetary policy due to insufficient inflation growth in the country. At first it was pointed out by Janet Yellen, and then after the release of the recent Fed’s minutes it turned out that the chairwoman was supported by a number of members as well. If Yellen confirms her negative view of the situation, USD may get considerably cheaper.

Support and resistance

Right now the price is moving to the middle line of Bollinger Bands. If it consolidates above it and the level of 1.1840 (Murrey [6/8]) growth may continue to 1.1900 (Murrey [7/8]) and 1.1962 (Murrey [8/8]). Otherwise the fall will resume to 1.1718 (Murrey [4/8]) and 1.1657 (Murrey [3/8]). Technical indicators don’t give a clear signal. Stochastic has reversed upwards, Bollinger Bands are narrowing before considerable movement, and MACD is reducing in the positive zone.

Support levels: 1.1780, 1.1718, 1.1657.
Resistance levels: 1.1840, 1.1900, 1.1962.

Trading tips

In the current situation sell positions may be opened below the level of 1.1780 with targets at 1.1718, 1.1657 and stop-loss at 1.1810.
Buy positions may be opened above the level of 1.1840 with targets at 1.1900, 1.1962 and stop-loss at 1.1810.

USD/CAD: Murray analysis

Current trend

Since October on the daily chart the pair is trading above the Ultimate Resistance of Murray ([8/8]) around 1.2695, but cannot break the level of 1.2940 (Murray [+2/8]) and is trading within the horizontal channel. Now the price is trying to reverse into fall to the lover border of the range 1.2695. However, it needs to consolidate below the level of 1.2817 (Murray [+1/8]), as the price is set near it. Stochastic confirms the possibility of the decrease, entering the overbought zone, which reflects the perspective of a reversal. In addition, the price is near the temporal border, where the direction of the movement usually changes. If the price cannot break the level of 1.2817, it can grow to the levels of 1.2940 and 1.3000 (Murray [5/8] for H4).

Support and resistance

Resistance levels: 1.2940 ([+2/8]), 1.3000 ([5/8] for H4).
Support levels: 1.2817 ([+1/8]), 1.2695 ([8/8]), 1.2573 ([7/8]).

Trading tips

Short positions can be opened at the level 1.2817 with the target at 1.2695 and stop loss at around 1.2860.
Long positions can be opened at the level of 1.2880 with the targets at 1.2940 and 1.3000 and stop loss at 1.2840.

Brent Crude Oil: oil tries to reclaim positions

Current trend

On Tuesday, the Brent price underwent significant fluctuations. First, it reached two-year highs, outpacing the mark of $65.00 per barrel, but then adjusted to the area of 62.60. The growth of quotes was caused by reports on the suspension of the operation of the largest North Sea pipeline, Forties Pipeline System, which transported 40% of region’s oil from 85 fields. However, the enthusiasm of investors quickly dried up, giving way to fears that the physical restriction of the supply of the North Sea blend could lead to its ousting from the Asian markets by other types of oil from the Middle East.
At the moment oil prices are making a new attempt at growth, taking advantage of a significant reduction in commercial oil reserves in the United States. According to the API, it amounted to 7.382 million barrels. In addition, prices were supported by OPEC chairman Mohamed Barkindo, who said that the surplus of world oil reserves fell to 130 million barrels, while last month it was 154 million barrels. This fact indicates the gradual return of the oil market to stability. Probably, these data will be reflected in OPEC's monthly report on the oil market that is coming out today. Also we should note the evening release of data on oil reserves in the US from the EIA, which are also expected to show reduction (by 3.78 million barrels). Finally, one can not discount the factor of the Fed meeting.

Support and resistance

Technically, the price is in the region of the upper boundary of the Murrey channel ([5/8]) at 63.28, further price growth is hampered by the middle Bollinger Bands’ line. The potential for further recovery of quotes to the levels of 64.05 (Murrey [6/8]) and 65.84 (Murrey [7/8]) is available, as turned up Stochastic shows. However, fixing the price below the 63.28 mark will give the prospect of resuming the decline to 62.50 (Murrey [4/8]), 61.72 (Murrey [3/8]), and 60.93 (Murrey [2/8]).

Support levels: 63.28, 62.50, 61.72, 60.93.
Resistance levels: 64.05, 64.84, 65.62.

Trading tips

In the current situation, short positions may be opened below the level of 63.28 with targets at 62.50, 61.72 and stop-loss at 63.60. Long positions should be opened from the level of 63.70, with targets at 64.00, 64.84 and stop-loss at 63.30.

LiteForex: XAU/USD: Fibonacci analysis

Current trend

On the 4-hour chart the price is growing after the reversal around 1240.00. Now the “bullish” targets are the level of 1260.05 (correction 38.2%) and 1267.50 (correction 50.0%), approximately coinciding with the lower border of the sideways channel for D1 chart and being a key level for the further growth. If the price is set below the level of 1250.90 (correction 23.6%, the price can return to 6 months lows at the area of 1240.00.

On the daily chart the price оrebounded from the correction cluster 1242.00 (50.0% for W1, 76.4% for D1) and is now trying to grow through the upward upcoming fan. Key “bullish” level is the correction cluster around 1265.00 (38.2% for W1 and 61.8% for D1) and the middle line of Bollinger Bands behind it. After the breakout of the levels the price can return to the long term horizontal channel and can grow to the levels of 1279.50 (correction 50.0%) and 1297.00 (correction cluster 23.6% for W1 and 38.2% for D1). However, the possibility of the reversal of the price 1265.00, which is the strong “mirror” resistance and return of the price to the area of 1242.00 is high.

Main scenario

Short positions can be opened below the level of 1250.00 or after the rebound at the level of 1265.00 with the target at 1242.00 and stop loss 1256.00 and 1268.00.

Alternative scenario

Long positions can be opened above the level of 1267.50 with the targets at 1279.50, 1297.00 and stop loss around 1264.00.

LiteForex: EUR/USD: the pair remains in the downward channel

Current trend

The European currency against USD dollar remains in the side consolidation stage in the long term despite its wide channel. Euro had been consolidating against USD until the end of November due to the fall of demand for the US currency. However, dollar was strengthened by positive data on the main sectors of the US economy, namely strong December releases on the labor market, inflation, key indexes, and industrial output.

Right now the pair is trading in the wide downward channel. Today it received support from positive data on key Eurozone indexes. The upward impulse is likely to remain today due to the absence of key released from the USA. A set of data is expected from Germany on Tuesday and Wednesday and may give the pair dynamics. The main macroeconomic releases for the USA (final GDP and labor market data) are due at the end of the week.

Support and resistance

The downward trend is likely to remain until the end of the year in view of growing demand for USD after the Fed’s decision to increase the interest rate and in view of positive fundamental background. The pair may gradually go down to 1.1600, but before that it should break through the strong support level of 1.1690.
Technically, the pair remain in the medium term downward channel increasing pressure on the European currency. Indicators fail to show direction: MACD in the D1 chart is near the zero mark, and Bollinger Bands have reversed horizontally. Therefore, an alternative scenario will be the consolidation of the pair within the wide side channel.

Support levels:*1.1730, 1.1715, 1.1690, 1.1665, 1.1600, 1.1575, 1.1530, 1.1500, 1.1470.
Resistance levels:*1.1785, 1.1800, 1.1830, 1.1860, 1.1900, 1.1925, 1.1980, 1.2030.

Trading tips

Short positions may be opened from the current level with target at 1.1600 and stop-loss at 1.1870.