Brokers Minutes

The Japanese yen quietly crept up to be the strongest performer this week. The Bank of Japan maintained its current stimulus measures. However, this did not hurt the Japanese yen, which could be boosted by safe-haven flows amid high global geopolitical tension. Let’s take a look at the USD/JPY, EUR/JPY, and GBP/JPY pairs.

The USD/JPY failed to hold above 102, and fell below a rising trendline support from mid-July. Price action this week refocuses the pair toward the 101-101.10 July lows and the 100.75 lows on the year. The EUR/JPY continues to fall and is making fresh lows on the year. GBP/JPY looks like it is shifting from a bullish continuation mode in June-July back into consolidation.


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We ended a week of central bank announcements (BoE, ECB, RBA, BoJ) with heightened geopolitical tension, which propped up the USD, and even more so, the JPY. *What will be the key fundamental factors this week? Key releases will start after a light Monday.

Tuesday:

Eurozone ZEW Economic Sentiment (Aug.). Forecast: 41.3, Previous 48.1
German ZEW Economic Sentiment (Aug.). Forecast: 18.2, Previous: 27.1




From the Eurozone and Germany specifically, we are expected to see the most recent gauge of economic sentiment deteriorate. Even though both readings are still expected to be positive, it seems like sentiment has peaked in January and has been receding since then.

US JOLTS Job Openings (July). Forecast: 4.74M, Previous: 4.64M



Labor market conditions in the US continues to improve. According to the Bureau of Labor Statistics, recent readings of job openings have surged to highs above the pre-financial-crisis period. July’s print is expected to continue improving, and might continue to keep the USD elevated.

Wednesday:
UK Claimant Count Change (July). Forecast: -29.7K, Previous -36.3K
Unemployment Rate (June). Forecast: 6.4%, Previous: 6.5%

Average Earnings Index 3m/y (June). Forecast: -0.1%, Previous 0.3%



UK jobs data will be key. The claimant count change is expected to decline as a slower rate, but this should not be so alarming. The unemployment rate is expected to edge lower, but that is not much to write home about. However, the earnings index, seen to have shrank in the 3 months to June compared to the same period in 2013, could reaffirm the BoE’s concern of the lack of wage growth. The lack of wage growth is something that will likely keep the rate hike from happening in 2014. Note in the historic chart above, that the previous 3 readings have missed forecast (the orange marks).

BoE’s quarterly Inflation Report will have even more significant implication to monetary policy. The bank president, Mark Carney will hold a press conference. *Make sure to watch it or at least watch the markets reaction to this presser. Again, it will be interesting to see where the BoE sees inflation, especially wage inflation, and how this effects its interest-rate-hike time-line.

US Retail Sales m/m (July). Forecast: 0.2%, Previous 0.2%
US Core Retail Sales. Forecast: 0.4%, Previous: 0.4%
Not much is expected to change for July’s retail sales numbers. This reading has been less than impressive lately, so an above-expectation print can boost the USD at least in the short-term. If retail sales numbers miss forecast, we should limit the bearish expectation because the prevailing trend is strong for the USD in the recent weeks.

NZ Retail Sales q/q (June). Forecast: 1.0%, Previous 0.7%
NZ Core Retail Sales q/q (June). forecast 1.1%, Previous 0.8%

Thursday:

German Prelim GDP q/q (Q2). Forecast: -0.1%, Previous: 0.8%



Eurozone Final CPI y/y (July). Forecast: 0.4%, Previous: 0.4%

The preliminary estimate of German’s GDP growth in the second quarter is expected to be around -0.1%, after a 0.8% print for Q1. A reading below 0 would be in-line with recent soft data, credit crunch issues, and geopolitical tensions that have plagued the Eurozone. It would add to the theory that the ECB should implement more stimulus measures soon.

We saw the preliminary inflation estimate at an annual rate of 0.4% a couple of weeks ago. The final version is expected to be the same. Downward revision can have very negative effect on the already ailing EUR.

US Jobless Claims. Forecast: 307K, Previous 289K

Jobs data continue to impress, and we have recently gotten a couple of below-300 reading in the jobless claims print since July. A run of readings below 300K can make the case for an earlier Fed rate hike than in mid-2014.

Friday:

UK GDP q/q (Q2), second estimate. Forecast 0.8%, 1st Estimate: 0.8%.

UK GDP data should confirm growth of 0.8% in the second quarter. This would be the strongest quarter to quarter growth rate since Q3 of 2012, and reflects a recovery on track in 2014. However, we know this already, and the BoE is looking for growth to translate to an increase in wages, which then can in turn provide the domestic demand that cna help sustain the recovery track.

CAN Manufacturing Sales m/m (June). Forecast: 0.5%, Previous: 1.6%
The Canadian economy has been leveling off somewhat, and a reduced growth in manufacturing sales in June would confirm the recent “flatness” in the Canadian economy.

US PPI m/m (July). Forecast: 0.1%, Previous. 0.4%

US Empire State Manufacturing Index (August): Forecast: 20.3, Previous: 25.6
Industrial Production m/m (July). Forecast: 0.3%, Previous 0.2%

Prelim UM Consumer Sentiment (Aug). Forecast: 82.7, Previous: 81.3



We will wrap up the week with a slew of US economic data. Collectively Friday’s data is expected to show that*the consistent economic recovery shown in Q2 can carry over into Q3. If the UM Consumer Sentiment reading is going to match forecast around 82.7, it will be the highest reading in a year, since July 2013

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The USD/CHF rallied from July’s low of 0.8898 to a high of about 0.9115 in August.
This rally is coincident with the decline in EUR/USD as*the EUR and CHF are positively correlated – a product*of the Swiss National Bank’s intervention policy to keep CHF from skyrocketing, and to peg it to the EUR if the CHF does rally too sharply.

The 4H chart shows a double top forming last week, albeit the second top being slightly higher. The*week ended with the pair falling below 0.9040 briefly, which essentially completed the double top. The moving averages in the 4H chart are still in bullish alignment, and price is now testing the 100-period SMA in this time-frame. The RSI has dipped below 40 which shows loss of bullish momentum. It has not tagged 30, so we don’t see any bearish momentum enter the picture yet.

USD/CHF 4H Chart 8/11



Assessing the Double Top:

The 4H chart above shows the double top completion. Now if price pulls back we will have a chance to test the double top.

Bearish Correction: If a price top has indeed been established, price should hold below 0.9080, which seems like a central and support/resistance pivot within the double top pattern. In that scenario, we might anticipate a bearish correction toward the 0.90 pivot, the 200-period SMA, or a rising trendline seen in the daily chart. All these factors are between 0.8950 and 0.90. Since there is a prevailing uptrend since May, in the medium-term, we should limit our bearish outlook to the short-term and within the context of this bullish trend.

Bullish Continuation: If price pushes above 0.9080, it is likely to have completed an expanded consolidation instead of a double top. Note that this would bring price above the 50-period SMA as well, and provide a bullish technical picture in the 4H chart, especially if the RSI also climbs back above 60 to tag 70. In this scenario, the next resistance will be the 2014-highs in the 0.9130-0.9155 area. Above that the Nov. 2013 high has resistance at 0.9250.

USD/CHF Daily Chart 8/11





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Double Bottom:
The EUR/USD is essentially trying to consolidate after a bearish trend that has brought the pair from the high on the year at 1,3993 to a fresh low on the year last week at 1.3333. After that fresh low on the year, the EUR/USD formed a double bottom.

Flag Pattern:
The EUR/USD is starting this week by retreating within a flag pattern. A flag pattern can be often spotted in the middle of trends, so a break above this flat pattern would suggest another bullish correction attempt like the one we got at the end of the week.

EUR/USD 1H chart


Technical Conditions:
As we start this week, here are some additional observations in the 1H chart (near-term).
1) Price has broke above the 200-, 100-, and 50-hour simple moving averages and is testing them now collectively as support. The ability of the SMAs to act as support and hold price above 1.3390 would be a sign of further bullish outlook in the near-term.
2) The RSI has almost tagged 70 and is now back to 40. Its not the strongest indication of bullish momentum, but if the 1H RSI pops back above 60, we are likely seeing some bullish momentum in the near-term.

Support:
The 1.3378-1.3390 area is a support zone based on the cluster of moving averages, but a break below this does not necessarily revive the bearish trend. There is some elbow space for the bullish correctiomn scenario to develop.
You can see a rising trendline from last week’s price lows. Around 1.3365, we also see a support/resistance pivot. At this point, a break below 1.3365 would violate the double bottom by breaking the rising trendline, and the key central pivot see in the 1H chart. This breakdown would suggest a continuation of the prevailing downtrend, which has the 1.3295-1.33 lows from Nov. 2013 in sight.

EUR/USD Daily Chart 8/11


Bullish correction vs. Resistance:
When you look at the daily chart, you can see that the bearish trend since 1.3993 is strong and intact. However we do *have 2 clues that there could be some short-term consolidation/bullish correction:
1) There is a bullish divergence with the RSI. Last time this happened in June, EUR/USD consolidated for a month.
2) Last Friday’s bullish candle was a strongest one since June.
If we do have this short-term bullish outlook, let’s first limit the next bullish swing to the falling trendline seen in the daily chart. There should also be sellers in the 1.3475-1.35 area.


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EUR/USD is trading at the crossroads ahead of a couple of ZEW Economic Sentiment data, most important of which for Germany and the Eurozone as a whole. Let’s take a look at the fundamental factors first.

German ZEW Economic Sentiment – Forecast: 18.2, Previous 27.1



Eurozone ZEW Economic Sentiment – Forecast: 41.3, Previous 48.1



The readings since 2010 for both of these data points show that sentiment has been positive since 2013, but looks to have made a downturn early this year. Readings have missed forecasts and have been trending down. This reflects the credit issues lingering in the Eurozone, slower growth seen in Q2, and the geopolitical tensions escalating in*Q3.
The EUR/USD has been falling since the 1.3993 high made in May, which is also the current high on the year. As we began this week, EUR/USD still looks pressured in the 1H chart.

EUR/USD 1H Chart 8/12


Here are some observations:
1) Price structure of the Monday (8/11) session has been corrective. It looks like a flag pattern.
2) The bullish momentum from Friday’s push looks lost as the 1H RSI dips below 40 at the start of*the 8/12 Asian session.
3) Failure of price to push and stay above the 200-, 100-, and 50- simple moving averages (SMAs) is a sign that bulls are losing control.
4) However, the rising trendline from last week is still intact.
5) There is also a key support/resistance pivot at 1.3365.

Scenarios Around the ZEW Economic Sentiment data:
1) Now, a break below 1.3365 could be a bearish continuation signal. IF the ZEW comes in worse than expected, AND price indeed falls below 1.3365, we should look for a bearish outlook toward the 1.3340 area, then the 1.3295-1.33 lows from Nov. 2013. If there is a pullback after the break below 1.3365,*there should be sellers in the 1.3390-1.34 area if this bearish scenario were to materialize.
2) Now, if the data is soft, and price dips below 1.3365, but you get a sharp rejection and price climbs quickly back up above 1.34, we are likely in a bullish correction scenario for the short-term, with upside toward the 1.3444 August high, and a key resistance.
3) If data is better than expected and you see an initial reaction push towards 1.3390-1.34 area but settle and fail to break by day’s close, we are likely to see further weakness toward the 1.3340 area.
4) If good data can push EUR/USD back above 1.34, there is a chance that EUR/USD has legs this week for a bullish correction toward the 1.3444 area. However, because this is consolidation mode, it might be prudent to wait for price to break above 1.34, then wait for a pullback to the 1.3390-1.34 area before confirming the bullish attempt.

Final word: We know EUR/USD has been bearish, but it looks due for a consolidation, or a short-term bullish correction. If ZEW economic data is soft, look for price to remain neutral-bearish. Strong data might pave the way for a more bullish consolidation with upside limited to 1.3444 for now. Basically, going with the prevailing bearish trend, we should have a more bearish bias, unless price is able to stay north of 1.34.


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This is by far the most depressing day in the cryptocurrency markets as every top coin, including the likes of Bitcoin, Litecoin, Darkcoin, Dogecoin, etc. have fallen massively in the last 24 hours. The series of falls are supposedly surfaced due to a huge stack of Bitcoin (almost 1,000 units) that have been sold by Ethereum lately.

The huge drop in Bitcoin prices have thus created a ripple effect. The major one to have influenced by it is Litecoin, followed by NXT, Dogecoin and Peercoin – all of which has fallen by double-digit percentages. Nonetheless, they were already dropping due to certain subjective issues of their own, but Bitcoin’s instability has impacted their market caps and prices further.

Here is the full report:

BTC/USD
The BTC/USD opened yesterday while being trading at around $591. It stayed in its trademark style in the initial hours, remaining between narrow trading ranges. However, the pair massively slipped in afternoon trading hours, coinciding with the time when over 1,000 BTC were sold by Ethereum. The Bitcoin market, which had already decoupled itself from the influential events long ago, wasn’t saved by the ongoing optimism within the economy. At the end of the day, the BTC/USD closed at around $573.

This trend is continuing even at present. At press time, the BTC/USD has fallen over 3% in last 24 hours and is being priced at $570.45. We though can speculate it to be its bottom, following which it may rebound soon due to the enough buying pressure at low.

LTC/BTC
The LTC/BTC was the biggest shock of the day as it fell more than 16% in last 24 hours. While the fall is definitely caused by the massive slip seen in Bitcoin charts, another reason why LTC/BTC have faced the maximum damage is its miners who are constantly dumping Litecoin in order to comply with their investments in expensive ASIC machines. This two-side attack has resulted in what we see now, a terribly devastating market.

The LTC/BTC opened yesterday while being traded at around 0.01177000 BTC and fell in sync with Bitcoin, eventually closing at the six month low 0.01016340 BTC. There is however a chance that investor starts buying LTC at bottom, but the upcoming surge might live short in absence of any crucial update.


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Gold (XAU/USD)
Wedge Breakout: After breaking above a falling wedge pattern seen in the 4H chart, gold (XAU/USD) stalled at 1323, and has been trading in a triangle consolidation.
The wedge breakout was a bullish signal. The rally pushed gold (XAU/USD) above the cluster of 200-, 100-, and 50-period Simple Moving Averages (SMAs). The 4H RSI was pushed up above 70. Now if price can hold above the SMAs, the wedge*breakout is still valid, and if the 4H RSI holds above 40, there is maintenance of the bullish momentum from that breakout.

ABC Correction; Support, Upside risk: However if price breaks below 1305, the triangle can evolve into an ABC correction, which could still stay be within the bullish context. if price*finds support in the 1295-1300 area. A break below 1290 will likely invalidate the bullish outlook, and put the focus back toward the 1280 low, with downside toward 1270 (on the daily chart, there is a triangle support that might challenge a downswing if gold gets to around 1270).

If the wedge breakout remains in play, there is upside risk toward the 1330 level. (on the daily chart, there is a large triangle, with resistance that will challenge a rally around 1330).

Gold 4H Chart 8/13


Gold Daily Chart 8/13


Silver (XAG/USD)

Consolidation range: Since July’s high of 21.57, silver (XAG/USD) fell to 19.73 and found support last week. Since then, it has essentially been trading within a consolidation*range with resistance at 20.17.

Bearish market: Note that the 4H chart is very bearish, with the 200-, 100-, 50-period SMAs sloping down, in bearish alignment, and spreading apart. Price is also trading below all of these SMAs. The left half of the chart tells a different story, so we know the downtrend has been short-lived, but has been strong.

Bullish outlook: Now, if price can push back above 20.20, it will likely also break above the falling trendline from July, which would shelve the bearish outlook, and revive a bullish one. In this scenario, the RSI should at least break above 60 to show loss of bearish momentum, and break above 70 to show strength of bullish momentum. In this breakout scenario, we can expect a short-term target of 20.70-20.80, where we have the 200-period SMA, and a previous resistance pivot.

Bearish scenario: A break below 19.70 would open up a bearish outlook, exposing the 2014-low around 18.64.

Silver (XAG/USD) 4H Chart



Silver (XAG/USD) Daily Chart





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A security breach was reported by BTCJam, the bitcoin lender, on August 10, but hastened to reiterate that accounts of users have not been compromised.
In a statement, the spokesperson for the lender claimed that, the hack had reached the lender’s website by hacking into its email providers’ system.

The hacker has apparently accessed funds of customers whose security settings were minimal.

A reddit user posted the lack of response on stalled services at the BTCJam website. The post found a response from Chief Product officer Gustavo Guida at BTCJam, claiming the company was on routine services back up, adding that, “The majority of our coins are in our cold storage and no users will lose any bitcoins at all.”

Later Guida, regretted the downtime but official clarification of the attempted hack came through a post

“A recent hack at our email provider Mailjet allowed a hacker to gain access to some of the transactional emails of BTCJam for a period of two hours. Through this, he was able to initiate unauthorized transactions from a small amount of users who did not have Two*Factor Authentication enabled.
The problem is now solved and no users have lost any bitcoins as a result of this.”

BTCJam was quick to reassure, asserting that it had moved transaction based emails to its own servers and recommended that users always opt for the two-step verification for secured services.

Guida has reiterated that the ‘affected accounts will be reinstated to previous state’ and that BTCJam will ensure that there end user will not have to face issues of lost bitcoins from his account.

Though, this is a major set-back to the lender who has been building the platform to provide peer-to-peer lending on a global footprint, its swift action and preventive measures reiterate its security standards.


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Litecoin Awaiting Breakout from Near-term Consolidation

By Forexminute - Fan Yang | Litecoin | Aug 14, 2014 2:37AM BST




Litecoin opened up a bearish outlook toward the 2014-low of 2.21 when it broke below a support pivot at 6.66. Since then, price has been “chewing” down the tail from the July 1st spike down. The trend looks bearish in the daily, 4H ,1H, down to the 15-minute chart, based on the moving averages, and the RSIs in the these time-frames.
In the 4H chart, you can see that price has fallen sharply over the past 2 sessions, but there has been no signs of stopping except for a bit of bullish divergence between price and the RSI. However, volume during the dips has been strong, so we can not rely solely on the bullish divergence to consider a consolidation or pullback.

Litecoin 4H chart

When we move down to the 15-min chart, we can see that price has been consolidating, and drifting down during the 8/13 session. It has formed a falling wedge. around the 5.00 handle.

If litecoin price can rally above 5.00 it would break above the falling wedge, as well as the 50-period SMA in the 15-min chart. If then, price can start treating the 4.90-5.0 area as support, we can start considering a bullish correction or consolidation in the short-term.

The 15-min RSI reading should also break above 60 and preferably tag 70 to show bullish momentum in the near-term. If the 15-min RSI then comes back but holds above 40, we can say that bullish momentum is building in the near-term, which again should introduce the bullish correction/consolidation scenario for the short-term.

Litecoin 15 min Chart



If we do get a pullback, we should monitor that 6.66 level as resistance. If price stays below 7.0, the bearish outlook is still valid for the short to medium term, with downside risk toward 2.21.


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Gold has been consolidating in a descending triangle this week after it found resistance at about 1322. Note the bullish bias in the 1H chart.
1) Price was bullish at the end of last week, so the prevailing trend in the 1H chart is bullish before it consolidated this week.
2) Price is for the most part trying to stay above the 200-, 100-, and 50-hour simple moving averages, which would reflect a bullish market.
3) Price broke above the descending triangle resistance today.
However, you can see that as we get into the 8/15 Asian session, price is falling below back into the 100-, and 50-hour SMA area. Gold has retreated back into the previous triangle. It is also breaking below a 2-day rising trendline seen in the 1H chart.

Gold (XAU/USD) 1H Chart 8/15


Silver (XAG/USD)
Silver has entered a period of consolidation as well. It has been mostly sideways with the 19.73 area as support, and 20.17 area as resistance. There is a divergence between gold and silver. You can see that gold is consolidating after a bullish swing because the moving averages were upward sloping in the 1H chart. The moving averages in silver’s 1h charts, are downsloping.
For silver, a break above 20.00 will be needed to put away some bearish bias in the short-term, and a break above 2.20 would put in a price bottom for a bullish outlook.

However, if silver price falls below 19.70, it opens up the 2014 low in the 18.64-18.70 area.

Silver (XAG/USD) 1H Chart 8/15


Gold – Silver Correction: There is a correlation between silver and gold, but it can diverge like this in the short-term. And it is really, within a larger picture of a sideways market in 2014, which describes both gold and silver. Still, when both start moving in the same direction, traders might have more confidence in extending the trend, at least more than if gold breaks one way while silver breaks another.


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