As BOE Bailey speaks, the GBPUSD comes off highs

The price action today is up and down and waiting for the next shove

As BOE governor Bailey speaks, the GBPUSD is coming off highs for the day.  The price action has been choppy with the choppiness coming around the 200 hour MA. 

The price action today is up and down and waiting for the next shove

 Yesterday, the price moved above the 200 hour MA for the first time since May 8th but quickly reversed. 

Today has seen that same pattern unfold with 10 bars trading above and below the MA line at 1.22565. The "market" is unsure on what to do next, hence the choppy trading.   

Of note as well is the 38.2% of the move down from the April 30 high is at 1.27905. The high price from yesterday reached 1.2295 before rotating back lower.  The high today has come up short of that level at 1.22865.  

So although the price is trying to get above the 200 hour MA, the 38.2% is proving to be another hurdle to get to and through.  Failure to do so, and the correction is of the "plain-vanilla" variety. That is....the buyers are not showing their love to move the pair higher.  

Taking a broader look at the daily chart, the 1.2240-653 area is home to swing lows from mid April and early May.  We are currently trading just above that level at 1.2274

Buyers are trying to keep and make a play to the upside, but they need more "umph" in their effort.  Stay above the 1.2268 level would be the best. Stay above the 200 hour moving average would be good. On the topside move above the 38.2% retracement at 1.22905 and the overall technical picture improves even more.

Fail at those levels and what we've seen off the lows just a plain-vanilla correction of a trend move lower in May.

GBPUSD on the daily chart



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AUD/USD edges above the range but follow-through elusive

AUD/USD touches highest since March 9

AUD/USD touches highest since March 9

A series of charts are painting a picture like AUD/USD. It's attempting to break out of the range but it's really just dipping a toe in the water rather than busting out.  We saw something similar yesterday and then it reversed as sentiment sagged.

In general, a triple top is bullish because it means that a double-top was violated. It's a temporary top that is about to break out. Given how we've quickly shaken off the vaccine mess/reversal yesterday, it's easy to be positive on this chart.



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EUR/USD extends gains to fresh two-week high, runs into 100-day moving average

EUR/USD rises to a session high of 1.0975

EUR/USD D1 19-05

The dollar and yen are continuing to stay pressured on the session, with the euro among the lead gainers as we see EUR/USD make fresh two-week highs of 1.0975 currently.

Notably, the euro is also posting a solid run higher against the franc since yesterday with EUR/CHF recovering from its "floor" around 1.0515 to 1.0655 at the moment.

As for the EUR/USD, the pair is now running into resistance from the 100-day MA (red line) @ 1.0972. That was the level that halted the upside move in early May with the daily close failing to break the 1.1000 handle at the time.

It will be a real test of buyers' resolve once again to see if they can manage that this time.

Beyond that, there is further resistance from the 200-day MA (blue line) and 1 May high at 1.1017-18 currently. A break above those levels will give buyers more initiative to chase a move towards the late March high @ 1.1163 next potentially.

 



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Equities lose further ground on the session

European stocks fall further, US futures also keep lower for now

DAX
The DAX is now down by 1% on the session, with European indices seeing similar losses across the board as it has been a bit of one-way traffic since the open.

The mood coming into European morning trade was more positive but that has quickly unraveled over the past few hours. That said, the declines seen so far today pales in comparison to the large gains posted in trading yesterday to start the week.

So, we are still very much in so-called retracement territory - for now at least.

Meanwhile, US futures are also keeping lower - down by about 0.5% - after an optimistic start to the session where we saw gains of nearly 1% coming into European trading.



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AUD/USD buyers look to build on move above the 100-day moving average

Can buyers keep the run higher from yesterday going?

AUD/USD D1 19-05

Despite stocks pulling back on the session, major currencies are still sticking with dollar and yen weakness as the key theme for the most part in European morning trade.

AUD/USD is still settling higher, around 0.6540-50 levels currently, after having started the session a little lower closer to 0.6520 amid concerns about Australia-China tensions.

From a technical standpoint, the pair is now starting to try and keep a break above its 100-day MA (red line) - a key line in the sand that has prevented gains over the past few weeks.

That level currently rests @ 0.6508 and for buyers, staying above that is pivotal now.

There is some upside resistance from the recent highs @ 0.6561-70 but a move above that - especially on a daily break - should pave the way for a further upside move towards the 200-day MA (blue line) @ 0.6664, another key resistance level in the pair.

For now, it is all about risk flows and despite some caution heeded in the equities space, AUD/USD buyers appear convinced that dip buyers will step in once again later today.

Let's see if that will be the case as the S&P 500 is also approaching a test of its own key daily moving averages after breaking above the 61.8 retracement level yesterday.

SPX

With the AUD/USD recovery pretty much mirroring the S&P 500 move as well, the break of the latter may very well to a stronger break higher in the former as well.



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European equities open firmer to start the day

A solid start to the session as risk stays more optimistic for now

  • Eurostoxx +1.7%

  • Germany DAX +2.1%

  • France CAC 40 +2.0%

  • UK FTSE +2.0%

  • Spain IBEX +1.7%

The risk mood in the market is still slightly more upbeat, with US futures still holding gains of just over 1%. In that regard, not much has changed since the tail end of Asia Pacific trading but once again, just be mindful of headline risks this week.

Brewing tensions between US and China are the main thing to wary about but for now, investors are taking heart in the calmer tones as we get things going on the session.



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EU's Regling: ECB will not change approach after German court ruling

Comments by the managing director of the ESM, Klaus Regling

Well, at least that is one German who is sitting in favour of the central bank. But I guess one's gotta take the side of whichever puts the food on the table.

In any case, the yields spread between Italian and German bonds have remained somewhat calmer through all of this in recent sessions, and that argues that this issue isn't quite what is going to be moving the market - for now at least.

Italy 10-year yields



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AUD/USD a little higher on positive risk tones but sellers keep near-term control

AUD/USD trades higher to start the day, but key near-term levels still intact

AUD/USD H1 18-05

The aussie leads the charge in the major currencies space, as we see equities keep more upbeat in European morning trade. That is helping AUD/USD to trade around 0.6440 levels currently, with the pair up by over 0.5% now.

However, despite the move to the upside, sellers are keeping near-term control in the pair.

This is seen as price action is still below both the key hourly moving averages with the 100-hour MA (red line) close by @ 0.6455. Stay below that and the near-term bias is more bearish, but break above and the near-term bias then turns more neutral instead.

Just above that, further resistance is then seen at the confluence of the near-term trendline resistance and the 200-hour MA (blue line) around 0.6466-69 currently.

That will be the key spot for buyers to break above to sustain any short-term momentum.

Looking further out, the 100-day moving average remains the key line in the sand that has helped to limit any upside gain and that rests @ 0.6511.

For buyers, they need to break above the key levels highlighted above in order to really find any further momentum for a stronger upside break. As for sellers, the levels above will provide key areas to lean on in order to keep the downside bias in the pair for now.

Looking ahead, risk sentiment will continue to be the key driver of the pair and for now, the risk mood is keeping more optimistic. But as mentioned earlier, be wary of US-China headlines as they could mess up the picture in the coming sessions.

Translating that to the chart, the risk mood today is helping buyers move closer to key near-term levels but they are not enough to suggest a major shift in momentum yet.



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USDCAD moves lower as Poloz a bit more upbeat

Sees best case scenario remains within reach and financial conditions are solid

As Gov. Poloz virtual press conference pushes on, the Gov. is bit more upbeat. He said that he sees a best case scenario remaining within reach, the fiscal response has mitigated the shock and that the policy response will lay the foundation for recovery.

Sees best case scenario remains within reach and financial conditions are solid_

The CAD has strengthened (lower USDCAD) over the last few minutes. The price has moved back below a swing area in the 1.4113 to 1.41198 area.  The price has been above that swing area back on May 4 and again on May 6 – 7 in addition to today's stretch above. However each of those moves failed. Once level for resistance now. Stay below will be more bearish

On the downside, the low today did fine support against the broken 61.8% retracement at 1.40677. It would take a move back below that level, to increase the confidence from the sellers.



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GBPUSD tests cluster of support and bounces on the 1st look

April low at 1.21616/38.2% at 1.21737.

The GBPUSD has so far successfully tested a cluster of support defined by the swing low from April at 1.21616, and the 38.2% retracement of the move up from the March low to the April high at 1.21737. The low for the day reached between those 2 levels at 1.2165.

April low at 1.21616/38.2% at 1.21737._

With risk defined and limited against the area, the buyers stuck a toe in the water and have pushed the price back up toward the 1.2200 level. The current price trades at 1.2189. The high price off the low has stalled at 1.2199 – just below the natural 1.2200 level.

Intraday technical levels are defined by those support/resistance levels. On the topside get above the 1.2200 level and we should see further upside probing. Failure to do that however and a run back down toward the support at 1.21616 – 73 would be eyed. The burden is still on the buyers to take more control.

Drilling to the hourly chart, helping the dip buyers that the low (and increasing the levels of importance) is that the price did bounce off of a lower trendline. That is just another reason for the buyers attempts to pick a bottom on the low risk opportunity.

GBPUSD tested a lower trendline on the hourly chart



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