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Date : 27th February 2015

TRADERS BUY THE USD AS THE US CORE CPI CAME IN AT +0.2%.



After a couple weeks of low volatility the EURUSD moved lower yesterday driven by the US inflation figures. The core CPI (change in the price of consumer goods and services excluding food and energy) rose by 0.2% instead of 0.1% expected by the economists. The CPI that includes the more volatile items (food and energy) fell by 0.7%, most since 1998. This is explained by the substantial fall in Crude Oil prices. The Fed policy makers focus on the Core CPI and therefore markets reacted to the higher than expected figure and bought the dollar as they concluded this will encourage the Fed to raise interest rates this year. However, economists believe that the effects of lower energy prices and a strong dollar will work their way to the Core CPI and cause low reading in the near future.

EURUSD has been really tame since the last time I wrote analysis on it. The weekly picture has not changed much as the downtrend still prevails and there is a shooting star candle indicating that the price will stay in the downtrend. The combination of resistance level at 1.1460 and the 23.6% retracement level held the pair down. The current support and resistance levels nearest to the current price are 1.1098 and 1.1460.



EURUSD, 240 min

Now that the EURUSD has been moving sideways the daily and 4h charts are so similar that I will only comment on the latter. Price is currently resting at a pivot candle high at 1.1203 and the Stochastics are well into the oversold territory while price has moved inside the Bollinger Bands. This suggests that there should be an intraday rebound higher probably to the nearest resistance level at 1.1287. This level coincides with the 50% retracement level drawn from the Wednesday’s high to the latest low yesterday.

Conclusion:

This market is still in a downtrend which means that the support levels are more likely broken and resistance levels honoured. However, the price is now relatively close to the weekly low and sitting at a 4h pivot candle. In addition the price is outside the daily lower Bollinger Bands and the 4h Stochastics are oversold. Therefore a move higher should be in the cards. This should however, be only an intraday rebound as we resistance levels and a sideways range above. Should this move take place I would be looking to benefit from the weekly trend by selling short at the resistance levels, providing the lower time frame charts confirm the idea.

Join me on Live Analysis Webinar on Tuesday 3rd of March at 12:30 pm GMT. Register HERE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 2nd March 2015

GBP A SAFEHAVEN CURRENCY IN EUROPE.



Now that EUR is weak due to both economic, geopolitical and Greece related risks Sterling starts to look like a safe haven currency with its economy rebounding. The UK job market is recovering, Industrial activity expanding and GDP at healthy 2.7% level (almost back to its 2007 pre-crisis levels). This creates a stark contrast to the ailing Euro Area but at the same time the risk is one of contagion: Euro Area being so important trading partner to the UK its can impact the growth in the UK negatively. However, the EURGBP pair is in a downtrend and reflects both the stark differences in the economic front and the interest rate hike expectations. The Bank of England is expected to raise rates either in the third or fourth quarter while the ECB is obviously committed to the QE program announced in January.

Price is now bouncing from general region of a 0.7255 support level, a historical pivot high. Stochastics in both weekly and daily timeframes are oversold and there is no divergence in these time frames. Out of major EUR crosses, it is the EURGBP that is the weakest and therefore makes it an ideal market to sell the rallies. The nearest resistance (a weekly low) is at 0.7340.




EURGBP, Daily

Since my previous analysis price moved lower and is moving sideways in the region of 0.7255 support area. Stochastics is edging closer to its moving average indicating lack of downside momentum at this support. This could of course change later in today’s trading but it shows how relevant this level was for the market participants. The pair is now moving at the lower end of the regression channel but potential resistance levels are not that far from the current levels. The nearest daily resistance levels are: 0.7300, 0.7317 and 0.7348.



EURGBP, 240 min

I expected price find support at 0.7255 and it did almost to a pip, rallied and then was sold again from 0.7300 level. This led to a move that touched the channel line. The current move higher is taking place after a touch at the lower end of a short term bear channel and after there was a higher low in the Stochastics (bullish divergence). There is a resistance area from 0.7300 to 0.7314 that coincides with a midline in the channel. In addition the upper Bollinger Bans are not that far above the zone either.

Conclusion:

With price being at a historical pivot high and close to the short term channel bottom it makes sense to wait for better levels to enter into short trades. The zone from 0.7300 to 0.7314 is an area we should be looking for momentum reversal signals as the channel midline and the upper Bollinger Bands coincide with the zone. For UK and Euro Area economic releases, see our economic calendar here: HotForex Economic Calendar

Join me on Live Analysis Webinar on Tuesday 3rd of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 4th March 2015

GOLD TRADES SIDEWAYS AT KEY SUPPORT LEVEL.



Lately many market participants have been focusing on this week’s jobs report from the US. This Friday the US Bureau of Labour Statistics releases the Non-Farm Payroll report, the most important piece of macro data before the next Fed meeting. This report is seen as an important indicator on when the Fed might start hiking the interest rates. Some participants expect the rate hike happen in June while most are looking to September as potential starting point for the Fed’s rate hike cycle. However, some prominent analysts believe that the Fed will be patient and start the rate hikes next year. Higher interest rates support the dollar and historically Gold has not done that well during the periods of rising dollar. At the same time demand for physical Gold is solid in Asia. India alone is consuming 800 to 1000 tons of Gold annually and imports to the country are increasing. In addition, China’s interest rate cuts in November 2014 and last Saturday are an indication that the Peoples Bank of China has moved into an easing cycle. This is a factor supporting demand for Gold in China.

The price of Gold reached the medium term ascending trendline a bit more than a week ago and has since been trading between the support at 1200 and a weekly low from the beginning of February. This level also coincides with the 50% Fibonacci retracement level. Gold is getting oversold in terms of Stochastics and I am looking for a move higher over this week or latest the next week.




Gold, Daily

The resistance level at 1220 coinciding with the 50% Fibonacci level has held the price down while the 1200 area has supported price. Price is ranging sideways which is quite common after downtrend is broken and the market participants fight over the future direction of the gold price. At the moment we have a higher low in place (from yesterday) which indicates that buyers are ready bid for Gold between 1190 and 1200. There is further support from a daily pivot candle from January 2nd this year and the lower Bollinger bands (currently at 1179 and 1188).



Gold, 240 min

Levels outside the lower Bollinger bands and a pivot candle from 24th February have been attracting buyers lately. There was an attempt to take the price higher last week and price was making higher lows and higher highs until the resistance at 1223 proved too much for the buyers. There was rejection candle yesterday (a candle with a long shadow below). This confirms the idea of 1190 to 1200 being an important range for buyers.

Conclusion:

Price is now at key levels and I am looking for a move higher from this support. In the recent past it has taken two to three weeks for the price Gold to turn from support levels. Therefore should there be a rally in not so distant future. But as the market participants are looking at this Friday’s jobs release from the US as a potential indication on when Fed might be raising rates the price of Gold might be moving sideways until Friday. Should Friday’s NFP figures be a disappointment, the likelihood of Fed raising rates early would be smaller and this should support the price of Gold. Levels close to or inside the 1190 – 1200 support range should be monitored for price action based buy signals. If you want to learn about price action based trading signals, just join me to educational and live analysis webinars.

Join me on Live Analysis Webinar on Tuesday 10th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 5th March 2015

EURUSD BROKE SUPPORT AHEAD OF ECB MEETING.



I said in my previous analysis that the shooting star candle indicated that the price will stay in the downtrend and concluded that the support levels are more likely broken and resistance levels honoured. The intraday move I hoped to see did not materialize and EURUSD kept on creeping gradually lower until the support was broken. This was another one of those situations where the market did not give us the high probability entry level I was hoping to have. At the same time I should emphasize that trading against the trend (buying against a support in a downtrend) is not a high probability trade. That is why the emphasis in my analysis was on finding short entries against resistance levels after a possible rally. Now that the support is broken the game has obviously not changed at all. Selling rallies still is the high probability trade in this market.

Now that the price has moved below the 1.1098 support level it has changed its role and become a resistance. The next potential support level in the weekly chart is at 1.0765 and could work as a target for short trades for those looking to trade the weekly downtrend. Stochastics stays in the oversold zone even though there is some divergence in the indicator due the recent sideways move. The ECB comes out today with the latest rate decision but no change is expected. There might be some details revealed on the 1.1 tr EUR QE plan though.



EURUSD, Daily

Since my last analysis EURUSD moved sideways for three days before dropping below the 1.1098 support. This is a good example of when a time based exit should be applied by those trading against a support level. I said earlier that trading against the trend is not a high probability game but there are always aggressive traders that hope that there will be an exception to the rule and market shoots higher against the trend. These traders should be even more cautious if there is no positive reaction and the price keeps on creating lower daily highs. This is obviously a sign of market being weak and any long ideas should be scrapped. We don’t have to fight against the market. Rather we seek opportunities to agree with it.

Currently price is reacting higher from the 61.8% Fibonacci extension level while the 261.8% Fibonacci extension level coincides with the 1.0765 support level and therefore adds to its significance. The resistance levels above are the 1.1098 (previous weekly support) and the proximity of 1.12 level with the 100% extension level. Price is oversold in terms of Stochastics oscillator which suggests that we might get an opportunity to sell the resistance levels.



EURUSD, 60 min

Price is trending lower in a relatively narrow regression channel and is at the time of writing reacting lower from a minor resistance level at 1.1060, which is also a pivot low in 240 min chart. The other resistance levels are 1.1152 and the zone from 1.1096 to 1.1112 that coincides with the upper Bollinger Bands.

Conclusion:

Market is still trending lower with resistance levels above. I am therefore still short oriented and look for lower time frame timing signals at resistance levels with a target at 1.0765. ECB rates decision is not expected to move the markets but commentary on the QE program could cause additional volatility. This emphasizes the need to follow the market action at the resistance levels and trade only the high probability setups.


Join me on Live Analysis Webinar on Tuesday 10th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 6th March 2015

S&P MOVING SIDEWAYS ABOVE THE DEC 2014 HIGH.



I suggested in my previous S&P 500 analysis that the market could be correcting lower. This was based on both technical and sector analysis. On February 25th I wrote: over the last six trading days the money flows have been once again favouring the Utilities and Health Care sectors over all the other sectors, while Energy and Financials have lagged the most. All this put together indicates that we could see the S&P 500 slowing down and possibly correcting lower in the course of the next few trading days. Index was trading at 2011.25 points at the time of my analysis and is trading at the time of writing at 2098.75 (-87 points).

Today’s an NFP Friday and the markets are likely to be in a waiting mode as the unemployment readings are important indicators for the Fed in deciding the timing of the first rate hike. Consensus expectation is 240K new jobs and should the number deviate strongly to the downside it’d be likely that the Fed would be more patient and delay the start of the rate hikes. Another important data point is the Average Hourly Earnings which will give an indication on the ability of consumers to consume. The Nonfarm Payrolls, Average Hourly Earnings, Labour Force Participation Rate and Unemployment Rate for the month of February are published today at 13:30 GMT. For other economic releases, see the HotForex Economic Calendar here.

The last two weekly bars have been narrow bodied Dojis. This indicates lack of demand and increases probabilities that this market will correct lower. As there has been no upside momentum over the last two weeks, Stochastics is overbought and turning lower. In addition, the upper Bollinger Bands are near and have been limiting upside. Support and resistance levels in weekly picture are: 2062.50, 2088.75 and 2117.75.



S&P 500, Daily

After wedging a bit at the time of my previous analysis S&P 500 e-mini future (ES) moved out of the rising regression channel. Price has been supported by the pivot high at 2088.75 and 23.6% Fibonacci level with a new resistance at the latest high (2117.75). Support at 2062.50 coincides with the lower Bollinger Bands and the 38.2% Fibonacci retracement. Should ES correct further the next important support level is 2020.50. The fact that price has been reacting higher from the proximity of 2088.75 level in suggests that this level is seen as an important support.



S&P 500, 240 min

Index futures have attracted buyers at 2085 area but the resistance from both the descending trendline and the previous support at 2101 level have this far blocked the moves higher. At the time of writing there isn’t much momentum to either direction as market waits for the NFP release but the moves from 2085 have been strong (hammer candles). This suggest there will be buyers at this level today. Should this level be broken the next support level at 2062.50 coincides roughly with the 1.618 Fibonacci extension level. It is also a former resistance which adds to the significance of this level.

Conclusion:

In the longer term picture US stock market is now fairly overbought and the last two weeks’ weekly narrow body candles indicate that there is not much willingness to pay higher prices for equities but no strong need to sell off either. At the same time technology, the heaviest sector in the S&P 500 index is close to channel top and Apple the heaviest weighted stock in this sector looks like it could correct lower after a bearish weekly candle last week. Even if this correction takes place I still believe this market can move higher and therefore look for buying opportunities at support levels.

Technicals and macro view are giving a slightly mixed message: if the employment numbers are weak the Fed is likely to start rate hikes later which would be good for the stock market. However, at the same time strong employment numbers would indicate an improving economy, which again is a reason to stay long in Stocks. Market reactions to today’s NFP release are therefore an important indicator of things to come in the near future. If market finds support either at 2085 or 2062.50 and reacts higher with good momentum (that takes ES into new highs) the technical picture stays positive and supports the long term bullish view.

In regards to short term trading ideas I am looking for minor time frame reversal signals at the above mentioned support and resistance levels once the employment numbers are released and the market is likely to have some volatility again. Market is not likely to move strongly before the employment release later on today. Should there be no strong deviation from the consensus expectation the nearest technical levels will be honoured but higher deviation from expectations will be translated into stronger whipsaws in price. If the latter is the case, then momentum reversal traders should be looking to trade levels further away from the current price.

Join me on Live Analysis Webinar on Tuesday 10th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 9th March 2015

GBPUSD HIT THE TARGET AND RETURNED TO RECENT LOWS.



In my previous analysis in GBPUSD from February 6th I took a view that with such a show of strength as we had seen in the market the only logical conclusion was to look for buying opportunities until there was price action based evidence to the contrary. Retracements to support levels should be monitored for momentum reversal signals. I pointed to 1.5487 to 1.5541 as a target area for successful swing entries. The pair overshoot the area by 11 pips before it turned lower again and formed a weekly shooting star candle providing the price action based evidence to switch the bias from long to short. It has now reached levels that are a potential buy level.

After Friday’s upsurge in the US Dollar index (caused by a surprisingly positive NFP reading) GBPUSD price has moved down to levels where it started its up move in the beginning of February. This area coincides with the lower weekly Bollinger Bands and higher end of the downward regression channel. RSI (7) is diverging suggesting bullishness at current levels. This combination of technical factors has caused a move higher today confirming that buyers are still interested to bet for Sterling at these levels. This price action looks very much like a bottoming process and the fact it takes place in weekly time frame adds to its significance. With relatively strong economic output and well developing job market the UK is at the moment one of the strongest economies globally and we could see a rate hike in the latter half of this year. This is reflected in the GBPUSD. We will have more comments on the UK economy tomorrow as Bank of England’s Governor Mark Carney will speak at 14:35 GMT.



GBPUSD, Daily

In the daily chart GBPUSD moved deep below the lower Bollinger Bands suggesting the price was very much oversold on Friday evening. The Stochastics and RSI confirmed the idea and are now beginning to point higher. In the daily time frame this market is now ranging sideways and we should therefore look for trading opportunities at the edges of the range. The lower end of the range obviously is where we look for buy opportunities while the upper end of the range at or close to the February high can work as an area for short term long trade exits or short entries (should the price action so indicate). The 1.5036 is a high for a pivot candle at the bottom of the range and therefore points to the region of potential support. This level has already supported price in the beginning of February and seems to attract buyers now as well. The previous support at 1.5220 is now likely a resistance area.



GBPUSD, 240 min

Four hour chart shows how Friday’s move lower was an overshoot as price extended from the trend defined by the regression channel. Now price has reacted higher from 1.5036 support and retraced back to the channel bottom where it is showing signs of weakness. The 0.382 Fibonacci level coincides with the 1.5220 resistance while the 0.618 level is at same levels with a former minor support (now potentially a resistance) and the upper Bollinger Bands.

Conclusion:

Even though the DXY is moving into new highs GBPUSD is still above the January lows after it moved above more than 12% from the January lows to February highs. Weekly chart is telling to longer term position traders that this market is possibly in a bottoming process as the price has moved out of the downward sloping trend channel, moved past four weekly highs and is now finding support just above the recent support area. Such an increase in volatility is usually a sign of a trend change. Shorter term traders could benefit from the longer term price action by trading the swings between the range edges using the support and resistance levels provided above.

Join me on Live Analysis Webinar on Tuesday 10th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 11th March 2015

EURGBP SETUPS HAVE MADE HUNDREDS OF PIPS.



We got it right again in EURGBP. The pair rallied to a resistance level I gave in my last analysis and has then sold off heavily. My view on March 2nd EURGBP analysis was that out of major EUR crosses, it is the EURGBP that is the weakest and therefore makes it an ideal market to sell the rallies. I wrote then that the zone from 0.7300 to 0.7314 is an area we should be looking for momentum reversal signals as the channel midline and the upper Bollinger Bands coincide with the zone. EURGBP rose to 0.7301 on that day and has since dropped over 200 pips. We have now had two very good sell signals in EURGBP lately. The first sell signal as per my analysis came at just below 0.7596 and now the other in proximity of 0.7301. My analysis and the signals that I teach in my webinars have made several hundred pips in EURGBP for our traders. If you would like to learn how to catch moves like this you are welcome to join me to free webinars here.

As the EURGBP is basically collapsing at the time of writing the weekly picture does not provide us with a lot to analyse. With trend lower indicators are oversold and price is hugging the lower Bollinger Bands. The nearest weekly support and resistance levels are 0.7022 a former resistance level from 2006 and 2007 and the last week’s low at 0.7183.



EURGBP, Daily

Price has extended below the regression channel and has for the first time since January 26th closed outside the lower Bollinger Bands. This suggests that the trend has moved too far too quickly. This increases probabilities for a corrective move against the prevailing trend over the coming few days.



EURGBP, 240 min

EURGBP trend is extended in 4h chart as well. In case there will be a move against the trend over the coming few days potential resistance levels that could turn price lower again are 0.7130 and 0.7180. The lower level is clearly a minor resistance level as it is a spot where price tried to hold the channel bottom. This caused a sideways move visible in the 60 min chart and could act as a resistance should the market be weak.

Conclusion:

As long as the market keeps on moving lower and there is no price based evidence to the contrary there is no hurry to close the short trades. Exception to this would be price hitting the 0.7022 support level which could well bounce the price higher and therefore is a logical target level. Price is in a downtrend and we should be looking to sell rallies as long as the approach works. However, once the 0.7022 target is hit the pair is at a major consolidation level and selling rallies might get trickier. Currently I am looking at 0.7130 and 0.7180 as potential shorting levels in case there is a rally higher and 0.7022 area as a target for short trades.

Join me on Live Analysis Webinar on Tuesday 17th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 13th March 2015

CADJPY TRADING IN A RANGE AFTER A SHOOTING STAR CANDLE.


CADJPY has weakened substantially since November last year and has over the last weeks bounced higher from a support at 91.78. The support is loosely defined by the lower Bollinger Bands and a pivot candle from March 2014. Last week price reacted lower from a weekly low creating a shooting star candle and confirming a resistance level at 96.74. A couple of weeks ago the pair bounced from 94.17 forming a support level.



CADJPY, Daily

There was a shooting star last week in the daily chart as well. CADJPY has since then moved sideways between resistance at 96.74 and a rising trendline. The resistance coincides roughly with 38.2% Fibonacci level (drawn from December 2014 high to the January 2015 low) and upper Bollinger Bands. Bollinger Bands are narrowing which indicates that the pair is nearing a breakout but to which direction? The last two days indecision is clearly visible in the chart. Stochastic Oscillator is close to being oversold and is about to cross over its signal line. This together with the rising trendline encourages the bulls but the above shooting stars and resistance that are relatively close dampens the enthusiasm.



CADJPY, 240 min

The pair has been making lower highs and breaking support levels since the move to 96.74 was rejected. Fluctuations created a triangle that was resolved to the downside and provided one shorting opportunity on a rebound as the pair tested the lower end of the triangle and failed to penetrate it. Since then we have had a new lower low and lower high as the pair has been moving towards the lower end of the range. Projection from triangle points to 50% Fibonacci level (near 94.17 support). Should that support fail the next interesting support level is at 93.03 as it coincides with a 261.8% Fibonacci extension. I have left the extension levels off from the chart to improve readability.

Conclusion:

Trading in the middle of the range is always tricky while the easiest money is made at the edges and the pair is currently trading pretty much in the middle of the range. However, the weekly and daily shooting stars at 96.74 resistance level indicate willingness to sell the CADJPY at those levels while the lower highs and lower lows in 4h chart suggest that the pair should be testing the 94.17 level in not so distant future. This far the 38.2% Fibonacci level and the rising trendline have prevented the price moving lower. In addition there was bullish divergence in the Stochastic Oscillator at the time the pair bounced higher from the trendline. The intraday picture therefore has both bullish and bearish elements while the weekly shooting star points to lower prices from current levels.

The wide range candle from the beginning of February indicates that demand between 91.78 and 94.17 was strong. Quick moves into this area should be therefore met by willingness to bid the pair higher. Should such a quick move happen I would be interested in long signals at or near to the 93.03 support. I will be monitoring the levels close to the upper daily Bollinger Bands (at around 96.20) and the shooting star high.

Join me on Live Analysis Webinar on Tuesday 17th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 16th March 2015

COPPER’S RELATIVE STRENGHT DUE TO CHINA.



Copper is in a long term bear channel and moved in February to a level that has supported price in the past. This was also the first time since year 2008 that Money Flow Index moved into overbought zone in Monthly timeframe. In February 2007 price touched 2.40 level and moved higher over the next two years. Now there was another bounce from the same level and the price of Copper is on the rise for the second month in a row. The nearest resistance level is approx. at 2.72 while the next major resistance is at 2.88.



Copper, Weekly

Copper (an industrial metal) has been stronger performer than precious metals since the latest US Jobs report came in with a surprisingly high number and strenhgtened the US dollar. While Gold and Silver have declined by almost 3% since March 5th Copper has at the time of writing gained 1.1%. However, the US rate hike expectations mean the US dollar strengthens and buying power amongst non-USD based investors decreases for dollar based assets such as Copper. This combined with slowing economic growth in China slows down the Copper bulls and has caused the price to fluctuate below resistance levels. On the other the hand price has held up and even edged higher as market participants believe that easier lending conditions should improve demand in China, the biggest consumer of Copper globally. The price of copper has made two weekly lower highs since touching the 2.72 resistance level (a former support from June 2010) while the MFI (7) is overbought and Stochastics are close to the same levels and hinting that the momentum is waning. This could lead to further fluctuation between the 2.59 support and a high of 2.73 from couple of weeks ago. Other support levels are 2.55 and 2.40, a high and low of the January pivot candle high and low.



Copper, Daily

The price of copper is near to the upper Bollinger Bands and Stochastics is getting overbought. Price has just recently bounced from a support at 2.59 forming yet another higher low. This was technically a good sign as it confirmed the level that used to resist price moves higher is now a support. The fact that this level now coincides with the lower daily Bollinger Bands makes it more significant support area.

Conclusion:

Fundamental factors that both support the price of Copper and resist its move higher translate into a ranging market, price action that honours the technical levels at both ends of the range. Levels near to 2.59 support level used to resist moves higher and are now providing support while the move to 2.72 resistance was rejected. This suggests that short term traders should look for trade opportunities at or close to these levels while longer term position traders might want to consider longs closer to the 2.40 support and shorts closer to the 2.88 resistance levels. This is the likely range copper futures over the coming weeks and months as major news stories or surprises on either the US Federal Reserve’s rate policy or Chinese consumption of Copper they might provide the trigger to move the price of Copper to these levels. Chinese premier Li Keqiang commented that the government will be ready to support the Chinese economy should the slowdown in growth affect employment and incomes. He wasn’t specific on the measures the government might use but a hope of economic stimulus in China should support the price of Copper. Against this backdrop traders might want to be buyers near support levels rather than trying to find shorts. This view would be negated if the US Fed indicated that it would hike rates more than expected. However, it is likely that the Fed will be cautious in raising rates.

Join me on Live Analysis Webinar on Tuesday 17th of March at 12:30 pm GMT. Register HERE for FREE and as usual it is better to log in early to get your seat!

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

[HFblogNews]

Date : 19th March 2015

US FED DOVISHNESS CAUSED EURUSD TO SPIKE.



EURUSD is now trading at 1.0640 support. Yesterday the pair moved all the way back to 1.1040 after the US Fed Chair Yellen took a more dovish stance on the economy. She removed patience from the vocabulary but indicated that strong dollar and slowing export growth are risks for the economy. According to Janet Yellen the change in forward guidance did not alter the timing of the first tightening and that a hike in April remained unlikely.

The tone of the statement also suggested a June hike is not likely to happen, especially since the FOMC downgraded its assessment of the economy in the opening paragraph. According to them “economic growth has moderated somewhat” thanks in part to slowing export growth. The Fed also seemed less confident that inflation pressures are transitory, which will continue to be “monitored closely.” The policy paragraph now states that rates will rise when the Fed sees “further improvement in the labor market and is ‘reasonably confident’ that inflation will move back to its 2 percent objective.”

It is interesting how no one paid attention to the headline inflation while oil prices were high. The focus was on CPI as it allowed the central banks to maintain the easy money policies. Now, suddenly it is the headline figure that seems to be in central banks’ focus. In the light of this the current wording in the Fed’s policy paragraph gives them more freedom in terms of continuing with the zero rates policy.

Janne Muta
Chief Market Analyst
HotForex

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.