Daily Forex market review 05 July 2016EUR/USD (Euro/dollar pair)
- on Monday the Italian government said that is not going to solve problems of credit institutions at the expense of state. Problems in Italian banks (and not only they alone) and a lot of investors began to sell banks' shares in a hurry, which is negative for the euro.
- ADX on the daily chart shows the flat; whereas on the hourly chart it shows the downtrend.
- RSI is out of the oversoldness area and allows us holding Sell trades.
- Recommendation: We should open Sell positions from 1.1140 (one eleven forty) and 1.1170 (one eleven seventy) (area of the middle and upper Bollinger bands, respectively). Set take profit at 1.1097 (one ten ninety seven) (a strong support).
GBP/USD (Pound /dollar)
- PMI index of the UK construction sector in June fell to its lowest level since October 2009 (two thousand and nine). In our opinion, this is just the beginning. Further we will receive an entire portion of weak macroeconomic statistics, cut of the rate by the Bank of England, increase of the QE (Quantitative Easing) package and decline of the pound to new multi-years Lows.
- ADX on the daily chart shows the flat; the hourly chart shows the downtrend.
- RSI on the hourly chart is in the oversoldness area, signaling a possible upward correction.
- Recommendation: We should open Sell positions from 1.3260 (one thirty two sixty) and 1.3305 (one thirty three zero five) (area of the middle and upper Bollinger bands, respectively). Set take profit at 1,3119 (one thirty one nineteen) (a strong support)
USD/JPY (Dollar/Japanese Yen
- "Risk appetite" has dropped again, which plays into the hands of bears. Once again, dark clouds are above the European banking sector: the Italian government refused to provide banks with additional liquidity. The management of Deutsche Bank does not know what to do with bad assets. Very often, crises begins with the banking sector. In 2008, it were the US banks, now, 8 years later, apparently, it will be the European financial institutions.
- ADX on the daily chart shows the flat; whereas on the 4-hour and hourly charts it shows the downtrend chart.
- RSI hourly chart has formed a divergence in the oversoldness zone, indicating the upward correction.
- Recommendation: We should open Sell positions from 102.30 (one hundred and two dot thirty) and 102.65 (one hundred and two dot sixty five) (the area of the middle Bollinger band). Set take profit at 100,82 (one hundred sharply dot eighty two (a strong support)
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