Apr 11, 2010

Forex Crunch GBP/USD Outlook – April 12-16 2010

Forex Crunch GBP/USD Outlook – April 12-16 2010

GBP/USD Outlook – April 12-16 2010

Posted: 11 Apr 2010 12:30 AM PDT


The Pound ended the week with a strong tone at a critical technical spot. Where will it go? Here’s an outlook for this week’s British events and an updated technical analysis for GBP/USD.

GBP/USD chart with support and resistance lines marked on it. Click to enlarge:

GBP/USD forecast

The British Pound received good figures during the past week. This includes a better growth estimate, stronger manufacturing and rising house prices, and it made gains, unwanted by policymakers. As we draw closer to election day, the importance of opinion polls will rise for the Pound. OK, let’s start:

  1. CB Leading Index: Published on Monday at 9:00 GMT. This compound index is made out of 7 economic indicators, some already published. Last month saw a rise of 0.8% in this index, and now the rise is expected to be more mild.
  2. BRC Retail Sales Monitor: Published on Monday at 23:00 GMT (midnight UK). This indicator is very similar to the official retail sales figure, but is limited to a smaller number of retailers. After a drop of 0.7% two months ago, a rise of 2.2% last month was quite positive for the Pound. A small rise is expected this time.
  3. RICS House Price Balance: Published on Monday at 23:00 GMT, together with the sales figure. After reaching a peak 4 months ago, this indicator that compares areas of growth in contraction in Britain has dropped quite strongly – from 35% down to 17%. Another drop is predicted now.
  4. Trade Balance: Published on Tuesday at 9:30 GMT. Britain’s trade deficit jumped to 8 billion last month, weighing on the British Pound. We’re now expecting to see a bounce back to 7.3 billion, the figure seen two months ago.
  5. Nationwide Consumer Confidence: Published on Wednesday at 23:00 GMT. This survey of consumers was supposed to be released last week. The slow and steady advance in the Brits’ mood is expected to continue with a rise from 80 to 81 points this time.

GBP/USD Technical Analysis

The Pound traded in a range throughout most of the week – between 1.5110 and in a safe distance from 1.5350. On Friday, it made a swing move above 1.5350 and peaked at 1.5391, before closing at 1.5364. Most lines haven’t changed since last week’s outlook.

GBP/USD is now at a sensitive spot – at the critical resistance line. If this swing is confirmed to a real break, the next level above is 1.5534, which was a minor support line when the pair traded higher.

Stronger resistance awaits the pair at 1.5833, which worked as a support and resistance line in recent months. There are more resistance lines higher, but they are too far now.

If Friday’s swing was only temporary, a drop of the pair will find support at 1.5110, a line that worked as a resistance line and then a support line in the past few weeks.

Lower, 1.4780 is an important line of support – it was the pair’s year-to-date low, and also a support line in 2009. Even lower, a collapse of the Pound will stop at around 1.44.

I am bearish on GBP/USD.

The move around 1.5350 isn’t confirmed yet, and the uncertainty towards the general elections still looms over the pair.

Further reading:

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AUD/USD Outlook – April 12-16 2010

Posted: 10 Apr 2010 02:00 PM PDT


The Aussie finished an exciting week higher. The upcoming week contains a few interesting Australian figures and also one Chinese release that will move the Aussie. Here’s the outlook, and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines marked on it. Click to enlarge:

Aussie forecast

Glenn Stevens pushed the Aussie higher with a fifth rate hike to 4.25%. The second event was within expectations – job figures were OK – no surprises meant no break of the resistance line. Let’s start the review:

  1. Home Loans: Published on Monday at 1:30 GMT. This indicator has been painful for the Aussie in recent months. Loans dropped faster than expected, including an unexpected plunge of 7.9% last month. These drops go hand in hand with the fall in building approvals. A small drop of 0.9% is expected this time.
  2. NAB Business Confidence: Published on Tuesday at 1:30 GMT. The National Australia Bank showed a rise in this survey of 350 businesses. The score of 19 points reached last month will probably be followed with a weaker score this time.
  3. Westpac Consumer Sentiment: Published on Wednesday at 00:30 GMT. The Westpac Banking Corporation surveys 1200 consumers for this indicator. After a few months of strong changes, this index edged up by 0.2%. Another small rise is predicted this time.
  4. MI Inflation Expectations: Published on Thursday at 1:00 GMT. This figure by the Melbourne Institute is important as the government releases an official CPI release only once a quarter. Inflation has been under control according to this indicator – expectations stand on 3.2%. A similar number is expected this time.
  5. Chinese GDP: Published on Thursday at 2:00 GMT. China is Australia’s main trade partner, so the demand from China has a strong impact on the Aussie. GDP is expected to accelerate from an annual rate of 10.7% to 11.7%, numbers that aren’t seen in the West. The number relates to the first quarter of 2010.

AUD/USD Technical Analysis

The Aussie began the week with a rise above 0.92. Near the end of the week, the pair challenged the 0.9327 line and closed right at this point.

At this critical point, 0.9327, the Aussie is at crossroads. If it really manages to cross it, it’s a big victory. This line has sent the Aussie down almost at each attempt. I’ve added a higher line on top of last week’s outlook.

Looking up, a confirmation of a move above 0.9327 will lead towards testing the 2009 high of 0.94. This important line is followed by 0.95 which was a resistance line in the past.

Below, 0.9190 is a minor support line. It’s followed by a more significant support line at 0.9090. Even lower, 0.8980 provided strong support in recent weeks, and is another line of importance.

I remain bullish on AUD/USD.

The fresh rate hike and the good economy pave the way for more gains. Looking at technicals, a confirmation of the break is necessary for more strength.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

EUR/USD Outlook – April 12-16 2010

Posted: 10 Apr 2010 10:00 AM PDT


The Euro finished an exciting week almost unchanged. The upcoming week has inflation figures as well as other indicators. Here’s an outlook for the European events and an updated technical analysis for EUR/USD.

EUR/USD chart with support and resistance lines marked on it. Click to enlarge:

EUR USD forecast

Note that also Euro crosses had an exciting week. In particular, EUR/JPY dropped below a support line and then recovered, moving in a range of 440 pips during the week. OK, let’s start:

  1. German Final CPI: Published on Tuesday at 6:00 GMT. The first inflation figure comes from Germany early in the week. Prices have returned to normal after moving like a see-saw. The rise of 0.5% that was reported in the initial release will probably be confirmed now.
  2. French CPI: Published on Tuesday at 6:45 GMT. Europe’s second largest economy releases its consumer price index shortly after Germany. Prices are predicted to rise by 0.5%, less than last month’s 0.6% rise. The release of both figures almost together will is likely to move the Euro.
  3. Industrial Production: Published on Wednesday at 9:00 GMT. Although Germany and France already released their figures, this release still tends to surprise and move the Euro. Last month’s rise of 1.7% was a reflection of the previous month’s drop. A more modest rise of 0.4% is expected this time.
  4. ECB Monthly Bulletin: Published on Thursday at 8:00 GMT. A week after the rate decision, this release exposes the figures that stood before the bankers’ eyes before making their decision. There could be hints about future policy as well.
  5. Trade Balance: Published on Thursday at 9:00 GMT. The European trade balance wasn’t published last month due to technical difficulties. So, we’ll get two releases at once – for January and February. Both are expected to show a smaller surplus than the last release for December, that stood on 7 billion euros.
  6. CPI: Published on Friday at 9:00 GMT. The final inflation release for the week is for the whole continent – Europe’s prices are rising quite slowly. The annually adjusted rise of 1.5% will probably confirmed. Core CPI is expected to be revised from 0.8% to 0.9%. Only a serious rise will pave the way for a rate hike.

EUR/USD Technical Analysis

The Euro had a bad start to the week – it began by dropping under the previous week’s low of 1.3380 and got close to 1.3267 – the year to date low. It then made a comeback, and managed to close at 1.3497.

Most of the lines haven’t changed since last week’s outlook. The current range is between 1.3380 and 1.36, which was the peak of the previous week.

Above 1.36, the next line of resistance is strong – 1.3850 proved as a stronghold – it sent the Euro down after a failed attempt to break this line. Even higher, 1.40 is a significant line, followed by 1.42 – they were support lines a few months ago.

Looking down, 1.3267 now has a more important position, after holding EUR/USD from dropping lower. A break below this line will lead the way to 1.3080, which was the area where the pair began the upwards move last year.

I remain neutral on EUR/USD.

Fear sent it down and hope helped it recover. All in all, the Greek news continue to dominate the pair’s trading – trading which has become wild, yet indecisive.

This pair receives many interesting reviews on the web. Here are my favorites:

  • James Chen talks discusses the bearish breakdowns within the downtrend.
  • Casey Stubbs brings his recent results on the pair, using 1 hour charts.
  • DailyFX says that the Euro troubles may reach a boiling point as Greece plans debt auction.
  • The Geek Knows reviews the week and looks forward.

Further reading on Forex Crunch:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

USD/CAD Outlook – April 12-16 2010

Posted: 10 Apr 2010 07:00 AM PDT


USD/CAD parity was closely watched in the past week. Trading around this area will probably continue. Here’s an outlook for the 5 events that will move the loonie, and an updated technical analysis for USD/CAD.

USD/CAD chart with support and resistance lines marked on it. Click to enlarge:

canadian dollar forecast

Canadian employment figures disappointed, and prevented USD/CAD to settle below 1.0000. It will be interesting to watch the pair this week. Let’s start:

  1. Housing Starts: Published on Monday at 12:15 GMT. In the past three months, Canadian housing starts exceeded expectations and sent the loonie higher. After reaching 197K, starts are predicted to rise to 201K. This is an important indicator.
  2. BOC Business Outlook Survey: Published on Monday at 14:30 GMT. The Bank of Canada surveys 100 businesses about their economic sentiment. There is no number released, only a written report. Nevertheless, this report is considered a good indicator of the next decisions by the BOC, especially as it’s released only once a quarter.
  3. Trade Balance: Published on Tuesday at 12:30 GMT. Canada’s balance turned positive last month and was also better than expected. The surplus of 800 million will probably be repeated with the same figure. This figure is also released in the US at the same time – making it a very volatile timing for USD/CAD.
  4. NHPI: Published on Tuesday at 12:30 GMT. Just to add more action, this housing figure is released with the Trade Balance. Prices of new homes have risen steadily in the past 7 months. The rise of 0.4% last month will probably be repeated with a 0.5% rise this time.
  5. Manufacturing Sales: Published on Friday at 12:30 GMT. Sales have risen in Canada in the past 5 months, with a strong 2.4% rise last time. This is another indicator for the strength of the Canadian economy. A rise of 1% is expected this time.

USD/CAD Technical Analysis

The Canadian dollar continued to gain against the dollar and reached parity. USD/CAD continued south and reached 0.9977 before retreating up to 1.01 and then closing at 1.0027, lower than last week.

Some lines have been modified since last week’s outlook. The pair currently trades between parity, 1, and last week’s high of 1.01, which is a minor resistance line.

Looking up, the next line of resistance is 1.02, the 2009 low, followed by 1.04, which worked well as a support and resistance line many times in the past. Higher resistance lines are irrelevant now.

Looking down below parity, 0.98 is a minor resistance line, followed by 0.97, which is already a stronger one. Both lines provided support during the previous period that the pair traded below 1.

I continue being bearish on USD/CAD.

Despite the pause in the job market, the loonie enjoys the back of a strong economy, higher oil prices, and an interest rate hike that will come sooner than the American one.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.
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