Hey folks,
Just a quick introduction about me. Started a blog at http://www.unchartedfx.com/ primarily focusing on Economics and Geopolitics (mind you that I have not posted much on Geopolitics as I would have liked). I post weekly market updates where I post charts and mention the key levels I am watching focusing on Commodities and Currencies. My technical analysis is based on fibonacci levels. After much research and now knowledge, phi is the basis of life. Well it really is expressed by fibonacci. Humans from birth, seeds which sprout into plants all strive towards phi meaning Phi is source. I cannot get too much in depth in this topic but I encourage all to research this. Interestingly enough, I have found that fibonacci works the best in the markets paired with pure price action. My strategy is simple and relies more on discipline and focus. My fibonacci levels are:
Black: The most long term usually monthly. Orange: Secondary long term move could be monthly or weekly. Dark Blue: Medium term usually daily but could be weekly. Green: Short term which is daily or 4 hour charts.
Anyways folks I hope you enjoy and my information will aid you. I attend many large conferences here in Vancouver BC and for future posts I shall post about industries which have the most potential for the future for investors.
Last week was eventful as we saw two central banks cut rates... and the beginning of the new "Fed will raise rates" media circus. The Reserve Bank of Australia cut rates down to their lowest of 1.50%. The Bank of England also cut rates but this was expected given the rhetoric in their July meeting. Rates are now the lowest in British history down at 0.25% and the BoE has increased the stimulus package which includes the purchasing of corporate bonds. Finally to end the week, we had Non-Farm Payrolls from the United States. The US added 255,000 jobs in the month of July. Of course many are now saying that the Fed will raise come September (the amount of times I have heard this for the past year and a half......) but it is quite unlikely they will given the US elections. A move by the Fed may be seen in these circumstances to be politically motivated and it is likely that December would be a better month for action if they tend to do so.
This week is quite light for US data but there are some key numbers to watch for. First of all we have the Reserve Bank of New Zealand interest rate decision on Wednesday with consensus expecting a cut from 2.25% to 2.00%. Given what the Australians have done, and of course the global trend of lowering interest rates in this currency war, the consensus may be correct. Friday we have the EU Q2 GDP, which will be monitored given the disappointing US GDP numbers, and to top it all of we have the US Retail Sales for the month of July. Of course it will all be about maintaining this strong US data after NFP (even though much of the previous US data has been disappointing and revised lower).
Tuesday: GBP GDP Estimate. AUD Governor Stevens Speech Wednesday: NZD Interest Rate Decision. Friday: EUR Q2 GDP. US Retail Sales (July)
The S&P 500 continues to hold a near term fib retracement level at 2,165.10. The break down failed to give follow through and the bulls are still in control. 2,137.13 is still my big long term fib (black) bullish invalidation level and I would like to see a break and close below that to consider a move lower. Mind you I believe a move lower eventually will occur.
The US FXCM Dollar Index on the daily has failed to provide follow through on the retest of the broken range. Just to clarify this is not the DXY Dollar Index but FXCM's index which gives equal weighting, 25%, to the EUR,GBP,JPY and AUD.
US Oil about to test the all important black fib at 42.66. It is worthy to note that a trend channel retest occurs near there as well. We do have a weekly hammer candle at the blue fib which is at 39.98 (close to the psychologically important 40 level). I will just await price action to tell me what will happen at the 42.66 level. As of writing, the oil daily close candle has closed above 42.66. Therefore this level is now in play and we will await a retest to confirm new support.
Gold has broken below an uptrend line, but we need the retest to support this. Personally I think we can go lower to 1301 or 1283.62 before we see a move up again. 1349 (1350) fib zone remains crucial resistance now. Was a very important level that we closed on the monthly. Given all the uncertainty in the world and the lose of faith in central banks Gold should see some bids on the dips. 1375 is also an important level to break for a higher run.
Silver essentially in a range between 19.22 and 20.48. We do have a long term blue fib at 19.77 which can also be used for executing positions. I tend to put more emphasis on these long term fibs of course. As you can see on the retests of the blue fib, we have not been able to produce a concrete candle stick to confirm the break.
EURUSD with a daily close below the 1.1088. Of course from last week, I mentioned how 1.1213 was the big level I was watching since it is a long term black fib level. I am bearish below that. I took my profits at 1.1088 and looking to re-enter short provided we get a bearish candle at 1.1088. We have a 4 hour pinbar currently but not that strong and was printed in the last 4 hours of Friday before the market closed for the weekend.
GBPUSD levels from last week still in affect. 1.3016 is long term black fib support while 1.3226 remains to cap price and even though we got a break of that level we could not hold. I believe we are ready for a move lower given the rate cut and increased stimulus by the Bank of England.
EURGBP supported by 3 touches of an uptrend line and the fib level at 0.8370 seems supportive. 0.8550 as resistance.
The Aussie continues to run higher even though the RBA cut rates. 0.7652 is a level we are testing right now and I would like to see a break above and a retest to confirm a move higher.
The Kiwi has closed below 0.7153 fib level. As you can see we are about to retest that level. For those who are bullish NZD, perhaps the AUDNZD which is testing an important level as well. Remember though that we do have the Reserve Bank of New Zealand on tap with expectations to cut interest rates this week. Although, when the Reserve Bank of Australia cut rates we did see the Aussie appreciate against the USD.
USDCAD I am supportive of this as long as we stay above 1.3064 orange fib level. 1.3181 is a resistance level so either wait for a retest of the previous mentioned orange fib level or await a break above 1.3181 and a retest to confirm.
EURCAD testing the level I mentioned last week. And that is the 1.4564 level. I would like to see a a nice bullish candle print here before I enter.