CHART OF THE WEEK: FAILURE MEANS SOMETHING

Each week, I highlight a chart out of the Quid Report.

The $GBPJPY failed above the 195.50 resistance level all week. Now that $GBPJPY has moved lower off these highs this week, is it now ready to break higher?


GBPJPY 4 HOUR CHART


This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.

The Easy Aussie Dollar

The release of the meeting minutes from the Reserve Bank of Australia (RBA) was met with AUD selling. The RBA maintained its dovish sentiment despite not making any changes to monetary policy at its last meeting. They, too, downgraded their economy. Even though the Australian labor market is still strong, households are laden with debt and are simply not spending money. While officials at the RBA expressed satisfaction with the effects of current monetary policy, they believe policy needs to remain accommodative. It is their assessment that the economy still requires a weak AUD trading at even lower levels. The minutes confirmed the dovish remarks from RBA Governor Stevens just the week prior. As a result, the $GBPAUD continues its rally to new, multi-year highs.

GBPAUD WEEKLY CHART

Momentum continues to build a bearish divergence with every new high. Last week was no exception. There still remains a bearish divergence that suggests the $GBPAUD is due for a correction. Despite the divergence in momentum, the $GBPAUD is in breakout mode. It has soared to new highs and continues to close above the important 2.00 support level. But the decreased buying momentum is glaring. The new highs at 2.0548 were accompanied by even more bullish momentum than last week’s new highs. That is a good sign for buyers this week. It suggests that fresh buyers are back in the market assured by the dovish RBA.

The $GBPAUD has maintained an orderly rally even with the dovish RBA. Momentum followed with building bullish momentum following the rally to new highs. Last week, however, the $GBPAUD established new highs on the daily chart with less momentum than at the previous high price. With diminishing buying momentum on these new highs and a bullish close, a breakout higher could produce a false break. If price is unable to hold above the 2.0344 lows with adequate buying demand, the buy zone at the Fibonacci levels will come into play.


This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.

How Much More Loonie Weakness?

The resumption in oil weakness has kept the $GBPCAD supported on the back of CAD weakness. Weakness in oil markets may also resume the dovish sentiment out of the Bank of Canada (BoC). While the BoC welcomed the weaker CAD that resulted from the slide in oil prices, the return of weak oil could also mark the return of the doves to the BoC. Recently, however, oil markets have stopped crashing and started consolidating. This stabilization may mean another push lower in oil is eventually coming. As long as the crude oil futures market are unable to rally further beyond the $60 level, the $GBPCAD will find traction to move higher.

The $GBPCAD had been range bound between 1.8900 and 1.9100 as oil markets consolidated. Thus, it has been Canadian economic data dictating direction in the $GBPCAD in recent weeks. Despite a good housing starts number released last week, it was the poor capacity utilization number that weakened the CAD. The $GBPCAD moved back above the 1.9100 resistance level to close the week. The new trading week has already seen a weak Canadian manufacturing sales report rally the $GBPCAD to new highs at 1.9234. These new highs complete the Fibonacci move after last week’s correction. With wholesale sales, retail sales and inflation numbers to be released this week, any weak data will see the $GBPCAD continue its rally back toward the highs at 1.9555. However, strong data will cause the $GBPCAD to retrace the current rally.

GBPCAD 4 HOUR CHART

With the close of last trading week above the 1.9100 level, the $GBPCAD had its first bullish close above the range between 1.9100 and 1.8900. Manufacturing data is such a market mover for the CAD because of Canada’s export-dependent economy. In fact, last week BoC Governor Poloz warned of weak economic effects due to bad weather extending into the second quarter of economic activity. The weak data seems to confirm this BoC warning issued just last week. Therefore the CAD will be on the back foot in trading this week. This CAD weakness will only be amplified on any weakness in the crude oil markets.


This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.

CHART OF THE WEEK: HOME IN THE RANGE

Each week, I highlight a chart out of the Quid Report.

The euro behaved as expected in this week’s Volume 15. The levels on the daily chart foretold the dramatic story of Greece. The week started off with a deal taking shape that rallied the $EURGBP off the 0.7250 level.  Then Greece played hard ball and the IMF left. Germany said the euro was too strong. $EURGBP peaked and fell to 0.7200. $EURGBP rallied off that support to close the week in that quirky little zone between the arrows. How will euro trade next week?


EURGBP DAILY CHART


This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time calls and adjustments to the weekly report. AVAILABLE NOW.

RBNZ Ushers in More Kiwi Weakness

The $GBPNZD continued its move higher last week by extending the rally to new highs at 2.1709. Since the breakout rally took out the former highs on both the daily and weekly charts, we must look to the monthly chart for the potential of a continuation higher. Looking at the monthly chart, the importance of the 2.1050 level is significant for future direction. After finding resistance at the 2.2050 level back in, the $GBPNZD made many attempts to move lower. Soon the $GBPNZD was trading in a huge range between 2.1050 and 1.9250. The past two months found price holding the bottom of that range to breakout above the range top. With a confirmed close above the key 2.1050 level, the $GBPNZD has potential to move higher still. The next major level of resistance is found just above the major 2.2000 psychological level.

GBPNZD MONTHLY CHART

While the breakout of last week took price to new highs, momentum, on the other hand, did not follow suit. The RSI shows a bearish divergence on the daily chart at the highs. This divergence has the potential to push price lower into the buy zone marked by the Fibonacci levels of the latest bullish wave. Though the 2.1050 level is a key level for direction, it is the 2.0800 level that must hold as support for the $GBPNZD to maintain its bullish bias.


This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.