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May 28, 2015June 15, 2015

A Failing Euro

The $EURGBP completed its Fibonacci move from the highs at 0.7482 with the new low below 0.7128. While it didn’t appear to be the top at the time, the euro became mired in Greek financial drama last week. The smoke-and-mirrors of Greek repayment is once again wearing thin on the markets. The euro had been rallying higher as Greece communicated ability to repay its debts. Then last week, the European Central Bank (ECB) meeting minutes confirmed the ECB’s satisfaction with its quantitative easing (QE) program and its intended effect on financial markets. The euro collapsed as markets were reminded that QE continues in full form out of the ECB.

While the $EURGBP may have completed a Fibonacci move on the daily chart, the Fibonacci move on the weekly chart still has yet to be completed. The 0.7100 support level is a formidable support level. It became the level against which bids stepped into the market to ignite the latest rally to 0.7482. While price last week did break below the 0.7100 support level, the trading week closed above it. With price already below the support level to start the new trading week, there are a slew of former lows to contend with as the $EURGBP looks to complete price action to the major support level at 0.7000.

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.

May 6, 2015June 15, 2015

Euro Sighs in Relief

The $EURGBP staged a monster breakout last week. We cited last week that the $EURGBP had the potential to rally if Greece received a bailout. No bailout came but the buyers still stepped out to buy the euro. One reason is just simple profit taking. At the end of the month, traders squared positions after the euro’s break of multi-year support levels. Another reason is the approach of summer trading. Trading desks are getting ready for the thinner summer market environment. So taking profits off the table and squaring up positions for summer trading may account for a large part of these EUR strength flows.

The $EURGBP had been previously range bound. It broke that range to the upside and broke above 0.7250 right away. It quickly confirmed the breakout on a 4-hr chart close above 0.7250. The $EURGBP immediately rallied 166 pips higher to 0.7416. Offers lined up at the highs with profit-takers and sellers. The $EURGBP is in a terrific downtrend after all. The Greek crisis makes it hard to buy euros for the long term so taking profits at the 38.2% Fibonacci level seems very prudent. But as news of a nearing bailout deal that will please everybody is starting to develop, the euro finds itself in a relief rally. The timing of the rally with election jitters underscores the upside move potential in the $EURGBP. The volatility that is supposed to occur around a change in Parliament has dissipated since hitting markets 2 weeks ago. Perhaps now, the week of the election, market volatility will return that can send the $EURGBP higher still.

If price breaks above last week’s high, it will go to the 0.7500 psychological level. A break higher targets the 50% Fibonacci level at 0.7568. But if price were to move lower in the new trading week, watch the 1st set of Fibonacci levels on the 4-hour chart. These levels mark a correction of the breakout rally of last week. The 38.2% Fibonacci level at 0.7373 should be a place where late buyers will look to enter the rally. Buyers who held from last week know this is also an opportune time to add to long positions. A move lower still targets the Fibonacci levels on the daily chart. These Fibonacci levels are over the entire rally off the 0.7016 lows.

April 30, 2015June 15, 2015

CHART OF THE WEEK: YEN SURGE

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

The Bank of Japan (BoJ) fueled yen weakness despite keeping monetary policy as is to maintain its massive quantitative easing (QE) program. While the BoJ does not see a need to further expand QE, they do confess that they will not meet their inflation target in 3 years. This admission gave sterling traders the green light to send the $GBPJPY back to the February highs at 184.00. This chart shows an early entry into this rally on dips back below 181.00, well ahead of when the BoJ policy statement was released.

April 29, 2015June 15, 2015

My Appearance on FXStreet’s Live Analysis #FXRoom

It was FOMC DAY in the #FXRoom yesterday. A big day for a big interview and Dale Pinkert (@forexstophunter) at FXStreet didn’t disappoint. We talked about the how the $FED may effect markets just a few hours later. I run through some chart art on the $GBPUSD, $EURGBP, $GBPJPY, $GBPAUD, and $GBPNZD. This is my 1st interview since launching Quid Report. So I basically talk through this week’s issue giving traders a sneak peek into my new project. Enjoy the video!

Broadcast live streaming video on Ustream

April 25, 2015June 15, 2015

CHART OF THE WEEK: GREECE WOES

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

We have unfinished business in the $EURGBP after the break of support this week. Greece will remain a basket case because the current Greek government is so new, so young and so boldly naive. The old establishment that makes up the Eurogroup will always have tension with Greece as the kids on the block govern in their own way. The latest proposal could really pressurize the euro.

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

April 22, 2015June 15, 2015

Will the RBA let the Aussie strengthen?

When the Reserve Bank of Australia (RBA) made no changes to monetary policy, the AUD managed to strengthen. In light of the recent strength, the RBA has taken to jawboning to weaken the Australian dollar. RBA Governor Stevens released comments as the new trading week opened that sent the AUD lower. Despite the strong jobs report last week and heating housing market in Australia, the RBA still has interest rate cuts on the table for future monetary policy adjustments. In fact, the RBA feels like the AUD can stand to move lower still. These remarks have already sent the AUD lower across the board in early trading.

Since the rally to 2.0027, the $GBPAUD has been on a corrective move lower. This move lower has allowed the overbought momentum that took the $GBPAUD to those multi-year highs to work lower. While still firmly planted in bullish territory on the RSI, momentum is at more reasonable levels. Momentum suggests that a rally higher is still a strong possibility as the RBA sets out to weaken the AUD. Additionally, since the break above the large 38.2% Fibonacci level at 1.9188, price has not managed to close below that level. Even on the decline to 1.8827, the $GBPAUD still closed that month back above the big 38.2% Fibonacci level. Just as hawkish fundamentals were set to push the $GBPAUD lower, the RBA has stepped in to keep the doves in place.

After price moved to 1.8827, the $GBPAUD made a failed high right at the 1.9650 resistance level. This failed high is supposed to result in a new low below the 1.8827 low, presumably into the 50% Fibonacci level at 1.8612. But this move lower is a tough go. The market has been unwilling to move lower despite the failed high and strong economic data out of Australia. In fact, price is putting in higher lows on the daily chart. This was not the action expected after a failed Fibonacci move and robust economic data. However, it is now clear that the RBA must be intervening in the currency markets to keep the AUD weak. Now that the RBA has made it very clear that they intend to keep monetary policy accommodative to achieve a weaker AUD, the market has started to move now in accordance.

April 16, 2015June 15, 2015

CHART OF THE WEEK: CABLE BULLS

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

The bullish divergence on the $GBPUSD weekly chart has been developing all year long. This week’s lows at the open and the subsequent rally have put yet another higher low on the weekly RSI. The bullish RSI divergence suggests, however, that price has the potential to return to the resistance level at 1.5000. Sellers are sure to step in at the major psychological level but can they hold off the bulls that having been building momentum all year?

April 15, 2015June 15, 2015

The Yen’s End Game is Nigh

The $GBPJPY broke its range and moved lower last weak. Yen strength has been relentless. With the very odd effect of QE actually having a beneficial effect, JPY has been pushing higher across the board.

After the breakout of the range to the upside fizzled, it appears that the $GBPJPY would like break lower still. This break of the range to the downside appears much more sustainable now. It is supported by momentum with the RSI still so squarely in the sell side below the 50 level. A break of 175.00 will have to be confirmed by a hold of 175.00 on the eventual bounce off new lows. A hold of 175.00 allows swing buyers to step in on an epic rally back above 181.00.

The weekly chart confirms the importance of 175.00. The 168.00 level holds a lot of weight to the downside. The 180.00-181.00 resistance zone is critical to the upside. The support level at 175.00 has finally been broken. We have our lower low due to failed highs after the previous attempt at 175.00. Bids were lined up at 175.00 as this bounce has become a reversal. To be sure, late bulls who were more tentative to step in front of the relentless JPY strength, will come in on dips.

April 15, 2015June 15, 2015

QUID REPORT – NOW AVAILABLE

Election jitters played out in trading last week as the GBP weakened across the board. Economists and financial media took to extreme headlines about sterling volatility spiking due to the uncertainty surrounding this particular general election cycle. The GBP did slide but election jitters did not take the GBP under siege. Rather, the Bank of England (BoE) hold on monetary policy last week gave the GBP a bit of reprieve from the election selling. Without a statement from the BoE after its policy announcement, the market is left to trade on its own expectations for a series of interest rate increases out of Great Britain to begin in early 2016. However, in the past few weeks, BoE members have taken to jawboning to temper those hawkish expectations.

In addition to hawkish expectations and election jitters, trading this month is already fraught with seasonality themes….

Read the full report: Quid Report, Volume 7 (subscribers only).

April 10, 2015June 15, 2015

CHART OF THE WEEK: YEN STRENGTH

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

This week it is the $GBPJPY daily chart. We had been anticipating a break of the range into support level since the beginning of the week. The $GBPJPY finally did break lower and now the big 175.00 support level looms ahead.