fbpx

Posts

Posted on

Sterling Digest, 13 February 2014: phase two

Mark Carney, Governor of Bank of England
The honeymoon is over

Bank of England Governor Mark Carney delivered the long awaited Inflation Report after “scrapping” forward guidance just a month ago. What Carney gave is what some are dubbing stronger guidance. He recognized and upgraded the UK economic recover and then added more indicators to produce “Forward Guidance – Phase 2”. Whatever you want to call it, the markets liked it and sterling rallied hard across the board. The rally continued even during the Asian session as those traders got the opportunity to digest the Inflation Report and Carney’s remarks. Now with sterling at key resistance levels, does it have the strength to go higher? What’s even more interesting to watch is if sterling can continue to rally in the face of a dovish BoE.

Image credit

 

Posted on

Is This Euro Rally For Real

It surprising to see the euro’s positive reaction to Draghi’s oration. There are pundits that like to speak about President Obama but he has nothing on our resident ECB Governor, Mario Draghi. After leaving monetary policy on hold, Draghi reiterated low interest rates and hinted at a cut or QE depending on data. And yet, the euro rallies. With an approving nod toward low inflation benefits on wages and recent positive economic developments, Draghi gave this budding euro rally some fresh legs to stand on.

EURGBP weekly chart

The weekly chart is a clear downtrend but this 61.8% Fibonacci retracement level has turned out to be a big deal right now. It was hard to get long earlier this week knowing how dovish the ECB is. But today’s positive reaction, really fits the technical outlook for a rally to 0.8600. A Friday close above 0.8300 would be very bullish also. Near term targets to contend with for any type of material trend reversal to occur lay at 0.8350, 0.8400 and 0.8500.

Listen to more $EURGBP analysis here.

Posted on

New Month, New Week, New Attitude

It’s the first week of a new month in a new year. We will get a new attitude from a Bank of England that has scrapped its new forward guidance policy after less than an year of implementation. This action makes this week’s rate decision all the more interesting.

In the mean time, we have a slew of PMI data before Thursday. A disappointing manufacturing PMI number kicked off the week. With a miss to start the week, it could be very likely that data disappoints in construction today and service tomorrow. Trading yesterday took sterling to key swing levels in all the major GBP currency pairs. Price moves this week could start a trend. Here is where we stand ahead of today’s release.

EURGBP 60 MINUTE CHART

GBPUSD DAILY CHART

GBPJPY WEEKLY CHART

GBPCAD DAILY CHART

GBPNZD DAILY CHART

Long overdue for a correction, GBP could easily be a great buy or sell deeding on the market’s reaction to PMI data and the BoE this week.

Posted on

Sterling Digest, 23 January 2014: threshold not target

 

If you repeat it enough, the market will listen. At least that is what the Bank of England is hoping. The UK sits 0.1% away from the unemployment rate threshold at which forward guidance dictates that their central bank would start to consider raising rates. But markets have thrown the word consider aside to side and are breaking out with volatility. With the GBP ripping across the board and the $FTSE falling lower, you have to believe that all the markets are trading on new rate hike expectations when just 12 months ago we were talking about raising quantitative easing. This hawkish change in sentiment is certainly a fundamental change that even technical traders are paying attention to.

 

Posted on

BLAME THE KIWI

The forex markets are super thin right now. Even though news just dropped out of New Zealand CPI, the liquidity in the air has disappeared.

Spreads have widened across the board signaling thin market conditions. I got my $GBPNZD orders out of there in a hurry. With US off today and still 45 minutes before Wellington and Sydney open, the sidelines is the best view in kiwi.

Posted on

GBP/CAD At A Crossroads

This week has the potential to be a pivotal for the $GBPCAD. The currency pair has enjoyed a massive breakout from historically lows to the 1.80 highs. This big psychological level has derailed the steam of the bulls it seems in 2014. The $GBPCAD has been rangebound between 1.80 and 1.78 for all of 2014. With the release of Bank of England meeting minutes AND the Bank of Canada interest rate decision on the calendar this week, it seems almost obvious that traders would buy $GBPCAD ahead of these releases. In fact, $JPM has issued this call today:

That has me very wary. To back that wariness is the RSI divergence evident on both the 4-hour chart and the daily chart.

GBPCAD 4 HOUR CHART

GBPCAD DAILY CHART

The continued failures above 1.80 combined with the bearish RSI divergences on these charts actually provides a really good opportunity for swing sellers. A price move lower targets the bottom of the range around 1.7830/00. However, I’d expect buyers to step in at those levels too. Depending on how the central bank news falls, the $GBPCAD has ample opportunity for both bears and bulls this week.

Posted on

Sterling Digest, 15 January 2014: WTF

TIME magazine cover of new Fed chairman Janet Yellen
Until her 1st meeting in March, USD may hijack the markets with uncertainty

These 1st 7 trading days have been a nightmare for me with sterling. SHEESH! The market pushed to highs and lows and yet still remains rangebound. The volatility, too, has been intense as players jostle for position in the year open. Nobody wants to miss the monster rally of 2013. Both bears and bulls have been shook out and made money. It hurts but there still a lot of new year left. It is important to admit to the pain, analyze mistakes and make the next decision. Timing has needed to be perfect and fearless. Yet this is always easier said than done. A $GBPNZD short at 2.00 was a beautiful opportunity but the volatility on NFP day shook me and faked me right out of the trade. Other traders have been sharing similar frustrations in the market. Thankfully, there are others still who are seeing very clearly and their shares have been a guiding light to (some) clarity. That is the beauty of the market…and the stream.

 

(Image credit)

 

Posted on

Disney Builds Its Exposure to Africa

When media boss and former human resources manager Mo Abudu launched EbonyLife TV in mid-2013, she boasted that the Afro-centric platform would air more than 700 hours of original content in its bid to capture a global audience. The channel has now partnered with Disney to produce an African version of hit series Desperate Housewives, set to debut in 2014.

Recognized as one of the top 5 people to watch in West Africa, Mo Abudu introduces the Walt Disney Co. to business with Nigeria rather than just in Nigeria. And as such, I have added $DIS to my watch list for 2014. $DIS stock has been trading at all-time highs for the past 2 years. Wow! While many traders will cite all kind of technical and fundamental reasons, I can only see now that Disney recognizes what I’ve known for a very long time: African media is ripe for growth. Nollywood is 2nd only to Hollywood in the worldwide film industry. And they want in in. I like this partnership. It makes me like the $DIS stock as the company is building on its momentum in Africa and gaining trust in Nigerian businesses.

Mentioned above:

 

Posted on

What I Wish I Said

I was honored today to be on @spz_trades’s last show on BFTD.tv with @NicTrades. @NicTrades is a superwoman who chatted markets in the middle of a power outage. She rocks. Some of her key observations for 2014 that I took away:

  • $AUDUSD to 0.9000 off the double bottom
  • $USDJPY to 112
  • USD lower and USD pairs higher
  • $EURUSD to 1.43
  • Correction in $SPX, $DAX and $FTSE
  • Stocks will have to rally on their own merit, not QE

I was clearly the student in the room and now in hindsight there are a number of thing I WISH I could say now. SMH. Face plant. So I’ll say them here.

  • I do see $EURGBP higher to 0.8600. I also still see heading lower in 2014 to 0.8000. It might happen way sooner than I imagined if current price action is any indication.
  • $GBPAUD is due a correction lower. Much lower. But if it were to correct to 1.7670 the 50% Fibonacci level, hold, and rip to new highs at 2.10, it would be the trade of the year.
  • Other great follows right now on Twitter for new traders that I didn’t mention: my traders list

I love that this blog gives me the opportunity to reflect on myself and remain true to who I am. I don’t know if it was nerves (Nic is a rock star!) or because I had company the night before, but I don’t feel like I came off myself today. Hopefully, you all can enjoy listening in on this chat about markets and trading for 2014.

Proudly powered by WordPress