SNB announced its interest rate decision last week and kept its ultra-accommodative monetary policy unchanged as expected.
The statement came out as expected by the market players. Swiss National Bank maintained its ultra-accommodative monetary policy unchanged, with the interest rate on sight deposits remaining fixed at -0.75%, and the three-month Libor target range at -1.25% to -0.25%.
It also indicates that it will continue to intervene as needed in the foreign exchange market. It still considers that the Swiss franc is “highly valued” even though the currency has depreciated slightly in a value weighted by foreign trade. This is due to the strengthening of the dollar, while the franc hasn’t changed much, remaining at a high level against the euro.
Wednesday; FED’s rate hike decision and FOMC Statement will be announced. It is widely expected a rate hike from FED that should bring the overnight target range to 2.25%–2.50%. The key outcome of the post-rate decision press conference is the economic and the monetary policy outlook Powell is going to pursue. If the Fed chair Charts. Above the current level, if the pair breaks out the parity, the targets of the Bulls will be 1.00400, 1.0065 and 1.01110.
On the smaller chart timeframes, the pair tested SMA 200 on H4 Chart at 0.99900. A firm closing above the parity level may be the confirmation of the bullish continuation.
On the H1 chart, a bearish Black Swan and Butterfly formations send a bearish correction signal. A break below 0.99760 can send the pair 0.99500 and 0.99200 levels which are shaped by EMA 50 and MA 20 on H4 Chart.
itradeandwin posted: Would like to share forecast and trading ideas.
XAUUSD Gold Trade Plan: Correction Consolidation and Bearish Continuation Near Term Bearish Gold Fundamentals Improving optimism is picking up as the U.S. and China appear to be moving closer to resolving their trade dispute. Growing momentum in the U.S. dollar, and rising equity markets. Equity markets soon will be normalised. Because of the government shutdown, the U.S. economic data remains relatively light. Markets are pricing: No News is Good News” No fresh need for safe-haven assets in the near term. Gold is doing what it’s supposed to as a hedge: it’s taking a breather as other asset classes rally.
Gold is still in the bear market. The trend change is above $ 1.375.
Gold Prices will remain under bearish pressure below 1300. We really need to see signs of lower growth in the US for gold to see a sustained push above 1300.
Markets are closed Monday in recognition of Martin Luther King Jr. Day.
We predict a minor correction somewhere 1278 – 1277 towards 1285 – A Bullish Bat Pattern-
After a consolidation XAUUSD is likely to retest 1276.50 support. The breakout of 1276 would push the prices towards 1265-1261 zone.
The bigger fight may start at $ 1.265. If some really strong buyers do not come in, the Gold prices will meet $ 1.240.
The U.S. dollar traded higher against all of the major currencies Friday with the exception of the Canadian dollar because as it turns out, the U.S. government shutdown has been good for the dollar and stocks.
The delay of U.S. government releases gives the market relief. Major reports such as retail sales and the trade balance have been delayed due to the shutdown and while government shutdowns don’t tend to inflict lasting damage on the economy, it’s never gone on for this long.
Dovish comments from the Fed Members continue to hit the wires.
US Markets will be closed on Monday due to Martin Luther King, Jr. Day in the US.
The most important USD data to be released next week:
Tuesday: Home Sales
Thursday: Manufacturing, Services and Markit Composite PMI
Friday: Core Durable Goods Orders and New Home Sales
Fundamentals on CAD Side:
CPI unexpectedly rebounded to 2.0% in December despite a notable drag from energy prices. Expectations were for the headline rate to hold steady at 1.7%, but a significant jump in airfares (methodology changes have made this component extremely volatile over the last six months) added a surprising 0.3 percentage points. By contrast, the BoC’s core inflation measures were marginally softer on balance (averaging 1.87% y/y) following revisions to the November figures. The BoC sees that as evidence the economy has been operating close to full capacity for more than a year now.
BoC is likely to be patient in raising interest rates. Markets think that The BoC will want to see how the economy is progressing through this latest oil price decline, and expect the current pause in their tightening cycle will extend through their next meeting in March
The most important CAD data to be released next week:
Tuesday: Manufacturing Sales and Wholesale Sales
Wednesday: Retail Sales and Core Retail Sales (Nov)
Last week we saw the pair in a consolidation process. The downside is limited by 1.31800 and the upside capped by 1.33000.
Loonie is trading below all main EMAs on the H4 chart still in the bearish territory of smaller chart timeframes. A clear break above 1.33000 may carry the price towards 1.33600 which is blocked by the EMA100 and EMA200.
A clear break below 1.32400 may push the price towards 1.31800 – SMA 100 Support-
We need to see a firm closing below 1.31800 for the bearish continuation. 1.30000 will be the targets of the Bears after a potential breakout of 1.31800.
A potential Bullish Cypher Pattern would be completed at 1.32000. This level can be used as a buying opportunity
BNZ, which is one of the most dovish central banks by stating that it will not increase any interest rates until the end of 2020, can continue to hold its dovish stance in the next week’s meeting with this data.
On the other hand, the FED is still the safest haven with its USD 2.5% interest rate even though its dovish stance.
The most important calendar data for the pair is undoubtedly RBNZ meeting on February 13th – No policy change is expected
If the negotiations between the US and China to be held on February 28th do not result in a market expectation, the market may switch to risk-off mode. This may be catalysed for new decreases in the pair.
The pair broke the short term bullish trend line. We see a triangle pattern on the daily charts. The pair is likely to test the baseline of the triangle 0.66500. Breakout of the triangle will trigger the bearish move.
Fundamentals: Euro is losing weight amid disappointing macroeconomic data and political turmoil. Swiss Franc is gaining weight as a safe haven asset.
Technically: As seen on the below Dail chart, the pair broke down 1.13500 support and ended the week at 1.13240. The pair ended the week in the lower Bollinger Band and below EMA 50. Bearish pressure will continue as long as the price stays below 1.13500.
Harmonic Overview and Trade Opportunity:
As seen on the H4 chart, the price is likely to continue to decline and test 1.13000 psychological support. A bullish Cypher pattern would be completed at 1.12980 and a Bullish Shark pattern completed at 1.12760. A technical correction is predicted between 1.12980 – 1.12760
The pound is trading under a slightly bearish pressure amid Brexit uncertainty and latest dovish BoE statement.
On the other hand; JPY is getting demand as a safe haven asset. As we have mentioned in our previous JPY forecast, the IMF’s global growth projections suggest that Japan’s healthy growth may cause the Yen to shine in the future.
Dragon ended the week at 142.020, just below EMA 50 and in the lower Bollinger Band after rejecting MA 100 & MA 200. RSI headed south.
On the H4 Chart, technical indicators turn to bearish. The price closed below EMA 50 and MA 100.
However, we can not talk about a trend reversal as long as Dragon holds above 140.600.
On the upside, 142.900 remains as the key resistance. The bearish pressure will continue as long as the price stays below 142.900.
On the downside, 141.400 and 141.100 are the levels to focus on Monday. We keep our short position targeting 140.600. A clear breakout of 140.600 may send the price 139.800, 139.000 and 138.200 Fibo 88.6 Retracement.
Brexit Scenarios, Sterling Report and GBPUSD Forecast
Parliament is about to enter another decisive week in the Brexit deliberations. On Tuesday MPs will vote on Theresa May’s deal, and, if it falls, on a no-deal Brexit and the question of extending article 50.
Calendar and Scenarios
March 12th: Parliament votes for May – EU revised plan. Expectation: NO If Parliament approves the plan; 1. Sharp Rally of GBP pairs. 2. March 21th – March 22nd: EU votes fort he agreements 3. Trade Talks between UK-EU begins. 4. Sterling may slow down because of the uncertainty. If the UK Parliament rejects the agreement;
March 13th: Parliament votes for No Deal Brexit. Markets Expectations: NO If Parliament approves No Deal Brexit; 1. Sell off in Sterling 2. Boe projection: 25% decline in Sterling. %8 decline in incomes. 3. BoE may go to a rate hike operation to protect the Sterling. 4. Increase in the Global Uncertainty. If UK Parliament says NO to No Deal Brexit
March 14th: Vote on delayed Brexit The market is pricing this scenario. The bullish trend in Sterling started with the expectations of delayed Brexit.
If Delayed Brexit Scenario becomes validated, we may see a rather small Sterling rally after the parliament’s “YES” to a delayed Brexit.
However, a delayed Brexit will not be the end of the uncertainties. That is the reason for the latest retracement in Sterling. At the point, the most positive scenario on the table is the second Brexit referendum. The Labour leadership, having seen its alternative soft Brexit proposals defeated, has formally announced support for a second referendum, suggesting this to be the logical consequence of the formal party conference position established last autumn.
If this scenario –the second referendum- gains weight we will see a sustainable Sterling Rally. We must say that the Sterling is very cheap now in the mean of real effective currency strength.
As seen on the weekly chart, we see a measured move up printing. After making historical low 1.19000 by an Algo Crash – in 24 hours-, Cable tested 1.45000 key resistance. The fresh bearish movement was triggered by Brexit and FED’s rate hike cycle. Dips completed at 1.25000 and Cable entered into the recovery period. The target of the formation is 1.48000 but a few fundamentals are needed and it is not the subject of this forecast. 1.30100 is the key support. If GBPUSD makes daily closings above 1.30100, we could see the pair moving towards 1.34500 – 1.38000 with an accelerated bullish trend.
On the smaller charts, as we have published last week, an inverted head & shoulders pattern became validated.1.32200 is the resistance and the invalidation level of the pattern is 1.29800.
Cable broke 1.32200 and tested 1.33500 resistance. But this breakout attempt and the bullish move were not sustainable due to Brexit uncertainty. The pair pulled back towards 1.30100 support and ended the week at 1.30120.
“YES” to revised May-EU Plan: ( Probability 0.01% ) Our trade plan is to buy and add long at the closing above 1.32200 targets 1.34500 and 1.37000 with a stop loss below 1.30100.
Delayed Brexit: ( Probability 99.8 % ) Our trade plan is to buy and add Long at the closing above 1.32200 targeting 1.34500 and 1.37000 with a stop loss below 1.30100. Second Referendum Scenario: Targets 1.4000-1.45000
No-Deal Brexit: To sell GBPUSD targets 1.2700 and 1.23000. And if we take “BoE’s projection of 25% decline” into consideration, this sell of may continue towards 1.2000.
Gamblers: They may buy or sell. No worries, only the table wins.
XAUUSD Gold Forecast: Will FED meeting be the catalyst?
What could drive Gold prices higher? Because XAUUSD needs a catalyst to go higher
Changes in the trade-weighted US Dollar. Weak USD. / Not yet Negative interest rates / No Changes in nominal yields on10-year U.S. Treasuries / Not supportive for Gold at the time being US Economic Data / Not too weak to support gold prices. Supply and demand / Physical demand are not too strong at the time being. Global Uncertainty / Brexit seems to be out of the scenario for a while. XAUUSD ended the week above the psychological level of $1,300. However, Gold needs a catalyst to ho higher to break above $ 1.312.
I am trying to find out at least one catalyst. ( I am a Gold Bull in the long run but our Gold rally is likely to be postponed for a while. )
The market is lacking conviction for higher prices. Resilience in equity markets is making gold a less attractive alternative for investors. The S&P 500 has broken above the psychological level at 2,800, and ended the week at 2824 points, up 3% from the previous week.
A potential catalyst which Brexit could bring is out of the scenario for a while. Right now there appears to be no major need for an insurance policy so investors are shunning gold and turning to equities.
The last hope is much more dovish FED. All eyes will be on the FED as it holds its monetary policy meeting next week and along with its interest rate decision will release updated economic projections. Market players are also expecting the central bank to unveil its plan to top its balance sheet reduction program.
The FED is likely to revise down the median growth projection. But I believe that the market has priced this revise already.
After the last dovish FED monetary policy statement, XAUUSD re-tested $ 1.350 but failed the break above. I have mentioned before that a new story is needed. This catalyst can be a weak USD, not a dovish FED. If gold is going to go higher we need to see weaker U.S. data. The U.S. economy still appears strong compared to the rest of the world and that is keeping the U.S. dollar bid
I do not expect the FED to be anywhere near dovish as the ECB was two weeks ago when it surprises markets with a shift in its forward guidance, not expecting to see any rate hike until at least the end of the year. ( Which was not surprising to me )
And one more thing: There is a risk that the Fed sounds hawkish as it downplays a potential slowdown in the domestic economy. More clear; if the Fed says that it’s downgrading its growth because of risks in the global economy or anything along those lines that could make them sound a little hawkish. This would support equity markets and put Gold prices under bearish pressure.
In any case, gold remains an attractive safe-haven asset as global economic uncertainty builds long run. If we see a significant drop on the gold prices towards $1.260 – $1.250, it would find strong buyers appetite there. On the back of slowing global economy, I don’t see a lot of reasons to be overly bearish on gold.
I will go over the H4 Chart which we have published on Thursday. XAUUSD broke the bearish flag pattern and tested $1.292. Gold prices recovered on Friday and retested the broken line. The pattern remains valid as long as the prices fail to make H4 closing above $1.307. If Gold price breaks below $1.296, it is likely to test $ 1.290. Break below $1.290 may start a sell-off towards $1.277 and $1.269. Technical target of the formation is $1254.
On the upside, a firm breakout of $1.308 would send the price towards $ 1.320. As I mentioned in the fundamental analysis, a catalyst is needed for a sustainable bullish move.
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