Forex Analysis & Reviews

We present to you the daily updated section of market analysis prepared by professional analysts of InstaForex.

Global macro overview for 23/05/2017

Global macro overview for 23/05/2017:

The Flash PMI data from across the Eurozone have surprised market participants. The PMI Composite Index for the whole Eurozone area was at the level of 56.8 points in May, which indicated that the economy was growing at the fastest pace in six years. The market assumed a minimal correction to 56.7 points, but the strong result of the German manufacturing industry was the main contributor to the overall score. Moreover, the Ifo Business Climate index rose to 114.6 (113.1, 113) points, the highest in history. In conclusion, this good set of data might indicate a bigger than expected 0.2% GDP figure in the second quarter in the Eurozone and a possible extension of the ECB monetary policy a little bit longer than planned.

Let's now take a look at the EUR/JPY technical picture on the H4 time frame. The market is still trading below the recent local high at the level of 125.80, but the momentum indicator remains bullish. The bulls might try again to test the local high and in a case of a breakout, the next technical resistance is seen at the level of 126.44 and in a case of a failure, the next technical support is seen at the level of 124.50 and 123.26. Please notice, that the weekend gap from the end of the April hasn't been filled yet.

analytics5923f5475b7b1.jpg


Back to top

Global macro overview for 23/05/2017

Global macro overview for 23/05/2017:

Interesting data from the US house market are scheduled for release at 12:30 pm GMT today. The New Home Sales data are expected to remain almost unchanged at the level of 611k houses which is close to last July's 622k – the highest level since the recession ended. The number of new home sales in recent years still points to a healthy trend and is still expected to bounce back in the second quarter after a weak first quarter. Nevertheless, the possibility of another interest rate hike in June 2017 might cast a shadow on future sales results as the credit (mortgage) costs will increase, so the number of people willing to buy the new home might start to decrease slowly. Interest rates, however, still remain at historically low levels, so there is no evidence yet of a sudden slump in new home sales data.

Let's now take a look at the USD/JPY technical picture on the H4 time frame. After a nosedive to the level of 61%Fibo at 110.50, the market recovered quickly, but there is still no sign of any impulsive rally towards the next technical resistance at the level of 112.06. Instead of that, the price is trading in a narrow range between the levels of 110.85 - 111.72. The momentum indicator is still below the fifty level, so the upside momentum is not that strong yet. The change in trend will come with the level of 112.06 violation, otherwise, a sideways price action is expected.

analytics5923f1f26c542.jpg


Back to top

Trading plan for 23/05/2017

Trading plan for 23/05/2017:

The terrorist attack in Britain set the financial markets to fly-to-safety mode, so Japanese Yen and Gold are now in demand. The price of EUR/USD did not change much overnight, but the Dollar remains weak with new scandal revelations in Washington.

On Tuesday 23rd of May, the event calendar is quite busy with important economic releases, so market participants will pay attention to Flash Services, Manufacturing and Composite date from across the Eurozone, Ifo Business Climate data from Germany, Wholesale Sales data from Canada and New Home Sales data and Flash Manufacturing and Composite PMI from the US.

EUR/USD analysis for 23/05/2017:

The bunch of Flash PMI data from across the Eurozone is scheduled for release between 07.00am and 08.00am GMT. Market participants do not expect any big changes in PMI's, so most of the data should remain unchanged. The Ifo data, however, is expected to increase again. The Ifo Business Climate is expected to increase from 112.9 to 113.1 points and Ifo Expectations data are expected to increase from 105.2 to 105.4 points. In conclusion, moderate economic growth doesn't look set to accelerate, but any loss of momentum will probably be minimal.

Let's now take a look at the EUR/USD technical picture on the H4 time frame. The market keeps making marginal higher highs just below the 1.1300 level, but the momentum is clearly in divergence with the price. The most important intraday level for bears is now the technical support at the level of 1.1212 because any violation of this level would immediately lead to the test of the next support at the level of 1.1170. Moreover, if at the end of the day the candlestick pattern on the daily time frame is any of the reversal patterns (doji, black cloud cover etc). then this would be the first sign of a possible deeper correction or even a reversal in this market.

analytics5923ee4447472.jpg

USD/CAD analysis for 23/05/2017:

The Wholesale Sales data from Canada are scheduled for release at 12:30 pm GMT and market participants expect a 1.1% increase in sales after a 0.2% drop a month ago. Wholesalers sell to industries and retailers in quantities far larger than most consumers are willing to purchase. Given that growth in Wholesale Trade usually precedes increases in retail trade and consumption, changes in Wholesale Sales can be used as an early indicator for the overall direction of the retail sector, consumption, and the economy.

Let's now take a look at the USD/CAD technical picture on the H4 timeframe. The market has broken out below the 50% Fibo at the level of 1.3508 and now it is heading towards the next support at the level of 1.3444. The overall market conditions are oversold, but there is no visible bullish divergence between the price and the momentum indicator yet. The next technical support is seen at the level of 1.3410.

analytics5923ee4cba53e.jpg

Market snapshot: Another failure to make a new high

The bulls did manage to test the recent swing high at the level of 1.3047 again, but failed to break out above it. The price is still trading above the golden trend line, but the whole structure look more like an ending diagonal formation. This means, the price might violate the golden trend line any time soon and move towards the next techncial support at the level of 1.2828.

analytics5923ee553ce83.jpg


Back to top

Ichimoku indicator analysis of USDX for May 23, 2017

The Dollar index remains in a bearish channel. Trend remains bearish. I favor a dollar bounce this week from current levels but we still have no confirmation of a reversal.

analytics5923e2050053d.png

Red lines - bearish channel

Short-term resistance by the tenkan- sen is at 97.12 and by the kijun-sen at 97.47. Cloud resistance and target of the bounce expected is at 98.60-99. The RSI is diverging on the 4-hour chart.

analytics5923e252f237f.png

Red line - resistance

Green line - long-term trend line support (broken)

The weekly candle is testing the weekly Kumo support at 96.90-97 area. The RSI is oversold on a weekly basis. This is not the time be shorting but to be looking reversal signs. The bounce that will come will give a better opportunity and a better selling price level higher. Traders need to be patient. Aggressive traders will also look to play the bounce once we get the first short-term reversal signals.


Back to top

Ichimoku indicator analysis of gold for May 23, 2017

Gold price remains just below the important resistance of $1,265 where the 61.8% Fibonacci retracement is found. Trend remains bullish but a pullback towards $1,250 is justified in the short term. As long as price is above $1,213, I expect Gold to reach $1,280-$1,300.

analytics5923e0bc487eb.jpg

Gold price continues to trade above both the tenkan- and kijun-sen indicators. Support is at $1,257 and at $1,252. Resistance at $1,265. Cloud support is at $1,230.

analytics5923e1164aba2.jpg

Gold daily candle remains above the cloud and above the daily kijun-sen at $1,253. Gold price rise has stopped at the 61.8% Fibonacci retracement. Gold resistance is here. I expect at least a short-term pullback and then more upside. The bearish scenario of a move towards $1,150-60 will happen only on a break below $1,213.

Back to top

Elliott wave analysis of EUR/NZD for May 23, 2017

analytics5923c7ab89082.png

Wave summary:

The failure to accelerate higher and the break below minor support seen at 1.5987 indicates that a slightly deeper correction towards 1.5836 should be expected before the next impulsive rally higher towards 1.6655.

Short term, minor resistance is seen at 1.6154, which should be able to cap the upside for a deeper corrective decline to 1.5836 and then higher again from here.

R3: 1.6354

R2: 1.6237

R1: 1.6154

Pivot: 1.6100

S1: 1.5971

S2: 1.5908

S3: 1.5836

Trading recommendation:

We are long EUR from 1.5665 with stop placed at 1.5800. If you are not long EUR yet, then buy near 1.5836 and use the same stop at 1.5800.


Back to top

Elliott wave analysis of EUR/JPY for May 23, 2017

analytics5923c6341d7fb.png

Wave summary:

EUR/JPY broke above resistance seen at 124.94 indicating the rally of the 122.53 low was impulsive (in 5 waves). This means that wave B completed with the test of 122.53 and wave C towards 138.50 now is developing.

The impulsive rally from 122.53 to 125.30 marks wave i and a correction in wave ii is now expected towards the 123.59 - 123.92 area before the next impulsive rally higher towards 134.30 and 138.52.

R3: 127.33

R2: 125.82

R1: 125.30

Pivot: 124.75

S1: 124.39

S2: 123.92

S3: 123.59

Trading recommendation:

Our stop was hit at 125.00 for a loss. We will re-buy EUR at 124.10


Back to top

Technical analysis of EUR/USD for May 23, 2017

EURUSD.jpg

When the European market opens, a batch of economic reports will be released such as ECB Financial Stability Review, Flash Services PMI, Flash Manufacturing PMI, German Ifo Business Climate, German Flash Services PMI, German Flash Manufacturing PMI, French Flash Services PMI, French Flash Manufacturing PMI, and German Final GDP q/q. The US will also post some macroeconomic statistics such as Richmond Manufacturing Index, New Home Sales, Flash Services PMI, and Flash Manufacturing PMI. So amid the reports, EUR/USD will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Breakout BUY Level: 1.1290.

Strong Resistance:1.1284.

Original Resistance: 1.1273.

Inner Sell Area: 1.1262.

Target Inner Area: 1.1236.

Inner Buy Area: 1.1210.

Original Support: 1.1199.

Strong Support: 1.1188.

Breakout SELL Level: 1.1182.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.


Back to top

Technical analysis of USD/JPY for May 23, 2017

USDJPY.jpg

In Asia, Japan will release the All Industries Activity m/m. The US will also release some economic data such as Richmond Manufacturing Index, New Home Sales, Flash Services PMI, and Flash Manufacturing PMI. So there is a probability the USD/JPY pair will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:

Resistance 3: 111.63.

Resistance 2: 111.41.

Resistance 1: 111.19.

Support 1: 110.93.

Support 2: 110.71.

Support 3: 110.49.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.


Back to top

Daily analysis of major pairs for May 23, 2017

EUR/USD: The EUR/USD pair went upwards yesterday, testing the resistance line at 1.1250. There could be some temporary pullback after this, but price is expected to continue heading upwards, going above the resistance line at 1.1250 and going towards another resistance line at 1.3000. The resistance line at 1.3000 is the ultimate target for this week.

1.png

USD/CHF: The USD/CHF pair trended lower on Monday in continuation of the bearish trend that is in place. There is a Bearish Confirmation Pattern in the market, and a further decline in price is anticipated as price goes towards the support levels at 0.9700, 0.9650, and 0.9600.

2.png

GBP/USD: The Cable remains in a bullish market in spite of the recent consolidation on it. Price is now around the accumulation territory at 1.3000, and it may go towards the distribution territory at 1.3050 (after the distribution territory at 1.3000 is breached to the upside). More and more northward movement is anticipated this week.

3.png

USD/JPY: The USD/JPY pair experienced a major pullback last week, and did nothing significant on May 22, 2017. There is a bearish outlook in the market, and it would continue to be logical as long as price does not go above the supply level at 114.00 (which would, however, require extraordinary buying pressure).

4.png

EUR/JPY: This cross pair went upwards on Monday in the context of an uptrend. Price is currently in the demand zone of 125.00, and it may rise further, especially given the bullish expectation on JPY pairs. One factor helping the situation is a measure of strength in the EUR itself. Price could gain additional 200 pips this week, especially when the Yen becomes weak.

5.png


Back to top