USD/CAD – Hurricane Laura Forcing Oil Rig Shutdowns

Oil prices have started to push higher as Hurricane Laura begins to move from the Gulf of Mexico towards the heart of the U.S. oil industry. Since Tuesday, 1.56 million barrels per day of crude output has been shutdown as well as 15% of the U.S. processing capacity has also been shut down. Let us look below at a pair that correlates well with the U.S. oil market and what the under supply of oil this week has done to the pair this week.

4 HOUR TIME FRAME

Above we have the 4-hour chart, looking at the highlighted box we can see this pair found support at the low formed during the U.S. session on the 19 August as well as Monday’s London low. We can also see that a lower high was formed on the major key level of 1.32000 shown by the ellipse and then went on to create a lower low. Looking at the overall structure of this pair we can see that the lower supply of oil this week pushed the oil market up slightly which favors USDCAD downside.

1 HOUR TIME FRAME

Dropping down to the 1-hour time frame, we can see more clearly that 1.31350 has been holding as support. Drawing a trend line from the high on the 25 August with the second touch of the trend line on the 26 August and also drawing a fib tool, the 61.8% level as well as the third touch of the trend line could be a potential zone where USDCAD could continue the momentum to the downside. If price breaks through the trend line we’d look at the 78.6 for reversals on this pair. If we do break through the 78.6 as well, I would plot a fib from the high on the 25 August to the highlighted region for the higher time frame fib where you will see that the 61.8% fib level lines up with the key level 1.32000.

At the moment, it will be crucial to see what kind of damage Hurricane Laura causes as it progresses through the U.S. It has already hit Louisiana causing flash floods and it is expected to hit Texas as well but refiners are expecting to be back online by the weekend. However, if the Laura can maintain speeds as it makes it’s way towards Texas, we could see the reopening of rigs and refineries get pushed back into next week which would further slow the production of oil and will push USDCAD down further.

Remember to always stick to your trading plan and use the correct risk management when entering set-ups. Subscribe to receive emails sent directly to your email.

USD/JPY – Updated Analysis

With the first data release for the dollar coming out negative this afternoon as well as the Consumer Confidence coming out negative, let us look at updated analysis on USD/JPY.

4 HOUR TIME FRAME

On the 4-hour time frame we can see that price rejected off of the potential right shoulder area meaning the head and shoulder pattern is still valid. Looking at the fib tool plotted, we can see that price has pushed just above the 61.8 and for further downside movement, the current candle would need close and engulf the previous candle. We could see a push further into the 78.6 region if price closes above the right shoulder area.

1 HOUR TIME FRAME

Dropping down to the hourly time frame, we can see that the upside momentum has slowed, and we are currently testing the upper end of the right shoulder region.

Be on the look out for monetary policy announcements on Thursday when Fed Chair Powell addresses the nation. Any reintroduction of further monetary policy will be a positive for the US economy. GDP (QoQ) as well as Initial Jobless Claims will also be released on Thursday. In terms of yen news for the rest of the week, Tokyo Core CPI will be released on Friday.

Remember to always stick to your risk management and wait for candle stick confirmation.

USD/JPY – Potential Continuation to the Downside

With the dollar index reaching record lows yesterday, let’s look at a potential move to the downside on USD/JPY.

4 HOUR TIME FRAME

On the 4 hour chart above, we can see that price made a lower low by looking at the upward pointing arrow. We also have a potential head and shoulder pattern which lines up nicely with the 50% and 60% fib which can be seen more clearly when looking at the two highlighted boxes drawn on the two sets of double bodies in the left shoulder region. Looking at the fib tool drawn more closely, we can see that there has been a rejection off of the first zone as well as a reversal off of the 50% fib. If price breaks through the 50% fib, the next point of call for the downtrend to continue would be the 61.8% fib which lines up perfectly with the upper zone of the left shoulder.

1 HOUR TIME FRAME

On the 1 hour chart above, we can see that there has been a close below the key level of 106.000. Plotting a fib we can see there has been two wicks into the 61.8% level and both candles closed below the key level. Looking at the highlighted box, we can see price has been consolidating on the key level and we just had the breakout as well as a retest of the box. Price has been making spinning tops at current price indicating indecision in the market, if there is a breakout above the drawn box, wait for candlestick confirmation at the zones spoken about above on the 4 hour chart.

Later today, the US will be releasing their Initial Jobless Claims which has made slight improvements in recent weeks. The Philadelphia Fed Manufacturing Index will also be released which will be important to watch out for as a positive data release could provide some relief for the dollar which could push this pair slightly higher into the above mentioned zones.

Remember to always be patient and wait for candlestick confirmation. Only take trades which line up with your personal trading plan. Subscribe to receive updates sent directly to your email.

EUR/NZD – Technical Analysis

Today, we’ll be looking at the Euro versus the New Zealand dollar for a potential move to the upside into and possibly through the monthly key of 1.82000.

4 HOUR TIME FRAME


Plotting the fib on the 4 hour time frame we can see that there was a wick into the 78.6 and a reversal off of the 61.8 followed by a very discreet higher high.

1 HOUR TIME FRAME


Dropping down to the 1 hour time frame, it’s clear that a higher high was formed. Now, plotting the fib to look for the potential higher low we can see that the 61.8 lines up nicely with the ascending trend line. To add another confluence, take a look at the highlighted region where we could have a potential inverse head and shoulder form if the lower high is created in the 61.8 region.


With today marking the seventh and last scheduled round of Brexit negotiations, it’s accepted by both parties that a deal will not be reached as soon as today with issues such as fishing rights still left to be agreed upon. The UK has ruled out extending the deadline until December 2020 with the hopes of an agreement being reached in September when talks are set to resume. Be on the look out for any significant updates regarding these negotiations later today.


Remember to wait for candlestick confirmation and always practice the correct management when executing trades.

Fundamentals for the Upcoming Week

Knowing what to expect in terms of news events for the week is crucial when trading as it gives you more insight into the market direction with the specific pairs you are trading.

US and China postponed trade talks that were planned for the weekend past. They were supposed to review the progress made on their phase one trade agreement, but the meeting date has been pushed back indefinitely. In terms of dollar news for the week, the Month over Month Building Permits will be released tomorrow. This is a key indicator of the demand in the housing market. On Wednesday, the Crude Oil Inventories will be important to consider when looking at any pairs that correlate with oil. The outcome of Wednesday’s FOMC Meeting Minutes will be worth noting as this is where stimulus and monetary policy decisions are made. On Thursday, the Philadelphia Fed Manufacturing Index and Initial Jobless Claims will be important to consider as well. Lastly, be watchful of the PMI data as well as the Existing Home Sales which will be released on Friday.

The Japanese yen saw its sharpest recorded contraction in GDP this morning with a 7.8% contraction Quarter over Quarter as well as a 27.8% contraction Year over Year. Their export data will be released on Wednesday and the only other news coming out for the yen this week will be their National CPI as well as the Services PMI coming out on Friday.

South Africa will be posting their CPI data on Wednesday. With alcohol and tobacco sales resuming as of tomorrow, we can expect the rand to gain strength over the next few weeks. It’s estimated that the country has lost around R6 billion in taxes due to the banning of cigarettes.

The Eurozone will be releasing their CPI data on Wednesday and their PMI data on Friday. They will also be publishing an update on their monetary policy on Thursday.

The UK’s CPI data is being released on Wednesday and their Retail Sales data which is coming out Friday.

Gold is currently trading at $1952/oz, Silver at $26/oz and USOIL around $42 per barrel.

Remember to always stick to your trading plan in order to ensure defensive money management. Hit the subscribe button to receive updates sent directly to your e-mail.

USD/JPY – Technical Outlook

USDJPY has recently closed above a major key level for the first time since the end of July. Below, I’ll do a top down analysis on this pair starting at the daily time frame.


Looking at the chart above, we can see that we’ve recently closed above the major key level of 106.500. Looking at the highlighted box as well as the upward and downward pointing arrows we can see how this level has been providing support as well as resistance.


On the 4 hour chart, we have a descending trend line plotted that was just broken above for the first time since the end of June. A 4 hour candle closure above the trend line indicates potential for further upside movement.


Looking at the 1 hour time frame, we’ve had a few rejections of the trend line already and price is currently retesting. Plotting a Fib on the 1 hour time frame, we can see that the 61.8 is offering some resistance. Look out for candle stick confirmation above this trend line to validate this trade set-up. If price breaks below the above trend line, the 78.6 as well as the major key level of 106.500 would then be the next levels of support.


Remember to always stick to your trading plan and always use the correct risk management. Hit the subscribe button to receive updates sent directly to your email.

Historic Contraction in Q2 Sends UK into Recession

A recession is a macroeconomic term that refers to a significant decline in economic activity when compared to the previously recorded data. This morning, the pound released their quarterly GDP which was down 20.4% compared to the first three months of the year. This was the biggest contraction recorded in the history of the pound.


To put the data into perspective, during the 2008 recession, the UK’s GDP shrunk no more 2.1% in a single quarter. Every sector contracted, with the majority of the drop in activity led by private consumption which shrank by 23.1% on the quarter and accounted for two-thirds of the fall in quarterly GDP. Household spending also recorded a 23.1% decline with business investment plummeting by 31.4%.


Looking at the more recent data provided, we can see that the reopening of the UK economy that was implemented at the beginning of June has had the desired effect with their Manufacturing Production as well as Industrial Production data both coming out with positive numbers as well as an increase on the previous months data. With more businesses set to reopen as lock down measures ease further, we can also expect an increase in consumer services spending. With this in mind, a rebound in GDP for the UK in the third quarter is highly likely. Monitor the CPI, Consumer Price Index, as well as the Retail Sales data which will be released next week to see any major changes in consumer spending.


Fundamentals play an extremely important part when trading and gives excellent insight into overall market direction. Be sure to always check the for the necessary fundamentals before entering any set-ups. Hit the subscribe button to receive blog posts send directly to your e-mail.

NZD/USD – Zones To Look Out For

There have been some attractive zones offering support and resistance on this pair recently which will be looked at below but first let’s start on the daily time frame to get a general idea of how this pair has been trending.

DAILY TIME FRAME


On the daily time frame, we can see that the overall trend here is bearish which can be spotted when looking at the descending trend line plotted which we’ve had 3 touches off of already. We had that huge spike to the downside when the dollar was treated as a safe haven at the beginning of the pandemic. Since then, price has made higher highs and higher lows but the third rejection off of the trend line could indicate further downside movement.

4 HOUR TIME FRAME


Looking on the 4 hour time frame, we can see how the previous resistance turned to support after higher highs were made by looking at the highlighted rectangle. After the third touch of the trend line shown by the elipse, structure was broken to the downside where a lower low was created shown by the upward pointing arrow and then price then went on to print a lower high shown by the downward pointing arrow. Dropping down to the 1 hour time frame below we can see the price action more clearly.

1 HOUR TIME FRAME


We can see that the lower high created actually formed a head and shoulder pattern shown by the zone drawn at 0.66900. With the neck line shown by the zone drawn at 0.66250, we have rejected that area twice already but currently trending in a tight range between the neck line and the next level of support.


From a fundamental perspective, the Reserve Bank of New Zealand will be releasing a Monetary Policy Statement as well as a Rate Statement tomorrow, with their interest rate decision being released as well. Their outlook is likely to remain dovish which means they are willing to reduce interest rates and even consider negative rates which will be something to look out for in the near future. On Friday, their Business PMI’s will be released which will give us more insight in to how well the manufacturing sector performed recently. From the US dollar perspective, their PPI’s will be released later today as well as their Weekly Crude Oil Stock. On Wednesday, the most noteable data releases to look out for will be the CPI’s, Crude Oil Inventories as well as the WASDE Report which gives estimates of the supply and demand within the agricultural sector. There have been talks of new stimulus packages to be implemented by Trump but without the approval of Congress, no agreement has been made yet.


As always stick to your trading plan and remember to hit the subscribe button to receive notifications sent directly to your e-mail.

EUR/GBP – Updated Analysis

Since the blog earlier in the week, we saw the pound’s Composite as well as Services PMI’s both came out 0.1 points less than expected which is usually seen as a negative for a currency but when looking at the bigger picture it was the fastest expansion of the UK service sector in five years which rose up sharply from 47.1 in June. Keeping this data in mind, let’s look below at the 4 hour chart to see how this pair reacted.

4 HOUR TIME FRAME

Not much price action has taken place since the last post but it’s important to note that we are still trading between the ascending and descending trend lines shown on this time frame which can be seen as a rising wedge.

1 HOUR TIME FRAME

On the 1 hour time frame above, we can see that the trend line provided some resistance shown by the downward pointing arrow as well as the highlighted ellipse. We can also see that price started making higher highs and higher lows. Once price broke and closed above the 1 hour time frame trend line, we can see that we had a perfect retest of the trend line shown by the upward pointing arrow and ellipse. However, we just had a break of structure to the downside and we are currently retesting the bottom end of the rising wedge as well as the descending trend line. If price breaks and closes below the rising wedge we will see further downside movement on this pair.

We have seen a positive fundamental shift for the pound since the staggered reopening of their economy which is evident when considering the release of their impressive services sector data as well as the most recent release of their Construction PMI which surpassed expectations and is up 3 points from the previous month.

Remember to always consider fundamentals before entering any trade set up and try to use news events as an extra confluence. If you find yourself entering a trade without the backing of fundamental analysis ensure that you are following the correct risk management. Hit the subscribe button below to receive blog updates sent directly to your email.

EUR/GBP – Euro British Pound Technical Outlook

Welcome to another blog by AspireFX, today we’ll be running over some technical analysis on EURGBP.

DAILY TIME FRAME

Looking at the daily time frame we can see that price is ranging between an ascending trend line as well as a descending trend line. We’ve also seen a reversal off of the 78.6 bullish Fib level with a bullish engulfing forming at the moment. Seeing as though we are in a bullish market, let us drop down to the lower time frames to look for potential long set ups.

4 HOUR TIME FRAME

On the 4 hour time frame, we can see that we are currently sitting on the 61.8 on the bearish Fib but with 3 hours left until the close of the current candle, I wouldn’t consider it to be a valid rejection of that level yet.

1 HOUR TIME FRAME

Drawing a descending trend line on the 1 hour time frame we can see we’ve already had 3 touches. If this trend line provides further resistance, we could look for potential buys around the ascending trend line drawn on the daily time frame. The other possible scenario would be to wait for a break and retest of the descending trend line drawn on the 1 hour time frame.


When you’ve found a pair that is working for you, it’s helpful to look at a few potential scenarios that could play out so that if one of your set-ups are invalidated, you have more analysis to back it up. Hit the subscribe button below to receive updates sent directly to your email.