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FxPro
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GBPJPY Wave Analysis

  • GBPJPY reversed from support area
  • Likely to rise to 144.00

GBPJPY recently reversed up from the support area lying between the key support level 141.00 (former monthly top from October) – intersecting with lower daily Bollinger Band and 38.2% Fibonacci correction of the previous sharp upward impulse from October.

The upward reversal from this support area stopped the previous short-term impulse wave C.

GBPJPY is likely to rise further toward the next resistance level 144.00 (top of the previous wave B).

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FxPro
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3 Major Reasons Gold is Preparing for Supercharged 2020 Rally

 

Factor #1: Big Geopolitical Risks = Spiking Demand For Gold

According to Peter Schiff, a prominent gold investor and CEO at Euro Pacific Capital, geopolitical risks remained the biggest factor for gold’s abrupt rise over the past week. Following the assassination of the Iranian general Qassem Suleimani by the U.S., oil price spiked as financial markets trembled, triggering the gold price to increase.

Factor #2: Underforming U.S. Real Estate Market

To a broader base of investors, gold and real estate are considered to be two major “real assets” or physical assets. Hence, when either one of the two underperforms, the other tends to see an increase in value. Possibly because of the record high stock market and the rise in the inflow of money into stocks, the U.S. real estate market has not met the expectations of analysts in the final month of 2019.

Factor #3: Surprising Retest Of $1,550

Although analysts anticipated the price of gold to react with a firm rally following the crisis in the Middle East, the magnitude of its upside movement has surprised investors. The $1,550 level has served as a particularly heavy resistance level since 2013 and a clean break above it would position gold for a new rally in the first half of 2020. To put into perspective, if the gold price cleanly surpasses $1,550 and it becomes a support level, the next resistance levels are found at $1,800 and $1,900. Gold, depending on how the price reacts over the next several weeks, could be en route to testing 2011 levels as long as it is not met with a steep sell-off in January.

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Gold Wave Analysis – 07 Janaury, 2019

  • Gold reversed from support level 1560,00
  • Likely to rise to 1600,00

Gold recently reversed up from the key support level 1560,00 (former strong resistance level which stopped the sharp uptrend in September).

The upward reversal from the support level 1560,00 continues the active impulse wave 3 – which belongs to the longer-term impulse wave (3) from November.

Gold is likely to rise further toward the next round resistance level 1600,00 (target for the completion of the active impulse wave 3).

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AUDCAD Wave Analysis – 07 Janaury, 2019

  • AUDCAD broke strong support level 0.8980
  • Likely to fall to 0.8900

AUDCAD continues to fall inside the sharp impulse wave (1), which previously broke through the strong support level 0.8980 (which has reversed the price multiple times from November).

The breakout of the support level 0.8980 follows the earlier breakout of eth daily up channel from the middle of October.

AUDCAD is likely to fall further toward the next support level 0.8900 (former support from October) – the breakout of which can lead to further losses toward 0.8830.

 

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EURAUD Wave Analysis

  • EURAUD reversed from resistance area
  • Likely to fall to 1.6300

EURAUD recently reversed down from the resistance area lying between the resistance level 1.6300 (which has been reversing the price from October), upper daily Bollinger Band and the 61.8% Fibonacci correction of the previous ABC correction 2.

The downward reversal from the resistance level 1.6300 stopped the previous sharp impulse wave 3 from December.

EURAUD is likely to fall further toward the next support level 1.6150 (former support from last month). Strong resistance stands at the resistance level 1.6300.

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CADJPY Wave Analysis

  • CADJPY reversed from resistance area
  • Likely to fall to 83.00

CADJPY recently reversed down from the resistance area lying between the resistance level 83.80 (which has been reversing the price from last April) and the upper daily Bollinger Band.

The downward reversal from this resistance area is aligned with the active impulse wave (1) – which started at the end of December.

CADJPY is likely to fall further toward the next support level 83.00 (low of the previous short-term correction 4 from last month).

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The old rally in the new year

It is often the case that markets start a new year with new trends. Fears of a full-fledged military confrontation between the US and Iran made the markets worry last week, but soon the situation returned to the previous course. Both sides demonstrate a desire for de-escalation of the conflict, which brought the markets back to the rally. Besides, there were very mild reaction (yet) to the crash of a passenger plane near Tehran. US and Canadian politicians say it possibly done by mistake, i.e. it may not have entailed additional toughening against Iran.

The Nasdaq index passed the 9000 mark this morning, an almost 10% increase over a month.

Oil returned to $65 per barrel of Brent, compared to levels above $70.50 at the peak of fears on Wednesday.

Gold, which jumped above $1600 in the middle of the week, traded at $1548, close to its highest levels since 2013.

Geopolitics got loud at the beginning of the year, but today it should give way to macroeconomic news as US employment data is published. Robust November data has removed much of the fear that the world’s largest economy is slowing down. December data is expected to show growth by 150K-160K, which looks good after a jump of 266K a month earlier.

Another pleasant surprise for the markets from macrostatistics may finally remove all the obstacles for the growth of stock markets. A sharp deterioration in the data may alert the markets, returning doubts about the economy’s ability to record-breaking 11th consecutive year.

For the dollar, the situation looks more complicated. Classically, weak data can cause pressure on the dollar, as it will indicate a softer tone of monetary policy in the coming months. Otherwise, a sharp US growth cooling may be perceived as a warning signal for the global economy. If the demand for safe assets on the world markets returns, the dollar may well get additional demand, developing the growth trend since the beginning of the year. In this case, an important milestone may be the area of Christmas highs at 97.40 for the USD index, as well as the area of 1.1060 for EURUSD and 1.29 for GBPUSD.

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UK economy, not Brexit, will drive the pound in 2020, analysts say

British Prime Minister Boris Johnson and new European Commission President Ursula von der Leyen met in London on Wednesday to begin discussions over a future zero-tariff trade deal, with the U.K. scheduled to leave the EU at the end of this month.

Johnson has pushed legislation to prevent trade talks extending beyond December 2020, despite seeking a similar deal to that between the EU and Canada, which took seven years to negotiate.

U.K. lawmakers on Thursday approved legislation allowing Britain to leave the European Union with an exit deal, following three years of stalemate over the terms of the departure.

Analysts are suggesting, however, that the pound is unlikely to reattach itself to Brexit developments until later in the year when progress, or a lack thereof, becomes clear. In the meantime, economic data, fiscal and monetary policy will guide sterling.

Others are even more bullish on the outlook for cable, and HSBC Senior FX Strategist Dominic Bunning told CNBC on Wednesday that investors should investors should look to 2017 for an example of how the market may treat the currency during the negotiation period.

UK economy, not Brexit, will drive the pound in 2020, analysts say, CNBC
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USDCHF Wave Analysis 

  • USDCHF rising inside impulse wave (c)
  • Likely to rise to 0.9775

USDCHF has been rising in the last few trading sessions inside the short-term impulse wave (c) – which started recently from the support area lying between the strong support level 0.9665 (which stopped the sharp downtrend in August) and the lower daily Bollinger Band.

The active impulse wave (c) belongs to the ABC correction (ii) – which also started previously from the aforementioned support area.

USDCHF is likely to rise further toward the next resistance level 0.9775 (former support from December and the target for the completion of the active impulse i).

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Hunger for risk pulls markets up

The US employment data released on Friday was able to maintain an optimistic sentiment in the markets, managing to catch the necessary balance to keep the positive trend. Employment growth was in line with the multi-year trend, noting healthy growth in new jobs and promising the same consumer demand. At the same time, there is still no inflationary threat on the horizon, as the rate of wage growth has somewhat decreased in recent months despite the historically low unemployment rate. Subdued wage growth removes the risk of an unexpected surge in inflation, which could force the Fed to tighten its policy tone.

Against the background of such a goldilocks employment report, it was somewhat unusual to note the weakening of the US stock indices at the end of trading on Friday. It was like a corrective pullback after touching significant round levels on the Dow Jones and Nasdaq. The former index rose above 29,000 at some point, while the latest overcame 9,000. The indices’ quick return to growth on Monday morning already suggests that it was nothing more than a pit stop before the rally attempt to 30,000 and 10,000, respectively.

The pull of US indices to the round levels may absorb all the attention of investors on the stock market. However, on the currency market, we may observe a departure from the round levels. EURUSD increases from 1.11, in response to expectations that the Eurozone economy will accelerate. The progress in trade negotiations also puts at risk the downtrend of the pair, formed with the first “shots” of trade wars.

GBPUSD trades near 1.30, declining since the beginning of the year due to investors’ awareness of Brexit’s severity for the economy. The outgoing Head of Bank of England Carney also poured some oil into the fire, warning about possible rate cuts later this year. It turns out that the area 1.30-1.33 is considered by investors as a severe resistance area, from where the pair has repeatedly turned to decline over the last year and a half.

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CHFJPY Wave Analysis

  • CHFJPY rising inside impulse wave С
  • Likely to rise to 113.70

CHFJPY recently broke the resistance area lying between the resistance level 112.40 (top of the previous wave (i)) and the 50% Fibonacci correction of the previous downward impulse from 2018,

The breakout of this resistance area accelerated the active impulse wave C from the end of November.

CHFJPY is likely to rise further toward the next resistance level 113.70 (target for the completion of the active impulse С).

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EURGBP Wave Analysis

  • EURGBP reversed from resistance area
  • Likely to fall to 0.8465

EURGBP recently reversed down from the resistance area lying between the resistance level 0.8600 (which has been reversing the price from November), upper daily Bollinger Band and the 38.2% Fibonacci correction of the previous downward impulse from October.

The downward reversal from this resistance area stopped the earlier impulse wave C from the end of December.

EURGBP is likely to fall further toward the next support level 0.8465 (low of the previous waves B and (ii)).

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Daily Insight for January 16

The global market continues to grow, while Australia, India and US stock indices update record highs. Dow Jones closed above 29,000, and the S&P 500 hit 3300. NZD and AUD are leading the growth to USD on higher demand for risk. CHF continue its rally after US Treasury put Switzerland in the list of potential currency manipulators.

Important upcoming events (GMT):
12:30 EA !! ECB Monetary Policy Meeting Accounts
13:30 US !!! Retail Sales
13:30 US !! Unemployment Claims
18:00 EA !!! ECB President Christine Lagarde Speaks
02:00 Cn !!! Gross Domestic Product

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EURNZD Wave Analysis

  • EURNZD reversed from resistance area
  • Likely to fall to 1.6640

 

EURNZD recently reversed down with the daily Hammer from the resistance area lying between the pivotal resistance level 1.6850 (former strong support from December), upper daily Bollinger Band and the 61.8% Fibonacci correction of the previous downward impulse wave 5 from December.

The downward reversal from this resistance area stopped the previous medium-term impulse wave (3) from the end of last month.

EURNZD is likely to fall further toward the next support level 1.6640 (which stopped the previous sharp downward impulse wave (C)).

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NZDJPY Wave Analysis 

  • NZDJPY reversed from resistance area
  • Likely to fall to 370.00

NZDJPY recently reversed down from the resistance area lying between the key, long-term resistance level 73.30 (which has been reversing the price from July) and the upper daily Bollinger Band.

The downward reversal from this resistance area stopped the previous short-term corrective wave 2.

NZDJPY is likely to fall further toward the next support level 72.35 (low of the previous short-term correction from earlier this month).

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USDCHF Wave Analysis

 
  • USDCHF reversed from support area
  • Likely to rise to 0.9700

USDCHF recently reversed up from the support area lying between the key support level 0.9650 (which has been reversing the price from August), support level 0.9650 and the lower daily Bollinger Band.

The upward reversal from this support area created the daily Japanese candlesticks reversal pattern Morning Star – with the Hammer in the middle.

With the clear bullish divergence visible on the daily Stochastic indicator – USDCHF is likely to rise further toward the next resistance level 0.9700.

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EURCAD Wave Analysis

  • EURCAD reversed from support area
  • Likely to rise to 1.4580

EURCAD recently reversed up from the strong support area lying between the key support level 1.4460 (which has been reversing the price from September) and the lower daily Bollinger Band.

The upward reversal from this support area stopped the previous short-term impulse wave (v).

EURCAD is likely to rise further toward the next resistance level 1.4580 (high of the previous short-term correction (iv)).

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USDCAD Wave Analysis

  • USDCAD reversed from resistance area
  • Likely to fall to 1.3030

USDCAD recently reversed down from the resistance area lying between the resistance level 1.3090 (former strong support from December) and the 38.2% Fibonacci correction of the previous sharp downward impulse from last month.

The downward reversal from this resistance area stopped the previous short-term corrective wave (b).

USDCAD is likely to fall further toward the next support level 1.3030 (low of the previous short-term correction a).

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FxPro
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EURCAD Wave Analysis

  • EURCAD reversed from resistance area
  • Likely to fall to 1.4460

EURCAD recently reversed down from the resistance area lying between the resistance level 1.4580 (former resistance from the start of this month), upper daily Bollinger Band and the 38.2% Fibonacci correction of the previous downward impulse (i) from November.

The downward reversal from this resistance area continues the active short-term impulse wave 5, which belongs to the impulse sequence (5) from last year.

EURCAD is likely to fall further toward the next support level 1.4460 (which has been reversing the price from October).

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Brexit moves the pound and the euro in different ways

There is a remarkable trend in the currency market. The EURUSD volatility weakened last year to levels never seen before in the single currency 20-years history. The low fluctuation of the FX market is a sign of equilibrium, where the euro and dollar are on one side, and “yielding” EM currencies – on the other.

The dynamics of the British pound have also left the front pages of the daily reports of the most significant market movements, while GBPUSD for the previous two months can not pull itself from 1.3000.

But at the same time, the dynamics of the euro to the pound is worth a separate mentioning. EURGBP reached its 10-year peak levels above 0.9300 in August on a wave of fears of chaotic Brexit after Boris Johnson came to power.

However, the new Prime Minister quickly moved the negotiations from the dead end, and managed to strengthen the party’s position in the Parliament. This gave carte blanche to pass laws without looking back at the coalition. As side effect, GBP soared to its peaks.
The growth of the pound was the most noticeable against the euro. In the EURGBP pair, the 10-year highs in August were followed by 3-year lows below 0.83, indicating 11% growth of the pound against the euro in just five months.

During the last weeks of the 2019, the pound experienced some decline, but for the most part, it associated with a correction in traders’ positions after the impressive rally. This week, the pound stood out brightly against both the dollar and the euro once again, recovered some positions.

The historically low rate of the British currency against the dollar increases the competitiveness of British exports, which supports the labour market and sales. Besides, the weakness of the pound creates inflationary pressure in the country, limiting the Bank of England to cut rates, following the example of Europe and the US, while the relatively smooth process of UK’s exit from the EU removes a significant part of risks from the market.

If there are no unpleasant surprises from Brexit, it may be quite logical for the pound to recover further against the euro.

From the side of technical analysis, the drop at 0.8300 will open the doors for EURGBP to the area of 0.8000, near which the pair consolidated in 2008, 2011 and 2014.

For the GBPUSD pair, the medium-term attraction area may be above 1.5000, where the pair was comfortable from 2010 to 2015.

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