Hello, dear friends!
Tuesday was interesting mainly due to the American statistics on the producer price index. In recent days, all the data on the United States is evaluated based on a possibility of rate cut in July. In addition, some interesting statements were received from Europe and the USA on Tuesday.
Donald Trump criticized the US Federal Reserve again on Twitter, almost accusing them of being incompetent. According to the American president, the main currencies are undervalued against the dollar, and high rate harms the American economy.
Indirectly, his opinion was confirmed by the producer price index that proved to be as predicted previously, which indicates a continuing slowdown in the US economic growth. The scenario that involves the Fed cutting the rate in July is considered with a probability of 76%.
On Tuesday, the Bank of Finland management confirmed the ECB determination to not only resume the quantitative easing program, but also to reduce the rate if necessary. One week earlier Mario Draghi has voiced a similar opinion.
Another thing to mention is undervaluation of the British pound. Despite the poor unemployment data the GBPUSD pair managed to consolidate above the level of 1.2700.
News to consider on Wednesday:
- 13:15 - speech by the Head of ECB Mario Draghi;
- 17:30 - consumer price index in the USA.
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NZDCHF - signal to sell is expected
Here we can observe rather aggressive sell signal being formed. Supporting segment is missing, the total minimum of the reversal pattern at 0.6572 was broken through downwards on Monday, and if it's retest will take place, one would be able to sell.
Stop for the deal should be located beyond the maximum of the pattern at the level of 0.6595. It's recommended to place take profits at 0.6549 and 0.6503.
GBPCAD - buying from the level of 0.6855
Here the situation is specular if compared to the previous pair. Reversal bullish pattern is observed with a total maximum at 1.6855, this level is a global imbalance. It has already been broken through upwards, and one needs to wait for getting back to this mark in order to enter the market.
Stop for this position should be located at 1.6789 (Low of the Pattern). We are expecting an upward movement to the levels of 1.6922 and 1.7055 to take place; both take-profits will be placed at these levels.
CHFJPY - signal to sell is received
The deal is considered to be aggressive. Global imbalance at the level of 109.43 was broken through downwards in the second half of the day, and on the next 4 candles price rounding with level retest was formed. All conditions for making a deal are fulfilled
Stop is placed beyond the model maximum with a margin of 4 pips, it shouldn't be located lower than the mark 109.77. We expect that the chart will reach at least the level of 109.09 (first take profit); in case of a favorable events' course the rest of the volume should be closed at 108.41.
AUDCHF - only bullish positions are considered
For this pair, imbalance at 0.6893 is a key point. The level has already been broken through, and immediately afterwards a slight rounding has taken place; at that point one should have opened deals to buy. If you didn't manage to do that, wait for global imbalance retest to take place and perform buying. Don't enter the market right after, it breaches stop/take profit ratio.
Place stop for long positions at 0.6872, and take profits - at 0.6913 and 0.6955. Risk on the deal is within the normal range, so we are working with a regular volume.
EURGBP - short positions can be opened
Imbalance at the mark of 0.8909 has been broken through downwards and tested twice. Deals for sale could have been opened after both retest. At the time the review was being prepared the chart was located in a close proximity to the imbalance, so one could open deals at the market price.
We expect target levels at 0.8883 and 0.8830 to be reached. Stop for short positions is placed with a margin at the mark of 0.8936.
Tuesday recommendations summary:
- Soybean, WTI, platinum, gold – no signal;
- Copper – entry point didn’t work out.