Weekly Analysis 18 May – 24 May 2015
Skerdian Meta • 5 min read
Market sentiment turned positive towards the USD this week.
The week in review
Last week we mentioned that the market had made up its mind about selling the US Dollar, especially against the Euro. This remark was unjustified; although the US economic data has softened recently and the Euro Zone data has not been as bad as it used to be a year ago, the US and the European economies are at very different stages. Europe has just started the QE programme and the economy has barely bottomed. On the other hand, the US has ended the QE programme and the economy is growing at a quicker pace than its
The smaller period MAs have been providing resistance recently.
It has been a similar story in all the USD
After the 50 MA gave way, the 100 MA provided resistance, but that is history now too.
The economic data this week has been somewhat ignored by the market,
The theme of this week has been the statements from central banks officials and politicians, which started on Tuesday. Two CB officials who reassured the investors about their determination to stick to the QE programme until the very last day. That put a very bearish tone to the Euro, losing ground against all other currencies. Its economic data didn’t help the Euro either; the German and the Eurozone ZEW economic
I was hoping the 20 MA would turn this pair around, but neither that nor the
Last week, market sentiment was bullish on the Euro and bearish on the US Dollar, but we had
An ascending triangle/wedge is being formed.
First off, let´s start with EUR/USD and see the damage that has been done this week. From the weekly chart we see that this pair has made 5 consecutive bullish candles, but this week closed as a bearish engulfing candle, erasing the last two week´s gains and the price moved back below the 20 moving average, which are very bearish signs. Besides that, the Stochastic is overbought and is already heading down together with RSI. The bearish sentiment is clearly seen on the daily chart – not a single day which closed with gains. The first meaningful support comes at 1.0980-1.10 where we see the 50 daily MA in yellow. The Stochastic just reached the oversold
The 20 MA has supported this pair during the down moves.
We are in the fourth wave of the Elliot Wave Principle.
We haven´t covered this pair in more than two months so it´s about time we had a look. EUR/GBP has been in a downtrend for the last 18 months. It had an attempt to turn up four weeks ago but the 20 MA (previously resistant) denied any further gains and crushed the hopes for the bulls. Both Stochastic and RSI are heading down with plenty of wiggle room before hitting bottom. The daily chart shows a similar story to EUR/USD with Friday the only exception, since it closed with minimal gains. In the daily chart we can see that the 20 MA has provided solid resistance during this week´s downtrend, until Friday when the price broke above it. The next decent support on this pair comes at 0.70; once that level is broken the door is wide open to the downside, so we´ll watch that level closely next week.
We witnessed a total shift in market sentiment towards the Euro and the US Dollar this week. EUR/USD closed as bullish as possible last week, but turned on a dime Monday morning. The last few weeks the market used any excuse to sell the Dollar and this week it couldn´t get enough of the Buck. This turnaround was helped by the ECB officials who pledged to throw every Euro they have into the market. We finished the week with around 200 pips of profit and hope that next week we keep the same performance. To wrap up this weekly analysis, one piece of major FX news. Six major UK and US banks were fined nearly $6 billion this week over Fx manipulation in the London interbank offered rate (LIBOR). I hope they and other banks have learned their lesson and maybe the forex market will be a better place for the ordinary retail trader after this?
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