June 2015 Monthly Analysis – Greece is peeking over the Euro-zone fence
Is Greece finally leaving the Euro?
The market this month
The Forex market this past month has been as hot as blue blazes. We have seen some irrational movements, such as the Euro taking off unexpectedly with a 500 pip rally against the US Dollar. There have been some more logical moments as well, especially in the NZD and AUD majors, which made trading easier for us and helped finish the month with great results regarding signal performance. The market has been affected by political, economic, and technical factors which
we´ll cover in this monthly review.
Are the Greeks voting ‘yes’ to more free cash?
The sluggishness of the US Dollar has made me take notice this month. The data has improved, which shows that the US economic slowdown in the previous months was due to factors like winter storms and the West Coast port delays. The payrolls have increased much higher than forecasted this month and consumer sentiment has picked up, which translates into better retail sales. Yet, the US Dollar didn´t take advantage of this. In fact, it closed the month of June lower against most of the major currencies. It shows that market sentiment towards the USD is not that positive. Although, it is not that strange to see the USD have a consolidation period, and nothing in the market is ever clear cut.
This week we had a bit of mishmash by the Japanese officials. The Yen has kept sliding continuously, with USD/JPY breaking the 122 resistance level in May and continuing higher at the beginning of June to reach the 1.2580s. Shortly after, the BOJ governor Kuroda was commenting that the current level of Yen was a fair value. That sent USD/JPY more than 300 pips down in the next two days, but Japan´s Minister of Economy was quick to downplay Kuroda´s comments, showing that the government is content with the Yen weakness. So, Kuroda was forced to eat his own words and reverse his first comments, which stopped the USD/JPY decline.
Economic Data
The 50 and 20 MAs have provided us with some very good selling opportunities.
In Europe, things appear to be less bright. The Greek referendum and its implications are weighing in on the economic sentiment. The inflation numbers at the beginning of the month suggested that Europe was moving away from deflation, but it declined by the end of the month and put it in the dangerous territory again. At 11.1%, which is very high, the unemployment remained unchanged from last month. The manufacturing and the service sectors are showing some signs of recovery at least.
Although the UK economy continues to be in the best shape among the developed nations, there have been some signs of uncertainty in some sectors. The PMI data shows that the expansion in manufacturing is losing pace and if it continues it will soon be flat or in contraction. Although the Q2 GDP final numbers came out 0.1% higher than the second estimate, at 0.4% it is still 0.2-0.2% short of the previous quarters. Nonetheless, the most important sectors of the UK economy (i.e. services and construction) are in a very strong position, continuously increasing the pace.
Signals
I don´t know if it has anything to do with the beginning of summer, but if that´s the case then it’s going be a good one. We had a difficult time in the first two weeks, going up in profit for a few days and then down in a loss in the remaining days. We still closed each of the first two weeks in profit with 71 and 90
The 20 MA stopped this pair from moving higher.
The number of signals for this month is 95. EUR/USD and GBP/USD were the most traded pairs for us, with 34 and 18 signals respectively, but they were not the most profitable pairs as we only made 117 pips in total. We got 155
We have issued 12 signals in this pair and since we couldn´t go against such a strong trend, all of them sell signals. We didn´t have a single losing signal in this pair, and the 306 pip profit reflects the good performance here. The black lines in the H4 chart represent some of our sell signals.
The daily chart shows the relentless downtrend in the last two months.
Pair analysis
Since NZD/USD was our most profitable pair this month, it deserves a technical analysis. This pair has been in a downtrend for about a year. It had a consolidation period for a few months when the 20 MA in the weekly chart stopped it moving higher. After the second attempt at 20 weekly MA failed, the downtrend resumed again and it´s been one-way traffic since, as indicated in both the weekly and the daily charts. The price had a go at the 20 MA in the daily chart in the second week of June, but it was unable to break above. In the H4 chart, the 50 MA has provided the ultimate resistance, and together with the 20 MA have given us some nice selling opportunities. The indicators are oversold, but all the charts still point down, so we won´t try to pick a bottom in this pair, instead we´ll try to ride the downtrend.
The stochastic indicator signaled the end of the retrace when reached the oversold area.
It´s been a while that we haven´t covered USD/CAD so we´ll revisit it. On the weekly chart, we can see that this pair made a retrace after the epic uptrend which lasted more than seven months. The stochastic made a good job indicating the end of the retrace when it reached the oversold area, and since then USD/CAD has entered the uptrend again. Two weeks ago it made a nice pin just above the 20 MA, which signals a possible move up in the coming weeks. It did move up the next two weeks, but we missed the chance to open a long-term signal. The yellow 50 MA has provided strong support on the daily chart in June. We can see another good buying opportunity by the middle of the month when the price made another pin just above the 50 MA. Since then this pair has moved more than 400 pips up. We can see an uptrend in the H4 chart, and since the stochastic is oversold there is room for further gains.
The 50 MA has been a strong support during June.
There´s an uptrend in the H4 chart and stochastic is pointing up.
In conclusion
The market started out this month full of hope for a Greek deal, which turned to be very positive for the Euro. It shot up against most currencies, notably the USD, gaining about 500 pips in the first few days of June. These hopes diminished alongside the negotiations as the days went past. At the end of the month, Greek PM Tsipra's walked out of them and declared a referendum on the EU proposals. This weekend is going to be very decisive for Greece; it will decide if it will stay in the Euro-zone or not. We might finally get an answer on this five-year saga. it was a great month.For us , We made 809 pips profit and hope to keep this performance up in July.
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