FOREX Technical Outlook 05 Aug

Posted: August 5, 2014 in Forex

The EUR/USD pair initially fell during the course of the day on Monday, EUR-USDbut as you can see we bounced slightly in order to form a bit of a hammer. However, the range was very tight, and as a result we believe that even if we do see some bullish pressure now, it’s going to have a fight on its hands to get above the 1.35 handle. With that, we are more than comfortable sitting on the side lines waiting for the market to come to the 1.35 region in order to sell the first signs of weakness.
The GBP/USD pair bounced during the session on Monday, GBP-USDas the 1.68 level has offered enough support to at least do that. We believe them the British pound has been sold off a bit too much, and as a result we think that a return to the 1.70 level is likely, and as result that’s what we are expecting. If we can get above the 1.70 level, we feel the market could go to the 1.72 handle after that. On the other hand, if we get weak candle at the 1.70 handle, we feel that the market will more than likely sell off again.
The AUD/USD pair initially fell during the day on Monday, but as you can see found enough support to turn things back around and form a hammer. AUD-USDThis hammer tells us that the market wants to go higher, but we need to get above the 0.9350 level in order to feel that we reenter the consolidation that leads to the 0.9450 handle. Ultimately, we believe that the market is trying to build up enough momentum to break out, which would be signified by a daily close well above the 0.95 handle. Once we get back, we are longer-term buy-and-hold type of traders.
The USD/JPY pair initially fell during the course of the day on Monday, but as you can see about enough support of the 102.50 level to turn things background and form a hammer. USD-JPYBecause of this, we believe that the market will make another attempt at the 103 level in the short term, but whether or not we can get above there is probably a completely different story. That area is a significant amount of resistance, so we prefer taking short term long positions. At this point in time, we have no interest in selling this pair.
Data Update for 5th Aug 2014

Time Currency Impact Particular Actual Forecast Previous
5:00am AUD AIG Services Index 49.3 47.6
7:00am AUD High Trade Balance -1.68B -2.00B -2.04B
7:15am CNY HSBC Services PMI 50 53.1
9:15am JPY 10-y Bond Auction 0.52|4.3 0.56|3.4
10:00am AUD High Cash Rate 2.50% 2.50% 2.50%
AUD High RBA Rate Statement
12:45pm EUR Spanish Services PMI 56.2 55.1 54.8
1:15pm EUR Italian Services PMI 52.8 53.2 53.9
1:30pm EUR Final Services PMI 54.2 54.4 54.4
2:00pm GBP High Services PMI 59.1 58.1 57.7
2:30pm EUR Retail Sales m/m 0.40% 0.00%
7:15pm USD Final Services PMI 61 61
7:30pm USD High ISM Non-Manufacturing PMI 56.6 56
USD Factory Orders m/m 0.60% -0.50%
USD IBD/TIPP Economic Optimism 46.2 45.6

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