Weekly Game Plan 03.07.17

Weekly Game Plan

Quick Wrap of Last Weeks Market Activity

Well last week will go down as the week that the ‘central banks woke up’. The BOC, ECB and BOE in particular hijacked a quiet week and laid down some of their trump cards on the table.

Some of the moves in the majors were dramatic as the shift in sentiment from these central banks came as bit of a shock to the market:

– The USD was pounded into submission breaking a number of support levels along the way and now hangs ‘flapping in the breeze’ around 95.50.

– There were a couple of big levels triggered in EUR, GBP & CAD and I’d say quite a few long term positions were taken out as:

* EURUSD hit a 14 month high of 1.1445.

* GBPUSD hit a 2 month high of 1.3030.

* USDCAD hit a 10 month low of 1.2945.

Central Bank sentiment as at 3rd July (my opinion only)

US Federal Reserve (FOMC) – Hawkish – USD positive
European Central Bank (ECB) – Hawkish – EUR positive
Bank of England (BOE) – Hawkish – GBP positive
Swiss National Bank (SNB) – Neutral – CHF neutral
Bank of Canada (BOC) – Hawkish – CAD positive
Bank of Japan (BOJ) – Neutral – JPY neutral
Reserve Bank of Australia (RBA) – Neutral – AUD neutral
Reserve Bank of New Zealand (RBNZ)- Neutral – NZD positive

Realistically though the Bank Of Canada is the only one of the big three that I believe has a chance of raising rates this year.

What’s Happening with the Majors

It’s definitely time to go to your ‘Daily’ charts as the shift in central bank sentiment usually leads to a change in the long term trend of the currencies.

It may be hard to think EUR and GBP can keep going up and the USD down especially considering the FED are the only bank raising rates at the moment.

But the fact is the FED moves have already been factored into the market, so we may see a shift in global sentiment away from the USD.

EURUSD

A break of 1.1450 and EUR has blue skies all the way up to 1.2800. We’ll have to revert to Fibonacci retracement levels as we have no other trendlines in sight. Seems crazy but it’s on the cards.

 

GBPUSD

Sterling is finding some resistance around 1.3050 (the previous high in May) at the moment but it also has the potential to shoot up towards 1.3900. It still has Brexit hanging over it’s head but should Brexit be a good result then this is definitely possible.

 

USDCAD

The Funds have already taken off to the downside and there’s a 45% chance of a rate hike on July 13. It’s broken through a major level around 1.3100 and the next trendline support comes in around 1.2235 at the moment. I’m definitely looking to sell this pair on rallies for a long term move lower.

 

Major Fundamental Drivers this Week

It’s definitely going to be an interesting week with loads of high impacting data scheduled.

Plus it’s going to be a bit disjointed with US Independence day on Tuesday 4th July. The majority of the market will likely take the Monday off as well so we may not be back to full liquidity until Wednesday….it’s just something to bear in mind.

 

After last weeks shift in central bank sentiment it will be very interesting to see if the RBA move also. They are currently neutral but we could see a surprise shift in tone. This would definitely lead to a massive up-move in the AUDUSD.

Obviously the really big release is the US Non-Farm Payrolls.

With the USD sitting precariously with no major levels this is definitely going to be a loose event. But it holds significant importance.

If the USD data is weak then it screws up Dudley’s remarks from 2 weeks ago and should see the moves I mentioned above for EUR, GBP and CAD occur much sooner then expected.

If the USD data is particularly strong then we’ll likely see a correction of last weeks moves.

Either way it’s going to be hectic. Not to mention more importantly the CAD employment data which is a much better trade at the moment.

Summary

It could be a slow start the week with the US holidays but it will definitely pick up come Wednesday.

The RBA is the major event for Asia earlier in the week before attention turns to the US employment data and the ‘potential impact’ it may have.

You need to go through your long term charts (Daily/Weekly) and find those long term trendlines as they will be very important from here on in.

Update on Website Launch

With the US holiday on the 4th July (and most people taking the extra long weekend) we have had to push back the launch of the site until the end of this week.

It’s all up and running with a few tweaks to be made and then just a bunch of testing to make sure your experience is ‘totally awesome’.

We will be switching over the software for the Live Trade Zone also and your new login details will work on all aspects of the site.

So hang in there…. in a few days prepare to be amazed!

Brad

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