Looking at the global financial and alternative markets it’s easy to see that this is an excellent time to be trading. We’re right in the midst of some strong trends so there should be plenty of opportunities now for short term traders and long term investors. There are excellent setups happening regularly for both technical and fundamental analysis. Let’s take a look.
The Bank of England event was certainly an exciting one. Not only did the BoE not signal towards raising the interest rate, they seem to have backed down significantly and overall showed a very pessimistic outlook for the economy.
The forecast for GDP growth this year was downgraded from 1.9% to 1.7% and the expected level of investment in the UK economy by 2022 was reduced by 20%.
Of course, with a weaker economy, it’s very difficult to start raising interest rates, even if the other central banks really want you to, and even if the current low levels of the Pound Sterling are hurting consumers.
Out of the eight voting members, only two voted to raise the rates, which is down from three at their last meeting. Furthermore, in the press conference following the decision, Governor Mark Carney’s feelings about raising the rates seemed a bit less than lukewarm.
The GBPUSD, which has been on a tear lately, pulled back significantly. Those who feel the stronger pound and/or weaker USD trend will continue now have a better entry point than they did 24 hours ago.
There are a few great ranges now showing on the charts, but I wanted to just highlight one for you. We’ll take a look at more of these in the coming updates.
Here’s the USDJPY since the Trump election (white circle). Pay special attention to the green line of 112 Yens to the Dollar. Notice how it seems to be magnetizing towards that price?
Since March, the range seems to be stabilizing as well. You can see that a double top (blue) formed just below 115 and right now we’re testing the dotted yellow line, which if it holds will be a classic rising support level.
This is an excellent setup for technical traders. You have a clean target, one that the price has met and crossed over dozens of times in the past year. So there is a perfect place to put your take profit. The rising support line provides an excellent place to put your stop loss too. If for whatever reason the trade goes against you, you can get out with relatively little damage.
For people who like to trade the high profile news events, today is your day. As we know the US Non-farm payrolls, released on the first Friday of every month, are known to produce some of the biggest moves in the shortest amount of time.
Today will be no different. The announcement will be at noon GMT and analysts are expecting to see 182,000 jobs added to the US economy in the month of July. Also pay attention to the unemployment rate, which is expected to fall a notch, and the average hourly earnings.
The US Dollar has been on the edge over the past few days. It’s been having a terrible year so far but the past few days has held on.
The Dollar index seems to have found some semblance of support just above 92 points.
The technical setup doesn’t look good. And of course, if it drops much further many would probably see it as a breakout.
Let’s hope for the Buck’s sake that a good jobs report today can at least break the fall.