Analysis 18/03/18

Posted on Posted in Weekly Analysis

AUDNZD

We are now showing you the 4H Head and Shoulder structure formed and we saw the neckline broken. Although it isn’t the most perfect shaped Head and shoulders its still a valid structure, it was on a diagonal support line. Remember you don’t always have to have horizontal support lines in these structures.

So in order to trade the trend a catch the remainder of this move to the downside we would want to see how the price reacts back at the previous neckline, it goes back through it then we would still expect to see a lower high form before more downside.

We have had a break out Friday along with the 20 Moving average now crossing the 50MA and moving below it also provides some insight into their potentially being more downside movement to it

The sellers are clearly in control on the Daily timeframe with us last weekly seeing a rejection off the monthly pivot point with S1 Support level at 1.0630 next support level to downside,

Sell Entry 1.0720 – on retest of neckline, or 1.0760 would be previous high on 4H

Targets, 1.06 short term – Long Term target 1.0400

 

EURUSD

EURUSD could be set for more downside momentum towards our area highlighted on the charts at 1.2080. Looking on the Daily Timeframe we can see that we are creating higher lows. So what is currently weighing down the EURO at the moment, first of all political uncertainty coming out of Italy, the 2 major winning parties are both right of politics and seen as new anti-establishment parties who are sceptical of Italy staying in the EU, (causes uncertainty for investors), a more dovish tone being taken by the ECB in regards to interest rate hikes – Last week Draghi said that he expected interest rates to remain at record low for a substantial time period which disappointed investors who are desperately wanting a more Bullish take on the Euro. And Thirdly, Low Inflation, Fridays Inflation data come out worse then expected and is the main focus of the European Central Bank at the minute.

So what will help pick Inflation up in the Euro, one way is a depreciating currency, so more dovishness from the ECB is likely as they will want the currency to weaken for Inflation to pick up. When the currencies weaken, import prices increase for the currency as they need more Euros for the good they buy from abroad. Companies then pass on the increases in costs on to consumers, that’s how inflation rises in the most simplest terms.

Also the USD are expected to hike rates this week from 1.5% to 1.75% – if they fail to rise rates then we should see the USD weaken off, should they increase rates and then hint that we could see 4 Rate hikes this year instead of the 3 the market expected then we would more then likely see a strong dollar, if they raise rates and then still stick to the 3 rate hikes then we could see the market left disappointed, the market tends to build up such high expectations when it comes to USD rate hikes lately.

So we have fundamentals a technical supporting up for this trade to continue down, especially if we break the daily trend line, Ideal selling price will be 1.2350 at the top of the trend line, as we can see below, target would be bottom of the Triangle, and if it breaks then to 1.2080