Alpesh Patel's NEWSLETTERPRO - Dollar ends the week higher on renewed investors’ confidence, will it continue strong over the current week?

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Dollar ends the week higher on renewed investors’ confidence, will it continue strong over the current week?

© Alpesh Patel

MORNING BRIEF

Friday was a good day for the Dollar as the US currency appreciated across the board against almost all of its major counterparts. The Dollar was back in demand last week as investors came to realize that the shocking NFP miss the week earlier was probably nothing more than a minor setback and that the overall progress made in the US economy justified the current tapering agenda. The price action at the end of the week sent the Euro below the critical 1.3550 support and market participants are growing modestly confident that the European currency might be on its way lower towards the 1.33-1.34 area. On the other hand, contrary to Euro’s losses the British Pound gained a lot versus the buck on early European hours benefiting by an impressive Retail Sales report. The report showed that the Retail Sales in the UK rose a staggering 5.3% which is more than double than the expected 2.5% rise. As a result the British Pound climbed above 1.6400 to reach as high as 1.6450 prior to retreating back down near the 1.6400 level. As we mentioned in our last report on Friday the Pound seemed to have formed a short-term bottom at the 1.6320 area and a move higher was expected. Now the week ahead of us holds a few important releases with the German ZEW report, a number of British labor market data and several PMI reports expected and we will plenty of opportunities for trading as the main focus for the rest of the month will be the FOMC meeting the coming Wednesday, January 29 where we will see whether the committee will go ahead and taper its asset purchases’ program even further. Today the week begins with no expected releases which means that the markets will probably still be moving the way they closed the previous week. We have a couple of trades still on that haven’t reached their full potential and the lack of news today might allow them to go all the way.

The week begins with no news expected but the next couple of days hold significant releases

The Economic Calendar today is empty of anything significant and this could make for a day of calm trading conditions affected mainly of the previous week’s themes. However, tomorrow and the day after we’ll be looking into some important news releases that could alter the short-term outlook. The ZEW survey report is expected tomorrow and its release could prove beneficial for the Euro and allow it to breathe against the Dollar as analysts are citing a probable rise in sentiment. Also on Wednesday a host of jobs-related data are expected from the UK and if we continue to see improvements made in the jobs market in the UK then the Pound could climb even higher against the Dollar and test the 1.6500 resistance.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

No significant releases scheduled for today

 

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TECHNICAL ANALYSIS & LEVELS

 

EUR/USD

The Euro declined on Friday against the Dollar and our short suggestion was triggered at the 1.3575 mark and our first target at the 1.3540 level was hit. The first 50% of our trade was closed there and our stops have been moved at the breakeven price (which is the opening price of the trade) as we always do. Now it seems that the currency might attempt a retracement higher but we’re situated perfectly to withstand this possible pullback as we’re risking nothing but we can benefit from an extended rally downwards. Thus, stops at the breakeven price and we’re eager to see how the Euro starts its week.

GBP/USD

The Pound exploded higher on Friday after an impressive Retail Sales report. The move higher has been expected and we’re pretty pleased to see that our analysis in our last report was  perfect. Quoting from Friday’s report: “the Pound seems to have formed a short-term bottom around the 1.6320 area that is a significant medium-term support and with the Retail Sales figures coming in this morning we’re biased towards a retracement higher”. Subsequently our long entry at the 1.6385 level was triggered and our first target at the 1.6420 mark was hit instantly. Now 50% of our trade has been liquidated there and our stops have been moved at the breakeven price. We’re happy to see that the Pound remained above the 1.6400 mark during the retracement that followed and as such we’re expecting further gains today and tomorrow with our second target at the 1.6480 level coming into play.

FTSE 100

The FTSE 100 found it hard to climb higher on Friday even though the Retail Sales report surprised to the upside. This could be interpreted as a sign of exhaustion for the UK index that has been on an uptrend recently and a retracement lower could come into play. As such we’d like to offer our idea for a short trade: we’d like to enter short at the 6,800 points, target the 6,785 and 6,750 marks and place a stop at the 6,850 mark.

Gold

Gold reversed higher on Friday against the Dollar and it broke above the $1,245 resistance triggering our long entry at the $1,246 mark. Our first target at the $1,250 level was hit within the first hour of trading and we’re happy to wake up to today to see that our second target was also hit overnight to conclude a perfectly executed trade. Now we’ll stand aside and see how Gold will start its week as a retracement lower could be expected.

 

The above charts have been created using FXCM’s Trading Station platform.

STOCK MARKET FOCUS

 

[Restricted Content] Ltd.

The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Ltd. as our stock of the day. 
Company Information: [Restricted Content]


Created using Sharescope Pro

[Restricted Content] Ltd. has been rated an 8 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is low suggesting that the stock might be  underpriced, the ratio of the price earnings growth is also low but Earnings are down year on year challenging the growth potential. From a technical standpoint, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline. We suggest that you wait for the price to break above recent highs prior to acquiring it. The suggested holding period for a stock of this type is 6-12 months.

Important Information

The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.

 

This is the free, time-delayed version of NewsletterPro, a subscription-based product.
If you would like to receive it before 7:30am, please subscribe by clicking here.

 

 

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