Alpesh Patel's NEWSLETTERPRO - Low volatility was the theme at the beginning of the week as major currency pairs trade sideways

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Low volatility was the theme at the beginning of the week as major currency pairs trade sideways

© Alpesh Patel

MORNING BRIEF

Low volatility was the theme of the currency market at the beginning of the week. The major currency pairs we monitor daily took advantage of a day lacking any scheduled releases and performed in a calm manner. The Euro and the Pound traded slightly higher against the Dollar and are now hovering around the 1.3550 and 1.6430 respectively. This stillness in markets however could be disrupted today especially regarding the Euro as the important ZEW survey is scheduled for release early in the morning. Reports coming from Germany the recent period have shown an improvement of economic conditions in Euro-zone’s strongest economy and this string of good news has helped the Euro maintain current levels versus the Dollar and the Pound. It is always a risk to hope for one country to carry the load for the whole region but at this point as long as Germany continues to perform admirably the ECB sees no reason to alter their monetary policy. Regarding the US Dollar there is nothing new coming out from the US and this week is rather light on releases but a number of heavy-weight stocks are reporting earnings and the volatility caused by these figures could spill over to the currency market but the effect should be minimal and short-lived. Finally, the Pound also remained pretty much unchanged yesterday on the back of a tier-3 release on the housing market’s conditions. Prices in the housing market hiked during the last month and this shows the resilience of the market in the UK. Nothing major is expected today regarding the Pound and everybody’s focused on tomorrow’s MPC minutes’ release for more hints on policymakers’ views.

 

The German ZEW report attracts investors’ attention

The Economic Calendar today is again light on new data coming in but the German ZEW survey figures regarding the economic conditions and sentiment in the Euro area is always a potential markets mover for the European currency and its crosses. Analysts are calling for an improved level of economic confidence and should this print like that then we could see the Euro trying to climb above 1.3570 again. This level is a key short-term resistance at this point and it would important to see whether the European currency will manage to overtake it again.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

10.00

EUR

German ZEW Survey

High

64.0

62.0

10.00

EUR

Euro-zone ZEW Survey

High

68.3

 

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TECHNICAL ANALYSIS & LEVELS

 

EUR/USD

The Euro pulled back higher on the back of no news released and tested the 55-period EMA that provided enough resistance to drive the currency slightly lower. Today however we’re facing a potentially good ZEW survey release and this forces to adjust our plans accordingly. So if the Euro breaks above the 1.3570 high then we could be looking at a retracement higher so what we need to do is first bring our stops lower and place them at the 1.3570 level to lock in these additional pips. Secondly, if the Euro breaks above this level we’d like to enter long and target higher so our trade should be: long at 1.3570, targets at the 1.3585 and 1.3615 marks and stop at the 1.3530 level (red levels on the chart above).

GBP/USD

The Pound moved sideways yesterday failing to produce a new high after it has retreated down to the 1.6400 support area. Now we need to adjust our trade a bit since it looks like the Pound lacks the momentum to move higher at this point. Our stops need to be moved at the 1.6395 mark as a breach below this low will probably send the Pound lower. On that thought a short trade could be attempted at this area so we’d like to enter short at the 1.6390 level, target the 1.6360 and 1.6310 marks and place a stop at the 1.6455 level (red levels on the chart above).

FTSE 100

The FTSE 100 failed to break out of this sideways move and this provides us with a dual trade opportunity. As we mentioned yesterday we’re prepared to short the index at the 6,800 points, target the 6,785 and 6,750 marks and place a stop at the 6,850 mark. However, if the UK index breaks above recent highs then a long trade could be established: long at 6,845, targeting the 6,865 and 6,900 points with a stop at the 6,800 points level.

Gold

Gold reversed lower yesterday and tested the $1,250 support area and it is now hovering around that level. We’d like to see how will Gold perform today as well as we’re reluctant at this point to offer a suggestion. Gold seems to be in an uptrend but to what extend this trend can continue higher we’re not sure. Thus we remain at the sidelines until we get a better grip on the instruments technical outlook.

 

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

STOCK MARKET FOCUS

 

[Restricted Content] Ltd.

The Alpesh Patel Bullish Momentum filter has indicated [Restricted Content] Ltd. as our stock of the day.


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 and Earnings are up year on year supporting the growth potential. From a technical standpoint, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline. The suggested holding period for a stock of this type is 1-3 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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