InvestMacro

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.10070
• Open: 1.09119
• % chg. over the last day: -0.49
• Day’s range: 1.08134 – 1.09812
• 52 wk range: 1.0777 – 1.1494

EUR/USD quotes show negative екутвы. The demand for risky assets remains at a low level. The coronavirus pandemic is still in the spotlight. The ECB launched an emergency asset buyback program for 750 bln EUR. The US Federal Reserve announced a new $3.8 trillion credit program to fight the consequences of the virus crisis. Currently, EUR/USD currency pair is consolidating in the range of 1.08000-1.09550. The trading instrument can decline further. Open positions from key levels.

At 14:30 (GMT+2:00), the Philadelphian PMI will be published.

The indicators signal the sellers’ power: the price has fixed below 50 MA and 100 MA.

The MACD histogram is in the negative zone, which indicates a bearish sentiment.

The Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 1.08000, 1.07000
• Resistance levels: 1.09550, 1.10600, 1.11600.

If the price fixes below 1.08000, expect further descend toward 1.07000.

Alternatively, the quotes could recover toward 1.10500-1.11000.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.20594
• Open: 1.15803
• % chg. over the last day: -3.69
• Day’s range: 1.14746 – 1.16614
• 52 wk range: 1.1466 – 1.3516

The British pound fell on Wednesday to its lowest level against the dollar since 1985 and to more than a decade low against the euro due to concerns about the coronavirus and investors’ desire to hold on to the US dollar. Currently, GBP/USD quotes are consolidating in the range of 1.14500-1.16500. Technical correction of the trading instrument after a significant collapse is not ruled out in the nearest future. Open positions from key levels.

The Economic News Feed for 19.03.2020 is calm.

The indicators signal the sellers’ power: the price has fixed below 50 MA and 100 MA.

The MACD histogram is in the negative zone, which indicates a bearish sentiment.

The Stochastic Oscillator is in the neutral zone, the %K line started crossing the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 1.14500
• Resistance levels: 1.16500, 1.20000, 1.21350

If the price fixes below 1.14500, expect the quotes to fall toward 1.13000.

Alternatively, the quotes could correct 1.18000-1.19000.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.42021
• Open: 1.45086
• % chg. over the last day: +1.99
• Day’s range: 1.44256 – 1.46679
• 52 wk range: 1.2949 – 1.4668

The CAD keeps losing ground against the USD. During yesterday and today’s trades the growth of USD/CAD quotes exceeded 400 points. The Canadian dollar remains under pressure amid a significant collapse of oil quotations. At the moment the trading instrument has stabilized. The key range is 1.44000-1.46600. Technical correction is not ruled out in the nearest future. Open positions from key levels.

The Economic News Feed for 19.03.2020 is calm.

The indicators signal the strength of buyers: the price has fixed above 50 MA and 100 MA.

MACD histogram is in the positive zone, which indicates a bullish sentiment.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates a possible correction of the USD/CAD currency pair.

Trading recommendations

• Support levels: 1.44000, 1.42750, 1.41500
• Resistance levels: 1.46600, 1.48000

If the price fixes above 1.46600, consider buying USD/CAD as the price rises toward 1.48000.

Alternatively, the quotes could descend toward 1.42500-1.41500.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev Open: 107.604
• Open: 108.042
• % chg. over the last day: +0.63
• Day’s range: 107.996 – 109.551
• 52 wk range: 101.19 – 112.41

The USD/JPY currency pair has moved up. The quotes have updated the local highs. At the moment the trading instrument is consolidating in the range 108.500-109.500. Financial markets participants are waiting for additional drivers. We recommend you to pay attention to the dynamics of US government securities yield. USD/JPY currency pair has potential for further growth. Open positions from key levels.

The Economic News Feed for 19.03.2020 is calm.

The indicators signal the strength of buyers: the price has fixed above 50 MA and 100 MA.

MACD histogram is in the positive zone, which gives a signal to buy USD/JPY.

The Stochastic Oscillator is located in the neutral zone, the %K line crosses the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 108.500, 107.850, 106.500
• Resistance levels: 109.500, 111.000

If the price fixes above 109.500, expect further growth toward 110.500-111.000.

Alternatively, the quotes could descend toward 107.000-106.500.

by JustForex

By Alpari.com

By Alpari.com

By Elliott Wave International

Crude oil took a 30% dive on Sunday, March 8. Yet what’s happened in oil this year is so much bigger than that headline-grabbing, one-day move. In January, oil was $64 a barrel. It hit $27.34 intraday on Monday, March 9, so the price of oil fell 57% in just two months. Talk about a swift decline.

If you turn on your favorite financial news network, the odds are good that you’ll find a pundit speculating about what this move down in oil means for stocks. To help us answer that question, let’s go back to 1973. Economists will tell you that the 1973-74 bear market was due to the infamous OPEC oil embargo. The embargo is a real thing that happened from October 1973 to March 1974, and it’s true that oil prices quadrupled over that time. But the stock market topped in January 1973. Stock prices had been falling for nine months before the embargo began, so the embargo cannot have caused the bear market in stocks. Plus, stocks continued to fall for nine months after the embargo was lifted, further destroying the embargo-caused-the-crash argument.

Although the data don’t support economists’ argument, let’s consider the logic that underlies their argument for a moment. The embargo resulted in oil shortages and pinched household and corporate budgets, ostensibly exacerbating the bear market and pushing the economy into a recession. But if drastically rising oil prices are bad for stocks and the economy, then logic demands falling oil prices must be good for stocks and the economy. Yet oil collapsed 78% in 2008 during the worst of the bear market in stocks. And the recent price slide in oil has overlapped a global selloff in stocks.

So what’s going on? The truth is that the correlation between stocks and oil swings willy nilly from positive to negative throughout history, as you can see on the chart. Pundits will try to use one market to predict the other, but the reality is that there’s no reliable relationship between the two at all. To understand each market, you have to look at each market’s Elliott waves.

Discover how Elliott waves can help you catch moves in the oil market when you watch a special video from EWI’s chief energy analyst, Steve Craig, available to ClubEWI members. Sign up for FREE and watch instantly.

By Orbex

SNB governing board member Andrea Maechler has stated that the bank is keeping a close eye on the current economic situation, and, that if deemed necessary, the bank will act accordingly.

Their willingness to take action depends on how the current crisis pans out. Will it be short-lived or spiral out of control?

In normal times, we wouldn’t even make a calculated assessment on whether the SNB would opt-in for a rate cut. But times right now are the farthest thing from normal there is.

Central Banks Pledge

Central banks around the world have proceeded with aggressive interest rate cuts this week.

The trend started with the Fed, which cut rates twice in less than 2 weeks by a total of 100 basis points. It then continued with other major central banks, including the RBNZ, RBA, and BOE.

So, will the SNB do their bit and announce an interest rate cut? Let’s turn the clock back a little.

Will They Cut?

The SNB has kept its interest rates at a record low of a negative 0.75% since 2015. Thus, they are reluctant to cut any further.

The SNB’s reluctance to cut is perhaps a little bolstered by the ECB’s action.

ECB president Lagarde was expected to follow on the pledge and cut interest rates by a minimum of 10 basis points, but she failed to deliver.

Therefore, the SNB is likely to follow the ECB’s lead and shy away from slashing interest rates. Swiss banks are already under pressure and any further burden would cause serious problems. Not to mention this could lead to serious cash hoarding.

The Swiss banks want the currency to weaken to make exports more lucrative. However, their attempts have yielded little to no response. They are forced to keep FX intervention on to keep euro-dominated assets in check.

Weakening their currency by keeping rates at ultra-low levels hasn’t truly worked either since 2015. The Swiss franc continued on with safe-haven flows.

This suggests that they are more interested in increasing the stimulus package than in cutting rates.

Lower Rates vs Stimulus

While monetary policy can’t really fight against a pandemic, these policies, if properly structured and deployed, can bring some kind of normalcy to business sentiment.

With the SNB looking for signals at the ECB for policy changes, they are most likely going to increase the stimulus package and FX intervention rather than cut.

This, however, could start a new feud with the US, as SNB is already on the watch list of currency manipulators.

By Orbex

By TheTechnicalTraders – Recently, I was asked to participate in a live radio talk with Arnold Gay and Yasmin Wonkers at Money 89.3 Asia First and was sent the following questions to prepare for the show.  I thought this would be a great way to share my thoughts and expectations related to the Covid-19 virus, global economics and what the Central Banks are doing to combat this virus economic event.

The reality is that the bottom in the markets won’t set up until fear subsides and the unknowns related to this virus event are behind us.  Until then, the global markets will attempt to seek out the true valuation levels based on this fear and the unknowns.  This means true valuation could be much further away from current price levels as the virus event is still very fluid in nature.

I’ve included a few of our custom index charts to highlight exactly where the markets are currently situated and have attempted to explain my thinking related to these charts.  Please continue reading.

First, be sure to opt-in to our free market trend signals before closing this page, so you don’t miss our next special report!

Custom Smart Cash Index Weekly Chart

This first chart is our Custom Smart Cash Index Weekly Chart.  We had been expecting a breakdown in the US stock market last August/September 2019 (near the origination point of the line on the RSI pane) as our Super-Cycle system indicated a major breakdown was likely near the end of 2019 and into early 2020.

As the US Fed started pumping credit into the Repo market and the US/China trade deal settled over many months, a zombie-like price rally pushed prices higher through December 2019 and into early 2020.  We alerted our members that this was likely a blow-off rally and to prepare for greater risks.

You can see how dramatic the change in trend actually is on this chart.  We have broken the upward sloping price channel and moved all the way to the lower range of the GREEN downward sloping price channel.  This is HUGE.  Near these levels, we believe the US stock market will attempt to find support while continuing to rotate and setup additional “waterfall downside price events”.  These custom indexes help us to understand the “hidden side” of the market price action.

Chart by TradingView

Weekly Custom US Stock Market Index

This next Weekly chart is the Custom US Stock Market Index and we want you to pay very close attention to the fact that the recent lows have come all the way down to reach the upper range of the 2016 trading range.  Once the 2018 lows were breached, we knew the markets were setting up for a deeper downside price move.

We do believe this current level is likely to prompt some type of “Dead Cat Bounce” or moderate support though.  The entire range of 2016 (low, midpoint and high) are very much in play right now as these represent the current support levels for the US stock market.  We do believe some moderate support will be found near these levels – yet we have to wait for the price to confirm this bottom setup.

Chart by TradingView

Weekly Custom Volatility Index

This is our Weekly Custom Volatility Index and the extremely low price level on this chart suggests the US stock market may attempt to try to find moderate support soon.  We have not seen levels this low since 2009.  If the markets continue to push lower, this Custom Index will continue to stay below 6.0 as the price continues to decline.  Yet, we believe this extremely low price level may set up a bit of support near recent lows (within the 2016 range) and may set up a sideways FLAG formation before the next downside price leg.

Chart by TradingView

Please continue reading the questions (below) and answers/thoughts to those questions (below the questions).  We certainly hope this information helps you to understand and prepare for the next 6 to 12+ months as we believe the volatility and unknowns will persist for at least another 4 to 6+ months. But keep in mind the market dynamics change on a daily and weekly basis and if you want to safely navigate them and have a profitable year follow my analysis and ETF trades here

Questions:

1. Rates at zero, massive injections and coordinated central bank action… why isn’t the market convinced the situation is under control?

2. What are investors looking for now – A peak in coronavirus infection rates? A sense that a proper healthcare response is in place and won’t be overwhelmed?

3. The main issue seems to be that this is not a slowdown, but the sudden closure of economic activity, do you see massive fiscal support coming, including bailouts for sectors like airlines?

4. Do you get a sense that the White House finally gets it, and is now moving to reassure markets and ordinary Americans?

Answers/Thoughts:

The markets are not reacting to what the global central banks are doing right now and probably won’t react positively until two things happen: fear of the unknown subsides across the globe and the total scope of the global economic destruction is assessed (think of this as TRUE PRICE VALUATION).  Right now, we are in the midst of a self-actuating supply and demand-side economic contraction that will result in a renewed valuation level as markets digest the ongoing efforts to contain/stop this virus.  Where is the bottom, I have an idea of where the bottom might setup – but the price will be what dictates if that becomes true.

If 2018 lows fail to hold as a support level, then we are very likely going to attempt to reach the 2016 trading range and I believe the midpoint and low price range of 2016 are excellent support levels for the market. I show the SP500, Nasdaq and Dow Jones index analysis and prediction in this video below.

The White House and most governments get it and are not missing any data with regards to this virus event.  I truly believe that once this virus event ends and the general population gets back to “business as normal”, the world’s economy will, fairly quickly, return to some form of normal – with advancing expectations, new technology and continued global economic and banking functions.  Until that happens, which is the effective containment and control of this virus event, then no amount of money or speech writing is going to change anything.

Far too many people are acting emotionally and afraid right now.  The facts are simple; until we get a proper handle on this virus event, there will continue to be extended threats to our economy, people, families and almost every aspect of our infrastructure, banking, society and more.  Once the virus event is mostly contained and settled, then we can get back to business cleaning up this mess and finding our way forward.

I’m not worried too much, my research team and I advised our clients to move into bonds and cash before the drop in equities and have been warning our members of a “zombie-rally) for the past 5+ months which took place as expected.  We called for a “volatile 2020 with a very strong potential for a breakdown in global markets” near August 2019.  This is playing out almost exactly like we expected (except we had no idea a virus event would be the cause).

I firmly believe the global leaders and dozens of technology firms will have a vaccine and new medical advancements to address the Covid-19 virus.  I believe this event will be mostly behind us in about 90+ days.  What happens at that point is still unknown, but I believe we will be able to see a pathway forward and I believe all nations will work together to strengthen our future.

In closing, I urge everyone to try to relax a bit and understand this is a broad (global) market event with a bunch of unknowns.  It is not like the Fed can just throw money at this problem and make it go away.  This is going to be a process where multiple nations and various industries and groups of people will have to work together to reduce and eliminate this threat.  Because of that, there are no real clear answers right now – other than to be prepared for a few months of quarantine to be safe.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen

TheTechnicalTraders.com

By Orbex

Australia hasn’t been immune to the wide swings in the market lately, largely due to liquidity fears.

Even countries like Australia who have not taken major economy-altering measures to combat the pandemic are seeing significant drops in capital markets.

While fundamentals might be looking up due to the restart of the Chinese economy, the issue of a looming credit crunch is weighing on markets. That’s why Australian jobs numbers are even more important than before.

The fate of the AUD is closely linked with what the RBA does next. Especially since the bank was already paying close attention to the jobs data before the current turmoil anyway!

The logic was that the economy needed to maintain near structural full employment in order to support inflation. Hence, the RBA’s policy is geared towards supporting job growth.

Things Change

Liquidity is drying up as the markets are plunging due to economic uncertainty. Meanwhile, the RBA has been pumping cash into the market, buying up assets.

The bank has not declared its actions as quantitative easing. However, nearly quintupling normal asset purchases is the textbook definition of QE.

The issue is that the RBA has not set out a defined policy and easing regime. So, while its actions are having the effect of increasing available funds for the market, there is no certainty that it will continue. This leaves investors wondering how much support they can expect.

A majority of economists in Australia are predicting that the RBA will cut rates before their next meeting. Not only as a response to the economic situation but also because most other major central banks have done so.

This would put the reference rate at the bottom of the policy range, at which Lowe has repeatedly said that non-traditional measures would come into play.

Importantly, Lowe will be giving a speech tomorrow. So we expect people will pay extra attention to any hints about what the bank might do.

Especially Relevant Now

Jobs data is extra relevant now because Australian banks are heavily invested in the real estate sector. This had seen consistently climbing prices thanks, in part, to investment from China.

However, the housing market already took a turn for the worst last year. And, with the potential of Australians losing jobs as an effect of the COVID-19 outbreak, those mortgages could come under increased pressure.

We should look out for the RBA taking a keen interest in supporting maintaining jobs, and the government as well.

What About the Data?

The consensus is that Australia added 11.6K jobs last month, a further decrease from the 13.5K in January. Job losses typically lag behind the economic situation. So, it might be that the full effect of the drop in demand from China during the virus outbreak isn’t fully reflected in the figures.

Even so, the projection is for the lower end of the “normal” range that labor creation has been maintaining for years.

Expectations are for unemployment to tick down to 5.2% from 5.3%, at least remaining consistent with the trend. Even a slight improvement in jobs figures might not be enough to calm the markets. This is because we expect more layoffs in March.

By Orbex

By Elliott Wave International

Pension funds were already in a highly precarious position before the DJIA’s February 12 high and the subsequent start of the high drama in stock moves.

The 2018 edition of Robert Prechter’s Conquer the Crash noted:

The bull market in stocks has gone on so long that pension funds, formerly boasting conservative portfolios, have embraced stocks as a safe investment. … This is a setup for disaster.

Fast forward to Nov. 5, 2019 when the Wall Street Journal said:

Public Pension Plans Continue to Shift Into U.S. Stocks

Discussing the same theme, our January 2020 Elliott Wave Financial Forecast showed this chart and said:

At the end of the third quarter, alternative investments such as private equity and who-knows-what made up 5.6% of [U.S.] public pension fund portfolios, a new record. At 47.3% in 2019, equities exceed the allocation at the stock market peak of 2007. ” … As in 2008, pension funds are doubling down. Once again, the strategy will prove a miserable failure.

Yes, deficit-plagued pension funds were nearly half invested in stocks — just when the main indexes started to plunge a few weeks ago.

On March 9, the Guardian, a British newspaper, put a positive spin on pensions and the market’s rapid downturn:

How badly has my pension been hit?

It’s bad, but not as grim as the headline falls in the FTSE or Dow suggest. As a rule of thumb, for every 10% fall in the FTSE, the value of your pension investments falls by about 5% to 6%.

Well, whether one chooses to call it “bad” or “grim,” one thing’s for sure: the British and U.S. stock markets have fallen even more since that article published.

Many observers believe the coronavirus “triggered” the big plunge in stock values. However, you may be interested in knowing that the Elliott wave model pointed to a big decline in the equity market well before the coronavirus became widespread frontpage news.

As example, our January 2020 Elliott Wave Financial Forecast (published Jan. 10) said:

The new year has coincided with new highs in the Dow Jones Industrial Average, but key pieces of evidence indicate that the rally is at or very near an end. … Now is the time to be prepared for a change of trend, which very few investors are currently anticipating.

Indeed, that “change of trend” did occur.

Now is the time to find out what EWI’s analysts anticipate for the stock market in the weeks ahead.

Elliott Wave International has been guiding investors through bull and bear markets since 1979. From that long experience, we know that at certain market junctures, we can help the most by giving everyone our latest analysis free.

Now is one of those market junctures.

Elliott Wave International has just made the entire “Stocks” section of our flagship market letter, the monthly Elliott Wave Financial Forecast, available to all Club EWI members, free. Your membership in Club EWI is also free.

It’s a rare opportunity to see what EWI’s subscribers are reading.

Read the Financial Forecast excerpt now, free

This will help you understand how the markets got to this juncture — and, more importantly what’s likely next.

Also, please feel free to share this special excerpt with friends and family.

Again, here’s that link:

Read the Financial Forecast excerpt now, free

By Orbex

The current GBPUSD structure hints at a bearish zigzag consisting of primary waves Ⓐ-Ⓑ-Ⓒ.

The first two waves of the structure are fully completed: wave Ⓐ- formed a 5-wave impulse, wave Ⓑ has taken the form of a triangle, wave Ⓒ is still under development and expected to have to maintain wave Ⓐ- ‘s pattern; a 5-wave impulse.

The bearish 5-wave impulse is expected to be completed near 1.1595. At that level, prices will reach the 261.8% extension of wave Ⓐ.

Without a meaningful retracement so far though, we must consider an alternative scenario.

In this scenario, the i primary impulse Ⓒ formed as we speak, is seen as an intermediate impulse wave (1). This suggests further weakness than the first scenario does.

This wave can find an intermediate bottom near 1.1618, in which case, minor wave 5 will be at the 150% extension of minor bearish impulse 3.

After the completion of the impulse (1), we could see a small correction in minor (2) near the 1.2400 area. This target would respect the tenancy prices retracing 50% of wave (1).

By Orbex

By Orbex

The yen returned to its safe-haven status when the stocks around the world dropped substantially.

As seen on the daily chart above, prices have tested two trendline lows and currently, we are on a bounce. The recovery was initiated on the back of the CB’s coordinated responses to COVID19.

The current target is a retest of the bear flag base, which the price broke on its way to posting the 101.18 lows. The retest of the base comes right under the 109 handle.

A daily close above the bear flag will most likely lead to a higher level. However, the support at the 104.30 region will act firmly if we get a confirmed retest of the flag base. This a level to look closely at when and if things turn ugly.

The pair has put up a base at the 105.20 support region in the short-term.

We are likely in an ascending wedge pattern with 106.70 marking an intraday support.

A break and a close above 107.80 would suggest a move towards 109.80.

By Orbex

By Orbex

The Turkish central bank joined the swelling ranks of central banks rushing to ease policy rates this week.

The CBRT has now cut rates back down to single digits with its own 1% interest rate cut. Following the move which echoed that of the Fed earlier this week, Turkish interest rates now sit at 9.75%.

This comes ahead of the bank’s scheduled rates meeting on March 19^th. And, once again, it highlights the fragile state of the global economy as more and more central banks scramble to buffer liquidity conditions.

CBRT Joins Co-ordinated Measures

The caution with which the central bank views the current situation was clear in its statement.

The CBRT noted:

“As developments regarding the spread of the coronavirus have weakened global growth outlook, central banks in advanced and emerging economies have taken coordinated expansionary measures. The pandemic disease is closely monitored for its evolving global impact on capital flows, financial conditions, international trade and commodity prices.”

The statement was not totally negative, however. The bank did note:

“In the period preceding the coronavirus outbreak, Turkey’s macroeconomic indicators improved significantly… A sustained fall in inflation and a sizable adjustment in the current account were achieved”.

Further Measures Announced

Along with the 1% rate cut, the CBRT also announced a range of further measures. These aim to help support the economy during the amplified risks posed by the coronavirus.

These additional measures include:

“Enhancing predictability by providing banks with flexibility in Turkish lira and foreign exchange liquidity management, (ii) offering targeted additional liquidity facilities to banks to secure uninterrupted credit flow to the corporate sector, (iii) boosting cash flow of exporting firms through arrangements on rediscount credits”.

CBRT To Monitor Incoming Data

In terms of forward guidance, the CBRT advised that:

“Monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process. The Central Bank will continue to use all available instruments in pursuit of the price stability and financial stability objectives. It should be emphasized that any new data or information may lead the Committee to revise its stance”.

Technical Perspective

The USDTRY has broken out above the top of the bullish channel which has framed price action since May 2019.

For now, the rally has run into resistance at the 1.4641 level. This has been a long-term supply level in USDTRY.

While above the channel top, however, a further move higher seems likely. In fact, the 6.6469 level is the next topside region to watch. To the downside, any retracement should find support into the 6.2255 level.

By Orbex