fx strategy fx 25 July 2016 This reflects the views of the Wealth Management Group Great expectations from BoJ, less so from the Fed Two key policy meetings are likely to shape currency markets during the week; the Fed on Wednesday and the BoJ on Friday. We expect the Fed to maintain status quo with largely cautious forward guidance but highlight the possibility of a rate hike in 2016. They may avoid a more hawkish tone as this could be destabilising for markets. We expect further downside in EUR/USD and GBP/USD. Though further BoJ easing in the form of additional asset purchases and further rate cuts are likely, this may already be priced-in. Hence, anything short of a significant surprise in terms of unconventional policy measures might not significantly weaken the JPY. We would use any bounce in USD/JPY to reduce exposure. In other data this week, GDP and inflation data in US, Euro area, Japan and the UK are likely to affect sentiment on currencies. Pairs Outlook (2-4 wk) Summary comments Support 2 Support 1 Spot Resistance 1 Resistance 2 EUR/USD Bearish Chart pattern maintains an overall bearish technical setup 1.072 1.082 1.097 1.118 1.130 USD/JPY Bearish BoJ action unlikely to reverse current USD/JPY downtrend 101.4 103.88 106.3 106.31 108.00 AUD/USD Bearish Downward bias confirmed following last week s decline 0.728 0.740 0.747 0.767 0.772 USD/SGD Bullish Impulsive rebound from key support suggests further upside 1.335 1.345 1.362 1.365 1.384 GBP/USD Bearish Failure to break the 1.34-35 suggests downtrend intact 1.280 1.302 1.313 1.348 1.354 XAU/USD Bullish Likely to find strong support around the 1300 region 1250 1300 1317 1375 1400 NZD/USD Bearish Recent pullback confirms possibility of a deeper correction 0.678 0.695 0.698 0.731 0.757 EUR/GBP Bullish Breach above a key resistance area suggests a deeper rally 0.800 0.824 0.836 0.861 0.877 USD/CNH Possibility of consolidation amid slowing momentum indicators 6.554 6.600 6.688 6.751 6.785 USD/CHF Consolidation to continue, SNB to limit significant CHF appreciation 0.950 0.950 0.988 0.990 1.000 USD/CAD Consolidation continues, a break of 1.315 needed to signal bulls 1.268 1.284 1.314 1.315 1.330 AUD/NZD Bullish Bullish break-out suggests further gains ahead 1.035 1.050 1.071 1.078 1.100 Darker shade indicates more important technical levels This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. Important disclosures can be found in the Disclosures Appendix. This document is provided for general circulation and information purposes only, it does not take into account the specific investment objectives, needs or financial situation of any particular person or class of persons and it has not been prepared as investment advice for such person(s). Person includes a corporation, cooperative society, trade union, sole proprietorship, partnership, limited liability partnership and any other business entity. Prospective investors should seek advice from a financial adviser on the suitability of an investment, taking into account these factors before making a commitment to invest in an investment. 1
Contents Great expectations from BoJ, less so from the Fed 1 12 month outlook 3 2-4 week outlook 3 FX trade ideas 3 Week in Review 4 EUR/USD 5 USD/JPY 6 AUD/USD 7 USD/SGD 8 GBP/USD 9 XAU/USD 10 NZD/USD 11 Interest Rate Differentials 15 FX Implied Volatility 16 Consensus forecasts 17 Disclosure Appendix 19 Steve Brice Clive McDonnell Manpreet Gill Adi Monappa, CFA Audrey Goh, CFA Arun Kelshiker, CFA Rajat Bhattacharya Victor Teo, CFA Tariq Ali, CFA Abhilash Narayan Trang Nguyen Chief Investment Strategist Head, Equity Investment Strategy Head, FICC Investment Strategy Head, Asset Allocation & Portfolio Construction Director, Asset Allocation & Portfolio Construction Executive Director, Asset Allocation & Portfolio Construction Investment Strategist Investment Strategist Investment Strategist Investment Strategist Analyst, Asset Allocation & Portfolio Solutions This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 2
12 month outlook 2-4 week outlook Currency EUR JPY GBP AUD NZD CAD CHF CNY TWD KRW SGD MYR IDR INR THB PHP Bullish Bearish Please see the latest Global Market Outlook for more details 12 month Pairs EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD XAU/USD NZD/USD EUR/GBP USD/CNH USD/CHF USD/CAD AUD/NZD FX trade ideas Outlook (2-4 wk) Bearish Bearish Bearish Bullish Bearish Bullish Bearish Bullish Bullish Entry Current Initiation date Pairs Position price price Target Stop 01/7/2016 EUR/USD Short 1.114 1.097 1.073 1.114 01/7/2016 GBP/USD Short 1.340 1.313 1.280 1.340 08/07/2016 XAU/USD Long 1320 1317 1400 1280 15/7/2016 USD/JPY Short 105.9 106.3 100.8 108.50 Please see the corresponding FX trade note for more details on each trade idea This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 3
Week in Review Weekly performance of core pairs 15 July 2016 to 22 July 2016 EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD -1.53-0.53 XAU/USD -1.10 NZD/USD -1.67-0.63 Weekly performance of supplementary pairs 15 July 2016 to 22 July 2016 EUR/GBP USD/CNH USD/CHF USD/CAD AUD/NZD 0.79 1.19-2.50-0.50 1.50-0.41 0.07 0.23 0.45 1.18-1.00 0.00 1.00 2.00 Pairs EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD XAU/USD NZD/USD Week in Review EUR/USD ended down (-0.53). The EUR extended its decline amid mixed Euro area economic data. In the US, data was a bit stronger while a rise in US 2-year yields further supported the USD. ECB maintained status quo but highlighted willingness to ease further if data weakens. USD/JPY ended up (1.19). The JPY lost ground against the USD for another week amid better investor sentiment, a stronger USD and expectations of further BoJ policy easing. AUD/USD ended down (-1.53). The AUD fell further during the week amid a pullback in commodity prices and a stronger USD overall. Australia s 2-year government bond yields also fell amid expectations of further rate cuts by the RBA USD/SGD ended up (0.79). The USD/SGD rallied last week as the stronger USD and higher treasury yields waned sentiment towards Asian currencies. GBP/USD was down (0.63). The GBP fell against the USD as manufacturing/service/composite PMI indicators fell into contraction. Wage data was also weaker than expected though the unemployment rate decline further to 4.9. XAU/USD was down (-1.10). The safe haven asset fell further amid improved risk appetite during the week and a rise in US and Euro area government bond yields. NZD/USD was down (-1.67). The NZD fell further after a RBNZ report signalled a possible rate cut amid low inflation and a strong currency. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 4
EUR/USD We remain bearish amid a higher probability of a Fed rate hike and bearish technical signals. Fundamental Overview The ECB decision to maintain policy status quo largely rested on the need to see increased Euro area economic data before deciding on the level of accommodation required. This now shifts the focus to August. Euro area inflation and GDP data this week will be key. Beyond this, an increased probability of a Fed rate hike in 2016 could also further weaken the EUR. Technical Analysis While continuing to trade broadly sideways, last week s price action suggests a deeper corrective phase can develop. Following breach of the 1.104 support level, the next major support now lies at 1.082, A breach of which can open room towards Dec low at 1.0524. Near term bounces in this bearish technical setup are likely to be restricted to the 1.118 region. Chart pattern maintains an overall bearish technical set-up EUR/USD 1.18 1.15 1.12 1.09 1.06 1.082 1.118 1.03 Mar-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Apr-16 May-16 Jul-16 EUR/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Key Levels Level Importance Resistance 2 1.130 High Resistance 1 1.118 Medium Spot 1.097 Support 1 1.082 High Support 2 1.072 Medium Key Signposts Fed policy rate Jul 27 Euro area core CPI Jul 29 Euro area 2Q GDP Jul 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 5
USD/JPY We remain bearish, not expecting a significant surprise from the BoJ policy this week. Fundamental Overview With a clear focus on BoJ this week, the question is, can the BoJ surprise markets? With direct financing of government debt already off the cards, we believe the BoJ has few ways to significantly increase stimulus. In any case, we do not believe incremental asset purchases or further cutting rates into negative territory can reverse the USD/JPY trend. Technical Analysis Failure to extend the rally beyond the 106-107 region (38.2 retracement from the Jan high and key moving averages) suggests possibility of a pullback, we believe. A breach of this region is likely to see rallies towards the 111.45 region. Pullbacks could find support in the 103-104 region, though a break of 100 is needed to signal a much deeper corrective action. BoJ action unlikely to reverse the current USD/JPY downtrend USD/JPY 127 123 119 115 111 107 103 99 106.31 103.88 95 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/JPY 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Buy Key Levels Level Importance Resistance 2 108.00 High Resistance 1 106.31 Medium Spot 106.30 Support 1 103.88 High Support 2 101.40 Medium Key Signposts Fed Policy rate July 27 Japan CPI July 28 BoJ policy rate July 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 6
AUD/USD We remain bearish as technical s suggest further downside. Fundamental Overview This week, the focus is on Australia CPI data. In the previous release, weaker than expected inflation resulted in the RBA cutting interest rates. The RBA has already indicated that it has room to further ease policy should inflation remain weak. Hence, we believe, the AUD is likely to remain weak on anticipation of further easing, barring any significant upside data surprises. Technical Analysis The impulsive reversal from this month s high suggests a deeper pull-back may be underway. A break-down from here could find support near the June lows around the 0.740 region. Below this the area corresponding to the 2015 2H tops and the 200DMA could limit downside. On the upside, we would need a break of 0.767 to indicate a stronger uptrend. Downward bias confirmed following last week s decline AUD/USD 0.83 0.80 0.77 0.74 0.71 0.740 0.767 0.68 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 AUD/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Key Levels Level Importance Resistance 2 0.772 High Resistance 1 0.767 Medium Spot 0.747 Support 1 0.740 Medium Support 2 0.728 High Key Signposts Australia CPI inflation Jul 27 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 7
USD/SGD We remain bullish following a rebound from an important support region and stronger USD. Fundamental Overview Although Asia-ex-Japan currencies are likely to be less impacted from events in Europe, we believe the short-term extension of USD strength against regional currencies (especially USD/SGD) can continue. With markets pricing a low probability of a 2016 rate hike, risks are tilted towards an upside surprise (in terms of higher US rates). However, there may be limits to USD/SGD upside, as the Fed may remain fairly dovish overall. Technical Analysis Recent uptick in the pair following a rebound from a key support region suggests a possibility of a deeper rally. However, we believe, near-term resistance at 1.365 is likely to be key. Any breach from here could open the way to test the May high at 1.384. Pullbacks could be limited to the 1.33-34 region, where a strong basing support appears to have formed. Impulsive rebound from key support suggests further upside USD/SGD 1.45 1.40 1.35 1.365 1.345 1.30 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/SGD 50DMA 100DMA 200DMA Bullish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Buy Key Levels Level Importance Resistance 2 1.384 High Resistance 1 1.365 Medium Spot 1.362 Support 1 1.345 Medium Support 2 1.335 High Key Signposts Singapore industrial production 26 July Fed Policy rate July 27 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 8
GBP/USD We remain bearish expecting a further drift lower towards recent lows. Fundamental Overview The GBP rebounded after the new UK PM and government were appointed quickly and the BoE decided to maintain status quo. However, we believe this is not likely to diminish medium term risk factors significantly. Risk of capital flight amid a large current account deficit, the possibility of sharp economic slowdown and BoE easing policy and further political risks (including a second Scottish referendum) are key risks that remain in place. Technical Analysis The pair failed to break the 1.34-1.35 region, suggesting some consolidation in the near term. The recent impulsive decline highlights potential for a deeper correction. Focus is now on the key psychological 1.300 zone, a breach of which could result in testing of the recent lows. Failure to break the 1.34-35 suggests downtrend intact GBP/USD 1.60 1.55 1.50 1.45 1.40 1.35 1.348 1.30 1.302 1.25 Mar-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Apr-16 May-16 Jul-16 GBP/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Key Levels Level Importance Resistance 2 1.354 High Resistance 1 1.348 Medium Spot 1.313 Support 1 1.302 Medium Support 2 1.280 High Key Signposts UK 2Q GDP Jul 27 UK housing prices Jul 28 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 9
XAU/USD We remain bullish, viewing the recent correction as an opportunity to renew long exposure. Fundamental Overview Gold is likely to remain in demand following renewed political uncertainty in Europe, reduced risk appetite and a scaling back of interest rate expectations across major regions. Hence, we believe, any pullback is likely to be bought into. However, eventual Fed rate hike expectations could ultimately put a cap on gold prices. Technical Analysis The recent pullback is likely to find support around the 1,300-1,320 region (61.8 retracement of the recent rally). A rebound from here would indicate the uptrend remains intact and is first likely to test the recent high at 1,375 and then the psychological 1,400 level. On the downside, a break of 1,300 could to lead to the 1,250 support region. Likely to find strong support around the 1300 region XAU/USD 1,400 1,350 1,300 1,250 1,200 1,150 1,100 1,050 1,300 1,375 1,000 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 XAU/USD 50DMA 100DMA 200DMA Bullish Key technical indicators and forecast* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Key Levels Level Importance Resistance 2 1400 High Resistance 1 1375 Medium Spot 1317 Support 1 1300 Medium Support 2 1250 High Key Signposts Fed policy rate Jul 27 BoJ Policy rate Jul 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 10
NZD/USD We remain bearish amid a bearish technical setup and increasing possibility of an RBNZ rate cut. Fundamental Overview The NZD has remained resilient so far amid increased demand for higher yielding AAA rated assets and a generally stable China outlook. However, the probability of another RBNZ rate cut also remains high, which could limit any NZD rally. Recent lower than expected inflation data has significantly increased this probability. Focus now, however, is clearly on the 11 August policy meeting with rising expectations of additional policy easing. Technical Analysis The recent bearish reversal from a strong resistance region suggests a deeper pullback might be underway. The focus is now on the 0.695 level (near 100DMA), a breach of which will shift the focus to the 0.68-0.67 region. Technical indicators have also turned firmly bearish. Recent pullback confirms possibility of a deeper correction NZD/USD 0.80 0.75 0.70 0.65 0.695 0.731 0.60 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 NZD/USD 50DMA 100DMA 200DMA Bearish Key technical indicators and forecast* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Key Levels Level Importance Resistance 2 0.757 Medium Resistance 1 0.731 High Spot 0.698 Support 1 0.695 Medium Support 2 0.673 Medium Key Signposts No Major data releases * Please see Appendix for explanation on technical xxx This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 11
SUPPLEMENTARY PAIRS Breach above a key resistance area suggests a deeper rally View EURGBP 0.90 0.88 0.86 0.861 0.84 0.82 0.80 0.824 0.78 0.76 0.74 0.72 0.70 0.68 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 EUR/GBP 50DMA 100DMA 200DMA Bullish The pair has undergone a recent overbought corrective phase, which is likely to find support at the 0.824 region. We expect increased political and economic risks in the UK to support further gains in the EUR/GBP pair. Possibility of consolidation amid slowing momentum indicators View USD/CNH 6.8 6.751 6.7 6.6 6.600 6.5 6.4 6.3 6.2 6.1 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CNH 50DMA 100DMA 200DMA We remain neutral USD/CNH. Technically, as slowing momentum indicators suggest bulls might be getting exhausted. However, policymaker preference for a weaker CNY might ultimately limit any pull-back. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 12
SUPPLEMENTARY PAIRS (cont d) Consolidation to continue, SNB to limit significant CHF appreciation View 1.04 USD/CHF 1.01 0.990 0.98 0.95 0.950 0.92 0.89 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CHF 50DMA 100DMA 200DMA We expect continued sideways movements around a broad 0.95-1.00 range. The soft peg to the EUR and SNB intervention to limit currency strength is likely to persist. Consolidation continues, a break of 1.315 needed to signal bulls View 1.50 1.45 USD/CAD 1.40 1.35 1.315 1.30 1.25 1.284 1.20 1.15 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CAD 50DMA 100DMA 200DMA Likely to consolidate near term, as oil prices fall into consolidation Tight sideways consolidation continues, break above 1.315 needed as a first sign of a leg up. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 13
SUPPLEMENTARY PAIRS (cont d) Bullish break-out suggests further gains ahead View 1.15 AUD/NZD 1.10 1.078 1.05 1.050 1.00 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 AUD/NZD 50DMA 100DMA 200DMA Bullish We remain bullish expecting the recent impulsive reversal to further develop. Strong resistance likely at 1.078 Increased probability of further RBNZ rate cuts following the weaker New Zealand inflation numbers could induce further upside. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 14
Interest Rate Differentials EUR/USD USD/JPY AUD/USD -0.10-0.30-0.50-0.70-0.90-1.10-1.30 1.4 1.3 1.2 1.1-1.50 1.0 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 EUR-USD 2 year interest rate differential EUR/USD (RHS) EUR/USD 1.45 135 1.30 1.15 125 1.00 0.85 115 0.70 0.55 105 0.40 95 0.25 0.10 85 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 USD-JPY 2 year interest rate differntial (RHS) USD/JPY USD/JPY 3.0 2.0 1.0 1.0 0.9 0.8 0.7 0.0 0.6 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 AUD-USD 2 year interest rate differntial (RHS) AUD/USD (RHS) AUD/USD GBP/USD NZD/USD USD/CAD 1.0 0.5 0.0 1.68 1.58 1.48 1.38 GBP/USD 4.0 3.0 2.0 0.92 0.82 0.72 NZD/USD 1.0 0.5 0.0-0.5-1.0 1.6 1.4 1.2 1.0 USD/CAD -0.5 1.28 Jul-13 Jul-14 Jul-15 Jul-16 GBP-USD 2 year interest rate differntial (RHS) GBP/USD (RHS) 1.0 0.62 Jul-13 Jul-14 Jul-15 Jul-16 NZD-USD 2 year interest rate differntial (RHS) NZD/USD (RHS) -1.5 0.8 Jul-13 Jul-14 Jul-15 Jul-16 USD-CAD 2 year interest rate differntial (RHS) USD/CAD (RHS) This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 15
FX Implied Volatility EUR/USD USD/JPY AUD/USD 15.5 13.5 11.5 9.5 7.5 5.5 3.5 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 EUR 1M implied vol 20 15 10 5 0 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 JPY 1M implied vol 18 16 14 12 10 8 6 4 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 AUD 1M implied vol GBP/USD NZD/USD USD/CAD 34 29 24 19 14 9 4 Jul-13 Jul-14 Jul-15 Jul-16 GBP 1M implied vol 18 16 14 12 10 8 6 4 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 NZD 1M implied vol 14 12 10 8 6 4 Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 CAD 1M implied vol This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 16
Consensus forecasts Consensus Forecasts Spot Q3 2016 Q4 2016 Q1 2017 Q2 2017 EUR/USD 1.10 1.09 1.08 1.08 1.08 USD/JPY 106.30 103.00 105.00 106.00 107.00 AUD/USD 0.75 0.72 0.71 0.72 0.71 NZD/USD 0.70 0.69 0.68 0.67 0.66 USD/SGD 1.36 1.38 1.40 1.39 1.40 GBP/USD 1.31 1.28 1.27 1.28 1.29 USD/CAD 1.31 1.32 1.32 1.32 1.31 USD/CHF 0.99 0.99 1.00 1.01 1.02 This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 17
TECHNICAL INDICATORS EXPLANATORY APPENDIX RSI (Relative Strength Index) The RSI indicators can be used to describe the speed at which prices move over a given time period. An RSI above 70 can indicate a currency pair is overbought while an RSI below 30 can indicate the pair is oversold. Stochastic Oscillator The Stochastic Oscillator compares where a security's price closed relative to its trading range over a given time period. The security or index is generally considered oversold when the Oscillator falls to 20, while a reading of 80 is considered overbought. MACD (The Moving Average Convergence/Divergence) This indicator shows the relationship between two moving averages of prices. A bearish signal is provided when the main moving average line drops below the second moving average line, and vice versa. ADX (Average Directional Index) This indicator quantifies a trend's strength regardless of whether it is up or down. An index rising above zero provides a bullish signal while an index falling below zero provides a bearish signal. Momentum Indicator The momentum of a security is the ratio of today's price compared to the price at a given point in the past. If the security's price is higher today, the momentum indicator will be considered strong. If the security's price is lower today, the momentum Indicator will be weak. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 18
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