Forex Sentiment Report 08 April 2015 www.ads-securities.com Q2 FORECAST WEAK AS LONG AS BELOW 1.1200 Targets on a break of 1.1534/35: 1.1740/50 1.1870/75 1.2230/35 Targets on a break of 1.0580/70: 1.0160 1.0090 0.9665/50 The EURUSD pair sold off sharply in the previous quarter, recording a loss of almost 12.74%. January s opening price was 1.2098 and closing price for March was 1.0731. Over the past three months, the overall sentiment has deteriorated significantly. On the monthly and quarterly charts, the pair has breached below its long term SMA s, posting a close below its lower Bollinger band. A break below the descending triangle pattern formed on the monthly time frame since July
2008 shows a likely continuation of the bearish drift in the euro. Bulls seem to have lost control with the monthly and quarterly momentum indicators, reflecting a bearish technical picture. Quarterly RSI is heading south below the 40 line, while MACD has witnessed a negative crossover, further endorsing weakness in the coming months. Monthly and Quarterly stochastic suggests there is still room left to the downside despite placed in the oversold territory. Overextended trading of the weekly stochastic in the oversold region indicates at a possibility of mild recovery over short term basis. Moreover, emerging signs of a mild positive divergence condition on the weekly RSI further hints that a bounce in the pair is likely in the coming weeks. However, overall sentiment would remain bearish as long as the pair is trading below the 1.1513/00 level. On the bright side, taking of February s high at 1.1534 level should lessen the bearish pressure. Above that, the next technical obstacle resides at around 1.1870/75, followed by the crucial one at 1.2230/35.The ability to break above the latter would prove to be bullish hinting that sentiment is improving and further gains would target 1.2570/1.2600 zone. On the downside, key support is seen at around 1.0580/70, selling through which would lead to further acceleration to the downside with the next potential downside target situated in the 1.0160-1.0000 zone, followed by the crucial one at 0.9665/50.
Q2 FORECAST WEAK AS LONG AS BELOW 1.5000
Targets on a break of 1.5000: 1.5275/80 1.5400/10 1.5735/40 Targets on a break of 1.4815/14: 1.4440/35 1.4275/70 1.4060/55 The GBPUSD pair ended in red for the third consecutive quarter, forming a long bearish candlestick pattern on the quarterly chart, recording a loss of almost 5.00%. The uptrend support line formed on the monthly chart since January 2009 offered enough support to the pair till December 2014. However, GBPUSD witnessed a break below the same in January after which bearishness continued in the following months. Although the pair attempted to regain its lost grounds in February, the psychological 1.5500 acted as a key technical hurdle, restricting further recovery. In March, the pair sold off sharply, breaching below the 1.4815/14 level (2013 low) to make a fresh low for the year at 1.4635, before ending higher at 1.4818. On the quarterly chart, RSI is heading south below the 40 line, while MACD and stochastic are also trading with a bearish tone below their midlines reflecting the presence of bearish momentum. Also on the monthly chart, the MACD indicator is attempting to crossover negatively and RSI is pointing lower below the 40 line further endorsing a weak technical picture. As of now, the near term resistance is situated at 1.5000 level and long as the pair is trading below the same overall bias would remain bearish. Meanwhile, continued trading below the 1.4815/14 level would trigger further acceleration to the downside with the 1.4440/35 as the next potential target, followed by the next at 1.4275/70 and 1.4060/55 levels. If the latter fails to hold, it would push the pair towards the 1.3965/50 and 1.3680 levels. On the upside, a surge through the psychological 1.5000 level, should be a bullish signal that sentiment is improving and further gains would target 1.5275 level, stability above which might clear the way for 1.5410 and 1.5735 levels, followed by the crucial one at 1.5995/1.6000.
Q2 FORECAST KEY TECHNICAL OBSTACLE AT 120.00 Targets on a break of 120.00: 122.20/25 124.00/14 126.00/05 Targets on a break of 119.65/60: 118.35/30 115.85/80 112.45 The USDJPY pair oscillated between gains and losses in the previous quarter, forming a doji candlestick pattern on the quarterly chart. As mentioned in the earlier view, the psychological 120.00 level acted as a key technical obstacle. After making several failed attempts in the month of January and February, the pair finally managed to post a monthly close above 120.00 at 120.13 in March. On the quarterly chart, the MACD indicator has crossed above its centreline to trade into the positive territory, while RSI and stochastic indicators are also placed at a higher level above their midlines, reflecting the presence of bullish momentum. The tone of the market in the coming weeks will however be determined by traders reaction to 120.00 level. Sellers will either take this level out with conviction, or buyers will come in to defend it. On the monthly chart, the price action is reflecting consolidation, suggesting that the current uptrend is slightly losing steam with expectations of a possible correction ahead in the short term. Emerging signs of negative divergence condition on the weekly MACD and RSI further endorses the above view. Since November 2012, the pair has remained inside a broadly bullish pattern signalling that long term sentiment is improving and investors are buying dips. Overall, as long as the pair is trading above the psychological 120.00 level, the sentiment would remain positive with an immediate upside target situated at around 124.00/124.14, followed by the next at 126.00/126.05 (which is likely to be resistive). The sustained break above the same would trigger further acceleration to the upside. On the downside, a move back below 120.00 would negate any bullishness, reflecting negative momentum in the coming weeks with the 118.35/30 and 115.85/80 as the immediate supports. A breach below the latter might further accelerate the downside movement with the next potential downside target at
around 112.45 (November 2014 low).
Q2 FORECAST WEAK AS LONG AS BELOW 0.7806/00 Targets on a break of 0.7820: 0.8060/70 0.8295/0.8300 0.8555/60 Targets on a break of 0.7560: 0.7350/47 0.7205/0.7190 0.7005/00 The AUDUSD pair recorded losses for the third consecutive quarter, forming a long bearish candle on the quarterly chart. The pair broke sharply at the end of January, breaching below its 200 month SMA after which bearishness continued in the following months. Although the pair recorded slight gains in February, recovery remained capped by the key resistance in the 0.7950-0.8000 zone. On the quarterly chart, the pair has posted a close below its 100 SMA and lower Bollinger band at 0.7607 after recording a fresh low for the year at 0.7561. Monthly momentum oscillators continue to favour a dominant bearish trend despite placed in the oversold territory. On the quarterly chart, MACD is attempting to crossover negatively, while RSI indicator is placed below the 40 level, suggesting that downside momentum is likely to continue in April. Overextended trading of the weekly stochastic and RSI into the oversold territory along with the emerging signs of mild positive divergence condition hints at a possibility of periodic short-covering rallies and retracements in the coming weeks before the pair resumes the downtrend. Immediate support to be watched is seen at the recent low of 0.7560, a breach below which might lead to the continuation of the bearish trend with the next potential downside target at around 0.7205/0.7190, which if fails to hold might push the pair lower towards the psychological 0.7000 level. On the upside, the key resistance to be watched resides at around 0.7945. The ability to capture this level could trigger further acceleration to the upside with 0.8060/70 as the next potential target, followed by 0.8295/0.8300 and 0.8555/60 levels.
Q2 FORECAST WEAK BELOW 1.1875/70 Targets on a break of 1.2800: 1.2985 1.3065 1.3148/50 Targets on a break of 1.2352/50: 1.2292/90 1.2140/30 1.1915/12 The USDCAD pair started the year trading sharply higher, forming a long bullish candlestick pattern on the monthly chart in January. The psychological 1.2800 level acted as a crucial resistance that restricted further upside movement. After a gain of almost 10.00% in January, the pair consolidated in the following months. Despite its several attempts to gain stability above the 1.2800 level, the pair failed as the key level continued to stand tall. Although the pair hit the 1.2835 level in March, it retreated towards the end of the month to close lower at 1.2686. As of now, on the weekly chart, positive momentum levels have fallen, warning that buying interest is weakening. Weekly price action is reflecting consolidation along with overbought trading conditions suggesting a possibility of a correction in the short term. Emerging signs of negative divergence condition on the weekly RSI further endorses the above view. Since January 2015 end, the pair has been trapped inside a sideways trading range of 1.2350/52-1.2800 on the weekly chart. A clear break and stability on either side of this range can help to determine a proper direction of the pair in the near term. A break on the downside is likely to target the 200 month SMA (currently placed at around 1.2292/90), which if fails to hold might provoke another leg downwards towards 1.2140/30 level, followed by the next important support in the 1.1500-1.1470 zone. Meanwhile, if the pair manages a convincing break above the 1.2800 level, potential is for further gains with a possibility of testing 1.2985 and 1.3065 levels (last tested in March 2009). A break above the latter would trigger further acceleration to the upside.
Q2 FORECAST KEY SUPPORT AT 128.00 Targets on a break of 131.15/20: 133.90/134.00 138.03/05 Targets on a break of 128.00: 125.00/124.97 122.56/50 The EURJPY pair sold off sharply in the previous quarter, recording a loss of almost 12.40%. The pair has recorded a bearish engulfing candlestick pattern on the quarterly chart after a breach below its 50 and 100 quarterly SMA s. Although the candlestick formed suggests at continued bearishness in the coming months, the quarterly MACD and RSI are tranquil in line with their centrelines, suggesting a neutral technical outlook. After the formation of a shooting star candlestick pattern on the monthly chart in December 2014, the pair reversed its trend leading to continued weakness in the following months. In March, the pair breached below its 100 and 200 month SMA s to make a fresh low for the year at 126.91. The pair however recovered slightly to close just above its 200 month SMA at 128.91. Loss of upward potential of the monthly momentum indicators hints at possible weakness. However, as long as the pair is trading above the 200 month SMA (currently placed at around 128.00), potential is for a possible recovery. A breach below 128.00 on a weekly closing basis would be a bearish signal that sentiment is deteriorating. The potential downside target is situated at around 122.56/50, which if fails to hold might lead to increased selling. Immediate resistance is seen at around 131.15/20, a move back and stability above the same might negate near term bearishness with the next technical hurdles at around 133.90/134.00 and 135.75 levels. A break above the latter on a monthly closing basis might lead to further gains with the 138.03/05 and 139.20/25 as the next potential upside targets, followed by 140.00/140.10.
Q2 FORECAST SIDEWAYS Targets on a break of 1260: 1307/10 1357/60 1390/1400 Targets on a break of 1200: 1140/30 1045/36 1005/00 The yellow metal started the quarter with a bullish tone, hitting the $1307.80 level in January, however was unable to sustain at higher levels, retreating in the following months to end the quarter below the crucial $1200 level at $1183.10. After the formation of a doji candlestick on the quarterly chart in Q4 2014, the commodity has formed a shooting star candlestick pattern in the previous quarter hinting at extended indecision. Since the end of 2013, the price action on the quarterly chart has been sideways along with the RSI indicator trading flat in line with its centreline reflecting a neutral technical view. The monthly RSI and MACD indicators are also tranquil just below their midlines, further endorsing the above view. Key support to be watched resides at around $1125 and resistance is situated at the $1307/10 level. A clear break and stability on either side would help to determine a proper near term direction of the metal. On the weekly chart, the metal is currently attempting to regain upward momentum; however stability above the psychological $1200 level is required to confirm bullishness. The next technical obstacle resides in the $1273-$1282 zone, followed by the $1307/10 level. The ability to capture the latter on a monthly closing basis would bring in further strength with a possibility of targeting $1357/60 and $1390/$1400 levels. On the flipside, trading below $1200 level would keep the overall bias to the downside with a possibility of retesting the $1125-$1110 zone, followed by $1045/36 and $1005/00 levels.
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