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Technical Analysis for 01/11/2016

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Technical Analysis for 01/11/2016

Technical Analysis for 01/11/2016
November 01
09:00 2016

EUR / USD – EURO US DOLLAR

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According to the market tradition, Monday is a day of correction. Market participants have ignored all the issuing statistics, and adjusted their positions after Friday’s weakening of the US dollar. On this background the rate of the pair Euro/Dollar was reducing from the maximum level of 1.0991 on Friday and by the end of the European session it has tested the minimum daily level at 1.0936. In general, the statistics, published in the eurozone, has shown very positive results. GDP growth for the third quarter has amounted to 1.6% in annual terms and 0.3% – on quarterly basis, which corresponded to the analysts’ forecasts.

The Consumer Price Index also has grown up by 0.5% year on year. “Bulls” have tried to use the economic growth and restore the daily losses. Partly, they have succeeded. While growing, the quotes of the single European currency have reached the area of morning highs (1.0983), but having met here tough resistance of the “bears”, they resumed their decline. “Bulls” didn’t have other drivers. Recent comments of the ECB officials also did not provide any new information, continuing to underscore that any monetary policy decision would be taken at a meeting in December. Against this background, the correlation of the euro against the US dollar has been resumed, however, staying within the current daily range and maintaining the potential for the further growth.

In our forecast for Tuesday we suppose the completion of the corrective rollback of the pair from its previous growth and the rate reversal of the single European currency in order to rise to the target levels: 1.0991; 1.1034 and 1.1070.

GBP / USD – BRITISH POUND DOLLAR

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Last week the supporters of the UK withdrawal from the EU criticized the Head of the Bank of England Mark Carney as contrary to the forecasts of the regulator, the UK economy had not only deteriorated, but also, it had considerably strengthened after the referendum. Market participants even are gossiping that Carney won’t finalize the full eight-year term and will retire after five years as chairman. At the weekend, the Bank of England denied the rumors, but in private conversations Carney confirmed that he could make such a statement in the coming days.

Against this background, the pressure on the British currency is being maintained, continuing to generate the price dynamics of the pair in a narrow sideways range. During the Asian session on Monday, the currency was testing the minimum at the price level of 1.2143, but during the bidding “bulls” managed to strengthen a little the position of the pound, ending the session near the upper limit of the range -1.2235.

In our today’s forecast we suggest the continuation of the upward trend of the pair and rise of the British currency to the target levels: 1.2248; 1.2276; 1.23 and 1.2330. Further, we expect the breakdown of the lower limit of the correction range (1.2085) and reduction to the key support level of 1.20.

USD / JPY – US DOLLAR JAPANESE YEN

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November has begun, and it is worth paying attention to candlestick charts for the month. Over four consecutive months (from June to September),we have been experiencing the pressure from below near the level of 100.00 through the shadows on the candles of a large time interval, and October candle has created the reversal candle configuration near the support level – absorption. Now, in addition to the fundamental expectations, graphically purchases are more attractive than sales. We do not exclude that the pair may reach the level of 109.00 in the coming months before the end of the year.

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