EURUSD entering multiple support/resistance range (1.1550-1.17) and DAX topping

 

EUR/USD (1.1695) is entering the long term key range of resistance support 1.1550-1.1700 :

  • 1.1715 was the August 2015 Top.

  • 1.1616 was the May 2016 Top.

  • 1.1550 was the Novemberr 2017 Bottom.

1.15 target mentionned in the April 12th post is in sight BUT a (big) corrective bounce could take place any time from the abovementionned  key levels . Down trend remains nevertheless in place. 

 

DAX : 13200 Target mentionned in the May 2d post have been reached yesterday…

Not a good sign to see DAX correcting lower while EUR is weak … MACD Daily shows Bearish signal today ( to be confirmed end of session).

 

 

Stifel : Macro & Portfolio Strategy – January 2018

• Stifel sees a 5% SP500 correction in Q1 for SP500.
• SP500 seen at roughly current levels by EOY = Active investing environment
• Slide 2 for long term forecast !!! (Note that Stifel forecast has been quite correct in the last 6-7 years in this bull market).
• Slides 6 on long rates and SP500.
• US 10 Yields seen at 2.96% eoy

Link to the Stifel Macro & Portfolio Strategy :  Stifel 050118

 

EUR/USD : Reversal Day ?

Shooting Star Bearish Reversal pattern appeared yesterday on EUR/USD chart : A strong push to nearly 1.21 and a move back to below opening level. This bearish pattern is especially significative when coming after a strong push which is the case here . The pattern would be negated should EUR/USD close back above yesterday’s high i.e. 1.2070.

SocGen, UBS , ING, Credit Agricol ,.. on what’s next for EURO

Shooting Star explained

 

 

EURO : Next – big – threat ? Berlusconi is back !

Talks of parallel currency gets bigger again in Italy after last weekend Berlusconi interview.

Following Citi , more than 2/3 of italian voters would support anti EUR parties.

The 3 right & centre rights parties will finalise a common program in september likely including parallel currency project.

Risk of Italy (even if low) going this way totally underestimated by FOREX markets but Italian Bonds have started to react negatively  with Bund/BTP spread  up 20 bps in the last week.

 

See more details in  FT’ link here below :

https://ftalphaville.ft.com/2017/08/21/2192571/parallel-currency-talk-gains-ground-in-italy/?ft_site=falcon&desktop=true

 

Italy + ECB obviously not wanting to see EURO above 1,20 + ECB potential tapering discussion in september already in EUR price + more dovish Fed priced as well = EURO/USD  to correct from current 1,18 to 1,20 range is becoming more and more likely.


 

 

EUR/USD : Targets reached / Time to be Neutral on EUR & Very Short Term bearish.

I refer here to January 12th post “EUR/USD  : Triple Bottom ? ”  in which i wrote :

“EUR/USD outlook starts to improve and the 1.0450-1.0600 might be a good level to buy EUR in USD portfolios / hedge USD in non USD portfolios. i believe one can refocus on targets in the 1.10-1.13 area especially should the 1.0650 50days MA be broken.”

EURUSD trades today around 1.1250 , in the upper part of target range mentionned in January . Some pause is likely due ; the move has been quick since first round of France election and traders sentiment towards Euro ( DSI see Daily Sentiment Index on trade-future.com) is  becoming extreme at 75%. Last such extremes – 86% in August 2015 & 78% in May 2016 – lead to 10% and 5% reversal reaction respectively .

1.0950 – 1.10 are the very short term target and 1.08-1.085 should act as base for further progress mid term .. if these latter  levels are reached again which i am not sure of.

On the up side a clear break of 1.1350 would propel the EUR higher to test 2015 & 2016 Highs at 1.16 / 1.17.

In a nutshell : Short term “risk/chance” to 1.0850 -1.1000 followed by more upside to 1.16-1.17 later this year.

 

USD Index : DSI index is at 5 % , the more extreme bearish reading on USd in the last 3 years which speaks for a USD positive reaction versus other major currencies like GBP (current 1.2950) ,  JPY current 111) and CHF ( Current 0.9720)

 

UK : May calls for election in June ….. GBP bounces above 1.28

 

Theresa May unexpectedly announced early elections yesterday : Forex markets pushed GBP at 6 months high as this is seen as a move for UK Prime Minister to secure political unity and reduce the risk of a much anticipated and GBP bearish “Hard Brexit” . Deutsche Bank  considers this early election as a complete “game changer” for Sterling and immediately cancelled its bearish view on the currency. UBS on its side sees the Pound at 1.36 versus USD in the year.

 

The below chart is an update of one posted in October 2016   ( link here : Post Dated Oct.19th 2016 ) where i mentionned that short term reactions would be limited to the 1.26 -1.28 range which happened 3 times so far. Yesterday’s move to above 1.28 brings GBP one step further with a clear (if confirmed) break of the 200D MA . Technical pattern is quite bullish with a break of july and august bottoms and of previouly mentionned tops in the 1.26-1.28 range. Short to mid term Bullish as long as above 1.26 is maintained .  Let’ s look now on the long term chart …

… The very long term  chart is an update of one posted on October 7th  2016, the day of GBP flash crash . We can clearly see the bottoming process that took place in last months with higher lows . The conclusion remains the same i.e a clean break above 1.32-1.33 on a monthly basis is needed to become again long term Sterling bullish .

 

 

UBS Technical View on Markets – 21/03/17

 

US markets – Break of SP500 2350  targets 2280 -2300 / Worst case 2240  // Sharp move but short in time 1 or 2 weeks.

Oils stocks basing and turning bullish.

Buy US Financials after pullback.

US yields will pull back short term  : Short term Top around 2.60% 10y in place // See 3% in H2 2017 .

Major top in USD in place / UBS sees DXY at 92 in 2018 from 100 now.

Bearish USD so bullish Commodities, Gold, EM, Oil .

Big move in Gold within 12 months minimun target 1700 USd after USD 1375 break.

European, stocks : Buy Dax on pullback at around 11500 and Eurostoxx50 3200 as  max retracement so buying opportunity in  3200 -3300 range.

 

 

 

 

Update Mexican Peso : From Oversold To Overbought in 1 month time.

 

Hereafter an update of chart posted on January 23rd   : “Mexico … Time to buy ! ”  :   Link here  .

9 % gain for MXN since January 23rd . Investors who played this move via a pure Forex/leveraged trade could take partial profit from here and approaching the 19 support level. Investors who traded MXN via a short term 1 year bond purchase should hold. Those who did not act should wait an upward correction to 20,25 to 20,50 as  a good entry point.

 

 

 

 

Indian stocks testing resistances – Nifty 50 @ 8996

 

Growth concerns that followed demonitization announced last november have receded and Indian stocks advance since mid december bottom amounts to around 14%. The market here represented by the Nifty 50 Index is testing the 9000 level for the 3rd time in 3 years . It never closed above this key level so far. Indian stocks might need a pause (divergences do appear on momentum / price) after a 32% up move since march 2016. Investors should remain long term bullish on this very high potential market . Two potential entry points at this stage : 1/ On a firm confirmed (more than 1 or 2 days) break of 9000 level – not my preferred scenario for the time being given the general overbought sutuation in global markets  2/ after a consolidation/down reaction – i will keep you updated on the timing should scenario under 1/ not happen before.

3 funds amongst the best performers (*) in the last 3 years :

  • Comgest Growth India $ Acc – IE00B03DF997 –         3Y : 112,2%  – 2016 :  8,1%
  • Jupiter India Select $               – LU0365089902 –        3Y : 102,2% – 2016 :  4,3%
  • Morgan Stanley India Eq $      – LU0266115632 –         3Y : 88,60% – 2016 :  5,8%

(*) Performance as of 31/12/16 – In EUR terms –

 

Nifty 50 Indian Index

Indian Rupee vs USD

Rupee successfully tested 69-70 previous bottom (top for USD) versus USD and started to reverse days after major event that represented demonetisation in India . Indian Rupee may have found a major bottom against USD (Watch 70 not being crossed) after several years of weakness.

 

Mexico … Time to buy ! – Virt Portfolio

 

Mexican Peso :   The Mexican Peso has lost around 18% against USD since the day before Donald Trump’s election  and  38% since 2014  . This latter numbers might look huge but it has to be put into perspective considering that currencies like EURO, GBP and NOK,..  have respectively lost 24%, 29% and 28% against the Dollar in the same period. In the last 3 years, the Peso has suffered like most other currencies from general USD strength and on top of that was slaughterted by the so-called “Trump”effect especially when in Q2 2016  odds to see Trump as the Republican candidate for the US election started to increase . Even tough the Trump administration might dramatically hurt mexican economy, MXN recent weeks acceleration to the downside (Up for USD) is clearly an exxageration. Do not forget that as The Economist pointed 2 weeks ago,  40% of inputs in goods sold from Mexico to US comes .. from USA !! If Trump wants to punish Mexico, America itself will be hurt.

Technically,  MXN has reached last week the upper side of its 1 year range and being in overbought position it looks difficult to see the 22 level broken at this stage. The trend is slowly reversing as shown by the macd curve and bearish (for USD) divergences do appear between price and momentum indicators (here macd).

There is room for correction here in favour of the peso given that “Trump” effect will likely fade and that USD has entered a consolidation (nice word to say weakness) period .

Short term MXN bonds can be found with 5 to 7% yields in very good names . For example a Rabobank  maturing in Jan 2018 has a approximate 6% Yield , a 3 years EIB with 7% yield .

 

Mexican Stocks :  The mexican stocks valued in USD as shown by the Ishares Mexico here below (ticker EWW) have lost 20% since November 8th ( by the way Russian stocks have GAINED the same percentage) . Stocks like the currency seem to have bottomed from an range (USD 39 -USD 42 – see long term chart link below ) that acted as strong support in the last 10 years . Like for the MXN I add MACD reversal and price/ momentum divergence as technical evidences of a potential rebound .

Action : Buy 1 unit of EWW Max price 43.25 USD // SL : usual 10% closing basis .

 

Long term EWW chart :    http://schrts.co/ZY8wGG

 

Q4 2016 InvestorID Blog Posts REVIEW : USDJPY / EURUSD / GBPUSD / APPLE / SP500 / NIKKEI / GOLD / DAX

October 6th post : USD/JPY 

Forex : Dollar higher across the board // USDJPY

October 10th post : EUR/USD

EUR/USD : Warning for more downside if quote below 1,11 persists

October 19th post : GBP/USD

GBP Update // Current 1,2290 // (Partial) Take profit for shorts.

October 25th post : Apple

Apple earnings tonight : Exp. USD 1,65/share

November 7th post : SP500

One Day before election – Markets bouncing – Virt.Portfolio : Add DAX & US BIOTECH ETF (1)

November 17th post : NIKKEI 

Nikkei breaking on the upside – Virt.Portfolio

November 23rd post : GOLD

Gold breaks the important USD 1200 support …

December 7th post : DAX

Dax update : If break of 10800 is confirmed, short term targets are in the 11400-11800 range.

 

Virt.Portfolio : Closed Trades during Q4

Bristol Meyers Squibb stopped  on Oct.10th                 – Loss 10%

USO (Oil tracker) closed on Oct.11th                              – Profit 6,5%

Apple closed on  Oct.25th                                                 – Profit 20,43%

UBS Turbo Put NDX closed – Nov.2d & 3rd                 – Profit 41,83%

iShares Eurostoxx 600 Banks closed on Nov.28th     –  Profit 17,55%

ETf Dax Daily 2X  closed on Dec 15th                            – Profit 18,40%

Eurostoxx 50 breaking higher …

In the aftermath of Italian referendum and ECB decision to extend QE until end of 2017, Eurostoxx50 has exceeded a cluster of resistances in the 3100-3150 area and made a new high for 2016.

The upside is open as long as profit taking in the next days does not drive the index back below 3100 on a closing basis and so cause a fake break up.

Many analysts do consider european stocks as not overly expensive and that they will profit from a weakening EURO . One has also to keep in mind that current levels of Eurostoxx50 is 17% off its April 2015 high & respectively 30% / 41% off 2007 / 2000 Highs ; Right , the european financial and economic landscape was much different at that time !!

estoxx50-131216

Long term Eurostoxx50 chart : In 2000 when the european index was at the top , EUR/USD was quoting around 0,90, at the bottom in 2009 , in the 1,30 -1,50 range … Where the EUR goes , …

estoxx50-w-long-term131216

Gold breaks the important USD 1200 support …

  • Gold Strongly negatively correlated to USD ( See 2d chart below ).
  • Gold strongly negatively correlated to US (and global) long term yields.
  • Inflation risks do not play any role … for the time being.
USD 1200 support gives away and if prices does not go back quickly above this level/stabilizes at current level (USD1190) more pressure on the downside to USD 1150 – 1100 range  might be expected.

Gold crossing the USD 1200 support :

gold-crosses-1200

Strong negative correlation between Gold price and USD especially since US election : Today EUR/USD at 1,0550 and USD/JPY at 112,40 .. USD INDEX AT MULTI YEAR HIGH

gold-eurusd-correlation