Technical Analysis Based on Breakout – Short USD

USDJPY – Down Technical observation Previously while on an upward trend, USD traded above a key support zone (111.70-111.46)price retraced to the zone twice then broke below it on 22.11.2017 with a big red candle but was not contained resulting to another break out above the zone, it then traded above it before breaking below the zone again on 10th of January this year, currently price is rallying towards the zone and I expect a strong rejection at it to short USD with my take profit at 110.23 and even further below towards 107.79 if price breaks below the line 110.23,the key lines to look for on this chart include 110.23 and 107.79. Technical levels Resistance levels R1.111.56 R2.111.83 R3.112.58 Pivot 111.09 Support levels S1.110.81 S2.110.33 S3.109.58 Trade signal Sell USD within (111.70-111.46) with your take profit at 110.23 and stop loss slightly above111.70 
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Gold Technical Analysis

For centuries, gold has been an important resource. Yet, gold has also been a major source of mystery. Is it a currency? Is it a commodity?

Gold has been an important resource for centuries. It has been found in caves dating back to 30,000BC. The first evidence of human interaction between gold and humans can be traced to ancient Egypt. It has been found in ancient tombs and Pharaohs loved to use gold in their temples and castles.

Yet, the mystery of gold still remains.

Unlike other metals like palladium and silver that have large industrial use, gold has very limited applications. The mined gold is only used in jewellery, ornaments, and trophies with the rest being used as a store of value.

Central banks like the Fed and ECB hoard gold in large depositories. In the United States, Fort Knox holds the largest gold reserves which are worth more than $100 billion.

In his book, The New Case for Gold, James Rickards makes the case that gold is an insurance against risk. To a large extent, he is right. As shown below, gold tends to go up when the dollar falls. This happens as investors move to gold which they consider a safe haven.

This year, gold has been on a bull run which started in December after the Fed raised interest rates. Gold futures have gone up from a low of $1236 to a high of $1344. During the same time, dollar has fallen to a three-month low.

The most likely scenario is where gold may continue to go up as investors search for a hedge against inflation. Therefore, futures may potentially fall to about $1320, which is a 23.6% retracement, which may indicate towards the bullish side of the market.

The alternative scenario is where inflation fails to pick up because of the high energy prices. As such, gold may retrace to the important support level of $1297.

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NZD/USD Technical Analysis: What Next After Testing a Major Level?

The Kiwi continued its upward trend against the dollar yesterday. The pair crossed the major psychological and technical level of 0.73 before ending the day slightly lower. The surge marked the sixth consecutive week of gains which started in November.

As shown, the pair reached the lowest yearly level in November when it touched the 0.6778 level. After that, it started making weekly gains fueled mostly by a stronger New Zealand economy and a weaker dollar.

For starters, New Zealand is the world’s 50th largest economy as measured by its GDP. Its main exports are in the agricultural industry with most of its income coming from concentrated milk. Its unemployment rate has fallen from 6.38% in 2012 to about 4.86% in 2018. It is estimated to remain steady below 5% up to 2022 and its GDP is growing at an average rate of 3.9%.

The current price action against the dollar can be viewed as a weakness of the dollar rather than the strength of the Kiwi. As shown below, the kiwi has fallen against its peers.

In the chart below, in the short term, the pair may see a 50% retracement to the 0.7171 level before starting to move higher which may potentially reach the 0.7391 level.

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Technical Analysis Based on Breakout – Long Gbp towards 1.4526

GBPUSD – Flat Technical Observation: Gbp continues to rise after bouncing from the weekly support line 1.3359 and is still in an upward trend. I went long around 1.3319 and is still holding onto this position, My expectations is that the price should continue to rise and should break above 1.398 towards my take profit set at 1.4526. As it is on the weekly chart above, a long position looks more ideal and can be advised towards 1.4526. At the moments, sellers are not given much consideration unless the price is below 1.3620 or below 1.3321. Technical Levels Resistance levels R1: 1.3816 R2: 1.384 R3: 1.3902 Pivot 1.3779 Support Levels S1: 1.3656 S2: 1.3717 S3: 1.3754 Trade Signal Long Gbp towards 1.4526
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Technical Analysis Based on Breakout – Bulls are charged

EURUSD – Up Technical Observation: Eur is currently trading with an increasing bullish momentum. I expect a surge upwards and should break above 1.2470 towards 1.3319. On the weekly chart above, I still expect a momentum upwards, therefore, I’ll be keen to look for long positions. On the way upwards, the key lines to look for include 1.2745, 1.3020 and 1.32. If these lines are broken, then I expect a rise towards the resistance line 1.3319. At the moment, only a long position looks ideal and can be advised. Technical Levels Resistance levels R1: 1.2307 R2: 1.2415 R3: 1.2718 Pivot 1.2111 Support Levels S1: 1.1505 S2: 1.1808 S3: 1.2004 Trade Signal Rebuy eur
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Company News – Bitcoin Price is above $16 000!

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Crude Oil Rallies, Dollar Falls, and South Korea Rattles Cryptocurrencies

This week, politics and geopolitical issues have dominated the markets. In the United States, the republicans and democrats have continued to find consensus to prevent a potential government shutdown. Democrats have vowed not to support a deal that does not include the Dream Act that protects the dreamers.

On Thursday, a deal between the two was thought to have been reached but the president and republicans opposed it.

In Germany, Angela Merkel made progress in her government formation process. This week, we saw major meetings between Merkel and Schultz who agreed to move to the next stage of negotiations. In the UK, Theresa May started to reconstitute her cabinet amid criticism.

Crude Oil

Among the major movers this week was crude oil which rallied to reach the highest levels since 2014. The rally came as data showed that United States’ oil rigs continued to decline. Data from API and EIA showed increasing drawdowns which is an indication of increasing demand.

As of this writing, WTI is trading at $63.17 while Brent is trading at $68.75.

Cryptocurrencies

The week was difficult for cryptocurrencies. Bitcoin struggled to recover from previous highs. The biggest sell off happened on Thursday when reports from South Korea indicated that the country would ban cryptocurrencies exchange. Bitcoin is currently trading at $13951 while Ethereum is trading at $1265 which is higher than last week’s ‘close’.

Dollar

On currencies, the dollar was a major loser this week. The decline shown above came as a result of improved economic data from abroad coupled with fears of a shut down. In Europe, the minutes from the ECB showed that members were interested in hiking.

As shown below, the dollar lost ground against most of its peers.

Today, the Bureau of Labor Statistics (BLS) released its inflation data that showed consumer prices rose by 0.1% versus the expected 0.2%. Retail sales rose by 0.4% and the core sales revised higher.

Stocks

This week, the earnings season started ‘officially’ in the United States. Today, Blackrock, Wells Fargo, PNC Financial, and JP Morgan released results. They all beat analyst expectations and as expected, they all announced major one time hits because of the tax reform.

A bog mover on stocks this week was Eastman Kodak, whose stock doubled after announcing a blockchain technology.

Global stocks continued to rise with the only challenge coming on Wednesday when reports from China indicated that the country would stop buying American treasuries. This report led to a major decline in American stocks.

However, this news was not factual which led to a rebound on Thursday.

Remember, China is the biggest holder of American debt and it is highly unlikely that the country would want to cause instability in the country.

Next week, we will get quarterly results from Citi, United Health, The Charles Schwabb, Kinder Morgan, Interactive Brokers, Alcoa, Bank of America, Atlassian, Bank of new York Mellon, Morgan Stanley, Wipro, and Schlumberger.

Notable News

Other notable news this week were. Today, Wall Street Journal reported that oil trader and legend, T. Boone Pickens was retiring and converting his fund into a family office. Boone Pickens is one of the most successful oil traders in the world. His retirement comes a few months after another legend, Andy Hall closed his oil fund last year. Also, Anthony Ward, one of the best known Cocoa trader ended his fund in December.

Also, this week, Dropbox became the next big unicorn to announce plans to go public. At the CES event, technology companies like Samsung, LG, and NVIDIA announced their biggest technologies.

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Daily technical Insight – EUR/USD Forms a Perfect Cup and Handle Pattern: Next Target 1.2100

In 2017, the dollar fell against many currencies. Against the Euro, the dollar fell by a whopping 8%. This fall was attributed to a strengthening the Euro and investors worry about Trump’s policies on trade.

The Bull Run ended on September when the pair reached the 1.2094 level. It then started going down, eventually reaching a low of 1.5558 in November.

A look at the pair’s 6-month chart below shows that it has established a cup and handle pattern.

A cup and handle pattern is a relatively old strategy developed by William O’Neil in 1986 in his book, How to Trade Stocks.

The strategy suggests that in a bullish trend, the financial instrument will form a U-shaped pattern before starting another bullish pattern. In other words, he suggested that in an upward move, the instrument will often pause the momentum and then may resume the upward move. The final part of the cup and handle is a relatively small downward move before the pair establishes a solid upward move. As seen above, the pair started forming a handle position on 4th January.

As I have written before, this year, I expect the EUR/USD pair to resume the upward momentum it started last year. Remember, the Euro area economy is doing well and in the latest ECB minutes, some members were optimistic about the normalization process.

Today, the pair is trading at 1.2040 level as it tries to move to the double top position of 1.2094.

As shown below, I expect the pair to attempt to cross the psychologically important level of 1.2100 as it moves upwards.

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Technical Analysis Based on Breakout – still some sellers left?

USDJPY – Down Technical Observation: Last week’s candle was a bullish engulfing candle and meant that the price was to rise but until now, bears still appears to have some strength left. I still expect a rise towards 114.10 and even a breakout above 114.82 to continue higher towards 118.00. As it is on the weekly chart above, only buy positions look more ideal, but if you’re a skeptic to buy now, you could wait and buy above 114.82, or sell upon a rejection from 114.10-114.82 with you take profit at 108.61. Technical Levels Resistance levels R1: 113.1 R2: 114 R3: 116.04 Pivot 111.97 Support Levels S1: 107.9 S2: 109.94 S3: 111.06 Trade Signal Look for a buy trade towards 114.10
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