USDJPY top and bear bias intact to aim lower for 104.80/69/47 into late October

  • Despite a Monday probe above modest resistance at 106.75/80 a failure as expected, back from ahead of a better barrier at 107.50.
  • Whilst below here, the break of 106.05/105.80 chart/ retrace support least week leaves deeper correction risk for mid-month, down below the 105.19 low for retrace and charts targets at 104.80 and 104.69.
  • Into midweek, we see bias for a roll back lower, for 106.15 and 105.50.


  • Above 107.50 eases bear risks; through 108.15/20 signals a neutral tone, only shifting positive above 108.75.

Download our full report with latest screencast & levels here:

4 Hour USDJPY Chart






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Financial markets are finally showing signs of stability today, as traders take a deep breath after the past few weeks of increased volatility. The S&P 500 index corrected by almost 10%, and commodities fell nearly 20%, after “King Dollar” regained prominence. Yes, the Dollar has also corrected of late, due primarily to weak retail sales data and a hint from James Bullard, an FOMC member, that QE may have no end in sight. Pundits are calling last week “Taper Tantrum II”, a not so mild reference to previous missteps.

Volatility is back, that grim reminder that fear and uncertainties really do drive financial markets. Analysts are quickly groping for the next fundamental clue as to where the market will head in the near term. At present, most of the crowd has dispensed with guessing central bank monetary policy and expectations for rate hikes. Too many other market indicia are in freefall, suggesting that there is a new game in town that must be unveiled soon to avoid more damage to portfolios. GDP growth and inflation seem to be the keys to the kingdom, so to speak, as this deciphering exercise continues.

The most compelling correlations have appeared when comparing the path of the Dollar and the recent behavior of global commodities:


The obvious divergence of the USD and commodity prices in general has grabbed the headlines. Most commodities are priced in Dollars in global markets, such that an inverse relationship is a given, but, in this case, the “delta” between the above averages is 13%. The rise in Dollar strength cannot account for the majority of the fall in value. The decline in oil prices has definitely spooked the market and given fodder for a plethora of articles on the topic. Speculations are all over the map, from a simple drop in global demand to a cabal-type conspiracy to punish Putin/Russia over their Crimea exploits. Russia depends heavily on oil exports to fund its domestic needs.

The more sober judgments are prophesizing that the global economy is again slowing down. The IMF has already adjusted their growth forecasts, and the drop in Copper prices, the bellwether of economic activity, seems to support this hypothesis. Europe is headed for another recession, and China, despite government attempts to paint a rosier picture, is not kicking into a higher gear, but pulling back a notch or two. As some analysts point out, however, lower commodity prices across the board will beat out any QE program any day as a directed stimulus program, the silver lining in this playbook.

What are we to conclude from this present situation? In the near-term, commodity currencies may still take more punishment. European currencies may take more heat, as well. Optimists will claim that these potential results have already been factored into market valuations, but Fibonacci ratios tell a different tale. The daily data for the EUR, GBP, and AUD have rebounded, but only to the 23.6% parallel, a sign that more weakness is present. The Yen, however, bounced off the 50% level, only to limp to the 38.2% line, due in part to a rekindled “carry trade” interest away from the Aussie.

Growth data is on the docket for this week, but eyes will turn to September’s CPI release for the U.S. on Wednesday. Economists swore on a stack of bibles that rampant inflation would overtake the U.S. market after various QE programs took hold, but the so-called ramp never appeared. Fast forward, and the fear of dis-inflationary pressure is now on the uncertainty table.

Will U.S. inflation remain stable or decline? Stable is good; a decline is bad.

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EUR/USD Stagnant as New Trading Week Begins


Figure: Hourly chart for EUR/USD

The Euro remained pretty stagnant in the early morning trading session against the dollar thanks to an increased demand in global equities post last week’s selloff. It is important to state the dollar witnessed a steep sell off for the most part of last week due to increased speculation that the Federal Reserve will delay raising the interest rates and may look to continue with its bond buying program, which will come to an end in October.

However, economic reports coming out of the Eurozone have led analysts to believe that the economy is heading towards a triple-dip recession which would effectively erase any gains the Euro may have made against the Dollar. Additionally, an ECB member recently spoke about the central bank starting asset purchase programs, which has furthermore kept the currency pair in check. Financial experts will closely be watching out for reports coming out of the China tomorrow in order to assess the worlds’ second largest economy. Considering that China is major trading partners with U.S. and the EU, any statement could have a prominent effect on the currency pair.

When looking at the hourly chart, the currency pair is currently at a support line of $1.27373 with the resistance coming in at around $1.27796. The EUR/USD is largely flat but continues to have a positive bias, while the momentum indicator for EUR/USD has given a fresh buy signal. The relative strength index continues to trade in no trade zone but has a positive bias while the currency pair trades above the 100 day moving average at $1.27531.

Actionable Insight:

Short EUR/USD if it moves below $1.27531 for an intermediate target at $1.26990

Long EUR/USD if it moves above $1.27800 for an intermediate target at $1.28400

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EURUSD positive tone and resistance threats

  • A resilient digestion theme late last week, above minor support at 1.2705 and better foundation a 1.2624 to leave upside pressures intact early this week.
  • The strong midweek rally through 1.2792 and the developing October recovery up trend points to a more bullish theme.
  • We still see upside targets into the 2nd half of October higher, into midweek for 1.2902 and 1.2930 next.
  • Overshoot risk is through 1.2995 for a stronger base to aims for 1.3160.
  • We see support holding today at 1.2705 likely 1.2735.


  • Below 1.2705 eases bull risks; through 1.2624 signals a neutral tone, only shifting negative below 1.2583.

Download our full report with latest screencast & levels here:

4 Hour EURUSD Chart





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How to Know When it is Time to Change Strategies

You have spent months working on a Forex strategy that is successful for you when you suddenly have a rough week and end up losing on a few trades. Does this mean you should toss the strategy aside and start over from scratch? Not necessarily. Before considering changing strategies, try and understand why your current one suddenly failed you.

Some strategies simply do not work well under certain market conditions. Look at how the currencies were behaving overall during your bad week. Was there a major announcement made or crises overseas that affected the way your currency was predicted to move? You might need to make some tweaks then to your current strategy, without having to change everything.

Improve Over Change

Your recent losing streak may have actually helped you in the long run by showing you were improvements in your strategy were needed. If you continually work on improving your plans and take the time to make sure that it fits in with the current state of the Forex market, you can see better returns on your money.

The more you study the strategy you are working with now and learn from it, the better equipped you will be to handle fluctuations in what you expect to happen in the market. Studying the trends and seeing how they played out according to what you thought would happen will give you more insight and let you make better predictions in the future.

Look at Your Money Management

It could be that you are frustrated because you lost sight of how to manage your money. Did you follow the right risk to reward ratio? Or maybe you used too much leverage? It is within reason to expect that your strategy is going to let you down once in a while, but if you are consistently managing your money wisely it shouldn’t break you.

You could be using the best created strategy ever seen in Forex trading, but if you aren’t managing your money you may as well be trading blind.

When Should You Fold?

If you are absolutely convinced that it is time for a change, take a break first. Even just a few days away from your trading platform may help you put the losing streak into perspective and help you figure out how to turn it back around. Once your mind is clear again, look at your trading strategy objectively and consider the following items:

  • Your Charts: Have you forgotten about using multiple chart methods when planning your trades? Sometimes a new trader with some success under his belt will forget about looking at the longer time frame chart and focus attention only on the short term ones. This does not allow you to clearly see trends, plus it limits your trading capability. To maximize your profits you need to do some long term trading to balance out the short term ones.
  • Your Currency: Have you strayed away from your usual currencies? Just because your strategy works great on the EUR/USD, it does not mean it will apply to the USD/JPY. Stick with the one currency pair you have been working with for now until you are entirely confident that you have mastered it. If you recently changed things up, this could be a solid reason why your strategy has stopped working.

I recently ran across a new trader who was frustrated because his usual strategy had suddenly turned south on him. As I questioned him it became obvious that not only had he decided to try a new currency pair, he chose one that did not include the USD. This put him at a great disadvantage as he had applied all of his knowledge of the dollar to the AUD thinking that it would be similar. What he found instead was that it reacted completely different to market news than what he was used to. Before you consider changing pairs, make sure that you at least have a rudimentary understanding of how they move in the market.

  • Your Analytics: Be brutally honest with yourself. Have you gotten lax in your trading habits or are you still studying the reports each day and reading financial news. It is not uncommon for a trader to suddenly get comfortable with a strategy and stop working as hard before placing their trades. If this is you, don’t think about changing up your strategy until you have gotten re-established with your discipline.

Being a successful Forex trader involves being introspective in order to understand where you went wrong and what you need to do to remedy that. If you are quick to just give up and try something new, then this may not be the right market for you.

The real time to start thinking about changing your strategy is when you have mastered the one you are using now. Once you find that it can no longer be improved upon, you can begin working on a new set of plans that can be helpful under different market conditions. Being the master of more than one type of strategy will only increase your odds of avoiding those losing streaks in the first place, and consistently add to your Forex account.

Casey Stubbs is the founder of which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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Key Fundamental Forex Events and Forecasts for the Coming Week

The following table lists the key economic data and other events that are due out during the week of October 20th – October 24th, with release times displayed for the GMT time zone.

The list also includes the current market consensus forecast for each event and indicates what sort of deviation might affect the forex market valuation of the indicated currency positively.

Monday, October 20th

  • 1:30pm CAD Wholesale Sales (0.2%, > good for currency)

Tuesday, October 21st

  • 1:30am AUD Monetary Policy Meeting Minutes (hawkish = good for currency)
  • 3:00am CNY GDP (7.2%)
  • 3:00am CNY Industrial Production (7.5%)

Wednesday, October 22nd

  • 1:30am AUD CPI (0.4%, > good for currency)
  • 9:30am GBP MPC Asset Purchase Facility Votes (0-0-9, more votes to reduce are good for currency)
  • 9:30am GBP MPC Official Bank Rate Votes (2-0-7, more votes to raise are good for currency)
  • 1:30pm CAD Core Retail Sales (0.3%, > good for currency)
  • 1:30am USD Core CPI (0.2%, > good for currency)
  • 3:00pm CAD BOC Monetary Policy Report (hawkish = good for currency)
  • 3:00pm CAD BOC Rate Statement (hawkish = good for currency)
  • 3:00pm CAD Overnight Rate (unchanged at 1.00%, > good for currency)
  • 4:15pm CAD BOC Press Conference (hawkish = good for currency)
  • 10:00pm AUD RBA Governor Stevens speaks (hawkish = good for currency)
  • 10:45pm NZD CPI (0.5%, > good for currency)

Thursday, October 23rd

  • 2:45am CNY HSBC Flash Manufacturing PMI (50.2)
  • 8:00am EUR French Flash Manufacturing PMI (48.6, > good for currency)
  • 8:30am EUR German Flash Manufacturing PMI (49.6, > good for currency)
  • 9:30am GBP Retail Sales (-0.1%, > good for currency)
  • 1:30pm USD Weekly Initial Jobless Claims (269K, < good for currency)
  • 10:45pm NZD Trade Balance (-620M, > good for currency)

Friday, October 24th

  • 9:30am GBP Preliminary GDP (0.7%, > good for currency)
  • 3:00pm USD New Home Sales (473K, > good for currency)

Technical Forecast and Levels to Watch for the Majors This Week
EURUSD: Mildly Lower
Initial: 1.2767, 1.2791/1.2805, 1.2815/21, 1.2834/86, 1.2900/04, 1.2919/21, 1.2978/98, 1.3000/03, 1.3047, 1.3059/66, 1.3077, 1.3093/1.3109, 1.3126, 1.3130, 1.3152/65, 1.3172/77, 1.3187/1.3206, 1.3220/42, 1.3294/99, 1.3305/08, 1.3318/24, 1.3332/35, 1.3344/53, 1.3366, 1.3376/89, 1.3398/1.3416, 1.3432/44, 1.3451, 1.3473/82, 1.3489/1.3524, 1.3538, 1.3546/88, 1.3597, 1.3602/15, 1.3621/31, 1.3639/50, 1.3663/76, 1.3682/86, 1.3685/1.3710, 1.3714/16, 1.3731/39 and 1.3748.
Above: 1.3758/74, 1.3784/98, 1.3807, 1.3810/20, 1.3824, 1.3832/36, 1.3845/54, 1.3864, 1.3875/78, 1.3888/92, 1.3905/14, 1.3937, 1.3947, 1.3966/69, 1.3993/1.4000, 1.4246, 1.4500/17, 1.4695 and 1.4939.
Initial: 1.2744/54, 1.2692/98, 1.2676, 1.2623/24, 1.2604/05, 1.2588/89, 1.2570, 1.2514/19, 1.2500/01, 1.2407/96, 1.2381/91, 1.2323/33, 1.2241/55, 1.2162, 1.2143 and 1.2133.
Below: 1.2041 and 1.1938.

USDJPY: Higher
Initial: 107.05, 107.18, 107.39, 107.49, 108.00, 108.24, 108.42, 108.98, 109.45, 109.53, 109.90 and 110.08.
Above: 110.39/47, 111.60 and 111.78.
Initial: 106.80, 106.66, 105.70, 105.41/43, 105.30/33, 105.18/19, 104.83/91, 104.63/68, 104.36, 104.07/26, 103.91, 103.82, 103.73/75, 103.37/43, 103.30, 102.92/103.08, 102.57/82, 102.49/52, 102.33/40, 102.26, 102.13/14, 101.90/102.04, 101.60/83, 101.50/56, 101.42/43, 101.30/32, 101.08/27, 100.82/86, 100.75, 100.60/65, 100.38/48, 100.22 and 100.00.
Below: 99.94, 99.66, 99.40, 99.25, 99.13/14, 99.00, 98.84/92, 98.63/72, 98.48/53, 98.28, 98.20, 98.08, 97.75/83, 97.49/63, 96.90/97.05, 96.81, 96.65/70, 96.55/56, 96.05, 95.79/80, 95.44, 94.90/95.07, 94.87, 94.55, 94.19, 94.05, 93.76, 93.78 93.68, 93.50, 93.17, 92.77/95, 92.14/30, 91.19, 90.85, 90.20/32, 89.40/66, 88.05, 87.95/99 and 87.79.

Initial: 1.6083/96, 1.6109/25, 1.6130/36, 1.6155, 1.6161, 1.6177, 1.6195/98, 1.6204/15, 1.6215/16, 1.6222/24, 1.6237/46, 1.6251/62, 1.6280/86, 1.6290, 1.6298/1.6309, 1.6336, 1.6348, 1.6357, 1.6376, 1.6380/83, 1.6394, 1.6400, 1.6415/18, 1.6441/44, 1.6458/65, 1.6484, 1.6496, 1.6516, 1.6524, 1.6534, 1.6548, 1.6576/86, 1.6592, 1.6611/17, 1.6624, 1.6640/56, 1.6665/67, 1.6683, 1.6692/98, 1.6716/24, 1.6730/37, 1.6745, 1.6755, 1.6765/68, 1.6777, 1.6785, 1.6800/02, 1.6812, 1.6819/22, 1.6831/44, 1.6874/87, 1.6902/09, 1.6919/20, 1.6951, 1.6960, and 1.6995.
Above: 1.7000, 1.7010, 1.7035, 1.7042/51, 1.7058/62, 1.7084, 1.7094/99, 1.7107, 1.7130, 1.7167, 1.7176/78, 1.7190 and 1.7440.
Initial: 1.6071/77, 1.6051/66, 1.6001/08, 1.5975/91, 1.5956/61, 1.5948/51, 1.5900/27, 1.5886/93, 1.5874/77, 1.5853, 1.5844, 1.5825, 1.5803/07, 1.5775/81, 1.5750, 1.5714/17, 1.5683/92, 1.5673, 1.5624/56, 1.5601/15, 1.5591, 1.5561/68, 1.5538/45 and 1.5514/16.
Below: 1.5498/99, 1.5476/79, 1.5458, 1.5434, 1.5427, 1.5403/21, 1.5313/92, 1.5304, 1.5293, 1.5260/62, 1.5237/39, 1.5208/23, 1.5198, 1.5173/87, 1.5164, 1.5152/57, 1.5130, 1.5123, 1.5101, 1.5092, 1.5081, 1.5072/75, 1.5026/32, 1.5013, 1.5007. 1.4985, 1.4966/67, 1.4884, 1.4872, 1.4856, 1.4830, 1.4812 and 1.4785, 1.4345 and 1.4232.

Initial: 0.8747, 0.8762/73, 0.8784, 0.8812, 0.8819/25, 0.8842/47, 0.8857/61, 0.8869, 0.8887/97, 0.8906/12, 0.8918/20, 0.8923/36, 0.8951/57, 0.8967/69, 0.8981/87, 0.8994/0.9010, 0.9035, 0.9041, 0.9042/48, 0.9054/57, 0.9061/66, 0.9072/79, 0.9102, 0.9110/19, 0.9127/37, 0.9147, 0.9162/67, 0.9179/89, 0.9200/08, 0.9214/26, 0.9232/74, 0.9286/94, 0.9304, 0.9311, 0.9328/34, 0.9343/53, 0.9359, 0.9386/0.9410, 0.9420/24, 0.9428/33, 0.9440/47, 0.9455/57, 0.9469 and 0.9483/86.
Above: 0.9500, 0.9524/27, 0.9536/42, 0.9571, 0.9585, 0.9592, 0.9620, 0.9640, 0.9664, 0.9676, 0.9689/96, 0.9710, 0.9732, 0.9757, 0.9791/94, 0.9841/96, 0.9900, 0.9925/83, 1.0000/18, 1.0052, 1.0099/1.0100, 1.0114/17, 1.0148/51, 1.0165/77 and 1.0181/82.
Initial: 0.8729, 0.8693, 0.8651/62, 0.8641, 0.8578 and 0.8512.
Below: 0.8066 and 0.7674.

USDCAD: Higher
Initial: 1.1269/77, 1.1360, 1.1384.
Above: 1.1723, 1.2985, 1.3007/14 and 1.3062.
Initial: 1.1221/29, 1.1210, 1.1194, 1.1168/73, 1.1158, 1.1152, 1.1141, 1.1116/32, 1.1102/09, 1.1097/99, 1.1081/89, 1.1069/70, 1.1030/53, 1.0982/1.1001, 1.0962/66, 1.0954/59, 1.0941/45, 1.0934, 1.0925/28, 1.0915, 1.0903/09, 1.0894,1.0873/86, 0852/59, 1.0849, 1.0839/40, 1.0820/27, 1.0813, 1.0793/96, 1.0742/85, 1.0736, 1.0726, 1.0717, 1.0702/09, 1.0693, 1.0668/79, 1.0646/60, 1.0619/29, 1.0608,1.0580/87, 1.0567/71, 1.0558/59, 1.0546, 1.0519/22, 1.0506, 1.0496/1.0502, 1.0471/87, 1.0459, 1.0441/44, 1.0414/18, 1.0401/04, 1.0390/92, 1.0379, 1.0355/68, 1.0333, 1.0324, 1.0309/12, 1.0283/1.0305, 1.0270/76, 1.0262, 1.0244/55, 1.0233/35, 1.0199/1.0226, 1.0172/82, 1.0165, 1.0151/56, 1.0148, 1.0128/42, 1.0103/05, 1.0081/99, 1.0050/56, 1.0029/34, 1.0018 and 1.0012.
Below: 0.9993/98, 0.9984, 0.9969, 0.9945/60, 0.9931, 0.9922, 0.9902/07, 0.9899, 0.9858, 0.9814/26, 0.9724/99, 0.9686, 0.9645, 0.9631, 0.9525, 0.9445 and 0.9405.
NZDUSD: Mildly Lower
Initial: 0.7927/32, 0.7967, 0.7989/0.8013, 0.8030, 0.8040, 0.8049/60, 0.8075/82, 0.8100/09, 0.8114/37, 0.8147/53, 0.8160/76, 0.8186, 0.8195/97, 0.8204/14, 0.8221/41, 0.8250/55, 0.8263, 0.8268/71, 0.8280, 0.8285/87, 0.8291/95, 0.8302/16, 0.8322/66, 0.8376, 0.8389, 0.8406, 0.8413, 0.8421/61, 0.8472/79, 0.8487/89 and 0.8499.
Above: 0.8504/18, 0.8523/37, 0.8542/53, 0.8560/61, 0.8571/78, 0.8584/90, 0.8602/05, 0.8633/41, 0.8647/53, 0.8660/67, 0.8671/74, 0.8693/0.8700, 0.8712/18, 0.8734, 0.8744, 0.8764/77, 0.8789, 0.8792, 0.8821, 0.8834 and 0.8840.
Initial: 0.7903/06, 0.7888, 0.7872, 0.7856/57, 0.7838/46, 0.7829, 0.7819, 0.7804, 0.7793/95, 0.7783, 0.7760, 0.7751/58, 0.7731/35, 0.7705/23, 0.7697 and 0.7681/86.
Below: 0.7605/76 and 0.7500/85.

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Key Fundamental Forex Events for the Week of October 13th through October 17th

The following table lists the key economic data and other events that came out during the week of October 13th through October 17th, with release times displayed for the GMT time zone.
The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

Monday, October 13th

  •  All Day JPY Bank Holiday
  •  3:00am CNY Trade Balance 31.08B versus 31.0B expected.
  •  All Day CAD Bank Holiday
  •  All Day USD Bank Holiday

Tuesday, October 14th

  •  1:30am AUD NAB Business Confidence 5 versus last 8 expected.  The currency fell.
  •  9:30am GBP CPI 1.2% versus 1.4% expected.  The currency fell.
  •  10:00am EUR German ZEW Economic Sentiment survey -3.6 versus 0.2 expected.  The currency fell.

Wednesday, October 15th

  •  2:30am CNY CPI 1.6% versus 1.7% expected.
  •  8:00am EUR ECB President Draghi said that, “An integration of the ECB statistical and supervisory data world will require painstaking work. One needs to go back to the drawing board and design a common European reporting framework that will serve all ECB functions, an information model and a data dictionary that will allow data for different final uses to be collected and processed in one coherent process, of course always respecting the rules of confidentiality. It will also require changes in legal texts, IT infrastructures and, not least, mentality. The sense of narrow “ownership” of the information by the final user may have been entrenched over years of separate existence of the statistical and supervisory data, but should be challenged.“  The currency rose.
  •  9:30am GBP Average Earnings Index 0.7% versus 0.7% expected.  The currency rose.
  •  9:30am GBP Claimant Count Change -18.6K versus -34.2K expected.  The currency rose.
  •  1:30pm USD Core Retail Sales -0.2% versus 0.2% expected.  The currency fell.
  •  1:30pm USD PPI -0.1% versus 0.1% expected.  The currency fell.
  •  1:30pm USD Retail Sales -0.3% versus -0.1% expected.  The currency fell.
  •  4:03pm NZD GDT Price Index 1.4% versus last -7.3% expected.  The currency rose.
  •  7:00pm EUR ECB President Draghi said that, “Working together to enhance awareness of a country’s cultural heritage that is part of our roots and our identity offers a good opportunity to educate and prepare future generations, who will have a key role in strengthening cohesiveness and community spirit and in deciding the way in which the European institutions will develop. The mission of the EUROPEAN CULTURAL DAYS fully meets this aim.“  The currency rose.

Thursday, October 16th

  •  1:30pm CAD Manufacturing Sales -3.3% versus -1.6% expected.  The currency fell.
  •  1:30pm USD Weekly Initial Jobless Claims 264K versus 286K expected.  The currency fell.
  •  3:00pm USD Philly Fed Manufacturing Index 20.7 versus 19.9 expected.  The currency fell.

Friday, October 17th

  •  1:30pm CAD Core CPI 0.2% versus 0.1% expected.  The currency rose.
  •  1:30pm USD Building Permits 1.02M versus 1.04M expected.  The currency rose.
  •  1:30pm USD Fed Chair Yellen said that, “The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.  It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.“  The currency rose.
  •  2:55pm USD Preliminary University of Michigan Consumer Sentiment survey 86.4 versus 84.3 expected.  The currency rose.

Technical Recap for the Majors This Week

Forecast: Mildly Higher
Actual: Higher from a 1.2628 open to a 1.2748 close.

Forecast: Mildly Lower
Actual: Lower from a 107.47 open to a 106.12 close.
Forecast: Mildly Lower
Actual: Mildly Lower from a 1.6066 open to a 1.5974 close.

Forecast: Mildly Lower
Actual: Mildly higher from a 0.8675 open to a 0.8680 close.

Forecast: Mildly Higher
Actual: Mildly higher from a 1.1200 open to a 1.1250 close.

Forecast: Mildly Lower
Actual: Higher from a 0.7807 open to a 0.7929 close.

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AUDUSD negative tone and support threats

  • Another whipsaw session Thursday to reinforce the range theme, defined by the .8643 cycle low and the .8900 level.
  • The setback from our .8860 resistance maintains a negative bias, despite the bounce from just ahead of .8676 support.
  • However, having pushed through .8705, we see bias back to .8676 and maybe for a retest to .8652/43, through which would see a resumption of a more bearish tone.


  • Downside: Below .8643 aims for longer term targets at .8633 and .8595 and maybe for a 2010 swing low at .8315.
  • Upside: Above .8900 aims higher through .8930/35 and .8950 for .9003.

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4 Hour AUDUSD Chart



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The Pound just keeps on getting pounded, an over-worked phrase if ever there was one, but current clouds of deflation and weak economic performance threaten to wreak even more havoc, if that is worthy of belief. The UK situation has definitely done a one-eighty in the past three months, a bitter pill that must be swallowed by the BoE’s proud and gregarious Governor, Mark Carney. Last June while the cameras rolled, modest Mark was mounting the ramparts and spouting soliloquies, reminiscent of Henry V. In Mark’s case, he soon fell from his horse, hoisted upon his own petard.

As with any Shakespearean tragedy, the lessons just keep coming until the final act is played out. In similar fashion, the Pound fell dramatically in July, which would have been enough to drive home the point. Equivalents drops, however, followed one another in August and September, and October is starting to look eerily on the same track. The Brits, me thinks, have suffered from irrational exuberance of the first order. Sterling has resembled a deflating balloon, as the chart so clearly depicts below:

The pricing behavior for the GBP has actually followed, almost in lock step, a similar path borne out by its cousin, the Euro. For a time, England seemed to have glommed onto the right formula for economic recovery, charging ahead of the pack of other developed countries in the northern hemisphere and staking a claim for potentially being the first nation to raise interest rates. Traders and investors alike bought into the story, hook, line, and sinker, but something happened on the way to Trafalgar Square.

When your major trading partners are having a rough go of it, wisdom suggests that it is only a matter of time until the plague across the British Channel found its way to the nearby islands. Yes, the resurgence of the U.S. Dollar had a lot to do with the fall of the Pound, but weak economic data in the UK played a part in its demise, as well. And then new CPI data was released for September, coming in at 1.2% when 1.4% was expected. Prices are inflating, but the trend is now very worrisome, as detailed below:

The trend for inflation has declined sharply over the last three years. The previous attempt to rise above 2% occurred when the champagne corks were flying about in June, but that was but a tease, a cruel form of comic relief on the public stage. Sterling received yet another pounding and now rests at 1.593, slightly below 1.60, but at a level that represents long-term support from as far back as 2009.

Analysts are now saying that the market has moved an interest rate hike in the UK from this quarter, way back to the second half of 2015. In one fell swoop, the U.S. economy has jumped back into the lead, as far as the developed country that will be the first to raise its benchmark rates. Janet Yellen must surely be smiling, but, hopefully, she will learn from Mr. Carney’s fateful example and control her own exuberance in public.

Where will the GBP go from here? Many still believe that the Pound is overvalued, perhaps by as much as 10%, if political rhetoric or purchasing power parity data from the OECD are to serve as acceptable guidance in this debate. Its present level is well below its 100-Day and 100-Week EMA’s of 1.67 and 1.61, respectively. Recent projections for yearend pegged the 1.67 valuation, but that figure was prepared before the CPI release.

Until the BoE weighs in on rate hikes, expect more ranging behavior.  

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GBPUSD bear trend intact despite modest bounce, capped at 1.6082

  • Despite a midweek bounce effort, a lower low and lower high Wednesday maintains negative pressures, faltering back from initial resistance at 1.6082.
  • We see a more negative theme through mid-month after another new setback low has reinforced the previous October plunge below the 50% retrace at 1.6005 and psychological 1.6000.
  • We still see risk to the 1.5854 weekly swing low from Q4 2013, maybe this week..
  • Below here, sees threat lower to aim for chart/ 61.8% retrace support 1.5750/20.


  • Above 1.6228 eases bear risks; through 1.6288 signals a neutral tone, only shifting positive above 1.6415/20.

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Daily GBPUSD Chart


Weekly GBPUSD Chart





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