This Will Be a Very Eventful Week

Some weeks are relatively uneventful, others, however, are full to the brim with scheduled high impact news events that cause a lot of volatility on the market. The next five days are definitely part of the latter, not the former.

Here are the main events that we can expect to cause such major volatility this week:

Monday – on Monday we can expect the Bank of Japan Outlook Report, Policy Rate and Monetary Policy Statement.

Tuesday – on Tuesday there will be a BoJ Press Conference, as well as a speech by Bank of Canada Governor Stephen Poloz.

Wednesday – the main event on Wednesday is undoubtedly the FOMC statement and the Federal Funds Rate announcement.

Thursday – on Thursday will be announced the Bank of England Inflation Report, as well as the Official Bank Rate.

Friday – and finally on Friday we can expect the announcement of the US Change in the Non-farm Payrolls.

About Trendlines and Their Importance in Technical Analysis (Part 3)

Later today we can expect the announcement of the FED interest rate, as well as a speech from FED Chair Janet Yellen.

Although such news usually cause tension and the market volatility drops until it comes out, I want to share what I expect and what my positions are beforehand. I made my decisions based on important trendlines and the pin bars that formed on the four-hour time frames.

EUR/USD: I expect that the most traded currency pair will move in favour of the EUR. The pair is at a support level at 1.1123 and on the four-hour time frame there is a bullish pin bar. I expect a move to the upside, towards the resistance trendline that has been framing the figure that the pair has been forming since 8th August this year.

GBP/USD is also at an important support level (the red line). What is more, in the past 24 hours the pair formed a double bottom on the four-hour time frame, not to mention that the two bars there are bullish pin bars. I expect a move to the upside towards the resistance trendline (the blue line) around 1.2090 – 1.3100. Once the pair reaches that level I think there will be a renewal of the move to the downside.

Regarding LCrude, the Federal Funds Rate and CAD

Earlier today the positive data about the Crude Oil inventories caused a sharp drop in the LCrude charts. That in turn affected the “oil” currency pair USD/CAD, which, after a purely technical drop of 90 pips in the past few days, jumped sharply to the upside and climbed with 70 pips for less than 30 minutes.

Later today we expect the announcement of the Federal Funds rate and analysts believe that rate will remain unchanged. 

From a technical analysis point of view the situation on the smaller time frames is unclear – it’s difficult to say whether the pair will start dropping right away today or will it reach its natural resistance level at 1.3300 first, which can be seen on the weekly time frame. 

I, personally, expect that the pair will reach the resistance level towards which it has climbed in the past 11 days first. I can’t say, however, when that will happen. The last bullish candlestick on the four-hour time frame, which was affected by fundamentals, engulfed the five previous candlesticks, and it is normal to see retracement to the downside afterwards. 

Considering that the resistance at 1.3250 is quite strong as well a further move to the upside seems even less likely.

 On the other hand LCrude appears to be in a freefall state.

In other words, today the fundamental news make the technical analysis picture quite unclear. All trading should be done very carefully.