Daily Market Review – 11/05/2015

Pound Surge to Continue Following Last Week’s Conservative Victory!


USDCHF Descending Trend Line Break  | Potential Reversal Underway

USDCHF could be in for a potential reversal, as it rallied past the descending trend line that had been holding on for quite some time. Price climbed above the .9200 major psychological level and could be in for more gains. Data from Switzerland has been weaker than expected, with the latest CPI reading showing a 0.2% decline in price levels.

The upside break has been spurred by the US non-farm payrolls release, which showed that the US economy added 223K jobs in April. This brought the jobless rate down from 5.5% to 5.4%, which is its lowest level since May 2008. In addition, underlying labor indicators have also shown significant improvements.

Stochastic is already indicating overbought conditions though, which shows that buyers are feeling tired and that sellers might take over from here. If so, a quick pullback to the trend line might be in the cards before the climb is resumed.

If the selloff continues though, USDCHF could fall back to the previous lows around .9100 or perhaps create new ones below the .9000 major psychological handle. On the other hand, a sustained climb could last until the next areas of interest at .9500 and the .9700 major psychological level. Event risks for this setup include the US retail sales release later on this week.


GBPJPY Bullish Flag | Trend Continuation Pattern

After its strong rally following the elections in the U.K., GBPJPY has formed a consolidation pattern on its short-term time frames. This could be indicative of a trend continuation with the potential catalysts lined up this week.

The BOE is set to make its interest rate announcement today and although no policy changes are expected, Governor Carney is set to emphasize their hawkish bias. The central bank has been saying that they are ready to hike interest rates soon as the economy could meet its 2% inflation target next year.

There have been no reports released from Japan so far, as risk sentiment has been responsible for driving yen price action recently. Risk appetite seems to have weakened lately though, as China announced a surprise rate cut in anticipation of further weakness in the world’s second largest economy.

If bullish momentum isn’t maintained, GBPJPY could fall back to the rising trend line forming on its short-term time frames. Price could draw additional support around the moving average near the 182.00 major psychological level or at the area of interest around the 184.00 handle.



Upward MA Crossover on Tesla Shares | Further Gains Possible

After finding support at a key level, Tesla shares could be in for more gains, as the moving averages made an upward crossover. The short-term exponential moving average on the daily chart climbed above the longer-term EMA, indicating that upside momentum is building.

In addition, stochastic is moving up, suggesting that buyers have enough energy to push for more gains. Price could climb to the previous highs around the $280/share level or possibly until the $300/share level later on. Near-term resistance is also located at the $260/share level, which might spark a bit of market correction before the climb is sustained.

A deeper pullback could last until the major support at $180-200/share but a break below this level would mark a move below the neckline support of a head and shoulders pattern on the same time frame. If that happens, the stock could face longer-term losses.

News from the company has been mostly positive for the stock, as the launch of the Tesla Powerwall continues to support the stock price. In addition, data from the US economy has been relatively upbeat and supportive of further progress and potentially stronger consumer spending later on.