Daily Market Review – 14/05/2015

US Stock Surge to be Driven By Acquisitions!

Forex

EURNZD Long-Term Correction | Resistance at 1.5500

EURNZD is showing signs of completing its long-term market correction on the daily time frame, with price finding resistance at the Fibonacci retracement levels. The pair previously climbed from the price lows at 1.4000 and could resume its drop around the current levels.

Data from New Zealand came in stronger than expected, as headline retail sales jumped 2.7% in the first quarter versus estimates of a 1.6% gain while core retail sales surged 2.9% in the same period instead of showing only a 1.5% increase. This could renew support for the Kiwi in the long run, as traders anticipate that an interest rate cut would add fuel to growth.

Meanwhile, the euro is under a bit of downside pressure as traders now focus their attention to the next set of payments that Greece has to make. Although the debt-ridden nation was able to meet its deadline for the latest loan obligations, many fear that it could not afford its next payments without having to implement more spending cuts.

Once the selloff resumes, the pair could be back on track to the previous lows at the 1.4000 handle. Stochastic is deep in the overbought region on the daily time frame, indicating that the recent rally is way overdone and that sellers are ready to put bearish momentum back in play.

 

AUDJPY Triangle Breakout | Next Target at 98.00

AUDJPY recently broke from the top of the ascending triangle that formed on its 1-hour time frame, indicating that further gains are likely. Resistance at the 96.00 major psychological level was breached and with the pattern roughly 200 pips in height, the next target could be at the 98.00 major psychological mark.

Although the RBA and the Chinese central bank just cut interest rates, Aussie bulls are still in the game in hopes that these stimulus efforts would be enough to shore up demand and growth. Employment reports from Australia and retail sales figures from China reflected poor performance, yet this might see a turnaround once the rate cuts kick in.

Risk appetite also seems to be supporting the higher-yielding Australian dollar at the moment and leading traders away from the lower-risk Japanese yen. This could lead to sustained upside momentum for AUDJPY, possibly until the 100.00 mark.

On the other hand, a return in selling pressure could lead to a move back to the nearby support at 94.00. There are no reports due from Japan and Australia today, which suggests that this pair’s price action could depend mostly on risk flows.

 

Stocks

AOL Stocks Gap Higher | Upside Breakout on Verizon Acquisition

AOL shares broke sharply above its tight consolidation visible on the shorter-term time frames, following the news of its acquisition from Verizon. Price surged to the $50.80/share level before retreating close to the moving averages, indicating that buyers are gathering steam for a prolonged climb.

On Tuesday, phone company Verizon signed a deal to purchase AOL for $4.4 billion or effectively $50/share. This could help the company advance its expansion into mobile advertising and video.

AOL shares have surpassed the previous long-term resistance around $48/share and may see further upside, depending on how the acquisition by Verizon turns out. For AOL, the sale is the latest chapter for a company that has redefined itself in recent years as a significant player in digital media and marketing, after originating as a pioneer in the dial-up Web access business.

Moving averages formed an upward crossover, reflecting the current bullish trend. Stochastic is also moving up, confirming that more buying interest has been drawn for the stock price, which might lead to a surge past the next resistance at $52/share.