Daily Market Review – 20/04/2015

Apple and GBPUSD Slide Imminent this Monday

Forex

GBPUSD

GBPUSD Long-Term Reversal | Double Bottom Neckline

Despite weaker than expected data from the UK economy last week, GBPUSD is completing its potential reversal pattern on the daily time frame. The pair is testing the neckline of the double bottom at the 1.5000 major psychological level and may be due for an upside breakout.

If that happens, the pair could start a long-term climb and head up by as much as 400 pips, which is the same height as the chart pattern. If the resistance holds, the pair could head back to the previous lows near the 1.4600 handle and create a triple bottom, another potential reversal signal.

The BOE minutes could be the major catalyst for any moves for the GBPUSD pair this week. Any changes in rhetoric could be crucial in determining longer-term price action for the pound, as officials seem to be more cautious recently. Risk sentiment might also play a key role in price action, as risk appetite appears to have weakened recently.

There are no major reports lined up from the US economy this week, indicating that the lower-yielding currency could continue to draw support from risk aversion. After all, signs of a slowdown have been seen in China and Greek debt talks haven’t shown any signs of a resolution recently.

 

NZDUSD

NZDUSD Rising Wedge | Resistance at .7700 to .7800

NZDUSD has slowly been treading higher but it seems that the rally is hitting a near-term resistance. A rising wedge pattern can be seen on the 1-hour forex time frame and price is finding a ceiling around the .7700 to .7800 psychological levels.

If these keep gains in check, NZDUSD could head back to the bottom of the pattern near the .7500 major psychological level. Sustained selling pressure might lead to a break below this level and a potential 400-pip drop, which is roughly the same height as the chart pattern.

Over the weekend, New Zealand printed a weaker than expected quarterly inflation reading. The CPI showed a 0.3% decline in price levels, worse than the estimated 0.2% dip. Prior to this, China had unveiled a set of weaker than expected economic reports, hinting that commodity-dependent nations could also be in for a downturn.

Data from the US economy has been mostly weak though, which could still lend support for NZDUSD. However, risk sentiment is also currently in favor of the US dollar, which means that the path of least resistance is to the downside. There are no major reports lined up from the US economy this week.

 

Stocks

AAPL Stock Breaking Down | Candle Close Below 50 SMA

AAPL stock could be in for more losses, as the share broke below the consolidation pattern on its daily chart. In addition, price is moving below the short-term 50 simple moving average support, indicating that a larger correction is underway.

For now, the shorter-term 50 SMA is treading higher than the longer-term 200 SMA, confirming that the uptrend might stay intact. Price could retreat to the 200 SMA for support, as this area has held as a dynamic inflection point in the past.

Risk aversion has been weighing on US equities, plus the fact that the data from the US economy has been disappointing recently. Jobs figures have fallen short of estimates while consumer spending has also lagged, suggesting that the economy is not performing as strong as previously indicated.

A return in risk appetite could mean another round of gains for AAPL stock, which might lead to a move up to the previous highs near $132.50/share. On the other hand, an extension of risk aversion could spur more losses and a potential move until the support at $120/share level.