Daily Market Review – 21/04/2015

Dollar Weakness to Drive Market Sentiment Today



CADJPY Ascending Channel | Support at 96.00

CADJPY has gradually been trading higher, as price has formed an ascending trend channel on its 1-hour time frame. The pair has just tested the top of the range near the 99.00 major psychological level and may be headed for support at the bottom, which is around the 96.00 major psychological mark.

Data from Canada has been mostly stronger than expected recently, leading BOC Governor Poloz to be a little more optimistic with Canada’s economic prospects. Even though policymakers downgraded growth forecasts for the current quarter, they upgraded their estimates for this year and the next.

This suggests that further BOC rate cuts are less likely, lending more support for the Canadian dollar. The shorter-term exponential moving average is moving above the longer-term EMA on the 1-hour chart, confirming that the uptrend is likely to stay intact. In addition, stochastic is indicating oversold conditions and suggesting that buyers are about to push prices back up.

A more conservative entry for a long trade could be at the bottom of the range around the 96.00 handle, as this could be tested if risk appetite remains weak this week. After all, the slowdown in China and the potential Greek exit are keeping traders cautious recently.


USDCHF Short-Term Downtrend | Descending Trend Line Resistance

USDCHF has been trading in a downtrend, as the recent highs on the 1-hour time frame can be connected by a descending trend line. The pair is testing the resistance at the moment and may be due to resume its drop if the trend line holds up.

Stochastic has already reached the overbought region, confirming that selling momentum is bound to pick up. In that case, USDCHF could move back to its previous lows at the .9500 major psychological support. Sustained bearish momentum could even lead to a downside break of .9500 and further losses for the pair.

On the other hand, a pickup in dollar demand might lead to an upside break from the trend line, possibly until the next resistance at the .9650 area. Further gains could lead to a prolonged climb until resistance at .9750 to .9800.

The path of least resistance is to the downside for now since data from the US economy has been mostly below expectations, enough for some traders to reduce bets that the Fed can hike interest rates this year. However, risk aversion has been supporting the lower-yielding currencies lately, which might still leave the dollar as a more attractive currency compared to the franc.




EBAY Area of Interest | Testing Support at $56/Share

EBAY shares have sold off recently due to the downturn in optimism for the US economy and the general decline in market risk appetite. Data from the US economy has weakened, China has decided to pump in more stimulus, and Greece is edging closer to default and a euro zone exit – all keeping higher-yielding assets such as equities weak.

For now, EBAY is settling at support around $56/share, which is an area of interest visible on the longer-term charts. This lines up with a former resistance and the longer-term exponential moving average, which has held as a dynamic inflection point in the past.

Stochastic is still pointing down though, which suggests the possibility of more losses for this stock. Price could break below the current support and possibly move towards the next floor at $48-50/share.

There are no major reports due from the US economy today, which suggests that equities could move to the tune of market sentiment. More downbeat news reports could keep risk-taking in check and spur further weakness for equities while a return in risk appetite could push EBAY shares back to the previous highs at $60/share.