Daily Market Review – 23/04/2015

US Stocks and GBP to Face Short-Term Downtrend


NZDUSD Testing Rising Trend Line | Support at .7600

NZDUSD has been in a steady uptrend on its 4-hour chart, as a rising trend line can be drawn to connect the recent lows. Price is testing the rising trend line support at the moment and may be due for either a bounce or a break, depending on market catalysts.

Earlier in the Asian trading session, an RBNZ official mentioned that the central bank isn’t likely to increase interest rates as their inflation outlook remains subdued. Further deterioration in economic conditions might even warrant a rate cut. This drove the Kiwi lower against its forex counterparts and may be enough to push for a break lower.

If that happens, the pair could be in for more losses all the way down to its previous lows at .7200. On the other hand, a bounce off the trend line could confirm that the rally will carry on and that price might test the nearby resistance at .7700. Economic risks for this trade include the release of the US retail sales, initial jobless claims, and manufacturing PMI today.

Stochastic is indicating oversold conditions, suggesting that a bounce is likely. In addition, the short-term EMA is treading above the long-term EMA on the 4-hour chart, which means that the uptrend could resume.


GBPCAD Downtrend Pullback | Resistance at 1.8500

GBPCAD has been trading lower on the 4-hour chart, as the moving average has been holding as a dynamic resistance level. The pair is showing signs of pulling back up to the moving average, which might continue to keep further gains in check.

In addition, the EMA lines up with the 1.8500 major psychological resistance and the 38.2% Fibonacci retracement level on the latest swing high and low. The shorter-term EMA is treading below the longer-term EMA, confirming that the downtrend is likely to stay intact.

Minutes of the BOE meeting triggered a bounce higher for the pound, although this might be temporary as the UK has yet to show economic improvements. In Canada, data has been firmer and BOC Governor Poloz has reiterated that they are not looking to lower interest rates once more.

The path of least resistance is to the downside, as a continuation of the selloff could lead to a test of the previous lows at 1.8200 for GBPCAD. Increased selling pressure could even lead to a move to new lows around the 1.8000 major psychological support. On the other hand, a break above the EMA resistance could spark a rally to the next ceiling at 1.8600.



GOOG Double Top Breakdown | Pullback to Neckline

Google shares confirmed the reversal pattern seen on its 4-hour chart, as price broke below the neckline of the double top formation. This indicates that a downtrend is likely to take place, possibly sending prices down to support at $500/share.

For now, Google shares are starting to retreat to the broken neckline support, possibly to retest resistance. If this continues to hold, Google shares could resume their drop. However, if an upside break past $550/share is seen, prices could move up to the previous highs around $575/share.

Stochastic is moving up, which means that there could be enough buying pressure to push for more gains. However, the indicator is almost in the overbought region, which also suggests that sellers are about to take control of price action.

The short-term moving average has just crossed below the long-term moving average on the same time frame, suggesting that the downtrend might gain traction. These indicators are also starting to move further apart, signaling a strengthening trend and potentially more losses for Google shares.