Daily Market Review – 24/04/2015

Alibaba Weakness to Continue; Aussie to Surge!

Forex

USDCHF Potential Triangle Breakout | Descending Triangle Support

USDCHF has been trading inside a descending triangle chart pattern visible on its 4-hour forex chart. Price is gearing up to test support around the .9500 major psychological level and may be due for a breakdown if selling pressure is strong enough.

Stochastic on the same time frame is indicating oversold conditions, which suggests that a bounce could take place. If so, the pair could test the top of the triangle around the .9600 major psychological resistance and go for an upside breakout if bullish momentum is strong enough.

The short-term exponential moving average on the 4-hour chart is moving below the longer-term EMA, suggesting that the path of least resistance is to the downside and that the pair is more likely to make a break lower. If so, the selloff might last by around 600 pips, which is roughly the same size as the chart pattern.

Similarly an upside break past the triangle resistance could lead to a 600-pip rally. This could depend on the release of the US durable goods orders data in the US session and the outcome of the Eurogroup meetings later today, with a negative outcome likely to spur franc losses in anticipation of debt contagion.

 

AUDJPY Ascending Triangle | Resistance at 93.00

AUDJPY has been moving mostly sideways so far, creating an ascending triangle pattern on its short-term charts. Price is testing the resistance around the 93.00 major psychological level and may see an upside breakout, depending on the outcome of today’s market events.

BOJ Governor Kuroda has recently revealed that policymakers are discussing the technical details of an exit strategy from their stimulus program, adding support for the Japanese yen. In addition, RBA Governor Stevens confirmed that they will keep monetary policy accommodative for much longer and that the Aussie could fall further.

These policy biases combined lend more downside for the pair, and a move below the 92.50 minor psychological level and triangle support could seal the deal for more losses. The selloff could last by around 250 pips, which is roughly the same height as the chart pattern.

Event risks that could impact market sentiment are still in play though, as the Eurogroup meetings could have a significant effect on risk appetite. A positive outcome or a compromise among the Greek government and its creditors could lead to a pop higher for higher-yielding currencies, possibly spurring an upside break from the 93.00 handle and further gains for AUDJPY.

 

Stocks

Alibaba Shares Moving Sideways | Support at $82/Share

Alibaba shares still haven’t picked a clear direction, as the stock price continues to move sideways on its short-term charts. Price has bounced off support around $82/share and is finding resistance at $86/share.

Price is testing the bottom of the short-term range at the moment, with stochastic indicating oversold conditions and hinting at a potential bounce. If that happens, price could head up to the range resistance once more and perhaps attempt an upside break if buying pressure is strong enough.

However, the moving averages are suggesting further downside pressure, as the short-term EMA is treading below the long-term EMA. This confirms that the longer-term selloff is likely to carry on and weigh on the stock price, possibly until the range support breaks.

Risk appetite could have a significant say in price direction, along with the outcome of US data. Data has recently been coming in weaker than expected, weighing on optimism for the economy and dragging equities lower. Another disappointment in today’s durable goods orders report could lead to a downside break for Alibaba shares.