Daily Market Review – 27/04/2015

Euro and Amazon the 2 Assets to Focus on this Monday

Forex

GBPJPY Descending Triangle | Testing Triangle Resistance

GBPJPY is forming a descending triangle chart pattern visible on its 4-hour and daily time frames. The pair is moving up to test the triangle resistance at the 180.50-181.00 area and another move lower could spark a test of support at the 175.00 major psychological level.

A breakout in either direction could last by around 500 pips, which is roughly the same height as the chart pattern. Last week, the BOE minutes sparked an upside move for the pound when policymakers seemed to revert to their upbeat bias. However, demand for the yen was still in play as BOJ Governor Kuroda mentioned that policymakers are discussing the technical details for an exit strategy.

Upcoming data from the UK and Japan could continue to push this pair around in the next few days. Tomorrow, the UK will print its preliminary GDP reading for the first quarter and possibly show a 0.5% growth reading, which is weaker compared to the previous two quarters. Another event risk for this trade setup is the BOJ policy statement around the middle of the week.

Stochastic is indicating overbought conditions for now, which means that price could have difficulty sustaining its climb. Once the indicator starts moving lower, bearish momentum might pickup for GBPJPY.

 

EURJPY Ascending Channel | Headed for Support at 128.50

EURJPY is in an uptrend on its short-term time frames and price is moving inside an ascending channel. The pair just tested the channel resistance at the 130.00 major psychological level and may be on its way to the bottom around the 128.50 to 129.00 support area.

However, price also seems to be finding a bit of support at the mid-channel area of interest and may move back up to the resistance sooner or later. Optimism for the Greek debt deal, even though no agreement has been reached last week, is keeping the shared currency afloat.

At the same time, the short-term moving average is staying above the longer-term moving average, which suggests that the uptrend could stay intact. Stochastic is also moving higher, confirming that bullish momentum is still present.

Much could hinge on the BOJ statement later on this week though, as the confirmation that policymakers are considering an exit strategy could drive more demand for the yen and push EURJPY lower. Apart from that, any negative updates on the Greek debt talks could lead to increased selling pressure for the pair and a potential break below the channel.

 

Stocks

Amazon Shares Gap Higher | Sustained Bullish Momentum

Amazon shares made a huge weekend gap on news that JP Morgan upgraded its assessment for the stock. The financial ratings giant revised its outlook from “overweight” to “neutral”, drawing more buying support for AMZN early on in the trading week.

This could lead to sustained upside momentum for the stock, as risk appetite could be returning to the financial markets. However, the upcoming FOMC interest rate statement could have a big say in equity price action later on, as their assessment for the US economy could also drive Amazon shares price action.

Data from the US has been disappointing recently, leading investors to price in weaker earnings and revenues for companies. The earnings reports are scheduled to be released within the next few weeks and these could provide more direction for equities in the coming days.

From a technical standpoint, the short-term EMA is treading way above the longer-term EMA on the daily chart, confirming the increase in bullish pressure for AMZN shares. In addition, stochastic is pointing up, which means that buyers still have enough energy to push for more gains.