EURGBP and Microsoft Key Players this Wednesday
EURGBP Range-Bound Movement | Resistance at .745
EURGBP seems to be moving sideways in the past few days, as traders try to pick a clearer direction for the currency. The path of least resistance seems to be to the downside since the euro zone is fundamentally weaker, but a potential resolution to the Greek debt talks might lead to a relief rally.
The event risk for this trade today is the release of the BOE minutes, which might indicate a more hawkish or positive monetary policy stance. In the latest Inflation Report hearings, BOE Governor Carney said that their next move is still likely to be a rate hike and that the drop in inflation could spur spending and growth.
With that, EURGBP resistance at .7450 minor psychological level might hold and price could drop to the bottom of its range at .7375. Stochastic is on its way down, which means that euro sellers are in control of price action.
Of course a breakout in either direction is still possible, given the tight consolidation and the low liquidity in the markets today. Asian traders might be off enjoying the Chinese New Year holidays, which means that any significant change in sentiment or a major announcement could spark large price swings.
CADJPY Potential Retracement | Support at 95.50
CADJPY recently made a strong upside break past resistance at the 95.50 minor
psychological level and indicated further gains. However, stochastic is reflecting overbought conditions on the 1-hour chart and may be the cue for a quick pullback before the pair resumes its climb.
Using the Fibonacci retracement tool on the latest breakout move shows that the 50% level lines up with the broken resistance at 95.50 and may act as support. If so, CADJPY might resume its rallies and possibly test the previous highs at 96.50. Sustained buying pressure could even lead to more gains past that point.
The event risk for this setup today is the BOJ interest rate statement, during which Governor Kuroda might admit that the Japanese economy could use more stimulus. In their previous statement, central bank officials said that the recovery could carry on and that the downturn in inflation was temporary.
Dovish remarks from the BOJ could lead to more gains for CADJPY while reassuring comments could lead to a sharper selloff. A break below the lowest Fib at 95.40 could mean the start of a reversal for the pair and a potential drop to the next support at the 95.00 major psychological level.
Resistance on MSFT Shares | Potential Downward SMA Crossover
MSFT shares recently made a strong rally for the past few weeks but seems to be encountering strong resistance at the 200 simple moving average. This indicator has held as a dynamic inflection point in the past and may continue to keep further gains in check.
MACD is moving higher though, indicating a potential pickup in buying pressure. This suggests that an upside break past the 200 SMA is still possible and that price may fill the large gap made in January. This is also near the shorter-term 50 SMA, which might also hold as a dynamic inflection point.
RSI is also heading up and price might have a chance at moving past the current highs at $44/share. In that case, a move towards the next resistance near $45/share might be possible.
The upcoming FOMC minutes release might be an event risk for this setup, as this could have a strong influence on market risk sentiment. Hawkish comments could assure investors that the US economy is doing well, leading to more gain