GBPJPY on Focus During Thanksgiving Holiday
GBPJPY Ascending Triangle | Resistance at 186.00
GBPJPY is making a consolidation pattern on its 1-hour time frame, as the pair created an ascending triangle. Price made higher lows and found resistance at the 186.00 major psychological level. For now, the pair is testing support at the bottom of the triangle.
A bounce could lead to a rally back to resistance at 186.00 and a potential upside break. If so, price could climb by as much as 250 pips, which is the same height as the chart pattern. Similarly, a downside break from the triangle support could lead to as much as 250 pips in losses.
The recent BOE Inflation Report hearings shed more light on why the UK central bank has shifted to a less hawkish stance, with policymakers citing heightened external risks stemming from the slowdown in euro zone and Japan. They also noted that geopolitical tensions could weigh on global growth prospects, which was why they pushed back their rate hike time line.
As for the yen, the Japanese currency seems to be taking advantage of risk aversion for now, although the prospect of further BOJ easing could lead to another round of selling. The minutes of the latest BOJ meeting indicated that policymakers might be open to more stimulus later on.
EURCAD Testing Broken Support | Resistance at 1.4100
EURCAD may be due to resume its selloff soon, as price recently broke below a major support area and pulled up for a retest. The pair traded below the 1.4000-1.4100 floor and dipped to the 1.3900 handle when ECB Governor Draghi reiterated his bias towards policy easing.
In ontrast, the Canadian economy seems to be faring well, with market participants buzzing about a potential BOC rate hike also next year. This is because annual inflation is moving way past target, partly as a result of the Loonie depreciation in the previous months.
The recent PBOC rate cut has also shored up commodity prices for a bit, with traders renewing demand for the commodity currencies as well. If risk appetite is sustained on improving global growth prospects, the Canadian dollar could strongly benefit and push EURCAD below the previous lows.
However, a pickup in euro demand could lead to more gains for the pair past the 1.4200 mark, although this seems to be an unlikely scenario. There are no major event risks for the Canadian dollar today while the euro zone has the German preliminary CPI and unemployment change figures on tap.
Retracement on MSFT Shares | Pullback to $47/share Support
Microsoft (MSFT) shares are in the middle of a major correction, as seen on the stock price’s daily chart. Price rallied to a high of $50/share recently then retreated towards the broken resistance zone, which lines up with the 38.2% Fibonacci retracement level.
A bounce off the $47/share area could take MSFT shares back to the previous highs at $50/share and beyond, possibly until $52/share in the near term if buying momentum persists. A deeper pullback could lead to a test of the next support zone at $45/share.
Meanwhile, a break below the Fib levels could mean a dip towards the major support at $43/share, which has held a couple of times in the last few months. A drop below this region could confirm that MSFT shares are in for longer-term declines.
The stock price could enjoy renewed buying pressure during the Thanksgiving shopping spree, as consumers take advantage of the sales and discounts during Black Friday. This could also be sustained throughout the holiday season in December, with higher revenues for retailers also sustaining overall market sentiment and shoring up US equities