Pound Surge on the Cards; Dollar Weakness to Dominate
GBPNZD Reversal Pattern | Double Bottom Formation
GBPNZD has been in a downtrend recently but it looks like a reversal is in the cards, with a double bottom pattern forming on its 4-hour forex chart. Price made a couple of failed attempts to break below the 1.9400 major psychological support and is testing the neckline resistance at the 1.9800 major psychological mark.
Today’s set of top-tier events from the UK might be a strong catalyst for an upside break, as the BOE minutes are up for release. This could show the 2-7 vote in favor of keeping rates on hold and the unanimous vote to keep asset purchases unchanged, although reassuring remarks are expected from BOE officials. Also up for release today is the UK jobs report, which is slated to show a 24.6K gain in hiring and a climb in the average earnings figure.
If GBPNZD confirms the reversal with a move past 1.9800, the pair could be in for as much as 500 pips in gains, which is the same height as the chart pattern. If the reports come in weaker than expected though, price could head south to the previous lows and create another bottom.
Earlier today, New Zealand reported a weak inflation reading, as the CPI showed a 0.2% quarterly decline. This could keep the Kiwi’s gains in check for the time being.
USDJPY Short-Term Correction | Pullback to 117.00
USDJPY has made a strong rally to the 119.00 major psychological level after completing a double bottom pattern on its short-term charts recently. Price has since pulled back after testing the resistance and may be due for a correction to the 117.00 major psychological support level
This potential support zone lines up with the neckline of the double bottom pattern and the 50% Fibonacci retracement level on the latest swing low and high. A bounce off this area could mean another test of the 119.00 handle and perhaps an extended move until the previous highs at 121.00.
On the other hand, a break below 117.00 would indicate that the longer-term downtrend is still intact and that USDJPY could retest the lows at the 116.00 level. Further declines below this could see a longer-term move until 110.00.
The BOJ interest rate statement is the main event risk for this pair today, although the Japanese central bank isn’t expected to make any changes for now. Dovish remarks could spur yen weakness, especially if the central bank officials remind markets that they are ready to implement more easing measures if necessary.
Downside Momentum on Tesla Shares | Potential Support Breakdown
The latest moving average crossover on the long-term time frame of Tesla shares indicates that further price declines are likely. On the daily chart, the 50 simple moving average just crossed below the longer-term 200 SMA, indicating that a downtrend is underway.
Tesla shares also appear to be breaking below the key support at the $200/share level and that a move below $190/share is likely. Risk aversion has been keeping US equity gains in check, as investors anticipate weaker revenues and lower investment once the Fed decides to tighten monetary policy sooner or later this year.
MACD is also moving down, although it appears to be settling around the oversold levels. RSI is on middle ground and indicating that there’s enough selling pressure left for another move lower.
So far, Tesla shares are down 15% this year and is being weighed down by the fall in oil prices, as alternative fuel vehicles seem to have lost demand in the past weeks. Sales in China appear to have dwindled and the company might report weaker earnings for the last quarter of 2014.