Twitter Shares to Jump; AUDJPY Slump Ahead

08.02.2015

Twitter Shares to Jump; AUDJPY Slump Ahead

Forex

AUDJPY

AUDJPY Inverse Head and Shoulders | Short-Term Forex Reversal Formation

AUDJPY seems to be done with its recent downtrend, as an inverse head and shoulders pattern can be seen on its 1-hour forex time frame. Price is still testing the neckline resistance around the 92.00 major psychological level and may be due for an upside break soon.

However, stochastic is indicating that buying pressure is weakening since the technical indicator just reached the overbought zone and is turning lower. If the neckline holds as resistance, price could simply head back south and test its former lows near the 89.00 major psychological support.

An upside break, on the other hand, might lead to a move until the 95.00 major psychological resistance. After all, the inverse head and shoulders pattern is approximately 300 pips in height, which means that the resulting rally could be of the same size.

Earlier today, the RBA released its official monetary policy statement after cutting interest rates a few days back. As expected, the release showed that the central bank has been concerned about the impact of falling commodity prices on export revenues and growth. There are no economic reports lined up from Japan, indicating that any changes in risk sentiment for today might act as a catalyst for a breakout.

GBPUSD

GBPUSD Triple Bottom Breakout | Potential Resistance Pullback

GBPUSD finally broke out of its consolidation pattern on the 4-hour chart, as the pair headed beyond the neckline of the triple bottom formation. Price can climb as much as 200 pips from here, which is the same size as the chart pattern.

However, a pullback to the broken resistance level around the 1.5200 major psychological mark could still be possible. This depends on the outcome of the upcoming NFP release, which is slated to show a weaker gain in hiring of 236K compared to the previous 252K.

Stronger than expected US jobs data could renew demand for the US dollar and lead to a move back to 1.5200 or perhaps the bottom of the previous range at 1.5000. On the other hand, weak figures could lead to more gains for GBPUSD, possibly until 1.5500.

The BOE decided to keep monetary policy unchanged in their latest rate decision, indicating that the British central bank hasn’t joined the doves yet. Traders are still waiting for the minutes of their policy meeting to be released before deciding on a longer-term bias for the pair.

Stocks

Consolidation Breakout on Twitter Shares | Possible Climb to $54/Share

Twitter shares seem to have bottomed out, as price broke to the upside of its consolidation pattern on the daily time frame. While the shorter-term 50 SMA is still moving below the 200 simple moving average for now and indicating a downtrend, price has also broken above these dynamic inflection points recently.

This could be an early signal that buyers are piling on their long orders for the stock since risk appetite has returned to the financial markets. This has been spurred by several easing efforts from most major central banks, suggesting that demand could pickup in the near term.

The event risk for future price action is the upcoming NFP release, which could show whether the US economy is still doing well or not. The previous report showed a few weak spots, particularly in labor force participation and wage growth, and the January reading could indicate a weaker pace of hiring growth.

Strong data could keep US equities afloat and allow Twitter shares to extend its climb in the coming weeks, possibly until the next major resistance around $54/share. However, weak data could lead to another move back to the support around $36/share and a continuation of the selloff.