Trading Strategy & Analysis

1 - 7 October 2018

Copyright © 2017 Valesco Trading Group. All rights reserved

FOCUS POINTS

Summary

Key News

Key stats today include:

● EUR Monday and Thursday - ECB President Speaks● USD Wednesday - FOMC Rate Decision and Statement● USD Thursday - GDP, Fed Chair Powell Speaks● GBP Thursday - BoE Gov Carney Speaks● GBP Friday - GDP (Q2)● EUR Friday - CPI (Sep)

Technicals

This week we are focusing on the following pairs:

● AUDUSD● GBPJPY

Correlation

Today we focused on the correlation between:

● AUDUSD & USDOLLAR

Market Brief

USD - The key stats this week include September’s ISM private sector PMI numbers due out on Monday and Wednesday, the September ADP nonfarm employment change figures on Wednesday, August factory orders on Thursday and the all-important September labour market figures on Friday, released alongside the NFP and wage growth numbers are August trade figures. We will expect Friday’s data to be the main data catalyst this week, with the ISM private sector PMIs to provide direction through the first half of the week.

AUD - Stats include September manufacturing numbers on Monday, August building approvals on Wednesday, trade figures on Thursday and retail sales numbers on Friday. Market participants will be focusing on the trade and retail sales figures. Outside the stats, China private sector PMI numbers released this morning and the RBA’s rate statement will also be in focus.

GBP - September’s manufacturing PMI on Monday, construction PMI on Tuesday and Services PMI on Wednesday will be the key drivers on the data front, September house price figures due out on Tuesday and Friday unlikely to influence, while Brexit chatter and the Tories may well overshadow the stats through the week.

EUR - It’s also a busy week, with finalized September Eurozone and member state private sector PMI numbers due out on Monday and Wednesday. Out of German August retail sales figures on Monday and factory orders on Friday will also be of influence, while we would expect Spanish unemployment numbers on Tuesday and Eurozone retail sales figures on Wednesday to have a relatively muted impact.

This Week News Catalysts

ECONOMIC CALENDAR

Previous Week Breakdown

Price has been trending down since the beginning of 2018 and has now corrected to the top of a weekly descending channel. The longer term bias is bearish as long as price remains within the monthly descending channel. Previous week candle closed as a doji at resistance at 82.130

AUDJPY Weekly Time-frame

AUDJPY

Confluences

1. Monthly descending channel2. Weekly resistance zone3. Weekly descending channel4. Historical Support/Resistance level5. Weekly support zone

Forecast

Price is at a key historical price level of 82.00 which means we are at a turning point in price. Our bias is bullish for this pair but this can quickly change if we get a strong close below the key level.

Alternative scenario

We will be watching the daily and 4hr time frame to decide on direction this week.

Chart Link

Previous Week Breakdown

Price has been steadily rising and consolidating in the uptrend daily channel. The recent impulsive move has confirmed more strength and liquidity from the bulls. The previous week candle closed as a marabuzo indicating we will now head towards the channel resistance.

USDJPY Weekly Time-frame

USDJPY

Confluences

1. Weekly downtrend channel2. Daily uptrend channel3. Marabuzo breaching daily medium4. Daily channel resistance targets

Forecast

The bulls have taken control again now that the week closed as a marabuzo candlestick above the daily medium. We are expecting price to continue this momentum up towards the daily channel resistance. For our entry criteria we will scale in for buy set ups once we have a correction on the smaller time frames.

Alternative scenario

A close back below the daily medium will invalidate this setup.

Chart Link

Previous Week Breakdown

This pair is in a clear long term downtrend and has recently made a short term correction spiking above resistance and forming multiple shooting stars which indicates short orders triggered.

GBPUSD Weekly Time-frame

GBPUSD

Confluences

1. Multiple shooting stars2. Support broken3. Previous support turnt resistance retest4. New low targets

Forecast

The support break following brexit talks has now become resistance. With the multiple shooting stars at the 1.30500 resistance we are anticipating price to reject this level and dip towards new lows at the next weekly 1.26000 level.

Alternative scenario

A close above the wicks of the shooting stars will invalidate this setup.

Chart Link

Breakdown & Forecast

The US Dollar shown as the red line graph is negatively correlated with GBPUSD. The current double bottom and breach of the counter trendline will cause Dollar to rally and push GBPUSD south towards the counter trendline and further to new lows.

CORRELATION

Chart Link

GBPUSD & DXY Weekly Time-frame

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