Many traders thought Trump would cause markets to go risk-off and that Gold and JPY would be the big beneficiary of a Trump victory with both appreciating aggressively. That move was nearly pips so we will look for a bounce higher of approximately Learn more about Trading for Ta-Tas.
Other correlated assets to Gold are also in a strong bear market that would need to reverse before entering a long Gold trade in Naturally, a downtrend does not automatically equal a buying opportunity. Before entertaining a long view, I would like to see momentum and a repricing of markets upon the information that can lead to a good trade.
In the current environment with equities at all-time highs, Yen staying weak, and bond yields rallying, we will await the right time for gold to turn Gold course. Also, given the stirrings going on in the market with very extreme bearish sentiment and Haven assets being sold off, euphoria in risky assets alongside uncertainty in future global trade and growth potential for equity earnings, Gold may be setting up for an early rally in a similar way it rallied in H1 Leave your preconceived notions in After a 'wave' election in which one party swept control of both halves of Congress as well as the Presidency, Republicans are in the rare position of being able to end legislative gridlock in Washington, which should translate into fiscal stimulus for the US economy.
Regardless of ideology, whichever singular party has tended to be in control after a wave election has pursued fiscal easing strategies: It seems that a Trump administration would uphold its bargain of running up the structural deficit as typically is the case during singular party control of the government.
Deficit spending in the form of a massive infrastructure spending bill, combined with sweeping tax reform, should prove to be significantly inflationary. With the decision to buy 1-year debt, the ECB has signaled that it is basically altering policy to be able to keep the front-end of European yield curves pinned to the floor.
The same can be said about what's happening with the Japanese Yen. Interest rate differentials US-Japanese year yield spreads have moved sharply against the Yen, and appear poised to do so for the foreseeable future three- to six-months. The President-elect Trump reflation trade could very-well last into Q1 or Q2'17, albeit in fits and starts, before trouble emerges. A similar reference can be found in the Relative Strength Index RSI as the oscillator flashes a bullish trigger ahead of After cutting the official cash rate to a fresh record-low of 1.
Trying to forecast a year in advance, especially from a macro-economic point-of-view, can be difficult and perhaps even disastrous. Next year could be equally or, perhaps even more volatile than ; especially for Europe as we head towards election cycles in the key regions of France and Germany. Combine this with continued-crisis in the banking sector of Italy, and there are some very big question marks for Europe next year.
But what we do know is that the ECB is effectively tapering QE by reducing purchases after March; and the bank may not have enough ammunition to do another round. Also of interest is the fact that the Euro has had a difficult time heading lower as we approach the widely-watched parity figure on the U.
But not many currencies are as strong as the U. Dollar with the post-Election back-drop. Rather than looking to buy support on the Euro against the U. Dollar, which could foreseeably continue to strengthen for months ahead; long-Euro setups could be directed towards the Australian Dollar. Australia still has some room to cut rates, a new Central Bank head in Phillip Lowe, and the potential for more-pressure or weakness to emanate from China.
But what makes the long setup attractive is the risk-reward on the monthly chart. After setting a fresh-high in August of last year at 1. Stops on the position can be set to 1. Top-side targets could be sought at 1. Chart prepared by James Stanley. NZDUSD was not kind to big picture bears during most of , but there is reason to believe this could change in as momentum from the swoon in Q4 may be the beginning of a big leg lower.
The low created in August took Kiwi higher for longer than many expected. Many market participants, self-included, were looking for the downtrend which began in to resume at an earlier time. The upward grind in Kiwi from the low morphed into a defined channel, or bear-flag in this case. An official break of the formation will be considered with a strong closing weekly bar beneath the lower trend-line.
There are several targeted points of support along the way towards the big picture target. This is highly dependent on the time-frame which one operates on, but the idea on this end is to wait for a confirmed break and then look to retracements on the daily chart.
Once broken, the rising trend-line will go from being viewed as support to resistance. In addition, interest will be taken in any attempts to trade up to the downtrend line off the high. Gold looks poised to continue disappointing investors. The trend since the peak remains lower and should key levels on the downside fail to hold, gold could find itself continue winding lower in rapid fashion.
If this zone is broken, then watch for momentum to accelerate. Before the big region is tested, though, there is a trend-line of minor significance which could be enough to provide a bounce; it rises up from the low to around the mark. This is the line-in-the sand for gold bulls. Hold, then a sizable rally may develop, but if it breaks then things might get ugly.
It just may be what the bear market needs to end, a final flush after several years of carrying lower. Silver is obviously setting up similarly to gold, but with its own twist. Silver is currently heading back to a trend-line in place since , which will be a very important inflection point.
The level is currently around A break below there will clear a path to the late low at Similar levels to gold should it fall below the low are The long-term trend-line looks likely to be met soon, and whether it can hold there or at the low could hold significant long-term implications. Kiwi and precious metals are highly correlated, worth noting for positioning purposes. If positioning on the same side in NZD and precious metals, traders will want to be aware of this correlation for risk management purposes.
Keep in mind, this is a long-term correlation and the shorter the time-frame you look at the more noise there is in the correlation. This is why it is always important to keep an eye on emerging and ongoing technical trends.
Ultimately finding the trend will help make our decisions to buy and sell easier, but it can also help us know which pairs to target for the upcoming trading year. This value is currently acting as technical price support for the pair, which suggest that traders may look for a breakout below this point. Not only would this be a strong technical hint that the trend is again turning bearish, but it would also potentially classify the move to. As with any trade idea, there are always two sides to each story.
If prices do increase, traders may look for the pair to make a move on the previous high at. A move above this value would suggest that the pair is attempting to put in higher highs and may attempt a move on the multiyear high of.
The coming year looks likely to be an annus horribilis for the Euro. The Italian banking system remains in crisis and there are national elections in Germany, France, the Netherlands and perhaps Italy — all events that could spark Euro weakness. That, in turn, suggests a lack of interest-rate support for the Dollar and potential currency weakness, particularly if nervousness grows about the economic policies of US President-Elect Donald Trump.
By contrast, the Japanese Yen has plenty going for it. For a start, it is seen by some as a haven — along with gold and US Treasuries — to shelter in when markets are risk-averse, as they are likely to be in Moreover, recent Japanese economic indicators have been healthy and core inflation may have bottomed out. Any short covering would likely boost the Japanese currency. Then there are the elections: In all three, far-Right — and largely Euro-skeptic — politicians will mount serious challenges to the incumbents.
Both those areas would have to be breached before any slide back to the On the upside, any break above the Think back to the end of December, The US Federal Reserve had just raised interest rates for the first time in nearly a decade. The post-crisis Fed Funds rate of 0. And, the Fed expected to make four more increases through The markets never quite believed that.
Sure enough, they were right. Here we are at the end of The Fed has just raised rates again. It expects to be doing the same, thrice, through Futures contracts suggest only two hikes. Nobody has seen one since ; experts with experience will be a lot rarer. To take an obvious example we might go back to Then there was a generally weaker US Dollar. Wage and pricing controls boosted inflation, and it took some fighting.
Almost every hiking cycle since has involved more substantive increases than those currently envisaged by the Fed. But history suggests inflation can be harder to control than it seems. Might raising rates also fail as inflation brake? Then there is President-elect Trump. If his campaign rhetoric is to be believed, we can expect a deliberately inflationary fiscal policy.
In short, the backdrop could be more inflationary than it has been for years. In that case, it makes sense to be long of the US Dollar and to remain long. Gold would come in for even more severe punishment than that already meted out. US Treasury yields would also have to rise much further too. There are clear risks to this scenario. Trump may be less expansionary once in power. European Union worries may presage crisis. But if all these can be avoided, we may find that we get higher US rates than the Fed now expects.
The Yen is weak, which is exactly where the Bank of Japan wants it. And little looks to be changing that. On December 19, the BoJ kept monetary policy steady, leaving rates at minus 0. The BoJ did raise its assessment of the economy for the first time in a year, noting the economy is continuing its moderate pace of recovery. But the Bank still has low inflation expectations. Inflation remains near zero, almost four years after the BoJ began enormous monetary stimulus.
This suggests the Bank is unlikely to change its easing policy next year, which will keep the Yen weak. The UK economy, meanwhile, keeps showing remarkable resilience after the shock vote to leave the European Union in June. The Pound crashed to record lows in the aftermath of the referendum.
What are the key levels? There is huge support around the Resistance is at If these levels are breached, the next key zone is the range hit between June and August And the growing tide of discontent across Europe will do little to help the current situation as Europe faces four — Netherlands, Italy, France and Germany - potentially tricky general elections in On the USD side, today FOMC Member Powell is going to speak about nation's key interest rates and future monetary policy which is expected to be neutral in nature and Total Vehicle Sales report is expected to show growth to To sum up, USD has been quite positive with the economic reports and events recently which lead to further gains against GBP and any positive report on USD and negative report of GBP will enhance the bearish pressure in the market.
Now let us look at the technical view, the price has broken below the 1. Currently it is expected to show short term bullish move towards the dynamic level of 20 EMA before it pushes lower towards the support area. As the price remains below the dynamic level resistance and 1. InstaForex analytical reviews will make you fully aware of market trends!
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