EUR/JPY Forecast: Starting (May 2015) with potential rally to resistance

EURJPY 5th May, 2015

EUR/JPY Analysis

EUR/JPY had a rally to 135.40 (exactly as I expected in this post). EUR/JPY found 135.40 resistance hard to break and it fell hard again to test 133.10 level. Personally, I think that sideline moves will rule this pair for the next 48 hours from 133-135 and with the NFP on friday, we can see this pair giving a test to 137.30 resistance level. The downtrend clouds are still there so, watch out your steps as always.

The EUR/JPY has the following major resistance and support levels:

  • RESISTANCE: 137.30
  • SUPPORT: 126.03

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (50 pips stop loss applied):

  • Sell: at 137.10 – Take profit 136.10 (100 pips profits)
  • Buy: at 132.50 – Take Profit 133.50 (100 pips profits)
  • Buy: at 134 – Take Profit 135 (100 pips profits)
  • Buy: at 133.5 – Take Profit 135 (150 pips profits)

This review is valid during trading week: 4th-8th May, 2015

GBP/USD Forecast: Strong uptrend will last or .. ?

GBPUSD 29th April, 2015

GBP/USD Analysis

GBP/USD (currently at: 1.5420) broke the strong resistance 1.5429 easily and had a rally during the last week as I’ve previously mentioned in my previous post.

The BOE is still watching the economic data of UK with no serious action. On the other hand, the dollar is suffering from uncertainty and mixed expectations about the timing of the first rate hike. Sterling pound will stay for a while within this range and the way to 1.5805 (the next major resistance) should not be that easy.

My technical overview adds extra space for the current uptrend rally and I can see that there is higher chances that this uptrend will last for a while till we touch 1.5805. The move will be slower a little bit than what happened the last 48 hours. I recommend buying this pair with caution this time because mixed moves might occur sharply. Buy GBP/USD and watch these resistance levels: 1.5699 and 1.5805 as checkpoints for this rally. Our close support levels are: 1.5000 and 1.4565

The GBP/USD has the following major resistance and support levels:

  • RESISTANCE: 1.5805
  • SUPPORT: 1.4334

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (30 pips stop-loss applied):

  • Sell: at 1.5680 – Take profit 1.5600 (80 pips profits)
  • Sell: at 1.5790 – Take profit 1.5690 (100 pips profits)
  • Buy: at 1.5350 – Take profit 1.5500 (150 pips profits)
  • Buy: at 1.5250 – Take profit 1.5350 (100 pips profits)
  • Buy: at 1.5010 – Take profit 1.5090 (80 pips profits)

This review is valid during trading week: 29th-30th April – 1st of May, 2015

EUR/USD Forecast: Deceive moves

EURUSD 29th April, 2015

EUR/USD Analysis

EUR/USD is testing the resistance range 1.1050 right now after having a stable support around 1.0655. The limited uptrend is trying to deceive us by moving up like it is taking off however, I can not see any reason to buy Euro for long term and definitely it is not reversing the fundamental downtrend so, I’ll respect the short term uptrend by buying quickly and lock the profits quickly too. I am expecting EUR/USD to keep on sideline moves in the next week with attempt to test higher resistances around 1.1250 and 1.1450, I am interested to hunt the best short position during the next few weeks.

As I mentioned before EUR/USD still has a minor support at 1.0459 and it tested it once, I am still expecting another test to this support level. Greece’s smoke is lowered by a hope to find a way to end this dilemma.

Today, Fed meeting is not promising with any surprises, I am expecting the same language from the fed and a stress on a near rate hike (suggested June). They want to keep the market on this phase to the maximum time.

The EUR/USD has the following major resistance and support levels:

  • RESISTANCE: 1.1250
  • SUPPORT: 1.0459

Breaking these levels in any direction will take us higher or lower.

My Daily SELL advice (30 pips stop-loss applied):

  • Sell at: 1.1110 – Take Profit 1.1000 (90 pips profits)
  • Sell at: 1.1230 – Take Profit 1.1130 (100 pips profits)
  • Buy at: 1.0990 – Take Profit 1.1090 (100 pips profits)

This signal is valid during trading week: 29th-30th April and 1st May, 2015

Silver Forecast: Downtrend suspended for a while?

Silver 27th April, 2015

Silver bounced from 15.58 (higher than my previous expectation) to 16.40 in one shot.

The bullish momentum seems to be stronger now and it seems that we are ready to test this range (17.40-17.90). However, I can not confirm that this is the end of the downtrend. I am still waiting for cheaper silver to buy for long term.

Sell silver in any place around 17.80 and hold on till it hits 15 level again, I am expecting this to be slowly move as the previous one!

The Silver (XAG/USD) has the following major resistance and support levels:

  • RESISTANCE: 18.60
  • SUPPORT: 15

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (30 pips stop loss applied):

  • Sell: at 17.80 – Take profit 17 (80 pips profits)
  • Sell: at 17.50 – Take profit 17 (50 pips profits)
  • Sell: at 17.20 – Take profit 16.50 (70 pips profits)

This review is valid during trading week: 27th-30th April, 2015

Interest rate effect

How interest rates affect: Individuals, Businesses & the Stock Market?

Interest Rate Effect

Once Janet Yellen ended the QE program of the US dollar, Interest rate hike as a topic started to be the most popular topic on the investors tables. Interest rate effect is a dilemma for everyone because it affects every single part in the economy directly so, reactions are interchangeable, mixed and must be well-understood to know where is every local currency is moving. Basically, Interest rate is the cost someone pays for the use of someone else’s money

Away from complicated details, I will simplify the effect of this important term through the following explanation

Inflation Definition and Impact

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money.

Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.

Interest rate adjustment is one of the powerful tools which is used to control the inflation/deflation by the central banks

Interest Rate Effect on Individuals

Individuals are divided into two major types:

  • – Money Owner (individual who has extra money amount to invest or to save)
    • Increase in interest rate for this type of individuals mean the followings:
      • – Saving money (especially in banks) becomes much favorable for the majority of investors. Banks saving accounts, treasury bills and bonds offer competitive returns with lower risk if compared to stock market returns. Everyone knows that stock market is a high risk market.
      • – Lower spending desire because, money-saving is much tempting
  • – Money Needy (individual who has no/low money fund to get his/her needs and demands)
    • Increase in interest rate for this type of individuals mean the followings:
      • – Banks loans, credit cards, credit allowances and mortgage are much expensive
      • – Lower spending desire because, cost of borrowing is higher and less income available

Interest Rate Effect on Businesses

Businesses have different types too however, the effect of interest rate can be explained as follows:

  • – Businesses have 3 majors areas that are directly affected with interest rate increment
    • – Lower demand on their services and products driven by lower spending behavior from individuals
    • – Lower demand on the business services and products means lower profits for the business and lower returns on their stocks too. Then, stock price falls affected by the lower returns.
    • – Higher interest rate means higher borrowing costs for the businesses. Usually businesses borrow to expand and develop their sizes and operations. Higher interest rate will eliminate the business from expansion and growth.

Interest Rate Effect on the Stock Market

Stock market is directly affected with interest rate as follows:

  • – Stock market is the interaction area between the investors and the businesses. Higher interest rate will affect the businesses as I’ve mentioned above and this will push the stock prices lower. When stock prices are lower, this means that the whole market declines and its index(es) fall. Investors want appreciation for their equities overtime and falling stock prices and indexes will threaten their equities appreciation and lower their desires to invest in the stock market.

Question: Higher interest rate is a stock market killer?

The answer is: BIG FAT NO!

However, Interest rate is a correction flag for any stock market and it clearly means that a major correction might be coming in the near future, keep your eyes opened!.

What is important to know is that: Quantitative easing and low interest rate encourage investing in stock market and usually, the stock market indexes make new highs during the low interest rate periods and QE programs implemented by the governments. But, This does not mean that with a higher interest rate, you must sell your stocks.

There are other important factors affect the stock market so, do not panic. Corrections and consolidations usually happen every year.

What’s important is to watch the economic data releases to see how the economy of a specific country performs and based on this, you can sell and buy stocks.

Remember to keep sharing the useful knowledge