Concerns about the US inflation

Yesterday, we saw the FOMC meeting minutes and they delivered what the market expected. They held the rates unchanged and they confirmed that the process of balance sheet normalization will continue. The Fed highlighted the performance of the economy and the low unemployment. It’s true that the US economy is strong and the last GDP reading was better than expected. However, everything is not as the Fed would like it, and FOMC members expressed their concern about the inflation outlook. Let’s see how the markets reacted:

EURUSD December 2017 future

     Source: TradingView, EURUSD Dec17 future, 1 Hour

The Euro has been rising since the beginning of November. If we add to this trend the inflation concerns the result is a weaker dollar. We didn´t see a significant movement, the candle highlighted in yellow shows the upside movement after the FOMC minutes, as you can see the biggest movement was earlier in the morning.

10 Year T-Note December future

     Source: TradingView, 10 Year T-Note  Dec17 future, daily

Everytime that there is a negative outlook the bond futures raise, and this is what the 10Y T Note future did yesterday. I’ve been following for a while this contract and there is a clear triangle that if broken, I believe that it would go up to the resistance at 125.75.

2 Year T-Note December future

    Source: TradingView, 2 Year T-Note  Dec17 future, daily

In contrast with the 10 Year T-Note, the 2 Year T-Note hasn’t swung. The bearish trend is remarkable.

10 Year T-Note - 2 Year T-Note December spread

     Source: TradingView, 10 Year T-Note-2 Year T-Note Dec17 spread, daily

I’ve chosen to spread 1 contract of the 10 Year T-Note future versus 3 contracts of the 2 Year T-Notes. In my opinion is the best spread you can make with these two futures.

Yield between the 10 Year T-Note and the 2 Year T-Note

    Yield between the 10 Year T-Note and the 2 Year T-Note, source: St. Louis Fed

Historically this yield spread is an indicator or the recessions. We can see that it has narrowed during the last 4 years. This indicates the flattening of the interest rate curve.One of the reasons is the improvement of the US economy is pushing the short-term yields higher. The second reason is there is a strong buying pressure in the long maturities that doesn´t allow the yields to go up.

Conclusion

The Federal Open Market Committee statement doesn´t  significantly affect the markets if it delivers what the analysts expected. If it had been hawkish on the inflation outlook, we would have seen a strong bond selloff and buying pressure in the USD. The macro indicators are important but in trading is better to focus on the difference between the figure and the value expected by the market participants. I would use the yield spread introduced in this post for a medium or long-term investment. I will publish a strategy based on the yield spread between the US 10 year bond and the US 2 year bond in the future.

Have a good trading!!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverage involved

Technical Analysis, brief introduction

What is it?

It’s an analysis methodology for predicting the direction of the asset prices. It’s based on the study of the past market data focusing only prices and volume. In addition, there are several technicals indicators that were created by mathematicians and famous investors to avoid the subjectivity of reading charts.

What are the principles behind it?

There are three principles:

• Market action discounts everything
• Price move in trends
• History tends to repeat itself

The first one says that everything is discounted by the market, this is why its followers focus only on prices and volumes. It’s supposed that even a negative external factor will be priced because as soon as someone notices the sellers will come to the market.

Price move in trends, if the prices of the asset are rising it's called bullish trend. If the prices are falling is considered as a bearish trend. This depends on the time frame you check because maybe it's a bearish trend in the 1Hour charts while it's bullish on the daily chart.

The third principle is related to some patterns or price formations. It’s believed that if you see these patterns and according to the past you can guess where the prices will go.

The most famous patterns

Double top, it’s based on two highs in which the price couldn´t go higher. It’s supposed that if the price goes down and breaks the low between the two highs, the price can go down the same distance between one of the hights and the low.

     Source: TradingView, Failed double top in Gold Futures, daily

This example shows a failed double top. In this specific case was due to the growing geopolitical uncertainty that drove the gold prices higher.

Doble bottom, it´s similar to the double top but indicates the initiation of a bullish trend. 

    Source: TradingView, Eurodollar spread Mar19-Mar20, daily

This example is good and shows that after breaking the resistance the Eurodollar spread traded higher. 

Head and shoulders. It's a reversal pattern which can be formed by three peaks  (if the previous trend was bullish) or three troughs (in case of a bearish trend). The range is bigger in the formation in the middle. It shows weakness and can show the final of the trend.

     Source: TradingView, WTI future, daily

This is not the best example, but you can see the formation and the reaction after it broke the neck of this pattern.

Triangles, it´s one of the best figures to trade because usually there is a big move after the triangle is broken.

     Source: TradingView, WTI future, daily

There are more patterns such as flags, channels, diamonds that I’m not going to review in this post.

Technical indicators to follow

The most famous indicators are all classes of the moving average (simple, weighted, exponential) and the crosses between this averages and the price of the asset. The MACD, that basically is a cross between two moving averages with different time frames. The RSI indicates how strong is the movement. The Bollinger Bands were created in the 80s and they create a channel around the price that is adjusted by the volatility. Fibonacci Retracements are quite popular in the trading community because it´s believed that the prices rebound in certain levels.

My opinion

I like it as a quick way to see what’s going on in the different markets. I wouldn’t use in day trading without the support of the market profile. In addition, it’s difficult to use in day trading because unexpected news can affect the asset you are trading. I consider the Technical Analysis as an interesting tool for the medium to long-term (always supported with some fundamentals and risk management)

Conclusion

Technical Analysis is a great way to approach the markets and follow the movements. If you like, there are great books about this topic. In my opinion is not enough for trading, and I would recommend complementing this analysis with another one (depending about the asset you can use fundamental analysis, study the financial ratios, the sector, the economy…)  This was only a brief introduction to Technical Analysis. I will review the technical indicators in the future showing how profitable are in a backtest. I hope you like it. Thanks.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverage involved

#trading #technicalanalysis  #charting #indicators #introduction

Why is the European Central Bank dovish? Interest Rate strategies

The European Central Bank is very conservative at the time of taking decisions on economic policy. And this fact has been confirmed again today. As expected, the ECB will cut asset purchases to 30 billion euros from 60 billion euros. This will start in January and it will last for nine months to September. One of the reasons why the ECB remained cautious is the weak inflation.

What did the EURUSD?

After the decision, the Euro plunged. 

     Source: TradingView, EURUSD Dec17 Future, 30 min

The market didn’t expect a hawkish decision and it was reflected in the movement of the euro. I started the day falling. You can see how the volumes got bigger around the interest rate decision and the ECB conference. Draghi was optimistic about the eurozone growth but he signaled that is concern about the inflation. Technically, the EURUSD futures has broken 2 important levels (1.1793 and 1.1729)

What is the real reason behind this decision? My opinion

Economics is a social science and predicting the individuals' behaviour is really difficult. Let me make an example to show my thoughts about this dovish decision.

Let’s imagine an ideal world in which the most important economies keep performing like the last couple of years, China’s GDP growth meets the 7%, the commodities keep rising, the Federal Reserve raises rates and makes substantial cuts to the asset purchases and there isn´t any economic shock. In this context, the US dollar will rise vs the euro. The conservative ECB policy will support a weak euro, and with the conditions mentioned, it will help Europe to keep growing and the inflation will peak.

On the other hand, applying the economic policy in Europe is difficult due to the differences between the strong economies and the peripheric economies. So whatever is applied needs to be good in general terms without affecting in a negative way to certain economies.

As a theory, it’s valid but it’s very difficult that all of these will happen.

What can we see in the Euribor futures?

Euribor futures are the interest rate futures in Europe. You will see in the following charts that an improvement of the European economy is not discounted.

Euribor Jun18 future

     Source: Barchart, Euribor Jun18

As you can see it fell at the beginning of this year, showing an improvement of the economy. At this time the inflation was growing and it hit 2% in March. The euro was weak in this period, the EURUSD was trading around 1.06. Since then, the Euribor jun18 has been rising due to the low inflation, the Brexit, the lack of change in the economic policy. Considering the uptrend, the market participants don´t expect changes in the economic policy neither a big improvement of the European economy.

Euribor spreads

Euribor March 18 – June 18

    Source: Barchart, Euribor Mar18-Jun18

Euribor March 18 – December  18

     Source: Barchart, Euribor Mar18-Dec18

These spreads show the same as the outright explained before. A falling spread means that the difference between the two futures is decreasing. Talking about the interest rate curve, we can see that the yield curve is flattening. The main difference between both spreads is the volatility. Obviously, the 9-month spread moves more than the 3-month spread. They are in lows of the year, I would consider buying if I expected an economic improvement. At the moment, I wouldn’t buy because I don’t  see any sign of reversal.

Another strategy to consider is a Euribor butterfly. 

     Source: Barchart, Euribor butterfly Jun18-Sep18-Dec18

The butterfly is in a support and it´s trading at the lows of the year. I think it´s a better choice than the spreads at the moment.

Euribor spread June 18 – June 19

     Source: Barchart, Euribor Jun18-Jun19

The main difference with the other spreads is that the overall trend is bullish. This means that the traders expect that the economy and the inflation will be better in 2019 than 2018. The main problem is that the triangle is one of the most dangerous figures in technical analysis and I wouldn´t trade it until it breaks. If you like interest rate futures you should add to your watchlist. There is a strong support at 0.1550.

Conclusion

First of all, I hope you enjoy this article. The interest rates market is my favourite. You should consider the macroeconomic indicators and follow the central bank meetings. It’s a fundamental market and less volatile than other markets. There are strategies such as spreads and butterflies that are listed at the exchanges so you won’t have execution problems in the different legs. Thanks.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverage involved

#Trading #ECB #Euribor #Euro #EURUSD #fundamentals #InterestRates #Macroeconomics #opinion #Spread #trading #TechnicalAnalysis  #butterfly #creatingValue

USDCAD, fundamentals and technicals

Introduction

I’m going to compare the USD with the Canadian Dollar. These two economies are performing well. Each one has its own problems. Both central banks, Fed and BoC, are rising interest rates. 

Fundamentals

Let’s start with the fundamentals.  As you know I like to have a big picture where I can highlight the risks.

United States

Its economy is showing strength. The GDP has been growing since June 16. It´s not as high as someone would like but considering that it’s a developed economy is very good. The US CPI is surging as well and this with the strong labor market can lead to more interest rate hikes in the near future. The last unemployment rate reading was 4.2%. The ISM Manufacturing PMI is really high. Some fund managers and traders would prefer to sell some assets considering the high level in the ISM PMI, and statistically speaking I agree (always with a good risk management and considering the size of their portfolios).

    Source: Investing, ISM Manufacturing PMI historical

The Federal Reserve is ready to hike interest rates and stop the asset purchases to support the economy. The election of a new FED president can help to do it quicker. On other hand, if the tax proposal is successful, the stock market could continue the upside trend.

Canada

It’s been a busy year for the members of the Bank of Canada. The housing bubble and the high household debt made it even more difficult. All of these facts with the good macroeconomic data obliged the central bank to raise the overnight rate to 0.75% from 0.50%. This was very significant because it was the first hike after the financial crisis. This helped the Canadian Dollar. The BoC raised interest rates in early September for the second time this year. Canada’s economy is dependent on the heavily indebted household sector to support economic growth. According to some BoC employees, we can see more hikes in 2017, but I have my doubts about it. I understand that they need to hike interest rates to cold the housing market but the main problem is how to do it without affecting the economic growth. The property sales have decreased but the valuations are still high. It’s expected that the Canadian overnight rate will be around 1.75% by the end of 2018.

USDCAD

USDCAD year to date

     Source: TradingView, USDCAD FXCM CFD, daily

The most part of the year has been falling. It was bouncing from 1.3023 and 1.35169 in the first four months.  It broke the resistance at 1.3517, and it set up the highs of the year, but this movement finished around 1.3800. The BoC raised the overnight rate in July, it was the first time in seven years, this was a boost for the CAD. It fell until September, the last downside move was due to the second interest rate hike of the year in Canada. It´s been a tough year for the dollar. One of the reasons is that there is a high probability that the Federal Reserve will hike interest rates before the final the year.

The most important levels, in my opinion, are the following:

Resistance 4	1.3516
Resistance 3	1.3321
Resistance 2	1.3023
Resistance 1	1.2764
Support 1	1.2437
Support 2	1.2110

Relevant levels, own elaboration

I think that the USD will keep raising and test the resistance 1 (1.2764)

USDCAD daily from the middle of July

    Source: TradingView, USDCAD FXCM CFD, daily

Here, we can see how the dollar lost its strength in the middle of August. The probability of an interest rate hike in Canada increased. As a result of the speculation of a rate hike and the performance of the economy, the Bank of Canada rose the 0.25% the interest rate at the beginning of September. The CAD strength was temporarily boosted but it didn’t last for long. Since then, the USD has been rising. The reasons are: the high probability of another rate hike in the United States before 2018, the possibility of electing a hawkish Fed president and the tax proposal. As I said I think the USD will rise vs the CAD at least in the short term. It hasn’t crossed the support at 1.2437 and it´s above the 20 and 50 exponential moving average.

Conclusion

This is a good example of two economies in which their central banks are tightening for different reasons. We have seen one of the longest bullish markets, because it had the support from the central banks around the world. I think that the USD will be stronger than the CAD in the short to medium-term. I hope you like the article. 

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverage involved

Fed Funds futures, different trading strategies

Today I´m going to focus on the trading piece. I will explain the Fed Funds, the futures characteristics, the different trading strategies that you can use. If you are experienced in trading, you can jump to the third section.

What is the Fed Funds Rate definition?

The interest rate at which a depository institution lends funds to another depository institution overnight. These funds are maintained at the Federal Reserve.  As soon as the federal fund rate rises, borrowing becomes more expensive. You can consider these rates as the base rate that determines the price and the structure of the interest rate curve.

What are the characteristics of the Fed funds futures?

The futures contract has a face value of $5000000 for one month. This means that every time that you take a 1 lot position, you need to deposit $400 (this is an example) margin but it’s like you were trading $5M. The price quotation is 100 minus the average daily fed funds overnight rate for the delivery month.

 Example: Fed Funds overnight rate = 3.25, so the Fed Fund futures will be 100– 3.25=96.75

They have a monthly expiration. The tick value depends on the month we are looking at. If it's the nearest expiring month contract the tick value is $10.4175 because it´s quoted in ¼ of the interest rate basis point. The rest of the contracts are quoted in ½ of the interest rate basis point, so the tick value is $20.83 There are 36 months listed at the exchange.

This is the link to the contract specifications on CME:

http://www.cmegroup.com/trading/interest-rates/stir/30-day-federal-fund_contract_specifications.html

You can check the margins as well. Please be aware that they can be different from the ones that your brokerage offers.

Why should we trade them?

They are stable and they don't have big daily changes, there is a lot of liquidity. You should be careful because there are important days in which they can move a lot If you don´t feel comfortable it´s better to be out of the market in FOMC meetings, and economic releases such as GDP, Unemployment rate, CPI, Industrial Production and Retail Sales.

How to trade the Fed Funds futures?

You can trade them based on economic fundamentals, technical analysis, and quantitative models. Let me start on economic fundamentals, if you see the macroeconomic fundamentals are improving, you can think that the Fed funds rate will rise so you need to sell the futures (remember the quotation, 100 minus the average daily fed funds overnight rate). If you think that the economy will deteriorate, you should buy the futures. Please do not follow these simple steps because you should consider more things before you decide to trade.

If you prefer to base your decision on technical analysis you know that you should look for trends, important levels (such as resistances and supports), the market profile provides these levels with the volume traded on them. 

    Source: TradingView, Fed Funds Dec17 Futures, daily

As you can see, it moves as the 3 month Eurodollar futures. It closed higher last week due to the FOMC meeting, lower than expected US CPI and US retail sales.

    Source: TradingView, Fed Funds Dec18 Futures, daily

This is the Dec18 contract. It’s more directional and the range is bigger than the Dec17. One of the differences between both contracts is that Dec 18 broke the support in 98.39 while the Dec 17 couldn´t even test the support made in July. This means that the traders expect more interest rate hikes in the following year.

Alternative strategies

If you don’t like to take excessive risk with the outrights you can do spreads or combination of spreads such as butterflies or condors. Let me summarize advantages and disadvantages.

Advantages:

• You take less risk
• You can hold the position more time
• The margin is lower than the outright
• The Fed funds spreads and butterflies are an Exchange traded contract, so you don´t need a specific functionality in your trading platform

Disadvantages:

• Your trading fees are bigger
• It moves slower than other instruments

Fed Funds Spread Dec17-Dec18 

    Source: TradingView, Fed Funds  Spread Dec17-Dec18, daily

This chart seems that is one of the above reverted, this is why it shows the differences between the Dec17 contract and the Dec18. If we compare all the charts above and this one, the last two months rounded in red, the Dec18 fell more than the Dec 17, which means that the spread is bigger between both contracts.

Fed Funds Butterfly, Dec17-Jun18-Dec18

    Source: TradingView, Fed Funds  Butterfly Dec17-Jun18-Dec18, daily

The butterfly is made up of three equidistant maturity outrights within the same product, so it contains 3 legs You need to buy the same amount of contracts in the first and third leg, and sell double of the contracts used in leg 1 in the second leg. The chart shows the following combination

                                                    +1 Dec 17 -2 Jun18 +1 Dec18

As you can see this product was in a range until September, and it’s been rising since then. This means that probably the traders expect an interest rate hike before Jun18.

I hope you enjoy this post. There are a lot of trading styles. You need to look for the one you feel comfortable with. 

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

Index analysis, DAX, FESX, S&P500 and Nasdaq

Today I´m going to talk about some of the biggest indexes around the world. The year to date performance is really good in all of them. We have seen an improvement in the economic data which always help the stock market and brings confidence to the consumers. If you understand the movement of the stock market, you can guess what’s going on around the world, sadly, you need the experience to do it. Let’s say that I consider the stock market as it was a leading indicator of the economy. Other examples of leading indicators are the bond yields, the interest rate yield curve, new housing starts and money supply. Apart from them, the rest of the economic indicators are based on the last month or the last period of time.

For example, when the market participants expect positive data and the economic indicator is negative, there is a big movement in the market.

Let´s see how the indexes are performing this year:

DAX

    Source: TradingView, Dax Index, daily

The Dax went up during the first six months of the year. After this period, and due to the big fines of the German automotive sector and the uncertainty of the German elections if fell to the 11900 level.  It’s been raising since September without stopping.  As you can see it tested two times the 200EMA but it couldn´t consolidate the downward movement.

   Source: TradingView, Dax Index, daily

This is the German index from July until now. As I said before it went down to the 3rd support (11941.5) where we can see a double support. The technical figure and the buying pressure helped the Dax to look for highs again. At the moment, it´s around 12900 and probably this movement will continue in the short term.

Eurostoxx (FESX)

    Source: TradingView, FESX Index, daily

You can think that it´s the same chart as the section before with different scale. The shape is the same. I really like the FESX because there is a lot of liquidity. This index represent the 50 biggest companies in Europe. It respects the technical levels. The main difference with the Dax is that it has exposure to different countries in Europe. The peripherical countries in Europe don´t perform as well as the most conservative ones like Germany, and this fact is reflected on the EuroStoxx index. This is why there are more retracements than in the Dax or S&P500. 

    Source: TradingView, FESX Index, daily

This a stable contract full of liquidity as I said before. The shades highlighted in yellow are really important because they show of the buyers took control of the situation and reversed the downward move.  When the 20EMA crossed the 50EMA, this contract accelerated the move.

S&P500

   Source: TradingView, SP500 Index, daily

What can I say about the S&P500? It’s the best chart I´ve ever seen for a technical analysis book. It respects the trendline I drew on the chart. The moving averages don’t cross between then and this shows the strength of this bullish trend. The broken triangle pattern led the S&P500 to 2480, where it retraced to the trendline and rocketed to the current levels.

    Source: TradingView, SP500 Index, daily

This shows the last 4 months. You can see how technically this contract trades.

Nasdaq

    Source: TradingView, Nasdaq Index, daily

This is almost the same case as the S&P500. I’ve noticed that the buying strength is decreasing. If you see the red lines drawn by me, each rise is not as strong as the previous one. It means that maybe it’s consolidating or maybe the sellers will be back testing the 5900 or even the 5775 levels.

The main reasons for these strong performances are: improvement in the economies, the consumer confidence the change in the economic policy from the central banks When will this move stop? I'm not sure, but this move is supported in part by the central bank stimulus policies. I think the transition of these supportive economic policies will be a challenge and it can affect all the financial markets.The approval of the US tax reform can boost the US markets in the short term. I hope that this post helps you.

Have a good trading! 

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

Brent and WTI Futures, ytd behaviour

The energy markets are moving a lot this year. One of the best examples is the Brent future. The price was steady during the first three months. After that, the volatility rose and we saw big swings. The increase in US oil drilling, the low demand and the failed effort by the OPEC were the main reasons that made the Brent and crude oil fell to the lows of the year.

We have seen the energy markets rising during the last five month. The main reason why the Brent and WTI are rising is the increasing demand while the OPEC is trying to extend the output cuts policy. Considering these reasons, I expect that the bullish trend will continue at least in the short term. 

Brent Dec17 futures

   Source: TradingView, Brent Dec 17 futures, daily

This is the chart that shows the Brent futures behaviour during 2017.

Let’s check the last 5 months:

    Source: TradingView, Brent Dec17 futures, daily

As you can see the Brent has been rising since the middle of Jun.  The area between 50.50 and 53.03 was really important to allow the Brent trade higher. I consider that 55.51 is a good support and I expect that it will go up and consolidate the move above the first resistance (57.21).

The most significant levels for me are:

Resistance 2	59.17
Resistance 1	57.21
Support 1	55.51
Support 2	53.03
Support 3	50.50

WTI Crude Oil Dec17 Futures

    Source: TradingView, WTI Crude Oil Dec17 futures, daily

This chart is similar to the one above with the Brent. Depending on the inventories today it can look for highs around 52.41. It shows strength as it´s above the moving averages represented in the chart

Resistance 1	52.41
Support 1	50.55
Support 2	48.85

This is only a brief analysis of the Brent and WTI crude oil futures. I think it’s good to have an idea. I can´t provide a forecast for the future because a lot of things are involved. The popularity of electric cars is increasing. The environmental policies become more strict every year. We have seen a lot of sanctions in the automotive sector this year. The OPEC is promoting an output cut policy that it´s driven the oil prices higher. I hope it helps.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

Gold analysis

Today I’m going to analyze the gold futures. Apart from investment purposes, the Gold is used to hedge a portfolio versus unexpected situations. This is based on the negative correlation between this commodity and the stock market, as I will show later. It’s recommended to have at least a small percentage of your portfolio invested in gold. Ray Dalio advised to buy gold and increase the weight of this commodity in your portfolio to 5-10%. Another Hedge Fund managers, such as George Soros and John Paulson, invest in gold through Exchange Traded Funds. Let me recap the ways to invest in this commodity:

1. Gold Bullion, buy physical gold
2. Gold ETFs (Exchange traded funds), the most traded ones are SPDR Gold Shares, iShares Comex Gold Trust and ETFS Gold Trust
3. Gold ETNs, exchange-traded notes, debt instruments that track an index. It´s like to make a deposit in a savings account in which the return is based on the performance of the underlying product is based on. This is like buying the Comex future contract, it’s riskier than the first two options, there is no principal protection and you can lose all of your money.
4. Gold miner stocks, this strategy is risky because you should consider the price of the gold and study the company in order to know if it’s worth to invest or not.

    Source: TradingView, Comparison between Comex Gold Futures and S&P 500 Index

Please bear in mind that with the quantitative easing programs, the correlation between gold and the stock market is not like in the past.

Comex Gold Futures

    Source: TradingView, Comex Gold Futures, Daily

As you can see the gold contracts have been raising since the beginning of the year. The max of the year was driven by the growing tensions with North Korea. It has retraced since the maximums of the year in September. The area between 1300 and 1200 is the most important and I think that it will be trading between this levels in the short term. I think we will see significant moves as soon as the central banks start to reduce the stimulus. These are the levels I consider important:

Resistance 2	1338.0
Resistance 1	1298.1
Support 1	1261.1
Support 2	1217.2

Gold offers protection, insurance against inflation, currency debasement, and global uncertainty. In my opinion, everyone should invest part of the portfolio in gold.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

Technical Analysis of EURUSD, GBPUSD, USDJPY

Let’s check the most important levels of the main currencies. We have seen a strong dollar during the last two weeks.

Euro

    Source: TradingView, EURUSD Dec 17 Futures

We can see that the dollar has been rising in the last sessions. The US macroeconomic data is strong and the FED officials confirmed that they will keep raising the interest rates and they will start to taper the buying of government bonds and other assets to support the economy. On the other hand, we have Europe, which has improved a lot since last year. The weakest leg is that European inflation is not increasing as the BCE would like. I can see a strong resistance around 1.17235. We can see the shade created on the Friday´s candle. If it fails to break this support, it will look for the first resistance at 1.18020. These are the levels I consider important:

Resistance 3	1.20965
Resistance 2	1.19550
Resistance 1	1.18020
Support 1	1.17235
Support 2	1.15460
Support 3	1.14435

GBP

    Source: TradingView, GBPUSD Dec 17 Futures

The British Pound has suffered a big fall since the double top in the middle of September. As I comment before it has been driven by the strong US macroeconomic figures. I´d like to add that Kevin Warsh popularity is soaring a he can become the next FED president. Considering him as a hawkish, his election will boost the USD. The UK is negotiating the Brexit with Europe, this can add uncertainty to the GBP. This contract has broken the 20 and 50 EMA and it’s near the 200 EMA. Maybe this is not relevant for trading but it´s one of the things that the people look at. These are the levels I’m looking:

Resistance 3	1.3615
Resistance 2	1.3283
Resistance 1	1.3153
Support 1	1.3066
Support 2	1.2952
Support 3	1.2848

JPY

   Source: TradingView, JPYUSD Dec 17 Futures

This is one of my favourite currency pairs. It moves really well according to fundamentals and technical levels. I expect that the USD will raise vs the JPY. It´s above the exponential moving averages and fundamentally is strong.  I would be surprised if the price goes back to  1.12 and then looks for the 1.1340s level.

I´ve quoted this contract in JPYUSD instead of USDJPY, this is why I’ve included two columns with prices:

Resistance 2	0.88160	1.1343
Resistance 1	0.88835	1.1257
Support 1	0.89905	1.1123
Support 2	0.90945	1.0996
Support 3	0.92225	1.0843

Have a good trading.

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved