GBPUSD is forming a cycle top at 1.5128 level on 4-hour chart. Key support s now at the lower border of the rising price channel, now at 1.4910, a clear break below the channel support will confirm the cycle top and indicate that the uptrend from 1.4346 is complete, then the following downtrend could bring price back towards 1.4230 previous low. However, as long as the channel support holds, uptrend is expected to continue and one more rise to 1.5400 is still possible.
The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour. To read the entire conversation, access the 20-page report here.
Jim Puplava: Bob, I want to pick up from last September. Since then we’ve had several quarters of positive economic growth. Asset classes rose substantially, CPI turned positive, gold has hit a new record, oil is close to $80 a barrel. I guess a lot of our listeners would like to know, have these events altered your views on deflation?
Robert Prechter: No, because we forecasted these events, and we forecasted them at the bottom in March and April of 2009. On February 23 in the Elliott Wave Theorist, I said that we were almost at the bottom; that ideally the S&P should get down in the 600s before turning up; and that the Dow was going to rally from that low up to about 10,000. We put that target out a few days after the low. The main thing we said at the time was that it was going to be only a partial retracement, in other words a bear market rally. By the end of it, we said people would be bullish on the economy, there would be positive economic numbers, investors would think we have made the turn, the Fed would take credit for having saved the financial system, and there would be optimism across the board. All of this has happened. And going into April 2010, few people in the fundamentalist or technical camp were looking for a downturn.
The final thing I said was that Obama’s popularity would rise into that peak, and on that one I was wrong. His ratings couldn’t even bounce during that period, which I found very surprising. But both Obama and George Bush’s popularity trends followed the real value of stocks, not the inflated dollar price of the stock market, which I find interesting.
As far as inflation and deflation go, we had deflation during the down cycle in 2008. Commodities fell hard, the stock market fell hard and real estate fell hard. But the recovery that we were looking for in the first quarter of 2009 was expected to be a reflationary, and it was. You saw a decline in credit spreads. You saw a rise from the lows in commodity prices and stock prices. All of that is perfectly normal. These are just waves ebbing and flowing. But the long-term trend is still down, and as this cycle matures we are going to see more and more evidence of deflation.
Editor’s Note: The article you are reading is just one small excerpt from Elliott Wave International’s FREE report, 20 Questions With Deflationist Robert Prechter. The full 20-page report includes even more of Prechter’s insightful analysis on fiat currency, gold, the Fed, the Great Depression, financial bubbles, and government intervention. You’ll learn how to protect your money — and even profit — in today’s environment. Read ALL of Prechter’s candid answers for FREE now. Access the free 20-page report here.
This article, 20 Questions with Robert Prechter: Signs Point to Deflation,was syndicated by Elliott Wave International. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
By CountingPips.com
The US dollar has been gaining against most of the major currencies today in the forex markets following the worse than expected ADP employment report. The dollar has risen on the day versus the British pound sterling, Australian dollar, New Zealand dollar and the Canadian dollar while trading lower against the euro and the Swiss franc in the a.m. of the US 
trading session. The dollar currently trades close to unchanged against the Japanese yen.
US stock markets, after a major down day yesterday, have been a bit higher at time of writing with the Dow Jones industrial average up by about 15 points while the NASDAQ and S&P 500 have edged higher by about 10 points and 4 points, respectively. Oil has edged down very slightly while gold has increased by almost $3 dollars to trade at the $1244.60 level.
The ADP private employment report released today showed that companies added a total of 13,000 workers in the month of June. This follows a revised increase of 57,000 workers added in May and marks the fifth straight monthly increase for private employers. Despite the increase, market forecasters and economists were looking for a gain of approximately 60,000 jobs in the month of June.
Leading the way in job creation in June was the service sector which registered an increase of 30,000 workers while the goods-producing sector showed a decrease of 17,000 workers. Manufacturing jobs rose by 16,000 workers for the month but was offset by a decrease in the construction sector by 35,000 workers. The financial sector also shed 10,000 workers in June.
Large businesses added 3,000 workers in June while medium-size businesses added 11,000 workers. Small businesses or companies with less than 50 workers saw employment payrolls fall by 1,000 for the month.
The market-moving US nonfarm government payroll report is scheduled to be released on Friday at 12:30 GMT. Last month this report showed 431,000 workers were added to payrolls and the unemployment rate dipped to 9.7% although temporary census workers provided a huge boost to the data and private job creation was disappointing. Early forecasts are looking for the payrolls report to decline by 110,000 workers and the unemployment rate to increase back up to 9.8%.
Links from around the web today:
By Fast Brokers – The Cable is holding strong above its highly psychological 1.50 level despite strong rallies in the dollar and yen across the board. Negative news from China to Europe is taking its toll on the risk trade, sending the EUR/USD tumbling back below its psychological 1.22 level. China’s SCI dropped by nearly -5% after leading economic indicators disappointed investors. Meanwhile, Spain has requested the ECB to keep its emergency window open and Greek citizens are on the streets protesting austerity measures, denting confidence in the EU’s ability to handle its fiscal crisis. Altogether, investor confidence has taken a hit today, sending investors towards the risk trade. However, the Cable is holding strong as the Pound continues to benefit from optimism over last week’s MPC minutes and broad approval of parliament’s emergency budget. That being said, the Cable will be tested again this week as the UK releases nationwide HPI and final GDP. Should fundamental data disappoint and downward pressure remains on the risk trade the Cable could undergo a sharp sell-off and play catch-up. On the other hand, if UK fundamentals print positive this could help the Cable sustain its relative strength.
Technically speaking, the Cable faces technical barriers in the form of 6/28 and 5/4 highs. As for the downside, the Cable has intraday and 6/25 lows serving as technical cushions along with the highly psychological 1.50 area.
Present Price: 1.5059
Resistances: 1.5072, 1.5089, 1.5105, 1.5118, 1.5136, 1.5152
Supports: 1.5048, 1.5028, 1.5013, 1.4985, 1.4957, 1.4931
Psychological: 1.50, June highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
By Fast Brokers – The Aussie has been driven towards a test of its psychological .85 level after the SCI tumbled by nearly -5% on fears of a slowdown in China. China’s leading economic indicators cooled, showing the global economy’s engine of recovery is slowing down. A slowdown in China would be natural considering recent real-estate measures and appreciation in the Yuan. Since Australia’s impressive economic performance has been driven by Chinese demand for commodities, weakness in China tends to have a direct impact on the Aussie. After all, strong economic performance has yielded interest rate hikes at the RBA, hence the Aussie’s rally over the past year. Meanwhile, the risk trade as a whole has been hit by uncertainty in the EU. Spain has requested that the ECB keep its emergency window open, raising concern that Spain’s financial industry is not stable enough to stand on its own two feet. Moving further West, America’s CB consumer confidence figure came in much lower than anticipated, revealing more cracks in the U.S. recovery. America will also release its ADP employment figure tomorrow, meaning markets should remain active over the next 24 hours. Australia will also release new home sales and private sector credit data tomorrow. It will be interesting to see whether interest rate hikes at the RBA are slowing down Australia’s housing market. If so, the RBA would be less incline to raise again in July, a negative for the Aussie.
Technically speaking, the Aussie faces technical barriers in the form of 6/14 and 6/28 highs. Additionally, the highly psychological .90 level should serve as a solid barrier should it be tested. As for the downside, the Aussie is testing its highly psychological .85 level and has technical supports in the form of intraday and 6/11 lows.
Price: .8540
Resistances: .8549, .8565, 8587, .8613, .8633, .8671, .8690
Supports: .8523, .8500, .8461 .8431, .8396, .8363, .8350
Psychological: .90, .85
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
By Anton Eljwizat – The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, as I demonstrate below, the daily chart signals that a bullish reversal is imminent, and it might have the potential of reaching towards 90.00 levels in the coming days. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.
• The technical indicators used are the Slow Stochastic, and Relative Strength Index (RSI).
• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.
• Point 2: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.
• Point 3: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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By Adam Hewison – In today’s short video we look at Amazon, not the river, but the stock. Yesterday (6/28/10)
I spotted some market action that I wanted to bring to your attention. Unfortunately, I could
not release this video any sooner because of scheduling.
Amazon is in a whole lot of trouble in my opinion. Not only are our “Trade Triangles”
negative, but also an important technical element for Amazon was breached. This one element
is one of the simplest, yet most powerful technical tools you can use in trading.
I think you’ll enjoy this very simple approach as it has worked consistently over the years.
As always our videos are free to watch and there are no registration requirements.
All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub
Hello once again forex fans! Earlier today, I presented the recent price action of the Aussie-USD pair. Now, it’s the Kiwi’s turn to be on the spotlight. On this canvas is an update of the NZDUSD pair which I posted yesterday (kindly click here to see my blog yesterday). It turned out that the Kiwi lost sight of the “KitKat” that I was talking about yesterday when it broke down from a rectangle pattern. As I had mentioned, a break of the range;s support would likely send it back down towards the double bottom’s neckline – and that is exactly what transpired. Yesterday’s fire sale caused the Kiwi to be dropped like it’s hot with the NZDUSD sliding from 0.7065 to close at 0.6923. But unlike the AUDUSD in my other post today, the NZD’s double bottom lifeline has not yen been breached, giving it a higher chance of surviving the next couple days. With the stochastics in the oversold area, the pair could bounce back until it meets some resistance at the former support of the rectangle. A break of the 0.6900 psychological barrier, on the other hand, could send it down at the trough of the double bottom which is around 0.6575.
Yesterday’s breakdown was due to the downbeat results from China’s leading economic indicators. China recent leading barometers failed to impress with only a 0.3% gain after printing a surge of 1.7% during the previous month. This result sparked some fears that the present global growth may not be as robust. Remember that China is the number 2 largest economy in the world. With the US already slowing down, a cool down in China’s growth would further cap the world’s economic growth. Remember also that China sources its raw materials like commodities from countries like Australia and New Zealand. A drop, therefore, in China’s production would also limit their need for these input materials.
China’s manufacturing PMI is on deck tomorrow (July 1) at 1 am GMT. China’s manufacturing index is seen to have dipped slightly to 53.2 from 53.9. Such would add some confirmation that China’s economy has indeed cooled down a bit. If the index comes in as expected or worse, the higher yielding currencies like the NZD could suffer again. An upside surprise, on the one hand, could give the Kiwi some support. Let’s all hope for that.
More on LaidTrades.com …
Good day forex people! Here’s an update of the AUDUSD pair which I posted back on June 22 (click here to see my previous entry). Anyway, the Aussie bullish run was cut short last night due to a slide in the global equities markets. The Aussie skidded from 0.8709 to settle at 0.8463 against the greenback in yesterday’s bloodbath. Looking at the pair’s 4-hour canvas, you can see that it has retreated even past the neckline support of its previous double bottom after reaching a high of 0.8859. The only net that is keeping it afloat now, in my view, is the 0.8500 psychological support. If this number gives way, the Australian dollar could further return its gains over the USD and the pair could fall towards 0.8300 or 0.8100. However, given the oversold conditions, traders could view the AUD as ‘cheap’ which could lead them to push it back higher. If the fear in the market dissipates and buying resumes, the pair could at least reach for the resistance just below 0.8800.
The Aussie’s slide yesterday was due China’s leading economic indicators for April cooled down 0.3% after posting a jump of 1.7% during the month prior. This unexpected figure stirred some concerns that the present global growth may not be as strong. Remember that China, as of now, is the world’s second largest economy. With the ongoing fiscal crisis in Europe and the US’s mixed economic standing, a dip in China’s economy could further add a lot of bearish pressure on the markets.
China also has a big impact on Australia because the latter is one of the former’s major trading partners. A dip in China’s economy could mean lesser exports, hence, lesser growth for Australia. Tomorrow (July 1), China is set to publish its latest manufacturing PMI figure. The index is also seen to have cooled to 53.2 from 53.9. If such decline indeed happens, the Aussie could once again take a hit. On separate news, Australia will likewise release its May building approvals and retail sales. Building approvals are projected to hold steady after falling sharply by 14.8% the other month. Retail sales on the other hand, are expected to have gained again by 0.3% on top of the 0.6% rise in April. Upbeat figures from these two accounts could support the Aussie while bleak numbers could obviously push it lower.
More on LaidTrades.com …
Uncertainty flooded the markets yesterday, as concerns escalated over the global economic recovery following a disappointing release in U.S. consumer confidence, a downward revision to China’s leading indicator index and an unanticipated rise in the Japanese unemployment rate.
Adding to market jitters is the Thursday’s upcoming deadline for the European Banks to repay 442 billion Euros to the ECB. On Thursday, time runs out for the ECB financing program which investors fear could result in a potential liquidity shortfall of over 100 billion Euros in the financial system. Banks across the Euro Zone, Spain in particular, have been finding it extremely difficult to obtain liquid funding in the commercial markets, especially with inter-bank funding practically non-existent. Spanish banks have been petitioning the ECB to take action to ease the systemic fallout from the expiry of funding program.
EUR/USD
The Euro edged up against the Dollar this morning, after a report showed that Americans were becoming increasingly distressed over the outlook of for their jobs and income. The EUR/USD touched on $1.2223 as the market reacted to yesterday’s unexpected drop the in CB confidence index.
Yesterday, the Euro hit a 2-week low against the Dollar, as market concerns escalated over Thursday’s expiration of a European Central Bank refinancing program. The Euro touched on $1.2135, its lowest level since June 14th.
GBP/USD
The Pound has been a big winner this week, as it continues to appreciate against the Dollar. However waning risk appetite may affect the GBP/USD should the pair fall below the $1.50 level. UK Gilts have been sold off as a result of comments that the recent rise in inflation may force the Bank of England to tighten its monetary policy earlier than it had originally intended; however this remains a minority view on the MPC, and the generally sentiments are towards a medium-term drop in inflation. According to some analysts, this morning’s unexpected fall in the UK housing price index could indicate that the UK housing market is headed for another dip – an event that would weigh heavily on the British currency.
USD/CAD
The Canadian Dollar touched on its lowest level in three weeks as concerns escalated over the European debt crisis and signs of a global economic slowdown pushed traders out of higher- yielding assets such as stocks and commodities. The Loonie slipped 2.1% to C$1.0575 per U.S Dollar yesterday, its lowest level since June 8th. Later today, Stats Canada is set to release the nation’s GDP for the month of April. Canada’s GDP grew by 0.6% in March and by 6.1% in the 1st quarter of this year. This time around, the market expects the growth to continue with a 0.2% expansion.
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