News & Analysis
News & Analysis

Eyes are on the BOE tonight for the rate decision

4 August 2016 By GO Markets


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Eye’s are on the BOE tonight for the rate decision.  As with the previous meeting the market is expecting a cut from 0.50% to 0.25%. Expectations were not met in the last meeting with the BOE holding rates. Based off that I’m not leaning towards any sure thing for tonight’s meeting.

Overnight Oil snapped out of this weeks down trend with a 3% counter rally. I’m looking for this to extend further. Gold and Silver lost ground overnight with Silver continuing to lose further ground today. US Markets bounced back, the US30 put in a second failed low this could be a trend continuation forming. I ‘m looking for more upside tonight to confirm this current pattern. The EURUSD had a strong move down over night losing 72 pips. It’s sitting on a previous high which could come in as short term support.

Today’s Asian session has been mixed for the USD, the AUD has recovered retesting its .7630 high. The JPY has mainly been weaker but has seen some buyers. It’s currently weaker at this point in the session with pairs making small increases consolidating yesterday’s gains. The JPN225 has reversed a low put in earlier and is now posting a strong looking session. I’m seeing 16020 as short term support. It’s showing signs this could be a developing reversal point. The GBP has been in quiet trade as the market awaits tonight’s raft of news. Expect a sharp move up on the GBP if the BOE holds rates for the second time. Due to the upcoming multiple news events, I’m steering clear of the GBP tonight.

EURUSD –  Two levels shown are the points I’m watching currently. We did have a strong move down overnight but 1.1134 is presenting as the first point of support. 1.10860 is the next level down. I still see the EURUSD in an uptrend at the moment.  Until counter evidence develops I’m looking for support to confirm and a continuation to possibly follow.

EURUSD candlestick chart

US30 – Buy idea filled today. The first sign here for me was the failed low on the 2nd of AUG. While last night’s recovery can be seen as an inside bar, it also shows a failed low off 18295. This point now has three tests and three fails at going lower. Divergence has also set up around this support area. These are all good signs we could see a continuation higher to possibly test 18460 if buyer commitment stays strong. A new move lower that breaks 18245 cancels this buy idea out. There’s one issue present that didn’t make this setup perfect for me. It’s the fact that price is still in a short-term downtrend. Seeing a break is normally best for trend continuation setups, keep that in mind when looking at future trend continuation trades.
US30 candlestick chart
XAGUSD – This is a follow up from yesterday’s silver section. Price tried to break 20.64 again overnight. This attempt failed and sellers took control of the session. Today my sell idea was filled, price has broken its current trend in today’s Asian session. This is the hard part of being in a sell position in an established uptrend. We don’t know if this is going to be a deep or short reaction. As shown I have sharpened my stop loss and closed part of the position to limit any losses in case we have a snap back to test the new breakout. 20.00 has shown support and has seen buyer interest today. I have a target of 19.96 down to 19.83. Time will tell if that’s reached or not. Managing potential damage is important once your position is moving in the right direction. If prices get down to 19.37 I would be looking for buyers to reconfirm that support area.
XAGUSD candlestick chart

Good Trading.
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Written by Joseph Jeffriess, GO Markets Market Strategist

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