Keane Insights….Thursday’s Forex Trading Plan

 

The markets have found the spark of life this week and volatility only promises to pick up from here.  In early North American trading Wednesday, a few details emerged regarding Draghi's rumored ECB bond purchase plan.  The ECB would buy government bonds with up to three-years maturity rates and wouldn't claim the status of senior creditor.   Under the plan,  the central bank wouldn't place an upper limit on the amount of bonds it buys but would drain the equivalent amount from the markets to limit inflation risks.  The drawback to the plan at the moment is that the Bundesbank President Jens Weidman has opposed it.  Now the question remains if the plan will be announced at Draghi's press conference following the ECB rate decision Thursday or will the ECB wait to see if the German constitutional court rules in favor of the constitutionality of the European financial stability vehicles TEFS and PESM.  If the high court rules either mechanism is illegal Draghi's plan would suffer because the current plan stipulates that countries must first seek financing through these mechanism before the ECB.

Heading into Thursday trading all eyes will be on the EURUSD and the AUDUSD.  The AUDUSD will be in the spotlight once again in early trading due to the release of the AUD Employment Report.  Estimates are asking for an increase of 5K and the employment rate to settle at 5.3%.  The AUDUSD moved down to key support at 1.0175 in New York trading Wednesday and could rebound with a stronger number.  A disappointing report could send the pair lower towards 1.01.  The EURUSD will also be of interest  because the pair has settled in New York trading at the descending monthly trend line from last October's highs around 1.26.   The pair could fade from this level ahead of the ECB rate decision.  As always, remember to keep your trades KEANE and play it safe.

EURUSD RUMOR HAS IT

The EURUSD bounced higher in quick fashion Wednesday after rumored details regarding the ECB bond purchase program surfaced.  Now the question remains if the Draghi will move forward with the plan on Thursday or wait to for the German constitutional court ruling.  Heading into Thursday's trading the cross has found resistance once again at the descending trend line from last October's highs.  This line has steered the pair lower for almost an entire year.  The cross could pull back from this level ahead of the ECB press conference to test support at the 1.2560 level followed by 1.25.  If the ECB announced a new bond purchase program tomorrow or any sort of interest change the pair could easily break above the 1.26 level towards 1.2750.

Sup    1.2560           1.2480

Res    1.26               1.2750

Keane Plan...Watching price action at descending trend line at 1.26.  Will keenly watch ECB rate decision to clarify future direction.

GBPUSD WAITING ON THE BOE

Similiar to the EURUSD the GBPUSD pushed higher on Thursday following the EUR lead.  The pair moved predictable to the .618 Fib from last May's decline at 1.5904.  This level has capped price action so far on the crosses slow climb higher.  The BOE is widely expected to remain on the sidelines Thursday and leave interest rates and it's asset purchase program unchanged.  This will leave the pair open to the direction the EURO sets.  A break above 1.5904 exposes 1.5980 followed by 1.6050.  A break lower exposes the 50 fib once again at 1.5782.

Sup    1.5782

Pivot    1.5904

Res   1.5980             1.6050

Keane Plan...Watching the pivot at 1.5904 for hints of future price action.

AUDUSD FINDS SUPPORT

It is interesting to see that the AUDUSD did not follow the lead of the EURUSD and continued its slow grind lower today.  The pair has managed to find a bit of support at 1.0175.  A break below this level exposes 1.01 followed by parity.  The AUD will once again be in the news early Thursday with the release of the AUD Employment report.  Expectations are for an increase of 5k jobs and an employment rate around 5.3%.  A better than expected number could open the door up to a move towards 1.0280 followed by 1.0320.

Sup   1.0175        1.01

Res   1.0280       1.0320

Keane Plan....Looking for a break or hold of 1.0175

NZDUSD TRYING TO CONSOLIDATE BELOW SUPPORT

The NZDUSD Continued  to move sideways in a tight 35 pip range on Thursday.  At the open of trading in Europe the pair dipped down to take out stops and then never looked back with while slowly climbing higher.  In the short-term resistance rest around .7970 and support is near .7910.  A break of either of these levels following the ECB press conference could open the pair up to a larger move.

Sup   .7910

Res   .7970

Keane Plan...Sitting tight ahead of the ECB.

USDCAD BOUNCED OF SUPPORT ONCE AGAIN

The USDCAD squeezed higher on Wednesday but is still well with in its current range.  The cross found support once again in the .9840/00 region and now is slowly gliding towards resistance at .9950.  Until risk trends break, which could very well be Thursday.  The pair could remain in this range.

Sup   .9840/00

Res    .9950

Keane Plan...Play the range until risk trend break.

 USDJPY RETAIL LOVES IT

The USDJPY is in an interesting situation.  Depending on the NFP number on Friday traders will once again speculate the possibility of further QE.  If QE expectations diminish due to the report the pair could drift higher back towards the .80 level.  If further QE looks likely the USDJPY could head towards the lows of the year.  What is interesting about the pair is that retail investors are long the pair at about a 11-1 ratio.  A push lower could squeeze lower very quickly towards possible intervention territory.

Sup   78.15/00

Res   78.70.

Keane Plan....On the sidelines with the pair at the moment 
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