Free Forex Trading Signals: EURUSD & AUDUSD May 2016
■ Market: Foreign Exchange
■ Forecast: EURUSD to Range / Commodity Currencies to Correct in May
It seems the Foreign Exchange market has entered a new phase. Recent economic data from both sides of the Atlantic make the ECB and Fed less willing to accept further currency gains. Both central banks worry that tighter monetary policy could directly hurt the real economy. So, it’s not surprising to see EURUSD trading in a wider range between 1.05 and 1.17 for some time. Meanwhile, commodity currencies like the Canadian Dollar, Australian Dollar, and New Zealand Dollar are quickly gaining against EUR and USD. In early 2016, the Australian Dollar rose against the US Dollar from 0.68 to 0.78, and the USD dropped against the Canadian Dollar from 1.46 to 1.26. These sharp moves reflect that most commodity prices hit their lowest point in early 2016 and are now rising fast. Keep in mind, AUD is closely tied to gold prices, and CAD is closely tied to crude oil.
Our Previous TCI Trading Signal
In our early March 2016 Trading Signal, we forecasted a bullish British Pound against the US Dollar. Back then, GBPUSD was trading at 1.3913. We advised to “focus on long GBPUSD positions, targeting momentum that could push GBPUSD to 1.41 and then 1.43.” By mid-March, GBPUSD hit both targets and is now trading above 1.45. The TCI trading signal was fully confirmed.
Macroeconomic Outlook
Commodity Prices and China
Commodity prices hit their low in early 2016 and are now rising quickly. Many analysts attribute this to growing Chinese demand, tighter supply, and the chance of a weaker US Dollar. In a recent report, Citigroup stated, “There is growing evidence that nearly all commodities have hit a price bottom and are looking to return to normal.” The report also noted that oil and natural gas markets are recovering, while industrial metals are rising as China’s property market improves.
Tensions Inside the Euro Area
Negative Euro interest rates are causing some tension within the ECB. As Mario Draghi said, “We continue to expect interest rates to remain at present or lower levels for an extended period, well beyond our net asset purchases.”
A recent report from Societe Generale showed that the ECB’s quantitative easing and negative rates push investment funds outside the euro area. Between February 2015 and February 2016, Europeans invested 829 billion euros outside the euro area. In the same period, only 261.5 billion euros flowed into the Eurozone, creating a large net outflow. Societe Generale notes this trend.
On the other hand, the Eurozone’s total current account surplus (12 months to February 2016) was 321.5 billion euros, or 3.1% of GDP.
The British Pound Recovers
Despite expectations around the June 23, 2016 Brexit referendum, most British banks believe the vote will favor staying in the EU. This partly explains the recent strength of the British Pound against other major currencies.
TCI on EURUSD
The Trading Center Indicator (TCI), a unique technical analysis tool developed by TradingCenter, is applied to EURUSD and AUDUSD to forecast highs and lows over the next few weeks.
In the following table, TCI Indications regarding EURUSD (press slider).
Table: TCI on EURUSD Date Close High Low Volume Change TCI 2016.04.26 1.12947 1.13388 1.12555 83651 0.25% 0.04% 2016.04.27 1.13241 1.13326 1.12906 (MID-DAY) 0.26% 0.30% (+1 Trading Day) 0.38% (+2 Trading Days) 0.39% (+3 Trading Days) -0.07% (+4 Trading Days) LOCAL LOW -0.59% (+5 Trading Days) -0.39% (+6 Trading Days) -0.55% (+7 Trading Days) -0.40% (+8 Trading Days) -0.24% (+9 Trading Days) -0.02% (+10 Trading Days) 0.16% (+11 Trading Days) LOCAL HIGH 0.48% (+12 Trading Days) 0.32% (+13 Trading Days) -0.28% (+14 Trading Days) -0.57% (+15 Trading Days) LOCAL LOW -0.90%
The EURUSD Range
As shown in the following Heikin-Ashi D1 chart, EURUSD is trading within a wide range between 1.05 (S2) and 1.17 (R2). There is strong additional support at 1.08 (S1) and strong additional resistance at 1.15 (R1).
Chart: EURUSD Range
TCI on AUDUSD
In the following table, TCI Indications regarding AUDUSD (press slider).
Table: TCI on AUDUSD Date Close High Low Volume Change TCI-34 2016.04.26 0.77460 0.77643 0.76960 72141 0.43% 2.55% 2016.04.27 0.76101 0.77644 0.76043 (MID-DAY) -1.75% -1.03% (+1 Trading Day) -0.75% (+2 Trading Days) -0.45% (+3 Trading Days) -1.29% (+4 Trading Days) LOCAL LOW -1.66% (+5 Trading Days) -0.47% (+6 Trading Days) -0.84% (+7 Trading Days) -0.42% (+8 Trading Days) -0.59% (+9 Trading Days) 0.09% (+10 Trading Days) -0.28% (+11 Trading Days) LOCAL HIGH 0.10% (+12 Trading Days) -0.50% (+13 Trading Days) -0.91% (+14 Trading Days) -1.41% (+15 Trading Days) -1.51% (+16 Trading Days) LOCAL LOW -1.69% (+17 Trading Days) -0.80%
EURUSD and AUDUSD Statistics
EURUSD and AUDUSD stats based on 13.5 years of research by TradingCenter.
■ EURUSD: April is usually a very good month to go long on EURUSD (+0.72%), but May tends to be negative (-0.52%).
■ AUDUSD: April is an excellent month to go long on AUDUSD (+1.83%), while May is generally a good month to go short (-0.91%).
Press the slider to see the full EURUSD and AUDUSD stats for April and May.
Conclusions
EURUSD is expected to stay between 1.05 and 1.17 for some time. Right now, both the ECB and Fed are cautious about taking on more monetary risks. Only surprising fundamental data could trigger a new major EURUSD trend.
Commodity currencies (AUDUSD, NZDUSD, and USDCAD) are likely to rise in 2016, but they have already gained quickly in early 2016.
May 2016 is expected to be a corrective month for these commodity currencies. If you plan to go long, it may be wise to wait for a pullback in May before trading aggressively. Still, carry trading commodity currencies could be one of the best investment opportunities in 2016.
■ Free Forex Trading Signals: EURUSD, AUDUSD
George Protonotarios
TradingCenter (April 27th, 2016)
L MORE RESOURCES • COMPARE • GLOBAL MARKETS • FOREX PAIRS • OTHER ASSETS
□ Forex Brokers Comparison
□ Expert Advisors (EAs)
□ Fx Seasonality Calendar
□ TCI Forex Trade Signals
□ Reviews
» Forex Market
» Equity Trading
» Commodities
» EURUSD
» GBPUSD
» USDJPY
» USDCHF
» USDCAD
» AUDUSD
» Historical Perspective on Gold Prices
» Crude Oil Trading
