Renko Charts Weekly Trade Opportunities (23 – 27 Jan)

Last week's trading was mixed with a lot of key economic events that were shaping the markets. Although the U.S. markets got off to a slow start, the week was marked by the swearing-in ceremony of the 45th President, Donald Trump on Friday. The markets did not react much to the event but the U.S. dollar was trading mixed in the earlier part of the week. The greenback initially weakened after Trump, in an interview with the Wall Street Journal, briefly spoke about the U.S. dollar being too strong. This sent the dollar falling sharply on Tuesday.

However, the greenback reversed the losses after the Fed Chair, Janet Yellen was hawkish on the U.S. economy as she said that the Federal Reserve was looking for further rate hikes in the coming years. The dollar reversed the gains  trimming most of the losses from the previous day on Trump’s comments.

On the economic front, data this week shows that the U.S. consumer prices rose 2.1% on a year over year basis, pushing inflation into the Fed’s inflation target rate above 2.0%. It was good news for the U.S. dollar but the CME futures fed funds probability tool showed a probability of only 29% rate hike in March. Meanwhile in other parts of the world, the Bank of Canada’s monetary policy did not see any changes as interest rates were left unchanged at 0.50%. However, during the press conference, BoC Governor Poloz did not rule out further rate cuts if downside risks materialized.

The European Central Bank’s meeting last week saw the key interest rates left unchanged. ECB President, Mario Draghi told reporters in the press conference that the ECB will maintain its QE purchases until end of December and it could extend QE even further despite recent signs of pick up in the Eurozone inflation. Data earlier in the week showed that inflation rose 1.1% on the headline in the euro area.

Technical Outlook

GBPCHF 

The British pound has been posting a steady increase over the past few weeks with prices recently topping out near 1.2432. There is scope for further upside in GBPCHF with the recent declines likely to see a correction towards 1.2307 – 1.2282. As long as support is formed here and prices do not dip further, expect GBPCHF to resume the upside continuation towards the first resistance level at 1.2507 followed by a longer term correction towards 1.2707. Bear in mind that the current trend remains down with the 20/50 EMA’s staying bearish alongside the Stochastics posting a hidden bearish divergence.

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I/We do not have any positions in the above mentioned instrument.

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