Vang SJC

Fundamental Analysis

The U.S. home sales reached 5.46 million in December last year, increased by 700,000 compared with the previous data. The number rebounded strongly from a 19-month low, along with the housing prices, indicating the stable recovery in housing market. US manufacturing PMI rebounds in January, led by fastest rise in new orders for three months. Positive data supported USD against the euro, pulling EUR / USD to up 0.7% last session.

WTI futures turned up from a 12-year low, part of a broad rally in global markets fueled by speculation that central banks will adopt further stimulus measures. Prices jumped 9 percent on Jan. 22 from $28.48, to close at $32.49 last Friday.

Global stocks shared similar upbeat trend with the oil price amid dovish signal from European Central Bank for more easing before the end of the first quarter.

Bank of Japan is also under pressure to enlarge stimulus in the context of China’s slowdown, falling exports and oil’s crash.

Standard & Poor’s 500 Index advanced 2 percent last Friday, the most since Dec. 4; and Dow Jones surged up by 1.33%.

On Monday, ASX200 of Australia closed at 5006.6, up 1.8%. In 12.30 a.m. GMT, Australia’s December business conditions came in at 7 versus 10, while confidence stood at 3 versus 5, with NAB noting that business confidence remains resilient to financial market turmoil, and non-mining sectors recovery remains on track.

The Topix increased 1.14 percent 12.47 a.m. in Tokyo, extending Friday’s 5.6 percent advance. The Nikkei 225 increased 0.83 percent to 17,099.79. The Hang Seng Index from Hong Kong jumped 1.26% after Chinese authority pledged to cut overcapacity and excess labor in steel and coal industries. CSI 300 increased 0.36%, leading by mining shares.

Latter in the day, German Ifo Business Climate, considering the business sentiment in the biggest economy of the EU, will be released as of 9.00 a.m. GMT. In the absent of important figures from major, ECB President Draghi Speaks will come in the spotlight in 6.00 p.m., indicating hints for further monetary policy of the Eurozone.

Oil price is still edging higher, reaching $33.05 as of 6.68 a.m. GMT. UK and EU shares are predicted to witness an increase on oil recovery and upbeat economic data.

Technical Analysis

On last Friday, the pair of AUD / USD tried to break the resistance 38.2 of Fibonacci, the resistance was at $0.70180. During the session, the trend kept going up until the end of the day, AUD / USD had made a big swing to continue the down trend and that made the pair closed session below the Fibonacci level 38.2. This means the Fibonacci 38.2 is a strong resistance because on the day before (Thursday), the pair also had struggled to approach this level at $0.70180 (38.2%) which was the peak of the day and then fell 203 points to $0.69977. The last session on Friday also closed at $0.69977, that means this level is a strong support. Today, AUD / USD is trying to break the resistance 38.2 once more, there are times the pair reach to $0.70310 but after that, the pair goes back to the level 38.2 again, that makes a long upper shadow on the current candle stick. Those two factors of the current candle stick and the Fibonacci level show that the market currently moves within a narrow border of 203 points.

Analysis with Indicator as SMA 200, the candles are still below the line SMA 200, that is the proof of the deep going downtrend. The difference between the SMA 200 and the highest price on 18-1-2016 is 4492 points, compares to the current time, the difference is only 3311 points, which is decreasing by 26.2%. By common, when the price is below the SMA, SMA becomes a resistance, and this is a “flexible resistance”. The closer of the pair approach to the resistance, the stronger of the selling power becomes. When the distance between price and resistance narrows down to 26.2%, the market will begin to sell more.

With the above factors, we can conclude that the probability of the pair of AUD / USD going up is very low, and only the great increase in buying power is able to significantly break the resistance at $0.70180 (38.2%) and if the RSI indicator pass 50, we can conclude that the pair is changing to uptrend.

With the smaller time frame as H1, market is moving within border of $0.69802 to $0.70414 and these are the current support and resistance of the market now. Reading the chart, the pair is just 174 points or 0.25% to reach the resistance. If we look back to the last Monday, the market had moved 1.2% and today AUD / USD has moved 0.75%, if we sum up the 0.25% until the resistance, the probability will be very comfortable but the chance to continue going up is not high and the trend may go back to downtrend.

Conclusion: The signs of market show that the downtrend has higher chance to continue than changing to uptrend, even if the trend changes to uptrend the probability to go up is not significant and is easy to change to the downtrend again. We recommend that investor should sell the pair at $0.70310 until the resistance $0.70406 with Stop Loss at $0.70653 and Take Profit at $0.69855.

Analysis of Group Fiinvesting.com.

Linh Nhan