Forex Technical Analysis: May 30, 2014

Today we expect the GDP MoM, to be published at 14:00 (CET, server time). This is a key indicator of economic activity, which is calculated after adjustment for inflation. For today, according to various sources, the predicted drop is from 0.2% to 0.1%. However, if the actual data turns out higher than the forecast, we can expect the Canadian Dollar to strengthen vs. the most liquid currencies.


We form a synthetic instrument based on the portfolio pair. We use PCI GeWorko technology. In the base part, we have the Canadian Dollar and in the quoted part, the homogeneous portfolio of European currencies: CHF (25%), EUR (25%), GBP(25%), NZD (25%). Each of the components is expressed in U.S. Dollars. Dolly was not included in the personal composite instrument due to the high relatedness of the American and Canadian economy. Here we consider technical analysis signals within the NetTradeX trading platform.

We would like to analyze the synthetic pair on the H4 chart. The presented bullish trend has been existed for 10 days and demonstrated 4 touches to the trendline. The RSI approaches the local oversold area level so we would expect the bullish trend to weaken after crossing the oscillator line upwards. Characteristically, the price of the composite instrument entered the narrow corridor, as it is shown by the indicator Bollinger Bands. We are seeing the famous "calm before the storm" effect, or the delicate balance between bulls and bears. The influence of this effect can be found in the previous constrictions of the range. We should expect a new impetus with the breakthrough of the critical levels, which, is more likely to be bullish given the long-term trend direction.

The buy GTC is optimal to be open above the nearest fractal resistance at 1.0011. Opening a position is recommended only if the predicted GDP value exceeds 0.1%. The SL should be set around the trend line and the nearest fractal support at 0.9989. Will move the SL following after the Parabolic SAR every hour, following the trend. Thus, we optimize the return/risk ratio in our favor in the process of changing market conditions. The trailing stop distance is to be 35 points away from the price, if the position is left overnight. This distance corresponds to the distance between the last two fractal peaks. As usual, we recommend to cancel a pending buy order if the price crosses the stop loss level before the pending order.