Trading plan for 07/06/2017:
The volatility overnight was very low. EUR/USD remains below 1.13 and goes back to 1.1260. In the last days before the general election, GBP/USD is trading at 1.29. USD/JPY is near 109.50 after yesterday's fall. On Wall Street, the trade was taking place with light selling pressure but no major low was made either. During the Asian trading session, the Shanghai Composite is rising slightly and the Nikkei 225 fell slightly below 200,000 points, testing the temporary support from the last week.
On Wednesday 7th of June, the event calendar is light in important economic releases, but market participants will pay attention to German Factory Orders, Halifax House Price Index data from the UK, Building Permits data from Canada and Crude Oil Inventories data from the US.
GBP/USD analysis for 07/06/2017:
The Halifax House Price Index data are scheduled for release at 07:30 am GMT and market participants expect another decrease in prices from 0.1% last month to -0.2% for the reported month. On a quarterly basis, the price should decline as well, from 3.08% to 3.0%. The Halifax House Price Index is the UK's longest running monthly house price series with data covering the whole country going back to January 1983. This survey reflects prices for new constructions and real estate markets. It is a leading indicator of the housing industry's health because rising house prices attract investors and spur industry activity. Nevertheless, after the peak in house prices at the level of 4.0% in 2014, the index has been sliding down, with 2.5% in 2015 and 2.4% in 2016. After the Brexit referendum, the prices of new houses are not rising again and further deterioration is expected, especially in the London area, which will, in turn, weaken the British Pound in the long term.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. In the last days before the parliamentary election, the market is behaving rather calmly. Any bullish rally is being faded, so was the test of the golden trend line resistance. The overall market conditions at this time frame are overbought and the bias is rather to the downside. The price should now test the technical support at the level of 1.2844 and then 1.2828. In a case of a breakout lower, the road to the important technical support zone remains open.
Market Snapshot: EUR/JPY is testing the technical support again
Despite the oversold market conditions on the H4 time frame, the price of EUR/JPY is again testing the technical support at the level of 122.89. After the price fell out of the golden channel zone, the price has made a lower high and now the bears are trying to push the price below the support. If they succeed then the next support is seen at the level of 122.53 and this is the line in the sand for bulls.
Market Snapshot: AUD/USD bullish breakout towards 0.7555
The bulls have managed to breakout above the important technical resistance at the level of 0.7516 and now are trying to test the next important resistance at the level of 0.7555. Nevertheless, the market conditions are overbought and some sideway price action can be expected now, but the overall bias remains bullish.
