Friday Retails Sales came in fast and strong, beating expectations and printing a higher value at 1.3% against -0.3% with core retail sales of 0.8% against 0.6%e, this only means that the economy is back rallying after previous months showed a slight slowdown in the job markets and a rise of gasoline prices which by the way didn’t deter anything. With these kinds of prints, we expect inflation to be moving upwards towards the Fed’s ideal 2% as people continue to spend and save more. It is worth noting that, this Retail Sales data represented the highest jump in monthly growth since March 2015 reflecting a true recovery in household finances and more motivation to borrow. During the weekend, Chinese industrial production was also released and data wasn’t that impressive with an obvious slow down in production which fell to 6.0% in April from March’s 6.8%, this drop in production was in par with Retail Sales which also rose by 10.5% against 11.0%e critical drops which were attributed to lack of external demands and of note, a drop in mining according to the Chinese National Bureau of Statistics.
Now with these fundamentals, let’s look at the Charts
Daily Chart Analysis
On Friday, this pair moved approximately 70 pips with highs coming in around our resistance zone-0.687 area which was visible in the 4 hour and 1 hour charts and represented the 61.8 Fibonacci level in both the yearly and daily HiLo. We expect a follow through after the formation of that strong bearish candle when retail sales news was released. As observed both OBV and stochastics are in the oversold region we shall be looking at the weekly chart trend, which is the exact opposite of this chart-technical wise- to determine if our shorts are valid.
Other than the Fed’s Minute meetings set for Wednesday, we will be watching for tomorrow’s New Zealand Quarterly Inflation Expectations given the continuous easing the RBNZ embarked on. Any indication of inflation means that the NZD will gain ground.
4HR Chart Analysis
Fibonacci 100 level drawn from HiLo of week ending 6th May still shows that this level is our resistance and it is important because when it was broken through last week, price action failed to break and close above this level-0.687 area and we saw that sharp reversal to form the double tops in the middle of last week. Momentum, as shown by the Stochastics is still bearish and we shall look to short on all highs as signaled on the 1 hour chart.
15 Min chart Analysis
The Asian Session has been purely bullish with price action reversing at the 261.8 Fibonacci level drawn from Thursday’s HiLo. With sustained momentum, we can expect price action to breach the 61.8 and probably reverse in the 38.2-50 Fibonacci level depending on all fundamental news flowing in today starting with Empire State Manufacturing index which is forecasted at 7.2 from 9.6 recorded last month. We shall only be looking for short opportunities as signaled by perfect indicator combination in the overbought regions of the Stochastics.
Other than that, have a pipful day.