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Eur/Usd Analysis

3162 words - 13 pages

Contents

Trade Recommendations 2
S&P Fundamental and Political Analysis 2
S&P Technical Analysis 3
EUR/USD Fundamental and Political Analysis 5
EUR/USD Technical Analysis 5
Appendix 1: Markets Presentation Data – Nikkei 225 8
Appendix 2: Markets Presentation Data – Apple Inc. 9
Appendix 3: Markets Presentation Data – HSBC Holding Plc. 10
Appendix 4: Markets Presentation Data – Walt Disney Company 12

Trade Recommendations

Action | Price | Comment |
Market order to BUY S&P 500 | 2060 | Expected to reach this price in 1-2 weeks |
STOP LOSS | 2000 | 60 points maximum risk |
PROFIT TARGET | 2160 | 100 points potential profit |
Expected to reach ...view middle of the document...

Data compiled by FactSet on earnings growth for the quarter has also been revised up to 3.5%, up from 3.1% a week ago. Lower fuel prices, higher wages and lower unemployment are just some of the factors contributing to higher consumer spending (+4.3% in Q4 2014), boosting corporation earnings.

However, U.S. investors are notoriously sensitive to comments and policies announced by the Federal Reserve, as experienced during the tapering of QE. The market is anticipating an increase in interest rates , which is likely to upset markets. Furthermore, as the market continues to reach new highs, commentators worry that the index is considerably overvalued, with the 12-month forward PE ratio for the S&P 500 near 10-year highs, around 17x. The turmoil in the Eurozone may also unnerve investors. As such, there is a potential downside risk.
S&P Technical Analysis

Chart 1:
The S&P 500 has been following a fairly steady uptrend since 2013; only breaking its 200 day moving average once during that period in October 2014 when falling oil prices sparked a sell off. However, recently the price momentum has tailed off as the price fails to hit the upper-bound of the channel.


Chart 2:
The chart the formation of a symmetric triangle since the start of 2015, an impulsive breakout of the triangle on February 10th 2015, and a subsequent rally. If traded at the breakout, a minimum price objective would have been at around 2160 points.

* However since the breakout, the slow stochastic has exceeded 80% indicating that it has been overbought. Furthermore, the faster line has crossed and gone below the slower line highlighting a sell signal and potential slowdown of the increasing trend. A bearing signal can also be indicated by the decrease in volume, even as the price increases.
* As the market fundamentals are still strong, we don’t believe there will be a reversal from the long term trend or break the 200 day moving average (around 2000); even if there is an announcement by the Fed to raise interest rates.
* Rather than reverting all the way back to 2000 however, it is more that we will see a new support level at a the previous resistance level at 2060, at which point there may be a buying opportunity. Looking at previous short term reversals, this should between 1-2 weeks to hit.
* Thus if the price falls to around 2060 and shows strong buying momentum at this point, we recommend buying here, with a MPO of 2160 achievable in 4-6 weeks and a stop loss at 2000.

EUR/USD Fundamental and Political Analysis

EUR/USD is one of the most volatile currency pair that represents two of the world’s biggest economies. There are multiple factors which influence the exchange rate: debt crisis, monetary policies, GDP, inflation rate, interest rate, unemployment rate, trader’s expectations, etc. Recent information gives a general picture of 2015, that euro can depreciate more, while the dollar can get...

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