Friday 20 December 2013

Crude Oil Outlook

CRUDE OIL: Consolidating Below Key Overhead Resistance.

CRUDE OIL: The outlook for Crude Oil still remains to the downside except it takes out the 98.74 level. While that level continues to hold as resistance, the risk is for the commodity to retarget the 96.21 level.
Further down, support stands at the 95.00 level with a breach of here leaving the threat of a return to the 94.00 level on the cards. Conversely, resistance resides at the 98.74 level where a violation will aim at the 100.00 level.

Further out, resistance comes in at the 101.50 level with a cut through here turning attention to the 102.00 level. All in all, Crude Oil may be attempting to recover higher but still retains its broader downside bias in the medium term.


crude oil

Markets unwinding after taper day and the Fed’s promise to continue forward guidance


The long awaited “taper” has finally arrived, with equity markets taking the announcement in stride and treating the relatively more hawkish statement from the FOMC as an early Christmas present.  The feeling that the American economy was on strong enough ground the Fed could reduce their monthly asset purchases by $10bn sent stocks to record highs, with the S&P rallying from earlier lows to close up by 1.7% on the day.  In addition to the beginning of the “great unwind”, the Fed also made sure to reinforce that tapering is not tightening (despite 10yr treasury yields in the secondary market leaking higher post-announcement), and enhanced their forward guidance by suggesting that the exceptionally low level of interest rates would remain in place “well past the time that the unemployment rate declines below 6.5%.”

The amendment to the previous communication around forward guidance and the 6.5% unemployment threshold gave markets slightly more confidence that the first interest rate increase from the Fed is still a long ways off, especially if inflation remains subdued and below the FOMC’s long-run objective; 12 of the 17 Fed officials now expect rates to be at or below 1% at the end of 2015.  While yesterday’s decision to lop off $10bln of monthly asset purchases was slightly ahead of when we forecast the initial taper to come, the choice to pair the reduction in balance sheet growth with enhanced forward guidance was in-line with our expectations, and not necessarily outside the realm of prospects for what the Fed was capable of administering.

Bernanke’s press conference shed a little more light surrounding the future path of monetary policy, and while he reiterated that the pace of asset purchases were not on a preset course, should the incoming data continue to show improvement like it has over the previous few months, the pace of reduction (along with the breakdown of $5bn from treasuries and $5bn from MBS) is likely to continue at subsequent meetings in 2014.  In short, the Fed will continue to remain data dependent, with incremental gains in productivity and the labour market leading to the gradual unwind of additional monetary stimulus.  Bernanke also made sure to reinforce the point that Yellen was instrumental in the shaping of FOMC policy during the course of the meeting, signaling to markets there would be continuity from the Fed when Yellen takes over for Bernanke in January.

The reaction across asset markets was initially one of confusion, as stocks, treasuries, commodities, and currencies all whipsawed back and forth as traders and investors digested the news.  After the dust settled, the outcome was very much USD positive, with high-beta commodity currencies like the AUD and CAD feeling the brunt of the sting.  The Loonie was squeezed lower as the USD bid-tone sent USDCAD north of 1.07, while AUDUSD dropped into the low-0.88s, and USDJPY tested the waters above 104.  The small reduction of liquidity from the Fed sent the DXY ramping into the mid-80s, while treasury markets were less impressed, and after the initial knee-jerk reaction the US 10yr grinded higher to end at 2.897%.  The outcome of yesterday’s meeting reinforces our thesis that the USD is poised to enter 2014 on solid ground, with the eventual unwind of additional stimulus underpinning the big dollar as interest rates in the secondary market gradually increase.

Equities traded in positive territory during the overnight session, clinging to the back of gains seen on Wall Street with the Nikkei positing an increase of 1.74%.  While the Bank of Japan isn’t expected to make any major policy amendments at their meeting tonight, the negative trade balance data from earlier in the week will likely continue to put upward pressure on USDJPY as traders assess the growing divergence between monetary policy regimes in the US and Japan.

European bourses are seeing a similar shade of green on traders’ screens, with the majors playing catch-up to the Fed’s non-aggressive taper decision as the Dax, FTSE, and Stoxx are up by 1.37%, 1.14%, and 1.49% respectively.  After the initial spike that saw Cable trade into the high-1.64s, GBPUSD has retraced those earlier gains, backing away from the 1.64 handle as retails sales in the UK increased by less than expected for the month of November.  The y/o/y reading missed forecasts coming in with only a 2.0% increase, however this was up from the 1.8% that had been registered in October, as clothing sales were spurred by a colder than anticipated month.

Heading into the North American open, futures are displaying a slight weight to the tape, seeing a little bit of an easing from yesterday’s aggressive rally.  Unemployment Claims, Existing Home Sales, and the Philly Fed Manufacturing Index are all on tap for later in the session, and while they will not have the same market-moving power as the FOMC yesterday, a positive economic docket will continue to put upward pressure on the USD as it reinforces the unwind of QE.   The Loonie struggles continue this morning, with little interest from market participants to increase exposure to the commodity-linked currency considering FOMC decision.

Copper futures are down 0.74%  Gold encroaches on the $1,200/ounce level, and WTI remains flat just south of $98/barrel, so there is little working in the CAD’s favour in terms of its traditional drivers.

Turning our attention to the beleaguered Loonie, domestic inflation numbers are due out tomorrow and could give the CAD a slight reprieve, or escalate the sell-off and send USDCAD to new highs depending on the strength of the release.  Expectations are that we see the core reading remained pinned at an increase of 1.2% when compared to the last twelve months, while the headline reading moves up from 0.7% to 1.0% over the same measurement period.  With the Bank of Canada taking a keen interest on inflation remaining persistently below target, consumer prices will have more of an influence on price action in the Loonie moving forward.  A warmer than expected reading would provide some relief to the recent pressure the Loonie has succumb to, while a print that misses the median analyst forecast will likely accelerate the upward momentum in USDCAD.  With price action stretching the upward Bollinger Bands, further weakness in the Loonie would see the pair test 1.0750 at the top of the trend channel drawn from the September rally, which if broken, would open up room for the pair to make a run at the May 2010 high of 1.0850.

US Dollar Index ready to rally?

US Dollar Index: With the Index bullish and threatening further upside, more strength is expected.
However, it will have to break and hold above its declining trendline currently at the 80.61 level to trigger further strength. This if seen will extend recovery higher towards the 80.98 level where a violation will aim at the 81.48 level.

A push through this level will set the stage for a run at the 82.00 level and possibly higher towards the 82.50 level. Its daily RSI is bullish and pointing higher supporting this view.

Conversely, as long as it continues to trade below its declining trendline, expect a push back lower. Support lies at the 80.50 level where a violation will aim at the 80.00 level.

Further down, support lies at the 79.75 level with a turn below here paving the way for a run at the 79.00 level. All in all, the Index continues to face upside threats in the short term.


US Dolla Index

Thursday 12 December 2013

Idea of the day....


Idea of the Day
Markets were skittish on Wednesday, with various rumours doing the rounds and causing more nervousness regarding the prospect of Fed tapering next week. The Aussie took most of the pain, with the Swissie and yen holding their ground. EURCHF is now at levels last seen in the early part of May and having gained nearly 3% so far this month on the dollar. The price action encompasses our broader view for next year, namely that Fed tapering will be bullish for the dollar, but not overwhelmingly so. Near-term, the Aussie continues to look the most vulnerable, simply because their central banks wants to see a weaker currency and there is scope for the RBA to lower rates further in 2014.
20131212 - Daily Table_0
Data/Event Risks
USD: Retail sales the main focus, with the market expecting a modest rise of 0.2% in the ex-autos measure (same as October). Weekly claims are seen moving higher from the dip below 300k seen last week. The dollar remains nervous so the data could do have an outsized impact, especially if away from expectations.
Latest FX News
NZD: No surprise to see rates steady after the central bank meeting yesterday, but expectations of a move early next year increased, the governor underlining that the RBNZ would “increase the cash rate as needed”. The kiwi bounced modestly, with an overnight high of 0.8292. AUDNZD moving lower to 1.0891, continuing the bearish trend that has been in place from March.
EUR: French CPI data in line with expectations early on today, rising at 0.7%. More inflation is seen today. The euro at 1.38 and this is currently the 8th consecutive daily gain for EURUSD. Note that upcoming stress tests continue to offer support, banks both repaying loans to the ECB and repatriating funds from overseas, which creates the risk of a new year hangover for the euro.
AUD: Employment data was better than expected overnight, with a 21k rise in November, expected was 10k. The unemployment rate held steady at 5.8%. The Aussie was initially firmer, up to the 0.9080 level, but fell back to a low of 0.9011 thereafter, underlining the tendency for rallies to be sold.

USD/CHF bearish

USD/CHF: With USDCHF slightly holding below the 0.8889 level, further weakness is envisaged possibly towards the 0.8800 level. Bulls may come in here and turn it higher but if that level is broken expect further decline to occur towards the 0.8750 level. 

Further down, support lies at the 0.8700 level. Its daily RSI is bearish and pointing lower supporting this view. On the upside, resistance resides at the 0.8950 level followed by the 0.9000 level and then the 0.9100 level.

Further down, support lies at the 0.9190 level followed by the 0.9249 level. A breach of here will turn attention to the 0.9450 level where a break will turn focus to the 0.9542 level. All in all, the pair remains biased to the downside.


USDCHF

Aud/Usd update

Australian Employment Change, which is released monthly, provides a snapshot of the health of the Australian labor market. A reading which is higher than the market forecast is bullish for the Australian dollar.
Here are the details and 5 possible outcomes for AUD/USD.
Published on Thursday at 00:30 GMT.
Indicator Background
Job creation is one of the most important leading indicators of overall economic activity. Thus, the release of Employment Change is a market-mover which can affect the movement of AUD/USD.
In October, the indicator posted a modest gain of 1.1 thousand, well below the estimate of 10.3 thousand. The markets are expecting a strong turnaround for November, with the estimate unchanged at 10.3 thousand. Will the indicator match or beat this rosy prediction?
The RBA did not reduce interest rates last week, but it continues to loudly shout that it wants to see a weaker Australian dollar. This is weighing on the Aussie, which has been struggling against its US cousin. Sharp US employment numbers last week, led by Non-Farm Payrolls has increased speculation of a December taper, which could help the US dollar, as a QE scale down is a US dollar-positive event. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels from top to bottom: 0.9283, 0.9180, 0.0947, 0.90, 0.8893 and 0.8747.
5 Scenarios
  1. Within expectations: 10.0K to 13.0K: In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 13.1K to 17.0K: A strong reading could push the pair above one resistance level.
  3. Well above expectations: Above 17.0K: A sharp rise in employment numbers could propel AUD/USD upwards, and two or more resistance lines could be broken.
  4. Below expectations: 6.0K to 9.9K: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below 6.0K: A very poor reading will likely hurt confidence in the Australian economy and AUD/USD could break two or more support levels.

Eur/Usd Update


EUR/USD continues its upward movement, continuing the trend which we’ve seen all week. The pair is trading in the mid-1.37 range in Wednesday’s European session. In economic news, it’s another quiet day, with no major releases. French Final Non-Farm Payrolls and German Final CPI both matched their estimates. In the US, today’s highlight is Crude Oil Inventories.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
  • EUR/USD was uneventful in the Asian session, trading close to 1.3760. The pair is unchanged in the European session.
  • Current range: 1.3710 to 1.3800.
Further levels in both directions:  EUR USD Daily Forecast Dec. 11th
  • Below: 1.3710, 1.3675, 1.3615, 1.3525, 1.3440, 1.34, 1.3320, 1.3240, 1.3175 and 1.31.
  • Above: 1.3800, 1.3870, 1.3940 and 1.4036.
  • 1.3710 continues to provide support. 1.3675 is next.
  • The round number of 1.3800 is the next line of resistance. 1.3870 follows.
EUR/USD Fundamentals
  • 6:30 French Final Non-Farm Payrolls. Exp. -0.1%, Actual -0.1%.
  • 7:00 German Final CPI. Exp. 0.2%, Actual 0.2%.
  • 15:00 US Treasury Secretary Jack Lew Speaks.
  • 15:30 US Crude Oil Inventories. Exp. -2.2M.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Exp. -142.6B.
*All times are GMT
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
  • European finance minister discuss banking union: EU finance ministers met in Brussels on Tuesday and high on the agenda was a proposal for a European banking union. The aim is to relieve debt-ridden countries from the burden of rescuing failing banks in their countries. Instead, the banks would tap a Eurozone rescue fund, the Single Resolution Mechanism. However, no agreement has been reached on the SRM, and the finance ministers are likely to meet again next week to try and hammer out details of a banking union. ECB head Mario Draghi is a firm supporter of a banking union and has urged national governments to move forward with the plan.
  • German data disappoints:  The week started off on a sour note, as German releases fell below market expectations on Monday. Germany’s trade surplus shrank to 16.8 billion euros, down from 18.8 billion in October. Industrial Production declined by 1.2%, the third decline in the past four readings. The estimate stood at 0.8%. German CPI gained 0.2%, which matched the estimate. Although just a modest gain, this was the best figure we’ve seen in the past four months. If German numbers don’t improve, we’re unlikely to see much growth out of the struggling Eurozone economy.
  • Will Fed taper in December? Last week’s employment numbers were super, as Unemployment Claims, Non-Farm Payrolls and the Unemployment Rate all impressed. The Fed has said that a stronger employment picture is a prerequisite to tapering, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting. Other factors also favor a December taper. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.
  • Negotiators reach budget agreement:  With memories of the October government shutdown still fresh on Capitol Hill, Congressional negotiators have reached a budget deal which Congress will have to pass. The agreement will remove the risk of a government shutdown and reduce the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the economic uncertainty we’ve seen in recent months. Con

Sunday 8 December 2013

Markets have not looked this good for a LONG TIME...

So, the dollar failed to rally despite outstandingly positive GDP and employment figures, and the EUR/USD found buyers on dips, pointing to close this first week of December at fresh 5 weeks highs. What happened to “taper trading”? An educated guess will suggest numbers had not been enough to change what market players had already priced in that is, no taper at least until March 2014. But upcoming FED meeting on December 18th, will be the last of Bernanke as chairman. Will he dare to kick start tapering anyway, so he can leave with the feeling of mission accomplished? 
 
Looking to sell at 13830 a double top.

Market consensus seems to disagree with such theory, and rather focus in upcoming head Yellen dovish preferences. But can the EU support a strong EUR? ECB latest decision to stay on hold followed a rate cut to record lows of 0.25%. The EUR/USD tested 1.3290 afterwards, and it has been a one way ride ever since.  And while European recovery is still on doubt, the EUR continues to surge regardless.

The daily chart shows indicators heading higher in positive territory, 20 SMA offering dynamic support for most of these last few days and heading north below current price, and overall, price accelerating above 1.3625, 61.8% Fibonacci retracement of the latest bearish run. So technically bulls prevail now aligned around mentioned Fibonacci support, with the 1.3700 area as immediate resistance: a break above it should lead to a retest of the 1.3831 high posted this year.

On the other hand, bears are quite far from taking control, as dips are still seen as buying opportunities as said before, with levels to watch at 1.3625, 1.3550 and the 1.3490 price zone, 38.2% retracement of the same rally.


View Live Chart for EUR/USD

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The following are on my watchlist as well

USD/CHF BUYdouble bottom at 8892

EURGBP, sell very soon, again

USD/JPY A break above 10382 is then heading for 110.50

Many other Yens will follow, eurjpy, cad/jpy, gbp/jpy etc

See my latest video update here : MARKET UPDATE HERE

Tuesday 26 November 2013

#FX Majors Market Update

EURUSD

The Euro returns to strength and regains levels above 1.35 handle, following yesterday’s pullback from 1.3559 to 1.3489, where 4-hour 55DMA contained dip. The price consolidates near session high at 1.3540, as near-term bulls are gaining traction after hourly indicators returned to positive territory. Immediate resistance lies at 1.3577, 20/11 recovery peak, with reak higher to resume recovery off 1.3294 and open 1.3600, round figure resistance and 1.3626, Fibonacci 61.8% of 1.3831/1.3294 descend. However, daily studies maintain neutral/negative tone and require caution in case of price’s failure to clear 1.3577. Increased downside risk would be seen on a slide below 1.3500/1.3489, with extension below 1.3460, 22/11 higher low / 61.8% retracement of 1.3398/1.3559, to signal double-top formation.

Res: 1.3577; 1.3600; 1.3626; 1.3645
Sup: 1.3510; 1.3489; 1.3461; 1.3444

eurusd



GBPUSD

Cable’s near-term price action came under pressure after strong rally stalled on approach to critical barriers at 1.6254/59 and subsequent pullback to 1.6132 retraced 61.8% of 1.6071/1.6239 upleg. Formation of bearish reversal pattern increases downside risk, with extension and close below 1.61 handle, required to confirm. Hourly studies are negative, while larger picture remain bullish that keeps the upside targets in near-term focus, with regain of psychological 1.62 barrier, seen as a signal for renewed attempt higher. Otherwise, slide below 1.61 and more significant 1.6071, 21/11 higher low / daily cloud top, would shift near-term focus lower and confirm further range trading.

Res: 1.6200; 1.6215; 1.6239; 1.6259
Sup: 1.6144; 1.6132; 1.6107; 1.6071

gbpusd


USDJPY

The pair trades in near-term consolidative mode, after posting fresh high at101.90 yesterday. Initial support at 101.30, Fibonacci 23.6% of 99.56/101.90, so far contained, however, weak hourly and 4-hour indicators descending from overbought territory, suggest that correction lower may extend. Next strong support lay at 101.00, higher platform / Fibonacci 38.2%, ahead of 100.73, 50% and 100.60, previous peak, where stronger pullback should find support. Resumption of the uptrend through 102.00, opens 102.48/52, 28/29 / 05 peaks next, ahead of 103.10, Fibonacci 161.8% projection and key barrier at 103.72, 22/05 yearly high.

Res: 101.70; 102.00; 102.50; 103.00
Sup: 101.35; 101.00; 100.60; 100.42

usdjpy


AUDUSD

The pair enters near-term consolidative phase after posting fresh low at 0.9119, with initial 0.9200 resistance capping the upside for now. Improved hourly structure sees scope for further recovery, with additional support given from 4-hour indicators that emerge from oversold zone. Extension above 0.9200 opens 0.9244, Fibonacci 38.2% of 0.9446/0.9119, ahead of strong 0.9270/80 zone, previous lower platform and 50% retracement, where rallies should be limited. Only sustained break above 0.9300 barrier would sideline immediate bears. Overall bears, however, remain in play and are expected to resume larger downmove once corrective phase is completed, with 0.9100 seen as immediate support, ahead of key short-term support and breakpoint at 0.8891, 30/08 low.

Res: 0.9200; 0.9248; 0.9270; 0.9300
Sup: 0.9177; 0.9141; 0.9119; 0.9095

audusd

Monday 18 November 2013

Oil supply, pricing and Outlook for this week..

Oil price (WTI) slipped again last week, while Brent oil rallied: WTI inched down by 0.80%; Brent oil sharply rose by 3.26%. As a result, the gap of Brent oil over WTI expanded: The premium ranged between $11.26 and $14.78 – the highest range since April 2013. Last week, the EIA’s weekly report showed a drop in oil’s stockpiles by 5.9 million barrels and the oil market tightened. The OPEC report showed no change in the OPEC production, but the frictions in Libya and the tension between Israel and Iran may have contributed to the rally of Brent oil.  Will oil rally next week? This week, several reports may affect oil prices. These items include: U.S retail sales, EU and China’s manufacturing PMI, Philly fed index, and EIA oil weekly report.

Here is a weekly outlook and analysis for the oil market for November 18th to November 22nd:
Oil Prices – November Overview

During last week, crude oil price (WTI) slipped by 0.80% and reached by Friday $93.84/b; conversely, Brent oil sharply rose by 3.26% to $108.55/b;

In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to January 31st). As seen below, Brent oil price rallied in the past couple of weeks.
oil forecast Brent and WTI  November 18-22 2013 
Premium of Brent over WTI – November

The gap between Brent and WTI oil widened last week as it ranged between $11.26 and $14.78 per barrel. During the week, the premium increased by $4.19 per barrel.
Difference between Brent and WTI  November 18-22 2013 
Oil Stockpiles, Demand and Supply

The oil stockpiles slipped by 5.9 MB and reached 1,806.9 million barrels. The linear correlation between the changes in stockpiles has remained stable at -0.198: this correlation implies that oil price, assuming all things equal, may rally next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:

Supply: Oil imports slipped again by 0.5% last week. Conversely, oil production sharply rose by 1.8%; the total supply rose by 0.6%;

Demand: Refinery inputs rose again by 0.9% last week. In total the demand remained lower than the supply; the gap between supply and demand is still positive but the difference has slightly narrowed – this may eventually slightly pull up oil prices as the oil market in the U.S tightens.

The chart below shows the changes in the gap between supply and demand (below zero: Demand is above Supply; above zero: Supply is above Demand).
oil market tight loose oil price  November 18-22 
As seen above, the currently loose oil market in the U.S coincides with the drop of oil price. But if U.S oil market continues to tighten, as it did during the previous week, this could eventually lead to a rise in oil price.    
The next weekly report will be released on Wednesday, November 20th and will refer to the week ending on November 15th.

OPEC Monthly Report

According to the recent OPEC Report, OPEC’s oil production remained nearly flat at 29,894 thousand in October – nearly unchanged from the preceding month. This news suggests the oil supply hasn’t changed despite the tensions in Libya.

IEA Monthly Report

According to the recent monthly update, the global oil supply rose in October by 640 thousand bbl/d to reach 91.8 million bbl/d mainly due to rise in non-OPEC countries’ liquids. The estimate on global demand was slightly raised in 2013 due to stronger than expected oil demand in Europe during Q3. For 2014 the projection are for a 1.1 mb/d gain.

The rise in expected demand for oil in 2014 may have pulled up the price of oil. Global refinery runs for Q4 have been cut by 0.6 mb/d due to reduced European throughputs. These data provide a mixed signal regarding the progress of the oil market.

Middle East and Oil – update

The riots in Libya between rival militias in the outskirts of Tripoli have raised the uncertainty in the region and could eventually further reduce Libya’s oil production, which is currently one third of its normal output. But since Libya’s output currently accounts for only 1.3% of OPEC’s total output, it is likely to have little adverse effect on the oil market. The tensions between Israel and Iran over Iran’s nuclear program continue. The U.S continues to ease the situation but with little success. These tensions could also have some small effect on oil prices. But only if there were to be an escalation in the situation, this could have a significant effect on oil prices.

Oil Related News for the Week

Here are several news items that could influence oil investors:
Wednesday –U.S. Retail Sales Report: This monthly report refers to October; in the previous report regarding September, retail sales inched down by 0.1% (month-over-month); core retail sales rose by 0.4%; this report could signal the developments in U.S’s gasoline demand and thus may affect U.S oil;

Thursday – Flash Chinese German, French and Euro Zone Manufacturing PMI: In the last monthly report regarding October 2013, the Germany’s PMI inched up to 51.5 i.e. the manufacturing conditions are growing but at a slightly faster pace. France’s PMI inched down to 49.4. This report serves signals to the developments in the Euro Area’s manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities prices;

Thursday – Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the last survey regarding October, the growth rate fell from +22.3 in September to +19.8 in October. If the index continues to fall, it may adversely affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);

Oil Outlook and Breakdown

From the supply side, the ongoing drop in imports continued to partly offset the rise in oil production. From the demand side, refinery inputs rose again. In total, the gap between supply and demand has diminished due to the drop in imports; this could suggest the oil market has tightened. In any case, the gap is still high and the demand remains lower than the supply. Looking forward, the upcoming European, American and Chinese reports could offer some additional insight regarding the growth of these economies. The gap between Brent and WTI picked up to the $11-$14 range. This recent rise might be due to stronger than expected demand for oil in Europe, which suggests the oil market in Europe is tighter than estimated. The fundamentals suggest oil prices may rise in the coming weeks especially if the upcoming reports show growth and exceed expectations and if the oil market further tighten. Moreover, if the USD continues to fall, this could also pull up the price of oil.   
The bottom line, on a weekly scale, I guess oil price (WTI) may slightly rise. 

Monday 11 November 2013

Market Update

2013-11-10 08:00:15-05
AUD/USD posted modest gains last week, as the pair dropped below the 0.94 line, closing at 0.9385. This week’s key event is NAB Business Confidence. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. Australian employment numbers were weak and the RBA maintained rates.


2013-11-10 08:44:58-05
EUR/USD: A follow through on its previous week decline has left EUR targeting further downside. Support lies at the 1.3300 level with a break turning focus to the 1.3250 level and possibly lower towards the 1.3200 level.


2013-11-10 10:25:15-05
GBP/USD bounced back and crossed above the 1.60 level, gaining about one cent last week. The pair closed at 1.6018. This week’s key events include CPI, Claimant Count Change and Retail Sales.


2013-11-10 11:35:28-05
The Japanese yen showed some strength last week but ended the week almost unchanged as USD/JPY closed the week just above the 99 line. There are nine events in the upcoming week.

Thursday 7 November 2013

Market Update, plenty of set ups!


MARKET COMMENTARY


Firstly see my video update here : Click Here



Global risk appetite looks like it will have trouble continuing along the positive trajectory posted yesterday, with equities ending the Asian session mixed and the guarded price action escalating during the European session and ultimately driving S&P futures lower before the opening bell.


The US ISM Non-Manufacturing PMI for October surprised by rising to 55.4 points. It was expected to tick a bit lower to 54 from 54.4 points in September. The services sector (non-manufacturing) is the vast majority of the US economy. The employment component rose from 52.7 to 56.2 points.


Economic data out today in the UK shows that the little island is recovering much stronger than expected and is now forecast to be among the fastest growing economies in the western world in 2014. Data due out earlier today showed that Britain’s services sector increased in October at the fastest rate since 1997.

 AUD/USD: Trading the Australian Employment Change

 Australian Employment Change, which is released monthly, provides a snapshot of the health of the Australian labor market. A reading which is higher than the market forecast is bullish for the Australian dollar. Here are the details and 5 possible outcomes for AUD/USD. Published on Thursday at 00:30 GMT.

 NZD/USD back to uptrend channel on excellent job figures

 The employment situation in New Zealand, no matter how you look at it, and the improvement also exceeded expectations. The great data could bring forward rate hikes by the RBNZ and has already pushed NZD/USD higher, back to the uptrend channel that it lost recently. Can it challenge the highs of 2013?

 EUR/USD Nov. 6 – Steady Despite Weak PMIs and Retail Sales

 EUR/USD has moved higher on Wednesday, as the pair trades above the 1.35 line in the European session. In economic news, Spanish and Eurozone Services PMIs beat their estimates but the Italian Services PMI lost ground and fell short of expectations. Eurozone Retail Sales declined 0.6%, its weakest reading in nine months.

Monday 28 October 2013

Market update on majors

EURUSD

The Euro stabilizes around 1.38 handle, where the price closed for the week, after posting fresh high at 1.3831, Fibonacci resistance. Overall tone remains positive, however, descending indicators on 4-hour chart suggest further consolidation that was signaled by Friday’s Doji. Also overbought daily studies see risk of a pause in near-term rally. Initial support lies at 1.377, consolidation floor /Fibonacci 38.2% of 1.3664/1.3831 upleg, ahead of strong 1.37 zone, previous highs / 38.2% retracement and 1.3650 higher low / 50%, where stronger dips should find a footstep. On the upside, break above 1.3831 to focus 1.3900 initially.

Res: 1.3817; 1.3837; 1.3857; 1.3900
Sup: 1.3770; 1.3750; 1.3700; 1.3650

eurusd



GBPUSD

Cable trades in prolonged consolidative phase, with price action being established within 1.6254/1.6114 range, following repeated failure at key 1.6254/59 barrier. Hourly technicals are weak, while 4-hour chart indicators are losing traction, as the price moves within hourly triangular consolidation. Increased downside risk would be seen on a break below 1.6114/00 support zone, as this would also signal double-top formation on 4-hour chart and keep the upside targets on hold. Conversely, sustained break above 1.6200 handle, would shift near-term focus towards key barriers and breakpoints at 1.6254/59, above which to signal resumption of larger uptrend and focus short-term targets at 1.6300/80.

Res: 1.6221; 1.6245; 1.6254; 1.6259
Sup: 1.6168; 1.6148; 1.6114; 1.6100

gbpusd


USDJPY

The pair regains strength and averts immediate downside risk, as bounce off 97.00 support zone that was cracked last Friday, retraces over 50% of 98.47/96.93 downleg, on a weekly gap-higher opening. Hourly studies turned positive, however, weak tone prevails on 4-hour chart, as the price remains in near-term downtrend from 98.99 and current rally being capped by 55DMA at 97.74. Regain of 98.00 and more significant 98.47 lower top, is required to shift focus higher, otherwise, fresh lower top and extension of larger downtrend, would be likely near-term scenario. Initial support lies at 97.43, session low / 20/55DMA’s bullish crossover, while, extension below 96.93 handle would open way for full retracement of 96.55/98.99 ascend.

Res: 97.74; 98.00; 98.18; 98.47
Sup: 97.43; 96.93; 96.55; 96.00

usdjpy



AUDUSD

Near-term price action remains under pressure, as extension from 0.9670, where the lower top was left, broke below initial 0.9600 support. Fresh extension lower retraced 38.2% of 0.9280/0.9755 rally on a dip to 0.9571 so far, with near-term indicators sliding into negative territory. Initial targets lay at 0.9526/18, previous peak / 50% retracement, along with psychological 0.9500 support, reinforced by daily 55DMA. Break here to neutralize near-term bulls and spark stronger correction of larger 0.9280/0.9755 rally, as the upside remains capped by descending 200DMA. Corrective attempts face initial resistance at 0.9622, with 0.9670 expected to cap.

Res: 0.9622; 0.9670; 0.9700; 0.9755
Sup: 0.9571; 0.9526; 0.9500; 0.9461

audusd

Thursday 10 October 2013

Technical Analysis for Majors

EURUSD

The Euro remains at the back foot, as break below initial 1.3540 support, triggered fresh acceleration that fully retraced 1.3500/1.3645 upleg. Break below 1.3500 support, focuses strong support zone at 1.3460/40, higher platform / previous peak of 20/08 and Fibonacci 38.2% retracement of 1.3103/1.3645 rally. Negative near-term technicals favor the scenario, with consolidative action on oversold hourly studies, expected to precede fresh weakness. Any stronger rally should stay capped under 1.3545/65, Fibonacci 38.2% and 50% of 1.3645/1.3484 downleg, to keep freshly established bears in play.

Res: 1.3525; 1.3545; 1.3565; 1.3583
Sup: 1.3484; 1.3460; 1.3440; 1.3400

eurusd


GBPUSD

Cable came under increased pressure yesterday, with fresh bearish acceleration extending reversal from 1.6259 peak below 1.6000 handle and approaching the next support at 1.5900. The third wave that commenced from 1.6123 lower top, could travel to 1.5871/57, main bull trendline off 1.4812 and 100% Fibonacci expansion, with negative near-term studies supporting the notion. Bears may be interrupted by consolidative action, as hourly and 4-hour studies are oversold, with 1.6000, previous support, now offering solid resistance.

Res 1.5965; 1.6000; 1.6041; 1.6081
Sup: 1.5912; 1.5900; 1.5871; 1.5857

gbpusd


USDJPY

The pair extends near-term correction through initial barrier at 97.47 and Fibonacci 38.2% of 99.65/96.55 descend, approaching initial barriers at 98.00/10, psychological resistance / 50% retracement. Positively aligned near-term studies support further advance, however, overbought hourlies may delay rally. Clear break above 98.00 resistance zone is required to confirm freshly established uptrend and near-term base at 96.55, for stronger recovery towards next significant barrier at 99.00. Corrective dips should be contained above higher low at 97.11, to maintain bulls.

Res: 97.81; 98.00; 98.10; 98.28
Sup: 97.45; 97.11; 96.81; 96.55

usdjpy



AUDUSD

The pair came under pressure, as recovery attempt off 0.9280 failed to sustain break above 0.9455 barrier, with extension higher stalling at 0.9483 and subsequent pullback probing levels below 0.9400 support. Hourly studies turned negative, while 4-hour indicators are heading south that keeps the downside at risk, as the pullback retraced nearly 50% of 0.9280/0.9483 rally. Further easing would signal prolonged consolidation under 0.9526 high, as the price holds within 0.9280/0.9500 range. However, positive daily studies keep the upside in focus, with price action required to hold above key near-term support at 0.9280.

Res: 0.9422; 0.9471; 0.9483; 0.9500
Sup: 0.9388; 0.9358; 0.9332; 0.9300

audusd

Thursday 3 October 2013

Market Update, look out for the Yens!

Analysis for October 3rd, 2013

AUD/USD

Australian Dollar rebounded from the H4 Super Trend again; earlier the price rebounded from the 4/8 level. Most likely, during the next several days the pair will start a new ascending movement. The target for the bulls is at the 8/8 level.
AUDUSD
At the H1 chart, the Super Trends are still under pressure “bullish cross”. If the market is able to keep the price above the 5/8 level, the pair will continue growing up. In this case, the target will be at the 8/8 level.
AUDUSD


NZD/JPY

The pair rebounded from the 3/8 level and is trying to start a new ascending movement. If the bulls are able to break the daily Super Trend, they will become more dominant. I’ll increase my long positions as soon they break it.
NZDJPY
At the H1 chart, the market could leave an “oversold zone”; the Super Trends formed “bullish cross”. The closest target for the bulls is at the 2/8 level.
NZDJPY


SILVER

Silver broke the H4 Super Trend, thus ruining all bearish plans and expectations. During a local correction I opened a buy order. Later the market is expected to move upwards and reach the daily Super Trend. If the market breaks it, the instrument will continue growing up.
Silver
At the H1 chart we can see, that the bulls’ first attempt to enter an “overbought zone” failed; the Super Trends formed “bullish cross” and right now are supporting the current correction. We can’t exclude a possibility that the price may break the -2/8 level during the next several days. In this case, the lines at the chart will be redrawn.
Silver

Friday 27 September 2013

Forex Update Trends and Price action: Market Update where now for US Dollar?

Forex Update Trends and Price action: Market Update where now for US Dollar?: EUR/USD Current price: 1.3542 View Live Chart for the EUR/USD The EUR/USD trades at fresh weekly highs, finally showing signs of life a...

Market Update where now for US Dollar?

EUR/USD Current price: 1.3542

View Live Chart for the EUR/USD
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The EUR/USD trades at fresh weekly highs, finally showing signs of life and detaching off the 1.3500 level. Market has lost faith on the US as renewed concerns over debt ceiling and budget surged earlier today: sell the dollar is the name of the game this Friday. The EUR/USD upward momentum persists with US opening, with the pair pressuring the 1.3550 area, a few pips away from 1.3567, past week high and immediate resistance level. Short term technical readings support and upward continuation, with the pair now eyeing the 1.3610/20 area on a break above mentioned high, and in route to 1.3710 this year high.
Support levels: 1.3535 1.3500 1.3470
Resistance levels: 1.3570 1.3615 1.3660

GBP/USD Current price: 1.6104

View Live Chart for the GBP/USD
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Pound recovered the 1.6100 mark against the greenback, supported by both UK data and Carney’s positive words on the local economic outlook. The hourly chart shows 20 SMA heading strongly higher below current price, while indicators lose some strength but hold in positive territory. In the 4 hours chart technical readings present a strong upward momentum, supporting a retest of the 1.6160 price zone, post FOMC high. A weekly close around these levels, should anticipate a continued advance in the pair for the upcoming week.
Support levels: 1.6060 1.6020 1.5970
Resistance levels: 1.6130 1.6160 1.6200

USD/JPY Current price: 98.30

View Live Chart for the USD/JPY
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Accelerating downside and nearing the weekly low, the USD/JPY presents a strong bearish tone according to the hourly chart, with price well below moving averages and indicators heading south in negative territory. Weekly low at 98.25 is about to be challenge, and a price acceleration below should expose the daily ascendant trend line, today around 97.70 which also stands as post FED decision low. This will assit with our CAD/JPY and AUD/JPY positions now in profit by over 150 pips, so far
Support levels: 98.25 97.70 97.30
Resistance levels: 98.40 98.80 99.10

AUD/USD Current price: 0.9312 

View Live Chart for the AUD/USD
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Australian dollar presents a pretty negative tone, having bounce slightly higher after testing 0.9296 daily low. The hourly chart shows price developing below a bearish 20 SMA, while indicators stand in negative territory, heading back lower. In the 4 hours chart the technical outlook is clearly bearish, which will likely help keep the upside limited today.
Support levels: 0.9300 0.9260 0.9220
Resistance levels: 0.9335 0.9370 0.9410

Thursday 19 September 2013

What now for USD Dollar and all pairs?

Analysis for September 19th, 2013

EUR/USD

Being influenced by the news, Euro formed an ascending impulse and may continue forming this wave. We think, today the price may consolidate at the current levels and renew the previous top. Later, in our opinion, the pair may return to the level of 1.3400 to test it from above and then start forming a continuation pattern.
EURUSD

GBP/USD

Pound completed its ascending structure, which may be considered as the third wave. We think, today the price may start forming a correction with the first target at the level of 1.5795.
GBPUSD

USD/CHF

Being influenced by the news, Franc continued moving towards its main target at the level of 0.9100; this movement may be considered as the third wave of the current correction. We think, today the price may consolidate for a while at the current levels and then start forming another impulse to reach a new minimum and the target of this wave. Later, in our opinion, the pair may return to the level of 0.9190 to test it.
USDCHF

USD/JPY

The USD/USD currency pair completed a descending wave and right now is moving upwards to reach the target at 101.20. We think, today the price may form the first ascending wave with the target at the level of 99.20.
USDJPY

AUD/USD

Australian Dollar reached the target of its ascending structure. We think, today the price may consolidate at the current levels, renew the previous top, and then form a continuation pattern for a new descending movement.
AUDUSD

GOLD

Gold broke the channel of the previous descending wave and continues forming an ascending impulse. We think, today the price may reach the local target at 1380. Later, in our opinion, the instrument may fall down to reach the level of 1340 and then grow up towards the target at 1390.
Gold

Wednesday 11 September 2013

USD/JPY Holds above 100.00 looking to go to 103.00

Technical Analysis

EUR/USD
EURUSD
EUR/USD struggles with the 23.6% Fibo
“The euro was for many years before seen as a more expensive currency, but now it’s not so obvious given the prospects of tapering. Draghi promises more accommodation if necessary for years to come.”
- UralSib Financial Corp. (based on Bloomberg)
  • Pair’s Outlook
    It seems that bullish momentum from the bounce form the 50% Fibo (July to August move) has worn off as at the moment the pair is struggling with the 23.6% retracement. For the time being 20 and 55-day SMAs with the help of weekly R1 were able to keep the pair supported, but it might be that bearishness given by the short term technicals will take upper hand. It becomes even more likely when we remember that 61.8% retracement awaits testing.
  • Traders’ Sentiment
    Situation in the market remains largely unchanged as greenback remains second most bought (in 60% of cases) currency across the board. Bears hold majority (60%) of all open positions. It is a marginal increase since yesterday. Distribution of pending orders is exactly the same—51% against 49% with the bears holding marginal upper hand.
GBP/USD
GBPUSD
GBP/USD aims at 6 month high
"The kind of growth we want won't simply emerge of its own volition. In fact, I see a number of dangers. One is complacency, generated by a few quarters of good economic data. There are risks, not least the housing market getting out of control. Recovery will not be meaningful until we see strong and sustained business investment."
- Britain's Business Secretary Vince Cable (based on Reuters)
  • Pair’s Outlook
    Pair struggles with the 1.575 resistance area where we have 6 month and recent (relative) high. Probability of a failure here is rather high. In case the pair manages to consolidate above it, 1.588 would be a good interim target, 1.580 might have some psychological effects as well. Closure below 1.570 could easily pave the way to slip to 1.560.
  • Traders’ Sentiment
    Pound remains the most sold major currency across the board. There is no surprise that bears hold overwhelming majority (73%) of open positions. They are strengthening their positions in the distribution of pending orders as well. They have posted 55% of them, that is 2% more than yesterday.
USD/JPY
USDJPY
USD/JPY breaches 100 JPY
“Investors are taking on more risk amid a global stock rally as concern recedes over military intervention. That’s pushing the yen downward, which is raising expectations for higher earnings at Japanese exporters.”
- SMBC Nikko Securities Inc. (based on Bloomberg)
  • Pair’s Outlook
    After the prolonged struggle with the 100 JPY, pair managed to breach it. This uplifted significant portion of the downside pressure and put 101.4 as an interim target. If the pair manages to advance above it in a timely fashion, we could easily expect it to test 103 JPY in the short term as well. In case of a failure at the 2 month high, we could expect it to slip to 100 JPY. Failure here would put 99 JPY on the map.
  • Traders’ Sentiment
    Bears are keeping the pressure on the bulls, who have lost additional 4% of the market and at the moment account for 58% or market participants. Majority of pending orders, however, remains in favour of the bulls suggesting they are not willing to give up that easy.
USD/CHF
USDCHF
USD/CHF slips below the 200-day SMA
"Although Syria tensions continue to linger in the background, risk assets performed well overnight, helped in part by Chinese trade and inflation data released over the weekend."
- Credit Agricole (based on The Economic Times)
  • Pair’s Outlook
    It seems that the pair’s bullishness after the failure at the 50% Fibo (July-August move), has ended as at the moment the pair is testing 100 and 200-day SMA.s Failure here could provoke a sell off till 0.915 with in between here and then support being at 0.924. Closure above the 100 and 200-day SMAs would put 0.945 on the map once again, but it is too soon to speak if the pair would manage to breach it with ease.
  • Traders’ Sentiment
    Distribution of open positions is exactly the same as yesterday-bulls hold 72% of them. Noticeable changed took place in the distribution of pending orders. Share of the ones posted by the bulls increased by 6% and at the moment is at 63% gauge.

Thursday 29 August 2013

Market update on Video


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Wednesday 28 August 2013

Market Update despite Low Volumes...

EUR/USD

Euro is still moving above the level of 1.3344 and may continue growing up towards the target at 1.3480. We think, today the price may test the level of 1.3344 again from above and then continue moving towards the above-mentioned target. Later, in our opinion, the pair may start a descending correction to reach the level of 1.3200.
EURUSD

GBP/USD

Pound continue moving downwards with the target at 1.5460. After reaching it, the price may return to the level of 1.5588 to test it from below. If the market rebounds from it, the pair may start a new descending movement to reach the target at 1.5400. However, if the market stays above the level, the pair may start forming a new ascending structure towards the level of 1.5890.
GBPUSD

USD/CHF

Franc is still moving downwards with the target at 0.9110. We think, today the price may reach it and then return to the level of 0.9250. Later, in our opinion, the pair may grow up to reach the target at 0.9400 and then continues falling down.
USDCHF

USD/JPY

The USD/JPY currency pair reached the target of its first descending structure. We think, today the price may reach a new minimum at the level of 96.50 and then form a correction to return to the level of 98.00. Later, in our opinion, the pair may start a new descending movement towards the next target at 95.00.
usdj

AUD/USD

Australian Dollar continues moving downwards. We think, today the price may reach the level of 0.8860, form a slight correction, and then continue falling down towards the main target of this structure at 0.8800. Later, in our opinion, the pair may start forming an ascending correction.
AUDUSD

GOLD

Gold is extending the fifth wave; the market has already reached a local target of this extension. We think, today the price may form a descending structure towards the level of 1365 to test it from above and then complete this extension by forming one more ascending structure towards the level of 1455. Later, in our opinion, the instrument may start a fast descending movement to reach the target at 1280.
Gold

Friday 23 August 2013

Market Update

EURUSD

The Euro extended pullback from 1.3450 high and tested pivotal 1.3310/00 support, higher platform / Fibonacci 61.8% retracement of 1.3205/1.3450 upleg, where the price found footstep. Subsequent bounce to 1.3370 zone diminished immediate downside risk, with price action consolidating within 1.3330/70 range. However, near-term studies are losing momentum and keep the downside risk in play. Conversely, regain of 1.3400 handle, required to confirm base and re-focus 1.3450 target. Daily studies remain positive and keep the upside favored.

Res: 1.3373; 1.3400; 1.3427; 1.3450
Sup: 1.3330; 1.3300; 1.3263; 1.3232


eurusd


GBPUSD

Cable enters near-term consolidative mode, after pullback from fresh high at 1.5716 found footstep at initial support at 1.5670 zone, where 55DMA contained dips. Prevailing negative tone on near-term technicals, sees the downside vulnerable, with slide below 1.5670/60 handles, seen as a trigger for stronger corrective action towards psychological 1.5500 support and 1.5481, Fibonacci 38.2% of 1.5100/1.5716 upleg. Alternatively, sustained break above 1.5600 barrier and regain of minimum 1.5650/60 handles, would signal an end of corrective phase and shift near-term focus higher.

Res: 1.5600; 1.5627; 1.5650; 1.5700
Sup: 1.5561; 1.5517; 1.5500; 1.5481

gbpusd


USDJPY

The pair remains well supported and extended recovery rally from 96.90 low, through key near-term barrier at 98.64, 15/08 high. This also confirms higher base at 97 zone, with positive near-term studies favoring eventual push through psychological / bear-channel resistance at 99.00 zone. Break here is required to give an initial signal of completion of weekly bullish pennant and expose another significant barrier at 100.00. Overbought near-term studies, however, suggest a pause in current rally, with immediate supports at 98.64 and 98.30, ahead of psychological 98.00 support, above which corrective dips should be ideally contained.

Res: 99.00; 99.50; 99.76; 99.93
Sup: 98.80; 98.64; 98.30; 98.00

usdjpy



AUDUSD

The Aussie remains under pressure, as fresh extension of downleg from 0.9332 peak, retraced 76.4% of 0.8846/0.9332 ascend. Brief corrective action sees not much upside potential, as near-term studies are weak. Initial barrier lies at 0.9045, Fibonacci 38.2% retracement of 0.9232/0.0.8930, ahead of 0.9081/0.9100, 50% retracement / lower platform, where stronger rallies should be capped, as larger picture bears remain fully in play.

Res: 0.9045; 0.9081; 0.9100; 0.9131
Sup: 0.8970; 0.8930; 0.8918; 0.8900


audusd