Articles

EUR/USD:

A combination of broad-based USD bidding and ECB President Draghi highlighting recent economic developments have been weaker than forecasts, weighed on the single currency Tuesday. Down 0.48% on the day, the EUR/USD’s H4 candles broke through and retested January’s opening level at 1.1445 as resistance, and eventually whipsawed through 1.14 into the close.

The move to lows of 1.1382 likely tripped a truckload of stop-loss orders from traders attempting to fade 1.14, potentially clearing the path south towards December’s opening level plotted at 1.1350.

The H4 timeframe’s bearish vibe is also echoed higher up on the curve. Weekly resistance at 1.1465 remains defensive, opening up the possibility of further selling towards weekly demand at 1.1119-1.1212. In conjunction with weekly flow, daily action also recently crossed under support at 1.1455 (now acting resistance), consequently exposing support priced in at 1.1302.

Areas of consideration:

In the event buyers regain a foothold above 1.14, the research team notes possible shorting opportunities between 1.1465/1.1445 (green – comprised of the weekly and daily resistance levels as well as January’s opening level). The first downside target from this area is set around 1.14, though further selling beyond this number is high probability.

Should the H4 candles continue exploring lower ground from current price and retake 1.14 to the downside, however, traders are then free to look for shorting opportunities (preferably on the retest of 1.14 as resistance) towards December’s opening level mentioned above at 1.1350 as an initial take-profit target.

Today’s data points: Limited.

GBP/USD:

British lawmakers rejected Prime Minister Theresa May’s Brexit deal by a wide margin Tuesday. GBP fell against its US counterpart to lows of 1.2668 in a knee jerk reaction, though swiftly pared back losses to move towards flat for the day, as traders reasoned the rejection of May’s deal along with a Parliament committed to leaving the EU with a deal lessens the chance of a no-deal Brexit. Labour opposition, however, proposed a no-confidence vote on PM May that will take place today at 19:00 GMT.

Despite recent volatility, the technical picture remains unchanged.

Coming in from the top this morning, we can observe weekly price holding reasonably firm north of demand at 1.2365-1.2615, with a run towards supply at 1.3472-1.3204 still in the mix as a possibility. A closer reading on the daily timeframe witnessed yesterday’s candle reconnect with support at 1.2697 and strongly rebound north. Continued buying from this point could lead to a test of supply at 1.3072-1.2984, according to our technical studies. Above 1.2697, limited supply is visible, with a major portion likely consumed as price declined lower in late November of 2018 (see red descending line).

Areas of consideration:

Although the technical structure on the bigger picture points to higher prices, 1.29 on the H4 timeframe could hamper movement as it did on November 22, 2018 and more recently on Monday this week.

Despite this, the research team has labelled this a flat market, given further volatility is expected. Trading technical formations in an environment such as this, as you probably found it yesterday, is incredibly precarious and challenging.

Today’s data points: BoE Gov. Carney Speaks; UK CPI y/y; UK PPI Input m/m; UK RPI y/y.

AUD/USD:

AUD/USD prices concluded Tuesday’s segment unmoved for a second consecutive day, flipping between gains/losses around the 0.72 handle on the H4 timeframe. As a result of this, much of the following piece will echo similar thoughts put forward in previous briefings.

From the top of the pile, we can see weekly flow engaging with its 2017 yearly opening level at 0.7199 after experiencing a marginal breach to the upside last week. Should buyers remain in the driving seat here this week, notable resistance at 0.7371 is in range.

Contrary to weekly structure, daily supply at 0.7246-0.7178 is still in the picture, currently hindering upside. Failure to hold ground, however, not only confirms bullish strength above the 2017 yearly opening level at 0.7199 on the weekly timeframe, it also frees upside in the direction of a daily Quasimodo resistance at 0.7338.

 Areas of consideration:

In view of recent movement, the research team is still cautious in this market.

Before considering a long (based on where we’re trading from on the weekly timeframe), waiting for a H4 close above the aforementioned daily supply is recommended. This, in theory, likely clears sellers from within the zone and opens up the path north for further buying. A H4 close above daily supply, followed up with a retreat to 0.72 offers traders the chance to buy, according to our reading, targeting H4 resistance at 0.7274. Still, it is worth noting that round numbers (0.72) are typically prone to fakeouts, therefore entering long on the retest of this number using additional candlestick confirmation is recommended (entry/stop parameters can be defined according to this pattern).

Today’s data points: Limited.

USD/JPY:

In lockstep with a robust US dollar index and continued buying observed in US equities, the USD/JPY maintained a bullish stance Tuesday.

According to the H4 timeframe, this has positioned the candles just south of a rather interesting area of resistance between 109 and 108.84 (yellow).The 109 handle remains in the firing range as a viable upside target for a large portion of intraday traders this morning, which happens to merge closely with a 61.8% H4 Fibonacci resistance value at 108.84 and a daily resistance at 108.95 (a Quasimodo support-turned resistance). In addition to this, traders may also want to pencil in another layer of daily resistance (also a Quasimodo support-turned resistance) seen directly above at 109.55.

While 109/108.84 appears strong resistance, it is somewhat marred by weekly traders defending support at 108.13.

Areas of consideration:

On account of the above, structure in this market seems to be caught between a rock and a hard place at the moment. Irrespective of the direction one selects here, traders have to contend with strong opposition.

Should your methodology agree with shorting the 109 area today, waiting for additional candlestick confirmation to take shape may be an idea to help avoid an unnecessary loss.

Today’s data points: Limited.

USD/CAD:

Outlook unchanged

Breaking a three-day bullish phase, Tuesday’s movement recoiled from just south of the 1.33 handle and shook hands with December’s opening level on the H4 timeframe at 1.3235. WTI rebounded strongly yesterday to highs of $52.28, consequently reinforcing the Canadian dollar and weighing on its US counterpart.

In spite of yesterday’s retreat, though, the technical landscape remains optimistic, according to our studies.

For weekly traders, support at 1.3223 is currently offering a floor to base potential longs from. The next upside objective from this point falls in at 1.3434: the 2017 yearly opening level. Closer analysis of this market on the daily timeframe reveals the unit shook hands with a daily Quasimodo support at 1.3181 last week. This level, as you can see, is situated just south of the current weekly support level. As long as the buyers continue to defend the said supports, the next port of call to the upside from here falls in around trend line support-turned resistance (extended from the low 1.2782).

Areas of consideration:

Although both weekly and daily structure suggest buyers govern movement at the moment, entering long on the H4 timeframe is, as highlighted in Tuesday’s briefing, precarious. Not only do we have to contend with nearby resistance at the 1.33 handle, there’s also another layer of resistance positioned directly overhead at 1.3329.

 With the above in mind, the research team feels waiting for a H4 close to form above 1.3329 before looking to buy this market is a logical path to explore. This would not only confirm bullish intent on the bigger picture, it’d also clear upside on the H4 scale towards 1.34ish which aligns nicely with the daily trend line support-turned resistance highlighted above.

 Aggressive traders will likely enter on the close of a H4 breakout candle above 1.3329 and locate stops beneath the candlestick’s tail. Conservative traders, on the other hand, may opt to wait and see if a retest of 1.3329/1.33 takes shape (red arrows) before pulling the trigger (stop-loss orders can be positioned below the rejecting candle’s tail or beneath 1.33).

Today’s data points: Limited.

USD/CHF:

Improved market sentiment and a robust US dollar across the board bolstered the USD/CHF amid trade Tuesday. Leaving the 0.98 handle unchallenged on the H4 timeframe, the pair rotated northbound and reclaimed both January’s opening level at 0.9838 and resistance at 0.9854 (now acting support) to the upside. The next area of resistance falls in at its 0.99 handle, which, as you can see, served the market well at the beginning of the year (blue). Beyond 0.99, on the other hand, a possible ABCD (black arrows) 161.8% formation completes just south of a Quasimodo resistance (0.9956) at 0.9942.

Our technical reading on the weekly timeframe, however, reveals price tested its 2018 yearly opening level at 0.9744 in the shape of a bullish pin-bar formation last week and recovered in robust fashion. From this point, we see little stopping the unit from climbing to 1.0029: the 2016 yearly opening level. In terms of where we stand on the daily timeframe, the candles display room to advance as far north as resistance priced in at 0.9986, which happens to boast strong historical significance.

Areas of consideration:

Having noted both weekly and daily charts show scope for further upside, entering short from 0.99 on the H4 timeframe is a precarious move. The same could be said for the H4 Quasimodo resistance level at 0.9956, despite being complemented by an ABCD approach just beneath it at 0.9942.

Intraday longs above 0.99 are an option given what we’re drawing from the higher timeframes, though do take into account the noted H4 Quasimodo resistance level could very well hamper upside.

Should your trading methodology point to shorts around the noted H4 Quasimodo resistance level, waiting for additional bearish candlestick confirmation to form is an option. This will provide traders entry and stop levels and also display whether or not active sellers reside around the area before pulling the trigger.

Today’s data points: Limited.

Dow Jones Industrial Average:

Outlook unchanged

US equity indexes concluded Tuesday in positive territory despite poor fourth-quarter earnings figures reported by Wells Fargo and JPMorgan. The H4 candles, however, remained capped by supply drawn from 24224-24026. What’s interesting about this area from a technical perspective, as underlined in Tuesday’s briefing, is it engages with daily resistance coming in at 24090. As a result, the index could still observe a pullback take shape from this area. 

 An alternative to the aforementioned H4 supply is another layer of H4 supply seen at 24750-24555. This area houses the 2018 yearly opening level on the weekly timeframe at 24660, and is firmly positioned within the walls of a daily supply zone at 24842-24538. In addition to this, the daily supply has the added bonus of being accompanied by a daily ABCD approach (black arrows).

Areas of consideration:

On account of the above, there are two clear supply areas worthy of attention for potential shorts: 24224-24026 and 24750-24555. As emphasized above, both zones display higher-timeframe convergence, though the upper area at 24750-24555 has the edge in terms of confluence, according to our technical drawings. That does not mean to say the lower H4 supply at 24224-24026 will not force price to lower levels, though. To help avoid an unnecessary loss, however, it might be worth considering entering on the back of bearish candlestick confirmation. This not only offers traders a defined entry and exit point, it also shows whether or not sellers are active.

 The first take-profit target from 24224-24026 falls in around H4 support at 23549.

Today’s data points: Limited.

XAU/USD (Gold):

Outlook unchanged

Bullion, once again, offered little to shout about Tuesday, ranging between 1295.4/1285.8: a small H4 consolidation (brown) that begun forming Thursday last week. Traders may also want to acknowledge the surrounding landscape, molded in the shape of larger consolidation (yellow) seen at 1296.8/1279.7. Inside the lower limits of this range, it’s also worth keeping an eye on January’s opening level at 1282.2 as this number could serve as support at a point over the coming week.

Beneath 1296.8/1279.7, space for the sellers to stretch their legs towards H4 demand plotted at 1259.0-1265.3 is visible, which happens to fuse nicely with weekly support at 1260.8. Note this H4 demand is also sited within the lower limits of the daily support area coming in at 1272.5-1261.5. It might also be worth mentioning before we reach the aforementioned H4 demand, daily buyers may try to defend the channel resistance-turned support (etched from the high 1214.3) that’s positioned just north of the said daily support area.

 Above the current H4 range, however, we have the 2018 yearly opening level positioned nearby at 1302.5 (weekly timeframe), shadowed closely by a daily Quasimodo resistance at 1303.0.

Areas of consideration:

Over the past week, the yellow metal has served well as a range trader’s sanctuary on the H4 scale. Given the recent strength of gold over the past couple of weeks, however, a break of this range to the upside is possible this week. Should this come to fruition, traders’ crosshairs will likely be fixed on the 2018 yearly opening level mentioned above at 1302.5/daily Quasimodo resistance for medium/long-term short positions. Irrespective of this forecast, though, range traders will likely continue taking advantage of gold’s medium-term position until the extremes of the H4 range (yellow) are violated.

For those interested in trading the current H4 ranging motion, the research team recommends waiting for additional confirmation to form before pulling the trigger. A bullish/bearish candlestick signal would suffice. This not only offers traders a defined entry and exit point, it also shows whether or not buyers/sellers are active. 

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Global Markets:

• Asian Stock Markets : Nikkei down 0.64%, Shanghai Composite up 0.00%, Hang Seng up 0.24%, ASX up 0.35%
• Commodities : Gold at $1291.15 (+0.21%), Silver at $15.62 (+0.02%), Brent Oil at $60.74 (+0.16%), WTI Oil at $52.15 (+0.08%)
• Rates : US 10-year yield at 2.709, UK 10-year yield at 1.250, Germany 10-year yield at 0.204

News & Data:

• (AUD) Westpac Consumer Sentiment -4.70% vs 0.10% previous
• (GBP) Parliament Brexit Vote Reject vs Reject expected
• (USD) Core PPI m/m -0.10% vs 0.20% expected
• (USD) PPI m/m -0.20% vs -0.10% expected
• Yuan eases on stronger US dollar as China lines up more stimulus
• Brexit: Theresa May faces confidence vote after huge defeat

Markets Update:

Asian stock markets are mixed on Wednesday following the overnight gains on Wall Street and as investors digested news that the UK House of Commons has voted down Prime Minister Theresa May’s Brexit deal, which adds more uncertainty about the UK’s exit from the European Union. Investors now focus on a no-confidence vote on May’s government by Britain’s parliament on Wednesday.

Greater China markets mostly fell, and Hong Kong’s Hang Seng Index was up 0.2%. The Shanghai composite flat, while the Shenzhen composite and Shenzhen component index were both hovering between positive and negative territory.

Japan’s Nikkei 225 fell about 0.7 percent while the Topix index slipped 0.3 percent. In South Korea, the Kospi traded higher, up about 0.4 percent. In Australia, the benchmark ASX 200 rose 0.35 percent as the heavily-weighted financial subindex added 0.7 percent.

U.S. Treasuries steadied after a choppy overnight session. The yield on benchmark 10-year notes last stood at 2.711, a tad lower from 2.718 percent at the U.S. close on Tuesday. In commodities, oil prices rose about 3 percent overnight supported by China’s promise of more stimulus.

Upcoming Events:

• 10:15 AM GMT – (GBP) BOE Gov Carney Speaks
• 10:30 AM GMT – (GBP) CPI y/y
• 10:30 AM GMT – (GBP) PPI Input m/m
• 10:30 AM GMT – (GBP) RPI y/y
• &more…

Global Markets:

• Asian Stock Markets : Nikkei up 0.85%, Shanghai Composite up 0.83%, Hang Seng up 1.65%, ASX up 0.71%
• Commodities : Gold at $1291.25 (0.00%), Silver at $15.72 (+0.24%), Brent Oil at $59.78 (+1.34%), WTI Oil at $51.20 (+1.37%)
• Rates : US 10-year yield at 2.715, UK 10-year yield at 1.298, Germany 10-year yield at 0.231

News & Data:

• (NZD) FPI m/m -0.20% vs -0.60% previous
• (NZD) NZIER Business Confidence -17 vs -30 previous
• (EUR) Industrial Production m/m -1.70% vs 0.30% expected
• (CNY) Foreign Direct Investment ytd/y 0.90% vs -1.30% previous
• (EUR) German WPI m/m -1.20% vs 0.30% expected
• (CNY) USD-Denominated Trade Balance 57.1B vs 51.6B expected
• China NDRC: Will strengthen counter-cyclical adjustments in its macroeconomic policy
• Janet Yellen says it’s ‘very possible’ the Fed has made its last rate hike of this cycle

Markets Update:

Asian stocks pulled ahead on Tuesday, led by a bounce in Chinese shares as Beijing signaled more supportive measures to stabilize a slowing economy, while the British pound braced for a showdown in parliament over the government’s Brexit plan.

In Japan, the benchmark Nikkei 225 added 0.9 percent after resuming trade on Tuesday — the Japanese market was closed Monday for a public holiday. South Korea’s Kospi gained 1.31 percent while the Kosdaq rose 1.52 percent. Greater China markets also gained: Hong Kong’s Hang Seng index rose 1.65 percent. Mainland Chinese markets higher, with Shanghai composite up by 0.85%.

Australia’s ASX 200 was up 0.7 percent as the heavily-weighted financial subindex added 0.57 percent while the energy and materials sectors also posted gains.

The British pound is likely to steal the limelight later in the day as the Britain’s parliament will vote on Prime Minister Theresa May’s Brexit deal. The pound’s one-month implied volatility stood at 12.5 percent, above the average for the past year of around 8.8 percent well off 20-percent plus levels seen in the days just before the UK referendum on June 23, 2016. Oil prices also rebounded on supply cuts by producer club OPEC and Russia.

Upcoming Events:

• 02:30 PM GMT – (USD) PPI m/m
• 02:30 PM GMT – (USD) Core PPI m/m
• 04:00 PM GMT – (EUR) ECB President Draghi Speaks
• Tentative – (GBP) Parliament Brexit Vote
• 07:00 PM GMT – (USD) FOMC Member George Speaks
• &more…

EUR/USD:

The single currency traded sideways against its US counterpart throughout its session Monday, taking cues from a docile dollar and sidestepping lower-than-expected industrial production figures.

Traders who read Monday’s briefing may recall the piece highlighting the yellow H4 zone at 1.1445/1.1460 as a potential platform for buyers. Though the area (comprised of reasonably attractive confluence: a H4 AB=CD symmetrical completion point around 1.1460s [black arrows], January’s opening level [also positioned on the H4] at 1.1445 and daily support at 1.1455) is holding ground, the research team remains troubled by weekly resistance at 1.1465. Traders are urged not to overlook the weekly resistance level based on last week’s push to highs of 1.1569, as the barrier boasts strong historical significance dating as far back as early February 2015. In addition to this, there’s also some concern surrounding the nearby H4 resistance level priced in at 1.1486 and the 1.15 handle.

Areas of consideration:

In light of the above reading and Monday’s movement seen defending the top edge of the yellow H4 zone mentioned above at 1.1445/1.1460, buyers are clearly active in spite of the threat of selling from weekly resistance (see above).

As underlined in Monday’s report, traders are urged to wait for additional confirmation to form before pressing the buy button in a bid to help overcome the threat of weekly selling.

A bullish candlestick pattern that forms within the lower limits of the buy zone, for example, would serve well (see chart for a visual image: a pin-bar formation), offering a defined entry and exit point. By entering lower within the H4 buy zone, traders are able to target more favourable risk/reward numbers.

In regards to targets out of 1.1445/1.1460, keep eyes on H4 resistance at 1.1486/1.15 as an initial take-profit zone.

Today’s data points: ECB President Draghi Speaks; US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

GBP/USD:

The GBP/USD clocked highs of 1.2929 amid early US trade Monday, following headlines that ERG Brexiteers will be voting with Theresa May and the government today. The source was later denied by Conservative lawmaker Steve Baker, who, as part of the ERG, stated they are planning to vote against the deal. This witnessed the market pullback and reclaim 1.29 to the downside, settling around 1.2861 into the close (+0.08%).

For those who read Monday’s briefing, our technical report highlighted a long opportunity from H4 support at 1.2824/the 1.28 handle. Well done to any of our readers who managed to jump aboard this move. We liked this area due to both the weekly and daily charts displaying room to press higher. A run towards supply painted at 1.3472-1.3204 may be in store over the coming weeks, after weekly price respected demand coming in at 1.2365-1.2615. In conjunction with weekly movement, daily activity concluded recent trade closing firmly above resistance priced in at 1.2697 (now acting support).Continued buying from this point could lead to a test of supply at 1.3072-1.2984, according to our technical studies. Above 1.2697, limited supply is visible, with a major portion likely consumed as price declined lower in late November of 2018 (see red descending line).

Areas of consideration:

Today is likely to bring with it robust market movement, particularly in the GBP/USD market. Three possible outcomes to today’s Brexit vote are: UK PM May wins, the PM loses by a narrow margin and the PM loses by a wide margin.

Should May win (highly unlikely), the research team expects sterling to advance as far north as 1.35ish. If May loses by a narrow margin, expect a pop towards 1.30ish. And if the PM loses by a wide margin we’re looking at the 1.25 area.

We expect the British Pound to see plenty of volatility today, with the possibility of wider spreads and price gaps throughout this risk event. For that reason, traders are urged to trade with caution.

Today’s data points: UK Parliament Brexit Vote; US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

AUD/USD:

Down 0.20% on the day, the Australian dollar traded in a subdued fashion Monday against its US counterpart. Despite disappointing Chinese trade balance in which exports unexpectedly fell 4.4%, and imports marked the largest decline since July 2016, the AUD/USD H4 candles spent the day cycling around its 0.72 region.

In view of the somewhat lackluster performance, much of the following piece will echo similar thoughts put forward in Monday’s briefing.

From the top of the pile, we can see weekly flow engaging with its 2017 yearly opening level at 0.7199 after suffering a marginal breach to the upside last week. Should buyers remain in the driving seat here this week, notable resistance at 0.7371 is in range.

Contrary to weekly structure, daily supply at 0.7246-0.7178 remains in the picture and could possibly hamper upside this week. Failure to hold, however, not only confirms bullish strength above the 2017 yearly opening level at 0.7199 on the weekly timeframe, it also frees upside in the direction of a daily Quasimodo resistance at 0.7338.

Areas of consideration:

Having seen 0.72 fail to offer support Monday, intraday buyers are likely fearful here. This is likely a combination of sub-standard Chinese data, a docile greenback and daily technical supply mentioned above at 0.7246-0.7178.

In view of recent movement, the research team is cautious in this market. Before considering a long in this market, waiting for a H4 close above the aforementioned daily supply is recommended. This, in theory, is likely to clear out sellers from within the zone and open up the path north for further buying. Should the market observe a using) are considered high probability, targeting H4 resistance at 0.7274 as the next upside target.

Today’s data points: US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

USD/JPY:

In lockstep with US equities, the USD/JPY began the week on a negative footing. Under pressure from disappointing data out of China in early Asian hours ignited demand for the safe-haven Japanese yen.

Following a slump towards 108 on the H4 timeframe, the candles established support and staged a modest recovery, though still concluded Monday’s session down 0.32%. The 109 handle remains in the firing range as a viable upside target, according to our technical studies, given it joins closely with a 61.8% Fibonacci resistance value at 108.84 (yellow).

Support emerging from 108 is likely a mixture of a tame US dollar, technical buying off the 108 round number and longer-term buyers entering the fold off weekly support at 108.13. The only grumble, technically speaking, for the buyers right now is daily resistance at 108.95 (a Quasimodo support-turned resistance that merges beautifully with the 109 handle highlighted above on the H4 scale) currently capping upside. In addition to this, another layer of daily resistance (also a Quasimodo support-turned resistance) is seen directly above at 109.55.

Areas of consideration:

On the whole, the technical setting presented here offers a somewhat bullish bias until we shake hands with 109ish. Weekly price is establishing support off 108.13, H4 action defending its round number 108 and daily movement displaying room to press as far north as resistance at 108.95.

Therefore, the research team will be keeping a close eye on how H4 action responds from 108 today. An ideal condition would be for a H4 bullish candlestick formation to print. This – coupled with the surrounding support and room to press higher – is likely enough to entice buyers into the market towards 109 today. This not only offers traders a defined entry and exit point, it also shows whether or not buyers are active.

Today’s data points: US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

USD/CAD:

Having seen the US dollar index offer little in terms of movement Monday, and WTI record its second consecutive day in negative territory, the USD/CAD popped higher for a third consecutive daily session.

From a technical standpoint this was an expected move. For weekly traders, support at 1.3223 is currently offering a floor to base potential longs from. The next upside objective from this point falls in at 1.3434: the 2017 yearly opening level.

Closer analysis of this market on the daily timeframe reveals the unit shook hands with a daily Quasimodo support at 1.3181 last week. This level, as you can see, is situated just south of the current weekly support level. As long as the buyers continue to defend the said supports, the next port of call to the upside from here falls in around trend line support-turned resistance (extended from the low 1.2782).

Areas of consideration:

Although both weekly and daily structure suggest buyers are in the driving seat, entering long on the H4 timeframe is precarious. Not only do we have to contend with nearby resistance at 1.33, there’s also another layer of resistance positioned directly overhead at 1.3329.

With the above in mind, the research team feels waiting for a H4 close to form above 1.3329 before looking to buy this market is a logical path to explore. This would not only confirm bullish intent on the bigger picture, it’d also clear upside on the H4 scale towards 1.34ish which aligns nicely with the daily trend line support-turned resistance highlighted above.

Aggressive traders will likely enter on the close of a H4 breakout candle above 1.3329 and locate stops beneath the candlestick’s tail. Conservative traders, on the other hand, may opt to wait and see if a retest of 1.3329/1.33 takes shape before pulling the trigger (stop-loss orders can be positioned below the rejecting candle’s tail or beneath 1.33).

Today’s data points: US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

USD/CHF:

Disappointing trade data out of China and industrial production data from the Eurozone triggered a flight to safety Monday, favouring the Swiss franc.

H4 resistance at 0.9854 along with its converging H4 trend line resistance (extended from the high 0.9963), and January’s opening level at 0.9838, as you can see, held firm in recent trade. Selling pressure from these areas weighed on the USD/CHF, bringing the H4 candles to lows just north of 0.98 into Monday’s close. In the event further losses are observed today, 0.98 is likely to be engulfed and H4 demand at 0.9737-0.9763 likely to be brought into the mix. Although this H4 demand suffered a breach to its lower edge last week, there are potentially still active buyers remaining here based on unfilled orders from traders unable to buy following the fakeout lower.

Our technical reading on the weekly timeframe reveals price tested its 2018 yearly opening level at 0.9744 last week and recovered in robust fashion. Although forming in the shape of a bullish pin-bar formation, buyers appear to be struggling at this point. In terms of where we stand on the daily timeframe, the candles are meandering between a daily trend line support (taken from the low 0.9187 – merges with the current weekly support at 0.9744) and daily resistance at 0.9876.

Areas of consideration:

At current price, we do not see a whole lot to hang our hat on.

Sub 0.98 into H4 demand at 0.9737-0.9763, however, is an interesting area for a possible bounce higher today. Not only does the zone house weekly support at 0.9744, it also fuses closely with daily trend line support highlighted above. Should H4 price test this area today and chalk up a reasonably nice-looking bullish candlestick formation (entry/stop parameters can be defined from this structure), a round of buying towards at least 0.98 is likely on the cards.

Today’s data points: US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

Dow Jones Industrial Average:

In recent hours, the H4 candles crossed swords with supply priced in at 24224-24026 and appears to be holding, as we write. What’s interesting about this area from a technical perspective is it engages with daily resistance coming in at 24090. As a result, the market could observe a pullback take shape from this area today.

An alternative to the above is the next layer of H4 supply seen at 24750-24555. This area houses the 2018 yearly opening level on the weekly timeframe at 24660, and is firmly positioned within the walls of a daily supply zone at 24842-24538. In addition to this, the daily supply has the added bonus of being accompanied by a daily ABCD approach (black arrows).

Areas of consideration:

On account of the above, there are two clear supply areas worthy of attention for potential shorts: 24224-24026 and 24750-24555. As highlighted above, both zones display higher-timeframe convergence, though the upper area at 24750-24555 has the edge in terms of confluence, according to our technical drawings. That does not mean to say the lower H4 supply at 24224-24026 will not hold price, though. To help avoid an unnecessary loss, however, it might be worth considering entering on the back of bearish candlestick confirmation. This not only offers traders a defined entry and exit point, it also shows whether or not sellers are active.

The first take-profit target from 24224-24026 falls in around H4 support at 23549.

Today’s data points: US PPI m/m and Core PPI m/m; FOMC Member George Speaks.

XAU/USD (Gold):

Bullion offered little to shout about Monday, ranging between 1295.4/1285.8: a small H4 consolidation (brown) that begun forming Thursday last week. Traders may also want to acknowledge the surrounding landscape, molded in the shape of larger consolidation (yellow) seen at 1296.8/1279.7. Inside the lower limits of this range, it’s also worth keeping an eye on January’s opening level at 1282.2 as this number could serve as support at a point over the coming week.

Beneath 1296.8/1279.7, space for the sellers to stretch their legs towards H4 demand plotted at 1259.0-1265.3 is visible, which happens to fuse nicely with weekly support at 1260.8. Note this H4 demand is also sited within the lower limits of the daily support area coming in at 1272.5-1261.5. It might also be worth mentioning before we reach the aforementioned H4 demand, daily buyers may try to defend the channel resistance-turned support (etched from the high 1214.3) that’s positioned just north of the said daily support area.

Above the current H4 range, however, we have the 2018 yearly opening level positioned nearby at 1302.5 (weekly timeframe), shadowed closely by a daily Quasimodo resistance at 1303.0.

Areas of consideration:

Over the past week, the yellow metal has served well as a range trader’s sanctuary on the H4 scale. Given the recent strength of gold over the past couple of weeks, however, a break of this range to the upside is possible this week. Should this come to fruition, traders’ crosshairs will likely be fixed on the 2018 yearly opening level mentioned above at 1302.5/daily Quasimodo resistance for medium/long-term short posiitons. Irrespective of this forecast, though, range traders will likely continue taking advantage of gold’s medium-term position until the extremes of the H4 range (yellow) are violated.

For those interested in trading the current H4 ranging motion, the research team recommends waiting for additional confirmation to form before pulling the trigger. A bullish/bearish candlestick signal would suffice. This not only offers traders a defined entry and exit point, it also shows whether or not buyers/sellers are active.

The use of the site is agreement that the site is for informational and educational purposes only and does not constitute advice in any form in the furtherance of any trade or trading decisions.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability with regard to financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com.au, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.

IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.

EUR/USD:

Weekly Gain/Loss: +0.64%

Weekly Close: 1.1468

Weekly perspective:

Despite clocking highs of 1.1569 last week, the pair failed to sustain gains and overpower resistance coming in at 1.1465. Taking the form of a mildly respectable bearish pin-bar pattern, price action concluded the week closing just three pips above the said resistance.

Traders are urged not to overlook the current resistance level on this scale, as it boasts strong historical significance dating as far back as early February 2015. In the event we continue to press for lower ground this week, traders’ crosshairs will likely be fixed on demand drawn from 1.1119-1.1212.

Daily perspective:

The key observation on this timeframe is supply at 1.1622-1.1573 and support at 1.1455.

Price action witnessed a sharp change in mood Thursday, turning just north of the aforementioned supply. This, as you can see, weighed on the unit Friday, pulling the market towards noted support which, according to our technical reading, has the ability to hamper selling this week given how well this level held as resistance during the month of November (2018).

H4 perspective:

Shortly after Friday’s US CPI m/m and US core CPI m/m – both in-line with consensus – hit the wires the EUR/USD rotated lower (see M30 chart). Swiftly taking out the 1.15 handle and eventually support at 1.1486 (now acting resistance), price cleared the pathway south for the unit to challenge a nearby AB=CD symmetrical completion point around 1.1460s (black arrows).

Taking into account the AB=CD formation completes just north of January’s opening level at 1.1445, which is positioned just beneath daily support highlighted above at 1.1455 (yellow), traders are likely expecting active buyers to be present here today. The only grumble, of course, is weekly structure trading from resistance at 1.1465.

Areas of consideration:

In light of the above reading, the research team agrees buyers likely reside within the yellow H4 zone mentioned above at 1.1445/1.1460, though points out weekly resistance throws a red flag on the area.

To overcome this, traders are urged to wait for additional confirmation to form before pressing the buy button. A bullish candlestick pattern, for example, would serve well (see chart for a visual image). This not only offers traders a defined entry and exit point, it also shows whether or not buyers are active.

In regards to targets out of 1.1445/1.1460, keep eyes on H4 resistance at 1.1486/1.15 as an initial take-profit zone.

Today’s data points: Limited.

GBP/USD:

Weekly Gain/Loss: +0.86%

Weekly Close: 1.2834

Weekly perspective:

Cable, as highlighted in last week’s weekly report, firmly entered the parapets of demand at 1.2365-1.2615 in the opening stages of the year, challenging the lower borders of the area before finding willing buyers and pushing higher. Assuming buyers remain defensive out of this zone, a run towards supply painted at 1.3472-1.3204 may be in store over the coming weeks.

Daily perspective:

In conjunction with weekly movement, daily activity concluded recent trade closing firmly above resistance priced in at 1.2697 (now acting support). What’s also notable from a technical perspective is Friday’s bullish engulfing candle formation.

Continued buying from this point could lead to a test of supply at 1.3072-1.2984, according to our technical studies. Above 1.2697, limited supply is visible, with a major portion likely consumed as price declined lower in late November of 2018 (see red descending line).

H4 perspective:

The pound, as you’ll see on the M30 chart, established support in response to Friday’s UK monthly GDP figures (0.2% vs. expected 0.1%) and UK monthly manufacturing production (-0.3% vs. expected 0.4%). The move was later exacerbated amid reports of a potential delay to the Brexit date. This, however, was later dismissed by a UK PM May spokeswoman.

A number of resistances were consumed thanks to Friday’s advance, potentially unlocking the path north for further buying today/early week on this timeframe. The break of Quasimodo resistance at 1.2824 could potentially offer support to the market, targeting Quasimodo resistance overhead at 1.2885.

Areas of consideration:

Having noted higher-timeframe structure offering a reasonably clear path north this week, coupled with room for the H4 candles to explore higher ground towards 1.2885, a long off H4 support mentioned above at 1.2824/nearby 1.28 handle, is an option. Waiting for additional bullish candlestick confirmation to form (entry/stop parameters can be defined according to this pattern) is advised, nevertheless, since round numbers (1.28) are prone to stop runs/fakeouts.

Today’s data points: Limited.

AUD/USD:

Weekly Gain/Loss: +1.41%

Weekly Close: 0.7214

Weekly perspective:

By way of a mammoth bullish pin-bar formation printed out of demand priced in at 0.6769-0.6943 the week prior, the Australian dollar extended gains vs. its US counterpart last week, marginally overthrowing the 2017 yearly opening level coming in at 0.7199. Should buyers remain in the driving seat here this week, notable resistance at 0.7371 is in range.

Daily perspective:

Contrary to weekly structure, daily supply at 0.7246-0.7178 remains in the picture and could possibly hamper upside this week. Failure to hold not only confirms bullish strength above the 2017 yearly opening level at 0.7199 on the weekly timeframe, it also frees upside in the direction of a daily Quasimodo resistance at 0.7338.

H4 perspective:

Friday’s movement on the H4 timeframe maintained a healthy bullish tone, eventually conquering 0.72 to the upside. What’s interesting here, even though price is currently engaging with daily supply, is the retest of 0.72 as support by way of a bullish pin-bar formation. This, alongside weekly price overthrowing its 2017 yearly opening level at 0.7199, could be sufficient enough to draw in additional buyers this week.

Areas of consideration:

On account of the above analysis, the research team feels the AUD/USD may be heading for higher levels this week, despite daily supply at 0.7246-0.7178. This is largely due to H4 action retesting 0.72 as support in the shape of a bullish candlestick signal, and weekly price recently taking out a major level at 0.7199.

Entering long at current price (with stop loss orders tucked beneath the H4 bullish pin-bar’s tail [0.7183]) is an option this morning, targeting a break of the current daily supply. Once, or indeed if, the daily zone is engulfed, traders can consider reducing risk to breakeven and taking some profits off the table. The next upside target beyond here is H4 resistance at 0.7274.

Today’s data points: AUD MI Inflation Gauge m/m; China Trade Balance.

USD/JPY:

Weekly Gain/Loss: +0.05%

Weekly Close: 108.55

Weekly perspective:

Support at 108.13, in spite of the prior week’s gargantuan move to lows of 104.65, remained in the fight last week. Buyers and sellers, however, according to the weekly candle close, are indecisive.

The research team notes a relatively clear path to the upside from 108.13 until connecting with the 2018 yearly opening level at 112.65. Should the market spin south, nonetheless, Quasimodo support at 105.35 is the next level on the hit list to be aware of.

Daily perspective:

The picture on the daily timeframe offers traders a somewhat sturdier picture in terms of the possible direction weekly players may take this week, as resistance at 108.95 (a Quasimodo support-turned resistance) is currently capping upside. In addition to this, another layer of resistance (also a Quasimodo support-turned resistance) is seen directly above at 109.55.

H4 perspective:

A quick recap of Friday’s movement on the H4 timeframe shows little change was observed in terms of structure. What is notable from a technical standpoint, however, is a potential AB=CD (black arrows) 161.8% bearish pattern terminating just south of 109 that sides with a 61.8% Fibonacci resistance value at 108.84 (yellow).

Areas of consideration:

Tentativeness witnessed on the weekly timeframe off support at 108.13, combined with daily candles establishing resistance off 108.95 and H4 price in the process of chalking up an AB=CD bearish correction off 109 is likely enough evidence to warrant a sell from 109ish this week, according to our technical drawings.

As round numbers are prone to fakeouts/stop runs, traders may want to consider waiting for additional confirmation to form before pulling the trigger. A lower-timeframe trend line support break/retest, a lower-timeframe engulf of demand followed up with a retest as supply or simply a bearish candlestick signal would suffice. Confirming structure not only offers traders a defined entry and exit point, it also shows whether or not sellers are active.

Today’s data points: Japanese banks are closed in observance of Coming-of-Age Day.

USD/CAD:

Weekly Gain/Loss: -0.85%

Weekly Close: 1.3263

Weekly perspective:

After price action overlapped its 2017 yearly opening level at 1.3434 in the shape of a near-full-bodied bearish candle, this prompted another wave of selling last week. Though the sellers clearly govern market movement at the moment, this could change this week with support at 1.3223 recently entering the fray.

Daily perspective:

Closer analysis of this market on the daily timeframe reveals the unit shook hands with a daily Quasimodo support at 1.3181 last week. This level, as you can see, is situated just south of the current weekly support level. As long as the buyers continue to defend the said supports, the next upside target on the daily timeframe falls in around trend line support-turned resistance (extended from the low 1.2782).

H4 perspective:

The commodity-sensitive Canadian dollar came under modest pressure Friday as crude oil struggled to push for higher ground. The USD/CAD advanced to a three-day high at 1.3276 and cleared sellers out from December’s opening level at 1.3235.

Although the H4 timeframe closed in the form of a bearish candlestick pattern, further buying towards 1.33 is still a strong possibility today, considering where we’re coming from on the higher timeframes (see above).

Areas of consideration:

Given the factors presented above, the pendulum is certainly beginning to swing toward further buying.

Should the H4 candles turn lower today and retest December’s opening level mentioned above at 1.3235, this would likely be enough to draw in buyers. Assisted by higher-timeframe support, a move from here could easily reach 1.33 and possibly beyond this week. Remember the nearest resistance on the higher timeframes is the trend line support-turned resistance (extended from the low 1.2782).

Aggressive traders may look to simply enter long from 1.3235 with stop-loss orders tucked beneath 1.32, while conservative traders are likely to wait and see if price action delivers additional confirmation before pressing the buy button.

Today’s data points: Limited.

USD/CHF:

Weekly Gain/Loss: -0.40%

Weekly Close: 0.9837

Weekly perspective:

Our technical reading on the weekly timeframe reveals price tested its 2018 yearly opening level at 0.9744 last week and recovered in robust fashion. By way of a bullish pin-bar formation, the long-term picture now points to further buying this week, targeting the 2016 yearly opening level at 1.0029.

Daily perspective:

Supporting the 2018 yearly opening level on the weekly timeframe is a daily trend line support (taken from the low 0.9187). The daily resistance to be watchful of, however, falls in nearby at 0.9876. This, we believe, is the last line of resistance until the market is free to test the notable daily resistance priced in at 0.9986.

H4 perspective:

Following Thursday’s decisive advance the USD/CHF struggled to find direction Friday, latching on to the underside of January’s opening level at 0.9838 and resistance at 0.9854 (merges with trend line resistance [extended from the high 0.9963]). Latest macroeconomic data out of the US also did little to aid market movement as both US CPI m/m and US core CPI m/m fell in-line with consensus.

In the event we reject the said resistances today, the 0.98 handle will likely be brought back into motion. A break higher, however, has the 0.99 handle to target.

Areas of consideration:

According to our technical studies on the higher timeframes, further buying could be on the horizon until reaching daily resistance plotted at 0.9876. Having seen the H4 candles hovering beneath H4 resistances (see above), though, buying this market is tricky. Beyond 0.9854 we also have to take into account we have little more than 20 pips to work with until shaking hands with daily resistance at 0.9876.

On account of the above, neither a long nor short appears worthy in this market at the moment. Both ends remain restricted.

Today’s data points: Limited.

Dow Jones Industrial Average:

Weekly Gain/Loss: +2.36%

Weekly Close: 23953

Weekly perspective:

Recording its third consecutive week in the green, US equities firmly overthrew resistance at 23578 last week (now acting support), exposing resistance in the form of the 2018 yearly opening level at 24660. Traders will, however, need to prepare for the possibility of a pullback taking shape this week to retest 23578 before reaching 24660.

Daily perspective:

Contrary to weekly structure pointing to further upside this week, the daily candles show resistance notched in at 24090. Interestingly, we also observe a potential ABCD (black arrows) bearish formation in the process of completing around the underside of supply at 24842-24538, suggesting a possible move above the noted resistance this week.

H4 perspective:

A brief look at recent dealings on the H4 timeframe show the candles remained sedated around the Quasimodo resistance priced in at 23938, positioned just south of supply drawn from 24224-24026. It might also interest traders to note an additional layer of supply is visible around 24750-24555, and the RSI indicator is currently seen displaying a divergence/overbought reading.

Areas of consideration:

With H4 Quasimodo resistance suffering somewhat at the moment, eyes are likely turning to H4 supply mentioned above at 24224-24026 for possible shorting opportunities this week, given it houses the current daily resistance level within.

Should price ignore 24224-24026, traders’ crosshairs will likely be drawn towards the next layer of H4 supply also highlighted above at 24750-24555. This area is firmly positioned within the walls of the current daily supply zone and has the added bonus of being accompanied by a daily ABCD approach.

Despite weekly price showing room to pursue higher levels, both H4 supplies mentioned above are worthy of shorts this week, according to our technical studies. To help avoid an unnecessary loss, however, it might be worth considering entering on the back of bearish candlestick confirmation. This not only offers traders a defined entry and exit point, it also shows whether or not sellers are active, which is crucial seeing as how you will effectively be selling against weekly flow.

Today’s data points: Limited.

XAU/USD (Gold):

Weekly Gain/Loss: +0.19%

Weekly Close: 1287.2

Weekly perspective:

Leaving its 2018 yearly opening level at 1302.5 unopposed, the price of gold curved lower against its US counterpart again last week. Though still managing to wrap up the session mildly in the green, the closing weekly candle printed its second consecutive bearish pin-bar formation, which could entice sellers into the market over the coming week towards support at 1260.8.

Daily perspective:

Limited change has been observed on the daily timeframe since our last weekly report. Price action remains sandwiched between a channel resistance-turned support (etched from the high 1214.3) along with a nearby support area coming in at 1272.5-1261.5 and a Quasimodo resistance level at 1303.0 (positioned just north of the 2018 yearly opening level at 1302.5).

H4 perspective:

The H4 candles remain busy carving out a consolidation (yellow) between 1296.8/1279.7. Inside the lower limits of this range, traders may also want to note January’s opening level at 1282.2 is noticeably visible.

Beneath the aforementioned H4 consolidation, the research team notes room for the sellers to stretch their legs towards H4 demand plotted at 1259.0-1265.3, which happens to fuse nicely with weekly support at 1260.8. Note this H4 demand is also sited within the lower limits of the daily support area coming in at 1272.5-1261.5. It might also be worth mentioning before we reach the aforementioned H4 demand, daily buyers may try to defend the channel resistance-turned support (etched from the high 1214.3).

Above the current H4 range, however, we have the 2018 yearly opening level positioned nearby at 1302.5 (weekly timeframe), shadowed closely by a daily Quasimodo resistance at 1303.0.

Areas of consideration:

Range traders may look to trade the limits of the aforesaid H4 range today/early week, using additional confirmation as a way of checking whether active buyers/sellers are present around the edges of this formation.

Given the recent strength of gold over the past couple of weeks, however, a break of this range to the upside is possible this week. Should this come to fruition, traders’ crosshairs will likely be fixed on the 2018 yearly opening level mentioned above at 1302.5/daily Quasimodo resistance for shorts.

The use of the site is agreement that the site is for informational and educational purposes only and does not constitute advice in any form in the furtherance of any trade or trading decisions.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability with regard to financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com.au, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.

IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.

Global Markets:

• Asian Stock Markets : Nikkei up 0.97%, Shanghai Composite down 0.73%, Hang Seng down 1.51%, ASX down 0.02%
• Commodities : Gold at $1291.05 (+0.12%), Silver at $15.60 (-0.34%), Brent Oil at $59.69 (-1.31%), WTI Oil at $50.89 (-1.36%)
• Rates : US 10-year yield at 2.699, UK 10-year yield at 1.287, Germany 10-year yield at 0.180

News & Data:

• (CNY) Trade Balance 395B vs 345B expected
• (AUD) MI Inflation Gauge m/m 0.40% vs 0.00% previous
• (USD) Core CPI m/m 0.20% vs 0.20% expected
• (USD) CPI m/m -0.10% vs -0.10% expected
• (GBP) Manufacturing Production m/m -0.30% vs 0.40% expected
• (GBP) GDP m/m 0.20% vs 0.10% expected
• (AUD) Retail Sales m/m 0.40% vs 0.30% expected

Markets Update:

Asian stock markets are mostly lower on Monday following the weak cues from Wall Street Friday amid worries about the ongoing U.S. government shutdown and global economic growth. Investors also turned cautious as they await China’s trade data for December due later in the day. The Japanese market is closed for a public holiday.

Chinese government data showed that December exports and imports fell unexpectedly, deepening concerns of a slowdown in the world’s second-largest economy as Beijing’s trade war with the U.S. appeared to be taking a toll. China’s trade surplus with the U.S. — closely watched amid a bitter trade war between Washington and Beijing — grew 17 percent from a year ago.

The Shanghai composite and the Shenzhen component index both fell by 0.7 percent. Hong Kong’s Hang Seng Index was down 1.5 percent while the Kospi declined nearly 0.5 percent as tech names in the country declined. Australia’s benchmark ASX 200 reversed early gains to trade flat as the energy sector declined 0.8 percent.

In currencies, the euro was subdued as it hit key technical levels following data from Italy on Friday that showed the euro zone’s third-largest economy was at risk of recession. In commodities, oil prices extended losses from Friday as investors worried about a global slowdown. Gold gained to inch towards a recent seven-month high of $1,298.42 an ounce.

Upcoming Events:

Monday, January 14, 2019

• 10:00 PM GMT – (NZD) NZIER Business Confidence

Tuesday, January 15, 2019

• 02:30 PM GMT – (USD) PPI m/m
• 02:30 PM GMT – (USD) Core PPI m/m
• 04:00 PM GMT – (EUR) ECB President Draghi Speaks
• Tentative – (GBP) Parliament Brexit Vote
• 07:00 PM GMT – (USD) FOMC Member George Speaks

Wednesday, January 16, 2019

• 12:30 AM GMT – (AUD) Westpac Consumer Sentiment
• 10:15 AM GMT – (GBP) BOE Gov Carney Speaks
• 10:30 AM GMT – (GBP) CPI y/y
• 10:30 AM GMT – (GBP) PPI Input m/m
• 10:30 AM GMT – (GBP) RPI y/y

Thursday, January 17, 2019

• Day 1 GMT – (All) G20 Meetings
• 04:20 AM GMT – (JPY) BOJ Gov Kuroda Speaks
• 10:30 AM GMT – (GBP) BOE Credit Conditions Survey
• 02:30 PM GMT – (USD) Philly Fed Manufacturing Index
• 04:45 PM GMT – (USD) FOMC Member Quarles Speaks

Friday, January 18, 2019

• Day 2 GMT – (All) G20 Meetings
• 10:30 AM GMT – (GBP) Retail Sales m/m
• 02:30 PM GMT – (CAD) CPI m/m
• 02:30 PM GMT – (CAD) Common CPI y/y
• 02:30 PM GMT – (CAD) Median CPI y/y
• 02:30 PM GMT – (CAD) Trimmed CPI y/y
• 03:05 PM GMT – (USD) FOMC Member Williams Speaks
• 04:00 PM GMT – (USD) Prelim UoM Consumer Sentiment
• &more…

Dear Trader,

This coming Tuesday, 15th January, the Brexit vote will be taking place at 19:00 UK time. UK Prime Minister Theresa May brings her Brexit deal to Parliament knowing that she faces almost certain defeat in a vote that could mean weeks of perilous political brinkmanship for Britain.

What should you do?

High volatility is expected to continue. We recommend you to reduce your exposure, especially on GBP pairs as well as FTSE 100 Index (UK100), closely monitor any open positions and ensure sufficient equity is available in your trading account.

We expect the British Pound and Euro to see plenty of volatility with the possibility of wider spreads and price gaps throughout this risk event. Presently we are pleased to confirm no changes will be made to ICM’s margin terms, however we need to request that accounts be fully collateralised ahead of this event.

If you have any questions or require any assistance, please contact one of our support team members via Live Chat, email: support@icmarkets.com, or phone +61 (0)2 8014 4280.

EUR/USD:

In recent sessions, four Fed Presidents advised moderation and caution in the central bank’s rate policy this year. In addition to this, the meeting minutes from the Fed’s December meeting also struck a dovish tone, with many policymakers reporting the Fed could be patient about further policy tightening due to muted inflationary pressures. Combined, this weighed on the greenback and propelled the euro to higher ground Wednesday.

From a technical perspective, weekly price broke free of a long-term resistance at 1.1465 and trend line resistance (extended from the high 1.2476), consequently exposing a resistance area coming in at 1.1717-1.1862. In terms of daily action, the unit cleared two resistances at 1.1455 and 1.1523 (both now acting supports), highlighting nearby supply at 1.1622-1.1573 as the next upside target.

A closer reading reveals the H4 candles conquered its 1.15 handle along with nearby Quasimodo resistance at 1.1534 (now acting support) Wednesday. According to this scale, this has potentially set the stage for further buying today towards 1.16.

Areas of consideration:

In light of Wednesday’s upbeat session, our technical studies observe an upside bias this morning.

Should H4 price rotate lower and retest its support at 1.1534 (traders may want to note there is also a daily support lurking just beneath this level at 1.1523 so price could just as easily surpass the H4 support in favour of daily support here) in the shape of a bullish candlestick formation (entry/stop parameters can be defined according to this pattern), a long in this market, targeting the underside of daily supply at 1.1573, followed by 1.16, is an option.

Today’s data points: ECB Monetary Policy Meeting Accounts; Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

GBP/USD:

UK Government lost the vote on the Grieve amendment Wednesday, meaning Prime Minister Theresa May has 3 days to present the next steps on Brexit if her deal is rejected in Parliament next week. BoE’s Carney also took to the stage yesterday, reiterating future rate hikes are to be limited and gradual.

In spite of the above, both weekly and daily technical structure display signs of further upside materializing over the coming weeks. Cable firmly entered the parapets of weekly demand at 1.2365-1.2615 in the opening stages of the year, challenging the lower borders of the area before finding willing buyers and pushing higher. Assuming buyers remain defensive, a run towards supply painted at 1.3472-1.3204 may be in store over the coming weeks. In conjunction with weekly movement, daily activity concluded recent trade closing above resistance priced in at 1.2697 (now acting support). Continued buying from this point could lead to a test of supply at 1.3072-1.2984. Above 1.2697, limited supply is visible, with a major portion of orders likely consumed as price declined lower in late November of 2018 (see red descending line).

Lower down on the curve, however, H4 movement is testing the underside of 1.28, which, as you can see, is shadowed closely by a Quasimodo resistance at 1.2824.

Areas of consideration:

While higher-timeframe structure indicates further upside, the short-term outlook bodes well for those looking to short this market off the H4 Quasimodo resistance mentioned above at 1.2824. This level is perfectly positioned to facilitate a stop run above not only the 1.28 handle, but also the two tops marked with red arrows at 1.2811 and 1.2815. In terms of stop placement for a sell from 1.2824, above the Quasimodo apex is a possibility at 1.2839. As for take-profit targets, November and December’s opening levels at 1.2767/65 are logical starting points should the unit overcome 1.28 (could potentially act as support).

In the event we overthrow 1.2824 as a sell zone today, as the higher timeframes suggest, traders’ crosshairs will likely be pinned on another layer of Quasimodo resistance at 1.2887. A H4 close above 1.2824, therefore, followed up with a retest by way of a bullish candlestick formation (entry/stop parameters can be defined according to this pattern) would be considered a high-probability long, targeting 1.2887 as the initial upside target.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

AUD/USD:

In early trade Wednesday, the Australian dollar suffered a hit to the mid-section against its US counterpart on the back of disappointing Australian building approvals. Despite this, though, the commodity currency swiftly recovered and ended the day topping just south of 0.72, up 0.44%.

The psychological handle 0.72 remains a critical level in this market, according to our analysis. Besides the H4 RSI offering a confirming overbought reading, 0.72 also represents the 2017 yearly opening level at 0.7199 on the weekly timeframe. Further adding to this, traders may also want to acknowledge daily supply around 0.7203-0.7165. This area boasts strong momentum to the downside out of its base, indicating strength.

Areas of consideration:

0.72 is a key level in this market this morning for potential shorts. As round numbers are prone to stop runs/fakeouts, however, traders are urged to consider waiting for additional confirmation to form before pulling the trigger. A bearish candlestick pattern, for example, not only identifies seller interest, it’d also offer structure that defines entry and stop parameters.

In terms of downside targets from 0.72, the 0.71 handle appears logical, thus providing traders ample room to secure reasonable risk/reward.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

USD/JPY:

Broad-based USD selling decorated the charts Wednesday, following Fed Presidents voicing concerns over the central bank’s rate policy this year. Further downside was observed after the meeting minutes from the Fed’s December meeting hit the wires, also striking a dovish tone.

Sellers on the H4 timeframe remained defensive at 109, forcing the unit to lower ground towards 108, which, as you can see, is currently holding ground. Beyond 108, should the candles drop lower today, the research team sees limited support until reaching 107.

Higher-timeframe movement is interesting. Weekly structure shows price action testing support at 108.13, after retreating from a weekly peak of 109.08. This level, as can be seen from the chart, boasts incredibly strong historical significance. Contrary to this, nevertheless, the daily candles are visibly seen respecting the underside of resistance at 108.95 – a Quasimodo support-turned resistance. Note directly above this we also have another layer of resistance plotted at 109.55, also a former Quasimodo support level.

Areas of consideration:

Having seen weekly price retest support at 108.13 and daily price establish a ceiling off 108.95, this is concerning for longer-term traders.

Rather than guessing which direction the market will trade today, why not let price action lead the way? 108, in this case can be our base. A firm rejection off of this number in the form of a H4 bullish candlestick pattern (entry/stop parameters can be defined according to this pattern) would indicate weekly buyers may be looking to take things higher from its support at 108.13.

On the other side of the field, however, a H4 close beneath 108 suggests weekly buyers are weak and daily sellers are likely to gain traction. This, therefore, opens up the possibility of a short either on the breakout candle, or on the retest of 108 as resistance.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

USD/CAD:

In the shape of another near-full-bodied daily bearish candle, the US dollar ceded further ground to its Canadian counterpart Wednesday.

The Bank of Canada kept rates unchanged at 1.75% as expected, though introduced tweaks to its guidance stating rates will need to rise over time into a neutral range to achieve its inflation target. This – coupled with strong moves north in oil and a waning US dollar on the back of comments out of the Fed – collectively weighed on the USD/CAD market yesterday.

From the top, weekly activity is shaking hands with support coming in at 1.3223. This is a long-term level and is, therefore, likely to offer some form of a floor to this market. A closer look at price action on the daily timeframe, however, shows support at 1.3260 (now acting resistance) was overthrown in recent trade, clearing the pathway south towards support pinned at 1.3174.

Closer examination of this market on the H4 timeframe brings in the 1.32 handle, after price conquered support in the form of December’s opening level at 1.3235. Beneath this number, we have November’s opening level lurking nearby at 1.3158. In addition, it might interest some traders to note the RSI indicator is displaying an oversold reading (green).

Areas of consideration:

Buyers looking to long from 1.32, given we are trading at weekly support drawn from 1.3223, today are faced with the threat of a possible move lower to November’s opening level mentioned above at 1.3158, which happens to be sited just beneath daily support at 1.3174.

An alternative to trading 1.32 blindly is wait for a H4 close to print above December’s opening level at 1.3235. This, followed up with a pullback to 1.32 for a long (with stops planted beneath 1.3158), could be enough to clear sellers out from 1.3235 and open up an approach towards daily resistance at 1.3260, followed by 1.33 on the H4 scale.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

USD/CHF:

Dovish comments by a number of Fed officials, and a dovish stance set by the meeting minutes from the Fed’s December meeting, further pressured the already weaker USD Wednesday.

Using a top-down approach this morning, we can see weekly price, in the shape of a full-bodied bearish candle, crossing swords with its 2018 yearly opening level at 0.9744. Beyond here, the team notes an absence of support until the 0.9524 September 17 low (2018), tailed closely by a support area visible at 0.9443-0.9515.

In terms of daily price, support at 0.9755 (now acting resistance) was overthrown yesterday, consequently unlocking the door to a nearby trend line support (extended from the low 0.9187). Across the charts, H4 movement reclaimed 0.98 to the downside and eventually conquered demand coming in at 0.9737-0.9763. This, although not visible on the screen, opens up the runway south towards support drawn from 0.9694.

Areas of consideration:

In essence, we have the weekly timeframe suggesting a possible round of buying off its 2018 yearly opening level at 0.9744, though this is somewhat hindered by the recently broken H4 demand at 0.9737-0.9763 and nearby daily resistance at 0.9755.

Logically, neither a long nor short seems attractive at the moment, according to our current read. Irrespective of which direction traders choose, opposing structure is clearly visible. With that being the case, opting to remain on the sidelines could be an option going into today’s sessions.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

Dow Jones Industrial Average:

US equities built on recent gains Wednesday, closing higher for a fourth consecutive day. In recent hours, however, risk appetite hit a sour note as H4 flow challenged a Quasimodo resistance at 23938, which also merges with a 127.2% Fibonacci extension point at 23949. This – coupled with the RSI indicator displaying a clear overbought/divergence reading – has seen the index turn lower in early trade this morning.

Bringing forward the higher-timeframe picture, traders will note weekly price remains above resistance at 23578, eyeing a possible run towards the 2018 yearly opening level at 24660. Daily flow, on the contrary, is poised to attack nearby resistance drawn from 24090. Note this level boasts reasonably strong historical meaning. As you can see, the current H4 resistance level boasts limited connection to higher-timeframe structure.

Areas of consideration:

For folks who read Wednesday’s briefing you may recall the piece highlighted a possible sell from either the current H4 resistance level at 23938, or the H4 supply seen overhead at 24224-24026. Well done to any of our readers who managed to jump aboard the move from 23938. Downside targets from this region fall in around H4 support at 23287/January’s opening level at 23313.

Today’s data points: Fed Chair Powell Speaks; FOMC Members Bullard and Evans Speak.

XAU/USD (Gold):

Across the board, the US dollar explored lower ground, consequently lifting the price of gold to higher levels Wednesday, up 0.64%.

From the weekly timeframe, bullion is poised to extend gains towards the 2018 yearly opening level at 1302.5. This level served the market well back in June of 2018 as resistance, therefore there’s a strong chance history may repeat itself. The picture on the daily timeframe, nevertheless, shows price action lodged between a Quasimodo resistance level at 1303.0 (positioned just north of the 2018 yearly opening level), and a channel resistance-turned support (taken from the high 1214.3) that intersects closely with a support area coming in at 1272.5-1261.5.

January’s opening level at 1282.2 on the H4 timeframe remained supportive Wednesday, despite a number of attempts to push lower in recent trade. Aside from some local peaks at 1295.2 and 1298.5 (red arrows), limited resistance is seen in this market until the 2018 yearly opening level at 1302.5.

Areas of consideration:

While further buying is possible, according to all three timeframes analysed, taking advantage of this move is proving challenging as the only logical support on the H4 timeframe is January’s opening level drawn from 1282.2.

Therefore, the only alternative we see is to drill down to the lower timeframes and attempt to trade local zones long, with an ultimate target set at 1302.5. An example of this would be a break of resistance followed up by a retest as support.

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