18 Jan: Sterling rallies after Brexit speech. Trump comments hurt US$. Gold higher

By | January 18, 2017

 

 The dollar was under pressure from the outset of the session and eventually fell to a four-week low on Tuesday, with Sterling leading the way, rising by almost 3% after short covering pushed it higher following a calming statement from British Prime Minister Theresa May, in which she outlined her case for a “hard Brexit”. US traders, returning from the long weekend, added to the US$ weakness after President-elect Donald Trump said that he was concerned about the strength of the US$ and seemingly increased the prospect of a trade war with China when he said that the dollar’s strength against the Chinese yuan “is killing us.” In other markets, stocks were slightly lower, oil was steady, while the metals were higher, taking advantage of the weakness in the dollar.

Today will mostly be about inflation data, with releases due from German ((December CPI; exp 0.7% mm, 1.7% yy (HICP; exp 1.0% mm, 1.7% yy) ), the EU (0.5%mm; 1.1%yy, Core 0.4%mm, 0.9%yy) and the US (0.3%mm, 2.1%yy;  Ex Food/Energy, 0.2%mm, 2,2%yy), along with a speech from Janet Yellen  which could create some waves although 2 days before Trumps inauguration she seems unlikely to rock the boat too much. Elsewhere we get the Australian WBC Consumer Confidence (Jan), UK Unemployment and from the US, the Industrial Production and the API weekly Crude Oil Stock Inventory.

CURRENCIES
EURUSD: 1.0706
Res  1.0730  1.0750  1.0800
Sup  1.0685  1.0650  1.0620
USDJPY: 112.75
Res  113.00  113.30  113.60
Sup  112.65  112.30  112.15
GBPUSD: 1.2396
Res  1.2415  1.2430  1.2475
Sup  1.2350  1.2310  1.2250
USDCHF: 1.0023
Res  1.0040  1.0075  1.0095
Sup  0.9995  0.9965  0.9935
AUDUSD: 0.7562
Res  9111.4740  9507.2270  9875.3690
Sup  8697.3140  8329.1720  7915.0120
NZDUSD: 0.7205
Res  0.7210  0.7240  0.7275
Sup  0.7185  0.7150  0.7125
INDICES / COMMODITIES
S+P: 2261
Res  2268  2276  2290
Sup  2254  2248  2240
DJ30.fs: 19733
Res  19780  19815  19900
Sup  19600  19660  19509
SPI200.fs: 5640
Res  5665  5700  5720
Sup  5635  5615  5580
GOLD: 1216
Res  1220  1230  1240
Sup  1208  1200  1190
XAGUSD: 17.15
Res  17.20  17.40  17.60
Sup  17.00  16.80  16.60
OIL (WTI): 52.47
Res  53.50  54.35  55.20
Sup  52.00  51.45  50.65

 

Indices/commodities
S&P Futures 2261
U.S. stocks were a little lower on Tuesday with investors taking a cautious tone in the wake of President-elect Donald Trump’s comments on the dollar, while also keeping an eye on the comments coming from the Davos economic forum. Technically, the dailies still look a little heavy, while the weeklies remain positive so a cautious stance is best as we head towards Donald Trump’s inauguration on Jan 20. Buying dips would seem to be the longer-term theme although I cannot bring myself to do so at these levels and the Trump factor could easily see stocks turn ugly – very quickly – especially if he ramps up the prospect of a trade war with China, which he seems intent on doing.
24 Hour: Mildly bearish Medium Term: Neutral – Possibly buy dips but with tight SL
Resistance Support
2290 Minor 2258 Session low
2280 Minor 2248 12 Jan low
2277 All-time high/14 Dec high/6 Jan high 2240 Minor
2273 13 Jan high 2230 Minor
2267 Session high 2225 30 Dec low
DJ30.fs 19733
Ditto S+P.
24 Hour: Mildly bearish Medium Term: Neutral – Possibly buy dips but with tight SL
Resistance Support
20000 Minor 19716 Session low
19964 All-time high/14 Dec high 19692 12 Jan low
19924/20 6 Jan high/9 Jan high 19660 30 Dec low
19903 11 Jan high 19600 Minor
19875 12 Jan high /13 Jan high 19500 10 Jan low
SPI200.fs 5640
The ASX had a tough session, taking out the minor support at 5666 and heading to a low of 5635. As we said before, with the daily momentum indicators rolling over and picking up increasing negative momentum, lower levels look possible although there is some decent support in the 5625/05 area, but below which could see a quick slide towards 5580. Under there the next Fibo support is not seen until around 5500. On the topside sellers, will be seen at 5660/70 and again at 5695 although I don’t think we see it again for a while. Trading from the short side still seems to be the theme.
24 Hour:  Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
5740 13 Jan high 5635 Session low
5719 16 Jan high/200 HMA 5625 Daily Kijun
5795/98 38.2% of 5789/5635 5615 30 Dec low
5670 23.6% of 5789/5635 5605 23.6% of 5029/5789
5660 Minor 5576 23 Dec low
GOLD 1216
Gold was able to take advantage of the dollar’s weakness and headed up to a high of 1218, helped on its way by nervousness surrounding Britain’s exit from the EU and by US President-elect Trump’s inauguration this week, which combined to feed haven demand. The 4hour/daily momentum indicators both look constructive so further gains would seem possible, may be towards 1240/50, which should provide decent resistance, if we see it. Ahead of that, 1220 will still see decent sellers, and if we do fail here, we could yet turn lower. If so, on the downside, buyers will be seen at 1200 where the 100 WMA could again act as a pivot. Below that, 1180/90 will provide further bids.  Right now, trading from the long side seems to be the plan.
24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
1248 50% pivot of 1375/1122 1202 Session low
1238/41 100 DMA /11 Nov high 1195 (23.6% of 1122/1218)
1233 16 Nov high 1188 13 Jan Low
1230 50% pivot of 1337/1222 1182 (38.2% of 1122/1218)
1219 38.2% of 1375/1122 1175 11 Jan low
XAGUSD 17.15
Silver finally broke above 17.00 on Tuesday and headed swiftly to 17.21 before consolidating around 17.15. The 4hour/daily momentum indicators both point higher although there is good resistance in the 17.30/40 area, but above which we could see a run towards 17.60/80. Support will arrive at 17.00 and again at 16.80. From the look of the charts, buying dips seems to be the plan.
24 Hour: Prefer to buy dips Medium Term:  Mildly bullish
Resistance Support
17.85 200 DMA 16.80 Session low
17.60 100 DMA 16.70 100 WMA
17.40 Weekly cloud base 16.53 10 Jan low/11 Jan low
17.30 (50% of 18.98/15.63) 16.41 9 Jan low
17.21 7 Dec high/Session high 16.25 6 Jan low
OIL (WTI) 52.47
WTI had a choppy, sideways session within a 52.21/53.49 range. A similar session could lie ahead. Further out, look for a choppy range of 50.70/54.00 to cover it over the next few days, with a topside break of 54.00 likely to target the 55.21 January high. On the downside, immediate minor support lies at 52.00/10 and then again at the H/S neckline at 50.70, which should be strong. Back under 50.00 could then open the way to 49.00 and possibly towards the 200 DMA at 47.00. As before, keep SL on long positions either on a break below 50.70 or at around 49.20. As for today, 52.00/53.50 may cover it. Prefer to buy dips.
24 Hour: Prefer to buy dips Medium Term: Cautiously long – Tight SL sub 50.70
Resistance Support
55.21 3 Jan high 52.09 16 Jan low/12 Jan low
54.29 6 Jan high 51.50 Minor
53.80 9 Jan high 51.00 Minor
53.47/49 12 Jan high /Session high 50.70 Rising trend support/ Reverse Head/Shoulders Neckline
53.15 Minor 50.00 Psychological

EURUSD: 1.0706
The dollar came under pressure on all fronts on Tuesday, not helped by the comments from Donald Trump, with the Euro reaching a high of 1.0719 before finishing the day at the Fibo resistance at 1.0700.  With the 4 hour/daily momentum indicators both looking constructive, further gains would now seem possible and above the session high the Euro could then head towards the next minor Fibo resistance at 1.0750, above which there is little to stop it until we reach 1.0815. On the downside, buyers will be seen today at 1.0650/85, below which we could head back towards 1.0600 although this looks unlikely to be seen again today. For the time being buying dips seems to be the plan, although further out I still prefer to look for levels to sell the Euro, and buy the US$, as we head towards the next Fed rate hike.
24 Hour: Neutral Medium Term: Mildly bullish – but look to sell into strength.
Resistance Support
1.0825 50% pivot of 1.1299/1.0340 1.0685 Minor
1.0815 38.2% of 1.1616/1.0340 1.0650 Minor
1.0750 (76.4% of 1.0874/1.0340) 1.0620 100 HMA
1.0719 Session high 1.0595 Session low/200 HMA
1.0702 (38.2% of 1.1299/1.0340) 1.0570 12 Jan low

Economic data highlights will include:

World Economic Forum – Davos, German CPI, EU CPI, US CPI, Industrial Production, Capacity Utilisation, Janet Yellen Speech , API weekly Crude Oil Stock Inventory

Meta Trader
EURUSD: 4 Hour


USDJPY: 112.75
US$Jpy had a tough session, and after an early squeeze up to 114.27 it has been pretty much downhill all the way, to a low of 112.62, where it is finishing the day on its lows.  The 4 hour/daily momentum indicators still point lower, so below the current level the next major support is not seen until 112.15 (weekly cloud top) and 112.00, which seem to be approaching rather fast but should combine to provide strong support. On the topside, if we head back above  113.50, we could again see a squeeze back to 114.00 although this seems unlikely in the short term and selling rallies towards 113.00 seems to be the plan, with a SL now lowered to just above 113.60.
24 Hour: Prefer to sell rallies Medium Term: Mildly bearish
Resistance Support
114.27 Session high/100 HMA 112.62 Session low
114.10 23.6% of 118.66/112.67 112.30 Minor
113.80 Minor 112.15 Weekly cloud top
113.60 Minor 112.00 38.2% of 101.18/118.66
113.30 Minor 111.61 29 Nov low
Meta Trader
USDJPY: 4 Hour


GBPUSD: 1.2396
So much for Sterling takin a dim view of a “hard” Brexit! There will be plenty of blood on the street today after Cable had its biggest one day rise since1998, rallying by 3% and only stopping as it came up against the base of the daily cloud. From here, while the dailies remain fairly flat, the 4-hour momentum indicators point sharply higher and further gains towards 1.2475/1.2500 would seem possible, and for the coming session buying dips would seem to be the plan. Support now arrives at 1.2350 and below there at around 1.2310 although I doubt we see it down there again today.
24 Hour: Prefer to buy dips Medium Term: Neutral
Resistance Support
1.2550 100 DMA 1.2350 Minor
1.2510 16 Dec high 1.2310 23.6% of 1.1986/1.2415
1.2475 61.8% of 1.2774/1.1981 1.2248 38.2% of 1.1986/1. 2415
1.2432 5 Jan high 1.2200 50% pivot of 1.1986/1. 2415
1.2415 Session high/Daily cloud base 1.2150 61.8% of 1.1986/1. 2415

Economic data highlights will include:

Unemployment

Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0023
US$Chf made it to the target at parity, trading down to 0.9995 before a minor bounce to 1.0030. Both the 4 hour and the daily charts continue to point lower, so trading from the short side and selling into strength still seems to be the plan. Back below parity would seem to open the way to the 100 DMA, and below there we could see a run towards 0.9935 and 0.9900.  Resistance today should be seen at around 1.0075 and selling into that area, with a SL placed above 1.0100 would seem to be the plan.
24 Hour: Neutral Medium Term: Mildly bearish
Resistance Support
1.0165 50% pivot of 1.0335/0.9995 0.9995 Session low
1.0125 38.2% of 1.0335/0.9995 0.9965 100 DMA
1.0095 100 HMA 0.9935 23.6% of 0.9549/1.0343
1.0075 23.6% of 1.0335/0.9995 0.9900 Minor
1.0040 Minor 0.9860 200 DMA
Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7562
The Aud had a good day, and after holding on to the 0.7460 support is has risen steadily through the session in reaching a high of 0.7562, helped on its way by the combination of the weaker US$ and the much stronger iron ore price, it is finishing just below its highs. While the dailies remain positive, the 4 hour charts are showing a degree of bearish divergence and thus the upside may be a little limited today but given the look of the dailies, buying dips would currently seem to be the plan. For the time being, support arrives at 0.7545, where the daily cloud has today been breached on the topside, below which we could see a run back to 0.7500. On the topside, sellers will be seen at 0.7580, above which there is not a great deal to stop it heading towards 0.7635. While the US$ remains under pressure the Aud could continue its way to higher ground, helped along by improving commodity prices. The RBA will not like it up here though, so expect an increase in the rhetoric as they try and talk it lower.
24 Hour: Prefer to buy dips Medium Term: Mildly bullish – but looking to sell into strength
Resistance Support
0.7650 Minor 0.7545 Daily cloud top
0.7635 76.4% of 0.7777/0.7160 0.7520 Minor
0.7600 Minor 0.7500 Minor
0.7581 14 Nov high 0.7465 23.6% of 0.7160/0.7562
0.7563/67 Session high/15 Nov high 0.7457 16 Jan low
Meta Trader – AxiTrader
AUDUSD: 4 Hour


NZDUSD: 0.7205
As with the Aud, the Kiwi moved sharply higher on Tuesday, reaching 0.7208, where it is finishing the session.  Having also broken above the daily cloud, this will now provide the initial support, at 0.7185, below which we could revert to the 100 DMA, which was also broken today. If so, any such dip would seem to be a buying opportunity given the constructive look of the dailies. If we do head higher, 0.7240 and 0.7275 will provide resistance. I am still looking to sell into strength although it seems that now is not the time to do so.
24 Hour: Prefer to buy dips Medium Term: Mildly bullish
Resistance Support
0.7361 9 Nov high 0.7185 Daily cloud base
0.7305 10 Nov high 0.7148 100 DMA
0.7275 76.4% of 0.6857/0.7143 0.7123 23.6% of 0.6857/0.7207
0.7238 14 Dec high 0.7095 200 DMA
0.7208 Session high 0.7075 38.2% of 0.6857/0.7207
Meta Trader
NZDUSD: 4 Hour