21 Dec: US$ firm, with the Euro falling to a 14 year low. Stocks close to all time highs.

By | December 21, 2016

The US$ remains firm on Wednesday, underpinned by safe haven flows after the probable terrorist attack in Germany and in a nervous reaction to the assassination  of the Russian ambassador to Turkey. The dollar also continued to be supported by the upbeat comments from Janet Yellen at the end of the previous session on the US employment conditions. Although the Euro made new trend lows, safe haven demand for the Chf and Yen ensured that the reaction to the day’s events in those currencies was more muted. Elsewhere, WTI is higher, as are stocks, with the DJI edging ever nearer to 20,000.

Interest and liquidity will begin to diminish as we head towards the weekend and there is little today to bolster any enthusiasm. The NZ Trade Balance will be the main interest in Asia and then there is very little at all until the US Existing Home Sales for November, due late in the day. Bear in mind that tomorrow will be a very active session and will include the US Chicago Fed National Activity Index, US Personal Consumption/Expenditure/Income (Nov), Jobless Claims, Q3 GDP, Durable Goods Orders (Nov), House Price Index (Oct) and the CB Leading Indicator (Nov).

EURUSD: 1.0389
Res  1.0420  1.0450  1.0500
Sup  1.0350  1.0335  1.0300
USDJPY: 117.79
Res  118.25  118.40  118.65
Sup  117.65  117.40  117.00
GBPUSD: 1.2369
Res  1.2425  1.2460  1.2505
Sup  1.2250  1.2315  1.2200
USDCHF: 1.0287
Res  1.0320  1.0345  1.0400
Sup  1.0260  1.0220  1.0195
AUDUSD: 0.7253
Res  0.7280  0.7310  0.7340
Sup  0.7220  0.7200  0.7180
NZDUSD: 0.6918
Res  0.6930  0.6950  0.6990
Sup  0.6900  0.6880  0.6840
S+P: 2264
Res  2270  2278  2290
Sup  2258  2250  2240
DJI: 19889
Res  19935  20000  19965
Sup  19830  19790  19740
ASX SPI: 5562
Res  5574  5590  5600
Sup  5550  5534  5510
GOLD: 1131
Res  1142  1150  1164
Sup  1122  1110  1100
SILVER: 16.04
Res  16.25  16.45  16.60
Sup  15.65  15.50  15.35
OIL (WTI): 53.22
Res  53.75  54.50  55.00
Sup  52.50  51.20  50.00


S&P Futures 2264
The S+P has continued to grind higher, today reaching the 2270 resistance but pulling up short of the 2277 all time high. More of the same looks likely today in the absence of any major data as the market awaits tomorrow’s heavy data load, which will include the Q3 GDP and the monthly Durable Goods Orders.  On the topside, resistance will be seen at the all-time high of 2777, above which would see the slow grind continue to 2300, albeit this now seems delayed for a while. On the downside, support will be seen at 2260 and again at 2250. I still mildly prefer to trade from the short side, but with a tight SL placed just above the 2277 all-time high.
24 Hour: Neutral Medium term: Prefer to sell rallies


                                         Resistance Support
2290 Minor 2259 Session low
2285 Minor 2253 19 Dec low/200 HMA
2280 Minor 2247 15 Dec low/ H/S Neckline
2277 All-time high/14 Dec high 2235 Minor
2269 Session high 2220 (23.6% of 2028/2276)
DJI Futures 19889
Ditto S+P.  The DJI has squeezed up to 19931 on Tuesday, pulling up short of last week’s 19964, and the magnet that seems set to attract, at 20,000. The momentum indicators are pretty much neutral, requiring a cautious stance. I still prefer to be short, but with a tight SL placed above the all-time high of 19964, or preferably above 20,000.
24 Hour: Neutral Medium term: Prefer to sell rallies


Resistance Support
22000 Minor 19832 Session low
21000 Minor 19791 19 Dec low
20000 Minor 19740 15 Dec low
19964 All-time high/14 Dec high 19700 Minor.
19931 Session high 19600 Minor
ASX SPI 5562
The SPI had another good session, led by the banks, and reached a high of 5573 in overnight trade, essentially filling in the chart gap, back to 13 December. A neutral stance is required although the 4 hour charts do hint at further gains, where above 5591 could see a quick run to 5600 and above, with not a lot to then stop it heading to 5680. On the downside, support will be seen at 5550 and again at the session low at 5511. This seems unlikely to be seen today although while the near term momentum indicators look positive, I am still wary of the bearish divergence that can be seen in the weekly charts. In the meantime, buying dips seems to be the plan.
24 Hour: Neutral Medium term: Prefer to sell rallies


Resistance Support
5620 Minor 5550 Minor
5600 Minor 5535 200 HMA
5591 13 Dec high 5511 Session low
5585 Minor 5480 Minor
5573 Session high 5462/57 16 Dec low/(23.6% of 5029/5681)
GOLD 1131

Gold remains under pressure from the stronger dollar, falling to 1125 today before a bounce, to currently sit at 1130.

Below the session low, 1120 will continue to provide strong support but below there would allow a move to 1100, a break of which could then see a run towards 1090 and even to 1070. While the weekly charts suggest that this could eventually happen, the dailies remain oversold and could yet lead to a bounce providing better levels to sell into. If so, the topside will see offers at 1140, at 1150 and again at 1160/65. Selling rallies is preferred.

24 Hour: Neutral Medium term: Prefer to sell rallies


Resistance Support
1172 (23.6% of 1337/1122) 1125 Session low
1165 14 Dec high /12 Dec high 1123/22 15 Dec low/(76.4% of 1046/1375)
1150 200 HMA 1108 28 Jan low
1142/44 19 Dec high/15 Dec high 1090 Minor
1139 Session high 1071 14 Jan low
SILVER 16.04

Silver made a new trend low today, reaching 15.63 before a bounce back to 16.00, where it currently sits unchanged on the day.

The short term momentum indicators are mixed, suggesting further choppy trade ahead although the dailies are still pointing lower and below the session low could quickly see a run towards 15.35/30, below which 15.00 and 14.80 would attract. On the topside, 16.25/30 will again provide minor resistance, beyond which we could see a squeeze towards 16.60, above which would then open the way towards 17.00, albeit doubtful today. Selling rallies is preferred.

24 Hour: Prefer to sell rallies Medium term: Neutral


Resistance Support
17.05 (38.2% of 18.98/15.88) 15.63 Session low
16.88 200 HMA 15.50 Minor
16.60 (23.6% of 18.98/15.88) 15.35/38 11 April low/(76.4% of 13.64/21.13)
16.45 Minor 15.00 Minor
16.27 16 Dec high 14.78 1 April low
OIL (WTI) 53.22

WTI headed higher on Tuesday, back towards the 54.48, 12th December trend high, an 18 month peak, as market players looked ahead to the weekly EIA stockpile data due later today. US crude and refined products are forecast to drop by 2.4 million barrels.

Further gains look possible and on the topside, above the session high the next resistance will be seen at the 54.48, beyond which there is not too much resistance ahead of 57.10 (38.2% of 107.65/26.03) . Support will arrive at the session low (52.04) and then at the neckline of the major reverse head shoulder formation, at 51.15. As long as this holds, the head/shoulder objective remains at $82.00. Below 51.00 may see a return to the 16 Dec low of 50.48 although this looks a little unlikely in the near term. Under there could see a return to 50.00/49.75, which should be strong support, but below which could see an acceleration towards 48.00/50, below which could see a run to 46.50/00

24 Hour: Neutral Medium term: Mildly bullish


Resistance Support
56.00 Minor 52.04 Session low
55.00 Minor 51.48 19 Dec low
54.48 12 Dec high 51.15 H/S Neckline
54.00 Minor 50.48 16 Dec low
53.75 Session high 49.92 15 Dec low

EURUSD: 1.0389

The Euro briefly reached levels last seen in January 2003, trading down to 1.0351 before pulling up just ahead of the previous low of 1.0334. Some minor profit taking bought the Euro back, to close pretty much unchanged on the day at 1.0400.

Technically, below today’s low (1.0351) would then allow a move to the 1.0334, Jan 2003 low but, with the daily/weekly momentum indicators picking up downside momentum a test of parity would seem to be a matter of time. There is not very much support at all below 1.0300 until 1.0050, which should be a strong Fibo level (76.4% of 0.8225/1.6037) but below which 1.0000 would quickly beckon. Indeed the head/shoulder formation, seen on the weekly charts, suggests that eventually we are heading much, much lower. In the meantime, selling rallies appears to be the plan. The 4 hour momentum indicators still hint at the chance of another short term squeeze, possibly back towards 1.0450/1.0500, but I would not be looking for too much more in the short term. With little data due, another sideways session may be in store although the EU Consumer Confidence may provide some waves.

24 Hour: Neutral – Prefer to sell rallies Medium term: Mildly bearish


Resistance Support
1.0548 (38.2% of 1.0351/1.0872) 1.0351 Session low
1.0500 Minor 1.0334 Jan 2003 low
1.0472 (23.6 of 1.0351/1.0872) 1.0300 Minor
1.0450 100 HMA 1.0250 Minor
1.0417 Session high 1.0050 (76.4% of 0.8225/1.6037)

Economic data highlights will include:

EU Provisional Consumer Confidence (Dec), Existing Home Sales, EIA Crude Oil Stocks Weekly Change

Meta Trader
EURUSD: 4 Hour



USDJPY: 117.79

US$Jpy  has largely stayed within its previous range today following the BOJ meeting, when rates were left on hold, with the Yen somewhat underpinned by safe haven buying following the terrorist attacks in Germany/Turkey.

More of the same looks possible today as we approach major descending trend resistance levels at around 119.00 and then again at 120.50. On the downside, support will be seen at the session low at 117.00, where the rising trend support will look to hold the dollar up. A break of this could see a deeper move towards 116.50 and even to 115.00/114.50 although that is a long way off and seems unlikely to be seen ahead of Christmas unless there is a need for major safe haven demand.

As we said before, it may be that we spend a while chopping around below 120.00 ahead of Christmas, allowing the dailies to continue to unwind and there are easier pairs to trade right now, but looking further out, with the weeklies pointing strongly higher, a retest of 125.85 (7 June 2015 high) would seem to be on the cards at some stage in 2017.

24 Hour: Neutral Medium term: Prefer to buy dips


Resistance Support
120.00 Psychological 116.98 Session low
119.35 (76.4% of 125.85/98.94) 116.54 Minor
118.80 Descending trend resistance 116.25 200 HMA
118.65 15 Dec high 116.00 Minor
118.24 Session high 115.50 Minor

Economic data highlights will include:

All Industry Activity Index

Meta Trader
USDJPY: 4 Hour



GBPUSD: 1.2369

Cable traded pretty much in unison with the Euro today and having fallen to a 4 week  low of 1.2312 it has since put in a mild recovery to close the session at 1.2360.

The shorter term charts look neutral although the dailies seem to be pointing lower so below the session low could see a run towards 1.2300 and lower, with not too much support to be seen until 1.2190/1.2200. Short term resistance lies at 1.2420, 1.2440 and 1.2500, which is likely to be toppish if seen again today. Selling rallies is favoured. The Public Sector Net Borrowing Requirements may provide some minor volatility today.

24 Hour: Neutral Medium term: Mildly bearish


Resistance Support
1.2581 (61.8% of 1.2723/1.2354) 1.2312 Session low
1.2536 (50% 1.2723/1.1.2354) 1.2300 (50% pivot of 1.1821/1.2775)
1.2496 (38.2% 1.2723/1.1.2354) 1.2250 Minor
1.2440 (23.6% 1.2723/1.1.2354) 1.2190 (61.8% of 1.1821/1.2775)
1.2415 Session high 1.2135 Minor

Economic data highlights will include:


Meta Trader
GBPUSD: 4 Hour


USDCHF: 1.0287

Unlike EurUsd, US$Chf did not make a new trend high today, with the Chf mildly underpinned by safe haven demand.

Given the lack of data due in the coming session, further consolidation near current levels looks likely, but with the dailies leaning bullish, I think buying dips, with a SL placed, either tight below 1.0220, or preferably  under the  1.0140, 61.8% Fibo support may be the way to go.

In the longer term, the dollar has taken out all the nearby resistance levels and there is now not too much to stop it heading on towards 1.0600+. Short term dips are likely, where the downside looks supported at 1.0260 and 1.0220, with SL best placed below the 1.0195 low.

24 Hour: Prefer to buy dips Medium term: Bullish


Resistance Support
1.0500 Minor 1.0260 100 HMA
1.0400 Minor 1.0220 (38.2% of 1.0019/1.0343)
1.0343 15 Dec high 1.0205 200 HMA
1.0319 Session high 1.0180 (50% of 1.0019/1.0343)
1.0300 Minor 1.0140 (61.8% of 1.0019/1.0343)

Economic data highlights will include:

Q4 Quarterly Bulletin

Meta Trader
USDCHF: 4 Hour


AUDUSD: 0.7253

The Aud has recovered from a 0.7222 session low to sit at 0.7255, and with the short term momentum indicators looking constructive further gains towards 0.7300 would now seem possible, where 0.7290/0.7310 would see decent offers, and if seen would provide a decent opportunity to get short.

On the downside, support will be seen at the 0.7222 session low ahead of 0.7200. Under there, unlikely today I suspect, would open the way to 0.7180 and then to the 7 month mow at 0.7144.

Further out, with the longer term momentum indicators pointing down, I think we may have started the move to 0.7000 and eventually lower. Given the potential for diverging monetary policy between the RBA/Fed heading into 2017 as well as the increasing chance of a cut in the Australian AAA credit rating, we could eventually be looking towards a move to the January lows of 0.6825.

24 Hour: Prefer to sell rallies Medium term: Bearish


Resistance Support
0.7370 (50% of 0.7524/0. 7222) 0.7240 Minor
0.7336 (38.2% of 0.7524/0. 7222) 0.7222/18 Session low/3 June low
0.7312 19 Dec high 0.7200 2 June low
0.7292 (23.6% of 0.7524/0. 7222) 0.7180 Minor
0.7261 Session high 0.7144 24 May low

Economic data highlights will include:

WBC Leading Index

Meta Trader


NZDUSD: 0.6918

The Kiwi has recovered from a dip to 0.6882, prior to the Global Dairy Trade Index (GDT PI -0.5% and WMP -0.8%), and despite the poor outcome it has bounced to currently sit at 0.6925. With the short term momentum indicators looking constructive further gains towards 0.6970 would now seem possible, which should be good resistance. If seen, further gains beyond there would allow a run towards 0.7000/15, which would see decent offers, and if seen would provide a decent opportunity to get short.

On the downside, support will be seen at 0.6900 and at the day’s low at 0.6882, which seems set to underpin the Kiwi today. Further out, a break of 0.0.6880 would then open the way to the major rising trend support at 0.6820.

24 Hour:  Prefer to sell rallies Medium term: Bearish


Resistance Support
0.7060 (50% of 0.7238/0. 6882) 0.6900 Minor
0.7015 (38.2% of 0.7238/0. 6882) 0.6882 Session low
0.7000 Minor 0.6840 Minor
0.6965/70 (23.6% of 0.7238/0.6882) / H/S Neckline 0.6820 Rising trend support
0.6932 Session high 0.6800 Minor

Economic data highlights will include:

Trade Balance, NZ Visitor Arrivals

Meta Trader


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