1 Dec: Surprise OPEC deal sends WTI 10% higher. US$ stronger as yields rise. Focus now on PMIs.

By | December 1, 2016

Today’s OPEC meeting has seen a deal to cut oil production, pushing prices sharply higher and causing a flow on effect in sending U.S. Treasury yields up, which in turn has seen the U$ rally strongly, particularly against the Yen. Also underpinning the dollar today, ahead of tomorrow’s US employment figures, was the release of a batch of firm data, including the ADP jobs report, which showed U.S. private employers added 216K jobs in November, well above economists’ expectations of 160K.

Thursday kicks off with a relatively busy session for Asia, starting with the NZ Terms of Trade, the Australian Performance of Mfg Index and Private Capital Expenditure and then the closely watched China Mfg/Non Mfg PMI and the Caixin China Mfg PMI, for November. Later in the day we get the EU PMIs and the important US ISM Mfg PMI. The US session also sees the November Total Vehicle Sales and Construction Spending but we seem likely to remain within the range while waiting on tomorrow’s US jobs figures

CURRENCIES
EURUSD: 1.0598
Res  1.0630  1.0665  1.0685
Sup  1.0575  1.0550  1.0515
USDJPY: 114.37
Res  114.55  115.00  115.50
Sup  113.90  113.35  112.75
GBPUSD: 1.2508
Res  1.2530  1.2560  1.2600
Sup  1.2450  1.2415  1.2385
USDCHF: 1.0165
Res  1.0205  1.0225  1.0255
Sup  1.0140  1.0080  1.0105
AUDUSD: 0.7382
Res  0.7415  0.7430  0.7450
Sup  0.7360  0.7335  0.7310
NZDUSD: 0.7080
Res  0.7100  0.7120  0.7135
Sup  0.7070  0.7055  0.7030
INDICES / COMMODITIES
S+P: 2198
Res  2214  2220  2230
Sup  2196  2190  2180
DJI: 19132
Res  19215  19250  19300
Sup  19080  19040  18990
ASX SPI: 5458
Res  5476  5490  5500
Sup  5440  5426  5404
GOLD: 1174
Res  1184  1198  1206
Sup  1170  1160  1150
SILVER: 16.50
Res  16.75  16.85  17.00
Sup  16.40  16.30  16.15
OIL (WTI): 48.90
Res  49.85  50.90  51.30
Sup  48.50  48.00  47.00

 

Indices/commodities
S&P Futures 2198

U.S. stocks briefly rose to new all time highs on Wednesday, with the S+P  trading to 2213, before reversing late in the day to close near session lows of 2200, leaving the overall outlook unchanged.

As before, after making another all time high, the dailies still look positive although they may be on the point of tipping over so a cautious stance is required given that the 4 hour charts show little sign of any positive momentum. Ahead of Friday’s US Jobs data we may be in for further consolidation at current levels. On the downside, back under the 2196 29 Nov low will find bids at 2191 (23 Nov low), beneath which could see a run back to 2180 and then towards 2170. On the topside, resistance will be seen at 2213 above which we might expect the slow grind higher to continue, towards 2220. For the time being a neutral stance is required, but given the look of the dailies, buying near term dips still seems to be the longer term plan.

24 Hour: Neutral

Medium term: Neutral

Resistance Support
2230 Minor 2200 Session low
2225 Minor 2196 29 Nov low
2220 Minor 2191 23 Nov low
2215 Minor 2178 21 Nov low
2213 Session high  / All time high 2167 (23.6% of 2028/2213)
DJI Futures 19132

The DJI made it up to 19214 today, an all time high, before topping out to finish the session at 19150.  As with the S+P, a neutral stance is required but given the look of the dailies, buying near term dips still seems to be the longer term plan as the slow creep higher appears set to continue. Note though that the dailies may be reaching a tipping point, so I would be keeping stops tight under 18900.

24 Hour: Neutral

Medium term: Neutral

 

Resistance Support
19500 Minor 19099 Session low
19400 Minor 19041 28 Nov low
19350 Minor 18973 23 Nov low
19300 Minor 18911 22 Nov low
19214 Session high/All time high 18832 21 Nov low
ASX SPI 5458
The ASX had a rangebound session (5426/76) leaving the outlook unchanged

The 4 hour/daily momentum indicators are mixed, suggesting a neutral stance heading into Thursday and on the topside, above the session high, resistance will again be seen at 5490/5500, at the 5517, 28 Nov high and then at the Friday high of 5527. Beyond there, further gains will find little to stop the SPI heading on to the August high of 5568, which should be strong resistance but beyond which could see a run to 5600 and above, and then we could then see a run towards the August 2015 high at 5671.

On the downside, back below the 5450 will once again see support at 5425/30, a break of which could see a run back to 5400, although this looks unlikely today. A range trade looks likely again today, although given the constructive look of the longer term momentum indicators, buying into weakness seems to be the plan. Keep an eye out for the Chinese manufacturing data.

24 Hour: Neutral

Medium term: Neutral

 

Resistance Support
5568 1 August high 5450 200 HMA
5527 25 Nov high 5426 Session low
5517 28 Nov high 5405 23 Nov low/ (23.6% of 5029/5527)
5492 29 Nov high 5375 Minor
5476 Session high 5335 (38.2% of 5029/5527)
GOLD 1174

Gold dropped below 1180 on Wednesday, falling to the 1171 support as it came under pressure from the stronger dollar on the back of the increasing anticipation of a rate hike by the Fed next month,  dampening the short-term outlook for commodities. The 4 hour momentum indicators have turned lower and if the dollar strength continues it may be that we see a sterner test of 1170, below which Gold would find bids at 1155, but under here there is little to hold the price up until 1120. On the topside, resistance will be seen at 1185 and then again in the 1195/1200 area although this looks unlikely to be seen for a while. Given that the weeklies also point lower I still prefer to trade strategically from the short side.

24 Hour: Neutral

Medium term: Neutral

 

Resistance Support
1220 (23.6% of 1375/1270) 1171 Session low / 25 Nov Low / (61.8% of 1046/1375)
1210 (23.6% of 1337/1170)/200 HMA 1164 8 Feb low
1200 200 HMA 1157 4 Feb low
1197 28 Nov high 1140 Minor
1185 100 HMA 1122 (76.4% of 1046/1375)
SILVER 16.50

Silver had a rangebound session leaving the outlook unchanged (16.40/76).

The short term momentum indicators are flat and another neutral session could be in store as we wait on tomorrow’s US jobs data. As we said yesterday, it could be that Silver is building a minor reverse head/shoulder formation, with a neckline at 16.85, which if that were the case, would have an objective at around 17.50. If seen it would suggest a medium term sell opportunity although given the strength of the dollar it seems unlikely that this will come about. With that in mind, below 16.40 could see a test of 16.00, below which would allow a run towards 15.80 and potentially to 15.40.  I prefer to trade from the short side.

24 Hour: Neutral

Medium term: Neutral – Prefer to sell rallies

Resistance Support
17.50 14 Nov high 16.41 Session low/29 Nov low
17.23 (38.2% of 18.98/16. 17)/16 Nov high 16.16 25 Nov Low/23 Nov low
17.00 Minor 16.00 Minor
16.85 (23.6% of 18.98/16. 17)/28 Nov high 15.81 1 June low
16.76 Session high 15.50 Minor
OIL (WTI) 48.90

OPEC representatives today surprised markets and reached a deal to cut oil production after months of wrangling.  The deal would involve cutting production by 1.4 mio barrels per day, or 1.5% of global production. Non-OPEC countries including Russia could cut by 0.6 mio barrels a day.

WTI gained by around 10%, to $49.87 pb, before giving up some of those gains, to finish at 48.90. A cautious stance is required as the daily momentum indicators are flat, although the 4 hourlies look positive, so we could yet see a run to 50.00 and beyond, where 51.30 should see good sellers, and as we said before, this level is important. The weekly charts do show the potential for a reverse head and shoulders, and a break of the neckline at 51.30 would have an objective of 82.00. Don’t get excited, but worth keeping in the back of your mind. On the downside, support will be seen at 48.00 and again down towards 47.00. Buying dips now seems to be the plan, albeit cautiously.aud-1

24 Hour: Neutral

Medium term: Neutral – Prefer to sell rallies

 

Resistance Support
52.19 19 Oct high 48.50 Minor
51.30 Descending trend resistance 48.05 (23.6% of 42.19/49.87)
50.90 25 Oct high 47.25 200 HMA
50.07 26 Oct high 47.00 (38.2% of 42.19/49.87)
49.80/87 (76.4% of 52.19/42.18)/Session high 46.10 (50% of 42.19/49.87)

EURUSD: 1.0598

EurUsd has been choppy, falling from session highs (1.0666) to the lows (1.0551) following the announcement of the OPEC deal and under pressure from the stronger dollar following the firm US data, but ultimately it remains close to 1.0600 leaving the outlook unchanged.

Technically, the short term charts remain neutral, while the dailies still appear to be trying to find a base although this will depend on the outcome of tomorrow’s US Jobs data, where a strong number will see the dollar resume its recent rally, keeping the Euro under pressure. In the meantime, 1.0600 could again act as a pivot, particularly as there is a very large 1.0600 expiry (4.6 bio) today, but above which we could potentially see squeeze back to the session high, although the 4 hour charts do not really suggest such a move. If wrong, above 1.0665, we could then  head to the 1.0685 28 Nov high, a break of which would allow a run towards 1.0700/10 and possibly to 1.0745, which given the ongoing demand for dollars would seem to be an area to sell into, with a SL placed above the 16 Nov high of 1.0758.

The downside will again see bids at the 1.0551 session low, a break of which could head to the 1.0517/20 lows seen last Thursday, below which would eventually open the way to the March 2013 low at 1.0461. Under this, there is very little to hold the Euro up ahead of 1.0300 and then again, not a lot until we reach parity. The PMIs will be the focus today, with the US ISM likely to be the key driver although if we chop around current levels ahead of the US Jobs data it would not surprise.

24 Hour: Prefer to sell rallies

Medium term: Prefer to sell rallies

Resistance Support
1.0725 Minor 1.0600 200 HMA
1.0703/10 (23.6% of 1.1282/1.0517) /17 Nov high 1.0551 29 Nov low
1.0685 28 Nov high 1.0537 Friday Low
1.0666 Session High 1.0517 24 Nov low/3 Dec 2015 low
1.0600 200 HMA 1.0462 March 2015 low

Economic data highlights will include:

EU Manufacturing PMIs, Unemployment, ISM Mfg PMI/Prices Paid, Construction Spending, Total Vehicle Sales, EIA Crude Oil Stocks Weekly Change

Meta Trader
EURUSD: 4 Hour

euro


USDJPY: 114.37

US$Jpy headed sharply higher on Wednesday, driven by firmer US yields following the OPEC meeting and a batch of strong US data, spiking up through 114.00 to a high of 114.53 before pulling up just short of the 100 DMA at 114.60.The price action looks set to remain highly volatile and the daily charts do remain extremely overbought, so corrections do seem inevitable, although buying dips remains the medium term theme, and a strong NFP reading on Friday would likely see the dollar head higher still. If so, on the topside the 100 DMA at 114.60 will be the first hurdle although above there, there is little to stop the dollar heading on to 115.50/60, beyond which we could see a run towards 116.00 and even to 117.80 (76.4% of 121.05/98.94). On the downside, support will be seen at 113.90, the previous trend high, below which there is little to be seen until the rising trend support, which comes in at 112.50.  The 4 hour charts are supportive and buying dips seems to be the plan, but I would be keeping stops placed tightly under the rising trend support, as we could yet see another spill, as we did earlier in the week. There are likely to be some decent offers protecting 115.00 option knockouts and it may take an effort to get above there today.

24 Hour: Neutral

Medium term: Neutral

Resistance Support
115.50 (61.8% of 125.85/98.94)/Weekly cloud top 113.90 Minor
115.00 Minor 113.50 Minor
114.60 100 DMA 113.30 Minor
114.53 Session high 113.00 Minor
114.25 (61.8% of 123.55/98.94) 112.50 Rising trend support

Economic data highlights will include:

Meta Trader
USDJPY: 4 Hour

yen

yen-1


GBPUSD: 1.2508

Sterling was unable to make a sustained break above 1.2500 following the announcement of the OPEC deal and remains within the recent range.

The 4-hour momentum indicators are still flat, as are the dailies, suggesting a cautious stance is needed and we could be in for more of the same sideways, choppy price action.

 If anything, the short term momentum indicators look mildly supportive and we could see a test of the 28 Nov high at 1.2531, above which could then see a squeeze towards 1.2600, and beyond that, towards the mid November high at 1.2673, albeit probably not today. On the downside, the rising trend support is now seen at 1.2410, which underpinned the downside yesterday but a break of which would allow Cable to head back to 1.2385 and then 1.2360, below which we could head towards.2300. Overall, a choppy sideways session would not really surprise. Watch out for the Manufacturing PMI today.

24 Hour: Neutral

Medium term: Neutral

Resistance Support
1.2635 Minor 1.2445 100 HMA
1.2600 Minor 1.2418 Rising trend support/ Session low
1.2560 Minor 1.2385 29 Nov low
1.2531 28 Nov high 1.2360 23 Nov low
1.2525 29 Nov high 1.2301 18 Nov low

Economic data highlights will include:

UK Manufacturing PMI

Meta Trader
GBPUSD: 4 Hour

gbp


USDCHF: 1.0165

US$Chf finally reached 1.0200 today, albeit briefly, and it is now back in more familiar territory, currently at 1.0160. The momentum indicators generally seem supportive, and if the dollar does move higher we could yet see a sterner test of 1.0200, beyond which could then head on to 1.0250 and to 1.0300/25 at some stage. Any  dip would again find good buyers at 1.0100/10, below which could see a move back to 1.0060 and possibly to 1.0030, although any such decline would seem to offer a buying opportunity. As we said before, with the weekly charts seemingly picking up steam we could be in for something much bigger going into 2017, with 1.0325 (Nov 2105 high) now coming into view, above which could see a run towards 1.0700 and feasibly to 1.1380 ((38.2% of 1.8309/0.7080). Buying dips remains preferred.

24 Hour: Bearish divergence – Prefer to buy dips

Medium term: Prefer to buy dips

Resistance Support
1.0327 27 Nov 2015 high 1.0135/40 200 HMA/100 HMA
1.0307 2 Dec  2015 high 1.0106 Session high
1.0255 29 Jan high 1.0078 28 Nov low
1.0223 2 Feb high 1.0060 18 Nov low
1.0204 Session high 1.0030  (23.6% of 0.9548/1.0091)
Meta Trader
USDCHF: 4 Hour

chf


AUDUSD: 0.7382

The Aud was unable to crack 0.7500 on Wednesday, and after reaching 0.7496 it headed sharply lower following the generally strong US data, falling to a low of 0.7373 as the US$ found new legs, closing the session near the lows.

The 4 hour and daily momentum indicators  both now look negative and we could see another test of the 0.7070, a break of which  could then head to the support at 0.7360 below which could then see a move towards 0.7335 and then to 0.7300/10. The Chinese data will be in focus today and if that outperforms we could yet see the Aud squeeze higher, where the levels to watch will be at 0.7415 and at 0.7450, both relatively minor resistance levels, ahead of the 0.7495/0.7500 area but which looks unlikely to be seen again in the short term. The Performance of Mfg index, Private Capital Expenditure (Q3), China Mfg/Non Mfg PMI, Caixin China Mfg PMI are all due. Selling rallies is again preferred.

24 Hour: Mildly bearish .

24 Hour: Prefer to sell rallies.

Resistance Support
0.7496 29 Nov high/Session high 0.7369 Session low
0.7480 Minor 0.7363/61 24 Nov low/22 Nov low
0.7450 100 HMA 0.7335 Weekly cloud base
0.7430 Minor 0.7310 21 Nov low
0.7415 200 HMA 0.7288/84 (76.4% of 0.7144/0.7834)/16 June low

Economic data highlights will include:

AIG Performance of Mfg index, Private Capital Expenditure (Q3), China Mfg/Non Mfg PMI, Caixin China Mfg PMI

 

Meta Trader
AUDUSD: 4 Hour

aud


NZDUSD: 0.7080
The Kiwi made up to a high of 0.7169 before falling sharply in the face of US dollar strength, heading down to 0.7070 and finishing the day just above the lows.

The 4 hour/daily momentum indicators are mixed, with the dailies currently still looking supportive although the 4 hour charts hint that we may yet see a retest of the lows, below which would find further bids today at the 28 Nov low of 0.7042, where the 200 DMA previously propped it up. Under there could then see another run towards 0.700, albeit possibly not today. On the topside, resistance will be seen at 0.7100 and then again at 0.7135 and at 0.7150, both minor, ahead of the session high of 0.7169, but which I think is unlikely to be bothered for a while. The NZ Terms of Trade are coming up shortly but it is likely to be the China Manufacturing PMIs that are the main focus for the coming session

24 Hour: Prefer to sell rallies Medium term: Prefer to sell rallies

 

Resistance Support
0.7185 (50% of 0.7400/0.6983) 0.7070 Session low
0.7170 Minor 0.7055 200 HMA
0.7159 Session high 0.7035/32 200 DMA
0.7135 Minor 0.7000 Minor
0.7100 Minor 0.6971 24 Nov low

Economic data highlights will include:

Terms of Trade Index (Q3)

Meta Trader
NZDUSD: 4 Hour

nzd

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