21 Nov: US$ rules! Plenty more come. Market now looking to the FOMC Minutes (Wed) for guidance.

By | November 21, 2016

The US$ continued its relentless run higher on Friday as the markets price in the near certainty of a December Fed rate hike, with the Dollar index reaching 101.48, the highest level in 23 years, before drifting a little lower as profit taking set in ahead of the weekend. Following on from Janet Yellen’s hint on Thursday of an imminent hike, St. Louis Fed president James Bullard (recently dovish in outlook) seemed to underline her comments by saying that “markets are currently pricing in a high probability of a December move and I am leaning toward supporting that”. The dollar had already made its move for the day, led by the Yen which remains under heavy pressure but with the EU majors and the Aud also showing weakness, with technical signs of plenty more to come heading in the year end and beyond, into 2017.

The coming week will focus on Wednesday’s FOMC Minutes, in the hope of gleaning further indications that the Fed will raise rates in December. Ahead of their release, Wednesday will also see the annual UK Budget Statement and a fair bit of US data including the October Durable Goods Orders, Consumer Sentiment and Housing data. Today will look to the flash PMIs and a speech from ECB Governor, Mario Draghi for inspiration and later in the week it will be the Thanksgiving long weekend in the US, so activity is likely to be thin, and it will be the FOMC Minutes that dictates the direction.

CURRENCIES
EURUSD: 1.0587
Res  1.0660  1.0695  1.0745
Sup  1.0570  1.0520  1.0500
USDJPY: 110.86
Res  111.00  111.30  111.45
Sup  110.40  110.00  109.80
GBPUSD: 1.2340
Res  1.2365  1.2390  1.2410
Sup  1.2325  1.2300  1.2270
USDCHF: 1.0103
Res  1.0125  1.0150  1.0195
Sup  1.0080  1.0025  1.0055
AUDUSD: 0.7334
Res  0.7365  0.7385  0.7400
Sup  0.7315  0.7300  0.7285
NZDUSD: 0.7007
Res  0.7040  0.7060  0.7085
Sup  0.7000  0.6970  0.6935
INDICES / COMMODITIES
S+P: 2180
Res  2186  2190  2200
Sup  2170  2160  2150
DJI: 18841
Res  18920  19000  19050
Sup  18790  18680  18575
ASX SPI: 5368
Res  5376  5400  5420
Sup  5344  5320  5300
GOLD: 1208
Res  1220  1230  1240
Sup  1200  1190  1180
SILVER: 16.55
Res  16.85  17.00  17.15
Sup  16.45  16.25  16.00
OIL (WTI): 46.29
Res  46.55  47.15  47.70
Sup  45.80  45.15  44.75

 

Indices/commodities
S&P Futures 2180
Resistance Support
2210 Minor 2172 17 Nov low
2205 Minor 2160 200 HMA
2200 Psychological 2150 (23.6% of 2028/2187)/100 DMA
2191 All time high (23 Aug) 2135 Minor
2187 Friday high 2125 (38.2% of 2028/2184)

Bias

US stocks again remained rangebound on Friday (2177/87), leaving the outlook for the beginning of the week pretty much unchanged, and further sideways action could be in store as traders look forward to Wednesday’s FOMC Minutes The dailies still look constructive though, and it is not out of the question that we do head above the 2187 high and on towards the all time high of 2191, above which would see a stern test of 2200 and beyond, although I would be doubtful of seeing new highs today. On the downside, below the 2170 minor support will find bids at 2160 and then there is strong support at 2150. For the time being a neutral stance is required, but given the look of the dailies buying near term dips in the 2150 area – if seen – seems to be the longer term plan. Just be aware of the short term wedge shape that seems to be building. A downside break could see an acceleration lower, so stops on long positions should be kept tight.sp

24 Hour: Neutral

Medium Term: Prefer to buy dips

DJI Futures 18841
Resistance Support
19300 Minor 18792 16 Nov low
19200 Minor 18755 15 Nov low
19100 Minor 18682 11 Nov low
19000 Minor 18560 (23.6% of 17417/18916)
18916 14 Nov high /All time high 18340 (38.2% of 17417/18916)

Bias

As with the S+P, the DJI was rangebound on Friday, leaving the outlook unchanged.

The 4 hour momentum indicators still point a little lower, so further near-term upside potential looks limited in the short term although the dailies remain positive, and buying dips seems to be the plan.  Until Wednesday, a cautious stance is required and further rangebound trade seems likely as we await the FOMC Minutes.dji

24 Hour: Neutral

Medium Term: Prefer to buy dips

ASX SPI 5368
Resistance Support
5440 (76.4% of 5568/5029) 4345 Friday low
5220 Minor 5325 Minor
5400 Minor 5300 200 HMA
5375/80 (76.4% of 5488/5029)/100 DMA 5290/85 (23.6% of 5029/5370)
5376 Friday high 5270/65 10 Nov high low/200 DMA

Bias                

The SPI did make up to the 5370 resistance on Friday (high 5376) but did not carry on, in what was a fairly tight session.  The daily indicators still look constructive though, so if the current resistance can be taken out, a quick move to 5400+ may be on the cards, and with the 4 hour charts also looking a little more positive today we could be in for a squeeze to the topside. Dips look likely to hold 5345, and below there 5320 should provide support, if seen. The preference is to be long rather than short, but with the FOMC minutes due on Wednesday it may end up being rangebound until then.spi

24 Hour: Neutral

Medium Term: Mildly bullish

GOLD 1208
Resistance Support
1259 (38.2% of 1337/1212) 1203 Friday low
1250 Minor 1200 31 May low
1241 (23.6% of 1337/1212) 1190 16 Feb low
1235 100 HMA 1181 10 Feb low
1233 16 Nov high 1172 (61.8% of 1046/1375)

Bias

Gold was again under pressure from the stronger dollar on Friday and traded down to 1203, but is so far holding on above the May low at 1200, just!

With the dailies pointing lower further declines look to be in store in the days ahead, and below 1200 would head towards levels which are layered at $10 increments, starting at 1190, down to 1170, so any downside progress, if seen, may be slow. The topside will find offers at 1215/20 and then again 1230/35 although this is now looking over the horizon unless we see a sharp selloff in the dollar. Staying short is preferred, looking to sell into the 1220 area. SL above 1230.gold

24 Hour: Prefer to sell rallies

Medium Term: Bearish

SILVER 16.55
Resistance Support
17.40  (38.2% of 18.98/16. 48) 16.48 (61.8% of 13.64/21.13)
17.30 (23.6% of 20.06/16. 48) 16.43 Friday low
17.23 16 Nov high 16.23 7 June low
17.04 (23.6% of 18.98/16. 48) 16.00 Minor
16.80 Minor 15.81 1 June low

Bias

Silver fell to meet the major Fibo support at 16.48 on Friday, which has so far propped it up, but given that the dailies still point lower it appears to be headed, eventually, for a test 16.25/00, below which would allow a run towards 15.80 and potentially to 15.40. Short term rallies should be limited to 16.85, possibly 17.00, which if seen would now appear to be a decent sell area.silver

24 Hour: Prefer to sell rallies

Medium Term:  Bearish

OIL (WTI) 46.29
Resistance Support
48.40 (61.8% of 52.19/42.18) 45.80 Minor
47.70 Daily cloud top 45.15 Friday low
47.17 (50% of 52.19/42.18) 44.75  (38.2% of 42.18/45.46.38)
46.54 17 Nov high 44.27 (50% of 42.18/46.38)
46.42 Friday high 44.00 200 DMA

Bias

Oil prices were mixed on Friday, with WTI chopping around between 45.15/46.42, with hopes of an OPEC deal to limit production being offset by the stronger dollar. Technically, with the 4 hour/daily momentum indicators still looking mixed, a cautious stance required.  The 100 DMA at 46.00 would seem set to act as a near term magnate although back above the 46.54 (17 Nov high) and 46.65/70 (see below) could lead to a larger squeeze towards 47.15 and even back to 48.40. A downside break of Fridays low could see a move back to 44.70, below which would open the way towards 44.25 and possibly to the stronger support at 43.90/80. The dailies remain mildly positive, so the structural view of buying dips remains intact, as I suspect we are in for another run to 48.00 at some stage. Note the possibility of a reverse head/shoulder formation appearing on the 4 hour charts. If correct, a break of the 46.60 neckline would then have an objective of 50.60. Wait and see!wti
24 Hour: Prefer to buy dips

Medium Term: Mildly bullish


EURUSD: 1.0587
Resistance Support
1.0758 16 Nov high 1.0585 Major rising trend support
1.0740/45 (23.6% of 1.1282/1.0628) /17 Nov high 1.0568 17 Nov low
1.0695 100 HMA 1.0522 3 Dec 2015 low
1.0660 Minor 1.0500 Minor
1.0640 Minor 1.0462 March 2015 low

Bias                                                                                         

The dollar’s strong run higher against all its counterparts continued on Friday, with the Euro under heavy pressure and quickly reaching the rising trend support at 1.0585, before heading on to a low of 1.0569 and then followed by a mild bounce to finish the week at 1.0600. Further Euro weakness looks likely in the sessions ahead and a break of Friday’s low would then head to the Dec 2105 low at 1.0522 and then possibly to the March 2013 low at 1.0461. In the shorter term, with the shorter term indicators again trading at oversold levels we could see a bounce to 1.0640/60 and even possibly back to 1.0700/1.0720, above which could then bring about a move towards the 17 Nov high at 1.0745 and even the previous day’s high at 1.0758 although this looks unlikely. Trading from the short side and selling into near term strength, if we see any, with a SL above 1.0745 seems to be the plan.

Further out, this dollar strength looks to me as though it has a long way to go. After almost 2 years of sideways trade, a move towards 1.0000 and possibly a fair bit lower, could be on the cards heading into, and throughout, 2107.

Note the article that I posted last Wednesday on the Dollar Index (DXY), with the attached support/resistance levels, and also not that we are now closing in on a major resistance level at 101.80. http://www.fxchartsdaily.com/the-dxy-is-on-a-roll-and-it-looks-like-it-is-just-beginning-fx-forex-us/

24 Hour: Becoming Oversold -Prefer to sell rallies

Medium Term: Bearish

Economic data highlights will include:

M: EU/US Flash Mfg/Services/Composite PMIs, BuBa Monthly Report, ECB Governor, Mario Draghi Speech, Chicago Fed National Activity Index,

Meta Trader
EURUSD: Daily

euro

euro1

DXY Weeklydxy


USDJPY: 110.86
Resistance Support
111.88 28 April high 110.40 Minor
111.44 30 May high 110.00 Minor
111.29 (50% pivot of 121.05/98.94) 109.80 Friday low
111.00 Psychological 109.30 100 HMA
110.94 Friday high 108.60 16 Nov low

(23.6% of 101.18/110.91)

Bias

US$Jpy continued its relentless run higher on Friday after taking out 110.00, by making several attempts to break through 111.00, falling just short by making a high of 110.94 late in the US session and closing on the trend highs. The uptrend remains firmly intact and the daily momentum indicators still point higher so, on a break of 111.00, which seems imminent, there is little to stop the dollar from heading to 111.25 above which the next minor resistances are seen at 11.45 and at 111.90, with the next Fibo level not seen until 114.20 (61.8% of 121.05/98.94) although that remains over the horizon at this stage. As with Friday’s outlook, although the dollar remains strong, the 4 hour momentum indicators are extremely overbought and continue to show a degree of bearish divergence, so some caution is warranted. Minor support will arrive at 110.30 and at Friday’s low at 109.80, below which, would open the way to 109.00 and even back to the 200 Month MA at 108.30, albeit that this looks unlikely in the near term. Buying dips still seems the longer term plan.

24 Hour: Becoming Overbought – Prefer to buy dips

Medium Term:  Bullish

Economic data highlights will include:

M: Japan Trade Balance, All Industry Activity Index

T:

W: Japan Holiday

T: Nikkei Mfg PMI

F: Japan CPI

Meta Trader
USDJPY: 4 Hour

yen

yen-1


GBPUSD: 1.2340
Resistance Support
1.2485 (50% of 1.2673/1.2301) 1.2325 Minor
1.2440 (38.2% of 1.2673/1.2301) 1.2301 Session low
1.2410 Minor 1.2270 Minor
1.2388 (23.6% of 1.2673/1.2301) 1.2247 (50% pivot of 1.1821/1.2673)
1.2370 Minor 1.2210 Minor

Bias                                                                         

Cable was unable to contain the strength of the dollar on Friday and finally broke below 1.24 and then below the previous rising trend support, in heading down to 1.2302 before a bounce into the weekend close.

Sterling is going to find it increasingly difficult to withstand the strength of the dollar, and the 4 hour momentum indicators are beginning to pick up some downside momentum and are possibly carving out a short term head shoulders formation which would suggest an objective of somewhere around 1.2090 (see chart.). Further out, With Cable having broken lower and the daily momentum indicators seemingly turning down as well, below 1.2300 would find bids at 1.2250, 1.2200 and 1.2150 although these are not particularly strong, suggesting that the downside move could begin to accelerate. A squeeze to the topside will see sellers at 1.2400, where the previous trend support and the neckline of the head/shoulder formation both lie. Back above here would negate the h/s and could see a run back towards 1.2440 and possibly to 1.2500 Above there, should we see it, Cable could head to the 14 Nov high of 1.2592, albeit unlikely.  For now, selling into strength, looking for a squeeze towards 1.2400 with a SL placed above 1.2440 would seem to be the plan.

24 Hour: Possible short term head/shoulder – Mildly bearish

Medium Term:  Neutral

Economic data highlights will include:

M:

T: PSNBR, CBI Distributive Trends Survey – Orders

W: UK Budget Statement

T:

F: UK Provisional GDP, Total Business Investment, CBI Distributive Trade Survey – Realised

Meta Trader
GBPUSD: 4 Hour

gbp


USDCHF: 1.0103
Resistance Support
1.0255 29 Jan high 1.0080 Major descending trend resistance, turned support
1.0223 2 Feb high 1.0055 Minor
1.0193 3 Feb high 1.0025 100 HMA
1.0150 Minor 0.9993/88 17 Nov low/(23.6% of 0.9548/1.0122)
1.0117/22 (76.4% of 1.0327/0.9443) /Friday high 0.9940 200 HMA

Bias                                                                                                                                16 Nov

US$Chf headed up to a high of 1.0122 on Friday, meeting the major Fibo resistance,  before closing at 1.0100, pretty much right (just above) on the long term descending trend resistance going back to November 2005.

The 4 hour/daily momentum indicators remain constructive and now hint that we could head towards 1.0200 and possibly to 1.0250. With the weekly charts also 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). That is a long way off, and in the meantime on the downside, should we see a healthy correction, then 1.0050/60 will provide support ahead of 1.0000 and then, further out,  0.9900/10. Buying dips remains preferred.

24 Hour: Prefer to buy dips

Medium Term: Bullish

Economic data highlights will include:

M:

T: Trade Balance

W:

T:

F:

Meta Trader
USDCHF: Daily

chf  …chf


AUDUSD: 0.7334
Resistance Support
0.7450 Minor 0.7335/30 Weekly cloud base/Friday low
0.7435 (23.6% of 7777/0.7330) 0.7300 Minor
0.7410/17 Weekly cloud top/Friday high 0.7288/84 (76.4% of 0.7144/0.7834)/16 June low
0.7400 Minor 0.7217 31 May low
0.7365 Minor 0.7200 (76.4% of 6006/1.1080)

Bias

The Aud took another heavy hit on Friday, falling to 0.7330 where the weekly cloud base prevented further losses, under pressure from the rampant US$ as Aud/Usd yield spreads narrow, with little bounce seen into the end of the session.

With the momentum indicators still pointing lower, further downside pressure would seem to be in store in the days ahead, where a break of 0.7300 should find decent buyers at 0.7285, but below which there is little support to be seen until 0.0.7217 and below that, at 0.7200. I think we are probably heading there and eventually lower, where distant targets would be at the May low at 0.7145.

As with last week, selling into short term strength seems to be the plan, where minor resistance will now be seen at 0.7365 and 0.7400, with SL to be left above 0.7420, or 0.7435.

24 Hour: Mildly bearish -Prefer to sell rallies.

Medium Term:  Bearish

Economic data highlights will include:

M:  China Leading Economic Index

T: RBA Asst Governor Kent Speech

W: Construction Work Done

T: Press Conference

F:

Meta Trader
AUDUSD: Daily

aud

aud-1


NZDUSD: 0.7007
Resistance Support
0.7140 14 Nov high 0.7015/12 200 DMA
0.7110 (23.6% of 0.7401/0.7035) 0.7000 Friday low
0.7090 Minor 0.6951 21 July low
0.7060 Head Shoulder Neckline 0.6933 (50% pivot of 0.7743/0.7485)
0.7040 Minor 0.6915 (50% pivot of 0.6345/0.7485)

Bias

 The Kiwi remained heavy heading onto the weekend, although it was more resilient than the Aud and managed to hang on above 0.7000. How long for seems doubtful given the look of the longer term indicators and the downside still seems to be the direction to concentrate on. A break below 0.7000 will quickly head towards 0.6950, I suspect, below which, decent bids should arrive at 0.6915/35, although if we break 0.6890 there is nothing to hold it up until we reach 0.6830. In the bigger picture, as I said before, note that the Kiwi appears to be building a decent sized head/shoulder formation, with a neckline at 0.7060, which, now broken, would have an objective at 0.6570. On the topside, sellers will again arrive at the neckline at 0.7060 (Friday high) and then again at 0.7100/10, which if seen (doubtful) would again be a sell area with a SL placed above 0.7140.

24 Hour: Mildly bearish –Prefer to sell rallies

Medium Term: Bearish

Economic data highlights will include:

M: NZ PPI

T: BZ NZ Visitor Arrivals

W:

T:

F: NZ Trade Balance

Meta Trader
NZDUSD: 4 Hour

nzdnzd1