ACFX London opening technical report – 28.11.2014What news will drive the markets today The drop in the value of Oil hits commodity based currencies
OPEC’s expected decision not to introduce quotas and cut oil production hit commodity based currencies such as the Norwegian Crown and the Canadian Dollar hard.
With Light Sweet Crude overnight trading at $67.66 and Brent at $71.50 traders focused on shorting national currencies where governments rely on revenues from Oil to fund their budgets.
The Norwegian Crown has hit a five year low against the Dollar with USDNOK is this morning trading at 6.9490.
The Loonie, (USDCAD) this morning is testing its New York session highs and is currently trading at 1.1350 being a two week high for this currency pairing.
Disappointing CPI numbers which are being impacted by the fall in oil prices has market sentiment expecting a need for a greater expansion of QE in Japan.
USDJPY is currently trading at 118.20 being a 112 pip increase off yesterday’s lows. The move higher for this currency pair would seem to indicate that USDJPY is once again attempting to revert to an intraday uptrend.
The deflationary problems that are hitting Japan are also effecting the ECB”s ability to generate some growth into the stagnant Eurozone economies.
There are now fears that scheduled inflation data releases today (Friday) for Germany and Spain could miss targets.
This leads us nicely to today’s data releases.
At 10:00am we have the Eurozone year on year CPI Flash Estimate. The prior was 0.4% and the ECB has its fingers crossed that the actual beats the 0.3% forecast.
Across the Atlantic in Canada, Statistics Canada releases latest month on month GDP numbers. With all the pressure on the Canadian Dollar a beat of the -0.1% prior and 0.4% forecast would give the Canadian Central Bank some relief.
EURUSD
The macro technical view The bullish double bottom scenario could maybe put to the test today if we have disappointing CPI numbers.
Combined with the OPEC decision which is also deflationary are probably the main reasons why we had negative trading yesterday.
From a weekly perspective if we can get a good up close today the overall picture of a bottom forming is reinforced.
However as every major pull back on the 4 hour and daily charts has resulted in an opportunity to short the Euro it would not be a surprise if we got more of the same.
Popping up to the monthly chart we do have monthly support coming in at around the 1.2200 level. This comes off the back of a monthly trend line.
This level now becomes an obvious target for the shorts and a magnate for EURUSD to drop down to.
The intraday technical outlook Intraday this morning we had our first unsuccessful test of the 1.2445 level. This price point is the current line of control and higher low swing point. A 1 hour close beneath this level would confirm that the trend has changed from up to down.
However as long as we can stay above the 1.2445 level the 1 hour trend points upwards with the current price target being 1.2500 and 1.2570.
Alternatively a breach of the 1.2445 level could see EURUSD test the 1.2400 and then the 1.2360 levels.
GBPUSD
The macro technical view At one point yesterday GBPUSD managed to trade at the 1.5825 level in what has turned out to be a decent rally for the pound.
Having broken above its 4 hour triangle I am now monitoring the possibility that GBPUSD can put in a higher low or at least a double bottom above the 1.5600 level.
In terms of trying to assess a much bigger picture one really needs to take a look at the monthly chart. The monthly chart has actually put in a higher high and is now trading at the 61.8% Fibonacci support level.
We have also had no less than 5 months of lower closes. Therefore the question now becomes is this drop over done?
Therefore for all the negative sentiment that surrounds the Pound right now, the formation of higher highs on the 4 hour and daily charts would be the first sign that this large macro long play is about to begin.
These kinds of trades need big stops and big pockets to finance them but a return to a macro uptrend has a target price of 1.7050. This was top of the bottom of the 2005 monthly down swing and top of the last isolated monthly high of July of this year.
Back to reality and the current daily momentum is down. If nothing changes then the current daily targets of
1.5630 and 1.5590 levels which coincide with priors 4 hour swing low points are still valid.
The intraday technical outlook The pound today is trading lower and as I speak is testing the 1.5715 support level.
A continuation of the move down that successfully breaches the 1.5675 level would change the trend from up to down.
The current upside targets are 1.5740 and 1.5785.
Alternative downside targets are 1.5675 and 1.5645.
USDJPY
The macro technical view Yesterday USDJY continued to trade lower however following the disappointing inflation data and concerns that Japan has to implement even more stimulus has this morning pushed USDJPY higher.
On the weekly chart I am interested to see if USDJPY can trade above the 118.98 level being last week’s high.
Down to the 4 hour chart it would appear that the bullish ABC scenario is now in play.
This puts into focus a retest of this year’s high being the 119.00 level.
The intraday technical outlook Intraday USDJPY has this morning tested and been repelled by the 118.30 level which is my line of control.
As long USDJPY can continue to trade under this level the 1 hour bias is down.
The downside targets are 117.65 and then 117.35.
Alternatively a break above the 118.30 level could see USDJPY test the 118.60 and 119.00 levels.
USDCHF
The macro technical view Yesterday’s higher close has had the effect of creating triangle consolidation pattern around the price action on the 4 hour and daily charts.
The question does continue to be is USDCHF now toppish however with the rejection of lower prices yesterday and this morning bullish open the focus does somewhat return to upside.
With the weekly time frame looking bullish trying to find areas of resistance and potential price targets forces me to take a look at the weekly and monthly time frames.
The 0.9915 and 0.9970 levels do offer obvious price points which are created by weekly and monthly swing lows and highs.
Alternatively a downside triangle break has an initial target at the 0.9530 level.
A breach and daily close under this level would change the daily trend from up to down.
The intraday technical outlook This morning we have had a 1 hour close above the 0.9665 level which is the intraday line of control.
Technically this changes the intraday trend from down to up.
However not one to jump the gun I want to see how USDCHF now pulls back.
What is important is if USDCHF can form a higher low. This will then become a base that propels USDCHF and into a new intraday uptrend.
The upside targets are 0.9700 and then 0.9730.
Alternative downside targets are 0.9630 and 0.9605.
AUDUSD
The macro technical view There is a saying that one swallow does not make a summer. This can be applied to the Aussie Dollar with one piece of good data not being enough to keep the AUDUSD trading higher.
The monthly chart and the formation of a large head and shoulders scenario that potentially targets the 0.8065 level is still in play.
The intraday technical outlook The 1 hour chart continues to point up but only just.
AUDUSD is now trading very near to the 0.8480 level which is the intraday line of control.
A breach and close of this level would turn the intraday trend from up to down.
The current upside targets are 0.8535 and 0.8635.
Alternatively a test of the 0.8480 support level could see AUDUSD test the 0.8325 and 0.8075 levels.
These levels are a bit away from the current price action. The reason for this is that there are no recent 1 hour swing points to target.
The only points I can really target are off the weekly time frame. However one could also use significant numbers such as 00 and 50 levels and pivot points.
GOLD
The macro technical view I mentioned in my previous posts that Gold had entered into area of Fibonacci resistance.
It would now appear that this has been targeted by some traders who are now attempting to push XAUUSD back into a daily down trend.
A key level to watch today is the 1175.00 level which coincides with an area just beneath last week’s low.
The 4 hour medium term chart is still trading in an uptrend. As long as the price action can hold above the 1174.50 level being the last isolated 4 hour swing low the bullish scenario remains intact.
The intraday technical outlook On a 1 hour basis the breach of the 1192.50 level has changed the trend for XAUUSD technically from up to down.
The current downside targets are 1181.00 and 1174.50.
Alternatively upside resistance comes in at 1186.50 and 1192.50.
OIL
The macro technical view What a surprise. OPEC did not cut production and the net effect was both Light Sweet Crude and Brent dropping like a stone.
In terms of long term technical’s nothing has really changed from yesterday with my 67.00 target for Light Sweet Crude now in touching distance.
There are no real arguments for the long side just yet with the momentum from 4 hour and up being so bear ugly.
Let’s see if we get any signs of life at the 67.00 2010 low level.
The intraday technical outlook As posted yesterday on an intraday basis the 1 hour chart continues to be very bearish with 1 hour line of control at 74.45.
The 71.50 and 69.50 downside targets have been hit. All eyes are now on the 67.00 level
Alternatively if bulls are brave enough to show their face we may get a bounce back to 69.50.
