WTI traded lower yesterday and tumbled further during the Asian morning Friday, even after the Energy Information Administration (EIA) reported that US crude oil inventories fell by almost 6.9 million barrels in the week ended on the 12th of January. Expectations were for a 3.5 million slide. This followed the American Petroleum Institute (API) report, which showed a drawdown of 5.1 million.

The fact that the OPEC monthly report, released yesterday, showed that the cartel has raised once again its forecasts for supply from non-member countries may have encouraged some oil-bulls to lock some profits. The International Energy Agency also raised its forecasts of non-OPEC supply in its monthly outlook today.

However, from a technical standpoint, the near-term trend of WTI remains positive. The slide was limited near the crossroads of the 62.95 support and the short-term uptrend line drawn from the low of the 14th of December. Then the price rebounded somewhat.

If the bulls manage to take charge near current levels and drive the battle above 63.30 and the 50-EMA, then they may set the stage for extensions towards the 64.20 hurdle, marked by the peak of the 17th of January.

On the downside, another try below the aforementioned short-term uptrend line could initially aim for the 62.50 support, where a dip could open the way for the next support obstacle of 61.75.

Having said that though, even in case the price retreats further, the picture on the daily chart suggest a longer-term upside path. The price continues to trade above the uptrend line taken from the low of the 30th of August. As such, even if we see a short-term trend reversal, we would treat it as a corrective phase of the longer-term uptrend.

WTICrudeH4 190118

EUR/USD traded north yesterday, after it hit support at 1.2165 on Wednesday, near the upper bound of the prior upside channel that contained the price action from late October until the 12th of January. Our view remains the same as yesterday. As long as the pair is trading above that boundary, the outlook remains cautiously positive.

We still expect to see the rate challenging the 1.2300 territory soon, but we prefer to wait for a decisive break above 1.2320 before we get confident on larger bullish extensions. Such a break is likely to open the way for our next resistance of 1.2410, defined by the inside swing low of the 15th of December 2014.

Taking a look at our short-term oscillators, we see that the RSI rebounded from near its 50 line and could now be headed towards 70, while the MACD, already positive, shows signs of bottoming and that it could cross above its trigger lines soon.

On the downside, a slide below 1.2165 would bring the rate back within the aforementioned channel, and could initially target the 1.2125 support. Another dip below that level could pave the way for our next support obstacle of 1.2090.

EURUSDH4 190118

USD/JPY traded lower yesterday after it hit resistance near 111.50. Then, the pair hit support at 110.70 and rebounded somewhat. However, during the Asian morning Friday, the pair turned down again and currently looks to be headed once again for the 110.70 hurdle. Bearing in mind that the rate continues to oscillate within the broader sideways range, between 108.30 and 114.40, we stick to our guns that the broader outlook of the pair remains neutral.

However, for now, we see the case for some further declines. We would expect the bears to aim for another test near 110.70 soon, and if they manage to drive the battle below that hurdle, then we may experience extensions towards our next support of 110.25.

Our short-term oscillators detect negative momentum and support somewhat the notion. The RSI turned down and fell back below its 50 line, while the MACD, already negative, has topped and appears ready to cross back below its trigger line.

On the upside, if the bulls manage to take charge and push the rate above 111.50, then we may see them aiming for our next resistance of 111.85.

USDJPYH4 190118

Thursday, 18.01.2018, 08:32

EUR/USD Slides as ECB Officials Talk Down the Euro

Written by
Published in Forex

EUR/USD slid yesterday following the concerns of ECB officials with regards to the euro’s latest appreciation. Nevertheless, the slide was stopped at 1.2165, near the upper bound of the prior upside channel that contained the price action from late October until the 12th of January. In our view, as long as the pair continues to trade above that bound, the picture remains cautiously positive.

If the bulls manage to jump in soon, then we may see them driving the battle once again near the 1.2300 territory. That said, in order to trust further upside extensions, we would like to see a decisive move above 1.2320. Such a break would confirm a forthcoming higher high and could set the stage for our next resistance of 1.2410, marked by the inside swing low of the 15th of December 2014.

On the downside, a dip below 1.2165 would bring the rate back within the aforementioned channel and may initially aim for the 1.2125 line.

Shifting our attention to our short-term momentum studies, we see that the RSI hit support near 50 and turned up, but the MACD, although positive, stays well below its trigger line. We would like to see it turning up and crossing above its trigger before we assume that EUR/USD has gained the necessary momentum to edge north and challenge the 1.2300 territory.

EURUSDH4 180118

USD/CAD tumbled on the BoC’s decision to raise rates and hit support fractionally above the 1.2355 barrier, marked by the low of the 5th of January. Nevertheless, the NAFTA uncertainties and the caution on future policy adjustments that were included in the statement may be the catalysts for the subsequent spike north. The rally brought the rate above the 1.2515 resistance for a while, to test the 100-EMA. Subsequently, the pair edged south again.

At the time of writing, USD/CAD is trading slightly below the 1.2470 level and the 50-EMA. If the bears manage to take the reins at current levels, then we may see them aiming for another test near 1.2400. A decisive break of that barrier may open once again the way for the 1.2355 territory.

On the upside, a break above 1.2470 could set the stage for a recovery towards 1.2515.

Taking a look at our short-term oscillators, we see that the RSI rebounded from near its upside support line to hit its 50 line, while the MACD, although negative, stands above its trigger line. These momentum signs make us careful that some recovery may be on the cards before sellers seize control again.

USDCADH4 180118

EUR/JPY slid yesterday after it hit resistance at 136.10. However, the rate found support near the 135.00 barrier and rebounded. Bearing in mind that the pair is back above 134.50, the upper bound of a prior medium-term sideways range, we believe that there is scope for some further advances.

We would expect the bulls to take the reins again soon and aim for another test near 136.10. If they manage to overcome that obstacle, then we could see them targeting the 136.65 territory, marked by the peak of the 5th of January.

Taking a look at our short-term momentum studies though, we see the case for another setback before the next positive leg, perhaps for another test near 135.00. The RSI, although above 50, has turned down, while the MACD, even though positive, lies below its trigger line.

If the 135.00 territory doesn’t hold, then we may experience further retreat, probably towards 134.50, the upper bound of the aforementioned sideways range.

EURJPYH4 170118

 

USD/CAD traded in a consolidative manner yesterday, staying between the 1.2400 support level and the resistance of 1.2455. The rate continues to trade below 1.2650, the lower bound of the prior sideways range that contained the price action from the 24th of October until the 27th of December. It is also trading below all three of our moving averages, which they all point south. As such, we still see a somewhat negative short-term picture.

Having said that though, we have to note that a lot of the pair’s forthcoming direction will depend on the BoC meeting outcome later in the day. A hike accompanied with a hawkish narrative could bring the pair under selling interest and we may see another test near 1.2400. A decisive dip below that level could pave the way for our next support barrier of 1.2355, marked by the low of the 5th of January.

In contrast, a “dovish hike" may be the reason for the pair to rally. A break above 1.2455 could open the way for our next resistance of 1.2515. Nevertheless, such a recovery may occur even ahead of the meeting. This notion is somewhat supported by our momentum studies. The RSI rebounded from near its upside support line and now appears to test its 50 line, while the MACD, although negative, has bottomed and emerged above its trigger line.

Now, in the unlikely scenario, where the Bank refrains from raising rates, the pair could rally much higher.

USDCADH4_170118.png

Cable continued its upside ride. However, the pair hit resistance around 10 pips below our 1.3830 barrier and then it retreated somewhat. GBP/USD continues to trade above the short-term upside support line taken from the low of the 13th of November and thus, we still see a positive near-term picture.

Although the pair may continue correcting lower for a while more, we expect buyers to seize control again soon and aim for another test near 1.3830. A clear break above that resistance may see scope for larger extensions, perhaps towards the psychological round number of 1.4000, defined by the inside swing lows of the 6th of April and 16th of June 2016. The trigger for a break above 1.3830 may be an upside surprise in the UK CPI data today.

Taking a look at our short-term oscillators, the RSI has topped above its 70 line, and could fall below 70 soon, while the MACD, although above both its zero and trigger lines, shows signs of topping as well. These indicators support the case for some further correction, perhaps for a test near 1.3725.

If the 1.3725 barrier does not hold, then we may see a deeper correction towards 1.3660. The fuel for a corrective retreat may be downside surprise in the inflation data.

GBPUSDH4 160118

EUR/USD continued trading north yesterday, breaking above the resistance (now turned into support) zone of 1.2250, marked by the inside swing low of the 8th of December 2014. However, the rate hit resistance fractionally below 1.2300 and then it retreated. Having in mind that the pair continues to trade above the upper bound of the upside channel that had been containing the price action since late October, we still see a positive picture.

We would expect a clear and decisive break above 1.2300 to set the stage for more short-term upside extensions, perhaps towards our next obstacle of 1.2410, defined by the inside swing low of the 15th of December 2014. Another break above that hurdle could pave the way for the psychological zone of 1.2500.

That said, for now we see the likelihood for a corrective retreat before the bulls decide to take the reins again. Our view is based on our momentum studies. The RSI shows signs of topping within its above-70 territory, while the MACD, although above both its zero and trigger lines, has started to top as well.

A break back below 1.2250 could confirm the case of a corrective retreat and may initially aim for our next support of 1.2215. Another dip below that level could target the crossroads of the 1.2185 level and the upper bound of the aforementioned channel.

EURUSDH4 160118

Monday, 15.01.2018, 09:40

FTSE 100 Continues to Aim for Fresh Highs

Written by
Published in Indices

FTSE 100 continued aiming for unseen territories. On the 27th of December, the index broke above the upper bound of the sideways range that had been containing the price action since the 24th of April, between 7200 and 7600. The exit signaled the continuation of the prevailing uptrend, with the index entering a rally mode.

We believe that the bulls are likely to continue dominating and aiming for new highs. However, given how steep the latest rally is, and also bearing in mind our momentum indicators, we have to sound a note of caution. We stay careful of a corrective setback, perhaps for a test near 7745 as a support this time. If that level does not hold, then the retreat may continue towards our next support of 7690.

As we already noted, our daily oscillators are one of the reasons we are mindful of a possible correction. The RSI stands above 70, but it has started to flatten, while the MACD although above both its zero and trigger lines, it has started to top.

UK100CashDaily 150118

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