18/11/2019

EURUSD

Bullish reaction for EURUSD last week which recovered from one-month lows closing above 1.10, at1.1051. The contradictory news from the USA – China trade war have created a kind of tiredness to the traders and investors while the last week’s news & announcements were more neutral for both Europe and USA. Current week focuses at FOMC Minutes on Wednesday, at ECB Monetary Policy Meeting Accounts on Thursday and at the speech of the new ECB President Christine Lagarde on Friday. Along with the already created trading sentiment and the trade war news, these events are expected to dominate the markets this week while Monday & Tuesday are neutral days without any special announcement activity. The uptrend momentum that EURUSD has taken is expected to try 1.11 but for the moment the long-term downtrend outlook for the pair has not changed. The volatility keeps on decreasing and it seems that EURUSD has built a strong resistance at the 1.1170 – 1.1180 price area. We’ll wait until the price approach the area of 1.11 before we try our sell positions with target 1.10. Besides the important news & events that we mentioned above, there are important ECB officers speeches (Luis De Guindos and Philip Lane) on Monday, the announcement of Building Permits & Housing Starts for USA on Tuesday, the EU Financial Stability Review on Wednesday, the OECD Economic Outlook for Eurozone on Thursday, the German GDP on Friday, the German Composite PMI on Friday and the US PMIs (manufacturing, services and composite) on Friday as well.

GBPUSD

GBPUSD kept on moving into the price channel between 1.28 and 1.30 that has been developed the last 4-5 weeks, after the great bullish trend that started from mid-August and the price area of 1.20. Weekly open was a bit below 1.28, at 1.2794 and weekly close at 1.2907 (so we took the target of our long positions at 1.29) while the weekly lows and highs were very close to the open and close respectively. Boris Johnson, who has already removed from his party’s announcements the case of a hard Brexit has 2-digit poll gains and so there’s a big optimism that strengthens the British pound. On the other side, last week’s news, even if it was not so satisfying for the markets showed that UK is not very close to a recession. Due to last week’s close above 1.29, we’ll prefer buy positions this week too targeting the price area of 1.30 and if there is a 1.30 breakout, most likely the markets would have already taken for granted the victory of Boris Johnson and the removal of a hard Brexit scenario.

Except the USA news that we saw at EURUSD entity, other scheduled UK announcements and events of the current week include the Inflation Report Hearings on Wednesday, the Public Sector Net Borrowing on Thursday and the PMIs on Friday (manufacturing, composite and services).

USDJPY

It was a week of a light correction for USDJPY which opened at 109.21 and closed at 108.78 with all the newest progress of the trade war on the table and the latest news from Hong Kong to add more uncertainty. The result is a strong JPY which traditionally is considered to be one of the safe haven assets. Last week the pair approached 109 but on Friday there was a strong bullish reaction. President Trump’s positive statements and Jerome Powell’s testimony in Congress who claimed that the US economy remains strong and the monetary policy is in a good place, made USD even stronger and so the bearish week that just passed over should be considered as a parenthesis on the bullish long-term movement of the pair since the end of August. We’ll take buy positions this week and we expect turbulences and fluctuations at the area of 109.20 but our main target remains the price area of 110.

Regarding the scheduled news for the Japanese economy, there is nothing important on Monday& Tuesday but on Wednesday we have the announcements of Imports, Exports and Trade Balance, on Thursday there’s the announcement of Direct Foreign Investments in Japanese Stocks and Bonds and in the same day there’s the announcement of All Industry Activity Index. Finally, on Friday the National Consumer Price Index is announced.

EURJPY

The sideways movement channel that we have spotted had a bearish breakout last week since the first 4 days were strongly bearish and leaded the pair from the weekly open of 120.36 to the price area of 119.24. The breakout of the psychological support of 120 always has a critical role but EURJPY recovered impressively on Friday since up to a degree, the risk mood returned to investors & traders after the good news from USA – China trade war. Weekly close on Friday above 120, at 120.21 creates more expectations for a further bullish trend up to the area of 121, which will be the  target of our buy positions this week because the risk mood keeps the traders away from JPY while in parallel, news and announcements from Europe do not create any special concerns.

News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.

EURGBP

The price squeeze that we noted for 3 weeks in a row for EURGBP, finally caused a bearish breakout of the sideways movement channel. The pair was dropping for four days and only on Friday there was a bullish reaction. EURGBP opened above 0.86, at 0.8607 and closed at 0.8564 without exceeding 0.86 after last Monday. We couldn’t reach our target of our sell positions at 0.85 but definitely the week was profitable for us so we’ll keep on opening sell positions, targeting 0.85 again. It is obvious that news from UK and the possible victory of Boris Johnson along with the positive outlook that the Island avoids the hard Brexit give fresh air and fuel to GBP by pressing the pair bearishly.

News & announcements regarding European and UK economies are mentioned at the sections of EURUSD and GBPUSD accordingly.

USDCAD

Bullish, even slightly as we had expected was last week for USDCAD even if on Thursday there was a correction that carried on through Friday as well. Weekly open was at 1.3219 and weekly close was at 1.3222 while during last week the pair approached the area of 1.33 with weekly highs at 1.3270. Even if we couldn’t manage to hit our take profit, still we were in the money last week. The oil prices that usually affect CAD significantly could not climb further and so the Canadian Dollar did not manage to take extra boosting. Weekly close above 1.32 in combination with the last weeks strong USD develops expectations for approaching the area of 1.33 again which will be the main target for our buy positions.

Regarding Canada’s economy, news & announcements that along with US news will affect the pair is mostly the speech of Carolyn Wilkins (Bank of Canada) on Tuesday, the Consumer Price Indices on Wednesday, the discussion in Toronto of Stephen Poloz (Bank of Canada) on Thursday and the retail Sales on Friday.

USDCHF

The attitude of USDCHF lately is quite erratic. For a 6^th week in a row we see an alternation of bullish and bearish weeks. After approaching the area of 1:1 and opening at 0.9960 the pair had serious pressures and dropped below 0.99 on Wednesday, reaching the weekly lows on Thursday at 0.9870 and finally on Friday USD became stronger and the pair had a bullish reaction closing at 0.9899. Most likely, the sideways channel (0.9840 – 0.9970) will still be on for one more week, even if for the moment, the pair has difficulties to breakout the price of 0.99. If this breakout take place, we’ll open buy positions, targeting profits at the area of 0.9970.

Current week will be pretty quiet for the Swiss economy and the only important new that exists is the announcement of the Industrial Production on Thursday.

AUDUSD

Another strong bearish week passed by for AUDUSD due to the negative news of the Australian jobs market that released. Australia’s economy lost 19,000 job positions while the expectations were for 15,000 new ones. Moreover, the Industrial Production in China was also lower than the anticipation (4.7% vs 5.4%) and the pressure on the pair became even bigger. AUDUSD opened at 0.6855, there were three lightly bearish days but on Thursday we had the 0.68 bearish breakout down to the weekly lows of 0.6869. Finally, on Friday there was a bullish reaction and the pair recovered and returned above 0.68 with a weekly close at 0.6814. The negative outlook has not changed so we’ll favor sell positions this week, targeting the price area of 0.6720 – 0.6730.

On Monday will be released the announcement for Direct Foreign Investments in China, on Tuesday the RBA (Reserve Bank of Australia) Meeting Minutes, on Wednesday the important Australian Westpac Leading Index, also on Wednesday the Chinese Interest Rates with no expectation for a change from the current value of 4.2% and finally on Friday the Australian PMIs (composite, manufacturing and services).

SP500

The uptrend momentum of SP500 is unstoppable and continuous. Index had several new price records during last week and finally managed to exceed 3,100 points with profits circa 1%. Even if last Monday was lightly bearish (Index approached 3,074 points), the rest of days and mostly last Friday were highly bullish and the weekly close was at 3,119 points, very close to weekly highs. It is obvious that the huge market liquidity in combination with low or negative rates and yields from the bonds markets provide extra motivation to the traders & investors to purchase stocks. The price levels of the Index, before a possible correction, it’s really hard to predict because it is already to overbought levels while this price area is unexampled and unprecedent and there are no captured resistances. A reasonable target is 3,140 points at the moments and this will be the target of our long positions this week while it seems that the Index has built a good support at 3,100 points. We don’t forget that from the beginning of October the raise is more than 8%.

DAX30

Bullish trend dominated the German Index DAX30 last week with profits of 0.2%. Most of the days were consolidative but on Tuesday there was a good raise and on Thursday a drop. The beginning of the week was at 13,215 points and the weekly close at 13,243 points but during last Tuesday we saw the breakout of 13,300 points, up to 13,311 points. The explosive uptrend of the last weeks seems to calm down and getting slower as we underlined to last week report so we’ll open short positions targeting the area of 13,000 points.

FTSE100

The price correction that we expected on FTSE100 finally took place. The weekly open was at 7,368 points and it was followed by a drop that drove the Index below 7,300 on Thursday. The drop continued on Friday as well to the levels of 7,241 points while after Friday afternoon there was a recover with a weekly close at 7,312 points. Nothing seems to be changed from the bearish outlook of the Index so we’ll open short positions with main target the price area of 7,150 points.

Gold

Gold recovered after its huge drop but not in a degree that allows us to conclude that the downtrend has not changed. Profits were close to 0.6% with a weekly open at $1459 and a weekly close at $1468. The weekly range was between $1445.5 and $1474.5 and last Wednesday and Thursday were the days that produced the profits. The risk mood has been limited since USD seems strong and there are solid hopes for a solution in the USA – China trade war. Also, some recession scenarios seem to weaken and traders avoid safe haven assets such as gold. The most possible case now is to see gold even close to $1440 which will be the take profit price for our sell positions. Of course, there’s always the case of things getting worst regarding the trade war or further implications with violence at the Hong Kong protests and this would trigger the risk mood again and maybe we’ll see gold close to $1480 again.

US Oil

Another profitable week for oil that managed to keep its prices close to $58, even if the weekly low was at $56.23. The optimism regarding USA – China trade war in combination with Aramco’s IPO which is the biggest world’s oil producer, keep oil prices at these levels. We’re in the homestretch for the OPEC decisions in early December and as long as the optimism regarding trade war persists, we expect to have high oil prices. There are two reasons that could lead to a price drop: possible trade war complications and any negative surprises from the US inventories that are announced in Tuesday. Furthermore, we need to emphasize on the price of $58 which is a very strong price resistance for oil and the last time that the price exceeded this level was after the drones’ attack at Aramco in September. Thus, there are two dominating scenarios: either the rally will carry on and we’ll see oil prices close to $60 either due to the aforementioned reasons there will be a correction to the price area of $56. We’ll take our chances of the first case and we’ll open buy positions.

Bitcoin

The Bitcoin support at $8,600 does not exist anymore as by the end of last week there was a certain breakout to the area of $8,363. After that, the prices close to $8,000 make perfect sense as we approach the price zone before the big explosion during the week 21/10 – 27/10. Moreover, the volatility keeps on falling lower and lower but Bitcoin still remains out of oversold levels. That is why we’ll prefer short positions for the current week, targeting prices close to $8,000. Only a price recovery above $8,600 can make the bulls return and it will heat the interest for $9,000 again.