27/01/2020
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
A week of a big drop was for EURUSD which started with consolidative tendencies but on Thursday and Friday we had serious pressures and finally it closed at 1.1025, 60 pips below its weekly open. It was a profitable week for our sell positions. PMIs that had been announced for Eurozone and USA had a critical contribution as well as the risk–off mood for the traders. Now the milestone price of 1.10 is very close and a possible bearish breakout may trigger a further drop. This week is appropriate for high volatility since there’s the FED session for Interest Rates in USA on Wednesday, the Consumer Price Index for Germany and the US GDP on Thursday and on Friday there’s the Consumer Price Index and GDP for Eurozone. Our mood is bearish but we’ll wait for prices below 1.10 before we open our sell positions for this week.
GBPUSD
We saw a bullish reaction on GBPUSD, even if it was not so big (weekly open at 1.2988 and close at 1.3071) but we should really underline that it was the first bullish reaction after three slightly bearish weeks and that the weekly close was above 1.30. the truth is that last week’s economic announcements were rated positively from the markets and helped GBP but some concerns regarding the monetary policy from Bank of England have also limited the rise. Besides the news & events from USA that we saw at EURUSD section, this week is also important for the UK economy as on Thursday there’s the Bank of England session where some important results will be announced, such as the Inflation and the Interest Rates. Of course, we don’t ignore that on Friday 31/1 it is the typical deadline for Brexit. The rational behaviour of the pair is “wait and see” mode until the bespoken days and after that it’s really too risky to provide estimations. A possible return of the prices below 1.30 increase the probability for a bearish week but in any case, we won’t take the risk.
USDJPY
Heavily bearish was last week for USDJPY which is the 2nd pair in volumes worldwide after EURUSD. The weak uptrend last Monday was followed by bearish days and on Tuesday we already had prices below 110. The weekly close was at 109.27. Especially on Friday we had positive announcements for the Japanese economy and the intention from Bank of Japan for keeping the Quantitative Easing policy. JPY was not really affected though. There’s bigger interest in the coronavirus fears which possible pushes the investors to safe-haven assets such as JPY. Current Monday opened with an important bearish gap below 109 and even if we see attempts for a filling, we see a bearish trend for USDJPY that is why our sell positions will target the price area of 108.
EURJPY
Similar behaviour with USDJPY had the EURJPY pair which had a weekly open at 122.08 and a weekly close at 120.48, falling by 160 pips. The target for our sell positions at 121 was easily reached. The pair also has a bearish gap early this Monday and currently it is moving to price areas that we haven’t seen since the beginning of December. The price of 119.70 is an important support for EURJPY and a bearish breakout would put to the test the last months’ uptrend. We’ll be sellers for one more week.
EURGBP
Finally, EURGBP had a week with a clear direction, even if it was bearish, after four weeks in a row with heavy uncertainty. With a weekly open at 0.8531, a weekly close at 0.8433, we had a drop about 100 pips even if we saw a recovery on last Friday from the weekly low of 0.8385. From one side the pair has a bullish reaction close or/and below 0.84 but on the other side we’re in the middle for a clear downtrend that started from mid-August. We cannot exclude the case of the recovery above 0.85 either the test for the important support at 0.8330, that is why we’ll stay out this week.
USDCAD
Indeed, the uptrend for USDCAD that started three weeks ago seems to get stronger since the pair had the biggest weekly performance of the last months. USDCAD opened at 1.3056 and closed at 1.3147. We took the target of 1.3170 of our buy positions. The most critical day was last Wednesday after the Bank of Canada session. Interest Rates remained unchanged but the announcement had a certain tone of concern for the growth of the Canadian economy. The big drop of oil prices also helped to the weak outlook of CAD. Now the road for more bulls is open that is why we’ll try buy positions with targets above 1.32 and maybe close to 1.33 which is the price area of last November.
USDCHF
Bullish reaction we saw for USDCHF last week but not that strong in order to make us think for a serious recovery. With a weekly open at 0.9674 and a weekly close at 0.9709, we had a price return above 0.97 but not even the previous week drop was covered neither the important resistance of 0.9720 was broken. The week was profitable for our buy positions though. If the price falls again below 0.70 then maybe the support of 0.9670 will be tested and below this level, it’s really difficult to spot the next support. On the contrary, price solidification above 0.97 and especially above 0.9720 sets some potential for a bullish reaction. We prefer the 2nd option and we’ll open buy positions above 0.9720 with main target the price area of 0.9790.
AUDUSD
The drop of AUDUSD is getting continuous and stronger since the pair lost about 50 pips last week by closing at 0.6825. We took the 1st target of 0.6850 and we approached the 2nd target of 0.6810 since the weekly low was at 0.6817. Given that only on next Wednesday we have some serious announcements for the Australian economy, it seems that the pair is affected by the strong USD and from the global concerns regarding the coronavirus in China. We should remind at this stage that the economy and the currency of Australia are strictly correlated with China. Early this Monday, AUDUSD is moving even lower, close to 0.68, so prices of 0.6760 are absolutely reachable. We’ll insist of sell position for this week too. From the price area of 0.6760 started a big uptrend the 1st week of December so a bearish breakout of this level would mean a lot for the pair.
SP500
After 15 weeks of uptrend with very slight corrections, we had a clear bearish week for SP500. The weekly open was at 3,325 points and the weekly close at 3,293 points with loss that touched 1%. It is the biggest weekly drop since the end of September and given that early this morning the SP500 futures have a loss of 1%, it’s likely to witness the correction that markets expect. Of course, it is very early for such conclusions but we’ll take our chances for short positions this week.
DAX30
Last week we saw high volatility for DAX30 with weekly high at 13,627 points, weekly low at 13,368 points but a drop only 18 points below the weekly open at 13,503 points. We think that it is possible to see a further bearish reaction for DAX30 and technically speaking the price area of 13,200 is an important support for the Index, so this will be the main target for our short positions this week.
FTSE100
Important losses for FTSE100 the previous week with open at 7,682 points, close at 7,553 points and total loss close to 1.7%. With such heavy pressures, sellers almost think of 7,400 points which would mean the return of the Index to the price area before the big uptrend that started during the week of UK elections in December. We’ll follow this scenario for our short positions this week.
Gold
Bullish was last week for gold since the weekly open close to $1,557 and the weekly close at $1,570.5, caused profits circa 0.9%. Now the gold is moving to price areas that we saw last time at the beginning of 2013 while we saw some attempts above $1,600 a few weeks ago. The current week has opened positively and the current price is above $1,580. The world concerns regarding coronavirus, the US stock markets loss and the 10-year old US Bonds price drops are factors that increase the bullish mood for gold. We’ll try long positions, looking for prices close to $1,600.
US Oil
One of the biggest weekly drops of the last months we saw for US Oil prices which fell from $59.30 to $54.20 with weekly losses about 8.6%! Prices are now below $55 as it was last October with the main reason the fears from the coronavirus spreading. Early this week the oil prices are below $53 with heavy downtrend tendencies so we’ll open short positions and below $52.40 we’ll double the size because we’ll have increased probability for prices even below $50.
Bitcoin
An insignificant correction for Bitcoin price we saw last week that closed on Sunday. We need to remind that the crypto markets are open during the weekends so many investors and traders trade cryptos while the rest of the markets are closed. With a weekly open at $8,699 and a weekly close at $8,590 we had weekly loss like 1.25% which is barely noticeable for a high volatility asset such as Bitcoin which got used us to a weekly price range often above $1,000. It seems that the price at $8,600 – $8,700 is considered fair from the markets nowadays and we also notice that there is a strong support close to $8,330. The uptrend in new year is confirmed so we’ll remain buyers on Bitcoin for this week took, considering that prices close to $9,000 is a realistic target.
