28/12/2020
END OF THE YEAR: MORE RALLY OR PROFIT TAKING?
General Comment
Last week closed with the beginning of vaccinations in the European Union and low volatility due to Christmas holidays. In USA, the outgoing president Trump initially refused to sign the new stimulus bill of $900 bn, asking for an amendment but finally under certain pressures from Congress member, he signed it in the Sunday evening. Also, important news came from UK as per the Brexit deal which took place at the Christmas Eve.
USD was a bit stronger against the major currencies while strong enough appeared GBP as well. The major stock markets had some mild corrections, so did the gold and the oil prices but we need to underline that Bitcoin had a remarkable rally since during the weekend the price surpassed $28,000.
This week contains just a few and unimportant scheduled economic announcements and most likely the low volatility (due to holidays and New York Day) will carry on.
EURUSD (Euro vs US Dollar)
Bearish was the last week for EURUSD which opened at 1.2221 and closed at 1.2188. By the end of the week, we saw low volatility due to Christmas holidays but early this week, the pair has recovered above 1.22. The USD Index is moving around 90 and EURUSD is in a critical crossroad because either it will continue its uptrend, trying to exceed the yearly highs above 1.2272 or it will have a further correction to 1.20. There are no important scheduled economic news & announcements in the next days so we’ll open buy positions this week, trusting the uptrend of the pair.
GBPUSD (Great Britain Pound – US Dollar)
It was a much bullish week for GBPUSD which opened at 1.3409 and closed at 1.3550. The week had started with a bearish gap but the positive mood due to the Brexit deal, helped to pair to climb higher, despite the USD strength. The only pending issue before the Brexit deal that had to do with fisheries, finally resolved with a 5.5 years transitional period. From now on, Brexit will move away as a factor that influences GBPUSD and the well-known economic factors of UK and USA will return. Prices above 1.3625, may trigger the road to 1.40 so we prefer buy positions this week too.
USDJPY (US Dollar – Japanese Yen)
Consolidative was the last week for USDJPY as it opened at 103.44 and closed at 103.59 in between of a mild USD recovery. The US 10-years treasury yield raised respectively to 0.95%. Obviously, the pair is in a strong downtrend since last spring which may intensified below 103. In case of a further USD recovery though, we may see a return even close to 105. There is also a very possible scenario of the sideways movement continuation, most likely because of the low volatility. We’ll try sell positions this week.
EURJPY (Euro – Japanese Yen)
Slightly bearish was the last week for EURJPY with an open price at 126.50 and close price at 126.26. There is a price stabilization at the current levels during the last month since the trend is bullish in the last two months but on the other hand the strong resistance at 127 does not allow a further rise. Maybe the same outlook will take place this week but we’ll trust more the trend by opening buy positions.
EURGBP (Euro – Great Britain Pound)
Strongly bearish week we saw for EURGBP which opened at 0.9106 and closed at 0.8986. The Brexit deal helped GBP a lot so the pair managed to close below the milestone price of 0.90. If EURGBP is able to remain below 0.90 and especially if it can breakout the area of 0.8860, then there is a strong probability to drop even to 0.85 so sell positions is what we’ll open this week.
USDCAD (US Dollar – Canadian Dollar)
The recovery of USDCAD carried on the last week too as the pair opened at 1.2798 and closed at 1.2857. During the week, we saw attempts of approaching the 1.30 area but the oil price drop did not favour a further rise. It takes a solid bullish breakout above 1.30 so we can talk about a downtrend reversal, keeping in mind that this downtrend is strong for many months. In the opposite case of breaking out below 1.27, prices close to 1.25 will not impress us so sell positions is what we prefer this week.
USDCHF (US Dollar – Swiss Franc)
Bullish movement for USDCHF last week, after five bearish weeks in a row. The pair, based on USD recovery, opened at 0.8842 and closed at 0.8903. A possible recovery continuation may allow the approach of 0.90 but as long as the pair remains below 0.89, the downtrend won’t be affected seriously. We’ll try sell positions in the current week on USDCHF.
AUDUSD (Australian Dollar – US Dollar)
Consolidations took place for AUDUSD last week with open & close price around the area of 0.7590. There are no important economic news and announcements this week in Australia and USA and maybe the PMIs in China on Thursday may cause some higher volatility. If there is a clear bullish breakout of 0.7640, the pair will return to its strong uptrend but there is also the case of a further correction to 0.75 so we may try sell positions this week.
SP500
Slightly corrective was the last week for SP500 which closed at 3,693 points, having losses close to 0.6%. The new stimulus package that announced at $900 bn is importantly lower than the expectations of $2 trillion so the markets reacted negatively. It seems that this is temporary though as early this week, the futures of the Index are profitable and the Index is close to its all–time highs. The case of reaching and exceeding the all-time highs is possible enough so we’ll try long positions.
DAX30
Mildly bearish was the last week for DAX30, which ended the week at 13,590 points with losses that approached 0.3%. The futures of the Index are already moving in a positive area and a possible bullish breakout of 13,760 points may trigger more bulls to come. Long positions is our selection for the current week.
FTSE100
FTSE100 moved lower for one more week since it closed at 6,456 points, having losses like 0.6%. After the Brexit deal announcement, we may witness a recovery which may become stronger above 6,500 points so we prefer long positions for this week.
Gold
It was a week of mild correction for gold which closed at $1,882, performing losses around 0.25%, in between of a stronger USD. The futures of gold are performing a big rise in the beginning of the week and the price is already close to the area of $1,900 since after his initial reaction, president Trump finally signed the new stimulus package of $900 bn for the US economy. If these bullish movements carry on, especially above $1,912 it may mean the return of the gold prices to a solid uptrend. On the contrary, if gold cannot manage to remain above $1,900, it may bring concerns to the investors and a possible target for the sellers the price area of $1,860. Trusting the 1st case more, we prefer long positions this week.
US Oil
After seven bullish weeks, finally the oil prices had a corrective week as the next month’s futures closed at $48.27, with losses close to 2%. It seems that the oil market lately, pays less attention to the fundamentals like the inventories and the OPEC’s announcements. OPEC announced a production rise of 500K barrels per day from 1/1/2021 but the markets pay more attention to the pandemic and the vaccinations developments and news. Technically speaking, oil needs to return above $48.60 for a possible approach of $50 but prices below $47.50 may trigger signals for a further correction. We believe in the uptrend so we’ll open long positions this week with main target the price area of $50.
Bitcoin
This crazy rally of Bitcoin carried on for one more week, since the weekly close price was at $26,260 with weekly profits that touched 12%. The price at some stage, exceeded $28,000 which is one more sign for the latest very high volatility. The year that ends in a few days was undoubtably excellent for Bitcoin as it reached the high price of 2018 above $20,000 but it also had a sequence of positive statements from serious markets analysts and professionals and many positions that opened in big financial organizations and funds. Many analysts consider that Bitcoin may replace gold but there are still many basic issues for that: very high volatility which means very high risk and lack of fundamentals which makes Bitcoin an object of heavy speculations. With such a bullish momentum though, prices close to $30,000 seem like a realistic target for our long positions this week.
