This week has given us a sneak preview into what the first half of the week will entail come Monday, any market move is likely to be dominated by the US Presidential Election. Despite relatively solid US data throughout this week, the USD found itself on the back foot with investors taking a flight to safety, with the EUR, JPY and in particular the CHF being the major benefactors. Saturday morning released a poll with Donald Trump in the lead, this is just an illustration that this election could go down to the wire.
We took the conscious decision this week to step up and trade off the Daily charts, the higher the time frame we trade the more “noise” gets absorbed into the price action. Coupled with support and resistance we also employed Fibonacci as our tool of choice – this can be a very powerful tool if used correctly and it helped us stay out some pairs, without it we would have taken some very early entries.
The EURUSD closed the day at 1.1140, a long way from the 1.0900 it started the week, trading was almost one way traffic. It is interesting to note that we are inching slowly to our 61.8% fib at 1.1175, could this be a key level where the USD recovers after the US Elections next week?
Cable had a really good week, with a very hawkish BOE Governor Carney announcing that he will steer the ship through Brexit and in 2019 providing the stability that the market was looking for. What began as a rally early in the week progressively turned into some short covering with GBPUSD trading as high at 1.2560. I will be monitoring the 1.2500 handle next week as it looks a tough level to break.
The USDJPY found its comfort zone yesterday, like EURUSD and USDCHF it saw a lot of flows during the week. Unlike the EUR and CHF however, the buyers came into the market yesterday and formed a nice support zone between 102.90 and 103.15. There has been some strong correlation between the USDJPY and the S&P 500, the equity index spent most of the day in the black but gave back all its gains in the final hour of trading. This may explain why the USDJPY was a little lacklustre on Friday and opens up the possibility of gap open on Sunday evening.
The USDCAD has created a tight trading range for now between 1.3375 and 1.3425, oil price was obliterated this week but the very week USD has meant that CAD has been able to hold on and not run away just yet. It was a similar theme in the AUDUSD where the pair spent most of the week in a 30 pip range. The USDZAR and NZDUSD were able to take advantage of the weak dollar and also their own good news. The NZD in the form of much better economic data and ZAR in the form of some respite from their own political drama of late.
I sit here today asking myself some unanswered questions leading into next week, none more central than did the dollar spend the best part of the week pricing in the election move? The reason that I ask this question is that prices across all the majors (and USDZAR) are hovering around support and resistance levels and also around big daily Fib levels – is the USD bracing itself for a big rally next week?
Price action will take their cues on Monday and Tuesday from the polls, something which was prevalent during Brexit, and I suspect will spend most of Wednesday absorbing the result. Part of my risk management is to pay attention to what the broker is telling us – the increase of margins between Monday and Thursday reinforces for me that it could be a roller coaster next week.
Even if you not trading the market next week – it will be difficult to keep your eyes off of it!!
Enjoy the weekend.
Weekly FX Ranges 07/11/2016 – 11/11/2016
Majors
EURUSD
Resistance 1.1169 – 1.1215
Support 1.0971 – 1.1000
GBPUSD
Resistance 1.2733 – 1.2850
Support 1.2340 – 1.2300
AUDUSD
Resistance 0.7733 – 0.7765
Support 0.7567 – 0.7500
NZDUSD
Resistance 0.7340 – 0.7379
Support 0.7140 – 0.7110
USDCAD
Resistance 1.3460 – 1.3500
Support 1.3300 – 1.3250
USDJPY
Resistance 104.80 – 105.40
Support 102.20 – 101.63
USDCHF
Resistance 0.9825 – 0.9860
Support 0.9630 – 0.9600
Selected FX Pairs
USDZAR
Resistance 13.7700 – 14.0300
Support 13.3000 – 13.1900
AUDCAD
Resistance 1.0311 – 1.0335
Support 1.0203 – 1.0180
EURCHF
Resistance 1.0836 – 1.0855
Support 1.0775 – 1.0735
EURGBP
Resistance 0.8997 – 0.9022
Support 0.8856 – 0.8830
EURJPY
Resistance 115.27 – 115.66
Support 114.00 – 113.62
GBPJPY
Resistance 131.84 – 133.00
Support 126.59 – 125.53
Commodity and Indices
XAUUSD
Resistance 1320.00 – 1331.59
Support 1279.98 – 1268.44
XAGUSD
Resistance 19.04 – 19.26
Support 17.80 – 17.60
DE30
Resistance 10670 – 10740
Support 10140 – 10081
UK100
Resistance 7040 – 7095
Support 6604 – 6550
US500
Resistance 2120 – 2137
Support 2072 – 2056
BRENT
Resistance 48.75 – 49.28
Support 44.95 – 44.19
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