After what can only be described as unparalleled volatility since the US Elections in early November, this past week seemed to be an absolute gift from the market. I love weeks like we just had and it seemed as though the market was dishing out pips as a peace offering for what we had to endure during November. Most pairs this week traded strongly against the USD for the first half of the week, most pairs traded to the top of their ranges, support/resistance zones and fib levels and immediately retraced.
After a pretty wild ride on Thursday, one would have been forgiven if you were expecting a bounce in the EURUSD on Friday. We did warn that 1.0600 would be a key level to watch and that it could be set to break, strong US economic data was the catalyst and the 1.0600 support level did break. It rebounded at 1.0530 before closing at 1.0550. There is a triple bottom forming at 1.0520 which stretches back to April 2015 and I suspect that this pair may have a look at this level next week. If 1.0520 breaks then I really fear for the EURUSD as momentum could force this pair way lower.
The GBPUSD has been using all its energy to try and carve some gains against the dollar. We discussed this week how cable has not been able to close above the 100 day MA since Brexit – this level comes in at 1.2775. Until this top level is able to give way the sellers will be in control on the longer time frames, on the more intraday view, this pair is flirting with the 200 hour MA at 1.2625 and this will likely be a key level for short term traders. If price remains below this level, 1.2500 will be the next support to watch next week.
For me the USDJPY was a disappointment this week, it looked as though the buyers were running out of steam and this would be the week that the sellers wrestled back its momentum. We had some very strong resistance forming between 114.44 and 114.86, the sellers took their opportunity on Monday and drove the price down to 113.15 which was also the 200 hour MA – this was the opening the bears were looking for but the door was firmly shut on them. The pair broke through 3 resistance levels on Friday on its way to close at 115.20 which is the high last seen in February, the next levels to watch will be 115.60 and 115.95 – a break through that and we could trade as high as 118.00. There is a definite correlation formed between the USDJPY and the US 10 year notes so I will be watching that to give me a clue – this is a big week for the USDJPY.
The USDCAD was the exception to the rule this week, when it got to its weekly range it merely changed gear and continued its march. Much of the reason that CAD is feeling the love is on the back of rising oil prices, there is event risk in the form of non-OPEC countries are meeting this weekend to discuss production cuts in line with OPEC and this could drive the CAD even stronger. The 61.8% Fib that we put in place on the daily chart this week comes in at 1.3100, and I will be monitoring price action between 1.3150 and 1.3100 on Monday.
The NZDUSD attempted to break through the 0.7200 level this week but found confluence there with a 50% Fib level and major resistance and immediately failed. Later on the week the buyers come in at 0.7130 which is also the 200 hour MA, this will be the key level to watch next week – a break of that and we could wander lower. For now it seems as though a nice range is forming and I will watch that level with a lot of interest. The AUDUSD traded in a similar fashion to the kiwi, we have formed a very tight range between 0.7490 and 0.7450.
The FOMC will dominate price movements next week, I think that a 25bp hike is a racing cert but the market will be watching eagerly to determine if the Fed will raise expectations of further hikes in 2017 or continue on their cautious approach. Get some rest this weekend because next week could prove to be a show stopper!
Weekly FX Ranges 12/12/2016 – 16/12/2016
Majors
EURUSD
Resistance 1.0730 – 1.0760
Support 1.0510 – 1.0470
GBPUSD
Resistance 1.2709 – 1.2800
Support 1.2530 – 1.2500
AUDUSD
Resistance 0.7500 – 0.7540
Support 0.7400 – 0.7360
NZDUSD
Resistance 0.7199 – 0.7229
Support 0.7042 – 0.7018
USDCAD
Resistance 1.3302 – 1.3340
Support 1.3140 – 1.3100
USDJPY
Resistance 115.50 – 115.84
Support 113.30 – 112.87
USDCHF
Resistance 1.0178 – 1.0215
Support 1.0058 – 1.0020
Rand
USDZAR
Resistance 14.0087 – 14.2195
Support 13.5375 – 13.4335
EURZAR
Resistance 14.7800 – 14.8300
Support 14.4832 – 14.4092
GBPZAR
Resistance 17.5960 – 17.6600
Support 17.1020 – 17.0000
Minors
AUDCAD
Resistance 0.9936 – 0.9977
Support 0.9790 – 0.9750
AUDJPY
Resistance 86.07 – 86.60
Support 84.50 – 84.00
EURCHF
Resistance 1.0820 – 1.0834
Support 1.0690 – 1.0642
EURGBP
Resistance 0.8505 – 0.8537
Support 0.8385 – 0.8300
EURJPY
Resistance 122.34 – 122.67
Support 121.04 – 120.43
GBPJPY
Resistance 145.66 – 146.28
Support 142.90 – 142.30
GBPCAD
Resistance 1.6872 – 1.6913
Support 1.6522 – 1.6500
GBPCHF
Resistance 1.2844 – 1.2900
Support 1.2718 – 1.2670
CADCHF
Resistance 0.7740 – 0.7781
Support 0.7586 – 0.7535
Indices
DE30
Resistance 11250 – 11500
Support 10690 – 10600
UK100
Resistance 6980 – 7020
Support 6750 – 6670
US500
Resistance 2270 – 2300
Support 2211 – 2190
US30
Resistance 19800 – 20000
Support 19220 – 19000
SA40
Resistance 44400 – 44700
Support 43200 – 42700
Commodities
BRENT
Resistance 54.70 – 55.30
Support 52.20 – 51.50
XAUUSD
Resistance 1182.00 – 1295.40
Support 1157.70 – 1151.00
XAGUSD
Resistance 16.00 – 17.20
Support 16.50 – 16.22
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