Opportunities may present themselves in Cable (GBPUSD) and USDCAD. It is evident that the liquidity is drying up and not too many forex traders want to carry big positions into the holidays. All quiet on the western front as they say!
Dean's Daily FX Update – 22 December 2016
In the Zone
- GBPUSD
- USDCAD
- USDJPY
- USDCHF
Noteworthy News
- A turbulent 2016 has taken the spotlight off of Greece – anyone remember Grexit? Headlines that Greece will be able to unlock short term debt measures and that a Eurogroup meeting is unnecessary may comfort some. I am a little bit more sceptical as we have heard this countless times before – the last thing the EUR needs now is further bad news.
Recap
The festive season has gripped the market as liquidity has started to dry up, it is evident by the fact that some major equity bourses are trading in a 10 point range. I watch the VIX (Volatility Index) for any indication of market flow, it is telling that this Index yesterday was at the lowest level for 17 months – this is an indication for me to sit the market out and enjoy the holiday season.
The reduced liquidity is starting to filter into the currency market with any moves centred on the open and close in London – this indicates to me that most of the price action is dominated by natural flow and that there is very little speculation in the market. My gut says that this could be it for the year, ranges are getting tighter and price only moves on flow, which is random in nature.
The EURUSD managed to find some support yesterday at the 1.0400 level which is a solid sign, the 100 hour MA is trading close to 1.0420 and one wonders if this may be magnetic. The major defined resistance remains at 1.0460 and price will have to close above this level if it is going to target the 200 hour MA at 1.0500. On the down side, if price breaks below 1.0388 then we target the low of 1.0350.
The USDJPY is frustrating to trade at the moment, we continually experience what I like to refer to as a “mock charge,” every time it attempts to break lower we see a bounce. The good news is that the market seem to have lowered the resistance level to 118.20 which is telling in itself, today’s pivotal level is 117.60. This represents the bullish or bearish dilemma, a move above targets 118.00 whilst a move lower targets 116.70.
The AUDUSD continues to loiter around 0.7220, which is near the low levels for the past 6 months – the 61.8% fib of the 2016 level is sitting at 0.7200, whilst this should provide strong support in theory, I do think that this pair looks vulnerable. Sellers seems to be building between 0.7275 – 0.7300 and I don’t see any reason why they would abandon those levels this morning. I am more concerned about the downside this morning though, a break of 0.7200 opens it up for a look at 0.7140.
In similar fashion, the NZDUSD is currently trading at close to the 61.8% fib of 2016 which comes in at 0.6910. Just like the Aussie, this level should in theory provide strong support but it does look vulnerable to trade lower this morning. On the top side, 0.6950 has formed a large resistance level and this is where the sellers sit, pivotal for today however will be 0.6910. Price above that level is bullish, but unless that materializes – the sellers will be in control.
Daily Ranges 22/12/2016
Majors
EURUSD
Resistance 1.0440 – 1.0460
Support 1.0365 – 1.0350
GBPUSD
Resistance 1.2390 – 1.2430
Support 1.2320 – 1.2310
AUDUSD
Resistance 0.7265 – 0.7285
Support 0.7239 – 0.7205
NZDUSD
Resistance 0.6940 – 0.6960
Support 0.6890 – 0.6880
USDCAD
Resistance 1.3430 – 1.3450
Support 1.3360 – 1.3340
USDJPY
Resistance 118.13 – 118.37
Support 117.10 – 116.77
USDCHF
Resistance 1.0288 – 1.0300
Support 1.0230 – 1.0200
Rand
USDZAR
Resistance 14.0785 – 14.1210
Support 13.9140 – 13.8527
EURZAR
Resistance 14.6320 – 14.6619
Support 14.5000 – 14.4542
GBPZAR
Resistance 17.3750 – 17.4140
Support 17.1840 – 17.1270
Minors
AUDCAD
Resistance 0.9729 – 0.9748
Support 0.9680 – 0.9660
AUDJPY
Resistance 85.42 – 85.63
Support 84.86 – 84.63
EURCHF
Resistance 1.0706 – 1.0711
Support 1.0682 – 1.0667
EURGBP
Resistance 0.8445 – 0.8460
Support 0.8410 – 0.8400
EURJPY
Resistance 122.80 – 122.91
Support 122.10 – 121.92
GBPJPY
Resistance 145.71 – 146.00
Support 145.09 – 144.70
GBPCAD
Resistance 1.6601 – 1.6617
Support 1.6514 – 1.6480
GBPCHF
Resistance 1.2707 – 1.2718
Support 1.2650 – 1.2637
CADCHF
Resistance 0.7675 – 0.7690
Support 0.7632 – 0.7622
Indices
DE30
Resistance 11473 – 11500
Support 11378 – 11352
UK100
Resistance 7055 – 7077
Support 7000 – 6980
US500
Resistance 2270 – 2300
Support 2264 – 2256
US30
Resistance 19980 – 20000
Support 19900 – 19850
SA40
Resistance 44600 – 44700
Support 43800 – 43600
Commodities
BRENT
Resistance 55.45 – 55.69
Support 54.30 – 54.00
XAUUSD
Resistance 1138.00 – 1141.11
Support 1128.10 – 1122.75
XAGUSD
Resistance 16.17 – 16.28
Support 15.80 – 15.63
Important Economic Data out today
- 15:30 USD Unemployment Claims
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