Every day this week felt like it was Ground Hog day, we kept on waiting for the dollar to retrace and it just never happened. My preferred method of trading is to use divergence as a “trigger” to enter trades, it feels like I have been waiting with my finger on the trigger since the US elections last week – I am forced to practice the most difficult art of trading, patience.
I am finding that price levels in a lot of the major pairs have aggressively extended long standing trading ranges and we currently sit at key support and resistance levels. The USD is trading at high levels and in some pairs, multiple year highs. You do get the impression that next week could start the week with a “make or break” tone, there is bound to be some chatter this weekend on the make-up of Donald Trump’s cabinet which could aid the movement on Monday. All eyes will be on his appointment of Treasury Secretary and Secretary of State, thus far his appointments have been much like his campaign – controversial!
The EURUSD has been lower for 10 consecutive days now, we closed the week at price levels last seen in November of 2015 at 1.0592. Inevitably we are starting to see those same commentators from last year calling for parity creeping out the shadows again. Is it possible? Sure – but the past has shown that 1.0500 to be a very stubborn level to break, this week may hold the key to where this pair goes in the medium term.
GBPUSD initially seemed to love the winds of change blowing through the air after the US Election results, as cable started to strengthen. Although it has been fairly resilient compared to some of the other pairs, it eventually got caught by the rampant greenback. I still think that the range we put in place post the flash crash of 1.2670 – 1.2100 is intact, I do acknowledge though that current levels near where the 61.8 fib is at 1.2320 is vital – if this holds then it could be a bullish sign for the pair.
Like the EUR, the USDJPY has spent the last 10 days firmly on the back foot and is currently testing 111.00 levels. It has found resistance here before and so I will be watching the open keenly, the USDJPY has been a little different to the other major pairs in that the move has been a little bit more thought out than the rest, almost a little more ruthless. The technicals do look appealing to me but I am more cautious on this pair than any other.
The AUDUSD for me was the most surprising of the week in the manner that it got slaughtered. I have seen a lot of commentary stating a vulnerable gold price, but that doesn’t hold sway with me considering how resilient the USDZAR has been. There may have been a corrective mood on the back of possible diverging interest rate movements but that too doesn’t hold sway with me. From a technical perspective this move was way too steep for me, steep trend lines often have less validity, and price has also stalled 0.7330 which coincides with the 50% fib of the move between the 2016 highs and lows. There is a chance that these levels will find support next week, I am cautiously optimistic that next week may be an “Aussie” week – hopefully not on the cricket field though.
The USDCAD is an interesting pair to monitor, any strength in the USD seems to be getting countered on news that oil producing countries are near an agreement to freeze oil production levels. Confirmation of this will only be at the end of the month but there seems to be a lot deal making behind the scenes and headlines will affect the CAD. For now 1.3550 – 1.3560 looks to be a strong resistance level.
Next week is Thanksgiving in the US, traditionally a very slow week, but there is nothing traditional about the current market conditions. As is evident in the pairs above, we are trading at key levels now, and we may possibly see traders start to take profit on an already over-extended USD. Monday could be key – hence the “make or break” tone. Before then, let’s enjoy the weekend first!
Weekly FX Ranges 21/11/2016 – 28/11/2016
Majors
EURUSD
Resistance 1.0850 – 1.0912
Support 1.0570 – 1.0540
GBPUSD
Resistance 1.2530 – 1.2570
Support 1.2340 – 1.2300
AUDUSD
Resistance 0.7536 – 0.7550
Support 0.7326 – 0.7305
NZDUSD
Resistance 0.7143 – 0.7180
Support 0.7005 – 0.6980
USDCAD
Resistance 1.3540 – 1.3580
Support 1.3440 – 1.3400
USDJPY
Resistance 110.67 – 111.24
Support 108.50 – 108.00
USDCHF
Resistance 1.0100 – 1.0125
Support 0.9939 – 0.9900
Selected FX Pairs
USDZAR
Resistance 14.4928 – 14.6000
Support 14.1571 – 14.1000
AUDCAD
Resistance 1.0110 – 1.0157
Support 0.9883 – 0.9824
EURCHF
Resistance 1.0740 – 1.0760
Support 1.0696 – 1.0680
EURGBP
Resistance 0.8683 – 0.8705
Support 0.8550 – 0.8520
EURJPY
Resistance 117.40 – 117.65
Support 116.28 – 116.00
GBPJPY
Resistance 136.96 – 137.90
Support 134.20 – 133.50
Commodity and Indices
XAUUSD
Resistance 1241.00 – 1247.40
Support 1211.00 – 1200.00
XAGUSD
Resistance 17.05 – 17.45
Support 16.43 – 16.20
DE30
Resistance 10700 – 10800
Support 10518 – 10487
UK100
Resistance 6848 – 6890
Support 6739 – 6715
US500
Resistance 2184 – 2195
Support 2160 – 2130
BRENT
Resistance 47.60 – 48.56
Support 45.48 – 45.09
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