Market Overview
There have been fluctuations in market sentiment over how to trade the Coronavirus, but there has been a far more decisive view taken in the past 48 hoursChinese yuanWall StreetS&P 500US futuresNikkeiShanghai CompositeFTSE 100 FuturesDAX FuturesforexJPYGBPgoldoilUS weekly jobless claimsECB President Christine LagardeFOMC’s Robert KaplanChart of the Day – USD/CHF
The fluctuations in risk appetite have driven significant swings on USD/CHF recently, and especially over the course of the past week. However, the moves come with an improvement in the positive momentum which suggests the bulls are positioning for a base breakout. The resistance around 0.9760/0.9765 has become the neckline for a potential six week base pattern and a closing breakout would be a key shift in sentiment. Momentum indicators have been tracking higher in recent downswings and suggest a positive outlook is brewing. The RSI is now at two month highs above 50, whilst MACD lines have just “bull kissed” higher and even Stochastics have crossed back higher to look more positive. This all suggests buying into weakness now. The immediate inference of a closing breakout above 0.9768 would be to open the key medium to long term pivot at 0.9840, although the pattern suggests an implied target of 0.9900. The hourly chart shows good support near term between 0.9700/0.9720 as a near term buy zone now. A break back below 0.9675 would defer the recovery again.
EUR/USD
GBP/USD
Cable continues to trade around the old key support band between the key December low at $1.2900 and the old breakout around $1.3000. It should be noted though that whilst the dollar makes considerable gains versus the euro and yen, the performance of sterling continues to hold up relatively well. On Cable, time and again, in recent weeks, support around $1.2940/$1.2960 has held firm. This has meant that a range between $1.2940/$1.3215 has formed. There is a negative bias to the range in recent sessions as the market has failed to engage a decisive rebound off the lows. However, technically there is no explicit lead towards a downside break, yet. RSI continues to hold in the 40/45 area and Stochastics are reasonably contained. A slight tick lower on MACD lines reflect the bear bias, but for now the market is consolidating. The hourly chart shows minor resistance around $1.3010 under yesterday’s rebound high of $1.3070. A close under $1.2940 would pressure $1.2900, and a close below there would be a bearish breakdown. For now though, the market is in consolidation.
USD/JPY
Gold
The near term outlook for gold has taken on an increasingly uncertain configuration. Key intraday swings on gold yesterday came on fluctuating newsflow surrounding the Coronavirus, and this is likely to remain the case in the coming sessions. The bulls have lost control of the recovery, having broken the multi-week uptrend. However, once more the 38.2% Fibonacci retracement (of $1445/$1611) around $1548 is notable as a basis of support. We have turned neutral near term on gold, as the market looks to now be consolidating. Whilst the support band $1536/$1546 remains intact the medium term outlook is still constructive. However, the bulls now have resistance building overhead between $1562/$1572 which is restricting them. Momentum indicators are unwinding but retain a positive medium term configuration still. Subsequently we favour buying into weakness on a medium term basis. Holding initial support at $1546 would help to renew bullish confidence.
WTI Oil
Dow Jones Industrial Average
The last couple of sessions have had an incredible response from the bulls. Another hugely positive session, has seen a decisive rally to now bring the market to within sniffing distance of the all-time highs again. The corrective aspect of the two week decline which unwound around -4%, has in the space of three sessions almost entirely been reclaimed. Gapping through the pivot resistance at 28,945 leaves this now as support, whilst momentum indicators swing into positive configuration again. The improvement in Stochastics and RSI is notable, but also the MACD lines ready to cross higher above neutral is very encouraging for the bulls. The 29,373 all-time high is highly likely to be overcome today (with futures looking positive currently) so the next upside target would then be the psychological 30,000 level.
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