key resistance

  EUR/USD has been trading in the sideways range at the price of1.0930 but I see potential for the downside movement towards the upside trend-line. Due to the reversal pattern in the background and test of resistance at 1.0930, I see potential for the downside movement towards lower reference. Downside objective is set at the price of 1.0870 MACD oscillator is showing neutral reading with no defined momentum. Key resistance is set at the price of 1.0970  

Gold has been trading in the sideways range at the price of $1.950 but I see potential for the downside movement towards support of the trading range. Due to the weak demand after the mark up phase from lat week and rejection of the supply trend line, I see potential for the downside movement towards lower references. Downside objectives are set at the price of $1.930 and $1.894 MACD oscillator is showing neutral reading with no defined momentum. Key resistance is set at the price of $1.970 and $1.985 Read more: https://www.instaforex.com/forex_analysis/328038

The rally of USD/JPY has reached 142.25/142.50 key medium-term resistance ex-post BoJ monetary policy decision last Friday. Latest Commitments of Traders report on JPY futures on net large speculators’ open bearish positioning has reached close to a 3-year extreme. The next key related event will be the release of Japan’s nationwide inflation data for May on this Friday, 23 June.   This is a follow-up analysis from our earlier publication dated 15 June 2023, “USD/JPY Technical: Bullish breakout from 4-week range ahead of BOJ” (click here for a recap). The USD/JPY has shaped the expected positive follow-through in price actions reinforced by the latest Bank of Japan (BoJ)’s dovish jawboning last Friday, 16 June to maintain its ultra-dovish monetary policy due to an expectation that inflation in Japan faces a risk of a slowdown in the second half of the current fiscal year. The last 3 days of up move in the USD/JPY has led it to hit a 142.25/50 key resistance with bullish exhaustion elements at this juncture ahead of the next key related economic data release, the Japan nationwide inflation for May out on this Friday, 23 June.     Fig 1: USD/JPY medium-term trend as of 20 Jun 2023 (Source: TradingView, click to enlarge chart   Fig 2: USD/JPY short-term minor trend as of 20 Jun 2023 (Source: TradingView, click to enlarge chart) JPY futures’ bearish net open positioning of large speculators has reached close to a 3-year extreme   Fig 3:  JPY futures net open positioning trend of large speculators as of 12 Jun 2023 (Source: MacroMicro, click to enlarge chart) Traders’ sentiment from the Commitments of Traders report can be measured by the difference between the net open positions of large non-commercials (speculators) and the large commercials (hedgers/dealers) in the futures market. A positive number represents net long positions on JPY and a negative number represents net short on JPY.   Based on the latest weekly Commitments of Traders report as of 12 June 2023 compiled by the Commodity Futures Trading Commission (CFTC) on US exchange-listed FX futures market on the JPY futures contract (take note that JPY is quoted as the base currency & USD as the variable currency, i.e. JPY/USD), it has indeed shown that traders’ sentiment is skewed towards a more significant increase bearish positioning on JPY versus three months ago.   The latest weekly reported net open positions on the JPY futures market have indicated a jump of net shorts positions on JPY to -222,157 contracts which is close to a 3-year extreme with -243,729 contracts reported on 11 April 2022.   Interestingly, the current reported -222, 157 contracts on net short JPY futures open positions have surpassed the -220,700 contracts reported on 24 October 2022 and thereafter saw the JPY strengthen by +15% against the USD in the following three months.   That’s a form of contrarian opinion analysis where positioning has reached a relatively extreme level and the risk of a reversal in price actions is likely to be easily triggered if related news or events fail to meet the expectations of an “overconfident and exuberance” mindset of participants due to the overcrowding effect.     142.25/142.50 key medium-term resistance of USD/JPY is defined by a confluence of elements There are three different elements that allow 142.25/142.50 on the USD/JPY to be classified as potential key resistance (see daily chart). Firstly, it is the prior swing highs area of 11 and 22 November 2022 that led to a significant decline in price actions thereafter. Secondly, it is the upper boundary of a medium-term ascending channel that price actions have oscillated within it since the 16 January 2023 low of 127.72. Thirdly, it’s the 61.8% Fibonacci retracement of the prior medium-term decline from the 21 October 2022 high to the 16 January 2023 low. Thus, such confluence of elements on the 142.25/142.50 resistance level may suggest that the USD/JPY medium-term uptrend from 16 January 2023 is at risk of hitting a terminal juncture where a potential corrective decline may occur next.     Upside momentum has started to wane The daily RSI oscillator has flashed a bearish divergence signal at its overbought region and the shorter-term 1-hour RSI has broken below a corresponding support at the 52% level. Below the 141.15 minor support exposes the next intermediate support at 140.30 (also the 20-day moving average) in the first step. However, a clearance above 142.50 key medium-term pivotal resistance invalidates the bearish tone for the next resistance to come in at 143.45.      

Gold has been trading downside as I expected and I found re-break of the symmetrical triangle pattern in the background, which is good sign for the further downside movement. Due to the breakout of the upside channel and tight triangle in the background, I see potential for the further drop towards lower references. Downside objectives are set at the price of $1.861 and $1.819 MACD oscillator is showing increasing in the downside momentum, which is good confirmation for the further downside movement. Key resistance is set at the price of $1.967  

Output cuts and inflation data continue to boost crude prices Temporary disruptions could add to the bullishness Potential resistance around $83-$84   Oil is trading relatively flat today but has made tremendous gains over the last couple of weeks and could still add to that over the coming sessions. The price has risen more than 13% from the lows on 28 June and, despite appearing to struggle at times yesterday, still has plenty of momentum. The break above $80 was very significant after multiple efforts by Saudi Arabia and its allies to manipulate the price to more sustainable levels, from their perspective. Temporary output disruptions, like those currently in Libya and Nigeria, could further lift prices in the short term as potential tightness in the market on the back of cuts and economic resilience boost demand.   Key Resistance Lies Ahead Brent could face an interesting test around $83-$84 if it keeps rallying, with the boost from US inflation data and Saudi/Russian cuts potentially giving it an additional boost, as well as the psychological lift from this week’s breakout.     The 200/233-day simple moving average has been a key zone of support and resistance previously and could prove to be so again. It hasn’t traded above here in more than a year so a break above would be significant. A move lower could draw attention back to $80 and whether we’ll get that confirmation of the initial breakout. A move below here wouldn’t necessarily be a particularly bearish move, with the 55/89-day SMA band around $76-$78 arguably more important, falling around the upper end of the descending channel. It could also fall around a key fib level depending where the price peaks first.       

Last week, Nasdaq 100 underperformed against the other major US stock indices. Nasdaq 100 failed to have a weekly close above 15,690 key medium-term resistance and ended with a weekly bearish “Shooting Star” candlestick pattern. Key near-term support will be at 15,270 (20-day moving average). Last week, the year-to-date highly flying technology-concentrated Nasdaq 100 underperformed with a weekly loss of -0.90% versus weekly gains seen in other major US stock indices; S&P 500 (+0.69%), Dow Jones Industrial Average (+2.08%), and Russell 2000 (+1.51%). The underperformance of the Nasdaq 100 has been caused by the “Magnificent Seven” cohort with weekly losses seen in Telsa (-7.59%), Alphabet (-4.30%), Meta (-4.73%), Amazon (-3.48%), and Nvidia (-2.55%).   Nasdaq 100 failed to have a weekly close above 15,690 key medium-term resistance     Fig 1:  Nasdaq 100 major trend as of 24 Jul 2023 (Source: TradingView, click to enlarge chart) The initial price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) breached above the 15,690 key medium-term resistance in the first half of last week but reintegrated below it last Thursday, 20 July, and failed to have a weekly close above 15,690. In addition, it has formed a weekly bearish “Shooting Star” candlestick pattern which indicates that the bullish sentiment of the medium-term up move in place since the March 2023 low is likely to be exhausted (see weekly chart). Also, the weekly RSI oscillator has traced out a bearish divergence signal at its overbought region which suggests medium-term and major upside momentum has started to wane. These observations increase the risks of a potential multi-week corrective decline below 15,690.   Price actions evolved into a minor downtrend phase     Fig 2:  Nasdaq 100 minor short-term trend as of 24 Jul 2023 (Source: TradingView, click to enlarge chart) Since its 19 July 2023 intraday high of 15,937, the price actions of the Index have traced out a series of “lower highs and lower lows” which indicate a minor downtrend phase is in progress. Watch the 15,690 key pivotal resistance to maintain the minor downtrend with the next near-term support coming in at 15,270 (also the 20-day moving average). However, a clearance above 15,690 negates the bearish tone to see the next resistance at 15,945.

Oil Crude prices are rising after the IMF raised their World GDP forecast from 2.8% to 3%.  The outlook for global growth is the key for the crude demand outlook and right now it seems that might only get better as we get more stimulus out of China and as soft landing hopes grow for the US.  WTI crude will likely face key resistance from the $80 level, which means the recent rally might consolidate until we get beyond the FOMC decision. Gold Gold prices are wavering ahead of the FOMC decision, slightly higher on the day as the $1950 level provides key support.  Gold is going to wander around for the next 24 hours as nothing else really matters except the Fed.  Massive earnings might provide a key catalyst for risk-appetite, so bullion traders might want to pay attention to what happens to Microsoft and Alphabet earnings.

Canada lost 6,400 jobs in July as the unemployment rate rose for a third straight month Canadian wage pressures jump to 5.0%, which might not let policymakers signal that the peak in rates is in place Crude prices rally for a sixth straight week on OPEC+ determination to keep oil market tight   USD/CAD The past few weeks have not been kind to the Canadian dollar, but that could be changing.  The general rise in the dollar has stemmed from concerns over the US debt situation.  With both the Fed and BOC in similar positions when it comes to their respective tightening cycles, the Canadian dollar seems like it might be better positioned over the short-term as traders unwind their US dollar bets.  The USD/CAD shows the correlation with rising oil prices has not provided much support to the loonie, but that could be changing here.  If bearish momentum accelerates, further downside could target the 1.3300 handle.  The Canadian dollar could remain in oversold territory a while longer, which could support a further decline towards the 1.3250 region.  To the upside, the 1.3400 level provides major resistance.   Oil Crude prices are rising as the dollar drops following a mixed NFP report and as OPEC+ remains committed to keeping the oil market tight.  Saudi Arabia’s decision to extend a unilateral 1-million barrel oil cut did not surprise anyone. Energy traders however wanted to see if Russia would extend their export cut pledge and they did. Oil is at a 3-month high and starting to attract more buyers.  The crude price rally could continue since the US economy remains resilient and if China’s data next week confirms that part of the world’s crude demand is growing. The $85 level should provide key resistance for WTI crude, but if that doesn’t slow the rally, every trader will have their eyes on the $90 level.   Gold Gold prices are rallying as the bond market selloff ends following a mixed NFP report that did not derail some expectations that the Fed is still probably done raising rates.  This jobs day still suggests a soft landing is obtainable but if wage growth remains strong over the next couple of months that could create some problems.  Higher rates for longer is still an environment that gold can thrive in, especially if Wall Street becomes fixated over the deficit

Technical analysis:   Gold has been trading upside this morning but I found test and reject of the important resistance at $1.923, which is good sign for the downside rotation. Due to the market extended condition in last 2 days and test-reject of the important resistance cluster, I see potential for the further downside movement towards lower reference. Downside objective is set at the price of $1.914-$1.910 Stochastic oscillator is showing fresh downside cross and overbought condition, which is another good sign for the further downside movement. Key resistance is set at the price of $1.923  

Short-term RSI momentum indicator has flashed out bullish exhaustion condition after 6 consecutive weekly positive closes. At the risk of minor corrective decline sequence below 16,910 key short-term resistance. Intermediate supports rest at 16,590 and 16,440. This is a follow-up analysis of our prior report, “Germany 30 Technical: New intraday record high, short-term bullish trend intact” published on 6 December 2023. Click here for a recap. The Germany 30 Index (a proxy for the DAX futures) has managed to soar towards the 16,780/850 resistance zone as highlighted in our last analysis and printed a fresh all-time high of 16,829 yesterday, 12 December. Overall, the major uptrend phase from the October 2022 low of 11,795 remains intact with its major resistance zone at 17,780/18,170 (see Fig 1). Fig 1: Germany 30 long-term secular trend as of 12 Dec 2023 (Source: TradingView, click to enlarge chart) At risk of minor corrective decline after 6 consecutive weekly positive closes Fig 2: Germany 30 minor short-term trend as of 12 Dec 2023 (Source: TradingView, click to enlarge chart) In the shorter term, its medium-term uptrend phase in place since the 27 October 2023 low of 14,586 has reached overstretched conditions as it has recorded six consecutive weekly positive closes. In addition, current price actions have almost reached the upper boundary of the medium-term ascending channel with a bearish divergence condition being flashed out by its hourly RSI momentum indicator at its overbought region yesterday, 11 December. These observations suggest an increasing risk of an impending minor corrective decline sequence with 16,910 as a key short-term pivotal resistance and break down below 16,735 near-term support sees the next intermediate supports coming in at 16,590 and 16,440. However, a clearance above 16,910 negates the bearish tone to expose the next intermediate resistance at 17,100.

EUR: Still eyeing 1.10 The euro stands a chance to end the year above 1.10, which seemed quite unlikely only a few weeks ago when the dollar was restrengthening and ECB rate cut bets were rising rapidly. Despite the diverging narratives which emerged from the ECB and Fed meetings last week, probably favouring more attempts at the 1.1000 key resistance into Christmas, a break higher is far from guaranteed. Firstly, the euro still has to deal with the domestic factors that triggered its previous underperformance. Today, the IFO figures will be watched quite carefully, while the rest of the week sees the final release of CPI figures. We’ll also need to see whether post-meeting comments by ECB officials diverge in some way from last week’s pushback by President Lagarde.

EUR: Rejected at 1.1000 Yesterday, EUR/USD was rejected at the 1.1000 key resistance level, and in line with our dollar view, we now expect some more days of rangebound trading, with some modest downside risks for EUR/USD. One factor that we wish to keep highlighting, though, is the rather wide potential for the euro to benefit from an unwinding of ECB dovish bets in the coming months. Markets continue to price in 140bp of easing by year-end, while our economics team only forecasts 75bp. We expect to see those benefits to the euro more clearly in pairs such as EUR/CHF in the short term rather than in EUR/USD, at least until a clearer dollar downtrend emerges (in our view, a 2Q story). Other than some final December CPI reads in France and Spain (which shouldn’t move the market), the eurozone calendar is empty today. The next key data input for the euro is the German ZEW on Tuesday. We’ll keep monitoring ECB speakers to make sense of what is the “consensus” degree of rate-cut pushback the bank wants to convey to markets. Today, we’ll hear from Chief Economist Philip Lane. Elsewhere in Europe, Sweden’s Riksbank releases FX sales figures for the week around Christmas today: expect a low number, or even zero, due to low liquidity conditions. In a piece we published this week, we discuss how we expect the end of Riksbank FX sales by early February, hurting SEK in the crosse