- The British pound was the strongest major overnight as traders began pricing in the prospect of a Brexit deal to be announced. GBP/USD briefly tested 1.3500 for the first time in 12 months but momentum was then lost as EU said they cannot guarantee there will be a deal. Still, GBP pairs hold onto most of the session’s gains so traders clearly still favour a deal to go through.
- Global coronavirus cases has topped 1.5 million deaths according to a Reuters tally.
- Despite this, the Nasdaq 100 (USTEC) briefly touched a new record high yet is on track for a small bearish hammer, which warns of a minor corrective phase.
- Gold continued to rally from multi-month lows and hit 1843 overnight, during its third bullish session this week.
- Cryptocurrencies remained in a holding pattern from recent highs. With volatility now subsiding we will be watching for a breakout (bullish or bearish) over the coming day/s.
Today’s Calendar Events (Times are GMT+11 Sydney)
- Australian retail sales are expected to rebound +1.6%, mostly due to lockdowns being eased in parts of Australia. Given the strong rebound in growth then we are on guard for a stronger-than expected print today.
- US and Canada release their employment reports simultaneously overnight. For a clean bullish reaction on USD/CAD, traders would like to see a strong US report coupled with a weak Canadian one. Whilst a clean bearish reaction could be expected from a weak US report and strong Canadian one. However, it is not always this simple as there are multiple numbers to assess in the Nonfarm payroll report. In which case price action can be fickly and provide volatile spikes in either direction if the numbers do not provide a clear divergent theme.
EUR/GBP: 2-Bar Reversal at Key Support
- Prices have retraced back to key support after reaching our initial target at 0.9070.
- Given 0.9000 remains a pivotal level, we like the bullish engulfing candle on H4 which has appeared above it.
- A break above the pattern’s high assumes a swing low is in place and the bias remains bullish above 0.9000 support.
NZD/CAD: Key Reversal Warns of Trouble at The Highs
- The daily chart on NZD/CAD is on track for a bearish key reversal (also a bearish outside day) at the highs.
- Given the strength of the preceding move higher, a corrective phase may be on the cards.
- A clear break beneath the key reversal low assumes the correction has begun.
- The next major support level is around 0.8948 – although the bullish engulfing low could also be used as an interim target.
FTSE 100 (UK100): On Track of Bullish Outside Week
- This is one for bulls to watch next week. Currently on track for a bullish outside week, a break above its high assumes bullish continuation.
- Note how this week has failed to break beneath the 50-day eMA, and that the engulfing candle appears near the highs after seeing a strong breakout from a bearish channel.
- If our bias is correct we could see a strong bullish rally emerge from the FTSE over the coming week/s, with the most likely trigger being a Brexit deal.
USD/CNH: The bias remains bearish beneath the 6.5665 resistance and for a fall towards the 6.4500 support zone.
GBP/NZD: Removed from watchlist. A minor break to new lows as short lived before a sharp reversal higher, and the session closed with a bullish engulfing candle.
EUR/USD: Bulls pushed higher and the initial target at 1.2152 has been reached. We prefer to step aside until after a retracement
Gold (XAU/USD): Gold’s third consecutive bullish day is near the initial 1850 target. Depending on time horizon some bulls may want to book profits ahead of the weekend. For those looking to trade a major corrective low, the bias remains bullish above 1800.