- Despite news of a possible vaccine for the new year, with the US and Europe heading into winter new coronavirus cases are likely to increase their trajectory. With COVID-19 cases continuing to skyrocket and the novelty of the election now wearing thin, equity bulls are losing momentum.
- Major indices across US and Europe all closed lower with all but the CAC 40 (FR40) exceeding their ATR’s (average true ranges).
- The British pound was the worst performing major overnight following weaker than expected growth, with growing expectations GDP will contract in Q4.
- Despite Trump’s refusal to accept defeat in the election, Biden is pushing ahead and building his cabinet and named Ron Klain as his Chief of Staff.
Today’s Calendar Events (Time are GMT+10 Sydney)
- No major economic data is scheduled for today.
- We can expect minor reactions to Euro zone GDP and US PPI data sets, but given the amount of stimulus that is propping markets up it would take some large deviations away from expectations before we could expect larger volatile reactions.
EUR/AUD: Not Ready to Break Major Support
- EUR/AUD has spent the best part of four months trapped between 1.6120 to 1.6600 range.
- Bullish range expansion at key support suggests a prominent swing low has formed. It’s not quite a Marabuzo candle but not far off – so we can use a 50% Marabuzo line as potential support and bulls could seek long entries above it.
- A break above yesterday’s highs assumes bullish continuation and the bias remains bullish above yesterday’s low.
Nasdaq 100 (USTEC): Seeing Evidence of a Swing High on H4
- Given Monday’s bearish engulfing candle below record highs we have been seeking an opportunity for a lower high to form. We could be nearing that moment.
- The H4 chart trades within a corrective channel. Whilst it has the potential to form another minor high, we are seeking evidence of a lower high to form around the 50% or 61.8% retracement level.
- A break below the bearish channel or 11,785 swing low assumes a swing high has formed and brings the 11,517 low into focus.
Brent (BRENT): Reversal Candles Form at 200-day eMA
- The original bullish breakout we highlighted failed to hold above key resistance and warned of a bull-trap. Instead, a bearish pinbar and bearish engulfing candle has formed, both of which closed beneath the 200-day eMA.
- A convincing break beneath yesterday’s low assumes bearish continuation and brings the 41.63 high into focus (mid-range).
- If you look at WTI (WTI) the 200-day eMA sits around the middle of its range around 39.61, which makes the 41.63 target on Brent more likely in our view.
AUD/USD: Bearish range expansion has seen AUD close beneath the 07250 support zone which brings the low around 0.7150 low into focus.
Bitcoin (BTCUSD): Prices have broken above 16k for the first time since January 2018, although momentum is not as compelling as usual. We’d like to see prices continue towards 17,000 and 17,2340 target but as also on guard for a potential bull-trap.
NZD/USD: Removed from watchlist. Prices have entered a corrective phase with a break below 0.6860. The daily trend remain bullish above 0.6800 so we’ll monitor its potential for a swing low to form.
NZD/JPY: Removed from watchlist. A 2-bar reversal closed beneath the original 0.7200 breakout level but it could return to the watchlist if we see evidence of a swing low form.