- It was a good week for crypto markets with Bitcoin (BTCUSD) on the brink of break above 19k and potentially to a new record high.
- Whilst positive vaccine news initially supported US indices, disagreements on relief funding took the wind out if their sails to see the S&P 500, Nasdaq and Dow Jones close marginally lower for the week. Yet risk sentiment is currently positive in early Asian trade, with USD broadly weaker, AUD/JPY breaking higher along with US indices.
- Gold remains supported above 1850 support yet bulls remain wary of the precious metal. We continue to favour a bearish breakout before prices eventually break to new highs.
- It was another bearish week for the US dollar. The weekly chart of the US dollar index (DXY) printed a dark cloud cover pattern and the monthly chart is on track for a bearish outside candle.
Trader FX Positioning (COT Report):
As of Tuesday 17th November:
- Large speculators of GBP futures were their most bearish in over 3 months
- The largest weekly change of positioning was on JPY futures, with net-long exposure being reduced by -12.3k contracts
- Traders were net-short AUD futures for a third consecutive week
- Large speculators remained net-long on the Mexican peso for a seventh consecutive week, underscoring demand for emerging markets
Calendar Events This Week (Times are in GMT +11 Sydney)
It is not a huge week for economic data. However, sentiment is currently being supported in hopes of a quick vaccine rollout. And the closer we get to December with a positive mindset with markets, the greater the probability of Santa’s rally coming to fruition.
On Thursday the US will celebrate Thanksgiving Day, which means US stock markets will be closed. Traders will typically square up their positions ahead of Thanksgiving, and volatility is expected to be lower on the day.
Purchase manager indices (PMI’s) are released for Europe and US. They are leading indicators so closely watched by traders as they provide a forward look at growth (GDP) potential. Given that parts of Europe and the UK are locked down again means there is the potential for weaker-than expected data. That said, they are not expected to contract (below 50).
The calendar incorrectly labels the release as ‘preliminary’, when in fact it is the 2nd estimate. It is therefor unlikely to provide a volatile reaction form markets unless we see a radical revision from the initial release.
Bitcoin (BTCUSD): Trend Remains Firmly Bullish
- Bitcoin stopped just shy of 19k last week and price action suggests it has now entered a corrective phase.
- The trend remains firmly bullish and price action continues to respect a bullish channel.
- Bulls could seek evidence of a higher lower within the bullish channel or the lower trendline, then target 19k and 20k.
GBP/USD: Bullish Pinbar Marks Support at 1.3200
- A bullish pinbar has formed to show support at 1.3200.
- Prices are testing last week’s highs and appear set to breakout.
- A break above 1.3310 brings the September high around 1.3482 into focus.
USD/JPY: Bears Tease a Break to New Lows
- The four-hour chart (H4) remains within an established downtrend.
- A break beneath 103.65 support brings the 103.18 low into focus.
- The bias remains bearish beneath the 104.21 high, although the tight congestion beneath 103.91 could also be used to fine-tune risk management.
AUD/JPY: Potential for a Bullish Swing Trade
- Friday produced a bullish engulfing (and bullish outside) candle. That it closed back above the monthly R1 pivot suggests a swing low could be in place.
- Price action in early Asia is trying to break above Friday’s high.
- The bias remains bullish above the 75.40 low and for a re-test of the 77.00.
CHF/JPY: Consolidating Near its Lows
- Prices are currently consolidating near 4-week lows, and the 200-day eMA (not pictured) is providing support.
- Given the downtrend on the H4 chart, the bias is for a break beneath 113.77 support and for a test of the 13.27.
- However, given the fact the 200-day eMA is providing support, we should also be on guard for a bullish breakout from consolidation. Therefore, a break below 113.77 or above 114.20 could mark its next directional move.
NZD/JPY: Bullish Engulfing Candle Respects Broken Trendline
- NZD/JPY is on track for a bullish engulfing candle on the H4 chart. Its low has perfectly respected the broken trendline we highlighted last week.
- With bullish momentum picking up after building support around 71.50, the bias is for a re-test of the November high.
- A break beneath the engulfing candle low invalidates the bullish bias.
USD/NOK: Remains Anchored to Key Support
- Prices remain anchored to 8.9645 support. Given the bearish structure on the H4 chart the bias is for a bearish breakout.
- The bias remains bearish below 9.093, and a run towards the 2020 low.
- We would want to see broad USD weakness to gain confidence in a bearish breakout on USD/NOK.
Copper (XCUUSD): Bullish momentum returned with vigour. Prices are close to the initial 330 target, but the possibility of corrective price action appears high. We’d be happy to step aside for now.
USD/SEK: We continue to wait for a break beneath 8.5527 support to signal a major breakout.
USD/CNH: The bias remains bearish below 6.6560. The next major support is around 6.4650.