- Despite equity indices closing the week broadly higher, the Nasdaq 100 (USTEC) failed to break to new highs and instead printed a bearish hammer candle on the weekly charts.
- Among the major indices we track the Nikkei 225 (JP225) was the strongest Asian performer, rallying another 4.3% and hitting its highest level since 1991. The CAC rallied an impressive 8.5% and was the strongest performer last week.
- Precious metals remained under pressure with both Gold (XAU/USD) and Silver (XAG/USD) producing bearish 2-bar reversals last week.
- The USD regained strength despite stronger equity markets, which brings in the question as to whether the inverted relationship between USD and stocks has disappeared. Still, the trend remains bearish and new lows appears more likely than a trend reversal at present.
Due to Veterans Day in US last week, the CFTC COTR (Commitment of Traders Report) has been delayed.
Calendar Events This Week (Times are in GMT +11 Sydney)
Traders will want to hear views on how the coronavirus vaccine could impact oil demand, and whether it will see OPEC hold off from cutting oil supply to support prices. If they fail to impress traders with supply cuts it could weigh further on oil prices.
Chinese Retail sales and Industrial Production:
Chinese data can be a bellwether for global growth, so investors will pay close attention to retail sales on Monday and industrial production later today. Stronger than expected data could help support riskier assets such as equities, AUD/JPY and NZD/JPY.
We’re not expecting any major moves from the minutes, but it’s worth keeping on your radar in case something unexpected is revealed.
RBA’s Lowe Speeches:
On Monday RBA’s Governor Dr Philip Lowe addresses the CEDA (Committee for Economic Development of Australia) annual dinner, where he’ll provide an overview of the Australian economy and milestones for 2021. On Wednesday he’ll also participate in a panel at the Australian Strategic Forum, although if he is to say anything market moving it would more likely be on Monday’s event.
Unemployment is expected to rise to 7.2% and employment growth expected to fall by -30k jobs, so anything slightly better than this could support AUD prices, although arguably the bigger driver for AUD at present is stock market performance.
USD/JPY: Bias Remains Bearish Below 105
- Despite the strong bullish candle last Monday, USD/JPY does continue to print a series of lower highs and lows.
- Friday saw prices close convincingly below 105 support, so bears can consider fading into minor rallies below this level.
- The initial target is the 104 handle and a break beneath 104 brings the 103.00 – 103.18 support zone.
USD/CNH: 3-Bar Reversal within Downtrend
- USD/CNH has produced a bearish reversal pattern on the daily chart. The 3-bar reversal is an evening star reversal and suggests a swing high has formed.
- A break beneath Friday’s low confirms the pattern and assumes bearish continuation.
- The bias remains bearish beneath 6.6360 and the next target is the support zone around 6.450
NZD/USD: Support Found Above 0.6800?
- NZD/USD has developed a bullish trend on the daily chart.
- After a minor retracement from the highs, a small bullish hammer has formed above the 32.8% Fibonacci level to suggest a swing low has formed.
- The bias remains bullish above the 0.6800 support zone although bulls could consider seeking longs around Friday’s high.
EUR/JPY: Waiting for Bullish Momentum to Return
- Price action on the four-hour chart appears to be corrective. If so, it suggests that bullish momentum should return.
- Support has been found around the 38.2% Fibonacci retracement level. A break above 124.30 assumes bullish continuation and brings the 125.12 high into focus.
- If we see a deeper correction, we would see if the 50% retracement level holds as support or remove it from the watchlist if it breaks lower.
Hang Seng (HK50): Bullish Wedge Within an Uptrend
- The Hang Seng (HK50) has developed a strong bullish trend on the H4 chart.
- A bullish wedge has formed as part of a correction. A break of the wedge’s trendline confirms the reversal pattern and suggests prices could retest the 26,862 high.
- If prices continue higher then the next major resistance level is 28,000. A clear break below the 38.2% Fibonacci level / August high removes the bullish bias.
Gold (XAU/USD): 2-Bar Reversal Suggests a Swing High Has Formed
- The analysis on the daily chart remains valid, although today we wanted to show the 2-bar bearish reversal on the weekly chart.
- A dark cloud cover reversal has formed which suggest a lower high has formed and gold prices are heading towards a deeper correction.
- A break beneath 1850 brings the 1800 support zone into focus.
Bitcoin (BTCUSD): Bears Drive BTC Below 16,000
- Bitcoin didn’t last above 16,000 for very long and prices have now broken the lower trendline of its bullish channel.
- A bearish divergence formed on the RSI and bears may be looking to target the lows around 15,000.
- Bull may try and close the gap, although whilst prices remain below 16,000 the bias remains bearish.
EUR/AUD: Prices are retracing towards the 50% retracement level of the large bullish engulfing candle. Bulls can consider a break above Friday’s high as a trend continuation signal.
AUD/USD: Removed from watchlist. Friday’s bullish candle closed back above the 07250 support zone to warn of a bear-trap.