At one point yesterday, Wall Street was experiencing the worse sell off since 2008, before markets rebounded and closed -1.58%. The selloff on the first trading day of 2016, started from China where stocks collapsed -7.5% and trading was halted for the day. Soon, the spillover effect was transferred to Europe where the biggest loser was DAX which closed -4.5% in the red. As a result, USD strengthened across the board, with exceptions being against the JPY and CHF which are always sought after when risk averse environments prevail. GOLD managed to climb higher to 1080 also from 1062.
Overnight, Shares in Asia have steadied after an early selloff after Chinese regulators released a statement saying it would announce guidelines later in the day that aims to regulate by major Chinese shareholders.
At this point, CHF, JPY and GOLD are the biggest winners this week, while commodity currencies (AUD, NZD, CAD, and NOK) are the weakest with markets being extremely vulnerable to OIL price fluctuation and further geopolitical tensions between Iran and Saudi Arabia. Tomorrow will feature FOMC’s Fed minutes from last meeting at 19:00 gmt while we have the NFP standing out this Friday at 13:30 gmt.
Trading quote of the day: “No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation.” – Robert Rhea
Green lines are resistance, Red lines are support.
EUR/USD
Pivot: 1.0865
Likely scenario: short positions below 1.0865 with targets @ 1.078 & 1.0755 in extension.
Alternative scenario: above 1.0865 look for further upside with 1.0895 & 1.094 as targets.
Comment: the RSI lacks upward momentum.
GBP/USD
Pivot: 1.4755
Likely scenario: short positions below 1.4755 with targets @ 1.466 & 1.463 in extension.
Alternative scenario: above 1.4755 look for further upside with 1.479 & 1.4815 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
AUD/USD
Pivot: 0.724
Likely scenario: short positions below 0.724 with targets @ 0.715 & 0.713 in extension.
Alternative scenario: above 0.724 look for further upside with 0.727 & 0.73 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
USD/JPY
Pivot: 119.15
Likely scenario: long positions above 119.15 with targets @ 119.95 & 120.45 in extension.
Alternative scenario: below 119.15 look for further downside with 118.7 & 118.4 as targets.
Comment: the RSI is bullish and calls for further upside.
USD/CAD
Pivot: 1.3875
Likely scenario: long positions above 1.3875 with targets @ 1.3985 & 1.4035 in extension.
Alternative scenario: below 1.3875 look for further downside with 1.3815 & 1.3775 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
GOLD
Pivot: 1070
Likely scenario: long positions above 1070 with targets @ 1082 & 1086 in extension.
Alternative scenario: below 1070 look for further downside with 1066 & 1063.3 as targets.
Comment: the RSI is mixed to bullish.
OIL
Pivot: 36.2
Likely scenario: long positions above 36.2 with targets @ 37.45 & 38.3 in extension.
Alternative scenario: below 36.2 look for further downside with 35.8 & 35.35 as targets.
Comment: a support base at 36.2 has formed and has allowed for a temporary stabilisation.
DAX
Pivot: 10250
Likely scenario: long positions above 10250 with targets @ 10625 & 10765 in extension.
Alternative scenario: below 10250 look for further downside with 10200 & 10120 as targets.
Comment: the RSI is mixed with a bullish bias.
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