EU Session Bullet Report – Stocks fall along with oil, EURUSD surges

EU Session Bullet Report - Stocks fall along with oil, EURUSD surges

There was a broad USD selloff that was ignited by a short lived recovery in commodity prices. Oil surged initially after data revealed less than expected inventory buildup. As a result GOLD also rose to 1084. EURUSD broke higher than 1.0980 which was post ECB high, and reached as high as 1.1041. Also, ECB governing council member Ewald Nowotny’s comment also provided further support to Euro. In short, Nowotny noted that the pre-ECB meeting expectation was “really a massive failing of market analysts” and the central bank didn’t gave a “false signal”. That is, markets were wrong in anticipating the larger than expected stimulus from ECB.

Australian dollar is boosted strongly higher today by another month of spectacular job data. The job market expanded by 71.4k in November, much better than expectation of -10k contraction. The USD/CHF bounced off two-month low near 100 DMA and now extends higher towards the mid-point of 0.98 handle. Stock indices fell for the 3rd straight session yesterday and during Asia today, as earlier gains evaporated alongside the drop in Oil prices. Data wise today we’re focusing on the SNB and BOE interest rate decisions.

Trading quote of the day: “A lot of people get so enmeshed in the markets that they lose their perspective. Working longer does not necessarily equate with working smarter. In fact, sometimes is the other way around.” – Martin Schwartz, in Pit Bull

Green lines are resistance, Red lines are support.
EUR/USD
Pivot: 1.0945
Likely scenario: long positions above 1.0945 with targets @ 1.104 & 1.109 in extension.
Alternative scenario: below 1.0945 look for further downside with 1.09 & 1.086 as targets.
Comment: the RSI lacks downward momentum.

GBP/USD

Pivot: 1.511
Likely scenario: long positions above 1.511 with targets @ 1.52 & 1.5245 in extension.
Alternative scenario: below 1.511 look for further downside with 1.5075 & 1.5035 as targets.
Comment: technically the RSI is above its neutrality area at 50.

AUD/USD

Pivot: 0.725
Likely scenario: long positions above 0.725 with targets @ 0.7345 & 0.737 in extension.
Alternative scenario: below 0.725 look for further downside with 0.7205 & 0.718 as targets.
Comment: the RSI is well directed.

USD/JPY

Pivot: 121.95
Likely scenario: short positions below 121.95 with targets @ 121 & 120.55 in extension.
Alternative scenario: above 121.95 look for further upside with 122.45 & 122.7 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

USD/CAD

Pivot: 1.362
Our preference: short positions below 1.362 with targets @ 1.35 & 1.344 in extension.
Alternative scenario: above 1.362 look for further upside with 1.369 & 1.3755 as targets.
Comment: the RSI is badly directed.

USD/CHF

Pivot: 0.9915
Likely scenario: short positions below 0.9915 with targets @ 0.9795 & 0.975 in extension.
Alternative scenario: above 0.9915 look for further upside with 0.995 & 0.9985 as targets.
Comment: as long as 0.9915 is resistance, likely decline to 0.9795.

GOLD

Pivot: 1068
Likely scenario: long positions above 1068 with targets @ 1088 & 1093 in extension.
Alternative scenario: below 1068 look for further downside with 1064 & 1058 as targets.
Comment: a support base at 1068 has formed and has allowed for a temporary stabilisation.

OIL

Pivot: 38.6
Likely scenario: short positions below 38.6 with targets @ 36.6 & 35.9 in extension.
Alternative scenario: above 38.6 look for further upside with 39.2 & 39.8 as targets.
Comment: as long as 38.6 is resistance, likely decline to 36.6.

DAX

Pivot: 10745
Likely scenario: short positions below 10745 with targets @ 10380 & 10260 in extension.
Alternative scenario: above 10745 look for further upside with 11000 & 11135 as targets.
Comment: the RSI is below its neutrality area at 50%