20/01/2020
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The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
Bearish was last week for EURUSD dropping below 1.11, at 1.1089. The uptrend in the beginning of the week that brought the pair close to 1.1172, turned to a downtrend from Thursday and on. US Retail Sales on Thursday was beyond expectations and the sign of the 1st phase agreement between USA and China, boosted US. The 1st phase of the agreement includes beneficiary terms for USA but it does not cancel the tariffs so the markets did not accept it as a clearly positive progress. The current week opens with a US Public Holiday at 20/1 (Martin Luther King Day) and there are expectations for low volatility but by the end of the week (especially after Thursday) there are really important economic announcements such as ECB Interest Rates and Monetary Policy as well as the PMIs for Germany, Eurozone and USA that will move EURUSD more. The trend seems to be bearish and if we have a breakout of 1.1070 which is the low price since the end of December then maybe the pair will drop even more since it was the 3rd in a row bearish week. We’ll open sell positions this week, targeting 1.10. On the contrary, if the price of the pair reacts quickly above 1.11, then maybe EURUSD returns back to a mid-term uptrend that started from last September from price area below 1.10.
GBPUSD
Consolidative to slightly bearish was last week for GBPUSD which opened at 1.3033 and closed at 1.3010, above 1.30. It was the 3rd week in a row that we had the same sights: the weeks close a bit below the open with lower highs and lower lows. During the week we saw a tone of optimism which carried on during last Friday and the pair exceeded 1.31 but the UK Retail Sales results were rather disappointing so GBP was into heavy pressure. Uncertainty in Brexit along with the strong US economy produce this outlook and now there are two main scenarios: a clear bearish breakout of 1.30 will cause a further drop and a stabilization close or above 1.30 would postpone the events in the near future. Traders like high volatility and such a squeeze is not going to last. We’ll open sell positions, targeting 1.29 at the first place.
USDJPY
The rise of USDJPY continued, even if it happened in a smaller scale. The big thing of the week was the breakout of the milestone price of 110. This happened temporarily on last Tuesday but prices fixed above 110 from Thursday and on and the weekly close on Friday was at 110.16, almost 65 pips above the weekly open. Phase one of the agreement between USA and China finally signed and the strong last week results of US economy threw away the traders from JPY. Only some implications in Libya or the impeachment of Donald Trump may cause some concerns in the markets but it’s not very possible. The heavy uptrend of the pair challenges traders for prices close to 112, just like the price zone of last spring for USDJPY. Early this Monday we had the disappointing -8.2% for the Japanese Industrial Production in November and JPY keeps on weakening. There’s also interest for the Interest Rates decision and the Monetary Policy from Bank of Japan, without any expected surprises though. We should also mention that the average weekly volatility of the pair has been decreased by 40% since last October. We’ll try opportunistic buy positions this week.
EURJPY
Bullish was last week for EURJPY which opened at 121.74 and closed at 122.17. On Thursday we saw prices up to 122.84 but the bearish pressures on Friday, limited the weekly profit. This drop on last Friday makes us sceptical since USDJPY was bullish at the same day. The volatility keeps on decreasing on this pair as well and maybe we’ll see a price correction this week. Sell is our selection with main target the price area of 121.
EURGBP
We saw lack of direction and low volatility for EURGBP for another week. The pair closed near to its opening price (circa 0.8525), touching 0.86 on Tuesday but dropping below 0.85 on Friday. After the big bullish reaction at the elections week last December, EURGBP seems stuck a bit above 0.85 and every attempt of moving away has a result the return to this price zone. News and updates from UK Monetary Policy and the Brexit progress may possibly change this stale situation but we’ll go long this week looking for profits close to 0.8570.
USDCAD
It was the 2nd in a row week with bullish reaction for USDCAD, after its temporary drop below 1.30. The weekly open was at 1.3049 and the weekly close at 1.3072. There are good reasons for high oil prices this week (see entity for US Oil) but this week is also full of important news for the Canadian economy such as the Interest Rates and the Monetary Policy and the Retail Sales. If there will be a price solidification above 1.3060, that would mean that we have a fixed uptrend. We’ll try this scenario by opening buy positions this week, targeting 1.3170.
USDCHF
The light bullish reaction of USDCHF didn’t have a sequel since last week we had a drop from 0.9721 down to 0.9676. We also saw weekly low prices significantly below, at 0.9612 and attempts for a reaction from Thursday and on. The big downtrend that started from early December seems strong enough but we cannot ignore the bullish reaction that carries on this Monday too. If the pair’s price is able to stay above 0.9720, we’ll have high hopes for this bullish reaction’s future. We’ll open buy positions, looking for target close to 0.9780. In Davos this week there is the World Economic Forum with a very hot agenda, including the world economic growth, the environment and the high technology sector.
AUDUSD
A 3rd in a row bearish week for AUDUSD, with a weekly open at 0.6896 and a weekly close at 0.6871. China had positive economic announcements but this could not stop the pressures on AUD so there are many fears for a further weakening, especially if we see prices below 0.6850. Early this morning we had a bullish reaction close to 0.6885 because according to china.org.cn, the Bank of China increased the liquidity by 200 bn through repos with an interest rate of 2.65%, in order to increase the banking system whole liquidity. After a few hours AUDUSD turned bearish again so we prefer sell positions with main target the price area of 0.6850 at the first place and maybe 0.6810.
SP500
We don’t see this reasonable stop from rising for SP500 but on the contrary we see weeks like the last one with bigger profits, comparing to the previous ones. The Index opened at 3,265 points and closes at 3,323 points with profits like 1.77%. There are just a few things that we can say for this phenomenon of constant rising, almost without any corrections. The stream of US stocks buyers keeps on rising too and we just sit & watch the consecutive records breaks and all-time highs. We persist in our long positions for one more week.
DAX30
The rise of DAX30 continued last week too. The German Index opened at 13,457 points and closed at 13,523 points making profit of 0.5%. We’re now very close from all-time highs of 13,600 points and every estimation is very risky. If we should select one direction, it would be the short.
FTSE100
We had a very clear bullish week for FTSE100 which closed at 7,685 points and performance above 1.4%. At these price levels there is a strong resistance with highs from the summer of 2018 so we may see corrective trends. We’ll open short positions, targeting the price area of 7,570 points.
Gold
We had a week full of uncertainty for gold with a weekly open at $1,559, a bearish navigation below $1,536 and finally a recovery and weekly loss like 0.17%. After this sharp explosion above $1,600 two weeks ago, gold prices seem to consolidate around $1,560. There are no serious geopolitical concerns, news from USA prelude a strong USD, there are hopes for strong growth and so there is a risk aversion mood to the traders. Most of the times, situations like this lead to short-term gold price drop that is why we’ll take our chances by shorting gold this week with a target at $1,545.
US Oil
Bearish again was the oil last week which opened at close to $59 and closed at $58.75. The current week though opened with a bullish gap, around $59.30 since two OPEC member countries, Iraq and Libya decrease the oil supply, each one for different reasons. According to the breaking news, the security guards in Iraq request constant jobs and they have blocked the access to Al Ahdab. From the other side the National Corporation in Libya invoke force majeure reasons due to the command of general Haftar to stop the oil exports from the ports that he and his forces control. For the time being this gap seems to fill in and the oil price is moving below $59 again but this situation bring back scenarios for prices above $60 again. We prefer to stay out this week.
Bitcoin
The Bitcoin uptrend carried on for one more week with a weekly open at $8,175 and a weekly close at, making profits close to 6%. There’s one thing that we need to pay attention though: the extremely high volatility last Sunday of $700 (or close to 8%) which ended up with a price correction. It was the first attempt after last November for prices above $9,000 but without success so Bitcoin may need a few breaths and strength before it continues its last weeks’ uptrend. Of course, there are some voices who say that the long–term downtrend since last summer is still on. We’ll insist in our positive outlook by opening buy positions this week too, targeting the price area of $9,000.
