Daily Market Commentary
EUR/USD Balances with Upward Momentum Intact
The EUR/USD is gravitating around the psychological 1.45 area as we suspected may happen. However, the EUR/USD is recovering quickly from losses earlier today by bouncing off of our 2nd tier uptrend line. Meanwhile, our 3rd tier uptrend line is reaching an inflection point with our makeshift 1st tier downtrend line. We say makeshift because the best we could do to form a downtrend line was to connect through last week’s highs. We notice interest is waning on the sell-side, and the lack of convincing downward momentum keeps the EUR/USD’s new near-term uptrend alive and well. The Euro’s relative strength is back in 1st gear with a large bounce taking place in the EUR/GBP. However, we find little reasoning behind the move since Britain’s economic data outperformed the EU’s last week. Perhaps are speculating the BoE may keep the gates of liquidity open.
The EU will gradually re-enter the econ. data headlines following a very quiet week. The first key release will be tomorrow’s ZEW Economic Sentiment data. Analysts are expecting continual improvement in sentiment regarding the EU’s economy. This wouldn’t be surprising considering the latest wave of econ. data from the EU was positive. Tomorrow’s ZEW data will be accompanied by employment data from Britain along with pricing data from the U.S. The FX markets sprung back to life last week after the official end to summer. We’ve seen volatility increase across the board and we expect price movements to pick up as Autumn nears. Last week’s breakout to the topside was a key technical movement, and we have little reason to alter our positive near-term outlook on the EUR/USD. A seismic reversal to the downside would require large setbacks in global economic data along with technically significant declines in U.S. equities. However, the global stimulus packages are still impacting the economy, so we don’t expect the legitimacy of the EUR/USD’s uptrend to be brought into question until 3rd quarter earnings season rolls around.
December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Meanwhile, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD’s medium-term uptrend is concerned.
Present Price: 1.4580
Resistances: 1.4591, 1.4607, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4494
Psychological: 1.45
GBP/USD Bounces off our 2nd Tier Uptrend Line
The GBP/USD is finding strength in our 2nd tier uptrend line, avoiding a retest of the psychological 1.65 level following recent weakness. Though we saw a slight uptick in volume to the downside on Friday, we don’t believe this pullback carries much weight. We’ve seen technical breakouts to the topside in the EUR/USD and gold coupled with key declines in the USD/JPY. Hence, it’s clear investors continue to look unfavorably upon the Dollar, which bodes well for the Pound even if investors are turned off by the BoE’s taste for liquidity. The Pound will be tested further this week since we will receive key British economic data throughout the week. Tomorrow Britain will release its CPI and RPI data along with the Inflation Report Hearings. We will be paying particularly close attention to tomorrow’s pricing data since Friday’s Input PPI registered a surprising 2.2% growth rate. The Pound could experience a round of relative strength if the return to growth in Britain’s pricing data accelerates. Surprisingly positive pricing data tomorrow could lead investors to speculate that the BoE will keep any planned injections of liquidity on hold. However, unflattering pricing data could have the opposite effect and keep the Pound lodged within its relative weakness. Speaking of which, investors should keep a close eye on the EUR/GBP. The currency pair has received a wave of buying, and is currently staring down August/September highs. If the EUR/GBP surpasses these previous highs and breaks out to the topside, this would be a clear indication that Britain’s data will fail to impress this week.
Technically speaking, momentum in the GBP/USD remains to the topside due to last week’s large breakouts in the Cable’s positive correlations. Meanwhile, our 1st tier uptrend line is reaching an inflection point with our 1st tier downtrend line. Hence, we anticipate a possible pickup in volatility this week as economic data floods the FX market. Though lying in the distance, our new 2nd tier downtrend line should serve as a key barometer regarding the health of the GBP/USD’s medium-term uptrend. Since our 2nd tier downtrend line runs through August highs, an eclipse of the 2nd tier should indicate a large breakout to the topside. As for the downside, the GBP/USD has our 1st and 2nd tier uptrend lines along with the psychological 1.65 level to fall back on. Furthermore, the meat of the 8/10-8/24 trading range should prove to be both a reliable defense and obstacle due to its significance this summer. Hence, investors should keep a close eye on the lid and the bottom of this trading band.
Present Price: 1.6570
Resistances: 1.6570, 1.6589, 1.6608, 1.6635, 1.6661
Supports: 1.6552, 1.6519, 1.6491, 1.6475, 1.6455, 1.6431
Psychological: 1.65
USD/JPY Narrowly Avoids Retest of 90
The USD/JPY finally found some support right above the highly psychological 90 level after collapsing beneath our 1st tier downtrend line. The defense of 90 is to be expected, and the psychological weight of the area should be felt for some time. The USD/JPY has been a key mover the past couple weeks following an extended period of consolidation. Last week investors were favoring the Yen across the board despite Core Machinery Orders coming in much worse than analysts anticipated coupled with a weak GDP number. These two data points would normally have helped buoy the Yen since investors would feel more comfortable with the U.S. economy vs. Japan’s. However, there appears to be a strong psychological force at work that is making investors disregard present data. Investors should recall the selloff in the USD/JPY was triggered by the DPJ’s victory. Hence, there seems to be speculation that the DPJ’s economic policies will favor a stronger Yen instead of liquidating to keep the currency depreciated to aid exporters. This would be a huge shift in economic policy and send shockwaves throughout the major Yen crosses. On the other hand, investors shouldn’t get too far ahead of themselves since the DPJ has yet to make a significant economic policy decision.
Regardless of fundamental truths, the USD/JPY has made its directional decision clear. Our 1st tier uptrend line is fading into the distance, and even our 1st tier downtrend line is losing sight of present price. Therefore, even if the USD/JPY should continue to stabilize, we view the strength as a direct result of oversold conditions. We’ve witnessed fundamental breakouts in both the EUR/USD and gold, showing investors are divesting from the Dollar. The Yen should benefit from such a fundamental divergence from the Dollar, much to the USD/JPY’s chagrin. Meanwhile, the psychological 90 level should play a key psychological role. The USD/JPY also has the trading ranges established during December 2008 and January 2009 lows. Therefore, the USD/JPY seems to be running out of room to the downside for the time being despite the prevalence of the downtrend.
The BOJ will make its first monetary policy decision following the shift in Japan’s governmental power. Hence, eyes will be glued to the headlines late Wednesday as investors look for a change in policy from the previous administration. However, we believe the BOJ will keep its monetary policy intact since the shift is governance is so fresh.
Present Price: 90.73
Resistances: 90.77, 90.96, 91.18, 91.43, 91.72
Supports: 90.55, 90.33, 90.11, 89.75, 89.42
Psychological: 90
Gold Consolidates Around $1000/oz
Gold is hanging around $1000/oz as the highly psychological level exhibits a gravitational pull on price. Meanwhile, we notice consolidation in the Dollar across the board, telling us the Greenback was oversold and gold overbought. Hence, present consolidation in gold is healthy and does not detract from the validity of the precious metal’s uptrend. Gold’s eclipse of previous 2009 highs was key, and March 2008 highs serve as the last technical barrier separating gold from further exciting movements to the topside. Meanwhile, gold’s consolidation above our 2nd tier downtrend line is an important technical message since is runs through the two aforementioned highs. Hence, gold is signaling that it may challenge historic highs shortly. We created a new 3rd tier downtrend line connecting through 9/9 highs. Hence, a failure of our 3rd tier downtrend line would likely signify an upcoming movement beyond previous September highs.
Correlation wise, the EUR/USD echoed gold’s positive sentiment with a technical breakout of its own on Tuesday. Additionally, we’ve witnessed a corresponding collapse in the USD/JPY. Hence, investors are sending a strong technical signal that they prefer to divest from the Dollar. Devaluation of the Dollar is an important development since it supports crude’s surge to the topside. Therefore, investors should keep a close on behavior in the Dollar over the next few trading sessions for directional confirmations.
Price: $999.78/oz
Resistances: $1001.42/oz, $1002.74/oz, $1004.57/oz, $1005.89/oz, $1008.71/oz
Supports: $998.43/oz, $996.45/oz, $994.13/oz, $992.47/oz, $989.15/oz
Psychological: $1000/oz
The S&P Futures Creep Higher Despite China Trade Tensions
The S&P futures are trading slightly higher this morning despite a large pullback in Japanese equities following fear caused by a protectionist response from China. The retaliatory response from China does not come as a surprise since China has considerable bargaining power these days due to its holdings of U.S. government debt. China’s swift response is meant to send a message to the U.S. that it is willing to play hard ball if the situation arises. Now the ball is in America’s court concerning whether to let the conflict subside or escalate tensions further. The Obama Administration’s decision to impose tariffs on China’s tire exports a couple weeks before the G20 summit is likely not a coincidence. America is opting to wield some of its power since it has home court advantage for the G20 and China will have to play nice at the summit. While we expect tensions to calm over the near-term, the tug of war between China and the U.S. will likely continue for some time. After all, those with the power do not relinquish it easily.
Even though the news wires have been flooded by the recent trade tensions between the two nations, the FX markets and U.S. equities haven’t registered a significant response. The psychological tit-for-tat clearly hasn’t resulted in any fundamental changes, though the situation should be monitored closely. The SCI posted slight gains during the Asian trading session, showing Chinese investors aren’t taking the situation too seriously. Meanwhile, gold, the EUR/USD, and GBP/USD remain in their respective uptrends following last week’s technical breakout to the topside. Additionally, the USD/JPY has logged large losses amid a broad-based devaluation of the Dollar. The Dollar’s rapid depreciation is a positive catalyst for the S&P futures due to correlations. Therefore, investors should track the major Dollar pairs to ensure there is not a technically significant retracement altering the Dollar’s present trajectory.
The U.S. will release some key economic data this week beginning with Retail Sales, PPI, Empire State Manufacturing, and Business Inventories tomorrow. Britain and the EU will also release their fair share of data along with a monetary policy decision from the BOJ. Therefore, we expect volatility to remain high throughout the week considering summer has officially passed. The U.S. finished off last week strong with higher than expected Import Prices and Prelim UofM Consumer Sentiment numbers. It would be encouraging to see U.S. data follow through on recent strength and carry the S&P higher clear of 1000.
Technically speaking, there is little reason to question the S&P’s uptrend. The futures balanced perfectly on our 2nd tier uptrend line this morning and are staring down the psychological 1050 level. There are few technical barriers we can place to the topside, normally a positive sign for the near-term. As for the downside, the S&P futures have multiple uptrend lines serving as cushions along with 9/9 lows. We maintain our positive near-term outlook on the S&P futures, and investors should keep an eye on the major Dollar pairs for breakouts.
Price: 1043.25
Resistances: 1044.75, 1048.25
Supports: 1039.5, 1034.75, 1030.5, 1027.25, 1020.5
Psychological: 1050, 1000
Crude Stabilizes Above Previous September Lows
Crude futures are stabilizing following Friday’s pullback on rising sell-side action after the futures failed to break our 3rd tier downtrend line. Crude futures have avoided a retest of previous September lows for the time being, a positive technical development for the uptrend. However, if our 1st tier uptrend line doesn’t hold, we could witness a more exacerbated pullback in crude. Crude seems to be stuck within its August trading range following an OPEC meeting where leaders stated they are comfortable with crude futures around the $70/bbl level. This tells us that any significant pullback in crude may be met by further supply cuts from OPEC. Therefore, investors are likely to keep crude within reasonable reach of $70/bbl for the near-term in anticipation of the consequential cut in supply.
We maintain our positive outlook on crude for the near-term despite the negative technical developments on Friday. The Dollar has experienced a broad-based depreciation which we expect to continue. A weaker Dollar is a positive catalyst for crude since the Dollar-based commodity becomes a cheaper import globally. Investors will be watching tomorrow’s Retail Sales data closely. If Retail Sales come in stronger than expected, we should witness a recovery in crude due to an improved outlook for the demand side of the equation. However, if Retail Sales disappoint and crude dips beneath our 1st tier uptrend line and September lows we will consider revising our positive outlook. As for the topside, crude futures must battle the psychological $70/bbl trading range. Our three downtrend lines serve as the most immediate technical barriers along with Friday’s highs.
Price: $68.70/bbl
Resistances: $69.39/bbl, $69.67/bbl, $70.03/bbl, $70.39/bbl, $70.94/bbl
Supports: $68.48/bbl, $68.11/bbl, $67.74/bbl, $67.41/bbl, $66.92/bbl
Psychological: $70/bbl
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
EUR/USD Balances with Upward Momentum Intact
The EUR/USD is gravitating around the psychological 1.45 area as we suspected may happen. However, the EUR/USD is recovering quickly from losses earlier today by bouncing off of our 2nd tier uptrend line. Meanwhile, our 3rd tier uptrend line is reaching an inflection point with our makeshift 1st tier downtrend line. We say makeshift because the best we could do to form a downtrend line was to connect through last week’s highs. We notice interest is waning on the sell-side, and the lack of convincing downward momentum keeps the EUR/USD’s new near-term uptrend alive and well. The Euro’s relative strength is back in 1st gear with a large bounce taking place in the EUR/GBP. However, we find little reasoning behind the move since Britain’s economic data outperformed the EU’s last week. Perhaps are speculating the BoE may keep the gates of liquidity open.
The EU will gradually re-enter the econ. data headlines following a very quiet week. The first key release will be tomorrow’s ZEW Economic Sentiment data. Analysts are expecting continual improvement in sentiment regarding the EU’s economy. This wouldn’t be surprising considering the latest wave of econ. data from the EU was positive. Tomorrow’s ZEW data will be accompanied by employment data from Britain along with pricing data from the U.S. The FX markets sprung back to life last week after the official end to summer. We’ve seen volatility increase across the board and we expect price movements to pick up as Autumn nears. Last week’s breakout to the topside was a key technical movement, and we have little reason to alter our positive near-term outlook on the EUR/USD. A seismic reversal to the downside would require large setbacks in global economic data along with technically significant declines in U.S. equities. However, the global stimulus packages are still impacting the economy, so we don’t expect the legitimacy of the EUR/USD’s uptrend to be brought into question until 3rd quarter earnings season rolls around.
December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Meanwhile, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD’s medium-term uptrend is concerned.
Present Price: 1.4580
Resistances: 1.4591, 1.4607, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4494
Psychological: 1.45
GBP/USD Bounces off our 2nd Tier Uptrend Line
The GBP/USD is finding strength in our 2nd tier uptrend line, avoiding a retest of the psychological 1.65 level following recent weakness. Though we saw a slight uptick in volume to the downside on Friday, we don’t believe this pullback carries much weight. We’ve seen technical breakouts to the topside in the EUR/USD and gold coupled with key declines in the USD/JPY. Hence, it’s clear investors continue to look unfavorably upon the Dollar, which bodes well for the Pound even if investors are turned off by the BoE’s taste for liquidity. The Pound will be tested further this week since we will receive key British economic data throughout the week. Tomorrow Britain will release its CPI and RPI data along with the Inflation Report Hearings. We will be paying particularly close attention to tomorrow’s pricing data since Friday’s Input PPI registered a surprising 2.2% growth rate. The Pound could experience a round of relative strength if the return to growth in Britain’s pricing data accelerates. Surprisingly positive pricing data tomorrow could lead investors to speculate that the BoE will keep any planned injections of liquidity on hold. However, unflattering pricing data could have the opposite effect and keep the Pound lodged within its relative weakness. Speaking of which, investors should keep a close eye on the EUR/GBP. The currency pair has received a wave of buying, and is currently staring down August/September highs. If the EUR/GBP surpasses these previous highs and breaks out to the topside, this would be a clear indication that Britain’s data will fail to impress this week.
Technically speaking, momentum in the GBP/USD remains to the topside due to last week’s large breakouts in the Cable’s positive correlations. Meanwhile, our 1st tier uptrend line is reaching an inflection point with our 1st tier downtrend line. Hence, we anticipate a possible pickup in volatility this week as economic data floods the FX market. Though lying in the distance, our new 2nd tier downtrend line should serve as a key barometer regarding the health of the GBP/USD’s medium-term uptrend. Since our 2nd tier downtrend line runs through August highs, an eclipse of the 2nd tier should indicate a large breakout to the topside. As for the downside, the GBP/USD has our 1st and 2nd tier uptrend lines along with the psychological 1.65 level to fall back on. Furthermore, the meat of the 8/10-8/24 trading range should prove to be both a reliable defense and obstacle due to its significance this summer. Hence, investors should keep a close eye on the lid and the bottom of this trading band.
Present Price: 1.6570
Resistances: 1.6570, 1.6589, 1.6608, 1.6635, 1.6661
Supports: 1.6552, 1.6519, 1.6491, 1.6475, 1.6455, 1.6431
Psychological: 1.65
USD/JPY Narrowly Avoids Retest of 90
The USD/JPY finally found some support right above the highly psychological 90 level after collapsing beneath our 1st tier downtrend line. The defense of 90 is to be expected, and the psychological weight of the area should be felt for some time. The USD/JPY has been a key mover the past couple weeks following an extended period of consolidation. Last week investors were favoring the Yen across the board despite Core Machinery Orders coming in much worse than analysts anticipated coupled with a weak GDP number. These two data points would normally have helped buoy the Yen since investors would feel more comfortable with the U.S. economy vs. Japan’s. However, there appears to be a strong psychological force at work that is making investors disregard present data. Investors should recall the selloff in the USD/JPY was triggered by the DPJ’s victory. Hence, there seems to be speculation that the DPJ’s economic policies will favor a stronger Yen instead of liquidating to keep the currency depreciated to aid exporters. This would be a huge shift in economic policy and send shockwaves throughout the major Yen crosses. On the other hand, investors shouldn’t get too far ahead of themselves since the DPJ has yet to make a significant economic policy decision.
Regardless of fundamental truths, the USD/JPY has made its directional decision clear. Our 1st tier uptrend line is fading into the distance, and even our 1st tier downtrend line is losing sight of present price. Therefore, even if the USD/JPY should continue to stabilize, we view the strength as a direct result of oversold conditions. We’ve witnessed fundamental breakouts in both the EUR/USD and gold, showing investors are divesting from the Dollar. The Yen should benefit from such a fundamental divergence from the Dollar, much to the USD/JPY’s chagrin. Meanwhile, the psychological 90 level should play a key psychological role. The USD/JPY also has the trading ranges established during December 2008 and January 2009 lows. Therefore, the USD/JPY seems to be running out of room to the downside for the time being despite the prevalence of the downtrend.
The BOJ will make its first monetary policy decision following the shift in Japan’s governmental power. Hence, eyes will be glued to the headlines late Wednesday as investors look for a change in policy from the previous administration. However, we believe the BOJ will keep its monetary policy intact since the shift is governance is so fresh.
Present Price: 90.73
Resistances: 90.77, 90.96, 91.18, 91.43, 91.72
Supports: 90.55, 90.33, 90.11, 89.75, 89.42
Psychological: 90
Gold Consolidates Around $1000/oz
Gold is hanging around $1000/oz as the highly psychological level exhibits a gravitational pull on price. Meanwhile, we notice consolidation in the Dollar across the board, telling us the Greenback was oversold and gold overbought. Hence, present consolidation in gold is healthy and does not detract from the validity of the precious metal’s uptrend. Gold’s eclipse of previous 2009 highs was key, and March 2008 highs serve as the last technical barrier separating gold from further exciting movements to the topside. Meanwhile, gold’s consolidation above our 2nd tier downtrend line is an important technical message since is runs through the two aforementioned highs. Hence, gold is signaling that it may challenge historic highs shortly. We created a new 3rd tier downtrend line connecting through 9/9 highs. Hence, a failure of our 3rd tier downtrend line would likely signify an upcoming movement beyond previous September highs.
Correlation wise, the EUR/USD echoed gold’s positive sentiment with a technical breakout of its own on Tuesday. Additionally, we’ve witnessed a corresponding collapse in the USD/JPY. Hence, investors are sending a strong technical signal that they prefer to divest from the Dollar. Devaluation of the Dollar is an important development since it supports crude’s surge to the topside. Therefore, investors should keep a close on behavior in the Dollar over the next few trading sessions for directional confirmations.
Price: $999.78/oz
Resistances: $1001.42/oz, $1002.74/oz, $1004.57/oz, $1005.89/oz, $1008.71/oz
Supports: $998.43/oz, $996.45/oz, $994.13/oz, $992.47/oz, $989.15/oz
Psychological: $1000/oz
The S&P Futures Creep Higher Despite China Trade Tensions
The S&P futures are trading slightly higher this morning despite a large pullback in Japanese equities following fear caused by a protectionist response from China. The retaliatory response from China does not come as a surprise since China has considerable bargaining power these days due to its holdings of U.S. government debt. China’s swift response is meant to send a message to the U.S. that it is willing to play hard ball if the situation arises. Now the ball is in America’s court concerning whether to let the conflict subside or escalate tensions further. The Obama Administration’s decision to impose tariffs on China’s tire exports a couple weeks before the G20 summit is likely not a coincidence. America is opting to wield some of its power since it has home court advantage for the G20 and China will have to play nice at the summit. While we expect tensions to calm over the near-term, the tug of war between China and the U.S. will likely continue for some time. After all, those with the power do not relinquish it easily.
Even though the news wires have been flooded by the recent trade tensions between the two nations, the FX markets and U.S. equities haven’t registered a significant response. The psychological tit-for-tat clearly hasn’t resulted in any fundamental changes, though the situation should be monitored closely. The SCI posted slight gains during the Asian trading session, showing Chinese investors aren’t taking the situation too seriously. Meanwhile, gold, the EUR/USD, and GBP/USD remain in their respective uptrends following last week’s technical breakout to the topside. Additionally, the USD/JPY has logged large losses amid a broad-based devaluation of the Dollar. The Dollar’s rapid depreciation is a positive catalyst for the S&P futures due to correlations. Therefore, investors should track the major Dollar pairs to ensure there is not a technically significant retracement altering the Dollar’s present trajectory.
The U.S. will release some key economic data this week beginning with Retail Sales, PPI, Empire State Manufacturing, and Business Inventories tomorrow. Britain and the EU will also release their fair share of data along with a monetary policy decision from the BOJ. Therefore, we expect volatility to remain high throughout the week considering summer has officially passed. The U.S. finished off last week strong with higher than expected Import Prices and Prelim UofM Consumer Sentiment numbers. It would be encouraging to see U.S. data follow through on recent strength and carry the S&P higher clear of 1000.
Technically speaking, there is little reason to question the S&P’s uptrend. The futures balanced perfectly on our 2nd tier uptrend line this morning and are staring down the psychological 1050 level. There are few technical barriers we can place to the topside, normally a positive sign for the near-term. As for the downside, the S&P futures have multiple uptrend lines serving as cushions along with 9/9 lows. We maintain our positive near-term outlook on the S&P futures, and investors should keep an eye on the major Dollar pairs for breakouts.
Price: 1043.25
Resistances: 1044.75, 1048.25
Supports: 1039.5, 1034.75, 1030.5, 1027.25, 1020.5
Psychological: 1050, 1000
Crude Stabilizes Above Previous September Lows
Crude futures are stabilizing following Friday’s pullback on rising sell-side action after the futures failed to break our 3rd tier downtrend line. Crude futures have avoided a retest of previous September lows for the time being, a positive technical development for the uptrend. However, if our 1st tier uptrend line doesn’t hold, we could witness a more exacerbated pullback in crude. Crude seems to be stuck within its August trading range following an OPEC meeting where leaders stated they are comfortable with crude futures around the $70/bbl level. This tells us that any significant pullback in crude may be met by further supply cuts from OPEC. Therefore, investors are likely to keep crude within reasonable reach of $70/bbl for the near-term in anticipation of the consequential cut in supply.
We maintain our positive outlook on crude for the near-term despite the negative technical developments on Friday. The Dollar has experienced a broad-based depreciation which we expect to continue. A weaker Dollar is a positive catalyst for crude since the Dollar-based commodity becomes a cheaper import globally. Investors will be watching tomorrow’s Retail Sales data closely. If Retail Sales come in stronger than expected, we should witness a recovery in crude due to an improved outlook for the demand side of the equation. However, if Retail Sales disappoint and crude dips beneath our 1st tier uptrend line and September lows we will consider revising our positive outlook. As for the topside, crude futures must battle the psychological $70/bbl trading range. Our three downtrend lines serve as the most immediate technical barriers along with Friday’s highs.
Price: $68.70/bbl
Resistances: $69.39/bbl, $69.67/bbl, $70.03/bbl, $70.39/bbl, $70.94/bbl
Supports: $68.48/bbl, $68.11/bbl, $67.74/bbl, $67.41/bbl, $66.92/bbl
Psychological: $70/bbl
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
