- US crude oil rebound taking place.
- Moving average resistance ahead of trendline.
Q4 2019 Oil Forecasts and Top Trading Opportunities
Crude Oil Bouncing off Short-Term Support Zone
A familiar pattern is emerging on the daily US crude oil chart. The recent heavy sell-off in crude was arrested as it neared a supportive zone between $50.50/bbl. and $50.70/bbl. and has turned higher. The daily chart shows this is the third time this zone has acted as a springboard for higher prices after a supportive upward trend was broken. The 20-day moving average is breaking below the 50-day ma, as it did in the previous two moves, while the CCI indicator flashed an oversold signal near the three recent lows.
To confirm the recent bullish move, US crude oil will need to break back above the old support/new resistance trendline around $57/bbl. while taking out the 200-day moving average at $57.90/bbl. would confirm the move higher. Above here, old horizontal resistance at $60.98/bbl. becomes the next bullish target. The $50/bbl. level has been supportive since mid-January this year and is also seen as a big figure line in the sand for oil producers. A break and close here would see the chart turn bearish.
Crude Oil Price Daily Chart (January – October 9, 2019)
WTI vs Brent: Top 5 Differences Between WTI and Brent Crude Oil
The IG Client Sentiment Indicator shows retail traders are 85.0% net-long US crude oil, a bearish contrarian bias, but recent shifts in daily and weekly positioning give us a mixed outlook.
Short-Term Rally May Run Into Resistance
EUR/USD Price, Chart and Outlook
- EUR/USD rallies off the 50-day moving average.
- Any Brexit-boost may see the pair test near-term resistance.
EUR/USD: 50-Day Moving Average – Resistance Turning to Support
The daily EUR/USD chart is showing a few conflicting signals of late, leaving a decisive break unlikely in the near-term. While the rally off the October 1 multi-month low at 1.0879 looks well supported, the pair are starting to run into resistance which should stem further upside. The pair however are benefitting from one technical indicator which may well limit any notable downside.
EUR/USD made a confirmed break above the 50-day moving average (blue line on chart) at the start of this week, for the first time since mid-July. The 50-dma has capped the pair for most of the year, while the 200-dma has acted as even firmer resistance aside from a breakout between June 21 and July 1. The 50-dma now turns to support for EUR/USD, while the 200-dma is the next important upside target.
The recent rally has broken a series of lower highs, confirming the shift in momentum, and a close above the 1.1250 lower high made on August 6 would change the medium-term outlook for the Euro to positive. A cautionary signal from the CCI indicator which shows that EUR/USD is currently heavily overbought.
Looking ahead the economic calendar has some important data releases next week including Eurozone consumer confidence, German and Eurozone PMIs and German IFO numbers. Of more importance will be the latest ECB monetary policy meeting and press conference on Thursday – President Mario Draghi’s last meeting – and the EU Commission Economic Forecasts on Friday, both notable market moving events. Resistance and support levels may come under pressure from any of the events noted above.
EURUSD Daily Price Chart (January – October 18, 2019)
IG Client Sentiment shows that traders are 51% net-short EURUSD, a bullish contrarian bias.
However recent daily and weekly positional changes give us a mixed outlook for EUR/USD.
What is your view on the Euro and the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at firstname.lastname@example.org via Twitter @nickcawley1.
EUR/GBP May Rise if Brexit Hopes Continue to Fade
British Pound Outlook, Brexit, GBP/USD Technical Analysis – Talking Points
- British Pound may reverse recent gains if Brexit perils undermine confidence
- UK members of Parliament will be voting on Boris Johnson’s new Brexit plan
- Will DUP derail Johnson’s plan, and if so, will there be yet another extension?
Learn how to use political-risk analysis in your trading strategy!
The Euro may edge higher against the British Pound if hopes for an orderly Brexit continue to dissolve. On October 17, UK Prime Minister Boris Johnson and European Commission President Jean-Claude Junker jointly announced that a Brexit deal had been reached. Sterling rallied on the news, though its upside movement was curtailed by news that the Irish Democratic Unionist Party (DUP) would not support his plan.
Securing their support is essential if Mr. Johnson wants to pass a deal through the House of Commons. If he fails to do so, it could severely derail plans for an orderly Brexit which would likely see the British Pound reverse a significant portion of its recent gains. However, EU Council President Donald Tusk has not ruled out the possibility of an extension if lawmakers failed to agree on a deal on Saturday.
In Parliament there are currently 287 voting conservative lawmakers which Mr. Johnson will need if his proposal is to survive. He may also have to lean on over 20 former Tory MEPs who switched over to become independents. However, that may not be enough votes which may compel the PM to ask for help across the political aisle.
Market Analysis of the Day: Will the British Pound Reverse its Recent Gains?
GBP Index chart created using TradingView
FX TRADING RESOURCES
— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
Australian Dollar Firm After China GDP Miss But Trend Aims Lower
CHINA, GDP, TRADE WAR, AUSTRALIAN DOLLAR – TALKING POINTS:
- 3Q Chinese GDP registers narrowly worse than expected at 6.0% y/y
- Industrial production data, US trade talks may have offset the headline
- Australian Dollar little-changed but overall trend still pointing lower
Where will markets end 2019? See our Q4 forecasts for currencies, commodities and stock indexes!
The Australian Dollar found little of interest in mildly disappointing Chinese GDP data. The figures put the on-year growth rate at 6 percent, a hair lower than the 6.1 percent expected by economists. Nevertheless, this marks the slowest pace of expansion in at least 27 years.
Upbeat industrial production readings might have helped offset a soggy headline figure. The rate of on-year growth unexpectedly jumped to a three-month high of 5.8 percent. Early signs of stabilization in retail sales figures may have helped as well.
The report’s limited implications for larger macro themes dominating investors’ attention may likewise explain the tepid response. Extrapolating a view on future Chinese growth seems nearly impossible without greater clarity on trade negotiations with the US, making today’s release appear somewhat moot.
Assessing the broader landscape, choppy AUD/USD consolidation since early August leaves firmly intact a well-defined downtrend established from late December 2018. Prevailing monetary policy trends suggest it is likely to continue, with longer-term charts setting the stage for deep losses in the months ahead.
Daily AUD/USD chart created with TradingView
AUD/USD TRADING RESOURCES
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
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