Oil rallies as US inventories decline, Bank of Canada ‎preview, Big Win for Blackberry

This article was last updated on April 16, 2022

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Overnight trading continues to reflect an end to the recent bout of complacency and recognition of growing political risk. ‎Gold and the Yen are consolidating yesterday’s breakout rallies, while the Nikkei fell 1.0% as capital continued to exit stocks.

This morning finds US index futures, the FTSE, Dax, and major currencies including gold all trading flat. The war or words between the US and North Korea ramped up overnight amid more threats from both sides, while China called for a peaceful resolution. Meanwhile, Secretary of State Tillerson is in Moscow today for talks with Russia with Syria likely high on the agenda.

Crude oil continued to advance overnight, rising another 0.6%. Traders have responded positively to Tuesday’s API inventory report which showed a 1.3 mmbbl decline in US stockpiles. This provides more evidence that the big build phase is over and the US market is starting to tighten up again. Crude oil and gasoline may remain active through today’s DOE reports.

Rising oil prices and strong employment gains suggest that the Bank of Canada is unlikely to cut interest rates today. Another hold decision is widely expected. Although it look like Canada is not in President Trump’s sights over trade, until NAFTA renegotiations are settled and the issue of a border tax is resolved, Governor Poloz may keep the option of an emergency rate cut if needed in his back pocket.

Blackberry could attract renewed interest today after the company was awarded nearly $815 million in arbitration from a dispute with Qualcomm.

Chart Signals: Gold, Sterling and Yen consolidate big breakouts

Markets have paused this morning to digest yesterday’s big swings and big breakouts by gold, the British Pound and the Japanese Yen and consolidate new support. On the flip side, the UK 100 has started to decline again after confirming the right shoulder of a head and shoulders top. 

North American and European Indices

US 30 is sitting on its 50-day average trading near 20,640 as it bounced around between 20,600 and 20,700. RSI near 50 confirms sideways momentum with next support near 20,480 and next resistance near 20,765.

US SPX 500 is still trading between 2,335 and 2,365 nearing the point of a symmetrical triangle. RSI trending lower indicates momentum turning downward. Next support near 2,322 with next resistance near 2,376.

US NDAQ 100 has a big RSI 50 test underway which could signal a downturn or confirm the underlying uptrend. The index continues to drift downward with resistance falling toward 5,410 from 5,440 and next support at the 50-day average near 5,335 then 5,305.

UK 100 is dropping back toward 7,355 after an attempt to break out over 7,400 resistance failed, keeping a head and shoulders top pattern intact. Initial support appears at the 50-day average near 7,320 then 7,260 the pattern’s neckline.

Germany 30 continues to roll over, dropping from 12,240 back under 12,165 a previous breakout point and on toward 12,150. RSI falling toward 50 indicates a downturn pending but it remains in an uptrend above 12,000 round number and 50-day average support. 

Commodities

Gold has encountered resistance at $1,280 a Fibonacci level and has dropped back toward $1.272 in normal backing and filling after a big breakout rally to digest an overbought RSI. It remains well above the $1.260 and $1,270 levels it broke out over Tuesday. 

Crude Oil WTI continues to trend upward, with resistance moving up toward $53.00 from $52.40 and the price advancing on $53.40 with next potential resistance near $54.45 the top of its current trading channel. RSI nearing overbought suggests the potential need for a rest following several days of gains.

FX

US Dollar Index has paused near 100.60 after completing an Evening Star candle pattern and a bull trap peak near 101.00 over the last three days. RSI holding 50 suggests consolidation with next support near the 100.00 round number and next resistance near 101.20.

USDJPY has encountered support at a Fibonacci cluster in the 109.00 to 109.25 area. It remains in a downtrend holding below its 110.00 round number breakdown point with RSI under 50 and falling confirming downward momentum. Next support at the 200-day average near 108.75. 

EURUSD has stabilized near $1.0600 on the pair and 40 on the RSI. It remains in a downswing below its 50-day average and Fibonacci resistance near $1.0655, and is currently holding above $1.0585 support with more possible near $1.0500.

EURGBP is still trending downward with resistance falling from near 0.8560 toward 0.8500 with next support near 0.8460 a Fibonacci level, than 0.8400 a channel bottom. RSI confirms downward momentum.

GBPUSD is testing $1.2500 having broken out of a short-term downtrend over $1.2470 on Tuesday. RSI back above 50 confirms an upswing underway with next potential resistance near $1.2520, $1.2560 and $1.2600.

USDCAD is sitting just above $1.3300 the middle of a $1.3000 to $1.3600 broad trading range. RSI falling under 50 signals momentum turning back downward. Next potential support near $1.3275 a channel bottom and the 50-day average. Initial upside resistance near $1.3355.

CADUSD continues to build support near $0.7500 with more possible near $0.7485. RSI above 50 confirms an upswing underway with next potential resistance near $0.7525 the 50-day average then $0.7750 a Fibonacci level.