Central Banks, Oil, Brexit and Obamacare in focus for trading

Today looks like it could be active for trading across a number of fronts.

The impact of yesterday’s big drop inm the price of oil on energy stocks has been worki‎ng its way through world markets overnight. While US index futures, the Dax and the Nikkei are all down marginally, resource weighted indices like the FTSE down 0.4% and Australia’s S&PASX down 0.9% have underperformed.

So far this morning, Oil has been bouncing back a bit on no news. WTI is up 0.4% while Brent has regained the $45.00 level. Oil sensitive currencies like CAD are also rebounding.

Major currencies have been steady overnight while gold has bounced cack above $1,250. The top performing currencies have been NZD and NOK in response to central bank meetings. Both the RBNZ and Norges Bank held interest rates steady and put out generally balanced statements. Post-meeting currency rallies indicate that traders had been expecting them to be more dovish. Instead, it appears that more resource country central banks are following the Bank of Canada’s lead from last week, deciding at least  not to add more stimulus if not yet ready to start reducing stimulus.

An emerging hawkish shift at central banks may also continue to impact US and UK trading. Traders continue to digest the hawkish turn taken by three MPC members in the last few days including former dove Haldane. In the US today Fed Governor Powell is scheduled to speak with stress test results for US banks due after the close today.  four FOMC members are scheduled to speak including

For the UK, Brexit remains in focus with PM May set to speak at an EU summit on her plan for the rights of EU citizens living in the UK and future freedom of movement, potentially one of the key issues in negotiations‎.

In the US, health care stocks may take the spotlight today. The Senate is expected to announce its proposal for Obamacare reform.‎ Discussions have been going on behind the scenes with a vote likely soon, but it’s not clear if the proposal has enough support to pass.

Chart Signals: Oil and gold rebound, indices struggle with resistance

Oil and gold, both of which have been under pressure lately, have been bouncing back a bit this morning and may be base building, helping CAD to rebound as well. Meanwhile, major indices continue to show signs of peaking with an Evening Star in the US30, a head and shoulder top in the UK 100 and a Descending Triangle in the Germany 30. 

North American and European Indices

US 30 has dropped back into the 21,390 to 21,430 area after completing a bearish Evening Star candle pattern earlier this week. RSI back under 70 from overbought confirms a trading correction starting with next support near 21,300 then 21,195.

US SPX 500 is still in an uptrend but appears to be starting to run out of steam, falling back into the 2,428 to 2,440 area after failing to break decisively through 2,450. RSI drifting back toward 50 indicates upward momentum slowing.

US NDAQ 100 is on the rebound, bumping up against 5,800 the extension of a broken uptrend line and round number. RSI has regained 50 already and a breakout by the index would confirm an upturn with next resistance possible near 5,900 then 6,000. Initial support in a downturn possible near 5,715 then 5,670 the 50-day average.

UK 100 continues to form a head and shoulders top, currently testing the neckline near 7.705 with next support possible near 7,380. Resistance drops toward 7,460 from 7,500 while RSI under 50 indicates momentum turning increasingly downward.

Germany 30 is still sending mixed signals. The index remains in an uptrend holding trend support above 12,700 but still stuck below 12,085 resistance. An ascending triangle continues to form but RSI trending toward 50 indicates a downturn possible. Next support near 12,560 the 50-day average with next resistance near 12,950.

Commodities

Gold is on the rebound regaining $1,250 having held its 200-day average and establishing support at a higher low near $1,240. RSI bouncing off of 40 suggests downward pressure starting to ease. Next resistance possible near $1,258 and the 50-day average.

WTI crude oil found support near $42.00 and has bounced back into the $42.40 to $42.70 area. An oversold RSI and positive divergence suggest potential for a trading bounce with initial resistance possible near $43.60 a recent breakdown point.

FX

US Dollar Index is still sitting just above 97.00 in the upper half of a 96.20 t0 97.50 trading range. RSI bouncing around 50 confirms sideways momentum.

USDJPY has paused in the 110.60 to 111.70 range above its 200-day average, consolidating an initial breakout rally. RSI holding just above 50 suggests a rest within an emerging uptrend. 

EURUSD is still showing signs of topping. A descending triangle continues to form above $1.1118 with resistance falling from $1.1220 toward $1.1180. RSI trending toward 50 indicates a downturn in momentum pending. Next potential support near $1.1050 the 50-day average.

EURGBP is sending mixed signals. The pair continues to struggle with 0.8860 channel resistance but also remains in an upswing with an ascending triangle forming above 0.8760 support. RSI indicates upward momentum pausing.

GBPUSD continues to stabilize above $1.2600 support, trading near $1.2670 while RSI suggests downward pressure flattening out. Initial resistance appears near $1.2715  on a rebound then $1.2790 the neckline of a completed head and shoulders top.

USDCAD ran into resistance at a lower high and its 200-day average near $!.3340 and has dropped back toward $1.3300. RSI still under 50 and a lower high indicate the recent rally was an upward correction within a bigger downtrend that appears to be resuming. Next potential support near $1.3260 then $1.3200.

CADUSD held $0.7500 and 200-day average support, keeping its uptrend intact. Initial rebound resistance looks possible near $0.7545 then $0.7570 and $0.7600. Rising RSI confirms ongoing accumulation following a correction.

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