Oil and Gold active ahead of Trump press conference

Market Insights

Oil and Gold active ahead of Trump press conference

Equity traders have been reluctant to make big commitments ahead of today’s developments, but aren’t shaking in their boots either. ‎US index futures, the FTSE and the Dax are all slightly in positive territory today.

The huge moves across global markets in late 2016 radiated outward from big rallies in US stocks and the US Dollar as traders positioned themselves and picked potential winners and losers in a Trump administration. By the start of this year traders had priced Trump to perfection increasing the risk of disappointment or negative surprises.

With the new Congress sitting and Cabinet confirmation hearings underway, traders are starting to turn from hope and speculation to ‎looking at what is actually happening or not happening. Today’s Trump press conference is another big step in the transition with markets looking for more clarity on which promises and policies are top priority as the January 20th inauguration approaches.

Ahead of the press conference, which is at 11:00 am EST, the US Dollar is trading higher against EUR, GBP and JPY. Gold and copper are both up about 0.5% extending this week’s gains. Higher metal and energy prices are keeping support behind resource currencies like CAD and AUD.

Crude oil has been trying to rebound from two days of heavy losses with WTI holding $50.00 and gaining 0.7%. Iraq exports, OPEC cuts and US production remain in focus. API inventories rose 1.3 mbbls last week. Crude could be active through today’s DOE weekly inventories at 1030 am EST with a 2.0 mmbbl increase widely anticipated.

Chart Signals

Chart Signals: GBP and WTI stabilize as markets pause

The big trends upward and downward of recent weeks increasingly appear to be shifting into sideways ranges with RSI indicators near 50 confirming neutral momentum and range bound trading opportunities. Some of the markets depressed recently like GBP and WTI are starting to stabilize while some of the stronger markets like gold and US NDAQ 100 appear to be pausing.

North American and European Indices

US 30 is holding steady in the 19,850 to 19,890 area drifting back toward the middle of a 19,700 to 20,000 sideways range. RSI drifting back toward 50 indicates momentum downshifting from upward to neutral with a correction still possible.

US SPX 500 continues to show signs of peaking for now, drifting back from 2,282 resistance earlier this week back into the 2,265 to 2,2670 area with next potential support near 2,255 then 2,242 in a correction. Lower highs in the RSI as it falls toward 50 indicate upward momentum fading.

US NDAQ 100 has paused its advance following a doji day with an inside day trading near 5,040. RSI also suggests upward momentum levelling off. Initial resistance in place near 5,050 followed by a measured 5,100. Downside support in place near 5,025 then 5,000 and 4,960.

UK 100 has encountered some resistance near 7,300, slipping back toward 7,275 with next potential support near 7,215. Really overbought RSI suggests potential for a correction at some point but so far its underlying uptrend remains intact.

Germany 30 has bounced up from near 11,530 toward 11,630 but remains stuck in a channel between 11,445 and 11,650 while it tries to work off an overbought RSI.

Commodities

Gold’s rebound has paused near $1,190 as it approaches a number of potential resistance levels including the 50-day average near $1,192, the $1,200 round number and $1.204 a Fibonacci test. Support appears near $1.184 and $1,180. Rising RSI indicates upward momentum still increasing through what looks like a rest stop. 

Crude Oil WTI continues to attract support above $50.00 and has been trying to regain its footing in the $50.60 to $51.00 area following two days of sharp declines. Initial rebound resistance possible near $51.60. RSI under 50 but holding 40 suggests sideways to downward momentum.

FX

US Dollar Index has bounced up from near 102.00 toward 102.50 but essentially remains stuck trending sideways between 101.50 and 103.50. RSI sitting on 50 confirms sideways momentum.

USDJPY is trading between 116.00 and 116.40 having bounced up off 115.50 a 23% Fibonacci retracement of the previous uptrend. A double top is still in place near 118.60 with initial resistance near 117.15. RSI holding 50 suggests momentum may be shifting into neutral with a downturn still possible.

EURUSD has resumed its broader downtrend. After faltering at its 50-day average near $1.0620, the pair has plunged down through $1.0585 a Fibonacci level and on toward $1.0500 with next potential support near $1.0475 then $1.0445. RSI turning back under 50 indicates momentum turning downward again.

EURGBP is back retesting its 0.8660 breakout point. A shooting star candle from a rally up toward 0.8765 suggests the recent advance may be tiring. Resistance has dropped toward 0.8700. Next potential support appears near 0.8600 with initial resistance near 0.8700. 

GBPUSD has started to find some support near $1.2100 with initial resistance near $1.2160 then $1.2205 on a rebound. RSI suggests downward pressure still intact for now, however. Next potential support on a breakdown in the $1.1970 to $1.12000 range.

USDCAD has paused between $1.3180 and $1.3280 below $1.3300 Fibonacci resistance. It’s hard to tell at this point if this is a base forming or a pause within an emerging downtrend. Next resistance possible at the 50-day average near $1.3400 with next support possible at the 200-day average near $1.3100.

CADUSD is forming a symmetrical consolidation triangle between $0.7530 and $0.7600 above $0.7500 round number support following a rally. This suggests a pause within an emerging uptrend with next resistance possible at the 200-day average near $0.7635. RSI rolling over, however, suggests more base building work may be needed.

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