Crude Oil rallies between US inventory reports

The main trading action overnight has been in energy markets where WTI and Brent crude oil plus heating oil have all rallied ‎1.4%. Natural gas is up 2.9% despite warm conditions in consuming regions while gasoline is up 1.0%. Renewed interest in energy was sparked late yesterday afternoon when API reported a 0.9 mmbbl drawdown signalling the record breaking multimillion barrel build up of stockpiles in recent weeks may finally be ending. Oil may remain active through the DOE weekly inventory reports due at 1030 am EST with a 3.5 mmbbl increase for crude oil currently expected by the street.

Stock markets have been steady overnight. US index futures are up marginally while the Dax, FTSE and Nikkei are down marginally. There was no major economic or political news overnight. It’s still not clear if the Fed is planning to raise rates in March or not. It does look‎ the announcements on tax and health care reform may not come until March leaving me wondering if traders patience can last that long.

Currencies have been mixed overnight. EUR is under pressure relative to USD and GBP again as French polls show Euroskeptic Marine Le Pen adding to her first round lead. Other majors are trading slightly higher or slightly lower relative to USD.

Canadian banks could attract attention today after CIBC kicked off their earnings season with a bang. CIBC‎ reported adjusted EPS of $2.89 well above the $2.60 street estimate. It also raised its dividend slightly. Loblaw’s report was mixed with a small miss on earnings potentially offset by a small beat on sales.

Chart Signals: Gold, Oil and GBP rally while indices struggle to advance

A number of resistance tests are underway today that could end in significant breakouts in gold, WTI crude oil and GBP against both USD and EUR. CAD and JPY are also on the rebound while yesterday’s bounce in EUR appears to be ending. Meanwhile, indices continue to level off, some just barely reaching new highs while momentum indications suggest recent rallies may be overextended and near exhaustion.

North American and European Indices

US 30 remains under accumulation advancing on 20,800 with next measured resistance possible near 20,830. RSI remains really overbought but also indicates upward momentum intact for now. Initial correction support possible near 20,665 then 20,500.

US SPX 500 appears to be levelling off near 2,366 with measured resistance possible near 2,373. An overbought RSI and a momentum double top suggest a pause or correction possible with initial downside support near 2,352. 

US NDAQ 100 is levelling off near 5,355 with the RSI also suggesting upward momentum flattening out. Initial correction support possible near 5,330 then 5,300 with next measured resistance near 5,365. 

US Small Cap 2000 is still holding between the 1,400 round number and breakout point and 1,410 resistance. It’s next upside test appears near a measured 1,455 but a correction back toward 1,388 or the 50-day average near 1,372 appears possible with RSI rolling over again.

UK 100 is still hanging around 7,300 quietly slipping back from 7,330. RSI falling toward 50 indicates upward momentum weakening. Next potential support near 7,2160 then 7,235.

Germany 30 continues to encounter resistance near the 12,000 round number sliding back from 12,010 toward 11,980. RSI is not confirming the new high for the index, a negative divergence indicating slowing upward momentum. Next potential pullback support near 11,875. 

Commodities

Gold has resumed its uptrend, clearing $1,240 and advancing on $1,245 where a breakout would complete a bullish ascending triangle. Next upside resistance possible in a Fibonacci cluster between $1,250 and $1,255. Rising RSI indicates upward momentum increasing.

Crude Oil WTI has cleared $53.85 and regained $54.00. A close above this area would complete an ascending triangle and signal the start of a new upleg following a period of consolidation. Next potential resistance near $55.00 then a measured $55.40.

FX

US Dollar Index is still struggling with resistance at its 50-day average near 101.40 with more resistance possible near 101.75 but remains supported above 101.00 for now. RSI bouncing around 50 indicates a sideways trend. Next support in a pullback possible near 100.40.

USDJPY appears to be resuming its downtrend with resistance falling toward 113.30 from 114.05 and the pair dropping toward 112.80 with next potential support near 112.35 then 111.25 both Fibonacci levels. RSI still below 50 and falling indicates downward pressure increasing.

EURUSD held $1.0500 for now and has bounced back up into the $1.0540 to $1.0575 area but it remains in a downtrend below $1.0585 a Fibonacci level and its 50-day average near $1.0600. RSI suggests a pause underway within a bigger downtrend.

EURGBP remains under pressure with resistance falling toward 0.8500 from 0.8545 and the pair trading under its 200-day average while testing 0.8460 Fibonacci support. RSI under 50 confirms downward momentum. Next potential downside support near 0.8400 then 0.8370.

GBPUSD appears to be turning upward again, advancing on $1.2500 from higher support near $1.2450 up from $1.2410. RSI peeking back above 50 indicates an upturn but the pair needs to break out as well to confirm. Next resistance possible near $1.2575 on a breakout.

USDCAD is turning downward again after a rally attempt failed at $1.3200 while resistance at 50 on the RSI held keeping its broader downtrend intact. The pair has dropped back under its 200-day average near $1.3145 toward $1.3115 with next potential support near $1.3070 then $1.3020.

CADUSD is on the rebound following a successful retest of support at its 50-day average near $0.7565. The pair has regained $0.7600, advancing on $0.7625 with next potential resistance near $0.7640 then $0.7665 and $0.7685.

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