Season's Greetings

Season's Greetings and a Happy New Year to all of you. I will be back with the market analysis in January. Thank you for your support during this whole year.

WTI oil enters a congestion area

WTI oil rallies for today after Kuwait agreed to cut their production much lower than previously agreed at the last OPEC and non-OPEC meeting. If other producers jump in the wagon and also agreed to make further cuts, then oil may go back to the 54.50 level. On the daily chart of WTI oil we can see that the commodity has found a good support at the 50.00 level from where it has bounce twice on this chart. If for some reason oil drops below the 50.00 level, then it may reach the 48.00 level or the 200 day EMA, which is around the 46.42 level.

Three month rally on the USD/JPY

On the monthly chart of the USD/JPY we can see that during the last three months the pair has been rising and reaches a high around the 118.64 level. The bullish trend is still in place and there could be a breakout of the 118.64 level in January. If the price breaks above the 118.64 level, it may stay consolidated between that level and the 125.79 level during the first few months of 2017. To the downside, the 114.00 level could act as a support along with the 109.00 level. The future plans of the FED for next year could keep the pair strong, but there could also be some mention of intervention by the Bank of Japan, since a weaker Yen may not be in the best interest of the rising sun country.

New ceiling for the dollar index

The dollar index, which measures the strength of the greenback versus six of its major counterparts, has risen rapidly during this Wednesday’s session after the Federal Reserve of the United States raised its interest rates by 0.25% to leave them at 0.75%. According to most analysts, the rate hake was already priced in to the markets before the announcement; none the less, the dollar index managed to rally and made another higher high at the 102.34 level. On the daily chart we can see that the index has formed what it appears to be a broadening wedge or a flag with a bullish breakout. If the index retraces to the downside, then the 100.00 level could act as support. The zone between the 99.00 level and the 99.47 level could also act as support.

And we were right

A few weeks ago we identified on the daily chart of the USD/JPY a “Golden Cross”, which involves the crossing of the 55 day EMA, purple line, above the 200 day EMA, blue line. The golden cross usually has bullish implications for the instrument in the long run and that is why we have seen the USD/JPY making higher highs. The bullish trend is still in place and the angle of inclination of the 55 day EMA is telling us that the trend is still strong. If the pair breaks above the 116.12 level, then it may try to go and visit the 117.00 zone. To the downside, the pair may try to retrace back, but the 114.00 level may act as its first support. Below that level, the USD/JPY may just go and visit the 111.00 area.

The Dow Jones hits another all-time high

The Dow Jones Industrial Index just keeps going higher, breaking new record highs. On Monday the index rises 0.20% and reaches the 19811 zone. If the rally continues, the Dow may try to reach the 20000 level. So far the post-election rally is extending and there could be further surprises towards the end of the year and maybe next year. But the index is clearly over-extended to the upside and it could be ready for a bearish correction. To the downside, the 19278 level may act as support, since around that zone the index tried to consolidate. Also, the 18771 level may also act as support since at that level we can see the 55 day EMA. But something really amazing has to happen in order for the Dow to drop that far down in the short term.

Pullback on the Pound to the 55 day EMA

The GBPUSD is still struggling to break the 55 day EMA to the downside, it is forming what it appears to be a breakout and pullback pattern on that zone. For the pattern to be completed, the price must bounce to the upside. If the pair bounces to the upside, then the 1.2800 level may act as resistance. Above the 1.2800 level, the 1.3000 may also act as resistance. The bullish trend is still in place; therefore, there is a good probability for the GBPUSD to continue going higher. Below the 55 day EMA, its next support level could be the 1.2300 or the 1.2200 level.

Excellent Webinars to end the year

During the month of December, ActivTrades is offering excellent Webinars to sharpen our trading skills and get us ready for the New Year. Malte Kaub, a great professional of the financial markets will be conducting the last two Webinars of the year, all free of cost and online, so that anyone that registers from anywhere in the world will be able to attend. On December 22^nd the topic will be on trading volume and how to adjust to it. On December 29^th, Mr. Kaub will be giving us different tips and advice on how to make the next year a profitable one. To register for the upcoming events, please visit the link below:

https://www.activtrades.com/en/webinars

Don’t miss this great opportunity to learn more from the professionals. 

The USD/CAD visits its 200 day EMA

The 200 day EMA usually acts as a good support or resistance zone, especially when there is a round number level close to it. On the daily chart of the USD/CAD we can see that the 200 day EMA is right on the 1.3200 level and the price of the pair is practically at that same zone. Even though the bearish trend is still in place, the 200 day EMA may act as a support from where the price may try to bounce to the upside. If the pair bounces to the upside, then the 1.3300 level may act as resistance. If the pair breaks below the 1.3200 level, then it may try to go and visit the 1.3100 level from where it may try to stall. Another scenario that may develop is that the pair may consolidate and go sideways oscillating around the 1.3200 zone.

Sugar struggles with the 19.00 level

On the daily chart of the March contract of sugar, we can see that the commodity has had a very good bearish trend during the past few months, but once it got to the 19.00 level, it stalls there and tries to pull back up. Around the 19.00 level we can also see the 200 day EMA, which could have also contributed for the instrument to stall there. Usually, the 200 period EMA acts as a good support or resistance zone. But the bearish trend is still in place and the price of sugar may try to break below the 200 day EMA. If it breaks to the downside, then the 18.00 level or the 17.00 level could act as support. On the other hand, the stochastics are in the over-sold area, indicating that the instrument may be ready for a bullish correction. To the upside, the 20.00 level may act as resistance, followed by the 21.00 level or the 22.57 level.

USD/JPY: Possible trend reversal

The Dollar versus the Yen has been rising steadily, but once it got to the 114.87 zone, it lost its bullish momentum. The pair has already visited the 114.87 level twice, as shown on the daily chart. If the prices bounces from the current levels to the downside, then a double top pattern may develop. The double top pattern is a bearish reversal pattern; therefore, the USD/JPY may change direction to the downside. The MACD indicator is also showing us a possible trend reversal, but it is too early, though to call a trend change. To the downside, the 111.28 level may act as a support along with the 200 day EMA, which is much lower around the 107.00 zone.

EUR/JPY: Bullish trend is still in place

The Euro versus the Yen has had a very good rally as shown on the daily chart. Once it got to the 122.00 zone, it retraces to the downside. The 119.00 zone has been a very good support, where the pair has already bounced to the upside a couple of times. A breakout above the 120.00 level could take the pair to the highs around the 122.00 level. At the 118.00 level we can see the 200 day EMA, blue line, which could contribute to making that zone a good support area. The 117.00 level could also act as a support.

Oil: Possible pullback

On the daily chart of WTI oil we can see that the black gold is stalling its rally momentarily around the 51.60 level. The bullish trend is still in place and oil may try to continue going higher, but since it is over-extended to the upside, the commodity may be due for a retracement or pullback to the downside. The 50.00 level may act as a support, but below that level, the 48.00 and the 46.00 may also act as support. Around the 46.00 level we can see the 200 day EMA, which could contribute to making that level a good support. To the upside, if the rally continues and oil breaks above the 51.60 level, then its next resistance could be the 53.50 level.