Weekly Wrap

This is the first of our weekly wraps where we review what has happened during the week, apply some simple analysis to the charts and highlight some of the risk on tap for next week.

The highlights this week, from a fundamental risk point of view, were the unexpected results for Industrial Production, Philly manufacturing and Unemployment claims coming out of the US on Thursday. These caught market participants by surprise.

One of the common themes you will notice in most of the charts is that there seems to have been a sentiment change towards the end of the week. We don’t know if this will continue.

USDJPY

The week started with the bears firmly in control but the bulls have had the upper hand for the last two days. Given the moves we have had over the last year with Yen, a deeper correction to 103 may be on the cards.

However, this week, buyers came in at the half way back coinciding with an old high from  the end of 2013 and for now, although the week is closing bearish, buyers are setting the tone on this pair into the close this Friday.

Buyers came in at the half way back

Buyers came in at the half way back

EURUSD

We are at a key demand level for the euro looking at the longer term chart. Although the week is closing bullish, the last two days have seen some dollar strength

Demand level on the EURO

Demand level on the EURO

Technically, the 1.28 is the line in the sand here.

1.28 line in the sand for buyers

1.28 line in the sand for buyers

GBPUSD

This market closed higher then the open after a battle where the bears sold it down over 200 pips before buyers stepped in. 1.60 could be the line in the sand for the bulls. We are at the half way back of the move from the lows of 2013 and this level was well defended by buyers last year, albeit in a bull market at the time. If history is anything to go by, we can probably anticipate some consolidation here.

Either way, the bulls have it on cable going into the close this Friday. This could easily pop up and squeeze those shorts next week.

GBPUSD closes above the weekly open.

GBPUSD closes above the weekly open.

AUDUSD

This pair has found some support at the yearly lows this week and right now is consolidating. The yearly low looks like it is the line in the sand, with the next stop 0.80 if sellers have their way.

Year lows defended.

Year lows defended.

The price action this week has been range bound – caught in the range set by last week.

Caught in the range

Caught in the range

Gold

Buyers have stepped in defending the 2013 lows this month. This was the price where, in July 2010, after about a five week decline in the precious metal, buyers stepped in resulting in the impulsive move to the metals highs.

Gold lows defended

Gold lows defended

This week, and the previous week, have closed with the buyers firmly in control. The lows from late May in 2013 are proving a bit sticky at the moment. If the bulls can keep it going, 1280 could be on the cards. For now, 1248 (this weeks high) is the line in the sand for the bears. Should this breaks, buyers may push this metal to the next area of supply around 1280.

This weeks high the line in the sand for the bears

This weeks high the line in the sand for the bears

Crude

No winners this week on this market – oil closed almost exactly on the half way mark of this weeks range. We are now testing previous support (turned resistance?) – looks like the weeks high of 84.75 is the level to watch going into next week.

Oil

Oil – buyers need to clear resistance before price becomes inpulsive

S&P Index

There has been blood on the streets over the last month with most of the world’s stock indexes taking a hammering. Looking at the longer term chart, it is within the bounds of reason to think there may be more downside before buyers step in.

More downside?

More downside?

This week we have seen some buying coming in with price retesting the low from early august which was also at the 38.1 Fibonacci. This seems like a pretty good place for shorts to reload and the week has closed nearby. The half way back also looks attractive and this market may still rise, shaking out the early shorts before dropping to retest the lows.

If you were a seller, at what price would you get involved?

If you were a seller, at what price would you get involved?

Risk on tap for next week

USD

  • Core CPI Wed Oct 22
  • Unemployment Claims Thurs Oct 23
  • New Home Sales Fri Oct 24

EUR

  • French and German Manufacturing PMI Thurs Oct 23

AUD

  • Interest Rate Minutes Tues Oct 21
  • CPI Wed Oct 22

If you would like to know what the crowd is thinking about where a market is going to go  – just click the sentiment icon on the chart in Spark Profit and we’ll tell you right away.

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