Tradeview Marketview (Week Commencing December 16th 2019)

Market Overview

The week started of with expectations for it to be one of the most volatile this year, and it certainly lived up to the billing. The UK General Elections stole the attention of most in the markets, with huge swings from GBP and the FTSE on the news that Boris Johnson won a landslide majority in the polls. GBPUSD went as high as $1.35, before the technicals took charge with the markets retreating on the downside and settling at $1.33.

In other news we saw FOMC and the ECB both keep rates unchanged. Further talks of US/China trade deals being struck saw the SP500 reach record highs, with Gold continuing to consolidate at the $1460 – $1478 range.

Market Preview

This coming week, essentially the last week before the holidays will see markets begin to slow as traders get ready for the holiday season. That said it will be interesting to pay attention to the following story lines as we head into 2020. Firstly post the election, how will GBP react to the rallies we saw, will selloffs begin to take place as the markets realize the huge debate on how to get a Brexit deal done still looms, or will these new highs be where the pound decides to reside. We have several key numbers coming from the UK, with Carney also speaking after the interest rate decision is made.

Economic Data View

  • Tuesday:GBP BOE’s Carney Speaks at Coeure’s Farewell Dinner
  • Wednesday: GBP Consumer Price Index (YoY) (NOV)
  • Thursday: GBP Bank of England Bank Rate (DEC 19)
    See more

Technical view

GBPUSD – Daily Chart

As somewhat expected, the victory by Boris and the Conservatives, would send GBPUSD
towards the long-term resistance of $1.35. This scenario took place, and the resistance was duly held as the markets encountered the overbought level on the weekly charts. Now with that event in the past, this coming week’s Super Thursday from the BOE, where interest rates, amongst other key economic indicators are to be unravelled will provide further insight into the future direction here. Traditionally we have seen bears take charge at a similar level in the past, the question for this week will be essentially will history repeat itself?

02-3

SP500 – Daily Chart

“How many times have they said the trade deal is finally agreed”. This was one of the quotes here at Tradeview this week, as another announcement of Trump getting a deal done was announced. Like on the previous occasions we did see rally, with the US markets reaching new highs as a result. Now the markets have reached another hurdle, as the RSi shows us back at the point of being overbought.The Moving averages of 10 , 25 and 50 day all also still positioned for a potential drop. Like the previous occasions, if the news turns out to be unfounded, or essentially played down by China as in the past, we may see the recent gains soon fade, and sellers enter the fold.

03-2

CrudeOil – Daily Chart

The Aramco IPO finally reached the valuation the Saudi’s expected as we saw markets reach the $2bn value. As a result, crude oil broke clear of the $58 resistance it entered the week in, going as high as $60. However, in this run, markets reentered the areas of consolidation they have been accustomed to, with the RSI level of 60, which has seen volumes stutter, once again was reached. Bulls may be peering above this level in hopes of a breakout and more sustained runs towards $60 per barrel, however the momentum of moving averages have been long positioned for a downward cross, could this new $59 hold the selling volume required to see this happen, or will the long-term ascending triangle continue?

04-2

Charts analysed and narrated by Eliman Dambell – edambell@tvmarkets.com