Week Commencing December 2nd 2019
The week of Thanksgiving didn’t give much in the form of moves, besides the blockbuster 5% drop in Oil on Friday. Markets mainly remained as we saw last week, with the consolidation story continuing. Data showed US GDP was better than expected, which led to further highs on Index markets. Gold dropped on the day of the news, however then rallied back over the $1464 resistance. Oil fell on the news OPEC were adverse to further cuts in supply, and after reaching a 5 month low, Bitcoin was one of the big movers climbing back into the $7700 zone. The unfortunate terror attacks in London one of the contributors to the Friday rally in Gold, also caused huge bear activity in the UK100 which dropped over 100 points in intraday trading on the news.
First week of the new month and a chance for the markets to shake off the Turkey stuffing from last Thursday’s Thanksgiving dinner. This Friday will see NFP numbers released, and although it is at the end of the week, most traders are likely to use this as there torch light to finding opportunities in the days leading to Friday. Another topic will be Oil. We’ve seen this market use the current $55 level as a floor, and after dropping $3 in price on Friday alone, the question for next week is will it find stability, or are further runs ahead. Christine Lagarde continues her introductory tour as ECB chair speaking at the European Parliament, could we see EUR or DAX movements as a result?
Economic Data View
- Monday: CAD RBC Canadian Manufacturing PMI (NOV)
- Wednesday: CAD Bank of Canada Rate Decision (DEC 4)
- Friday: USD Change in Non-farm Payrolls (NOV)
CrudeOil – Daily Chart
To technical traders in the room, the $3 selloff of crude Oil would come as no surprise. History shows this level to be a hard resistance, only recently, briefly broken by the news of the Oil attacks in Saudi Arabia. Although this market had been creating an ascending triangle, the resistance, along with moving averages were positioned as to say a fall was inevitable, plus the fact that the RSI usually find the 58 level of this chart as Overbought. Sticking with the RSI the floor of 33 has not been hit, however we have seen heavy support at the current level, which may make many believe this market may consolidate for a few days after such a sharp move.
SP500 – Daily Chart
The potential for a big short or selloff in the SP500 remains, however the issue of timing still remains. Although many believe this is soon to experience a correction and enter a bear streak, similar to the previous occasions we saw historical highs, this index continues to set new highs. This week’s better than expected GDP numbers acted as the perfect Thanksgiving present for the economy, leading to the run extending. However the same questions still remain. With this overbought, moving averages started to slow down, will a real resistance be formed, leading to selling taking place?
XAUUSD – Daily Chart
Following from the above, relatively speaking the shorter than usual working week turned out good for the US. As a result we initially saw the week bring, ample levels of uncertainty and consolidation in Gold. RSI consolidating between 34 and 47 which have seemed to be zones of sideways trading. The $1451 floor as a result saw a few days of action, but little in the shape of movement. That was at least until Friday, when ironically the “party” and celebrations in the US were proverbially over. As the Pound gained in strength on the news of a terrorist attack, investors fled generally money markets, and into Gold. This bull run took place at the floor, also leading to moving averages set for a potential upward cross. Could this be the storyline heading into NFP this Friday?
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