WTI Crude Oil and AUDUSD

US-China trade talks have concluded today with progress made according to US Officials. Markets have remained bid as risk sentiment runs high since Friday. The US Presidential speech overnight mainly focussed on conducting meetings to have the southern border wall completed and further meetings to reopen the government. The President backed away from declaring a national emergency to unlock the funds for building the wall. The New Zealand Dollar, Canadian Dollar and the Australian Dollar are the top performing currencies against the US Dollar. The Japanese Yen is lower against the US Dollar.

The schedule for today is dominated by the Bank of Canada in the afternoon as they make their rate decision. It is expected to be left at 1.75%, and a press conference will follow fifteen minutes later. Bank of England Governor Carney will also speak in the afternoon. The US FOMC Minutes will be released this evening with traders looking for direction on the future path of hikes.

WTI Crude Oil

The WTI Crude Oil chart remains in its channel higher but has run into resistance at 50.616 just ahead of its 200 period moving average at 50.781. This area was important support in early December and traders will be positioning to take this into account. US Crude Oil Inventories will be released this afternoon and may provide a catalyst for the next move. A break higher from current levels may engage with the falling trend line resistance around 51.775. A break above this line might give more control to bulls and target higher levels at 53.460 and 54.780.

Support may accumulate around the 50.000 area but failing that 48.330 has been used as support and resistance in recent trading. The 100 period moving average is gaining ground just below this level at 48.250 as it follows the retracement higher in price. The 50 period moving average is also on the move at 47.884. A loss of these levels may result in a retest of the rising support trend line around 46.566 to maintain the channel. If traders fail to but any such retest the situation may develop into a bearish continuation pattern with a focus on lower levels such as 45.000 and 44.317 followed by the December low at 42.340.

AUDUSD

The AUDUSD pair has recovered from the dramatic selloff in Yen and other currencies last week. The selloff occurred during a period of low liquidity between the US and Asian session and on a day when Japanese traders were on holiday. The move lower in the pair was retraced higher in the same day, as the market bounced back and this has continued to the current level of 0.7156 and the 50 DMA. If price fails to advance further and retests and breaks support at 0.7131, the potential arises for a retest on previous support around 0.7019 followed by 0.7000. Further losses may target 0.6900 and the low at 0.6745.

Resistance at the 100 DMA around 0.7208 may add strength to the 0.7200 level if price tries to continue higher. Above this area the 200 DMA at 0.7300 may also interest traders. The area of previous support and resistance around 0.7330/0.7350, lies in the path of a retest on the lower high at 0.7393 ahead of 0.7400. If price pushes above this area, traders may wish to test 0.7483 and the 0.7500 level. Beyond this area 0.7600 is followed by the 0.7672 high.

 

Phillip Konchar

Core Spreads

Core Spreads is financial trading as it should be. No noise – just tight spreads on thousands of markets.

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