Market Analysis: 11 October 2016
by Christala Parmaxi
Oil Producers Meeting
Oil rose up to 52 yesterday recording a 1-year high while WTI increased to 4-month high. The rise was immediately after the Russian president Vladimir Putin said that the nation is willing to join OPEC’s attempts to stabilize the market through an output cut or a production freeze. Those are signs that a deal may be near, however yesterday no conclusion or deal was announced. As a result, USDCAD fell down to 1-week low reaching the support of 1.314. After the appreciation of the news on Canadian Dollar and oil, they recovered back to their previous price levels and if no deal is announced then we do not expect further rise.
British Pound Daily performance
The British Pound keeps on falling against the majors as it depreciated by -1.08% against the Canadian Dollar, -38% against the greenback and -34% against the Australian Dollar. Today, the price of the Cable tested the level of 1.225. Both fundamentals and technicals are indicating further downside risk for the Pound, and its parity with Euro and USD is no long an impossible scenario.
US Dollar Daily Performance
The Dollar gained ground yesterday since it rose almost against all of its major counterparties yesterday. The only currency that was stronger than the USD was the Canadian Dollar due to the oil producers’ meeting updates. On the other hand, the big loser against the greenback was New Zealand Dollar since USD rose 0.60% against it.
Today during the US session we are expecting the speech from the President of the Federal Reserve Bank of Minneapolis Neel Kashkari. Later, during the Asian morning tomorrow, the Australian Westpac Consumer Sentiment is going to be released.
The Gopher tested again today the significant resistance of 104 with no luck of breaking it. We predicted the price move yesterday upon the upwards penetration of Fibo 23.6% and at the time of writing the pair is having an attempt to penetrate SMA50 to the downside. The indicators are revealing bearish signals today since MACD is slopping down but on positive levels, RSI crossed its equilibrium level and ADX is on negative territories. However, we would prefer to see a move below the resistance of 103.3 and Fibo 23.6% level to confirm further bearish movement. The nearest support levels are near 103.3 and 102.8 while the major resistance lays at the psychological level of 104.
Have you noticed that the main pair broke the symmetrical triangle to the downside? That’s a strong bearish signal. The critical level now is the resistance of 1.107. If EURUSD close below this level today, then we are looking to lock profit on the next valid support area of 1.10-1.103. MACD has crossed its signal and its equilibrium level to the downside and ADX indicates strong negative directional movement. Furthermore, Stochastic is sloping down to its oversold level indicating bearish sentiment. On the flip side, the risks are lying on the resistance level of 1.114 which is the breaking point of the triangle.
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