20-Nov-2020

1) EUR/USD: Bulls Might Wait For A Break Through November Highs, Around 1.1920
2) GBP/USD: Profit-Taking Kicks In As EU Leaders Press For Own No-Deal Brexit Plans
3) Emini S&P 500: In A Sideways Consolidation To Ease Overbought Conditions
4) USD/CAD: Comes To A Standstill As Momentum Fades

1) EUR/USD: Bulls Might Wait For A Break Through November Highs, Around 1.1920

Worries about the continuous surge in new coronavirus cases and its impact on the fragile global economic recovery weighed on investors’ sentiment. This, in turn, drove some haven flows towards the US dollar and exerted some downward pressure on the EUR/USD pair through the first half of the trading action on Thursday. However, expectations of further monetary easing by the Fed, along with a fresh leg down in the US Treasury bond yields kept a lid on any runaway rally for the USD.

The pair managed to find decent support near the 1.1815 region and gained some traction following the release of rather an unimpressive US macro releases. In fact, the US Initial Weekly Jobless Claims unexpectedly rose to 742K during the week that ended November 14, and the previous week’s reading was also revised higher to 711K. Separately, the Philly Fed Manufacturing Index came in at 26.3 for November as compared to 22 expected, though marked a notable fall from 32.3 previous.

Apart from this, a late recovery in the US equity markets further undermined the safe-haven greenback and provided an additional boost to the major. The USD lost some additional ground after the US Treasury Secretary Steven Mnuchin told the Federal Reserve to return money earmarked for pandemic relief for struggling businesses, nonprofits, and local governments. Mnuchin’s decision added to market anxiety about the broader economic growth and prompted some fresh selling around the greenback.

The pair rallied around 65-70 pips from daily swing lows and finally settled near the top end of its daily trading range. The momentum extended through the Asian session on Friday, pushing the pair back closer to the top end of its weekly trading range. Friday’s economic docket features the releases of the German Producer Price Index for October and the EU Consumer Confidence for November. The data will be looked upon for some impetus amid absent relevant market-moving economic releases from the US.

Meanwhile, the anti-risk flow could extend some support to the buck and continue capping the upside for the major, at least for the time being. This makes it prudent to wait for some strong follow-through buying before traders start positioning for a further near-term appreciating move.

From a technical perspective, any subsequent move up is likely to confront resistance near-monthly swing lows, around the 1.1920 region. A sustained move beyond will be seen as a fresh trigger for bullish traders and push the pair back towards reclaiming the key 1.2000 psychological mark. Some follow-through buying beyond YTD tops, around the 1.2010 region, should pave the way for an extension of the near-term upward trajectory. The pair might then accelerate the momentum towards the 1.2065-75 intermediate hurdle en-route the 1.2100 round-figure mark.

On the flip side, immediate support is now pegged near the 1.1850 horizontal zone. This is followed by the overnight swing lows, around the 1.1815 region and the 1.1800 mark. Failure to defend the mentioned support levels might prompt some technical selling and turn the pair vulnerable to slide further towards last week’s swing lows around the 1.1745 region. A convincing breakthrough will negate any near-term bullish bias and set the stage for a further near-term depreciating move, possibly towards testing the 1.1600 mark.

2) GBP/USD: Profit-Taking Kicks In As EU Leaders Press For Own No-Deal Brexit Plans

After months of negotiations, Britain and the European Union have not been able to arrive at a post-Brexit agreement. Talks have stalled amid disputes over the key sticking points – the so-called level playing field and fisheries. Against the backdrop, reports that European leaders will demand the European Commission to publish no-deal plans took its toll on the British pound. Having struggled to find acceptance above the 1.3300 round-figure marks, the GBP/USD pair witnessed some long-unwinding trade on Thursday and continued losing ground through the first half of the European trading session.

The pair dropped to the 1.3200 neighborhood and was further pressured by a goodish pickup in the US dollar demand. Growing market worries about the economic fallout from the imposition of new restrictions tempered the optimism over a potential vaccine for the highly contagious coronavirus disease. This, in turn, dampened the global risk sentiment and drove some haven flows towards the greenback. That said, firming expectations of further monetary easing by the Fed might hold the USD bulls from placing aggressive bets and help limit deeper losses for the major, at least for now.

Investors might also refrain from positioning for any further near-term depreciating move, rather prefer to wait for official Brexit updates. EU negotiators are reportedly due to update envoys of the bloc’s 27 member states on the latest in trade talks with Britain on Friday. This, in turn, warrants some caution before positioning for any further depreciating move amid absent relevant market moving economic releases from the UK.

Meanwhile, the US economic docket features the releases of the Philly Fed Manufacturing Index and Initial Weekly Jobless Claims. The data, along with the broader market risk sentiment and developments surrounding the coronavirus saga, will influence the USD price dynamics and further produce some meaningful trading opportunities.

From a technical perspective, the near-term bias still seems tilted in favor of bullish traders and the ongoing pullback might still be categorized as corrective. The positive outlook is further reinforced by the formation of an upward sloping channel, which points to a well-established short-term uptrend. Hence, any subsequent fall below the 1.3200 mark might still be seen as a buying opportunity and remain limited near the 1.3165-60 horizontal support. However, some follow-through selling has the potential to drag the pair further towards last week’s swing lows support, around the 1.3110-05 region.

On the flip side, the 1.3275 level might now act as immediate resistance and is closely followed by the 1.3300 mark. A sustained strength beyond might trigger a short-covering move and push the pair further towards challenging the trend-channel resistance, currently around the 1.3345 region, which if cleared decisively will be seen as a fresh trigger for bullish traders. The pair might then prolong its near-term appreciating move and aim towards reclaiming the 1.3400 round-figure mark. The momentum could further get extended towards YTD tops, around the 1.3480-85 region, en-route the key 1.3500 psychological mark.

3) Emini S&P 500: In A Sideways Consolidation To Ease Overbought Conditions

Emini S&P December trading in a triangle consolidation from support at 3530/25 up to resistance at 3610/15.

Nasdaq December volatility is decreasing & we are establishing a sideways range exactly as predicted.

Emini S&P in a sideways consolidation to ease overbought conditions exactly as predicted. Very minor resistance at 3565/70 & again at 3591/95. Further gains test 2 week triangle trend line resistance at 3610/15. Shorts need stops above 3620. A break higher targets this week’s high at 3635/38 before a retest of the all-time high at 3664/68. A break higher has to be taken as a buy signal although I think gains are likely to be limited. Look for 3673/75 & 3686/90.

Holding 3565/70 targets 3545/40 with minor trend line support at 3535/30 for profit taking on any shorts. Be ready to sell a break below 3525 for a buying opportunity at 3500/3495 with stops below 3485.

Nasdaq bounced from just below 11880/840 to target minor resistance at 11925/960 then strong resistance at 12050/090. Try shorts with stops above 12120. A break higher is a short term buy signal targeting 12250/270 before a retest of the double top high at 12410/465.

Shorts at 12050/090 target 11990/960 then 11900/860. Cover any remaining shorts at the lower end of the short term range at 11840/800. There is a buying opportunity at 11700/600 with stops below 11550. A break below lower is a sell signal targeting 11500/450 & 11350/300.

4) USD/CAD: Comes To A Standstill As Momentum Fades

USDCAD’s dictating bearish picture seems to be taking a breather after a bounce off a newly formed 10-month low of 1.2927. The slowing bearish pace of the 50- and 100-day simple moving averages (SMAs) and the flattening out in the 50-day SMA are assisting the stalled, negatively-skewed structure.

The short-term oscillators currently display conflicting signals in directional momentum. The MACD, in the negative region, is above its red trigger line, while the stochastic oscillator maintains a negative bearing. That said, the flat RSI is hovering slightly below its 50 thresholds.

In a positive scenario, early resistance may develop from the 1.3172 high and the nearby 50-day SMA at 1.3185, followed by the 100-day SMA at 1.3245. Should buyers persist to oppose the predominant negative bearing, they may meet constraints from the 1.3298 level before the critical region of highs of 1.3389-1.3420. Moving higher, their efforts may then be challenged by the resistance zone of 1.3458-1.3504, and the 200-day SMA of 1.3540 overhead.

If selling interest intensifies, initial friction to downside moves may come from the key limiting low of 1.2993, followed by the support section of 1.2927-1.2950. Deteriorating under this base, the price may dip towards the 1.2884 obstacles from back in September 2018. Steeper declines may then have sellers meet the 1.2782 trough from October 2018 ahead of the 1.2728 low achieved in May of 2018. If the bears persist, they could take the price as low as the 1.2622 boundaries.

Summarizing, a controlling neutral-to-bearish bias has gripped the pair below the SMAs. A break below 1.2927 may strengthen the negative structure, while a thrust above 1.3420 could boost confidence in the pair.