Back Where it All Began

GBPUSD – technical overview

On a medium to longer term basis, the outlook is still looking constructive off the +30 year low from 2016, with a higher low sought ahead of the next major upside extension back towards and through the current 2018 high. Shorter-term however, the market is threatening a possible break to another fresh 2018 low. If the market breaks down below the yearly low, it will open possibility for a measured move extension into the 1.2000s. Right now, a break back above the weekly high at 1.3073 would be required to alleviate the downside pressure.

• R2 1.3073 – 14Nov high – Strong
• R1 1.2885 – 19Nov high – Medium
• S1 1.2724 – 15Nov low – Medium
• S2 1.2662 – 15Aug low  – Strong

GBPUSD – fundamental overview

Theresa May has been standing tough after the massive setback in the previous week, after her Brexit chief negotiator stepped down. The Prime Minister will continue to push forward with her plan to get that deal done, despite ongoing efforts to secure a vote of no confidence. The Pound has managed to get some additional support from renewed selling of the US Dollar as well, with the market selling Dollars on last week's less hawkish Fed Powell comments and some renewed trade tension between the US and China. EU Barnier has since proposed an extension on the Brexit transition period by two years, while a report in the Sun says the PM is considering scrapping the Irish border backstop in favour of a model that would be more amenable to Brexiteers and the EU.  As far as today's calendar goes, we get some UK CBI trends data, along with US housing starts and building permits.

GBPUSD - Technical charts in detail

USDJPY – technical overview

Rallies continue to be very well capped on a medium-term basis, with the outlook still favouring lower tops and lower lows. Look for yet another topside failure ahead of 114.00, in favour of the next major downside extension towards key support around 109.75. Ultimately, only a break back above 114.75 would negate the bearish outlook.

• R2 113.71 – 15Nov high  – Strong
• R1 113.63 – 16Nov high – Medium
• S1 112.40 – 20Nov low – Medium
• S2 111.38 – 26Oct low – Strong

USDJPY – fundamental overview

There has been a renewed round of risk liquidation in markets over the past few sessions and this has weighed on the correlated pair. The combination of a less hawkish, less upbeat Fed Powell and some renewed tension around global trade, are the primary drivers behind the flow. BOJ Kuroda was on the wires earlier but offered nothing new as far as the outlook was concerned. Looking ahead, US housing starts and building permits are the only notable standouts on the economic calendar.

EURCHF – technical overview

The market has been in the process of recovering out from a 2018 low coinciding with critical support in the 1.1200 area. However, at this stage, there is no clear directional bias, with the price action deferring to a neutral state. Back above 1.1560 would get some bullish momentum going for a push to 1.2000, while back below 1.1200 would be quite bearish.

• R2 1.1560– 8Aug high – Strong
• R1 1.1502 – 22Oct high – Medium
• S1 1.1313 – 27Sep low– Medium
• S2 1.1224– 18Sep low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation between now and year end, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

Technical studies have been turning back up from stretched medium term readings, with the latest break back above 0.7300 suggesting a meaningful base could be in the process of carving out. This puts the shorter-term pressure back on the topside, with the focus on a push to the psychological barrier at 0.7500. Back below 0.7165 would be required to shift the focus back on the downside.

• R2 0.7500 – Psychological – Strong
• R1 0.7382 – 21Aug high – Medium
• S1 0.7251 – 16Nov low – Medium
• S2 0.7165 – 13Nov low – Strong

AUDUSD – fundamental overview

While the Australian Dollar has received a nice boost in recent days on the back of renewed broad based US Dollar declines and some better data out of Australia, the currency is underperforming into Tuesday, as downside risk associated with China weighs on the correlated currency. A lot of what happens here will likely hinge on the outlook for global trade and risk sentiment. The RBA Minutes were out earlier, though no surprises and no reaction to the central bank releases. Looking ahead, US housing starts and building permits are the only notable standouts on the calendar.

USDCAD – technical overview

The market has been consistently sold into rallies since topping out in June, which could still invite a deeper decline before the next upside extension gets underway. Still, look for any weakness to be well supported ahead of 1.2500 with only a break back below this psychological barrier to negate the bigger picture constructive outlook.

• R2 1.3291 – 20Jul high – Strong
• R1 1.3264 - 13Nov high – Medium
• S1 1.3088 – 8Nov low– Medium
• S2 1.3049 – 2Nov low – Strong

USDCAD – fundamental overview

The collapse in the price of OIL off the 2018 high has been turning heads, with the commodity down over 30% since topping out in early October. This has resulted in some underperformance in the Canadian Dollar. Still, the Loonie did manage to hold up against the US Dollar in the previous week, with broad based selling in the Buck offsetting the negative flow from lower OIL. Less hawkish comments from the Fed Chair have been behind a lot of the offsetting flow, while OIL has since managed to find its footing. Looking ahead, awe get an appearance from Bank of Canada Wilkins late in the day. Ahead of this, US housing starts and building permits are out.

NZDUSD – technical overview

The market has been in the process of recovering out from +2.5 year lows and is looking to extend the correction following the latest break back above consolidation resistance around 0.6725. This sets the stage for a push that could extend back towards the psychological barrier at 0.7000 before the market considers the legitimacy of the recovery and prospect for a more significant bullish structural shift or bearish resumption.

• R2 0.7000 – Psychological – Medium
• R1 0.6923 – 25Jun high – Medium
• S1 0.6788 – 15Nov low – Medium
• S2 0.6707 – 12Nov low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has held up nicely against the Buck over the past week, despite renewed downside pressure in global equities. While Kiwi strength could be reconciled against the Buck, given broad based weakness in the US Dollar, outperformance against the Yen has proven to be somewhat confounding. On Monday however, Kiwi deserved some bids on a supportive round of data including above forecast performance of services and producer prices. Downside risk associated with China has also been helping Kiwi by way of its relationship with the Australian Dollar, with market participants swapping commodity currency exposure to the lesser correlated Kiwi. Looking ahead, we get the latest GDT auction results, along with US housing starts and building permits.

US SPX 500 – technical overview

A market that has been extended on the monthly chart is at risk for a major correction, with the possibility for a massive topping formation. Any rallies should now continue to be very well capped ahead of 3000, in favour of renewed weakness back below the 2530 area yearly low (neckline) and towards a retest of strong longer-term resistance turned support in the form of the 2015 high at 2140. Only a weekly close above 3000 would negate the outlook.

• R2 2824 – 17Oct high – Strong
• R1 2800 – Figure – Medium
• S1 2603 – 29Oct low – Strong
• S2 2594 – 3May low – Medium

US SPX 500 – fundamental overview

Investor immunity to downside risk is not as strong these days. The combination of Fed policy normalisation, US protectionism, ongoing White House drama and geopolitical tension are all warning of capitulation ahead, despite this latest run to record highs. The Fed has also finally acknowledged inflation no longer running below target in 2018, something that could very well result in even less attractive equity market valuations given the implication on rates. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as this could be something that inspires a more aggressive decline in the fourth quarter.

GOLD (SPOT) – technical overview

The market has been showing signs of wanting to turn back up after establishing back above the daily Ichimoku chart. There are also signs that we could be seeing the formation of a more significant medium to longer-term structural shift that would be confirmed if this latest recovery can extend back through big resistance in the form of the 2016 high at 1375. Look for setbacks to be well supported ahead of 1200, with only a close back below 1150 to compromise the constructive outlook. A daily close above 1250 will strengthen the outlook.

• R2 1266 – 9Jul high – Strong
• R1 1244 – 26Oct high – Medium
• S1 1196 – 13Nov low – Medium
• S2 1160 – 16Aug/2018 low  – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

An extended period of range contraction has come to an end, with the market breaking down below the apex of a massive triangle formation in 2018. The decline has resulted in fresh yearly lows and warns of a deeper setbacks that could accelerate to the September 2017 low at 2,975. At this stage, it would take a break back above the October peak around 7,700 to take the pressure off the downside.

• R2 6,648 – 21Oct high – Strong
• R1 5,740 – 18Nov high – Medium
• S1 4,728– 20Nov/2018 low –Medium
• S2 4,000 – Psychological  – Strong

BTCUSD – fundamental overview

Bitcoin is facing intense headwinds from broader risk liquidation themes and has sunk to fresh 2018 lows. The cryptocurrency has already been struggling to find its place in 2018, with the decentralised technology space still very young and yet to fully prove concept. The current backdrop of global sentiment deterioration only makes things more challenging in the space and we are seeing investors head for the exits as a result. This could open a bigger drop towards $3,000 before the market looks for stability. The Bitcoin Cash hard fork hasn't helped matters in any way, only casting more doubt on where the crypto market should look for that leader, at a time when things are quite shaky.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market remains under pressure in 2018, extending its run of intense declines to fresh 2018 lows. Medium term studies are however stretched, which could warn of the start to a correction. Still, it would take a break back above 255 right now to take the pressure off the downside and suggest that the market could be starting to turn bullish again. The next major downside extension target comes in at the 100 psychological barrier.

• R2 255 – 22Sep high – Strong
• R1 183 – 18Nov high – Medium
• S1 138 – 20Nov/2018 low – Medium
• S2 100 – Psychological  – Strong

ETHUSD – fundamental overview

Overall, we've seen quite a bit of weakness in the price of Ether in 2018 and there's still legitimate risk for deeper setbacks, given technical hurdles within the protocol, ongoing regulatory challenges and a global macro backdrop exposing risk correlated projects on the Ethereum blockchain. Monetary policy normalisations around the globe and an anticipated reduction in global risk appetite are placing a tremendous strain on ERC20 projects that have yet to even produce proper use cases and proof of concept. At the same time, longer term prospects are looking quite bright and after a drop of well over 70% off the record high, the market is starting to find some stability.