New Updates on Brexit, US-China Trade

GBPUSD – technical overview

The major pair has put in an impressive recovery in recent weeks, helping to support the case for a longer-term developing uptrend off the 2016 low, with a higher low sought out by the multi-month low from early January. Pullbacks are now viewed as corrective on the daily chart, while the market holds above the daily Ichimoku cloud top. A break back above the September 2018 high at 1.3300 will strengthen this outlook, while setbacks should now be well supported ahead of 1.2650.

• R2 1.3219 – 25Jan high – Medium
• R1 1.3110 – 20Feb high – Medium
• S1 1.2969 – 22Feb low – Medium
• S2 1.2892 â€“ 18Feb low  â€“ Strong

GBPUSD – fundamental overview

The Pound has opened up relatively unchanged despite some headlines over the weekend that suggested more volatility on the open. There was some positive weekend speculation Labour was very close to backing a second referendum, while cabinet member Gove said the PM was close to securing backstop concessions. At the same time, The Times has reported the PM was told to rule out no-deal or face ministerial resignations, after it was revealed that she would be waiting until 17 days before the Brexit date for the vote on her revised exit plan. Looking at today’s calendar, we get an appearance from BOE Governor Carney, followed up by US releases in the form of the Chicago Fed national activity index and Dallas Fed manufacturing.

USDJPY – technical overview

The major pair is in the process of chopping within a bigger picture downtrend. Look for any recovery rallies to be well capped ahead of 111.50 in favour of the next major downside extension below the 104.63, 2018 low. This would expose a very important psychological barrier at 100.00 further down, which guards against the 2016 low at 99.00.

• R2 111.47 â€“ 21Dec high  – Strong
• R1 111.13 â€“ 14Feb high – Medium
• S1 110.26 â€“ 15Feb low – Medium
• S2 109.56 â€“ 6Feb low – Strong

USDJPY – fundamental overview

Overall, the major pair should continue to track along with risk sentiment. After benefiting from a healthy rebound in stocks since the yearly open, the market could be getting ready to roll over again. We don’t see equities holding up in a world where risk assets are exposed to the realities of exhausted monetary policy and government stimulus post 2008 financial markets crisis. We’ve also seen plenty of headlines in recent days talking downward revisions to growth outlooks in major economies around the globe. Looking ahead, the calendar is quite light, with the Chicago Fed national activity index and Dallas Fed manufacturing as the only notable standouts.

EURCHF – technical overview

The market has been in the process of consolidating off the 2018 low, which coincided 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 1.1500 would get some bullish momentum going for a push to 1.2000, while back below 1.1185 would be quite bearish.

• R2 1.1502– 22Oct high â€“ Strong
• R1 1.1445 â€“ 5Feb/2019 high – Medium
• S1 1.1311 â€“ 28Jan low – Medium
• S2 1.1185– 7Sep/2018 low â€“ 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 in 2019, 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

The market has been very well supported since breaking down in early January to multi-year lows. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7400 to strengthen this outlook. Look for setbacks to now be well supported ahead of 0.7000.

• R2 0.7296 â€“ 31Jan high – Medium
• R1 0.7207 – 21Feb high – Medium
• S1 0.7070 – 21Feb low â€“ Medium
• S2 0.7055 – 2Feb low â€“ Strong

AUDUSD – fundamental overview

The Australian Dollar faced some headwinds in the previous week and has managed to hold up well. The news of positive talks between the US and China has definitely been helping to prop the correlated commodity currency. President Trump announced he would delay raising tariffs on Chinese goods on account of the productive talks, which would lead to a summit to commit to a deal. As far as the calendar for the remainder of the day goes, it’s very light, with only the Chicago Fed national activity index and Dallas Fed manufacturing standing out.

USDCAD – technical overview

A period of consolidation has kicked in after a run at the end of 2018 to its highest levels since May 2017. Overall, the structure remains constructive, with dips expected to be well supported ahead of a medium-term higher low from September 2018 around 1.2780.

• R2 1.3341– 14Feb high – Strong
• R1 1.3243 – 22Feb high – Medium
• S1 1.3100 – Figure – Medium
• S2 1.3069 â€“ 1Feb/2019 low â€“ Strong

USDCAD – fundamental overview

The Loonie has entered a period of stabilisation following an impressive recovery run off the 2018 low against the Buck (USDCAD high). Better bid OIL and and renewed broad based selling in the US Dollar on a dovish shift in Fed policy, have helped the Loonie hold up into periods of weakness. This past Friday, Canada retail sales came in mixed, with the headline data above forecast and the ex-autos component below forecast. Looking ahead, Monday’s calendar is quiet. There’s no data out of Canada that needs to be watched and only the Chicago Fed national activity index and Dallas Fed manufacturing stand out in the US.

NZDUSD – technical overview

While the bigger picture outlook still shows the market in a downtrend, as per the weekly chart, there’s a case to be made for a meaningful low in place at 0.6425. As such, look for setbacks to be well supported ahead of 0.6500 in anticipation of additional upside, with only a break back below 0.6500 to put the focus back on the multi-month low from October at 0.6425. A push through 0.6970 will strengthen the constructive outlook.

• R2 0.6942 â€“ 1Feb/2019 high – Strong
• R1 0.6894–  18Feb high – Medium
• S1 0.6758 – 22Feb low â€“ Medium
• S2 0.6720 â€“ 12Feb low – Strong

NZDUSD – fundamental overview

Kiwi propped up early in the week after New Zealand retail sales came in stronger than forecast. Overall, Kiwi has done a good job finding support, pulling from a more upbeat RBNZ outlook that contrasts with the Fed’s dovish adjustments. As far as the calendar for the remainder of the day goes, it’s very light, with only the Chicago Fed national activity index and Dallas Fed manufacturing standing out.

US SPX 500 – technical overview

There have been legitimate signs of a major longer term top, with deeper setbacks projected in the months ahead. Any rallies should now continue to be very well capped ahead of 2800, in favour of renewed weakness that targets an eventual retest of strong longer-term resistance turned support in the form of the 2015 high at 2140. The projection is based off a measured move extension derived from the previous 2018 low from February to the record high move.

• R2 2824 – 17Oct high â€“ Strong
• R1 2804 – 25Feb/2019 high – Medium
• S1 2864 – 21Feb low – Medium
• S2 2730 – 15Feb low – Strong

US SPX 500 – fundamental overview

Investor immunity to downside risk is not as strong into 2019. The lag effect of Fed policy normalisation, US protectionism, ongoing White House drama and geopolitical tension are all warning of deeper setbacks ahead. The Fed has also finally acknowledged inflation no longer running below target, something that could very well result in even less attractive equity market valuations this year, given the implication on rates. Although we have seen attempts to push the market higher in early 2019, on the Fed’s more cautious outlook, exhausted monetary policy tools post 2008 crisis suggest the prospect for fresh record highs at this point in the cycle are not a realistic prospect. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that will continue to stress the market in 2019.

GOLD (SPOT) – technical overview

There are 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, with only a close back below 1250 to compromise the constructive outlook. The latest push through 1300 strengthens the outlook.

• R2 1375– 2016 high – Very Strong
• R1 1347 – 20Feb high – Medium
• S1 1302 â€“ 14Feb low â€“ Medium
• S2 1277 â€“ 4Jan/2019 low â€“ 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

At this stage, any upside moves are classified as corrective ahead of what could be the next downside extension and bearish continuation. It would take a break back above previous support in the 6,000 area to take the pressure off the downside. Next critical support comes in the form of the July and September 2017 lows, around 2,000 and 2,975 respectively.

• R2 4,480 â€“ 29Nov high – Strong
• R1 4,380 â€“ 24Dec high – Strong
• S1 3,400– Round number –Medium
• S2 3,212 â€“ 15Dec/2018 low  â€“ Strong

BTCUSD – fundamental overview

Bitcoin has just gone through a tough 2018, with the cryptocurrency suffering on a number of fronts. Still, overall, the cryptocurrency and the technology it rests on continue to show a lot of potential looking out and we expect the market will regain composure over the medium to longer term.

BTCUSD – Technical charts in detail

ETHUSD – technical overview

The latest recovery rally has stalled out into a meaningful previous support zone, to keep the pressure on the downside, with risk for a bearish continuation to next critical support in the 50-75 area. At this point, it would take a sustained break back above 170 to take the immediate pressure off the downside.

• R2 200 â€“ Psychological – Medium
• R1 170 – 24Feb high – Strong
• S1 100 â€“ Psychological – Medium
• S2 83 â€“ 7Dec/2018 low  â€“ Strong

ETHUSD – fundamental overview

We’re coming off a year of dramatic weakness in 2018 and the cryptocurrency continues to face headwinds into 2019. Ongoing regulatory challenges and a global economic downturn are some of those headwinds that need to be considered in the weeks and months ahead. At the same time, longer term prospects are looking quite bright and valuations are increasingly attractive with adoption showing signs of ramping up again. There was a good wave of optimism out of the ETHDenver conference the other week that has also been sourced as a contributor to recent outperformance.