Risk liquidation carries over into new week

GBPUSD – technical overview

The major pair has put in an impressive recovery off the multi-month low in early January, helping to support the case for a longer-term developing uptrend off the 2016 low. Pullbacks are now viewed as corrective on the daily chart, with dips expected to be supported ahead of 1.2700. Look for a weekly close back above 1.3400 to strengthen the outlook.

• R2 1.3382– 13Mar high – Strong
• R1 1.3312 – 19Mar high – Medium
• S1 1.3082 – 22Mar low – Medium
• S2 1.3004 – 21Mar low  â€“ Strong

GBPUSD – fundamental overview

The latest on Brexit has Theresa May needing to make a decision after the EU communicated that the PM would have until April 12th to decide whether to leave the EU without an agreement, or to request a ‘much longer’ extension. The EU also put forward a deal for an extension to May 22, if the Brexit deal did go ahead and pass. This sets up another vote on Brexit this week. Overall, all signs continue to point towards a longer extension, which would make possibilities for a second referendum more possible. The process has been less than ideal since the UK voted to leave back in 2016, with no solid plan in place to handle the Brexit process in an efficient and productive way. This leaves many who would be happy with another chance to reconsider their position on the path forward. Looking at the calendar for the day, absence of first tier data out of the UK will keep the focus on Brexit updates. In the US session,we get the Chicago Fed National Activity Index and Dallas Fed manufacturing.

USDJPY – technical overview

The major pair has stalled out after an impressive run up from the 2019 low. Look for this topside failure to set the stage for the next major downside extension back towards the 2019 flash crash low down in the 104.00s. The recent break back bellow 110.00 strengthens the bearish outlook. Ultimately, only back above 112.15 delays the bearish outlook.

• R2 112.14 – 5Mar high – Strong
• R1 110.96 – 21Mar high – Medium
• S1 109.71 – 25Mar low – Medium
• S2 109.44 – 4Feb low – Strong

USDJPY – fundamental overview

Overall, the major pair should continue to place a bigger focus on global risk sentiment and US Dollar yield differentials. This latest dovish Fed read has inspired a reconsideration of Dollar long exposure, while an accompanying bout of risk liquidation, is fueling additional Dollar profit taking into the Yen on the traditional correlation. Soured US-China trade talks have accounted for a good deal of the risk off price action. Looking at the Monday calendar, the market will be highly sensitive to the investor appetite for risk. On the data front,we get the Chicago Fed National Activity Index and Dallas Fed manufacturing.

EURCHF – technical overview

The market has been in the process of consolidating off the 2018 low, which coincides with critical medium-term 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 a sustained break back below 1.1200 would be quite bearish.

• R2 1.1394 – 27Feb high â€“ Strong
• R1 1.1299 – 22Mar high – Medium
• S1 1.1200 – Psychological – Strong
• 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 continue to be well supported ahead of 0.7000.

• R2 0.7207 – 21Feb high – Strong
• R1 0.7169 – 21Mar high – Medium
• S1 0.7057 – 20Mar low â€“ Medium
• S2 0.7004 – 8Mar low â€“ Strong

AUDUSD – fundamental overview

The Australian Dollar is coming off a week in which the currency settled unchanged, unable to establish a directional commitment, in light of offsetting flow. On the one hand, Aussie was supported in the aftermath of the more dovish than expected Fed decision. At the same time, a sell-off in US equities into the weekly close, was enough to weigh on those gains from less favourable US Dollar yield differentials, given Aussie’s sensitivity to risk markets. Setbacks in the US-China trade talks have not helped matters. Looking ahead, global risk sentiment will likely dictate a lot of the Monday flow. We also get the Chicago Fed National Activity Index and Dallas Fed manufacturing.

USDCAD – technical overview

Overall, the structure remains constructive, with dips expected to be well supported for fresh upside back above the 2018/multi-month high at 1.3665. Back below the psychological barrier at 1.3000 would be required to delay the outlook.

• R2 1.3500 – Psychological – Strong
• R1 1.3468 – 7Mar/2019 high – Medium
• S1 1.3350 – 22Mar low – Medium
• S2 1.3251 – 19Mar low â€“ Strong

USDCAD – fundamental overview

The Canadian Dollar Dollar was sensitive to the reduction in global risk appetite and softer Canada retail sales data on Friday, with the Loonie under pressure and USDCAD rallying up as a consequence. OIL prices were also in retreat mode off recent highs, which further contributed to profit taking on Canadian Dollar longs. The one positive for the Loonie was the hotter than expected CPI read, though this was not enough to keep the currency from trading lower on the day. Looking ahead, there’s no first tier data scheduled out of Canada on Monday and it will be about the Chicago Fed National Activity Index and Dallas Fed manufacturing.

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 0.7000 will strengthen the constructive outlook.

• R2 0.6942 – 1Feb/2019 high – Strong
• R1 0.6900 –  Figure – Medium
• S1 0.6809 – 14Mar low â€“ Medium
• S2 0.6745 – 7Mar low – Strong

NZDUSD – fundamental overview

There were some mixed signals for the New Zealand Dollar last week, though the currency managed to close higher on the week, despite giving back gains into the close. Last week’s solid GDT auction result, healthy Kiwi GDP print and more dovish than expected Fed decision, were the major sources of demand for the commodity currency. However, traditional risk correlations could not be ignored and the late week reduction in investor risk appetite, brought the New Zealand Dollar back down, well off the weekly high. Setbacks in US-China trade talk factored into this risk off flow. Looking ahead, global risk sentiment will likely dictate a lot of the Monday flow. We also get the Chicago Fed National Activity Index and Dallas Fed manufacturing.

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, 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. Next key support comes in at 2722, with a break to strengthen the outlook.

• R2 2900 – Psychological â€“ Strong
• R1 2863 – 21Mar/2019 high – Strong
• S1 2765 – 21Feb low – Medium
• S2 2722 – 8Feb low – Strong

US SPX 500 – fundamental overview

Although we have seen attempts to push the market higher in Q1 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 realistic. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.

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.

• R2 1347– 20Feb/2019 high – Strong
• R1 1321 – 21Mar high – Medium
• S1 1300 – Psychological 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 the December high at 4385 to take the immediate 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 4,278 – 24Feb/2019 high – Strong
• R1 4,153 – 16Mar high – Strong
• S1 3,763– 4Mar low – Strong
• S2 3,570 – 13Feb low  â€“ Strong

BTCUSD – fundamental overview

Bitcoin is showing signs of stability in Q1 2019 after an abysmal performance in 2018. At the moment, the market still faces headwinds in the form of regulatory uncertainty and ready to go front end applications with meaningful use cases, though looking out, there continue to be many encouraging signs the market is here to stay and will be seeing increased adoption.

BTCUSD – Technical charts in detail

ETHUSD – technical overview

Recovery rally attempts have stalled out into a meaningful previous support zone, to keep the pressure on the downside, with risk for a bearish continuation below 100, towards the next critical support zone 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 170 – 24Feb/2019 high – Strong
• R1 148 – 16Mar high – Strong
• S1 126 – 4Mar low – Strong
• S2 102 – 6Feb low  â€“ Strong

ETHUSD – fundamental overview

Ongoing regulatory challenges, technological obstacles and a global economic downturn are some of those headwinds that need to be considered in the 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 over the longer term.