Why today will be the last day of this week

Next 24 hours: Trading conditions about to thin out in a big way

Today’s report: Why today will be the last day of this week

Trading conditions will thin out dramatically later today, as the US heads off for the Thanksgiving long holiday weekend. But before they do, we’ll first get a massive dump of economic data that could have an impact on market direction.

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Wake-up call

Chart talk: Technical & fundamental highlights

EURUSD – technical overview

The downtrend off the 2018 high is looking exhausted and the prospect for a meaningful higher low is more compelling. A higher low is now sought out above the multi-year low from 2017, ahead of the next major upside extension. Only a weekly close back below 1.0800 would compromise this outlook. Back above 1.1412 will strengthen the view.

  • R2 1.1180 – 21 October high – Strong
  • R1 1.1097 - 21 November high  – Medium
  • S1 1.0989 - 14 November low – Medium
  • S2 1.0941 – 8 October low – Strong

EURUSD – fundamental overview

The Euro continues to trade mostly sideways, with setbacks to this point, nothing more than setbacks within a consolidation. Otherwise the official speak continues. ECB Vasiliaskas said 'it's unreasonable to expect interest rates to substantially change in the near-term.' French Finance Minister Bruno Le Maire said his country will 'push for a global maximum tax rate of 12.5% to combat tax evasion and optimization.' Bank of France Villeroy said 'transposing Basel 3 rules in France will not hurt lending and growth.' On the data front, Germany December Gfk consumer confidence came higher than forecast. Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book. We also get German import prices earlier in the day.

EURUSD - Technical charts in detail

GBPUSD – technical overview

The market has seen a recovery out from the lowest levels since 2016, with the price recovering back above the daily Ichimoku cloud to take the immediate pressure off the downside. Ultimately, only back below the bottom of the daily Ichimoku cloud would compromise the more constructive outlook for the major pair. Next key resistance comes in the form of the 2019 high from March around 1.3380. Setbacks should ideally be well supported ahead of 1.2400.

  • R2 1.3013 – 21 october high – Strong
  • R1 1.2900 – Figure – Medium
  • S1 1.2800 – Figure – Medium
  • S2 1.2769 – 8 November low – Strong

GBPUSD – fundamental overview

The Pound came under some pressure on Tuesday, with polls showing a narrowing of the Conservative lead in the upcoming election. Nevertheless, the lead is still tracking in the double digits and shouldn't be taken as all that much of a GBP negative. On the official front, Irish Foreign Minister Paschal Donahoe said the EU-UK trade deadline is 'very demanding', and 'the bloc will be very ambitious in post-Brexit talks.' Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book. There is no data of note out in the UK on Wednesday.

USDJPY – technical overview

The longer-term downtrend remains firmly intact, with the major pair recently taking out major support in the form of the 2018 and 2019 lows respectively. Rallies should continue to be well capped below 110.00 in favour of  the next major downside extension towards the 2016 low at 99.00.

  • R2 110.00 – Psychological – Strong
  • R1 109.49 – 7 November high – Strong
  • S1 108.24 – 14 November low – Medium
  • S2 107.89 – 1 November low  – Strong

USDJPY – fundamental overview

BOJ Sakurai was out on the wires with dovish comments, which may have been contributing to some of the recent Yen weakness. Still, with the comments mostly consistent with the central bank's outlook, the moves weren't going to be all that aggressive. Most of the Yen selling of late has come from the upbeat sentiment around US-China trade and ongoing easy money policy around the globe, which has been helping to bolster investor confidence. Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A break back above 1.1060 would be required to take the immediate pressure off the downside. Below 1.0800 exposes the 1.0600 area.
  • R2 1.1173 – 2 July high – Strong
  • R1 1.1060 – 17 October high – Medium
  • S1 1.0864 – 14 November low – Medium
  • S2 1.0811 – 4 September/2019 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, 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 under pressure over the past several months, but has also been well supported on dips. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7100 to strengthen this outlook. In the interim, look for setbacks to continue to be well supported above 0.6700 on a weekly close basis.

  • R2 0.6930 – 31 October high – Strong
  • R1 0.6842 – 14 November high – Strong
  • S1 0.6750 – Mid-Figure – Medium
  • S2 0.6710 – 10 October low – Strong

AUDUSD – fundamental overview

Mixed messages for the Australian Dollar into Wednesday. On the one side, RBA Lowe had downplayed the odds of QE and Aussie construction data was better than expected. On the other side, Westpac and RBC were out forecasting the RBA to initiate QE in the second half of 2020. Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book.

USDCAD – technical overview

The longer-term structure remains constructive, with dips expected to be well supported for renewed upside, eventually back above the 2018/multi-month high at 1.3665. At this point, only a weekly close below the psychological barrier at 1.3000 would compromise this outlook.

  • R2 1.3348 – 3 October high – Strong
  • R1 1.3328 - 20 November high – Medium
  • S1 1.3254 – 22 November low – Medium
  • S2 1.3190 – 19 November low – Strong

USDCAD – fundamental overview

Not much action in the Canadian Dollar in recent sessions, with the currency caught between demand from the better than expected economic data, and offers in the price of OIL. Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book. There is no data of note out out of Canada on Wednesday.

NZDUSD – technical overview

Despite recent weakness, there's a case to be made for a meaningful bottom, with the market rallying out from longer-term cycle low area around 0.6200. As such, look for setbacks to be well supported in the days ahead, in anticipation of a continued recovery. Only a weekly close below 0.6200 would give reason for rethink. Back above 0.6451 will strengthen the outlook and take the immediate pressure off the downside.

  • R2 0.6466 – 4 November high – Strong
  • R1 0.6437 –  19 November high – Medium
  • S1 0.6322 – 8 November low – Medium
  • S2 0.6241 – 16 October low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been propped up this week on the better outlook for US-China trade and some solid local data. Early Tuesday, New Zealand retail sales came in above forecast. Market conditions will thin out for the remainder of the week as the US heads off the desks for the Thanksgiving long holiday weekend. But before they do, the US calendar is quite heavy. Key standouts on the day include personal income and spending, GDP, durable goods, Chicago PMIs, pending home sales, and the Fed Beige Book. There is no data of note out out of Canada on Wednesday.

US SPX 500 – technical overview

There have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of renewed weakness targeting an eventual retest of strong longer-term previous resistance turned support in the form of the 2015 high at 2140. The initial level of major support comes in at 3091, with a break below to strengthen the outlook. A monthly close above 3100 would be required to compromise the outlook.

  • R2 3200 – Psychological – Strong
  • R1 3147 – 27 November/Record high – Medium
  • S1 3091 – 20 November low – Medium
  • S2 3000 – Psychological – Strong

US SPX 500 – fundamental overview

Although we've seen the market extending to fresh record highs in 2019, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. Meanwhile, tension on the global trade front should continue to be a drag on investor sentiment despite any signs that would suggest otherwise. 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

The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1600, while in the interim, look for any setbacks to be well supported above 1400.

  • R2 1558 – 4 September/2019 high – Strong
  • R1 1536 – 24 September high – Medium
  • S1 1445 – 12 November low – Medium
  • S2 1400 – Psychological – 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

The market continues to correct in the aftermath of a major surge in the second quarter of 2019. However, any setbacks should be very well supported in the 6,000 area, with an higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 6,000 would compromise the constructive outlook.

  • R2 10,468– 26 October high – Strong
  • R1 8,806 – 11 October high – Medium
  • S1 6,500 – Psychological – Strong
  • S2 5,755 – Internal support/June 2018 – Strong

BTCUSD – fundamental overview

Bitcoin is going through a period of technical adjustment after the fierce Q2 run up, though we anticipate continued demand from institutional players starved for yield in a world where global equities are increasingly vulnerable. Plenty of demand is reported on dips down towards $6,000.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of a major correction after a surge in the second quarter of 2019. Look for setbacks to be well supported above of previous resistance turned support at 100 on a weekly close basis, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 100 would compromise the outlook.

  • R2 225 – 19 September high – Strong
  • R1 200 – Psychological – Medium
  • S1 133 – 25 November low – Medium
  • S2 102 – 6 February/2019 low  – Strong

ETHUSD – fundamental overview

Profit taking in the aftermath of the rapid Q2 appreciation has triggered a healthy period of correction and consolidation, while critique of the space from the likes of President Trump and Fed Chair Powell, along with worry associated with fallout in the global economy, are stories that could continue to keep the more risk correlated crypto asset weighed down into the end of the year. Risk off in the global economy is expected to result in ETH underperformance relative to Bitcoin.

Peformance chart: 5 Day Performance vs. US dollar

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