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Daily Market Report
23 Oct 2019

EURUSD

The EUR/USD pair has fallen intraday to 1.1122, a fresh weekly low, but managed to bounce from the level ahead of Wall Street close. Nevertheless, it’s finishing the day in the red for a second consecutive day. The dollar enjoyed some temporal demand, advancing against most major rivals, particularly during European trading hours, although mixed data coming from the US put a lid to its gains. According to the official releases, Existing Home Sales fell by 2.2% in September, although the Richmond Fed Manufacturing Index improved in October to 8 from -9 in September, also beating the -14 expected.

This Wednesday, the EU will release October preliminary Consumer Confidence, foreseen at -6.7 from the previous -6.5, while the US will publish MBA Mortgage Applications for the week ended October 18. There are little chances that these figures could affect the pair’s behaviour.

The EUR/USD pair extended its decline to 1.1117 on the back of Brexit drama, ending the day at around 1.1130. The short-term picture is bearish, as the pair has broken below the 20 SMA, which has now turned flat, while technical indicators have extended their declines, the Momentum already in negative ground and the RSI currently at 54. The bearish corrective movement seems poised to extend toward 1.1065, the 38.2% retracement of the latest daily advance. The upside seems capped by sellers aligned around 1.1180.

Support levels: 1.1100 1.1065 1.1030  

Resistance levels: 1.1180 1.1210 1.1250

USDJPY

The USD/JPY pair has spent most the day lifeless around 108.60, finally reacting negatively to Brexit headlines.  A holiday in Japan exacerbated the quietness around the pair, alongside Brexit-related uncertainty throughout the first half of the day. The pair remained afloat amid some modest dollar’s demand during London trading hours, also finding support in the positive performance of European and Asian equities, as most indexes closed in the green. As per government debt, US Treasury yields remained at the upper end of their weekly range but turned into the red after the UK Parliament voted against PM Johnson’s motion to accelerate the process, as the headline spurred demand for safe-haven assets, also dragging US stocks lower. There are no macroeconomic releases scheduled in Japan for this Wednesday, which means sentiment will lead the way.

The USD/JPY pair has remained within familiar levels for a third consecutive day, although the daily chart shows that it reached a higher high of 108.72, indicating that bulls are not willing to give up. Despite the late decline, the pair has also set a higher low. In the shorter term, and according to the 4 hours chart, the pair offers a neutral-to-bearish stance, as it continues hovering around its 20 SMA, which currently gains downward traction. The Momentum indicator remains directionless around its mid-line, while the RSI gains bearish traction, currently at 46. The bearish potential will increase on a break below 108.28, the weekly low an immediate support.

Support levels: 108.25 108.00 107.75

Resistance levels: 108.65 109.00 109.35

GBPUSD

The GBP/USD pair plunged to the 1.2860 price zone after the UK Parliament voted in favor of the Withdrawal Agreement Bill, but rejected PM Johnson’s proposed timetable that would have forced MPs to pass legislation within the next three day. Right after the vote, PM Johnson said that it would pull the UK from the EU by October 31, making no mention to an upcoming election.

A PM  spokesman later said that Johnson’s next step would be having talks with EU leaders and ask them not to extend the October 31 date, although hinting his open to a short extension. The never ending-Brexit soup continues, with more Parliament discussions scheduled for Wednesday. Next market’s big reaction will probably be linked to whatever EU representatives announce next.

The GBP/USD pair is trading near its daily lows, although a bearish continuation needs further confirmation in the short-term, as, in the 4-hour chart, it has broken below its 20 SMA for the first time in almost two weeks. At the same time, technical indicators have turned sharply lower, now challenging their midlines, not yet within negative levels. A recovery, however, seems unlikely in the current scenario. A break below 1.2860 will lift odds of a bearish continuation in the upcoming sessions.

Support levels: 1.2860 1.2820 1.2785

Resistance levels: 1.2910 1.2950 1.2990

AUDUSD

The AUD/USD pair advanced up to 0.6882 during Asian trading hours, finding support in the Australian CB Leading Economic Index, which rose in August to 107.4. Still, investors had a hard time trying to push it further higher, as there are no solid reasons to buy the AUD. The pair eased during US trading hours, with the subsequent attempt to recover ground capped by Brexit headlines weighing on high-yielding assets. There’s no data scheduled in Austria this Wednesday, with the only notable event being a speech from RBA’s Kent.   

The AUD/USD pair is ending the day with modest losses around 0.6860, and the 4-hour chart shows that it’s holding above its 20 SMA, which retains its bullish stance. Technical indicators in the mentioned chart have continued retreating from overbought readings, with the Momentum approaching its mid-line but the RSI holding around 60, suggesting limited selling interest at the time being.

Support levels: 0.6850 0.6820 0.6795  

Resistance levels: 0.6900 0.9630 0.6960

GOLD

Spot gold advanced towards the 1490 level, trading higher by 0.22% having travelled between a low of $1480.91 and a high of $1489.04. Gold for December delivery on Comex, on the other hand, lost around 60 cents, or 0.04%, to settle at $1,487.50 an ounce as investors remained indecisive over trade and Brexit progress. 

Technically, the price is in familiar ranges and the bearish bias has hardly shifted on a 0.20% increase on the day. Instead, a 50% mean reversion of the late June swing lows to recent highs level around 1460/70 remains compelling. However, should the bulls break above the  50-DMA on a closing basis, then a subsequent advance beyond the psychological 1500 level ahead of the 1520 area will open prospects for a test back to the key 1535 resistance target. 

Support levels: 1479 1467 1458 

Resistance levels: 1501 1510 1522

 

SILVER

Spot Silver was losing 0.31% on the day into the Wall Street close on a spot basis, despite the Brexit uncertainty, albeit ending off its lows for the day. The price travelled lower from a high of $17.67 to a low of $17.43 while the December Silver contract dropped 10.2 cents, or 0.6%, at $17.50 an ounce. As for the Silver and Gold ratio, it travelled from a low of 84.28 to a high of 85.01 as Gold advanced as the markets preferred go-to place during times of uncertainty. 

There is little change here in the technical outlook, with the price in consolidation on the 17 handle still, failing to overcome the 21-DMA on upside attempts. Indeed, the prior session's bearish pin-bar gave weight to the downside case and a break of the 50-DMA will likely see the trendline support come back under pressure, giving way to a 61.8% Fibonacci level down at 16.10, guarding the 200-day moving average which is resting in the 15.95s.

Support levels: 17.25 16.92 16.67 

Resistance levels: 17.81 18.05 18.39

 

CRUDE WTI

West Texas Intermediate crude spiked to the upside on Tuesday to test the October resistance just shy of the $55 the figure, rising 1.76% to a high of $54.78. As for futures, crude for November delivery added 84 cents, or 1.6%, at $54.15 a barrel on the New York Mercantile Exchange, after falling 0.9% on Monday. 

Technically, a breach of the 55 handle will open risk towards the 57 handle and the 200-day moving average where it collides with a 38.2% Fibonacci retracement level. Meanwhile, below the said resistance, bears can look for a break below the 21-DMA around 53.70 then the 50 handle which opens prospects for the Nov 2018 lows at 49.39 again. The 46.90 level ahead of the 18th Dec lows down at 45.77 will then be in focus.

Support levels: 53.62 52.42 51.11

Resistance levels: 54.93 56.12 57.43

 

DOW JONES

Stocks on Wall Street ended lower Tuesday with a barrage of corporate earnings reports and Brexit headlines. The S&P 500 index lost 10.73 points, or 0.36%, to 2,995.99 while the Nasdaq Composite Index dropped 58.69 points, or 0.72%, to 8,104.30. However, The Dow Jones Industrial Average, DJIA, lost 39.54 points, or 0.15%, to 26,788.10, on the back of poor and disappointing third-quarter results from McDonald’s and Traveler Cos.

The DJIA remains below the 27000s and the technical picture remains neutral while the price hovers over the 21-DMA. However, on the downside, the 21 and 50-day moving averages are guarding a run to the 200-day moving average, down in the 26000s. The bulls need to advance to the 27500s targets on a break of the 27200s. The trend-line resistance guards the July highs. 

Support levels: 26642 26515 26275 

Resistance levels: 26882 27009 27249

 

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* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

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