High Volatility Range Bound Trading Expected
With many markets reaching highs over the previous week, markets are expected to consolidate gains over the upcoming holiday period.
Low volume can often equals high volatility with markets carving out ‘see-saw’ moves until volume returns. There is little real news flow set for release over the up-coming two weeks which are punctuated by closures for both Christmas and New Year celebrations.
As a result there is little reason to expect prices to more beyond their current ranges.
The major news of note this week is limited to Canadian GDP figures and US Core Durable Goods Orders/ New Home Sales due on Christmas Eve. With most markets closing early on the 24th there is unlikely to be much reaction to these figures. They could determine buying activity in the days following the break.
Key News This Week
Forex
EUR/USD – After 7 consecutive trading days of gains, the EUR/USD pulled back at the end of last week. It still however has a bullish stance. 1.3705 coincides with a rising line of support. Look for a break here to signal a lower move this week.
USD/JPY – The pair is back testing recent highs above 103.00 reaching 103.97 last week. We would continue looking higher from this level over the course of the week. Levels of support if needed are at 103.25 and 102.75.
USD/CHF – The trend is likely to remain lower for the pair despite last week’s bounce at 0.8830. A close back above 0.8893 is needed to have faith in the pair carving out at least a temporary low.
GBP/USD – The pair has fallen back from it’s early highs last week. The next line of support of interest is 1.6240. If the pair rallies here we could see new strength and a push back higher.
Major Indices
DOW – Despite the bullish technical picture prior to last week, the Index fell hard, holding at support just above 15750. 15600 is the most obvious area of interested here. If the bullish trend is to resume then the Index will need to hold this level this week.
NASDAQ – For the second week in a row the 4000 level proved support. This time however the Index barely held with the Index finishing directly on this level. Look for an early move lower at the beginning of the week to signal further losses. 3900, 3850 and 3800 are areas of support.
FTSE – Ending the week at 6439, the FTSE feel for a 6 successive week. The 6300-6400 area is a fairly major support area so we would expect the market to find some support here. Given the current bearish tone in global markets we would have to look lower from current levels.
Commodities
Oil – Crude lost some of its previous week’s gains. Initially pushing higher towards $99 per barrel, price pulled back to end the week at $96.48. While we would expect some further falls, staying above the $95.00 would give the potential for gains.
Gold – Despite the ‘risk off’ mood in markets, the Gold price saw little benefit, ending the week down but off the previous weeks lows. $1200 remains a key level of support. It could prove a floor to a double bottom on the chart, but a bounce would need to be seen early in the week.
Stocks
There are two stocks to be aware of reporting this week. FedEx post their Q2 figures on Wednesday, with Nike offering a potential trading opportunity on Thursday. Again Q2 figures are due for release.
