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Crude oil's quiet session today suggests the street is in wait and see mode for tomorrow's OPEC meeting.

Oil has settled into wait and see mode overnight with both contracts finishing ever so slightly low from the previous day. Brent closed down 50 cents at 63.10 and WTI fell a minuscule 10 cents to 57.57, shrugging off a higher than anticipated climb in crude stocks from the American Petroleum Institute's inventory data.

Brent suffered some intra-day wobbles ahead of tomorrow's crucial OPEC/Non-OPEC official meeting in Vienna. Although the market has priced an extension of the production cut until the end of March 2018, rumours continue to circulate that Russia may not be entirely on board or may request a review in June. Either outcome is likely to provoke some heavy selling of crude if cracks appear driven by the world's largest producer.

Brent crude was sleepless in Singapore this morning, almost unchanged at 63.20. Initial support is nearby at 62.90 followed by 62.00 and then the all-import multiday low at 61.25. Brent quietly dropped through its short-term trend line on Monday, and this now intersects with the double top today at 64.45. Above there is the second double top at 64.85.

WTI was also unchanged with support at 57.25 and then 56.75, its two-month trendline support. A break of this level opens up a potentially ugly drop to a series of daily lows at 55.00. Resistance is at 58.00 and then the November high at 57.90.

With so much complacency about a rollover priced into tomorrow's meeting, the balance of probabilities suggests that oil is more vulnerable at the moment to any disappointments from the OPEC summit.

The UK government has agreed to pay their Brexit bill
Northern Ireland issue is still the thorny matter
the US senate Budget committee decided to push the bill towards full chamber

Global equities are on track to end the year at their record highs and this would be one of the best year since the immediate aftermath of the financial crisis.

A major unexpected breakthrough happened yesterday when it comes to the subject of Brexit. The UK government has agreed to pay their Brexit bill and the amount will be in between 45-55 billion euros. This is surely a substantial amount no matter how you look at it and hopefully the government understands that it is not committing to something which it cannot afford to pay.

However, it should aid the deadlock in the Brexit negotiation and help them to move forward. Picking up the Brexit bill has been the very thorny issue since day one and given that now the government has agreed to a respectable amount, the talks between the UK and the EU (which are set to resume next month) should be smoother. If the EU accepts the bill, then we will be moving to the next hurdle which is securing the EU rights. Nonetheless, the more favourable outcome so far has made some positive impact on Sterling which recovered some of its lost ground.

It is important to keep in mind that we are no way close to be out of the woods when it comes to the smooth negotiation process because the Northern Ireland issue is still the thorny matter.

North Korea's regime confirmed yesterday that they have completed their nuclear program. Initially, the news about another missile test created some uncertainty in the market, but it was short lived due to the fact that the reaction from the US was muted. Usually, Donald Trump would take the matter to Twitter and he would come up with some ballistic and firy comments.

However, we have not witnessed that yesterday. This enabled investors to keep the focus on the earning's story and that continued to help Wall Street to push the indices higher. President Trump vowed yesterday to take care of the situation. The question which investors should be asking, and not underestimating is, if Trump's reaction and action would result in more sanctions on something far larger?

As for the dollar index, the US senate Budget committee decided to push the bill towards full chamber. This simply means that there will be a marathon of debate which could delay the process further if the bill continued to be tossed around. The upcoming Fed chairman confirmed in his testimony to senate that December rate hike case is coming together. He supports the current stance which the Federal Reserve Bank has. Despite his outlook, the dollar index hasn't been able to rock. Even the unexpected improvement in the US confidence date (released yesterday) failed to produce much colourful result.

For Euro traders, they are seeking only outcome when they look at the biggest economy of the Eurozone, which is stability. This is where the grand coalition provides the answers to all the questions which one may have.

GBP/USD – 1.3341





Original strategy :

Bought at 1.3260, Target: 1.3450, Stop: 1.3200

Position: - Long at 1.3260

Target:  - 1.3450

Stop: - 1.3200




New strategy :

Hold long entered at 1.3260, Target: 1.3450, Stop: 1.3330

Position: - Long at 1.3260

Target:  - 1.3450

Stop:- 1.3330



As cable found renewed buying interest at 1.3221 yesterday and has rallied, reinforcing our bullishness for recent erratic rise from 1.3027 low to extend further gain to 1.3450, however, near term overbought condition should limit upside and price should falter below 1.3470, bring retreat later. Our preferred count is that (pls see the attached chart) the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C could have ended at 1.3658.

In view of this, we are holding on to our long position entered at 1.3260. Below 1.3330 would defer and risk weakness to 1.3290-00 but still reckon downside would be limited to 1.3250-60 and said support at 1.3221 should remain intact, bring another rise later. 

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200. 


GBP/JPY - 148.40

Original strategy:

Bought at 148.00, stopped at 147.60

Position: - Long at 148.00
Target: -
Stop: - 147.60

New strategy :

Buy at 148.50, Target: 150.30, Stop: 147.90

Position: -
Target:  -
Stop:-

Although sterling dropped briefly to 147.00 yesterday, as the pound found good support there and has staged a strong rebound, suggesting low has possibly been formed there and consolidation with upside bias is seen for gain to 150.00 resistance, break there would revive bullishness and signal the fall from 151.90 top has ended, then further gain to previous resistance at 150.30 would follow but reckon 150.90-00 would hold on first testing. 

In view of this, we are looking to buy sterling again on dips as 148.40-50 should limit downside. Below 148.00 would defer and risk weakness to 147.50-60 but still reckon said yesterday’s low at 147.00 would hold and bring another rebound later. 

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.


EURJPY has a more positive bias today after breaking above the shorter-period moving average (20-MA) on the 4-hour chart. There was a bullish crossover of the 20 with the 50-period MA.

The pair's failure to make a sustained break below the bottom of the medium-term range at 131.50 has kept the market neutral in a sideways pattern since mid-September. The 134.50 level is capping EURJPY to the upside.

EURJPY appears well supported above 131.50 but upside momentum is relatively weak in the short-term, judging by the RSI on the 4-hour chart. There is scope for prices to push higher since risk is tilted to the upside. The target is 133.20, an important resistance area that held after being tested on November 24. A successful breach of this barrier would improve upside momentum and open the way towards 133.87. From here EURJPY could push higher towards the top of the range at 134.50 and then the odds would increase at this point for a resumption of the longer-term uptrend.

Alternatively, EURJPY may lose the current upside momentum and reverse back down towards the bottom of the range at 131.50. This level appears to provide firm support at the moment and thus more sideways trading is expected within the current range.

Spot Gold made no reaction on North Korea's latest missile launch, staying in directionless mode for the second day.

A batch of data from the US are due today and along with speech of Fed's chair Janet Yellen, expected to provide more clues about trajectory of US central banks monetary policy.

From the technical point of view, outlook remains positive on firm bullish setup of daily studies. However, Monday's strong upside rejection at $1299 and yesterday's Doji candle, could early signs of stall.

Broken base of widening daily cloud offers solid support at $1288, which is expected to hold keep alive hopes of fresh upside and possible test of daily cloud top ($1309) break of which could trigger further bullish acceleration.

Conversely, close below daily cloud base would generate negative signal and risk fresh weakness.

Res: 1297, 1300, 1306, 1309
Sup: 1292, 1288, 1286, 1282

WTI oil stands at the back foot on Wednesday but holding above previous day’s low at $57.41. Oil price remains under pressure on concerns whether major oil exporters will reach a deal about extending current output cut beyond March 2018.

Additional pressure came from unexpected rise in US crude stocks after API report on Tuesday showed build in crude inventories by 1.82 million barrels, compared to forecasted draw of 2.5 million barrels.

Focus turns towards EIA crude inventories report due later today and forecasted for 2.3 million barrels draw, compared to 1.8 million barrels draw last week.

Another surprise could push oil price below strong support at $57.41 (Fibo 38.2% of $54.80/$59.02 upleg, reinforced by rising 10SMA) which for now holds pullback from 2 ½ year high at $59.02.

Break of $57.41 would open daily Tenkan-se ($57.09) and $56.41 (Fibo 61.8% of $54.80/$59.02) in extension.

Outcome of OPEC meeting tomorrow would provide more clues about near-term direction.

Res: 57.80, 58.02, 59.02, 59.82
Sup: 57.41, 57.09, 56.91, 56.41

The US Dollar strengthened against the Japanese Yen on a strong enhancement in the US consumer confidance. The USD/JPY exchange rate increased 8 pips or 0.07% to reveal high volatility on a trading session, targeting the 111.65 area.

The Conference Board revealed that the Consumer Confidence Index for the US rose to the 129.5 mark in November, reaching the highest level in 17 years. The strong increase mostly reflected households’ optimistic perceptions of the job market. Economists noted that bullish consumers in conjunction with tight job market were reasonable grounds for the Fed to make the interest rate hike in December, despite worries over persistently low consumer inflation growth.

The Sterling weakened against the US Dollar on the Bank of England report showing its stress test results for this year. Britain’s biggest lenders all passed the BOE yearly stress tests ever since they were introduced in 2014, the country’s Central Bank stated, adding that major banks would continue to contribute to the real economy even in the case of 'disorderly' quit from the European Union.

GBP/USD jumped almost 100 base poins at 17:30 GMT on the news agencies’ reports that the EU and British negotiators reached an agreement on the Brexit bill. Then, the UK government official noted that source’s account on the matter was not recognised, but another newspaper confirmed the initial report, keeping the pair nearing 1.3380.

The second half of previous trading session the rate spent in horizontal movement. A release of better than expected US consumer sentiment data pushed it to the bottom, while another launch of ICBM by North Korea gave a reason to continue the surge. Technically, the southern side was protected by the 55- and 100-hour SMAs that are lying along the lower support line of the rising wedge formation, while the northern side contained the weekly and monthly R1. Although the pair has formed a minor symmetrical triangle, it is still expected to make a breakout to top. This assumption is based on market sentiment, which is 52% bullish as well as dominance of the larger pattern. However, there is a need to notice that release of the US Prelim GDP can lead to short-term strengthening of the buck.