Sample Category Title

Pivot (invalidation): 1.2850

Our preference Long positions above 1.2850 with targets at 1.2900 & 1.2930 in extension.

Alternative scenario Below 1.2850 look for further downside with 1.2820 & 1.2785 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 1.1395

Our preference Long positions above 1.1395 with targets at 1.1435 & 1.1465 in extension.

Alternative scenario Below 1.1395 look for further downside with 1.1380 & 1.1360 as targets.

Comment The RSI calls for a new upleg.

Crude oil is dropping like a rock, unfolding a bigger, bearish five waves of decline down from 76.83 that can be coming to an end now as we see price in fifth wave hitting the lower trendline of an EW channel. This can be an important reversal point which would likely be confirmed as a low if price can manage recover out of that channel. In such case oil can be looking even for a retracement back to $60.

Crude oil, 4h

A bearish continuation is most likely at this moment when taking into the account the massive bearish momentum. A break below the support trend line (green) could see price continue lower with a new low and move towards the Fibonacci retracement levels. As long as the downtrend channel stays intact, price is expected to move down lower but be careful of round support levels like $50.

Oil is showing a strong wave 3 (pink) after completing a 2-year long correction at the recent high. The bearish break below the support trend line (dotted green) completed waves Y within wave 4 (purple)

Rates: Core bonds to stay little changed in low-volume trading
German Bunds hardly profited from yesterday’s equity slump with low-volumes as US markets were closed. We expect global risk sentiment to be in the driver’s seat for today as well with only EMU PMI’s catching the eye on the economic calendar. The timid risk sentiment could provide some support for bond markets.

Currencies: Sterling jumps as EU and UK make step forward in the Brexit process
EUR/USD gained a few ticks in thin trading conditions yesterday. The EU and the UK agreeing on a political text on their future relationship was a marginal positive for the euro, but propelled sterling. Today, USD trading will probably still be sentiment driven. GBP-traders are counting down to the EU Brexit summit on Sunday.

The Sunrise Headlines

• US markets were closed yesterday in observance of Thanksgiving Day. Asian equities are trading mixed with China (-2%) underperforming. Japan’s Tokyo Stock Exchange is closed for Labour Thanksgiving Day.
• Oil prices slump again on Friday amid oversupply worries after Saudi Arabia signalled it has boosted output to record levels. Meanwhile US crude inventories rose for the 9th week in a row, the longest streak since March 2017.
• EMU consumer confidence dropped from -2.7 to -3.9 in November, the lowest since March 2017, yet well above its multiyear average. That is more than markets expected (-3.0).
• China’s Vice Commerce Minister Wang said on Friday that officials of both the US and China were in close contact. He hopes disputes can be resolved by an equally footed and mutually beneficial dialogue. Trump and his Chinese colleague Xi-Jinping are expected to meet during the G20 summit next week.
• Greece’s central bank elaborated a plan to remove non-performing loans from banks by transferring them to a bond funded SPV. 45% of Greek bank loans are classified as non-performing. The proposal aims to reduce that to a single-digit ratio.
• US Congress is to decide about federal funding next month. President Trump warned of a government shutdown if no more money is provided for a wall between the US and Mexico.
• Today’s economic calendar is rather meagre with only EMU, German and French PMI (November) data to be published. US markets close early for Black Friday.

Currencies: Sterling Jumps As EU And UK Make Step Forward In The Brexit Process

Sterling gains on Brexit agreement, for now.

USD trading developed in slow-motion modus yesterday with US markets closed for Thanksgiving. Sentiment in Europe stayed cautious. However, the risk-off had no lasting negative impact on EUR/USD. The news flow on Italy remains diffuse, but investors apparently see room for talks between the EU and the Italy. EUR/USD spiked briefly higher after the announcement of a Brexit deal, but the gains couldn’t be sustained. EUR/USD finished marginally higher at 1.1403 (from 1.1384). The dollar also lost a few ticks against the yen (112.95 vs 113.06). This morning sentiment remains risk-off. Especially Chinese markets suffer on new headlines on the trade/technology war between the US and China (Huawei). The trade-weighted dollar (DXY 96.45) trades with a tentative negative bias. EUR/USD is changing hands just north of 1.14. US traders return from the Thanksgiving holiday today. There are few US data, but media headlines/projections on Black Friday activity might influence global sentiment. In Europe, November PMI’s will be published. A marginal further decline for the composite EU measure is expected (53.0 from 53.1). We (and markets) will look out for signs of a bottoming out process after the dismal performance of the previous months. A positive surprise might be slightly euro supportive. At the same time, sentiment on risk remains fragile. Italy and Brexit remain a source of uncertainty, too. We had a neutral bias on EUR/USD. Earlier this month, the USD lost momentum as investors ponder whether the up-tick in volatility might cause the Fed to slow policy normalisation. Still, we think it’s too early for a sustained market repositioning away from the USD. The news from Europe is mixed at best. This week, the euro didn’t perform that badly. Some further limited gains are possible in a daily perspective. However, we maintain the working hypothesis that EUR/USD 1.15/1.1621 resistance won’t give away easily.

Sterling enjoyed a positive repositioning yesterday as the EU and the UK announced agreement on a political text on their future ties. This opened the way for a formal Brexit approval at an EU summit on Sunday. EUR/GBP closed the session at 0.8855 (from 0.8910). Late yesterday, BoE’s Saunders also gave quite a hawkish assessment on the BoE approach going forward. Unexpected developments in the Brexit process are always possible, but we assume more wait-and-see trading for sterling as markets are counting down to Sunday’s Summit. We stay cautious on sterling as long as uncertainty on final vote persists

USD (trade-weighted) stabilizes as market ponders Fed rate hike intentions

Daily Pivots: (S1) 0.7235; (P) 0.7251; (R1) 0.7269; More...

Intraday bias in AUD/USD remains neutral for the moment. On the upside, sustained break of 0.7314 resistance will indicate medium term reversal. Further rally should be seen to 38.2% retracement of 0.8135 to 0.7020 at 0.7446 next. Nevertheless, failure to sustain above 0.7314, and break of 0.7164 support will retain bearishness and turn bias back to the downside for retesting 0.7020 low.

In the bigger picture, AUD/USD's decline from 0.8135 could have completed at 0.7020 already, ahead of 0.6826 key support (2016 low). Break of 0.7314 will confirm and bring strong rebound. But for now, we'd expect strong resistance from 0.7500 support turned resistance to limit upside. Medium term fall from 0.8135 should extend to take on 0.6826 low at a later stage.

Daily Pivots: (S1) 1.3166; (P) 1.3207; (R1) 1.3231; More...

Intraday bias in USD/CAD remains neutral at this point. Near term outlook remains bullish as long as 1.3141 support holds. On the upside, above 1.3318 will extend the rise from 1.2781 to 1.3385 resistance. Decisive break there will resume larger up trend from 1.2061 to 1.3685 fibonacci level next. However, break of 1.3141 will argue that the choppy rebound has completed and turn bias back to the downside.

In the bigger picture, current development revives the case that corrective fall from 1.3385 has completed at 1.2781 already. And whole up trend from 1.2061 (2016 low) is ready to resume. Break of 1.3385 will target 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685. This will now be the favored case as long as 1.2781 support holds.

Daily Pivots: (S1) 1.1378; (P) 1.1407; (R1) 1.1432; More.....

EUR/USD is staying in range of 1.1358/1472 and intraday bias remains neutral first. Also, as long as 1.1499 resistance holds, outlook remains bearish. On the downside, break of 1.1358 minor support should bring retest of 1.1215 low first. Break will resume medium term down trend. However, on the upside, firm break of 1.1499 will indicate near term reversal and turn outlook bullish for 1.1814 resistance again.

In the bigger picture, down trend from 1.2555 medium term top has just resumed and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1814 resistance is now needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Daily Pivots: (S1) 1.2785; (P) 1.2857; (R1) 1.2950; More...

Intraday bias in GBP/USD remains mildly on the upside. Rebound from 1.2723 could be another rising leg inside the consolidation pattern from 1.2661. Further rise might be seen to 1.3071 resistance first. But overall, upside should be limited by 1.3316 fibonacci level to bring down trend resumption eventually. On the downside, below 1.2764 minor support will turn bias back to the downside for 1.2661. Firm break there will resume the larger down trend from 1.4376.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

XAUUSD (1228.33): Gold has been gradually inching higher after clearing the minor resistance level at 1223.50. Price action is likely to continue to the upside with the target level of 1238 being tested in the near term. Alternately, any reversals are likely to see the recently breached resistance level of 1223.50 being tested. A decline below this level could push gold prices down to 1213.50 level which is pending a retest of support.