International oil prices fell slightly on Wednesday, with benchmark Brent crude oil trading near US$83.00 per barrel, while WTI crude fell toward US$77.00 per barrel.

The pullback in crude oil prices stemmed in part from strong gains in geopolitical risk, as the market's focus on these headlines appears to be fading and investors are now turning their attention to the Fed decision. Any major shift in bias could trigger volatility in commodities as a dovish bias would give downside to the USD and upside to risk assets.

On the other hand, a hawkish bias could mean another rise in the USD and other safe-haven currencies, as the prospect of higher borrowing costs could dampen demand for energy commodities.

The crude oil market is trading towards the end of the month. As the escalation of attacks on ships in the Red Sea has diverted tanker traffic and sparked fears of a wider conflict erupting in the Middle East; the increase in oil prices since September last year may record its first rise in months.

Top crude exporter Saudi Arabia may raise the price of its flagship export to Asia (Arabian Light) in March as the market structure improves. Last month, Saudi Arabia sharply cut its official crude selling price to a 27-month low.

Saudi Aramco is likely to raise its official selling price for medium-quality, high-sulfur crude by about 55 cents per barrel in March, a Reuters poll showed. Respondents said demand for Middle East crude has been decent this month. As of now, Middle East crude supplies to Asia have not been affected by the Red Sea situation, as most of the crude is shipped from the Persian Gulf through the Strait of Hormuz. Saudi Aramco usually announces its official selling price around the 5th of the month.

Finally, the EIA's upcoming inventory report could push crude prices higher, but the main drivers are likely to be the FOMC decision and the NFP release.

In Wednesday's trading, WTI Crude fell below the support of the rising trendline in the 1H timeframe, signaling that the short-term uptrend is meeting resistance. Bears also seem intent on taking over.

The Fibonacci Extension tool shows other levels that bears may be targeting. The 38.2% level is at US$76.68 and the 50% level is at US$76.24. The 61.8% level is at US$75.79, near the swing low. Continued selling pressure could take crude oil prices down to the 76.4% level at US$75.23 or extend it to US$74.34 altogether.

However, the current situation does not fully reflect that the turning point is coming. 100 SMA is located above 200 SMA, indicating that the path of least resistance is upward, or the support is more likely to hold rather than be broken. The gap between indicators is even widening, reflecting the increase of bullish momentum, while 100 SMA is still a dynamic support recently.

In the higher scenario, the 38.2% Fibonacci level is close to the US$78.48 level and then the 50% level, in line with the US$79.13 swing high. Stronger bullish momentum could push crude oil prices to the 61.8% extension of US$79.78 or the 76.4% level of US$80.59. The full extension price is US$81.89.

In terms of price patterns, the crude oil market retraced some of the strong gains stemming from geopolitical risks during Tuesday and Wednesday's trading; on the other hand, the market's retracement could also be a technical retracement made for the monthly close to avoid a strong candlestick (long white body), which could have an incremental effect on the next month's rise. There is no end to the upward momentum. It is recommended to buy the dips.

Trading direction: Long

Entry price: 76.13

Target price: 82.20

Stop loss: 74.50

Deadline: 2024-02-14 23:55:00

Support: 76.68, 76.24, 75.79, 75.23

Resistance: 78.48, 79.13, 79.78, 80.59

WTI crude oil swung narrowly in the Asian session on Wednesday (January 31), and it is currently trading near $77.4 per barrel.

WTI oscillated largely at highs yesterday, showing a V-shaped rebound. In the evening session, WTI retraced by 2 dollars after reaching 77.3 and then pulled further back to 78. The main reason for yesterday's decline was that Saudi Aramco said on the 30th local time it had received instructions from the Ministry of Energy to keep its maximum sustainable capacity (MSC) at 12 million bpd rather than 13 million bpd, which validated previous market concerns about an early end to production cuts. However, the inventory data released in the early hours of the following morning fell more than expected, and refined oil products' performance was better than expected, driving the oil price up quickly to recover the decline. The current oil market is dominated by the bulls, but it tends to swing. On the one hand, traders may consider taking profits at highs, and on the other hand, the market sentiment on peripheral commodities is unsatisfying and risk appetite has slipped. Therefore, the market will be more cautious.

Yesterday, our recommendation was to buy low and sell high in the range of 75-78.Investors who went short at 78 in the evening session see small floating profits now, and they can keep their positions. At present, the price starts to oscillate. Without sufficient market momentum, WTI will not be able to make a breakout. However, a new round of production cuts will be traded in February, and the situation is not expected to be satisfying. Thus, investors should be ready for a complicated situation with mixed bullish and bearish factors.  

News: The U.S. Department of Energy will purchase a further 3.1 million barrels of oil to replenish the Strategic Petroleum Reserve (SPR). Saudi Aramco said the government had asked it to keep oil production at 12 million bpd and stop raising it to 13 million bpd.

Production Cuts: OPEC+ appears to be making slow progress on the new production cuts, according to shipping intelligence firm Kpler. Key coalition members have pledged to reduce supply by an additional 900,000 bpd this month, but so far total exports have remained largely unchanged in January.

Today's focus: crude oil inventory data and tracking of production changes due to the cold snap.

WTI was weak in the Asian session yesterday. After the news was released, WTI depreciated to its lowest price at 75.7 without effectively breaking through significant support at 76.3 and 75.2. Then, it ascended tremendously after the release of inventory data, closing the daily chart higher with a long-lower-shadow. Now, WTI oscillates at the upper area of the channel below. It is possible to cross above it on bullish sentiment. But this will not happen shortly unless great bullish news is released to support WTI. Currently, WTI stabilizes at the 60-day SMA and is testing the 5-day SMA at 77.4. The further target will be the 10-day SMA (75.8), where investors should go long with small positions. Investors should focus on the resistance at 78.5 and 79.5, where aggressive investors could go short with small positions. As the oil stock data and the Fed's interest rate decision will be announced tonight, and the OPEC+ meeting will be held tomorrow, investors should be trade with caution.  

In the 1H chart, the bullish momentum is released sufficiently, and WTI price will peak today. In addition, MACD forms a death cross, showing that WTI may turn weak. Regarding the 4H chart, the MACD death cross expands, heading toward the 0-axis, while the overbought situation is improved a lot. But as WTI has declined for 3 consecutive days, the trend is not optimistic today, so WTI may retrace further. The daily chart closed higher with a long-lower-shadow, and the MACD golden cross expands, but it hasn't reached the overbought area, indicating a strong trend in the middle and long term. Oil bulls will still dominate. Today, investors should buy low and sell high in the range of 75.5-78.5.

Trading direction: Short

Entry price: 78.500

Entry price: 75.500

Stop loss: 79.000

Support: 76.200/74.500

Resistance: 78.500/79.500

During Wednesday's (January 31st) Asian session, spot gold oscillated slightly, and it is now trading at $2035. 

U.S. JOLTS job openings exceeded 9 million and hit a three-month high in December, which was higher than expected. The market again scaled back its expectations for a March rate cut by the Fed. Before the release of the data, traders hyped rate cut expectations. Gold climbed to as high as $2048 as a result. But after the job openings were released, coupled with the IMF's upward revision of the global growth forecast for 2024 to 3.1%, the price of gold once fell to $2028, before rebounding to around $2035. Yesterday's data, like previous data, continued to confirm the soft landing of the U.S. economy, but gold remained resilient and was relatively strong for the whole day. Just as we had predicted, the gold price would be more likely to rise than fall. Tonight, the Fed will announce its interest rate decision and Powell will deliver a speech after the meeting, which investors are watching closely. Meanwhile, the ADP employment data will also be published today. So gold prices are expected to be volatile. After all, the market always misinterprets officials' speeches. If the data and the speech are significantly bullish for gold prices, gold perhaps can rise to the 2065 level. Otherwise, it may continue to move down to find support in the $2015-$2020 range or even lower.

Yesterday, our suggestion was to trade in the range of $2015 to $2045. We entered a short order at $2045, which realized the first take-profit target with a margin of $15. As we have taken partially profits, the remaining positions can be closed when the price surges above $2040.   

Data: U.S. JOLTS job openings reached 9.026 million in December, higher than the expected 8.75 million and the previous 8.925 million. Meanwhile, the U.S. Consumer Confidence Index was 114.8, compared with an expected reading of 115, and the previous reading was 108.

Today's focus: Wednesday's ADP employment data, initial jobless claims, Fed interest rate decision, Powell's speech, and Friday's U.S. December non-farm payrolls report. 

Yesterday, gold oscillated more widely compared to the previous days by about 20 dollars. After arriving at the highest level at $2048 at the beginning of the U.S. session, gold plunged when the data was released, dropping to the 10-day SMA ($2028). Later, gold rebounded with oscillations and closed the daily chart higher with a long-upper-shadow. Despite bearish data, gold remained resilient. Now, the trading logic remains the same, as the market is acting in advance. The bullish sentiment prevails, so gold bulls will be benefited as time goes by. My expectation is that the nonfarm payrolls will drag down the gold price, and a significant retracement may take place soon. Then, it will be the time to go long in the middle and the long run. This evening will be a crucial point, and we should see if Powell will surprise us. The U.S. session instead of the Asian session will be focused on today.  

Technically, gold was strong yesterday, standing above 5-day,10-day and 20-day SMAs in a row. However, the SMAs were closely connected and failed to expand. Thus, gold was not under an absolute strong trend. Now, gold will test the support near the lower area of the channel below, which is effective currently. Regarding the daily chart, MACD forms a golden cross at the 0-axis, and gold bulls will be supported if the golden cross can expand. Nonetheless, with significant meetings and data today, technicals are just for reference. The oscillation will be large, and we should not trade in one direction as we are not sure that we could be always lucky to turn floating losses into profits. Today's oscillation range will be $2015-$2055, where aggressive investors could buy low and sell high.

Trading direction: Long

Entry price: 2015

Target price: 2055

Stop loss: 2010

Support: 2015.000/2000.000

Resistance: 2040.000/2055.000

Australian retail sales fell -2.7% MoM in December, missing expectations for a -1.9% MoM decline. On a YoY basis, sales were down -0.8%.

Ben Dorber, Head of Retail Statistics at the ABS, said: 'The sharp fall in retail turnover in December was caused by a fall in discretionary spending. Consumers brought forward some of their December spending to November to take advantage of Black Friday sales.

"Although December saw a sharp decline adjusted for seasonal factors, from a trend perspective, retail sales increased by 0.1%. This suggests that underlying retail spending remains subdued when we look back at the volatile trend in the months leading up to Christmas."

MARKET WATCH: Although the market was prepared for weaker retail sales in December, the decline was worse than expected. It was the biggest drop in retail sales since August 2020 as consumers did their Christmas shopping early and took advantage of November's Black Friday sales. Any hopes that December Boxing Day sales would ease the pain were dashed as November's growth came at the cost of December's losses.

A recession may not be far off for Australia, and the Reserve Bank of Australia (RBA) is expected to leave interest rates unchanged at its February 6 meeting. The market has already digested a 70% chance of a rate cut in August.

Separately, the RBA has previously emphasized that the upcoming interest rate decision will depend on data, with quarterly inflation on Wednesday being crucial. Inflation has been falling, with the general expectation for Q4 at 4.6% compared to 5.4% in Q3.

If expectations from time to time are correct, then the Q4 increase should be lower than that of Q3, but roughly the same as Q2, the level before inflation rose again six months ago. With a quarterly change of 0.8%, the RBA is unlikely to give a definitive answer at this time.

Unless inflation falls much more than expected, the RBA is unlikely to give any indication of an imminent rate cut at next week's meeting. If it does, it could become one of the relatively dovish central banks and the AUD could suffer as a result.

The AUDUSD experienced a sharp two-stage sell-off after hitting the 0.6870 peak, not only breaking below the 50-day and 200-day SMAs but also appearing to be in a slight "head-and-shoulders" pattern. Although the price in the 0.6525 double bottom stop retracement, but the rebound is repeatedly subject to the resistance of the 200-day SMA.

The AUDUSD recovered slightly today, but not for long, and remains within the 0.6524-6639 range. The intraday bias remains neutral, with further declines expected given the bearish signals provided by both the Relative Strength Index and Stochastics.

On the downside, a solid break below 0.6524 support would indicate that the overall rebound from 0.6269 is complete and bring deeper declines to that support level. However, on the upside, a hold of 0.6639 would turn the bias back to the upside for a stronger rebound.

From a broader perspective, the trend from 0.6169 (2022 low) is seen as a medium-term corrective pattern of the downtrend from 0.8006 (2021 high). The consolidation may continue in the 0.6169 -7156 range for some time. However, as long as 0.7156 remains intact, the eventual downside breakout will be moderate.

Overall, the AUDUSD has tried to regain some of the lost ground in recent trading, but the 200-day SMA has been acting as a strong ceiling. Failure to rebound could pave the way for a sustained decline. It is recommended to go short at the highs.

Trading direction: Short

Entry price: 0.6770

Target price: 0.6335

Stop loss: 0.6850

Deadline: 2024-02-13 23:55:00

Support: 0.6525, 0.6481, 0.6452

Resistance: 0.6624, 0.6643, 0.6690

Canada's November GDP, to be released on Wednesday, is expected to likely show its first sign of strength in six months, but the economic backdrop for the end of 2023 still looks weak.

Markets now expect Canada's GDP to have increased by 0.1% in November from October, in line with Statistics Canada's preliminary estimate from a month ago. That said, data released since November have been broadly consistent with a modest rise in output. retail sales fell modestly in November, but manufacturing and wholesale sales rose (up 1.6% and 0.6% m/m, respectively), and crude oil production in Alberta also increased.

Nevertheless, other indicators remained weak. Employment continued to rise through the end of last year, but actual hours worked declined in Q4 for the first time since the early days of the outbreak (Q2 2020). Manufacturing sales were initially forecast to fall by 0.6% in December.

After controlling for still rapid population growth, per capita economic growth figures look substantially weaker. Markets continue to expect GDP to decline modestly in Q4 after all the data have been tallied, but even a small increase would result in a sixth consecutive quarterly decline in per capita output.

In addition, the labor market still looks substantially weaker, with the unemployment rate up 0.8 percentage points since spring 2023. The Bank of Canada (BOC) cites the weak economic backdrop as a reason why further rate hikes are unlikely this year, and we expect rates to shift to gradual cuts by mid-year.

Market participants will be paying close attention to the Federal Reserve's upcoming interest rate decision and monetary policy statement on Wednesday. Investors will take cues from the press conference and look for trading opportunities around the USDCAD.

Separately, on Friday we will receive the first U.S. jobs report of 2024. employment is likely to have risen by 195,000 in January, slightly lower than December's 216,000. The unemployment rate should continue to rise to 3.8% from 3.7% in December, reflecting some easing in the labor market.

The USDCAD weakened the initial bullish outlook after falling below the 200-day SMA at 1.3483, giving it a downward bias during the session. Meanwhile, in the 1D timeframe, the price is below the 50 and 100-period exponential moving averages (EMAs). The Relative Strength Index (RSI) is also in the bearish zone below the middle line of 50.

Intraday bias is back to downside support at 1.3342. Firming there would indicate that the rebound from 1.3176 has completed at 1.3540 and target that low to resume the overall downtrend from 1.3897. However, on the bright side, a break above 1.3540 would resume the rebound from 1.3176.

In the bigger picture, the trend since 1.3976 (2022 high) is seen only as a corrective pattern. In case of another decline, strong support should emerge above the 1.2947 resistance level, turning support and bringing a rebound. Finally, the larger uptrend since 1.2005 (2021 low) is still expected to resume to 1.3976 at a later stage.

Overall, the short-term bullish outlook seems to have all but disappeared as the USDCAD fell below the threshold of 1.3400. Especially for the bears, they seem to favor the "Double Top" pattern. This increases the likelihood of the next major downside move. It is recommended to go short at the highs.

Trading direction: Short

Entry price: 1.3440

Target price: 1.3125

Stop loss: 1.3615

Deadline 2024-02-13 23:55:00

Support: 1.3342, 1.3285, 1.3178

Resistance: 1.3468, 1.3543, 1.3593

The GBP/USD pair is currently in a consolidation phase as traders eagerly await the upcoming meetings of the Bank of England (BoE) and the Federal Reserve (Fed). Amidst speculation of potential rate cuts by major central banks this year, particularly the Fed, market sentiment remains uncertain. While expectations for rate cuts have tempered since the beginning of the year, the upcoming central bank meetings could provide clarity on future monetary policy directions.

As the year 2024 unfolds, investors have been cautiously optimistic about the prospect of multiple rate cuts by major central banks. However, recent communications from central bank officials have aimed to temper these expectations, introducing an element of uncertainty into the market.

The focus now turns to the Federal Reserve's meeting scheduled for Wednesday. While a rate cut in March is anticipated by some, doubts linger regarding the timing of such a move. Nonetheless, the meeting presents an opportunity for the Fed to signal its stance on monetary policy, especially considering the progress made in addressing inflation concerns.

Following the Fed's meeting, attention will shift to the Bank of England's gathering on Thursday. While a clear indication of an imminent rate cut may not emerge, the release of updated economic forecasts could offer valuable insights into the BoE's future policy trajectory, potentially affecting market sentiment.

The GBP/USD pair has remained range-bound, with neither bulls nor bears asserting dominance. However, technical analysis suggests a bearish bias, with a possible formation of a bearish rising wedge pattern on the 4-hour timeframe. Persistent failure to breach the resistance level around 1.27400 indicates a potential downward movement towards the support level near 1.25000.

SELL GBPUSD

ENTRY PRICE : 1.2700

STOP LOSS : 1.2800

TAKE PROFIT : 1.2500