GBP/USD Possible Revisit To 1.28000?

Zi Cheng

Traders' Opinions

Summary:

During the last Friday's session, the GBP/USD continued its upward momentum and surpassed the 1.2700 level.

BUY GBPUSD

Close Time

CLOSED

1.27069

Entry Price

1.28506

1.24895

1.22164 -0.00267 -0.22%

42.3

Pips

Loss

1.24895

1.26646

Exit Price

1.27069

Entry Price

1.28506

Fundamental Analysis

The sterling's weekly rebound was prompted by strong figures from both the Manufacturing and Services PMIs in the UK for December. These data points managed to counteract the bullish trend in the US Dollar occurring simultaneously.

Positive data in the UK included a recovery in house prices tracked by Halifax and a notable increase in the Construction PMI for December. Concurrently, the Cable experienced gains, driven by the renewed strength in the UK 10-year gilt yields, which surged to multi-week highs and approached the critical 4.0% threshold by the week's end, a level last seen in mid-December.

Within the UK money markets, investors continued to reassess the likelihood of potential interest-rate cuts by the Bank of England later in the year. Presently, these expectations hover around approximately 120 basis points of rate cuts in 2024, slightly lower than the previous estimate.

Looking ahead to upcoming events across the Channel, investors should direct their attention to the release of UK GDP figures, as well as Industrial and Manufacturing Production data for November, all scheduled for the latter half of the upcoming week.

Technical Analysis

GBP/USD has been forming a bullish market structure since last year November and has crossed over the 200 Day Moving Average. This tells us that the current bullish momentum is strong because it is difficult to crossover and remain strong above the 200 Day Moving Average without sufficient strong bullish momentum.

Besides that, GBP/USD is moving in an ascending channel which has just rejected the bottom side of the channel. I will be placing longs and targetting the upper side of the channel.

TRADE RECOMMENDATION

BUY GBP/USD

ENTRY PRICE : 1.27056

STOP LOSS : 1.24895

TAKE PROFIT : 1.28506

Risk Warnings and Disclaimers

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Zi Cheng

Forex

Traders' Opinions

Summary:

On Monday, the AUD/USD is trading at an elevated level near 0.67000 against the US Dollar, further advancing its gains following a tumultuous session on Friday.

BUY AUDUSD

Close Time

CLOSED

0.67160

Entry Price

0.69012

0.65118

0.62177 -0.00086 -0.14%

163.9

Pips

Loss

0.65118

0.65521

Exit Price

0.67160

Entry Price

0.69012

Fundamental Analysis

On Friday, the Australian Dollar exhibits lateral movement in proximity to the psychological threshold of 0.6700. Despite the US Dollar lacking a discernible trend and an uptick in China's Caixin Services PMI for December, the AUD/USD pair is under downward pressure. The diminished market sentiment and a broad decline in commodity prices contribute to the weakness in the Australian Dollar.

The most recent Purchasing Managers Index (PMI) data from Judo Bank in Australia reveals a contraction in business activities in both the services and manufacturing sectors, underscoring the susceptibility of the Australian Dollar. Notably, the Services PMI indicates the swiftest contraction in services since the third quarter of 2021. Despite these trends, Matthew De Pasquale, Economist at Judo Bank, suggests that the slowdown in the Australian economy is not gaining momentum.

Technical Analysis

As we can see from the chart below that I have attached, the current trend of AUD/USD is an uptrend determined by the market structure forming higher highs and higher lows. Besides that, we also get confirmation from the 200 Day Moving Average, price remains far above the 200 Day Moving Average, conveying that current bullish trend is still strong.

Furthermore, we can see AUD/USD is moving like a upward channel and price just rejected from the lower side of the channel with a huge wick. This tells us there are strong buyers below ready to push the price higher. This adds confirmation for our longs.

AUD/USD Regain Bullish Momentum From Friday's Session_1

TRADE RECOMMENDATION

BUY AUD/USD

ENTRY PRICE : 0.67150

STOP LOSS : 0.65118

TAKE PROFIT : 0.69012

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

The escalating situation in the Red Sea is prompting oil buyers to turn to US shale oil producers, with the likelihood of US crude oil exports breaking historical records in the coming weeks.

BUY WTI

Close Time

CLOSED

73.877

Entry Price

76.180

70.890

78.605 -0.517 -0.65%

298.7

Pips

Loss

70.890

70.885

Exit Price

73.877

Entry Price

76.180

Fundamentals

As the market enters 2024, crude oil prices continue to exhibit range-bound volatility. Initially, concerns over supply disruptions due to escalating tensions in the Red Sea, a critical gateway to the Suez Canal, led to an increase in oil prices. The intensification of events followed an attack by Houthi rebels on a vessel operated by Danish shipping company Maersk in the Red Sea, which was thwarted by the US. Semi-official Tasnim News Agency reported Iranian warships entering the Red Sea, adding complexity to geopolitics and heightening market concerns.

However, over time, the crude oil market reassessed the situation, concluding that direct conflict between Iranian and US military forces was less likely. This reassessment alleviated initial concerns about supply disruptions, leading to a reversal of earlier gains and the maintenance of range-bound volatility.

Simultaneously, crude oil buyers may have found ways to cope with transportation interruptions by turning to US shale oil. The latest data from the US Energy Information Administration (EIA) indicates a significant unexpected increase in US gasoline and distillate oil supplies. As of the week ending December 29, daily US crude oil exports surged by 1.377 million barrels, reaching 5.292 million barrels. This marks the first substantial increase in US crude oil exports since Houthi rebels began disrupting international shipping in the Red Sea.

Ironically, the chaos in the Middle East is driving international crude oil customers into the arms of US shale oil producers. In the coming weeks, US crude oil exports are likely to break historical records, coinciding with a reduction in operating rates for domestic refineries.

The EIA's reported extraction volume of 5.292 million barrels, exceeding expectations, coupled with an anticipated production of 3.2 million barrels, is providing support to crude oil prices. This suggests stronger-than-expected demand or limitations on supply levels.

However, crude oil traders may still await the later release of the nonfarm payroll report, as it could impact market sentiment and commodity demand in the short term. The significant ADP employment report suggests an unexpected increase in official data, potentially lowering the likelihood of a swift Fed rate cut.

Furthermore, the latest Federal Open Market Committee (FOMC) meeting minutes reinforce the notion of a "longer-term hike," despite dot plot projections indicating three rate cuts this year. Nevertheless, an unexpected decline in nonfarm employment data could reignite hopes of easing, especially with restrained wage inflation.

Market Potential for Another Upside, Forming a "Double Top" Pattern_1

Technical Analysis

WTI crude oil is showing signs of a short-term recovery in an ascending trend, with prices hovering around the midsection of an intriguing upward channel. A breakthrough of the recent resistance zone could test the channel's top at $76.00.

Technical indicators present a mixed picture. The 100 SMA below the 200 SMA indicates a path of least resistance to the downside, suggesting that resistance is more likely to hold than be breached. The price has also encountered resistance around the dynamic turning point of the 200 SMA, approximately at $74.00.

Persistent selling pressure could lead the price down to the channel's bottom at $70.00, or possibly even lower. If the latter occurs, the upward trend may reverse.

However, the stochastic oscillator is on the rise, indicating bullish pressure and the oscillating indicator has room to climb before reflecting overbought conditions. Similarly, the Relative Strength Index (RSI) is also ascending, signaling a return of bullish momentum, with no signs of reaching oversold levels.

Overall, WTI crude oil's rebound from the range bottom at $67.95 is expected to complete around $76.20. As the market enters the second half of range-bound oscillation, further upside may not surpass the previous high of $76.20 and could potentially form a double top before continuing to decline. In terms of trading strategy, buying the dips is recommended in the short term (as depicted in the chart seeking a double top).

Trading Recommendations

Trading Direction: Long

Entry Price: 72.00

Target Price: 76.18

Stop Loss: 70.89

Valid Until: 2024-01-19 23:55:00

Support: 72.06, 71.10, 70.62

Resistance: 74.05, 74.62, 75.40

Risk Warnings and Disclaimers

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Warren Takunda

Energy

Traders' Opinions

Summary:

Surging US gasoline inventories clash with Libyan supply disruptions, creating uncertainty in the oil market.

SELL WTI

Close Time

CLOSED

73.000

Entry Price

65.000

77.000

78.605 -0.517 -0.65%

70.2

Pips

Profit

65.000

72.298

Exit Price

73.000

Entry Price

77.000

Oil markets found themselves at a crossroads on Friday, with WTI crude futures managing to maintain a delicate equilibrium above $72 per barrel. Traders grappled with a complex interplay of factors, including weakening US demand, supply disruptions in Libya, and unforeseen geopolitical events in Iran.

On Thursday, oil prices experienced a notable dip of 2.3%, triggered by official data revealing an unprecedented surge in US gasoline inventories by 10.9 million barrels—the largest week-on-week increase in over three decades. Distillate stockpiles also rose unexpectedly by 10.1 million barrels, far exceeding the anticipated 400,000 barrel build. In contrast, crude inventories bucked the trend, falling by 5.5 million barrels.

Simultaneously, developments in Libya captured traders' attention, as protests disrupted production from the Sharara and El-Feel fields, jointly contributing around 365,000 barrels per day. This added a supply-side dynamic to the market, countering the bearish sentiment driven by the US inventory data.

In a tragic turn of events, Iran faced two explosions during a ceremony honoring the late commander Qassem Soleimani, resulting in nearly 100 fatalities and numerous injuries. While not directly impacting oil production, this event injected an element of geopolitical risk into an already nuanced market landscape.

Technical Analysis:

Last week witnessed a setback for US oil, as it retreated from its recent high of $76 to $73, denting market confidence. The decline breached the average daily line and the previous trend line, necessitating a phase of repair for the overall market shape. The crucial juncture at $73 demands close attention, as it tests the market's resilience and establishes a potential support level.

The upcoming week is pivotal for the trajectory of US oil, requiring a careful observation of whether the $73 level can hold and fortify itself as a strong support. A successful maintenance of this level could pave the way for a rebound, but any failure to do so introduces variable risks in the short term, impacting market sentiment.

Key technical points to monitor include the 73-73.3 pressure range above the 5 and 10-day moving averages, alongside the support level around 70. The Asian session might witness repeated testing of the $73 level, necessitating a flexible response to short-term intraday price patterns. Today's crude oil trading strategy leans towards anticipating a rebound to higher levels, with a cautious approach incorporating risk management for potential downside moves. Notable levels to watch include resistance around 71.5-72.0 and support around 65.0-64.5 in the short term.

TRADE RECOMMENDATION

SELL WTI

ENTRY PRICE : 73.00

STOP LOSS : 77.00

TAKE PROFIT : 65.00

Risk Warnings and Disclaimers

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Peterson

Commodity

Summary:

The oscillation range during the day will be 72-74.5, and investors are advised to buy low and sell high.

BUY WTI

EXP

EXPIRED

72.000

Entry Price

74.500

71.500

78.605 -0.517 -0.65%

Pips

EXPIRED

71.500

72.960

Exit Price

72.000

Entry Price

74.500

Fundamentals

During the Asian session on Friday (January 5), WTI crude oil fluctuated in a narrow range and is currently trading around 72.6 dollars per barrel.

Oil prices rebounded in Asian trading yesterday, hitting as high as 74.1. Although oil prices entered the resistance zone of 74-74.5, they failed to break through it effectively, and then the price fluctuated to the downside. Although crude oil inventories announced in the US session fell more than expected, the rare and unexpected increase in refined oil inventories caused investors to worry about weak demand, and the market finally chose to trade demand concerns. At the same time, the extremist group “Islamic State” declared responsibility for the bombings in Iran, eliminating the risk of a conflict between Iran and Israel. As a result, oil prices also quickly fell to give back the risk premium, falling as low as 71.2, but then quickly rebounded above 72, moving in the 72-72.5 resistance zone. In addition, as investors are concerned about declining inventories and reduced production, the increase in gasoline stocks may be due to the holiday effect.

Yesterday, we made relatively good profits in crude oil trading. Our strategy of buying at 71.5 currently has earned $1. However, the shortcoming was the failure to enter short orders. The oil price reached as high as 74.1 and was in the 74-74.5 resistance zone, but we set to sell at the upper edge of the zone, i.e. at 74.5, missing out on the $2.5 profit. However, this is part of our strategy. If we choose a high profit/loss ratio, we will inevitably miss some opportunities, resulting in less trades and even lower winning rates. The quality of a trade is not measured by profit but by execution power! When we firmly execute our strategy, profits will come naturally. There is no other way!

Inventories: The EIA reported that commercial crude oil inventories, excluding strategic reserves, fell by 5.503 million barrels to 431 million barrels. Strategic Petroleum Reserve inventories rose by 1.055 million barrels to 354.4 million barrels. US EIA gasoline inventories rose by 10.9 million barrels in the week ended Dec. 15, compared with an expected decrease of 215,000 barrels. Refined oil inventories rose by 10.09 million barrels, compared with the expected increase of 588,000 barrels. US domestic crude oil production fell by 100,000 barrels to 13.20 million b/d in the week ended Dec. 29.

Data: The number of US ADP employment increased by 164,000 in December, greatly exceeding expectations. Initial claims for unemployment benefits fell to a two-month low of 202,000. The final value of the US Markit services PMI in December was revised slightly upward to 51.4, which is a record high in half a year.

Investors need to pay attention to the non-farm payrolls report today.

Technical Analysis

Oil prices edged higher in the Asian session yesterday, rising as high as 74.1. Later, driven by news in the US session, oil prices rose after falling. They first fell as low as 71.2, and finally rebounded and closed at 72.5 with a bear candle. We stressed yesterday that the rapid rise in oil prices driven by news was also not a good thing. There will also be a rapid decline or giving up gains without continuous bullish momentum. We also reminded investors to be patient and wait for oil prices to pull back before going long. Recently, the market has become more complicated, and investors need to grasp the core. At present, the core is demand and supply, and the others are all disturbance factors in a certain period. Demand is the core, which means we need to keep an eye on the changes in crude oil inventories. At the moment, the inventories are declining, which is bullish for oil prices. Perhaps the market has not yet realized that. Once the declining inventory becomes the main trading logic, the rise in oil prices will be relatively smooth. It is crucial for investors to seize trading timing.

In the 1-hour candlestick chart, oil prices rebounded after a rapid decline, and a bullish piercing pattern appeared. Therefore, we can expect a rebound at the hourly level. The same is seen on the 4-hour candlestick chart. In addition, the MACD turns to form a golden cross, and the daily MACD golden cross also is widening. Oil prices may continue to rebound in the short term. Resistance is still initially seen in the 74-74.5 area. For further resistance, we can look at the 76-76.5 area. During the day, investors can still buy low and sell high in the range of 72-74.5. Oil Prices Surge on Multiple Positive Factors_1

Oil Prices Surge on Multiple Positive Factors_1

Trading Recommendations

Trading Direction: Long

Entry Price: 72.000

Target Price: 74.500

Stop Loss: 71.500

Support: 72.500/71.500

Resistance: 73.500/74.500

Risk Warnings and Disclaimers

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Peterson

Commodity

Summary:

The oscillation range during the day will be 2020-2070, and investors are advised to buy low and sell high.

BUY XAUUSD

EXP

EXPIRED

2020.00

Entry Price

2070.00

2015.00

2698.77 +1.84 +0.07%

Pips

EXPIRED

2015.00

2041.28

Exit Price

2020.00

Entry Price

2070.00

Fundamentals

During the Asian session on Friday (January 5), spot gold fluctuated in a narrow range and is currently trading around 2044.

Gold prices fluctuated to the upside in the Asian session yesterday, but the momentum was not strong. The rise encountered resistance near $2050. In the U.S. session, however, the price pulled back on a stronger dollar as the published ADP employment, initial jobless claims and services PMI data were relatively strong. It fell to as low as 2036, followed by a slight rebound. That was also because the important December non-farm payrolls data will be released tonight. Following the November data and the Federal Reserve giving optimistic rate-cut expectations, the December data is expected to give more guidance on the rate-cut path. It remains to be seen whether the data will strengthen or cool down the optimistic rate-cut expectations. I don't think the Fed will make its first cut rate in March as the market largely expects. The optimistic expectations will be revised, so gold prices are expected to retreat. However, the retracement is not a reversal. It's all for a better rise. Only in this way will the rise be strong.

Yesterday, the oscillation in gold prices eased significantly from previous days. With the resistance in the 2050-2055 area and the support in the 2035-2040 range, gold prices rose as high as 2051 and fell as low as 2036, which did not touch entry level of our strategy, so we didn't trade yesterday. In fact, trading is more about mindset and belief, not the skills. Staring at the small fluctuations in the intraday market and trading frantically will not only deplete your principal but also waste your precious time and life! Less is more, and giving is gaining. Investors need to be more patient and trade less, and trading will be easier in this way, so you can achieve more desired results. Of course, everyone will have their own methods and models. We cannot say whose is better. What we need to do is to think, learn and optimize, and finally find out what suits us. But we have one thing in common, that is cultivating our mind and reflecting in actions.

Data: The US ADP employment increased by 164,000 in December, greatly exceeding expectations. Initial jobless claims fell to a two-month low of 202,000. The final US Markit services PMI in December was revised slightly upward to 51.4, which is a record high in half a year.

Today, traders should focus on the US non-farm payrolls report for December.

Technical Analysis

Yesterday, the gold price continued to rebound in the Asian market, rising as high as 2051. However, at the beginning of the US market, gold prices fell sharply to 2036 on bearish data. Overall, resistance was in the 2050-2055 zone, and support was in the 2035-2040 zone. The trading opportunity appeared when gold prices declined after the release of the data, but the pullback was not strong, which made it difficult to take considerable profits. Investors need to pay attention to the non-farm payrolls data tonight, during which the XAUUSD pair will be volatile. Investors need to consider their positions, keep waiting and seeing in the Asian session before the data is released. Aggressive traders can follow the trend.

Currently, gold prices are trending to stabilize, but they are still under pressure in the 2050-2055 area. Today's non-farm payrolls data is critical. If it's bullish for gold, the price will easily break through that area. For further resistance, we can look at the 2070-2080 area. If the data continues to be bearish for gold prices, the support in the 2018-2020 area is important. Judging from the 1-hour K-line, MACD still maintains a golden cross, so gold prices are still expected to rebound in the Asian session, and the initial resistance is still in the 2050-2055 area. The MACD in the 4-hour candlestick chart tends to form a golden cross at the low. If the hourly level price rebounds, initial resistance could be near the MA60 at 2058. In the daily chart, a death cross is extending at a high level, and the bearish divergence has not improved. In a larger cycle, there is still a need for a pullback in gold prices. Today's trading range can refer to 2020-2070, and aggressive traders can still buy low and sell high within the range. Gold's Rebound Limited by Strong Data_1

Trading Recommendations

Trading Direction: Long

Entry Price: 2020

Target Price: 2070

Stop Loss: 2015

Support: 2030.000/2020.000

Resistance: 2055.000/2065.000

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The British pound, bolstered by a robust UK Services Final PMI, has risen against the US dollar, reaching 1.2698, marking a 0.27% increase. The upbeat services sector performance, with a PMI of 53.4 in December, signals a revival in consumer demand and heightened optimism among service providers.

SELL GBPUSD

Close Time

CLOSED

1.26651

Entry Price

1.23000

1.28000

1.22164 -0.00267 -0.22%

20.3

Pips

Profit

1.23000

1.26448

Exit Price

1.26651

Entry Price

1.28000

The GBP/USD exhibited upward momentum on Thursday, trading at 1.2698, marking a 0.27% increase in the North American session. The impetus behind this rise was the positive performance of the UK Services Final PMI for December, surpassing expectations and reaching 53.4, up from 50.9 in November. This marked the second consecutive month of expansion, reflecting an encouraging improvement in consumer demand and heightened optimism among service providers regarding business conditions.

Despite an initial retreat post-PMI release, the British pound managed to recover losses, underscoring the resilience of the currency. As the week concludes, attention shifts to the upcoming UK Construction PMI, projected at 46.0 for December. However, concerns persist as the construction industry grapples with the enduring impact of a weakened UK economy, particularly evident in the ongoing slump in residential and commercial house building.

Across the Atlantic, the US Federal Reserve's minutes from its December meeting delivered unexpected dovish signals. Despite months of hawkish indications, the Fed surprised markets by anticipating three rate cuts in 2024. This contrasted sharply with market expectations of six cuts, prompting a decline in the US dollar and a rally in equity markets.

The minutes revealed the Fed's acknowledgment that the current benchmark rate might be at or near its peak, with members anticipating rate cuts in the coming year. However, an "unusually elevated degree of uncertainty" surrounds the rate path, contingent on evolving economic conditions. Market expectations are already priced in, with an 80% probability of a rate cut by March, and anticipations of five or six cuts throughout the year. The Fed's strategy in managing and potentially dampening these expectations will be a key focus in the coming months.

Technical Analysis

GBP/USD Corrects on UK Services Surge, Yet Looms Over Construction Woes_1

GBP/USD currently faces a downward trend, influenced by data from the US indicating a higher-than-expected increase in private sector wages in December. This surge has heightened demand for the US Dollar, limiting the potential for GBP/USD to appreciate further. Presently encountering resistance at 1.2700 before the 1.2740 level, a rebound within the 1.2740 channel may trigger a pullback in price, with a potential target of 1.2399.

TRADE RECOMMENDATION

SELL GBPUSD

ENTRY PRICE : 1.2600

STOP LOSS : 1.2800

TAKE PROFIT : 1.2300

Risk Warnings and Disclaimers

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GBP/USD Possible Revisit To 1.28000?

Fundamental Analysis

Technical Analysis

TRADE RECOMMENDATION

AUD/USD Regain Bullish Momentum From Friday's Session

Fundamental Analysis

Technical Analysis

TRADE RECOMMENDATION

Market Potential for Another Upside, Forming a "Double Top" Pattern

Fundamentals

Technical Analysis

Trading Recommendations

$73 Holds the Key as US Oil Markets Brace for Potential Rebound

Oil Prices Surge on Multiple Positive Factors

Fundamentals

Technical Analysis

Trading Recommendations

Gold's Rebound Limited by Strong Data

Fundamentals

Technical Analysis

GBP/USD Corrects on UK Services Surge, Yet Looms Over Construction Woes

Risk Disclosure