Daily Market Commentary: January 19th 2017

EURUSD – The EURUSD broke up above 1.0670 key resistance yesterday, but fell back under that level today. We will wait and see what unfolds from here; if prices move back up above 1.0670 we will likely see some more upside movement before 1.0875 comes into play. However, if price cannot rally from here, it could sell-off from this 1.0670. Either way, we are more bearish on this pair right now. EURUSD-JAN-19GBPUSD – The GBPUSD briefly broke down through 1.2100 support at this week’s opening. We discussed that support in our weekly outlook, indicating that prices could bounce from there. What ended up happening was basically a false-break of that support, as prices quickly reversed and surged higher, following the false-break. Notice that prices even closed up above 1.2335 resistance, showing the conviction of bulls. We will wait and see what develops in this pair in the coming days, but right now it would not be surprising to see some upside follow through at least, whilst above 1.2100.


EURGBP – The EURGBP has been trending lower after topping out in October 2016. Notice the two giant event areas on the chart below, the market has experienced a vacuum back up to test these areas recently. We have a confluence of two factors that support a bearish bias under 0.8850 resistance area; Obvious strong resistance area at the previous event areas that are now containing the market, and an approximate 50% retrace of the initial swing lower, both of which we can see below. For bears, it all depends on the line in the sand at 0.8850; if price is below that containment level, we expect the market to trade lower. We are looking to be sellers on any pockets of strength and we would hold short positions until a strong break or close back above 0.8850. Downside targets are near 0.8340 or even lower potentially.


AUDUSD – The AUDUSD broke up and closed above 0.7505 resistance yesterday, this opens the door for more upside movement and we could see prices re-test 0.7735 key resistance in the days and weeks ahead, an area that we will watch closely for sell signals at.


S&P500 – The S&P500 consolidated last week, but whilst above 2227.00 and 2170.00 key support, the bulls remain strongly in control and the multi-year bull market continues. We did see a bullish pin bar on the daily time frame last Thursday, but given it’s position right against previous resistance and all time highs, it’s hard to know if this signal will produce any upside breakout. It might be a good idea to wait for a breakout and close higher before looking for another long entry or we could wait for a more substantial pull back into the 2227 support handle and look to get long there. Either way, this market is strongly biased to the upside and buying the dips remains the strategy of choice.