Nikkei 225
Over the last week, we have seen the index in Tokyo rally, but we are in the midst of a ¥2500 range. The ¥40,000 level above continues to be like a brick wall, so if we can get a daily close above there, then I think the Nikkei 225 will start to take off. If we pull back, the ¥37,500 level continues to be very supported, especially now that we have the 50 Week EMA approaching that level as well. In other words, I think that this remains a “buy on the dips” market, but I also recognize that we are still very much in the range.
S&P 500
The S&P 500 has rallied again during the week, and I fully anticipate that any time we pull back, there should be plenty of buyers willing to jump in and try to take advantage of the “tentacles rally” that happens at the end of every year. Short-term pullbacks should continue to be buying opportunities with the 6000 level offering a certain amount of support. After all, 6000 had previously been resistance, and now with the large, round, psychological importance of the figure, I think it will continue to offer support on the way up.
GBP/USD
The British pound has been all over the place during the course of the week, as we continue to hang around the 1.2750 level. The 1.2750 level has been important multiple times and now we have the 200 Week EMA hanging around the same area, as well as the 50 Week EMA. In other words, there’s a lot of technical noise here, but if we can break above the highs of the week, it’s very likely that the British pound will try to go looking toward the 1.30 level. The Federal Reserve is expected to cut interest rates by 25 basis points this month, so perhaps that might be part of what’s going on here.
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EUR/USD
The euro has been all over the place during the week, and although it is a fairly neutral candlestick for the weekly chart, it’s also worth noting that the Friday candlestick was very negative. What this tells me is that we are more likely than not to continue to bounce around in this area. It’s worth noting that we are sitting on significant support going back a fairly long amount of time, so it does make a certain amount of sense that the market is very tentative about getting too bullish or too bearish at this point.
Gold
Gold markets initially plunged during the week but now they look as if they are starting to find support again, and therefore I think we are trying to find our way back to the upside. The $2725 level is a major barrier above, but if we can clear that, there’s not much on this chart that would keep us from going to the $2800 level. Short-term pullbacks could be expected, but I think ultimately, they will end up being noise that people will look at as buying opportunities to pick up “cheap gold.”
USD/JPY
The US dollar has been all over the place against the Japanese yen during the week, and the neutral looking candlestick is actually a good thing, because it stabilizes the pair after the beating that it took during the previous week. At this point, if the market can clear the ¥151.50 level, then I think it’s got a good shot at going higher. If we break down below the bottom of the weekly candlestick, then we are starting to threaten the 50% Fibonacci retracement level, an area that a lot of technical traders will be paying close attention to.
NZD/USD
The New Zealand dollar looks horrible. At this point in time, it’s probably only a matter of time before it breaks down even further, perhaps trying to get down to the 0.56 level. Quite frankly, the only thing that is likely is to see this currency as if something happens with the US dollar itself. Unless you see the US dollar falling apart across the board, I don’t trust any rally in the New Zealand dollar. This is especially true now that Australia released a GDP number that was lower than anticipated, which does have a bit of a “knock on effect” on the Kiwi dollar.
AUD/USD
Speaking of the Australian dollar, it looks very much like a currency that is going to try to go down to the 0.6250 level. The week ended up being horrific, and now we are threatening the beginning of major support. While I don’t necessarily think that the Australian dollar is going to suddenly go up in flames, I do think that any time this pair rallies, we will continue to see traders fade the first signs of exhaustion. As mentioned previously, GDP quarter over quarter in Australia came in lighter than anticipated this week.
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