FX And Oil Week Ahead: Will It Be A Roaring Start To The Year? Part 2

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Summary

S&P500 near a possible long term top.

Gold turns bullish.

WTI set to rise after the current consolidation.

U.S. employment numbers unfortunately failed to beat expectations, despite our initial expectations that a beat was in order due to the falling Jobless Claims numbers. Nonetheless, PMI numbers did surprise to the upside as expected. The retail sales report and consumer confidence numbers will be key this week to gauging the strength of the U.S. consumer, which will be pivotal to continued gains in U.S. economic growth.

The S&P500 (NYSEARCA:SPY) is also nearing a possible long term technical top at 2340 from the 2009 low, though further gains are possible if U.S. consumer spending holds up. All things will be known in good time.

Charts created by themarketjournal, data provided by SAXO markets

Trading and Technical Strategy for the week ahead:

GBP/USD (FXB)Charts created by themarketjournal, data provided by SAXO markets

Key Levels
Support: 1.2210/ 1.2140/ 1.2000/ 1.1930/ 1.1810
Resistance: 1.2300/ 1.2460/ 1.2560/ 1.2760/ 1.2870/ 1.2960
*Level to consider buying at for support and selling at for resistance for intra-day trades

GBP/USD retains a medium term bearish bias and should see the pair continue it's decline from current levels or 1.2460 toward the 1.2000 level and lower. The Pound has been sliding since early in the year, and a good retail sales print next from the U.S. could be the catalyst for the next move down.

Trading strategy:

We think traders can look to sell at 1.2410/ 1.2460 with a stop loss at 1.2600 targeting levels closer to 1.2000 which should be seen in the coming weeks.

XAU/USD (NYSEARCA:GLD)

Charts created by themarketjournal, data provided by SAXO markets

Key Levels
Support: 1170/ 1130/ *1100/ 1050
Resistance: 1205/ 1220/ 1245/ 1265/1280/1305/1330/1360/1400
*Level to consider buying at for support & selling at for resistance for intra-day trades

GOLD managed to overcome the key 1170 level which sets up the metal for further gains after the next consolidation occurs. As it stands, the metal remains oversold on a weekly time frame, and the current move down should end around 1153 before a move to 1233 thereafter, which is where we see the current upside move terminating.

Trading strategy:

We think that gold traders can look for long positions closer to 1153, with a target of 1233, with a stop loss at 1129 to play this upside move in gold to work off oversold conditions. Longer term fundamentals for gold remain bearish for now, but technical conditions are likely to demand a bounce before more selling can take hold.

WTI OIL (USO)

Charts created by themarketjournal, data provided by SAXO markets

Key Levels
Support: 52.60/ 51.30/ 50.20/ 49.80/ 49/ 48.30/47.15/ 46.30/ 45.30
Resistance: 53.80/ 55/ 56.20/ 57/ 58.50
*Level to consider buying at for support & selling at for resistance for intra-day trades

*Note on our price chart: Before we dive into the WTI technical analysis, we have decided to use the WTI continuous futures price as a chart instead of the original spot price posted in our article. This price will match the nearest dated WTI crude futures contract which will switch automatically once the contract settles, moving on to track the next nearest dated futures contract. We will also be only analyzing the technical aspect of the WTI price, given the fundamental aspect of WTI oil is well covered by many subject matter experts in the energy commodities section. At this time, the nearest dated futures contract being tracked by the above price chart is the January 2017 contract.

WTI oil hit the $55 level to the upside as expected, before a sharp move lower. We think the current move down will terminate around $52/ $50.50 before one more move higher in WTI. The next move higher in WTI will likely be followed by a larger sell off to work off longer term overbought conditions.

Trading strategy:

WTI traders can consider long positions at $50.50 or $52 with a stop loss at the $50 level to play the next upside move. Thereafter, we do expect the next significant move in WTI to be lower in order to setup for the next larger move up. For more updates throughout the week, do join our mailing list.

Risk Disclosure:

High Risk Warning: Foreign exchange, futures and ETF trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade any instrument, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with trading, and seek advice from an independent financial or tax advisor if you have any questions.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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