WTI Crude Oil, ASX 200 Analysis: Asian Open - 11th July 2023
WTI has rallied to the top of its range but, with several important levels looming nearby, we're on the lookout for a dip lower. And today's question for ASX traders is whether they can build a base above 7,000 and retrace some of its recent losses.
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Market summary
- Classic risk-off patterns re-emerged across currencies with JPY and CHF being the strongest majors, whilst AUD and CAD were the weakest – sparking some to question whether were are seeing some intervention in the yen
- Yet the sentiment wasn’t reflected on Wall Street with the major indices holding up (the Nasdaq 100 created a marginal new low but closed above 15k with a small bullish hammer, the S&P 500 and Dow Jones posted bullish engulfing days)
- USD continued to weaken after the general message from Fed members on Monday said that, whilst rates needed to be hiked further, the end of the tightening cycle is near
- EUR/USD reached our 1.10 target after retracing and forming a base around the initial ‘volume cluster’ support level near 1.0945, USD/CHF fell to a 9-week low and within range of its YTD low, USD/JPY fell to a 12-day low and closed beneath 142
- AUD/USD remains within the 66-67c range, although a break above 0.6705 also clears the 50-day EMA and 2090-day MA
- BOE Bailey intends to “see the job through” with inflation, which basically means to continue hiking interest rates until inflation comes back towards target
- GBP/USD reached our 1.0800/50 target, although its close on the June high and hanging man day leaves room for a potential shakeout before its next leg higher towards 1.3000
- View the weekly COT report for a look of large speculative positioning across forex, indices and commodities
Events in focus (AEDT):
- 09:50 – Japan’s unemployment, industrial production
- 10:30 – Australian consumer sentiment (Westpac)
- 11:30 – Australia business sentiment (NAB)
ASX 200 at a glance:
- The ASX 200 closed lower for a fourth day
- 61.5% of ASX 200 stocks declined (compared to 92% on Friday)
- It held above key support of 7,000
- Daily trading volume was its lowest since 3rd January
- Bearish volatility is also receding on the daily chart
- A corrective bounce could be approaching (if global sentiment allows)
WTI crude oil 1-hour chart:
WTI crude oil has risen to 5-week high yet met resistance at the $74 handle 50-day EMA – and the $75 handle and ‘production cut’ high is also nearby by for potential resistance. RSI (2) was oversold on Friday, which can precede a near-term top. Daily trading volumes were also lighter over the past three days whilst prices rose, so we’re looking for a potential top. To increase the potential reward / risk ratio, we’d prefer to fade into spikes below $75 with a break above 75.67 (Q3 open) invalidating the near-term short bias. Perhaps we’ll see a move towards $70, but as we’re counter to recent strength it carries additional risk, so bears may want to consider smaller positions and / or tighter risk management.
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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