Two trades to watch GBPUSD WTI
GBP/USD eases back after weak retail sales data, uptrend remains WTI falls as covid cases in China rise
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GBP/USD off session lows after GDP data
• UK GDP MoM Nov -2.6% beating expectations of -5.7% YoY -8.9% vs -12.1%.• UK vaccine programmme to accelerate to 500,000 jabs a day
• USD clawing backs losses from previous session after Joe Biden introduced $1.9 trillion relief package but hinted at tax rises• Fed Powell said now was not the time to consider the Fed’s exit from an accommodative stance.
• US retail sales up next
GBP/USD technical analysis
GBP/USD trades range bound between 1.3650 – 1.37.
GBP/USD continues to trade above its 20 & 50 sma on the 4 hour chart and remains firmly within the ascending channel indicating an establish bullish trend, however it has not shown strong signs of a break above 1.37. Renewed momentum is needed to retest this key level.
The RSI is over 50 but below 70 but points lower so a near term pullback could be on the cards.
A positive tone remains for the pair above 1.36. A break below here could see horizontal support at 1.3540 come into play.
On the upside a break above 1.37 could open the door to resistance at 1.3730 before 1.3760.
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WTI pulls back after retesting $54
WTI is coming under pressure in early trade as rising covid cases in China overshadowed strong crude import data from the world’s biggest crude imported.
Crude imports into China +7.3% in 2020.
Vaccine rollouts, rising sentiment and huge US stimulus optimism have been lifting oil over recent sessions. However China wrestling with fresh covid outbreaks has dragged on oil prices in the Asian session.
WTI technical analysis
WTI has seen a solid run up over the past few month, but failed to break over $54 at the start of the week, turning lower to $52.24 on Tuesday, before rebounding to make another attempt on $54 overnight.
Another rejection of this level is signaling uptrend exhaustion, at least for now profit taking and technical selling is being seen.
On the 4 hour chart WTI trades over its 50 sma and the 20 sma is being tested at $53.
The RSI shows a bearish divergence which favours a pull back in the price for now.
Even so, the overall trend is bullish with key resistance at $54 prior to $54.66 (2020 high). A break below $50 is needed to negate the current uptrend.
GBP/USD declines on disappointing retail sales, uptrend remains
GBP/USD is declining towards 1.3650 after disappointing UK retail sales.
GBP/USD is declining towards 1.3650 after disappointing UK retail sales.
Retail sales missed forecasts +0.3% MoM in December vs. 1.2% expected.
US Dollar strength is back in play on Friday amid a souring market mood. The US Dollar Index (DXY) finds support at 90.00
Preliminary January Manufacturing & Service sector PMI data due both for UK & US. Given the aUK lockdown the service sector data is expected to show a deeper contraction.
WTI falls as Chinese covid cases rise
GBP/USD technical analysis
After pushing beyond 1.37 overnight GBP/USD is trending lower. The pair trades -0.4% at 1.3665 at the time of writing.
Yet despite today’s pullback, GBP/USD continues to trade above its 20 & 50 sma on the 4 hour chart. Furthermore is remains comfortably within the ascending channel pattern dating back to early October pointing to an established bullish trend.
Immediate horizontal support is being tested at 1.3665a break through here could see 1.36 20 sma and round number tested, prior to 1.3560 lower band of the ascending channel.
On the upside the overnight swing high of 1.3745 is the level to beat. Any follow through buying could help lift the pair to 1.38.
Learn more about trading forex
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WTI falls as Chinese covid cases rise
Oil prices are trending lower, retreating from an 11 month high struck last week
Fears are growing that new pandemic restrictions in China could curb fuel demand in China, the world’s largest importer.
Recent gains in crude have been under pinned by recovering fuel demand in China, whilst US and Europe lagged. With this source of support potentially waning as covid cases rise and lockdowns are imposed, investors are struggling to see through the near term risks.
EIA inventory data is due later today. Data on Wednesday showed a surprise2.6 million barrel increase versus 1.2 million expected.
WTI technical analysis
WTI has been trending higher making a series of higher highs and higher lows. However after three attempts to break above $53.90, WTI is easing back.
The price has just crossed below the 50 & 20 sma on the 4 hour chart at $52.80 in a bearish signal. The RSI also favours more selling.
A break through support at $51.70 (low 15th Jan) could negate the current uptrend and lead to a deeper sell off to 50.50.
However, should he price retake the 52.80, an attempted rebound could see the 53.90 high retested before $54.75 is targeted.
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