Summary:
- JAP225 surges past resistance despite US tariffs on China
- OIL close to 2018 highs, will the resistance work?
- EURUSD stuck below 1.1750 mark, what’s next?
This week we start with the JAP225 chart for two reasons. First, we have just seen the announcement that the US will slap 10% tariffs on $200 billion of the Chinese imports. Second, JAP225 blew past the resistance, just above 23000 points. These things do not seem to be a good match – after all escalation of Trade Wars is bad for the economy, right? It might be so but the move has been expected and markets might not believe in the US threats of even bolder moves. Technically JAP225 looks very strong. A resistance just above 23000 points used to lock the index in a triangle between the zone and rising trend lines. A breakout was needed and it occurred to the upside. The resistance level to watch is the multiyear high at 24000 points.
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JAP225 broke higher with a major momentum. Source: xStation5
Oil prices remain elevated and in fact we have already seen 6 tests of the $80 barrier. This resistance zone looks to be solid for sure but the bulls are yet to give up. Do notice that prices are still forming a positive sequence of higher lows and highs and pullbacks from the resistance have been fairly minor. Therefore a breakout higher remains in play. On the fundamental side Russia pledged to deliver more oil if needed but Saudi Arabia said it was comfortable with prices above $80/b. Investors are also concerned about declining exports from Iran as the sanctions are going to kick in soon and about unrest in southern Iraq.
OIL prices could not make it past the $80 resistance but bulls remain in play. Source: xStation5
Last but not least let’s take a look at the EURUSD currency pair. We have seen a strange situation where the pair consolidated between 1.15 and 1.175, then broke lower, recovered quickly and again remains locked into 1.15-1.175. One could think that a swift recovery from ’18 lows below 1.13 would invigorate bulls but they clearly face a strong selling pressure at 1.1750. If that zone is not broken soon, this positive momentum may fade.
EURUSD is in a “make or break” situation testing the 1.1750 zone. Source: xStation5
