Daily Outlook

February 22, 2016

Risk appetite weakened towards the end of last week as markets awaited news out of the EU Summit. The UK has managed to reach an agreement in negotiations held on Friday, which would provide them special status within the EU. The new deal provides provisions to the financial services industry as well as curbing access to welfare to new UK arrivals. The referendum is scheduled for the 23rd of June.

European equities fell as sentiment shifted, with the DAX and FTSE closing 0.80% and 0.36% in the red respectively. US equity markets had little net movement however, as US CPI date beat market expectations with an annualized rate of 1.4%, offsetting the shift in market sentiment.

Oil prices are struggling to find support post OPEC and non-OPEC production freeze negotiations last week, with WTI hitting highs of $33.82/bbl. Markets initially reacted bullish, as production talks including the world’s largest oil producers; Saudi Arabia, Russia, Iran, Qatar and Venezuela, indicated forward moment in curbing the current global supply glut. Gains made earlier last week are retracing with WTI and Brent Oil sitting around the $31.90/bbl and $33.06/bbl respectively, as the major global oil producers fail to commit to production limits.

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Currency Updates:

EUR/USD Intraday: key resistance at 1.1145.

Pivot: 1.1145

Our preference: short positions below 1.1145 with targets @ 1.1070 & 1.1040 in extension.

Alternative scenario: above 1.1145 look for further upside with 1.1185 & 1.1210 as targets.

Comment: the upward potential is likely to be limited by the resistance at 1.1145.

Supports and resistances:
1.1210 ***
1.1185 ***
1.1145 ***
1.1123 Last
1.1070 ***
1.1040 **
1.0990 ***

USD/JPY Intraday: the downside prevails.

Pivot: 113.20

Our preference: short positions below 113.20 with targets @ 112.35 & 111.65 in extension.

Alternative scenario: above 113.20 look for further upside with 113.65 & 114.15 as targets.

Comment: a break below 112.35 would trigger a drop towards 111.65.

Supports and resistances:
114.15
113.65
113.20
112.59 Last
112.35
111.65
111.00

GBP/USD Intraday: under pressure

Pivot: 1.4340

Our preference: short positions below 1.4340 with targets @ 1.4250 & 1.4205 in extension.

Alternative scenario: above 1.4340 look for further upside with 1.4405 & 1.4465 as targets.

Comment: the RSI is badly directed.

Supports and resistances:
1.4465 **
1.4405 ***
1.4340 ***
1.4296 Last
1.4250 ***
1.4205 **
1.4170 ***

AUD/USD Intraday: the bias remains bullish.

Pivot: 0.7100

Our preference: long positions above 0.7100 with targets @ 0.7170 & 0.7190 in extension.

Alternative scenario: below 0.7100 look for further downside with 0.7070 & 0.7030 as targets.

Comment: technically the RSI is above its neutrality area at 50.

Supports and resistances:
0.7220
0.7190
0.7170
0.7139 Last
0.7100
0.7070
0.7030

SPI 200‏ (ASX)‏ (H6) Intraday: consolidation.

Pivot: 4950

Our preference: short positions below 4950 with targets @ 4890 & 4850 in extension.

Alternative scenario: above 4950 look for further upside with 4980 & 5023 as targets.

Comment: as long as 4950 is resistance, look for choppy price action with a bearish bias.

Supports and resistances:
5023
4980
4950
4935 Last
4890
4850
4820

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