Weekly Market Commentary | 16.01 – 22.01

Curious as to what’s happening on the markets this week? Take a quick tour of the latest news, economic updates, and trading setups that will keep you up to date and in the know.

Monday>

– The American market will be closed today in celebration of the Martin Luther King Day

– The end of the European session will bring us a speech by Mark Bailey from the BoE

– Today marks the start of the World Economic Forum in Davos

Tuesday>

– Tuesday will start with the GDP data from China, where we are expecting a growth of 1.6%

– The Canadian Dollar will be in the spotlight as we learn the inflation data. CPI is expected to drop significantly, which is in line with a general global trend

– The day will finish with the Empire State Manufacturing Index who is expected to come negative (-8.7), but not as much as in the previous month (-11.2)

Wednesday>

– Wednesday will be an important day for the Japanese Yen as the Bank of Japan will present its stance on the monetary policy and outlook for the next months

– Before the start of the European session, we will also find out the inflation data from the UK that is expected to be slightly lower than the previous reading (10.5% vs 10.7%)

– Wednesday will also be the key day for the American Dollar as we will learn the PPI numbers along with the retail sales data. In both cases, worse numbers compared to the previous month are expected

Thursday>

– Thursday will be an unusually quiet day with no Tier-1 data in the calendar

– We will learn the job data from Australia, where the Unemployment Rate is expected to remain the same (3.4%)

Friday>

– Friday is expected to be rather quiet as well with quite unusual activity from Central Bankers, which is, however, understandable as the World Economic Forum in Davos will still be taking place. We shall hear speeches by FOMC Members Williams, Harker and Waller, and some from European Bankers such as SNB Chairman Jordan and ECB Governor Lagarde

Setups for This Week:

USDJPY

Primary View:

Since the middle of November, USDJPY has been moving inside a channel-down formation (black)

Most recently, the price broke the 131.1 support (orange) which was quite important in the mid-term

Currently, we are bouncing off the lower line of the channel down pattern, which may be a good occasion for a bullish bounce and a test of the 131.1 as a resistance

Alternative View:

Should the price break the lower line of the channel-down pattern, we will have a strong sell signal

WTI Oil

Primary View:

January started with a huge drop but in recent days, oil has been quite strong

Currently, we can see a nice Inverse Head and Shoulders pattern (orange)

Price is below the neckline (black) and the mid-term downtrend line (red)

Oil climbing above those two would be an amazing buying opportunity

Alternative View:

The bounce off the two resistances would be a proper signal to go short

DAX

Primary View:

Last week brought a breakout of crucial resistance on 14800 points (yellow)

This week will most probably bring us a test of this area as a support

Price staying above 14800 will be bullish

Alternative View:

DAX dropping below 14800 points would be a legitimate signal to go short