With the US markets closed today for the annual Thanksgiving holiday, focus in the currency markets has centered around the Japanese Yen once again, as money flows continue to move into other currencies ahead of the Japanese elections in December. Both the USD/JPY and several of the cross currency pairs have seen sharp moves higher, with the GBP/JPY one of these, and climbing on the daily chart once again today, following yesterday’s wide spread up bar, which added further impetus to the move.
Following the breakout above the 130.00 price level, the bullish trend is now firmly established, with both the daily and three day trends firmly established. The Hawkeye Heatmap has also returned to bullish, following a period of transition, and with sustained and rising buying volumes on the daily chart, supported by buyers on the three day chart, the outlook for the GBP/JPY remains very positive. Finally of course, Hawkeye has delivered a conservative entry signal this week giving a solid entry for longer term trend traders in this currency pair.
January oil futures closed marginally higher yesterday, closing the oil trading session at $87.38 per barrel, having touched an intraday high of $87.89 per barrel, before ending the oil trading session just 10 cents per barrel higher. The current lack of direction for crude oil has been a feature of many markets over the last few weeks, as commodities in general trade in a consolidation phase as we move towards the year end, with the price congestion for oil clearly defined by the pivots above and below this current range.
To the upside, we have two isolated pivot highs, just below the $90 per barrel level, and below, two isolated pivot lows in the $85 per barrel price area, which define the limits of the current congestion phase. The most recent of these was on Tuesday, which is pushing the market lower as a result.
The Hawkeye widebar of early November was never validated, suggesting a lack of downside momentum, with the market pulling back to trade within the spread of the bar and failing to continue the bearish trend, with the daily trend now in transition to white. The three day trend however remains firmly bearish, with no transition as yet, and supported by heavy selling volumes in this time frame.
On the daily chart buyers have returned, but counterbalanced by yesterday’s rising selling volume in a narrow spread day. The Hawkeye Heatmap is in transition from bearish to bullish, but has yet to complete the full cycle, and the key now for the oil market, is whether we see a break above or below the current congestion. For a move higher, the $90 per barrel level is now key, and if this holds then we can expect to see a retest of the deep price congestion in the $92 per barrel area and beyond. A break below the $85 region, could see the market sell of sharply again, and test the $78 per barrel level in due course. As always, Hawkeye will reveal the future direction of the market, using volume as the only leading indicator.