EU Session Bullet Report | The Rollercoaster ahead of The ECB Rate Decision

Asian Stocks have resumed their downfall after taking over from a Rollercoaster ride in Wall Street which saw US stocks post a dramatic reversal of losses and nearly close in Green area. It was one of the most volatile sessions in years which at one point saw Dow Jones losing over 500 points and reversed in an almost 1000 point swing, backed by a rebound in oil prices which by the way posted (surprise surprise) a new low.

In currency markets, the action was relatively muted however big swings were also noticeable. EURUSD once again tested its topside barrier at 1.0970 as stocks dropped however it fell below 1.09 as the reversal started to take place. GBPUSD spent most of the day trading within a 90 pip range between 1.4220 and 1.4130 while USDJPY recovered to 117.45 overnight after hitting 116.00 lows yesterday. USDCAD price action was the most volatile as the USDCAD initially lost 160 pips after BOC held rates unchanged but bounced back 100 points almost instantaneously. The pair then ended the day 200 points lower again as the oil drop intensified.

AUD/USD managed to hold above 0.6830 support and rallied together with the other commodity currencies into the NY close. It reached 0.6955 ahead of the Tokyo open, but ran out of momentum and eventually fell back to 0.6890.

Standing out in the calendar today is the ECB Rate Decision and Press Conference. ECB president Mario Draghi may show some concerns over further decline in oil price and the effect on inflation expectations. With that in mind, Draghi might signal that ECB is open and ready for further stimulus this year but that would be dependent on new economic forecasts to be published in March. In other words, there isn’t much expectation for today’s event.

Trading quote of the day: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. Warren Buffett

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Technical Analysis

Green lines are resistance, Red lines are support.

EUR/USD

Pivot: 1.0935

Likely scenario: short positions below 1.0935 with targets @ 1.0855 & 1.0835 in extension.

Alternative scenario: above 1.0935 look for further upside with 1.0975 & 1.101 as targets.

Comment: as long as 1.0935 is resistance, look for choppy price action with a bearish bias.

GBP/USD

Pivot: 1.423

Likely scenario: short positions below 1.423 with targets @ 1.4125 & 1.408 in extension.

Alternative scenario: above 1.423 look for further upside with 1.427 & 1.432 as targets.

Comment: as long as 1.423 is resistance, look for choppy price action with a bearish bias.

AUD/USD

Pivot: 0.6875

Likely scenario: long positions above 0.6875 with targets @ 0.6955 & 0.6975 in extension.

Alternative scenario: below 0.6875 look for further downside with 0.6825 & 0.68 as targets.

Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

USD/JPY

Pivot: 117.5

Likely scenario: short positions below 117.5 with targets @ 116.5 & 116.2 in extension.

Alternative scenario: above 117.5 look for further upside with 118.1 & 118.35 as targets.

Comment: the RSI is mixed to bearish.

USD/CAD

Pivot: 1.4595

Likely scenario: short positions below 1.4595 with targets @ 1.442 & 1.433 in extension.

Alternative scenario: above 1.4595 look for further upside with 1.469 & 1.4755 as targets.

Comment: as long as 1.4595 is resistance, look for choppy price action with a bearish bias.

GOLD

Pivot: 1095

Likely scenario: long positions above 1095 with targets @ 1106 & 1110 in extension.

Alternative scenario: below 1095 look for further downside with 1090.5 & 1086 as targets.

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

OIL

Pivot: 29.2

Likely scenario: short positions below 29.2 with targets @ 27.5 & 26.8 in extension.

Alternative scenario: above 29.2 look for further upside with 29.75 & 30.5 as targets.

Comment: as long as 29.2 is resistance, likely decline to 27.5.

DAX

Pivot: 9530

Likely scenario: short positions below 9530 with targets @ 9255 & 9150 in extension.

Alternative scenario: above 9530 look for further upside with 9650 & 9760 as targets.

Comment: the RSI advocates for further downside.

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