Oil Bluff and a BoJ Preview

January 29, 2016

Oil Bluff:
Crude Oil and risk assets were again top of the headlines last night, with WTI rallying on both short covering after coming off so much, and headlines hitting the newswires surrounding possible production cuts.

It all kicked off as the Forex world transitioned between the London and New York sessions, when Russia flagged the idea of cutting production in Oil by trying to drop Saudi Arabia into it. All headlines here from Reuters:

“RUSSIAN ENERGY MINISTER NOVAK SAYS SAUDI ARABIA PROPOSED TO CUT OIL PRODUCTION BY EACH COUNTRY BY UP TO 5 PCT”

“RUSSIAN ENERGY MINISTER NOVAK SAYS PROPOSAL ON OPEC AND NON-OPEC MEETING MEANT FOR ENERGY MINISTERS, NO FIRM AGREEMENT REACHED”

During the hours that passed, markets held their breath until the denials from OPEC and finally the Saudi’s came. Oil of course then spiked back down on the fact that THE WHOLE SESSION TRADED ON BASELESS HEADLINES!

“OPEC DELEGATES SAY NO PLAN YET FOR MEETING WITH RUSSIA”

“SAUDI HAS NO PROPOSAL TO CUT OUTPUT 5%: OPEC GULF DELEGATE”

Not only was there no meeting planned by OPEC delegates, in the end there wasn’t even a proposal of a cut… Seriously.

WTI 15 Minute:
Indices chart, WTI 15 Minute, 160129
Click on chart to see a larger view.

Looking at the 15 minute oil chart with daily dividers in place, was this ‘headline driven price action’ really that different from any other day this week?

Bank of Japan Preview:
Consensus is that the Bank of Japan will hold steady on any further increases to their stimulus package tonight. Most recently the Yen has strengthened (shown by the USD/JPY rally) but a whole plethora of economic data has been bad news for Kuroda and his men could today be the day that they jump at the opportunity?

Popular opinion has the BoJ always wanting to get the biggest bang for their buck and taking a look at where the technicals and COT data sit on the Nikkei and USD/JPY sit, the door could be seen as being left slightly ajar. Either way, this possibility means day traders will get some price action to run off following the release.

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Chart of the Day:
Further to the Bank of Japan decision today, lets take a look at USD/JPY chart.

USD/JPY 4 Hourly:
Forex chart, USDJPY 4 Hourly, 160129
Click on chart to see a larger view.

Price has coiled nicely in an ascending triangle, with each higher low off the trend line representing the diminishing number of sellers coming into the market each time they try to wrangle control.

When there are no more sellers left to be absorbed, the supply/demand imbalance is what causes breakouts from the horizontal, upside resistance of the tri.

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On the Calendar Friday:
JPY Monetary Policy Statement
JPY BOJ Outlook Report
JPY BOJ Press Conference

EUR CPI Flash Estimate y/y

CAD GDP m/m
USD Advance GDP q/q

Do you see opportunity in Forex trading? Take advantage on your free $50,000 MT4 MT4 Forex demo account.

Dane Williams – @VantageFX

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