E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Tech Up as Investors Buy Semiconductors

June E-mini NASDAQ-100 Index futures are trading higher shortly before the cash market close on Friday after President Trump’s China actions kept the trade deal intact.

During his news conference late in the session, Trump said he would take action to eliminate special treatment towards Hong Kong, however, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year. The news greenlit the late session rally as it eased trader concerns for the time being.

Technology sector investors celebrated the news by buying up semiconductor stocks. The iShares PHLX Semiconductor ETF (SOXX) jumped to its session high following the news conference, trading more than 2% higher.

Nvidia and Micron Technology shares advanced more than 2% each. However, among the biggest gainers in the ETF were Marvell Technologies and Lam Research, rising 6.7% and 2.9%, respectively.

At 19:46 GMT, June E-mini NASDAQ-100 Index futures are at 9537.00, up 76.75 or +0.81%.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 9604.00 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 8847.00.

The minor trend is down. This is controlling the short-term momentum. A trade through 9604.00 will change momentum to the upside, while a trade through 9172.50 will reaffirm the downtrend.

The first minor range is 9604.00 to 9172.50. Its 50% level at 9388.25 is support.

The second minor range is 8847.00 to 9604.00. Its 50% level at 9225.50 is additional support.

The short-term range is 8556.25 to 9604.00. Its retracement zone at 9080.00 to 8956.50 is a support zone.

Daily Swing Chart Technical Forecast

Into the close on Friday the key level that must hold is the first minor pivot at 9388.25.

A close near 9604.00 will put the index in a position to continue the rally early next week. If there is enough buying behind the move then look for the rally to possibly extend into the February 20 main top at 9780.50.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Trading Near Highs after ‘Trump Bump’

June E-mini Dow Jones Industrial Average futures are trading nearly flat during the last hour of cash market trading after clawing back earlier losses. Blue chips stocks fell earlier in the session ahead of a U.S. response to China’s national security law on Hong Kong that threatens to take the shine off another month of strong gains for the stock market.

At 19:09 GMT, June E-mini Dow Jones Industrial Average futures are trading 25418, down 39 or -0.15%. This is up from a low of 24991.

Traders breathed a sigh of relief after President Donald Trump’s much-awaited news conference on China Friday afternoon. During the news conference, Trump said he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year, easing trader concerns for the time being. Investors celebrated this news with a late session rally.

In other news, the iShares PHLX Semiconductor ETF (SOXX) jumped to its session high following the news conference, trading more than 2% higher. Marvell Technologies and Lam Research were among the biggest gainers in the ETF, rising 6.7% and 2.9%, respectively. Nvidia and Micron Technology also advanced more than 2% each.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Thursday with the formation of a closing price reversal top and its subsequent confirmation on Friday.

A trade through 25794 will negate the closing price reversal top and signal a resumption of the uptrend. A move through the last main bottom at 22704 will change the main trend to down.

The minor trend is also up. A trade through 24076 will change the minor trend to down. This will also confirm the shift in momentum.

The main range is 29506 to 18086. Its retracement zone at 25144 to 23796 is controlling the longer-term direction of the major average. Its Fibonacci level at 25144 is major support.

The minor range is 24076 to 25794. Its 50% level at 24935 is controlling the longer-term direction of the Dow.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini Dow Jones Industrial Average futures contract into the close on Friday is likely to be determined by trader reaction to the major Fib level at 25144 and the minor 50% level at 24935.

Bullish Scenario

A sustained move over 25144 will indicate the presence of buyers. If they can create enough upside momentum then look for the Dow to make a run at 25794.

Bearish Scenario

A sustained move under 24935 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the next major target a price cluster at 24076, 23796 and 23571.

For a look at all of today’s economic events, check out our economic calendar.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Pivot into Close is 2984.50; Seeing Trump Bounce

June E-mini S&P 500 Index futures are edging lower late in the session on Friday, but clawing back earlier losses as traders braced for an upcoming news conference on U.S.-China relations from President Donald Trump.

The benchmark index began to cut its losses after a Bloomberg News report said Trump was not pulling the U.S. from the phase one trade deal with China. A reporter from PBS NewsHour also said the announcement would not include additional tariffs or changes to the existing trade agreement.

At 18:41 GMT, June E-mini S&P 500 Index futures are trading 3023.00, down 15.00 or -0.49%.

In other news, Bank of America and Wells Fargo led bank stocks lower, falling more than 1.6% each. Citigroup and JPMorgan Chase also dipped 1.9% and 1.7% respectively.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through yesterday’s high at 3065.50 will signal a resumption of the uptrend. A move through 2903.75 will change the main trend to down.

The minor trend is also up. Today’s price action turned 3065.50 into a new minor top.

The main range is 3397.75 to 2174.00. Its retracement zone at 2930.25 to 2785.75 is controlling the longer-term direction of the index. Holding above this zone will continue to give the market a solid upside bias. The nearest support is the main Fibonacci level at 2930.25.

Daily Swing Chart Technical Forecast

The new minor range is 2903.75 to 3065.50. Its 50% level at 2984.50 is controlling the direction of the index on Friday.

Bullish Scenario

A sustained move over 2984.50 will indicate the presence of buyers. If this creates enough upside momentum then look for a retest of yesterday’s high at 3065.50. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 2984.50 will signal the presence of sellers. This could trigger an acceleration to the downside with 2930.25 to 2903.75 the best downside target.

The main bottom at 2903.75 is a potential trigger point for an even stronger break with 2785.75 to 2765.50 the next target zone.

EUR/USD Mid-Session Technical Analysis for May 29, 2020

The Euro is trading higher at the mid-session on Friday as traders await a key press conference from President on China in a move that could have a dramatic effect on investor sentiment.

On Friday, the greenback extended its slide against the surging Euro, hurt by month-end flows and as the common currency continued to enjoy a boost from the European Union’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion-Euro ($828 billion) recovery fund.

At 18:17 GMT, the EUR/USD is trading at 1.1093, up 0.0014 or -0.12%. This is down from an intraday high of $1.1145.

An early session gain by the Euro was driven by optimism generated by the European Commission’s stimulus plan announced earlier this week, as well as investors’ improved appetite for risk-taking as global economies gradually move to reopen after coronavirus-linked shutdowns, analysts said.

However, prices fell after the U.S. Dollar found support as traders awaited U.S. President Donald Trump’s response to China’s tightening control over Hong Kong, which could worsen tensions between the two powers over the financial hub.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend continued earlier today when buyers took out yesterday’s high. A trade through the main top at 1.1147 will reaffirm the uptrend. The main trend will change to down on a trade through the last main bottom at 1.0871.

The main range is 1.1496 to 1.0636. The EUR/USD is currently testing its retracement zone at 1.1066 to 1.1167. This zone is controlling the longer-term direction of the Forex pair.

The short-term range is 1.0636 to 1.1147. Its retracement zone at 1.0987 to 1.0937 is the nearest support zone.

Daily Swing Chart Technical Forecast

Based on the early price action and current price at 1.1093, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1066.

Bullish Scenario

A sustained move over 1.1066 will indicate the presence of buyers. If this creates enough upside momentum then we could see a surge into the main top at 1.1147, followed by the main Fibonacci level at 1.1167.

Bearish Scenario

A sustained move under 1.1066 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the short-term retracement zone at 1.0987 to 1.0937 the next likely downside target zone.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Daily Forecast – Trump’s Announcement, China’s Response Sets the Tone

Gold is trading higher on Friday in reaction to lower Treasury yields and a plunge below long-term support by the U.S. Dollar. The catalysts behind gold’s strength are lingering U.S.-China trade tensions as traders cautiously await Washington’s response to the Chinese parliament’s approval of a national security law for Hong Kong.

At 12:26 GMT, August Comex Gold is trading $1745.60, up $17.30 or 1.00%.

The price action suggests that traders are betting against the U.S. Dollar ahead President Trump’s response to China’s tightening control over Hong Kong, which could worsen tensions between the two over the financial hub.

Traders fear that new U.S. sanctions against China might escalate into something more serious. If Trump announces more tariffs, for example, then look for retaliation by China. Both moves will put pressure on the U.S. and Chinese economies at a time when they are just starting to show signs of recovering from the impact of the coronavirus pandemic.

Moh Siong Sim, a currency strategist at Bank of Singapore, doesn’t expect Trump to come down too hard on China because of the state of economy. He said, “You can never quite predict Trump. But I think this year it’s really difficult for him to do tough action.”

Trump to Hold Press Conference

U.S. President Donald Trump is expected to hold a news conference on China later on Friday as his administration moves to pressure Beijing over its treatment of Hong Kong.

“People will be looking for guidance to see whether that could trigger further escalation between the two largest economies. After Trump’s speech, people will also be keen to see China’s response,” said Bank of China International analyst Xiao Fu.

“Even with many economies reopening, the economic status is still quite weak. So with this new geopolitical tension it means that recovery in many parts of the world can take longer, which could lift gold prices.”

Daily Forecast

The direction of the gold market the rest of the session on Friday will be determined by Trump’s announcement. A soft response by Trump to China could help the U.S. Dollar recover, pressuring gold prices.

But a tough response that garners a swift retaliation from China will likely drive the U.S. Dollar lower against the major currencies, which will be supportive for gold.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Worsening US-China Relations Likely Source of Impending Volatility

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Friday with prices dragged down by weak U.S. fuel demand, fears of a second wave of coronavirus cases in South Korea and a worsening in U.S.-China relations. Nonetheless, the markets remain on track for a hefty monthly gain.

At 11:55 GMT, July WTI crude oil is trading $32.85, down $0.86 or -2.55% and August Brent crude oil is at $35.28, down $0.75 or -2.08%.

Both futures contracts are also in a position to post their first weekly loss after four consecutive weeks of gains that leave them set for the biggest monthly gains in years thanks to production cuts and optimism over Chinese-led demand recovery, analysts said.

WTI is on track for a record monthly gain of 72% in May, with Brent set for a 35% increase that would represent its strongest monthly rise since March 1999, Reuters said.

There are headwinds, however, which is likely the reason behind this week’s abrupt halt of the current rally.

“The global reaction to China’s move to propose new security laws for Hong Kong continues to increase, while there’s a score of new COVID-19 cases in South Korea,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugend.

U.S. President Donald Trump is due to announce his response to the situation in Hong Kong later on Friday. His announcement is likely to be the source of volatility later in the session.

Despite US-China Issues, There are Positives

Thursday’s data from the Energy Information Administration (EIA) showed that U.S. crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.

However, storage in Cushing, Oklahoma, the main delivery point in WTI, decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%.

Additionally, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts.

Daily Forecast

The wild price swings seem to be behind us, but the market is still vulnerable to a steep retracement of the recent rally. Traders are now waiting for the next OPEC+ meeting to set the longer-term tone. However, over the short-run Trump’s announcement regarding China’s influence in Hong Kong is likely to set the tone. We’re looking for a near-term correction of the recent rally.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Futures (GC) Technical Analysis – Potentially Bearish Secondary Lower Top May Be Forming

Gold climbed more than 1% early in the session but has since then given back all of those gains. I guess there wasn’t enough gold bug money out there willing to chase it higher at current price levels. Surprising because the chat room commentators think gold should be trading at $2000 because of all that stimulus money floating around.

The price action suggests the stimulus money is fully-priced in so unless the central banks and governments decide to throw more money into their respective economies, a gold rally is going to have trouble gaining traction. It also suggests that perhaps traders are getting fed up chasing the headlines and may be waiting for a strong pullback into a value area.

Just keep remembering that gold is an investment and not a so-called safe-haven asset. Gold investors want to buy gold low and sell it higher. Professionals are buying dollars when there is fear and they are selling gold and dollars when conditions soften.

That’s the way the market is trading now. The traditional dollar/gold relationship has been shelved for the time being.

If gold prices went up because of the threat of a major global recession then it makes sense that it should weaken a little now that the economies are opening up. But we could get another flare-up in prices if a second wave of coronavirus cases hits.

At 18:04 GMT, August Comex gold is trading $1726.70, down $0.10 or -0.01%.

In other news, the number of Americans filing for unemployment benefits held above 2 million for a 10th straight week, while a separate report showed GDP contracted at a bigger-than-expected 5% annualized rate in the first quarter, the deepest drop in output since the 2007-09 Great Recession.

Daily August Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on May 18.

A trade through $1787.50 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a move through $1683.30, but the really hard selling is likely to start if $1668.40 fails as support.

The minor trend is down. This is controlling the momentum. Taking out $1701.60 should strengthen the downside momentum and bring the new minor top down to $1743.70.

The minor range is $1787.50 to $1701.60. Its retracement zone at $1744.10 to $1754.30 is resistance.

The short-term range is $1789.00 to $1668.40. Its 50% level at $1728.70 is potential support and also the trigger point for an even steeper sell-off.

The main range is $1454.80 to $1789.00. Its retracement zone at $1621.90 to $1582.40 is the primary downside target and potentially major support.

Short-Term Outlook

We’re going to be watching trader reaction and order flow at $1728.70 into the close. This should tell us if the selling is getting stronger or if buyers are coming in to support the market. The reaction to the earlier rally suggests the move was fueled by short-covering rather than new buying.

Furthermore, the formation of a secondary lower top at $1743.70 will be a sign of weakness.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Key Level into Close is 25534

June E-mini Dow Jones Industrial Average futures are trading higher at the mid-session on Thursday, boosted by gains in healthcare and technology stocks, as investors hoped for a swift economic recovery from a coronavirus-driven economic slump.

Boeing Co. climbed 3.3%, the most among the 30 blue-chip Dow components, as the planemaker said it had resumed production of its 737 MAX passenger jet at its Washington plant, although at a “low rate”.

At 16:42 GMT, June E-mini Dow Jones Industrial Average futures are trading 25684, up 150 or +0.59%.

Although the Dow is testing levels not reached since March 6, the buying has been tentative on Thursday. Worsening ties between Washington and Beijing over the handling of the coronavirus outbreak and a new national security law in Hong Kong pose a major threat to the stock market’s strong recovery from the crash earlier this year.

President Donald Trump has promised action over Hong Kong by the end of the week.

In other news, the number of Americans filing for unemployment benefits held above 2 million for a 10th straight week, while a separate report showed GDP contracted at a bigger-than-expected 5% annualized rate in the first quarter, the deepest drop in output since the 2007-09 Great Recession.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out yesterday’s high. The next objective is the March 3 main top at 26962. A trade through 22704 will change the main trend to down.

The minor trend is also up. A move through 24076 will change the minor trend to down. This will shift momentum to the downside.

The main range is 29506 to 18086. Its retracement zone at 25144 to 23796 is controlling the longer-term direction of the Dow. The nearest support is the main Fibonacci level at 25144.

Daily Swing Chart Technical Forecast

Look for the upside bias to continue as long as the June E-mini Dow Jones Industrial Average remains above 25144. If this is able to generate enough upside momentum then look for the rally to possibly extend into 26962.

A failure to hold 25144 should result in the loss of upside momentum. This could trigger a near-term correction into a minor pivot at 24935. Since the main trend is up, buyers are likely to come in on a test of this level. If it fails then look for the selling to possibly extend into a cluster of potential support levels at 24076, 23796 and 23571.

Crude Oil Price Update – Reaction to $32.77 Pivot Sets the Tone into the Close; EIA Says Crude Stocks Rose

U.S. West Texas Intermediate crude oil futures are trading marginally lower at the mid-session on Thursday following the release of government report that showed a surprise increase in U.S. crude stocks, which offset hopes for a demand recovery as coronavirus lockdowns ease.

According to the U.S. Energy Information Administration (EIA), U.S. stockpiles rose by 7.9 million barrels the week-ending May 22. Analysts had been expecting a draw of 2.5 million barrels although analysts at FactSet were predicting a 1.3 million barrel draw.

At 14:40 GMT, July WTI crude oil is trading $32.73, down $0.08 or -0.24%.

The market is actually clawing back earlier losses that pushed prices into an intraday low of $31.14. This move was fueled by a surprise build in Wednesday afternoon’s American Petroleum Institute (API) weekly inventories report.

Also weighing on prices was uncertainty about Russia’s commitment to continuing deep output cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through the main tops at $34.81 and $351.8 will change the main trend to up.

The minor trend is up. This is controlling the momentum. A trade through $30.72 will change the minor trend to down. This will shift momentum to the downside.

The main range is $54.86 to $17.27. Its retracement zone at $36.07 to $40.50 is the primary upside target and potential resistance zone.

The minor range is $30.72 to $34.81. Its 50% level at $32.77 should act like a pivot. It is providing resistance early Thursday.

The short-term range is $17.27 to $34.81. If the momentum shifts to the downside then its retracement zone at $26.04 to $23.97 will become the primary downside target area.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $32.73, the direction of the July WTI futures contract the rest of the session on Thursday is likely to be determined by trader reaction to $32.77.

Bearish Scenario

A sustained move under $32.77 will indicate the presence of sellers. If this move creates enough downside momentum then look for a test of the minor bottom at $30.72. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $32.77 will signal the presence of buyers. This could lead to a quick test of $32.98, followed by $34.81.

For a look at all of today’s economic events, check out our economic calendar.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Hold 3035.50 to Sustain Upside Momentum

June E-mini S&P 500 Index futures are nudging higher for a third session shortly after the cash market opening on Thursday. The early buying is also coming across as tentative for a second session. Yesterday, the benchmark index spent most of the session lower before screaming to the upside into the close.

At 14:09 GMT, June E-mini S&P 500 Index futures are trading 3041.75, up 6.25 or +0.24%.

The index is up about 2.7% during this holiday shortened week with most of the gains driven by optimism about the reopening of the U.S. economy and positive steps toward the development of a vaccine to halt the spread of coronavirus.

Gains are being held in check, however, after China’s National People’s Congress approved a national security bill for Hong Kong. President Trump said he would announce the U.S. response to the move before the end of the week.

In economic news, the Labor Department said Thursday another 2.1 million Americans filed for unemployment benefits last week. That was higher than the 2.05 million forecast. Continuing claims, which is a better indication of the unemployment picture, plunged by nearly 4 million.

With the economy reopening at a steady pace, buyers are looking at bank stocks such as JPMorgan Chase, Citigroup and Wells Fargo to outperform. Meanwhile shares of companies that rose during the worse of the pandemic like Zoom Video, Shopify and Amazon are feeling some pressure.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through yesterday’s high signaled a resumption of the uptrend. A trade through 2903.75 will change the main trend to down.

The main range is 3397.75 to 2174.00. Its retracement zone at 2930.25 to 2785.75 is controlling the longer-term direction of the index. Its Fibonacci level at 2930.25 is the nearest support.

Daily Swing Chart Technical Forecast

The direction of the June E-mini S&P 500 Index the rest of the session on Thursday is likely to be determined by trader reaction to yesterday’s close at 3035.50.

Bullish Scenario

A sustained move over 3035.50 will indicate the presence of buyers. If this continues to generate enough upside momentum then the index will remain on pace to challenge its next objective at 3131.00.

Bearish Scenario

A sustained move under 3035.50 will signal the presence of sellers. This will put the index in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to 2-3 day counter-trend selling with 2930.25 the first objective.

EUR/USD Mid-Session Technical Analysis for May 28, 2020

The Euro hit a fresh eight-week high on Thursday, bolstered by a 750 billion Euro European Union plan to prop up the bloc’s virus-hit economies. But it is facing headwinds as doubts about delivery the scheme crept in.

“It is probably too early to say that the rally in the Euro is the start of a major re-rating of European risk,” said Chris Turner, global head of markets at ING, in a note.

“The path to getting (the) recovery fund carved out of the long-term EU budget will be a bumpy one…thus it is hard to make the case that (the) Euro moves higher in a straight line from current levels.”

At 13:56 GMT, the EUR/USD is trading 1.1038, up 0.0030 or +0.27%.

In other news, first-time claims for U.S. unemployment benefits totaled 2.1 million last week, the lowest total since the coronavirus crisis began though indicative that a historically high number of Americans remain separated from their jobs. Economists were looking for a 2.05 million increase.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday when buyers out the May 1 top at 1.1018. The main trend will change to down on a move through the last swing bottom at 1.0871.

The main range is 1.1496 to 1.0636. Its retracement zone at 1.1066 to 1.1167 is the next upside target. Sellers could show up on a test of this zone.

The short-term retracement zone at 1.0987 to 1.0937 is the first support. The intermediate retracement zone at 1.0892 to 1.0831 is the second support.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.1026, the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at 1.0987.

Bullish Scenario

A sustained move over 1.0987 will indicate the presence of buyers. Now that the main tops at 1.1008 and 1.1018 are out of the way, the Forex pair has a clear shot at the 50% level at 1.1066. This is a potential trigger point for an acceleration into the main top at 1.1147 and the main Fibonacci level at 1.1167.

Bearish Scenario

The inability to overtake 1.1066 will be the first sign of selling pressure, but the bullish tone will be tarnished if 1.0987 fails as support. This could lead to a pullback into at least 1.0937.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Daily Forecast – Traders Chasing Hong Kong Headlines

Gold prices are moving higher on Thursday after a seven-day setback as tensions between the United States and China over a proposed Hong Kong security law escalated, while fresh monetary and fiscal stimulus measures from India, Japan and the Euro Zone to mitigate the coronavirus fallout also lent support.

At 12:31 GMT, August Comex gold is trading $1737.90, up $11.10 or +0.64%.

Unlike earlier in the week, gold buyers aren’t shying away from the long-side despite higher equity prices. As far as I know, there is still optimism in the air over the reopening of global economies and progress being made toward a vaccine to stop coronavirus. These are the two factors traders blamed for gold’s decline this week.

Did something change? Even the reaction to fresh stimulus measures from Europe and Japan is a bit of a surprise since these ideas have been out there for over the week. Furthermore, we can’t be sure yet if we’re looking at short-covering or new buying. After all, recent data showed many professionals trimming long gold positions in recent weeks and some actually shorting the precious metal.

The point I’m trying to make is that gold is expected to trade at heightened volatility levels over the short-term, but there is enough stimulus out there to provide a cushion for long-term investors.

We continue to have a longer-term upside bias, but we do realize that over the short-run, due to the ever-changing headlines, gold is going to have experience unexpected price swings.

If you’re a gold trader then you’re going to like the volatility. If you’re an investor than you’ll have to ride out the price swings, however, with a two-sided trade, there’s a better chance of a pullback into a major value zone.

The Headlines

Gold traders appear to be reacting to two narratives today:  Hong Kong and fresh stimulus.

As far as Hong Kong is concerned, most of the headlines appear to be coming from the United States. China has been merely responding to U.S. comments although we’re not sure if they have been official comments.

U.S. Secretary of State Mike Pompeo said Hong Kong no longer qualifies for its special status under the U.S. law, dealing a blow to its status as a financial hub. Additionally, U.S. President Donald Trump has a long list of possible responses to China’s to impose a national security law on Hong Kong, including visa and economic sanctions, said David Stilwell, assistant Secretary of State for East Asia.

China has basically said it may respond with sanctions of its own when provoked to do so.

As far as fresh stimulus is concerned, the European Union unveiled a 750 billion Euro ($826.13 billion) plan on Wednesday. Japan approved a fresh $1.1 trillion stimulus package also and India may need to pump about $20 billion into its struggling economy.

In U.S. economic news, Preliminary GDP fell 5.0% versus 4.8%. Core Durable Goods plunged 7.4%, better than the -14.8% forecast. Durable Goods Orders fell 17.2%, also better than the -19% estimate.

Weekly Unemployment Claims were a dismal 2.213 million. This was worse than the 2.100 million forecast. The previous week was also revised lower to 2.446 million.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Fundamental Daily Forecast – Traders Looking for EIA to Report Triple-Digit Build

Natural gas futures are trading lower on Thursday ahead of the regular session opening at 12:00 GMT and the release of the government’s weekly storage report at 14:30 GMT. On Wednesday, the market firmed for a second session shortly after the opening, but gains were quickly erased and prices plunged into the close as traders expressed concerns over weaker export demand and another large weekly storage injection.

At 07:27 GMT, July natural gas is trading $1.857, down $0.029 or -1.54%.

US Energy Information Administration Weekly Storage Report Estimates

Natural Gas Intelligence (NGI) is reporting that ahead of the release of the government data, a Bloomberg survey of three analysts produced a range of estimates from 99 Bcf to 126 Bcf, with a median of 103 Bcf. Reuters polled 16 analysts, who had the same range of estimates but arrived at a median of 106 Bcf. NGI projected a 110 Bcf build, which is on par with last year’s 110 Bcf injection but well above the five-year average build of 93 Bcf.

Working gas in storage was 2,503 Bcf as of Friday, May 15, 2020, according to EIA estimates. This represents a net increase of 81 Bcf from the previous week. Stocks were 779 Bcf higher than last year at this time and 407 Bcf above the five-year average of 2,096. At 2,503 Bcf, total working gas is within the five-year historical range.

NGI Sees Bearish Problems with Liquefied Natural Gas

“Ongoing concerns related to U.S. liquefied natural gas (LNG) exports also remain a massive headwind for pricing. Although NGI data shows that the feed gas volumes for Wednesday were higher day/day, deliveries were still well off late-March highs at around 6.5 Bcf/d, and the outlook for summer remained rather bleak,” NGI said.

“More than 30 U.S. LNG cargoes have been canceled for June, and international prices are signaling that oversupply conditions will linger for a while, even when accounting for any increased demand in the wake of COVID-19,” NGI added.

Short-Term Weather Outlook

Weather models continued to warm, with the overnight data being “a touch hotter” for the June 5-7 period across the southern United States due to upper high pressure strengthening, according to NatGasWeather.

However, models still favor the upper ridge weakening June 8-11, and this is where the national pattern needs to be hotter, the firm said. “Again, the data isn’t quite as bearish as Friday’s data and needs close watching, as it wouldn’t take much hotter trends to look increasingly bullish.”

Daily Forecast

A bearish EIA storage report is likely to drive prices into the two main bottoms at $1.822 and $1.802. The selling pressure may even be strong enough to reach the upper $1.70’s area.

However, you have to be careful about shorting aggressively at new lows because speculative buyers may show up. They’re likely to be betting on the return of hotter temperatures.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Weaker after API Reports Large Unexpected Inventories Build; EIA on Tap

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Thursday, shortly before the NYMEX regular session opening at 12:00 GMT and ahead of the U.S. Energy Information Administration (EIA) weekly inventories report at 15:00 GMT.

Prices are down for a second session on Thursday as a U.S. private industry report showed a steep and surprising build-up in crude stockpiles, putting a lid on hopes of a smooth demand recovery as the global economy begins to ease its way out of coronavirus-related lockdowns.

At 06:46 GMT, July WTI crude oil is trading $31.95, down $0.86 or -2.62% and August Brent crude oil is at $34.91, down $0.54 or -1.52%.

Russia’s Commitment is Questioned

On the demand front, traders are becoming a little worried about Russia’s commitment to deeper than agreed upon oil production cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+.

“As is often the case during a run-up to an OPEC+ meeting, the focus is squarely on Russia’s commitment and understandably so as historically they have been the laggard within the OPEC+, said Stephen Innes, chief global markets strategist at AxiCorp.

Two days ago Russian Energy Minister Alexander Novak met with domestic major oil companies to discuss the implementation of global oil production curbs and the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.

American Petroleum Institute Weekly Inventories Report

The API reported late Wednesday a large crude oil inventory build, of 8.731 million barrels for the week-ending May 22. Analysts were looking for an inventory draw of 2.50 million barrels.

The API also reported a build of 1.120 million barrels of gasoline for the week-ending May 22, compared to last week’s 651,000-barrel draw. This week’s draw compares to analyst expectations for a 33,000-barrel draw for the week.

Distillate inventories were up by 6.907 million barrels for the week, compared to last week’s 5.1 million-barrel build, while Cushing inventories saw a draw of 3.370 million barrels.

Daily Forecast

After nearly a one-month rally, crude oil traders are booking profits. Prices just got too high given the uncertain outlook for supply and demand beyond June. Although we don’t expect the markets to come anywhere close to their late April lows, we would not be surprised by a normal 50% to 61.8% correction of the rally.

Worries about whether Russia will go along with an OPEC+ extension of the output cuts is understandable since there is always apprehension ahead of and OPEC+ meeting.

The wildcard over the near-term will be U.S. inventories. Given the steep drop in the number of operating wells, traders are expecting today’s EIA report to show a 2.5 million-barrel decline. Prices could stabilize if the report hits or exceeds the mark. However, expect a steep break if the numbers are bearish.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Fundamental Daily Forecast – US Dollar’s Safe-Haven Appeal Attracting Buyers

The Dollar/Yen is edging higher for a second-session early Thursday. Despite the stronger demand for higher risk assets, investors are starting to move money back into the U.S. Dollar due to its appeal as a safe-haven asset.

Investors have been tentatively buying stocks this week on optimism over the reopening of the U.S. economy and progress being made toward a coronavirus vaccine. However, they have also been expressing concerns over simmering U.S.-China trade relations as they await the announcement of the U.S. response to China’s security proposal designed to suppress pro-democracy protestors in Hong Kong.

Additionally, on Wednesday, Secretary of State Mike Pompeo targeted Beijing over its efforts to tamp down on dissent in Hong Kong, announcing that the State Department no longer viewed Hong Kong as autonomous and reiterating U.S. support for anti-government protesters there.

Meanwhile, China has warned that it will retaliate against any sanctions imposed and denies the allegations of abuse inside its reeducation camps, which are believed to house as many as a million Uighurs, ethnic Kazakhs and members of other minority groups.

At 03:40 GMT, the USD/JPY is trading 107.809, up 0.089 or +0.08%.

Daily Forecast

With the spread between U.S. Government bond yields and Japanese Government bond yields extremely tight, the carry trade is nearly non-existent. When the spread is wide, investors tend to borrow at low interest rates from Japanese Yen, sell Yen then buy dollars to invest in U.S. stocks. Essentially, when there is demand for risk, the USD/JPY rises.

But since the outbreak of the coronavirus pandemic and the plunge in U.S. interest rates, traders have not adhered to the carry trade. Instead, traders have been treating the U.S. Dollar as a safe-haven asset.

We may be seeing a little of that going on at this time as investors flock to the greenback at the earliest sign of market unrest. It’s not about the economies of Japan and the U.S. at this time, but rather where can an investor get protection and earn some interest at the same time. Right now, that place is the U.S. Dollar.

The carry trade is not likely to come back in full-force until the spread widens significantly between the U.S. and Japanese debt instruments.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Stumbles Amid News China Will Target Coal Exports

The Australian Dollar traded higher early Wednesday but ran into a wall of sellers at .6680, just slightly below the major March 9 top at .6685. The currency closed lower for the session, producing a potentially bearish closing price reversal top chart pattern.

We’ll know if the selling was profit-taking or shorting on Thursday if follow-through pressure takes out Wednesday’s low at .6568. The chart pattern doesn’t change the main trend to down, but it does indicate the selling may be greater than the buying at current price levels. This could trigger a 2 to 3 day counter-trend break.

At 02:14 GMT, the AUD/USD is trading .6630, up 0.0006 or +0.09%.

Australian Dollar

The whip-saw action in the Aussie that led to the reversal to the downside was fueled by changes in risk sentiment on Wednesday. Earlier in the session, demand for higher risk assets supported the currency. The catalyst behind the move was optimism over the opening of the global economy and talk of two potential vaccines for coronavirus. Later in the session, the Aussie tumbled from its high on concerns over escalating tensions between the United States and China.

There were other reports that the Australian Dollar turned sharply lower against the U.S. Dollar amidst signs China was looking to ramp up economic pressure on Australia. The potential restrictions on coal imports from Australia – which is Australia’s second largest export and earner of foreign exchange – follows similar more on retraining imports of Australia’s number one export:  iron ore, poundsterlinglive.com reported.

“If coal or iron ore, Australia’s biggest export goods, were considered to be the subjects of Chinese retaliation, the risk to the country’s economy and the AUD would be accentuated,” says Jane Foley, Senior FX Strategist at Rabobank.

New Zealand Dollar

The New Zealand Dollar is trading nearly flat early Thursday following yesterday’s potentially bearish closing price reversal top chart pattern.

On Wednesday, the Reserve Bank of New Zealand (RBNZ) released its Financial Stability Report and RBNZ Governor Orr gave a speech.

New Zealand’s financial system is in a solid position both to weather the significant economic impact caused by the COVID-19 pandemic and support recovery, the Central Bank’s governor said.

Adrian Orr also said in a financial stability report released on Wednesday that RBNZ economic stress test analysis suggests banks in the country can continue to lend and prosper through a broad range of adverse scenarios.

The RBNZ also said banks in the country have strong buffers of capital and liquidity, although their resilience will be tested in the coming months as loan losses rise from current low levels.

“Our economic stress test analysis suggest banks can continue to lend and prosper through a broad range of adverse scenarios,” RBNZ Governor Adrian Orr said in the financial stability report that it releases twice a year.

At 02:42 GMT, the NZD/USD is trading .6184, down 0.0005 or -0.08%.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – API Report Expected to Show 2.5M Barrel Draw

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower late Wednesday, shortly before the release of the American Petroleum Institute (API) weekly inventories report at 20:30 GMT.

Oil prices tumbled early in the session after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong and as some traders doubted Russia’s commitment to deep production cuts.

Later in the session, U.S. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, a blow to its status as a major financial hub.

But those aren’t the concerns late in the session on Wednesday, traders want to see if the API numbers will show a third consecutive weekly draw.

At 20:02 GMT, July WTI crude oil futures are trading $32.90, down $1.45 or -4.22% and August Brent crude oil is at $35.54, down $1.20 or -3.27%.

Oil Prices Jumped after Last Week’s API Report

On May 19, the American Petroleum Institute (API) reported a large crude oil inventory draw of 4.8 million barrels for the week-ending May 15.

WTI was trading up in the afternoon on May 19 prior to the API’s data release, but the day had already seen a two-sided trade, then back to a gain as the demand picture turned a bit rosier than it has been over the past few weeks.

Oil production in the United States has now fallen from 13.1 million bpd to March 13 to 11.6 bpd for May 8, according to the Energy Information Administration – a drop of 1.5 million barrels.

The API also reported a draw of 651,000 barrels of gasoline for the week-ending May 15 and distillate inventories were up by 5.1 million barrels for the week, while Cushing inventories saw a draw of 5 million barrels.

Daily Forecast

Today’s API report is expected to show another drawdown of about 2.5 million barrels. A steady to better reading could launch crude oil higher into the late session close.

A bad report will sent prices lower. The upside momentum seems to be slowing so I anticipate any sell-off to lead to a substantial near-term correction.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – In Position to Post Closing Price Reversal Bottom

The U.S. Dollar is trading higher against a basket of major currencies late Wednesday after reversing earlier weakness. After feeling some early session selling pressure, the greenback was able to stabilize and move higher against the Euro, British Pound, Canadian Dollar and Japanese Yen.

The move against the Euro came about even as the common currency remained supported by news of a proposal for an economic recovery package to help the Euro Zone region recover from the coronavirus pandemic.

Sterling retreated below $1.2300 as investor focus shifted back to the possibility of negative interest rates in Britain and comments from government officials that not much progress had been made in Brexit negotiations.

Worries about the U.S. response to China’s proposed security law for Hong Kong helped drive U.S equity indexes lower during the cash market session, which in turn increased the U.S. Dollar’s appeal as a safe-haven asset. This move led to lower demand for the Japanese Yen.

At 19:16 GMT, the June U.S. Dollar Index is trading 99.240, up 0.334 or +0.34%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 98.715 will signal a resumption of the downtrend, while a move through the 98.345 swing bottom will reaffirm the downtrend.

The minor trend is also down. A trade through 99.995 will change the minor trend to up. This will also shift momentum to the upside.

The main range is 94.530 to 103.960. Earlier today, the index attracted buyers when it tested its retracement zone at 99.245 to 98.130.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 99.240, the direction of the June U.S. Dollar Index into the close on Wednesday is likely to be determined by trader reaction to yesterday’s close at 98.906.

Bullish Scenario

A sustained move over 98.906 will indicate the presence of buyers. This will also put the index in a position to form a potentially bullish closing price reversal bottom. If confirmed, this could trigger a 2 to 3 day counter-trend rally.

Overcoming the 50% level at 99.245 will indicate the buying is getting stronger. This could trigger a rally into the next 50% level at 99.690.

Bearish Scenario

A sustained move under 98.906 will signal the presence of sellers. This could trigger a test of the main bottom at 98.345, followed by the major Fibonacci level at 98.130.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Trend Up, But Momentum Shifted to Downside

June E-mini NASDAQ-100 Index futures are trading lower late in the session on Wednesday after traders hit the technology sector amid caution about simmering tensions between the United States and China at a time when governments are attempting to revive the economies in the midst of a coronavirus-driven recession.

Amazon.com, Microsoft Corp. and Facebook, Inc., which have led a recent rally, weighed on the tech-heavy NASDAQ, while healthcare and technology stocks – which outperformed in the coronavirus-led market slump – were among the S&P 500 sector indexes in the red.

At 18:42 GMT, June E-mini NASDAQ-100 Index futures are trading 9287.50, down 119.00 or -1.27%.

On a positive note, travel-related stocks beaten up by the government shutdowns, including airlines, cruise companies and hotel operators jumped between 2.4% and 4.5% after taking a beating earlier this year due to a virtual halt in global travel.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Wednesday. A trade through 9604.00 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at 8847.00.

The minor trend is down. It turned down on Wednesday when sellers took out 9241.50. This move also shifted momentum to the downside.

The minor range is 8847.00 to 9604.00. Its 50% level at 9225.50 is controlling the price action on Wednesday.

The short-term range is 8556.25 to 9604.00. Its retracement zone at 9080.00 to 8956.50 is potential support. Since the main trend is up, buyers could come in on a test of this zone.

The main range is 9780.50 to 6628.75. Its retracement zone at 8576.50 to 8204.50 is controlling the longer-term direction of the index.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 9287.50, the direction of the June E-mini NASDAQ-100 Index into the close on Wednesday is likely to be determined by trader reaction to 9225.50.

Bullish Scenario

A sustained move over 9225.50 late in the session will indicate the presence of buyers. This is followed by 9388.25 then 9604.00.

Bearish Scenario

A sustained move under 9225.00 will signal the presence of sellers. This could trigger a further break into the short-term retracement zone at 9080.00 to 8956.50.

For a look at all of today’s economic events, check out our economic calendar.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Setting Up for Reversal Top

June E-mini Dow Jones Industrial Average futures are trading higher shortly after the cash market opening, but has given up most of its earlier gains. The benchmark S&P 500 Index and the technology-based NASDAQ Composite have given back all of their earlier gains and are now trading lower for the session. Traders said a huge drop in tech shares is responsible for the reversal to the downside.

At 14:47 GMT, June E-mini Dow Jones Industrial Average futures are trading 25024, up 14 or +0.06%.

Based on the intraday downside momentum, it may be just a matter of time before the Dow cash and futures turn negative for the session. Weakness in Dow components Apple, Microsoft and IBM are weighing on the blue chip index.

Bank stocks were broadly higher earlier in the session as investors reacted to the prospects of the economy reopening. Gains were led by Citigroup which was up 4.9%, followed by JPMorgan Chase which posted an earlier gain of 3.6%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out yesterday’s high. The main trend will change to down if sellers can take out the last main bottom at 22704.

The minor trend is also up. A trade through 24076 will change the minor trend to down. This will also shift momentum to the downside.

The main range is 29506 to 18086. Its retracement zone at 23796 to 25144 is controlling the longer-term direction of the Dow. The major average is currently testing this zone.

The strongest support may be the price cluster at 23796 to 23571.

Daily Swing Chart Technical Forecast

Given the prolonged rally in terms of price and time, the direction of the June E-mini Dow Jones Industrial Average the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s close at 25002.

Bullish Scenario

A sustained move over 25002 will indicate the presence of buyers. Overtaking the major Fibonacci level at 25144 will signal that the buying is getting stronger. If this is able to generate enough upside momentum over the near-term then look for a possible extension of the rally into 26962.

Bearish Scenario

A sustained move under 25002 will signal the presence of sellers. This will also put the Dow in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to a 2 to 3 day correction.

The first downside target is the minor bottom at 24076. This is followed by the support cluster at 23796 to 23571.