E-mini S&P 500 Index (ES) Futures Technical Analysis – Benchmark Index Supported by Microsoft Surge

September E-mini S&P 500 Index futures are trading higher at the mid-session on Monday. The strength is being driven by Microsoft’s pursuit of TikTok’s U.S. operations and a clutch of upbeat quarterly earnings reports. Gains are likely being limited by Congress’ inability to agree on a fiscal coronavirus stimulus deal.

At 16:04 GMT, September E-mini S&P 500 Index futures are trading 3288.50, up 25.00 or +0.83%.

Microsoft jumped 3.7% as it said it would push ahead with talks to acquire the U.S. operations of Chinese-owned TikTok after President Donald Trump reversed course on a planned ban of the short-video app. Additionally, tech and healthcare led gains among the 11 S&P 500 sectors.

A rally in tech-related stocks and historic stimulus have lifted the S&P 500 to within 4% of its peak, but faltering macroeconomic data and a gridlock on more government stimulus have made investors cautious again.

Daily September E-mini S&P 500 Index

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 the last main top at 3284.50. A trade through 3195.00 will change the main trend to down.

After trading inside a compressed range for two weeks, the index appears ready to break out to the upside. Today’s early price action suggests there is a bid, but we’d like to see if buyers will come in on a pullback into the former main tops at 3284.50 and 3269.00.

Defending 3284.and 3269 will indicate that buyers are coming in with conviction and defending the breakout. This will also indicate that the buying was being fueled by new money coming into the market rather than buy stops.

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

Natural Gas Price Fundamental Daily Forecast – Expectations of Higher Export Demand, Possible Heat Supportive

A shift in the short-term forecast over the weekend was all it took to revive the sluggish natural gas market on Monday. The news that heat was being put back into the forecast helped offset the generally bearish tone created by worries that Hurricane Isaias would bring in cooler temperatures throughout the Midwest and East Coast.

At 14:30 GMT, September natural gas is trading $2.008, up $0.209 or +11.62%.

NatGasWeather wrote Monday morning, “The weekend weather data was only slightly changed in most models except for the European model, which gained a hefty amount of demand. In fact, the European model was cooler than the rest of the data by nearly 10 CDD’s at Friday’s close, then trended notably hotter over the weekend to now nearly 10 CDD’s hotter than the rest of the data.”

“The natural gas markets are clearly hoping the hotter European model is correct with prices up more than 20 cents this morning. Although, prices were likely aided by LNG/feedgas/exports increasing to 4 Bcf over the weekend to tighten the balance. The European model has been running too hot in most instances this summer, so there risk if it loses some demand to line up better with the rest of the data.”

Additionally, Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas demand jumped higher over the weekend, with Genscape Inc.’s estimate showing a 740 MMcf/d day/day increase on Saturday.

“Recently, a Bloomberg survey of traders found that up to 45 cargo cancellations are expected for the month of August, down from roughly 50 for the month prior,” Genscape analyst Preston Fussee-Durham said.

The largest increase in feed gas inventories occurred at Cheniere Energy Inc.’s Sabine Pass terminal, with volumes to the facility climbing nearly 580 MMcf/d, according to Genscape estimates.

“Effective for today’s gas day (based on timely cycle nominations), feed gas demand from interstate pipelines stands at 3.85 Bcf/d – 0.68 Bcf/d more than July’s average of 3.17 Bcf/d,” Fussee-Durham said.

Daily Forecast

Bullish traders are responding to the news without hesitation. They really had no choice, the weather guys put heat back into the forecast, and demand for feed gas was up. These are short-term bullish factors.

Although there is no significant resistance until $2.499, there is room to rally into a 50% to 61.8% resistance zone at $2.041 to $2.149. Sellers could return on a move into this area.

The return of hot weather and firmer demand for LNG may not have that much of an impact on nearby natural gas futures, but it means a lot to deferred traders who want to see storage supply fall head of the winter demand season.

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

Oil Price Fundamental Daily Forecast – Rangebound as Big Money Waits on Sidelines for Demand Clarity

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Monday, but posting a second-consecutive rangebound day as prices remain inside last Thursday’s unusually wide trading range. The price action suggests a couple of things, investor indecision or the transitioning from bullish to bearish as the market adjusts to COVID-19 related demand shifts that are likely to lead to a rise in global supply.

At 13:30 GMT, September WTI crude oil is trading $40.45, up $0.18 or +0.45%. December Brent crude oil is at $44.54, up $0.37 or +0.84%.

Other analysts agree that prices are being pressured by rising coronavirus cases around the globe and by oversupply worries as OPEC and its allies are set to wind back up output cuts in August, but supported by positive industry data in Europe and Asia.

Stronger PMI Data Out of China, Euro Zone

A private survey released Monday showed China’s manufacturing activity expanded in July. The Caixin/Markit manufacturing Purchasing Manger’s Index came in at 52.8 for July, above expectations for a reading of 51.3 by economists in a Reuters poll.

In the Euro Zone, manufacturing activity across the region expanded for the first time since early 2019 last month as demand rebounded after more easing of the restrictions imposed to quell the spread of the new coronavirus, a survey showed on Monday.

IHS Markit’s final Manufacturing Purchasing Managers’ Index bounced to 51.8 in July from June’s 47.4 – its first time above the 50 mark that separates growth from contraction since January 2019.

Russia is Raising Oil Output as OPEC+ Cuts Ease:  Reuters Source

Russian oil and gas condensate output increased to 9.8 million barrels per day (bpd) on August 1-2 from 9.37 million bpd in July as the country eases production curbs under an OPEC+ deal, a source familiar with data said on Monday. The Energy Ministry declined to comment on the data.

Russia has said it will increase its crude oil production by 400,000 bpd as part of that deal, which does not include output of gas condensate, a light oil.

Daily Forecast

WTI and Brent crude oil could remain rangebound until traders get more clarity about how the new surge in COVID-19 cases will affect demand. Traders are also likely to try to hold prices in a range until they see how the OPEC+ output cut tapering changes the supply dynamic.

With most money managers on the sidelines or investing in other momentum driven markets like the metals, crude oil speculators are getting a little nervous about attacking the long side of the market because of worries over the strength of the demand recovery. Bullish speculators are concerned that the surge in coronavirus cases in the U.S. and around the world could slow the recovery if more restrictions are put into place.

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

Price of Gold Fundamental Daily Forecast – Ripe for Correction During Dollar Short Squeeze

Gold futures are taking a breather on Monday from its tremendous rally to record highs in July. The catalyst behind the weakness is a stronger U.S Dollar that is weighing on foreign demand for the dollar-denominated precious metal. A sharp rise in 10-year U.S. Treasury yields is also weighing on gold prices after the benchmark hit a record low yield late last week.

At 13:03 GMT, December Comex gold futures are trading $1984.70, down $1.20 or -0.06%.

Dollar Jumps after Weakest Month in a Decade

The dollar is trading higher against a basket of major currencies on Monday as a squeezing-out of crowded short positions combined with safe-haven demand gave the U.S. currency some respite after its weakest monthly performance in ten years. The greenback lost more than 4% in July, its biggest monthly drop since September 2010.

Dollar Short-Squeeze

Speculators’ net shorts on the U.S. Dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

A partial squeezing out of that crowded short position may be the reason for the dollar’s rally and gold’s subsequent reversal to the downside earlier today.

Essentially, the dollar ran out of sellers. Traders could sense it because the downside movement was a bit cautious late last week. It seemed that nearly every short in the Forex market decided to cover at the same time on Friday, creating a tremendous reversal to the upside.

Treasury Yields Bounce Slightly from Last Week’s Record-Setting Drop

Probably exerting the most pressure on gold is a rise in U.S. Treasury yields after last week’s decline pushed some of the front-end rates to record lows.

Yields were pressed lower last week on the hopes of fresh fiscal stimulus from Congress, but members went home for the week-end without reaching deal. Policymakers are likely to have a deal in place this week, but it’s probably being priced into the market already.

Daily Forecast

We’re going to be keeping an eye on the U.S. Dollar, but an even closer watch of Treasury yields. Right now the dollar is going through the early phase of a short-covering rally that could lead to at least a 50% retracement of the recent sell-off. If this were to take place then gold could mirror the move with a 50% retracement of its current rally.

Traders shouldn’t fear a normal 50% to 61.8% correction in gold. In fact, they should embrace it because it would likely lead to a break back into a value area where it would become attractive to long-term investors.

The fundamentals are there for higher prices over the longer-term. However, over the short-run, I can build a case for a near-term correction.

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

EUR/USD Mid-Session Technical Analysis for August 3, 2020

The Euro is trading lower on Monday as a squeezing-out of crowded short U.S. Dollar positions combined with safe-haven demand is driving investors into the greenback following its weakest monthly performance in ten years.

In other news, manufacturing activity across the Euro Zone expanded for the first time since early 2019 last month as demand rebounded after more easing of the restrictions imposed to quell the spread of the new coronavirus, a survey showed on Monday.

At 12:40 GMT, the EUR/USD is trading 1.1732, down 0.0040 or -0.33%.

Factories appear to be playing their part in the recovery in the Euro Zone. IHS Markit’s final Manufacturing Purchasing Managers’ Index bounced to 51.8 in July from June’s 47.4 – its first time above the 50 mark that separates growth from contraction since January 2019. An initial “flash” release had it at 51.1.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Friday’s closing price reversal top and subsequent follow-through to the downside has shifted momentum to the downside. This could trigger a 2 to 3 day correction of between 50% and 61.8% of the last rally.

The minor trend is also up. A trade through 1.1371 will change the minor trend to down and confirm the shift in momentum.

The minor range is 1.1371 to 1.1909. Its retracement zone at 1.1640 to 1.1577 is the first downside target zone.

The main range is 1.1185 to 1.1909. Its retracement zone at 1.1547 to 1.1462 is the primary downside target zone.

Combining the two retracement zones creates a price cluster at 1.1577 to 1.1547. This zone also represents value so it should be attractive to buyers if tested.

Daily Swing Chart Technical Forecast

The closing price reversal top is not a change in trend, but often used as a means to alleviate some of the excessive upside pressure.

Our work suggests a 2 to 3 correction is likely with 1.1640 to 1.1577 the first downside target zone. Since the main trend is up, buyers are likely to show up on a test of this level.

The EUR/USD should hit 1.1640 to 1.1577 if the downside momentum continues. If the downside momentum pauses or shifts back up then look for a retracement of the first leg down. This price is approximately 1.1812.

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

Asian Shares Mixed; Nikkei Jumps Over 2 Percent after Yen Plunge, Shanghai Boosted by Manufacturing PMI

The major Asia-Pacific stock indexes finished mixed on Monday but mostly lower with both the Nikkei and Shanghai indexes posting more than 1.50% gains while the others sputtered. Japanese shares snapped six consecutive sessions of losses on Monday after the Yen retreated from a 4-1/2-month high against the dollar. Chinese stock jumped as key manufacturing data came in above expectations.

On Monday, Japan’s Nikkei 225 Index settled at 22195.38, up 485.38 or +2.24%. Hong Kong’s Hang Seng Index closed at 24458.13, down 137.22 or -0.56% and South Korea’s KOSPI Index finished at 2251.04, up 1.67 or -0.07%.

China’s Shanghai Index settled at 3367.97, up 57.96 or +1.75% and Australia’s S&P/ASX 200 Index closed at 5926.10, down 1.70 or -0.03%.

China’s Factory Activity Expanded

Sentiment was helped by a survey showing China’s factory activity expanded at the fastest pace in nearly a decade in July, with the Caixin/Markit PMI at 52.8, above expectations for a reading of 51.3 by economists in a Reuters poll. PMI readings above 50 signify expansion, while those that fall below that figure indicate contraction.

US-China Tensions Remain at Forefront

Tensions between Washington and Beijing likely continued being watched by investors, with U.S. Secretary of State Mike Pompeo saying Sunday that U.S. President Donald Trump is set to announce “in the coming days” new actions related to Chinese software companies viewed by his administration as a national security threat.

On Friday, Trump told reporters he will act soon to ban Chinese-owned video app TikTok from the U.S., according to NBC News. Microsoft on Sunday confirmed it has held talks to buy TikTok in the U.S. from Chinese tech firm ByteDance.

Nikkei Rebounds on Wall Street Gains, Yen’s Retreat

Japanese shares ended six straight sessions of losses on Monday after the Japanese Yen retreated from a 4-1/2-month high against the dollar in a short squeeze. Exporters got a boost as the Yen fell to a low of 106.40 Yen against the dollar, moving away from a high of 104.195 yen touched on Friday.

Hang Seng Dragged Down by HSBC First-Half Profits Miss

HSBC reported a 65% fall in pre-tax profits for the first half of 2020 to $4.3 billion – missing analysts’ expectations.

Chief Executive Noel Quinn said the bank was “impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility.”

HSBC shares in Hong Kong tumbled by more than 3% when trading resumed after a lunch break.

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 – Chart Pattern Indicates Heightened Volatility

September E-mini S&P 500 Index futures finished higher after clawing back earlier losses in what proved to be a very volatile trading session. Stocks opened higher then fell to their lows of the session as concerns about the economic damage from the COVID-19 pandemic replaced early bullishness from stunning quarterly earnings reports by Apple, Amazon.com and Facebook. However, the market managed to recapture those losses into the futures market close despite a lower cash market close.

On Friday, September E-mini S&P 500 Index futures settled at 3269.50, up 20.75 or +0.63%.

The S&P Technology Sector, a major component of the overall index, was boosted by a strong performance in shares of all three tech heavyweights.

Apple Inc shared surged to reach a record high in the wake of blowout quarterly earnings results and a four-for one stock split announcement.

Amazon.com Inc jumped after posting the biggest profit in its 26-year history, while Facebook Inc gained after it reported better-than-expected revenue.

Google-parent Alphabet Inc, on the other hand, fell as quarterly sales dipped for the first time in its 16 years as a public company.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday, but the rally fizzled earlier today after an attempted breakout over 3269.00 failed to attract enough buyers to extend the move. Late in the session, however, the index managed to reaffirm the uptrend.

The main trend will change to down on a trade through 3195.00, but were not likely to see an acceleration to the downside unless the selling is strong enough to talk out the next main bottom at 3191.50.

The short-term range is 3284.50 – 3191.50. Its 50% level at 3238.00 appears to be controlling the near-term direction of the index. Traders straddled this price level four times this week as they tried to establish direction.

The short-term range is 3105.25 to 3284.50. Its retracement zone at 3194.75 to 3173.75 is support. It has been propping up the index since July 15.

The main range is 2923.75 to 3284.50. Its retracement zone at 3104.00 to 3061.50 is another potential support zone.

Short-Term Outlook

Based on this week’s price action, it looks like we are likely to experience a volatile trade next week because of the tight trading range. Traders don’t like to see the same prices every day. They want movement and action.

A volatile breakout to the upside could start on a sustained move over 3238.00. Other potential trigger points for an acceleration to the upside are 3273.75 and 3284.50.

On the downside, crossing to the weak side of the short-term Fibonacci level at 3173.75 is likely to draw in the short-sellers. Also contributing to a potential acceleration to the downside will be sell stops placed under 3173.75.

If traders hit this level with selling conviction then don’t be surprised by an acceleration to the downside with the first target a support cluster at 3105.25 to 3104.00.

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

Natural Gas Price Fundamental Daily Forecast – Weather News Dominates the Trade

Natural gas futures finished lower on Friday as summer heat moderated, a hurricane headed toward Florida potentially zapping cooling demand and surging coronavirus-cases continued to weigh on demand. Bespoke Weather Services expected temperatures in many parts of the country to cool down over the coming week.

Meanwhile, Isaias strengthened into a Category 1 hurricane late Thursday, according to the National Hurricane Center (NHC). At the end of the week, it looks as if the weather is going to dominate the news over the next week or two.

On Friday, September Natural Gas futures settled at $1.816, down $0.013 or -0.71%.

Bespoke also said its weather models showed “a sizable trough diving into the middle of the nation, which pushes eastward slowly” over the first full week of August. “We also expect some impact along the East Coast from Hurricane Isaias the next few days. It is not clear yet if the storm will bring demand destruction to the big cities of the East, but that is a possibility.”

The National Hurricane Center (NHC) said on Friday that the hurricane has crossed the Dominican Republic with sustained winds up to 80 mph and was battering the Southeastern Bahamas with heavy rains and strong winds that threatened severe flooding. The hurricane was expected to approach Florida’s east coast by Saturday, with rain totals up to six inches in some areas over the weekend, the NHC said.

In continuing our weather theme, analysts at Tudor, Pickering, Holt & Co. (TPH) said the sustained intensity of heat over most of July generated strong demand and eased the risk of filling storage.

“On the other hand, weather forecasts are trending materially cooler for August and this will likely push inventories above the high end of the five-year range through August,” the TPH analysts said. They said the latest injection “implies a roughly balanced market on weather-adjusted basis” and expect the coming week to look “very similar, with our early modeling pointing to a build of 26 Bcf.”

Looking ahead to next week, according to NatGasWeather.com for August 3-9, “An unseasonably strong cool shot will bring showers and comfortable highs of 70s to 80s to the central U.S., Midwest and Ohio Valley this week for much lighter national demand. Heavy rain is expected along the East Coast Monday – Tuesday as Tropical Storm Isaias tracks northward. Regionally hot conditions continue across the West and far southern U.S. with highs of 90s to 100s. Warmer conditions will push into the central and northern U.S. next weekend, while hot most elsewhere, increasing national demand back to strong levels.”

USD/JPY Forex Technical Analysis – Closing Price Reversal Bottom Could Alleviate Downward Pressure

The Dollar/Yen closed higher on Friday after posting a dramatic closing price reversal bottom. The move may have been fueled by end-of-the-month position-squaring or profit-taking. Some traders said better-than-expected U.S. consumer spending news may have caught short-sellers off-guard fueling a massive short-covering rally in all major currencies.

On Friday, the USD/JPY settled at 105.935, up 1.199 or +1.14%.

The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 5.6% last month after a record 8.5% jump in May as more businesses reopened.

Economists polled by Reuters had forecast consumer spending would advance 5.5% in June. When adjusted for inflation, consumer spending increased 5.2% last month after surging 8.4% in May.

Traders also said the increase in consumer spending sets up consumption for a rebound in the third quarter, though the recovery could be limited by a resurgence in COViD-19 cases and the end of expanded unemployment benefits.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.530 will change the main trend to up. A trade through 104.189 will negate the closing price reversal bottom and signal a resumption of the uptrend.

The closing price reversal bottom will be confirmed on at trade through 106.055. This chart pattern will not change the trend to up, but it will indicate that the buying is greater than the selling at current price levels. It’s basically an adjustment in the main trend, designed to alleviate some of the downside pressure.

The short-term range is 107.530 to 104.189. Its 50% level at 105.860 could act like a pivot over the near-term as investors try to determine whether the dollar has taken enough of a beating or if it’s ready for round two.

The main range is 112.226 to 104.189. Its retracement zone is resistance and a possible upside target. It is essentially controlling the longer-term direction of the USD/JPY.

Daily USD/JPY

Short-Term Outlook

Although some short-term traders are focusing on the closing price reversal bottom and they very well should be because there is the threat of a sizeable retracement and a major giveback of profit, the longer-term traders are keeping their eyes on U.S. interest rates.

Treasury yields continued to move lower on Friday with short-maturity rates reaching record lows as investors remained worried about the pace of economic recovery.

Yields are what the major players are watching. So unless there is a dramatic turnaround in U.S. Treasury yields, most of the longer-term investors are likely going to fade this possible upcoming short-covering rally, and look for another entry level to increase their short positions.

NZD/USD Forex Technical Analysis – Bearish Tone Could Develop on Sustained Move Under .6666

Volatility hit the New Zealand Dollar on Friday with the currency first grinding to a multi-month high before turning lower for the session and wiping out the week’s gains. The whip-saw price action could have been fueled by end-of-the-month profit-taking or profit-taking ahead of next week’s New Zealand labor market reports.

On Friday, the NZD/USD settled at .6628, down 0.0073 or -1.09%.

The firming of U.S. Treasury yields could have influenced the price action. Recently, the Kiwi has been supported by the widening in real bond yield differentials as U.S. rates tanked in July. On Friday, U.S. Treasury yields moved lower with short-maturity rates reaching record lows before firming later in the session.

Economic news could have also triggered the volatile response. On Friday, the U.S. Commerce Department said consumer spending increased for a second straight month in June, setting up consumption for a rebound in the third quarter.

Countering this news, however, was Congress’ inability to pass a coronavirus stimulus plan in a timely matter.

If so many off-setting news events, we have to conclude that good old-fashioned profit-taking was behind the reversal in prices.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early Friday as prices edged toward the December 31, 2019 main top at .6756.

A trade through .6716 will signal a resumption of the uptrend, while a trade through .6615 will change the main trend to down.

The Kiwi also formed a potentially bearish closing price reversal top. A confirmation of this chart pattern on money could shift momentum to the downside and change the main trend to down. Trader reaction to .6623, .6620 and .6615 will set the tone. This is a major support cluster in my opinion that has to hold to continue the uptrend.

The minor range is .6615 to .6716. Its pivot at .6666 is resistance.

The short-term range is .6503 to .6716. Its retracement zone at .6609 to .6584 is potential support. This is followed by the main support zone at .6548 to .6509.

Short-Term Outlook

The first key level to watch on Monday is the pivot at .6666. A sustained move under this level will indicate the presence of sellers and could generate the downside momentum needed to trigger another round of technical selling.

We’re close enough to .6615 to change the trend on Monday. So this would be the second level to watch. The bullishness starts to deteriorate if .6584 fails as support.

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

AUD/USD Forex Technical Analysis – Trader Reaction to .7146 Pivot Sets the Tone

The Australian Dollar touched its highest level since February 2019 on Friday, but at the end of the session, buyers couldn’t hold onto those gains and the currency finished lower. With the U.S. Dollar gaining against most major currencies, the strong reversal to the downside could be indicative of a short-term top.

We’re going to have to determine by the price action on Monday if the price slide was fueled by end-of-the-month profit-taking and position-squaring, or if it was generated by legitimate selling or shorting due to a change in sentiment.

On Friday, the AUD/USD settled at .7142, down 0.0053 or -0.74%.

Early in the session on Friday, the AUD/USD was supported by a survey out of China showing factory activity expanded in July for the fifth month in a row, beating analysts’ expectations. Overall, throughout the month, the Aussie benefited from China’s economic recovery with its reliance on infrastructure heavy commodity intensive capital investment.

The AUD/USD was also supported by a combination of the improvement in risk sentiment and key commodity price drivers. Additionally, the widening in real bond yield differentials after U.S. rates tanked is also seen providing upside momentum.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the February 21, 2019 main top at .7207.

A trade through .7064 will change the main trend to down, but Friday’s closing price reversal top is already offering evidence that the selling may be greater than the buying at current price levels.

The minor range is .7064 to .7227. Its 50% level or pivot is .7145.

The short-term range is .6833 to .7227. If the trend changes to down, then look for a test of its retracement zone at .7030 to .6983.

Short-Term Outlook

The closing price reversal top will be the focus on Monday because trader reaction to this chart pattern will tell us if momentum is shifting to the downside.

On the bearish side, a trade through .7133 will confirm the chart pattern. If this move generates enough downside pressure to take out the minor bottom at .7121 then the minor trend will change to down and momentum will officially turn lower.

The daily chart indicates there is plenty of room to the downside under .7131 with .7064 the next likely target.

On the bullish side, the failure to follow-through to the downside and a sustained move over .7146 will signal the presence of buyers. If this move develops then we could easily see a retest of .7227 especially if the U.S. Dollar starts out weak in August.

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

Crude Oil Price Update – COVID-19 Demand Issues Continue to Cap Gains

U.S. West Texas Intermediate crude oil futures finished higher on Friday just one day after a plunge nearly erased all of the month’s gains. That move ensured a lower close for the week. Prices were boosted on Friday by the news that U.S. oil output cuts in May were the largest on record.

On Friday September WTI crude oil settled at $40.43, up $0.51 or +1.28%.

U.S. crude oil production plummeted in May, falling a record 2 million barrels per day to 10 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Friday.

In related news, Chevron Corp reported an $8.3 billion loss on asset write-downs and ExxonMobil Corp recorded a second consecutive quarterly loss.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out three main bottoms at $40.48, $39.97 and $38.77 before stopping at $38.72.

A trade through $38.72 will signal a resumption of the downtrend, while a move through $41.93 will change the main trend to up.

On the upside, the major resistance is a long-term 50% level at $41.72.

On the downside, retracement zone support comes in at $39.92 to $39.30.

The new minor range is $41.93 to $38.72. Its 50% level at $40.32 acted like minor resistance on Friday. It could control the direction of the trade on Monday.

Short-Term Outlook

The news writers said that the market was supported by some bullish data from May. Obviously it is stale news. If you followed the Baker Hughes numbers released each Friday, you would’ve seen a drop in the number of producing oil rigs. This means production was going down. No surprise there.

Prices are likely to remain in a range, but with a bias to the downside as long as the number of coronavirus cases continues to rise. This is because of its impact on demand. However, as long as OPEC+ continues to trim production, the supply side shouldn’t get out of control.

From a technical perspective, unless a vaccine is developed over the near-term, buyers are going to have a hard time overcoming the major resistance at $41.72.

Meanwhile, a sustained move under $39.30 could trigger an acceleration to the downside. The daily chart shows $36.96 to $35.83 is a potential downside target. This may actually be good because this zone represents value so a test of this area is likely to attract new buyers.

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

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Upside Momentum Can Build Over 10768.75

September E-mini NASDAQ-100 Index futures surged more than 1% on Friday, boosted by strong earnings from some of the largest U.S. companies, however, gains may have been limited by uncertainty about the government’s next round of coronavirus aid.

The index was primarily boosted by strong performances by Apple Inc, Amazon.com and Facebook. Perhaps putting a lid on prices was a poor performance by Google parent Alphabet. The four companies are among the top five in market capitalization. Additionally, Apple’s gain pushed it ahead of Saudi Aramco as the world’s most valuable public company, according to Refinitiv data.

On Friday, September E-mini NASDAQ-100 Index futures settled at 10914.25, up 120.25 or 1.10%.

Meanwhile, the White House and Democrats were still negotiating on coronavirus relief aid, but not yet on a path toward reaching a deal, according to House of Representatives Speaker Nancy Pelosi, hours before the expiration of a federal unemployment benefit.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Thursday after the index spent nearly a week in a downtrend.

A trade through 10939.00 will signal a resumption of the uptrend while a move through 11058.00 to 11058.50 will reaffirm the uptrend. The main trend will change to down on a move through 10502.75.

From the bottom up, the intermediate range is 9728.75 to 11058.50. Its retracement zone at 10393.50 to 10236.75 is the key support. It stopped the selling on July 24 at 10301.00.

The short-term range is 11058.00 to 10301.00. Its retracement zone at 10679.50 to 10768.75 is now support after spending most of the week as resistance.

Short-Term Outlook

Holding above the retracement zone at 10768.75 to 10679.50 will be the key to sustaining the upside momentum. This may be enough to trigger a rally into the double-top at 11058.00 to 11058.50. The latter is a potential trigger point for an acceleration to the upside.

On the downside, 10393.50 to 10236.75 is holding the rally together. Buyers came in strong to defend this zone when they produced a bottom at 10301.00.

The daily chart indicates there is plenty of room to the downside under the Fibonacci level at 10236.75. Taking out this level with conviction could trigger an acceleration to the downside with the next major target the June 29 main bottom at 9728.75.

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

Gold Price Futures (GC) Technical Analysis – Protect the Downside, the Upside Will Take Care of Itself

Gold futures closed higher on Friday after hitting a new contract high early in the session. The market gave back some of its gains when Treasury yields rose slightly and the U.S. Dollar recovered from more than a two-year low.

Spot gold also reached a new all-time high with the market posting it best month since February 2016, and its fifth straight positive month.

Despite Friday’s new high, traders looked a little cautious with the new high coming in only $5.40 higher than the previous high earlier in the week before the intraday pullback. This suggests a shaky outlook over the short-run.

However, the longer-term picture remains bullish with the market tracking real interest rates that are hovering near zero percent. Extreme weakness in the U.S. Dollar also helped buoy gold prices last month with the greenback posting its biggest monthly drop in almost a decade.

On Friday, December Comex gold futures settled at $1994.00, up $27.20 or +1.38%.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out $2000.00. A trade through $1819.30 will change the main trend to down. This is highly unlikely, but investors should be aware of the potentially bearish closing price reversal top.

The minor range is $1927.50 to $2005.40. Its 50% level at $1966.50 is the nearest support.

The short-term range is $1819.30 to $2005.40. Its 50% level at $1912.40 is another potential support level.

This is followed by a series of retracement levels at $1896.90, $1888.70, $1871.20 and $1861.20.

Short-Term Outlook

There are no minor bottoms in the picture, but $1952.30 has the characteristics of a minor bottom. Another level to watch is $1927.50. This low was put in when gold dropped $72.50 on July 28.

If a top is forming then the market should stair-step down, first taking out $1966.50 then $1952.30. These are only minor levels but novice traders like to put ill-advised stops under these levels. The next such level is $1927.50.

The value levels are where the buyers are lurking. They come in at $1912.40 and the support cluster at $1896.90 and $1888.70.

In other words, $1966.50 $1952.30 and $1927.50 are weak support levels. The best is $1896.90 to $1888.70.

The decision for short-term traders is to chase the market higher or play for a pullback into value.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Major Support 25938, Resistance 26608

September E-mini Dow Jones Industrial Average futures closed higher on Friday, diverging from the cash market Dow, which closed lower for the session. The blue chip average started higher, boosted by a surge in Apple after the tech giant reported stunning quarterly earnings the night before. However, the Dow couldn’t hold on to those gains shortly after the opening as concerns about the economic damage from the COVID-19 pandemic encouraged investors to book profits.

On Friday, September E-mini Dow Jones Industrial Average futures settled at 26378, up 160 or +0.61%.

Investors betting on more U.S. government stimulus were also disappointed as the Senate adjourned for the weekend after letting the extra $600-per-week federal jobless benefit expire.

Other Dow components were also a drag on the blue chip average. Chevron Corp reported an $8.3 billion loss on asset write-downs and ExxonMobil Corp recorded a second consecutive quarterly loss. Caterpillar reversed premarket gains and fell 3.2% after the heavy equipment maker signaled more pain from an uncertain economic outlook.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 25881 will signal a resumption of the downtrend. The main trend will change to up on a move through the last main top at 27057 and 27063.

The minor trend is also down. A trade through 26599 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 27057 to 25881. Its retracement zone at 26469 to 26608 is resistance. This zone is controlling the near-term direction of the Dow.

The main range is 27466 to 24409. Its retracement zone at 25938 to 26298 is major support and a possible trigger point for an acceleration to the downside.

Short-Term Outlook

Last week’s price action said it all. Simply stated, in order to get the September E-mini Dow Jones Industrial Average rolling to the upside again, the 50% level at 25938 has to hold as support, and the buying has to be strong enough to overcome the minor Fibonacci level at 26608.

Since the main trend is down, sellers are likely to defend 26469 to 26608. If buyers can overtake 26608, however, we could see an acceleration to the upside with the next targets 27057 to 27063.

If sellers can stop the rally then traders are going to try to work on the downside. This could mean a test of 25938 to 25881. There’s even another minor bottom at 25874. This price is a potential trigger point for an acceleration to the downside with 25293 and 25053 the next potential downside targets.

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

U.S. Dollar Index (DX) Futures Technical Analysis –Watching for Confirmation of Closing Price Reversal Bottom

The U.S. Dollar closed higher against a basket of major currencies after posting a dramatic mid-session reversal to the upside. The move erased all of the earlier losses. Nonetheless, the market was still on pace for its biggest monthly drop in a decade as concerns that an increase in U.S. coronavirus cases will slow the rebound in the economic recovery.

On Friday, September U.S. Dollar Index futures settled at 93.321, up 0.312 or +0.34%. This was up from a low of 92.510.

The strong rebound was partly fueled by data on Friday that showed U.S. inflation-adjusted consumer spending has pulled out of April’s deep hole but remains below its pre-pandemic level. End of the month position-squaring and profit-taking may have been other reasons for the higher close.

The heavily weighted Euro settled down -0.64%. The Japanese Yen lost 0.19% and the British Pound was off 0.13%. The commodity-linked Canadian Dollar gained 0.01% and the safe-haven Swiss Franc fell 0.52% against the U.S. Dollar.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.510 will signal a resumption of the downtrend.

A trade through 97.810 will change the main trend to up. This is highly unlikely over the near-term, but Friday’s closing price reversal bottom suggests the buying may be greater than the selling at current price levels.

The minor trend is also down. A trade through 96.380 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 96.380 to 92.510. Its retracement zone at 94.445 to 94.900 is the first upside target.

The main range is 97.810 to 92.510. Its retracement zone at 95.160 to 95.785 is the second upside target.

Short-Term Outlook

The closing price reversal bottom only stops the selling; it’s the follow-through to the upside to the upside through the session’s high that confirms the potentially bullish chart pattern. The market hasn’t crossed the previous day’s high since July 16 so taking out 93.525 could develop into something significant.

Typically, a confirmed closing price reversal bottom triggers the start of a 2 to 3 day counter-trend rally often combined with a 50% retracement of the last break. This would make 94.445 and 95.160 potential upside targets.

The closing price reversal bottom will be negated on a trade through 92.510. This will also signal a resumption of the downtrend.

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

EUR/USD Mid-Session Technical Analysis for July 31, 2020

The Euro is trading lower late Friday after erasing nearly half of its weekly gains in a matter of hours. This followed a rally to its highest level since May 2018. The price action suggests end of the month profit-taking and position-squaring is behind the move because no major news events were announced.

If you’re looking to blame something, blame Washington’s inability to come to an agreement over coronavirus relief. On Friday, Republicans and Democrats made little progress toward a coronavirus relief deal as economic data show an economy still reeling from the coronavirus pandemic.

According to CNBC, Democrats have rejected the possibility of passing a short-term extension while the sides negotiate a broader deal. Meanwhile Republicans started to float a short-term fix this week after they released their aid proposal on Monday, more than two months after Democrats passed their rescue bill in the House.

At 18:34 GMT, the EUR/USD is trading 1.1796, down 0.0052 or -0.44%.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous day’s high.

The main trend will change to down on a move through 1.1185. This is highly unlikely by the market is in a position to form a daily closing price reversal top that could trigger the start of a 2 to 3 day correction if confirmed on Monday.

The minor range is 1.1371 to 1.1909. Its 50% level at 1.1640 is a potential downside target. Since the main trend is up, buyers are likely to come in on a test of this level.

The main range is 1.1185 to 1.1909. Its retracement zone at 1.1547 to 1.1462 represents value. A test of this zone is likely to attract even stronger buyers.

Short-Term Outlook

Due to the prolonged move up in terms of price and time, the possibility of a closing price reversal top isn’t a surprise.

The key level to watch into the close is Thursday’s close at 1.1848. A close under this level will form the daily closing price reversal top. If confirmed on Monday then look for the start of a 2 to 3 day correction with the minor 50% level at 1.1640 the minimum downside target.

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

Oil Price Fundamental Daily Forecast – Higher for Month, but Demand Destruction Worries Cap Gains

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Friday after a steep fall the previous session changed the main trend to down on the daily chart. Nonetheless, the markets were able to bounce back throughout the session, finishing just under four-month highs.

Despite the late volatility, the markets remain on track to post solid monthly gains, mostly benefiting from a weaker U.S. Dollar which continued to be hit by concerns over the recovery of the U.S. economy as the coronavirus ravages economic output. A falling dollar tends to increase foreign demand for dollar denominated crude oil.

At 12:59 GMT, September WTI crude oil is trading $40.37, up $0.45 or +1.13% and December Brent crude oil is at $44.12, up $0.18 or +0.41%.

The price action toward the end of the week clearly shows that investors are becoming more concerned about demand.

Oil Set for Fragile Recovery as Economies Limp Towards Normal:  Reuters Poll

A Reuters poll released on Friday showed that oil prices are set for a slow crawl upward this year as the gradual easing of coronavirus-led restrictions buoy demand, while a potential second COVID-19 wave could slow the pace of recovery.

The survey of 43 analysts and economists forecast benchmark Brent crude to average $41.50 a barrel in 2020, up slightly from the $40.41 consensus in last month’s survey and compared with around $42 average for the benchmark thus far this year. It is expected to average $49.85 in 2021.

The 2020 outlook for West Texas Intermediate rose to $37.51 per barrel from June’s $36.10.

The poll projected global demand to contract by between 7.2 and 8.5 million barrels per day (bpd) this year, versus last month’s 6.5-8.7 million bpd prediction. The International Energy Agency raised its 2020 demand forecast earlier this month to 92.1 bpd.

Short-Term Outlook

Prices could remain essentially rangebound over the near-term until major strides are made on the demand side of the crude oil equation. On the supply side, things seem to be moving in the right direction with the extension of the OPEC+ production cuts although they are expected to be tapered from August 1 until the end of the year.

The problem is with the demand side where uncertainty rages over whether the re-opening of the global economy will be impeded.

It seems the development of a successful vaccine against coronavirus may be necessary to fast-track an economic recovery and in turn boost oil prices. Without a vaccine, the recovery is likely to be rocky, leading to a series of stops and starts in the next crude oil rally.

Until traders are convinced the recovery in the global economy will be faster and stronger than expected, it’s going to be hard to build a case for a breakout to the upside and the start of a prolonged rally.

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

Price of Gold Fundamental Daily Forecast – Plunge in Yields Pushes Gold to Biggest Monthly Gain in 8 Years

Gold futures edged to a new contract high and spot gold moved to a new all-time high on Friday with both headed for their biggest monthly gain in 8-1/2 years as the impact of the worsening coronavirus pandemic on the U.S. economy hammered the dollar, prompting foreign investors to buy dollar-denominated gold.

At 11:25 GMT, December Comex gold is trading $1991.90, up $25.10 or +1.28%.

The primary driver of this month’s rally in gold has been the plunge in U.S. Treasury yields. Prices are also being influenced by a steep drop in the U.S. Dollar Index. Falling interest rates and a stronger Euro are combining to keep the downside pressure on the greenback.

The catalysts moving multiple markets in July were expectations of more fiscal and monetary stimulus. However, the fiscal stimulus is still hung up in Congress and the Federal Reserve is not likely to make a major move until September. Nonetheless, the bets are in that the government and the Fed will get it done.

Meanwhile, the economic data remains gloomy; putting the V-shaped recovery very much at risk and gold is seeing the benefit from that. U.S. data showed the deepest economic contraction in at least 73 years in the second quarter and weekly unemployment claims continued to rise. The dollar was also hurt by President Donald Trump raising the possibility of delaying the November presidential election.

In other news, money managers allocated $3.9 billion into gold, the second largest weekly inflow ever, Bank of America said on Friday.

We expect the short-term to be shaky because traders are going to be a little more cautious as prices straddle the $2000 level. Longer-term investors can just sit back and relax because favorable conditions are likely to prevail until there is a successful coronavirus vaccine. Meanwhile, the inability to contain the spread of COVID-19 is likely to continue to stoke the bullish flames.

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

Asia-Pacific Shares Close Mostly Lower, Fading Wall Street

The major Asia-Pacific stock indexes finished mixed but mostly lower on Friday, led by a steep decline in Japan. The sell-off was primarily fueled by a record contraction in U.S. gross domestic product in the second quarter. This was followed by another rise in weekly U.S. initial claims, the inability of Congress to pass another stimulus bill and mixed earnings results. Meanwhile, China’s factory activity beat expectations.

On Friday, Japan’s Nikkei 225 Index settled at 21710.00, down 629.23 or -2.82%. Hong Kong’s Hang Seng Index finished at 24595.35, down 115.24 or -0.47% and South Korea’s KOSPI Index closed at 2249.37, down 17.64 or -0.78%.

China’s Shanghai Index settled at 3310.01, up 23.18 or +0.71% and Australia’s S&P/ASX 200 Index finished at 5927.80, down 123.30 or -2.04%.

US GDP Plunges During Second Quarter

Data released Thursday by the U.S. government showed GDP dropping 32.9% in the second quarter – the worst drop ever, with the closest previously coming in mid-1921. Still, the data print was not as bad as feared, with economists polled by Dow Jones have expected a 34.7% decline.

US Weekly Jobless Claims Rise

The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reported Thursday, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy.

Continuing claims – which are composed of those receiving unemployment benefits for at least two straight weeks – rose by 867,000 to 17.018 million for the week-ending July 18.

Congress Fails to Agree on Next Coronavirus Stimuli Deal

Republicans and Democrats have made little progress toward a coronavirus relief deal as economic data show an economy still reeling from the coronavirus pandemic. Congressional leaders are blaming one another for the expiration as coronavirus cases continue to increase around the country. Meanwhile, an enhanced federal unemployment benefit is expiring even as initial jobless claims increased for two consecutive weeks.

China’s Factory Activity Beats Expectations in July

China’s factory activity expanded in July for the fifth month in a row and at a faster pace, beating analyst expectations despite disruptions from floods and a resurgence in coronavirus cases around the world.

The official manufacturing Purchasing Manager’s Index (PMI) rose to 51.1 in July from June’s 50.9, official data showed on Friday, marking the highest reading since March. Analysts had expected it to slow to 50.7.

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