2020 – The Year Ahead in the Charts – Webinar Dec 18

He will explain the impact they had on the markets and how the markets are positioned going into 2020 and what the charts may be suggesting. This webinar covers:

  • 2019 – Trade Deals, a strong USD & Brexit
  • 2020 – Trade Deals, Brexit & The US Election
  • What the charts may be suggesting

DATE: 18 December 2019, 11:00 AM

REGISTER NOW

About Stuart Cowell, HF Markets’ Head Market Analyst

Stuart is a passionate advocate of keeping things simple. His forex webinars aim to make you understand how the news, charts and sentiment work together to provide trading opportunities across all asset classes and all time frames.

Stuart has been trading the global markets since 1997 and has also run his own consultancy. He is now a valuable contributor to our team of forex webinar presenters. Stuart believes that knowing yourself and employing effective risk management are the keys to successful trading.

Goldman Sachs (GS) – Regarded by many as THE Bank

The Trend is always a Trader’s Friend

Goldman Sachs Group (GS), the once bastion of the exclusive super rich and 150 years old this year, is now a much more diverse and outward looking organization than it used to be. The notoriously long hours and 100%+ commitment expected and demanded from the investment bank from staff is still the creed of the place but with the launch of products like the Marcus account things are changing.

Stay tuned to the HotForex Analysis page for exclusive expert analysis of all the major market movements!

The Marcus (named after the company’s founder Marcus Goldman) “offers no-fee, fixed-rate personal loans, high-yield online savings accounts and certificates of deposit to help people achieve financial well-being”, something that the founder would find very interesting as the bank made its reputation in investment banking and successful IPOs. In the UK the account is a little over a year old and is “an easy-access savings account”, which at the time paid 1.5% AER, including a fixed bonus of 0.15% for 12 months, which was the highest in the UK since 2016.

So why would THE bank, as many refer to GS, be interested in online savers in the UK and fixed-rate personal loans for ordinary US workers? Answer – Reputation. It all goes back 11 years and the great financial crisis of 2008, when Goldman Sachs and all of Wall Street were deemed to be the bad boys that caused the crisis, yet they were “bailed out” by the government as ordinary workers lost their jobs and homes. In September that year Bear Sterns and Lehman Brothers had failed and thousands of jobs were lost, and it was not only banks, but Insurance giant AIG also required a bail out of $85 billion to survive. The money was coming from the US government and the guy in charge of the US Treasury at the time was Henry (Hank) Paulsen (a former CEO of THE bank). A total of $800 billion was eventually pumped into the US economy to save Recession becoming Depression. GS (and Morgan Stanley) were seen as the next most vulnerable of the Wall Street banks and 11 years ago this week they received $10 billion each from the government, a relatively small amount compared to others on Wall Street, but reputations were fundamentally tarnished. A month later in November 2008 the stock was trading at under $49.00.

The consensus for next week’s earnings, from the 28 analysts that follow the stock, is for Earnings per share to top $5.03 and Revenue to be in excess of $8.55 billion. Many major hedge funds remain bullish but wary of financials, with reports that the number of bullish hedge fund positions fell by 15 in recent months. Overall, however, hedge fund sentiment is still quite bullish, just not as bullish as before and with GS not being a top 30 hedge fund pick, although it was in 61 hedge funds portfolios at the end of June 2019.

Technically, the stock printed a Double Top (bearish) at $220.00 and has support zones at $195.00, $180.00 and $150.00. It remains below key 50 and 200-day moving averages. $206.00 is the first key Resistance zone if the double top is to be tested again.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)


Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Yen – The Currency of Choice in Volatile October

The Trend is always a Trader’s Friend

USDJPYDollar Yen has been locked in a sideways action for most of the last three weeks between a top capped by the 50.0 Fibonacci and September high at 108.50 and a floor at 107.00. Wednesday’s move down below the 20-day moving average also breached the flat-lining 50-day moving average and was another attempt to test the 107.00 low. A breach of this level would test the 23.6 Fibonacci level and S2 at 106.00, the September low at 105.75 and the August low and key psychological 105.00. A breach and hold of 108.50 could then test the 200-day moving average at 109.00 and the 61.8 Fibonacci level. The Oscillators remain neutral but bias is to the downside in the higher timeframe weekly and monthly charts.

EURJPYThe Euro continues to be buffeted by continued weak economic data, the uncertainty that still swirls around Brexit and now the Trade War comes to Europe as the WTO backs the US and the imposition of tariffs on $7.5bn of goods it imports from the EU. The pair broke under the 20 SMA September 23, stalling at 118.00 and the 50.0 Fibonacci level before moving lower again yesterday to the 61.8 Fibonacci level. 117.00 represents the next support and the 116.00 September low. A significant reversal over 118.50 is required if the pair is to test 120.00 and the September high. The Oscillators remain negative and the bias is to the downside in the higher timeframe weekly and monthly charts.

GBPJPY – Sterling, as I have written many times in the last 40 months, remains firmly locked in the claws of Brexit fear, uncertainty and doubt and if it’s one thing that markets hate above all else it is FUD. GBPJPY the “widow-maker” moved below the 20 SMA and 50-day moving average September 27 stalling at 132.50 and the 38.2 Fibonacci level before moving lower again on Wednesday to test the S1 level at 131.50. Today the pair has recovered 132.50. 131.00 and the 50.0 Fibonacci level is the next support area, with the 61.8 Fibonacci at 130.00. The September low breached 127.00. A reversal over 133.50 is required if the pair is to test over 135.00 and the September high. The Oscillators are negative and the bias in the higher timeframes is mixed with the weekly chart positive and the monthly chart still negative.

AUDJPY – Action recently from the RBA has seen the Aussie depreciate significantly, with the AUDUSD posting a new more than 10-year low this week at 0.6670. AUDJPY, a proxy for China’s economic resilience and wider Asian economic performance, moved under the 20 SMA September 20, spending 6 days supported at 72.75 and the 38.2 Fibonacci level before moving lower on Tuesday under 72.00 to test the 61.8 Fibonacci at 71.67, below that is the floor of the recent consolidation zone at 70.75. The Oscillators remain negative and the bias in the higher timeframes is mixed with the weekly chart positive and the monthly chart still negative.

 

CAD, CHF & NZD Yen crosses also all remain below the key 20 SMA, having broken below on October 2, September 30 and September 19, respectively.

 

As Q419 completes its first week the Japanese Yen remains in demand as economic data continues to underwhelm, the “R” word (Recession) appears in the literature more frequently and the spectre of the inverted yield curve persists.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

Sterling Remains Locked in The Political Headlights – Again

Brexit

Big political developments and big debate and big news noise erupted in the UK yesterday, but not a lot that would appear to have any bearing on how the unresolved Brexit process will unfold, although underscoring how divided and distracted the political system is. A lot is at stake, including the possible devolution of the United Kingdom, along with Brexit. Prime Minister Johnson accepted the Supreme Court’s ruling that his decision to suspend Parliament for five weeks was unlawful while stating that he disagrees with it, and politicizing it with a full-throttled hamming-up the people vs parliament narrative, roiling up the pro-Brexit base ahead of an upcoming election. The opposition is sticking with its tactical refrain from agreeing to an election or staging a confidence vote until the avoidance of no-deal Brexit on October 31 has been assured. If Johnson fails to secure a deal with the EU, the new law (the Benn bill) that will extend Brexit to January 31 will kick in on October 19. The opposition is in part concerned that calling an election before October 19 would leave room for Johnson to trigger a no-deal Brexit before the election has taken place, while they are also wanting to force Johnson to break his “do or die” promise to deliver Brexit by October 31, thinking this will cost him votes at the election.

Cable moved down over 1% yesterday and has moved another leg lower today within a pip or two of 1.2300. PM Johnson returned to a particularly vitriolic and acrimonious Parliament as the Brexit deadlock looks no nearer to a conclusion. When, how or even if the UK leaves the EU still remains unresolved, and as ever, uncertainty breeds fear and fear spikes confidence, sentiment, and the long-suffering pound. Cable remains rooted under 1.2400, triggering another move lower on the crossing EMA (H1) strategy at 07:00 GMT today, for a net gain of 27 pips.

The move lower yesterday took the pair down to the 20-day moving average and the 38.2 Fibonacci level around 1.2335. A breach of this level and 1.2200, the 61.8 Fibonacci level and the recent low below 1.2000 are next support areas. 1.2500 remains a key psychological line in the sand to the upside, beyond which is the recent September high at 1.2580 and the 200-day moving average at 1.2650.

With sterling down some 15% from the EU Referendum in June 2016, a potential significant upside move cannot be ruled out. The upside move will only come with some clarity in the Brexit process. The assumption, by many market participants, is that all sides want a deal and that the pain and disruption of a no-deal exit will cause both parties to compromise. So far there are little actual or practical signs of such compromise and the talking at least continues. The latest is that UK Brexit Secretary is to meet chief EU negotiator Barnier tomorrow in Brussels. Halloween is some 36 days away.

Most likely, Brexit will be delayed to January 31 and a general election staged in late November or December. The election will presumably be the final Brexit battle. One of four endgame scenarios will be produced by the election, depending who the victor is, or what possible inter-party alliances or coalitions prevails:

1. A no-deal Brexit on January 31 (which would be the fruit of a possible Conservative-Brexit party coalition).

2. Brexit with a deal and transition phase (the Conservative Party’s preference, though the party would have to win the election outright, which there is potential for, and reach an accord with the EU, which would be an uncertainty).

3. Brexit with a deal and multi-year transition period, but also subject to a “confirmatory” referendum (which is the position of Labour and SNP).

4. Brexit canceled (which is the position of the Liberal Democrats).

For the Pound, which has been the principal conduit of the financial market opinion of Brexit, outcome number 1 would be the most bearish scenario, while outcome 4 would be the most bullish.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

Sterling Remains Locked in The Political Headlights

Weak UK Inflation Numbers

UK August CPI came in weaker than expected, dropping to a headline rate of 1.7% year/year, down from 2.1% year/year in July. The median forecast had been for 1.9% year/year. Core CPI also abated much more markedly than expected, to a rate of 1.5% year/year, down from 1.9% year/year in the month prior. Input prices showed mostly negative prints, too.

The dip in inflation comes despite a 5%-plus weakening in the trade-weighted value of the pound from August 2018 levels, and despite UK wage growth hitting a near 10-year high recently.

UK yields and the Pound took a turn lower since the release, though the BoE is likely to remain on the sidelines with the Brexit process coming to a resolution, with the outcome and thereby associated impact on the UK economy still uncertain.

Ahead of the UK inflation data, Cable had triggered lower on the simple Crossing Exponential Moving Average (EMA) strategy (H1). The 5-period EMA crossed below the 9-period on the close of the 09:00 candle. The second trigger and Entry was a close below the 20-period moving average (the Bollinger Band mid-line) on the chart below at the close of the 10:00 candle (1.2472).

This approach uses the Average True Range (ATR) to generate target levels, with 1 x the ATR as Target 1 (1.2461) and 2.5 x the ATR as Target 2 (1.24445). At 10:00 the GBPUSD (H1) had an ATR of 11pips. The initial Stop Loss level should be where the market has turned, and this morning it was at the key psychological 1.2500 zone, which is now a 4-day resistance level, following the break of the 20-day moving average on September 4th.

Cable (and most USD crosses) will likely now remain in tight ranges ahead of the FOMC announcement at 18:00 (GMT) where expectations are for a 25 basis point cut and communication that pegs the move more as a mid-cycle adjustment and less as a second cut in a protracted easing cycle.

The BoE policy decision tomorrow is likely to be a non-event, with no-change widely anticipated as their hands remain tied to the political ramifications of the Brexit process.

The UK Supreme Court is currently hearing the government’s appeal on the ruling from Scotland’s highest court that the government’s suspending of parliament was illegal. A decision is expected Thursday or Friday.

Most likely, although not a certainty, it will agree with the recent court rulings seen in England and Northern Ireland, that the matter was “non-justiciable” — being political rather than a legal matter. Most likely, Brexit will be delayed to January 31 and a general election staged in late November or December. The election will presumably be the final Brexit battle.

One of four endgame scenarios will be produced by the election, depending who the victor is, or what possible inter-party alliances or coalitions prevails: 1, a no-deal Brexit on January 31 (which would be the fruit of a possible Conservative-Brexit party coalition); 2, Brexit with a deal and transition phase (the Conservative Party’s preference, though the party would have to win the election outright, which there is potential for, and reach an accord with the EU, which would be an uncertainty); 3, Brexit with a deal and multi-year transition period, but also subject to a “confirmatory” referendum (which is the position of Labour and SNP); 4, Brexit cancelled (which is the position of the Liberal Democrats).

For the Pound, which has been principal conduit of financial market opinion of Brexit, outcome number 1 would be the most bearish scenario, while outcome 4 would be the most bullish.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

Apple Underwhelms as Share Price Rises, But It is September

The Trend is (always) King

September is always an interesting month for APPLE shareholders as the company traditionally announces new products and more recently, services to be launched and available for the important Q4 Christmas sales. This year was no different. Apple shares have moved with this year’s technology pack with highs posted following this week’s event over $223 and lows during August of $192, as the 50-day moving average proved an important support level.

September 10th was the launch event this year with upgrades announced for a raft of products from the iPhone (11), iPads and MacBook through to the Air Pods and Apple Watch (5). However, there were no new products announced. Simply upgrades to the existing lineup. However, what buoyed investors was something not normally announced at these September events, price cuts. There were reductions for the iPhone 11 range, heavy discounts for the Apple Watch (3) and the big surprise, APPLE TV+ at $4.99 a month, half the price many analysts were expecting and new Arcade game subscription service which will also be priced at just $4.99 per month and include a free one-month trial.

Hardware design and functionality have always been at the core of what Apple does and the big move in recent years has been away from this dominance of hardware (even though the iPhone still accounts for over 60% of revenues) to invest significantly in services. The initial move was a partnership in 2015 with IBM and Cisco to try to break in the corporate market; this has been followed by Apple Pay and more recently the long awaited upgrade for Apple TV and this week Apple Arcade.

Apple TV+ is scheduled for release November 1, and initially it was only to be in the USA but will now be available to 100 countries at an extremely competitive $4.99 per month. Apple is entering a very crowded video-streaming marketplace, currently dominated by Netflix, but including Amazon and Disney. Apple Services is a growing revenue stream within the technology giant and TV+ marks its latest attempt to diversify its dependence from the ubiquitous iPhone. The aggressive pricing structuring, undercutting its competitors, is a break from traditional Apple pricing models.

The US-China trade war hangs over all US consumer products and companies but Apple seems to have the ability to keep both Washington and Beijing on side.

The market clearly liked what disappointed the tech community this week as the shares rallied significantly following the launch. Apple stock trades up 41.7% year to date, 11.53% just this month and 6.88% this week. Apple’s market capitalization is now back over $1 trillion.

However, September being the final month of the third quarter it is traditionally the weakest performer of the entire year. Over the last twenty-one years, the USA30, USA100 and USA500 have all recorded average losses for September, with gains in the first half evaporating in the second half and the final week in particular. The rise this week for Apple shares is a typical post launch event rally. The major Wall Street banks have price targets for the stock ranging from Nomura at $175 to Morgan Stanley at $247.

Apple reports Q4 earnings for the end of September on October 29 and current expectations are for revenues to top $62.55 billion and EPS to top $2.80.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

Sterling and the New Season – The Trends Remain

The Trend is King

The Pound took a severe knock after the British Prime Minister Boris Johnson moved to restrict Parliament’s ability to instigate an obstruction to a possible No-Deal Brexit on October 31. By suspending (proroguing, in the official speak) Parliament for around one month and scheduling the Queen’s Speech to outline his new parliamentary agenda October 14 it leaves very little time for his opponents to organize. October 31 is a little over 9 weeks away.

Opponents both politically and constitutionally were outraged whilst Brexit supporters welcomed the highly unusual political manoeuvre. Speaker of the House of Commons, John Bercow called it a “constitutional outrage”, Leader of the Opposition labour party, Jeremy Corbyn said “Suspending Parliament is not acceptable, not on. What the prime minister is doing is a smash and grab on our democracy to force through a no deal,” whilst an editorial in the Brexit supporting Daily Telegraph says that is not – a constitutional outrage – and that “Whingeing Remainers need to grow up”.

Sterling dived on the news losing close to 0.8% – as Cable crashed to 1.2150, EURGBP rallied to 0.9120 and GBPJPY took another leg lower to 129.45. This comes with markets already bracing for the risk of a disorderly no-deal Brexit (which was given a median 35% probability of happening in the latest Reuters poll, up from 30% previously).

So the opening salvos of the new season and the final showdown between anti-no-deal members of parliament and the pro-no-deal Brexiteers, led by Prime Minister Johnson and his cabinet have been fired.

Cable has immediate support at the 20-day moving average (1.2125) and resistance at the 50-day moving average (1.2360). Cable has been north of the important 20 SMA baseline for the last five trading days, having spent the previous 38 days, below it, during which time it posted a multi-year low (August 12) at 1.2010.

The UK100, which benefits from a weaker Sterling rate as so many of its constituent companies derive so much of their income in currencies other than GBP, is also weaker as the spectre of no-deal Brexit increases. The UK100 has collapsed (-9%) in the last month from highs of 7730 (July 30) to lows of 7025 on Monday (August 26), trading under the very important 200-day moving average for the last 10 consecutive days.

The BOE Problem also remains

For the BoE the debate following a no-deal or even renegotiated hard Brexit would be whether to accept the likely impact of additional inflation pressures and focus on the growth impact, which ultimately will also have a dampening effect on inflation. In the meantime, the yield curve could well invert more if a no-deal Brexit scenario becomes even more likely as the Reuters polling suggests.

The trend remains very much biased to the downside for Sterling and the UK100 in the inevitably volatile nine weeks ahead of October 31.

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

Global Equities Back to Key Levels

The Trend is (always) King

The S&P 500 (USA500) – the world’s most important and significant equity market closed over the key 20-day simple moving average for the first time in 16 trading days at 2924.43, having rallied from the psychological 2900 level. Technically, the 200-day moving average sits as support at 2850, 2800 is a key psychological support (and 100-day moving average), with the summer & spring lows (June 3 & March 8 respectively), at 2730. Additionally, the close over the 20 SMA also coincides with the 61.8 Fibonacci retracement level of the move down from the all-time high from mid-July over 3025 to the August 6 low of 2775.

A break and hold from the current levels are required if the equity markets are to recover from the summer shake out and fears of a looming recession. The FOMC minutes aside, US equities were given an unexpected boost this week as earnings from retails Target and Lowes, significantly beat expectations. Both retailers have rallied (25.78% and 15.40%) respectively this week alone. The US consumer remains alive and relatively well, for the time being at least, and continues to spend.

In the higher time frames the 2730 low is the Weekly 100-moving average, with the 200- moving average sitting at 2520 and hiatus low of Christmas week 2018 at 2315, 620 points and 21% below current levels.

The 2730 level also represents a 10% decline from all-time highs, a decline during September–October timeframe to below 2420 would represent a 20% decline from all-time highs and suggest the possible end of the bull market run.

Meanwhile, US equities are making headway, with the markets looking ahead to Fed Chair Powell’s speech Friday. Hopes are riding high that the Chairman will indicate further policy stimulus is on the way, and the talk of recession is simply that, talk.

Stuart Cowell, Head Market Analyst at HotForex

(read our HotForex Review)

GBP, Yield Curve Inversion & Brexit – The Trends Remain

The Trend is King

The Pound took a knock after the UK yield curve inverted, in sympathy with the inversion seen on the US curve. The Gilt 2-/10-year yield differential went negative for the first time since the global financial crisis of 2008. This follows preliminary UK Q2 GDP data, released last Friday, unexpectedly showing a negative reading, of -0.2% q/q, and comes with markets bracing for the risk of a disorderly no-deal Brexit (which was given a median 35% probability of happening in the latest Reuters poll, up from 30% previously). The UK currency has reversed intraday gains that were seen after warmer than expected CPI data and on news that the speaker of the House of Commons, John Bercow, stated that he will fight to stop PM Boris Johnson from shutting (aka proroguing) parliament as a means to force through a no-deal Brexit.

Cable has dropped back to levels around 1.2065-70 after printing an intraday high at 1.2076. The day’s low, seen during Asian hours, is at 1.2050, and the 31-month low seen on Monday is at 1.2015.

Regarding Brexit, the scene is set for a final showdown between anti-no-deal members of parliament and the pro-no-deal Brexiteers, which include Prime Minister Boris Johnson and his cabinet (who lead a weak minority government with a working majority of just one, and with a portion of their own Tory members disposed to stopping a no-deal eventuality, but who would be galvanized by some favourable polling).

The battle will commence on September 3, when parliament reopens after the summer recess.

The BoE Problem

The UK curve also reflects the BoE dilemma. The UK 2-10 year curve inverted after higher than expected CPI readings and remains virtually flat even after the initial excitement over the higher than expected headline reading has settled down. The 2-year is trading at 0.454%, up 0.5 bp, while the 10-year is down -3.6 bp at -0.455%. The above-target inflation reading of 2.1% followed labour data on Tuesday that showed a further acceleration in wage growth, and while a Brexit-related slowdown in economic activity may reduce wage pressures, the rise in CPI is likely to at least partially reflect the decline in Sterling, which is pushing up imported inflation.

For the BoE the debate following a hard Brexit would be whether to accept the likely impact of additional inflation pressures and focus on the growth impact, which ultimately will also have a dampening effect on inflation. In the meantime, the yield curve could well invert more if a no-deal Brexit scenario becomes even more likely as the Reuters polling suggests. The trend remains very much biased to the downside for Sterling in the inevitably volatile weeks ahead of October 31.

Stuart Cowell, Head Market Analyst at HotForex


(read our HotForex Review)

ALPHABET – Watch the Revenue Numbers – Q2 Earnings later today

The Cloud is King

Over the last 2 years, Alphabet has beaten EPS estimates 75% of the time and revenue estimates 100% of the time. Zack Investments report that Alphabet’s search market share (north of 90%) is a big positive, which along with its focus on innovation of its AI techniques, strategic acquisitions and Android OS should continue to generate strong cash flows for the company. Moreover, the growing momentum of Google Cloud and expanding data centres will continue to bolster the company’s presence in the cloud space.

From the negative perspective though, Alphabet is facing some downwards risks, as with Q42018 and Q12019, it invested heavily on digital advertising and on opening data centres to extend its cloud footprint worldwide and for designing, developing and marketing the new range of Pixel phones. Growth in advertising revenues will also be under the spotlight later. The revenue growth in Q1 was under 20% (the first time in over 3 years) at 16.7% and the key revenues from advertising were down 15.6%, representing a two-year lows. On top of this was the announcement earlier in the week, from the Department of Justice that the US Attorney General, William Barr, was interested in launching a broad antitrust investigation into the Big Tech companies within the USA- the sort of scrutiny that has brought successful anti-trust actions in the past in other jurisdictions, notably from the EU.

So what does Q2 hold?

In general, Alphabet is expecting revenues to be just shy of $31.00 billion at $30,90 with a consensus earnings per share coming in at $11.49 for a decline of 2% However, Alphabet has a history of beating estimates by more than 10% on average, so could Q2 prove to be the same? The Cloud business continues to grow significantly following the huge invest from Q42018, some analysts polled by Reuters are expecting the business unit to be worth between $17 and $20 billion by Q42020. However, it is a very competitive space with Amazon, IBM and Microsoft, all key players and with larger market shares than Alphabet. The investment needs to continue.

Technically, Alphabet shares are up 9% year to date, under performing peers and the wider USA500 in general. The chart is very mixed although Analysts remain biased to the upside with 38 of 43 having a BUY or STRONG BUY rating for the stock, with targets ranging from $1,150 to $1,500.

The Pivot zone is the confluence of the 200, 50 and 20-day moving averages at $1130. Below this level $1100 provides short-term support with the lower Bollinger band at $1075. Resistance sits initially at $1160, the upper Bollinger band at $1180 and $1190.

The Alphabet numbers are released at 20:00 GMT later today, and all eyes will be on the revenue numbers and the growth of Google Cloud.

 

Stuart Cowell, Head Market Analyst at HotForex
(read our HotForex Review)

Latest Dollar Dip helps Gold Consolidate at Highs

7 weeks up for gold

The rally in the Commodity complex and particularly XAUUSD, which started at the beginning of June with the break and breach of the key psychological $1300 level, shows no signs of waning. Indeed, comments from Jerome Powell in his testimony to Congress this week have simply added to the bid on the yellow stuff as it consolidates above $1400.

Back in mid-May, with continued signs of stagnation in the US-China trade talks, Gold rallied from lows of $1265 to $1300. Officials in the Trump administration were talking of differences between the two sides so great that, in his view, there won’t be a resolution before the end of the year. The fallout and finger-pointing that followed the collapse of the talks, the black listing of Huawei and the escalation of tensions between US and Iran all added to the significant (over 7.5%) move in the Gold price during June. It was becoming a contest between President Trump, who faces an election next year, and president-for-life Xi, with Trump’s view being that a trade war will hurt China more than the US.

The atmosphere improved following the G20 meeting in Japan at the end of June. Both leaders agreed to restart talks, China agreed to import more US agricultural products and the US offered not to impose tariffs on the final $300 billion of Chinese imports. Gold gapped down on the first trading day of July back under $1,400, but within 3 days was back over $1430, and has tested as low as 41385 since but remains in demand.

What are the technicals suggesting?

Technically, the key base lines of the 20 and 50-day moving averages were both broken back on May 30 and the 20-day MA has proved key support in the rally to over $1435. Last summer (in the northern hemisphere) we saw a collapse in the Gold price from highs in April at $1365 to lows in August at $1160. That provided key Fibonacci levels (61.8) at $1286, which did indeed prove to be an important resistance and subsequently support zone, and now $1500 (the 161.8 Fibonacci extension level), with initial resistance at the previous high at $1438 and $1450.

2019-07-11_16-16-00

With the continued dovishness extending out of the central banks in both developed and developing markets with forecasts being revised lower, Gold prices could continue to be supported. As yields fall and even as Equities rise on weaker currencies the non-yielding yellow stuff could continue to find a bid as the year rolls on.

Weaker Global Sentiment & Mrs Lagarde at the ECB – CHFJPY Moves Lower

Under Lagarde the IMF repeatedly backed and called for ongoing or further ECB support, so markets are clearly hoping for additional and wide ranging easing measures, although part of the rally in bonds and weakness in the EUR may reflect relief that market-focused Draghi won’t be followed by Bundesbank President Weidmann, who has a much more traditional view on monetary policy.

Indeed, like Fed’s Powell, Lagarde is a lawyer and not a trained economist. However, while many in Germany may lament that Weidmann lost out and that the ECB missed the chance to distance the central bank somewhat from financial market pressures, Lagarde’s skill as negotiator and her wide ranging contacts may help to fill the cracks in the monetary union that are becoming more apparent and to not only improve public support for the central bank, but also to get politicians to finally push ahead with the banking union and further integration.

The euphoria following the prospect of the restarting of US-China talks and cooling of trade tensions (for now at least) has subsided as we move into July, adding a renewed bid for the Japanese Yen.

The CHFJPY pair may not be on every trader’s radar but with a trading system, trading plan and good risk management no asset should be ignored. Indeed the sign of a good trading system/strategy is that it should be applicable to as many markets as possible, be that forex, commodities or equities.

“A chart is a chart” is the call of many chartists. But whatever time frame, asset or approach an individual trader takes they have to be able to follow the rules, accept their losing trades as well as their winning trades and above all manage their risk.

Below are three Trend Following and one Mean Reversion approach to the pair from the close on July 2.

  1. Is the Daily Moving Average approach – the baseline for this approach is a breach and break of the 20-SMA, (109.37) with a Target 1 set by the ATR x 1.25 (108.55) and Stop Loss at the turn in the market (110.55). The higher time frames (Week & Month) are both biased to the downside so the move on the Daily chart is with the trend.
  2. Shows the EMA Crossing Strategy which is also based on moving averages and utilizes the ATR for target setting too, this time ATR x 1 and ATR x 2.5. Stop Loss, as ever, above the turn.
  3. Shows the clarity and simplicity of the Heikin Ashi candle approach – lack of upper wicks and a red candle enough to suggest a short position, Stop Loss again above the turn but this time no target, simply a wait for the candle to change colour.
  4. If Mean Reversion is your approach then again the simplicity of the Awesome Oscillator could be for you. This approach suggested a turn in sentiment July 1 but has yet to suggest a short position as the histogram remains north of zero.

For details on all these approaches and how to manage the most important aspect, YOU then join us during July for our exclusive series of educational webinars.

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