NZD/USD Forex Technical Analysis – Strengthens Over .7160, Weakens Under .7122

The New Zealand Dollar edged higher on Wednesday as the prospects of aggressive fiscal stimulus in the United States bolstered the global outlook, while economic data out of Australia remained mostly positive, helping to underpin the Kiwi.

At 09:53 GMT, the NZD/USD is trading .7160, up 0.0043 or +0.60%.

Sentiment was supported by a declaration from Janet Yellen, U.S. President-elect Joe Biden’s nominee for Treasury Secretary, that the government had to “act big” on stimulus.

According to Reuters, a surge in debt-funded spending would be positive for the global economy and commodity prices, while more money-printing could put pressure on the U.S. Dollar.

Commodities saw the benefit with oil prices climbing anew, while an auction of dairy, New Zealand’s biggest export earner, produced a sharp 4.8% rise in prices.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7096 will signal a resumption of the downtrend. The main trend will change to up on a move through .7240.

The short-term range is .7003 to .7316. The NZD/USD is currently straddling its retracement zone at .7122 to .7160.

The minor range is .7316 to .7096. Its retracement zone at .7206 to .7232 is a potential upside target and resistance zone.

The main range is .6589 to .7316. If the downtrend resumes then its retracement zone at .6952 to .6867 will become the primary downside target area.

Daily Swing Chart Technical Forecast

The early price action suggests the Fibonacci level at .7122 is controlling the direction of the NZD/USD.

Bullish Scenario

A sustained move over .7123 will indicate the presence of buyers. This could trigger a quick move into .7160. Taking out this level could trigger an acceleration to the upside with the next target clustered at .7206, .7232 and .7240.

Bearish Scenario

A sustained move under .7122 will signal the presence of sellers. This could trigger a break into .7096.

Taking out .7096 will reaffirm the downtrend. If this move generates enough downside momentum then look for a possible acceleration into the next main bottom at .7003.

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

S&P 500 Price Forecast – Stock Markets Reach All-time Highs Again

The S&P 500 has rallied significantly during the trading session on Wednesday as we continue to see a drive into equities due to the idea of stimulus and of course everything that goes along with that. Ultimately, the stock market has been in an uptrend for ages and I do not see how that changes anytime soon. With this, I think that it is only a matter of time before we would see longer-term traders continue to hang on and newer traders continue to pile in. The consolidation area underneath suggests that we could go as high as 4000, based upon the measured move.

S&P 500 Video 21.01.21

Furthermore, we also have the uptrend line underneath that is far below, so I think that even if we got a 200 point pullback, it is very likely that there would still be plenty of buyers willing to get involved. The 50 day EMA sits just above the uptrend line as well, so that uptrend line will continue to be very important. However, the last couple of days have shown us plenty of bullish pressure, so I think that we are willing to continue going higher as it looks like the earnings season will be a disaster by any stretch of the imagination.

Stimulus will continue to be a main driver anyway, even though the earnings season might be a reason for the short term move. At the end of the day, Wall Street moves on cheap money and that is really all that matters. As long as liquidity is being tossed into the marketplace, the S&P 500 will continue to rally to the upside and towards that psychologically important 4000 handle.

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

Silver Price Forecast – Silver Markets Looking Towards 26 USD

Silver markets will continue to be bullish as long as we have a strong case for stimulus coming out the United States, and at this point in time I think the $26 level is very crucial to pay attention to. The $26 level has offered plenty of recent resistance, and if we can break above that level it is likely that we go looking towards the $27.25 level. Ultimately, this is a market that I think will continue to see upward pressure, so even if we do pull back, I would be looking at silver as a potential “buy on the dips” type of scenario. Ultimately, I think that the 50 day EMA of course attracts a certain amount of attention and so does the $24 level. The $24 level has been supportive more than once, and the fact that we have stayed above at and bounce from there suggests to me that it is the new “floor the market.”

SILVER Video 21.01.21

To the upside, I believe that we will be looking at the $28 level above as an area where there should be a significant amount of resistance. I do believe that ultimately, we will find reasons to get long given enough time. The market probably breaks above there based upon an announcement of stimulus that opens up the possibility of a move towards the $30 level over the longer term. If we can break above the top of the $30 level, then it opens up the floodgates for a much larger move longer term. At this point, I do not have a scenario in which a willing to sell this market anytime soon.

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

Crude Oil Price Forecast – Crude Oil Markets Quiet

WTI Crude Oil

The West Texas Intermediate Crude Oil market continues to be relatively noisy as we are hanging around the middle of the overall consolidation area between the $55 level on the top, with the $50 level on the bottom. This is a market that I think will continue to see a lot of noise overall, due to the fact that there are a lot of questions when it comes to overall demand. I do not see how demand picks up significantly, despite the fact that they are calling for stimulus to drive prices higher. If crude oil rallies, it is going to be due to the US dollar falling more than anything else as we had already seen a lack of demand before the pandemic hit.

Crude Oil Video 21.01.21

Brent

Brent markets were slightly positive during the trading session on Wednesday initially but gave back the gains as we are getting a bit exhausted. I think at this point we are starting to ask the question as to whether or not we can continue to go to the upside, and quite frankly I think at this point we are getting stretched. I do expect to see a bit of a pullback in the short term, perhaps back down towards the $50 level area. The Brent market will suffer at the lack of demand going forward, and therefore I believe that eventually we have to come to grips with the idea that simple stimulus will not be enough to send oil markets screaming to the upside any further. At this point in time, I think that short-term selling might be possible, but you need to be very cautious about overexposing yourself.

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

Natural Gas Price Forecast – Natural Gas Continues to Get Pummeled

Natural gas markets sold off significantly during the trading session on Wednesday to break down below the 200 day EMA. That being said though, I think that it is only a matter of time before we bounced a little bit in order to sell off yet again. Given enough time, I think that the market will probably go looking towards the $2.40 level, possibly even lower than that. After all, as the temperatures warm up in the United States, that will drive down the price of natural gas as the demand also drops.

NATGAS Video 21.01.21

To the upside, the $2.80 level offers a significant amount of resistance and I think now offers the “ceiling in the market” that we are waiting to see. Ultimately, I think that this is a market that cannot be bought under pretty much any circumstance, due to the fact that the demand of the United States will continue to drop, not only due to warmer temperatures but the fact that the economy is going to be slowing down. Stimulus does not matter, because quite frankly it did not matter before the pandemic.

Yes, there may be a sudden surge economically, but the fact that natural gas is typically used as a heating commodity does not bode well for the upcoming several months. As long as that is the case, I think that you continue to short signs of exhaustion after small bounces. All things being equal, this is a market that I have no interest in buying, at least not until we start talking about trading winter contracts again.

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

Gold Price Forecast – Gold Markets Rally Significantly

Gold markets have rallied significantly during the trading session on Wednesday to break above the recent resistance area and go looking towards the 50 day EMA. By doing so, the market is likely to continue to go higher over the longer term, perhaps reaching towards the $1900 level. I think that short-term pullbacks will continue to offer buying opportunities and therefore I think that this is a “buy on the dips” market going forward. This makes quite a bit of sense, because quite frankly there is a ton of stimulus coming, and of course there is a whole litany of potential problems out there that could have people running towards safety.

Gold Price Predictions Video 21.01.21

The 200 day EMA underneath should offer plenty of support, near the $1820 level. At this point, the $1800 level underneath is a large, round, psychologically significant figure, and the fact that we ended up forming a bit of a hammer suggests that we are probably going to continue to find plenty of support underneath, based upon not only the fundamental situation, but the structural and technical support level. I have no interest in shorting gold, I think that it is trying to form a longer-term basing pattern, as we will certainly see currency destruction be a theme of 2021 going forward, not just in the US dollar, but multiple other currencies around the world.

Gold serves far too many different reasons right now to think that you should be a seller. Ultimately, I believe that the market will eventually break out to fresh highs later this year so therefore I look for opportunities to pick up gold “on the cheap.”

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

Procter & Gamble Raises FY2021 Guidance; Stock Has 20% Upside Potential

Procter & Gamble, the world’s largest maker of consumer packaged goods, reported better-than-expected earnings in the fiscal second quarter and said it has raised its outlook for fiscal 2021 all-in sales growth to a range of 5-6% from the previous forecast of 3-5%.

Cincinnati, Ohio-based consumer goods corporation said its net sales rose 8% to $19.7 billion in the second quarter fiscal year 2021. Diluted net earnings per share increased 4% to were $1.47 and Core-EPS surged 15% to $1.64, beating the Wall Street consensus estimate of $1.51 per share.

Procter & Gamble raised its outlook for organic sales growth to a range of 5-6% from 4-5%. The Company said it now expects fiscal 2021 GAAP diluted net earnings per share growth in the range of 8-10% from fiscal 2020 GAAP EPS of $4.96. In addition, P&G upgraded their guidance for core earnings per share growth to a range of 8-10% from 5-8% versus fiscal 2020 core EPS of $5.12.

Procter & Gamble’s (PG) strong quarter should lift shares, improve sentiment for (lagging) HPC group -stock remains a Franchise Pick. We are focused on a “stronger for longer” theme in HPC w/ ’21 a transition year as the public gradually overcomes its trepidation toward the vaccine, though certain consumer behaviours sustain (cleaning, health & wellness, etc.), which should benefit PG and the group,” noted Kevin Grundy, equity analyst at Jefferies.

“At 22x P/E, PG (and our “core” HPC / beverages basket) are near relative lows vs. the S&P 500 last seen during the 08-09 downturn, leaving risk-rewards skewed to the upside. PG’s strong quarter should drive shares higher and offers a positive read-through for the group as Procter kicks off earnings season.”

However, Procter & Gamble shares traded 1.2% lower at $132.0 on Wednesday; the stock rose over 11% in 2020.

Procter & Gamble Stock Price Forecast

Twelve analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months at $157.00 with a high forecast of $169.00 and a low forecast of $130.00.

The average price target represents an 18.82% increase from the last price of $132.14. From those 12 analysts, eight rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $165 with a high of $184 under a bull scenario and $103 under the worst-case scenario. The firm currently has an “Overweight” rating on the consumer goods corporation’s stock.

Several other analysts have also recently commented on the stock. JP Morgan lowered the target price to $159 from $163. Jefferies decreased the price objective to $168 from $169. Smith Barney Citigroup boosted their price objective to $165 from $159.

In addition, Truist boosted their price objective to $150 from $125. Wells Fargo & Company set an “overweight” rating and a $160.00 price objective for the company.

Equity Analyst’s View

“We expect a positive reaction to a strong FQ2 with a 2.5% top-line and 10.8% operating profit beat vs consensus, driven by strong 8% organic sales growth and an 80-bps gross margin beat vs consensus. Importantly, each segment organic sales growth was 5% or above, giving us greater confidence that PG momentum can continue going forward, as results were not narrowly driven by any one segment benefitting from COVID-19 demand. PG essentially flowed through almost all of Q2 EPS upside vs consensus to FY21 EPS guidance, which moved up by 250 bps at its midpoint, but we still view as overly conservative,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We believe strategy tweaks can sustain PG long-term top-line growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports long-term top-line growth above HPC peers. We see continued GM expansion with moderate commodity headwinds and a solid competitive environment. PG trades at 23x CY22e EPS, a discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher long-term PG growth.”

Check out FX Empire’s earnings calendar

Oil Gains Ground On Stimulus Optimism

Oil Video 20.01.21.

Oil Tries To Settle Above Multi-Month Highs

WTI oil made an attempt to settle above multi-month highs at $53.90 as traders focused on Joe Biden’s stimulus plans.

The market believes that Joe Biden will not face significant resistance against the $1.9 trillion stimulus package, and that the direct support to consumers will boost oil demand in the near term.

Judging by the recent coronavirus data from the U.S., traders should not expect strong virus containment measures which may deliver another blow to the domestic oil demand.

While Joe Biden has many times stated that he planned to boost coronavirus response, his measures will likely be focused on increased healthcare funding rather than restrictions on mobility which is good for the oil market.

Oil traders have successfully ignored the constant flow of bad news from Europe which struggles to contain the second wave of the virus, and it looks like only a true catastrophe may attract their attention. The market remains in a bullish mood, and expectations of another round of stimulus may serve as the catalyst that will push WTI oil towards the $55 level.

Analysts Expect That Crude Inventories Will Continue To Decline

The market’s optimism will soon get tested by crude inventory reports from API and EIA which will indicate whether the current oil demand is strong enough to push inventories to lower levels.

Currently, analysts expect that crude inventories will decrease by about 0.3 million barrels. The previous EIA Weekly Petroleum Status Report showed that crude inventories decreased by 3.2 million barrels and were about 8% above the five-year average for that time of the year.

Thus, the pace of crude inventory draw is expected to decrease. Inventories have been declining since early December so the continuation of this trend may provide psychological support to the market. At the same time, a sudden increase in crude inventories may hurt the market’s mood as oil remains near multi-month highs which increases its sensitivity to such news.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – ‘Risk On’ Sentiment Chasing Out Weak Short-Sellers

The Australian and New Zealand Dollars are trading higher on Wednesday helped by a weaker U.S. Dollar and the hope of huge fiscal stimulus from the Biden administration to combat the effects of coronavirus on the economy. Meanwhile, the economic news in Australia remained mostly positive.

At 10:53 GMT, the AUD/USD is trading .7733, up 0.0035 or +0.45% and the NZD/USD is at .7137, up 0.0020 or +0.28%.

Traders are now looking forward to the inauguration of President Joe Biden at 17:01 GMT and a speech that follows. Early Thursday, Australia will release its latest data on Employment Change and the Unemployment Rate. Early Friday, New Zealand will release its latest report on consumer inflation.

More US Fiscal Stimulus to Come

Demand for riskier currencies is being supported by a declaration from Janet Yellen, U.S. President-elect Joe Biden’s nominee for Treasury Secretary, that the government had to “act big” on coronavirus relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden.

Yellen also said that the value of the dollar should be determined by markets, a break from departing President Donald Trump’s desire for a weaker U.S. currency.

“The United States does not seek a weaker currency to gain competitive advantage and we should oppose attempts by other countries to do so,” she said.

Australian Consumer Confidence Clouded by COVID-19 in January Survey

A measure of Australian consumer sentiment slipped from a decade high in January as new outbreaks of COVID-19 in Sydney and Brisbane spooked people, though the spread has now been contained with relatively few cases and no deaths, Reuters Reported.

The Westpac-Melbourne Institute Index of Consumer Sentiment released on Wednesday fell 4.5% in January, from December, when it rose 4.1%.

The index is still 41% above a nadir hit back in April when COVID-19 lockdowns were at their height, and 14.6% up on January last year. At 107.0, the index implies optimists clearly outnumber pessimists.

“A pullback in the index was to be expected,” said Westpac’s chief economist, Bill Evans. “Since the last survey we have seen domestic border closures; the emergence of COVID clusters in some states; and the sharp upswing in COVID cases overseas, notably the U.S. and the U.K.”

Daily Forecast

A surge in debt-funded spending would be a positive for the global economy and commodity prices, while more money-printing could put pressure on the U.S. Dollar.

Commodities saw the benefit with oil prices climbing anew, while an auction of dairy, New Zealand’s biggest export earner, produced a sharp 4.8% rise in prices.

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

Natural Gas Price Fundamental Daily Forecast – Bulls May Be Close to Throwing in the Towel on Winter Cold

Natural gas futures are trading lower at the midsession on Wednesday as hopes for an extreme cold snap fade with every new weather forecast calling for milder trends over the near-term.

The early pressure was fueled by the European model, which trended milder, putting it about 10-12 heating degree days warmer compared to previous runs over the past 24 hours, NatGasWeather said on Wednesday.

At 14:54 GMT, March natural gas futures are trading $2.477, down $0.052 or -2.06%.

NatGasWeather also said the American model added demand overnight, “but the European had been colder, and the natural gas markets were likely hoping the frostier scenario would come through,” the firm said. “Not to be the case, as the weather data disappoints yet again, as it’s done in almost all instances the past two winters.”

There’s still a “decent” amount of national demand expected starting this weekend through January 29, NatGasWeather said.

“However, the natural gas markets were clearly hoping for frigid air over Western Canada to push more aggressively across the Midwest and Northeast instead of only modest cold shots arriving,” according to the firm. “Also at issue, the pattern is now quite bearish for February 1-3 as warm upper high pressure builds over most of the U.S. besides the West Coast and far East for light national demand.”

Short-Term Weather Outlook

According to NatGasWeather for January 20 to January 26, “A cold shot will track across the Great Lakes and interior Northeast today with chilly highs of 20s & 30s. Most of the rest of the U.S. will be mild with highs of 40s to 60s for light national demand. Colder weather systems will push into the West and Northern Plains with rain and snow late this week with lows of -10s to 30s, then spreading across the rest of the northern U.S. this weekend for a swing to strong national demand.”

Daily March Natural Gas

Short-Term Outlook

Thursday’s U.S. Energy Information Administration (EIA) Weekly Storage report is likely to be a non-event because the data represents conditions for the week-ending January 15 and traders are focusing on next week’s heating demand and the possibility of bearish weather for February 1 – 3.

There’s still a shot at some decent demand next week, but it’s only supposed to be a spike lower in temperatures rather than a lingering cold spell. That’s not enough to wake up the bull.

The daily chart pattern suggests the bearish tone is likely to continue on a sustained move under $2.485, but we could see a short-covering surge if buyers can recover $2.552 with conviction.

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

Bank Earnings Off to a Rough Start

Even so, the group has booked major gains since November when positive vaccine data from Pfizer Inc. (PFE) triggered a sustained rotation out of COVID-19 beneficiaries and into 2021 recovery plays. As a result, current selling pressure appears technical in nature, driven by overbought readings.

Bond yields are rising while the yield curve steepens, signaling a more favorable banking environment that should generate higher profit margins. Revenue remains a major obstacle, with most quarterly reports so far posting substantial year-over-year revenue declines as a result of the pandemic. Dow component JPMorgan Chase and Co. (JPM) is the only bank of the big three to grow revenue in the quarter, in line with its longstanding market leadership.

JPMorgan Chase

JPMorgan Chase lifted to an all-time high ahead of last week’s strong earnings report and pulled back in a notable sell-the-news reaction. Two days of profit-taking could mark the start of an intermediate correction that targets unfilled gaps at 120 and 126. The Nov. 9 breakout gap between 105 and 110 remains unfilled as well, but that might not come into play until later in the year. When it does, it should mark a low-risk buying opportunity.

Bank of America

Bank of America Corp. (BAC) lost nearly 1% on Tuesday after beating Q4 2020 profit estimates and falling short on revenue, with a 9.9% year-over-year decline. Credit loss provisions dropped sharply during the quarter, indicating less stress on customer budgets as the world adjusts to the COVID-19 pandemic. The company announced it would buy back up to $2.9 billion in common stock in the first quarter, after getting Federal Reserve approval.

Citigroup

Citigroup Inc. (C) has booked the greatest downside of the three banks after beating Q4 2020 earnings by a wide margin on Friday. However, revenue fell 10.2% year-over-year, triggering a shareholder exodus that’s now relinquished nearly 8%. Unlike Bank of America, Citi credit losses went in the wrong direction during the quarter, rising to 3.73% of total loans, compared to just 1.84% in the same quarter last year.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Silver Price Daily Forecast – Silver Tries To Settle Above $25.55

Silver Video 20.01.21

Silver Continues To Move Higher

Silver is currently testing the resistance at the 20 EMA at $25.55 while the U.S. dollar is mostly flat against a broad basket of currencies ahead of Joe Biden’s inauguration.

The U.S. Dollar Index has recently made an attempt to settle below the support at the 20 EMA at 90.35 but failed to develop sufficient downside momentum and rebounded closer to 90.50. The next resistance level for the U.S. Dollar Index is located at 90.70. If the U.S. Dollar Index moves above this level, it will gain additional upside momentum which may put some pressure on silver and gold price today.

Meanwhile, gold is testing the resistance at the 20 EMA at $1865. The next resistance is located at the 50 EMA at $1870, so gold will likely face significant resistance in the $1865 – $1870 area. A move above this resistance area will open the way to the $1900 level which will be bullish for silver and other precious metals.

Gold/silver ratio made an attempt to settle below the 73 level but did not manage to gain downside momentum. If gold/silver moves towards the 72 level, silver will get additional support.

Technical Analysis

Silver managed to get above the resistance at $25.30 and is trying to settle above the next resistance level at the 20 EMA at $25.55. In case silver manages to settle above this level, it will head towards the next resistance at $25.85.

A move above this level will push silver towards the resistance at $26.30. There are no important levels between $25.85 and $26.30, and previous moves in this area were fast.

On the support side, the previous resistance level at $25.30 will likely serve as the first support level for silver. The next support level is located at the 20 EMA at $25.20. If silver declines below the 20 EMA, it will get to the test of the next support level at $25.00. This support level has already been tested during the current trading session and proved its strength so silver may need additional catalysts to settle below $25.00.

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

USD/JPY Price Forecast – US Dollar Pulls Back from 104 JPY Level.

The US dollar has pulled back a bit against the ¥104 level, an area that has been important more than once. In the short term, it looks as if the market is simply going back and forth and trying to figure out what it wants to do next. We have been in a longer term downtrend, so I think at this point in time the market probably continues to go to the downside. Short-term rally should continue to offer selling opportunities right around that ¥104 level, and I think that the resistance probably extends all the way to the ¥105 level.

Near the ¥103.50 level, I think there is a certain amount of support in that general vicinity that is worth paying attention to, especially if we can break down below there. If we do break down below there, then it is likely that we go down towards the ¥102.50 level, perhaps even lower than that. We have been in a very extended downtrend for a while, and I simply just do not see that changing in the short term.

Furthermore, if we are going to massive amounts of stimulus, one would have to think that eventually the US dollar needs to continue going lower. What makes this trade a little bit more confusing at times is the fact that it also is highly sensitive to risk appetite, so it is a little bit of a “push/pull” type of situation in the short term, and that explains a lot of the choppiness that is seen on the chart.

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

GBP/USD Price Forecast – British Pound continues to Bang Against Ceiling.

The British pound has rallied to kick off the trading session on Wednesday on the bullish foot. However, the market has pulled back from the 1.3750 level again, an area that seems to be a bit of an issue in general. With this being the case, I think that the market probably finds pullbacks as attractive, especially near the 1.35 handle underneath as it is not only a large, round, psychologically significant figure, but it is also an area that features the 50 day EMA now.

Because of this, I think what we are looking at here is the opportunity for value hunters to come back into the marketplace and take advantage of what is typically going to be thought of as “cheap pounds.”

The 50 day EMA itself of course attracts a lot of attention, but at the end of the day I think what we are seeing here is the likelihood of a “continuation of the buy on the dips attitude” that we have seen for so long. Stimulus is one of the main drivers of this pair to the upside, and although we already know that there is going to be more stimulus coming out of the United States, the reality is that we do not know how much of it there will truly be at the end of the day.

Because of this, I think what we are looking at is an opportunity to take advantage of what has been a very strong trend, but currently is suffering at the hands of a little bit of doubt when it comes to whether or not the stimulus package is going to be as massive as once thought.

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

GBP/JPY Price Forecast – British Pound Fails to Break Through Resistance.

The British pound has rallied a bit during the trading session on Wednesday, but continues to struggle with the ¥142.50 level, as we have pulled back significantly from that level. Nonetheless, this is a market that will continue to be supported underneath, as there are plenty of buyers on dips from everything that we have seen. The more, I do think that the “risk on trade” will probably continue to be the favored one, but we have a lot of work above that we need to get through.

The ¥140 level underneath continues to be rather important from not only a large, round, psychological important figure standpoint, but the fact that it has previously been both structurally supportive as well as resistive. Because of this, I think that we probably get a short-term pullback towards that area before we may get a bit of extended buying pressure. The 50 day EMA sits just below the ¥140 level as well, so that makes that area interesting from that standpoint. Furthermore, the trend has clearly been to the upside when it comes to the British pound in general, so there is no need in fighting that.

It appears that the trend is trying to build up enough momentum to go to the upside even further, so even though this candlestick suggests that we are going to fall in the short term, I do not like the idea of shorting this pair, rather I think that we are more than likely going to continue to see a deaf opportunities to buy the dip that it is exactly what we should be doing over the longer term.

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

EUR/USD Price Forecast – Euro Continues to Grind Sideways.

The Euro initially tried to rally during the trading session on Wednesday but then turn things around to show signs of negativity. At this point, it looks like we are probably going to go down towards the 1.20 level, although I am not necessarily looking to sell this pair. Quite frankly, this is a pullback that is desperately needed, and therefore I think that it is welcomed by both bullish and the parish traders alike.

The ECB has been active behind the scenes doing what is tantamount to yield curve control, so that may work against the Euro going forward. The Euro has been rising rather rapidly and although there has been no direct intervention in the currency markets, the reality is that the market had gotten far ahead of itself as it reached towards the 1.23 level. The weekly chart looks somewhat ominous, but really at the end of the day I think there are plenty of buyers near the 1.20 level, extending down to the 1.19 level where buyers would be looking for value based upon the idea of stimulus in the United States.

However, it should be noted that the $1.9 trillion stimulus package that Joe Biden suggested is not necessarily a “slam dunk”, and I think at this point in time it is likely that we will see a lot of noise when it comes to the idea of that stimulus shrinking the US dollar. The consensus is of course that the US dollar continues to fall in value, but we had gotten so overextended that a correction was desperately needed. We are still in the midst of that correction.

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

AUD/USD Price Forecast – Australian Dollar Continues to Grind Higher

The Australian dollar has rallied a bit during the trading session on Wednesday as we continue to see more of a grind to the upside. The Aussie of course is part of the “reflation trade”, and therefore I believe that the Australian dollar probably continues to be bullish more than anything else, but at this point in time I think that what we are looking at is a little bit of exhaustion, perhaps the market will try to build a bullish flag here.

This does not mean that I am willing to sell this market, just that I am not expecting a lot over the next few sessions.

To the upside, I believe that the 0.80 level is the target, but it will take a while to get to that area. In time will more than likely be bought into as they offer value, extending all the way down to the 0.75 handle, especially as the 50 day EMA has broken above that region.

However, I do recognize that this probably comes down to stimulus more than anything else, so that is worth paying attention to. Stimulus of the United States will continue to weaken the US dollar but there are some questions about whether or not Joe Biden can get a huge package through Congress, and as long as that is the concern it will more than likely cause a bit of hesitation.

However, once it is all said and done, there will be a lot of stimulus, and therefore it is likely that we will continue to see buyers on these dips regardless. I have no interest in trying to short this market anytime soon.

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

UnitedHealth Earnings Beat Wall Street Estimates; Target Price $395

As expected, fourth quarter net earnings of $2.30 per share and adjusted earnings of $2.52 per share declined as care patterns normalized, while COVID-19 costs rose, and further rebate effects were recognized. That was higher than the market expectations $2.41 per share.

The Company affirmed its recently issued full year earnings outlook for 2021, including net earnings of $16.90 to $17.40 per share and adjusted net earnings of $17.75 to $18.25 per share. The largest insurance company by Net Premiums’ said its full-year 2020 revenues of $257.1 billion grew $15.0 billion or 6.2% year-over-year, reflecting broad-based revenue growth across the businesses.

“Adj. EPS $2.52 vs. $2.41 consensus. 4Q MLR 190 bp better than consensus but the full year MLR was only 10 bp better than UNH’s full year guide of 79.2%. Optum results were better-than-expected across the board. Management noted continued restoration of care patterns in 4Q20– positive for the group as it indicates better visibility into 2021, all else equal, although we look for more detail on the call,” said Charles Rhyee, equity analyst at Cowen and company.

UnitedHealth shares closed 0.25% higher at $352.19 on Tuesday; the stock rose about 20% in 2020.

UnitedHealth Stock Price Forecast

Eighteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months at $395.61 with a high forecast of $462.00 and a low forecast of $359.00.

The average price target represents a 12.33% increase from the last price of $352.19. From those 18 analysts, 16 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $462 with a high of $529 under a bull scenario and $261 under the worst-case scenario. The firm currently has an “Overweight” rating on the health care company’s stock.

Several other analysts have also recently commented on the stock. Cowen and company raised the target price to $370 from $360. Bernstein upped the stock price forecast to $413 from $403. Jefferies increased the price objective to $375 from $335. UnitedHealth Group had its target price hoisted by Deutsche Bank to $404 from $359. The brokerage currently has a buy rating on the healthcare conglomerate’s stock.

In addition, Raymond James increased their target price to $405 from $355 and gave the stock a strong-buy rating. Truist increased their target price to $420 from $400. Credit Suisse Group increased their target price to $395 from $355 and gave the stock an average rating.

Analyst Comments

“UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Netflix Rockets After New Subscribers Fuel Blockbuster Q4 Sales

Netflix, Inc. (NFLX) shares surged over 12% in extended-hours trade Tuesday after the streaming content provider reported better than expected fourth-quarter sales on the back of robust subscriber growth. The company also said it is considering returning free cash flow to shareholders through buybacks.

Revenues for the fourth quarter (Q4) came in at $6.64 billion, slightly above the $6.63 billion consensus mark analysts had forecast. Moreover, the top line grew 20% from a year earlier, thanks to a boost of 8.5 million paid subscribers during the period. The company disclosed quarterly earnings per share (EPS) of $1.19, with the figure falling shy of Wall Street estimates of $1.30 a share and contracting 8% on a year-over-year (YoY) basis.

As of Jan. 20, 2021, Netflix stock has a market value of $221.68 billion and trades 7.21% lower on the year. However, the shares have gained nearly 50% over the past 12 months as investors piled into names that benefited from consumers spending more time at home during the pandemic.

Returning Free Cash Flow to Investors

CFO Spencer Neumann raised the prospect of returning excess free cash flow to investors while remaining on the lookout for strategic investments. “We put a premium on balance sheet flexibility, so we’re going to continue to invest aggressively into the growth opportunities that we see, and that’s always going to come first,” he said, per CNBC. “But beyond that, if we have excess cash, we’ll return it to shareholders through a share buyback program,” Neumann added. He also told investors that the company would no longer need to raise external financing for its daily operations.

Wall Street View

Citi’s Jason Bazinet maintained his ‘Neutral’ rating on Netflix shares earlier this month but raised his price target to $580 from $450. The analyst cautioned price hikes might limit new subscribers in coming quarters, resulting in a loss of market share to Disney’s streaming service, Disney+.

Elsewhere, the Street sentiment remains mostly bullish. The shares receive 21 ‘Buy’ ratings, 4 ‘Overweight’ ratings, and 12 ‘Hold’ ratings. Just one sell-side firm currently recommends selling the shares. Price targets range from as high as $700 to as low as $235, with the median pegged at $580.60. Watch for a flurry of additional upgrades over the next few weeks after yesterday’s upbeat quarterly update.

Technical Outlook and Trading Tactics

Since climbing to a new all-time high in mid-July, Netflix shares have remained stuck in a 110-point trading range. Premarket data indicates the stock will open around $565 today, placing the price toward the range’s upper trendline.

Those looking to play a breakout should plan entries above key resistance at $575 while managing risk with a stop-loss order placed around $20 below the execution price. Consider using a measured move to set a profit target. For example, add the trading range distance, as measured in points, to the breakout level. ($105 + $575 = $680 profit target)

For a look at today’s earnings schedule, check out our earnings calendar.

USD/JPY Technical Analysis – Rangebound as US Treasury Yields Flatten After Recent Volatility

The Dollar/Yen is trading lower on Wednesday, reversing yesterday’s rally as the choppy trade continues for a fifth straight session. The price action suggests traders are trying to decide if the risk is on or risk is off.

The five-day counter-trend rally in March 10-year U.S. Treasury notes could also be confusing traders after the recent steep rise in interest rates. Traders seem to wait for yields to make their next move before committing to a direction in the Dollar/Yen. Higher yields will widen the spread between U.S. Treasuries and Japanese Government bonds, making the U.S. Dollar a more attractive investment.

At 07:32 GMT, the USD/JPY is trading 103.745, down 0.160 or -0.15%.

In other news, on Tuesday, U.S. Treasury Secretary nominee Janet Yellen, appearing before the Senate Finance Committee, urged lawmakers to “act big” on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden. This news gave risk appetite better support, helping to boost the U.S. Dollar.

Daily Swing Chart Technical Analysis

Daily USDJPY

The main trend is up according to the daily swing chart. A trade through 104.398 will signal a resumption of the uptrend. The main trend changes to down on a trade through 102.593.

The minor trend is also up. A trade through 104.198 will indicate the buying is getting stronger. The minor trend will change to down on a move through 103.524.

On the upside, resistance is a series of retracement levels at 104.135, 104.499 and 104.821.

The minor range is 102.593 to 104.398. Its 50% level at 103.496 is potential support and a trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The price action the last seven sessions suggests the direction of the USD/JPY will be determined by trader reaction to a pair of 50% levels at 103.496 and 104.135.

Bearish Scenario

A sustained move under 103.496 will indicate the presence of sellers. If this move generates enough downside momentum then look for a potential acceleration with 102.593 the next major downside target.

Bullish Scenario

A sustained move over 104.135 will signal the presence of buyers. This could lead to a labored rally with initial targets coming in at 104.198, 104.398 and 104.499.

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