The US dollar fell rather hard against the Japanese yen during the trading session on Friday to close out the week, as we continue to see US dollar softness. That being the case, it is likely that we are going to try to reach towards the ¥106 level. That is an area that has formed a bit of a double bottom but if we break down below there it is likely we go looking towards the ¥105 level. Ultimately, this is a market that has been very attracted to the ¥107.50 level, as it has been like a magnet for price. Think of it like a Bollinger Band indicator, that is almost “normal.” However, it does look like we are going to attempt the ¥106 level again, and if it does break down it is almost assured that we are going to go looking towards the ¥105 level rather quickly.
USD/JPY Video 13.07.20
Ultimately, the ¥105 level should be rather important, because of that gives way to the selling pressure, then we could be looking at a move down to the ¥102 level. Rallies at this point cannot be trusted, because quite frankly there is no point in trying to fight what has been the case for some time, US dollar weakness based upon the Federal Reserve. As long as the Federal Reserve continues to liquefy the markets, it is likely that we are going to continue dropping. If we continue dropping, it then will probably bring the Bank of Japan into the picture, but probably closer to the ¥100 level.
The British pound has gone back and forth during the trading session on Friday, initially dipping below the 200 day EMA. However, we turned around to show signs of life again as the Americans came aboard. At this point in time it looks as if the British pound is going to continue to fight, and a break above the shooting star for the trading session on Thursday would be a very bullish sign, opening up a move towards the 1.2750 level. At this point in time, the market is likely to continue reaching to the upside, because quite frankly it just will not fall.
GBP/USD Video 13.07.20
I could give you plenty of reasons as to why the British pound should be drafting lower, but at the end of the day it seems as if the market is focusing on the Federal Reserve and what it is doing to the dollar. Because of this, this market turns around to rally every time it falls, and therefore it does not make much sense to fight the momentum. That being said though if we end up forming a hammer for the Friday session preceded by a shooting star, that normally means that you are going to go sideways for a short amount of time.
A breakout of that little range tells you where you are going next. If we break down from here, I anticipate that the 50 day EMA, currently colored in red on my chart is going to offer support for those looking to pick up British pounds. We have made a long series of “higher lows”, so if I had no idea what was going on in the world, this looks like a market that wants to go higher.
The British pound fell fairly significantly against the Japanese yen during trading on Friday but found enough support just above the 50 day EMA to turn around and form a bit of a hammer. By doing so, the market is showing that there is a lot of support at the 50 day EMA, but it also looks as if there may be resistance at the 200 day EMA. Because of this, I anticipate that the market has nowhere to go, at least not in the short term. However, if we can break above or below one of these moving averages, that gives us the possibility of placing a trade with a bit more confidence.
GBP/JPY Video 13.07.20
Breaking below the 50 day EMA opens up a move down to the ¥132 level, just as breaking above the 200 day EMA would open up a potential move towards the ¥140 level. With the way this pair has been acting, I do believe that it is probably a much easier trade to the upside, as we have made a series of “higher lows.” The British pound has been rather healthy against most currencies, so it is not just this currency pair.
Because of this, I would be much quicker to take that breakout to the upside and might even position size it a little bit bigger than to the downside. If we were to somehow break down below the ¥132 level after that initial breakdown, then we could be talking about a bigger move for a longer amount of time. However, that would need some type of negativity entering the risk appetite of traders.
The Euro has gone back and forth during the trading session on Friday, showing signs of confusion yet again just below the 1.13 level. Because of this, it is likely that we are going to see back and forth behavior heading into the weekend and perhaps even at the open. We are currently trading in a sloppy range between the 1.14 level on the top and the 1.12 level on the bottom. The market breaking out of that range would be rather important, but it is much easier for this market to fall at the moment that it is to rise, as the 1.14 level is a massive resistance barrier that extends all the way to at least the 1.15 handle a break above that level however would change the overall attitude of the markets and could send this market much higher over the longer term.
EUR/USD Video 13.07.20
On the other hand, if we were to break below the 1.1180 level, that opens up massive selling pressure to reach right back down towards the 1.10 level underneath, perhaps even lower than that. That being said, the market has been stubborn in its up pressure over the last several weeks. With this, I think we are simply compressing for a bigger move but do not have the energy or the catalyst to make it quite yet. With that in mind, I do believe there is a nice trade coming, but we just are not there at the moment. Because of this, short-term choppy back-and-forth trading probably continues to be the best way to handle this market, which quite frankly is pretty normal for the Euro.
The Australian dollar has initially fallen during the trading session on Friday but found enough buyers underneath the turn things around and show signs of resiliency yet again. Having said that, the resistance barrier at the 0.70 level is still very much intact, and I just do not see an argument for the market to break through there suddenly. Obviously, it is an area where we have seen a lot of sellers, but I think it is also a bit of a range that extends all the way to the 0.71 handle. If we were to somehow break above the 0.71 handle, then it would be a massive trend change, and we would see the Australian dollar continue to go much higher, perhaps making a run towards the 0.80 level.
AUD/USD Video 13.07.20
To the downside I see plenty of support at the 0.68 level, and it would not surprise me at all to see the market reach back towards that area but I will say this about the Australian dollar: it has clearly shown just how resilient it is going to be. I do not know that this has anything to do with economic conditions, it is probably more about the Federal Reserve flooding the market with liquidity. That of course works against the value of the US dollar so it could send the Aussie much higher by default. That being said, Australia is highly levered to the Chinese situation which has been getting better but is still tenuous at best. With this, I expect to see more choppy behavior over the next several trading sessions.
In addition to virus fears, demand for safe haven assets is supported by another increase in U.S. – China tensions. The U.S. sanctioned several high-ranked China officials over alleged human rights abuses against Uighur minority.
The markets are worried that the continued deterioration of U.S. – China relations comes at the worst possible time when the world economy tries to rebound while the global number of new virus cases continues to surge.
With no big economic reports scheduled to be released today, GBP/USD dynamics will mostly depend on market sentiment. If traders remain focused on the virus, GBP/USD will stay under pressure.
GBP/USD has once again failed to settle above the major resistance at the high end of the current trading range at 1.2650. Since April, GBP/USD made five attempts to get above this level but only one such attempt was successful.
However, even this attempt did not lead to a new upside trend since GBP/USD quickly lost momentum and returned to the previous range between the support at 1.2250 and the resistance at 1.2650.
At this point, it looks like GBP/USD will need significant upside catalysts to settle above 1.2650. If this happens, it will head towards the next resistance level at 1.2750.
On the support side, the nearest support area is located between the 20 EMA at 1.2500 and the previous resistance level at 1.2530. In addition, the 50 EMA is located at 1.2470 so GBP/USD is set to receive strong support near 1.2500.
A move below this level will signal a return to the local downside trend. From a big picture point of view, GBP/USD has once again proved that it continues to trade in a wide 1.2250 – 1.2650 range.
Bitcoin, BTC to USD, slid by 2.32% on Thursday. Reversing a 1.94% gain from Wednesday, Bitcoin ended the day at $9,248.9.
It was a bearish start to the day for Bitcoin. Bitcoin fell from an early morning intraday high $9,451.7 to a late morning low $9,374.0 before finding support.
Steering clear of the first major support level at $9,302.93, Bitcoin recovered to $9,440 levels before hitting reverse.
Continuing to fall well short of the major resistance levels, Bitcoin fell to a mid-afternoon intraday low $9,175.0.
Bitcoin fell through the first major support level at $9,302.93 before finding support.
Steering clear of the second major support level at $9,158.87, Bitcoin moved back through to $9,200 levels.
The near-term bullish trend remained intact in spite of the early July pullback to sub-$9,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend.
The Rest of the Pack
Across the rest of the majors, it was a mixed day on Thursday.
Monero’s XMR (+1.87%), Stellar’s Lumen (+6.11%), and Tron’s TRX (+3.41%) bucked the trend on the day.
The S&P 500 has pulled back significantly during the trading session on Thursday as we got a bit of panic selling in the middle of the day. That was not necessarily any particular news that I am aware of, I think it is just simply a scenario where we have seen traders take profit after a significant move higher. This was first seen in the NASDAQ 100, which was a bit overdone anyway. We have the earnings season coming next week, and that probably has some people spooked as well. With that being the case, I still think that we go looking towards the 3200 level eventually, but we may get an opportunity to buy the S&P 500 closer to the 50 day EMA, at least that is what I am hoping.
S&P 500 Video 10.07.20
On the other hand, is possible that we see a market that breaks above the recent highs at the 3230 level, which allows the market to go looking towards the 3400 level. All things being equal, this is a market that I think gives us an opportunity to pick up the S&P 500 on that dip. However, if we were to break down below the 200 day EMA which is closer to the 2980 handle, the market more than likely goes looking towards the 2800 level after that. At this point, despite the fact that we have sold off rather hard during the middle the day, we are still very much in the same range that we had been in previously, bordered by 3200 to the upside and 3000 to the down. Although this has been a bit of a shock in the middle the day, not much has changed from a longer-term perspective.
Silver markets shot higher during the trading session on Thursday again, but have turned around near the $19.50 level, to form a bit of a shooting star midday. It looks as if we are going to try to go looking towards $19 to find buyers again. At this point in time, I think that the market is going to continue to see a lot of volatility, but clearly there are buyers underneath waiting to get involved. With that in mind I look at this as a value proposition and would love to be buying silver again on some type of a bounce from either the $19 level or possibly even as low as $18.60. This would simply be a retest of a breakout, something that we see quite often.
SILVER Video 10.07.20
With that being the case, simply being patient and waiting for value underneath is probably the best way to play this market. The Thursday session was a bit erratic and shaky, so I would not read too much into this pullback other than we did not have enough follow-through to continue straight up in the air. That should not be a huge surprise but look at this as an opportunity to pick up silver “on the cheap.” With this being the case, I will wait for a daily support of candle to go long or I would buy a break above the top of the candlestick for the trading session on Thursday. Either one works for me and I will take a look at this every 24 hours to place that trade.
The West Texas Intermediate Crude Oil market has pulled back a bit during the trading session on Thursday finally, after sitting at major resistance for several days in a row. Looking at this market, it is only a matter of time before we see value hunters coming back into pick up this market which has been so bullish for so long. I believe that the 50 day EMA underneath continues to offer potential support as well, as it sits right at the bottom of the gap from before. I like buying dips, and of course would like to buy a breakout above the 200 day EMA, but I think we need to pullback in order to build up the necessary momentum.
Crude Oil Video 10.07.20
Brent markets also pulled back during the day as you would anticipate, with a major amount of volatility in markets overall. The $41.50 level was challenged via the pullback, but I think Brent still has further to go to the upside in relation to the WTI market. To the downside I still see the 50 day EMA underneath offering plenty of support as it is the bottom of the overall gap. I think that the closer we get to that area, the more likely we are to see more buyers jump in. To the upside, believe that the top of the gap near the $45.50 level is the target, right along with the 200 day EMA. However, you may have a couple of days to put money to work.
Natural gas markets continue to go back and forth in general as we are in theory looking at a bit of a bullish flag right now, with the $1.90 level being the top. That being the case, I do think that this market goes higher eventually. I think at this point what we are seeing is some type of bullish flag being formed, and therefore if we can break above the $1.90 level I think we are at the very least going to go looking towards the $2.00 level, possibly even the $2.10 level on that breakout as the bullish flag measures for that move.
NATGAS Video 10.07.20
Conversely, if we were to break down below the 50 day EMA, then the market is probably going to go down to the $1.70 level, possibly even the $1.50 level on a serious breakdown. The $1.50 level is a major bottom in the market, and one that we have seen holding several times over the last several years. With the hotter temperatures in the United States I do expect that we will continue to see a “buy on the dips mentality”, but I do not know if we can break significantly above the $2.10 level.
I do believe that the 50 day EMA should offer a bit of support, so keep that in mind as well. We did pull back a bit during the session on Thursday, but at the end of the day I think we still have plenty of buyers underneath. I do not necessarily think that the market is going to collapse again.
Gold markets initially tried to rally during the trading session on Thursday but then turned around to show signs of exhaustion. Having said that, the market is likely to see buyers underneath just waiting to get involved, as the market has been bullish for some time. At this point I think it is only a matter of time before the value hunters come back in and try to take advantage of “cheap gold.” After all, the Federal Reserve continues to loosen monetary policy and therefore I think gold continues to rise over the longer term. After all, gold loves loose monetary policy as it is a way to protect wealth as a “hard asset.”
Gold Price Predictions Video 10.07.20
Underneath, I think there are plenty of buyers waiting at the $1800 level, and therefore we will continue to see the big figure respected, but even if we did break down below there I think it is only a matter of time before traders would get involved and trying to take advantage of what has clearly been a nice trend, and that cannot be fought. With the stock market getting crushed during the day, it is possible that perhaps we are seeing traders taking profit in gold in order to cover margin calls in other market such as the S&P 500. We have seen this more than once, and quite frankly this is typically very short-lived. This trend is long-term and secular, so I think it is only a matter of time before we get towards the $2000 level.
The Initial Jobless Claims report showed that 1.31 million Americans filed for unemployment benefits in a week. Meanwhile, Continuing Jobless Claims dropped to 18.1 million as some workers managed to find new jobs.
However, market sentiment changed quickly after the release of U.S. employment reports as traders focused on the worsening coronavirus situation in the U.S. On Wednesday, the U.S. has registered more than 60,000 new cases of the disease.
Renewed worries about potential lockdowns increased demand for safe haven assets and provided support to the U.S. dollar.
At the same time, the Canadian dollar found itself under pressure as WTI oil fell below the key $40 level. There was no specific catalyst for this move, and it looks like general virus worries put pressure on oil.
Canadian oil benchmarks mostly trade in sync with the leading world benchmarks like Brent and WTI so the downside move of WTI oil is negative for the Canadian dollar.
USD to CAD continues to trade in a range between the support at 1.3500 and the resistance at the 50 EMA at 1.3590. Recent trading sessions have been volatile but USD to CAD did not manage to get out of this range.
In case USD to CAD manages to settle above the 20 EMA, it will likely develop upside momentum and head towards the next resistance level at the 50 EMA which has declined to 1.3665.
On the support side, USD/CAD will need to settle below 1.3500 to gain downside momentum. A move below this level will be a material bearish development for USD/CAD which will head towards the next support level at 1.3440.
Oil Does Not Have Enough Near-Term Catalysts To Get Above $41
Oil traded in a very tight range for six sessions in a row and a move out of the range between $40 and $41 was long overdue.
Currently, it looks like the first move may be to the downside as oil is trying to settle below the $40 level.
On Wednesday, the U.S. has reported more than 60,000 new cases of coronavirus, and some traders fear that the continued deterioration of the virus situation may lead to new lockdowns.
In addition, the recent inventory report did not provide reasons for optimism as crude inventories increased by 5.7 million barrels. Gasoline inventories decreased by 4.8 million barrels but that’s normal for the driving season. In fact, I’d bet that many traders expected to see better inventory dynamics.
Oil is a volatile commodity and it cannot stay glued near one level for many days. Ultimately, it will have to follow the path of least resistance. At this point, the risk may be shifting to the downside as the oil market simply lacks additional catalysts to continue the upside move, and a healthy correction may be due.
OPEC+ Will Not Extend Current Production Cuts For August
On July 15, the market monitoring panel of OPEC+ will meet to discuss the recent developments in the oil market. Currently, OPEC+ has agreed to cut production by 9.6 million barrels per day (bpd) until the end of July.
In August, production cuts will decrease to 7.6 million bpd so an additional 2 million barrels of oil will be supplied to the market.
The main intrigue is whether OPEC+ will prefer to provide additional support to the market and extend current cuts for August.
In my opinion, this will not happen. OPEC+ countries are struggling from lower levels of production while some countries like Russia may have problems maintaining current production cuts for technological reasons.
In addition, the U.S. domestic oil production has recently jumped from 10.5 million bpd to 11 million bpd. OPEC+ would not like to provide a “free lunch” for the U.S. oil industry and support prices when the market share of its competitor grows day by day.
In this light, oil will need healthy upside in demand to get above the recent trading range since some of the curtailed supply will soon return to the market.
The US dollar has drifted a little bit lower during the trading session on Thursday as the ¥107.50 level continues to offer resistance. The 50 day EMA is sitting at that level, so it does make sense that we will continue to see the market struggle going forward as well. If that is in fact going to be the case, then ultimately I believe that this market will drift a bit lower from here and go looking towards the ¥106 level which is the area that we have seen a bit of a “double bottom”, which is a very supportive level that I think will continue to cause an issue. If that level gets broken down below, then the market is likely to go looking towards the ¥105 level.
USD/JPY Video 10.07.20
To the upside, the market breaking above the ¥107.50 level could open up the door towards the 200 day EMA which is closer to the ¥108 level. At this point, breaking above there would go looking towards the ¥110 level. That seems to be unlikely though, considering that the market simply is drifting and as you can see the market simply cannot seem to keep the gains. This of course could be due to the fact that the Federal Reserve is continuing to flood the market with US dollars, and of course this pair does tend to drop in times of concern, which we clearly have plenty of things to worry about out there. With that in mind, I think that you continue to fade short-term rallies in this market until the climate changes.
The British pound rallied significantly during the trading session on Thursday as we are leaving the 200 day EMA behind now. Looking at this chart, I also see that there is significant resistance at the 1.2750 level, so it is more than likely only a matter of time before we see a bit of a pullback. Quite frankly, this is a market that continues to chop back and forth and nothing has changed here as far as I can see. With that being the case, the market is likely to see an eventual exhaustion in this market.
GBP/USD Video 10.07.20
To the downside, the 200 day EMA should offer a bit of support but I believe the 50 day EMA will be even more important at this point. The British pound is moving back and forth due to Brexit, and of course a whole host of issues when it comes to the UK economy. We are seeing the British slowly open up their economy, so it does help the overall situation but ultimately one of the biggest drivers of this pair seems to be the Federal Reserve out there pumping the system with US dollars. That has worked against the greenback in multiple currency pairs, so this should not be a huge surprise. With this being the case, I think you continue to see a lot of choppy and difficult trading behavior, but I think that buying the dips probably continue what we see here going forward.
The British pound has been remarkably resilient over the last couple of months, even though we have had massive noise around the world, and of course we still have Brexit to worry about. While this does not logically make any sense, the reality is that price is truth, and that is all that truly at the end of the day will help your account. If that is the case, then you cannot be a seller of this pair, at least not right now. It does not matter what “should happen” it is what “does happen.”
GBP/JPY Video 10.07.20
I can give you hundreds of reasons why we should have more of a “risk off” attitude around the market which should send this pair lower, but at the end of the day it is obvious that nobody seems to care about anything related to risk right now. With that, a break above the 200 day EMA should send this market to the upside, giving the buyer yet another reason to get bullish.
To the upside, it looks like the market is trying to go towards the ¥140 level, which has been massive resistance. That for the buyers right now seems to be the target, and short-term pullback should offer buying opportunities from what history tells us. However, if we were to turn around a break down below the 50 day EMA it could show the first sign of serious trouble. With this, keep in mind that the buyers simply have not given up.
The Euro has shot higher during the trading session on Thursday but also gave back quite a bit of the gains as we have seen significant exhaustion in the Euro every time it rallies. I also see that there is a massive amount of resistance at the 1.14 handle, which extends all the way to the 1.15 handle. With that in mind I do believe that fading this market still works, perhaps opening up a pullback towards the 1.12 level. If we can break down below that level significantly, we will then go looking towards the 1.10 level underneath. That is an area that will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, and an area that has been previous resistance.
EUR/USD Video 10.07.20
Overall, I think that the Euro is benefiting from the Federal Reserve flooding the markets with US dollars, but that is probably the main reason for strength here. I do read where pandemic relief plans in the European Union should boost the Euro, but quite frankly it will just flood the market with those very same Euros. If that is going to be the case, I do not see how that is going to be bullish, but quite frankly I think we do not have a major uptrend until we can break above the 1.15 handle. If we do, then it becomes more of a “buy-and-hold” scenario but I do not see that happening in the short term so I would not hold my breath for that move. Ultimately, I believe that we are still essentially in a trading range.
The Australian dollar initially tried to rally during the trading session on Thursday but continues to see a lot of trouble at the 0.70 level, which has been extraordinarily difficult for some time and it also leads to quite a bit of resistance all the way to the 0.71 level after that. At the first signs of exhaustion him willing to start shorting this market, because I think it is going to go down towards the 0.68 level which has been massive support. That leaves us with a 200 point range to trade back and forth, so at this point it looks like we continue to see a lot of the same but if we were to break above the 0.71 handle, that would be an extraordinarily positive sign.
AUD/USD Video 10.07.20
Breaking above that level makes the Aussie more of a “buy-and-hold” opportunity, perhaps one that runs all the way to the 0.80 level, which would be quite a remarkable move. This would show a complete change in overall tone and would be something that I would be more than willing to jump on top of an continue to buy dips. Until then, I have to assume that the resistance will continue to hold, and if that is going to be the case, I am more than willing to sell signs of exhaustion. Quite frankly, I think the world is trying to figure out where it wants to go next, and the Australian dollar is a proxy for that as we continue to trade in this range.