Crude Oil Price Update – Trader Reaction to $12.38 Pivot Will Determine Next Short-Term Move

U.S. West Texas Intermediate crude oil futures are trading slightly lower at the mid-session after clawing back all of its earlier losses. Oil turned positive shortly after the regular session opening as reopening of economies outweighed fears about dwindling storage capacity worldwide.

Prices were under pressure for a second session after the United States Oil Fund (USO), said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term deferred contracts.

At 15:46 GMT, June WTI crude oil is trading $11.63, down $1.30 or -5.38%.

The intraday rally was fueled by short-covering. It would be premature to hit the buy button given the current weak demand situation. According to some estimates, as much as a third of worldwide demand has been sapped, which has sent prices tumbling to record lows.

Daily June WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $6.50 will signal a resumption of the downtrend. The main trend will change to up on a move through $33.15. This is highly unlikely. It also shows how much work buyers are going to have to do to change the trend.

The minor range is $6.50 to $18.26. Its 50% level or pivot at $1238 is controlling the price action so far this week.

The short-term range is $33.15 to $6.50. Its retracement zone at $19.83 to $22.97 is the next upside target and resistance zone.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $11.63, the direction of the June WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to the pivot at $12.38.

Bullish Scenario

A sustained move over $12.38 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into $18.26 to $19.83.

Bearish Scenario

A sustained move under $12.38 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible retest of the contract low at $6.50.

Side Notes

At 20:30 GMT, traders will get the opportunity to react to the weekly inventories report from the American Petroleum Institute (API). It is expected to show a 12 to 15 million barrel build for the week-ending April 24. The previous week’s report showed a 13.226 million barrel build.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Watch for Light Volume Ahead of Fed Meeting

June E-mini NASDAQ-100 Index futures advanced on Monday as investors prepared for a busy earnings week while turning a hopeful eye toward several U.S. states that are relaxing shutdown restrictions put in place to curb the spread of the COVID-19 pandemic. The technology-based index has clawed back nearly 70% of the ground it lost since the coronavirus crisis brought the economy to a grinding halt.

On Monday, June E-mini NASDAQ-100 Index futures settled at 8818.25, up 49.25 or +0.56%.

In stock related news, Apple Inc. slipped 0.2% following a report indicating the company was postponing a production ramp up for its flagship iPhone.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 8966.75 will signal a resumption of the uptrend, while a move through 8342.00 will change the main trend to down.

The minor trend is also up. This is helping to generate upside momentum. A trade through 8498.25 will change the minor trend to down.

The minor range is 8966.75 to 8342.00. Its 50% level or pivot at 8654.25 is support.

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

Short-Term Outlook

It was a good start to the week with the index picking up where it left off on Friday with a solid rally from the opening on Sunday night. If this upside momentum continues into Tuesday then 8966.75 should be an easy target.

With the Fed starting a two-day meeting on Tuesday, light volume could prevent a breakout over 8966.75. However, if the Fed delivers more positive news on Wednesday then look for a breakout over this level with 9006.75 the next upside target.

On the downside, support is staggered at 8654.25, 8576.50 and 8498.25.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Should Test 2885.00 – 2930.25 on Tuesday

June E-mini S&P 500 Index futures rallied on Monday as investors celebrated the possibility of reopening the economy after the coronavirus outbreak. The market never struggled during the session, opening strong Sunday night then pushing higher before the cash market opening after the Bank of Japan announced more stimulus measures.

At 21:45 GMT, June E-mini S&P 500 Index futures are trading 2867.50, up 38.00 or +1.34%. The high of the session was 2881.25. This was just shy of the recent top at 2885.00.

The financials sector led the S&P 500 Index higher, climbing more than 3%. Citigroup shares rallied more than 6% while Wells Fargo and Bank of America were each up over 4%.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through 2885.00. A move through 2717.25 will signal a resumption of the downtrend.

The minor trend is up. This led to the shift in momentum to the upside.

The minor range is 2885.00 to 2717.25. Its 50% level or pivot at 2821.00 is new support.

An additional support cluster comes in at 2785.75 to 2765.50.

Short-Term Outlook

Look for the upside bias to continue as long as the index can hold the pivot at 2821.00. If this move creates enough upside momentum then look for buyers to take out 2885.00, changing the main trend to up. This could trigger an acceleration into the major Fibonacci level at 2930.25.

For longer-term bullish traders, the key to extending the rally will be overtaking 2930.25.

On the downside, a failure at 2821.00 will signal the presence of sellers. This could lead to a pullback into 2785.75 to 2765.50.

Taking out 2765.50 with big selling volume could trigger an acceleration to the downside with the next targets 2717.25 and 2652.50.

Natural Gas Price Fundamental Daily Forecast – Wicked Price Action Ahead of May Futures Expiration

Natural gas futures posted a wicked reversal to the upside on Monday that may have been fueled by massive short-covering ahead of the expiration of the May futures contract on Tuesday.

U.S. weather forecasts were mostly supportive, but lower commercial and industrial demand due to the COVID-19 lockdowns across the country would’ve more than offset any weather related bullishness.

At 19:29 GMT, June natural gas futures are trading $1.918, up $0.023 or +1.21%. This is up from a low of $1.765.

The rebound in the market may have also been fueled by another plunge in crude oil futures, which renewed concerns over lower production. Furthermore, a successful test of a short-term support zone may have also been behind the technical closing price reversal bottom.

May Expiration Volatility

Early in the session, weak near-term fundamentals kept the pressure on the front of the natural gas futures curve. Additionally, the volatile moves in the May futures contract didn’t come as a complete surprise with some analytical firms actually predicting the possibility of erratic movement.

Some “chaotic moves” could be in store prior to the expiration of the May contract, with more risk to the downside than to the upside, according to Bespoke Weather Services.

However, “the market is thinner, meaning it can more easily be pushed around, so we’d still advise caution,” the firm said. “Either way, the data still suggests that it is difficult to really be bullish at the front of this curve until we see clearer signs that the economy is coming back and balances tighten significantly.”

“Winter can remain supported, as that is where the lower production story can take precedence. Is it possible that cuts in production come sooner? Absolutely, and if that happens, the story at the front of the curve can change, but we do not see that yet.”

EBW Analytics Group Sees More Downside Pressure

EBW Analytics Group analysts said they expect the May contract to slide in its last two days of trading, extending Friday’s 6.9-cent sell-off. The firm attributed the recent price weakness to two main drivers, Natural Gas Intelligence (NGI) reported.

First is “the steep decline in weather-driven demand for gas expected over the next two weeks,’ which should result in the first reported triple-digit storage injection from the Energy Information Administration (EIA) next week, the EBW analysts said. The other factor is “collapsing natural gas prices in Europe and Asia, which threaten to shut the door” on U.S. liquefied natural gas exports this summer.

This sets the stage for May to head lower before rolling off the board Tuesday, according to the firm.

“The June contract is also expected to slide this week, potentially ending the week at or below Friday’s close for May,” the EBW analysts said. “The bleeding may temporarily slow by next week, though, as large amounts of oil production start to be shut in and reduce supplies of associated gas.”

Short-Term Outlook

Expect more volatility on Tuesday with the markets showing sensitivity to the May expiration and the crude oil market. Any rallies are not likely to be fueled by a change in demand, but rather production or supply issues.

EUR/USD Mid-Session Technical Analysis for April 27, 2020

The Euro is trading higher against the U.S. Dollar at the mid-session on Monday. Some investors were squaring short Euro positions ahead of Thursday’s European Central Bank monetary policy and interest rates decisions. Others were selling U.S. Dollars as traders turned more positive and less averse to risk amid an easing in coronavirus lockdowns around the world.

At 14:00 GMT, the EUR/USD is trading 1.0845, up 0.0021 or +0.20%.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside after the confirmation of Friday’s closing price reversal bottom.

A trade through 1.0727 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main trend will change to up on a trade through the last main top at 1.0991.

The minor trend is also down. Taking out 1.0885 and 1.0897 will change the minor trend to up. This will reaffirm the shift in momentum.

The main range is 1.0636 to 1.1147. Its retracement zone at 1.0831 to 1.0892 is resistance. The EUR/USD is currently trading inside this zone. It is also controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 1.0845, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the Fibonacci level at 1.0831.

Bullish Scenario

A sustained move over 1.0831 will indicate the presence of buyers. If this move creates enough upside momentum then look for a rally into a series of levels at 1.0885, 1.0892 and 1.0897. The latter is a potential trigger point for an acceleration to the upside with 1.0991 the next likely target over the near-term.

Bearish Scenario

A sustained move under 1.0831 will signal the presence of sellers. This could trigger an intraday break into a minor pivot at 1.0794. If this fails then look for the selling to possibly extend into 1.0727.

The IMF Delivers a Reality Check. Will Italy and Spain Deliver Brussels Another?

Through the early part of the European session today, we saw the majors give up gains from Tuesday.

A run of 5 consecutive days for the CAC40 and EuroStoxx600 had come off the back of fresh optimism.

This optimism was not from hopes of a less severe impact of COVID-19 on the economy but on countries reopening for business.

Once more, however, the markets and governments appear to be ignoring China’s model.

This time around, with China now dealing with returnees infected with COVID-19. This coincides with a number of U.S States looking to loosen confinement measures.

For the EU, the likes of Spain, Italy, Germany, and France will also be looking to get their economies up and running.

It is perhaps not too surprising when considering the IFM’s latest economic forecasts for the current year.

The Forecasts and the Markets

The fixation on the COVID-19 numbers ahead of the IMF‘s forecasts was evident in the markets. Even the worst economic indicators on record had not been enough to stall the global equity market rebound.

Just as investors were preparing for the earnings season, the IMF delivered its reality check.

If investors were thinking that the global financial crisis was bad, the IFM figures are preparing the markets for far worse…

The global economy contracted by 0.1% during the global financial crisis. For 2020, the IMF has forecast that the economy will contract by 3%. To make matters worse, the U.S is forecast to contract by 6%, and the Euro area by a whopping 7.5%.

Somewhat surprisingly, it has taken the IMF to remind the markets of what lies ahead. It’s not just the current spread of the virus that must be considered but also the longer-term economic impact.

It goes without saying that, the greater the contraction the less likely a V-curve rebound will be.

For that very reason, the IMF poured cold water on those projecting a V-shaped economic rebound in the U.S.

Service sector economies are certainly at the mercy of the virus and the lockdown measures taken by governments. But manufacturing and export economies are unlikely to be better off. A marked surge in unemployment, by levels never seen before, means that demand for just about everything will take time to recover.

So, when factoring the growth outlook, unemployment and the fact that borders will remain closed for some time to come, some pullback is due.

Fiscal and Monetary Policy Support

When considering the measures taken by governments and central banks to combat the effects of COVID-19, the EUR should be on a much less steady footing.

EU Finance Ministers managed to agree to a €500bn package for member states. Throw in the forecasted 7.5% contraction for 2020 and that support looks particularly small. Even more so when you consider the support delivered by the FED and the U.S administration.

On the face of it, it’s not too surprising to see the Dollar on the move and for the European equity markets to see red.

It remains to be seen whether this is the beginning of the big correction, however. Much will depend on what is in store from a monetary and fiscal policy perspective.

For Italy and Spain, forecasted contractions of 9.1% and 8.0% respectively will once again raise the possibility of a break from the EU.

Years of austerity followed by an economic meltdown will have voters demanding more support from Brussels. A failure to deliver will undoubtedly lead to the talk of a breakaway once more.

At the time of writing, the EUR was down by 0.66% to $1.09070. After having visited $1.14 levels in March, is the EUR facing the prospect of a return to sub-$1.06 levels?

Any chatter from Spain, Italy and possibly from Germany on the viability of the EU project and we may even see parity against the Dollar…

The worse economic meltdown since the Great Depression certainly warrants more than the March sell-off. After all, that sell-off came well before the markets had any sense of what economic mayhem COVID-19 has created…

EUR/USD 15/04/20 Daily Chart

Silver Daily Forecast – Silver Moves Higher as Investors Show Optimism

Silver has posted slight gains in the Friday session. Currently, silver is trading at $12.61, up $0.51 or 4.28% on the day.

Markets Rebound After Rate Cuts, Stimulus

Global markets have moved higher on Friday, as governments and central banks have intervened with massive stimulus packages in order to stabilize the volatile financial markets. On Wednesday, President Trump signed into law a massive stimulus package that had been quickly approved by Congress. The package, worth close to a trillion dollars includes direct payments, deferred payments and tax breaks. The move is aimed at shoring up the U.S. economy, which analysts fear could be headed towards a recession.

Major central banks have mobilized to combat the financial turmoil caused by COVID-19 outbreak. The Federal Reserve has slashed interest rates to near zero and also announced a huge bond-buying campaign. Across the pond, the ECB announced a 750 billion euro asset purchase package. The Pandemic Emergency Purchase Program (PEPP) will last until the end of 2020. On Thursday, the Bank of England trimmed rates from 0.25% to 0.10%, a record low. This move comes just one week after an emergency rate cut of 50 basis points. The bank will also buy an extra 200 billion pounds in government and corporate bonds. These massive bond purchases by the central banks are aimed at improving economic conditions, which have badly deteriorated due to the outbreak, especially with crippling travel restrictions through much of the world.

The cautious optimism in the financial markets has helped boost silver, although the metal is down 14.8 percent this week. For now, silver is keeping its head above the critical $12 level, which has been tested during the week.

 

Silver Technical Analysis

The crucial 12.00 level remains an immediate resistance line. Above, there is resistance at 13.00. If that level is broken, the market will next be looking at 15.00. On the downside, if silver drops into the mid-11 range, we could be headed much lower, as the next major support level is at the symbolic 10.00 level.

Silver 1-Day Chart

Crude Oil Daily Forecast – Is this the Time to Buy Crude?

Crude has posted gains in the Friday session. Currently, U.S. crude oil is trading at $27.59, up $2.24 or 8.51% on the day. Brent crude oil is trading at $31.97, up $2.57 or 8.67%.

Crude Tests $20 – To Buy or Not to Buy?

We are seeing a pause in the massive sell-off of crude, which hit $20 a barrel earlier in the week. Despite this upward price retracement, traders should bear in mind that the current trend remains downward and overall sentiment is pessimistic. This means that the floor could be still lower. At the same time, oil prices have crashed and fell this week to 18-year lows, which certainly represents a buying opportunity. Traders may wish to show some caution and not go “full in” to such volatile markets, but these prices can certainly be considered a bargain.

Oil Rebounds on Trump Remarks

Crude prices have moved higher on Friday after U.S President Trump said on Thursday that he was prepared to get involved in the Saudi Arabia-Russia price war “at the appropriate time”. Trump did not offer any specifics, but investors were heartened that Trump’s remarks (warning?) could help end the price war, which has contributed to plunging oil prices. Earlier this week, U.S. crude fell as low at $20.27, its lowest level since 2002.

The U.S. is unhappy with plummeting oil prices, which has severely hurt U.S. shale oil production, which makes up 1/3 of onshore oil production in the continental U.S. Still, analysts aren’t expecting Russia or Saudi Arabia to lose face anytime soon and be the first to blink. Saudi Arabia is incensed that Russia torpedoed its move to slash production and has responded with deep price cuts and an increase in production. However, Russian President Putin is unlikely to bend to the Saudis, as long as the Russian economy is not hit too hard by falling prices.

Technical Analysis

With crude showing some sustained upward movement, a number of resistance lines have fallen. Currently, there is resistance at 29.85. If crude breaks through this line, it has room to move as high as 32.80, which is the next major resistance line. On the downside, there is support at support 26.80, followed by 24.20.

U.S. Crude 1-Day Chart

European Equities: Futures Point to a Slide as the Markets React to China Stats and the FED’s Rate Slash

Economic Calendar:

Monday, 16th March

Italian CPI (MoM) (Feb) Final

Tuesday, 17th March

German ZEW Current Conditions (Mar)

German ZEW Economic Sentiment (Mar)

Eurozone ZEW Economic Sentiment (Mar)

Eurozone Wage Growth (YoY) (Q4)

Wednesday, 18th March

Eurozone Core CPI (YoY) (Feb) Final

Eurozone CPI (YoY) (Feb) Final

Eurozone CPI (MoM) (Feb)

Eurozone Trade Balance (Jan)

Friday, 20th March

German PPI (MoM) (Feb)

The Majors

It was a relatively bullish end to the week for the European majors that enjoyed a much-needed relief rally after 4-days in the red.

The CAC40 and EuroStoxx600 led the way with gains of 1.83% and 1.43% respectively, while the DAX30 rose by just 0.77%.

It could have been a far better day, with the DAX30 up by 9% on the day before sliding back, as coronavirus news continued to weigh.

Following the WHO’s reclassification of the virus as a pandemic, Europe quickly became the epicenter last week. Talk of fiscal and monetary policy support may have been positive takeaways, but a widening shut down across the region was the major negative…

The Stats

It was a relatively busy day on the Eurozone economic calendar on Friday. Key stats included finalized February inflation figures out of Germany, France, and Spain.

The numbers had a muted impact on the majors, however, with no data major shocks for the markets to consider.

Late in the session, a fall in U.S consumer sentiment in March didn’t help… The Michigan Consumer Sentiment Index fell from 101.0 to 95.9 in March, according to prelim figures.

The Market Movers

For the DAX: it was a particularly bullish day for the auto sector. BMW and Continental led the way, with gains of 7.29% and 6.00% respectively. Daimler and Volkswagen saw more modest gains of 5.45% and 4.43% respectively.

It was also a bullish day for the banks, with Commerzbank and Deutsche Bank rallying by 3.78% and 8.42% respectively.

Deutsche Lufthansa rallied by 10.14%, with the upside coming in spite of travel restrictions and border shutdowns.

From the CAC, it was a relatively bullish day for the banks. Credit Agricole and Soc Gen rallied by 4.06% and 10.30% respectively. BNP Paribas saw a more modest gain of 2.35% on the day.

The auto sector also found much-needed support, with Peugeot and Renault gaining 2.90% and 2.29%% respectively.

Air France-KLM managed to reverse Thursday’s 12.69% slide, with a 12.69% gain on Friday.

On the VIX Index

The VIX saw its 2nd day in the red out of 7, with a 23.37% slide on Friday. Partially reversing a 40.02% surge from Thursday, the VIX ended the day at 57.8.

A bullish end to the week saw the U.S equity markets recoup most of Thursday’s losses as investors responded to the U.S administration’s decision to call a national emergency. Added measures to contain the spread of the virus also provided support on the day, detracting investor focus from the actual spread across the U.S.

Thursday had seen the markets pummelled in response to the administration’s apparent ineptitudes in handling the virus.

On Friday, the S&P500 rallied by 9.29%, which left the VIX in the red but at elevated levels that had not been since 2008.

VIX 16/03/29 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Finalized February inflation figures are due out of Italy later this morning.

With the markets having plenty to consider following the coronavirus news updates from the weekend, the numbers will have a muted impact on the majors.

Over the course of the day, expect governments and central banks to attempt to ease the market panic.

We saw the FED slash rates to zero ahead of the Asian open this morning, while also delivering $700bn in QE, with the RBNZ also cutting rates.

The reality is, however, that containment measures came in too late and the EU has become the epicenter.

With the 1st quarter coming to a rapid end, economic woes will spill into the 2nd quarter, which will test risk sentiment at the start of the week.

If economic data from China from this morning is anything to go by, the impact could be quite catastrophic. Industrial production in China slumped by 13.5% in February, year-on-year. In January production had risen by 6.9%. While the numbers were particularly dire, economists had forecast a 1.5% increase, which was way off the mark.

In the futures markets, at the time of writing, the DAX was down by 288 points, with the Dow down by 1,041 points.

EUR/USD Bearish Freefall Drops 200 Pips and Reaches 1.09

Dear traders, the EUR/USD is showing massive bearish momentum. The expected downtrend is now unfolding in 5 waves (orange). Can price action even break the bottom of wave 3 (blue) at 1.0881?

4 hour chart

EUR/USD euro US dollar 4 hour chart

Our EUR/USD wave analysis was expecting a bearish wave 4-5 (green) pattern within a wave C (blue). The bearish breakout indeed confirmed our bearish view. However, the momentum is much stronger than expected. Price could be building a larger bearish wave 3 (rather than a wave C) if it’s able to break below the 100% Fib of wave 2 vs 1 at 1.0881.Also, Ultima EA had massive wins with the +/- 7 shorts on the EUR/USD. The winning streak is sending the account sky high.

1 hour chart

EUR/USD euro US dollar 1 hour chart

The EUR/USD made a pullback pattern after Friday’s NFP event. This has been labelled as wave 1-2 (dark red). Yesterday price was able to break the support line (dotted blue) for a new lower low, again. The bearish impulse remains strong, so the price swing has been labelled as a wave 3 (dark red). The current pullback could be a wave 4 (dark red) as long as price action stays below the 61.8% Fibonacci retracement level of wave 4 vs 3. A bearish breakout could confirm a move lower towards the Fib targets.

Good trading,

Chris Svorcik

The analysis has been done with the help of SWAT method (simple wave analysis and trading)

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The Crypto Daily – Movers and Shakers -06/12/19

Bitcoin rallied by 2.77% on Thursday. Reversing a 1.33% decline from Wednesday, Bitcoin ended the day at $7,440.0.

A mixed start to the day saw Bitcoin fall to an early morning intraday low $7,191.0 before finding support.

Steering well clear of the first major support level at $6,948.2, Bitcoin rose to an early afternoon intraday high $7,530.9.

In spite of the breakout from $7,400 levels, Bitcoin came up short of the first major resistance level at $7,709.2.

A pullback through the afternoon saw Bitcoin slide through to sub-$7,400 levels before finding support.

The near-term bearish trend, formed at late June’s swing hi $13,764.0, remained firmly intact.

For the bulls, Bitcoin would need to break out from $11,000 levels to form a near-term bullish trend.

The Rest of the Pack

Across the rest of the top 10 cryptos, it was a mixed day for the majors.

Ripple’s XRP and Binance Coin led the way, rallying by 3.53% and by 3.43% respectively.

Bitcoin Cash ABC (+2.49%), EOS (+2.24%), Ethereum (+1.84%), and Stellar’s Lumen (+1.40%) also saw solid gains.

Bitcoin Cash SV and Litecoin trailed the pack. While Litecoin rose by 0.31%, Bitcoin Cash SV fell by 0.17% to buck the trend on the day.

Through the current week, the crypto total market cap slid from $203bn levels on Monday to a Wednesday low $195.19bn before hitting a Thursday high $203.71bn. At the time of writing, the total market cap stood at $201.32bn.

Bitcoin’s dominance hit 67% levels before easing back, supported by the strong gains on the day. 24-hour trading volumes returned to $70bn levels before easing back.

This Morning

At the time of writing, Bitcoin was down by 0.72% to $7,386.3. A bearish start to the day saw Bitcoin fall from an early morning high $7,440.0 to a low $7,378.8.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a bearish start to the day for the majors.

With the rest of the pack in the red, Binance Coin led the way, with a 0.70% loss.

Bitcoin Cash ABC (-0.55%), Bitcoin Cash SV (-0.34%), EOS (-0.66%), Ethereum (-0.57%), and Litecoin (-0.33%) weren’t far behind.

Ripple’s XRP and Stellar’s Lumen saw limited losses early on, with the both down by 0.06%.

BTC/USD 06/12/19 Daily Chart

For the Bitcoin Day Ahead

Bitcoin would need to move back through to $7,390 levels to support a run at the first major resistance level at $7,583.6.

Support from the broader market would be needed, however, for Bitcoin to break out from this morning’s high $7,440.0.

Barring a broad-based crypto rebound on the day, resistance at $7,500 would likely pin Bitcoin back.

In the event of a rebound, Thursday’s high $7,530.9 and first major resistance level would likely limit any gains.

Failure to move back through to $7,390 levels could see Bitcoin struggle on the day.

A fall back through to sub-$7,300 levels would bring the first major support level at $7,243.7 into play.

Barring a crypto meltdown, however, Bitcoin should steer clear of the second major support level at $7,047.7.

GBP/USD Daily Forecast – Sterling Falls Into a Range

UK CPI Lowest in Nearly Two Years

The consumer price index in the United Kingdom was reported to rise by 1.5% in the year to October which was the lowest reading since December 2016. It was the third consecutive reading where CPI fell short of the analyst estimate.

Despite the shortfall in the reading, GBP/USD is little changed on the day. The exchange rate has been consolidating for the past two sessions and from a slightly broader perspective, the pair has mostly traded in a range for the past month or so.

The pair shows resilience considering that the dollar has recovered notably. Since the start of the month, the US dollar index (DXY) has been rallying while retracements have been quite shallow. The index is up just over 1% since the start of November and trades at levels not seen since the middle of October. Further, the greenback has advanced against all of its major counterparts in the month thus far.

Economic data later in the session could move the exchange rate out of its range as the latest US CPI figures will be released. Although typically, this release does not accompany a lot of volatility. Unless of course there is a significant deviation from the expectation.

Technical Analysis

There is a significant upside hurdle in play for GBP/USD. It stems from the 20-day moving average and the 50 moving average on a 4-hour chart. It should be noted that the exchange rate has not seen much selling pressure despite this resistance confluence coming into play.

GBPUSD 4-Hour Chart

I think it’s worthwhile keeping a close eye on the dollar here as DXY is trading in oversold territory on the smaller time frames. A pullback in the dollar could provide the fuel for an upside break in GBP/USD.

But while the exchange rate holds below moving average resistance, the path of least resistance remains to the downside. Near-term support is seen at 1.2800 which is a level that held the pair higher in late October.

Bottom Line

  • GBP/USD has fallen into a narrow range.
  • The 50 moving average on a 4-hour chart and 20-day moving average is capping the upside in the pair.
  • US CPI figures will be released later in the US session today.

European Equities: A Week in Review – 08/11/19

The Majors

It was yet another positive week for the European majors, with the CAC40 up by 2.20% to lead the way. The DAX30 wasn’t far behind, rising by 2.06%, while Eurostoxx600 saw a more modest gain of 1.50%.

For the DAX30 and EuroStoxx600, 0.46% and 0.28% losses respectively on Friday pulled back the pair, while the CAC40 ended the day flat.

Corporate earnings and economic data were in focus in the week as was chatter from the U.S and China on trade.

On the trade front, the majors found strong support from news of Beijing and Washington agreeing to rollback some tariffs.

This came off the back of news that Washington was preparing to issue licenses to U.S firms to do business with Huawei Technologies.

Four days in the green out of five delivered the solid gains for the week.

A pullback on Friday came as a result of the news of disagreements within Washington over the removal of tariffs on Chinese goods.

The Stats

It was another busy week on the Eurozone economic calendar.

In a busy first half of the week, October private sector PMIs, Eurozone retail sales figures, and German factory orders were in focus.

On the PMI front, Spain’s manufacturing sector deteriorated further, with the PMI falling from 47.7 to 46.8. The numbers were more upbeat elsewhere, with the French manufacturing PMI rising from 50.5 to 50.7.

In spite of the positive numbers, Italy, Germany, and the Eurozone’s manufacturing PMIs continued to sit at sub-50 levels.

On Wednesday, service sector PMIs were also skewed to the positive. While Spain’s services PMI fell from 53.3 to 52.7, it was positive for the rest of the member states.

The positively skewed numbers led to a rise in the composite PMI from 50.2 to 50.6.

In spite of the positive numbers, the composite PMI remained close to September’s six-and-a-half-year low.

Out of Germany, factory orders rose by 1.3%, reversing a 0.4% decline in August, providing support, with Eurozone retail sales up by 0.1%.

On Thursday, German industrial production figures failed to pin back the European majors, in spite of a 0.6% decline. The upbeat factory order numbers pointed to a pickup in industrial production at the start of the 4th quarter.

German trade data wrapped things up on Friday. A widening in the trade surplus from €18.1bn to €19.2bn failed to make it a 6th consecutive day in the green for the DAX.

The Market Movers

From the DAX, it was a bullish week for the auto sector. BMW led the way for the week once more, rallying by 8.05. Volkswagen and Continental also saw solid gains, rising by 5.22% and 6.94% respectively. Daimler trailed the pack in the week, rising by just 1.52%.

It was also a bullish week for the banking sector, in spite of a sharp pullback on Friday. Deutsche Bank rallied by 4.54%, with Commerzbank up by 2.57%.

From the CAC, the banks also found strong support, reversing previous week losses. Soc Gen led the way, rallying by 9.78%, with BNP Paribas up by 7.50%. Credit Agricole made a more modest 4.33% gain, with a 2.31% slide on Friday limiting the upside.

Credit Agricole’s slide on Friday came off the back of the bank’s quarterly earnings results. While net profit beat estimates, a slide in net income from the retail operation weighed, as net interest income declined in the quarter.

The French auto sector also saw green. Peugeot rose by 3.25%, while Renault eked out a 0.04% gain.

On the VIX Index

The VIX Index fell 1.87% in the week ending 8th November. Following on from a 2.77% decline from the previous week, the VIX ended the week at 12.1.

In spite of 3 days in the green out of 5, the weekly loss came as a result of the U.S and China’s progress on trade talks.

Throughout the week, economic data provided support, with the stats skewed to the negative for the Greenback.

VIX 09/11/19 Weekly Chart

The Week Ahead

It’s a busy week on the Eurozone economic calendar. November ZEW economic sentiment figures for Germany and the Eurozone are due out on Tuesday.

Following the IMF’s Regional Economic Outlook Report last week, we can expect the majors to be particularly sensitive to consumer sentiment and spending figures.

Eurozone industrial production figures for September will provide direction on Wednesday, ahead of 3rd quarter GDP numbers on Thursday.

Barring a revision to 1st estimate numbers for the Eurozone, Germany’s 1st estimate GDP numbers will have the greatest influence. Forecasts are for the German economy to contract by 0.1%.

The Eurozone’s September trade figures will wrap up the week, with forecasts market positive.

Barring particularly dire numbers, we would expect finalized October inflation figures to have a muted impact throughout the week.

From outside of the Eurozone, expect China industrial production figures, due out on Thursday to also provide direction.

On the geopolitical front, chatter from Beijing and the U.S on trade requires monitoring. There is also UK politics to consider.

There are also corporate earnings to track throughout the week, with Continental and Infineon Tech likely to garner plenty of attention.

Failed Breakouts Take a Heavy Toll on the Oil Bulls

They’ve given up almost all of their gains, closing below the many important resistances they’ve eyed to break above. Heavy selling followed earlier today, and the question is whether we can expect more downside…

Let’s take a closer look at the charts below.

charts courtesy of www.stooq.com

Yesterday, crude oil futures tested the resistance zone created by the red gap, the previous peaks and further reinforced by the 61.8% Fibonacci retracement. This combination proved strong enough to stop the bulls once again.

The breakout attempt has been invalidated, and prices moved lower as evidenced by the long upper knot. It clearly shows the area of increasing involvement of the bears.

The futures also tested the declining red resistance line, invalidating the breakout above it in the process. This has brought further deterioration earlier today.

And that hasn’t been the only bearish developments. On the 4-hour chart below, you’ll see that the breakout above the upper border of the purple declining trend channel has also been invalidated.

Connecting the dots, lower prices of crude oil futures are likely ahead of us. If this is the case, the lower border of the purple trend channel and our downside target will be in play in the following days.

Summing up, yesterday’s oil rebound has mostly fizzled out and reversed lower. The many important resistances have stopped the bulls again, and further decline followed earlier today. Our downside target will be likely in play next week, and our short position remains justified.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist

Sunshine Profits – Tools for Effective Gold & Silver Investments


All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

The Week Ahead: Brexit, Monetary Policy, Stats and Trade Are in Focus

On the Macro

For the Dollar:

It’s another packed week ahead on the economic calendar, following a busy week last week.

Manufacturing PMI figures kick off the week on Tuesday, with the U.S markets closed on Monday.

We expect the ISM manufacturing PMI to be the key driver, with both employment and orders needing to support.

Market focus will then shift to ADP Employment change and service sector PMI numbers on Thursday.

From the service sector numbers, the markets preferred ISM non-manufacturing PMI will have the greatest impact.

At the end of the week, the all-important labor market figures are due out. Expect nonfarm payroll and wage growth figures to have the greatest impact, assuming the unemployment rate holds steady.

We would expect trade data, factory orders, trade and productivity and unit labor cost numbers to have a muted impact on the Dollar.

Outside of the stats, FOMC member commentary and chatter from Beijing and the Oval Office will need monitoring.

The Dollar Spot Index ended the week up 1.25% to $98.807.

For the EUR:

It’s also another busy week ahead on the economic data front.

Manufacturing PMI numbers due out on Monday brings the EUR into focus early. Barring deviation from prelim figures, Italy, Spain, and the Eurozone PMIs will have the greatest impact.

With no material stats due out on Tuesday, service sector PMI and Eurozone retail sales figures will provide direction on Wednesday.

We expect the Eurozone’s composite PMI and retail sales figures to have the greatest influence on the EUR.

The focus will then shift to economic data out of Germany. July factory orders on Thursday and industrial production figures on Friday will provide direction.

Barring deviation from 2nd estimates, 3rd estimate GDP numbers for the Eurozone will unlikely to have an impact on the day.

Outside of the numbers, expect Brexit news and trade war chatter to also influence in the week.

The EUR/USD ended the week down by 1.45% to $1.0982.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

The Manufacturing PMI on Monday, Construction PMI on Tuesday and Service PMI on Wednesday will provide direction.

We can expect the Pound to also show some sensitivity to the August BRC Retail Sales Monitor due out on Tuesday.

House price figures, due out on Friday, will likely have a muted impact on the Pound.

Outside of the stats, Brexit will continue to dictate the direction of the Pound throughout the week.

The GBP/USD ended the week down by 0.90% to $1.2156.

For the Loonie:

It’s a relatively busy week ahead on the data front.

Labor productivity and trade data will provide the Loonie with direction on Wednesday.

August employment figures and Ivey PMI will also influence on Friday.

The main event of the week, however, is the BoC interest rate decision and release of the rate statement on Wednesday.

GDP numbers released last week were impressive. But, with the U.S – China trade war in full swing and the global economy slowing, a dovish BoC rate statement is expected.

We can expect the Loonie to be particularly sensitive in the run-up to the release of the rate statement.

Market sentiment towards trade and the global economy will also of influence in the week.

The Loonie ended the week down 0.21% to C$1.3311 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead on the Economic data.

Manufacturing figures and 2nd quarter company gross operating profits due out on Monday will provide direction.

The focus will then shift to July retail sales figures due out on Tuesday. Consumer spending continues to be a key consideration for the RBA. Expect any weak numbers to weigh ahead of the RBA’s September interest rate decision later in the morning on Tuesday.

2nd quarter GDP figures due out on Thursday and July trade data on Friday will also have a material impact on the Aussie.

The main event, however, is the RBA interest rate decision and release of the rate statement.

The RBA had suggested a willingness to provide further rate cuts should the need arise. Did a shift in sentiment towards the U.S – China trade war give the RBA more breathing room?

The Aussie Dollar ended the week down by 0.34% to $0.6733.

For the Japanese Yen:

It’s also relatively busy week ahead on the economic calendar.

2nd quarter capital spending and the finalized August manufacturing PMI are due out on Monday.

With no material stats due out on Tuesday, the focus will then shift to the August service PMI on Wednesday.

The key stat of the week, however, is July household spending figures due out on Friday.

Outside of the stats, expect the Yen to find direction from monetary policy decisions, Brexit updates, and chatter on trade.

The Japanese Yen ended the week down 0.84% to ¥106.28 against the U.S Dollar.

For the Kiwi Dollar:

It’s a particularly quiet week ahead, with no material stats due out of New Zealand.

The lack of stats will leave the Kiwi at the mercy of Beijing and Washington and private sector PMIs out of China.

A dovish RBA could also weigh on Tuesday.

The Kiwi Dollar ended the week down 1.20% to $0.6328.

Out of China:

It’s a relatively quiet week ahead on the economic data front. Key stats are limited to August’s manufacturing PMI and service PMI due out on Monday and Wednesday respectively.

While we can expect the manufacturing PMI to have the greatest influence, service sector activity will need to hold steady.

Outside of the numbers, trade war chatter will continue to influence. Further positive updates would limit adverse market reaction to any disappointing numbers.

On Saturday, China’s NBS private sector PMI numbers were mixed. Manufacturing sector activity slowed at a marginally quicker pace in August, while service sector activity saw a marginal pickup in sector activity.

The Manufacturing PMI eased from 49.7 to 49.5, while the Service PMI rose from 53.7 to 53.8.

The Yuan ended the week down by 0.86% to CNY7.1565 against the Greenback.

Geo-Politics

Italy Snap General Election: Uncertainty remains on whether a snap general election can be avoided. While the Five Star Movement and Democratic Party had agreed to form a coalition government, M5S demands have raised doubts on whether the coalition will go ahead. Expect news from both parties to influence the EUR and the major European bourses.

Trade Wars:  1st September tariffs came into effect, adding tariffs on an additional $112bn worth of Chinese goods. We can expect further updates through the week, with China likely to be looking for tariffs to be withdrawn before any meaningful talks can proceed. Any escalation and expect risk aversion to hit the markets.

UK Politics: it’s gone from bad to worse for British politics. MPs are due back on 3rd September and we can expect plenty of debate over Brexit and Johnson’s plan to suspend Parliament on 10th.

Court rulings on the Queen’s agreement to suspend Parliament and any progress on a vote of no confidence will have a material impact.

The Rest

The RBA: While the RBA is expected to leave rates unchanged on Tuesday, the RBA rate statement will be key. The effects of the extended U.S – China trade war continue to be reflected in stats globally. Will the RBA need to talk up the prospects of a rate cut before the end of the year?

The BoC: The BoC is also expected to leave rates unchanged on Wednesday. Better than expected GDP numbers last week suggest that Canada has managed to buck the trend until now. Will the BoC stand pat or raise concerns over the possible impact of an escalation in the U.S – China trade war and deliver a dovish statement?

The FED: FOMC member chatter in the week ahead will give the markets some guidance on what’s to come later this month. For now, expectations are for the FED to deliver a rate cut.

S&P 500 Price Forecast – Stock markets rally yet again

The S&P 500 has broken the top of the hammer from the previous session, which of course is a very bullish sign. That being said though I see a lot of technical and potential trouble above that could come in and cause issues. Because of this, I am more than willing to short this market at various levels if we get an exhaustive and desperate candle such as a shooting star.

S&P 500 Video 08.08.19

The first area that I am paying attention to is the 50 day EMA which of course is painted in red on the chart. I think any signs of exhaustion in that area could be focused on, as it could give us an opportunity to start selling with what had been a massive break down. Ultimately, I think this is a marketplace that should continue to be noisy to say the least. All things being equal though, I think that the damage that has been done and the continuing issue that we have with the US/China trade relations should cause major issues with risk appetite which of course works directly against the way the stock market works.

I think at this point if you just simply stand back there will probably be another selling opportunity, although I am the first to admit that in the short term we probably will pop a little bit higher. Overall though, I think this is a market that gives us quite a bit of opportunity in both directions, and more of a “two speed market.”

Please let us know what you think in the comments below