USD/CAD Price Prediction – The USD/CAD Eases from Overbought Territory

Canada’s economic highlight this coming week is April retail sales.  With oil prices rising, Canada a significant exporter of black gold gained traction and has had a robust upward trend against the Greenback since hitting a high in April of 2020. U.S. yields have been the key to the USD/CAD. The recent rebound is the expectations of the market that the Fed will reduce bond purchases sooner rather than later.

Technical Analysis

The U.S. dollar surged higher against the Canadian dollar last week, rising 2.5%.  The USD/CAD closed above trend line resistance and ran out of steam near 1.25 as prices moved into overbought territory.  The currency pair appears to be testing the breakout level, which will be key support. Ahead of the gains seen by the CAD, the USD/CAD was overbought as the fast stochastic was printing a reading of 96, well above the overbought trigger level of 80, foreshadowing a correction.

The relative strength index (RSI) ahead of Monday’s rally in the Loonie was printing a reading of 74, above the overbought trigger level of 70, which foreshadows a correction. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices for the USD/CAD.

Yields Ease

The pullback in U.S. yields has helped the Loonie gain traction. The change of dot plots by the Federal Reserve helped the 2-year yield gain 6-basis points, which helped the dollar surge higher. The markets are now incorporating the likelihood that the Fed will be on hold for a while, taking some of the steam out of the Greenback. If prices are also to hold support, look for another leg up in the U.S. dollar.

Silver Price Prediction – Prices Edge Higher from Oversold Territory

Silver prices bounced slightly but failed to gain traction like gold. The slip in the dollar failed to buoy prices which appear to be forming a topping pattern. Instead, strong U.S. yields have helped buoy the greenback paving the way for lower gold prices. Silver has also felt the downward pressure of falling copper prices which have also created headwinds for silver. The U.S. growth outlook from the Fed regional banks remains robust, which should continue to put upward pressure on yields and make it difficult for precious metals to gain a toe hold.

Technical Analysis

Silver prices moved higher on Monday but failed to gain traction ahead of support near an upward sloping trend line that comes in near 25.25. Resistance is seen near the 50-day moving average at 27.04. The 10-day moving average is poised to cross below the 50-day moving average which means that a downward trend is in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is also printing a reading of 15, below the oversold trigger level of 20 which foreshadows a correction. The RSI turned up slightly but never pushed through the oversold trigger level of 30. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a declining trajectory which points to lower prices.

q1

U.S. Growth Projection Remain Strong

The U.S. growth projections for the second quarter of 2021 remain strong.  According to the Atlanta Fed’s GDPNow model forecasts Q2 growth at 10.3% 10.5% previously, the New York Fed’s Nowcast model currently shows Q2 growth at a more modest 3.7% vs. 4.2%.   While the softer than expected U.S. retail sales weighed on growth projections, these numbers are still strong and will likely keep U.S. yields buoyed.

Oil Price Fundamental Daily Forecast – US-Iran Deal Uncertainty, Weak Dollar Help Spike Prices Higher

U.S. West Texas Intermediate crude oil and international-benchmark Brent crude oil futures surged to the upside late in the session on Monday as talks between the U.S. and Iran over nuclear issues and the end of oil sanctions stalled, while a weaker U.S. Dollar drove up foreign demand for the dollar denominated asset.

At 19:40 GMT, September WTI crude oil is trading $72.03, up $1.58 or +2.24% and September Brent crude oil is at $74.04, up $1.31 or +1.80%.

Additionally, oil prices have drawn support from optimism over the pace of global COVID-19 vaccinations and an expected pick-up in summer travel. The market has also drawn support from forecasts of limited growth in U.S. oil output, giving OPEC and its allies more power to manage the market in the short-term before a potentially strong rise in shale oil output in 2022.

US – Iran Talks Stall

Negotiations for the nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won Iran’s presidential election. Two diplomats said they expected a break to around 10 days.

The U.S. and Iran began in mid-June their sixth round of indirect talks on reviving a 2015 nuclear deal that former U.S. President Donald Trump pulled out of in 2018. Trump reimposed sanctions on Iran’s energy sector, leading refiners in many countries to shun Iranian crude and forcing Tehran to pump well below capacity.

Iran Stores More Oil on Tankers as It Counts Days to Enter Markets

While the pause in U.S.-Iran negotiations may be behind Monday’s upward price spike, there still are some traders who fear a deal between the two countries could bring more oil into the market than previous thought.

According to Reuters, Iran could quickly export millions of barrels of oil it is holding in storage if it reaches a deal with the United States on its nuclear program and has been moving oil into place to prepare for an eventual restart, four traders and industrial sources said.

Traders are also saying that a deal could lead to Iran exporting an extra 1 million barrels per day, or 1% of global supply, for more than six months from its storage facilities.

OPEC Told to Expect Limited US Oil Output Growth for Now

Reuters is reporting that OPEC officials heard from industry experts that U.S. oil output growth will likely remain limited in 2021 despite rising prices, OPEC sources said, giving it more power to manage the market in the short-term before a potentially strong rise in shale output in 2022.

Short-Term Outlook

Monday’s price action indicates that buyers have the ability and the conviction to absorb any short-term weakness even if it’s caused by a stronger U.S. Dollar or the threat of more oil from Iran.

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

S&P 500 Price Forecast – Stock Markets Recover After Federal Reserve Comments

The S&P 500 has bounced quite nicely during the course of the trading session on Monday, as traders start to weigh upon the idea of whether or not the Federal Reserve is going to be able to tighten rates. The overreaction seems to be getting work against, and therefore it is very likely that we will go looking towards the all-time highs, and perhaps break above there. Once we do it opens up the possibility of a move to the 4400 level.

S&P 500 Video 22.06.21

To the downside, the 50 day EMA also offer support, right along with the 4000 level underneath that is not only a large, round, psychologically significant figure, but it is also an area where we have a gap that will also have an influence on whether or not we can stabilize. If we were to break down below the 4000 handle, then it is possible that we could go looking towards the 200 day EMA, which at that point I would be a buyer of puts. I have no interest in shorting this market whatsoever, due to the fact that the Federal Reserve has already started to walk back some of their hawkish comments, and therefore it shows just how beholden to Wall Street that the Fed is.

We are still very much in an uptrend, but one thing that I look at more than anything else is the fact that we continue to see buyers jump in based upon the fact that there is plenty of liquidity out there, and the Federal Reserve is nowhere near tightening things, despite the fact that they have recently shown a proclivity to confuse the market yet again.

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

Silver Price Forecast – Silver Markets Have Tested 200 Day EMA

Silver markets have fallen initially during the trading session on Monday, but as you can see the market has turned around quite significantly from the 200 day EMA area, showing signs of stability again. The $26 level of course is an area that has been important more than once, and the fact that it was preceded by an inverted hammer suggests to me that the market is likely to go into more or less a sideways move than anything else, as there is conflicting pressure on both sides. Because of this, I think that if you will are a longer-term trader, then this is more or less going to be a “buy-and-hold” situation, while the shorter-term trader is probably going to be more focused on the back and forth action in this general vicinity.

SILVER Video 22.06.21

I am not concerned about the longer-term attitude of silver at this point, at least as long as we can stay above the 200 day EMA and of course the massive uptrend line that forms the ascending triangle. With that, I still look at this as a market that you should be a buyer up, not a seller. If we can break above the top of the inverted hammer on Friday, that would be a very bullish sign, sending this market looking towards the $28 level again. Breaking above that then has the market testing the major barrier that extends to the $30 handle, offering a glimpse of a potential longer-term break out to send this market looking towards the $50 level based upon historical precedence.

That being said, I think we have a lot of noise to deal with right now, and therefore you should keep your position size small enough to reflect that.

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

Crude Oil Price Forecast – Crude Oil Markets Continue to Plow Higher

WTI Crude Oil

The West Texas Intermediate Crude Oil market has rallied just a bit during the trading session to gain over 1% as market participants have reached towards the highs again. The global economy appears to be reopening, and that of course is going to drive prices higher as it has become somewhat of a “one-way trade.” Ultimately, I like the idea of buying pullbacks and it should continue to respect the $70 level, which of course is a large, round, psychologically significant figure. If we break down below there, the $67.50 level would be supportive as well, as it was the top of the ascending triangle. I believe at this point in time, the market is likely to go looking towards the $77.50 level.

Crude Oil Video 22.06.21

Brent

Brent markets have rallied during the trading session on Monday, to reach towards the $75 level. If we can break above the $75 level, then the market is likely to go looking towards the $80 level. This is the “measured move” of the ascending triangle, and of course we have the 50 day EMA reaching towards the top of the ascending triangle, adding more credence to the idea of the $70 level to be supportive.

It is not until we break down below the bottom of the ascending triangle in either one of these grades that I would be a seller. I do not see that happening anytime soon, and of course with the world waking back up, it makes quite a bit of sense that demand will continue to push this market higher. At this point, I have no interest in shorting anytime soon.

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

Natural Gas Price Forecast – Natural Gas Fall to Kickoff Week

Natural gas markets have fallen a bit during the course of the trading session on Monday as we continue to see gravity come back into the picture. The commodity market boom continues in general, but that is only a bit of a sideline to the real fundamentals of this market, as it may have gotten a bit of a boost due to the fact that people are simply looking to buy anything commodity related. However, the natural gas markets will continue to be a bit noisy in general, but we also have a significant amount of support underneath.

NATGAS Video 22.06.21

Natural gas as a major oversupply in general, but all things being equal, the market is likely to continue to respect the $3.40 level, as it has been major resistance previously, and it is worth noting that we had a rather negative candlestick form when we did get close to it. All things been equal, I think that the market probably continues to see a lot of sellers in that area, perhaps showing a bit of hesitation.

Ultimately, this is a market that I believe has a possible break down just waiting to happen, with the $3.00 level being an obvious support level, right along with the 50 day EMA. Underneath that level would open up the possibility of a move down to the $2.80 level, which is the top of the gap that had been broken to the upside. The 200 day EMA is sitting in that area, so it does make quite a bit of sense that it would offer a bit of a “floor.”

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

Gold Price Forecast – Gold Markets Recover Slightly on Monday

Gold markets have rallied during the trading session on Monday as we continue to see a lot of noise in this market. The 200 day EMA above at the $1811 level and should offer a bit of resistance if we get there. If we can break above it, then it would be very bullish sign for gold, sending it much higher to fill the gap above which started out the $1861 level and drops down to roughly $1810 underneath. The 50 day EMA sits in that general vicinity but is turning lower. At any rally at this point time could show signs of exhaustion that we could get involved with.

Gold Price Predictions Video 22.06.21

If we break down below the bottom, then the $1750 level would be the next target, as it could be supportive based upon previous action, but more likely than not we will see an attempt to break down even further if we do fall from here. The market is likely to see a lot of selling pressure in general if we do get the breakdown, but at this point in time I think the one thing you can probably count on more than anything else is going to be a lot of choppy and noisy behavior as we continue to see confusion about the Federal Reserve and of course what they are going to do next.

All things been equal, we will probably have multiple opportunities to trade back and forth on short-term charts, if you are so inclined to trade shorter-term charts. We will make a longer-term decision sooner rather than later, and once we do the trade will become much more obvious.

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

Gold Price Prediction – Prices Rebound as the Dollar Eases

Gold prices rebounded sharply on Monday, as the dollar eased and yields moved sideways. Despite the rebound, prices formed an inside day which is a sign of indecision. With the 2-year yield continuing to remain buoyed following the decision by the Federal Reserve which saw the dot plots change slightly, it will be hard for gold to gain traction.

[fx-broker slug=fxtm]

Technical analysis

Gold prices were nearly rallied sharply on Monday reversing some of last week’s decline. Prices remain well above support near the November 2020 lows of 1,764, Resistance is seen near the 50-day moving average at 1,832.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold. The current reading on the fast stochastic is 15, below the oversold trigger level of 20 which could foreshadow a correction. The RSI is also oversold printing a reading of 34 up from 28, which was below the oversold trigger level of 30 which could foreshadow a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a declining trajectory which points to lower prices.

The Fed’s View is Mixed

Minneapolis Federal Reserve President Neel Kashkari said he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023. Kashkari’s remarks show he’s in a decided minority in an increasingly hawkish Fed.

USD/CAD Daily Forecast – Test Of Support At 1.2385

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle below the support at 1.2385 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the support at the 92 level and is trying to develop additional downside momentum. In case this attempt is successful, it will get to the test of the next support at 91.80 which will be bearish for USD/CAD.

There are no important economic reports scheduled to be released in the U.S. and Canada today so foreign exchange market traders will focus on general market sentiment and commodity markets.

Commodity-related currencies are moving higher today as WTI oil managed to get to new highs while copper began to rebound after the recent sell-off. If commodities continue to move higher, Canadian dollar will get more support.

Traders will also continue to monitor the developments in U.S. government bond markets. It’s been a volatile day for bond traders, and the yield of 10-year Treasuries moved towards 1.49% after an unsuccessful attempt to settle below 1.36%. Higher yields are often bullish for the U.S. dollar, but it looks that American currency is under pressure today because traders take profits after the recent strong rally.

Technical Analysis

usd cad june 21 2021

USD to CAD managed to settle below the support at 1.2420 and is testing the next support level at 1.2385. In case this test is successful, USD to CAD will move towards the next support level at 1.2350.

If USD to CAD declines below the support at 1.2350, it will head towards the support at 1.2325. If USD to CAD manages to settle below this level, it will move towards the support level at 1.2300.

On the upside, USD to CAD needs to settle back above 1.2385 to have a chance to develop upside momentum in the near term. If USD to CAD settles above 1.2385, it will head towards the resistance at 1.2420. A successful test of this level will open the way to the test of the next resistance at 1.2450.

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

Why MicroStrategy Stock Is Down By 8% Today

MicroStrategy Stock Falls As Bitcoin Drops Towards $32,000

Shares of MicroStrategy found themselves under strong pressure amid strong sell-off in crypto markets. Bitcoin managed to settle below the support at $35,000 and made an attempt to settle below the next support level at $32,000 after China banned crypto mining in Sichuan province.

Today, the company announced that it purchased approximately 13,005 Bitcoins for $489 million at an average price of $37,617 per Bitcoin. MicroStrategy noted that it holds approximately 105,085 Bitcoins.

MicroStrategy is a business intelligence company, but it has emerged as one of bets on the growth of the crypto market after it started to buy Bitcoin. In this light, the dynamics of Bitcoin are a bigger catalyst for MicroStrategy compared to its main business.

What’s Next For MicroStrategy Stock?

MicroStrategy has recently completed an $500 million offering of 6.125% senior secured notes due 2028 and immediately used the proceeds to buy Bitcoin. Back in February, MicroStrategy completed a $1.05 billion offering of convertible senior notes due 2027 which was also used to buy Bitcoins.

At this point, MicroStrategy’s average purchase price is approximately $26,080 per Bitcoin, inclusive of fees and expenses, so the company has “paper profits” despite the major pullback in Bitcoin.

However, it should be noted that Bitcoin is trading not far from MicroStrategy’s average purchase price, and a move towards $26,000 may put significant pressure on MicroStrategy’s stock which remains very dependent on market sentiment.

At the current Bitcoin price of about $33,000, MicroStrategy’s Bitcoin are valued at approximately $3.47 billion, which is more than half of the company’s market capitalization.

Recent crackdown on miners in China has already led to increased volatility in crypto markets, and this volatility will likely remain intact in the upcoming trading sessions. MicroStrategy stock will be very sensitive to Bitcoin’s trading dynamics so traders should be prepared for fast moves.

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

Have Gold Stocks Lost All Their Vigor?

The Gold Miners

While investors believed that superficial strength indicated clear skies ahead, I warned on Jun. 14 that storm clouds were likely to rain on gold, silver and mining stocks’ parade.

I wrote:

Not only has gold’s RSI fallen precipitously, but the yellow metal’s stochastic oscillator is also at levels that preceded significant historical drawdowns. As a result, while a $100+ decline is likely to materialize in the short term , an even larger decline will likely occur over the medium term. And with the 2008 and 2012-2013 analogues becoming even more valid by the day, gold’s ominous path forward will likely catch many market participants by surprise.

And with the technical realities finally drowning the yellow metal, it was a tough pill to swallow for those that didn’t heed the warning.

Please see below:

As part of the problem, the vast majority of individual investors and – sadly – quite many analysts focus on the trees while forgetting about the forest. However, once one zooms out and looks at the situation from a broad perspective, it’s clear that: “What has been will be again, what has been done will be done again; there is nothing new under the sun.” (-Ecclesiastes 1:9)

Therefore, while investors often focus all of their attention on the yellow metal, I warned on Jun. 14 that the HUI Index’s ominous behavior signaled significant downside for gold, silver and mining stocks.

I wrote:

With the HUI Index acting as the PMs’ canary in the coal mine, the bearish implications are as clear as day when eyeing the long-term chart. In the past three weeks, two key events unfolded:

  1. The stochastic oscillator delivered a clear sell signal.
  2. The self-similarity patterns became increasingly valid.

And with last week’s price action adding further confirmation, investors’ optimism is showing severe cracks in its foundation.

On top of that, even though the HUI Index plunged by more than 10% last week , the carnage may not be over. Case in point: the HUI Index is in the midst of forming the right shoulder of its bearish head & shoulders pattern, and if completed, could result in a profound decline over the medium term. For context, with gold approaching its late-April bottom and its rising medium-term support line, the yellow metal could bounce at roughly $1,750. In the process, the gold miners may follow suit. However, the bearish implications remain intact over the medium term, and a significant slide is likely to follow.

Please see below:

To explain, if you held firm in 2008 and 2013 and maintained your short positions, you almost certainly realized substantial profits. And while there are instances when it’s wise to exit one’s short positions and re-enter at more attractive prices, the smooth declines of gold, silver, and mining stocks mean that the risk-reward of doing so is tilted toward the downside.

Or to put it more bluntly, the prospect of missing out on the forthcoming slide makes exiting the short positions a risky investment decision. For context, we believe that holding the short position is the most prudent course of action. However, if gold, silver and mining stocks become extremely oversold, we may consider covering on a short-term basis.

If that wasn’t enough, I warned previously that the recent plunge was weeks in the making:

I wrote the following about the week start started on May 24 :

What happened three weeks ago was that gold rallied by almost $30 ($28.60) and at the same time, the HUI – a flagship proxy for gold stocks… Declined by 1.37. In other words, gold stocks completely ignored gold’s gains. That shows exceptional weakness on the weekly basis and is a very bearish sign for the following weeks.

To that point, the HUI Index is still following two medium-term historical analogies. To explain, back in 2008, right before a huge slide, in late September and early October gold was still moving to new intraday highs, but the HUI Index was ignoring that, and then it declined despite gold’s rally. However, it was also the case that the general stock market declined then. If stocks hadn’t declined back then so profoundly, gold stocks’ underperformance relative to gold would likely be present but more moderate.

Moreover, in 2012, the HUI Index topped on Sep. 21, and that was just the initial high in gold. At that time the S&P 500 was moving back and forth with lower highs – so a bit more bearish than the current back-and-forth movement in this stock index. And what was the eventual climax? Well, gold moved to new highs and formed the final top (Oct. 5). It was when the S&P 500 almost (!) moved to new highs, and despite both, the HUI Index didn’t move to new highs. Thus, the similarity to how the final counter-trend rally ended in 2012 (and to a smaller extent in 2008) ended is uncanny .

On top of that, the stochastic oscillator (which flashed a clear sell signal ) is singing a similar tune. Not only do these signals often precede massive price declines on their own, but the analogies of 2008 and 2012 serve as confirmation that the huge decline has only just begun and that forecasting lower gold prices is currently justified.

Thus, if history rhymes, as it tends to, the HUI Index will likely decline profoundly and find medium-term support in the 100-to-150 range. For context, high-end 2020 support implies a move back to 150, while low-end 2015 support implies a move back to 100. And yes, it could really happen, even though it seems unthinkable.

The HUI Index retraced a bit more than 61.8% of its downswing in 2008 and in between 50% and 61.8% of its downswing in 2012 before eventually rolling over. Now, in both (2008 and 2012) cases, the final top – the right shoulder – formed close to the price where the left shoulder topped. And in early 2020, the left shoulder topped at 303.02.

That’s why I previously wrote that “it wouldn’t be surprising to see a move to about 300 in the HUI Index”. And that’s exactly what we saw (a move above 320 is still close to 300 from the long-term point of view). To clarify, one head-and-shoulders pattern – with a rising neckline – was already completed, and one head-and-shoulders pattern – with a horizontal neckline – is being completed, but we’ll have the confirmation once miners break to new yearly lows.

Furthermore , three of the biggest declines in the mining stocks (I’m using the HUI Index as a proxy here), all started with broad, multi-month head-and-shoulders patterns. And in all three cases, the size of the declines exceeded the size of the head of the pattern.

As a result, we’re confronted with two bearish scenarios:

  1. If things develop as they did in 2000 and 2012-2013, gold stocks are likely to bottom close to their early 2020 high.
  2. If things develop like in 2008 (which might be the case, given the extremely high participation of the investment public in the stock market and other markets), gold stocks could re-test (or break slightly below) their 2016 low.

Keep in mind though: scenario #2 most likely requires equities to participate. In 2008 and 2020, the sharp drawdowns in the HUI Index coincided with significant drawdowns of the S&P 500 . However, with the Fed turning hawkish and investors extremely allergic to higher interest rates, the likelihood of a three-peat remains relatively high.

Let’s zoom in.

To explain, the senior miners’ weekly decline occurred relatively uninterrupted, with little buying pressure witnessed on Jun. 18. Moreover, not only did the GDX ETF close below its April lows and its March highs, but it also dipped below the 61.8% Fibonacci retracement level. Thus, while the senior miners’ RSI (Relative Strength Index) signals a buying opportunity (by falling below 30), the technical damage (breakdown below the 61.8% Fibonacci retracement) justifies the bearish outlook even in the short run. Of course, I remain on the lookout for this breakdown’s invalidation as it would be a sign of potential strength.

Finally, let’s consider the size of the possible corrective upswing based on the analogy to 2012. Back then, the GDX ETF’s corrective upswing didn’t recapture 61.8% or even 38.2% of its previous decline, and the bullish correction was rather “muted” relative to gold. Thus, the notable detail here is that the GDX ETF started its November 2012 correction with the RSI close to 30, but also when it moved slightly below its previous (August) lows, and the final short-term bottom took place after the second (!) day when it declined on big volume.

So, if history is going to continue to rhyme (which seems likely), even if gold corrects quite visibly, gold stocks’ corrective upswing might not be that significant. If we see “screaming short-term buy signals” or something like that, we might close or even briefly switch to the long side, but for now, the trend remains down.

In conclusion, gold, silver and mining stocks’ plight was a humbling experience for many investors. And while the recent slide highlights the importance of investing without emotion, we remain confident that the precious metals will soar once again. However, because secular bull markets don’t occur in a straight line, based on the similarity to how similar situations developed in the past, a final profound decline will likely occur before the metals resume their resurgence. As a result, even though gold, silver, and mining stocks are poised to shine in the long run, I still think that short positions in the precious metals sector – especially in the junior miners – currently remain attractive from a risk-reward perspective.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

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

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

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 subject to change without notice. Opinions and analyses are 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 deemed 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.

 

Silver Price Daily Forecast – Support At $25.80 Stays Strong

Silver Rebounds After Recent Sell-Off

Silver has recently made an attempt to settle below the support at $25.80 but lost momentum and rebounded towards $26.00 while the U.S. dollar lost ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below the support at 92. In case this attempt is successful, the U.S. Dollar Index will head towards the next support level at 91.80 which will be bullish for silver and gold price today.

Weaker dollar also provided support to gold which is trying to settle above $1775. If gold manages to settle above this level, it will move towards the resistance at $1800 which will be bullish for silver.

Gold/silver ratio has recently made another attempt to settle above the resistance at 68.70 but failed to develop sufficient upside momentum and pulled back. In case gold/silver ratio settles above 68.70, it will have a good chance to get into 69 – 70 range which will be bearish for silver.

Technical Analysis

silver june 21 2021

Silver did not manage to settle below the support at $25.80 and made an attempt to settle above $26.00. If silver gets above $26.00, it will have a good chance to get to the test of the nearest resistance level at $26.30.

A move above the resistance at $26.30 will open the way to the test of the next resistance level which is located at $26.65. If silver manages to settle above the resistance at $26.65, it will head towards the next resistance level at the 50 EMA at $27.00.

On the support side, silver needs to settle below the support at $25.80 to develop additional downside momentum in the near term. RSI remains in the moderate territory, and there is enough room to gain additional momentum in case the right catalysts emerge.

If silver settles below the support at $25.80, it will move towards the next support level at $25.50. A move below this level will push silver towards the support at $25.30. If silver declines below the support at $25.30, it will head towards the next support at $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 Slightly

The US dollar fell a bit during the course of the trading session on Monday, breaking down towards the ¥109.50 level, only to turn around and show signs of life. As we have bounced significantly, the market looks as if it is trying to form a bit of a hammer. That is a very bullish sign, but we also have recently struggled at the ¥111 level, which of course is an area that I have mentioned more than once as significant resistance. Furthermore, the MACD shows divergence, which is also another reason to suspect that we might be running into a little bit of trouble.

USD/JPY Video 22.06.21

Underneath, the 50 day EMA sits near the ¥109.25 level, and that could offer a little bit of dynamic support. That being said, if we break down below it, we could go looking towards the ¥109 level, perhaps even below there to go looking towards the 200 day EMA. The 200 day EMA would of course be very crucial to pay attention to but what I think at this point we are looking at is a market that is trying to determine whether or not a longer-term “double top” has been put in the case.

All things being equal, I think that we will see a lot of noisy behavior, and at this point in time I believe that the ¥111 level is a major resistance barrier that will be very difficult to overcome, so at this point in time I think we continue to chop around and perhaps see more pressure building up for a potential pullback based upon the historical value of the area as a ceiling.

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

GBP/USD Price Forecast – British Pound Recovers From Support Level

The British pound has rallied a bit during the course of the trading session on Monday to bounce from the 1.38 level. That is an area that has been fairly important for some time now, and therefore it makes sense that we bounced just a bit after falling straight down towards it. The question now is whether or not we can find some type of upward momentum? At this point, it is worth noting that although we are still technically in an uptrend, we had seen a lot of damage over the last couple of days.

GBP/USD Video 22.06.21

The 200 day EMA is currently reaching towards the 1.3650 level, an area that I think will offer a bit of support, but it will be interesting to see whether or not it reaches towards the 1.3750 level. That is an area that previously had been important, so it is worth paying attention to. I think we probably get a short-term bounce, but a lot of noise above the keep things somewhat quiet in the short term.

This is the type of market that could be very noisy over the next several sessions, so I anticipate more neutral trading than anything else. I do think that we are probably going to make an impulsive move in one direction, or the other hand be able to follow it. In general, this is a market that I think is probably best being cautious with, if for no other reason than the fact that the British pound does not seem as if it knows what it wants to do over the next several weeks.

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

GBP/JPY Price Forecast – British Pound Has Volatile Session

The British pound has gone back and forth during the course of the trading session on Monday as we have been all over the place when it comes to risk appetite. After all, this is a pair that is very sensitive to risk appetite, and this is why we have seen so much in the way of noise. Looking at this chart, I believe that it is worth noting that the candlestick for the trading session on Monday shows a lot of confusion, and I think that is a good sign of what is ready to hit the market.

GBP/JPY Video 22.06.22

If we break above the top of the candlestick for the trading session on Monday, that would be very bullish, and I think we would go looking towards the ¥155 level. However, if we were to break down below the bottom of the candlestick it is very possible that we go looking towards the ¥150 level underneath. All things being equal, I think we are going to continue to see a lot of noisy behavior, but if we get more of a “risk off” type of attitude out there, then that will more than likely bring this pair lower.

If we break down below the ¥150 level, that could be a very negative sign, perhaps sending this market down towards the ¥147.50 level, and then after that down to the ¥145 level. In general, this is a market that I think you will need to be very cautious about your position size, but it is worth noting that we have been very bullish for a long time, so I am a bit hesitant to put a lot of money to work.

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

EUR/USD Price Forecast – Euro Bounces to Kickoff Week

The Euro has bounced a bit during the course of the trading session on Monday, as we are looking at the 200 day EMA just above. Because of this, it is likely to be a scenario where we could see further bearish pressure. That being said, a lot will come down to the next thing that the Federal Reserve says, as the risk appetite out there is going to be skewed back and forth by the perceived ability of the Federal Reserve to start tightening.

EUR/USD Video 22.06.21

There are a lot of economic announcements during the course of the week, and several central bankers speaking, so there is the possibility that we get a bit of noise. From a technical analysis standpoint, the 200 day EMA above could offer a bit of resistance, so keep that in mind. If we break above it, then I think the market will challenge the 1.20 level which of course is a large, round, psychologically significant figure that a lot of people will be paying attention to. If we can clear that area, then we will continue the overall uptrend, sending the Euro back towards the highs.

I think the next couple of days are going to end up being very difficult as they will almost certainly be very choppy, due to the fact that there has been a lot of fear put into the market overall. Pay attention to the US bond market, because if we continue to see demand for treasuries, that will naturally drive up the price of the US dollar and other currencies such as the Euro. At this point, I believe that we may form a bit of a consolidation area between the 200 day EMA and the 1.1830 level.

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

AUD/USD Price Forecast – Australian Dollar on The Precipice

The Australian dollar has rallied a bit during the trading session on Monday to show signs of recovery, as the 0.75 has caused a lot of noise. That being said, it will be interesting to see how this plays out because if we do break down a little bit, then the market is likely to go much lower, perhaps as low as the 0.71 handle. After the last couple of days, it is very likely that we will see continued downward pressure given enough time. The question at this point is whether or not we are going to bounce and break down, or are we going to turn everything right back around? I suspect it is going to take quite a bit of effort to turn this thing around.

AUD/USD Video 22.06.21

If we break down below the bottom of the Monday candlestick, that probably opens up a little bit of a “trapdoor” kind of situation, where we could break down rather drastically. Ultimately, the US dollar strengthening does make quite a bit of sense considering that the Federal Reserve has suggested that they are much closer to tightening than originally thought. Furthermore, we are below the 200 day EMA, which for some traders will be reason enough to get short based upon a longer-term movement.

I suspect that the next couple of days will determine what happens longer term. Ultimately, the market has clearly had a shock, so one would think that it would only take a little bit of a push to make things fall apart again, because quite frankly there is a lot of fear out there suddenly.

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

Price of Gold Fundamental Daily Forecast – Attempting to Consolidate Following Fed’s Hawkish Shift

Gold futures are trading higher on Monday after failing to follow-through to the downside following Friday’s sell-off. Sellers came in ready to pressure prices, but when buyers successfully defended last week’s low at $1761.20, shorts covered and the market turned positive for the session.

At 12:11 GMT, August Comex gold settled at $1780.10, up $11.10 or +0.63%.

Helping to boost prices were an overnight drop in Treasury yields and a pause in the U.S. Dollar’s rally. The price action suggests that last week’s sell-off may have been overdone and that the market may have to consolidate before making its next major move.

Prices plunged last week following the Federal Reserve’s surprise hawkish turn. Gold plunged more than 6% last week after central bankers signaled tapering of its asset purchase program and brought forward projections for the first post-pandemic interest rate increases into 2023.

10-Year Treasury Yield Falls to Two-Month Low to Start the Week

The 10-year U.S. Treasury yield fell to around 1.43% on Monday morning, its lowest point since early March. Safe-haven bond buying has driven yields lower since last Wednesday after the hawkish Federal Reserve’s latest policy update spike yields higher.

US Dollar Loses Some Steam after Fed Boost

The dollar dipped on Monday against major currencies, but broadly held most of the previous week’s gains after the Fed’s surprise hawkish tilt.

The dollar index lost momentum after a leap of 1.9% last week – the most since March 2020 – as the U.S. Federal Reserve signaled a sooner-than-expected end to its ultra-easy monetary policy.

Daily Forecast

Despite today’s early strength, gains are expected to be capped because of the Fed’s hawkish shift. Volatility in the Treasury market and the U.S. Dollar could translate into choppy, two-sided price action I gold throughout the week.

Weakness in the stock market could drive traders into Treasurys which would pressure yields. Lower yields could encourage some short-covering in gold.

Last week’s sell-off in gold was primarily driven by long liquidation. Therefore, the market may have to rally in order to attract new short-sellers.

Today, St. Louis Fed President James Bullard is set to speak along with Dallas Fed President Robert Kaplan, on an Official Monetary and Financial Institutions Forum panel at 14:00 GMT.

On Friday, Bullard drove gold prices lower after he said that he expected an initial rate increase to happen even sooner in 2022.

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

What a Welcome US Equity Market Pullback! Fading Emotion

It was no secret that rates could not remain near-zero forever. It also is no secret that inflation has been real in the US . If you live in the US, you already know this from your day-to-day life. So, why the big fuss? Did you need someone to tell you?

I know it is painful when long positions move against a trader quickly. Nobody expected the Fed to come out with the language that appeared this week, at least not anybody that I know. I also realize that it may seem logical to sell equities as a result. But, since when does the obviously logical approach win?

So, the overnight Fed Fund rate is scheduled to begin increasing in 2023 (potentially late 2022 if you listened to Bullard on Friday). This news must mean that the Ten-year note yield had to go up, right? Nope. Down she went on Thursday and Friday; after catching a bid on Wednesday off the news.

Figure 1 – $TNX Ten-year note treasury yield February 10, 2021 – June 18, 2021, Daily Source stockcharts.com

Perhaps taking a trade like that is just too obvious; too logical. Now, will $TNX increase over time? Most likely it will, but 2023 is a long time from now. We have to wait and see how the new information is digested by the market and go from there.

Can we look to apply similar logic to the S&P 500? For that question, I would like to refer back to the May 12th publication where we discussed $SPX pullbacks to the 50-day simple moving average.

From May 12th:

  • $SPX found support around the 50-day moving average on 2 of its last 3 attempts.
  • When $SPX broke the 50-day on 1 of the last 3 attempts, it traded below it for 2 sessions.
  • When $SPX broke the 50-day in September 2020 & October 2020, it closed below it between 7 – 9 sessions.

Let’s keep in mind that the $SPX traded to the 50-day SMA on May 12th and May 19th, and is now below the 50-day SMA as I write this.

Today, for the SPY ETF traders out there, let’s take a fresh look at recent pullbacks.

Figure 2 – SPDR S&P 500 ETF December 04, 2020 – June 18, 2021, Daily Candles Source stockcharts.com

Can the previous price action near the 50-day SMA give us any clues about what could happen this time? Well, we have the 50-day SMA, and we also have the 414.15 50% Fibonacci retracement level and the 411.79 key 61.8% retracement level. We have been waiting for such a pullback and I don’t think the recent Fedspeak is any reason to negate consideration of buying pullbacks. I know it seems somewhat illogical; that’s why I like it even more.

Keep in mind that such pullbacks to certain price levels could take place in the overnight futures sessions. In that case, ETF traders may not get the exact price they are looking for if markets reverse to the upside during NY trading hours. At least this gives us some levels to consider.

Why I Welcome this Pullback So Much

If you have been following along and are a premium subscriber, you know that I have been waiting for pullback opportunities across many markets. In fact, out of the eight markets that I am covering, I have been waiting for pullback opportunities in six of them . The current price action and additional downside momentum could give us the opportunities that we have been patiently waiting for in several ETFs.

Now, for our premium subscribers, we have a lot to cover. As we approach potentially key levels that we have been waiting for with patience and discipline, a plan is required. There are buy idea levels that could be triggered soon and were very close to triggering on Friday. Not a Premium subscriber yet? Go Premium and receive my Stock Trading Alerts that include the full analysis and key price levels.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Rafael Zorabedian
Stock Trading Strategist

Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. You should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a recommendation, endorsement to buy or sell any security or futures contract. Any references to any particular securities or futures contracts are for example and informational purposes only. Seek a licensed professional for investment advice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Information is from sources believed to be reliable; but its accuracy, completeness, and interpretation are not guaranteed. Although the information provided above is based on careful research and sources that are believed to be accurate, Rafael Zorabedian, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. Mr. Zorabedian is not a Registered Investment Advisor. By reading Rafael Zorabedian’s 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. Trading, including technical trading, is speculative and high-risk. There is a substantial risk of loss involved in trading, and it is not suitable for everyone. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment when trading futures, foreign currencies, margined securities, shorting securities, and trading options. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Rafael Zorabedian, Sunshine Profits’ employees, affiliates, as well as members of their families may have a short or long position in any securities, futures contracts, options or other financial instruments including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Past performance is not indicative of future results. There is a risk of loss in trading.