Daily Market Analysis by CapitalStreetFX
Daily Report on July 04, 2016
This Monday, July 4th, financial and commodity markets in the US will be closed for the Independence Day holiday. Markets currently are expected to face some significant moves resulting from thin trading action and low volume due to the absence of US traders.
In the Asian trading session, Sterling trimmed its enormous losses against the US dollar from last week. The British pound rose to $1.32987, 0.25% higher than the closing price on Friday.
The survey on inflation expectations conducted by the Bank of Japan showed that Japanese companies expected the consumer prices to increase by an annualized rate of around 0.7%, while this expectation in the previous quarter was at 0.8%. This is a negative signal given that the BOJ’s target is of 2% price growth. For now, the target seems quite difficult to reach. Some additional monetary easing policies are likely to be deployed soon.
Over the past weekend, a new wage deal between employers and workers in Norway was signed, stamping out a strike that might have reduced production in the largest oil producer in Western Europe. As a result, oil prices were down slightly on Monday morning. The global benchmark, Brent slid to $50.46/barrel after closing the trading session on Friday at 50.72/barrel.
Technicals
EURUSD
After hitting the record low in almost four months at 1.09089 , EURUSD is forming an up channel as the euro is recovering from its losses against the USD. A green arrow has formed under the price chart since the 1st of July, signaling longs on the currency pair. ADX (14) also confirms that the up-move is fairly strong. The price is expected to test the solid resistance of 1.11991 before pulling back.
Trade suggestion
Buy stop at 1.11462, Stop loss at 1.11106, Take profit at 1.11888
GBPJPY
The sterling has been moving in an unclear fashion versus the safe-have yen since a while, after plummeting significantly to a four-year low of 133.101. The stochastics chart shows that the %K line and %D line are crawling upwards from the oversold territory, hinting that the bull is stepping in. However, the pair is forecast to consolidate for some time as RSI (14) is still far below the average level.
Trade suggestion
Sell limit at 138.630, Stop loss at 142.768, Take profit at 133.946
USDCAD
Last Monday, the pair reached a peak at 1.31191 per dollar, and then declined to as low as 1.28941. All indicators are showing that the bear is dominant, as RSI (14) is pointing downwards from the average level, not to mention the two MAs are hanging over the price chart. The trend indicator also supports short positions on this pair.
Trade suggestion
Sell stop at 1.28873, Stop loss at 1.29464, Take profit at 1.28363
GOLD
GOLD is retreating after failing to break through the firm resistance of 1357.95. The stochastics chart shows that the precious metal is struggling to get out of the overbought territory after having been in this zone for a period of time. The trend indicator notices a large move-up of 312 pips on this commodity since June 24. The bullish power is anticipated to die down and the price may test the support of 1314.18
Trade suggestion
Sell stop at 1341.93, Stop loss at 1356.80, Take profit at 1325.12
WTI
The two moving averages are getting closer and attempting to cross over the candles, which will create significant downward pressure in the market. The %K line has already reversed, and is likely to confirm a pull back. The commodity is expected to continuously fall from the 61.8% level of Fibonacci retracement.
Trade suggestion
Sell stop at 49.21, Stop loss at 49.90, Take profit at 48.46
FTSE
On June 30th, FTSE broke through its solid resistance of 6430.77 - rising strongly. RSI (14) hovers around the overbought threshold, implying that the bull is still taking the lead in the market. Long positions on this index are encouraged as the trend indicator has created a green arrow under the price chart since last Wednesday.
Trade suggestion
Buy stop at 6599.09, Stop loss at 6538.05, Take profit at 6671.04
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Daily Report on July 01, 2016
In a speech in London overnight, the Bank of England (BOE) Governor Mark Carney stated that more stimulus to the UK economy may be deployed over this summer after the shock decision by voters to leave the European Union last Friday. The UK benchmark rate, which has been kept stable at 0.5% in the last seven years, is expected to be cut in BOE?s July or August meeting.
The British pound was on the defensive in the early Asian trading session today, after plunging more than 1% against the US dollar to 1.32044 late yesterday. The UK 10-year bond yield, meanwhile, dropped to a record low of 0.882%.
The KOF Economic Research Agency on Thursday released its monthly survey on Swiss economy. The Barometer for June came in at 102.4, compared with 101.8 in the preceding period. This indicator continued to stay above its historical average, indicating that the nation?s economy is still in a stable condition.
On a similar note, the Canadian economy is also reporting positive signals which can be seen in data reported recently. The real Gross Domestic Product (GDP) in April rose for the first time after declining in the two preceeding months. The latest report showed an increase of 0.1% in monthly growth, led by gains in manufacturing, utilities and the public sector.
The commodity markets on the first day of July marked some gains. Gold, still held its steam - rising to $1329.95/oz - 1.3% higher than its previous close. The global oil benchmark, Brent, also ticked up to $50.11/barrel, in comparison with the last settlement of $49.83/barrel on the day before.
The trading session ahead could be marked by thin trading that could cause some sharp moves as position squaring and low volumes increase volatility ahead of the 4th of July Independence Day Holiday in the US.
Technicals
USDCHF
The greenback is extending its losses against the swissie since the last several days, leading the pair USDCHF to fall back below the 38.2% Fibonacci retracement. The stochastic chart shows that the %K line (blue line) has crossed over the %D line (read line). As the bullish power dies down, the pair USDCHF is likely to get out of the overbought territory.
Trade suggestion
Sell stop at 0.97493, Stop loss at 0.97762, Take profit at 0.97100
EURJPY
EURJPY has been stuck in a narrow up channel after hitting a record low of 109.398 one week earlier. RSI (14) hovers around the average point, indicating that the market is stepping cautiously. The pair is expeced to continue its current up move for a while as the two moving averages are still under the price.
Trade suggestion
Buy limit at 113.889, Stop loss at 113.059, Take profit at 115.291
AUDNZD
AUDNZD has formed a rectangular sideways channel on the price chart and is still bouncing between 1.05122 and 1.04126. The Stochastic chart indicates that the pair has already approached the oversold territory. Yet a reversal into an uptrend is not likely to occur in the near-term as the %K line and %D line show no signals of crossing. The trend indicator suggests a short position on this pair via a red arrow above the price chart.
Trade suggestion
Sell stop at 1.04293, Stop loss at 1.04449, Take profit at 1.04147
WTI
WTI is on course to climb higher from a low of 4845 formed late yesterday. RSI (14) is struggling above the average level, implying that bulls are in an attempt to hold their momentum against the bear. The two MAs have crossed the price chart, with the long-term SMA 21 firmly under the price chart. This is evidence of an up-move. The price may inch up continuously, heading up to test the firm resistance of 50.58.
Trade suggestion
Buy stop at 49.03, Stop loss at 48.53, Take profit at 49.85
COPPER
The trend indicator has suggested long positions on COPPER since June 20. Up to now, the commodity has witnessed a substantial move of 132 pips. Hence, a reversal into a downtrend is forecast to happen in the near future. Also, ADX (14) has fallen to the reading of 24.5955, along with a shrinking distance between the DI- and DI+. This means that the bull is getting exhausted. The metal is likely to pull back soon.
Trade suggestion
Sell stop at 2.1885, Stop loss at 2.2051, Take profit at 2.1571
DAX
DAX is bouncing back up after testing the support of 9206.08 a few days ago. ADX (14) is at 26.8073, combined with DI+ staying far from DI-. This indicates that the current move is quite strong. However, the index is lingering around 9774.82, a solid area in the price chart. Some consolidation may occur in the near term and the price is expected to be supported by the upward pressure from the two MA's to break through this zone.
Trade suggestion
Buy stop at 9799.91, Stop loss at 9690.68, Take profit at 9924.57