Wednesday, 27 March 2019
Gold
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fundamental review
As a result of trading on Tuesday, gold slipped by more than 0.5% amid pressure from the dollar and some reduction in demand for defensive assets.
Despite the release of weak domestic statistics, the US dollar on Tuesday was able to complete trading in the green zone due to the weakening of other G7 currencies and a decrease in concerns related to a possible lower interest rates in the US in 2019. If on Monday the probability of a rate reduction in the current year was estimated at 72%, then on Tuesday it dropped to 66%.
Another strong pressure factor on gold on Tuesday was the situation in the stock markets. The market as a whole is looking forward with optimism to a new round of trade negotiations between the United States and China, which increases investors' appetite for risk. The European and US stock market completed yesterday's trading in the green zone, which always negatively affects the demand for the yellow metal.
On Wednesday, the situation has not changed much. The dollar and the growth of major stock indexes put pressure on gold. This morning, the dollar index was supported by comments from the RBNZ, in which the regulator did not rule out the possibility of lowering the interest rate in New Zealand. In response to these messages, the national currency slipped against the US dollar by more than 1.5%.
There are not so many important economic news today. Among the most significant events can be identified only the speech of Mario Draghi and other ECB officials at the event in Frankfurt. In the United States today will be published the latest data on the trade balance. The main influence on trading will likely be provided by geopolitical news and trading dynamics on stock exchanges.
On the hourly chart, gold is still moving in the upward price channel, but in recent days there has been an increase in pressure on the lower border of the channel, which increases the likelihood of its breakdown and the development of downward movement. Therefore, in the coming days you should pay attention to the local area of support 1310.00-1313.00. Breakdown of this range downwards may provoke a strong decline in quotations to 1300.00 and below. If buyers manage to keep the price above this range, we should expect further development of the bullish movement with the target 1350.00.
Resistance Levels: 1318.00, 1325.00, 1330.00;
Support levels: 1313.00, 1310.00, 1300.00.
The main scenario - a decline to 1310.00.
An alternative scenario - consolidation above 1318.00 and growth to 1325.00.
Locally, gold is under pressure by fundamental background, which can trigger the development of a fairly strong bearish wave. But on the chart, the situation is not so unambiguous, the price remains in the ascending channel, so long from the level of 1310.00 still retain their relevance.
Tuesday, 26 March 2019
Overview of 4-hour charts GBP/USD, USD/JPY
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EUR / USD
The EUR / USD pair today is trading in a very narrow range amid a lack of news on the market that could have a strong influence on the course of trading. Published in the morning data on the consumer climate index in Germany (fact 10.4, forecast 10.8) and French GDP for the fourth quarter of 2018 (fact 0.3%, forecast 0.3%), had practically no effect on the market.
Against the background of the lack of economic news, the market’s main focus is now on Brexit-related events, which is a negative factor for the European currency. As long as the uncertainty on this issue remains extremely high, there is no big interest in the European and British currencies.
For the dollar today, the main test should be data on CB consumer confidence index and the construction sector. According to the main indicators, experts predict the release of stronger data, so the dollar can strengthen its position in the evening trading.
There are no global changes on the graph. The currency pair demonstrated a rather modest correctional pullback, which met serious resistance already at the nearest level - 1.1320. Accordingly, today from this mark we can expect the resumption of downward movement with the immediate target at 1.1250.
Our recommendations: shorts from 1.1320
GBP / USD
The pair GBP / USD is trading at a moderate decline on Tuesday, waiting for news on Brexit. The day before it became known that Theresa May was going to postpone the vote on the bill on leaving the UK from the EU, agreed with the EU, since the parliament is not yet ready to support it. At the same time, Teresa May continues to lose support of her own cabinet of ministers; on the eve, three ministers resigned immediately, expressing their disagreement with May's policies. They supported the scenario of transferring control over negotiations with the EU to Parliament.
In the near future, the country's parliament should vote on a few more alternative scenarios for resolving the Brexit issue, in order to reduce uncertainty and determine the main direction in which it is worth moving to break the deadlock.
On the chart, the range is developing around the level of 1.1320. At higher time intervals, the bearish trend remains dominant, so the scenario with the price going down out of the range is more likely now. As part of the development of this scenario, we can expect a decrease in quotations to the area of 1.3100.
Our recommendations: shorts from 1.3230
USD / JPY
The USD / JPY pair is consolidating in a fairly narrow price range against the background of the absence of strong drivers in the market for the formation of directional price movements.
The currency pair is still influenced by two main factors: the dynamics of the dollar index and the situation in the stock markets. The American dollar at the beginning of the trading week is still trading sideways. On the stock market, the situation also remains uncertain, the market moves between a slight increase and a moderate decrease. Against this background, we should expect further development of the sideways movement in the USD / JPY pair, at least until the beginning of the American trading session, when statistics from the United States may change the balance of the market.
On the chart, the main range of trading can now be designated by the levels of 109.80-110.25. Accordingly, until we see the price fixing beyond one of the boundaries of the outset, the main scenario is to consider is the consolidation in the horizontal channel, with the priority of downside direction.
Our recommendations: shorts from 110.25
Gold
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The new trading week, the yellow metal began with quite a confident growth, more than 0.85%, thanks to support from the dollar and the high level of demand for defensive assets.
Growing concerns about the future prospects of the US economy have put pressure on the US dollar. On Friday, traders received a strong signal indicating a possible recession in the US, for the first time since 2007, yields on 10-year and 3-month US government bonds almost reached the same level. Now investors are waiting for new data of important economic statistics from the United States, to assess the current situation in the country and assess the prospects for market’s directions.
On the whole, the market still maintains a fairly high level of demand for safe assets, as investors are increasingly concerned about the development of the world economy. All data published this year indicates a slowdown in growth, which puts pressure on stock exchanges.
Today, the focus of investors remains on the situation on the stock markets, as well as economic data from the United States, which can have a fairly strong impact on the dollar and gold, respectively. Today a report on the construction sector is expected to be published, as well as an index of CB consumer confidence. Regarding the main indicators, experts expect the release of stronger data, which may increase the pressure on the yellow metal.
On the graph for the last day there were no significant changes. Gold continues to move within the upward price channel. Price growth is accompanied by numerous price pullbacks down, but reversal signals have not yet been formed as part of these kickbacks. Therefore, in the medium term, the priority remains with the growth of quotations to the level of 1350.00. If we consider the situation locally, then there are signals for the formation of the next rolling back motion with the goal at the level of 1310.00.
Resistance Levels: 1320.00, 1330.00, 1340.00;
Support levels: 1310.00, 1300.00, 1295.00.
The main scenario - a decline to 1310.00.
An alternative scenario - consolidation above 1320.00 and an increase to 1330.00.
The fundamental background for the instrument changed from positive to neutral, which exerts a certain pressure on the price. At the younger time intervals, there are also signals about the possible development of the rolling back motion, therefore, within the day, we give preference to shorts, which should be looked for at the level of 1320.00
Thursday, 21 March 2019
Overview of 4-hour charts GBP/USD, USD/JPY
EUR / USD
On Thursday, the EUR / USD currency pair is trading with a decline, as part of a correction that develops on the market after the highs of more than six weeks of trading were updated.
The reasons for the corrective decline are mainly due to the technical factors. On updated local highs, some investors have begun to fix long positions in EUR / USD.
If we look at the situation for a longer perspective, the EUR / USD pair yesterday received a rather strong support factor, which will help strengthen the instrument, even against the background of high economic and geopolitical risks in the EU. Investors believed in the strength of the American economy and took into account in the price the further implementation of a fairly tough policy by the Fed. Decisions made yesterday on adjusting forecasts for economic growth and monetary policy will lead to large-scale reductions in long positions on the dollar, which will inevitably be accompanied by a weakening of the dollar against other major currencies.
Locally, one of the main risk factors for the European currency remains the uncertainty associated with Brexit, so the focus of investors today will be on the EU summit, which will discuss the issue of postponing the UK exit dates. Also on the market remain the strong influence of yesterday's decisions of the Fed, which will more pressure on the dollar.
On the chart from the level 1.1450 a downward correction began, that has already reached its main target, located at the level of 1.1400. At this level, one can expect a significant increase in the buyers' trading activity and a reversal to the upward price movement. Shorts will again be relevant only after fixing the price below 1.1400. In this case, we can expect the return of quotations to 1.1350.
Our recommendations: longs from 1.1400.
GBP / USD
The pair GBP / USD is trading this morning with a decline, amid reports of a possible rejection of the UK request to postpone Brexit to June 30. According to the Telegraph, the EU leaders will insist on a postponement of Brexit until May 22, so that the official release of the United Kingdom takes place before the elections to the European Parliament. This decision can significantly complicate the task of Teresa May to promote her Brexit project through the country's parliament.
According to media reports, German Chancellor A. Merkel wants to initiate another EU summit, in case Teresa May fails to convince parliament to adopt her Brexit plan.
Retail sales for February were announced in the UK today. Sales (m / m) increased by 0.4%, while the forecast was a decline by the same number. Changes for the year are + 4.0%, with the forecast of 3.3%. In general, the published report can be assessed very positively, but, according to the recently appeared tradition, the market ignores the data of internal statistics, fully concentrating its attention on news related to Brexit. For the same reason, today we should not expect a strong market reaction to the meeting of the Bank of England.
On the chart, the 1.3200 mark was broken, the currency pair continues to decline, increasing pressure on the next local support level of 1.3150. Breaking of this level will open new targets towards 1.3050. The alternative scenario provides the resumption of price growth, in case of the formation of a false breakthrough of the level 1.3150.
Our recommendations: outside the market
USD / JPY
The USD / JPY pair continues to move down today, which was provoked yesterday, by unexpected statements of the Fed. Significant easing of the Fed’s rhetoric and the actual completion of the rate hike cycle have seriously weakened the dollar’s position on the world stage. Trump's statements about the possible preservation of increased duties on Chinese goods, even after the signing of a trade agreement, added fuel to the fire. For Trump, these sanctions will be a kind of guarantee that China will fulfill its obligations under a bilateral agreement. These statements can significantly slow down the process of settling the trade conflict, as it was previously reported that the Chinese side intends to seek additional guarantees from the United States that the previously imposed duties will be canceled after the trade agreement is signed. The high geopolitical uncertainty in the world and the growing problems in the global economy significantly reduce investor risk appetite and increase the demand for traditional defensive assets such as gold and the Japanese yen.
On the graph we can see the working out of the reversal formation, which was previously formed in the region 111.80. Yesterday quotes failed to overcome local resistance at 111.60, from which there was a strong pullback. Now the price is testing the strength of a fairly strong intermediate support level of 110.40, from which we can expect the formation of a rolling back movement, the immediate target for which will be the level of 110.80.
Our recommendations: shorts from 110.80
GOLD
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The dovish tone of the Fed statements provoked a sharp increase in gold prices, which by the end of the day strengthened by more than 1.2%.
The last FOMC meeting confirmed the worst concerns of investors, who expected a serious revision of the Fed policy for 2019-2020 and lower forecasts for the main economic indicators and interest rates increase. According to updated forecasts, the Fed no longer expects interest rate increases in 2019 and is considering the possibility of only one increase in 2020. The forecast for GDP growth in 2019 was reduced from 2.3% to 2.1%, in 2020 from 2.0% to 1.9%, in 2021 the forecast remained at 1.8%. Thus, the regulator signaled the completion of the interest rates increase cycle, which began more than three years ago.
As the main reasons for making this decision, Powell noted weak inflationary pressure, the situation in the stock markets, as well as a significant increase in external risks for the US economy.
For gold, the transition to a softer monetary policy on the part of the Fed is a strong long-term growth factor, as this decision will help weaken the dollar, in which the yellow metal is nominated, and reduce the yield of US government bonds, which are strong competitors for gold in terms of investment attractiveness.
The growth of quotations of gold was also supported by the comments of Trump on further trade relations between the United States and China. The American president said that the United States could keep the increased duty on Chinese goods for a sufficiently substantial period of time, even after the conclusion of a bilateral trade agreement. For the United States, this will be a kind of guarantee that the Chinese side will fulfill its obligations under the trade agreement, after which a phased abolition of duties may begin. Recall that yesterday, Bloomberg reported that there was no progress in trade negotiations, since the Chinese side wanted to get additional guarantees from the United States to cancel duties after an agreement was reached.
On the gold chart, the rising wave continues from the level of 1285.00, where the reversal formation appeared. Therefore, in the medium term, we expect further development of the bullish movement with the closest target 1340.00. At a longer distance, you can count on growth to the nearest local maximum at 1350.00.
Resistance Levels: 1320.00, 1330.00, 1340.00;
Support levels: 1311.00, 1300.00, 1295.00.
The main scenario - a correction to 1311.00 and the resumption of movement up to 1320.00.
An alternative scenario is the breakdown of support at 1311.00 and the return of the price to 1300.00.
Fundamental and technical analysis support the further development of the bullish movement, therefore, we still prefer longs from the level of 1311.00.
Wednesday, 20 March 2019
Overview of 4-hour charts GBP/USD, USD/JPY
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EUR / USD
The new trading day the EUR / USD pair began with a moderate decline, being under pressure from the dollar, whose index is now trading in positive territory. According to most experts, local news related to the course of the US-Chinese trade negotiations, as well as reports of new nuclear tests in North Korea, supported locally the American currency, due to the increased investor’s interest in safer assets.
The data on the producer price index in Germany could have put some pressure on the pair, the indicator was -0.1% with the forecast of + 0.2%.
An ECB meeting is to take place today, which will not have discussions regarding the bank’s monetary policy issues, but some possible comments from the meeting participants may have a moderate impact on trading.
The central event of the day will be the FOMC meeting and the final press conference of the Fed Chairman Mario Draghi. On the eve of this meeting, the dollar was under serious pressure, as investors fear a significant softening of the regulator’s position on the further implementation of monetary policy, as well as lower forecasts for the main economic indicators. Therefore, during the trading day, despite the local growth, the dollar is likely to be traded under pressure, contributing to the development of the bullish movement in EUR / USD. The further vector of the market will depend on the FOMC decisions and Powell’s comments.
The price met a rather strong resistance at the level of 1.1360, which limited the further course of the price movement upwards. Nevertheless, buyers still manage to keep the price within the ascending price channel, which preserves high chances for the breakdown of the level of 1.1360 and the growth of quotations in the direction of the mark 1.11400.
Our recommendations: longs from 1.1345.
GBP / USD
The pair GBP / USD on Wednesday is trading with a decline waiting for the start of the EU summit and the meeting of the Bank of England, which will be held tomorrow. Earlier it was planned that on Wednesday a regular parliamentary vote would be held on the Brexit issue, but at the beginning of the week the Speaker of the House of Representatives canceled this vote due to the absence of significant changes in the Brexit agreement terms in the document submitted to vote.
Now the market is waiting for the EU decision to postpone Brexit. On the eve the representatives of the European Union announced that they expect from the UK specific proposals on the terms of the postponement of Brexit and, most importantly, the reasons why the British side wants to do this. Any postponement of the Brexit date increases the risks for the EU and UK economies, and officials fear that at the end of the new negotiation period, the British side will not be able to decide on the conditions for leaving the EU. On the eve the press secretary of the British government announced that in a letter to the EU, the Prime Minister may ask for a postponement of Brexit for at least 3 months.
In addition to news related to Brexit today, data on the consumer price index in the UK can affect trading.
On the chart, after another unsuccessful price attempt to overcome the level of 1.3300, a rollback movement develops. This situation retains as a priority scenario with the development of lateral movement in the channel 1.3200-1.3300. In the framework of this side movements, you can consider short-term longs of a currency pair in the lower range, which can be designated as 1.3200-1.3220
Our recommendations: purchases from 1.3200
USD / JPY
The USD / JPY pair this morning showed a rather strong growth, against the background of statements by the head of the Japanese bank Kurodo about possible strengthening of mitigating measures during the implementation of monetary policy, in case of the price increase in the country weakens. These statements have put strong pressure on the yen, since the softer policies of the central bank of any country always reduce the demand for national currency.
But, in our opinion, sellers can very quickly regain lost positions, because in the future the situation on stock exchanges, where major indices are trading in the red zone, can support the yen, increasing the demand for risky assets. Negative market expectations from today's FOMC meeting can also limit opportunities for strengthening the dollar.
On the chart, the currency pair is now testing a rather strong intermediate resistance level of 111.60, at which we can expect the formation of a reversal and the resumption of the price movement down. This scenario is now considered as the main one and it will lose its relevance only after the price is fixed above 111.60.
Our recommendations: shorts from 111.60
EUR / USD
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The EUR / USD currency pair was able to close the third day in a row with positive trend, but yesterday most of the day trading took place in a fairly narrow price range, with the prevailing side trend.
The restraining influence on the price had another batch of inconclusive statistics from Europe. The ZEW index of economic sentiment in Germany maintained a positive dynamic and over the month rose from -13.4 to -3.6 points, but still remains in the negative zone, which indicates the prevalence of pessimistic sentiment in German business. The index of current economic conditions, on the contrary, continues to decline, for the month dropped from 15.0 to 11.1 points, which is the minimum value of this indicator since December 2014.
The main support to the price is still provided by the American dollar, which is under pressure from the expectations of the outcome of the FOMC meeting. The inconclusive data of internal statistics reinforces investors' fears that the Fed may change its position to a softer one. Bank Of America even suggested that the regulator might cut the rate by 25 bp. against the background of a possible decrease in forecasts for the pace of economic development, inflationary pressure and the number of rate increases in 2019 and 2020.
Fed policy is the main factor determining the dollar vector, so today's FOMC decision and comments from Fed Chairman Jerome Powell can initiate the development of a new trend not only for EUR / USD, but also for other instruments involving the US currency. Now the market is dominated by pessimistic expectations regarding the outcome of the meeting and the prospects for the movement of the US dollar.
On the graph for the day the situation has not changed. At lower time intervals, the bull trend continues to develop, which so far does not show signs of weakness. The level of 1.1350 became a certain obstacle for the price, but the bulls continue to increase upward pressure on it, which significantly increases the likelihood of a breakdown of this mark. This will be a good signal of further development of the upward movement with a short-term goal at the level of 1.1400.
· Resistance levels: 1.1350, 1.1400, 1.1450.
· Levels of support: 1.1335, 1.1300, 1.1245.
The main scenario - growth to 1.1400
An alternative scenario - the breakdown level of 1.1325 and a decline in the area of 1.1300.
The currency pair maintains a positive dynamics, against the background of the absence of reversal signals on the chart. Therefore, intraday preference is still to be given to longs, which can be already searched at current prices.
Tuesday, 19 March 2019
Monday, 18 March 2019
Friday, 15 March 2019
GOLD
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fundamental review
On Thursday, the gold price fell amid a recovery in the dollar and weak statistics from China.
For several days, the US currency was under pressure from domestic statistics, which were slightly below market expectations. Yesterday, there were no important economic reports in the United States, so the dollar was able to partially restore its position. Since gold is nominated in dollars, the increase in its value makes the yellow metal more expensive for most investors.
China yesterday published a weak report on industrial production, which put pressure on the entire market of non-ferrous and precious metals. China remains the largest consumer of metals, so a further decline in economic activity will adversely affect on physical demand for metals. As a result, at the end of the day, gold lost just over 1% in price, silver declined by 1.8%, platinum lost 1.7% in price.
Today the market is trying to recover due to the weakening of the dollar. USD index is still being traded with a decrease of 0.1%. But, the situation as a whole remains rather uncertain, since the market is currently influenced by some factors that are completely unknown. Investors are waiting for the resolution of the trade conflict between the United States and China, but when and how it will be resolved is not yet clear. Trump said today that the negotiations are going well, but so far they can not unequivocally answer the question whether the parties will succeed in concluding a deal. Earlier it became known that the American side decided to postpone the meeting of Trump and Xi Jinping from late March to April. Therefore, most likely in the coming weeks, the signing of a trade agreement should not be expected.
The problem of Brexit, which investors have been closely watching this week, remains unresolved. Yesterday, the British Parliament voted to postpone Brexit. But the timing will depend on the further results of the voting, which will take place next week. If the parliament accepts the May’s plan by March 20, Brexit will be rescheduled for June 30. If parliament rejects the May plan, Brexit will be delayed for a longer period.
On the chart, there are still more signals in favor of resuming upward movement and further development of a bullish trend that has dominated the market for several months. But, this option does not exclude the possibility of forming a short-term kickback price movement, in order to retest the support area located in the region of 1290.00. Therefore, today we focus on the level of 1300.00. If the price manages to overcome it - we are waiting for growth to 1310.00. If the level of 1300.00 is not passed - the option with the retest of the level of 1290.00 will be relevant.
Resistance Levels: 1300.00, 1310.00, 1315.00;
Support levels: 1297.00, 1290.00, 1285.00.
The main scenario - a decline to 1290.00.
An alternative scenario - consolidation above 1300.00 and growth to 1310.00.
Locally, the market situation remains rather uncertain, although for a longer perspective, the graph has significantly more signals in support of the growth scenario. Today better to refrain from active trading with gold.
Thursday, 14 March 2019
Gold
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During the Wednesday session, gold demonstrated increase of more than 0.8% thanks to dollar support and a relatively high demand for the defensive stocks.
The domestic statistics announcement once again caused pressure on the dollar index. Basic orders for the durable goods in the United States in January decreased by 0.1%, while experts expected the figure growthe by the same amount. At the same time, the previous figure was revised to the better range from + 0.1% to + 0.3%. The producer price index that is one of the leading indicators of the consumer inflation also did not reach the forecasted value, the fact is 0.1% while the forecast is 0.2%. As a result, the dollar index finished day by lowering more than 0.7%.
A whole series of inconclusive domestic statistics reinforces investors' concerns about the prospects for the development of the American economy and generally justifies a significant easing of rhetoric at the end of the Federal Reserve System. This is a strong medium-term support factor for the yellow metal.
Today, during the Asian session, gold is declining on the recovery of the dollar index. The US currency closed four negative trading days in a row, so despite the continued pressure, the development of a correctional wave is expected, especially on the background of the absence of the important statistical reports in the United States. Therefore, the potential growth of gold quotes today is likely to be limited. On the other hand, the situation in the stock markets can support the demand for the yellow metal. Most indexes today are traded in the red zone against the background of the next publication of weak statistics from China, as well as the continuing uncertainty around the Brexit. According to the presented report, the volume of industrial production in China in February grew by 5.3% (forecast 5.5%), while a year earlier the growth reached 5.7%.
Yesterday, gold tested a strong intermediate resistance level of 1310.00, from which a correctional wave is now developing. Taking into account the fact that the closest strong support level is now located in the area of 1298.00, today we can expect a continuation of the rolling move in the direction of this level, since there are no signals indicating the end of the correctional wave at shorter timeframes.
Resistance Levels: 1310.00, 1315.00, 1320.00;
Support levels: 1298.00, 1290.00, 1285.00.
The main scenario - a decline to 1298.00.
The alternative scenario is consolidation above 1305.00 and retest 1310.00.
In the medium term, the scenario with the gold quotation growth remains possible but locally the contract is under pressure now, so taking into account chart signals , intraday preference should be given to short positions at the range of 1310.00.
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