Weekly USDJPY analysis

Trading 04 jan 2020 Commentaire »

USDJPY has broken down below the upward sloping wedge pattern we have noted in our previous posts. The bearish warning signs we mentioned have been confirmed and price has pulled back from 109.70 to 108.

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Black lines - triangle broken

Blue lines -wedge pattern broken

If we zoom out and see where price reversed relative to the bigger picture something worrying for bulls arises. On a weekly basis we see price having broken the long-term triangle pattern. This was a major bearish signal. Price did not break below the 104.80 horizontal support and bounced. Price reached the broken triangle pattern from below but got rejected. Price formed a wedge pattern as we saw in previous posts and has now broken this pattern as well to the downside. This bounce towards the lower triangle boundary and rejection is a bearish sign. This increases the chances of a move back towards 104-105 specially as long as price is below 109.70. Key resistance remains at 109.70. I remain bearish as long as price is below that level.

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Weekly EURUSD analysis

Trading 04 jan 2020 Commentaire »

EURUSD is in a bullish trend. Last week's low is very important for the continuation of the bullish trend. EURUSD has so far been making higher highs and higher lows. In order to reach our 1.1280 target we need to see price stay inside the bullish channel.

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Red lines -bullish channel

Orange rectangle -major support

EURUSD is in a bullish trend. The orange rectangle area where the low of last week is found should hold if bulls want to continue to be in control of the trend. Staying inside the bullish channel is crucial. So bulls do not want to see price break below 1.1120-1.11. Resistance is at 1.12-1.1235 and breaking above it will open the way for a move towards 1.13. However it is possible that we have a sideways move this coming week before moving higher. The RSI has still not reached overbought levels and I believe there is still room to the upside for EURUSD.

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Ichimoku cloud indicator short-term analysis of Bitcoin for January 4, 2020

Trading 04 jan 2020 Commentaire »

BTCUSD remains in a bearish trend. Price is below the Ichimoku cloud however we can observe bullish reversal signals in the RSI. If these signals are combined with a break above cloud resistance we could have the start of a trend reversal in BTCUSD.

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As can be seen above in the Daily chart, the RSI price has not followed the price of BTCUSD to new lower lows. This is a bullish divergence. This is a warning to bears. However price remains below the Kumo (cloud) and bulls need to at least enter the cloud in order to change trend to neutral. Resistance by the cloud is at $7,480. Trend will change to bullish on a daily close above the Kumo at $8,370. The Chikou span is challenging resistance at current levels and both tenkan- and kijun-sen are below current price. In Ichimoku cloud terms things are a bit mixed but mostly bearish. Entering the cloud will be a big step towards trend reversal. So keep an eye on $8,370. If it breaks to the upside we could have a new upward move starting.The material has been provided by InstaForex Company - www.instaforex.com

Gold price creates condition for a move to $1,600

Trading 04 jan 2020 Commentaire »

Gold price gave us some warning reversal signs last week when it was trading around $1,530. However these warning signs never gave reversal sign as the bearish divergence was canceled by the strength of the move in price this last Friday. The strength of the move has indicated that more upside should be expected.

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Blue lines - bearish channel corrective move

Red channel - new bullish move

Black line - expected path

Green line - RSI divergence (canceled)

As we explained in previous posts, the pull back in Gold price from August to September was just a pause to the bigger upward trend. This was a corrective phase. Now price is in a new bullish phase as the RSI suggests inside the red channel. This past week we warned bulls to be cautious in case the RSI got rejected once again at the green resistance line. However this was not the case as bulls were too strong and the RSI price broke above the green line giving new higher highs. This was a sign of strength. This does not mean that Gold can continue this parabolic run forever. Traders need to be cautious still. A pull back towards $1,515 is justified and could provide another opportunity to go long before reaching $1,600. Trend remains bullish as we have noted after recapturing $1,490-$1,500. This is not the time to bet against the trend but wait patiently for any pull back as a buying opportunity.

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Dollar Stays Firm Against Most Major Currencies

Trading 04 jan 2020 Commentaire »

The U.S. dollar stayed firm early on Friday, extending gains from previous session, amid heightened geopolitical tensions after the U.S. confirmed it killed Iranian Major-General Qassem Soleimani in an airstrike on Thursday.

Although the dollar pared some gains subsequently, it still stayed fairly steady as the session progressed and was off a 6-month low of 96.36 it touched earlier in the week.

The U.S. Department of Defense said the head of the elite Quds Force and Abu Mahdi Al Muhandis, a top Iraqi militia commander, were killed in the air strike on their convoy at Baghdad airport.

The department added that Soleimani was behind the recent attacks on the U.S. embassy in Baghdad and that the air strike on Thursday was aimed at deterring future Iranian attack plans.

Iranian leader Ayatollah Ali Khamenei said there would be "revenge" for Soleimani's death, while U.S. President Donald Trump cryptically tweeted, "Iran never won a war, but never lost a negotiation!"

Trump later claimed that he does not want to start a war with Iran but said he is "ready and prepared to take whatever action is necessary" to protect American lives.

The dollar index, which advanced to 97.11 early on in the session, dropped to a low of 96.71 a little before noon, and edged up to 96.90 by late afternoon, gaining marginally over previous close.

Against the Euro, the dollar strengthened to 1.1159, from 1.1172, and against British Pound Sterling, it gained nearly 0.5% at 1.3075 a sterling.

The yen was notably higher at 108.11 a dollar, rising from Thursday's close of 108.56. Swiss franc was down slightly against the dollar, with the dollar-franc pair trading at 0.9721.

Against the Aussie, the dollar gained about 0.6%, strengthening to 0.6952.

In U.S. economic news, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at a faster rate in the month of December.

The ISM said its purchasing managers index slid to 47.2 in December from 48.1 in November, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the reading to come in at 49.0.

With the unexpected drop, the index pointed to the fastest rate of contraction in manufacturing activity since June of 2009.

According to a report from the Commerce Department, construction spending in the U.S. climbed by 0.6% to an annual rate of $1.324 trillion in November after inching up by 0.1% to an upwardly revised $1.317 trillion in October.

Economists had expected construction spending to rise by 0.3% compared to the 0.8% slump originally reported for the previous month.

The Commerce Department said spending on private construction rose by 0.4% to an annual rate of $985.5 billion in November.


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Treasuries Move Sharply Higher Amid Rising Geopolitical Tensions

Trading 04 jan 2020 Commentaire »

Treasuries moved sharply higher over the course of the trading session on Friday as traders flocked to the safe haven asset amid concerns about rising geopolitical tensions.

Bond prices gapped open higher and saw further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9.4 basis points to 1.788 percent.

With the steep drop on the day, the ten-year yield extended the decline seen on Thursday to end the session at its lowest closing level in a month.

The rally by treasuries came in reaction to news that a U.S. airstrike in Iraq killed Iranian military leader Qassem Soleimani.

The U.S. Department of Defense said in a statement that it had killed the head of the Islamic Revolutionary Guard's elite Quds Forces in an airstrike on the Baghdad International Airport in Iraq.

The Pentagon claims Soleimani was behind the recent attacks on the U.S. embassy in Baghdad and said the "strike was aimed at deterring future Iranian attack plans."

Iranian leader Ayatollah Ali Khamenei said there would be "revenge" for Soleimani's death, while President Donald Trump cryptically tweeted, "Iran never won a war, but never lost a negotiation!"

Adding to the appeal of treasuries, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at a faster rate in the month of December.

The ISM said its purchasing managers index slid to 47.2 in December from 48.1 in November, with a reading below 50 indicating a contraction in manufacturing activity.

The modest decrease came as a surprise to economists, who had expected the manufacturing index to inch up to 49.0.

With the unexpected drop, the index pointed to the fastest rate of contraction in manufacturing activity since June of 2009.

Developments on the geopolitical front may continue to impact trading next week, although traders are also likely to keep a close eye on the Labor Department's monthly jobs report.

Reports on the U.S. trade deficit, service sector activity, and factory orders may also attract some attention next week.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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Oil Futures Rise Sharply, Settle At Over 7-month High

Trading 04 jan 2020 Commentaire »

Crude oil prices rose sharply on Friday amid an escalation in tensions in the Middle East after an airstrike by the U.S. killed Iranian military leader Qassem Soleimani.

The U.S. Department of Defense said in a statement that it had killed Qassem Soleimani for his alleged role behind the recent attacks on the U.S. embassy in Baghdad. The Department of Defense also said that the "strike was aimed at deterring future Iranian attack plans."

Iranian leader Ayatollah Ali Khamenei said there would be "revenge" for Soleimani's death.

Data showing a sharp drop in U.S. crude stockpiles last week and China's recent policy easing move contributed as well to oil's uptick.

West Texas Intermediate Crude oil futures for February ended up $1.87, or about 3.1%, at $63.05 a barrel, the highest settlement since May 20.

On Thursday, WTI crude oil futures for February ended up $0.12, or about 0.2%, at $61.18 a barrel, coming off a low of $60.64 a barrel.

For the week, WTI crude oil futures gained about 2.2%.

Brent crude futures were up $2.30, or about 3.5%, at $68.56 an ounce around late afternoon.

According to the data released by the Energy Information Administration (EIA), crude stockpiles fell by 11.5 million barrels last week, about 3.5 times the expected drop.

The EIA also reported that gasoline stockpiles rose by 3.2 million barrels, versus an expectation for a rise of 1.8 million barrels. Meanwhile, distillates stocks rose by a whopping 8.8 million barrels, compared with forecasts for a climb for 1.1 million.

Meanwhile, data released by Baker Hughes said crude oil rigs in the United States decreased to 670 in the week to January 3, from 677 in the previous week.


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Fed Minutes Show Some Concern Low Rates Could Lead To Excessive Risk-Taking

Trading 04 jan 2020 Commentaire »

Members of the Federal Reserve generally agree that interest rates should remain unchanged for the foreseeable future unless there is a material shift in the economic outlook.

However, the minutes of the Fed's December meeting showed a few participants raised concerns that keeping interest rates low over a long period might encourage excessive risk-taking.

The participants suggested that policies that keep interest rates persistently low could exacerbate imbalances in the financial sector.

Such policies could be inconsistent with sustaining maximum employment and could make the next recession more severe than otherwise, the Fed members warned.

Nonetheless, economic projections provided by the Fed after the meeting show a majority of participants expect interest rates to remain unchanged throughout 2020.

The meeting resulted in the Fed members voting to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent on the heels of three straight quarter-point reductions.

The Fed judged that the current stance of monetary policy is appropriate to support a sustained economic expansion, strong labor market conditions, and inflation near its symmetric 2 percent objective.

The central bank maintained its assessment of the economy, reiterating that recent data indicates the labor market remains strong and that economic activity has been rising at a moderate rate.

The Fed also once again noted that while household spending has been rising at a strong pace, business fixed investment and exports remain weak.

The accompanying statement noted the Fed will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path for rates.

The minutes revealed that members agreed retaining references to global developments and muted inflation pressures meant text referring to uncertainties about the economic outlook could be removed.

The vote to leave interest rates was unanimous, as Kansas City Fed President Esther George and Boston Fed President Eric Rosengren joined in after voting against the past three rate cuts.

The Fed is scheduled to hold its first monetary policy meeting of 2020 on January 28th and 29th, with rates widely expected to be kept unchanged.


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Gold Futures End Sharply Higher On Rising Geopolitical Tensions

Trading 04 jan 2020 Commentaire »

Gold prices rose sharply and hit a four-month high on Friday as the demand for the safe-haven asset increased due to an escalation in geopolitical tensions following a U.S. airstrike killing Iranian military leader Qassem Soleimani.

The U.S. Department of Defense said in a statement that it had killed Qassem Soleimani, who it alleged was behind the recent attacks on the U.S. embassy in Baghdad. The Department of Defense also said that the "strike was aimed at deterring future Iranian attack plans."

Iranian leader Ayatollah Ali Khamenei said there would be "revenge" for Soleimani's death.

The dollar index, which opened higher Friday morning, extending gains from previous session, gradually lost ground and slipped into negative territory to 96.71. The index has now recovered to 96.84, down slightly from previous close.

Gold futures for February ended up $24.30, or about 1.6%, at $1,552.40 an ounce, the best settlement since early September.

On Thursday, gold futures ended up $5.00, or about 0.3%, at $1,528.10 an ounce. Gold futures gained 2.3% in the week, after having moved up by about 2.5% a week earlier.

Silver futures for March ended up $0.105 at $18.151 an ounce, while Copper futures for March settled at $2.7870 per pound, down $0.0380 from previous close.

In U.S. economic news, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at a faster rate in the month of December.

The ISM said its purchasing managers index slid to 47.2 in December from 48.1 in November, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the reading to come in at 49.0.

With the unexpected drop, the index pointed to the fastest rate of contraction in manufacturing activity since June of 2009.


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*Federal Reserve Releases Minutes Of December Monetary Policy Meeting

Trading 04 jan 2020 Commentaire »

Federal Reserve Releases Minutes Of December Monetary Policy Meeting


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