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Daily Analysis: Dollar Jumps on Strong Payroll and Wage Numbers

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2472 0.01%
DAX 12307 1.25%
WTI Crude Oil 48.77 -0.52%
GOLD 1260.00 0.75%
Bitcoin 2840 2.99%
EUR/USD 1.1736 -1.17%

Jobs Friday is here, and market statistics say that the US Employment Report is the most important monthly release, causing the strongest volatility in currencies and the most durable moves in the case of a huge surprise. With that in mind the better than expected numbers might be enough to cause a meaningful correction in the most important trend of the recent weeks, the Dollar’s demise. Sure enough, the Greenback surged higher against its major peers, but the currency is still just slightly off its 2-yesr lows against the Euro, so there is ample room for a correction without endangering the underlying trend.

Non-Farm Payroll Growth in the US

Eurozone assets bounced back off their multi-week lows as the common currency got weaker, while US equities barely budged, with low summer volumes still being the dominant force. Stock volatility is near its historic lows, and even the intensifying bipartisan moves against Donald Trump aren’t enough to break the back of the Trump-Rally. That said, there is still apparent weakness under the hood, with only the mega-cap DOW index being able to march to new highs lately.  All the major currencies are losing ground to the USD, with gold also drifting lower, while oil being stable around the $49 per barrel level.

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EUR/USD, 4-Hour Chart Analysis

Cryptocurrencies

The major coins have settled down after the Bitcoin Fork and bull market like price action continues, as investor confidence is back after the uncertainty. That said, some of the largest coins are still inside the correction patterns that developed following the historic spring rally, and a clear trend change is yet to be confirmed. Ethereum, Ripple, Dash, Monero, and Litecoin are all trading near important resistance levels, while NEM is already on the move. As Bitcoin Cash is losing market cap, we expect BTC to at least test the prior highs near $3000, with the long-term picture still being constructive for the most valuable coin.

BTC, 4-Hour Chart Analysis

Technical Picture

The DAX found support near 12,100 as the advance of the Euro stalled for a couple of days at 1.19 against the Dollar. The index remains stuck in a downtrend, but the short-term MACD is in oversold territory, signaling a likely correction towards the dominant trendline. Strong resistance levels are ahead near 12,375 and 12,500 but a durable bounce is possible if the Euro enters a meaningful correction.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA RBA Monetary Policy Statement
3:30 AUSTRALIA Retail Sales 0.3% 0.2% 0.6%
14:30 CANADA Employment Change 10,900 14,600 45,300
14:30 CANADA Unemployment Rate 6.3% 6.5% 6.5%
14:30 CANADA Trade Balance -3.6 bill -1.4 bill -1.1 bill
14:30 US Non-Farm Payrolls 209,000 183,000 222,000
14:30 US Unemployment Rate 4.3% 4.3% 4.4%
14:30 US Hourly Earnings 0.3% 0.3% 0.2%
14:30 US Trade Balance -43.6 bill -45.6 bill -46.5 bill
16:00 CANADA Ivey PMI 60.3 59.2 61.6

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:30 AUSTRALIA AIG Construction Index 56.0
7:00 JAPAN Leading Indicators 104.6%
9:15 SWITZERLAND CPI Index -0.1%
9:30 UK Halifax HPI -1.0%
10:30 EUROZONE Sentix Investor Confidence 28.3

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Pre-Market: Stocks Extend Losses on Next Round of US Tariffs

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The main European and Asian indices and US stock futures are all significantly lower just before the Wall Street session, as Donald Trump announced that the administration will seek to extend the trade tariffs targeted at China. The extension would affect another $200 billion of products, and it would be a major escalation of the, so far relatively limited trade skirmish.

Shanghai Composite, 4-Hour Chart Analysis

Asian markets are underperforming as Chinese equities have been smashed below key support in the wake of the announcement, but the previously outperforming US indices are also close to breaking their short-term uptrends. That said, the Nasdaq continues to be relatively strong, and the Russell 2000 is the best performing global benchmarks, as small-cap stocks are benefiting from the trade tariffs.

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S&P 500, 4-Hour Chart Analysis

The housing market has been in focus with regards to economic releases, and while housing starts beat the consensus estimate, the more forward looking building permits unexpectedly declined in May. As the Fed is expected to continue with rate hikes, at least until the end of the year, further cooiling of the housing market is likely as mortgage rates are steadily rising.

Dollar and Yen Shine

Dollar Index (DXY), 4-Hour Chart Analysis

Forex markets are reflecting the risk off shift as well, with the US Dollar and especially the Japanese Yen performing well, and the Euro, the Aussie, and the Canadian Dollar lagging behind. Emerging Market currencies are still under heavy selling pressure, as trade war fears sparked flight to safety flows.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

While European markets are only hitting one-month lows, the Turkish Lira and the Brazilian Real are trading near all-time and multi-year lows respectively, as the Dollar’s strength continues to hut the fragile currencies.

Treasury yields are lower, but as safe haven flows are still concentrated on the longer end of the curve, short-term yield pressures haven’t eased much while the flattening of the yield curve continues in earnest.

Gold Futures, 4-Hour Chart Analysis

Commodities are in the red across the board, as the risk-off trade spread to the segment, with gold outperforming somewhat. The precious metal is still well below the $1300 level after last Friday’s steep drop, and it briefly spiked below the $1275 level as well. We still expect gold to resume it’s uptrend so the current levels could be good for accumulating investment positions in the metal. Crude oil is also lower, as volatile trading continued as expected, with the WTI contract trading near the $65 per barrel level before the OPEC meeting.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Coins Pop Higher as Consolidation Continues

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Trading activity increased in the major coins today, amid a mixed news flow, and for now, bulls scored a small victory following last week’s bearish price action. Bitcoin, Ethereum and most of the largest digital currencies gained several percents, despite the weekend’s deterioration, and although the technical setup didn’t change significantly, an immediate breakdown has been averted.

The discouraging BIS report that has been making waves today wasn’t enough to push the coins below support, but for now, the short-term strength left the trading range intact with the primary resistance levels still keeping a lid on prices. Given the uncertain long-term picture, the coming weeks will be crucial for the largest coins and the whole segment alike, with Bitcoin being in the center of attention after its long period of relative weakness.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin held up above the April low, despite the bearish short-term picture, and the coin the highest price level in a week, breaching the $6750 level in the process. While the most valuable coin fared relatively well today, it clearly remains a laggard from a broader perspective, and it is still trading in a declining short-term trend, with several strong resistance levels just ahead.

The $5850 is the key from a long-term perspective, with further support levels at $6500 and $6275 and resistance ahead at $7000 and $7350.

Bearish Rotation Among Altcoins

ETH/USD, 4-Hour Chart Analysis

On a negative note, the leaders of the latest rally were among the weaker coins today, and that is a sign of bearish rotation in a segment, and until major resistance levels are broken traders shouldn’t enter new positions here. Ethereum managed to rally above $500 yet again, but it remained below week’s bounce high, leaving the trading range intact, while the declining short-term trend is also still dominant.  Strong resistance is still ahead between $555 and $575, while support below $500 is found at $450, $400, and $380.

EOS/USD, 4-Hour Chart Analysis

EOS, which is one of the strongest majors technically speaking also edged higher today, but it remains stuck in the declining short-term pattern, and below key support/resistance zone near $12. The coin is well below last week’s high and until a confirmed short-term trend change, traders shouldn’t enter positions here.

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Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 277 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Brent Crude Might Be at Risk

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At the beginning of this week, the Oil prices are still under pressure. By the middle of Monday, Brent is trading at 73.36 USD, but it was much lower during the Asian trading session.

Attention of market players is focused on the OPEC meeting, which is scheduled to take place in Vienna on June 22nd and 23rd. The Austrian meeting has been under scrutiny for some time now: earlier, investors were worried by discussions about possible increase of the daily output by 1 million barrels, but now they are concerned by intention of three countries, namely Venezuela, Iraq, and Iran, to block such decision.

In fact, 1 million barrels per day is about 80% of the oil supply excess, which the OPEC+ has been fighting over the last 18 months. If the countries make decision to increase the daily output, the oil market will be quickly back to the numbers it was against for a long time. The oil supply will rise, but the demand won’t be able to grow at the same pace. As a result, the oil prices will have to fall again.

Still, there is one interesting detail. The OPEC+ can’t increase the daily output by a split decision. However, Saudi Arabia and Russia need this decision, that’s why one may assume that these countries will try to find the way to increase the daily output by sidestepping other members of the organization.

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From the technical point of view, Brent is trading downwards. In the H4 chart, one can see two descending channels: the major channel, which is quite wide, and the internal one, which is narrower. Speaking of the first channel, one can see that the price was reaching new lows step by step, without touching the support line, which shows the downtrend weakness. The internal channel is looking more stable and if the price rebounds from its support line, the instrument may resume growing towards the resistance level at 76.00. However, if the price breaks the support line at 72.00, Brent may fall to reach the psychologically-crucial support level at 70.00.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 3 rated postsHaving majored in both Social Psychology and Economics, Dmitry went on to continue his education in post graduate. He then worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped him to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. Dmitry is a pro in the financial field who authors articles for various international media. He also holds the position of Chief Analyst at RoboForex.




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