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Daily Analysis: Oil and Gold Jump on Saudi Turmoil

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Monday Market Recap

Asset Current Value Daily Change
S&P 500 2588 0.22%
DAX 13,468 -0.05%
WTI Crude Oil 57.34 3.06%
GOLD 1281.00 0.98%
Bitcoin 7133 -5.11%
He 1.1612 0.06%

While rumors have been circling about a severe inner struggle in the Saudi Royal family, the weekend’s serious crackdown caught everyone by surprise. As of now, two princes died in one day, while dozens of high-ranking officials were arrested, in what could be described as a reverse coup by crown prince Mohammad bin Salman, not unlike the events in Turkey earlier this year.

The price of crude oil jumped to a more than two-year high following the events, as the offensive strategy of the prince puts the balance of the Middle East into jeopardy, although the fundamentals of the energy market remain highly vulnerable. Gold and natural gas also surged higher today as a consequence of the crisis, while the Japanese Yen gained ground too, thanks to increased safe-haven flows.

WTI Crude Oil, Daily Chart Analysis

Equity markets barely budged on the turmoil, as the most important US indices are still hitting marginal new all-time highs, while European and Asian stocks are slightly lagging behind. The NASDAQ is pulling is weight with the help of Apple and Amazon, although market internals still show a strong divergence between the leaders of the rally and the majority of stocks.

Apple, 4-Hour Chart Analysis

Currency markets had an active session, with the Great British Pounds rebound and the Yen’s strength dominating the day. Commodity currencies, such as the Canadian Dollar and the Aussie, also gained ground thanks to the jump in the energy segment and gold, while the Euro performed at par with the USD, with no major economic releases coming out in the most-watched markets.

Cryptocurrencies

The major coins had another hectic session after the busy weekend, with Bitcoin’s decline stealing the show, as the currency slipped below the $7000 level. BTC is still the best performing coin on almost all time-frames, but the overbought technical picture points to elevated risk regarding the short-term outlook.

Altcoins experienced some buying as capital fled Bitcoin, while the total value of the segment gradually declined below the historic $200 billion mark. Ethereum Classic continued to make headlines, but Monero although rallied strongly, while IOTA showed signs of strength in the second half of the session. The rest of the market was little changed, and that could mean that the volatility in BTC won’t “infect” altcoins during the correction.                                               

XMR/USD, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
03:00 JAPAN BOJ Governeor Kuroda Speaks
17:00 CANADA Ivey PMI 63.80 60.20 59.60

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
05:30 AUSTRALIA RBA Rate Decision 1.5% 1.5%
05:30 AUSTRALIA RBA Statement
10:30 UK Halifax HPI 0.3% 0.0%
11:00 EUROZONE ECB President Draghi Speaks
21:30 US Fed Chair Yellen Speaks

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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 291 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: Bulls Hold Their Ground as Coins Settle Down

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Trading volumes and volatility declined substantially in the cryptocurrency segment this weekend, as the major coins are trying to hold the key support levels that are just below the current prices. For now, Bitcoin, Ethereum, and Ripple all managed to avoid a break below the June lows and the technical damage is limited among the smaller coins as well, despite the still dangerous setups on the long-term charts.

That said, the general character of the market is still bearish, with high correlations between the majors, and robust resistance levels capping the rally attempts in most cases. With all of those in mind, and given the still active short-term sell signals in our trend model, traders should still not enter new positions here, as a test of the lows is likely in the coming week.

The market is still missing a leadership that could turn the short-term trend around, and the relatively weak coins that have been leading the way lower in the recent period are still not showing signs of strength, despite the occasional short squeeze rallies.

BTC/USD, 4-Hour Chart Analysis

BTC tried to get back above the $6275 support/resistance level several times since falling below it on Thursday but the attempts all failed so far. The coin is still in a clear downtrend, although the previous lows haven’t been tested yet.

From a long-term perspective, a durable break below $5850 would signal a structural bear market, so the coming period will be crucial for the whole segment. Primary support is at $6000, while resistance is ahead at $6500, $6750, $7000, and $7350.

Still No Real Momentum Among Altcoins

ETH/USD, 4-Hour Chart Analysis

The basic setup among the largest altcoins is unchanged similarly to BTC, with Ethereum trading between the $400-$420 support zone and the $450 resistance level since the Monday plunge. The coin is holding up above the June low, and it’s still relatively strong from a longer-term standpoint compared to Bitcoin.

On the contrary, ETH is looking weak short-term, and that also points to the continuation of the declining segment-wide trend. ETH is facing further resistance near $500, while support below $400 is found at $380 and $360.

XRP/USDT, 4-Hour Chart Analysis

Ripple barely managed to avoid a break below the June lows, and the third largest coin remains very weak from a technical standpoint, and strong selling pressure is apparent in its market. The coin should stay above the $0.42 level to avoid major technical damage, and he coming days could be crucial for bulls, with strong resistance ahead around $0.45 and $0.51.

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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 291 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

Forex Update: USD/INR Showing Signs of Weakness Yet Remains Bullish Long-term

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The US Dollar/Indian Rupee (USD/INR) pair has been in a strong bull run ever since it took out resistance of 53.50 in April 2012. The breakout ignited a massive rally that pushed the pair to as high as 69.528 in August 2013. In a little over year, investors raked in almost 30% in profits.

Unfortunately for buyers at this level, 69 proved to be a major resistance. Five years later, that resistance is still giving investors nightmares. The good news is time appears to be on the side of the bulls. In this article, we show why long-term investors shouldn’t lose sleep even though USD/INR appears to be heading down.

The Pullback of USD/INR is a Setup for a Comeback

USD/INR has looked unstoppable recently after it generated a higher low of 63.16 early this year. While the rally was impressive, the pair eventually ran into a brick wall at resistance of 69. So far, bulls look exhausted. It seems they don’t have what it takes to breach a resistance level that has stood for half a decade.

USD/INR Daily Chart

A quick look at the daily chart reveals multiple bearish signals. First and most important, bulls attempted several times to go above 69 but to no avail. The long red candle yesterday symbolizes their defeat.

On top of that, a bearish divergence emerged on the daily RSI. This is compounded by the bearish cross on the daily MACD. If that’s not enough, the 4-day, 8-day, and 21-day moving averages are all trending south.

As an investor, it is easy to lose your confidence in the market after seeing these signals. However, the incoming drop is actually good for the overall health of the market. It is very likely that bulls will take advantage of this temporary weakness and buy on dips. This sentiment is one of the reasons why we believe USD/INR remains bullish long-term.

The Emergence of a Large Continuation Pattern

Breakouts from multi-year consolidation periods often spark a rally that generates handsome returns to investors. This is what happened when USD/INR broke out of the inverse head and shoulders pattern in April 2012.

USD/INR Inverse H&S

Now, it seems that USD/INR is looking for a repeat performance while dancing to a different tune. The pair appears to be in the final leg down of a large ascending triangle pattern, thus explaining the short-term weakness. This is actually one of the best structures that can take down a major resistance like 69. The series of higher lows puts tremendous pressure on the resistance.

USD/INR Weekly Chart

As bulls hold on to positions, the supply in the market becomes more and more limited. This forces new investors to buy at higher price, hence the formation of higher lows. Eventually, the supply becomes so tight that even a five-year resistance like 69 won’t be able to withstand the onslaught of buyers.

When that happens, USD/INR is likely to explode like it did before.

Bottom Line

USD/INR might be on the way down. However, we believe that this pullback is nothing but a setup for a comeback. The impending retracement is most likely the last wave of an ascending triangle pattern. Investors can sleep soundly, confident that the market will likely reward them with substantial profits in the future.

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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3.7 stars on average, based on 191 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Pre-Market: Dollar Jumps as Chinese Troubles Mount

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Global stock markets are a tad higher today following the US open, with the main US indices lagging behind somewhat after a hectic overnight session. With forex markets stealing the show yet again, equities tried to maintain their bullish momentum from yesterday, but the after-hours gains were mostly erased thanks to the renewed rally in the US Dollar.

S&P 500 Futures, 4-Hour Chart Analysis

With the economic calendar being empty in Europe and the US, all eyes were on some of the big US banks that reported earnings before the bell, kicking off the earnings season. Wells Fargo (WFC) missed expectations, while JP Morgan (JPM) and posted better than expected numbers, but for now, the market’s reaction is muted, and the two giants have already been diverging in line with today’s surprises in recent months. Citigroup (C) also beat the consensus estimates, but the stock opened lower as the guidance disappointed investors.

WFC, 4-Hour Chart Analysis (JPM Comparison)

Reported earnings are set to hit record highs thanks to the tax cuts and the modest growth in the US, but as usual, the market’s reaction will be more important than the actual numbers, especially given the strong global divergences that we have been monitoring in recent months.

Commodities Mixed as Yuan Tumbles but Dollar Rally Looms

The Chinese trade balance release made the biggest waves so far today, as the record high level of the indicators points to a widening momentum difference, with regards to growth between the two largest economies of the planet. The recent trade conflict between the US and China seems to be hurting the latter country more, and if we look at asset prices, the divide is even more apparent.

USD/Yuan, 4-Hour Chart Analysis

The Chinese Yuan got close to its recent lows against the Dollar after the release and the reserve currency gained ground compared to most of its peers, which is another bad news for emerging market currencies, which remain under pressure.

Copper Futures, 4-Hour Chart Analysis

With the Greenback’s strength weighing on commodities, the relative strength of copper is worth noting, as the battered metal remains above the key support zone that we pointed out earlier this week. Despite the bounce, Dr. Copper is still signaling troubles for the global economy, with the Chinese woes especially hurting the global growth narrative. In the meantime, crude oil is virtually unchanged after the recent volatile period, while gold is testing its recent low near $1240, trying to stabilize in the face of the strong Dollar.

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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 291 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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