Wave Analysis by InstaForex

Brent ignores Trump's calls

When there is no agreement in the comrades, their business will not go smoothly. Contrary to the calls of Donald Trump, OPEC did not increase oil production in order to suspend the growth of prices. Inside the cartel, there is a clear division between those who can do it, but would like to see a corresponding increase in demand, and those who are unable to expand production, and it is satisfied with the current levels of Brent. Futures on the North Sea variety, by the way, updated the four-year high. The market is amplified by rumors that the increase in global demand (according to the International Energy Agency, the figure will grow by 1.4 million b/d in 2018 and 1.5 million b/d in 2019), the reduction of Iranian exports and the reluctance of OPEC to increase production will lead to such a deficit of oil, which has not been seen for several decades.

Oil closes in the positive territory for the fifth consecutive quarter, which has not happened since the beginning of 2007, when six straight quarters of growth inflated the WTI quotes to a historic high of $147.5 per barrel. In the current situation, the expansion of the imbalance allows banks to set "bullish" forecasts for Brent and WTI. In particular, BofA Merrill Lynch and JP Morgan believe that the North Sea variety can jump up to $95 per barrel.

Not the least role in the September oil rally was played by a weak dollar. Despite the strong US economy and labor market, as well as the Fed's desire to continue the cycle of monetary policy normalization, speculators preferred to get rid of the US currency at the end of the quarter, as the escalation of trade disputes between Washington and Beijing could not provide it with the expected support. At the same time, the risks of Donald Trump's impeachment in the event of the Democrats' victory in the midterm elections to Congress in November are growing. Taking into account the existing correlation of the USD and Brent index, the growth of black gold looks quite logical.

Dynamics of Brent and USD index



It can not be said that politics does not even consider the oil market. Rising prices have the potential to increase ordinary Americans' spending on gasoline and reduce the effectiveness of the fiscal stimulus. This is a serious trump card in the hands of opponents of Donald Trump. In this regard, the President's calls for OPEC to increase production look logical.

Despite the fact that sanctions against Iran are a pronounced "bullish" factor for Brent and WTI, there is an opinion in the market that it is unlikely to become a long-term driver of growth in quotations. Moreover, the reduction in global demand under the influence of trade wars (IMF estimates it at 150-200 thousand b/d) may limit the potential for oil growth. In my opinion, much will depend on the buyers' refusals and on the scale of hostilities between the US and China. So far, several countries have expressed their intention to reduce purchases of oil from Tehran, including India, South Korea, Japan and others.

Technically, the implementation of the target by 113% on the "Shark" pattern increases the risks of a rollback. If the bulls do not stop there, the probability of achieving the target by 161.8% for AB=CD will increase.

Brent, daily chart



Analysis are provided byInstaForex.

The Fed will open gold eyes

Gold continues to sleep peacefully near the $1200 per ounce mark, but it is unlikely that an experienced investor will be deceived by such calmness. The market is cyclical, trends are replaced by consolidations, trading ranges give way to new trends, so the current sleepy state will probably end soon. We need a reason to wake up. And they are quite capable of becoming the events of the end of September. The Fed meeting, the publication of the draft budget of Italy and the release of data on European inflation will directly affect the USD index, and in fact its dynamics has become the main "bearish" driver for the XAU/USD. Since the beginning of the year, the precious metal has lost about 8% on expectations of an increase in the Federal funds rate and on fears of increased trade tensions.

Despite low prices, physical demand does not support gold. Stocks of the largest specialized stock exchange fund SPDR Gold Shares fell to 742 tons, the lowest level since February 2016. Since the beginning of the year, the figure has lost 11.2%. Rumors of an increase in import duties in India from the current 10% to 12-13%, and possibly up to 20%, increase the risks of reducing demand for precious metals in the country - its largest consumer. At the same time, the People's Bank of China has not purchased gold for two years in order to increase its reserves. However, the holy place is never empty: Russia has claimed the status of the largest buyer, increasing its own reserves to 64.3 million ounces (about 2000 tons). In August, they rose by 31 tons. Bloomberg reports that the official Delhi will leave tariffs at the same level, as it fears an increase in smuggling, and ETF stocks tend to follow the price, and not vice versa.

I believe that the market conditions of the physical asset will gradually improve, and to predict the further dynamics of the XAU/USD it makes sense to look at factors such as trade wars and FOMC meetings. During the current cycle of normalization of monetary policy of the Fed, gold reacted quite clearly to the increase in the Federal funds rate: on the eve of the meetings, it fell, then quickly restored the lost positions. In my opinion, this dynamics is due to the implementation of the principle of "sell on rumors, buy on facts".

Dynamics of gold and Fed rate



The failure occurred in June, when the tightening of monetary policy did not lead to an increase in the value of the precious metal. In summer, investors were keen on buying the US dollar amid divergence in economic growth between the United States and other countries. They believed that China and the developing countries would slow down, while Washington would not feel the pain of trade wars. Currently, the world has changed. The US economy may lose momentum, while EM assets look oversold. In this respect, the former associated with the recovery of gold prices after the FOMC meetings is quite capable of playing.

Technically, the exit of the precious metal from the trading range of $1184-1214 per ounce will allow it to determine the direction of further movement. The breakout of the upper limit will increase the risks of the rally in the direction of $1240 and $1260. On the contrary, a successful storm of support for $1184 will open the way for the "bears" to the south.

Gold, daily chart



Analysis are provided byInstaForex.

Elliott wave analysis of EUR/NZD for September 28, 2018



The daily trading range is getting smaller and smaller, indicating that energy is building for the next larger move towards the upside. A break above minor resistance at 1.7685 will be the first good indication, that the next impulsive rally towards 1.8030 is developing, while a break above resistance at 1.7732 will confirm this rally is well underway. Support at 1.7580 should continue to protect the downside for the expected break above 1.7685 and above.

R3: 1.7823
R2: 1.7783
R1: 1.7732
Pivot: 1.7685
S1: 1.7651
S2: 1.7626
S3: 1.7580

Trading recommendation:

We are long EUR from 1.7615 with our stop placed at 1.7515. Upon a break above 1.7732 we will move our stop higher to 1.7575. We will take profit on half our position at 1.8000.

Analysis are provided byInstaForex.

The dollar returns to the game

The US dollar did what it had to do. It strengthened due to the increase in the Federal funds rate to 2.25% and the Fed's intentions to bring it to 3.5% in 2019. The central bank plans to tighten monetary policy once this year and three times next year, which makes the "greenback" a very attractive currency against the background of the slowness of its main competitors. Yes, the head Of the Bank of Austria Ewald Nowotny requires an earlier increase in the rate on deposits from the ECB, but the "hawks" of the Governing Council would not be "hawks" if they did not make such statements. While core inflation in the euro area is not going to go far from the 1% mark, the European Central Bank is unlikely to change its plans.

The divergence in the monetary policy of the Fed and the ECB is not the only trump card in the hands of the "bears" for the EUR/USD. The peak of the pair in April-August was associated with different rates of economic growth and trade wars, and if investors' views on the conflict between the US and China have changed, hen there is little doubt in the strength of the American economy. The growth in the negative balance of trade led to a deterioration in GDP forecasts for the third quarter from the Atlanta Federal Reserve to 3.8%, but this figure is still impressive. At the same time, the dynamics of business activity in the eurozone indicates serious concerns of the manufacturing sector, and given the close correlation of the purchasing managers' index and GDP, it can be assumed that the economy of the currency bloc is far from its optimal conditions. As if under such conditions, the ECB did not have to postpone plans for the start of the normalization of monetary policy in September 2019 for a later period.

Another problem of the euro is Italy. Eurosceptics secured from the Ministry of Finance of the republic a budget deficit of 2.4% of GDP in order to fulfill pre-election promises. But this figure does not effectively reduce the debt of the country to €2.3 trillion. In its absolute size, Italy is the largest borrower of the eurozone, in relative terms – inferior to one in Greece. Yes, after a compromise in Rome was found, the markets calmed down a bit, and the yield differential of Italian and German bonds could not rewrite the three-month highs recorded at the beginning of September, but who knows what will happen in October?

The dynamics of the spread of interest rates on the debts of Italy and Germany



Thus, the EUR/USD pair has plenty of trump cards to continue the downward campaign, however, I would not write off the euro from accounts ahead of time. First, as the midterm elections in the US approach, the dollar will be worried about political risks. Second, if macroeconomic statistics for the eurozone begin to improve, and Italy's financial markets stabilize, the single European currency will gain ground. In this regard, it is extremely doubtful that the main currency pair could rewrite the August low.

Technically, the "bears" for the EUR/USD pair intend to storm the support at 1.153-1.1535 and activate the subsidiary "shark" pattern with a target of 88.6%. If they succeed, the risks of continuing the peak to 1.135 will increase.

EUR/USD daily chart



Analysis are provided byInstaForex.

Trump won an important victory - concluded a new trade agreement with Canada and Mexico



At the last moment, one day before the expiration of the NAFTA agreement, the representatives of the USA and Canada managed to reach an agreement. A new trade agreement between the US, Mexico, and Canada was formed - the USMCA agreement (by the names of the participating countries).

Trump managed to get from Canada concessions on access to the Canadian dairy market for US farmers, as well as, for car manufacturers and on the protection of intellectual property.

This is a very important success for Trump - before the by-election to Congress in November, against the backdrop of the extremely tough US-China trade war unleashed by Trump. Just a week ago, the United States introduced duties for 200 billion dollars of goods from China in response to 60 billion dollars of goods from the United States.

Trump is critical that Republicans win in November and retain a majority in the lower house of Congress. Otherwise, Trump will become a "lame duck" two years before the US presidential election and the mood of voters is determined by the economy.

The US-Canada-Mexico market is huge, amounting to $ 1 trillion of Import-exports per year.

Analysis are provided byInstaForex.

EUR/USD: the recalcitrant Italians drown the euro

The narrative around the state budget of Italy for the next year continues, putting strong pressure on the European currency. The EUR/USD pair fell to 1.5 – month lows, currently testing a strong resistance level of 1.1520, which is the lower limit of the Kumo cloud on the monthly chart. If the price is fixed under this level, the pair will soon enter the 14th figure, confirming the dominance of bears on the pair.

Despite the fact that the proposed draft Italian budget does not violate the EU requirements in terms of the permissible size of the deficit (not more than three percent), it caused an uproar in Brussels. The EU leadership has strong arguments for its discontent: if last year the Italian authorities laid the budget deficit at the level of 1.6%, now they want to raise this bar to 2.4% at the previously agreed 0.8%. And this is despite the fact that the size of Italy's public debt is one of the highest in the eurozone (here the Italians are second only to the Greeks), and the unemployment rate in some areas of the country reaches 30 percent. But these facts do not confuse politicians who recently came to power on the wave of populist promises. Now they have to fulfill (at least partially) their promises – at the expense of "inflating" the budget.

It is worth noting that the political events in Italy are unfolding quite dynamically – in the last five years the country was led by four prime ministers. None of them held office for more than two years. Representatives of the current coalition are well aware that time is playing against them, and if Brussels wins the "budget battle", their positions will weaken in many ways. That is why the Italian deputy prime minister said today that he will not back down "one iota" from those expenses that were planned in the scandalous draft budget. In particular, we are talking about an increase in pensions and social benefits. In addition, representatives of the "League" want to carry out next year's tax reform by changing the tax rate on personal income: 15% for households with incomes less than 80,000 per year and 20% for those whose income exceeds this level.



These intentions are opposed by Brussels and Italy's Minister of Finance – practically the only influential "opposition" in the current government. In his opinion, the maximum allowable size of the budget deficit is 1.9%, but not the declared 2.4%. He also recalled that the Italian national debt exceeds 130% of GDP (2.3 trillion euros), and the actions of politicians offset the work on reducing the debt burden. It is noteworthy that to date Italy's budget indicators are consistent with the European Union, according to which the deficit was to be reduced from 1.6% of GDP this year to 0.8% in 2019, and in fact to zero in 2020. Now Rome shows the opposite trend - instead of the previously agreed 0.8%, it proposes to set the bar at 2.4% of GDP.

Such a sharp turn provoked a strong reaction from Brussels. According to the Italian press, if Rome implements the stated scenario, the European Commission will reject the draft budget and even consider the issue of applying sanctions against Italy. It is worth noting that we are talking about a fairly broad time frame: until October 20, members of the Italian government must approve the draft budget (in one form or another), before the end of November, this budget will be considered by the European Commission, and the sanctions procedure can be implemented at the beginning of next year. Therefore, if Rome decides on the declared budget deficit, the European currency will be under pressure for a long time.

In general, the EUR/USD pair reacted quite cautiously to the Italian event, until one of the ECB representatives commented on the situation. Thus, the head of the Bank of Finland Olly Ren said that the plans of the Italian government are alarming, and now the regulator is likely to "carefully monitor the risks." Obviously, if the Italian crisis worsens (especially if the European Commission returns Rome's unapproved draft budget), then at the next meeting of the ECB (October 25), the regulator will significantly soften its rhetoric, thereby putting additional pressure on the euro.

The current situation has its consequences, and not only in the context of the foreign exchange market. In particular, the Italian stock index FTSE MIB lost 3.7% amid a selling of Italian government bonds. If panic increases, this trend will continue.

However, in my opinion, the Italian crisis will end quite quickly when a certain peak is reached. Most likely, a compromise will be reached, assuming a reduction in the budget deficit under the two percent mark. On the one hand, Brussels will avoid a political crisis in Italy, and, on the other hand, Italian politicians will be able to partially fulfill their election promises, and the responsibility for the unfulfilled part will be transferred to the shoulders of the European Union, "which did not allow them to implement their plans." From a political point of view, this is a fairly convenient and "safe" position, so it will be surprising if Italian politicians show excessive principledness on this issue.

From a technical point of view, the euro-dollar pair has reached an important support level of 1.1520 (the lower limit of the Kumo cloud on the monthly chart). If bears push this mark, then the next support level will be the mark of 1.1440 (the bottom line of the Bollinger Bands indicator on W1).

Analysis are provided byInstaForex.

Gold saved by speculators

If the assets that have been marching in different directions for a long time begin to move in the same direction, there is a reason for bewilderment and search for the causes of what is happening. It turns out – you can find a good investment idea. Over the past few months, the main driver of the weakness of gold was the strong US dollar. Nevertheless, the political crisis in Italy increased the demand for safe-haven assets and contributed to selling the EUR/USD. At the same time, it played the principle of "when everyone sells, there is a great opportunity to buy." At the auction on October 2 at the beginning of the US session, the volume of operations within 10 minutes exceeded the average 100-day indicator by more than 12 times. While the crowd was selling the precious metal, sincerely hoping for a strong dollar, the big players, on the contrary, bought it. Bottoms up?

Dynamics of gold prices



According to Commerzbank, gold will surely move upwards in the direction of $1,300 per ounce, since the external background is favorable for it. First, the increase in the scale of trade wars leads to an acceleration of inflation, which at the current rate of normalization of monetary policy of the Federal Reserve will reduce the real yield of US Treasury bonds. This factor is bullish for the XAU/USD. Secondly, Brexit and the political crisis in Italy, along with trade wars, lead to a slowdown in business activity around the world. This slows down the growth rate of the world economy and delays the central banks' plans to normalize monetary policy. The profitability of the global bond market is falling, and gold is growing. Finally, thirdly, blazing Rome increases the demand for safe-haven assets.

The eurosceptic government persuaded Finance Minister Giuseppe Tria to adopt the draft budget for 2019 with a deficit of 2.4% of GDP. Their predecessors talked about 1.6% in 2018 and 0.8% in 2019. The current plan needs to be coordinated with the EU, which is already beginning to show discontent. So, Jean-Claude Juncker said that Brussels should do everything possible to avoid a new Greece. This time in Italy. Indeed, if the European Union accepts the figures proposed by Rome, the rest of the participating countries will begin to express dissatisfaction, which will strengthen the position of eurosceptics in the eurozone. On the other hand, it is necessary to find a common language with Italy, because from the side of the League and the Five Stars from time to time there is talk that the republic would be better without the euro.

Thus, the political crisis in Europe, trade wars and growing risks of falling real bond yields amid accelerating inflation and declining growth rates of business activity have contributed to the rise of gold towards the upper limit of the medium-term trading range of $1184-1214 per ounce. Speculators did not play the least role in this process. In my opinion, the external background is favorable for the precious metal, which increases the probability of breaking the upper limit of consolidation.

Technically, the output of gold outside the trading border will increase the risks of implementing the target by 88.6% using the "Bat"pattern.

Gold, daily chart



*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Analysis are provided byInstaForex.

AUD/USD. The pair is approaching the stronghold of bulls - 0.7000

The Australian dollar paired with the US currency weakened to 2.5-year lows, entrenched in the 70th figure. This dynamics is associated not only with the strengthening of the greenback, although the rhythm of today's trading is set by the US dollar. "Hawkish" comments of the head of the Federal Reserve provoked an increase in the yield of 10-year treasuries, and this fact in turn influenced the dynamics of dollar pairs.

Despite the clear dominance of the US currency, in the context of the AUD/USD pair, it is worth considering that it will be difficult for traders to break through the base of the 70th figure and go lower. The last time such a maneuver was in January 2016 - but even then the bears of the AUD/USD could not keep the price within the 69th figure for more than one week. Therefore, short positions should be treated with extreme caution: the pair is too close to a strong support level.



The long weekend in China (the country celebrates Independence Day throughout the week) shifted the focus of AUD/USD traders' attention to other fundamental factors. The theme of the US-China trade conflict has faded into the background, as the parties have so far "dispersed in the corners of the ring", also due to the national holiday in China. The Australian dollar did not get any benefit from this fact - on the contrary, now the pressure of the US currency has increased due to the tougher rhetoric of the Fed representatives.

And it's not just about Jerome Powell, who yesterday quite transparently hinted at the acceleration of the rate hike. In particular, speakers in recent days, Charles Evans, Eric Rosengren, Lael Brainard stated the need for further tightening of monetary policy ,and Brainard even allowed the possibility of accelerating the pace of the rate hike. Jerome Powell spoke about this, however, not directly, but in very clear hints. The meaning of its position is difficult to distort: apparently, the Fed will raise the interest rate three or four times next year and only in 2020 will it think about the level of the neutral rate.

The overall strengthening of the US dollar has not spared the AUD/USD pair. The yield spread between 10-year US and Australian bonds expanded to record levels in favor of the United States: the last time such dynamics was observed as much was 37 years ago. By and large, at one point connected many factors, the combination of which had a strong pressure on the Australian dollar.

The Reserve Bank of Australia is also not an "ally" of the Australian, as the devaluation of the national currency plays only into the hands of inflationary processes. The regulator has repeatedly stated this fact, each time voicing their concerns, if the AUD/USD exchange rate was approaching the region of the 80th figure. At their last meeting, which took place this week, the members of the RBA took a wait-and-see position, confirming the general expectations of the market about the prospects of monetary policy. According to the majority of traders, the issue of raising interest rates may not be considered until the second half of next year, and RBA members are in no hurry to dissuade the market from this.



Thus, the Australian currency does not have its own strength to resist, so the "aussie" is entirely dependent on the dynamics of the US dollar. In turn, this means that the motion vector of the AUD/USD in the short term depends on the Nonfarms, the release of which is scheduled for tomorrow. If the number of employed in the non-agricultural sector exceeds the 200,000 mark, the unemployment rate will drop to 3.8%, and the dynamics of the average wage will remain within 0.3-0.4%, the US currency will continue its offensive in all dollar pairs (except for the pound-dollar pair, where the subject of Brexit dominates).

Technically, the AUD/USD pair also shows a clearly bearish picture, and on the "higher" timeframes (daily, weekly and monthly chart). On each of them the price is on the lower or between the middle and lower lines of the Bollinger Bands indicator. Ichimoku Kinko Hyo indicator shows a strong bearish "Parade of lines" signal, and oscillators also signal the priority of the downward movement.

You can define several goals of the downward scenario, depending on the timeframe: D1 – 0,7070 (the goal is almost reached); W1 – 0,7055 and MN – 0,7005. When passing the above values, the pair will target the main "price stronghold" – the mark of 0.7000. Here it should be noted that the above support levels are not a reliable stronghold – the main battle will unfold for a decrease in the 69th figure.



Tomorrow's Nonfarms can impulsively reduce the price to the base of the 70th figure, but this price breakthrough should be treated with caution. In the area of multi-year lows, the pair can gradually buy back, and in the first trading days of the next week it can move away from record lows. Short positions in this case are appropriate only in the range of 0.7090-0.7010 or when the pair is fixed in the 69th figure. But to participate in the "battle" for a breakthrough in the 69th figure is very risky, since its outcome is not predetermined.

Analysis are provided byInstaForex.

The pound gets rid of the ballast

If you get rid of the ballast, it'll be a lot more fun. Over the past few months, the policy has restrained the offensive outbursts of the bulls on the GBP/USD. While most investors sleep and see the pound rise significantly higher, political risks prevent them from starting to form long positions. In past years, the Conservative Party conference invariably turned into a collapse of the sterling, and Theresa May's statement about the impasse in negotiations with Brussels leads its fans to sad arguments.

This time, nothing extraordinary happened at the Tory's meeting. The prime minister was not allowed to doubt the leadership. At the same time, rumors about the advancement of the Irish border issue led to a decrease in the EUR/GBP to the area of 3-month lows. Investors are playing on the contrast: while the fire of the political crisis in Italy is only heating up, in Britain, on the contrary, everything is moving towards the conclusion of an agreement. According to Reuters, London's new proposal to Brussels avoids large-scale checks on the border with Ireland, which signals progress in the negotiations.

Not the slightest role in strengthening the pound is played by the growth of the yield of British bonds to the area of 2-year highs. If the UK manages to achieve an orderly exit from the EU, the risks of continuing the Bank of England's monetary policy normalization cycle will increase. At the same time, the threat of an acceleration in inflation forces investors to flee from local debt obligations. If we add to this London's desire to take a step from fiscal consolidation to GDP acceleration and the potential growth of bond issuance associated with it, it becomes clear why the debt market rates are steadily moving upwards. Their increase raises the attractiveness of British assets, boosts demand for them and contributes to the revaluation of the sterling.

Dynamics of British bond yields



At the same time, there are always two currencies in any pair, so the success of one of them does not necessarily lead to a shift in a certain direction. The dollar also looks very attractive at the moment. The futures market increased the likelihood of three acts of monetary tightening of the Federal Reserve in 2019 from 40% to 42%, the duration of employment growth outside the agricultural sector does not get tired of rewriting records (96 consecutive months), and unemployment fell to a low of almost half a century. Against this background, the rise in the yield of US Treasury bonds to the peak in the spring of 2011 should not be surprising.

In the week to October 12, investors working with the GBP/USD will monitor the political situation in Britain, as well as the release of data on GDP of the UK for June-August and US inflation. In May-July, the economy of the United Kingdom accelerated to 0.6%, and if it continues in the same spirit, the pound will receive an additional trump card.

Technically, after a rollback to 50% of the AD wave of the "Bat" pattern, and the rebound from the lower limit of the upward trading channel, the "bulls" on the GBP/USD launched an attack in order to update the September high. If this happens, the chances of implementing the target by 161.8% on the AB=CD pattern will increase. GBP/USD daily chart



Analysis are provided byInstaForex.

Brent found the culprits

If at the beginning of 2018 someone started talking about the fact that Brent will finish the year near the mark of $100 per barrel, they would surely laugh at him. Best case scenario. Nevertheless, over the past 12 months, the North Sea variety has added about 50% of its value, and the psychologically important mark no longer seems like an impossible dream. US economic sanctions against Iran, strong global demand, supply disruptions from Venezuela and other countries and the difficulties of US shale production pushed oil futures to the 4-year highs. And from them to $100 per barrel at hand.

If Donald Trump wants to find those responsible for the rapid rally of Brent and WTI, then he should look in the mirror. According to Russian Energy Minister Alexander Novak, the US president's tweets bring confusion to the markets. Investors do not know how to act and what will happen in the future. In addition, Washington's actions against Tehran are too aggressive. Iranian exports before the announcement of sanctions since November were estimated at 2.5 million b/d. And if the market was initially set up with the fact that the sanctions would reduce it by 0.4-1 million b/d, then the current version of bringing the indicator to zero does not look great. At the end of the first week of October, the country exported 1.1 million b/d according to information received from tankers. The Tehran government says about 1 million b/d. In September, it was about 1.6 million b/d. Supplies are rapidly declining, but before the imposition of sanctions more time.

Only rumors about a more friendly attitude of the US to the buyers of Iranian oil allowed the "bears" on Brent and WTI to counterattack. The United States will not put pressure on India if Delhi does not completely refuse to import oil from Tehran. However, the information has not yet been confirmed, which allows investors to return to their favorite topic. When the $100 per barrel mark is reached. Players who did not have time to jump into the train leaving for the north are trying to make money on options. Since the beginning of September, the bets made with the help of futures contracts that the psychologically important level will be reached by January have doubled. BofA Merrill Lynch speaks openly about $100 per barrel and assesses the impact on the global economy. According to the bank's forecasts, global GDP growth will lose 0.2 pp from high oil prices, while the main victims will be the eurozone, Britain and Japan. Much will depend on the US dollar. Its weakness can be a catalyst for the rally of Brent and WTI.

Dynamics of US dollar and oil



Support for black gold is provided by information about the approaching hurricane Michael to the coast of the Gulf of Mexico and the forecast of experts Bloomberg to raise US stocks for the third week in a row.

Technically, the achievement of target levels at 161.8% according to the AB=CD pattern increases the risk of a rollback. At the same time, even the breakthrough of diagonal support in the form of the lower border of the ascending short-term trading channel will not allow the "bears" to breathe calmly on Brent. Until such time as the quotes are above $76.7 per barrel, the situation is controlled by the bulls.

Brent, daily chart



Analysis are provided byInstaForex.