Forex News Analysis by LiteForex

Brent: renew of maxima in the end of the year

Current trend

The Brent oil prices grew to the level of year maxima 57.00 on Wednesday, and it is trading there now. The growth is caused to the oil production countries confirmed their agreement on the oil production limitation. The Oil Ministry of Iraq confirmed that the country is ready to limit the oil production by 200-210K barrel in January. The Venezuela Oil Ministry confirmed the limitation by 95K barrel per day. The EIA Crude Oil Stocks change index is worth attention today. It is expected to decrease by 2060 million barrel. In this case the price can renew the year maxima and grow to the level of 57.70, 58.50. Otherwise the retreat to the level of 55.90 (the middle line of the Bollinger Bands and an upward fan line of Fibonacci 61.8%).

Support and resistance

Support levels: 55.90, 55.00, 54.90, 53.00, 51.70.
Resistance levels: 57.00, 57.70, 58.50.

Trading scenario

Open long positions when the price has consolidated above the level of 57.00 with the target at 57.70 and 58.50. Stop loss is at 56.70. Open short positions below the level of 57.00 with the target at 55.90, 55.00 and stop loss at 57.40.

USD/JPY: the dollar is lowering in the end of the week

Current trend

During the trading session on Thursday, December, 29, the USD was lowering against the yen, reaching the new local minimum from the 14 of December and then renewed it during the morning session on the 30 of December. The “bearish” dynamics is due to the correctional moods before the New Year holydays. The investors usually close the most of positions in this time of the year, in addition, the dollar is greatly overbought against the yen as a result of the November growth. The USD index has reached the highest level from the 2002 year.

Also, the macroeconomical data in USA has affected the trading sessions on Thursday. The weekly Initial Jobless Claims index has lowered from 275K to 265K, which is by 1K worth than expected value. On the contrary, the Continuing Jobless Claims index has grown from 2.039 million to 2.102 million, while the analysts expected the lowering to 2.030 million.

Support and resistance

Resistance levels: 116.54 (actively testing during the morning session 30 December), 117.00, 117.58, 118.00, 118.24 (maximum on December, 20), 118.66 (maximum on December, 15) and 119.06 (the level of the February, 3, 2016).
Support levels: 116.04 (current local minimum, renewed during the morning session on December, 30), 115.61, 115.00 (the level on December, 14), 114.40 (maximum on December, 7), 114.00, 113.50, 113.00 (the level on December, 5) and 112.60.
On the daily chart the Bollinger Bands indicator is growing. The price range is rapidly narrowing, reflecting the appearance of the correctional dynamics. Stick to the channel trade strategy until the situation is clear.

The MACD is lowering, keeping rather strong sell signal (the histogram is below the signal line). Keep the short positions in the short term and do not open new positions.

The Stochastic has reached the overbought area, was corrected and reversed sideways. It’s better to wait for the clear signal.

Trading scenario

Open long positions after the breakout of 117.00. Take profit is at 118.24 or 118.66-119.06. Stop loss is at 116.50-116.35. Implementation period: 2-3 days.
The alternative scenario is the returning of the strong “bearish” trend and a downward breakout of the level of 116.04. In this case the “bearish” targets are at 114.40-114.00. Stop loss is at 116.54. Implementation period: 2-3 days.

XAU/USD: general analysis

Current trend
During the second half of 2016 the price of gold continued to steadily decline due to a stronger US dollar. Currently, however, the pair has already finished the movements triggered by Brexit and raised interest rates of the Fed. At the moment, there is concern on the market about the presidency of Donald Trump. In the near future he will have to convince the US Congress to allocate a large sum for the implementation of economic programs, and his new cabinet still has to go through the approval process in the Senate hearings. In this situation, these processes are likely to be long and exhausting, which may have a prolonged negative impact on the US currency, and strengthen the positions of precious metals.

The current week is replete with important economic releases from the US. Today in the afternoon in the United States data on the index of gradual acceleration of inflation and the index of business activity in the manufacturing sector from the ISM will be published. Projected growth of both indices will reflect the positive sentiment in the business environment and will contribute to the strengthening of the dollar.

Support and resistance
On the daily chart the pair is trading around strong support level of 1148.50. The indicator "Bollinger Bands" is directed downwards, whereas the price range is narrowing, which indicates the probability of a change of the current trend. Histogram of MACD is in the negative zone, its volumes are growing, keeping a weak buy signal. Stochastic has turned down at the border of the overbought area.
Support levels: 1118.88, 1128.28, 1141.69, 1146.39.
Resistance levels: 1159.14, 1172.55, 1180.60, 1188.65.

Trading tips
Short positions should be opened at the level of 1146.00 with the target at 1132.00 and a stop loss at the level of 1153.00. Implementation period: 1-2 days.
Long positions can be set at the level of 1151.70 with Take Profit at 1166.50 and a stop loss order at the level of 1143.50. Implementation period: 1-2 days.

UKBrent: general review

Current trend

During yesterday’s trading session, after it has tested the level of 58.44, the price of Brent crude oil fell by almost $3 per barrel, and at its lowest point towards the end of the session was trading near the level of 55.40. Most likely, such a serious decline was caused by a strengthening in the US Dollar amid the publication of positive macroeconomic statistics in the US. Market participants were selling oil futures that are expressed in Dollars.

Today markets are waiting for the publication of the Weekly Crude Oil Stock by the American Petroleum Institute, due at 11:30 pm (GMT+2).

Support and resistance

The instrument is correcting after the sharp fall. The upward correction could continue to the middle MA of Bollinger Bands (56.77).

Support levels: 55.79, 54.74, 53.55.
Resistance levels: 56.49, 57.29, 58.44.

Trading tips

Long positions can be opened after the price consolidation above the level of 56.77 with targets at 57.29, 58.44 and stop-loss at 56.40.
Short positions can be opened after the price consolidation below the level of 55.37 with targets at 54.74, 53.55 and stop-loss at 55.60.

USD/JPY: general review

Current trend

The pair sharply fell yesterday after the release of the FOMC Minutes from the last meeting of the regulator in December. The Minutes showed that the officials are concerned with falling unemployment in the US that in the near future might result in higher inflation. However, it was noted that due to uncertainties regarding Donald Trump’s fiscal policy plans, the pace of further monetary policy tightening is hard to forecast. At present, the Fed is predicting 3 rate hikes in 2017.

Additionally, the Dollar remains under pressure prior to the publication of data on the US labour market, due tomorrow. Strong reading on the Nonfarm Payrolls could provide support to the American currency.

Support and resistance

The pair turned down having failed its 38.2% Fibonacci fan line. Both the RSI and Composite are showing Bearish patterns suggesting the fall could continue.
Support levels: 115.95 (local lows), 114.89 (March 2016 highs), 114.42 (November 2016 highs).
Resistance levels: 118.60 (local highs), 120.29 (July 2015 lows), 121.33 (January 2016 highs).

Trading tips

Short positions can be opened from the level of 115.95 with targets at 114.89, 114.42 and stop-loss at 116.30.
Long positions can be opened from the level of 118.60 with targets at 120.29, 121.33 and stop-loss at 118.17.

GBP/USD: general review

Current trend

The pair significantly grew yesterday amid a substantial weakening in the US Dollar that remains under pressure after the publication of the FOMC Minutes in the middle of the week. The Minutes, despite been quite hawkish, showed that further path of monetary policy tightening in the US is uncertain as the effect to the economy of the promised fiscal stimulus by Donald Trump is unknown yet. The market seems to agree with the regulator about high level of uncertainty, as the Dollar continues falling despite strong statistics that keep coming out in the US.

Additional support to the Pound came from strong data on the Markit Services PMI. In December, the index rose from 55.2 to 56.2 points, well above forecasts.
Today attention needs to be paid to data on the Nonfarm Payrolls in the US.

Support and resistance

On the 4-hour chart, the pair turned down having failed its long-term SMA200, a breakout of which could lead to a growth continuation. However, the Composite has formed a divergence with the RSI and price, suggesting a decline possibility.
Support levels: 1.2322 (local lows), 1.2297 (November 2016 lows), 1.2206 (local lows).
Resistance levels: 1.2433 (local highs), 1.2505 (local highs), 1.2542 (local highs).

Trading tips

Long positions can be opened from the level of 1.2443 with targets at 1.2505, 1.2542 and stop-loss at 1.2412. Validity – 1-2 days.
Short positions can be opened from the level of 1.2297 with the target at 1.2206 and stop-loss at 1.2322. Validity – 1-2 days.

XAG/USD: technical analysis

XAG/USD, D1

On the daily chart, the instrument is trading just above the middle MA of Bollinger Bands. The price remains below the EMA65, EMA130 and SMA200 that are directed down. The RSI is trying to turn down having broken out its December resistance. The Composite is testing its December resistance as well.

XAG/USD, H4

On the 4-hour chart, the instrument is trading on the middle MA of Bollinger Bands. The price remains on the level with the moving averages that are horizontal. The RSI is showing Bullish dynamics. The Composite is about to test its longer MA.

Key levels

Support levels: 16.15 (November 2016 lows), 15.67 (December 2016 lows), 15.34 (23.6% Fibonacci correction).
Resistance levels: 16.71 (local highs), 17.07 (October 2016 lows), 17.20 (50% correction).

Trading tips

There is a chance the upward correction is going to continue.
Long positions can be opened from the level of 16.71 with targets at 17.07, 17.20 and stop-loss at 16.55. Validity – 2-3 days.
Short positions can be opened from the level of 16.15 with the target at 15.67 and stop-loss at 16.33. Validity – 2-3 days.

Brent: oil prices fell

Current trend

The price of Brent crude oil fell at the beginning of the week amid growing concerns that the OPEC countries are going to carry out their agreement to cut the production.

According to the experts, in the first days of January the Iraqi exports going through the port of Basra were the highest in the last 4 years. In addition, oil reserves in Iran’s floating storages significantly fell. In September 2016, their levels halved that indicates an increase in the country’s exports activities.
Oil prices were also pressured by data on the number of oilrigs in the US. For the week ending on 30 December, their number rose by 4 to 529 rigs, reaching the highest level since December 2015. The number of rigs in the US has been growing for the 10th consecutive week.

Support and resistance

Bollinger Bands on the daily chart turned sideways while the price range remains unchanged. MACD is falling and giving a quite strong sell signal. Stochastic is falling as well and approaching the border of the oversold zone.
The indicators recommend waiting for clearer trading signals.
Support levels: 55.07 (local low), 54.37, 53.91 (22 December low), 53.50, 52.68 (8 December low), 51.85.
Resistance levels: 55.77 (20 December high), 56.50, 57.10 (12 December high), 57.52 (6 January high), 58.10, 58.68 (15 July 2015 high), 59.51.

Trading tips

Long positions can be opened after the breakout of the level of 55.77 with targets at 57.10, 57.52 and stop-loss at 54.00. Validity – 2-3 days.
Short positions can be opened after the price consolidation below the level of 55.00 with targets at 53.50, 52.68 and stop-loss at 55.80. Validity – 2-3 days.

USD/JPY: general analysis

Current trend

During the trading session on Tuesday the pair was lowering. The USA stock markets show the weakness, which affects the USD negatively. The growth of the Wholesale Inventories index by 1% has also pressured it: the growth of the index reflects the showering of the economical growth and can affect the GDP greatly. The JOLTS Job Openings is 5.522 million against the expected 5.555 million, which doesn’t support the USD also. The Japan Composite Index of Leading Indicators was growing to 102.7 points, exceeding the expectations by 0.1 points, which is good for the economy in the short term.

Donald Trump’s press conference will be held today in the USA. The main issues are expected to concern the plans of increasing the infrastructure investment and the tax decreasing plans. There can be come volatility peaks in the market during the conference.

Support and resistance

On the 4-hour chart the pair was corrected to the middle line of the Bollinger Bands indicator.
The MACD histogram is in the negative zone, keeping the signal to open short positions.
Support levels: 105.50, 115.20, 104.90.
Resistance levels: 116.300, 117.00, 117.50, 118.20.

Trading scenario

Open long positions from the level of 116.40 with the target at 117.00, 117.50. Stop loss is at 116.00.
Open short positions from the level of 115.50 with the target at 114.90. Stop loss is at 115.80.
Implementation period: 1-3 days.

XAU/USD: technical analysis

XAU/USD, D1

On the daily chart, the instrument is growing along the upper line of Bollinger Bands. The price remains below its moving averages that turned horizontal. The RSI is approaching the border of the overbought zone. The Composite starts forming a divergence with the price and RSI suggesting a downward reverse possibility.

XAU/USD, H4

On the 4-hour chart, the instrument is growing along the upper line of Bollinger Bands. The price remains above its moving averages that start turning up. The RSI has been forming a Bearish divergence just below the border of the overbought zone. The Composite is about to retest its strong resistance.

Key levels

Support levels: 1190.65 (local lows), 1170.55 (38.2% Fibonacci retracement), 1146.96 (March 2015 lows).
Resistance levels: 1207.46 (50% retracement), 1215.03 (April 2016 lows), 1244.55 (61.8% retracement).

Trading tips

There is chance of the downward reverse in the price.
Short positions can be opened after the price rebound from the level of 1207.46 with targets at 1190.65, 1170.55 and stop-loss at 1215.03. Validity – 3-5 days.
Long positions can be opened after the breakout of the level of 1215.03 with the target at 1244.55 and stop-loss at 1205.13. Validity – 3-5 days.