Forex News Analysis by LiteForex

YM: general review

Current trend

Dow Jones continues to trade near historical maximums: 21223.2 or 8/8 Murrey. Breaking through and consolidation above this level will open it the way to 21250.4. In the near future a vote on the Financial Choice Act project may take place. The purpose of the project is to reduce the level of regulation of the US baning system and reserve requirements for commercial banks. If the project is passed, the market may experience excessive liquidity which in the end may positively influence the stock market.

The second event that may impact stock markets all over the world is the UK parliamentary election. According to the initial data, the majority of places in the Parliament is to be taken by the Conservative Party under the leadership of Theresa May. However due to terrorist attacks the gap between them and other parties (namely the Labor Party) is narrowing.
Initial and secondary jobless claims are also to be publised in the USA. A slight drop by approximately 8 thousand is expected.

Support and resistance

Stochastic is reaching the level of 80 points or the overbought zone and signals about possible correction. Short positions may be opened only in case the lower support level of 7/8 Murrey or 21094.1 is broken through.
Support levels: 21094.1.
Resistance levels: 21223.2.

Trading tips

Short positions may be opened from the level of 21094.1 with targets at 20937.8 and stop-loss at 21223.2.

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GBP/USD: general review

Current trend

The pound fell by over 200 points against US dollar in view of release of exit polls data. According to them, the possibility that the Concervative Party may lose its absolute majority in the Parliament remained. Prime Minister Theresa May called for an early election hoping to get far bigger advantage, and the results of the election were truly shocking. Thus, according to recent BBC data, the conservatives are expected to get 318 places out of 650, and the Labor Party is to receive 267 places. The Brexit process becomes even more uncertain now which will add risks for the pound in the short and medium term.

The main item of the agenda today is the results of the UK election. After the release of the official data the market is expected to become volatile.

Support and resistance

Support levels: 1.2700.
Resistance levels: 1.2750, 1.2780, 1.2800, 1.2850.

Trading tips

Short positions may be opened from the level of 1.2670 with target at 1.2600 and stop-loss at 1.2700.
Long positions may be opened from the level of 1.2780 with target at 1.2850 and stop-loss at 1.2750.
The period of implementation is 1-2 days.

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EUR/USD: general review

Current trend

Today, the euro is strengthening against the US dollar after a decline at the end of last week, which was partly caused by the unexpected outcome of the parliamentary elections in the UK. Tory, contrary to expectations, could not gain an absolute majority in the parliament, the position of Therese May, as acting Prime Minister, weakened, which could affect negotiations on the Brexit process. It should be noted that this election outcome may be an advantage for the Eurozone, because the results have introduced a new uncertainty factor into the economy of Britain, and European leaders would like to start negotiations on Brexit as soon as possible.

This week, a number of economic releases are planned for the Eurozone, and the US Federal Reserve's decision on the interest rate is also expected.

Support and resistance

The decline at the end of last week was rather a correction of the upward trend, than a change in the general trend. On the 4-hour chart, the pair broke off from the support level of 1.1170 and adjusted to the midline of the indicator "Bollinger bands" at around 1.1219. The MACD histogram is in the negative area, keeping a weak signal to sell.
Support levels: 1.1200, 1.1170, 1.1120.
Resistance levels: 1.1240, 1.1265, 1.1280

Trading tips

Long positions can be opened at the level of 1.1230 with the target of 1.1280 and the stop loss at the level of 1.1200.
Short positions should be set at 1.1190 with a target of 1.1120 and a stop loss at 1.1220.
Implementation time: 1-2 days.

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WTI Crude Oil: general review

Current trend

WTI quotes after a long fall moved to the upward correction phase from the level of 45.36. Oil prices gained certain support from the statement of the Minister of Energy of Saudi Arabia that his country has considerably decrease oil supply to the market. Today market players will pay attention to initial data from API on weekly changes of oil reserves in the USA (22:30, GMT+2). If the data shows the increase of the reserves, WTI quotes will get under pressure. Otherwise oil prices will be supported in the short term.

Support and resistance

Technical indicators point at the preservation of the buyers activity. Bollinger Bands are pointing upwards. MACD histogram is in negative zone, but its volume is decreasing, signalling about the increasing influence of the buyers. Breaking through the level of 46.85 will be a signal for growth continuation and will open the way to the level of 47.80 for the buyers. If the sellers take the initiative and drop the rate below the lower line of Bollinger Bands (46.11), the fall will continue to 45.38.
Support levels: 46.11, 45.38, 44.53.
Resistance levels: 46.85, 47.80, 49.00.

Trading tips

Buy positions may be opened above 46.85 with targets at 47.80 and stop-loss at 46.60.
Sell positions may be opened below 46.11 with targets at 45.38 and stop-loss at 46.40.

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GBP/USD: general review

Current trend

The rate of GBP/USD continues to gradually strengthen and has already reached the level of 1.2800, but failed to consolidate above it.

After the release of mixed statistics pon the UK labor market the rate moved downward. Jobless Claims were better than expected and decreased to 7.3K in May from 22K a month earlier. Average salary was worse than expected: the growth of the indicator slowed down to 2.1% in April against 2.3% a month earlier. Investors reacted to this news with the sales of the British currency.

After the release of statistics from the UK the main macroeconomic event of the day will be the decision of FOMC on the interest rate followed by comments on the fiscal policy. Market participants expect FOMC to increase the interest rate at its meeting by 0.25 percentage points t 1.25%. Thus, the fact of the rate's increase has already been included into the current USD rate.

If the rate is increased, US dollar will receive support in the short term which will lead to the reduction of GBP/USD rate. If FOMC decides not to increase the rate, or if follow-up comments of its head show cautious or pessimistic attitude to the prospects of the US economy (level of unemployment, inflation), investors will start to sell USD which would lead to the growth of GBP/USD rate.

Support and resistance

Technical indicators don't provide a clear signal. Bollinger Bands are directed sidewards indicating lateral movement. MACD histogram is reducing in the negative zone reacting to the recent growth of the rate but does not provide a clear signal. Stochastic is directed downwards indicating the increasing influence of sellers.
Support levels: 1.2714, 1.2674, 1.2636.
Resistance levels: 1.2768, 1.2802, 1.2850.

Trading tips

Sell positions may be opened below 1.2714 with targets at 1.2674-1.2636 at stop-loss at 1.2740.
Buy positions may be opened above the level of 1.2768 with targets at 1.2802, 1.2850 and stop-loss at 1.2745.

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USD/CAD: general review

Current trend

Since the end of the previous week Canadian currency has been actively strengthening against USD due to positive data from the Canadian labor market. Moreover, CAD is supported by the statement of chief deputy chairperson of the Bank of Canada Caroline Wilkins made on Monday, in which the issue of increasing the interest rate was first mentioned. The reaction of the investors was to be expected. At first the pair USD/CAD dropped below the year trend line (blue) and then broke through the level of 1.3300 that is considered an important border between "bullish" and "bearish" tendencies. Yesterday after the decision of FOMC on the interest rate and folow-up press conference USD started to strengthen and the pair USD/CAD to correct.

The data on the unemployment rate (the number of jobless claims is expected to decrease) and industrial activity index by FRB Philadelphia (expected to fall by 14 points) are due at 14:30 (GMT+2). The volume of US industrial output will be published at 15:15 (GMT+2) (the indicator is expected to fall by 0.8%), and the volume of purchases of long-term securities (to decrease by $22.5 bln) —at 22:00 (GMT+2).
The pair is expected to continue consolidation in the next couple of days.

Support and resistance

Support levels: 1.3510, 1.3410, 1.3380, 1.3300.
Resistance levels: 1.3220, 1.3160, 1.3080, 1.3000.

Trading tips

Long positions may be opened at the market price with targets at 1.3300, 1.3380 and stop-loss at 1.3220.
Alternatively sell positions may be opened from the level of 1.3220 with targets at 1.3160, 1.3080 and stop-loss at 1.3280.
The period of implementation is 2 days. * * *

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CAC: technical analysis

CAC, D1

On the daily chart, the instrument is trading in the lower Bollinger band. The price remains above the EMA65, EMA130 and SMA200 that are directed up. The RSI has formed a “double bottom” reverse pattern. The Composite is about to test its longer MA and keeps forming a Bullish divergence with the price.

CAC, H4

On the 4-hour chart, the instrument is growing towards the upper line of Bollinger Bands. The price remains just below the EMA65, EMA130 and SMA200 that are turning down. The RSI is growing having broken out its longer MA. The Composite is showing similar dynamics.

Key levels

Support levels: 5155.0 (April gap), 5090.0 (March highs), 5078.0 (June 2015 highs).
Resistance levels: 5314.0 (local highs), 5367.0 (June highs), 5400.0 (local highs).

Trading tips

The price is approaching its short-term descending trendline. Its breakout would lead to a growth continuation.
Long positions can be opened from the level of 5314.0 with targets at 5367.0, 5400.0 and stop-loss at 5275.0. Validity – 3-5 days.
Short positions can be opened form the level of 5155.0 with targets at 5090.0, 5078.0 and stop-loss at 5190.0. Validity – 3-5 days.

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GBP/USD: general review

Current trend
Last week the Bank of England announced its decision on the interest rate. The value of 0.25% remained unchanged, but in the comments on the fiscal policy the representatives of the Central Bank announced not only positive aspects but also risks for the UK in view of the upcoming Brexit negotiations. At the same time, BOE report on the monetary policy strengthened the pair after it became known that three out of eight members of the committee voted for the increase of the rate.
Within the next week market participants may expect high volatility in the trading instrument as Brexit negotiations are going to be complicated.
No important releases are expected from the USA or UK today, therefore the pair is likely to consolidated with a slight "bullish" tendency. The key even of the current week will be the release of the data from the US Department of Labor on the number of initial jobless claims.

Support and resistance
On D1 chart the pair is trading in the lower part of Bollinger Bands. The indicator has reversed downwards while the price range has slightly narrowed confirming the turn from the upward trend. MACD histogram is in the positive zone with its volumes reducing keeping the sell signal. Stochatic does not give clear signal for entering the market.
Support levels: 1.2575, 1.2665, 1.2735.
Resistance levels: 1.2845, 1.2905, 1.2975, 1.3015.

Trading tips
Short positions could be opened from the level of 1.2835 with targets at 1.2665 and stop-loss at 1.2890. The period of implementation is 2-4 days.
Long positions may be opened from the level of 1.2865 with target at 1.2980 and stop-loss at 1.2810. The period of implementation is 2-4 days.


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Brent Crude Oil: general analysis

Current trend
Oil prices began to fall on May, 25, after the OPEC decision to prolong the oil production limitation Agreement. In the end of the last week the price met the strong support around 46.70. The reaction of the oil price around this year minimum will possibly determine the further price movement in the nearest future. The active development of the shale oil production in the USA is one of the main factors, which are weakening the oil. Besides, the OPEC Agreement leads to the gradual lowering of the world oil resources. In his last speech the Saudi Arabia Industrial and Energy Minister Khalid Al-Falih was confident, that in the 4th quarter 2017 the oil price and recourses will reach the needed balance.
The EIA Crude Oil Stocks change data, which are due at 16:30 (GMT+2) tomorrow, will clear the further development of the situation. The amount of the resources is expected to lower. The Baker Hughes US Oil Rig Count, due at 19:00 (GMT+2) on Friday, is an important issue, too.
Today at 14:00 (GMT+2) and at 21:00 (GMT+2) the USA FRS Members Fischer and Kaplan speeches will be published. According to the last FRS Members commentaries and the Head of the FRS Janet Yellen speech rhetoric, they are trying to support the USD verbally despite the macroeconomic reality.
The development of the correction is expected in the nearest two days.

Support and resistance
Support levels: 46.70, 45.80, 45.00, 44.10.
Resistance levels: 47.30, 48.50, 50.00, 51.50.

Trading scenario
Open long positions at the current price with the target at 48.50, 50.00 and stop loss at 46.90.
Open short positions at the level of 46.70, with the target at 45.80, 45.00 and stop loss at 47.40.


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AUD/USD: general review

Current trend
In the end of the previous week AUD consolidated in view of unexpectedly positive data from the Australian labor market. The pair AUD/USD broke through the psychologically important level of 0.7500 and the upper border of the 6-weeks upward channel (green line in H4). After that the statements by FOMC members strengthened USD, and the pair consolidated between 0.7570 and 0.7630.
Yesterday Australian dollar received support from the Reserve Bank of Australia that discused threats to financial stability in its meeting.
Secondary housing market statistics from the USA is due today at 16:00 (GMT+2), and a slight decrease of the outlook is expected. The data on the reserves of petrochemicals (with an expected drop in the volumes of crude oil and gasoline) are due at 16:30 (GMT+2).
The main forecast for the next two days is the weakening of the pair.

Support and resistance
Support levels: 0.7530, 0.7490, 0.7440.
Resistance levels: 0.7570, 0.7630, 0.7680.

Trading tips
Short positions may be opened at the market price with targets at 0.7530, 0.7490 and stop-loss at 0.7590.
Alternatively, long positions may be opened from the level of 0.7570 with targets at 0.7630, 0.7680 and stop-loss at 0.7510.



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