Forex Analysis by LiteForex

[MikhailLF]

Brent Crude Oil: wave analysis

The price may grow.

On the daily chart, a downward correction of the higher level developed as the wave B, and the formation of the upward wave C started, within which the first wave 1 of (1) of C develops. Now, the third wave of the lower level iii of 1 is forming, within which the wave (ii) of iii has ended. If the assumption is correct, the price will grow to the levels of 59.92–71.40. In this scenario, critical stop loss level is 46.60.

 

[MikhailLF]

Morning Market Review

EUR/USD

EUR shows flat dynamics of trading against USD during today's Asian session, consolidating after an active decline of the instrument last Friday. EUR ended the session on December 4 in the red, responding to technical factors, while USD remained under pressure after the publication of weak data on employment in the country. The November labor market report reflected an increase in Nonfarm Payrolls by only 245K after an increase of 610K in October. Investors expected a slowdown in the dynamics of the indicator, but hoped for 469K new jobs. At the same time, the Unemployment Rate fell from 6.9% to 6.7%, and Average Hourly Earnings in November increased from +0.1% MoM to +0.3% MoM, which also turned out to be better than the neutral market forecasts. Today, traders expect publication of data on industrial production in Germany for October. Interesting statistics from the US will appear only on Thursday, and before that investors will actively discuss the prospects for further easing of monetary policy from the Fed in the light of the published report on the US labor market.

GBP/USD

GBP is showing ambiguous trading dynamics against USD in today's Asian session, consolidating near 1.3400. The instrument managed to update record highs since May 2018 last week; however, GBP failed to consolidate at new levels, since the technical factors of the correction were very strong. The trading of the new week starts quite carefully. Some support for GBP is provided by weak data from the US, which appeared at the end of last week, but there are still few fundamental growth factors. It became known on Saturday that the UK and the EU again failed to agree on a trade agreement within the framework of the Brexit transition period, and therefore the negotiators will continue joint meetings this week. Meanwhile, British Prime Minister Boris Johnson and the European Commission President Ursula von der Leyen announced significant progress in the negotiations; however, the market got used to these statements.

NZD/USD

NZD is trading ambiguously against USD in today's Asian session, preparing to test the level of 0.7000 for a breakdown again. The instrument showed an active decline last Friday, retreating from the record highs, updated the day before. The reason for the development of the "bearish" trend were technical factors, while the long-awaited report on the US labor market, released last Friday, disappointed investors with a slowdown in the growth of Nonfarm Payrolls (+245K against +610K in October). The Chinese statistics provide moderate support to the instrument today. China's Exports in November showed an impressive 21.1% YoY growth after rising only by 11.4% YoY in October. Forecasts suggested an increase of 12% YoY only. Imports over the same period, on the contrary, slowed down from +4.7% YoY to +4.5% YoY, which led to a noticeable increase in the trade surplus from USD 58.44B to 75.42B, which is significantly ahead of forecasts investors at USD 53.5B.

USD/JPY

USD is trading with a downtrend against JPY during today's Asian session, leveling the growth of the instrument last Friday, when the "bulls" still managed to recover, despite the publication of not very successful macroeconomic statistics from the US. At the beginning of the week, investors are returning to strategies that are still characterized by high demand for "safe" assets, given the tense epidemiological situation in the world. Japanese investors expect the publication of statistics from Japan tomorrow. Among other things, traders will be interested in the updated data on the dynamics of Japan's GDP for Q3 2020. In addition, Japan will release the dynamics of changes in Labor Cash Earnings and Household Spending for October.

XAU/USD

Gold prices are consolidating in today's Asian session, being located near the level of 1840.00 and local highs since November 23, updated at the end of the last trading week. Technical factors contributed to the decline in the instrument last Friday, while fundamentally USD remains under pressure after the publication of an uncertain report on the US labor market for November and in anticipation of new support measures for the American economy. In turn, the optimistic news regarding the development of vaccines against the coronavirus makes traders keep some of the risky positions, and the stock market is kept near record highs. Since December 7, Great Britain is one of the first in the world to begin a large-scale vaccination of the population (starting with risk groups) with a vaccine from Pfizer and BioNTech.

 

[MikhailLF]

EUR/USD: wave analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) develops, within which the wave v of 1 forms. Now, the third wave of the lower level (iii) of v is developing, within which the wave iii of (iii) is forming, and the local correction iv of (iii) is ending. If the assumption is correct, the pair will grow to the levels of 1.2300–1.2400. In this scenario, critical stop loss level is 1.2037.

 

[MikhailLF]

USD/CAD: wave analysis

The pair may fall.

On the 4-hour chart, a correction of the higher level developed as the wave (2), and the formation of the downward wave (3) started. Now, the third wave of the lower level iii of 1 is developing, within which the wave (iii) of iii has formed, and the local correction (iv) of iii is developing. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 1.2700–1.2600. In this scenario, critical stop loss level is 1.2906.

 

[MikhailLF]

NZD/USD: wave analysis

The pair is in a correction and may grow.

On the daily chart, the upward wave (А) of B develops as a momentum, within which the wave 5 of (A) forms. Now, the third wave of the lower level iii of 5 has formed, and a local correction is developing as the fourth wave iv of 5. If the assumption is correct, after the end of the correction, the pair will grow to the levels of 0.7177–0.7350. In this scenario, critical stop loss level is 0.6951.

 

[MikhailLF]

The pair may grow.

On the daily chart, the third wave of the higher level (3) formed, and a downward correction formed as the wave (4). Now, the development of the fifth wave (5) has started, within which the first entry wave of the lower level i of 1 of (5) has formed, and the wave ii of 1 is ending. If the assumption is correct, the pair will grow to the levels of 1965.33–2013.38. In this scenario, critical stop loss level is 1762.36.

 

[MikhailLF]

Brent Crude Oil: prices are recovering

Current trend

Today, during the Asian session, oil prices are showing upward dynamics, trying to consolidate above the psychological level of $50 per barrel. The instrument dropped slightly at the end of the last trading week, however, it was caused by technical factors.

The quotes are strongly supported by optimism regarding vaccines against COVID-19. Last weekend, it became known that the US Food and Drug Administration (FDA) noted the advantage of the vaccine from Pfizer and approved its use for the population over 16 years old. A vaccination campaign is expected to start soon in the US, which will strengthen the market's confidence that the next year can be survived without new lockdowns.

Meanwhile, Baker Hughes' report on active oil platforms in the US, released on Friday, again reflected a solid increase from 246 to 258 units.

Support and resistance

On the daily chart, Bollinger Bands reverse into a horizontal plane. The price range is expanding from above but not as fast as the “bullish” dynamics develop. The MACD indicator is growing, maintaining a poor buy signal (the histogram is above the signal line). Stochastic, without reaching the overbought area, reversed into a horizontal plane near the level of 80, indicating the ambiguous nature of the last days' trading.

The current readings of technical indicators do not contradict the further development of upward dynamics.

Resistance levels: 51.07, 52.00, 53.00.

Support levels: 50.00, 49.07, 48.40, 47.50.

 

[MikhailLF]

XAG/USD: wave analysis

The pair may fall.

On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward correction develops as the wave 2 of (3). Now, the wave c of 2 is forming, within which a local correction has ended as the fourth wave of the lower level (iv) of c, and the development of the wave (v) of c has started. If the assumption is correct, the price will fall to the levels of 21.54–20.52. In this scenario, critical stop loss level is 24.84.

 

[MikhailLF]

EUR/USD: euro is near record highs

Current trend

Today during the Asian session, the EUR/USD pair is growing slightly, gradually returning to the previous record highs around 1.2174.

USD weakens amid optimism about COVID-19 vaccinations, actively starting around the world. The process may begin in the US soon, as the Food and Drug Administration (FDA) recently approved the use of Pfizer and BioNTech vaccines. Yesterday, it became known that the FDA is preparing to publish the results of the third phase of clinical trials of the vaccine from Moderna, which can also be interpreted as the first step towards its approval for emergency use in the country. Meanwhile, the epidemiological situation in the US remains difficult. Earlier, the mayor of New York expressed the idea of returning the city to a full-fledged quarantine in response to a sharp increase in the case number.

On Wednesday, European investors are focused on the block of macroeconomic statistics on business activity in Germany and the EU. Analysts predict the data to be poor, so there is no expectation of noticeable growth in the single currency.

Support and resistance

On the daily chart, Bollinger bands actively grow. The price range narrows, indicating the emergence of flat dynamics in the short term. MACD grows but keeps a sell signal (the histogram is below the signal line). Stochastic grows but rapidly approaches its highs, indicating that EUR may become overbought in the ultra-short term.

Resistance levels: 1.2200, 1.2243, 1.2270, 1.2300.
Support levels: 1.2150, 1.2087, 1.2039, 1.2000.

 

[MikhailLF]

USD/CAD: wave analysis

The pair is in a correction, a fall is possible.

On the 4-hour chart, a correction of the higher level developed as the wave (2), and the downward wave (3) forms, within which the wave 1 of (3) develops. Now, the third wave of the lower level iii of 1 has formed, and a local correction is developing as the wave iv of 1. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 1.2600–1.2500. In this scenario, critical stop loss level is 1.2881.

 

[MikhailLF]

WTI Crude Oil: wave analysis

The price may grow.

On the daily chart, a downward correction of the higher level developed as the wave B, and the formation of the upward wave C started, within which the first wave 1 of (1) of C develops. Now, the third wave of the lower level iii of 1 is forming, within which the wave (iii) of iii is developing. If the assumption is correct, the price will grow to the levels of 65.50–76.30. In this scenario, critical stop loss level is 43.50.

 

[MikhailLF]

EUR/USD: wave analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) develops, within which the wave v of 1 forms. Now, the third wave of the lower level (iii) of v of 1 has developed, and a local correction is forming as the wave (iv) of v of 1. If the assumption is correct, after the end of the correction, the pair will grow to the levels of 1.2340–1.2400. In this scenario, critical stop loss level is 1.2069.

 

[MikhailLF]

USD/CAD: wave analysis

The pair is in a correction, a fall is possible.

On the daily chart, the downward wave of the higher level (C) of 4 develops, within which the fifth wave 5 of (C) forms. Now, the third wave of the lower level iii of 5 is developing, within which the local correction (iv) of iii is ending. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 1.2600–1.2500. In this scenario, critical stop loss level is 1.3179.

 

[MikhailLF]

XAG/USD: silver rises again

Current trend

Silver contract prices began to recover again, trading at $25.7 an ounce.

In December, world prices for precious metals are quite stable and fully reflect the behavior of investors in the markets. In this regard, it is quite convenient to track the future possible movement of an asset by comparing it with the quotes of the VIX volatility index.

Historically, as the VIX rises, tensions rise in the markets, and investors start to actively move into the assets of the metal group, using them as shelter assets. The VIX has been declining since last Friday but yesterday, there was a major reversal, and the index rose sharply from 22.37 points to the current level of 23.31 points. Accordingly, soon, the strengthening of silver quotes is expected, especially since the long weekend is coming.

Support and resistance

On the local chart of the asset, the price moves within the local ascending channel. Inside it, the instrument has reached the support line and is forming a reversal. Fast EMAs on the Alligator indicator crossed the signal one upwards, and the AO oscillator histogram is in the sell zone but very close to the transition level.

Resistance levels: 26.10, 27.40.
Support levels: 25.10, 23.60.

 

[MikhailLF]

EUR/USD: wave analysis

The pair is in a correction and may grow.

On the 4-hour chart, the first wave of the higher level 1 of (3) develops, within which a downward correction ended as the wave iv of 1, and the fifth wave v of 1 develops. Now, the third wave of the lower level (iii) of v has formed, and a local correction is developing as the fourth wave (iv) of v. If the assumption is correct, after the end of the correction, the pair will grow to the levels of 1.2340–1.2400. In this scenario, critical stop loss level is 1.2074.

 

[MikhailLF]

WTI Crude Oil: the price is consolidating

Current trend

The price of WTI crude oil is trading sideways, being at the level of 47.82.

Oil quotes are traded with increased volatility. The external information background has a significant impact on the choice of investors. Thus, the situation with the beginning of vaccination in many countries is undoubtedly a positive factor for the asset. However, the greatest expectations are associated with the OPEC+ meeting, which will be held on January 4. The cartel members plan to consider the possibility of increasing quotas for oil production by 500K barrels per day.

The past week has confirmed the increased interest in contracts from investors. According to the Commodity Futures Trading Commission, the number of net speculative positions in crude oil for the first time since August reached 525.7K, which exceeds the 514.6K shown a week earlier.

Support and resistance

On the local chart of the asset, the price continues to trade within the upward channel and is currently consolidating near the key level of 48.00. Technical indicators are in a state of uncertainty. The fast EMAs of the Alligator indicator have crossed with the signal line, and the histogram of the AO oscillator is in the positive zone.

Resistance levels: 49.00, 53.00.
Support levels: 46.00, 42.50.

 

[MikhailLF]

Brent Crude Oil: waiting for OPEC decision

Current trend

Today, during the Asian session, oil prices grow slightly, testing the level of 51.00 for a breakout.

Yesterday, quotes decreased steadily, responding to the complication of the epidemiological situation in Europe, which correlates poorly with the market's plans to gradually increase energy demand. Also, investors fear that OPEC+ will decide to start a gradual increase in oil production. However, yesterday's meeting of the cartel did not lead to any specific decision, and it was decided to continue negotiations on January 5. Most of the OPEC+ countries are in favor of maintaining the current restrictions on production, while the UAE and Russia believe that oil production should be gradually increased.

On Tuesday, investors await the publication of a report from the American Petroleum Institute (API) on oil reserves for the week of January 1. The previous report showed a steady decline in inventories by 4.875 million barrels.

Support and resistance

On the daily chart, Bollinger Bands reverse into a horizontal plane. The price range narrows, reflecting the ambiguous trading in the short term. MACD falls, maintaining a relatively strong sell signal (the histogram is below the signal line). Stochastic falls but is rapidly approaching the lows, signaling that the instrument may become oversold in the super short term.

It is better to keep the current short positions until the signals from technical indicators are clarified.

Resistance levels: 51.07, 52.00, 52.65, 53.26.
Support levels: 50.00, 49.07, 48.40, 47.50.

 

[MikhailLF]

XAG/USD: the prices are consolidated

Current trend

Silver prices are showing a moderate decline on Wednesday, retreating from local highs, updated the day before. The instrument is still supported by the weak USD, which is waiting for new drivers at the market. US investors are watching Georgia's second round of Senate elections. If at least one Republican candidate wins, the Senate will remain with Mitch McConnell, which will allow Republicans to block the controversial initiatives of Democrat Joe Biden in the next two years. If both positions go to the Democrats, then the final word will remain with US Vice President Kamala Harris.

In turn, the demand for silver is supported against the background of a worsening epidemiological situation in Europe, which threatens with new restrictions. The UK has recently decided on a third full quarantine, since for several weeks the incidence statistics have been setting new records. The speed with which a new strain of coronavirus is being detected in countries around the world is also worrying.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range is narrowing, pointing at the ambiguous nature of trading in the ultra-short term. MACD indicator is growing preserving a rather stable buy signal (located above the signal line). Stochastic keeps an upward direction but is approaching its highs, which reflects the overbought silver in the ultra-short term.

Existing long positions should be kept until technical indicators are clarified.

Resistance levels: 27.65, 28.00, 28.50.
Support levels: 27.14, 26.74, 26.27, 25.97.

 

[MikhailLF]

XAU/USD: gold quotes are correcting

Current trend

Gold quotes are consolidating around 1919.00.

As expected by most experts, the price of the precious metal has shown significant growth since the beginning of the year, and despite yesterday's decline, it remains fairly high. Undoubtedly, the strengthening of quotes is directly related to the situation around the coronavirus pandemic: the recent introduction of additional restrictions in a number of countries have pushed investors to avert risk and seek "safe havens".

However, the transition to gold was not that significant. Since mid-December, the precious metal has a new competitor, Bitcoin. It was cryptocurrency that some institutional investors began to consider as a more reliable means of fighting inflation. Bitcoin is growing, and not only preserves assets but also brings very high profitability, which makes some investors, who have always kept their funds in gold, to make a short-term choice in favor of cryptocurrency.

Support and resistance

Quotes, which left the global descending channel yesterday, attempted to test the resistance line, after which growth may continue. Technical indicators continue to show a buy signal. Fast EMAs on the Alligator indicator are higher than the signal line, and the AO oscillator histogram is trading in the positive zone.

Resistance levels: 1951.0, 2067.0
Support levels: 1886.0, 1774.0.

 

[MikhailLF]

EUR/USD: EUR is corrected

Current trend

EUR is declining insignificantly against USD today, developing the "bearish" signal that formed the day before.

Noticeable pressure on EUR was exerted yesterday by macroeconomic statistics from the eurozone, which came out worse than expected. The volume of Retail Sales in November fell by 6.1% MoM after rising by 1.4% MoM in the previous month. Analysts had expected negative dynamics, but counted on a decrease by 3.4% MoM. On an annualized basis, sales fell by 2.9% YoY, while the forecasts were for an increase by 0.8% YoY. The data on consumer inflation were also negative. In December, the Consumer Price Index fell by 0.3% YoY, repeating November dynamics. Analysts had expected a slight improvement in the indicator to –0.2% YoY.

Today, European investors are focused on the statistics on Industrial Production from Germany for November, as well as on the Unemployment Rate in the eurozone for the same period.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is trying to consolidate, while remaining spacious enough for the current activity level in the market. MACD is going down having formed a new sell signal (located below the signal line). Stochastic is showing similar dynamics, signaling the presence of significant "bearish" potential in the ultra-short term.

Existing short positions should be kept in the short and/or ultra-short term until the signals from technical indicators clear up.

Resistance levels: 1.2271, 1.2309, 1.2348, 1.2400.
Support levels: 1.2234, 1.2200, 1.2150, 1.2087.