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Forex Analysis by LiteForex

Brent Crude Oil: awaiting the publication of monthly OPEC report

Current trend

The prices for benchmark Brent crude oil continue their correctional movement, trading around $68.30 per barrel. The quotes stopped their global growth and consolidated within a comfortable range.

Investors are monitoring the situation in Asia, where a new outbreak of the coronavirus pandemic has been recorded. It is still unknown to what extent this situation may affect demand. OPEC is to publish its monthly report today and the situation may become clearer. Also, the US Department of Energy will present its short-term outlook on the energy market, and traders will be able to assess the impact of recent cyberattacks on the US fuel infrastructure.

As for the situation in the global arbitrage position of the spread between Brent Crude Oil and WTI Crude Oil, then everything is quite calm, and the price difference has been kept in the range of $3.5–4 for a long time, which indicates the reluctance of large players to do something. Global investors are satisfied with the current quotes of the asset and the stable range of weekly volatility of 4–6%.

Support and resistance

Locally, the asset is growing smoothly within a fairly wide channel. Technical indicators are in a state of uncertainty: fast EMAs of the Alligator indicator intertwined with the signal line and the histogram of the AO oscillator trades close to the transition level.

Resistance levels: 68.90, 70.30.
Support levels: 67.70, 66.30.

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Mastercard Inc.: wave analysis

The price may grow.

On the daily chart, the fifth wave of the higher level (5) develops, within which the wave 3 of (5) forms. Now, the first wave of the lower level i of 3 has developed, and a local correction is forming as the wave ii of 3. If the assumption is correct, after the end of the correction, the price will grow to the levels of 450.00–500.00. In this scenario, critical stop loss level is 313.00.

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XAG/USD: high bond yields inhibit growth

Current trend

Silver contract price is correcting downwards, trading at 27.00 and continuing to trade in a global uptrend.

Investors watched the auction for the placement of 10-year US Treasuries at a rate of 1.684%. Such high yield has a negative effect on the price of silver and gold, but it could not exceed the psychological level of 1.700%, which gives hope for a slowdown in the growth of the debt market.

The XAG/USD pair is supported by a significant increase in inflation in the US, the expectation of which was one of the main reasons for the strengthening of precious metals in April and May. These assets have always been ideal hedging instruments to protect capital from inflationary risks, so higher rates from the US Fed are needed for their growth. Annual inflation in the country accelerated to 2.6%, which means an increased likelihood of an early change in monetary policy by the American regulator.

Support and resistance

On the global chart of the asset, the price continues to grow within a narrow ascending channel. Technical indicators maintain the buy signal: the range of EMA fluctuations on the Alligator indicator continues to expand, and the histogram of the AO oscillator is high in the purchase zone.

Resistance levels: 27.61, 29.00.
Support levels: 26.47, 24.93.

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Altria Group Inc.: wave analysis

The price may grow.

On the daily chart, the first wave of the higher level (1) develops, within which the wave 3 of (1) forms. Now, the third wave of the lower level iii of 3 has formed, and a local correction has ended as the fourth wave iv of 3. If the assumption is correct, the price will grow within the wave v of 3 to the levels of 55.00–57.50. In this scenario, critical stop loss level is 44.71.

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XAU/USD: growth in supply pushes quotes up

Current trend

Gold quotes continue corrective growth, trading at $1,855 per ounce. After the lifting of quarantine restrictions, the global demand for metals went up sharply, provoking price growth.

At the moment, industry leaders are beginning to actively recover from the consequences of the pandemic, increasing gold production, which will undoubtedly affect the price of the precious metal. Yesterday, the South African statistics service published data on mining for March this year. According to official data, the figure rose by 21.3%, the growth of platinum ore production was 68.6%, and of gold – 10.5%. However, the volume of sales of the asset rose much higher, at 61.3%.

Thus, the strengthening of world metal production and the current negative trend in the US dollar contribute to the positive dynamics of the instrument.

Support and resistance

On the global chart, the price reaches the resistance line of the global downtrend and its breakout will allow the rate to reach 2000.0 by the end of May. Technical indicators keep a global buy signal: the fluctuation range of the Alligator EMA is quite wide, and the histogram of the AO oscillator is trading in the positive zone.

Resistance levels: 1871.0, 1955.0.
Support levels: 1815.0, 1763.0.

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EUR/USD: investors await signals from the FOMC

Current trend

The EUR/USD pair grows, trading around the level if 1.2169 in anticipation of the publication of data on the Q1 EU GDP.

Although the pace of vaccination in the EU countries has accelerated significantly, the economy continues to recover extremely slowly. Analysts expect the indicator to remain unchanged at –1.8% YoY and –0.6% QoQ. Italian consumer prices were released yesterday, rising by 0.4% for April, slightly above 0.3% for March. The harmonized consumer price index for the same period slowed down to 0.9% from 1.8% for March.

USD is trading at rather low volumes in anticipation of the publication of the minutes of the Federal Open Market Committee (FOMC), which will take place tomorrow. Despite the numerous statements by experts that the US Federal Reserve does not need to raise interest rates right now, it has happened more than once that the regulator acted unexpectedly. Investors prefer to wait for hints from the department and are in no hurry to open positions with the American currency.

Support and resistance

Locally, the price continues its corrective growth. Technical indicators keep a buy signal: the fluctuation range of the EMA on the Alligator indicator is wide enough, and the histogram of the AO oscillator moves in the buy zone, forming new upward bars.

Resistance levels: 1.2182, 1.2260.
Support levels: 1.2141, 1.2060.

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Brent Crude Oil: pending decisions on the Iranian nuclear deal

Current trend

Brent crude prices continue their correctional movement, trading at 68.00 after another attempt to consolidate above the key level of 70.00.

Analysts point to possible significant progress in negotiations between the United States and Iran on the renewal of the nuclear deal. If the parties are able to agree, and the US authorities will not extend the sanctions against Tehran, this will allow Iran to significantly increase the supply of cheap "black gold" to the world market.

Yesterday, the American Petroleum Institute (API) released data on weekly stocks, which increased by 0.620M barrels, which is lower than the expected increase of 1.680M. Today, the Energy Information Administration (EIA) of the US Department of Energy will publish its report, which is predicted to show an increase in reserves of 1.623M barrels. However, if the actual data demonstrate a decrease in the indicator, the local trend in the asset may again change to an uptrend.

Support and resistance

On the local chart, the asset continues to trade close to the global high, forming a sideways channel with the boundaries of 70.00–66.50.

Technical indicators are in a state of uncertainty: the fast EMAs of the Alligator indicator are below the signal line, and the histogram of the AO oscillator has moved into the sell zone, forming the first bar below the zero level.

Resistance levels: 70.20, 74.00.
Support levels: 66.70, 63.00.

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NZD/USD: the likelihood of a decline in the USD increased

Current trend

The NZD/USD pair corrects and is currently trading near the level of 0.7181, trying to consolidate within an uptrend.

The latest statistics from New Zealand did not affect the price significantly. Thus, the Q1 producer purchase price index increased by 2.1%, while a quarter earlier the growth was only 0.1%. The selling price index increased by 1.2%, which was higher than the previous value of 0.5%. The Reserve Bank of New Zealand's net debt may fall to 34.00%, up from 39.70% in the last analyst forecast.

Although the publication of the US Federal Reserve Open Market Committee (FOMC) Meeting Minutes did not give clear hints of further actions of the regulator on monetary policy, the statements of several officials forced investors and analysts to take even more seriously a possible change of course at the next meetings. Inflation is accelerating and the authorities need to take measures to contain it. The debt market reacted sharply to the increased likelihood of rate hikes. The yield on the key 10-year US Treasuries reached 1.680%, while yesterday morning it was 1.641%. An increase in yield is a negative signal for USD, which is now on the verge of a new cycle of decline.

Support and resistance

The price moves within the local upward correction. Technical indicators keep a poor buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is in the buy zone.

Support levels: 0.7131, 0.6950.
Resistance levels: 0.7257, 0.7443.

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USD/JPY: positive reports support the yen

Current trend

The USD/JPY pair is correcting around the level of 108.71.

The Japanese currency began to rally after the country's Ministry of Health announced approval for the use of two vaccines: from the companies Moderna and AstraZeneca. According to the Ministry of Health, the Moderna vaccine will begin to be used as early as May 24 but the use of the AstraZeneca vaccine has been postponed for now. Also, the instrument is positively influenced by macroeconomic statistics. Japan's nationwide core consumer price index for April was –0.1% YoY, better than analysts’ expectations of –0.2%. The consumer price index reached –0.4%, while the Service PMI is at the level of 45.7 points.

The key data for the American currency was an unexpected reduction in the number of Initial Jobless Claims, amounting to 444K, which is less than the expected 450K. The average number of applications over the past 4 weeks also decreased to 504.75K against 535.25K a week earlier. However, the positive was short-lived, and data on the manufacturing activity index from the Federal Reserve Bank of Philadelphia for May stopped the upward trend. The indicator dropped to 31.5 points from 50.2 points a month earlier.

Support and resistance

The instrument moves within an upward corrective trend, forming an upward channel, which can subsequently transform into a Flag pattern. Technical indicators are in a state of uncertainty: fast EMAs on the Alligator indicator almost crossed with the signal line, and the histogram of the AO oscillator approached the transition level.

Resistance levels: 109.33, 110.75.
Support levels: 108.35, 107.48.

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WTI Crude Oil: wave analysis

The price may fall.

On the daily chart, a downward correction of the higher level developed as the wave B, and the upward wave C forms, within which the first wave 1 of (1) of C 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, within which the wave (b) of iv has ended, and the wave (c) of iv is developing. If the assumption is correct, the price will fall to the levels of 57.06–54.69. In this scenario, critical stop loss level is 66.82.

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Morning Market Review

EUR/USD

EUR is showing moderate gains against USD, developing the "bullish" momentum that formed the day before, when EUR managed to recover in a thin market. USD remains under pressure against the backdrop of inaction by the US Fed and actively growing inflation in the country. The regulator has repeatedly explained the rapid rise in prices only by temporary phenomena, but the market is beginning to doubt this. Macroeconomic statistics from the US published last Friday supported USD position, but investors are already confident in the recovery of the national economy, so the data did not have any long-term effect. Today, market participants expect the publication of statistics from Germany, which will help assess the prospects for the recovery of the largest economy in Europe.

GBP/USD

GBP is strengthening against USD during today's Asian session, trying to recover from the decline at the end of last week and the timid start of trading on Monday. Market activity remains subdued, while investors expect new drivers to emerge. Macroeconomic statistics from the US released last Friday provided only short-term support to USD, while traders are somewhat disappointed by the vague prospects of the US Fed's monetary policy, which prefers to take a wait-and-see attitude. Today investors will be focused on statistics on the US house price index from S&P/Case-Shiller for March, as well as the April dynamics of new home sales. In addition, a speech by the representative of the Bank of England Silvana Tenreiro is expected.

AUD/USD

AUD is showing ambiguous dynamics against USD during today's Asian session, testing 0.7760 for a breakout. The instrument's positions are strengthening against the backdrop of corrective sentiment for USD, as well as due to the stable positive dynamics in the commodity markets, including the oil market. The minutes of the US Fed meeting released last week underscored the wait-and-see position of the American regulator, which does not seek to curtail the measures to stimulate the economy. According to the Fed Governor Jerome Powell, the national economy will need several more months to reach a plateau, where it would be appropriate to discuss the reduction of support programs. This week, investors expect the publication of American statistics on the dynamics of personal income and spending, which will help assess the current inflationary processes within the economy.

USD/JPY

USD is trading with ambiguous dynamics against JPY in today's Asian session, consolidating near 108.70. Yesterday's trading was marked by a slight decrease in the rate of USD; however, in general, the market sentiment remained practically unchanged. Investors ignore the positive macroeconomic statistics from the US and are focused on the future policy of the US Fed, which refuses to recognize rising inflation as a threat to the national economic recovery. The market also reacted poorly to the speech of the head of the Bank of Japan Haruhiko Kuroda on Monday. The head of the Japanese regulator touched upon the global recovery of the world economy after the coronavirus crisis, warning that the stabilization process would be heterogeneous and could lead to increased economic inequality.

XAU/USD

Gold prices began to decline in trading this morning session, retreating from the highs since the beginning of the year, updated last week. The "bearish" trend is facilitated by technical factors, while the fundamental picture does not change much. Monday trading was characterized by flat dynamics; however, gold received support from the weakening positions of USD and a further decrease in the yield of US Treasury bonds. Additional support for the instrument is still provided by the extremely soft position of the US Fed, which does not consider the possibility of tightening monetary policy in the next few months.
 
Mastercard Inc.: wave analysis

The price may grow.

On the daily chart, the fifth wave of the higher level (5) develops, within which the wave 3 of (5) forms. Now, the third wave of the lower level iii of 3 is developing, within which the wave (ii) of iii has ended, and the formation of the wave (iii) of iii is beginning. If the assumption is correct, the price will grow to the levels of 450.00–500.00. In this scenario, critical stop loss level is 313.00.

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XAU/USD: gold updated local annual highs

Current trend

Gold prices are showing ambiguous dynamics during the Asian session, consolidating at 1900.00.

The day before, the instrument made another attempt to grow, and renewed local highs since the beginning of the year, having received support from the weak positions of USD and a decrease in the yield of US Treasury bonds. However, XAU/USD failed to consolidate at the new levels, and by the close of the daytime session, the pair had lost all the previously gained advantage. Investors closed part of their long positions on the instrument before the publication of updated data on the dynamics of US GDP for Q1 2021 and statistics on the dynamics of orders for durable goods. It is assumed that strong macroeconomic indicators may put additional pressure on the US Fed in the issue of curtailing support measures for the national economy.

Support and resistance

Bollinger Bands in D1 chart show stable growth. The price range is expanding, freeing a path to new local highs since the beginning of the year for the "bulls". MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic has been showing fluctuating dynamics near its highs for a long time, reflecting strongly overbought instrument in the ultra-short term.

The appearance of correctional decline is possible in the near future. New positions can be opened only after receiving additional signals from technical indicators.

Resistance levels: 1900.00, 1920.82, 1935.00, 1952.53.

Support levels: 1875.09, 1863.34, 1850.00, 1830.00.

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USD/CAD: the pair ends the week with flat dynamics

Current trend

Today during the Asian session, the USD/CAD pair is growing slightly, compensating for the decline yesterday, which prevented the formation of a corrective uptrend in the ultra-short term.

Yesterday’s US positive macroeconomic statistics on Initial Jobless Claims supported the "bullish" sentiment for the dollar; however, USD growth was still limited by the unclear prospects of the US FRS monetary policy. Although several bank representatives admitted that they are ready to discuss curtailing stimulus measures, the department does not plan to rush with them.

On Friday, the market expects the publication of a block of US macroeconomic statistics on the dynamics of personal income and spending for April, which may hint at the future policy of the American regulator.

Support and resistance

On the daily chart, Bollinger Bands reverse into a horizontal plane. The price range practically does not change but it remains spacious enough for the current level of activity for the instrument. The MACD indicator grows, maintaining a relatively strong buy signal (the histogram is above the signal line). Stochastic demonstrates similar dynamics, being located approximately in the center of its working area. However, its current readings are slightly correlated with the real dynamics in the market.

Technical indicators do not contradict the possible resumption of the correctional growth of the US currency soon.

Resistance levels: 1.2143, 1.2200, 1.2245, 1.2300.

Support levels: 1.2060, 1.2000, 1.1930.

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EUR/USD: wave analysis

The pair may fall.

On the daily chart, the first wave of the higher level 1 of (3) developed, and a downward correction forms as the second wave 2 of (3). Now, the wave a of 2 has formed, and an upward correction of the lower level has developed as the wave b of 2, within which the wave (c) of b has formed. If the assumption is correct, the pair will fall to the levels of 1.1700–1.1601. In this scenario, critical stop loss level is 1.2350.

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PayPal Holdings Inc.: wave analysis

The price may grow.

On the daily chart, the third wave of the higher level (3) develops, within which the wave 3 of (3) formed, and a downward correction developed as the wave 4 of (3). Now, the wave 5 of (3) is developing, within which the wave iv of 5 of the lower level has formed, and the development of the wave v of 5 has started. If the assumption is correct, the price will grow to the levels of 309.59–330.00. In this scenario, critical stop loss level is 234.89.

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GBP/USD: pound retreating from record highs

Current trend

The British pound shows ambiguous dynamics against the US dollar during the Asian session on June 2, consolidating near the level of 1.4150.

Yesterday, investors slightly corrected their long positions on the instrument, which was due to the strengthening of the USD positions against the background of the publication of positive US macroeconomic statistics. Thus, the Markit Manufacturing PMI for May rose from 61.5 to 62.1 points, which was better than the market's neutral forecasts. ISM Manufacturing PMI strengthened from 60.7 to 61.2 points, while analysts did not expect any changes in this case either. In turn, UK Manufacturing PMI for May fell for the first time in a long time, decreasing from 66.1 to 65.6 points.

On Wednesday, British investors await the publication of a block of statistics on consumer lending for April. Experts' forecasts are very optimistic and suggest that consumers continue to increase their activity as the epidemiological situation in the country improves.

Support and resistance

On the daily chart, Bollinger Bands are growing slightly. The price range narrows, reflecting the emergence of ambiguous dynamics in the short term. MACD falls, maintaining a fairly strong sell signal (the histogram is below the signal line). Stochastic reversed at the level of 80 and maintains a strong downward trend, signaling in favor of the development of "bearish" dynamics in the ultra-short term.

Resistance levels: 1.4200, 1.4247, 1.4300.
Support levels: 1.4135, 1.4100, 1.4050, 1.4000.

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American Express Co.: wave analysis

The price may grow.

On the daily chart, the fifth wave of the higher level (5) develops, within which the wave 3 of (5) forms. Now, the fifth wave of the lower level v of 3 is developing. If the assumption is correct, the price will grow to the levels of 180.00–190.00. In this scenario, critical stop loss level is 150.80.

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USD/CAD: the instrument shows an upward trend

Current trend

Today, during the Asian session, the USD/CAD pair is showing an upward trend, developing a strong "bullish" momentum, formed yesterday, when the encouraging May ADP report on US private sector employment came out to the market. The statistics reflected an increase of 978K jobs, which was significantly better than market expectations of 650K. The data for the last month were revised downward from the previous 742K to 654K.

On Friday, traders expect the publication of the final report on the US labor market for May, as well as a speech by the head of the US Federal Reserve Jerome Powell. It is worth noting that the official will speak before the publication of the Ministry of Labor, and therefore one should not expect a quick response from the regulator.

Canada will also show its report on the labor market today but analysts' expectations here are much more modest. It is assumed that the unemployment rate for May will rise from 8.1% to 8.2%, while the change in the number of employees will remain in the red zone at -20K.

Support and resistance

On the daily chart, Bollinger bands are moving flat. The price range widens slightly from above, hindering a more confident uptrend in the short term. The MACD indicator is growing, maintaining a strong buy signal (the histogram is above the signal line). Stochastic demonstrates similar dynamics but that the indicator line is approaching its highs rather quickly.

Resistance levels: 1.2143, 1.2200, 1.2245, 1.2300.

Support levels: 1.2060, 1.2000, 1.1930.

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Walt Disney Co.: wave analysis

The price may grow.

On the daily chart, a downward correction of the higher level developed as the fourth wave (4), and the fifth wave (5) develops. Now, the third wave of the lower level 3 of (5) has formed, a downward correction has ended as the wave 4 of (5), and the development of the wave 5 of (5) has started. If the assumption is correct, the price will grow to the levels of 202.98–220.00. In this scenario, critical stop loss level is 166.66.

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