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KeyToMarketsUK

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EURUSD: Counter trend was ended at the 80.0% fib reaction

March PMI data for EA and US
US Non-farm payroll will be the key driver
EA March PMI data and EA inflation are the releases to watch this short week. In addition, March US non-farm payrolls is the key data risk event due this Friday. In the 1Q 2018 EURUSD major rose by 2.8% compared to 1.35% posted in 1Q 2017.

Data review:

March Germany CPI rise by 0.4% on the previous month

Data preview:

EA inflation: We expect EA March inflation to increase to 1.4% and core CPI to increase to 1.1%

NFP preview: The EUR near-term strength will cast on the US data outcome, particularly market participants are focusing on the wage growth story and we expect the US payrolls to have increased 190k.


TECHNICAL OVERVIEW​

We believe in the near-term the USD rebound work will be the key risk to the EUR strength. The recent countertrend was rejected at the 80.0% fib reaction but held the ascending trendline. Immediate supports are found at 1.2280 below this 1.2240 earlier higher swing exists.

The price needs to break the 1.2240 the weekly pivotal, to forecast a meaningful reverse in the near term to 1.2200 and 1.2150. The selling practice will accelerate below 1.2150 could open to 1.2050 -1.2000.

Forecast: The major continues to consolidate between 1.2550 and 1.2000 in the 2Q 2018.


View: Focus remains on 1.2240

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KeyToMarketsUK

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KTM FX Daily: AUDUSD and AUDCAD technical overview

Asia data review:

  • Australia total dwellings fell by 6.2 percent in February
  • Australia Retail turnover rises 0.6 percent in February

In the European session, focus today will be on UK Construction PMI and EA flash inflation data. Market is also looking ahead to ADP non-farm employment and ISM non-manufacturing PMI.

March US non-farm payrolls are the key data risk event due this Friday. We expect the US payrolls to have increased 190k.

AUDUSD: The cross has been trading in a tight range between 0.7640-0.7700. Ahead of the Aussie retail data resistance zone seems to be between 0.7700-0.7715 above this, 0.7740 exists with supports at 0.7650 and 0.7620. Weekly pivotal finds at 0.7600. A break below 0.7600 could confirm a meaningful reversal to 0.7550 & 0.7500.

AUDCAD: The cross has tested the 250MA (weekly) and held on Tuesday session. The daily RSI is nearly oversold whereas the oscillator has been turned bullish. We spotted a parallel support at 0.9780 below this 0.9700 exists. The 80.0% fib reaction coincides at 0.9700 was an earlier swing low. We believe the cross will resume the short-term rebound to 0.9900. This view will erase if the cross retraces beyond 0.9670.


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KeyToMarketsUK

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KTM FX Daily: What’s on and What’s gone

Data review:

AUDUSD continued to trade higher in the yesterday session following a strong retail data. The other data building approvals were weakened again. Australia total dwellings fell by 6.2 percent in February and Retail turnover rises 0.6 percent in February. Turning to China data, at 52.3 in March, the seasonally adjusted Caixin China General Services Business Activity Index fell further from January’s multi-year peak, having slipped from 54.2 in February.

Moving to Europe, the major EURUSD manage to hold the parallel support and the cable posted a triple bottom at 1.4010 in Wednesday. UK Construction Purchasing Managers’ Index fell sharply from 51.4 in February to 47.0 in March, to register below the 50.0. Whereas EA annual inflation is expected to be 1.4% in March 2018, up from 1.1% in February.

Turning to the US, Private sector employment increased by 241,000 jobs from February to March according to the March ADP National Employment Report. Whereas the NMI registered 58.8 percent, which is 0.7 percentage point lower than the February reading of 59.5 percent. The safe currencies CHF & JPY down by 0.30% each against the dollar. However the USDCAD down by 0.45%, we believe the recent correction has been the answer to the classic H&S pattern. We have spotted the bearish pattern on Tuesday (Apr 04) now taking the return.

Risk events ahead:

Aussie trade balance due on Thursday Asian session and UK services PMI due on the European session.

March US non-farm payrolls are the key data risk event due this Friday. We expect the US payrolls to have increased 190k. Whereas Nomura forecast “ a somewhat soft 140k increase in nonfarm payroll employment for March, largely due to payback after warm weather pushed up February’s employment growth” published in the Economic insights report. The analysts also said “we expect a steady 0.2% m-o-m increase in average hourly earnings (AHE), bringing the y-o-y rate to 2.7%. Finally, we expect the unemployment rate to tick down 0.1pp to 4.0% after remaining at 4.1% for the past five months”.


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KTM Weekly: Global economic calendar. AUDNZD and EURGBP are sitting above big support

This week is a busy week with the CPI data for China and US, the other side FOMC and ECB minutes are due. Central banks minutes and comments from RBA, ECB and BOJ officials will provide central bank forward insights.

We are particularly focusing on the US March CPI and FOMC minutes from The March meeting.

The new Chair Powell raised interest rates in his first meeting in March. Since December 2015, this has been the 6th time that the Federal Reserve has raised the rates. Adding to the decision on the rate hike, the committee also released an updated statement, which suggested another upgrade in Fed’s economic forecast.

Regarding inflation, they mentioned that it is expected to move up on a 12‑month basis in the coming months and would stabilize around the 2 percent objective over the medium term, it seems that the projection for inflation is strengthened compared to January meeting.

As we pointed in our earlier article, we remain in our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”.

We believe more rates are coming and the economy will continue to strengthen. Overall, we consider inflation will be the only risk factor spotted in the March statement.

Turning to the March CPI report, which is due on Wednesday, we expect the CPI will be printed at 0.0% compared to 0.02%in February whereas core CPI will remain stable at 0.2%. We also believe that this week’s CPI report will provide a clue on the Fed’s tightening cycle.

Turning to the EA, the ECB President Draghi speaks at the Generation €uro Students’ Award Ceremony, in Frankfurt. In terms of other data, ECB minutes will also generate much trader’s interest and could provide some clues to the EURUSD near-term trading range.
In Asia, China CPI and Trade Balance will grab the trader’s attention.



FX comments:

We believe AUDUSD, EURUSD and USDJPY will remain between 0.7600-0.0.7780, 1.2150-1.2475 and 105.00-108.20 respectively.


AUDNZD: Sitting above big support

  • 3-year ascending trendline in focus (Weekly chart)
  • The oscillator has been turned bullish (below chart)
  • Support: 1.0490>1.0430
  • Weekly pivotal @1.0490


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KTM EURUSD Daily: Benefiting from risk aversion

The euro has started the week positively against the USD on the back of the weekend developments that Italian government may be formed in the coming week. The major has been well supported into dips, though the daily studies are remaining bearish.

Addition, the ECB’s upbeat Annual Report 2017 further strengthen the euro overnight.

Highlights:

“The economy grew by 2.5% and by the end of the year had recorded 18 straight quarters of growth. This represented the strongest expansion for a decade, and the broadest for two decades.” according to the ECB’s Annual Report 2017.
The report also revealed that “Employment rose by 1.6% to reach its highest level ever”.
Regarding inflation, “Headline inflation recovered from its past lows, averaging 1.5% over the year, domestic price pressures remained muted and underlying inflation lacked signs of a sustained upward trend”.
The ECB ended the report with a solid forecast, “we expect the pace of economic expansion to remain strong in 2018. While we remain confident that inflation will converge towards our aim over the medium term”.

Data review:

Germany March Trade Balance recorded a surplus of 19.2 billion euros in February 2018
EA annual inflation is expected to be 1.4% in March 2018, up from 1.1% in February

Data preview:

In the EA, the ECB President Draghi speaks at the Generation €uro Students’ Award Ceremony, in Frankfurt. In terms of other data, ECB minutes will also generate much trader’s interest and could provide some clues to the EURUSD near-term trading range.

Turning to US, we are particularly focusing on the US March CPI and FOMC minutes from The March meeting.


TECHNICAL VIEW​

EURUSD has reached a low at 1.2215 in last Friday, its lowest level in five weeks. Post- US March jobs data the major was lifted marginally and finished the week below 14MA.

Weekly range: 1.2150-1.2450. Status: Rangebound

The major has been in a well-defined range consolidation with a solid support available at 1.2150 levels. It has been well supported into dips much closer to the bottom of the range, though the daily studies are remaining bearish.

The recent countertrend was rejected at the 80.0% fib reaction with the immediate support zone is found at 1.2215-1.2200 levels. The price needs to break the 1.2200 to tag a meaningful reversal in the near term to 1.2150. The selling practice will accelerate below 1.2150 could open to 1.2090 and 1.2050 with resistance seems to be at 1.2340 and 1.2450 levels.


Overall, we remain neutral for this week as the risk aversion will limit the downside risk.

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KTM FX Daily: Symmetrical triangle patterns

The major EURUSD and the cable GBPUSD have been trading in a symmetrical triangle.


The cable has been rebound to the 80.0% of the fib reaction seems to be at 1.4220 levels above this 1.4245 exists. The daily studies RSI is climbing higher back and the oscillator turned bullish.
For an intraday trading purpose, resistance seems to be between 1.4220-1.4245.




EURUSD has been in a well-defined range consolidation in a symmetrical triangle with a solid support available at 1.2150 levels. It has been well supported into dips much closer to the bottom of the range. The risk aversion will limit the downside risk with potential resistance seems to be at 1.2400-1.2410 above this, target at 1.2450/1.2470.
For an intraday trading purpose, supports are found at 1.2290 and 1.2260.




The cross EURJPY is facing resistance at 14MA (weekly) in the Asian session. The risk-off mood will lift further to 133.00. Before retracing to 132.65 the cross gave a bullish break through the symmetrical triangle pattern. We believe the level 133.00 will be a potential resistance for intraday.The 100MA and 20MA (week) coincide at 133.00.


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KTM FX Daily: Thursday FX focus

  • USA vs Russia, the outcome was higher gold
  • US Core CPI marked higher, expect more Fed hikes
  • USD strengthens post FOMC minutes, gold retraced

The precious metal was well bided after Trump tweeted Russia: “Get ready” for missiles coming at Syria. As a result, the safe currency JPY was marginally strengthened across the board and the Gold price climbed to 1365.20$ but failed to breach Jan 25 high,1366.00$. The cross currency USDRUB rose by more than 3.30% later erased the gains completely.

In terms of the US data, US March CPI and Core CPI marked higher. The big positive news from US session was core inflation market higher above target 2.0%. What it means for a forex trader is expecting more hikes from Fed in 2018.

The Consumer Price Index decreased 0.1% in March after rising 0.2% in February, whereas the Core CPI rose 2.1%, its largest 12-month increase since the period ending February 2017.
As we pointed in our earlier article, we remain in our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”.

Fed minutes highlights:

Regarding trade war, the Fed said, “A strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the U.S. economy”.

Participants’ Views on Current Conditions and the Economic Outlook
  • Several participants noted that the 12-month PCE price inflation rate would likely shift upward when the March data are released
  • Regarding wage growth at the national level, several participants noted a modest increase, but most still described the pace of wage gains as moderate
  • Several participants commented that this gradual approach was most likely to be conducive to maintaining strong labor market conditions and returning inflation to 2 percent on a sustained basis without resulting in conditions that would eventually require an abrupt policy tightening.
  • Several participants expressed the judgment that it would likely become appropriate at some point for the Committee to set the federal funds rate above its longer-run normal value for a time
What’s on today?

RBNZ Assist Gov speaks (NZD)
BOJ Governor Kuroda speaks (JPY)
EZ Feb IP (EUR)
BOE Credit conditions survey (GBP)
ECB minutes (EUR)
US Weekly employment claims (USD)
BOE Governor Carney speaks (GBP)


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KTM FX Daily: Friday focus. AUD cross technical overview

What’s on today?

  • RBA Financial Stability Review, 11.30 am AEST (AUD)
  • China Trade Balance (CNH & AUD)
  • German Final CPI m/m (EUR)
  • EA Trade Balance (EUR)
  • JOLTS Job openings (USD)
In the Asian session, we are particularly focusing on the RBA Financial Stability Review and China Trade Balance.

According to Barclays, “Reflecting strong new export orders, we forecast double-digit export growth in March despite some moderation. Import growth is likely to rebound, as suggested by increase in the PMI import index”.

FX OUTLOOK​

AUDUSD

The cross has been consolidating in a tight range between 0.7785-0.7640 for four weeks. The daily studies are encouraging a short-term squeeze and a move above the descending wedge pattern could strengthen further. In this case 0.7815-0.7830 could expect.

It has a potential support zone at 0.7630-0.7600 a move below this could open to 0.7550 and 0.7500.



AUDNZD

The cross fell to the lowest level since July 2017 and tested the weekly pivotal. The price action has been sitting above big support 1.0480 and the three-year ascending trendline. The daily oscillator has been turning into a bullish mode and the RSI study is nearly oversold at 33.00.

Intraday support: 1.0490< 1.0430

Over the medium term, 1.0325-1.0370 should hold to maintain the upside potential.

View: Scope to resume the short-term rebound to 1.0550 and 1.0600 initially.


EURAUD

EURAUD faced renewed selling pressure with a lower low and a lower high pattern (below chart). At the end of the last month, the cross was rejected at a parallel resistance seems to be at 1.6225. The daily studies are remaining bearish with an immediate support is found at 1.5860 below this 1.5830 its 50MA exists. Alternatively, resistances exist at 1.5960 and 1.6040 levels. There are three separate levels that are converged between 1.5830-1.5770 (below daily chart), breaking lower could retrace further to 1.5730 and 1.5650.


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KTM FX Weekly: Global economic calendar (April 16-20)

Inflation for UK, EA and NZ
UK and Aussie jobs data
US and UK Retail sales
In the markets this week US Retail sales, China GDP and UK inflation are the key data risk events scheduled.

On the other side, Global traders are concerned about Geopolitical risk as over weekend developments have raised the risk of sentiment again. Trade wars and renewed geopolitical concerns are forcing investors to park the money in the safe haven camp (JPY and Gold).

In the US next week, most significant data release is Monday’s March Retail sales. The Commerce Department will publish the March data at 1.30pm GMT. The market consensus will show stronger March Retail sales by 0.4% from February -0.1%.

Turning to EA, German ZEW Economic Sentiment and final March CPI are the significant risk events grab the attention. EA March inflation expects at 1.4% on a YoY basis and core inflation expected to be at 1.0%.

In the UK, February jobs data and March inflation to provide clues on a May rate hike. We are particularly watching the wage growth to accelerate to 3.0% on Yoy.



In Canada, inflation, retail sales, and BOC policy settings are likely to raise the loonie volatility than usual. We expect BOC unlikely to hike this week, whereas May hike could be expected.

Turning to Asia, China Q1 GDP is the major risk event scheduled at 3.00am GMT. We expect the Chinese economy will grow by 6.8% yoy basis. Other data RBA’s March meeting minutes and Aussie jobs data are worth to watch to trade AUDSUD and AUDNZD.

In the Asia-Pacific region, NZ quarterly inflation figures will publish on Wednesday at 11.45pm GMT.




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KTM EURUSD Weekly: Exercising Patience

The EURUSD gained 0.60% during the past week and the major has extended the gains on Monday as well. US Retail sales data set to break the EURUSD range -bound territory. The major has been well supported into dips whereas price action has been trading in a symmetrical triangle.

Data review:

German trade balance recorded a surplus of 19.2 billion euros in February 2018
Consumer price index in Germany rose by 0.4% in March 2018

Data preview:

German ZEW Economic Sentiment and final March CPI are the significant risk events grab the attention. EA March inflation expects at 1.4% on a YoY basis and core inflation expected to be at 1.0%.


TECHNICAL OVERVIEW​

As we forecasted in late March, EURUSD has retraced to the support zone, but failed to break the support. Since then the major has been in a well-defined range consolidation with a solid support available at 1.2150 levels.

It needs to break the 1.2300 to forecast a meaningful reverse in the near term to 1.22240 and 1.2200. The selling practice will accelerate further below 1.2150 could open to 1.2090 and 1.2050 with resistance seems to be at 1.2340 and 1.2450 levels.


The levels to watch closely on the downside is 1.2300-1.2280. This is a crucial level to watch for an initial weakness.

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KTM FX Daily: Bank of Canada policy meeting

Bank of Canada expected to hold interest rates steady at 1.25%. Traders are closely watching to the full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR (Monetary Policy Report).

In the last week’s BOC Business Outlook survey report showed that business sentiment continues to be positive.

Regarding inflation, the reported showed “most firms still anticipate that inflation will remain within the Bank’s inflation-control range of 1 to 3 per cent, just above half now expect inflation to be in the upper half of that range”.

Preview: We expect the central bank will hike the rate in the May or post local general election, Ontario’s next election dated to June 07. The overall rating hike will come either in May or in July 2018.

In today’s meeting, we expect the BOC will update the growth estimates

Over the past month, the Canadian dollar has strengthened against the most traded currencies. Further hawkish signals from the BOC could add an extra fuel to the CAD bulls to the May meeting.


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KTM FX Daily: NZ CPI review. AUDNZD has rallied above our target price

Here are our quick reactions to New Zealand March CPI.

According to Stats NZ, the CPI rose by 0.5 percent in the March 2018 quarter. The annual inflation rate was 1.1 percent, down from 1.6 percent in the year ended December 2017 fell to the lower end of the RBNZ’s target range.


Since 2000, inflation has averaged around 2.7 percent. This compares with averages of 2.4 percent in the 1990s, and averages of over 11 percent for the previous two decades. Since September 2002, the inflation target has been to keep inflation within a range of 1–3 percent on average over the medium term, according to John McDermott, Head of Economics.

“Housing and household utilities made the largest upwards contribution to the 1.1 percent CPI increase in the year ended March 2018”, said Stats NZ in the statement.

The statement also said, “In the March 2018 quarter compared with the December 2017 quarter, Alcoholic beverages and tobacco rose 4.3 percent, influenced by higher prices for cigarettes and tobacco (up 10 percent)”.


On the other hand, “Education prices fell 5.6 percent, influenced by lower prices for tertiary and other post-school education (down 16 percent)”.

In the Westpac’s First Impressions report, analyst Michael Gordon said, “The dip in annual inflation is likely to be a temporary one. The lower New Zealand dollar over the last year will eventually give a boost to tradables prices, and the comparison with prices a year ago will favour a higher inflation rate over the next few quarters. That said, we don’t expect inflation to make it into the upper half of the 1-3% target range any time soon”.

According to ANZ Economist, Miles Workman, “We retain a view that domestic inflation will rise and broaden in time”. The economist also said “we suspect the RBNZ will continue to bide its time until there’s a little more certainty that inflation is set to rise. But with a new Governor there is naturally more uncertainty than usual, and Mr Orr’s first Monetary Policy Statement on 10 May will be perused with great interest, despite a clear market expectation of an unchanged OCR for a long time yet”.

FX INSIGHTS: The kiwi dollar reaction was largely muted post the CPI data in early Asia session.

As we forecast in our earlier articles the cross AUDNZD has rallied above our target price 1.0600, recorded at 1.0515. We are still biased for another leg up to ideal targets between 1.0660 and 1.0800, which should complete our medium-term bullish targets.


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Mar 28, 2017
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KTM Weekend FX: USDX strengthened overnight

The dollar index (KTM:USDX) strengthened overnight as the US 10year yields settle above 2.900 amid higher inflation expectations. Since early March, the index has been consolidating in a symmetrical triangle.

Overall, since the Jan 2018 low, the dollar index has gone sideways with a massive whipsaw effect and been trying to form a base. As we forecasted in our earlier articles, in the Q1 the price held the support level 88.00.

Our base case scenario to support the DXY is as we remain in our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”.

On the weekly chart, the RSI was posted a double bottom addition to this, the oscillator is remaining bullish. Based on these facts we forecast in Q2 the trading range will remain between 86.50-93.00 levels.

EURUSD: The angle of correction

The major has been locked in a range bound territory, but with a bearish tag. As shown in the below chart, the corrective A-B-C structure aiming at 1.2060, noting that 20MA (weekly) lies at 1.2100. The underlying indicators on the daily and weekly are remaining bearish.


AUDUSD: Rejected again at 200MA

The cross was rejected again at 200MA and has broken below the parallel support 0.7744. The daily and weekly studies RSI and oscillator are remaining bearish. After breaking the parallel support, we forecast two targets pointing to 0.7670 and 0.7640 its 100MA (weekly).

NZDUSD: Sitting above support

The kiwi baby finally snaps the three-week running course and closed below 20 and 50MA (daily). Currently, the cross is sitting tad above four-week ascending triangle, whereas the underlying indicators are remaining bearish. Immediate support is found at 0.7240/0.7230 below this, target 0.7200/0.7190.

We forecast a medium-term target at the 61.8% fib reaction is found at 0.7020. The near-term price action has already been capped. A daily close below 0.7170 targets 0.7110/0.7110 levels.

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Mar 28, 2017
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KTM FX : Weekly chart pack

The weekly chart pack summarizes forex market trends and provides some insights about the near-term trading patterns.

With regard to Friday’s closing price couple of forex pairs are sitting tad above key support level. We are particularly interested in AUDUSD, NZDUSD, and EURUSD, all are pointing to the South.

We seem they have been developing pretty classic bearish setups since the end of the January 2018. These setups are getting better and better and the bearish layers are widening across.






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Mar 28, 2017
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KTM Commodity weekly: Cruising into weekly 100.0FE

Since our last week’s bullish forecast, the oil price was up by 3.7% hits four-year high. The oil price started the Q2 on a bullish note and extending the gains led by the news from U.S sanctions against oil exporting nations.

“Added price pressure comes from U.S. sanctions against the key oil exporting nations of Venezuela, Russia and Iran,” said Kerry Craig, global market strategist at JPMorgan Asset Management reported by Reuters.

We continue to see the price may surge to 77.50$ its 161.8% FE (61.60-71.35-61.58$). Noting that, the daily RSI (below chart) has been indicating a negative divergence.

We forecast the weekly trading range likely to remain in a narrow range between 70.00$ and 77.00$ with supports at 70.00$ and 67.00$.

On the weekly chart, the 161.08 fe seems to be at 76.00$ and 83.00$ with solid support well placed at 61.50$ levels.


View: Getting better and better

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