23-Mar-2020

1) EUR/USD Failed To Capitalize On Friday’s Early Attempt
2) Markets and 50 year Periods: The End is Near
3) Oil Bears Laugh At Texas-OPEC Hopes, Gold Resumes Safe-Haven Role
4) USD/JPY: May Head Towards the South

 

 

1) EUR/USD Failed To Capitalize On Friday’s Early Attempt

The EUR/USD pair failed to capitalize on its early attempted recovery move on Friday, rather met with some fresh supply near the 1.0830 region. Resurgent US dollar demand was seen as one of the key factors behind the pair’s sharp intraday fall of nearly 100 pips to fresh 37-month lows. The greenback continued benefitting from a global rush to hoard cash amid the worsening coronavirus crisis and got an additional boost from a fresh leg down in the US equity markets.

The pair remained on the defensive through the early Asian session on Monday, albeit continued showing some resilience at lower levels and managed to stage a modest intraday recovery back above the 1.0700 round-figure mark. The USD was being weighed down by the US Senate’s failure to pass the COVID-19 rescue package bill and the risk-off environment-led slide in the US Treasury bond yields, which remained supportive of the pair’s attempted recovery move on the first day of a new trading week.

The pair has now moved back closer to mid-1.0700s, though it remains to be seen if bulls can capitalize on the move or the uptick once again meets with some fresh supply at higher levels. In absence of any major market-moving economic releases, either from the Euro zone or the US, developments surrounding the coronavirus saga might continue to influence the broader market risk sentiment and the USD price dynamics, which might turn out to be an exclusive driver of the pair’s momentum.

From a technical perspective, the previous session’s intraday pullback points to persistent selling interest at higher levels. This comes on the back of a break below a 2-1/2-year-old descending trend-line support and further reinforces the near-term bearish outlook. However, diverging RSI on the daily chart warrants some caution before positioning for any further near-term depreciating move.

In the meantime, the 1.0800 round-figure mark now seems to act as immediate resistance and is closely followed by the 1.0830-35 supply zones. Momentum beyond the mentioned barriers could get extended, albeit might face stiff resistance and runs the risk of fizzling out rather quickly near the 1.0880 strong resistances.

On the flip side, the pair might continue to find some support near mid-1.0600s, which if broken will reaffirm the bearish bias and set the stage for a slide towards the next relevant support, around the 1.0590 region. The downfall could further get extended towards the key 1.0500 psychological mark before the pair eventually drops to challenge December 2016 swing lows, around the 1.0380-65 regions.

 

2) Markets and 50 year Periods: The End is Near

In 2016 and 2017 to highlight the 45th year of the currency free float from January 1972, a series of research articles were published along with an article to market turning point years.

Market periods historically since the BOE was first established in 1694 as the first central bank last 50 years. 50 years means 4 quadrants of 12 1/2 years. But 50 years are biblical as in Genesis 41 for 7 Rich Years and 7 lean years and Leviticus 25 to mark the 49th year.

4 quadrants of 50 years highlighted by each quadrant of 12 1/2 years refers to 1st quadrant periods as trending, good markets, all profit.

2nd quadrant of 12 1/2 years are market crashes.

3rd quadrant of 12 1/2 years are ranging and traded markets.

4th quadrant of 12  1/2 years represent the end as governments are bankrupt and engage in creative destruction to remain solvent. As the 48th year is upon us, its always to little and much to late.

The forecast ability to 50 years, 4 quadrants and 12 1/2 years historically is perfectly accurate.

The question was for 2016 and 2017 when is the end and what’s next. Will markets become trade able markets in the next market period. Based on previous Gold and Slver standards since 1694, the answer is no to traded markets nor to 28 years of 1% exchange rate movements under Bretton Woods.

The best traded markets in 326 years based on the current experiment of interest rates is upon us but is now over and gone. We always believed the IMF’s program of SDR’s would become the new market period but this assumption contains many problems as not all nations are members of the SDR program yet all nations exchange trade.

One aspect is certain. As this 4th period ends, new 1st period begins to reign prosperity and safe and sound markets in whatever form comes next.

Watch for central banks to meet to arrange agreements to next period of markets for the next 50 years.

3) Oil Bears Laugh At Texas-OPEC Hopes, Gold Resumes Safe-Haven Role

Virus unquantifiable impact and blocked stimulus bill sink risk appetite: Oil bears laugh at Texas-OPEC hopes, Gold resumes safe-haven role, Bitcoin problem

Wall Street closed out last week with some optimism, US stocks were showing signs of stabilizing, hopes were high that Congress learned lessons from the Global Financial Crisis that would suggest bipartisanship would deliver a swift response in getting a stimulus agreement done.  Global equities got off to another terrible start after Democrats blocked the Senate’s coronavirus economic response rescue package.  Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime.  Volatility was supposed to start to calm down as central banks unleash a wrath of liquidity programs and stimulus, but coronavirus updates in Europe and the US continue to suggest we are nowhere near being out of the woods or even close enough to guess on when that could potentially be.

This week investors will start paying attention to economic data as we will see how bad it is getting for western economies.  The flash PMIs will be key for many economic models for trying to price in how bad the virus has brought business to a halt.  The pressure is on for US leaders to deliver stimulus for businesses and Americans as many hourly workers will be filing jobless claims.  Expectations are pretty high Congress will get something done this week, but US stocks will remain vulnerable on virus uncertainty.  Every passing day it seems lockdown efforts are intensified globally, thus it seems financial markets will remain nervous until we see the infection rate improve in both US and Europe.  Now that the US finally made some progress in delivering testing for the virus, markets could see in a few weeks if the lockdown efforts were successful enough in delaying the hitting of healthcare capacity.  Circuit breakers have become far to common over the past four volatile trading weeks and will probably be used again this week.

Oil seems ready to crash again as energy trader’s doubt that President Trump can really sanction his way into getting the Russians to play nice with the Saudis.  The speculation that OPEC and Texas could reach a production cut agreement seems highly unrealistic, which means WTI crude break the $20 level this week.

Oil prices are tentatively higher on the session, but that rebound is strictly matching the US equities move off the limit-down lows.

Even if oil prices somehow manage to rebound a little more, oil is heading south as the demand destruction for crude will only get worst as more countries intensify their shutting down of non-essential business efforts and as storage space for crude runs out.  Oversupplied and crippled crude demand conditions appear to have no signs of changing in the short-term.

Gold is trying to get back its safe-haven membership card back. With US stocks opening up limit-down, some metals traders were expecting the scramble for cash to drive gold prices lower.  The softer dollar along is probably more responsible for today’s rally in gold prices, but eventually bullion will benefit from all the fiscal and monetary stimulus that everyone seems to be pumping out.  Gold has held the $1,450 an ounce level and right now it seems that it could begin a steady climb back towards the $1,600 level as long as the dollar does not have a repeat of last week.

Bitcoin could be headed for a rough week as calls for short-ban selling in stocks grow, which means traders who want to short risky assets could just take it out on Bitcoin. Bitcoin volatility will remain on ludicrous speed as it continues to trade off financial markets reaction to the coronavirus pandemic and not off any crypto-fundamentals.

 

4) USD/JPY: May Head Towards the South

USD/JPY produced a doji candle on the daily chart last Friday. The pair, after being bullish, produced the bearish reversal candle at a strong resistance zone. Thus, it may make a bearish move. The H4 and the H1 chart look good for the sellers too.

The daily(D1) chart shows that upon finding its support at the level of 102.000, it produced a bullish engulfing candle. It continued its bullish journey upon having consolidation twice. On the last Friday, the pair created a doji candle. This figure is not a strong bearish reversal candle. However, it obeyed the level of 110.930 as resistance. Thus, today’s candle may come out as a bearish engulfing candle, which may drive the price towards the South in the coming days. The price may find its next support at the level of 107.820.

The H4 chart shows that the pair had its second rejection at the level of 110.930. The level produced a bearish engulfing inside bar at its second rejection. Since it is a double top resistance, the price may head towards the South. If it makes a breakout at the level of 109.350, the sellers may drive the price towards the level of 108.300. The price may consolidate around the breakout level before making its bearish journey after the breakout.

The chart shows that the price has been heading towards the South at a moderate pace. It found its resistance at the level of 109.930 and produced a bearish engulfing candle. This one is a strong bearish reversal candle. Thus, the H1 sellers may look for selling opportunities in the pair. The sellers may go short in the pair more aggressively if it makes a breakout at the level of 109.350. The H4 sellers are to wait for the price to make a breakout at the same level. Thus, the pair may get volatile and build a strong bearish breakout at the level of 109.350.

The Daily chart is getting ready to get bearish. On the other hand, the H4 and the H1 chart look good for the bear. The level of 109.350 seems to hold the key. A breakout at that level may make the pair bearish in the coming days. The last swing low is quite far. Thus, the sellers will surely be interested in keeping an eye on the pair today.