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FOREX PRO WEEKLY #2, November 06-10, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Nov 5, 2017.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Situation on many currencies, dollar index looks very similar and mostly suggests further dollar strength. That's why we've decided to bring analysis of some other related currency - CAD. As situation on Crude oil market stands slightly different.

    Fundamentals

    (Reuters) - Oil prices rose on Friday, with U.S. crude touching a two-year high, strengthening after U.S. rig data suggested drilling in the United States would throttle back.

    The latest rig data supported the market’s view that a global supply glut is receding. Throughout the week, prices have been bolstered by rising global demand data and expectations that OPEC and other producing countries will extend a deal to cut output.

    U.S. West Texas Intermediate (WTI) crude settled up $1.10 or 2 percent, at $55.64 a barrel, the highest since July 2015.

    Global benchmark Brent futures settled up $1.45 or 2.4 percent at $62.07 a barrel. Brent has risen around 38 percent since its low in June 2017.

    Both grades gained more than 3 percent in the week.

    U.S. energy companies cut eight oil rigs this week, the biggest reduction since May 2016, extending a drilling decline that started over the summer when prices slipped below $50 a barrel.

    The oil rig count fell to 729 in the week to Nov. 3, the lowest level since May, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.

    “The market continues to find support from expectations that we’re going to see the cut extended and from robust demand,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

    The Organization of the Petroleum Exporting Countries meets at the end of November to discuss further action after it agreed nearly a year ago with Russia and other producers to hold back 1.8 million barrels per day (bpd) of oil supply.

    Russia said on Thursday the deal, due to expire in March, could be extended but a decision was not imminent.

    China’s roughly 9 million bpd of imports have surpassed those of the United States to top the world’s crude importer list.

    “There’s an idea that the global economy is looking pretty good,” McGillian said, pointing to rising demand in other regions.

    “China’s oil demand growth appears to be accelerating,” investment bank Jefferies said.

    Physical oil prices are also rising. Saudi Aramco, the UAE’s ADNOC and Qatar Petroleum have all raised their crude prices for Asian buyers, with Aramco’s December premium over the average of the Oman and Dubai benchmarks now at the highest in three years.

    Traders also eyed risks from ongoing financial troubles of OPEC-members Venezuela and its state oil company PDVSA.

    The government and PDVSA owe some $1.6 billion in debt service and delayed interest payments by the end of the year, plus another $9 billion in bond servicing in 2018.

    The next hard payment deadline for PDVSA is an $81 million bond payment that was due on Oct. 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a default, investors say.


    If you let me guys, I bring you two cents on Crude Oil fundamentals. No doubts, crude oil is a political market, and you need to understand ongoing political processes to correctly understand what is going on there. You should do it with chill head, very pragmatically without making and judgments on who's right or wrong in one or another political situation or conflict. But extracting the core and hidden consequences for financial markets, and Crude oil in particular. This approach to market analysis demands isolated Political blog on forum. Actually I've given the hint to FPA administration that it needs to be created as situation in the world changes rapidly and may be it will appear a bit later. But right now we will bring just light insight on Crude oil market, so you better understand what is going on.
    Actually not too far ago, I've placed Crude Oil post where I've given you a hint with forecast of Crude oil rise.
    Speaking in two words there were no shale oil revolution in US and no delivery of this oil to Europe. It was a stolen oil from Syria by ISIS, which was delivered to Turkey and Israel, "laundered", legalized and then sold to Europe and other consumers. As oil stealing has turned to industrial scale it was disguised as "shale revolution in US". Crude oil prices were start to dropping as bargain price from Syria was very low.
    As Russian coalition efforts were led to some success, oil transfer channels have been destroyed and oil fields gradually have come back to government hands - "shale revolution"; surprisingly stalled and crude oil prices stabilized. Geopolitical situation in Middle East were starting to change
    and Russia with OPEC sat down for conversation.
    Now Middle East more and more coming under control of Turkey, Iran and Russia. Nobody from them are interested with low crude oil prices. And this tendency will continue. Qatar already has got warm fluffy slippers from Putin and joined new Middle East order. In fact, Iran and Qatar control all Middle East natural gas as well. So we must forget about crude oil below 50$. Price will go higher in long-term and should stabilize around 75-80$, I suppose.
    Middle East journey is a big campaign. Syria is just a beginning. Libya and Afghanistan are next. So this is a big topic for political blog. Here I do not provide you any links on sources, but you could find them, if you want.
    Yes, action to 80 bucks will not be smooth. But we need to keep this fundamental background to clearly understand what is going on.

    COT REPORT

    We consider both reports as for Crude oil as for CAD. Loonie has reached extreme levels of net long position 6-8 weeks ago and technically it needs some relief that now stands under way. Gradually as net long position (inverse scale here) as open interest smoothly decrease. This is typical for retracement:

    cot-USD_CAD.

    On Crude oil we have similar situation but oil has not reached record levels of net position. Here open interest has dropped more than net long position. It means that traders were closed as longs as shorts, but there were slightly more longs closed.

    crude_CFTC.

    Sentiment analysis points on retracement that stands as on Crude oil as on CAD. Crude oil is also entering in seasonal bullish trend as winter is coming.

    Technicals

    Monthly


    It was rather long time guys, when we've taken a look at CAD in weekly research. July, if I make no mistake.

    But mostly our analysis was correct. Market indeed has reached monthly strong support area and completed first AB-CD minor target. As you can see from the chart - this area indeed is rather strong and includes monthly K-support area and Agreement (with AB-CD target), Yearly Pivot Support 1, and previously there was a monthly OS as well. Now loonie has turned to reasonable bounce up. In fact, this bounce is an object of short term analysis - how high it could climb.

    At the same time, longer-term view suggests that as soon as current upward reaction will be over - market could continue move down with the same AB-CD pattern. Next target stands at 1.1560. And mostly CAD strength corresponds to our long-term expectations on Crude oil market. Also we have some kind of “three black crows” – rare candlestick pattern, as on slope of AB leg, as CD leg.

    cad_m_06_11_17.

    Another technical reason, guys, we anticipate further Crude oil growth and CAD as well is unfilled gap on monthly chart. It is interesting, that if, our major AB-CD pattern will be completed – it will accurately close this area:

    oil_m_06_11_17.

    Weekly

    Now we’re coming directly to upside action analysis. Here we do not see anything criminal yet, guys. Upward action goes rather well. CAD has not reached yet the major resistance that stands slightly higher – 1.3065-1.3130 K-area and MPR1. Now market is coiling around MPP. It means, that in perspective of few weeks upside action has chances to continue.

    But in shorter perspective, 1-2 weeks, it stands under question because of 2 reasons. Loonie itself has created tweezers top at reversal swing. Usually tweezers trigger some retracement down. Second – this idea confirms by Crude Oil situation. If you will take a look at daily chart, you’ll see butterfly “sell” failure and crude oil prices continue upward action.

    Besides, on monthly chart we have a kind of “morning star” candlestick pattern and the nature of this pattern suggests some pullback inside its body.

    cad_w_06_11_17.

    Daily

    So, on daily chart we do not have a lot of tools for analysis. Trend has turned bearish on Friday. Objective points that we have mostly suggest that slightly higher action should happen before major reversal here – as AB=CD as 1.27 extension have not been completed. But, at the same time we have weekly tweezers that give little space for any upside action.

    But, despite how retracement down will happen – first destination point will be 1.2590-1.2617 K-support and daily OS area.

    cad_d_06_11_17.

    Intraday

    Intraday chart also mostly suggests immediate downside continuation. Here we have DRPO “Sell” Look-alike pattern and no hint on patterns that could suggest any upside continuation. DRPO target has not been reached yet. Besides, there was strong rally on crude oil market, despite USD strength on Friday. Thus, it will not be surprise if downside action will continue on next week as well.

    cad_4h_06_11_17.

    Conclusion:

    That’s being said, we confirm our long-term CAD target around 1.1560 area.
    In shorter-term perspective, it seems that CAD could show retracement to daily 1.26 support area first.




    The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
     
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  2. AsstModerator

    AsstModerator FPA Forums and Reviews Admin

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    And Sive on Gold...

    Good morning,

    (Reuters) - Gold inched down on Tuesday after investors sold bullion to lock in profits following the nearly 1 percent gain in the previous session on safe-haven buying on concerns over corruption arrests that targeted royal family members and ministers in Saudi Arabia.

    Spot gold was down 0.2 percent at $1,279.62 per ounce at 0415 GMT. The metal jumped nearly 1 percent on Monday in its biggest one-day percentage gain since Sept. 25 and also moved above its 100-day moving average then, typically seen as a bullish signal by technical traders. U.S. gold futures for December delivery dipped 0.1 percent to $1,280.20 per ounce.

    "Saudi Arabia appears to have spooked global markets with the spillover from oil flowing into other markets. Gold has benefited from safe haven flows... Asia has seen some profit taking set in," said Jeffrey Halley, a senior market analyst with OANDA. "But we question the longevity of the rally. These tend to be short term in nature," he added.

    Saudi Arabia's future king, Crown Prince Mohammed bin Salman, tightened his grip on power through an anti-corruption purge by arresting some members of the kingdom's political and business elite. The campaign of mass arrests expanded on Monday after a top entrepreneur was reportedly detained in the biggest anti-corruption purge of the kingdom's affluent elite in its modern history.

    "The situation in Saudi Arabia will bear close watching and will likely be the prime driver for gold," said INTL FCStone analyst Edward Meir in a note.

    U.S. President Donald Trump's visit to South Korea, where the odds are that he will likely visit the Korean demilitarized zone could also provide gold with some support over the next few days, Meir added.

    Trump arrived there on Tuesday, the closest he has come to the frontline of the nuclear standoff with North Korea, on a visit that could aggravate tensions with Pyongyang. Many investors buy gold as an alternative investment during times of political and financial uncertainty.

    In the wider markets, Asian shares touched their highest in a decade on Tuesday, while the dollar fell from an eight-month high versus the yen.

    Spot gold may end its consolidation within a narrow range of $1,263 to $1,281 per ounce very soon and then either bounce more to $1,299 or fall sharply towards $1,241, according to Reuters technical analyst Wang Tao.


    So, on gold market help has come from where we’re not expected. Political turmoil in Saudi Arabia has triggered demand for safe-haven asset. Although reasonable doubts exist on durability of this rally, but, gold could climb slightly higher still.

    By looking again at daily triangle, now we can say that breakout is postponed and gold will spend more time inside. It could even rise to upper border of this pattern.

    gold_d_07_11_17.

    But most valuable for us is 4-hour chart right now. Here we mostly will watch for AB=CD action with 1285 target. This is the first destination point of this retracement. Although price still stands close to 1280 K-support, but it was tested too much last week and now has become weaker. As recent rally was rather strong, I suggest that market should move higher. By the same reason it is very probable that gold will show CD leg with some extension, say 1.27. Here we should keep an eye on 1290-1296 area. This is 5/8 Fib level and – what is more important – daily triangle border.

    But.. whatever extension will be formed, potentially gold will form bearish “222” pattern. Bearish scenario is still here. And to vanish it gold needs exceed 1305 top on daily chart.

    gold_4h_07_11_17.
     
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices nudged higher on Wednesday, as the dollar slipped following a media report that suggested a delay in the implementation of a major corporate tax cut under a crucial U.S. tax reforms plan.

    Spot gold was up 0.2 percent at $1,277.94 per ounce as of 0426 GMT. It fell about 0.5 percent on Tuesday.
    U.S. gold futures for December delivery gained 0.2 percent to $1,278.40.

    Senate Republican leaders are considering a one-year delay in implementing the centrepiece tax cut to comply with Senate rules, the Washington Post reported on Tuesday, citing unidentified sources.
    Republicans, who hold a slim majority in the U.S. House of Representatives, forged ahead on Tuesday with legislation to reshape the U.S. tax code, which the Democrats have blasted as a give-away to corporations and the rich. Senate Republicans are expected to unveil their own tax bill at the end of the week, and early indications suggest it could differ significantly from the House legislation.

    "Gold began on the front foot this morning with the dollar sold off aggressively...," MKS PAMP trader Alex Thorndike said in a note.

    The dollar index , which measures the greenback against a basket of six currencies, fell 0.1 percent.

    "$1,280-85 remains the ceiling for now and it will be interesting to see whether this Washington Post article can generate some upward momentum today in Europe and New York," Thorndike said.

    An anti-graft purge in Saudi Arabia and U.S. President Donald Trump's visit to South Korea amid tensions with the North could boost prices of the yellow metal, analysts said. "While the fundamentals are showing that gold prices should fall into 2018, these geopolitical events could cloud the fundamentals," OCBC analyst Barnabas Gan said.

    Trump said on Wednesday the United States would defend itself and its allies against Pyongyang's nuclear threat, warning its leader that nuclear weapons it is developing "are not making you safer, they are putting your regime in grave danger".

    Saudi Arabia's anti-corruption campaign, led by Crown Prince Mohammed bin Salman, is being seen by critics as a populist power grab, but as an overdue attack on the sleaze of a moneyed ultra-elite by ordinary Saudis.

    "The fact that oil has now broken out on the charts bodes well for further gains and gold could get pulled up with crude," said INTL FCStone analyst Edward Meir.

    Crude oil prices dipped on Wednesday, although they were still not far off from near two-and-a-half year highs reached earlier this week.

    Meanwhile, holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.14 percent to 844.27 tonnes on Tuesday.


    So, gold market stands in our triangle on daily chart and will stay inside for some more time probably. Daily traders now are watching for two major things - potential breakout of this triangle and large '222" Sell pattern on 4-hour chart.
    As short-term background stands bullish as tax reform will be postpone in US, new spiral of turmoil around North Korea and unrest in Saudi Arabia mostly bring support to gold - price could move up a bit more and reach upper border of triangle:
    gold_d_08_11_17.

    That's why here we are interested in intraday patterns. First is our potential "222" Sell on 4-hour chart:
    gold_4h_08_11_17.

    But first is, some minor patterns that have targets around 1286 area - AB=CD and potential butterfly "sell". Also take a look that gold has formed bullish grabber recently:
    gold_4h1_08_11_17.

    And other minor butterfly could be formed, based on most recent retracement down. But all these patterns have the same target around 1285-1287 area. So, let's keep watching...
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices edged higher on Thursday, after marking a near three-week high in the previous session, as the dollar eased while palladium remained close to a more than 16-year peak touched on Wednesday.

    Spot gold rose 0.2 percent at $1,283.81 per ounce at 0523 GMT. On Wednesday, it rose 0.4 percent and touched its highest since Oct. 20 at $1,287.13 an ounce. U.S. gold futures for December delivery gained 0.1
    percent at $1,284.90.

    "Gold has been probably tracking the currency (U.S. dollar) because some of the other drivers which had pushed it to its recent highs have subsided, in particular the geo-political risks and safe haven buying," said ANZ analyst Daniel Hynes. "I think they'll continue to trade around those currency moves."

    The U.S. dollar versus a basket of currencies edged 0.1 percent lower , while its near-term outlook was seen
    clouded by worries over possible delays to U.S. President Donald Trump's tax reform plans.

    "Although the dollar's travails have brought a smile to long-suffering bullish gold traders, it is important to note there seems to be an absence of risk aversion premium in gold's price and that its fate will be decided by the dollar alone," said Jeffrey Halley, a senior market analyst with OANDA.

    A U.S. Senate tax-cut bill, differing from one in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican tax overhaul push and increasing skepticism on Wall Street about the effort.

    Spot gold may retest a resistance at $1,286 per ounce, a break above which could lead to a gain into the range of $1,292-$1,298, according to Reuters technical analyst Wang Tao.

    Gold demand slid to its lowest in eight years in the last quarter as jewellery buying fell and inflows into bullion-backed exchange-traded funds dried up, data from the World Gold Council showed on Thursday.


    So, on gold market we continue to watch for action mostly on intraday charts, as on daily it stands in triangle consolidation. As multiple bullish patterns have been formed inside - we've come to conclusion that gold could rise a bit more and reach upper border of triangle around 1295 area:
    gold_d_09_11_17.

    Indeed, our recent target has completed as price has broken 1280 K-resistance and reached AB=CD target around 1286. Here we're mostly watching for large "222" Sell pattern, but now it is not clear yet, whether price will reach 1.618 AB-CD target or not.
    gold_4h_09_11_17.

    Still we have another patterns to watch for today. First is - recall that 1289.50 is major 5/8 Fib resistance on the chart above. Now - on hourly chart we have three different patterns, that suggest action to the same area. They are 1.27 butterfly "sell", 3-Drive "sell" and bearish wedge. All of them have the same 1289-1290 potential reversal point.
    gold_1h_09_11_17.

    That's being said, although 4-hour AB=CD target has been hit already, market could climb slightly higher before major retracement will happen...
     
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices on Friday held near a three-week high touched in the previous session, underpinned by uncertainty over U.S. tax reforms and on track for the first weekly rise in four weeks.

    Spot gold was nearly unchanged at $1,285.28 per ounce as of 0435 GMT, and was headed for a gain of more than 1 percent for the week. On Thursday, it touched its highest since Oct. 20 at $1,288.34 an ounce.
    U.S. gold futures for December delivery were down 0.1 percent at $1,285.80.

    "Further political uncertainty in the U.S. saw gold prices well supported. News that the Republican tax plan involved cuts being delayed until 2019 raised the ire of investors," ANZ said in a note.

    U.S. Senate Republicans unveiled a tax plan on Thursday that differed from the House of Representatives' version on several key fronts, including how they treat the corporate tax rate, the tax deduction for state and local taxes, and the estate tax.

    Gold is often used as an alternative investment during times of political and financial uncertainty. The slower than expected pacing of interest rate hikes by the U.S. Federal Reserve is supporting gold, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
    The appointment of Jerome Powell as the new Fed chair has watered down expectations of a more hawkish stance from the central bank, he added. "Overall though, the picture (for gold) is range-bound trading without much changes."

    Higher interest rates tend to boost the dollar, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. The dollar was on track for weekly losses after dropping on
    disappointment with the tax bill put forth by U.S. Senate Republicans that would delay expected corporate tax cuts.

    Spot gold may edge up to a resistance at $1,292 per ounce, a break above which could lead to a gain to $1,299, according to Reuters technical analyst Wang Tao.


    At first glance there nothing is going on at gold market. But this is not quite so. Currently gold stands in important moment that could bring clarity for medium-term perspective. As you can see on daily chart - price has not reached upper border of triangle, but on intraday charts bearish patterns are forming. If gold indeed will turn down - this will lead to classical bearish setup and suggest downside breakout:
    gold_d_10_11_17.

    On 4-hour chart we're watching for "222" Sell, but its shape could we different, as we've explained yesterday. IT could start as from current point as from 1295, which is 1.618 AB-CD target. Anyway this will be "222" Sell...
    Currently AB=CD action looks very harmonic and market indeed has some problems with upward continuation. Now we need to keep an eye on possible bullish grabber here, that could be formed within few hours:
    gold_4h_10_11_17.

    ...and completion of our 3-Drive "Sell" on hourly chart. Then, on market reaction on this pattern. Because we do not exclude situation when particularly this pattern will trigger daily downside continuation:
    gold_1h_10_11_17.
     
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