Tifia Daily Market Analytics

DJIA: US stock indexes are falling


Current situation

Leading US indices since last week are under pressure against the backdrop of rising government bond yields to multi-year marks.

On Tuesday, the yield on 10-year US Treasury bonds reached 3.261%, the highest in 7.5 years.

The growth of profitability is worrying investors. Many of them believe that the US stock market still has room for growth due to good economic data and high levels of business and consumer confidence. However, against the background of further increases in interest rates, there will be more and more doubts about the prospects for further growth of the market.

Increasing bond yields reduce the attractiveness of riskier assets, including stocks, and may trigger a slowdown in economic growth.

Investors are also analyzing the development of the trade conflict between the United States and China.

If the White House will levy duties on all of China’s imports to the United States, markets and the economy will take it negatively.

Before the resolution of the trade conflict between these two largest economies in the world is still far away, investors are eager to understand how the customs duties they have introduced will affect the global economy.

European and Asian indices are also declining after the US. European Stoxx Europe 600 fell by 0.4%, the shares of automotive and chemical companies dropped the hardest.

The Japanese Nikkei Stock Average Index declined by 1.3%. Hong Kong's Hang Seng Index decreased 0.1%.

After the Dow Jones Industrial Average rose at the beginning of the month to a new record high of 26953.0, DJIA futures fell from the opening of the trading day on Tuesday, reaching 26390.0 by the beginning of the American session.

Support and Resistance Levels

The DJIA so far maintains a long-term positive trend, trading in the ascending channels on the daily and weekly charts. Only the long positions should be considered above the support level of 26245.0 (ЕМА200 on the 4-hour chart).

Breakdown of this support level may provoke a deeper correctional decrease to key support levels of 25350.0 (ЕМА144 on the daily chart), 25000.0 (ЕМА200 on the daily chart). The bottom line of the ascending channel on the weekly chart also passes near these levels.

In general, positive dynamics remain, and long positions are preferable. Only a breakdown of the support level of 24200.0 (Fibonacci level 23.6% of the correction to growth from 15650.0 in the wave that began in January 2016. The maximum of this wave and the Fibonacci level 0% are close to 26620.0) can again threaten the bull trend.

Support Levels: 26245.0, 26000.0, 25750.0, 25350.0, 25000.0, 24930.0, 24200.0

Resistance Levels: 26560.0, 26840.0, 27000.0, 28000.0, 29000.0

Trading Scenarios

Buy Stop 26580.0. Stop Loss 26200.0. Take-Profit 26840.0, 27000.0, 28000.0, 29000.0

Sell Stop 26200.0. Stop Loss 26580.0. Take-Profit 26000.0, 25750.0, 25350.0, 25000.0

AUD/USD: Short positions are relevant.


Current Dynamics

The US dollar is falling after stock indexes. The DXY dollar index, which tracks the US currency against a basket of 6 other major currencies, has been dropping on Thursday for the third day in a row. DXY futures traded at the beginning of the American session near the 94.74 mark, 40 points lower than the opening price of the trading day.

Nevertheless, the dollar, in general, maintains its position and upward trend against the background of good economic data and high levels of business and consumer confidence. His current decline should be considered so far as corrective.

The dollar also receives support from a $ 1.5 trillion tax cut in December. Investors expect growth this year to be a sustainable fiscal stimulus. Markets expect the Fed to raise interest rates again this year, as well as three times next year. Amid further increases in interest rates, the investment attractiveness of the dollar will grow.

However, on Thursday, the US dollar fell, including against the Australian dollar. "The Fed is making a mistake", Trump told reporters after the worst fall in stock markets in more than seven months. "I think the Fed has lost its head", he added.

Trump made this statement amid falling American stock market. According to Trump, the fall in the stock market is "a correction that we have been waiting for a long time. Nevertheless, I really disagree with the actions of the Fed", he said.

At the same time, the Australian dollar remains under pressure.

According to Lucy Ellis, senior economist at the Reserve Bank of Australia, monetary policy should remain soft to reduce unused production capacity. "Removing reserve capacity may take some time. In this regard, for several years, a stimulating monetary policy may be needed," Ellis added. RBA has kept its key interest rate at a record low of 1.5% for more than two years. Some economists expect the Central Bank to keep rates at such levels until 2020.

Thus, the different orientation of the monetary policies of the Fed and the RBA remains the main fundamental factor in favor of further reducing the pair AUD / USD. In the long run, the pair is likely to decline. The most pessimistic forecasts suggest a fall to the support level of 0.6300 (2009 lows).

[b] Support and Resistance Levels [/b]

Despite the upward correction, negative dynamics persist and prevail.

Breakdown of the local support level of 0.7045 will resume the decline of AUD / USD with targets at the support levels of 0.6910 (lows of September 2015), 0.6830 (2016 lows).

AUD / USD is in a global downtrend that began in August 2011. Short positions are preferred.

Only if AUD / USD returns to the zone above the key resistance level of 0.7450 (ЕМА200 on the daily chart) can we consider long-term long positions with targets at 0.7820 (ЕМА200 on the weekly chart and Fibonacci level 23.6% of the correction to the decline wave of the pair since August 2011 years and the level of 1.1030. The minimum of this wave is near the level of 0.6830).

The signal for the development of this scenario will be the breakdown of the short-term resistance level of 0.7113 (ЕМА200 on the 1-hour chart).

Support Levels: 0.7075, 0.7045, 0.7025, 0.6910, 0.6830

Resistance Levels: 0.7100, 0.7113, 0.7150, 0.7200, 0.7235, 0.7300, 0.7400, 0.7450, 0.7700, 0.7820

Trading Scenarios

Sell in the market. Stop Loss 0.7140. Take-Profit 0.7045, 0.7025, 0.6910, 0.6830

Buy Stop 0.7140. Stop Loss 0.7070. Take-Profit 0.7200, 0.7235, 0.7300, 0.7400, 0.7450

WTI: price maintains positive momentum


Current Dynamics

After US President Donald Trump announced that “severe punitive measures” would be imposed against Riyadh, oil prices rose during the Asian session on Monday. At the heart of the conflict between the United States and Saudi Arabia are the charges of the murder of Saudi journalist and dissident Jamal Hashoggi. On Sunday, Saudi Arabia promised to respond if Washington imposes sanctions. The kingdom also noted that the largest exporter of oil "plays a significant and active role in the global economy". Mutual threats by the United States and Saudi Arabia increase concerns on the oil market, which contributes to the resumption of rising oil prices

At the end of last week, oil prices fell amid a collapse in the stock market, and also as a result of the revision of forecasts by OPEC and the International Energy Agency for Demand this year and next, downward.

At the beginning of the European trading session, WTI crude oil traded near the mark of 71.80 dollars per barrel. Positive dynamics of oil prices persists, despite the decline last week.

Support and Resistance Levels

The price of WTI crude oil is in an uptrend, maintaining a long-term positive trend and trading in the ascending channels on the daily and weekly charts.

On Thursday, the price of oil found support at 70.70 (EMA50 on the daily chart). Having repulsed from this level, the price attempts to grow above the important support level of 71.55 (ЕМА200 on the 4-hour chart). The overall trend is still bullish. Immediate growth targets are located at resistance levels of 72.80 (May highs), 73.85 (July highs), 75.00, 76.80 (annual and multi-year highs).

In the case of the breakdown of the support level of 70.70, the targets will be the support levels of 68.60 (Fibonacci level 23.6% of the correction to the growth wave that started in June 2017 with the support level near the 42.00 mark), 68.10 (ЕМА144 on the daily chart), 66.35 (ЕМА200 on the daily). chart). While the price is above the key support level of 66.35, a long-term upward trend remains.

Support levels: 71.55, 70.70, 68.60, 68.10, 66.35

Resistance levels: 72.80, 73.85, 75.00, 76.80

Trading Scenarios

Sell Stop 70.20. Stop Loss 72.90. Take-Profit 68.60, 68.10, 66.35

Buy Stop 72.90. Stop Loss 70.20. Take-Profit 72.80, 73.85, 75.00, 76.80

XAU/USD: correction after a long period of decline


Current Dynamics

Against the background of the continuing instability of stock markets, as well as weaker than expected macro data coming from the US, and the weakening dollar, investors are buying gold again. Last Monday, gold prices peaked from the end of July.

Gold futures on COMEX rose on Monday to $ 1233.00 per ounce.

A weaker dollar makes gold more attractive to holders of other currencies.

However, the current growth in gold prices should be considered as a correction after a long period of decline.

American stock indices in general are holding near record levels this year, and a strong dollar and high yield of treasury bonds have a negative impact on gold. After new strong financial reports and economic data, stock indexes and the dollar will start to grow again, and this will limit the potential for gold price growth.

Despite the recent increase in gold quotes, it is necessary to look for an opportunity to enter short positions in the XAU / USD pair.

The general trend of XAU / USD is still bearish. In the face of rising interest rates, the investment attractiveness of the dollar is rising, and of gold - is falling.
Support and Resistance Levels

From mid-April, XAU / USD has been trading in a downward channel on a weekly chart, the lower limit of which is near the support level of 1050.00 (2015 lows).

Below the key resistance level of 1248.00 (EMA200 on the daily chart and the Fibonacci level of 50% of the correction to the wave of decline since July 2016), the downward trend prevails.

The breakdown of the support level of 1220.00 (Fibonacci level 38.2%) confirms the return of XAU / USD to the global downtrend, which began in October 2012, and into the downward channel on the daily chart.

Correctional growth may still continue to resistance levels of 1239.00 (EMA144 on the daily chart), 1248.00.

However, in the long run, short positions are preferred below these levels.

Levels of support: 1220.00, 1208.00, 1204.00, 1185.00, 1171.00, 1160.00, 1128.00, 1085.00, 1050.00

Resistance Levels: 1239.00, 1248.00, 1265.00, 1277.00

Trading Scenarios

Sell Stop 1224.00. Stop Loss 1234.00. Take-Profit 1220.00, 1208.00, 1204.00, 1185.00, 1171.00, 1160.00, 1128.00, 1085.00, 1050.00

Buy Stop 1234.00. Stop Loss 1224.00. Take-Profit 1239.00, 1248.00, 1265.00, 1277.00