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Wave Analysis from InstaForex

Discussion in 'FOREX Forums' started by InstaForex Gertrude, May 10, 2016.

  1. InstaForex Gertrude

    InstaForex Gertrude Active Member

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    Forecast for EUR/USD on January 15, 2020
    EUR /USD
    The dollar slightly strengthened on Tuesday, with the release of inflation data for the United States, but investors found the data not sufficient enough for a more decisive offensive. As a result, the euro showed a decline of only five points by the close of the day. The basic consumer price index added 0.1% for December against the expected 0.2%, while maintaining an annual value of 2.3%.
    [​IMG]
    On the daily chart, the signal line of the Marlin oscillator moves sideways directly along the boundary of the bullish and bearish trends, which creates the risk of continued correctional growth to the Fibonacci level of 110.0% at the price of 1.1155. If the potential is not realized, a planned decrease to the Fibonacci level of 123.6% will follow at the price of 1.1073, where the MACD indicator line also passes.
    [​IMG]
    On the four-hour chart, a price reversal from the MACD line was noted, but not fully realized. At the moment, the price is already above the balance line (red moving) and the Marlin oscillator is holding in the growth zone, which shows the price's intention to once again attack the MACD line. Now the condition for a further decrease is overcoming the price of yesterday's low.
    In general, the situation is neutral and the euro may cheer up today's data on industrial production for November (forecast 0.3%), but tomorrow retail sales in the US for December will be released, the forecast for which is 0.5% for basic sales and 0.3% for general . It is likely that investors are planning more active actions for this data.
    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
    Analysis are provided byInstaForex.
     
  2. InstaForex Gertrude

    InstaForex Gertrude Active Member

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    Gold has come to life
    The storm continues to rage in the gold market. Despite the fact that only two weeks have passed since the beginning of the year, the precious metal has already managed to go to 7-year highs, collapse like a stone, and then begin to recover thanks to bad news about the trade war. Bloomberg is actively spreading rumors that tariffs on $360 billion of Chinese imports will remain in force, at least until the US presidential election, because the White House needs to assess how Beijing is fulfilling its obligation to increase purchases of American agricultural and other products. The trade war, which has lasted just under two years, does not seem to be going to stop, which means that demand for safe-haven assets will remain high.
    The conflict in the Middle East is gradually fading. The market is dominated by the view that the current XAU/USD correction is due to the mass closure of long speculative positions. Hedge funds in the week of January 7 increased them to the highest level since the end of September, probably hoping that the confrontation between US and Iran will be long-lasting. Some are still hoping for it. The Standard Chartered Bank notes that the price movement due to geopolitics was stronger than previously expected. HSBC raised its forecast for gold for 2020 from $1560 to $1613 per ounce.
    In my opinion, the reasons for the strengthening of the precious metal should not be found in geopolitics, but in the activities of central banks, in politics and in trade disputes instead. The Fed has made it clear that even exceeding the 2% inflation target will not force it to abandon passive behavior. The regulator is ready to endure the acceleration of consumer prices during the period of economic expansion, which is good news for the "bulls" on XAU/USD. The precious metal is traditionally perceived as a tool for hedging inflation risks, asits dynamics have a lot in common with the changes in the US CPI.
    The dynamics of gold and American inflation:
    [​IMG]
    The dog is buried in the increased sensitivity of gold to the real yield of US Treasury bonds. In December, inflation in the United States grew by 2.3%. This is the second best indicator for a calendar year since 2011, when its growth rate was at 3%. In 2018, consumer prices rose by 1.9%, and by 1.6% on average for 10 years.
    Another factor supporting XAU / USD is the propensity of the world's leading central banks to ultra-soft monetary policy, which keeps global debt market rates close to historical lows. At the same time, a large-scale monetary stimulus contributes to the devaluation of currencies, which increases the attractiveness of gold. If global GDP does not recover as quickly as expected, regulators will further weaken monetary policy. With tariffs on $360 billion of Chinese imports still in place, this is more than likely.
    Technically, after reaching the target of 113% for the "Shark pattern", a natural pullback to the 38.2% Fibonacci correction level followed. Important Pivot levels are also located here. The fact that the "bulls" managed to hold support at $1545-1548 per ounce, the hopes of restoring the upward trend remains.
    Gold, daily chart
    [​IMG]
    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
    Analysis are provided byInstaForex.
     
  3. InstaForex Gertrude

    InstaForex Gertrude Active Member

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    Prospects and trends for gold in January and February 2020
    The consolidation in the gold market ended with the New Year holidays as well as rocket salvos in Iraq, where the United States killed the commander of the Kudes Iranian unit, Qassem Soleimani. Thank God, the global war did not happen, but the nerves of the investors completely lost, and they rushed to buy gold in full accordance with the forecast published in early December 2019. However, the time has come to look at the prospects of the precious metal and make adjustments to the assessment of the situation.
    As we know, the position of traders in futures contracts traded on the CME exchange has the greatest impact on the price of gold. The latest data from the Traders Obligations Report - Commitments of Traders (COT) Reports, published by the US Commodity Futures Commission - CFTC, indicates an increase in the volume of new money entering the market. In addition, the Open Interest of the gold futures contract grew from 926 thousand to 1197 thousand contracts, or almost one third between November 29 and January 10.
    [​IMG]
    Such an increase in the interest of market participants in gold, which took place against the backdrop of a rise in stock indices, suggests that the departure of the price of gold to the level of $ 1,600 per troy ounce was not an accident caused by the geopolitical situation. The assassination of the general was just an excuse for the precious metal to begin to rise again after a period of consolidation that lasted until the end of the fourth quarter.
    Moreover, it is very important that the increase in the price of gold was supported by speculators Managed Money, whose long positions during the period from December to January grew from 225 thousand to 300 thousand contracts. According to the CFTC classification, Managed Money are a priori net buyers. Thus, the demand for gold from buyers was accompanied by the opening of new positions in the futures contract, which suggests fundamental reasons for the continuation of the current trend. Due to this, exchange traders felt the potential and began to increase positions.
    If the increase in the price of gold was caused only by the development of events in the Middle East, then, firstly, we would not see a constant influx of new money that occurred in December, and secondly, Managed Money, which are speculators, could simply not react on the events that are happening.
    So, for example, what happened in September 2019 and January 2020 in the oil market. The attack on the Saudi oil infrastructure was not supported by the influx of new money into the market, and speculators were in no hurry to open new long positions, which subsequently led to a decrease in oil prices. No demand - no price increase. In December, speculators bought oil, but almost no new positions were opened in the futures, which led to a decrease in oil prices as soon as the situation in the Persian Gulf area stabilized.
    However, we have an increase in Open Interest in gold and an increase in purchases by speculators at the same time, which qualitatively distinguishes this situation from the situation in the oil market. On the other hand, the price of gold declined slightly after the crisis between Iran and the United States was resolved, and this is natural, but do not be fooled by the possibility of a potential reversal, since most likely there will not be a deep decline in the gold market.
    We will analyze the positioning of traders in option contracts. The most liquid option contract now is the February contract OGG0 with the closure on January 28 (Fig. 1).
    [​IMG]
    Figure 1: Open Interest in an OGGO Option Contract.
    First of all, the significant predominance of "call" options over "put" options is noteworthy. The Put / Call Ratio coefficient is 0.71. This means that there are only 71 Put options for every 100 Call options. In the context of the growth of Open Interest, optional barriers may not withstand and miss the price higher. With this ratio, the importance of the Max Pain point located at 1500 also decreases, and returning to this point at the time the option contract expires is becoming less and less likely. This must be taken into account when opening gold sales positions. Option barriers hold the price well, but only when there is no trend on the market.
    In this regard, it can be assumed that the levels of optional support are at 1510 and 1500. There are also graphic levels of price support, where gold can return by the end of the month for purely technical reasons. After that, there is a possibility of further price growth over the next three to six months, which implies a rise in gold to the level of $ 1,750 per troy ounce. Thus, sales to the levels of 1,500-1,510 dollars will be inappropriate, but such a price can be an ideal point for buying gold, unless, of course, by that time there will be a change in the mood of buyers in the futures market. Short-term goals for such purchases may be levels 1500, 1575 and 1600, formed by options such as "Call".
    Today, the World Gold Council - published its forecast for 2020. The forecast indicates the main factors that, in the opinion of the Council, will affect the price of gold this year. It is assumed that financial uncertainty and low interest rates in most developed economies will support the price of gold, as investors will seek new sectors to protect investments and generate income. As a result, demand from central banks will also remain high. This, combined with investor interest, will allow gold to be added back to its value in all currencies.
    According to WGC experts, the price impulse and positioning of traders will also support the price of gold. At the same time, volatility and expectations of weaker economic growth in the short term may lead to softer consumer demand, but structural economic reforms in India and China will support consumer demand in the long term.
    Thus, traders trading can earn on price fluctuations by selling and buying precious metals on the best trading conditions, but investors should not forget that gold has provided them with a yield higher than the US dollar over the past twenty years, while performing a protection function risk investment.
    By investing in gold and trading it in the short term, an investor can not only profit from fluctuations in price quotes, but also insure himself against unforeseen market risks. Be very careful and follow the rules of money management.
    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
    Analysis are provided byInstaForex.
     

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