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Weekly Review 27.2.17- 3.3.16

EUR/USD

The EUR/USD pair closed the week a 1.0620. Fed's Yellen spoke about the US economic outlook at the Executives Club of Chicago last week (she added that two more rate hikes this year are likely, this is positive news for the USD). The US released encouraging macroeconomic figures last Friday, as the ISM non-manufacturing PMI rose to 57.6, the highest since April 2015, from 56.5 in January. The Markit services PMI on the other hand, was revised slightly lower to 53.8 from a flash reading of 53.9 and 55.6 in January (ahead of the release of the US Nonfarm Payrolls report this Friday). The EUR/USD pair recovery was enough to trim previous week's losses, but most analysts agree that as long as below the critical 1.15 level , the risk will remain towards the downside.

 

Tehnical analysis

When we look at the monthly chart of this pair we see that long trend is bearish (downtrend).  As long the price is below this trend line there is no indication of long trend reversal and EURUSD is in the sell zone(Big Investors are still in the short – SELL position on this pair). On this monthly chart I also marked support and resistance levels, 1.1500 (resistance) and 1.0500 (support) levels represent current trading range and breaking above/below this levels would open way to 1.2250 (resistance 2) or 1.000 ( psychological support).

 

On this daily chart we can see that EUR/USD bottomed at 1.034 level and after that started to rise. On this chart I marked short term support and resistance levels, 1.08 (resistance, 1.068-1.07 are also resistance levels) and 1.05 (support). If the price breaks 1.07 we have open way to 1.08 level. Most analysts agree that as long as below the critical 1.15 level , the risk will remain towards the downside. If the price breaks 1.055 support we have open way to 1.034 level and after that 1.01 level.

 

 

GBP/USD

GBP/USD pair closed its fifth consecutive week in the red, right below the 1.2300 level (GBP/USD closed Friday with modest gains after plunging to 1.2213). The Brexit bill will remain in the chamber until next Tuesday, and then return to the House of Commons, where PM May expects to revert the peers' decision. So far the British Pound has weakened over 10% against the US Dollar (in one year period) and tested its worst levels in more than three decades. Majority of the year-to-date losses were recorded on the day when British voters decided that UK should end its 43 year old association with the European Union (EU). UK will continue to be a part of EU as the actual process would take a minimum of two years (market sources reported that the House of Common cleared May's Brexit Bill that allows the UK government to initiate formal talks to exit the EU).

Fed's Yellen spoke about the US economic outlook at the Executives Club of Chicago last week (she added that two more rate hikes this year are likely, this is positive news for the USD). GBP/USD still lies within a downtrend channel. The pair is trading below 1.3000 and the bearish momentum remains lively. First resistance is located at 1.3000. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline.

GBP/USD is still in the "SELL" zone (fundamentally and technically)

 

Technical analysis

When we look at the monthly chart of this pair ( 12 years period) we can see strong " bearish" correction. On this monthly chart I marked resistance levels, 1.7000, 1.4300, 1.4000 are long - term resistance levels, 1.3000 also represents strong resistance level. As long the price is below 1.4000 resistance level there is no indication of long trend reversal and this pair is in the "sell" zone ( there could be a short term jump but strong "BUY" signal would be if the price jumps above 1.4000 level).

 

 

On this weekly chart we can also see that major trend is "bearish", price has dropped from 1.7000 level to 1.1946 level ( this level represents now strong support). On this chart I marked support and resistance levels - 1.2750,1.3000 and 1.3500 represent resistance levels, 1.2000 and 1.1946 represent strong support levels. On this chart I marked trend line and as long the price is below this line there is no indication of trend reversal (The pair is trading below 1.3000 and the bearish momentum remains lively). Breaking above 1.2600 would open way to 1.3000, breaking below 1.2200 would open way to 1.2000.

Oil 2017 report

 

The price of oil is currently floating at around $52-54 per barrel (in 2016 high price was 56.82 USD on December 30, 2016, low price was 26.05 USD on January 20, 2016). The market is currently operating in a situation of oversupply by approximately 1.53 million barrels per day (mb/d) produced over what is needed. This oversupply has, at least partially, been responsible for the drop in oil prices, from just over 112 USD a barrel in June 2014 down to 26 USD in January 2016. In November 2016, OPEC decided to decrease production by 1.2mb/d, and non-OPEC countries followed suit, dropping production by 0.6mb/d from January 2017.

Most analysts are expecting an increase in oil price for the first half of 2017 (a slow but steady rising of prices). In the second half of 2017, analysts are expecting the price to continue to grow at a similar rate (they also expect continued growth in Oil demand).

 

Technical analysis

When we take a look at this chart, we can see that priced dropped from 110 USD to 26.05 USD and than started to rise. The current rally has managed to break the downtrend that has been in place for so long, and coming after a double bottom, it looks positive from a technical perspective. The bullish trend is still in place, but momentum is starting to fade a little bit. On this chart I marked support/ resistance levels and midterm trend line. As long the price is above this trend line there is no indication of trend reversal and price will go up. If the price breaks it we have support levels on 45 and 40 usd (on this levels price could have some "bullish" reaction). Holding above 50 usd support level (psychological level) is important to achieve the waited targets, this supports the continuation of bullish trend overview efficiently for the upcoming period, and the way is open the achieve more gains that its next target located at 55 usd ( 60 - 62 usd is very strong resistance level). If the price jumps above 60 usd resistance level, 70 usd could be the next target.

 

According to technical analysis this trend line and 50 USD represent strong support levels ( 45 USD and 40 USD also represent support levels). If the price continues to rise we have first resistance at 55 USD

 

For now, oil price is more "bullish" - from technical and fundamental perspective, holding above 50 usd level (psychological support) is important to achieve the waited targets. As long the price is above this trend line there is no indication of trend reversal and price will go up ( Oil is in the "BUY" zone, If the price jumps above 60 usd resistance level, 70 usd could be the next target).

Most analysts are expecting an increase in oil price for the first half of 2017 (a slow but steady rising of prices)

 

Indices

A number of analysts and strategists over the past few days are cautioning that worrisome trends are starting to crop up as equities take the escalator higher, pointing to a market that is getting overheated (according to them there is several signs that suggest Wall Street’s “uptrend is getting tired”). Some analysts says the market’s run of good days to record highs could be a “bull trap” that sees latecomers gored when the market takes a step back. But most Wall Street's pros wouldn't say so, my opinion is also that there are no signs for now that "bullish" trend will end, there could be a short term retreat but as long S&P 500 and Dow Jones Industrial Average are above (2,250 and 20,000 points) there is no signal of "bear" market

 

Dow Jones Industrial Average

When we look at 5 year chart we see that Dow Jones Industrial Average is moving in "uptrend". As long DJIA is above this trend line and 20,000 points this index is in the "BUY" zone ( 20,000 and 19,000 represent support levels). Short term support and resistance levels are 21,000 and 21,500 points - If DJIA jumps above 21,500 points that would be a confirmation of "BULLISH" trend. If DJIA falls below 19,000 points it would be strong "SELL" signal and than we have open way to 18,000 level support.

 

 

 

S&P 500

When we look at this chart we can see that S&P 500 Index is moving in "uptrend". As long the S&P is above this trend line and 2,250 points this index is in the "BUY" zone ( 2,250 represent support level). If S&P jumps above 2,400 points that would be a confirmation of "BULLISH" trend and open way to 2,500 resistance.  As long is the S&P is above 2,250 points short term trend is "bullish" ( this index is in the BUY zone) and there is no indication of trend reversal. If the S&P falls below this trend line it would be strong "SELL" signal and than we have open way to 2,000 level support.

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