09/03/2020
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
General Comment
The unchartered territory of the world economy in between coronavirus and trade wars at the oil create new data in the markets with extremely high volatility. It is a case for very experienced traders and it’s good for the non-professional traders to wait until the storm of volatility calms down before they open new positions. It’s very important to know that sometimes in the markets the best positions are the ones that you didn’t open.
EURUSD
Strongly bullish week for EURUSD which opened at 1.1044 and closed at 1.1289. The announcement of the 0.50% rates cut 0.50%, to 1.25% from FED along with a solid fear for the coronavirus expansion have resulted a very weak USD, even if the new job positions in February that had been announced last Friday were better than expected. Early this morning, the pair has opened with strong bullish trends, touching even 1.15. This week there is the ECB session for Interest Rates in Eurozone and the markets are wondering if there’s a possibility for changes at this Central Bank as well. This case though until now has a low probability. An important role will also have the GDP announcement on Tuesday for the 4th quarter of 2019 but any possible rumours for new rates cut from FED in combination with the coronavirus will be the active dominators for the current week again. EURUSD had a big raise during the last weeks and maybe the new equilibrium is not far away from the current price. Under these circumstances, we’ll try range strategies this week, betting on consolidations and sideways movements for the pair.
GBPUSD
Bullish movement for GBPUSD which managed to close above 1.30, at 1.3045. There were some rumours for rates cut from the Bank of England as well but it didn’t affect GBP so the markets do not consider this scenario very possible at this stage. The negotiations between UK and EU regarding a trade deal in Brexit carry on without important news. Next Wednesday is going to be important for the UK economy since we’ll see the announcements of the Industrial Production in January, the British GDP in January and the economic forecast for the next year. USD seems very weak at this moment so we’ll open buy positions, targeting the price area of 1.32.
USDJPY
The free fall of USDJPY continues. Last week the pair dropped from 107.45 to 105.35 while in the current week the important support of 105 has been crashed since USDJPY is moving a bit above 102. Weak USD combined with the safety of JPY in concern & fear period (coronavirus) have brought this huge USDJPY drop and now the next target for our sell positions is the next support at 101.20. The 10-years US yield (which has strong correlation with USDJPY) has tumbled to 0.52%. We need to remind that about a month ago, the yield was above 1.50%.
EURJPY
Slightly bullish week for EURJPY with a weekly close at 118.94, just 25 pips above the weekly open. This mainly has to do with the big uptrend of last Monday since the rest of the days, the pair had bearish tendencies. This week has started very bearishly for and we’ll open sell positions, looking at the support at 116.50.
EURGBP
Low volatility for EURGBP last week that leaded to a slight raise, from 0.8639 to 0.8651. During the week though, we saw prices above 0.87 and the uptrend opening of the current Monday has brought the pair to the price area of 0.8730. With such dynamics, we’ll open buy positions targeting the price area of 0.88 which is the level of last September for the pair.
USDCAD
Corrective and consolidative trend for USDCAD last week. A big drop last Monday and weak uptrend the rest of the days had a result a weekly close at 1.3424, just 10 pips below the weekly open. This week USDCAD has opened significantly higher and it’s moving currently above 1.36. The Bank of Canada cut the Interest Rate 0.50%, to 1.25% and somehow the rates cut from FED has been compensated. A big factor though is the oil prices which really crash, resulting a very weak CAD. With such data, since it’s not impossible to see the pair even at 1.40, we remain buyers on the pair.
USDCHF
A real sinking for USDCHF last week since from the weekly open of 0.9630, closed last Friday at 0.9372. The current week has opened with strong bearish trend as well and the pair is moving around 0.9250. USD is very weak because investors have a risk averse mood but CHF is considered to be one of the safe haven assets, so only an artificial intervention from the Bank of Switzerland is able to stop the drop. If this does not happen, the next technical support for the pair is at 0.88 which will be the target of our sell positions.
AUDUSD
Bullish week for AUDUSD which managed to close at 0.6640, significantly higher from the weekly open of 0.6466. Early on the current Monday, we saw a big correction for the pair, down to 0.6310 but this gap has been filled already and AUDUSD is close to 0.6550 again. The Australian Prime Minister has announced a series of relieving measures from coronavirus consequences so investors consider AUD at this stage a better choice than USD. If AUDUSD is able to exceed the strong resistance of 0.6670, then it may exceed 0.67 too, by looking even higher. We remain buyers at the pair for one more week.
SP500
The strong pressures on SP500 continued last week with a weekly close at 2,965 points but this drop would be even bigger if we didn’t have the bullish reactions of Monday and Wednesday. This week’s futures have opened bearishly, following the trends of last Thursday & Friday and currently the Index is moving close to 2,820 points with losses of 5%. With such a bearish momentum for the Index, we need to put our eyes on the next supports: the first one is at 2,740 points and the second is at 2,400. These should be the take profit levels for our short positions this week.
DAX30
Another bearish week for DAX30, which closed at 11,544 points and loss above 3%. Index futures early this morning is moving already below 11,000 points and losses close to 5.5%. The first strong support is at 10,500 points and this would be our target for our short positions.
FTSE100
FTSE100 closed last week at 6,469 points and losses close to 2.5%. Following the rest of the Indices, FTSE100 is losing early this Monday more than 6%, moving below 6,000 points. 6,000 is a milestone price for the Index and this could trigger even lower prices that’s why we’ll insist opening short positions for one more week.
Gold
Gold price has recovered impressively after the technical correction and managed to close above $1,674 with weekly profit more than 5.5%. It’s obvious that the investors hold on gold, watching the rest of the markets crumbling. The weekly open price was close to $1,700 but we witness a correction to $1,670. Gold prices are in the level of 2012 but any liquidation in order to support other markets (mainly the stock markets) may cause temporary corrections again. The main trend though is obviously bullish and as long as there is no good news from coronavirus battlefront, we may see prices even close to $1,770. We’ll open long positions again.
US Oil
Significantly bearish was the last week for oil, which closed on Friday at $41.74, with losses that touched 8%. Th real crash though is taking place this week where oil prices moved below $30, with loss that touches 30%! This is the biggest daily drop since 1991. The main reasons for this have to do with the fears of the world growth due to coronavirus and above all, a new trade war that Saudi Arabia started. Saudi Arabia announced that will increase the production unilaterally above 10M barrels per day. Last week’s OPEC session didn’t have the result of a production cut but on the contrary, through Saudi Arabia which has a production capacity greater than 12M barrels per day the production will be increased. Production increases, supply increases and prices drop. We may see some technical bullish reactions but it’s really difficult to see prices below $20 and in the same time without relieving news it’s difficult to see prices significantly above $30 too. Maybe somewhere in the middle, close to $25, it’s possible to have the new fair price for the oil at this stage.
Bitcoin
While Bitcoin during last week had a bullish momentum, the last weekend was awful since the crypto returned back to the price area of $8,000 and total weekly loss close to 6%. There’s a big disappointment amongst the crypto traders & investors because it seems that in this case, Bitcoin didn’t act as an alternative asset solution. On the contrary, it seems that Bitcoin is in a downtrend since the beginning of last month where it touched the price of $10,500. Important test will be the price of $7,000 because a bearish breakout would mean the end of the big downtrend reversion. A big downtrend has started at last summer, we saw a bullish reaction in the beginning of the year and now back to bears again.
