Wave Analysis from InstaForex


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Gold answers with tooth for tooth

Gold quite rapidly responded to the United States and China's transition from a conflict to massive military action. China is ready to to retaliate in the "tit for tat", answering exactly the same way as its opponent. If the introduction of Washington's import duties on steel and aluminum on Beijing is estimated at $3 billion, then $50 billion was announced to match it for the Washington's allegations of violation of intellectual property rights along with duties for the supply of 106 US products, including soybeans, chemicals, airplanes and cars. According to China, the accusations are unproven, unilateral protectionism is flourishing, and the beast must be planted back into the cage.

It seems that Donald Trump has found a worthy opponent capable of putting an end to his desire to reduce the negative balance of foreign trade from the current $375 billion to a hundred billion. China is ready to defend its own interests, but the trade war does not bring anything good. Like any war, in principle. The slowdown in global GDP as a result of supply chain disruption, the acceleration of inflation under the influence of rising import prices and the aggressive monetary tightening of the Fed are bringing the US economy closer to a recession. The situation is aggravated by the growth of the national debt, which must be financed, and the problems in this area put serious pressure on the US dollar.

Indeed, if we assume that the United States will not stop at this and will pay all Chinese import duties, then China will have to take other measures, since supplies from the United States are less than its own in the opposite direction. An adequate response will require the sale of treasury bonds, rumors about it a few weeks ago, the dollar dropped. The greenbacks weakness can push gold to around $1,400 an ounce and higher, which significantly exceeds the median forecast of Bloomberg experts.

Forecasts and dynamics of gold

Traders with 40-year experience note that for several decades, precious metal has been sensitive to the USD index and the yield of US bonds. In this regard, its limited sensitivity to the trade war looks logical: despite the collapse of the stock indices, the dollar has remained stable. Perhaps the reason should be sought in the fact that the duties are not yet in effect, or that they may not do so at all. It is likely that Beijing and Washington will sit at the negotiating table, and their constructive nature will allow investors to turn their heads again towards the Fed. Thus, BNP Paribas claims that gold will close the year in the red zone, and IHS Markit expects prices to fall below $1200 on the background of four increases in the federal funds rate.

Unlike "bears" in precious metals, central banks continue to believe in its bright future. Thus, the Russian regulator in February added 22.8 tonnes to gold and currency reserves after 18.9 tonnes in January and 224 tonnes in 2017. The growth rate is the 11th consecutive month.

Technically, a breakthrough in resistance at $1357-1362 per ounce will open the way for bulls to target 127.2% and 161.8% for the AB = CD pattern. They are located near the marks of $1390 and $1405.

Gold, daily chart

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[b]Intraday level for USD/JPY, April 06, 2018 [/b]

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In Asia, Japan will release the Leading Indicators, Average Cash Earnings y/y, and Household Spending y/y data, and the US will release some Economic Data, such as Consumer Credit m/m, Unemployment Rate, Non-Farm Employment Change, and Average Hourly Earnings m/m. So, there is a probability the USD/JPY will move with a medium to high volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance. 3: 107.65.
Resistance. 2: 107.44.
Resistance. 1: 107.23.
Support. 1: 106.97.
Support. 2: 106.76.
Support. 3: 106.55.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

[b]*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.[/b]


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Sensation from North Korea

AUD / USD
On Friday, the Australian dollar did not give rise to the speculative sentiment of the European and American traders and was fundamentally declined by 10 points on the general unfavorable background of foreign markets. Oil lost in price slightly more than 2%, iron ore -0.08%, copper -0.7%.

This morning, investors were satisfied with the growth in the construction sector activity from AIG in the March assessment, the growth came in from 56.0 to 57.2 points. The NAB business confidence index will be release tomorrow, as the March forecast showed results of 12 against 9 in February. Also, the stock markets of the APR failed to grow badly today despite the Friday drop in the US market, with the Nikkei 225 + 0.68%, S & P / ASX 200 + 0.37%, and China A50 + 0.26%. The possible optimism is related to Kim Jong-un's statement about the readiness to test the nuclear weapons and to conduct a denuclearization of the Korean Peninsula. The "Australian" currency could possibly grow in the range of 0.7760 / 75.

* The presented market analysis is informative and does not constitute a guide to the transaction.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Producer prices in the US have grown significantly

Data released in the first half of the day, slightly supported the European currency, which formed a new uptrend yesterday.

Positively, euro buyers responded to the growth of industrial production in France and Italy in February of this year after more than a sharp decline in the beginning of the year.

According to the report of the statistics agency, industrial production in France in February this year grew by just 1.2% after falling 1.8% in January. Economists predicted that industrial production will grow by 1.3%.

In Italy, the indicator that was mentioned above also added 1.0% after a drop of 1.8% in January of this year. Economists were less upbeat and expected a decline in production in February by 0.5%. Compared to the same period in 2017, the industry in Italy grew by 2.5%, while economists were confident in growth of 4.8%.

The euro has grown well after weak data, which pointed to a decrease in the optimism level of the leaders of small companies in the US in March this year. It is logical to assume that the trade war unleashed by the White House administration negatively affects entrepreneurs who are expecting an improvement of the state of the economy and further develop their business.

According to the report of the National Federation of Independent Business, the optimism index of small business in March dropped to 104.7 points against 107.6 points in February. As noted in the NFIB, despite the decline in the overall index, hiring of employees and spending on the acquisition of new real estate remain at high levels.

Without attention, buyers of the US dollar left the fact that producer prices in the US in March of this year showed a significant growth, which will necessarily create a good overall inflationary pressure in the US economy, as expected by the Federal Reserve.

According to the US Department of Labor, the producer price index rose by 0.3% in March compared to the previous month. The tank index, which does not take into account volatile categories, especially energy prices, rose by 0.3% in March, compared with the previous month.

Economists had expected that the overall index would show an increase of 0.1%, and the base index will grow by 0.2%. Compared to the same period of the previous year, the overall index rose in March by 3.0%, the index excluding food and energy increased by 2.7%.

The British pound disregarded the speech of the representative of the Bank of England Andy Haldane, who said that monetary policy had not had a significant impact on income inequality in the UK. However, without stimulation, unemployment would be higher and GDP would be lower.

So far, demand for the pound remains on the back of a lack of new conversations related to Brexit. UK economic indicators also point to a positive scenario for the economy, which could lead to further hikes in interest rates by the Bank of England. *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Gold goes ahead

When investors do not know what to do, they buy gold. Mutual threats of the US and China on the introduction of import duties caused only a temporary decline of stock indices on fears of a slowdown in the world economy due to the trade war. The US administration managed to calm investors, who can not understand how the US dollar will react. According to Morgan Stanley, negotiations between Washington and Beijing, a strong economy, tightening of the monetary policy of the Fed and improvement of the state of foreign trade allow us to rely on the growth of the USD index. Deutsche Bank, on the contrary, is confident of its decline due to a double deficit.

While the foreign exchange market is looking for an answer to the question of how to respond to a trade war, investors are buying up precious metals. ETF stocks continue to increase, and Xetra-Gold, one of the three largest specialized exchange funds, has increased to peak levels since its inception in 2007. This indicates a high demand for the analyzed asset, primarily in Europe.

"Bulls" of XAU/USD particularly do not panic about the potential decline in Indian imports. Bloomberg, referring to its reliable sources in Delhi, who wished to remain anonymous, reported a reduction in shipments to 64.2 tons to that country in March. A year ago, it was about a figure of 121 tons. History shows that if gold flows from East to West ( in ETF), then the chances of getting an uptrend are much higher than the downtrend.

Especially against the background of increasing volatility of precious metals. The 60-day indicator rose to 12.4, the highest for more than a year. In such conditions, one can expect increased activity from central banks in the area of purchases of the analyzed asset for increasing gold and foreign exchange reserves.

Dynamics of gold volatility

If we add to the above, the recent escalation of the conflict around Syria and Iran, the growing likelihood of Russia's response to US economic sanctions and the associated deterioration of global appetite for risk, it becomes clear that the fundamental background contributes to the continuation of the XAU/USD rally.

The return of investors' interest in the single European currency also played a role in the process. Its share in the USD index is 57%. Therefore, the "hawkish" comments made by Ewald Novotny about the completion of QE in 2018 and the increase in the deposit rate from -0.4% to -0.2%, as well as the optimism of other ECB representatives regarding the prospects of a slow down in the first quarter of the economy for the currency bloc, returned hopes of a recovery of an upward long-term trend to bulls of the EUR/USD.

The release of data on US inflation for March and the publication of the minutes of the last meeting of the FOMC can hinder the plans of the fans of the precious metal. Overclocking the CPI and the "hawkish" rhetoric of the Fed will increase the chances of four rate hikes on federal funds in 2018 and will provide short-term support to the dollar.

Technically, breaking through the resistance at $1357 and $1362 per ounce will increase the risks of activating of AB = CD patterns and the realization of their targets by 127.2% and 161.8%.

Gold, daily chart

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The ECB looks with caution in the future

The data in the first half of the day had a negative impact on the exchange rate of the European currency, as it indicated a fall in industrial production in the euro area in February this year compared with January. The minutes of the meeting of the European Central Bank were also not optimistic. According to the report of the statistical agency, industrial production in the eurozone in February this year fell by 0.8% compared with January, while economists expected production growth of 0.2%. Such a sharp reduction will necessarily lead to a slowdown in the growth of the euro area economy in the first quarter of this year. A declining trend is observed for the third month in a row, and each time it is bigger and bigger. Thus, in December, compared with November, industrial production fell by 0.1%, and in January compared with December by 0.6%.

As I noted above, the publication of the minutes of the meeting of the Governing Council of ECB officials, which was held on March 7-8, put pressure on risky assets, which led to a sharp decline in the European currency.

The main reason for such a sharp decline was the ECB's concern over the probability of a trade war with the US, as well as the excessively high euro exchange rate. As noted in the minutes, much emphasis is put on what will be the damage from the trade war, as well as on what measures the European Union will take, which may affect the weakening of investor confidence.

After such a report, one can hardly rely on the regulator to reduce its fiscal incentives in autumn, and especially an increase in interest rates by the European Central Bank in the spring of next year.

As for the technical picture of the EURUSD pair, the development of the market went in accordance to a bearish scenario. Now sellers are working out support levels in the area of 1.2330, continuing to strive for a larger area of 1.2300 and 1.2275.

The British pound strengthened somewhat against the US dollar after a slight decline in the first half of the day. The pound was supported by a speech by David Davis, who is in charge of the UK government for Brexit talks.

According to Davis, at the present time there is a very low probability that the UK and the EU will not reach an agreement on Brexit, and during the transition period, little will change for business. The transition period will give the UK time to prepare for the application of the new rules

Davis also drew attention to the fact that the big plus of Brexit is the ability to independently conclude trade agreements, which in the future will enable the UK to conclude more favorable agreements.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Elliott wave analysis of EUR/NZD for April 16, 2018

EUR/NZD is following the expected path and is correcting. The minimum corrective target at 1.6793 has already been tested, but we expected a little more correction closer to the 1.6835 - 1.6860 area will be seen before lower again towards the ideal target near 1.6620. The test of 1.6620 will ideally complete the corrective decline from 1.7162. That said it's possible that a larger correction is developing and if this is the case, a decline to 1.6220 should be expected before a more firm bottom is in place.

R3: 1.6860
R2: 1.6820
R1: 1.6793
Pivot: 1.6736
S1: 1.6676
S2: 1.6620
S3: 1.6580

Trading recommendation:
We are looking for an EUR-selling opportunity at 1.6845.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Fundamental Analysis of EUR/USD for April 17, 2018

EUR/USD has been quite impulsive with the bullish gains recently which engulfed the recent bearish pressure with a daily candle yesterday. The volatility in the EURUSD is still quite high and expected to have no definite trend momentum until 1.25 is broken above or 1.21 is broken below. Despite having worse economic reports EUR gained good momentum over USD recently which is expected to push higher in the coming days. Today EUR German ZEW Economic Sentiment report is going to be published which is expected to decrease to -0.8 from the previous positive figure of 5.1, Italian Trade Balance report is expected to show an increase to 2.23B which previously was at -0.09B and ZEW Economic Sentiment report is expected to decrease to 7.3 from the previous figure of 13.4. On the other hand, today USD Building Permits report is going to be published which is expected to increase to 1.33M from the previous figure of 1.30M, Housing Starts is also expected to increase to 1.27M from the previous figure of 1.24M, Capacity Utilization Rate is expected to have slight decrease to 77.9% from the previous value of 78.1% and Industrial Production report is expected to decrease to 0.3% from the previous value of 1.1%. Moreover, today FOMC Member Williams and Quarles is going to speak about the nation's interest rate and monetary policy which is expected to be neutral in nature. As of the current scenario, both currencies in the pair is expected to have mixed economic results today and this week there is no further high impact economic reports or events to push the price into a definite trend but as the EUR is quite stronger in comparison to USD with the market sentiment, further bullish momentum is expected after certain retracement along the way in the coming days.

Now let us look at the technical view. The price is currently residing above 1.2350 which was recently broken below with a daily close showing good evidence of price proceeding lower. As of yesterday, after having a daily close above 1.2350 does signify previous bearish move as a false break which is currently expected to push the price much higher in the coming days with the target towards 1.2450-1.25 price area. As the price remains above 1.2350 area, the further bullish pressure is expected in this pair.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Brent: East is a delicate matter

Donald Trump's statement that "the mission is carried out" after the military strikes against Syria by the United States and its allies allowed the "bears" of Brent and WTI to go on a counterattack. The conflict around Damascus did not turn into a mass brawl and the risks of interruptions in supplies from the Middle East declined, which led to the removal of oil futures from the region of 3.5-year highs. However, fears about the resumption of economic sanctions against Iran, political instability in Venezuela, OPEC's readiness to expand its commitments beyond 2018, and a strong global demand set the fans of black gold in a major way. In addition, who will give his head to be cut-off to guarantee that the US president will not throw out another fortune?

Theoretically reducing the degree of geopolitical risks opens the way for correction. "Bears" are waiting for their hour, guided by the growth of American production by about a quarter from mid-2016 to 10.53 million bpd and the increase in drilling rigs by 73 units from the beginning of the year. The dynamics of indicators indicates that US companies are actively developing production and simultaneously hedging price risks through the sale of futures contracts. The problem is that the decline in stocks indicates the outpacing dynamics of domestic demand. According to the forecasts of experts in Bloomberg, by the end of the week of April 13, oil reserves in the USA will have decreased by 600 thousand barrels and for the first time in the last few years, will have fallen below their five-year average.

Dynamics of US stocks

Thus, the large-scale fiscal stimulus favorably affects domestic demand and allows to cover the negative from the increase in production. The increased interest in black gold in other countries, coupled with the implementation of the Vienna agreements of OPEC, lays a solid foundation under the upward trend for Brent and WTI. Thus, the volume of oil refining in China in March set a new record of 12.13 million bpd. The previous one was recorded in November (12.03 million). The acceleration of the indicator compared with the average for the first two months of the year (11.56 million) and March 2017 (11.19 million) speaks of the growing appetite of the Celestial Empire. The volume of its domestic extraction of black gold is 3.76 million bpd. The indicator is wandering near the lowest mark since June 2011, and its dynamics convince that Beijing is actively buying oil abroad.

The situation can be changed only by the large-scale trade war between the US and China. This is the opinion of the International Energy Agency. Nevertheless, it does not change its forecast for the increase in global demand for 2018 at 1.5 million bpd. This shows that the IEA does not believe in military action. In our opinion, if the world economy headed by the US is beginning to restore the growth rates taken in 2017. The increased interest in oil will allow the "bulls" of Brent to continue the northern trend.

Technically, the April update of the maximum will increase the risks of implementation of the Targets by 161.8% and 200% in the AB = CD patterns. They are located near the marks of $ 75-76.5 per barrel.

Brent, daily chart

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Technical analysis: Intraday Level For EUR/USD, April 19, 2018

When the European market opens, some Economic Data will be released such as Spanish 10-y Bond Auction and Current Account. The US will release the Economic Data too, such as Natural Gas Storage, CB Leading Index m/m, Unemployment Claims, and Philly Fed Manufacturing Index, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.2438.
Strong Resistance:1.2431.
Original Resistance: 1.2419.
Inner Sell Area: 1.2407.
Target Inner Area: 1.2378.
Inner Buy Area: 1.2349.
Original Support: 1.2337.
Strong Support: 1.2325.
Breakout SELL Level: 1.2318.

Disclaimer:
Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Analysis are provided by InstaForex