EUR/USD, GOLD, U.S. OIL
Anton Kolhanov | Mar 30, 2017 02:17AM ET
EUR/USD will go back to 1.0550, gold to $1200 and oil rebound down from $49 and will retest 47.60
Last Friday Trump wasn't able to close the “Obama care” program and he was “destroyed” by congress. Looking on this, most traders decided, that after this fall Trump will have the same situation with all the rest of his laws, such as spending on infrastructure and tax policy. Fake downtrend on the dollar was supported with a gap on EUR/USD, when big players on “Trump risks” started to decrease some part of their dollar longs. After that we have a break up of daily neck line and by cascade this started to open deals of the rest of the small players.
Big business can't miss new tax policy, so Trump is still on the horse
But they forgot one very important thing: “Obama care” is law just for "simple/small" people and who cares, what is better for them and what is worst? But tax policy is law for big boys, for business and even, if Trump has any disagreements with congress, he will not have them by the new tax law. Even, if congress is trying to shows how they are friendly and respectful of society, anyway they feed from hands of big businesses, whose interests they are protecting and lobbying.
That’s why it's very premature to say anything about the Trump disaster. At the same time, we still have differences in rates with U.S. and EU and EU still has not made any changes in their rates policy or tapering of money (QE) and we haven’t heard any verbal changes about this direction.
Buy dollar on the bottom, sell gold on the top
And at the same time the dollar now is trading on the best resistance, that we can have for near time. EUR/USD rebounded from a long term blue downtrend trend line on price 1.0880 and is going to made a false break up of neck line of clear pattern “head and shoulders”, at price 1.0770, with a break down of that pair that will go to support at 1.0560. Also dollar index rebounded up from daily neck line at 98.00 and going up to 101.30. GBP/USD rebounded down from daily neck line at 1.2620 and is already falling to 1.2200. Gold is trading on the strongest resistance at 1258 and with a break down of support at 1246 will go to daily neck line 1204 – 1195. Do I need to continue?
TECHNICAL FORECAST
EUR/USD
Uptrend scenario:
An uptrend will start as soon as the market rises above a resistance level of 1.0880, which will be followed by a move up to a resistance level of 1.1030 and uptrend will be expecting to continue, while the market is trading above a support level of 1.0840.
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Downtrend scenario:
A downtrend will start as soon as the market drops below a support level of 1.0770/50, which will be followed by a move down to a support level of 1.0500/60.
LONG TERM FORECAST (from March 15/2017)
FUNDAMENTAL OUTLOOK
Fact of rates increasing is a negative event and the dollar will fall on over 550 pips during few months to 1.1000 and 1.1250
Today the Fed will increase rates, but this fact will not bring anything positive for the dollar for long term perspective, only in a few days we can have a positive effect. Why? When the Fed increased rates on 16.12.15 the EUR/USD was rising over 3 days and made +200 pips, but after that fell on -660 pips over 2 months.
When the Fed increased rates a second time on 14.12.16, the dollar rose over 2 days, made +250 pips, but then fell on -480 pips over the next 1.5 months. The same was with prices on gold: 1 rising +240 (4 days) and then -2100 (2 month); second +330 (2 days) and then -1400 (3 month). That said, before rates increased, the market already included this possibility in the price and by the fact that the price start to go in the opposite side.
After rates market will switch its attention to negative factors
We have negative factors for rates future, such as:
- unknown Trump tax policy, that the Fed needs to include in further rates and as long as Trump does not say anything about it, the more we have a risk that his promises will not be fulfilled;
- collapsed oil price, that will reduce rising of CPI and will extend terms of increasing for next rates;
- a problem with further federal debt prolongation, that can not to be approved by government for some time, that will create instability and we already had such situations with Obama;
- a problem with rates increasing above 2% at all, because of huge debt that U.S. will not be able to service with big rates.
At the same time the previous week, Draghi increased ECB expectation relatively to a much stronger CPI and increased GDP growth, that is positive for euro.
All this Trump promises without execution and top trading of U.S. stock indexes, with big U.S. debt and without rising of rates above 2% and to 2%, is looks like a very big HYIP (financial pyramid), that Trump’s brigade trying to sell for us from the market top.
TECHNICAL FORECAST
Uptrend scenario:
The market is trading on strong support at 1.0550 - 1.0500, from that we can expect a continuation of an uptrend to resistance 1.0800 (neck line) and if it keeps on moving up above that level, we may expect the market to reach resistance levels of 1.1130 - 1.1230.
Downtrend scenario:
A downtrend will start as soon as the market drops below a support level of 1.0500, which will be followed by a move down to a support level of 1.0400, from that there will be a possible correction to resistance at 1.0500. But if market will keep on moving down below 1.0400, we may expect the market to reach a support level of 1.0250.
GOLD
Uptrend scenario:
An uptrend will start as soon as the market rises above a resistance level of 1258.50, which will be followed by a move up to a resistance level of 1285.
Downtrend scenario:
A downtrend will start as soon as the market drops below a support level of 1246, which will be followed by a move down to a support level 1195 - 1205.
U.S. CRUDE OIL
Uptrend scenario:
An uptrend will start as soon as the market rises above a resistance level of 49.00, which will be followed by a move up to a resistance level of 49.50, 50.20 and 51.00.
Downtrend scenario:
A downtrend will start from key resistance 49.00, which will be followed by a move down to a support level of 47.60.
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