Daily Report on July 04, 2016

This Monday, July 4th, financial and commodity markets in the US will be closed for the Independence Day holiday. Markets currently are expected to face some significant moves resulting from thin trading action and low volume due to the absence of US traders.

In the Asian trading session, Sterling trimmed its enormous losses against the US dollar from last week. The British pound rose to $1.32987, 0.25% higher than the closing price on Friday.

The survey on inflation expectations conducted by the Bank of Japan showed that Japanese companies expected the consumer prices to increase by an annualized rate of around 0.7%, while this expectation in the previous quarter was at 0.8%. This is a negative signal given that the BOJ’s target is of 2% price growth. For now, the target seems quite difficult to reach. Some additional monetary easing policies are likely to be deployed soon.

Over the past weekend, a new wage deal between employers and workers in Norway was signed, stamping out a strike that might have reduced production in the largest oil producer in Western Europe. As a result, oil prices were down slightly on Monday morning. The global benchmark, Brent slid to $50.46/barrel after closing the trading session on Friday at 50.72/barrel.


After hitting the record low in almost four months at 1.09089 , EURUSD is forming an up channel as the euro is recovering from its losses against the USD. A green arrow has formed under the price chart since the 1st of July, signaling longs on the currency pair. ADX (14) also confirms that the up-move is fairly strong. The price is expected to test the solid resistance of 1.11991 before pulling back.
Trade suggestion
Buy stop at 1.11462, Stop loss at 1.11106, Take profit at 1.11888

The sterling has been moving in an unclear fashion versus the safe-have yen since a while, after plummeting significantly to a four-year low of 133.101. The stochastics chart shows that the %K line and %D line are crawling upwards from the oversold territory, hinting that the bull is stepping in. However, the pair is forecast to consolidate for some time as RSI (14) is still far below the average level.
Trade suggestion
Sell limit at 138.630, Stop loss at 142.768, Take profit at 133.946

Last Monday, the pair reached a peak at 1.31191 per dollar, and then declined to as low as 1.28941. All indicators are showing that the bear is dominant, as RSI (14) is pointing downwards from the average level, not to mention the two MAs are hanging over the price chart. The trend indicator also supports short positions on this pair.
Trade suggestion
Sell stop at 1.28873, Stop loss at 1.29464, Take profit at 1.28363

GOLD is retreating after failing to break through the firm resistance of 1357.95. The stochastics chart shows that the precious metal is struggling to get out of the overbought territory after having been in this zone for a period of time. The trend indicator notices a large move-up of 312 pips on this commodity since June 24. The bullish power is anticipated to die down and the price may test the support of 1314.18
Trade suggestion
Sell stop at 1341.93, Stop loss at 1356.80, Take profit at 1325.12

The two moving averages are getting closer and attempting to cross over the candles, which will create significant downward pressure in the market. The %K line has already reversed, and is likely to confirm a pull back. The commodity is expected to continuously fall from the 61.8% level of Fibonacci retracement.
Trade suggestion
Sell stop at 49.21, Stop loss at 49.90, Take profit at 48.46

On June 30th, FTSE broke through its solid resistance of 6430.77 - rising strongly. RSI (14) hovers around the overbought threshold, implying that the bull is still taking the lead in the market. Long positions on this index are encouraged as the trend indicator has created a green arrow under the price chart since last Wednesday.
Trade suggestion
Buy stop at 6599.09, Stop loss at 6538.05, Take profit at 6671.04