Hot forecast and trading signals for the EUR/USD pair for July 15. COT report. Buyers dominate, aiming for 1.1422-1.1432.

EUR/USD 1H

analytics5f0e5fec9550e.jpg

The euro/dollar pair corrected to the critical Kijun-sen line and rebounded off it on the hourly timeframe on July 14. Thus, buyers dominated the market again despite the fact that they released quotes from the ascending channel a few days earlier. As a result, the ascending channel had to be rebuilt and now it signals an upward trend again. At the same time, we note that the bulls do not completely dominate the pair right now. Very frequent corrections, each of which can potentially result in a change of the trend to a downward one. In general, as we mentioned in the fundamental reviews, now is not the most convenient time to work with the EUR/USD pair. However, everything does not look as bad as on the higher ones on the hourly chart. The pair managed to break out of the 1.1200–1.1350 side channel, so certain prospects are opening up for the euro.

EUR/USD 15M

analytics5f0e6000d4028.jpg

Both linear regression channels are still directed upwards on the 15-minute timeframe, signaling an upward trend in the most short-term plan. There are no signs of starting a new round of corrective movement at the moment. The latest COT report from July 7 was quite boring. The most interesting category of large traders commercial, which is a set of professional traders who trade for commercial profit, opened almost 6,000 Buy-contracts and only 1,700 Sell-contracts. Thus, the net position for this category has increased by almost 4,000, which, simply put, means that the bullish mood of major players has increased. In principle, the beginning of a new trading week confirms this attitude of professional traders, as the euro continues to rise in price against the dollar. Slowly but surely. The total number of Buy-contracts for professional traders is also much higher than the number of Sell-contracts – 186,000 against 80,000.

The fundamental background for the EUR/USD pair did not change at all on Tuesday, as did the mood of the market participants themselves. Several relatively important macroeconomic reports did not particularly change the picture of things, as markets continue to pay more attention to the coronavirus epidemic in the United States, the statements of the country’s chief epidemiologist Anthony Fauci, which are completely opposite to the optimistic statements of the head of state Donald Trump, as well as the very gloomy prospects for the American economy if the second wave of coronavirus is not stopped in the near future. The European Union is more calm. The EU summit will be held this week, during which the most important issue for the bloc will be resolved – the issue of forming an economic recovery fund and the issue of approving the budget for 2021-2027. All 27 EU member states need to agree that 750 billion euros should be raised and distributed among the most affected sectors of the economy, as proposed by the European Commission. Thus, we can expect the euro to fall after the end of the summit, if there are no positive results. Otherwise, the euro’s fate will depend on traders, who will sooner or later take a time-out and the pair will begin to adjust at least. It is difficult to expect more than a correction for the US currency in the current conditions.

Based on the foregoing, we have two trading ideas for July 15:

1) Buyers pushed back from the critical Kijun-sen line and resumed purchases after a slight correction. Thus, the trend remains unambiguously upward, but do not forget about the frequent pullbacks and corrections that are now inherent in the euro/dollar pair. Judging by the last few bars, traders are preparing for a correction, however, the goals for long positions remain the same – resistance levels of 1.1432 and 1.1494. Potential Take Profit in this case is from 40 to 100 points.

2) The bears have failed to cross the Senkou Span B line or the Kijun-sen line over the past few days. Therefore, we state the fact: sellers do not have enough strength to start a new downward trend at this time. Thus, we advise you to sell the euro, but not before overcoming the Kijun-sen line, and ideally after closing below a new rising channel, while aiming for supporting levels of 1.1238 and 1.1176. Potential Take Profit in this case is from 50 to 110 points.

The material has been provided by InstaForex Company – www.instaforex.com

Overview of the GBP/USD pair. July 15. A “winter wave” of “coronavirus” in the UK could claim the lives of another 120,000

4-hour timeframe

analytics5f0e481bb5f9b.jpg

Technical details:

Higher linear regression channel: direction – upward.

Lower linear regression channel: direction – upward.

Moving average (20; smoothed) – sideways.

CCI: -121.2859

The British pound, unlike the European currency, was trading lower on Tuesday, July 14. On the one hand, the reason for the uncorrelation of the two main currency pairs could be the macroeconomic statistics from the UK, which turned out to be quite weak. On the other hand, no less weak statistics from the Eurozone were ignored by market participants, so such a conclusion can not be considered unambiguous. It should also be noted that the nature of the movement of both pairs in recent months has been completely different. The euro currency has spent the last month in an absolutely indistinct sideways or weak upward movement. While the pound was trading very actively and did not standstill. At the same time, it is the position of the British pound in the foreign exchange market that now looks weakest due to the uncertainty associated with the future relationship between the European Union and Britain, as well as an extremely strong fall in the British economy as a result of the pandemic and Brexit. However, the British currency regularly shows growth, which we correlate with the epidemiological emergency in the United States, as well as the political and economic crisis in this country. As we wrote earlier, the Fed lowered key rates “almost to zero”, so the strength of the monetary policies of these two states equalized. The US dollar no longer has the unquestionable advantage that it previously had.

Macroeconomic statistics from the UK disappointed traders. GDP in May was recorded at +1.8%, although traders expected to see at least +5% after the failed -20.4% a month earlier. Industrial production, as in the European Union, decreased by 20% in annual terms, which was more or less ready for market participants. Such a package of statistics could not cause the British pound to strengthen. Therefore, the GDP report may have created additional pressure on the British pound. Also, negative news continues to come from the fields of Brexit. According to the survey, only a quarter of all UK companies are fully prepared to complete the transition period and switch to the EU trade regime under WTO rules.

Meanwhile, no less negative forecasts are given by representatives of the UK health sector. According to them, in 2020-2021, the country will face the so-called “winter wave” of the epidemic, which will be much worse than the first “wave”, which claimed the lives of about 45,000 people, which is the highest figure in all of Europe. A report from the British Academy of Medical Sciences says that people spend much more time indoors in winter, which contributes to the faster and easier spread of infection. Thus, between September and June, about 120,000 Britons may die from COVID. The author of the report, Professor Stephen Holgate, believes that if the necessary measures are taken now, it will be possible to avoid such a scenario. “This is not a prediction, but it is a possibility. The model suggests that there may be more fatalities with a new wave of COVID-19 this winter, but the risk of this can be reduced if immediate action is taken,” said Professor Holgate. The Academy of Medical Sciences believes that under the current circumstances, it is necessary to more actively vaccinate the population against influenza, more widely test the population for “coronavirus”, constantly remind the population of the importance of observing safety measures, improve the definition of epidemic foci and more effectively localize them.

At the same time, the US recorded a record budget deficit. In June, it amounted to $ 864 billion, which is much higher than the average annual value. The deficit came from the fact that the White House and Congress allocated trillions of dollars to support the economy. But tax revenues during the pandemic were greatly reduced, as at least 25 million workers were laid off, which significantly reduced tax revenues to the Treasury. Meanwhile, the total public debt in the United States has already exceeded $ 26 trillion. The Budget Office forecasts that the budget deficit will be at least $ 3.7 billion in 2020.

Meanwhile, the American president Donald Trump does not allow you to forget about yourself for a day. A few months ago, we reported that YouGov conducted quite an interesting study, which resulted in the figure of 14,000. That’s how many times, according to YouGov calculations, Donald Trump was misled in his speeches, comments, and social media posts. A similar study was conducted by the Washington Post, which estimated that the US President has already made more than 20 thousand erroneous or deceptive statements. That is, on average, Donald Trump makes thirteen false statements a day. However, the Washington Post’s research is much more in-depth. For example, the publication reports that most often Trump made false statements on the topics of his impeachment, the “coronavirus” pandemic, as well as the racist scandal caused by the death of George Floyd. The publication also reports that most often the President made statements that do not correspond to reality when he spoke about the US economy, that it achieved the best state in the history of the country. Also, Trump lied when he said that he had the largest tax cut in the history of the country. Such statistics again do not paint Trump in the run-up to the presidential election.

In the UK, the consumer price index for June is scheduled to be published on the third trading day of the week. According to experts’ forecasts, inflation will slow even more and amounted to 0.4% in June. In monthly terms, the price increase will be 0%. It is possible that in reality, we will see even weaker figures, but the main question now is how market participants look at the topics of the deep economic crisis in the UK, complete uncertainty in the future, and the topic of the epidemiological crisis in the US. Judging by the fact that the quotes of the pound/dollar pair were fixed below the moving average line, the trend changed to a downward one, and traders began to pay more attention to the problems of the Foggy Albion. Thus, in the near future, we still expect a further decline in the pound. However, the reverse fixing of the price above the moving average can bring buyers back into the game. Both linear regression channels are directed upwards.

analytics5f0e482e7a0ec.jpg

The average volatility of the GBP/USD pair continues to remain stable and is currently 88 points per day. For the pound/dollar pair, this value is “average”. On Wednesday, July 15, thus, we expect movement within the channel, limited by the levels of 1.2458 and 1.2634. Turning the Heiken Ashi indicator upward will indicate a possible resumption of the upward movement.

Nearest support levels:

S1 – 1.2512

S2 – 1.2451

S3 – 1.2390

Nearest resistance levels:

R1 – 1.2573

R2 – 1.2634

R3 – 1.2695

Trading recommendations:

The GBP/USD pair has started a new round of downward correction on the 4-hour timeframe, which may turn into a downward trend. Thus, today it is recommended to open sell orders with the goals of 1.2451 and 1.2390 if the Heiken Ashi indicator does not turn up in the next few hours. It is recommended to resume buying the pair after fixing quotes above the moving average with the first goals of 1.2634 and 1.2695.

The material has been provided by InstaForex Company – www.instaforex.com

Overview of the EUR/USD pair. July 15. The “coronavirus” mutates and becomes more contagious. The United States is waiting

4-hour timeframe

analytics5f0e47c9de8df.jpg

Technical details:

Higher linear regression channel: direction – upward.

Lower linear regression channel: direction – upward.

Moving average (20; smoothed) – upward.

CCI: 180.3218

The second trading day of the week again remained behind the European currency, which slowly but surely continues to creep up. The upward movement has not stopped since June 26, that is, for 13 working days. During this period, the pair managed to cover a distance of approximately 150 points. Judge for yourself whether this can be called an “upward trend”. Moreover, during the past day, the pair again traded near the Murray level of “5/8”-1.1353, which is also the upper limit of the side channel 1.1200-1.1350, in which the pair has been trading for more than a month. Thus, the current technical picture is quite ambiguous. On the one hand, there is a side channel, above which buyers have not managed to gain a foothold, on the other – a weak upward trend. One thing is for sure – now is not the most favorable time to conduct trading. The movements of the euro/dollar pair are multidirectional alternating segments.

As we expected, the macroeconomic statistics of the last day did not have any impact on the mood of market participants. Yesterday, the consumer price index in Germany for June was published first. This indicator fully coincided with the forecast values, amounting to 0.9% in annual terms and 0.6% in monthly terms. A little later, data from the ZEW Institute was published, which reflects the mood in the business environment of Germany and the European Union. Without going into the figures, we can say that all three indicators were worse than the forecast values. Absolute values of indicators indicate that investors are very skeptical about the current state of the German and EU economies, but still optimistic about the future. But industrial production in the European Union turned out to be much worse than experts’ forecasts. In annual terms, the reduction was 20.9% with a forecast of -20.0%, and in monthly terms – an increase of 12.4% with a forecast of 15.0%. Thus, the conclusions on European statistics are unambiguous – it failed. However, the euro currency was trading higher in the European session. In the afternoon, the United States published a report on inflation for June, which showed 0.6% in annual and monthly terms for the main indicator and +1.2% y/y and +0.2% m/m for the indicator excluding food and energy. In general, these values almost completely coincided with the forecast. They are neither optimistic nor pessimistic. So the general conclusion is this. In the European session, traders had reason to sell the euro but did not do so. There was no reason to change the mood in the American session. In general, the entire package of macroeconomic information was ignored.

Meanwhile, more and more media are paying attention to the raging “coronavirus” epidemic in the United States. According to the American doctor Chad Krilich, the second “wave” is currently taking place in the United States, but after it, there will be a third. The doctor also said that in the near future we should not expect a vaccine against “coronavirus”, as “this is a very long and time-consuming process”. Meanwhile, Hong Kong scientists have concluded that the “coronavirus” has mutated and is now even more contagious than before. Previously, a person with the COVID-2019 virus could potentially infect three other people, but now this figure has increased to four. This was stated by the Dean of the medical school of the University of Hong Kong, Professor Gabriel Leung. Earlier, the same was reported by the chief epidemiologist of the United States Anthony Fauci. Dr. Fauci, who remains at this time almost the main actor in America, continues to conflict with President Donald Trump based on the epidemic. The conflict is very simple. The doctor makes statements based on his knowledge, experience, and research, which Donald Trump does not like, who makes his statements based on nothing. The leader of the American nation does not like that Fauci’s attitude is too pessimistic and he constantly predicts deterioration of the situation. Fauci’s latest statement, made on July 14, states that “the US authorities have not been able to impose a total quarantine, which is why we are currently seeing a huge increase in new cases”. According to the epidemiologist, the United States managed to achieve a significant reduction in the number of diseases, to about 20,000 per day, which is not so terrible for a multi-million country. But at this point, it was necessary to maintain the “lockdown”, instead, the government began to remove restrictive measures and received a second “wave” of the pandemic, according to Fauci. Also, Fauci said that now the country does not need to introduce a full range of restrictions, it is enough to “roll back a little” and then prudently take steps towards lifting the restrictions.

Donald Trump himself continues to bend his line on the issue of the gigantic scale of the epidemic in the United States. The President still believes that the high incidence of diseases in his country is due to the large number of tests carried out, and the death rate from the “coronavirus” is falling. “We check more than anyone in the world. We have one of the lowest death rates in the world. We are doing a great job. We have the best and most extensive testing program in the world. If you were testing China, Russia, or any of the major countries like we are testing, you would see numbers that would surprise you,” Trump said during a speech at the White House.

On the third trading day of the week in the US, only a more or less important report is planned – on industrial production for June. We believe that in the current conditions, it is the production indicator that is one of the most important, but yesterday’s report on European production shows that most traders do not think so. Therefore, we do not expect a serious reaction from market participants to this report. There are no more planned events in the EU or the US today unless you count the evening economic review of the Federal Reserve “Beige Book”, which rarely causes any reaction from the market.

Thus, from our point of view, technical factors continue to be in the first place, which, unfortunately, can not lead the pair out of an inarticulate upward movement, which is extremely difficult to reject. However, the upward movement continues, and cautious and small purchases of the euro currency are allowed as long as the EUR/USD pair is located above the moving average line. Moreover, both linear regression channels are also directed upwards.

analytics5f0e47dc36b00.jpg

The volatility of the euro/dollar currency pair as of July 15 is 84 points and is characterized as “average”. We expect the pair to move today between the levels of 1.1336 and 1.1504. A reversal of the Heiken Ashi indicator downwards will signal a turn of the downward correction to the moving average.

Nearest support levels:

S1 – 1.1353

S2 – 1.1230

S3 – 1.1108

Nearest resistance levels:

R1 – 1.1475

R2 – 1.1597

R3 – 1.1719

Trading recommendations:

The EUR/USD pair seems to have resumed the formation of an upward trend. Thus, it is now recommended to trade for an increase with the goals of 1.1475 and 1.1504 before the Heiken Ashi indicator turns down. Sell orders are recommended to be considered no earlier than fixing the pair below the moving average line with the first goal of 1.1230.

The material has been provided by InstaForex Company – www.instaforex.com

EURUSD breaks important long-term trend line

EURUSD is trading above 1.14. Price is now breaking above a long-term downward sloping trend line resistance that connects the 2018 highs and the recent 2020 highs at 1.1450 area. EURUSD has been mostly moving sideways the last few months but now the c…

EURUSD breaks important long-term trend line

EURUSD is trading above 1.14. Price is now breaking above a long-term downward sloping trend line resistance that connects the 2018 highs and the recent 2020 highs at 1.1450 area. EURUSD has been mostly moving sideways the last few months but now the c…

How to trade ahead of the ECB and the Bank of England meetings?

analytics5f0e5610c11c3.jpg

The dollar index still tends to decline, trading in a narrow range. The US dollar accelerated the pace of its decline against a basket of competitors on Tuesday in the US session. The indicator went below the level of 96.30. Thus, it broke down the border of the medium-term upward trend.

The US dollar may still benefit from the spread of the coronavirus in the short term. It is the fears of a pandemic that keep it from falling even further now. The long-term forecast remains bearish if we consider that COVID-19 will still be defeated. However, opportunities for growth in the short and medium term cannot be excluded. A jump can happen on a major correction of the US stock market.

In general, the greenback has a lot of negative factors. These include a drop in demand for dollar liquidity and weak interest in protective assets. Additional difficulties for it include increasing the rating of the US presidential candidate Joe Biden. The policy of the Democrats is just a bearish factor for the dollar.

USDX

analytics5f0e562541138.jpg

At the same time, the dollar was growing against the British pound on Tuesday, continuing the trend that had begun the day before. However, it is more likely that the dollar is not growing, but the pound is falling, as the bearish dynamics of the GBP/USD pair is connected with the news in Britain.

Bank of England Governor Andrew Bailey made it clear that the central bank will have to resort to more aggressive quantitative easing to overcome the crisis in the country. Earlier, Bailey said that the central bank is considering a scenario of negative rates. Now the rate is 0.1%, but “we are extremely close to zero interest rates,” Bailey said.

The pound received an additional negative from the publication of UK GDP data for May. The economy grew by only 1.8%, while markets were counting on 5% growth. The indicators in the construction and manufacturing sectors turned out to be very weak.

The GBP/USD pair was trading in the positive during the US session, which is mainly due to increased pressure on the greenback. Trading volatility increased after the publication of consumer price indices in the United States.

Despite the rise in sterling earlier this month, it remains under pressure from fundamental factors. These are the risks of a hard Brexit and an expected slowdown in the country’s economy, undermined by the coronavirus pandemic. The pound once again went to the zone below the key resistance level of 1.2580.

If the pound continues to trade around this level without a hint of a higher exit, then short positions on the GBP/USD pair will be preferred. A breakout of the 1.2490 support will confirm the scenario for a subsequent decline in sterling.

GBP/USD

analytics5f0e568f83920.jpg

As for the alternative scenario, the pound’s growth, it is worth looking at the breakout of 1.2580 and the local resistance level of 1.2670. If this happens, the GBP/USD pair will resume the upward trend.

The euro’s position looks pretty good now. The EUR/USD pair continues to develop growth waves to around 1,1400. Given the upward trend, it can be assumed that after a small correction, the quote will continue to grow to the resistance level of 1.1420. In this case, do not exclude the possibility of returning to the price of 1.1300.

EUR/USD

analytics5f0e56a14ba8c.jpg

The next meeting of the European Central Bank will be held on Thursday. The regulator can now afford to relax a little. Two important tasks have been completed – financial markets have been stabilized and economic activity has been rebooted together with the EU government. Signs of recovery can be seen in macroeconomic publications. It is unlikely that the ECB will be able to surprise the euro at this meeting after three rounds of powerful stimulus.

According to the latest data, the ECB has no reason to expect sharp changes in inflation, despite the fact that inflationary pressures have appeared in some parts of the economy. In general, conditions for slowing inflation prevail. So far, officials of the European regulator do not have a good reason to correct the policy. The status quo will probably be maintained.

The euro will lose an important driver of growth if the gloomy forecasts of Wall Street experts come to life. Now the rally of US stock indexes does not allow the dollar to take a full breath.

The material has been provided by InstaForex Company – www.instaforex.com

Gold slightly stalled down

The price of gold on Tuesday went down to some correction. The main reason for the emerging recession is, on the one hand, though not quite solid, is the strengthening of the greenback, and on the other, the uncertainty regarding the epidemiological si…

EUR/USD: rumors flying around market. EUR gaining ground ahead of EU summit, but long deals still risky

Traders speculating on EUR/USD gave an unexpected response to the US inflation data released today. Despite upbeat data, EUR/USD did not hit a new intraday high. On the contrary, the currency pair hit a new one-month low, having tested 1.14. The driving force for the pair today is EUR which is advancing not only versus USD but also in all forex crosses.

The thing is that EU leaders are trying to come to the common denominator ahead of the EU summit slated for this Friday. The key policymakers of the EU are holding talks with the view of reaching the compromise decision which will determine the fate of the €750-billion anti-crisis plan suggested by the European Commission. It was presented in May. Since then, the leaders of the 27 EU countries have been engaged in the painstaking talks to settle the blueprint. To implement this scenario into practice, the Commission needs consent from all member counties. At the same time, some countries teamed up in the so-called Frugal Four alliance. They raise serious objections to some terms of delivering financial aid.

analytics5f0dd05d578fd.jpg

Apparently, rumors on the recovery package are pushing EUR/USD upwards. Yesterday, Angela Merkel voiced doubts about whether the parties would be able to come to a compromise at the summit in July. From her viewpoint, stance of some countries differs from the majority in the EU. So, there is a long way until the package is eventually settled. Those four countries are the Netherlands, Austria, Denmark, and Sweden. They still oppose the EU authorities and the most influential European players like Germany and France. The Frugal Four offered their own plan. As an alternative to gratis bailouts, they suggest single-time loans with a payback period of no longer than two years and on condition of clearly defined fields of spending.

For your reference, the recovery package includes €500 billion as grants to ailing economies and the remaining €250 billion as credits on the terms suggested by the European Commission. The EU lawmakers invite ailing countries to borrow in financial markets. Loans will have to be repaid, but grants are a different matter. They will be also repaid but at the expense of the EU. For this purpose, the EU members will be required to increase alliance fees and trim some expenses. The EU will provide its own funds, including customs charges and the VAT as well as though raising some taxes. Brussels offers repaying interest on the borrowed funds as the first step starting from 2021 until 2027. Later, loans themselves will have to be paid pack for the period of 30 years.

In a nutshell, the agenda of the summit consists of two points only: 1) on what terms the financial will be delivered, 2) the scheme of paybacks. As I said earlier, the Frugal Four countries advocate only for loans but not grants, whereas the European Commission stands for joining these two options in the proportion of 250/500.

The second obstacle is the question of how the budget will be backed. The recovery package will require the member countries to increase their EU fees to the common purse. Such prospects aroused disagreement among EU leaders. The proposal of the European Commission to impose new taxes across the EU sparked controversy. In particular, Eastern European countries headed by Poland oppose the introduction of the common European tax on CO2 emissions. Such revenues are expected to replenish the EU budget. At present, the revenues from the quotas of CO2 emissions are allocated to the national budgets of the EU members. In 2019, their overall amount equaled €14.600 billion. Besides, Brussels proposed to impose other taxes, including plastic and incomes of digital corporations.

analytics5f0dd03be2097.jpg

Meanwhile, experts do not dare to predict the outcome of the EU summit in July. Indeed, the participants have sent too controversial signals. Moreover the skeptic tone of Angela Merkel raised doubts. Today, the fundamental background improved notably amid some rumors which haven’t been confirmed. The European media reported that Angela Merkel managed to assure opponents to come to some compromise. Importantly, this information is unofficial, so opening long deals on EUR/USD is highly risky. Ahead of such crucial events, the market is usually flooded with rumors which are not confirmed in the wake of the events. As of now, the anti-crisis package worth €750 billion is at stake. Therefore, if the optimistic rumors do not come true, EUR/USD will tumble in response.

Thus, it would be a good idea to play the waiting game at least until the first comments from the policymakers. I mean Angela Merkel and Emmanuel Macron. If they confirm the progress in the talks, EUR/USD will extend its climb. Only under such conditions, long positions towards 1.1460 will make sense.

The material has been provided by InstaForex Company – www.instaforex.com

Evening review on EURUSD for July 14, 2020

EURUSD: The euro continues to trade upward and already managed to broke through 1.1370 and is trying to gain a foothold higher.This what the ECB has expected. Investors turn to euro as insurance against the too aggressive Fed policy.You may keep purcha…

USDCAD reversing off 1st resistance, possible drop!

Trading RecommendationEntry: 1.3626Reason for Entry: Horizontal swing high resistanceTake Profit :1.3578Reason for Take Profit: Horizontal pullback supportStop Loss:1.3650Reason for Stop loss: Horizontal pullback resistanceThe material has been provid…

XAUUSD approaching support, potential bounce!

Trading RecommendationEntry: 1789.21Reason for Entry: Ascending trend line, 38.2% fibonacci retracement and horizontal pullback supportTake Profit: 1832.17Reason for Take Profit: Horizontal swing high resistance, 61.8% fibonacci extensionStop Loss: 176…

Instaforex Daily Analysis – 14th July 2020

Today we take a look at AUDUSD and how we can use Fibonacci retracements, Fibonacci extensions, market momentum, trend lines and support/resistance to play this move.The material has been provided by InstaForex Company – www.instaforex.com

Chainlink breaks into top 10

The Chainlink cryptocurrency surged to $8.5 for the first time. According to CoinMarketCap, one of the largest cryptocurrencies rose in price by 24% per day. Moreover, in general, Chainlink has increased by 375%.Last week, Santiment noted that LINK con…

Oil: time to collect stones

It is difficult to overestimate the role of OPEC+ in saving the oil market. Thanks to a large-scale reduction in production by 9.7 million b/d, 23 countries, including Saudi Arabia and Russia, managed to double the price of black gold in April-July. It’s time to collect the stones. The transition to the second stage of the agreement, which provides for a reduction in the volume of obligations to 7.7 million b/d in August-December, is expected by investors with apprehension. Previously, it was assumed that global demand will continue to grow and absorb the missing 2 million b/d, however, the difficult epidemiological situation in the United States and the reluctance of California, the state-largest consumer of gasoline, to leave the lockdown, cast doubt on this. Bad news from Hong Kong, which has re-introduced strict measures on social distancing, as well as from Japan, which does not exclude the re-closure of the economy, does not add to the optimism of the “bulls” for Brent and WTI.

According to the International Energy Agency, oil production in April-June decreased by 14 million b/d. The indicator will gradually recover, including due to a decrease in the volume of OPEC+ obligations. In June, the cartel’s production of black gold fell to 22.7 million b/d, the lowest level in three decades. Global supply is expected to fall by 7.1 million b/d by 2020, and then by 1.7 million b/d.

Dynamics of OPEC oil production

analytics5f0d9d3c8397a.jpg

The IEA forecasts that global demand in the second quarter fell less than initially expected – by 16.4 million b/d. As it recovers in Asia, in particular in China, the indicator will fall short of 7.4 million b/d by the end of 2020. Indeed, China’s oil imports reached daily and monthly highs in June. However, the International Energy Agency warns that due to the deterioration of the epidemiological situation, forecasts may be revised for the worse.

In such circumstances, the OPEC+ meeting is obligated to suggest in which direction Brent and WTI should move further. Optimists, including Rapidan Energy Group, believe that the market will easily absorb 2 million b/d. The consulting company estimates that global demand will grow by 18% in the third quarter to 95.7 million b/d and continue in the same vein in the fourth. As a result, world reserves of 5.6 million b/d will disappear, and prices will rise. Pessimists led by Morgan Stanley argue that due to uncertainty in the demand area, the growth in OPEC+ production will trigger a correction in the black gold market.

In my opinion, the increase in the number of COVID-19 infections and the growing risks of repeated lockdowns are bad news for both the global economy and black gold. Nevertheless, the world is on the threshold of the discovery of vaccines and effective drugs, so it is unlikely that the situation will take a threatening turn, and the US GDP will go on the path of a W-shaped recovery. If OPEC+ gives the market more than it expects, we buy Brent on the breakout of resistance at $ 44 and $ 44.7 with a target of $ 50-51 per barrel. The rollback will allow you to form longs from more profitable levels: $ 40.15 and $ 37.8.

Technically, while the quotes of the North sea variety have not fallen below the moving averages, the situation continues to be controlled by the “bulls”.

Brent, the daily chart

analytics5f0d9d57d46bb.jpg

The material has been provided by InstaForex Company – www.instaforex.com