The risk sentiment is mixed in equities.
Volatility does not calm down in the financial markets despite mid-June vacation period, which supposed to be quiet with low trading volume. Although most of the major assets charted a technical retracement at the beginning of the past week, recent trends renewed with higher momentum. For instance, the bulls did not let U.S. stock indices to bounce deep and took the market under control again. The S&P 500 benchmark rose another 0.85% this past week, rewriting all-time highs at 3010.9 points as the weekly result. Tech-heavy NASDAQ had also printed the highest weekly close on record at 7934.8 points, adding 1.31% to its value. Dow Jones Industrial Average surged 1.52% to 27332.0 points, the level never seen before. Overseas equities failed to follow the world’s leader. Japanese NIKKEI index remained almost flat, while German DAX 30 plunged -1.95%, and French CAC 40 declined by -0.37%.
U.S. dollar’s weakness across the board.
In the foreign exchange market, the U.S. dollar index was trying to continue the upward swing from the previous week, but failed to hold early gains, and slipped back down with -0.47% weekly losses. The New Zealand dollar was leading the gains versus the greenback, adding 1.02% to the exchange rate. Other commodity currencies were following the same trend as AUD/USD finished the trading week above 0.7000 psychological resistance (0.7021 close rates, +0.59%), while USD/CAD slid to 1.3029 support (-0.39%). Major currencies appreciated the dollar’s weakness as well. The Swiss Franc was the strongest among European currencies (USD/CHF -0.75%), while Euro, British Pound and Japanese yen printed moderate gains.
Commodities were moving in the same direction as in previous weeks with gold adding another 1.13% to the price ($1415.30 weekly close), and WTI Crude oil soaring almost 5% and closing the week above the significant level of $60 per barrel. The upcoming week is forecasted to continue the same expansion in U.S. stock indices, while the greenback is expected to keep the weak performance versus other currencies. Here are several charts for major assets.
EUR/USD weekly forecast: Bullish.
The most heavy-volume currency pair continued the downside swing in the first half of the past trading week, testing the crucial technical support at 1.12000 euro per U.S. dollar. However, the bears failed to sustain the momentum, while the bulls stepped in with long positions on Tuesday, leaving just a long shadow on the daily candlestick. The bearish weakness was changed to bullish strength, and EUR/USD printed a rally of almost 100 pips in three days, closing the weekly candlestick at 1.12707.
The daily chart below has a mixed technical sentiment as current quotes remain in the middle of the recent sideways channel between 1.11292 and 1.14124 (daily lowest and highest close rate). However, there are several technical signs for the pair to continue the upside swing towards the resistance of the channel. First, the daily chart has three consecutive higher lows starting from May 30. Second, the pair closed three days above 89-days simple moving average (1.12478). Third, RSI oscillator with 13-days period edged back above the 50% level. Fourth, MACD histogram lowered the negative value, while both lines remained above 0. All of the technical indicators point to further appreciation in the nearest future. The only condition needed for the bulls to accelerate the uptrend is that MACD lines have to cross each other, signalling bullish momentum.
A buy-and-hold trading strategy should be the most profitable for the week ahead. Conservative traders should consider a bearish bounce back to the former resistance (now support) of SMA 89 curve before opening long positions. If the support held prices, then intraday longs have to be considered. In that case, stop-losses should be hidden below 1.12000 mark as it acts as an attractive level for the bulls to step in. An alternative scenario suggests waiting for another test of the round-figure defensive barrier, and long positions from there in case if intraday signals confirm the demand for EUR/USD. Targets are as follows: 1.13333 and 1.14000 in extension.
WTI Crude weekly forecast: Bullish.
The black gold gained strength this past week, adding almost 5% to the price after two weeks of sideways consolidation around support at $57.50 per barrel. What’s more, the bulls had finally lifted oil price above significant psychological round-figure resistance of $60.00 per barrel and charted daily close rate above 89-days simple moving average ($59.47) for the first time since the bearish plunge on May 23.
Besides the strong buy signal mentioned above, Bollinger Bands %B indicator points to bullish continuation as the line is placed well above 50% with plenty of room to go north before the upper band of the range. ADX indicator changed the technical bias as the surplus between +DI and -DI lines turned positive (green line in the indicator’s window). The only concern is that the ADX mainline is still below the threshold, showing that the bullish momentum is still weak. Next resistance and target for the bulls is coming together with an ascending median line connecting lows charted on December 24, 2018, and May 23, 2019. WTI Crude buyers might struggle to break the range of $63.18/44 with the first attempt.
The buy-dips strategy looks reasonable as the overall sentiment is positive with several breakout signals occurred this past week. On the other hand, the bears might counter-attack and test support ranges at SMA89 at $59.52 and recent bottom at $58.08. Therefore, conservative traders should monitor shorter timeframes for entry levels on reversal intraday signals. Long positions should target oil prices above $63.00 per barrel. An alternative scenario suggests a bearish retracement to deeper support range at around $57.50, which could shift the technical outlook back to negative in the medium-term perspective.