Open Account Trading Carries Risk

T-Bonds rallied again strongly yesterday. As this means that the yields are falling the cost-sensitive Nasdaq index attracted investor money. Now the tech-heavy index has rallied on four days out of the last five. The idea of lower borrowing costs excited the DJIA bulls also and helped the index to trend higher, even though the gain was smaller than in Nasdaq 100. USD Index kept on ranging and didn’t find a clear direction. Another market that didn’t quite know what to do was USOIL which created an inside bar (a candle with a lower high and a higher low than the previous daily candle). Therefore, USOIL technically is still in a downtrend. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.

The US manufacturing PMI came in well below expectations (52.4, 56 expected) and significantly lower than the previous reading (57.0). This suggests inflation might be showing signs of slowdown but then the question rises whether investors should be worried about future growth. Powell said in his testimony yesterday that the labour market is unsustainably hot and that the Fed is committed to fighting inflation unconditionally. He also said that it’s difficult to fight inflation without impacting the labour market. Given the tower PMI numbers together with the above statements from the head of the Federal Reserve, it should be no surprise if investors start to price in lower growth. 

In today’s report, I provide you with trade ideas, analysis and key technical levels on

  • EURUSD
  • GOLD
  • GBPNZD
  • USOIL

Get live updates on my analyses and trade ideas here: https://t.me/TIOmarkets_Announcements

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EURUSD 4h chart 06 24

EURUSD – After the weak PMIs pushed EURUSD to rising trendline support at 1.0490 the market started to attract buyers again. Now EURUSD is trending higher in the 4h timeframe and stays bullish above the channel low (currently at 1.0513. The nearest S&R levels to focus on in today’s trading are 1.0482, 1.0513, 1.0584 and 1.0605.

Gold 2h chart 06 24

Gold – We saw some wild swings in gold yesterday and as a result, the market has created a sizeable trading range between 1847.85 and 1823. The lower end of the range has been, however, violated already and the failure to stay above the bear channel high is a bearish indication. Therefore it wouldn’t be a surprise if the market continued to trade lower. In order to negate these bearish indications, the market would need to move above the 1826.50 level with some dedication. The nearest S&R levels to focus on in today’s trading are 1813.48, 1821.55, 1826.50  and 1839.54.

GBPNZD 8h chart 06 24

GBPNZD – Yesterday’s analysis for GBPNZD is still valid. I said the day before yesterday that the big picture in this market is still bullish above 1.9244 and that we therefore should keep this market on our watchlist. The market has now created a series of lower highs below the 1.9620 level suggesting we’ll see a correction lower. The key support levels above the 1.9244 low are 1.9326 and 1.9407.

USOIL 8h chart 06 24

USOIL sold off from the 106.19 resistance level I talked about in yesterday’s analysis. This gave the readers of this report an opportunity to consider entering into short trades at very favorable levels. Now the market is trading somewhat lower and there’s still no break above the bear channel high so USOIL remains in a downtrend. At the same time, please remember that USOIL is fairly oversold and this is why we need to be prepared for the possibility of the downtrend reversing soon. A break above the bear channel high would be the first indication that something’s changing in the market psychology. The nearest S&R levels to focus on in today’s trading are 101.14 and 106.19.

Macro Drivers for the USD 

As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.

The Federal ReserveFed hiked by 0.75% in June and indicated that there will steady rate hikes until the end of the year. 
StimulusThe Fed is looking to scale down its bond-buying program (QE) but has signalled that it be careful with tightening due to the war in Europe. 
YieldsThe US 10-year treasury yield has been rising strongly over the last two weeks as investors sell their bond holdings. 
EmploymentThe May non-farm payrolls increased by 390K (436K previous) while the participation rate was confirmed at 62.3% (62.2% previous). The unemployment rate remained unchanged at 3.6%. 
InflationThe US annual inflation growth for May accelerated to 8.6%. This was the highest reading since 1981.  Analyst consensus had expected the yearly rate to be 8.3%. The prices for energy (+34.6%) and food (+10.1%) made record increases. For food, this was the first increase of 10% or more since March 1981. 

Open a VIP Black account now at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here.

 The Next Main Risk Events

  • EUR – German IFO Business Climate
  • AUD – RBA Gov Lowe’s Speech
  • USD – Revised UoM Consumer Sentiment

For more information and details see the TIOmarkets economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst

TIOmarkets.com

Open a VIP Black account now at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here. For more analysis and commentary, visit our YouTube channel where you can find market commentary videos to support your learning and growth as a trader.

DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated. 

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