Open Account Trading Carries Risk

Yields moving higher and oil rallying started to weigh on stocks that had rallied significantly over the last few days. Oil continued to rally as I expected. Traders are focusing on the news that UAE dosn’t really have much in terms of spare oil production capacity. This together with political unrest in Ecuador and Libya could limit supply boosted the oil price. Strength in the oil market sent USDCAD lower and the pair is now trading below the key level I focused on yesterday. This combination could provide shorting opportunities. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.

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

  • DJ 
  • EURUSD
  • USOIL 
  • USDCAD

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

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DJ daily chart 06 28

DJ – Dax rallying soon after the open yesterday helped the DJ to move sharply higher. This provided us with long trade opportunities but then profit-taking started softening the bids. While it still looks likely that we might see DJ rallying to the bear channel high (32350 – 32590 range) yesterday’s loss of momentum suggests today could be a down day in DJ but that’s obviously subject to intraday supports failing and DJ not being able to exceed yesterday’s high. A correction lower could bring the market down to the key supports I wrote about yesterday (30798 and 31027). As always, it makes sense to look for buy signals at or near major support levels. The same applies to resistance levels but vice versa.

EURUSD 4h chart 06 28

EURUSD traded to the 1.0605 key resistance level and then slightly above it. That’s where profit taking started pushing the pair below the 1.0584 level.  In the process, the market has created a bullish triangle formation where the resistance is gradually degraded as buyers keep on pushing the price higher. If this continues we could see a move to the 1.0630 – 1.0650 range but if the rising trendline fails then the 1.0514 would be likely to come into play. The nearest key S&R levels for EURUSD are 1.0482, 1.0514, 1.0605 and 1.0614.

USOIL 8h chart 06 28

USOIL continued to rally yesterday after a trend reversal took it out of the bearish channel. I expected the market to move to the 109.92 – 110.80 range if the bulls can push the market above 107. Now this target range has been almost reached with oil trading at 110 at the time of writing this. Upside momentum prevails above the 106.20 – 107 range. The nearest key support and resistance levels are 107.58 and 110.80.

USDCAD 8h chart 06 28

USDCAD – Strength in USOIL pushes the CAD higher against the dollar and the USDCAD pair is breaking below the key support (1.2860) I wrote about yesterday. There really aren’t that many technical support levels below this key level before the June 8th low at 1.2517 but based on the recent price action (above the 1.2860 level) we can create a measured move target range at 1.2709 – 1.2733. The nearest key resistance levels in USDCAD are 1.2860 and 1.2905.

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 – ECB President Lagarde Speaks
  • USD – CB Consumer Confidence
  • USD – Richmond Manufacturing Index
  • NZD – RBNZ Statement of Intent
  • EUR – German Prelim CPI m/m
  • USD – FOMC Member Mester Speaks
  • USD – Final GDP q/q
  • EUR – ECB President Lagarde Speaks
  • GBP – BOE Gov Bailey Speaks
  • USD – Fed Chair Powell Speaks

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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