USOIL – Price Hits $0.00 & Even Further Below

Could This Have Been Predicted ?

USOIL has presented us with a modern day black swan as of yesterday with prices crashing through the floor of $0.00, with the lowest chart reading of $0.01 and contracts reaching roughly -$40 per barrel. For those of you who don’t know what a black swan is, it is an event with the 3 following attributes :

  • It lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
  • It carries an extreme impact.
  • Lastly, although it’s outlier status, due to human nature we build explanations for its occurrence after the fact ( looking in retrospect ) , making it “explainable and predictable”

In summary, it is an event with rarity, extreme impact and retrospective predictability. Now with prices reaching into the negative seeing some futures contracts of West Texas Crude plummeting to -$37.63 a barrel. Try to rationalise this, if you were to go to a shopping mall, would you expect the stores to pay shoppers to take their goods away?

In this case, we actually have this coming to reality, producers are paying buyers to take their oil. Why? For certain producers it would be devastating and permanently damaging to their business, should they shut down. So it may be cheaper in the long run to pay buyers. This is one of the rarest events in trading history.

USOIL 3 MONTH TIMEFRAME

Above we have the quarterly chart, as you can see we have the base level low range between $9.75-$10.00 which was absolutely wiped out. As we surpassed the last piece of support provided on the chart, price collapsed below $0.00.

USOIL DAILY TIMEFRAME

Looking at the daily chart, we see the collapse of the US oil market. There are multiple reasons as to why oil prices reached these unthinkable levels.

Backtracking slightly, we had the Saudi Arabian Prince and Russia’s Vladimir Putin sparking an oil price war rapidly increasing oil supply. This rocked the oil market however adding the pandemic to this produces a devastating concoction. Record volumes of oil were brought into the market causing a collapse in price.

An agreement worked out by OPEC, Russia, Saudi Arabia and the US called for a 10-12% production cut however this hasn’t materialised to the fullest extent. Along with this, lockdown has caused a huge drop in demand with an ever-growing supply.

Saudi Super tankers Oil is still being shipped to Asia and Europe in large quantities and by mid week to the US. With no demand, prices are falling through the floor having traders quite literally looking under the desk for the candle. There is 9 days left till OPEC Plus Agreement however immediate action is needed. In the last 4 days, Russia have added 110,000 barrels to their oil production. The final blow for the oil market was the fact that US oil storage facilities were being filled to maximum capacity with no oil to sell nor places for it to be stored.

By 20:30 last night, WTI contracts reached -$40. Contracts have since expired with the opening price on new contracts around $21.39. This morning we’ve seen price collapse to $11.57 and at the time of writing this article, we see price at $15.50. One thing to note is that we may have a possible oil production reduction agreement as 9 days till the OPEC agreement is too long.

USDCAD 4 HOUR TIMEFRAME

Looking at USDCAD , we can see a bullish rally as oil plummeted. This is due to the fact that Canada receives between 3-8% of their GDP from oil supplies. Canada has announced bond buying of 60 billion Canadian dollars, this is a form of quantitative easing as well as they are looking to change the interest rate according to the oil market collapse. This is highly CAD negative.

Although this is an incredible wealth shift, trade carefully and do not get ahead of yourself as oil spreads and swaps may be extremely volatile as well as price may move rapidly as we get further news developments.

USD/ZAR – All Time Highs On The Way ?

Good day traders and welcome back to another market breakdown. Today we will be looking at the US Dollar against the South African Rand. Let’s have a look at what this exotic pair has in store for us.

MONTHLY TIMEFRAME

USDZAR has been one of the most affected pairs when it comes to the worldwide pandemic that we are currently experiencing. We have seen surges in price of almost 40% in roughly 3 months, from January until the end of March. The previous monthly candle has closed above the highs of 2016, showing further momentum into the highs.

The upside is understandable, as we have seen strengthening of the US Dollar due to President Trump pushing the FED for a more aggressive stimulus package, to combat the effect of Covid-19. Another thing to note is that during normal conditions we see gold act as a safe haven, however during these conditions where we have a worldwide economic slowdown, we see the dollar act as a safe haven as it is the world reserve currency. 

WEEKLY TIMEFRAME

Dropping down to the weekly timeframe, we can see price climbed further to eventually create a new high at 19.345, but immediately reversed and has almost engulfed the prior week’s price action. This pullback is expected though as we have had such a bullish run for the past 3 months. Looking at the current week, we’ve seen a sharp pullback as South Africa’s central bank cut interest rates from 5.25% to 4.25%, calling a state of emergency.

Looking at the last time we broke the prior highs of 2008, in 2015, we had a 50% price move to the upside. Should we see similar price action, this would coincide with the inverse head and shoulder seen, now breaking the neckline withe a target point around 24.15.

DAILY TIMEFRAME

Dropping down to the daily timeframe, we can see that price slowly approached the level of 17.76 which was the previous all time high for USDZAR. However, price fell short and tested the prior resistance now turned support, also slowing down around the key level of 18.00. We also reversed off of one of our favourable fibonacci levels and we are looking for a continuation into the highs.

4 HOUR TIMEFRAME

After seeing this move off the 61.8% fibonacci, we’ve seen a push into these recent levels of resistance however we anticipate further upside with a potential break and retest of this level. 19.00 will be a crucial price point to cross.

1 HOUR TIMEFRAME

Looking at the 1 hour timeframe, we have seen a break of structure with a higher low and higher high sequence beginning. Looking left, we can see 3 drives into the low followed by consolidation and a breakout to the upside. Price has now reached minor resistance where we may see a retracement or more likely, a break and retest or some consolidation.

Fundamentally the emergency interest rate cut from South Africa puts the dollar on the front foot, as well as retail sales coming in slightly better than expected this Wednesday afternoon. Economically, USA is ahead of South Africa and the world reserve currency status favours more dollar upside.

Lockdown will also massively effect the economy and GDP, so should we see lockdown extended in South Africa, we will see further upside on USDZAR. Expect volatility in the market due to the current ongoing pandemic and keep in mind that USDZAR is an exotic pair. Take spreads into account when forming setups and trade safely.

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GBP/AUD – Prime Minister Boris Hospitalised, Poor Data & An Everlasting Brexit

Good day traders and welcome back to another market breakdown on the currency pair GBPAUD. Let’s recap the rollercoaster of a week we’ve had so far.

After slowing down around the regions of 2.05000, we saw a decline before last weeks closure. In anticipation of further downside, we had our analysis plot with sell limits off of 2.05000, however on the opening of the market, we had a major gap in price amounting to 160 pips. After seeing a retracement of roughly 140 pips, price then took another dive without closing the gap. Major selling pressure has been seen, with a total decline of 580+ pips.

What has been the cause for all this? Well for starters, Boris Johnson, the Prime Minister of the UK has tested positive for the corona virus, with further reports this week that he was hospitalised. We then saw poor construction PMI data coming in at 39.3 with the forecast being 44.0 . One thing to note is that any figure below 50.0 is negative, so the original forecast was negative and we came in with an even worse figure.

To make matters worse, Boris Johnson was then admitted to intensive care adding fuel to the fire. This has all come in a time of uncertainty as well as a huge inconvenience with even further extensions being asked for on Brexit. This has caused outrage as talks are supposed to continue in April and May according to Michael Barnier, The European Commission’s Head of Task Force for Relations with the United Kingdom, however opposing parties look for a delay in December deadlines. Many are saying Covid19 is being used as an excuse to extend the transition period but this shouldn’t occur.

On a lighter note, Boris Johnson is stabilising and we have seen a slowdown around the pound currency, we may now see slight relief before gaining further guidance in trend direction.

DAILY TIMEFRAME

Starting on the daily timeframe, we’ve seen price come into the top end resistance of May 2016 and seen 2 wick rejections, in our prior article on GBPAUD, we anticipated 2.06000 being reached which we came just 5 pips shy of, before seeing a 3 pin pattern and rollover. Our bottom end support zone that has been marked up lies between 1.97500 and 1.98350.

4 HOUR TIMEFRAME

On the 4 hour timeframe, we have placed a fibonacci tool from low to high and we’ve identified two areas where price could react. We have rejected the 61.8 once which falls in line with prior support and a psychological level fo 1.99250. Another level is the psychological level of 1.97500 in line with another fibonacci region. This lines up with a trend line test as well, should 1.99250 break and close below, followed by a retest, we could see 1.97500.

1 HOUR TIMEFRAME

On the 1 hour, price is exhausted around 2.01000 and we look to retest 1.99500 and potentially lower. We have also marked on the lower high, lower low sequence, which was then followed by a break of structure making a new higher high. The next anticipated move is a higher low. From 1.99000 we can assess whether or not price could reverse and make its way Ito our orange zone located around the 2.02000 handle or should we continue to slide to 1.97500.

15 MINUTE TIMEFRAME

On the 15 minute we have a descending channel which may find support, however we are anticipating the lows to be tested before any upside moves. Should we see 1.98900 tested and we find reversal patterns, we may ride price back up into 2.02000 for a 310 pip move. 1.99900 is also a pivotal point for GBPAUD, so remain cautious and trade safely with correctly applied risk management. Thanks for tuning in, if you’re new, subscribe to blog for email updates.

USD/CAD – OPEC Meetings, Oil Supply Cuts & Dollar Flooded Market

Good Afternoon and welcome back to Aspire FX traders. As it is a new week, we shall be looking at the higher timeframes as well as looking at the prior weekly close. To begin the analysis of USD/CAD on the quarterly chart.

3 MONTH TIMEFRAME

As we can see on the quarterly chart, we have seen a bullish breakout above prior resistance as well as a failed attempt at reaching the highs of 2016. Looking back at resistance dating all the way back to 1995, we can see the current quarterly candle closed in that region with a failed attempt to break the resistance. Looking at the bodily closures of the candles in 2015/2016, we have broken above these regions showing momentum to the upside, however we need to see if price can sustain these levels of support. The major mover for this quarter was the oil price war between the Saudi Arabian Prince and Vladimir Putin which lead to US oil prices falling 34%.

MONTHLY TIMEFRAME

Looking at the monthly timeframe, we can see the levels of resistance more clearly. The prior month left a wick into the highs, closing above the prior candle bodies seen back in Jan/Feb 2016. One thing to note is that the level of resistance seen in May 2017 and tested at the end of 2018, has now been broken, so we could expect a retest, should we see exhaustion at these highs.

MONTHLY TIMEFRAME

Another interesting Fibonacci placement shows the 78.6 region being retested twice and we could see reversals. HOWEVER, we do not see these targets of the fib being met. We are looking at the 78.6 as a ceiling for price and should price show clear rejections, we may execute short positions.

WEEKLY TIMEFRAME

Taking a look at the weekly timeframe, we can see an inverse head and shoulder which has broken the neckline and jabbed straight into to the target resistance level of 1.46000. Looking left to May 2017, we have also broken the prior lower high and broken structure forming a higher high. Price wicked into 1.46000 psychological level and came straight back down, back below the resistance level of 1995, coincidentally around the same month of March. Currently price is stuck below this resistance at 1.42300 and we may see some relief after the massive bull run amounting to +-1200 pips.

DAILY TIMEFRAME

Reviewing the daily timeframe , we have annotated the oil price war announcement that led to a surge in the US dollar against the Canadian dollar. The resistance level has seen 5 wick rejections on the daily, so we may see a rollover into the 2017 highs. This will largely be based off of the OPEC meetings and President Trump trying to negotiate a 10-15 million oil barrel supply cut per day. That is roughly a 10/15% supply cut. In basic supply and demand, when the supply is lower, the demand is higher. That means that if they cut the oil supply, they will be boosting the price of oil. This will strengthen the Canadian dollar leading to a retracement to the downside on USDCAD.

USOIL DAILY TIMEFRAME

Having a quick look at USOIL on the daily, we can see price has seen more optimistic moves on the announcement that the oil price war may be cooling off. Plotting a fibonacci tool, the prior level of support in 2018 we broke and the 78.6 line up to the T. There is also a level of resistance plotted at $33.75 per barrel. This will see strength in CAD should oil recover as Canada is one of the top oil producers in the world.

4 HOUR TIMEFRAME

On the 4 hour after seeing an impulse leg to the downside, we can see a build up of consolidation around 1.42500. Price has broken out of an ascending trend line and we are awaiting the deepest pullback for an entry short, with targets at 1.37450 and 1.35000 should oil see a strong recovery this week. 1.40000 will be a major level of support to break.

1 HOUR TIMEFRAME

On the 1 hour, we have seen the trend line break, which we have highlighted as a zone. The 1 hour fibonacci is set for execution should we see any reversals. We have the Purple fibonacci levels for potential entries and stop placement above the grey zone highlighted.

Upcoming fundamentals this week, we have the BOC business outlook survey at 4:30pm. Wednesday we see the OPEC meeting and Thursday we have employment numbers from Canada. We also have unemployment claims for US on Thursday and CPI data on Friday. With all these high impact news events, make sure to use correct risk management and trade safe. Have a good evening and hit subscribe if you haven’t already, you will receive our daily blog posts directly to your email.

AUD/USD – Can The RBA Save The Economy ?

With the recent spike across the board for the Aussie, it was only right to make an update on the current status of the Australian Dollar. Before we look into the liquidity seen today, let’s break down the AUD/USD charts from top down.

3 MONTH TIMEFRAME

Looking at the quarterly chart, we can immediately spot a level of support dating back to 1998. The trend line break and retest has also seen price reach the target point of 0.60000. These are the lows of 2008 when we saw the financial crisis. If we look closely, the body of the quarterly candle closed just above the 2008 lows.

MONTHLY TIMEFRAME

Looking at the monthly, we can now see the closure above the 2008 lows as well as the monthly closed back above this price point. Taking into account, the candle formation is still bearish, so this may not be the low of 2020.

WEEKLY TIMEFRAME

On the weekly, things are getting clearer as we can now see the prior weekly candle is bullish, engulfing the weekly candle previously. As you can see, we have the 2008 recession lows plotted on the chart and this may serve as support for current market price.

With the recent purchasing of bonds and interest rates being cut by the RBA ( Reserve Bank of Australia ), there is an attempt to prop up price and increase the value of the Australian dollar. Over the last 3 weeks, $320 billion has been pumped into the economy to stimulate growth.

GBPAUD DISPLAYING FUNDAMENTAL ANNOUNCEMENT

The spike may not appear as insane on AUDUSD as it may seem on GBPAUD. In under 5 minutes, the pair fell nearly 400 pips. This came as a result of the Prime Minister of Australia increasing the stimulus package with an announcement of another whopping $130 billion.

Another major factor to take into account is that China is looking to recover and bounce back from coronavirus. What does that have to do with Australia ? Well, Australia and China are in fact the largest two way trading partners, so should China recover, we may see the Aussie bounce back, coming to test the 0.70000 handle in the coming months or year end.

4 HOUR TIMEFRAME

Jumping onto the 4 hour timeframe and we have an interesting setup to say the least. Price has begun creating higher highs and higher lows. Now that price is above the recession lows, we have a plotted fibonacci tool. The interesting part to note is that the recession lows line up with the 61.8 fibonacci region for a potential reversal. We also have support zone hi-lighted below this region. Upon confirmation of a reversal, this may push price back into the 0.70000 handle seeing another recovery from these lows.

As always , be patient and await the highest probability trade and execute with suitable risk management. For more articles like these, subscribe to our blog and stay up to date with the markets.

GBP/USD – Could Sterling Recover After All Time Lows ?

Good evening traders and welcome back to another article where we will be looking at the Pound against the US Dollar. As we make our way into a new quarter, it is useful to look at the quarterly chart to get a sense of where price is headed and where we have came from.

3 MONTH TIMEFRAME

Looking at the quarterly chart, we can see that interest rates being slashed and stimulus being needed was inevitable with the coronavirus and this has caused a huge spike into the downside. This isn’t just your average crash as this is the lowest price the Pound has traded at.

However, recently , those losses were somewhat gained back and we have seen the quarterly candle close back above support. Should this level hold over the coming weeks and we see the UK flatten the curve, stabilising coronavirus cases, we may see a flight back into the Pound after the ATL’s ( all time lows ). The quarterly is useful for spotting major levels for a currency pair and looking for guidance in the coming weeks/months, however this is highly impractical to execute trades off of. The quarterly chart is highly influenced by fundamental themes such as Brexit / Corona Virus / stimulus packages and interest rates.

WEEKLY TIMEFRAME

Looking at the weekly timeframe, we can see the two prior weeks formed a tweezer bottom as well as a bullish engulfing. The importance of last week’s candle lies in the closure. We have seen a closure back above the quarterly support level and the bodily closure is engulfing the prior candle’s wick. A clear weekly resistance level we can see is the psychological level of 1.27500. Let’s drop down to the daily timeframe to get a closer look at price action.

DAILY TIMEFRAME

Dropping down to the daily timeframe, we can now see price has clearly begun to slow down and stabilise above 1.23250. There is a potential for a 3 pin pattern to form to the upside as we have roughly 5 hours to close the daily candle. Below the quarterly level, we have a psychological level of 1.22500 which will be key for price to continue its ascent. 1.27500 is looking ever so clear as an upside target . If the long bias is invalidated, we will take it step by step with 1.20000 being the next point of call.

4 HOUR TIMEFRAME

Looking at the 4 hour timeframe, we can see consolidation in the form of a pennant. In general technical analysis, we anticipate a steep upside movement once the pennant is broken and retested in a bullish scenario. Should price break the ascending trend line that creates the pennant, we could find support on a third touch of the ascending outer trend line.

1 HOUR TIMEFRAME

On the 1 hour timeframe we can see the consolidation more clearly. Price has tested the quarterly once again and seen a reversal. Looking closely at this, we may have an inverse head and shoulder pattern forming to sling price back into 1.27500 and beyond. With prices incredibly low for investors, the Pound may be in for brighter days.

15 MINUTE TIMEFRAME

On the 15 minute timeframe, the inverse head and shoulder is a lot more evident and we may have a potential long setup on our hands. Looking at fundamentals , the dollar is under immense pressure with multiple high impact events this week as well as the NFP data on Friday which may send the dollar tumbling. The FED also approved a $2 trillion stimulus package, so with the huge increase in currency circulation, the dollar should lose value.

To keep up to date with the markets and receive our articles, subscribe to our blog. As always traders, trade safe and have a great week further.

XAU/USD – Major Level , Break Or Bounce ?

Let’s look at the almighty safe haven Gold. The precious metal is currently trading at 1610.50 at the time of writing the article. After seeing the massive selloff in gold as investors hurried to get cash on hand in fear of a recession and massive crash in the stock market , we saw the safe haven status come back to life with gold picking up steam off of 1450.00 and rallying towards a high of 1645.00.

4 HOUR TIMEFRAME

Since then we’ve seen a slowdown with price stabilising above the key level of 1600.00. Looking closely at the price action, we can see a higher high and higher low formation. The psychological level of 1600.00 will be a vital support level for gold to continue its rush into 1700.00 and an extended target of 1774.00. Should price break 1600.00 we can see a descent into the support level of 1563.00.

1 HOUR TIMEFRAME

Looking at the 1 hour timeframe, we can see the higher high, which we have also used as point 1 of our descending trend line. Price is currently forming a descending channel, as we trickle towards 1600.00. We also have an ascending trend line which has broken, retested and continued to the downside. 1600.00 would prove to be a pivotal point due to the fact that if price should break that level, we will break structure forming a lower low.

15 MINUTE TIMEFRAME

Looking at the 15 minute timeframe, the descending channel is more clear as well as we can see a break of support. As we make our way to the US session, we will be looking for a reversal/slowdown in & around 1600-1604.00 however, should price break and close below 1600.00 the long setup will be invalid and we will await further price action.

Looking at the fundamentals, we have major news for the US Dollar, so we could see a major flight into safe havens with consumer confidence, manufacturing PMI’s , crude oil inventories, jobless claims, the trade balance, AND NFP ! There is a boatload of fundamentals this week traders so trade safe and and remain patient for your setup in the markets.

GBP/AUD – A New Leg Into 2.03500 & Beyond ?

We’re starting on the 4 Hour timeframe today and we’re looking at GBPAUD. What we can notice first off is that we’ve printed a new higher high at the price of 2.03400. Since then we’ve seen a reversal and retracement back into the price regions of 1.98900 where we have a clear level of support. Price is forming higher highs and higher lows, trending back and forth as we look for liquidity to bring price into 2.06000 once again.

4 HOUR TIMEFRAME

We can also see a Doji currently forming on the 4 hour as well as 2 wick rejections. Should price pull back on the next candle open, we could anticipate a wick to be left into the downside and for price to accelerate into the highs leaving a 3 pin pattern. Looking closely at the formations, we have also formed a double bottom at our level labelled ‘ BASE SUPPORT LEVEL ‘ . We are expecting price to reach into the neckline and potentially even further.

15 MINUTE TIMEFRAME

Looking at the 15 minute timeframe we can see the double bottom more clearly. With the current counter trend line applied to the charts, we could see a break & retest, pushing price above the psychological key level of 2.00000. Should we see a break above this key level, we could find support before extending price into the highs. By breaking this level, we would also break structure and form a new higher high, signaling a reversal to the upside could be coming.

However, should price struggle below 2.00000, we could retest our support level, finding support around 1.99100, creating an inverse head & shoulder pattern. Upside targets are 2.03600 and 2.06400 respectively.

Now traders, lets take into account the fundamentals for the day ahead. GDP results have been released for QoQ ( quarter on quarter ) as well as YoY ( year over year ). We’ve seen the data fall inline with expectations have a QoQ data point of 0.0% and YoY data point of 1.1%. So we haven’t seen too negative of a result with the current pandemic and economic slowdown. Business investments came out a lot better than expected so we could see a flight into the Pound. There is no main news events today however we see Manufacturing PMI and House / Building approvals data coming out for the Aussie later this week.

As always traders, take care in handling your risk management and be aware of fundamentals, have a great week traders !

USD/JPY – Could We Be In For New Lows ?

Beginning on the monthly, we have a descending channel dating back to January 2017. As of February, we retested this descending trendline and again this month, leaving two wick rejections into the highs. Taking a look at the prior candle closures, we can see a slowdown and rejections into the highs, with Doji candlestick formations.

Let’s drop down to the weekly to get a clearer picture of price action.
On the weekly, the descending channel is more evident. We made a new lower low on the 9th of March with huge momentum seen as the FED Reserve Bank cut rates and quantitative easing measures were being exercised. We saw a pump into the upside where price then bumped its head on 111.500 as a psychological level.

Jumping down to the daily timeframe, we can see the majority of late February losses were made up, however, we began seeing resistance as soon as we crossed 111.200
If we plot a rectangle from the gap seen on the 24th February and extend it into the future, we can see multiple wick rejections into this level signaling buying pressure is weakening and bears are looking to take hold of the market.
The two dojiś formed beside each other signaled the reversal was near and we can drop down to the 4-hour timeframe to refine this viewpoint.

On the 4 HR we can see that 111.500 held firmly as a resistance level, over a five day period we saw 9 rejections off this level.
So once we established 111.500 as a resistance level and we had seen a slow down on the daily, we could look for reversal patterns on the 4HR. Coming into the US session, we saw a 3 pin pattern formation, which we could use as an execution point on the close. However, at AspireFX, we tend to refine our entry to the lower timeframes to catch high risk: reward trades. Drawing an ascending trendline we could also use the trend line break and retest as an entry.

1 HOUR EXECUTION EXAMPLE :

At the current time of writing this article, market price is at 108.000, the daily candle is rather indecisive and shows slowdown after a viscous bearish movement, seeing the dollar fall 350 pips on Thursday and Friday.

On a 4HR timeframe, we can see 107.500 held firm as a support level and we have seen a push, off that region with price closing above 108.000.
USDJPY may need relief before it´s next move so if the daily closes above 108.000, we could see a push back into 109.500 – 110.000 however, following in line with the current trend, if we close below 108.000 and find resistance, price will look to head into 106.000.

Taking note of fundamentals for the week we have Trump speaking tonight as well as CB consumer confidence tomorrow at 4:00 pm GMT+2. Wednesday we have non-farm employment change and manufacturing data to keep a look out for. Thursday we see unemployment claims and we then have the daunting NFP on Friday!

With all of these data points to look out for, the coronavirus pandemic and a huge stimulus package of $2 trillion, quantitative easing has been forced on the Fed. Can the Dollar recover or will we see major Dollar weakness ahead?

As always traders, keep risk management in line with your trading plan and for more updates, subscribe to our blog.