Good afternoon, fellow traders,
This week’s main news is related to central banks’ credit policy and interest rate decisions. This news affects the markets quite strongly, thus we observe sharp spurts in a number of currency pairs.
The Fed's decision was quite expected, so there were no strong movements observed on EURUSD. The decision showed Fed officials are split over where to set interest rates. Seven of 10 officials voted in favor of the cut, two opposed it and one argued for a larger half-point cut.
Jerome Powell claimed the current rate cut to be a “mid-cycle adjustment”. He also said the economic outlook was broadly “favorable” but warned that a “sequence” of rate cuts could be needed if economy turns.
On Thursday night, the Japanese Central Bank made its decision to keep the rate at the -0.1% level, which resulted into yen strengthening in pair with the dollar. The rates will remain low in Japan at least until the spring of 2020.
A few more important news to be considered while trading on Thursday:
- 12:00 CEST - interest rate decision in the UK;
- 13:30 CEST - production activity index in the US;
- 15:00 CEST - US real estate secondary market transactions.
Palladium market - looking for opportunities to buy
Attempts to consolidate above the level 1600 have failed, which opens up the opportunity for a downward movement up to the support zone 1509-1530. Here one can search for reversal constructions and open trades to buy with take-profit located at 1593.
In case of downtrend’ development short positions will still be relevant. An entry point might be formed on an extension inside the support area. For now, the priority is given to buying, so consider sales as a fallback scenario.
WTI oil - waiting for the GAP to be covered and opening long positions
Following a sharp spurt being a consequence of the attack on oil facilities in Saudi Arabia, WTI crude oil is having correction and has already consolidated below $59 per barrel. So far, the chart is located halfway between the support zone 53.94-55.75 and the resistance 61.23-63.00. It’s too late to sell and too early to open trades to buy.
In case the chart enters the area of 53.94-55.75, and any reversal construction gets formed within it, one can open long positions. Following that, there's a possibility of growth to the level of 61.23. An uncovered GAP formed at the beginning of the week speaks in favor of such a scenario.
Brent oil - similar scenario
Here, the situation is similar to the one on WTI oil. At the beginning of the week there was a sharp growth, however, due to the fact that oil supplies are not endangered anymore, the chart continues moving downwards.
The most likely scenario implies dropping' continuation and entering of the chart into the range of 58.85-61.08. After a reversal pattern is formed and confirmed, one can open trades to buy; reference point for placing take-profit is the level 67.51.
AUDUSD - opening trades to buy after rebound from support level
For this currency pair, the target for the downward movement from the resistance area of 0.6853-0.6894 has not yet been reached. The movement is expected to continue up to the support zone of 0.6687-0.6729.
If the chart enters this range, and a reversal pattern with the subsequent confirmation is formed, it will become possible to open trades to buy. Target for these trades is located at the level 0.6853; this can provide about 100 points of profit.
EURUSD - waiting for a bullish signal to be generated from the support zone
The Fed's interest rate decision wasn't followed by strong movements, so the previous forecasts for this currency pair remain valid. We still expect the chart to test support below the level 1.1000 once again. The zone 1,0927-1,0962 has not been tested for a second time, and in case a reversal pattern is formed within it, it can be taken into work.
Targets remain the same; when buying, place take- profit at 1.1072.
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