Gold price face trendline resistance – Century Financial Brokers Weekly Market Report

Currencies

Geopolitical uncertainty in Spain and Italy

The cross is witnessing intense downward pressure following another stretch of weakness hurting the single currency, while some bias towards the risk aversion also lend support to a rising Yen, all leading towards the downside to levels last seen in June 2017. Euro is expected to continue to face selling pressure on the back of escalating Eurozone geopolitical uncertainty as Spain’s Prime Minister Mariano Rajoy faces a vote of no confidence tabled by the chief Socialist opposition party. Meanwhile, political angst in Italy, continued to pressure the single currency. On the other hand, Japan continues to be one of the world’s largest creditors, and when risk-sentiment turns sour, Japan is often the first to respond. The drama in Spain and Italy have caused sharp repatriation of Yen as the pair has brokern below key support levels of 129.5, and further drama may take EURJPY lower toward 124 levels.

Bear Gartley Pattern Completion

The Bear Gartley Pattern is a reversal pattern composed of four legs, marked X-A, A-B, B-C and C-D. It is a reversal pattern that allows you to enter the market at extreme highs and lows. It helps you identify when a current price move is likely approaching its end. This means you can enter the market as the price reverses direction. To find B, the Fibonacci levels from X to A are inserted and B is formed at 0.618. To find point C, the Fibonacci levels from point A to point B are inserted and point C will be formed between 0.382 or 0.886 Fibonacci ratio of the AB leg. Once point C is formed, D is approximate 1.27/1.618 of BC or it can be 0.786 of XA. As the pattern is completed at point D or the zone in which reversal may occur, one can start taking the position as the trend is set to change.

Equities

No confidence vote leads to uncertainty

Two opposition parties threatened motions of no-confidence against the government, Socialist leader Pedro Sanchez proposed a vote of no confidence to overthrow the government. The liberal Ciudadanos party which had supported the conservative minority government till now said it would introduce its own motion if new elections are not called. This comes as dozens of people related to the ruling centreright Popular Party, including a former treasurer, were convicted on Thursday of a range of crimes related to the use of an illegal slush fund that helped finance party election campaigns between 1999 and 2005. No date has been set for the vote, but it could be as early as next week according to parliamentary rules. The Socialists will need at least 176 of the 350 votes in the national congress, where they only control 84 seats as opposed to 136 held by the Popular Party. They have enlisted the backing of 71 leftwing lawmakers.

Ease in geopolitical concerns

Geopolitical qualms swept through markets last week, causing large drift to the downside but a raft of solid corporate earnings capped the losses. U.S. President Trump’s decision to cancel the planned summit with North Korea shook markets on Thursday a day after the Fed’s dovish minutes had triggered a rally. Moreover, a sharp drop in oil prices put heavy pressure on the major indices this Friday, however, Nasdaq ended the week on a positive note as it has minimal exposure to oil companies. Trump’s reverse comment on North Korea on Friday, suggesting a meeting with North Korea’s Kim Jong Un could still take place drew back support in markets. Moreover, the Federal Reserve minutes on Wednesday stated that the Fed was comfortable with inflation overshooting the 2% target, decreasing the prospect of a faster pace of rate hikes. With expectations of four rate hikes fading away and ease in geopolitical concerns, the equities are poised to rally further. However, for the week ahead, investors would be eyeing a string of economic reports, including the preliminary U.S. GDP data due on Wednesday ahead of the key U.S. jobs report due on Friday.

Surge in monthly subscribers

Netflix last week transcend Disney and Comcast in market capitalization of $164B, becoming the world’s largest media and entertainment company. The recent massive success of Disney’s various Marvel, Star Wars, and Pixar brands shows that its upcoming 2019 streaming service may be even more overwhelming than previously imagined. Netflix’s run has been significantly helped by expectations for successful international expansion and continued domestic growth. It added 7.4 million subscribers last quarter to reach 125 million worldwide. Recently huge content deals with fox and Disney producers Ryan Murphy and Shonda Rhimes will give a good boost to the already dynamic content.

Metals

Ease in geopolitical concerns & Trendline resistance

Gold prices ended the week on positive note as the rise in geopolitical uncertainty renewed appetite for safe-haven gold, while falling bond yields cushioned pressure from a surging dollar. Underlying dovish tone observed in the Fed minutes dented expectations for a fourth rate hike causing a pullback in dollar leading to a rally in the precious metal. The yellow metal rose sharply to $1307.85 when Trump cancelled a scheduled meeting with North Korea on Thursday but soon gave up their gains as President Trump changed tact a day later following conciliatory comments from North Korea overnight. Gold prices ended the week at $1300.44 after President Trump commented that the meeting with North Korea could still take place there by reducing the safe haven demand. Technically, gold price face trendline resistance and can drop towards the golden ratio of 61.8% as they have ended below the 50% retracement level.

Energies

Oil Producers eyeing exit of output-cut agreement

Crude oil prices witnessed their biggest weekly loss since February after an ugly session on Friday saw market participants reverse some of their bullish bets following reports major oil producers could lift output. On Friday, Crude futures settled 4% lower as data displayed U.S. oil rigs resumed their expansion, hinting towards signs of growing domestic output. Oil prices were also shaken by the Energy Information Administration report on Wednesday showing an unexpected build in U.S. crude stockpiles last week. Reportedly, major oil producers are eyeing an exit of the OPEC output-cut agreement to counter the dropping Venezuelan output and the prospect of lesser Iranian output as U.S. sanctions loom. Technically, prices have given a breakdown from rising wedge pattern on daily chart at $71 level. The RSI (14) on daily chart is retracing back without entering the overbought zone which is a bearish sign. In addition, we are also witnessing a trend line breakdown in RSI, indicating any pullback to be sold into.

Strong trendline resistance broken

Wheat prices are edging higher, gaining traction from other markets and short covering in Chicago. The National Agricultural Statistics service forecast the size of wheat crop would be somewhere around 1.19 billion bushels that would be approximately 6% down from the previous year and it’s been also forecasted that acreage for wheat cultivation will also drop to record low of 24.8 million acres in US. Storms moving through the US Central Plains should eventually help areas to the south though concerns about dry conditions and slow planting on the northern Plains remain a cause of worry. Export sales also improved over the previous week. Technically, Wheat prices have ended the week above the trendline resistance and suggest further upside in the short term.

This article provided by NewsEdge.