Amana Capital Daily Market Reports
Today, energy linked currencies, such as the Canadian Dollar are under pressure as Brent crude oil prices might have turned bearish. Moreover, if crude oil prices add to their losses in the days ahead, then correlation analysis suggests that USDCAD and USDNOK are at risk of trading higher, while CADCHF and CADJPY could be heading lower.
Correlation analysis based on the last 20 trading days shows that the currencies mentioned above are the most sensitive in our sample against changes in Brent Crude oil prices.
Data: Last 20 closing prices, source: Bloomberg.
Indeed, the USDCAD, which happens to be the most correlated pair, has already risen, and earlier today, the price took out the May 15 high which had been capping it several times over the last ten days. The next major high that traders might now be targeting is the May 8 high of 1.2996, and the short-term trend will remain bullish as long as the price trades above the 1.2866 level which is an intraday low from the May 24 trading session.
Another high correlated currency is the CHFCAD, and this pair is short-term bearish below the May 23 high of 0.7769, and the next support level is the April 23 low of 0.7605, followed by the April 9 low of 0.0.7484.
Brent Crude Oil Forecast: Traders Might Be Targeting $79.83 as Trend Turns Bearish
In the last few hours, Brent crude oil prices slid below their May 21 low of $78.07, and this ended the very short-term bullish trend.
The reason for the slide in prices is comments by the Russian Energy Minister, Alexander Novak and his Saudi counterpart, Mr. Khalid al-Falih. They said that they had discussed the possibility to increase crude oil production by 1 million barrels per day as rising energy prices are challenging the growth of countries like India and China.
Following these comments, Brent crude oil prices saw a sharp decline, and in the next few days, I suspect the trend will remain bearish, as more traders book profits following the last few months’ bullish-rally.
I will treat the trend as short-term bearish below the May 23 high of $79.83, and I suspect that traders that are not short will see a bounce in price to the breakdown level and May 21 low of $78.07 a chance to short-sell Brent Crude. If I am right and the price indeed has turned bearish, then I anticipate a second sell-wave to take the price to the May 23 and May 30 highs around $75.16.
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Brent Crude Chart
Watch today’s trading strategy video for our technical analysis outlook for EUR/USD, Bitcoin (BTC/USD), Crude oil (WTI), Gold prices (XAU/USD), and DAX 30.
In today's video:
- EURUSD maintains its bearish downtrend.
- Bitcoin is once again challenging its weekly low.
- Crude oil prices slide and could reach the April 30 high.
- Gold prices trade higher, but the longer-term trend remains bearish.
- DAX 30 leaps higher but Wednesday’s high is still capping price.
Stellar Lumen is trying to recover upside momentum after a torrid week of trading losses on the cryptocurrency market, with price currently contained within a well-defined bear flag pattern across the lower timeframe charts. XLM/USD currently trades well above the weekly-low, of 0.263, although the pair was strongly rejected earlier today from the 0.297 level.
Looking at the four-hour timeframe, the price of XLM/USD is currently trading within a well-defined band, between its 100 and 50 period moving averages, with price now consolidating at the lower end of its short-term range, just above the 50-period moving average.
The bear flag pattern currently looks ominous for XLM/USD bulls in the short-term, with the bottom of the flag currently located at the 0.28 level. We may well see a test towards the lows of the month of if the bear flag is breached to the downside with conviction, especially if get a continuation of the recent decline seen across the broader cryptocurrency market.
To the upside, yesterday’s swing-high, at 0.299 is the key level to watch before the psychological 0.30 level comes into play. Above the 0.30 level, the bear flag-top is currently located at the 0.350 level, if we break above the 0.305 level I expect XLM/USD buyers will make a run for the key towards the key trendline, at 0.309, which is formed from taking th important lows from the May 11th and May 18th.
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Yesterday, the US dollar fell sharply against the Japanese yen, and the USD/JPY printed a low of 109, following the cancelation of a meeting between US President, Donald Trump, and the North Korean leader, Kim Jong Un.
The longer-term USD/JPY trend will remain bullish as long as the price trades above the May 8 low of 108.81. And I suspect some traders are using the decline to add to their USD/JPY long exposure, as the risk-reward ratio favors long positions at current levels. This makes sense as the price is trading near the trend-defining level of 108.77, and far away from the nearest resistance level which is the May 21 high of 111.40. Past the May high the next major level and potential profit target is the January 8 high of 113.40.
However, on a failure of price to hold above the trend-defining level of 108.77 I will turn neutral on the pair.
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In my latest technical analysis for ADA/USD, I said that the trend momentum remained bearish, and the price might challenge the April 26 low of $0.256, and breaching this support level might open up for more losses, taking Cardano’s price to as low as $0.196 – this turned better than anticipated, as the price slide to $0.18.
As ADA/USD has declined by a significant amount I suspect that it needs to correct to around $0.224 before trades start to consider to add short positions. If the price indeed bounces to around $0.224 I suspect that the price will be able to drift lower to the April 9 low of $0.144, as long as any price bounce is capped by the trend-defining high of $0.282.
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