It was an unusually busy Thursday in the summer as the markets were quite busy throughout the session. Of course, FOMC Chairman Jerome Powell, who spoke in the second part of the Fed statement by Humphrey Hawkins, contributed to this initiative; But that was certainly not all, because there were a few different topics in the headlines. This article covers some of the most popular ones.
Is oil just great?
A well-respected financial expert with a television show made a brazen phone call today saying that oil prices have peaked. This has attracted a lot of attention as oil prices have been in the midst of a one-way move over the past few months, hitting a new six-year high just last Tuesday.
Prices have been bogged down in resistance since that test last week, but as we highlighted in the latest analyst pick on oil, This is a large area of resistance with several levels in close proximity. I had started looking for bullish breakout potential in late May since Oil prices moved into another key zone and then an explosive move emerged. So it makes sense that prices should settle down after an exuberant run tested by a massive level on the chart.
But is the oil replenished? There is not enough information yet to recommend this. For traders looking to fade this recent breakout and wait for a test below the psychological level of 70 and beyond the 64.31-67.19 zone, it seems like a prudent indicator before attempting to spot a trend, that has been extremely bullish for the past two months to turn bearish.
Learn more about it psychological levels, Check out DailyFX training
Crude Oil Daily Price Chart
Diagram created by James Stanley; CL2 on Tradingview
USD, JPY strength
An interesting observation in the FX country recently has been the general strength of anti-risk currencies like the USD or JPY.
I checked the Japanese yen last weekwhich links yen strength to continued decline in US yields. These pressures have yet to ease, and the yen’s strength remains visible against many major currencies, including the US dollar.
Chairman Powell’s comments on Wednesday and Thursday proved unhelpful on the subject as US yields continued to fall as yen strength continued to rise. This presents a pretty interesting scenario for the days / weeks ahead, especially when we see some element of risk aversion emerging in global markets.
Since bonds and stocks have both risen lately, the question arises, “which one is right?” Often times, bonds are the signal to follow, and if this stays that way and yields continue to fall, a summer surprise may come in the not too distant future from which the yen bulls can benefit. Below, I’m looking at EUR / JPY as the pair pushed down to retest the level that hit the lows last week. Last week’s test jumped to a lower high, creating the appearance of a bearish breakout potential when that price comes back into play.
EUR / JPY daily price chart
Diagram created by James Stanley; EURJPY on Tradingview
BTC, crypto breakdown potential
The meme stock manias from earlier this year now seem a bit more distant as both AMC and Gamestop have been on sale for the past week. But even the crypto space seems to be getting less attention, and today there seem to be some pretty pessimistic predictions about the space from a number of different sources. Jeff Gundlach had some interesting comments on the subject, saying that the Bitcoin chart looks “scary” at the moment.
He also had some interesting comments in May saying that cryptocurrencies are the poster child for the speculative zeal that is floating through the markets, and he highlighted how the sell-off in Bitcoin could signal that the zeal is calming.
Bitcoin hasn’t collapsed since then, but it wasn’t exactly bullish either. The same support zone that came into play in mid-May remains in play today. And while the initial upward moves in May or early June could see it spike to the 40,000 level, those upward moves have shown a diminishing effect lately and now there is a declining trendline that sits on top of the price move.
This results in a descending triangle formation – often approached with the aim of bearish collapses. This can be a scary thing, especially for those who are long.
To find out more about the. to experience descending triangle formation, Check out DailyFX training
BTC / USD daily price chart
Diagram created by James Stanley; Bitcoin on Tradingview
— Written by James Stanley, Senior strategist for DailyFX.com
Contact and follow James on twitter: @JStanleyFX
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