Euro bulls seem to be on a mission to test fresh 2020 highs above 1.1495.
The EURUSD jumped roughly 60 pips on Monday, hitting 1.1467 before retracing back towards 1.1440 amid profit-taking and a stabilizing Dollar.
Given how the Greenback is likely to remain depressed and unloved, Euro bulls may have enough confidence to challenge the 1.1495 yearly high in the short to medium term. Fundamental drivers in the form of EU fiscal hopes and PMI data later this week could influence buying sentiment towards the Euro.
Looking at the technical picture, the EURUSD is bullish on the daily charts as there have been consistently higher highs and higher lows. Prices are trading comfortably above the 20 and 50 Simple Moving Average while the MACD has crossed to the upside. If the 1.1400 proves to be reliable support, this should offer enough foundation for the EURUSD to attack 1.1495.
A breakout above this yearly high may encourage a move towards levels not seen since October 2018 above 1.1600.
Alternatively, an appreciating Dollar could easily throw a proverbial wrench in the works for this bullish setup with weakness below 1.1400 signalling a technical correction towards 1.1300 and possibly lower.
Commodity spotlight – WTI Oil
Oil markets remain unfazed and unamused by OPEC’s decision to taper production cuts from 9.7 million barrels per day to 7.7 million barrels starting from August 2020.
Although Oil demand has jumped in recent weeks due to easing lockdown restrictions, tapering production cuts may be premature given the state of the global economy and rising coronavirus cases in the United States. Any signs of lockdown measures being reinstated or global growth crumbling even further could trigger demand-side fears – ultimately exposing WTI & Brent crude to downside shocks.
Looking at the technical picture, WTI Oil is struggling to push beyond $41 on the daily charts. Sustained weakness below this point could a move back towards $36.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
The US dollar is losing ground against its main competitors. On Friday, the US dollar index (#DX) has updated local lows and closed in the negative zone (-0.45%). Investors are still concerned about an increase in the number of people infected with COVID-19. Last week, the United States reported a new anti-record. At the moment, the number of people infected with coronavirus worldwide has reached 14.5 million.
The EU summit in Brussels, where the leaders of the countries discuss the bloc’s budget for 2021-2027 and an anti-crisis economic recovery plan, is in the spotlight. In June, Japan’s exports fell by 26.2% (y/y). The central bank of China left its key rate unchanged at 3.85% for the third month in a row.
The “black gold” prices have been declining. At the moment, futures for the WTI crude oil are testing the $40.40 mark per barrel.
Market indicators
On Friday, there was a variety of trends on the US stock market: #SPY (+0.29%), #DIA (-0.27%), #QQQ (+0.12%).
The 10-year US government bonds yield is consolidating. At the moment, the indicator is at the level of 0.61-0.62%.
The news feed for 2020.07.20:
– Consumer price index in the Eurozone at 12:00 (GMT+3:00);
– Statistics on the US real estate market at 15:30 (GMT+3:00).
In the time of Covid-19, Peter Epstein of Epstein Research breaks down the investment opportunity offered by CloudMD.
Please note: News came out July 16, the day this article was written, on CloudMD, the subject of this article. The news is not addressed in this article, but is considered to be good news and will be discussed in a future write-up.
Gold is at a nine-year high. Dozens of gold juniors have seen their share prices soar this year. Investors see the writing on the wall; gold fundamentals are incredibly strong due to Covid-19-induced government debt issuance, money printing and deficit spending, with no end in sight.
Once people realize a paradigm shift is at hand, they’re not afraid to buy smaller, riskier companies, seeking large gains. Covid-19 is ushering in a number of paradigm shifts, but few as clear-cut as gold.
Readers beware, some trends have already been exploited. Online shopping? Amazon is up 92% since March. Teleconferencing? Zoom up 140%. Online education? K-12 Inc., +175%. Movie streaming? Netflix, +110%.
Telemedicine is hot and will remain strong for years, not months or weeks
Like gold, I think telemedicine’s time has come. Covid-19 has vaulted this niche industry into the big leagues in a matter of months rather than years. Regulators were forced to rapidly understand and get behind tele-sessions. Insurance companies have had to do the same. Truly a win-win-win for patients, doctors/nurses and medical practices.
If one agrees that telemedicine is a bona fide paradigm shift in healthcare services, then one should consider investing in smaller companies with potentially more upside (albeit with commensurately more risk) than firms like $50 billion ($50B) Veeva Systems (VEEV:NYSE), which is +104% since March; $24B Teladoc Health Inc. (TDOC:NYSE), +114%, or $14B Livongo Health (LVGO:NASDAQ), +430%!
Much of telemedicine is new, everyone is learning as they go. Successes will be handsomely rewarded. Well-funded, small, smart, fast, nimble companies probably have a two- or three-year window to get it right. The top companies will get taken out at attractive valuations.
CloudMD well positioned to thrive in telemedicine, then get acquired
A company that’s ideally positioned to rapidly expand in telemedicine and potentially be acquired is CloudMD Software & Services Inc. (DOC:TSX.V; DOCRF:OTCQB; 6PH:FSE). It has a market cap of $72.7 million ($72.7M) and an Enterprise Value (EV) {market cap + debt cash} of ~$61M. Revenue is growing very rapidly, potentially increasing by >400% from $6.8M in 2019 to the consensus estimate of $34.7M in 2021.
CloudMD is revolutionizing the delivery of healthcare by providing patients easy, fast access to all aspects of their care via phone, tablet, laptop or desktop computer. The company offers SAAS (software as a service) based solutions to medical clinics across Canada. That’s on top of owning and operating brick-and-mortar clinics and acquiring new facilities.
Management has developed or acquired proprietary technology that delivers high-quality care through connected primary care clinics, telemedicine and artificial intelligence. CloudMD currently provides service to an ecosystem of 376 clinics in eight provinces, over 3,000 licensed practitioners, with access to nearly 3 million patient charts.
Hybrid business model; clinics + telemedicine + SAAS-like margin potential
Following the SAAS business model, CloudMD has the potential to be a high-margin, stable (low churn), rapidly growing company, with long-lasting (recurring) revenue. As shown in the chart below, the company has the fastest [expected] revenue growth (2021 over 2020) at 101% versus an average of 31%. Part of the reason is that revenue is launching off of a small base, but the company also compares favorably on its EV/revenue multiple (3.5x/1.8x) versus averages of (13.1x/9.9x). So, fastest-growing, cheapest valuation.
Management is prudently pursing a hybrid approach to healthcare delivery in Canada. In addition to telemedicine the team continues to acquire, own and optimize conventional clinics. I believe this approach captures the most efficient and cost-effective way to gain market share. There’s a finite number of doctors, nurses and family offices. Rolling them up into CloudMD, before they join other companies, is a winning strategy.
Medium-sized companies can only grow so fast organically. They need to acquire growth in order to make themselves attractive to larger players. There are a lot of small-cap telemedicine ventures, but only a few are high quality, with visionary management teams, strong balance sheets and rapid revenue growth. Fewer still offer compelling valuations.
After raising $15M last month, management has amassed a sizable war chest with which to make accretive acquisitions. CloudMD is making acquisitions of businesses at under 1x revenue, integrating and streamlining them, making the revenue worth more.
Larger players pay higher revenue multiples, M&A critically important
Larger entities can afford to pay well above 1x revenue because they unleash even greater synergies and economies of scale, and gain the opportunity to cross-sell new services. It appears that management has the financial wherewithal to acquire about $30M in annual revenue. That’s 86.5% of the consensus estimate for 2021 of $34.7M.
Once companies like CloudMD gain reasonable scale, they become prime takeover targets themselves. To be clear, this chain of events only works while the underlying sector is strong. Telemedicine is strong!
The company’s shares have languished; some fear an upcoming selloff as two blocks totaling ~6M shares (private placements at $0.48; current share price $0.64) become free-trading on July 20 and 30. Some of the feared selling has probably already taken place. Over the past three months, average daily trading volume was 1.3M shares (per Stockwatch).
As the telemedicine sector soared from late March on, CloudMD shares initially participated, rising from $0.37 to $0.95. However, the stock has settled back to $0.64. Early last month, the company issued $15M worth of shares at $0.70, with a half-warrant at $1.00, giving them the largest cash holdings relative to EV (23%) of any peer I could find.
CloudMD and its CEO are not new to telemedicine; this is a people business
CloudMD has been actively involved in the healthcare space for years. In May 2018, it acquired HealthVue Ventures, a family practice with three clinics performing telemedicine, and other more routine services. It’s been over two years that management has seen virtual meetings as the wave of the future. CEO Dr. Hamza has been practicing telemedicine for seven years, making him a leading expert in this nascent field.
Patients can avoid missing work or school by using virtual meetings, negating the need for childcareor worse, having to drag children to the doctor’s office. For some, getting to an appointment on time, and also planning the rest of the day’s activities, can be difficult and stressful.
Evidence from four months of pandemic in North America, as telemedicine has been thrust upon us, suggests most patients find it to be as good, or better, than in-person visits. Going to the doctor takes time and logistical preparation and carries added expenses. By car or public transport, finding/paying for parking, paying and waiting for Uber rides, or getting rides from friends and family. A half-hour appointment can turn into a much longer, unpredictable, stress-provoking ordeal.
In addition to being much more convenient, patients are reporting more time with doctors and feeling that they have a doctor’s full attention. Incremental, high-quality time spent with doctors and nurses means more questions asked and answered. In-person visits will still be needed, but the mix is shifting in favor of virtual consultations.
Patients like telemedicine; everyone benefits from less exposure to germs
As patients get used to the ease of telemedicine, pundits believe they will initiate more sessions with doctors than they otherwise would have. Also, patients who rarely, if ever, seek medical advice or treatmentdue to a fear of doctors, hospitals, germs or social anxietymight find telemedicine appealing.
From the doctor’s point of view, they can expect to “see” more patients per week, or the same number in fewer days (five days’ worth of patients in four days = Fridays off). Patients are less likely to cancel or not show up to appointments. If a doctor is away on business, at a conference, she/he could still meet remotely.
Earlier this week, the CDC director predicted that this fall and winter will be “one of the most difficult times we’ve experienced in American public health.” No one wants to hear thatI sincerely hope he’s wrongbut it means that investors will be thinking about and experiencing telemedicine for quite some time.
Doctors like telemedicine; everyone benefits from less exposure to germs
Healthcare is one of the toughest businesses to operate and especially hard to enter. It takes years of experience and, importantly, trusted relationships and teamwork. New companies can’t obtain credibility overnight. Yet credibility is critical to attracting new patients, doctors, nurses and family offices to join small companies like CloudMD.
Joining a smaller group of highly talented professionals has advantages over being a tiny fish in a giant pond. New executives and business partners can make a meaningful difference in how CloudMD evolves. In the end, telemedicine is only as good as the people/groups behind it. That’s where the story gets really exciting and where the company can deliver tremendous shareholder value.
Attracting healthcare rock stars, in part by offering sign-on bonuses, equity stakes, autonomy, a chance to help build a fantastic company, flexible hours/places to work (home, travel, holiday or in a medical office)getting this right will make an investment in CloudMD really pay off! Great people attract great people. Great people have large networks. Give them CA$15M to deploy? Great things should follow.
Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.
Peter Epstein’s Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about CloudMD Software and Services, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of CloudMD are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.
At the time this article was posted, CloudMD was an advertiser on [ER]. Peter Epstein owned no shares, options or warrants in the company.
Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events and news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.
Streetwise Reports Disclosure: 1) Peter Epstein’s disclosures are listed above. 2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with CloudMD. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of CloudMD, a company mentioned in this article. 6) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
EURUSD is moving not far from the upside border of a wide consolidation range. Possibly, today the pair may update 1.1455 and then fall towards the downside border at 1.1350. After that, the instrument may grow towards 1.1395. If later the price breaks this range to the upside, the market may resume trading upwards to reach 1.1550; if to the downside – start a new decline with the target at 1.1250.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD is still consolidating around 1.2550. Today, the pair may trade downwards to reach 1.2477 and then resume growing to test 1.2550 from below. Later, the market may start a new decline with the target at 1.2450.
USDRUB, “US Dollar vs Russian Ruble”
After breaking 71.31 to the upside, USDRUB is expected to continue the correction towards 72.20. Possibly, today the pair may reach this level and then fall to break 71.28. Later, the market may continue trading downwards with the target at 70.00.
USDJPY, “US Dollar vs Japanese Yen”
After finishing the ascending wave and reaching the target at 107.50, USDJPY is expected to continue growing towards 107.60 and then form a new descending structure to break 107.06. After that, the instrument may continue trading inside the downtrend with the target at 106.60.
USDCHF, “US Dollar vs Swiss Franc”
USDCHF is still consolidating around 0.9444. Possibly, the pair may fall to reach 0.9370 and then grow to break 0.9444. Later, the market may continue trading upwards with the target at 0.9474.
AUDUSD, “Australian Dollar vs US Dollar”
AUDUSD is still consolidating around 0.6982. Today, the pair may fall towards 0.6944 and then return to test 0.6982 from below. Later, the market may resume trading downwards to break 0.6944 and then continue falling with the target at 0.6900.
BRENT
Brent is still correcting towards 42.58. The main scenario suggests that the price may complete this correction and grow with the target at 43.23. After that, the instrument may start a new decline towards 42.95 and then form one more ascending structure to break 43.50. Later, the market may continue trading upwards to reach 44.44.
XAUUSD, “Gold vs US Dollar”
Gold is still consolidating around 1803.50. Possibly, today the pair may test this level from above and then form one more ascending structure towards 1812.97. Later, the market may start another decline to return to 1803.50 and then resume trading upwards with the target at 1819.22.
BTCUSD, “Bitcoin vs US Dollar”
After finishing the ascending wave at 9212.00, BTCUSD is trading downwards to reach 9136.00. After that, the instrument may resume trading upwards to complete this wave at 9300.00. Later, the market may resume falling to break 9000.00 and then continue moving inside the downtrend with the target at 8700.00.
S&P 500
The S&P 500 Index is consolidating above 3200.5. Possibly, the asset may break this level to the downside and continue the correction towards 3111.1. However, if the price grows and breaks 3235.5, the market may continue trading upwards to reach 3300.3 and then start a new decline with the target at 3111.1.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The bullish sentiment continues to prevail on the EUR/USD currency pair. The trading instrument has updated its local highs again. The euro found resistance at 1.1470. The 1.1435 mark is already a “mirror” support. Financial markets are still under pressure due to the rapid increase in the number of people infected with coronavirus. At the moment, investors are focused on the EU summit in Brussels, where the leaders of the countries discuss the bloc’s budget for 2021-2027. We recommend opening positions from key levels.
Indicators signal the power of buyers: the price has fixed above 50 MA and 100 MA.
The MACD histogram is in the negative zone, which indicates the bullish sentiment.
Stochastic Oscillator is located near the overbought zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.1435, 1.1410, 1.1370
Resistance levels: 1.1470, 1.1500
If the price fixes above 1.1470, further growth in EUR/USD quotes is expected. The movement is tending to 1.1500-1.1520.
An alternative could be a decrease in the EUR/USD currency pair to 1.1400-1.1370.
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.25519
Open: 1.25530
% chg. over the last day: +0.01
Day’s range: 1.25181 – 1.25943
52 wk range: 1.1466 – 1.3516
The technical pattern on the GBP/USD currency pair is still ambiguous. The British pound is being traded in a flat. Investors expect additional drivers. At the moment, the local support and resistance levels are 1.2570 and 1.2600, respectively. The trading instrument is tending to decline. Positions should be opened from key levels.
The news feed on the UK economy is calm.
The indicators do not give accurate signals: the price has crossed the 50 MA and 100 MA.
The MACD histogram is near the 0 mark. There are no signals at the moment.
Stochastic Oscillator is in the overbought zone, the %K line is above the %D line, which gives a weak signal to buy GBP/USD.
Trading recommendations
Support levels: 1.2570, 1.2520, 1.2485
Resistance levels: 1.2600, 1.2625, 1.2665
If the price fixes below 1.2570, GBP/USD quotes are expected to fall. The movement is tending to 1.2530-1.2500.
An alternative could be the growth of the GBP/USD currency pair to 1.2625-1.2660.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.35659
Open: 1.35690
% chg. over the last day: +0.02
Day’s range: 1.35645 – 1.35999
52 wk range: 1.2949 – 1.4668
USD/CAD quotes are consolidating. There is no defined trend. The loonie is testing the following key support and resistance levels: 1.3560 and 1.3600, respectively. Financial market participants expect additional drivers. We recommend paying attention to the dynamics of “black gold” prices. Positions should be opened from key levels.
The news feed on Canada’s economy is calm.
Indicators do not give accurate signals: the price has crossed the 50 MA and 100 MA.
The MACD histogram is near the 0 mark.
Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which gives a signal to sell USD/CAD.
Trading recommendations
Support levels: 1.3560, 1.3540, 1.3520
Resistance levels: 1.3600, 1.3625, 1.3645
If the price fixes above 1.3600, further growth in USD/CAD quotes is expected. The movement is tending to 1.3625-1.3645.
An alternative could be a decrease in the USD/CAD currency pair to 1.3530-1.3500.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 107.214
Open: 107.092
% chg. over the last day: -0.25
Day’s range: 107.013 – 107.543
52 wk range: 101.19 – 112.41
There are high trading activity and volatility on the USD/JPY currency pair. At the moment, the trading instrument is being consolidated. Local support and resistance levels are 107.10 and 107.30, respectively. USD/JPY quotes have the potential for further growth. Investors expect additional drivers. We recommend paying attention to the dynamics of the US government bonds yield. Positions should be opened from key levels.
Japan has published weak data on the trade balance for June.
Indicators do not give accurate signals: the price has crossed the 50 MA and 100 MA.
The MACD histogram is in the positive zone, which gives a signal to buy USD/JPY.
Stochastic Oscillator is in the oversold zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 107.10, 106.95, 106.80
Resistance levels: 107.30, 107.40, 107.60
If the price fixes below 107.10, USD/JPY quotes are expected to fall. The movement is tending to 106.80-106.60.
An alternative could be the growth of the USD/JPY currency pair to 107.50-107.70.
As we can see in the H4 chart, XAUUSD is forming a slight local correction inside the post-correctional extension area between 138.2% and 161.8% fibo at 1800.60 and 1823.00 respectively. After breaking this area to the upside, the instrument may try to attack its all-time high at 1920.66. The key support is at 1670.60.
In the H1 chart, the descending correction has reached 38.2% fibo. At the moment, the pair is moving towards the high at 1817.89 and may continue the uptrend after breaking it. At the same time, the instrument may yet start a new decline to reach 50.0% and 61.8% fibo at 1787.50 and 1780.45 respectively.
USDCHF, “US Dollar vs Swiss Franc”
As we can see in the H4 chart, after breaking its previous low and finishing a short-term pullback, USDCHF continues falling towards the mid-term 76.0% at 0.9350. The key downside target remains the low at 0.9176. The resistance is at 0.9580.
In the H1 chart, after testing the low, the pair has correcting towards 61.8% fibo. At the moment, the price is forming a new descending impulse. The key short-term downside targets are inside the local post-correctional extension area between 138.2% and 161.8% fibo at 0.9309 and 0.9267 respectively.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On Monday, July 20th, the major currency pair is rising and trading at 1.1443, which is very close to the March high at 1.1496. at the moment, it’s a quite reachable target for investors, who believe only in good and expect positive decisions from the European Union after the summit.
The EU summit, which was originally scheduled for two days, Saturday and Sunday, will continue on Monday as well. The European leaders couldn’t agree on the parameters of the stability fund, which is strongly required by many countries that suffered from the coronavirus pandemic. Apart from that, there are nuances in a multi-year financial plan, which should be a basis for the budgets of some particular European countries and the EU itself for 2021-2027.
There are no doubts that the alliance needs tools and mechanisms to support its economy. The question is at whose expense the fund is going to accumulate money, who will control expenditures and choose where to spend money first.
Even with all things considered, market players are looking pretty confident that the outcome will be positive. This is the reason why the demand for the Euro isn’t decreasing.
In the H4 chart, after breaking 1.1430 to the upside, EUR/USD is expected to continue growing towards 1.1480. After that, the instrument may correct to reach 1.1440 or extend the correction down to 1.1340. Later, the market may form one more ascending structure with the target at 1.1550. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving above 0 inside the histogram area, thus indicating a further uptrend on the price chart.
As we can see in the H1 chart, after forming a consolidation range around 1.1430 and breaking it to the upside, EUR/USD is expected to continue growing towards 1.1488 with no correction. This movement should be considered as an alternative scenario because the price may start plummeting to form such correction with the target at 1.1340 at any moment. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving above 80. If the line breaks 80 and starts plunging towards 20, it will confirm a sharp decline on the price chart.
Disclaimer
Any predictions contained herein are based on the author’s particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.
By Hussein Sayed, Chief Market Strategist (Gulf & MENA), ForexTime
Shares across global markets are trading in negative territory early Monday with one exception, as China’s Shanghai Composite traded 2.5% higher after the People’s Bank of China (PBOC) kept their benchmark lending rate unchanged. Commodities more sensitive to the real economy were also on the backfoot with Oil and Copper both declining slightly in early trade.
EU leaders struggling to agree on their recovery fund, still rising coronavirus infections across several countries and the fear of fiscal packages ending in the US are all factors contributing to shaky investors’ sentiment. Following a 47% rise in the S&P 500 from March lows, markets need another dose of positive news to keep the rally going, but given the many uncertainties ahead, the risks seem tilted to the downside.
While many investors do not expect a steep correction in equity prices, very few still believe the global economy is heading towards a V-shaped recovery in the second half of this year. With several states across the US expected to enter a second lockdown, it will require bold fiscal plans to keep the economy afloat. We will probably learn more this week about what packages Congress is preparing, and more importantly how the President perceives them. However, it is essential that some relief measures are passed sooner rather than later to prevent markets from experiencing another bout of extreme volatility.
Most US investment banks reported better than expected earnings last week, mainly due to the rise in trading income. This week, the earnings season enters full swing with companies from almost all sectors due to announce their results. Beating earnings per share (EPS) expectations won’t be enough to lift stocks, but guidance for Q3 and full year will be more significant, similar to what Netflix experienced last week.
Rotation from Tech growth stocks to value-oriented companies has been a key theme recently, however if the Tech sector receives a big hit, I expect this will drag the whole market lower with it. After all, it was expected that Tech companies would be the survivors of the pandemic and if that is no longer the case, I do not see high chances for other sectors in taking the lead.
Earnings, fiscal policies and Covid-19 infections will be the key drivers for markets this week. However, any surprising announcements of vaccine trials will also affect sentiment.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Equity markets are mixed currently after a mixed trading last Friday. Investors are cautious after mixed US data Friday signaled significant uncertainty as global covid-19 cases fail to retreat.
Forex news
Currency Pair
Change
EUR USD
+0.25%
GBP USD
+2.13%
USD JPY
+0.12%
The Dollar weakening has halted currently. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.4% Friday as US consumer sentiment index fell to 73.2 in July from 78.1 while US housing starts rose 17% from May. Both GBP/USD and EUR/USD reversed their sliding Friday. Euro is higher currently against the dollar while Pound is down. AUD/USD reversed its sliding while USD/JPY reversed its climbing Friday with the dynamics reversed for both pairs currently.
Stock Market news
Indices
Change
Dow Jones Index
-0.77%
GB 100 Index
-0.56%
Nikkei Index
+0.5%
US equity markets are lower today ahead of second quarter earnings reports. IBM and Halliburton are among the SP500 large capital companies slated to report earnings today. The three main US stock indexes recorded weekly returns ranging from -1.1% to 2.3% last week. European stock indexes are extending losses currently ahead of European Union Summit where leaders will continued discussing the €750 billion recovery fund after reports delegations might abandon the summit and try again for an agreement next month. Asian indexes are mixed today after data showed Japan’s exports suffered a double-digit decline for the fourth month in a row in June.
Commodity Market news
Commodities
Change
Brent Crude Oil
-0.89%
WTI Crude
-1.05%
Brent is extending losses today as trader anticipate the fuel demand will be negatively impacted by rising coronavirus cases worldwide. Oil prices ended lower last session. The US oil benchmark West Texas Intermediate (WTI) futures are lower currently. September Brent crude lost 0.5% to $43.14 a barrel on Friday.
Gold Market News
Metals
Change
Gold
-0.01%
Gold prices are edging lower today. August gold added 0.7% to $1812.10 an ounce on Friday.
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A familiar foe is back to haunt the Pound, as it commences the trading week on a weaker note against the US Dollar.
Brexit negotiators have descended onto London to resume talks over the course of this week, as the UK and EU seek to formulate their post-Brexit relationship.
Such concerns have clearly been reflected in GBPUSD’s performance. Last week, in the lead up to this week’s talks, the Pound was the worst-performing G-10 currency against the US Dollar. Even Sterling’s gains in the first half of this month weren’t enough for the currency pair to break out of the downtrend seen since December.
Although a “golden cross” has formed, with its 50-day simple moving average rising above its 100-day counterpart, such a technical event may prove to be a false dawn, especially if investors get a sense that a no-deal Brexit is becoming likelier, with just over five months remaining until the December 31 deadline.
As the currency pair consolidates into a tighter trading range, GBPUSD needs a catalyst to break out of that symmetrical triangle formation, which, from a fundamental perspective, could come in the form of a meaningful breakthrough in Brexit talks.
However, that remains wishful thinking at this juncture, as Brexit woes have long supressed the Pound’s performance, with GBPUSD having declined by over 15 percent since the referendum on 23 June 2016.
EURUSD lets gains slip as talks drag on
Meanwhile, the Euro is struggling versus the US Dollar this morning, as investors price in the prospects of more fiscal stimulus coming to the EU economy’s rescue having been wrecked by the global pandemic. At the time of writing, EU leaders remain deadlocked over the fate of the EUR750 billion economic support package, having held talks since Friday and through the weekend.
The early Monday performance by EURUSD appears to reflect the conflicted sentiment among investors, as they digest the softening stance from the likes of Denmark, Sweden and Finland, even as stern opposition is still coming from the Netherlands and Austria. Keep in mind that the plan requires the consent of all 27 members.
Markets are still holding on to hopes that the Euro-positive outcome, whereby all EU leaders can agree to the details of the stimulus package, may materialize by next month. On the other hand, the Euro’s recent gains could be unwound if the impasse drags on, leaving the bloc’s economy to languish in the interim.
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