ZFX: Hopes for the reopening of the economy propped up riskier assets

Monday (April 27) Review

• Oil prices plunged again. The June contract for WTI crude futures dropped more than 20%, and the June contract for Brent crude also fell below $20. Besides the concern of global crude oil storage capacity, the market is worried that the United States Oil Fund (USO), the world’s largest crude oil ETF,  will sell all of its June contracts of WTI and transfer its holding to the longer-term contracts, which added selling pressure to oil prices. However, due to certain expectations of the decline in oil prices, the news has just little impact on investor sentiment.

• The hopes of reopening the economy and the global central banks actions boosted risk appetite. The Volatility Index (VIX), which usually reflects the level of risk or investor panic, continued to go lower. All three Wall Street indexes jumped more than 1%, despite the drop of oil prices.

• The Bank of Japan announced expansion of the monetary stimulus that it will keep the short-term policy interest rate target at -0.1% and remove the upper limits of government bond-buying, which is 80 trillion yen. BOJ promised to purchase government bonds with no limit to keep the 10-year bond yield at around zero level.

• The spot gold edged lower, staying at $1700 level on Monday. Many countries around the world are now trying to ease the lockdown measures which turned the sentiment positive. Long positions tended to “cash out” in gold market when risk on.

• The situation of the global pandemic is still not that optimistic, with more than 3 million confirmed cases worldwide and more than 210000 deaths.

ZFX analyst Jacob Leung said that the risk appetite is now dominated as investors are now expecting the restart of the global economy. In the short term the hopes may “overshadow” the other bearish factors, like the gloomy outlook of oil prices. However, as always mentioned, investor sentiment is always sensitive. Any fall short will cause reversal move easily.

AUD / USD fundamentals or market sentiment – ​​the dollar weakened and the Aussie continues its strength.

Support: 0.6420; 0.6400 Resistance: 0.6450; 0.6470

View: Buying interest is still expected to be strong.

Recommendation: go long 0.6420, target 0.6440, stop loss 0.6390. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 0.6390 to go long, pending, target 0.6415, stop loss 0.6370. (Pending) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 495 pips

EUR / USD fundamentals or market sentiment – ​​the market is waiting for the ECB policy, the move of the euro is limited.

Support: 1.0800; 1.0770 Resistance: 1.0840; 1.0860

View: The euro seems to be neutral.

Recommendation: wait and see. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: — (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 425 pips

GBP / USD fundamentals or market sentiment – ​​The outbreak in Europe is easing, and the Pound is relatively strong.

Support: 1.2390; 1.2350 Resistance: 1.2450; 1.2480

View: Sterling has established an uptrend, likely to be bullish outlook.

Recommendation: 1.2470 short, target 1.2440, stop loss 1.2500. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.2360 short, pending, change to 1.2390 short, target 1.2360, stop loss 1.2420. (Pending) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 395 pips

GOLD fundamentals or market sentiment- Demand for the safe-haven lowered, gold price is under selling pressure on Tuesday.

Support: 1690; 1670 resistance: 1705; 1720

View: Spot gold has formed a “small” head and shoulders pattern, tended to be bearish.

Recommendation: 1705 short, target 1695, stop loss 1712. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1715 has been long, hit the target 1722 first. (Take profit) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -20 USD

USOIL (US crude oil) fundamentals or market sentiment- big negative news made the oil prices sunk, back to downtrend.

Support: 13.50; 11.50 Resistance: 15.00; 16.00

View: Oil prices may test the previous low level earlier.

Recommendation: the OTC quotes of the oil market have big differences, so no recommendation is made.

Position follow-up and profit and loss: —

Cumulative profit and loss: $ 9.8

US30 (Dow) fundamentals or market sentiment – ​​the bullish news continues to be supportive to the US stocks.

Support: 23900; 23700 Resistance: 24200; 24500

View: The Dow is forming an uptrend.

Recommendation: short 24400, target 24200, stop loss 24600. 23900  long, with a target of 24100 and a stop loss of 23800.  (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 24000 has been short, hit the target 23850. (Take profit) (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 0 points

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Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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