ZFX: No. 3 black swan? oil prices biggest drop since 1991

Review:

On Monday (March 9), investors witnessed history again. Due to the breakdown of production reduction agreement negotiations between OPEC and Russia, Saudi Arabia announced an extreme move over the weekend. Oil prices continued to drop sharply following the decline of last Friday. It was once more than 30% after opening, which was the biggest drop since 1991.

The global financial market was extremely panic, and stock markets around the world were in a bleak state. The Dow fell more than 2,000 points. During this period, it triggered a trading halt for 15 minutes. At the end, the three Wall Street indexes all fell more than 7% to close, the worst performance since the Lehman Brothers issue in 2008.

An “oil price war” means the mechanism for stabilizing oil prices by OPEC+ seems to have collapsed. Following the tension US Vs Iran and Coronavirus, it can be said that it is the third black swan this year. Investors witnessed that it may be the most specific and fastest “The Butterfly Effect”.

At present, the global outbreak of pneumonia, with no signs of control at all, has strengthened the expectation of economic recession. Almost all the funds withdrawn from the stock market have poured into safe-haven assets. The global bond market has been affected. The 10-year U.S. bond yield once reached 0.31%. around.

ZFX analyst Jacob Leung said that the market has no choice but to manage risks. Worrying about the epidemic and the “Oil price war”, the financial markets and economy are expected to continue deteriorating. Investors can only sell risky assets, even though last Friday’s non-farm payroll performed strongly.

The market is now anticipating that later the Fed will further cut the interest rates by another 75 basis points to 0.25-0.5% level, with a probability of 87%.

Yesterday another focus was on gold, which once reached a high of $ 1,703 around, but then dropped back to $1660 area. The market believes that many gold market participants are facing additional margin requirements in other markets, and the high price of gold makes it easier to withdraw funds and re-allocate their investment portfolios.

This week, investors will still mainly focus on the trend of oil prices, including how the other oil-producing countries respond. It is reported that Russia may also consider increasing production, seizing market share, which may further cause oil prices to collapse. In addition, US President Trump said that he would announce major economic policies, and it was reported that he also invited senior management of major Wall Street investment banks to discuss how to deal with the impact of the epidemic. On Tuesday’s Asian session, market sentiment was slightly stable

AUD/USD

Market theme / sentiment: The stock market collapsed, and the Australian dollar’s sharp drop for a time.

Support level: 0.6550; 0.6500 Resistance level: 0.6600; 0.6625

Recommendation: wait and see. (It is recommended not to consider the bid-ask spread factor)

Position follow-up and profit and loss: 0.6580 has been shorted and has hit the target of 0.6560. (TP) (It is recommended not to consider the bid-ask spread factor)

Cumulative profit and loss: 360 pips

EUR/USD

Market theme / sentiment: The euro was driven by safe-haven funds and once reached 1.15.

Support levels: 1.1370; 1.1300 Resistance levels: 1.1430; 1.1480

Recommendation: 1.1360 short, target 1.1320, stop loss 1.1385. (It is recommended not to consider the bid-ask spread factor)

Position follow-up and profit and loss:  —  (It is recommended not to consider the bid-ask spread factor)

Cumulative profit and loss: 390 pips

GBP/USD

Market theme / sentiment: Euro-based currencies are taking risks, and have strengthened under the expectation of the Fed’s interest rate cuts.

Support levels: 1.3050; 1.3000 Resistance levels: 1.3090; 1.3150

Recommendation: short 1.3030, target 1.3000, stop loss 1.3055. (It is recommended not to consider the bid-ask spread factor)

Position follow-up and profit and loss: 1.2935 short, target 1.2900, stop loss 1.2955. (Not reached, cancelled) (It is recommended not to consider the bid-ask spread factor)

Cumulative profit and loss: 335 pips

GOLD

Market theme / sentiment: Gold price dropped back, beware of reversals.

Support levels: 1660; 1650 Resistance levels: 1675; 1680

Recommendations: short 1662 and 1677, target 1650, stop loss 1687. (It is recommended not to consider the bid-ask spread factor)

Position follow-up and profit and loss: 1672 has been shorted, and stop loss at 1677 before 1662. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)

Cumulative profit and loss: -150 USD

USOIL(美国原油)

Market theme / sentiment: OPEC+ failed unexpectedly, production reduction factors are no longer supportive, oil price will be volatile.

Support: 32.50; 32.00 Resistance: 34.00; 34.50

Recommendations: 34 short, target 33.5, stop loss 34.5. (It is recommended not to consider the bid-ask spread factor)

Position follow-up and profit and loss: 44.5 and 45.5 long, stop loss 43.5. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)

Cumulative profit and loss: $ 8.6

Risk Warning: The above content is for reference only, and does not represent ZFX’s view. ZFX is not responsible for any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and take appropriate risk control.