ZFX: Unprecedented sell-off! Oil prices dragged down global stock markets

Tuesday (April 21) Review

• The outlook of oil prices is still extremely gloomy. The June contract of WTI crude futures fell sharply, once dropped below the $10 mark. Although there was a rebound in the late US session, the WTI still closed 43% lower! The plunge has boosted risk aversion so that the three major Wall Street indexes all fell more than 2%.

• The general analysis believes that the oil market is currently experiencing serious problem of imbalance, which is expected that lots of buyers are reluctant to or will not take physical delivery. Even by the settlement date of next month, a huge sell-off may still emerge, causing the WTI futures to fall into a negative territory again.

• The sales of existing homes in the US fell 8.5% in March, to 5.27 million units, the biggest monthly drop since November 2015, but the drop was roughly in line with market expectations.

• The new coronavirus outbreak is still severe, with more than 2.5 million confirmed cases worldwide and more than 170000 deaths. However, it is generally believed that the growth rate of both numbers will slow down.

• The US Senate finally reached an agreement on a new economic stimulus plan with a scale of nearly $500 billion to help small businesses and medical institutions to cope with the current crisis. President Trump reiterated that he will plan to provide funds for the energy industry to protect the companies and ensure the jobs.

ZFX analyst Jacob Leung said that the imbalance issue of the oil market has been totally exposed. Unless the major oil-producers in the world put more efforts to deal with the “cut”, oil prices may still keep under pressure and fluctuate in the short term. There have been several “Black Swan” events this year already, meaning that investors should always be well prepared to deal with unexpected things, unusual moves and volatility.

AUD/USD

AUD / USD fundamentals or market sentiment – ​​Under the risk averse sentiment, the Aussie still holds steady.

Support: 0.6280; 0.6260 Resistance: 0.6315; 0.6350

View: The Aussie is still moving within the range but the volatility is sometimes high.

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

Position follow-up and profit and loss: 0.6280 has been long, and the stop loss is 0.6260 before reaching the target 0.6310. (Stopped) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 530 pips

EUR/USD

EUR / USD fundamentals or market sentiment – ​​the dollar is still relatively strong, while the euro is forming a range.

Support: 1.0800; 1.0750 Resistance: 1.0870; 1.0900

View: The euro is like ranging.

Recommendation: Go long at 1.0840, target 1.0860, stop loss 1.0820. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: Long 1.0810, target 1.0840. (Cancelled) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 440 pips

GBP/USD

GBP / USD fundamentals or market sentiment – ​​The British Pound has breakthrough the range and is now more bearish as expected.

Support: 1.2250; 1.2200 Resistance: 1.2320; 1.2350

View: Sterling is likely to be a downtrend after breakthrough further.

Recommendation: 1.2350 short, target 1.2300, stop loss 1.2400. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.2450 short, target 1.2420, stop loss 1.2480. (Cancelled) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 335 pips

GOLD

GOLD fundamentals or market sentiment – ​​Risk-off sentiment seems not fully supporting the gold market.

Support: 1670; 1660 resistance: 1690; 1700

View: Gold price is under pressure with positive factors.

Recommendation: 1683 short, target 1673, stop loss 1690. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1695 has been short, has changed target to 1688. (Take profit) 1700 short, target 1695, stop loss 1706. (Cancelled) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -35 USD

USOIL

USOIL (WTI) fundamentals or market sentiment – it is difficult for judging the sell-off in oil market rationally.

Support: 12.00; 10.00 Resistance: 14.00; 15.50

View:  Oil prices may still go further down.

Recommendation: Big differences in OTC quotes of the oil market, and no recommendations are made at this time.

Position follow-up and profit and loss: —

Cumulative profit and loss: $ 9.8

US30

US30 (Dow) fundamentals or market sentiment – Unprecedented move in oil prices have halted the rebound in stock markets, turns to a bit bearish.

Support: 22900; 22500 Resistance: 23300; 23500

View: The Dow stays 23000 level but can’t be optimistic.

Recommendation: wait and see.

Position follow-up and profit and loss: 23200 has been long, change the target to 23300, stop loss 22900. (Hold) 23600 go long, target 23800, stop loss 23400. (Cancelled) (Pay attention to the OTC quotes may have differences) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -100 points

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.