Trading plan for 21/06/2017:
The Crude Oil prices decline below $43.74 during late Tuesday's session. EUR/USD is trading below 1.1150 and GBP/USD is holding at 1.2650, near two-month lows. Oil price volatility followed enthusiasm on stock exchanges and triggered a decline in US debt yields. In such an environment, the Yen is strengthening and USD/JPY is trading close to 111.20.
On Wednesday 21st of June, the event calendar is light in important economic releases, but market participants will pay attention to Public Sector Net Borrowing data from the UK and Existing Home Sales data from the US. Later tonight the Reserve Bank of New Zealand will make a decision on the interest rate and will release the official statement just after the event. Moreover, market participants might turn their attention to the Queen's Speech in the UK.
GBP/USD analysis for 21/06/2017:
The Public Sector Net Borrowing data from the UK are scheduled for release at 08:30 am GMT and market participants expect the number of expenditures less than the total receipts taken in by the government to decrease from 9.6Bln to 7.3Bln, so the public sector should maintain the fiscal deficit, but a little bit lower. Nevertheless, the expected difference seems to be small and not really capable of triggering any significant move in GBP/USD or a trend reversal. The political scene, however, might grab investors' attention today as focus remains on the Queen's Speech (which outlines the government's legislative agenda for the coming parliamentary session) taking place today (despite Theresa May not having agreed on a deal with the Democratic Unionist Party (DUP) yet). The other important event will be Chief Economist at the Bank of England Andy Haldane speech and he is likely to reiterate yesterday's Carney remarks regarding the interest rate and the Bank of England monetary policy. Any other rhetoric than this will be a big surprise for the markets.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The bears have managed to break out below the technical support at the level of 1.2634 and now are testing it from below. They are likely to fail here and move lower towards the golden trend line support around the level of 1.2585. If the golden trendline is violated as well, then the sell-off will likely accelerate ant the next important support at the level of 1.2514 will be tested.
Market Snapshot: Crude Oil breaks below the support
Crude Oil broke below the technical support at the level of $43.74, so the idea of a Double Bottom formation has already gone. The market fell as low as $42.67 and now the price is trying to test the level of $43.74 from below. Only a sustained breakout above this level and then the navy trendline violation would have put the bulls back in control over the market, at least for the corrective cycle. The key levels for any upside price developments are $ 44.22 and $45.07. The overall bias remains bearish.
Market Snapshot: SP500 start a correction?
The prices of SPY (SP500 EFT) fell yesterday just as the prices of Crude Oil as the risk-off mood dominated financial markets yesterday. The index still has a gap between the levels of 242.70 - 243.43 to fill. So if the negative sentiment continues, the market will be able to do it even today and the overbought market conditions are supporting this view. The most important technical support is still the level of 242.01, any breakout lower will be considered as a beginning of a more deeper correction.
