Oil prices rose on Tuesday, supported by increased optimism regarding a preliminary US-China trade agreement. In addition, since China continues to insist on the abolition of the planned increase in import duties on December 15 and the tariffs introduced in September, investors expect Washington to make concessions in this issue, which will significantly reduce the degree of tension in the market.
OPEC’s updated forecasts for oil production over the next few years also supported quotes on Tuesday: by 2024, oil production should be reduced to 32.8M barrels per day. Also, API Weekly Crude Oil Stock report for the week ending November 1 reflected sharp growth in stocks by 4.26M barrels after a decline of 0.708M barrels for the previous period. Today, investors are awaiting the publication of EIA Crude Oil Inventories report.
Support and resistance
Bollinger Bands in D1 chart show moderate growth. The price range expands from above, freeing a path to new local highs for the “bulls”. MACD is growing, keeping a weak buy signal (located above the signal line). Stochastic, having approached its highs, reversed into a horizontal plane, indicating risks of overbought instrument in the ultra-short term.
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Correctional decline is possible in the ultra-short term. Some of the existing long positions should be kept open for some time.
Resistance levels: 63.39, 64.00, 65.00.
Support levels: 62.67, 62.00, 61.16, 60.00.
To open long positions, one can rely on the breakout of 63.39. Take profit – 65.00. Stop loss – 62.20. Implementation time: 1-2 days.
A rebound from 63.39 as from resistance, followed by a breakdown of 62.67 or 62.30 may become a signal to new sales with the target at 60.00. Stop loss should be placed no further than 64.00.
Implementation time: 2-3 days.
EUR showed a steady decline against USD on Tuesday, updating local lows of October 16. The development of negative dynamics in the instrument was facilitated by the publication of ambiguous macroeconomic statistics, as well as the general growth of the American currency across the entire spectrum of the market. The strongest support for the dollar was provided by data on ISM Services PMI. In October, the indicator rose from 52.6 to 54.7 points, exceeding its forecast of 53.5 points. Today, the pair is trading in both directions, waiting for the appearance of new drivers at the market. Investors are focused on business activity indices in Europe for October. Separately, traders expect publication of the dynamics of Factory Orders in Germany for September.
GBP showed flat dynamics on Tuesday, ending the session with almost zero result. Moderate support for the pound was provided by Markit Services PMI in the UK. In October, the indicator rose from 49.5 to 50.0 points, which was slightly better than the forecasts of 49.7 points. In turn, BRC Retail Sales Monitor data came out worse than expected. In October, retail sales rose by 0.1% YoY after a 1.7% YoY decline in September and a forecast of 0.5% YoY growth.
AUD showed strong growth on Tuesday, updating local highs of October 31. However, the instrument failed to consolidate at new highs, and by the time the US trading session opened, it had lost most of its gains. Australian currency was supported by the results of the RBA meeting and the comments of the head of the regulator. As expected, the Reserve Bank of Australia kept its key interest rate at 0.75%. At the same time, investors hope that in the near future the regulator will not change the parameters of monetary policy significantly. RBA head Philip Lowe supported such sentiments, noting that the period of low interest rates will be quite long. Correction of the instrument was facilitated by the publication of ISM Services PMI with the opening of the American trading session. In October, the index showed growth from 52.6 to 54.7 points, which turned out to be better than market expectations of 53.5 points.
USD strengthened against JPY on Tuesday, rising to local highs of October 30. The growth of the US currency was due to the publication of a number of positive macroeconomic indicators from the United States, as well as a decrease in market demand for safe-haven currencies, as investors are still optimistic about the process of trade negotiations between the US and China. Today, the pair is trading in both directions, despite the publication of weak macroeconomic statistics from Japan. Jibun Bank Services PMI in October showed a decrease from 52.8 to 49.7 points against the forecast of 50.3 points.