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USD/JPY: DOLLAR IS IN CONSOLIDATION

14:26 06.07.2017

 

Technical levels: support – 113.00, 112.40; resistance –  113.60.

 

Trade recommendations:

 

Sell — 113.20; SL — 113.40; TP1 — 112.40; TP2 — 112.10.

Reason: narrow bullish Ichimoku Cloud; a golden cross of Tenkan-sen and Kijun-sen with rising Tenkan-sen; the prices are under the strong resistance on daily timeframe.

 

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WHEN THE EURO WILL RISE ABOVE 1.15 AND HIGHER?

15:12 06.07.2017

 

The euro has climbed to 1.1445 (its highest level in more than a year) due to improving the Euro area economic environment and Draghi’s hawkish commentaries at the last-week central banking conference in Sintra. According to some analysts, this was the peak; all the positive events have already been priced in and that 1.15 resistance is “unbreakable”. Analyst Carl Hammer of Skandinaviska Enskilda Banken (SEB) has a different point of view, he expects the EUR to rise well above 1.15 once one of the following conditions is met:

 

A fiscal collaboration within the Eurozone members should occur. That is, a banking union and a fiscal union will have to match the existing monetary union. Such a congruence should be announced no earlier than in May 2018. A fiscal union would mean a further stage in the European Union integration process; it would make the Eurozone more robust, more resilient to the spate of upcoming financial and economic crises;

The economic convergence within the Eurozone countries should be achieved. The internal imbalances in the levels of economic development should be eliminated. The Eurozone officials try hard to rectify these imbalances ever since the outbreak of Eurozone crisis. So far, their efforts are still not repaid.

The ECB becoming more hawkish not only in word by also in deeds. Meanwhile, the ECB officials believe that a monetary policy stimulus is still needed for the smooth economic recovery. Ewald Nowotny, a Governing Council member, has recently said that monetary policy should be normalized as soon as the economy allows. While inflation remains exceedingly volatile and most of the time subdued, the ECB will unlikely remove even a small degree of its monetary policy accommodation. The ECB’s policymakers admit though that sooner or later they will have to return towards a more neutral rate differential. And then, the euro will certainly spike above the 1.15 /1.20 levels much to ECB’s regret. Rapid euro appreciation would tighten financial conditions prematurely. That is something the ECB would like to occur, so it continues to accord truly great monetary stimuli instead of entering into the hawkish cycle.

 

 

One more condition we would like to add from our own part – the Fed moving away from monetary normalization and ceasing to raise rates. A non-provision of the long-awaited fiscal stimulus would also trim the USD potential for rising higher. The euro would certainly benefit from the USD weakness and finally break the resistances at 1.15/1.20.

 

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EUR/USD: BULLISH "HARAMI"

15:50 06.07.2017

 

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We've got a bullish "Harami" at the local low. This pattern has been confirmed, so the market is likely going to rise until any bearish pattern forms.

 

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There're bullish patterns such a "Harami" and a "Tweezers", which both have been confirmed. Also, we don't have any reversal pattern, which means the pair is likely going to continue moving up.

 

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USD/JPY: "HIGH WAVE" AND "HAMMER"

15:58 06.07.2017

 

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The price is consolidating, but we've got bullish patterns like a "High Wave" and a "Hammer". Therefore, the market is likely going to reach the nearest resistance level in the short term.

 

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The upper "Window" has acted as resistance, so there's a bearish "Harami", which hasn't been confirmed yet. In this case, the price is likely going to test the 34 Moving Average, which could be a departure point for another bullish rally.

 

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MORNING BRIEF FOR JULY 7

08:46 07.07.2017

 

USD/JPY edged higher in the Asian session as the Bank of Japan’s officials have recently said they will start buying unlimited amount of bonds to return the yield back to their zero target. JGB yields were on the, with the 100 year spiking above 0.105%.  The pair rose above 113.65 on the announcement.

 

The euro spiked above 1.1425 (o.4% higher) overnight as the ECB minutes indicated that the ECB was on the edge of announcing a taper of its asset purchase program in the near future. The bank will hold its meeting on July 20 next time. ECB’s determinacy to remove its policy accommodation will be push the euro higher. The technical outlook for EUR/USD is neutral. A break of the resistance at 1.1445 will be an indication of the EUR moving into a bullish phase.

 

The British pound also gained some points in the past few sessions. It rose above 1.2970 as the Bank of England’s McCaffery (a dissenter at the last MPC meeting) said that the policy accommodation might be removed in the near-term future. Mostly likely, GBP/USD will trade sideways within the range of 1.2890 – 1.3030 in the upcoming sessions. And only clear break of the upper border of the range will indicate that the euro has moved into a bullish phase. The odds for such move do not appear to be high at the present moment, but they might increase if we get upbeat UK manufacturing production figures and passable goods trade balance figures.

 

Kiwi suffered some losses overnight sliding to 0.7240. We got plenty of US data yesterday. ADP Payrolls were 158K against expected 188K. It could signal downside risks for today’s non-farm payrolls. A stronger than expected non-manufacturing ISM from the US remedied USD losses though. At the present moment, NZD/USD trades at 0.7275. There is a scope for extension of kiwi’s gains to 0.7530. But we wouldn’t rush into longs at this point. The overall outlook for NZD/USD is still neutral.

 

US dollar/Loonie traded higher in Tokyo morning to 1.2990. Crude oil prices declined after a sharp but short-lived boost from a big decline in the US stockpiles faded.  Canadian data coming at 3:30 pm will garner a special focus on the back of the next week Bank of Canada’s monetary policy meeting (at which a rate hike is expected). The major internal focus will on the US labor market report though. The market is currently expecting a payrolls growth of 178K and unchanged unemployment rate. Most analysts believe that NFP above 118K would still be enough for the Fed to continue the normalization of its monetary policy.

 

Other events that is coming up: a Fed monetary policy report is about to be presented to Congress ahead of Yellen’s testimony next week; the G-20 summit in Hamburg with the US President Donald Trump and his Russian homologue Vladimir Putin meeting to be held on its sidelines. Meanwhile, the investigations intro Trump’s presidential campaign collusion with Russia continues. It will be interesting to know whether Trump takes a hard line against Kremlin in the future or not.

 

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Banks’ preview: NFP, unemployment rate and average hourly earnings

BANKS’ PREVIEW: NFP, UNEMPLOYMENT RATE AND AVERAGE HOURLY EARNINGS

09:21 07.07.2017

 

The consensus expectation for the US NFP – 178K jobs. That is stronger than the 138K in May. A number like that (or any other number above 118K) will probably not deter the FED from their planned path. An additional hike is still expected this year as well as a run-off of the QE.

 

Our expectations in brief: the jobless rate is unchanged at 4.3%; average hourly earnings picking up slightly from 0.2% to 0.3%; probably weaker jobless claims.

 

Banks' preview:

 

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NZD/USD: KIWI IS ON THE CROSSROADS

09:49 07.07.2017

 

On the NZD/USD daily chart, there is a correction towards the uptrend. A break of the resistance at 0.7345 will increase the risks for the implementation of the target 113% in the Shark pattern. In contrast, an update of the July low will lead to the development of the correction.

 

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On the NZD/USD hourly chart, it seems that Bulls took a break as there is a consolidation after the long-term uptrend. If we are talking about the process of distribution of the short positions, there will be a deep correction. In contrast, the accumulation of long positions will lead to the continuation of the rally.

 

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GBP/USD: POUND CANNOT GET HOME

09:51 07.07.2017

 

On the GBP/USD daily chart, there is a unique situation. Bears cannot return the quotes within the borders of the downwards trading channel. Bulls have no strength to return the pound to the upward trading channel. If target 88.6% of the Shark pattern is fulfilled and the 1-2-3 pattern is formed, there will be a rollback.

 

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On the GBP/USD hourly chart, target 113% of the Shark pattern is fulfilled. If bears manage to test the support at 1.2893, there will be a transformation of the Shark pattern into the pattern 5-0.

 

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EUR/USD: BEARISH "FLAG"

10:14 07.07.2017

 

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Bulls faced resistance at 1.1425, so the price is consolidating. In this case, the market is likely going to test the nearest support at 1.1389 - 1.1387. If a pullback from this area happens, there'll be an opportunity to have an upward price movement towards the next support at 1.1443 - 1.1464.

 

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The price is consolidating under resistance at 1.1425. Also, there's a "Flag", so bears are likely going to reach the closest support at 1.1387. However, if we see a pullback from this level, bulls will probably try to achieve the next resistance at 1.1443 - 1.1464.

 

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GBP/USD: CONSOLIDATION NEAR 89 MA

10:17 07.07.2017

 

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There's a "Triple Top", which pushed the price to support at 1.2947. So, the pair is likely going to decline in the direction of the next support at 1.2926 - 1.2887. If a pullback from these levels happens, we could have another upward price movement towards resistance at 1.2976 - 1.3013.

 

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The price is still consolidating near the 89 Moving Average. Also, there's a "Flag" pattern, so the market is likely going to test the closest support at 1.2915 in the short term. Considering a possible pullback from this level, bulls will have an option to reach resistance at 1.2976 - 1.3013 afterwards.

 

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EUR/USD: EURO TESTED NEW HIGHS

12:10 07.07.2017

 

Technical levels: support – 1.1390; resistance – 1.1430.

 

Trade recommendations:

 

Buy — 1.1390; SL — 1.1370; TP1 — 1.1430; TP2 – 1.1500.

Reason: expanding bullish Ichimoku Cloud with rising Senkou Span A; a new golden cross of Tenkan-sen and Kijun-sen, rising Tenkan-sen; the market going to new highs.

 

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AUD/USD: AUSSIE BOUNCED FROM SSB

12:12 07.07.2017

 

Technical levels: support – 0.7570; resistance – 0.7615, 0.7650.

 

Trade recommendations:

 

Buy — 0.7580; SL — 0.7560; TP1 — 0.7650; TP2 — 0.7690.

Reason: narrow bearish Ichimoku Cloud with falling Senkou Span A; a dead cross of Tenkan-sen and Kijun-sen; but the prices supported by Senkou Span B and entered to the channel Tenkan-Kijun.

 

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EUR/USD: "HARAMI" PUSHED PRICE HIGHER

14:21 07.07.2017

 

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The last bullish "Harami" pushed the price higher, so we've got a new local maximum. Also, there isn't any reversal pattern so far. Meanwhile, there's an opportunity to have a local bearish correction towards the nearest support. Nevertheless, the market is likely going to continue moving up afterwards.

 

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We've bearish patterns such a "Shooting Star" and a "Tweezers", but both of them haven't been confirmed yet. Therefore, the 55 Moving Average is likely going to act as support in the short term.

 

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USD/JPY: NEW HIGH COMING SOON

14:23 07.07.2017

 

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There are a "High Wave" and a "Hammer", but we don't have any reversal pattern. So, the pair is likely going to continue rising towards the nearest resistance in the short term.

 

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We've got a "Doji" and a "Shooting Star" at the last high, so bears are likely going to test the closest "Window" during the day. If a pullback from this level happens, we could have a new high shortly.

 

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USD/JPY: OUTLOOK FOR JULY 10 -14

16:06 07.07.2017

 

The yen was one of the biggest losers in the past week mainly due to stronger USD which got traction on the upbeat economic releases out of the US. An additional drag on Japan’s currency came on Friday as the country’s central bank signaled its decision to buy an unlimited amount of bonds to keep 10-year yields at around zero percent level. As a result, USD/JPY spiked above 113.90 at the end of the past week.

 

Next week will start with Japan’s core machinery orders, economic watchers’ sentiment, and current account figures. Then, traders will be mostly focused on the US economic releases. The US producer price index and unemployment claims will the released on Thursday. On Friday, we will receive inflation and retail sales figures out of the US at 3:30 pm MT time. The key event of the week is Fed Chair Yellen’s testimony scheduled for 5:00 pm MT time Thursday. 

 

Regardless of the recent gains of the US dollar, the current technical outlook is still neutral. USD/JPY is trading in the broad range of 108.80 – 114.35 levels. A break of the upper limit of the range will open the way towards resistance at 115.50 last touched on March 10. On the downside, there are some supports at 112.90, 112.75 ahead of the psychologically important level of 112.00.

 

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USD/CAD: OUTLOOK FOR JULY 10-14

16:08 07.07.2017

 

The commodity-sensitive Loonie has appreciated to its strongest level since September (1.2910) due to surging oil prices and upbeat labor market data released on Friday.

 

Next week, traders will be focused on the Bank of Canada’s monetary policy meeting on June 12. Expectations for tightening have surged to 85% from just 4% a month ago as a number of hawkish comment from the BOC’s senior officials has increased in the past weeks. Some analysts believe that traders are overestimating the central bank’s willingness to raise rates. So, staying long in the loonie is not as clear cut as everybody thinks. Following the BOC’s monetary meeting the traders’ focus will shift towards Janet Yellen’s testimony scheduled for Wednesday-Thursday and the US inflation and retail sales data coming on Friday at 3:30 pm MT time. A positive oil market dynamics triggered by a possible decline in the US oil production or drops in inventory data will help commodity-linked Loonie to rise higher.

 

USD/CAD is trading around 1.2909 at the time of writing. There is a scope for extension towards 1.2820 (last September low). The odds for breaking lower levels is not high at this stage but the Bank of Canada’s rate hike could significantly improve them. On the upside, there are some resistances at 1.3015 and 1.3140.

 

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EUR/USD IS STILL BULLISH, LOOKS FOR A LOWER LEG

02:43 10.07.2017

 

The EUR/USD pair is following a bullish bias across the markets and it continues to strengthen the current path with a consolidation above the 200 SMA at H4 chart. Around 1.1446 it started to correct the overall bias, but it was blocked by the 50 SMA. However, we’re forecasting another lower leg to test the range between the 1.1282 and 1.1233 levels, at which could gain momentum to resume the bullish bias towards the 1.1523 zone (-23.6%).

 

RSI indicator is still at the positive territory, supporting the upside path.

 

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MORNING BRIEF FOR JULY 10

08:49 10.07.2017

 

Leaders from the world's leading economies broke with U.S. President Donald Trump on climate policy at a G20 summit held in Hamburg last week. On trade an investment, there were some usual platitudes about the countries’ commitment to open their markets, to fight protectionism and unfair trade practices with the legitimate trade instruments. These latter pledges were at US insistence. EC President Jean-Claude Juncker made clear that the European Union would act swiftly introducing countermeasures if the US impose steel tariffs. A decision could come any day the affected countries have already complained to the WTO. That is something that would put a drag on commodity-link currencies.

 

Resuming shortly the recent G20 meeting: the world’s leaders walked away hearing what they wanted to hear. They hardly changed anything, remained of the same mind they were at the start of the summit. But the silver lining is that they made dozens of fairly beautiful shots.

 

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This week will be especially important for the Canadian dollar which has appreciated to 1.2855 last week on Friday’s employment reports that beat market expectations. This increases the probability of the Bank of Canada’s rate hike by 0.25% on Wednesday.  A number of hawkish comments from the BOC’s officials overrode the breakdown in commodity and significantly strengthened Loonies in the course of the past weeks.  The US steel tariffs or rate states would send USD/CAD higher.

 

The yen has weakened in Tokyo morning on a big miss for machinery orders and a speech from Bank of Japan Governor Kuroda revealing a “no change” in the bank’s current ultra-loose monetary policy settings. USD/JPY is trading at 114.15 of writing just 20 pips from May’s high of 114.35. A break of this level could lead towards the significant resistance at 115.50. The outlook will remain bullish until quotes slide below 113.00.

 

Sterling was a big loser in the end of last week after missing industrial production, weaker construction output, and poor trade figures. Now, GBP/USD trades at 1.2900. The technical outlook is still neutral even though there is a potential for the slide of quotes towards 1.2800.

 

Aussie and Kiwi are both higher against USD in the Asian session. AUD/USD is at 0.7610 in the consolidation range of 0.7540 – 0.7660. Kiwi almost reached 0.7280. it will likely trade sideways in the upcoming sessions as there are no significant releases that would create a great swing or trough.

 

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USD/JPY: BULLS WERE SET FREE

09:40 10.07.2017

 

On the USD/JPY daily chart, the exit of quotes beyond the limits of the long-term downward channel followed by the successful test of the resistance at 113.3 allowed the Bears to continue the realization of the Butterfly pattern. Its target 127.2% is located near 117.4.

 

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On the USD/JPY hourly chart, the realization of the Dragon and AB=CD patterns continues. Target 200% of the AB=CD pattern is fulfilled. This increases the risks of the quotes’ rollback. The current trend is still bullish, thus corrections towards 113.75 and 113.45 can be used for opening long positions.

 

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GOLD: BEARS HAVE GREAT PLANS

09:42 10.07.2017

 

On the daily chart of gold, breaks of the lower border of the upward trading channel and the neckline of the Head and Shoulders pattern may result in a further downfall. The gold continues its downward movement towards $1189 and $1160. A break of the resistance $1209 will allow the Bears to hit these levels.

 

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On the hourly chart of gold, a return of quotes towards $1229 will increase the risks of the realization of the expanding wedge pattern and correction towards $1241 and $1252. If Bears manage to hold the resistance at $1218, there will be a continuation of the downward movement.

 

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EUR/USD: BEARS GOING TO REACH THE CLOSEST SUPPORT

10:45 10.07.2017

 

1499672654-d5f68df1a51ec0797eee50c7e1ec9

 

The price is consolidating under resistance at 1.1443. Also, we've got two "V-Top" patterns in a row, so the market is likely going to test the nearest support at 1.1365 - 1.1354. If a pullback from this area happens, there'll be an opportunity to have an upward price movement towards resistance at 1.1425 - 1.1444.

 

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There's a consolidation, which is taking place above the 34 Moving Average. In this case, bears are likely going to reach the closest support at 1.1365 - 1.1354 in the short term. If we see a pullback from this area, bulls will have a green light to test the next resistance at 1.1425 - 1.1444.

 

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GBP/USD: "V-BOTTOM" PATTERN

10:48 10.07.2017

 

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Bears faced support at 1.2860, so there's a "V-Bottom" pattern, which pushed the price to resistance at 1.2915. Therefore, the price is likely going to decline in the direction of the 89 Moving Average. However, if a pullback from this line arrives afterwards, there'll be an option to have the price higher, so we should keep an eye on the nearest resistance at 1.2926 - 1.2947 as an intraday target.

 

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The price found support at 1.2860, so we've got a "Triple Top", which led to decline to the 89 Moving Average. Also, there's a developing "Flag" pattern, so the pair is likely going to test the next resistance at 1.2915 - 1.2926 during the day. Meanwhile, if a pullback from this target happens, bears will probably try to achieve support at 1.2860 - 1.2830.

 

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OIL MARKET OVERVIEW

11:10 10.07.2017

 

Oil prices recovered some losses at the start of the week, rebounding from a 3% fall in the previous session amid a stronger USD and oversupply worries.

 

The number of active US oil rigs increased by 7 bringing the total count to 763 rigs this week, according to data published by Baker Hughes on Friday. The data contradicted investors’ expectations of the continued rig count fall, after the previous week decline (the first one from January).

 

The rising activity of the US oil industry comes as OPEC’s supplies remain ample despite the group’s commitment to cut output by the end of March 2018. OPEC exported around 26 million barrels per day in last month which 450000 barrels per day more than in May despite the extension of the OPEC’s output cut deal.

 

Additional drag was upbeat nonfarm payrolls data from the US that triggered USD buying.

 

This week modest rebound in oil prices was a reflection of opportunistic buying after the Friday’s downfall. Another boost was the news about the OPEC’s intention to cap unlimited supply of oil from Nigeria and Libya pumping industries. Up to day, they were exempt from OPEC’s production cut agreement due to their internal turbulences. After the appeasement, their production capacities have improved. Libya’s crude oil output has surged to more than one million barrels a day, up from 400 thousand in October, while Nigeria’s output has risen to 1.6 million barrels a day, up from 200,000 barrels a day in October.

 

These are significant increases. Nobody argues with that. Nevertheless, the main concern of investors is rising US oil output. The US Energy Information Administration said the US output has increased to almost 9.34 million barrels per day last week dragging oil prices downwards (the earlier rally had started due to US oil production’s downfall).

 

The African produced were invited to participate at the OPEC-non-OPEC meeting on July 24 in Saint-Petersburg to discuss the levels and stability of their production. If Libya and Nigeria manage to stabilize their oil production at today’s levels, they will be asked to decrease it as soon as possible. The other participants of production cut agreement won’t be demanded additional sacrifices. Mohammad Barkindo, Secretary General of OPEC, told media in Istanbul before the World Petroleum Congress (July 9-13) that OPEC/non-OPEC ministerial committee are not going to discuss the possibility of further cuts.

 

In the short-term, the oil prices will continue to fluctuate under the influence of the data reflecting the performance of the US oil industry (weekly crude inventory estimates coming on Wednesday, and Friday’s Baker Hughes rig count). As we approach the OPEC/non-OPEC meeting the focus will be on the participants’ decision to curb or not curb the African countries’ production, to discuss the prolongation of the output cut deal or leave this question open.

 

At the time of writing, Brent oil futures are trading at $46.75 well below the psychologically important level of $50. They added some gains in Tokyo morning, then lost their zest as the European session commenced.  WTI futures are down to $44.23 from today’s opening price of $44.52

 

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EUR/USD: WAVE GOING TO BE CONTINUED

11:19 10.07.2017

 

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There's another pullback from 3/8 MM Level, so wave is likely going to be continued. Previously, an impulse in wave C of (E) has been formed. So, we should keep an eye on 0/8 MM Level (1.1230) as the next intraday bearish target.

 

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As we can see on the one-hour chart, there's a possible flat pattern in wave (ii). Also, we've got a downward impulse in wave i. If a pullback from 6/8 MM Level happens in the coming hours, bears are likely going to deliver wave iii of (iii). The main target is 1/8 MM Level (1.1261).

 

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EUR/USD: BEARISH "ENGULFING"

13:54 10.07.2017

 

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We've got a bearish "Tower", which has been confirmed enough. Therefore, the market is likely going to reach the nearest support. If a pullback from this level happens, bulls will have a green light to continue pushing price higher until any reversal pattern forms.

 

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There's a confirmed bearish "Engulfing" at the local high. In this case, we should keen in mind the 89 Moving Average as an intraday target. If we see a pullback from this line afterwards, there'll be an opportunity to have a local bullish correction.

 

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