During Tuesday's (October 24th) Asian session, spot gold oscillated narrowly and it is now trading at 1977. After surging for days, gold started to retrace technically yesterday. However, since the conflicts escalate, investors still have safe-haven demand for gold, which prevents gold from falling in the near term unless a clear signal that the situation turns better (not likely at present). Nevertheless, the safe-haven sentiment has been priced in, so we should not chase the ascending trend but wait for a retracement before going long. Now, our investment logic should be updated. It is better to go short at highs because it will offer us a better profit/loss ratio compared to going long at lows before the conflicts escalate.  

Geopolitical situations: The current round of the Israeli-Palestinian conflict has led to more than 6,500 deaths on both sides, and Hamas released two Israeli hostages held in the Gaza Strip. 

Data: The Eurozone consumer confidence index in October was -17.9, while the expected figure was -18.3, and the previous figure was -17.8. In addition, the Chicago Fed National Activity Index in September was 0.02, while the expected figure was -0.14, and the previous figure was revised from -0.16 to -0.22. 

News: The media said the Bank of Japan would consider adjusting the easing policy. Yesterday, the yields of the 10Y Japanese bond soared 88 basis points, the largest increase in three months. 

Today's focus: The Eurozone PMI, the U.S. PMI in October, and the Federal Reserve Manufacturing Composite Index in October. Also, the development of the situation in the Middle East should be considered as well.  

Yesterday, gold opened gap down. Then it began to oscillate upward, recovered the gap, and once stood in the 1983-1988 strong resistance area, but it failed to stabilize there, closing the daily chart positively with a long upper shadow. From a technical point of view, the MACD golden cross continues to expand, but investors need to know that gold has entered the overbought area. Next, the MACD golden cross is expected to gradually narrow. A technical retracement is likely to take place. But in the fundamentals-oriented market, technical analysis is only a reference. If the conflict escalates again, gold may enter the deep overbought area. Thus, the profits will be higher when investors sell at highs. At the moment, investors need to trade the oscillating pattern, and try to buy low and sell high under the oscillations.

Trading Recommendations: Buy low and sell high. If gold retraces to 1955 today, investors could go long with small positions later, and set the stop-loss at 1950. To take profits, the first target will be at 1972, where they can reduce the position size and move the stop-loss to breakeven, and the second target can be fixed at 1985. Nevertheless, if gold surges to 1985, investors could go short with small positions, and set the stop-loss at 1988. To take profits, the first target will be at 1965, where they can reduce the position size and move the stop-loss to breakeven, and the second target should be at 1955.

Trading direction: Short

Entry price: 1985

Target price: 1955

Stop loss: 1988

Support: 1965.000/1953.000

Resistance: 1983.000/1988.000

During the Asian session on Tuesday (October 24), WTI crude oil moved downward and is currently trading around 85.9 dollars per barrel. Oil prices fell sharply yesterday, mainly due to the easing Palestinian-Israeli conflict. Diplomatic actions with humanitarian mediation by countries around the world have reduced the risk of supply disruptions. Over the weekend, as aid convoys began arriving in the Gaza Strip from Egypt, and Israel suspended plans for a ground incursion into northern Gaza to negotiate the release of hostages, the conflict eased slightly. As a result, oil prices began a sharp correction, from 89.7 to 85.6 on Friday night, which also confirmed the pattern of wide volatility. The conflict during the past two weeks is the core factor dominating oil prices. However, as time goes by, if this geopolitical conflict cools down or tends to be like the conflict between Russia and Ukraine, then crude oil is likely to give up the geopolitical risk premium. After the geopolitical conflict, oil prices surged from 80.6. However, they have now fallen back to 85.6, and the premium risk is also easing significantly. We also have to take into account that oil prices swooped down from 94 before the conflict. Currently, crude oil is still moving against the context of heavy inventory cuts and OPEC+ production cuts. The fundamentals have not changed. A plunge in oil prices requires a radical improvement in the conflict. Therefore, our strategy is still to buy low and sell high. At present, it's not worth shorting oil prices as the price is at the lower edge of the fluctuation range. Instead, investors are recommended to go long at 85.3 with small positions. At the moment, however, bears will not easily go short boldly, because no one knows whether the situation will get out of control.  

Geographical: The Wall Street Journal reported that Israel would allow fuel deliveries if all hostages were released. US President Joe Biden said a ceasefire could be negotiated after the release of the hostages in Gaza. Israel claimed in a statement that the two hostages released by Hamas had been handed over to the Israeli military and would be transferred to a medical facility. The United Nations said 20 trucks carrying humanitarian aid entered the Gaza Strip from Egypt on Monday.  

Today, investors should keep an eye on the Eurozone PMI, the US October PMI, and the US Fed Manufacturing Composite Index for October. In addition, the development of the situation in the Middle East also needs to be paid special attention.

Oil prices fell sharply yesterday. It fluctuated all the way down after the opening, falling as low as 85.2. Then, oil prices rebounded slightly, eventually closing with a long bear candle. As can be seen from the chart below, the oil price is still in the box and close to the lower edge. In addition, MACD is near the 0 axis, and there is a golden cross that has begun to widen. There is demand for a rebound in the market, and the first support level below is in the 85-85.2 area. If this support is broken, then strong support will be at 84.3, where there is a local triple bottom. The initial resistance above is at 88.5 and strong resistance is in the 89.7-90 area. For intraday trading, it is recommended that investors still buy low and sell high. Given where the price is at the moment, the profit/loss ratio and win rate of going long with small positions will be higher. As the current fluctuation of oil prices is very unstable, the stop-loss order will be easily triggered. Therefore, investors must not chase the market.

It is recommended that investors mainly buy low and sell high. If the oil price retraces largely to 85.2, you can go long with small positions. The stop loss is set at 84.7, the first target to take profit is 88.2, where you can reduce your positions and move the stop loss to break even, and the second is 89.7. If the oil price surges to 89.7, you can go short with small positions. The stop loss is set at 90.2, the first target to take profit is 88.2, where you can reduce your positions and move the stop loss to break even, and the second is 86.2.

Trading Direction: Long

Entry Price: 85.200

Target Price: 88.700

Stop Loss: 84.700

Support: 85.300/84.300

Resistance: 88.300/89.700

In the week of October 20th, a slew of concerning economic data heightened concerns about the possibility of a recession in the UK. Notably, the release of the UK's average income data on Tuesday revealed a slowdown in the labor market for the period from June to August. Although wage growth remained steady at 7.8%, a slight dip from the previous 7.9%, the data showing inconsistent wage growth and inflation raised worries. This led to speculations that the Bank of England might keep interest rates unchanged in November.

Simultaneously, the UK's Consumer Price Index (CPI) reported an inflation rate of 6.7%, still the highest among G7 nations. Despite the higher-than-expected inflation rate, the market believed it might not be enough to prompt the Bank of England to raise rates in November.

Furthermore, the latest UK retail sales data, released on Friday, was a cause for concern. Retail sales declined by 0.9% in September after rising by 0.4% in August. The sharp drop in consumer spending sparked concerns about an economic recession in the UK, causing the pound to decline during the week.

Additionally, the US dollar experienced fluctuations throughout the week due to changes in US economic data and mixed comments from various sources.

Stronger-than-expected US retail data for September, released on Tuesday, came in at 0.7%, just slightly lower than August's 0.8%. Sustained consumer spending indicated resilience in the US economy and alleviated concerns about a weak retail sector. As the safe-haven currency, the "US dollar" garnered investor attention, slightly boosting bets on Fed interest rate hikes.

At the same time, a multitude of speeches from Fed policymakers tempered the US dollar's rise. Many policymakers adopted a notably vague tone in their speeches, warning against letting recent optimistic data influence their overall decisions at the November meeting.

Fed Chairman Jerome Powell's speech on Thursday reflected the recent uncertainty. "A range of uncertainties, both old ones and new ones, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little," Mr. Powell stated. "Given the uncertainties and risks, and given how far we have come, the committee is proceeding carefully."

On the other hand, the US dollar continued to be influenced by market risk sentiment, with concerns about the Middle East situation aiding in limiting losses for safe-haven currencies.

Looking ahead to this week, the latest UK unemployment data is set to be released on Tuesday, with the unemployment rate expected to remain stable. Unless the data significantly deviates from the predicted 4.3%, its impact on the pound's performance may be minimal.

Also on Tuesday, the UK's Purchasing Managers' Index (PMI) will be published. Both the services and manufacturing indices are expected to rise, but as both industries are anticipated to remain in contraction territory, there may still be negative implications for the pound.

The GBPUSD had a turbulent week of trading last week. Despite two instances of breaking below the triangular consolidation range, the price failed to sustain a downward trend. Currently, the bulls are struggling to pull the exchange rate back into the triangular consolidation range.

The upward trend aligns with our expectations, and with the weakness of the US dollar, we anticipate that this asset may continue to rise. However, contrary to last Friday's strategy, this time our primary strategy is shorting. This is due to expectations that the US dollar will find solid buying interest below the 105.80 level (currently at 106.08, bearish on the dollar).

The GBPUSD is currently struggling to recover within the triangular consolidation range, and a closing price above the 1.2190 resistance level could trigger a decent recovery wave. The next major resistance level is around 1.2220. Any further upside may push the asset to touch the 1.2250 resistance in the short term, which is the entry point for our current strategy. In terms of trading strategy, the focus is on going short at highs.

Trading Direction: Short

Entry Price: 1.2270

Target Price: 1.1848

Stop Loss: 1.2450

Valid Until: 2023-11-06 23:55:00

Support: 1.2074, 1.2037, 1.2000

Resistance: 1.2169, 1.2203, 1.2250

Oil prices saw a slight decline on Friday as the geopolitical tensions eased following US efforts to dissuade Israel from a large-scale military action in Gaza. Nevertheless, concerns over the conflict's potential escalation kept oil prices on an upward trajectory for the second consecutive week as of last Friday's close.

According to sources cited by Bloomberg, Israel initially resisted postponing what officials described as a substantial military operation to eliminate Hamas, but succumbed to US pressure to delay the military action. In recent days, Israel publicly altered the tone of its planned operation, suggesting a more limited approach to minimize civilian casualties.

The Israeli-Palestinian conflict also triggered frenzied activity in the options market as traders adjusted their positions to respond to the risk of further surges in oil prices. Over the past month, the trading volume for call options has consistently exceeded that for put options.

We believe that even if the conflict escalates, it may not sustain price increases, as geopolitical risks have already pushed prices about $7 higher than their original levels. Data from the Chicago Mercantile Exchange's (CME) oil futures market shows traders added approximately 4,300 contracts over the weekend, reversing a multi-day bearish trend. Conversely, trading volume increased for three consecutive daily sessions, decreasing by roughly 182,300 contracts.

WTI prices retreated slightly from the weekly highs on Friday's close due to an increase in open interest contracts, suggesting the potential for further short-term declines. In other words, additional selling pressure should be expected near the monthly low point of around $81.50.

In addition to the conflict, the US Department of Energy stated last Thursday that it aims to purchase up to 6 million barrels of Strategic Petroleum Reserve (SPR) and will continue to replenish stockpiles following a record drawdown.

The department further indicated that it would continue to replenish reserves through monthly auctions, with the specific quantity yet to be determined. The Department hopes to secure contracts at $79 per barrel or lower, a price significantly higher than the earlier range of around $70 per barrel but lower than the current WTI crude oil price of $90 per barrel. The Biden administration has expressed the hope that its buyback strategy will yield a favorable return for taxpayers.

WTI crude oil has maintained an ascending wedge pattern since early October, forming higher lows and higher highs. The price is currently testing support and may potentially rebound towards the resistance level at $90.00 per barrel.

The 100 SMA is above the 200 SMA, indicating the path of least resistance is to the upside, and support is more likely to hold than to be breached. The dynamic turning point of the 200 SMA aligns with the wedge support, enhancing its strength as a bottom.

Furthermore, the stochastic oscillator is in the oversold region, suggesting that the bears appear exhausted and prices are starting to rise, indicating a return of upward pressure. Meanwhile, the Relative Strength Index (RSI) is also trending higher. Therefore, with the bullish momentum gaining strength, crude oil prices may follow suit. Continued upward pressure may even trigger a breakout of the resistance level and a rebound to a height consistent with the pattern.

On the other hand, breaking below the support near $85.29 could trigger a corresponding downtrend. In terms of trading strategy, going short at highs is recommended, with $88.49 as the key resistance level.

Trading Direction: Short

Entry Price: 88.29

Target Price: 82.00

Stop Loss: 91.50

Valid Until: 2023-11-06 23:55:00

Support: 86.97, 85.72, 84.37

Resistance: 88.45, 89.14, 90.07

During the Asian session on Monday (October 23), WTI crude oil fluctuated downward and is currently trading around 87.0 dollars per barrel. Last Friday, the scope of the Palestinian-Israeli conflict did not expand, and oil prices fell slightly. Oil prices rose as high as 89.7 on Friday, and then fell back in oscillation. Today, the Asian session opened as low as 86.6. From the current supply and demand side, there has not been much change, the inventory cuts continue, and the US is also accelerating preparations to replenish strategic oil reserves. On the supply side, the expectation is that OPEC+ will end production cuts early, but the reality is that production has been decreasing. At present, it is the geopolitical conflict between Palestine and Israel that affects the rapid and sharp fluctuation of oil prices. In the short term, the main line of trading is the development of the situation in the Middle East. If Israel turns to a ground offensive in Gaza, the conflict may gradually evolve into a long-term one like the Russian-Ukrainian conflict, and traders will gradually become used to it if the war does not expand. If the oil-producing countries passively enter the war, we do not rule out the possibility of oil prices quickly reaching $100. At present, as the situation is still under control, we still expect oil prices to widely fluctuate. Investors need to be patient to buy low and sell high.

News: The US Department of Energy said on Thursday it expected to buy 6 million barrels of crude to replenish the Strategic Petroleum Reserve (SPR), delivering 3 million barrels each in December and January next year, while continuing its plan to replenish emergency reserves.  

Inventory: US crude oil inventories fell more than expected by 4.491 million barrels to 420 million barrels in the week ended October 13. Also, gasoline inventories fell by 2.37 million barrels to 223 million barrels. US oil demand picked up.  

Geographical: Israel has not yet begun a full-scale offensive, but humanitarian crises are frequent. The US intercepted three cruise missiles and multiple drones launched by the Houthis. At the same time,  the Chinese Embassy in Israel recommended that Chinese citizens return to China as soon as possible when commercial flights are still operating, as the regional situation is gradually complicated.  

Focus: There is no important data today. Traders should focus on the development of the situation in the Middle East.  

Oil prices retreated on Friday, with the highest at 89.7 and the lowest at 87.3, closing with a bear candle with long upper and lower shadows. Since the beginning of October, oil prices have been running in the box below. Also, after touching the upper edge last Friday, it pulled back and is now approaching the support level of the lower edge. We now can focus on the support at 86.3 below and the resistance at the previous high around 89.7. Further resistance is near 90.3.

It is recommended that investors mainly buy low and sell high. If the oil price retraces largely to 86.2, you can go long with small positions. The stop loss is set at 85.7, the first target to take profit is 88.7, where you can reduce your positions and move the stop loss to break even, and the second target is 89.7. If the oil price surges to 90.0, you can go short with small positions. The stop loss is set at 90.5, the first target to take profit is 87.5, where you can reduce your positions and move the stop loss to break even, and the second target is 86.2.

Trading Direction: Long

Entry Price: 86.200

Target Price: 88.700

Stop Loss: 85.700

Support: 86.300/85.300

Resistance: 88.500/89.500

The Japanese yen has been navigating with a gentle sway in the currency markets, showing a minor weakness on Friday.  EUR/JPY is currently trading at 158.5, marking a modest uptick of 0.12%. This week, the yen's movements have been relatively contained, keeping it just below the significant 160 level.

One key aspect influencing this tentative yen behaviour is Japan's core Consumer Price Index (CPI). This metric, which excludes the volatile fresh food prices, unveiled a year-on-year increase of 2.8% in September. While this number is slightly down from August's 3.1%, it manages to surpass the market consensus of 2.7%. Notably, this marks the first time Japan's core CPI has dipped below the 3% mark since August 2022.

However, it's not just the core CPI that matters; the "core-core" inflation rate, which removes both fresh food and energy prices from the equation and is considered a more accurate gauge of inflation trends by the Bank of Japan, also underwent a shift. It dropped from 4.3% to 4.2% in September, albeit remaining higher than the market's expected 4.1%. This tells us that while inflation in Japan might be slowly decreasing, certain factors have the potential to counteract this trend.

One of these factors is the yen's ongoing depreciation, which could actually contribute to higher inflation. Moreover, rising tensions in the Middle East have ignited concerns about the possibility of oil prices surging to $100 or even beyond. Should this scenario unfold, it would exert further upward pressure on inflation in Japan, especially in energy-dependent sectors.

As the yen dances delicately and inflation figures waver, questions inevitably arise about how the Bank of Japan (BoJ) will respond to these challenges. On October 31st, the BoJ concludes a two-day meeting, during which it might need to reevaluate its quarterly inflation and growth forecasts. In the markets, there's speculation about the possibility of the BoJ gradually phasing out its extensive stimulus measures. However, as of now, BoJ policymakers have not yet revealed clear signals of shifting their policies.

The eurjpy pair is garnering attention. Its breakout from a robust resistance area, coupled with the 50% Fibonacci level, suggests the potential for a bullish upswing. Market participants keenly await if prices will reaffirm this resistance-turned-support level, paving the way for an upward trajectory in this forex pair.

ENTRY PRICE : 158.55

STOP LOSS : 158.00

TAKE PROFIT : 159.70