Indicator Signals Give Mixed Information and Both Bulls and Bears Have Opportunities

Summary:

Oil prices are entering wait-and-see mode ahead of Fed Powell's speech at Jackson Hole as everyone expects a major move in the dollar after Powell's speech.

BUY WTI

Close Time

CLOSED

91.095

Entry Price

97.000

89.000

77.239 -0.583 -0.75%

525.3

Pips

Profit

89.000

96.348

Exit Price

91.095

Entry Price

97.000

Fundamentals

WTI crude continued to trade lower on Friday after a volatile start as Fed officials dropped hawkish hints on economic policy ahead of the Jackson Hole symposium. As of press time, the price of WTI crude oil fell by more than 1% on the day, to below $93 per barrel.

The ongoing Jackson Hole Symposium and its impact on overall market sentiment could be the main catalyst for commodity prices in the coming sessions. After all, central bankers such as Fed Chair Powell can share more insights on their monetary policy plans, which in turn can influence interest rate expectations.

Meanwhile, crude oil prices continued to find support amid multiple signs of market tightness. Earlier this week, U.S. crude inventories fell for a second week in a row as the country exported the most crude oil and refined products ever.

In addition, crude oil prices appeared to be supported by OPEC+ proposals to cut production targets to keep prices stable. Expectations of lower demand due to slowing economic activity in major economies could lead to oversupply if Qatar does not adjust.

The Saudis also suggested that OPEC+ could intervene by curbing output if market fundamentals and futures markets continue to diverge. OPEC+ members have backed Saudi proposals for market intervention, while export concerns from Kazakhstan have brought supply concerns to the forefront. These developments boosted trading activity, with benchmark international futures trading above 1 million contracts for the first time since mid-July.

WTI: Indicator Signals Give Mixed Information and Both Bulls and Bears Have Opportunities _1

Technical Analysis

WTI crude traded sideways in the short term and tested upside resistance near the $95 level. The price is currently pulling back from the top of the range and it is likely to hit the bottom again.

However, the 100 SMA is above the 200 SMA, so the path of least resistance is to the upside. Crude oil prices are testing dynamic support at the 100 SMA and could rally to the top of the range to try to break higher.

In addition, the stochastic indicator has pulled higher without reaching the oversold territory, indicating that the bulls are eager to return. The indicator still has plenty of room to rise before the exhaustion among crude bulls. Likewise, the RSI is pulling higher but not indicating oversold conditions, which also suggests that the bulls are ready to take over. In the event of a bullish breakout, crude could rally to the same heights as the range. There are opportunities for both long and short positions.

Trading Recommendations

Trading Direction: Long

Entry Price: 91.50

Target Price: 97.00

Stop Loss: 89.00

Valid until 2022-09-09 20:00:00

Support: 91.00

Resistance: 94.00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Samantha Luan

Summary:

The rising USD is putting pressure on the metal because it means that USD-quoted copper is more expensive for buyers holding other currencies, curbing demand and prices. The USD has risen 13.6% so far this year. At the same time, the potential for more pro-economic policies from top metal consumer China has limited the downside for copper prices. Tight inventories and supply risks are also helping to support copper prices. The London and Shanghai exchanges recently reported declining inventories, while earnings reports from major producers show reduced production due to various supply disruptions. September copper futures are expected to trade in a range of $3.623 to $3.6598.

BUY COPPER

Close Time

CLOSED

8175.000

Entry Price

8335.000

8000.000

9193.150 -45.500 -0.49%

4555.5

Pips

Loss

8000.000

8129.445

Exit Price

8175.000

Entry Price

8335.000

Fundamentals

The ICE U.S. Dollar Index (USDX) was at 108.616 on Wednesday (Aug. 24), up 0.06% from the previous session and not far from the 20-year high of 109.205 set early Wednesday. The rising USD is putting pressure on the metal as it means USD-quoted copper is more expensive for buyers holding other currencies, curbing demand and prices. So far this year, the USD exchange rate has risen by 13.6%.

Slowing global economic growth, high inflation, and slowing demand continue to curb the upside for industrial metals, which is also reflected in the fact that speculative funds continue to hold short positions in the COMEX copper futures market.

Meanwhile, the potential for more pro-economic policies from top metal consumer China is limiting the downside for copper prices. Tight inventories and supply risks are also helping to support copper prices. The London and Shanghai exchanges recently reported declining inventories, while earnings reports from major producers show reduced production due to various supply disruptions.

Copper futures are up 2.13% so far this month but are still down 17.83% year to date, 26.07% below the all-time high set in early March, mainly due to aggressive interest rate hikes by central banks such as the Fed, raising concerns that demand for the metal is being hit by slower economic growth. By way of comparison, copper in 2020 and 2021 has recorded two consecutive years of 25% gains as the green transformation of the economy and electrification helped boost additional demand for the metal, which is widely used in the power and construction sectors, while copper production faced the disturbance of insufficient investment, pandemic, and strikes.

September copper futures are expected to trade in a range of $3.623 to $3.6598.

Technical Analysis

2.1 CMX Copper Monthly Chart

CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_1

The price is within the downside channel, forming downward impulse waves. For the last two months, the price has been around 3.4280, which constitutes a strong bottoming and the candlestick is a candle pattern of double bottom needles. There is a high probability that the market will turn long next month.

2.2 CMX Copper Weekly Chart

CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_2

The price is subject to the upward minor wave channel since July 15, 2022. The price continues to move upward with support around 3.606.

3.8225 at the upper weekly chart level is the key resistance level.

On the other hand, the downtrend line since June 3, 2022, is back again this week with the price at the same location around 3.606, making 3.606 a key support location below. The probability is that the price will close with a long lower shadow and continue the long trend next week.

2.3 CMX Copper Daily Chart

CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_3

The price of around 3.6160 is supported by the upward channel in the daily chart, and the bulls start to dominate again. Enter the market at the current price to go long.

2.4 CMX Copper Hourly Chart

CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_4

The price is inside the upper band channel in the hourly chart, which means that the intraday price is supported by strong channel support at both levels. CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_5

CMX Copper: Inventory and Supply Chain Crisis, U.S. Copper Bulls Rise Again_5

Long CMX copper at lows during the day.

Entry Price: 8175;

Take Profit: 8265, 8335;

Stop Loss: 8000.

Risk Warnings and Disclaimers

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Samantha Luan

Summary:

Most hedge funds have moved from profit-taking to net short on Chinese tech stocks since July, according to a report released by Morgan Stanley on August 18. Meanwhile, long-only regional equity funds have stopped increasing their exposure. This explains the recent declines - the NASDAQ Golden Dragon China Index and the Hang Seng TECH Index are down 13% and 21%, respectively, from their June highs. Now in a technology stock price depression, it is a good time to rebuild Chinese tech stocks. When the world's tech stocks usher in cold winter, they may rise and fall and may rebound at the bottom. While the rest of the world may be having a cold tech winter, this rise and fall is the opportunity for China's tech to rebound.

BUY HongKong50

Close Time

CLOSED

20120.00

Entry Price

20750.00

19525.00

19785.75 +352.50 +1.81%

5303.0

Pips

Loss

19525.00

19589.70

Exit Price

20120.00

Entry Price

20750.00

Fundamentals

Most hedge funds have moved from profit-taking to net short on Chinese tech stocks since July, according to a Morgan Stanley report released on Aug. 18. Meanwhile, long-only regional equity funds have stopped increasing their exposure. This explains the recent declines - the NASDAQ Golden Dragon China Index and the Hang Seng TECH Index are down 13% and 21%, respectively, from their June highs.

Now in a technology stock price depression, it is a good time to rebuild Chinese tech stocks. When the world's tech stocks usher in cold winter, they may rise and fall and may rebound at the bottom. While the rest of the world may be having a cold tech winter, this rise and fall is the opportunity for China's tech to rebound.

The report also said that China's exports had an astonishing year-on-year growth of 18%, better than the widely expected 15%, and the rebound in credit growth was the main reason to support buying. Continued policy easing, lagging inflation, the fact that much of the bad news has been absorbed, and the magnitude of the earnings revisions that bottomed out in the second quarter all constitute bullish reasons. Top-down policy support is particularly favorable for A-shares.

U.S. and Chinese tech stocks have been racing to catch up in recent months.

A benign regulatory environment is emerging for Chinese tech stocks, as exemplified by e-commerce giant JD.COM, which reported better-than-expected second-quarter revenue and profitability despite the challenging macro environment posed by the pandemic. The short-term risks posed by the outbreak confirm that Chinese tech companies still have the capriciousness to perform and better resilience to stress.

On the other hand, the Jackson Hole annual meeting has been scheduled for nearly two days.

Four academic papers will be presented on August 26 and August 27, and each day will also feature a panel discussion with policymakers.

On August 26, a panel discussion will be held at 12:55 p.m. Washington time on the topic "An End to Pre-Pandemic Trends or Just a Temporary Interrupt?" It includes as panelists International Monetary Fund First Deputy Managing Director Gita Gopinath, as well as Harvard University economics professor Jason Furman and University of California-San Diego economics professor Valerie Ramey.

On August 27, a panel discussion will be held at 12:25 p.m. Washington time on the topic of “The Outlook for Policy Post-Pandemic.” It includes as panelists Banque de France Governor Francois Villeroy de Galhau, Swiss National Bank Chairman Thomas Jordan, Bank of Korea Governor Chang Yong Rhee, and the ECB’s Schnabel.

The papers to be presented on August 26 and August 27 will look at topics including maximum employment, potential output, fiscal constraints, and central bank balance sheets.

Technical Analysis

2.1 Monthly Chart of Hang Seng Index

Hang Seng Index: One Wanes as Another Waxes, Chinese Tech Stocks May Have A Chance of Rebound_1

18100 is the key support position below since November 29, 2021.

And for the last six months, the Hang Seng Index has been trading sideways at around 18,100, forming a small consolidation area in the range with a contracting triangle structure.

According to the Elliott Wave Principle, the sideways trend is generally composed of 6 to 9 candlesticks. The price of this month will step back around 19100 and is doomed. It is expected that the operation direction of the next month will run in this contraction triangle and fluctuate upward.

2.2 Weekly Chart of Hang Seng Index

Hang Seng Index: One Wanes as Another Waxes, Chinese Tech Stocks May Have A Chance of Rebound_2

This week, the price below 19100 formed a three-candle reversal pattern, indicating that the bottom is established.

The minor wave downtrend line above the consolidation zone since July 1, 2022, has not yet been broken and there is still an upside from this trend line.

At present, the price is still running in this range, and there is a strong support function of the monthly chart and weekly chart below the price. Therefore, the market still operates in a volatile long position, and the target is near the downward trend line.

2.3 Daily Chart of Hang Seng Index

Hang Seng Index: One Wanes as Another Waxes, Chinese Tech Stocks May Have A Chance of Rebound_3

The price has broken the downtrend line of the band within the consolidation zone since July 8, 2022, and today (Aug. 25) it closed with a long white body, indicating a clear signal for a strong upside move. Enter at the current price to go long.

2.4 Hourly Chart of Hang Seng Index

Hang Seng Index: One Wanes as Another Waxes, Chinese Tech Stocks May Have A Chance of Rebound_4

The key resistance above the intraday consolidation zone is 20300, and if it is broken, then look for 20510 and 20745.

MACD: The main short area is bullish divergence and oversold, with a high probability of breaking the 20300 position.

According to Elliott Wave Principle, Wave C of the expanded flat will be at least higher than the starting position of Wave A, around 23.6%~38.2% of the Fibonacci Retracements.

Hang Seng Index: One Wanes as Another Waxes, Chinese Tech Stocks May Have A Chance of Rebound_5

Long Hang Seng Index at lows in the late session.

Entry Price: 20120；

Take Profit: 20750；

Stop Loss: 19525.

Risk Warnings and Disclaimers

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Winkelmann

Central Bank

Summary:

Europe's economy is facing a greater risk of recession, while the CAD has benefited from soaring energy prices and the central bank's stance, making the EURCAD weaker, which also continues to break the technical position, opening up more room for decline.

SELL EURCAD

Close Time

CLOSED

1.29800

Entry Price

1.28000

1.31300

1.48576 +0.00389 +0.26%

150.0

Pips

Loss

1.28000

1.31301

Exit Price

1.29800

Entry Price

1.31300