ANALYSIS

Market Overview - 07 May 2013

Trading in the Stock market is quiet; however the key indices traded in the red: МICEX  -015%, while RTS -0,09%. 

External background remains favourable; Nikkei index increased by 3%. The highest growth was observed in the shares of those companies that deal with exports, as the decline in the national currency rate makes their products more competitive at the world market.  

Oil price is growing amid escalation of the conflict between Israel and Syria and due to probability of reducing supplies of oil from Middle East. In general, high oil price shall support Russian stock market; however, we expect trading volumes will be low and movement is going to be sluggish due to coming holidays. 

Europe will not keep shady: new political crisis can develop in Italy, as supporters of the Party of Silvio Berluskoni can leave the Parliament if agreement on abolishing property tax imposed by EU is not reached. 

 Shares of Gazprom continue to grow. At the moment shares of the company traded near important resistance level of 131.26. If the price consolidates above this level, next target will be at the levels of 134.50-135 roubles. It is recommended to open long positions starting from the level of 131 with protective orders near 131.00 and target of 134.

The rate of Sea North crude oil Brent significantly rose on Monday amid the news from Syria and reached the highs of the month (at the level of $105.39). Israeli aircraft struck military targets in Syria during the operation aimed to destroy the Iranian missiles which have been designated for Lebanese “Heznollah”. High price of Brent is also supported by concern that supplies from Middle East will be reduced and the conflict in the region will continue to develop. In addition, Brent is also supported by positive macro-statistics from the USA. According to the data released last Friday, unemployment rate in the USA fell to the four-year lows and amounted to 7.5%, while the number of jobs increased above analysts’ expectations, amounting +165 thousand.

However, many analysts believe that of situation in Syria cannot trigger high growth in the Brent rate, as this country is not the key player in the oil market and only 0.3% of total oil in the Middle East is produced by Syria. In the near future the rate of Brent can experience correction.

Important levels (support and resistance)

Resistance levels for Brent: 105.40 and 106.40.

Support levels: 03.90, 102.35, 100.20,98.76.

Overview: USD/JPY is trading in higher range. The rate is underpinned by positive dollar sentiment on Friday's stronger-than-expected U.S. April non-farm payrolls report and on buoyant U.S. stocks overnight (S&P rose 0.19% on Monday to finish at record high of 1617.5); widening USD-JPY interest differential; Bank of Japan's aggressive easing measures to help reach its 2% inflation target; demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales. Daily chart is mixed as MACD is bearish; but stochastics is in bullish mode; possible bullish ascending flat triangle is evolving with potential for topside breakout. Trading recommendations:   The pair is trading above its pivot point. It is likely to trade in higher range as far as it remains above its pivot point. As far as the price is above its pivot point, trading in higher range is most favourable and buy position is recommended above its pivot with the first target at 99.45 and the second target at 99.57. You should keep in view short position below the pivot keep of the first target at 98.8, breach of this target will move the pair downward further and expect the second target at 98.55. The pivot point stands at 99.  Resistance levels:  R1 - 99.45 (Monday's high) R2 - 99.57 (April 25 high) R3 - 99.77 (April 24 high) Support levels: S1 - 98.8 S2 - 98.55 S3 - 98.35

GBPUSD

The long-term view remains bullish as long as the pair continues to consolidate within the depicted daily bullish channel above 1.5370-1.5400. However, the upper limit of the movement channel 1.5590-1.5600 may provide a considerable resistance for the pair. This idea is supported by the weak ongoing bullish structure with integrated swings and broken short-term uptrends as depicted on the 4H chart. On the 4H chart, there is a broken short-term uptrend line which was broken down to initiate a retracement movement towards 1.5530 (the next minor uptrend line). If the bears manage to break down 1.5530, the way towards 1.5480-1.5450 will be open. By breakdown of this trendline, there would be a confirmed signal of reversal. However, it is important to be cautious. Breakdown of 1.5480-1.5500 is essential for further bearish retracement towards 1.5400 and 1.5370. Stabilization above 1.5470 temporarily cancels the bearish reversal scenario.

GBPJPY

Overview: GBP/JPY is trading with risks skewed higher. The rate is supported by firm USD/JPY undertone; Bank of Japan's aggressive easing measures to help reach its 2% inflation target; euro demand from Japan importers. But GBP/JPY gains tempered by Japan exporter sales; weak euro sentiment. Daily chart is mixed as MACD is bearish, but stochastics is in bullish mode, five-day moving average is above 15-day MA and advancing. Trading recommendations: The pair is trading above its pivot point. The pair is likely to trade in higher range as far as it remains above its pivot point. As far as the price is above its pivot point, it will be most favorably to trade in higher range and buy position is recommended above its pivot with the first target at 154.8 and the second target at 155.35. You should keep in view short position below the pivot keep of the first target at 153.3, breach of this target will move the pair downward further and expect the second target at 153. The pivot point stands at 153.7.  Resistance levels: R1 - 154.8 R2 - 155.35 R3 - 155.75 Support levels: S1 - 153.3 S2 - 153 S3 - 152.6

EURUSD

The EUR/USD pair has been trading within the consolidation range between 1.2950 and recent high at 1.3240. The consolidation of 1.2950 and continuation to trade above, enhances the bullish bias for the pair towards 1.3240 and the possibility to extend to 1.3340-1.3400 levels before returning again to resume bearish movement. The lower limit of the depicted movement channel with the 100-day SMA is providing support for the pair today.

Backside of the broken bearish channel, 100-day SMA and the lower limit of the depicted bullish channel around 1.3030-1.3050 express quite strong bullish rejection to be targeting at 1.3240. For the short term, the view is neutral with the possibility to take advantage of reversals at the upper and lower limits of this range until breakout takes place. For the medium term, Price Levels 1.3340-1.3400 are suggested to be watched for good SELL entries with targets at 1.2750. Breakdown of 1.3030 threatens the current bullish view. Moreover, breakdown of 1.2950 cancels the whole bullish view at the moment.

NZDUSD

 Resistance: 0.8550 (sell below this level). Support: 0.8420 (buy above this level for retesting this level for a short period).  Trend: upward on the frame time of H1 - H4 (the trend still calls for a bullish market). Range: 67 pips (daily).                                        Trading recommendations: According to the previous events, the price is still between the levels of 0.8433 and 0.8500.  The descending movement will probably be lower than the 0.8550 level with the first targets at 0.8480 and 0.8430.  Buy deals are recommended above 0.8420 with targets at 0.8500 and 0.8545. Intraday Technical Levels: Projected High: 0.8674  Breakout (Buy Stop): 0.8619  Strong Resistance (Sell Limit): 0.8589  Current Pivot: 0.8489  Strong Support (Buy Limit): 0.8388  Breakout (Sell Stop): 0.8363  Projected Low: 0.8313 


Sources : Liteforex and Instaforex