Forex Price Action Setups – Oil forms Intraday Piercing Bar – July 2nd
Climbing massively last week as the false break pin bar led to a $7+ run in the commodity, Oil found new support today on the news that Iranian lawmakers have drafted a bill proposing a blockade of the Straits of Hormuz. This obviously would provoke a response in the West, but the obvious follow through is strong upside gains for Oil. After last weeks impulsive spike to end the week, Oil sold off in a corrective fashion for 16hrs to start this one off.
However, the news dominated the end of day moves and Oil formed a piercing bar at a key $82 support, which virtually erased the prior aggressive selling. We feel Oil short term will likely benefit from the news and will continue to make another leg up attempting to form a medium term bottom. Bulls can take short term dips to $82 with tight stops below, targeting $84 and $85.30. A break above here challenges strong resistance at $87. Bears can look for possible weakness to short at $85 and $87.
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Global Market Commentary:
As we get closer to the July 4th holiday in the states, volume out of the global markets was noticeably light today as the NYSE had its lowest volume day in over a decade along with avg. trade sizes in the S&P quite low for the year. Expect this to continue till after the holiday of fireworks. That combined with their being three rate decisions this week (RBA, BOE & ECB) and its unlikely we will see massive positions being taken prior.
But there was some solid activity today in the Euro which seemed to wake up from its EU summit hangover (which we wrote about would happen soon) as it fell vs. the greenback about 100pips on the day from a high to low basis. Speaking of the Euro, with the ECB rate decision this Thursday, watch for any talk of fresh stimulus measures (read bailout out failing banks). Failure to announce this will likely hurt the EZ picture even further.
US manufacturing contracted in June for the first time since the summer of 09′ suggesting the recovery and ongoing sensitivity to negative US economic news.
Upcoming Economic Announcements:
|CNY Non-manufacturing PMI||01.00GMT||21.00EST|
|AUD Reserve Bank of Australia Rate Decision||04.30GMT||00.30EST|
|GBP Purchasing Manager Index Construction||08.30GMT||04.30EST|
|EUR Euro-Zone Producer Price Index (YoY)||09.00GMT||05.00EST|
|USD Factory Orders||14.00GMT||10.00EST|
***NOTE – because of the coming holiday on weds, I will not be writing a market commentary tomorrow.
BUT – in times like these of low liquidity, it is always a good time for study, so I will be publishing a new article tomorrow morning so stay tuned.