Markets Recover From Sell-Off

Intraday Technical Analysis 15 May 2019

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The panic sell-off in the markets which led to a risk aversion earlier this week stabilized on Tuesday. Equity markets were showing signs of a rebound as the risk appetite was slowly building up.

The economic docket remains muted against the backdrop of the trade war spat between the US and China. The Beijing administration said that the US agreed to keep talking which still leaves hope that there could be some sort of a breakthrough in trade talks.

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Germany’s ZEW Economic Sentiment Weakens Unexpectedly

The monthly economic sentiment report from Germany fell to -2.1 unexpectedly in May. This was below the estimated increase to 5.1. The decline in the sentiment index for May ends a six-month trend of improvements in the index. The eurozone industrial production was down 0.3% matching estimates.

Euro Trades Weaker for a Second Consecutive Day

The common currency was trading weaker for the second daily session in a row. This comes after price briefly touched the resistance level of 1.1250. Following the breach of the minor rising trend line, price is attempting to rebound. A bullish close above the doji on the 4-hour chart could see the EURUSD attempting to retrace the recent losses.

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Oil Price Eases on API Inventory Report

Crude oil prices posted a brief intraday rebound. This came on reports of drone attacks on Saudi oil tankers. Previously, there were attempts on four other oil tankers off the coast of the UAE. The American Petroleum Institute’s weekly oil inventory report saw a big jump in the buildup of oil inventories. According to the report, US crude oil inventories rose 8.63 million barrels last week.

WTI Crude Oil to Maintain its Range Trading

Crude oil prices remain range bound within the 62.85 resistance and 60.33 support. The brief rebound earlier this week resulted in a lower high. Therefore, we expect to see the bias continue to the downside. Another retest of the lower support near 60.33 is quite likely in the near term.

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Gold Retreats as Risk Aversion Softens

Gold prices reversed gains after briefly testing the 1300 mark earlier this week. The reversal led to prices closing in the red on Tuesday. However, in the near term, the trade wars could remain a trigger which could keep the momentum biased to the upside. On the economic front, the US retail sales and industrial production figures will be the short-term catalyst.

Can Gold Maintain the Gains?

The reversal off the 1300 mark currently shows a consolidation in the gains. Gold prices are likely to test the support at the 1285 handle in the near term. Establishing support at this level could confirm the upside bias. However, if gold eases below the 1285 level, then price action could suggest another bout of sideways range in the precious metals market.

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