Stock prices will most likely decline in the coming months to quarters, although a rise is possible in the coming weeks if the emergency funds are strengthened or the ECB further loosens its monetary policy.
This situation is very awkward because when growth is low old debts weigh increasingly heavily. The economy will then grow ever-more slowly or even shrink. Therefore, it will not be long before stock prices plunge and credit spreads widen. Any favorable EMU agreements or speculation of even looser monetary policy could further boost stock prices.
Over the weekend, he market participants will analyze the European summit meeting and on Monday markets’ direction will be result from the final sentiment. In the following days, the volatility will probably fell amid the US Independence Day and non-farm payrolls data. Major averages are expected to consolidate from Tuesday to Friday, waiting for the crucial payrolls report. However, downside pressure is possible if negative speculations take place in the days before the official report.
The Reserve Bank of Australia will announce its interest rate decision on Tuesday which is expected to remain unchanged at 3.50%. The hours after this event could provide good conditions for binary investors.
Gold prices are also affected by the latest developments in the euro area and by data and announcements from the United States. In short-term, the precious metal will remain under pressure as central banks tries to avoid further money creation and investors. However, as soon as EU or US open the money taps gold futures will rally above 1700. During the next week, binary investors should expect range trading between 1500 and 1600, unless the European leaders make some very aggressive decisions on the summit meeting.
Binary EUR/USD options could rise to 1.28 – 1.30, if further measures are announced for fighting the crisis during the European summit. In long-term however a drop to around 1.20 in the coming weeks to months is more likely to happen. For the next week key resistance remains at 1.2745, which is 38.2% Fibonacci retracement of the 1.3486-1.2286 drop. A break above it will move the target towards the psychological 1.30, with the first resistance expected around 1.28. On the opposite direction, the first support remains at 1.24, followed by 1.2286.
Binary GBP/USD options continue to consolidate around 1.56. The key support remains at 1.55 and a break below it will be considered as signal for further drop towards 1.53. Binary speculators could try strategies with high-risk-high payout “touch down” options with targets around 1.5350-1.5400. On the opposite direction, the first resistance is expected at 1.5750, which coincides with the 200-day SMA, followed by the recent top near 1.58.
Binary USD/JPY stepped back, below the psychological 80.00 and since then it’s trading in very short range around 79.50. For the next week, the first resistance above 80.00 is seen at 80.50, followed by 81.85. A break above the latter will move the target towards the 2012 top at 84.17. On the opposite direction, below the 200-day SMA support is expected around 77.70. For now the range trading is between 79.15 and 78.85. A break way from one of the borders should be considered as signal for further development.
The Australian dollar is very close to the 1.0220 resistance, which is 50.0% fibo retracement of the 1.0856-0.9581 drop. On the daily chart the recent peak seems like an end to the June’s positive correction. Oscillator indicators and 200-day SMA provided good signals for binary options investors about the reversal. A break below the parity level will move the target towards the 2012 bottom at 0.9581. On the opposite direction, a break above 1.0220 is expected to send the pair higher towards 1.0475.
Binary gold rebounded from 1550 and it’s getting close to the resistance at 1590. Next weeks’ break will be above the latter and will move the target towards the 6th June top at $1640. Conversely, pullback from the resistance is also expected. The crucial support is seen at 1525, with short-term support level at 1550.
The index is still above the 200-day SMA and new effort to break the 1360 top is not excluded. Above this level next target will be the multi-year top at 1422. On the opposite direction, the support is expected around the psychological 1300, which coincides with the 200-day SMA. Break below it will move the index towards 1250 with support seen at 1266.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.