Wheat, EUR, Oil, and SP500 analysis
|Wheat rallied last week as it was expected. This market follows setups very well. Commercials are still long wheat and it makes me believe the price will retest recent highs near 570. But this market needs some breath. It is overbought on smaller time frames. However, wheat is a very tight market. Usually it doesn't give big pullbacks. I continue to look for and take buy signals in this market.
Some time ago we have talked about EUR COT reports. Swing traders should focus on taking sell signals. Commercials are short this market, while retailers are heavily buying. We saw almost the same in 2018 before a big decline in EUR. I believe the story repeats. However, we don't have a good entry yet. Keep in mind the price can make a false breakup before the trend starts. Besides, the evaluation index shows EUR is overvalued. Short-term traders can continue to trade in the range with tight stop loss. But our main focus is on taking sell signals, like swing failure, etc. Many data will be released the coming week, including retail sales, Empire State, Philadelphia Fed, and June University of Michigan consumer sentiment reports scheduled along with the Federal Reserve’s Beige Book. Possibly it will be driving power to break out of the range. We have to monitor COVID cases in the USA and government response to it. At the moment it is one of the most important fundamental factors for the American dollar and it will have an impact on EUR.
We have a similar COT report for Oil. The seasonal cycle is about to turn to the downside. But I believe it is a bit too early to short this market. The price will likely try to fill the gap. With that in mind, we watch for $44 - $45 as a potential range for swing failure. At least till last week's low holds there are more chances to see that gap filling. Intraday trading makes more sense now until we get a clear signal and trade with a good risk/reward ratio.
Not much has changed in the stock market. We are still in the same range. Based on the rejection we got last week, we can expect SP500 to test 32xx range (possibly even higher to form a double top near 3400). Advance-Decline Line broke higher than it was at the beginning of this year. That is bullish for the short-term. Based on cycles, we can expect trend reversal to the downside after July 20. Intraday trading is still the best idea for SP500 traders.
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