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Market Analysis: XAUUSD

XAUUSD hit a 2-month high

On 19th January, XAUUSD rose to a 2-month high, as the weakness of the U.S. dollar and geopolitical tension on Ukraine raised the attractiveness of safe-haven gold. Stock price decreased sharply, supporting gold price. However, the expectation of the U.S. Fed’s interest rate hike suppressed gold price.

The U.S. dollar decreased, but the outlook is optimistic

On Wednesday, the U.S. dollar decreased, and the 2-year U.S. treasury yield and the 10-year U.S. treasury yield fell after reaching 2-year highs. However, the U.S. dollar was supported as investors were ready for the expectation of March interest rate hike.

The U.S. Fed will convene a meeting next week, which may give some details on ending quantitative easing in March. The U.S. Fed is also likely to signal that it will raise interest rates in March after ending quantitative easing.

Biden predicts Putin will take military action against Ukraine

The president of the United States Biden predicted on Wednesday that Russian President Vladimir Putin would take military action against Ukraine, but said a full-scale invasion would trigger a massive response, which will cause the damage on Russia and Russian economy.

Biden said the U.S. and the West would response based on Russia’s actions. The United States is concerned that Russia could launch an attack on Ukraine within days or weeks.

Technically speaking, XAUUSD increased greatly, and it is expected to rise further

On the chart of the day, XAUUSD increased greatly yesterday. It broke the fluctuation recently. In terms of technical indicators, macd continued rising after golden cross occurred, and the Vegas channel went upwards, indicating the market trend is bullish. If XAUUSD resumes jumping, it may reach the target at 1850-1877.

On the 4-hour chart, XAUUSD continued rising in the short term. The market trend is bullish. In terms of technical indicators, kdj rose after golden cross occurred, and the Vegas channel went upwards, indicating the market trend is bullish. If XAUUSD is steady above the support at 1830, investors could buy as it reverses.

Key resistance: 1850, 1870, 1877

Key support: 1830, 1820, 1805

In summary, XAUUSD will continue rising if it breaks above 1830. However, gold price will be suppressed if the expectation that the U.S. Fed raises the interest rate rises. Investors should focus on U.S. initial jobless claims during the day.

20.01.2022 XTrend Speed

Market Analysis: AUD/USD

AUDUSD hit a 1-week low

On 18th January, AUDUSD continued falling. It breaks below 0.720 to a 1-week low. The increase in the U.S. dollar and the resurgence of epidemic in Australia put pressure on the Australian dollar.

The U.S. dollar recorded the largest increase in 2 weeks

On 18th January, the U.S. dollar index increased by 0.53% to 95.75 with the largest increase since 3rd January.

Investors should focus on the U.S. Fed meeting held next week. The meeting may hint that the U.S. Fed may raise the interest rate in March, which will be the first interest rate hike in 3 years.

Simon Harvey, a senior Forex analyst at Monex Europe, said in a research report that: “Great progress has been made in December job market, and the U.S. Fed will have to be more hawkish in January after the inflation increased to a 40-year high.”.

Confirmed COVID-19 cases surged in Australia

It is reported that the epidemic has been more severe in Australia since the beginning of 2022. New confirmed COVID-19 cases hit a record high and the death toll also jumps, which poses as the first crisis in 2022 to Australia. Australia’s medical system has been overwhelmed, and many medical workers ask for leave because of being infected with novel coronavirus. Australia’s New South Wales health officer appealed to the public: “In order to avoid putting pressure and burden on the medical system, the public should not go out if not necessary, and do not go to hospitals around the country if not necessary.”.

Technically speaking, AUDUSD continues dipping, and it has risks of falling further in the short term

On the chart of the day, AUDUSD continued falling, and the market trend was bearish. In terms of technical indicators, kdj went downwards after dead cross occurred, and the Vegas channel was downward, suggesting the market trend is bearish. AUDUSD will fall further if it breaks below the support at 0.713.

On the 4-hour chart, AUDUSD fluctuated and decreased. The market trend was bearish. In terms of technical indicators, macd was moving below zero axis, and the Vegas moved downwards, indicating the market trend is bearish. AUDUSD will fall further with potential support at 0.713-0.715 if it rebounds but is capped at the resistance at 0.720-0.723, and it will continue dipping with potential support at 0.710 if it breaks below 0.713-0.715.

Key resistance: 0.720, 0.723, 0.730
Key support: 0.715, 0.713, 0.710

In summary, AUDUSD was suppressed because the U.S. dollar was strong. AUDUSD will continue falling if it rebounds but is capped at the resistance at 0.723.

20.01.2022 XTrend Speed

Market Analysis: UKOIL

On 17th January, UKOIL hit $86.70 per barrel, the highest since October, 2018. Concerns on Omicron variant eased. Investors bet that global supply will tighten. Geopolitical tension increases recently, supporting oil price. Investors should focus on OPEC monthly report during the day.

Geopolitical tension boosted oil price

Iranian-backed Yemeni militants launched a drone attack on the UAE on Monday, sparking explosions and setting fires near its capital Abu Dhabi, causing casualties. At a critical moment, the attack has escalated security risks in this major crude oil exporting region.

Monday’s incident was one of the largest attacks to date on UAE, with a fire at Abu Dhabi’s main international airport and fuel tankers set ablaze near an industrial zone. A few days ago, Yemen’s Houthi rebels warned Abu Dhabi against further airstrikes.

Torbjorn Soltvedt, an analyst at risk intelligence firm Verisk Maplecroft, said: “Reports of damage to tankers and warehouses will worry oil market watchers who are also closely watching the nuclear talks between the U.S. and Iran. With negotiators running out of time, the risk of deteriorating regional security climate is rising.”.

Crude oil supply tightened

Germany’s foreign minister said on Monday that Germany and Russia diverged on many issues. The Nord Stream 2 project, which does not comply with European law, is currently suspended due to geopolitical tension.

Frenzy oil buying has pushed crude prices to multi-year highs, with oil supply disruption and signals of Omicron variant will not decrease the oil demand as expected. The increase in UKOIL price is likely to continue for some time.

Toshitaka Tazawa, an analyst at Fujitomi Securities, said that: “The bullish market trend continues. OPEC+ doesn’t provide enough supply to meet strong global demand.”. OPEC+ is withdrawing production cuts implemented in 2020 when the demand collapsed.

But many smaller oil producers have been unable to increase supply, while others have been wary of producing too much oil in case the epidemic hits the economy again.

Technically speaking, UKOIL is expected to reach 90 as the market trend is bullish

On the chart of the week, USOIL continued rising. The market trend is bullish. In terms of technical indicators, MACD went upwards after golden cross occurred, and the Vegas channel went up, indicating the market trend is bullish. USOIL will rise further to 90.0 if it continues jumping.

On the chart of the day, USOIL continued rising. The market trend is bullish. In terms of technical indicators, kdj continues rising after golden cross occurred at high levels, and RSI is moving at high levels, suggesting the market trend is bullish. If USOIL is steady above the support at 84.0, investors could buy as it reverses.

Key resistance: 88.5, 90.0, 95.3
Key support: 84.0, 82.0, 80.0

In summary, oil price increased due to the geopolitical tension and the tightening of oil supply. Investors should focus on OPEC monthly report. UKOIL may rise to $90 per barrel if OPEC raises the expectation of oil demand.

18.01.2022 XTrend Speed

Copper trading: Trading guidance for novice traders

Basic Introduction

Copper is a metallic element and its chemical symbol is Cu. Copper is a non-ferrous metal that is closely related to human beings and is widely used in electrical, light industry, machinery manufacturing, construction industry, national defense industry and other fields.

The London Metal Exchange, founded in 1876, is the world’s largest copper futures market. Exchange prices and inventories have a significant impact on the production and sales of non-ferrous metals worldwide.

Symbol Introduction

Copper CFDs are contracts that can be traded without actually owning copper. You can trade Copper on Xtrendspeed (corresponding code: COPPER).

Factors affecting copper price

International Economic Situation

The correlation between the commodity market and the economic situation is obvious, especially as the world economy is becoming more and more globalized. The commodity market has more correlation with the economy, so the price of copper is closely related to the economic situation. Generally speaking, when the economic situation is good, the demand for copper increases and the price rises, and vice versa.

The production status of the producing country

Chile is the world’s largest copper exporter, having the most abundant copper resource. Zambia and Zaire in central Africa are also important copper-producing countries. Almost all of the copper they produce is exported, and their production status has a great impact on the international copper market.

The impact of industrial policy

Since copper is mainly used in the electrical, electronic, construction, machinery and transportation industries, industrial policies on these industries have a more important impact on copper prices.

The price of alternatives

In the telecommunications industry, copper has always been an important raw material. However, due to the promotion and application of optical fiber technology, the status of copper has been challenged. At the same time, metal materials such as aluminum have the same properties as copper, and have also replaced copper in most fields.

The impact of inventory

Inventory is one of the important factors affecting copper prices. Enterprises will take different measures to increase or decrease inventory under different market conditions. In order to ensure the raw materials required for production or to speed up the flow of funds, the throughput reserves will also be used to stabilize the copper market in different periods.

Other factors

Since the copper market is an international market with a large volume of international trade, changes in relevant countries’ import and export policies, exchange rate systems, and efforts to combat smuggling will also affect copper prices.

Important events

On 18th October, copper price hit $10452.5 per ton, a record high. In 2022, the economic growth rate of major powers and political risks in South American resource countries are important factors affecting copper prices.

18.01.2022 XTrend Speed

Market Analysis: USD/CAD

Rising oil prices boost Canadian dollar, U.S.-Canada downside risks deepen

Bank of Canada tightens ahead of Fed

The Canadian dollar is the strongest of the world's major currencies in 2021, winning modest gains amid a strong U.S. dollar rally as the Bank of Canada tightens ahead of the Federal Reserve. The Bank of Canada has already ended QE completely in October 2021 and has brought forward the timing of a rate hike in 2022.

The Bank of Canada took the lead in April 2021, becoming the first major central bank to scale back bond purchases. In October, the Bank of Canada announced the end of quantitative easing.

Bank of Canada Governor McCollum said on the same day that we are getting closer to a full recovery, so quantitative easing is no longer needed. He also conceded that the rate hike may come sooner than previously expected.

Heading into 2022, the Canadian dollar is expected to continue to be one of the strongest currencies. Investors are betting that the Bank of Canada will start a rate hike cycle in the first quarter of 2022, and it will be one of the most aggressive in the advanced economies. Markets expect the bank to raise interest rates five times, taking the benchmark rate to 1.5%.

Even if the U.S. dollar strengthens slightly further in the year ahead, we still expect the Canadian dollar to edge up slightly on the back of a global economic recovery, the Bank of Canada's tightening lead over the Fed, and support from commodity prices, according to BMO economists.

EIA crude oil inventories fall to three-year low

U.S. crude stockpiles fell more than expected last week to their lowest level since October 2018, but gasoline inventories surged amid weak demand, the U.S. Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 4.6 million barrels in the week to Jan. 7 to 413.3 million barrels, compared with analysts' expectations for a drop of 1.9 million barrels in a Reuters poll. U.S. crude inventories have fallen for seven straight weeks and overall global inventories have been tightening as major producers struggle to increase supply amid rising demand.

Major crude oil holders on the U.S. Gulf Coast have been reducing inventories. Inventories in the Gulf of Mexico fell to their lowest level since January 2020. Refining capacity in the region accounts for about half of total U.S. capacity.

EIA crude oil inventories fell for the seventh straight week, Cushing crude fell for the first time in two months, and gasoline inventories rose sharply again after a sharp surge in inventories the previous week, financial blog Zero Hedge said. Oil prices are off to a positive start in 2022 as oil demand continues to expand and the market tightens as the impact of the COVID-19 outbreak on fuel consumption gradually eases. Crude supplies from OPEC members Kazakhstan and Libya have been disrupted in the past few weeks. We note that the rebound in oil and gasoline has pushed prices above pre-Strategic crude levels, and given the lag in the supply chain, these phenomena suggest that gasoline prices are about to start rising again.

Technical: The bear trend is significant, pay attention to the short-term rebound space

The weekly chart shows that the US dollar against the Canadian dollar is in a continuous decline, and it is expected to continue the downward trend in the market outlook. If the price this week is still blocked at the 1.2600 line, the exchange rate is expected to further test around 1.2280.

The daily chart shows that the downward trend of USD/CAD is maintained. In the short term, we need to pay attention to the support near 1.2420. If the price falls below this support, it will increase the downside risk. If the price breaks through the resistance near 1.2600, it will be expected to end the weak pattern, with further resistance at the 1.2700-1.2800 area.

Important support: 1.2420 1.2280 1.2000
Important resistance: 1.2600 1.2700 1.2800

To sum up, USD/CAD still has room to fall further, but there may be a rebound demand in the short term. At present, the important resistance above is near 1.2600, and breaking through this position is expected to weaken the downside risk; if it falls below the first-line support of 1.2280, it is necessary to be wary of the US dollar against the Canadian dollar to expand its decline.

13.01.2022 XTrend Speed
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Market analysis: EURUSD