Brent: the second wave of correction | 24 6月 2016

The forecast for the week 20 - 24 of June:

XAU/USD:

The last three trading weeks, gold has been finishing in the "green zone" on the background of outflow of capital from risky assets. Brexit may happen as early as this Thursday and then we can see it on $1,400 /ounce. Otherwise, we can expect a strong decline of gold. How to trade in this case? As uncertainty is very high, it is reasonable to wait for results of voting in UK and then open trading positions. Whatever the outcome will be, the market respond will be very strong and long-lasted, and every trader can capitalize on this event. However, if the United Kingdom remains to be the part of EU, sales of gold will be stronger, because in recent years it has been at high levels.

Trading recommendations:

Buy if the Great Britain leaves the EU on June 23 with Take Profit set at 30$.

Sell, f the Great Britain если Великобритания останется в Е.С remains in the EU on June 23 with Take Profit set at 50$.

Brent:

The the price has finished first wave of a downward correction started from the seven months' High. This week we should expect a second wave of correction. The main driver of drop is the expectations on growth of production in the United States. Friday's release of oil service company Baker Hughes disappointed investors one more time. The number of drilling rigs in the USA increased by 9 units, which indicates an increase of production volume. This trend has grounds, the number of drilling rigs has been growing for three weeks in a row - by 21 units. It is impossible to ignore decline in Baltic Dry Index (this index reflects the demand in the sea freight through the price costs of logistics), which indicates lack of strong demand in the raw materials. This index is one of the most objective indicators of economic activity. So, business activity in the world is still low and therefore, increase in the oil production volume would affect the price black gold.This week we should open Sell positions on growth of quotations to​​50.00/51.00 and take profit at 47.50.

S&P500:

This week can be divided into the two parts. First, this is announcement of results of the UK voting, the second part will be thetime after the referendum. In the first period, we should expect a moderate decline of the price. At the press conference after the Fed's meeting J Yellen said that the risk of UK exit was one of the key factors determining the decision not to raise the interest rate. However, the head of FED added that the Committee can easily respond to the unexpected acceleration of inflation and raise the rate! Core CPI has been above 2% for six months in a row and the trend remains to be fairly stable. Investors are choosing"safe assets", which is a negative factor for the stock market. The past week, fear index S&P500 VIX rose by 13.9% and last month increase was 18.8%. Investors are scared because of Brexit and are getting rid of risky assets. In the second period, trading will be determined by outcome of the referendum: if the UK leaves EU, a new wave of sales will start, if voting results save UK in the EU, we will see a strong upward movement. This week we should open Sell positions on growth of quotations to 2078/2089 and take profit at 2055.