It’s a relatively quiet day on the data front for the euro tomorrow, But, there is one event that could cause some volatility.
Generally, there isn’t much reaction to final GDP numbers because they confirm what the market already knows from the preliminary figure. However, sometimes there are surprises when the final GDP number does come out. And that can significantly move the market!
There is a case to be made that we could have even more movement should Q2’s final GDP be different from what’s expected, because in August liquidity is tighter. Many major traders take their holidays around this time. Therefore, this period often sees more erratic trading. So, what are the chances we could get a surprise, and what could happen?
The Baseline
The expectations are, of course, for the final results to confirm the preliminary ones. We are currently expecting quarterly GDP growth of -0.1% and an annualized adjusted growth of 0.4%.
A deviation of a decimal or two from that wouldn’t change the outlook all that much. So, we’re looking for a revision beyond that range to significantly move the market.
Of symbolic importance is if the quarterly figure is revised up to 0.0%. That would put Germany technically out of risk of a recession for another three months. Just last year, Germany managed to avoid a technical recession when Q4 came in flat after a negative quarter.
This could buoy the bond markets, and by extension, the currency. However, it would likely make the DAX suffer a bit since that would relieve some pressure on the ECB to take a more accommodative stance.
The Changes
Revisions to prior GDP figures are not uncommon. About 30% of preliminaries are revised for the final. It’s not any more evident from the data that a revision is more likely this time around. An improvement will likely have a stronger effect on the market than a cut. This is because generally, the market is pricing in a poor performance from the euro area’s largest economy.
There are already enough reasons for the ECB to ease policy in some way and put pressure on the German government to provide stimulus. A few decimals lower in the GDP number doesn’t change that scenario as much as avoiding negative growth.
Going Forward
The attention is now moving to the Third Quarter which is over halfway through, now. The Bundesbank recently announced that they expect further weakness in the economy for the rest of the year. They blame Brexit uncertainty and the trade war for lower exports, particularly of automobiles. The latter is what’s dragging on the Germany economy in particular.
This begs the question of how stimulus spending in Germany is supposed to help reverse the external problems that are affecting the economy. Nevertheless, an announcement in that regard from the German government (currently they have allowed for a $50B contingency only in the case of a recession) would likely support equity markets. However, it wouldn’t be all that helpful for the euro.
The Consensus
Analysts are expecting the EC to cut their projections for overall annual economic growth in Germany from their current 0.5% growth. Less optimistic is Deutsche Bank, who are forecasting a -0.3% drop in GDP for Q3. This would imply Germany would fall back into a technical recession.
But the leadership in Germany might have other problems before then. There are strong expectations that if the upcoming elections in Saxony and Brandenburg lead to disappointing results once again for the governing coalition, the junior member (the SPD) will pull their support. This, in turn, would bring about an end to Merkel’s tenure.
All-in-all, further poor performance from Germany just isn’t going to be surprising.
The market sold off on news from this junior miner operating in British Columbia’s Golden Triangle, and Peter Epstein of Epstein Research questions the logic.
Aben Resources Ltd. (ABN:TSX.V; ABNAF:OTCQB) recently announced results from the first shipment of drill core from its 2019 drill program at the Forrest Kerr gold project in the Golden Triangle (GT) of British Columbia, Canada. Results from three of ten completed drill holes were reported. Nothing too exciting in the assays, the best intercept was 61.7 meters of 0.46 g/t gold (August corp. presentation).
The market spoke, and it spoke loudly. The press release was not well received. But why such a negative response? Shares plummeted to $0.135, down 27%, before ending Wednesday at $0.155, and dropping a penny on Thursday to $0.145.
Trading volume of 3 million shares was the heaviest of the year. I would have expected something like this if the company was out of cash, with no more results pending.
But that’s simply not the case, Aben remains well funded. Eric Sprott is the largest shareholder. (Note: In the remainder of this piece I suggest that Aben’s share price [could, might, possibly, potentially] rebound from $0.145. However, I don’t know when or if this will happen, or how much of a rebound is likely.)
First and foremost, we need to see one or more strong drill holes reported in September, October or November. This remains quite possible because the zones being drilled are still open along strike and at depth.
All drill holes are important in understanding the geology, to better target zones of mineralization. The GT is known to have complex geology, as is the case with a lot of deposits in the district. Even assays that are not that exciting help explain geology and structure, improving Aben’s chances of success.
What if there’s nothing left to find?
Management believes there’s likely to be more high-grade gold on the property. Gold zones identified so far came from a powerful mineralizing event. The team is up in the GT this week planning the next batch of drill holes, and they remain optimistic for the remainder of this season.
Management pointed out that last year’s blockbuster hole FK18-10 (multiple high-grade zones, including 62.4 g/t gold over 6 meters within 38.7 g/t gold over 10 meters) was targeted based on a high-grade surface sample. Aben has several new target areas supported by high-grade surface showings that will be drilled over the next several weeks. Strong intercepts from any of these new areas would be deemed a new discovery.
A lot of angst, disgruntlement and fear over just three assays?!?
Along with a few disappointing drill holes was the arguably more important news that management is doubling down on its drill program. Aben is expanding the budget and intends to continue drilling into September. The team is drilling another 1214 holes at Forrest Kerr and should end the season with about $2 million in the bank.
On just three assays of up to 24 expected from the Golden Triangle this season, Aben is down 24% from $0.19 per share to $0.145. It has fallen out of the top 10 GT juniors, as ranked by enterprise value (EV) [market cap + debt cash], now sitting at #13 with an EV of $13 million.
The company’s share price is down 70% from its 52-week high. That’s the worst decline among the top 20 GT juniors. Is the considerable share price weakness justified?
While the press release was not great, it wasn’t all bad either. . .
The following are two streamlined quotes from the press release that describe the drill program at Forrest Kerr. There’s a fair amount of technical data in the press release for readers interested in that. I’m keeping it simple in this article:
“The goal of this year’s drill program is to test a specific area of the North Boundary Zone and the area around the historic ‘Noranda hole’ and a corresponding new zone south of the Noranda hole. These three assays are from widely spaced holes, peripheral to the main zone of mineralization. Each encountered variable and intermittent polymetallic mineralization.”
Obviously, the goal of this year’s drill program has not been defeated by the first three drill holes! In fact, the team believes the goal is alive and well, thus a more than doubling of the number of holes from 10 (completed) to a total of up to 24. Presumably, management would not do this unless they had good reasons:
“Mineralization corresponds to multiple and widespread fault and shear zone structures. The mineralized structures correlate very well with magnetic highs delineated by an airborne survey flown in May 2019. Drilling on this part of Forrest Kerr has only tested a small portion of the potentially mineralized structures defined by the magnetic survey.”
Only a small portion of potentially mineralized structures defined by a magnetic survey have been tested. Again, the goal remains intact: to drill test very specific zones with potential for high-grade mineralization.
Gold price up nearly US$300/ounce since this time last year!
Readers should not forget the critical importance of today’s gold price of approximately CA$2,000/ounce. In U.S. dollars, gold is at a 64-month high!
Last year, Golden Triangle juniors were working with a US$1,200$1,250/ounce gold price backdrop. Anything above US$1,400/oz. is awesome in my opinion. Last year’s lower gold price did not prevent some spectacular gains from select GT players. For example, who can forget GT Gold Corp. (GTT:TSX.V)?
GT Gold from $0.43 per share to $2.10 (+388%); August to November 2018
I never wrote about GT Gold, or invested in it, so I’m not biased or tooting my own horn by mentioning it. Yet, GT Gold actually sold off on mediocre drill results in mid-August 2018, from $0.74 to $0.43 (down 42%!) in just eight days. Two months later, strong assays sent shares soaring above $2.
The five-year stock chart of Aben Resources suggests a real possibility of a large move if we get strong drill results. Don’t read too much into this chart. I’m not an adherent of technical analysis.
Twice, in the third quarters of 2017 and 2018, Aben’s share price traded, briefly, in the $0.45-$0.50 range. In 2016 Aben’s stock was up over 400% from low to high in the third quarter. On Aug. 28 2018, Aben traded at a 52-week high of $0.49 and closed at $0.45.
On the same day, the gold price was $1,207/ounce versus the Aug. 20, 2019 price of $1,507/ounce. By no means does this predict anything, it only leads me to believe that there’s a decent chance of a significant move in the share price if, and only if, one or more drill holes hit high-grade mineralization.
Each year a few GT juniors make big moves in August through November
How big a move is anyone’s guess, but I noticed that within just the past month, ABN’s share price traded as high as $0.26. A return to $0.26 per share would be a gain of 79%.
CONCLUSION
Aben Resources is the 13th largest Golden Triangle junior (EVs ranging from a few million up to GGI’s $182 million). Based on just a few drill holes, investors traded three million shares on Aug. 20, sending the share price significantly lower, seemingly concluding that nothing good could possibly come from the remaining (roughly) 20 assays.
No one knows what the future holds for Aben, but selling shares now, with over 85% of total assays pending, seems like a knee-jerk reaction. Anyone holding shares for many months up until now, why sell in August??? Could shares go lower? Yes, absolutely.
However, for GT players, August-September-October is when big moves in share prices often occur (if they occur at all). That’s the whole point of owning shares in these critical months! It’s happened twice before for Aben; will it happen again this year?
Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.
Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Aben Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Aben Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.
At the time this interview was posted, Peter Epstein owned no shares of Aben Resources, and the Company was an advertiser on [ER].
Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.
Streetwise Reports Disclosure: 1) Peter Epstein’s disclosures are listed above. 2) The following companies mentioned in the article are billboard sponsors of Streetwise Reports: Aben Resources. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Aben Resources, a company mentioned in this article.
British Prime Minister Boris Johnson held a series of meetings with world leaders on the conditions for his country’s exit from the European Union. Will the GBPCHF quotations grow?
Their upward movement means the strengthening of the British pound and the weakening of the Swiss franc. The UK exit from the EU should take place on October 31, 2019. If, until this time, the parties do not conclude an agreement on the settlement of mutual obligations, this could have a negative impact on the British economy and the pound. The other day, German Chancellor Angela Merkel announced the possibility of reaching an agreement with Britain until October 31 about Northern Ireland, which could remain a member of the EU Customs Union. The reaction of the foreign exchange market was very positive. The progress of negotiations on Brexit is able to increase pound quotes. Until the end of August, particularly important macroeconomic data in the UK is not expected. In turn, the Swiss franc is considered a safe haven currency. It is weakening in the event of a decrease in global risks amid a trade war between the United States and China. Such risks really decreased after the United States postponed the date of increasing duties on imports of Chinese goods from September 1 of this year to December 15. At the same time, the parties will continue trade negotiations.
On the daily timeframe GBPCHF: D1 exited the downtrend and is trying to adjust up.Various technical analysis indicators have generated signals to increase. Further growth of quotations is possible in the event of the conclusion of an agreement on Brexit and progress in trade negotiations between the US and China.
The Parabolic indicator shows a signal to increase.
The Bolinger bands widened, indicating a volatility increase . Both Bollinger Lines Slope Up.
The RSI indicator is above the mark of 50. It has formed a divergence to increase.
The bullish momentum may develop if GBPCHF exceeds the 1st Fibonacci line and its last maximum: 1.207. This level can be used as an entry point. The initial stop lose may be placed lower than the last lower fractal, the minimum since October 2016 and the Parabolic signal: 1.167. After opening the pending order, the stop shall be moved following the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (1,167) without reaching the order (1,207), we recommend to cancel the order: the market sustains internal changes that were not taken into account.
Orphan drug and breakthrough therapy status, which could mean this company’s lead candidate is on the FDA fast track, translates to huge opportunities for both those suffering from diabetes and investors, says Daniel Carlson of Tailwinds Research.
Quite often when I write about companies I’m just about the only one doing so. It’s in these situations that Tailwinds can add value by not only highlighting our investment thesis, but in educating investors about a company for which there is little to no publicly available investment opinions.
Provention Bio (PRVB:NASDAQ) is not one of those cases. Instead, this company has a decent market cap of $400 million, has multiple analysts covering the stock and has a marquee investor in Amgen Inc. (AMGN:NASDAQ). At the same time, it has a drug that is going after a very common and well-publicized disease and, with the success shown here, has garnered significant attention from investors and the medical community.
Therefore I will not be writing a lengthy overview on the company nor on their lead drug candidate, teplizumab. Instead, I’m going to write about Provention to explain why I bought the stock recently and why I believe this is one of the most compelling opportunities I’ve seen of late.
To do so, we’ll cover very briefly the market potential of teplizumab, along with the basis of our belief in the drug’s success. Then we’ll focus on the confluence of events that has created what we believe to be an amazing buying opportunity in the shares.
Delaying, or potentially curing (!) diabetes, is massive
It almost feels Trump-ian to use adjectives like massive when describing investment opportunities. Expansive words get used far too often by investors touting their holdings (I’m certainly guilty). However, if there ever was a disease that could generate massive opportunities for therapies addressing it, diabetes would be that disease. Check out these statistics from the American Diabetes Association:
Prevalence: In 2015, 30.3 million Americans, or 9.4% of the population, had diabetes; Approximately 1.25 million American children and adults have type 1 diabetes.
Undiagnosed: Of the 30.3 million adults with diabetes, 23.1 million were diagnosed, and 7.2 million were undiagnosed.
Prevalence in seniors: The percentage of Americans age 65 and older remains high, at 25.2%, or 12 million seniors (diagnosed and undiagnosed).
New cases: 1.5 million Americans are diagnosed with diabetes every year.
Prediabetes: In 2015, 84.1 million Americans age 18 and older had prediabetes.
Deaths: Diabetes was the seventh leading cause of death in the United States in 2015, with 79,535 death certificates listing it as the underlying cause of death, and a total of 252,806 death certificates listing diabetes as an underlying or contributing cause of death.
Diabetes is one of the most followed and actively researched diseases. It’s simple to detect even in prediabetic individuals. A therapy addressing diabetes would have a large market right out of the gate due to its common occurrence and the fact that, to date, no approved drugs have shown any efficacy in preventing, or even delaying, the onset of diabetes.
Teplizumab could be the therapy that wins this market. As Provention said when they released results from their “At Risk” study: “Results from the study showed that a single 14-day course of PRV-031 (teplizumab) significantly delayed the onset and diagnosis of clinical T1D, as compared to placebo, by a median of two years. . .During the trial, 72% in the placebo group developed clinical diabetes compared to only 43% of the PRV-031 (teplizumab) group.”
Delaying diabetes by two years is a big deal. “I think everyone would agree that two years without diabetes is a gift. Type 1 diabetes is a disease that’s with you literally 24/7. There is not a single activity that someone with type 1 diabetes does that in some way isn’t affected by the disease. . .So to not have the disease for two years is actually very important,” says Dr. Kevan Herold, professor of immunobiology and internal medicine at Yale University.
With over 1.5 million Americans diagnosed per annum, the market potential for any therapy that can delay the onset of diabetes is in the billions of dollars. Go global and you can double it again. It’s tough to put numbers on the drug at this stage, however it’s clear that success here could be worth far in excess of $5 billion per annum in sales to Provention. That is truly massive.
Teplizumab is likely to be approved
The data from the recently completed trial was outstanding. Here’s what the company had to say about the results:
“This groundbreaking study demonstrates that we can use immunotherapy, specifically PRV-031 (teplizumab), to prevent or significantly delay the onset of clinical type 1 diabetes by at least two years in individuals who will almost certainly progress to clinical disease,” said Dr. Eleanor Ramos, Provention’s chief medical officer and chief operating officer. “More importantly, approximately 60% of subjects in the study did not develop T1D following only one course of PRV-031 therapy, double the placebo group. Teplizumab is the first immune modulator to show a delay in the clinical onset of type 1 diabetes.”
In other words, “It’s a very statistically significant finding,” said Dr. Herold, quoted in JAMA. Just as importantly, as was noted by the Expert Opinion on Biological Therapy, “Adverse events reported [for teplizumab] so far seem to be mild and of limited duration.” The drug not only works, but is safe. Safety frequently drives the speed of an FDA process.
The company already has obtained orphan drug status. Now, on the back of the recent data, the company received breakthrough therapy designation (BTD). This puts them on a much faster track for approval and would seemingly greatly increase the odds of approval for those handicapping the situation.
Here’s why BTD is significant. According to Provention, “BTD is an FDA program designed to expedite the development and review of therapeutic candidates intended to treat serious or life-threatening diseases. To qualify for this designation, preliminary clinical evidence has to indicate that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint. The benefits to Provention of this BTD include more intensive and interactive guidance from FDA on an efficient drug development program, access to a scientific liaison to help expedite review time, and eligibility for Priority Review if relevant criteria are met.”
In other words, instead of a phase 3 trial, Provention is proceeding, with permission from the FDA, straight into a registration filing. It will take time to file, and for review, but we’re now talking months, not years, before teplizumab will possibly be on the market. And, with the outstanding results, robust safety data, a cooperative FDA, and a disease that is high-profile with zero approved therapies, teplizumab would appear to have a high chance of receiving approval on this next go-round with the FDA.
Provention Bio is ripe now
I love when the market misprices securities. In the micro-cap space this happens frequently. News can be misinterpreted or overwhelmed by other factors. This is the case here.
When PRVB released their trial results, the stock ran from the $4 area to over $22 per share. It was off to the races, and those of us not already in the game missed it. . .or so it seemed.
Instead of going straight up to a multibillion market cap, PRVB reversed course. This was initially caused by the company announcing a financing. Happens a lot in stocks that make big moves, right? In this case, it took the wind out of the stock’s sails and brought it right back to $12. Still a bargain, but it was going to get cheaper.
The company, under no pressing need for capital, withdrew their offering. They also announced a breakthrough drug therapy designation from the FDA. This puts it on a faster path to approval and should have gotten the stock going again. But it didnt do so, because, one of the larger holders from years gone by needed cash and chose this time to cashlessly exercise 2.5 million warrants, which they then sold into the market. Despite all the great news, PRVB was back to below $9 per share.
At this time, we have been given a second chance. It’s almost as if, on Final Jeopardy, Alex Trebek has asked you, “Are you sure about that answer???” Uh, no Alex, I think I’ll erase it and put in the right one now. I was just kidding earlier. . .
Its a fair counterpoint to say the company might be coming back to the market with a financing. At this valuation, however, I’m not concerned, and any deal would simply bring new investors plus eliminate any overhang.
Instead I’ll focus on the fact that PRVB is a stock with a potential blockbuster drug that appears to be on track for approval. The upside is huge. And, due to a confluence of events in the market, its at a ridiculous valuation. I’m a buyer.
Daniel Carlson is the founder and managing member of Tailwinds Research Group and its parent company DFC Advisory Services, which is a licensed registered investment advisor (CRD # 297209). Tailwinds is a microcap focused research company that provides research on and consults to over 20 emerging growth companies in the technology and life sciences arenas. DFC Advisory Services is an RIA that manages money dedicated to investing in the companies covered by Tailwinds. For more information on these two companies and their track record, please see www.tailwindsresearch.com. Prior to founding these two entities, Dan spent many years working with small public companies, having been CFO of two public companies and helping finance many others. A 1989 graduate from Tufts University with a degree in Economics, Dans formative years in business were spent as an equity trader, first on the Pacific Coast Stock Exchange then on the buyside at several multi-billion dollar firms.
This article was submitted by Tailwinds Research. For more information on Tailwinds Research or on Provention Bio, please visit www.tailwindsresearch.com.
Tailwinds owns stock in Provention Bio. For a complete list of disclosures, please click here.
Disclosure: 1) Daniel Carlson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Provention Bio. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: None. Additional disclosures and disclaimers are above. I determined which companies would be included in this article based on my research and understanding of the sector. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
After forming another consolidation range close to the lows and breaking it to the upside, EURUSD has almost completed the correction towards the center of this descending wave. Possibly, the pair may form a new consolidation range above 1.1132. If later the price breaks this range to the downside, the instrument may resume trading inside the downtrend with the first target at 1.1100.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD has reached the short-term target of the third ascending wave at 1.2284. Today, the pair may be corrected towards 1.2205 and then form one more ascending structure with the predicted target at 1.2323.
USDCHF, “US Dollar vs Swiss Franc”
After forming another consolidation range above 0.9835 and breaking to the downside, USDCHF has completed the descending correction at 0.9720. Today, the pair may form a new consolidation range near the current lows. Later, the market may break 0.9777 upwards and start another growth with the first target at 0.9815.
USDJPY, “US Dollar vs Japanese Yen”
USDJPY has finished another descending structure; right now, it is moving downwards to reach 106.04. After that, the instrument may start a new correction towards 105.60 and then resume trading upwards with the target at 106.70.
AUDUSD, “Australian Dollar vs US Dollar”
After breaking 0.6735 downwards and expanding the range to the downside, AUDUSD has finished the ascending impulse and returned to the above-mentioned level. According to the main scenario, the price is expected to consolidate below 0.6740. Later, the market may break this range upwards and continue trading inside the uptrend with the target at 0.6800.
USDRUB, “US Dollar vs Russian Ruble”
USDRUB is being corrected towards 66.15. After that, the instrument may form a new descending structure with the predicted target at 65.20.
USDCAD, “US Dollar vs Canadian Dollar”
USDCAD is consolidating around 1.3300. Possibly, the pair may grow to break 1.3319 and then continue trading inside the uptrend with the predicted target at 1.3355.
XAUUSD, “Gold vs US Dollar”
There was a gap at the beginning of today’s trading session, which helped Gold to reach 1550.50 and complete this growth. Possibly, today the pair may consolidate near the current highs. Later, the market may break 1535.00 and resume trading downwards with the first target at 1510.00.
BRENT
Brent is consolidating near the lows. According to the main scenario, the price is expected to break 59.20 upwards and reach the first target at 59.90. However, the pair may choose an alternative scenario to fall to form a new descending structure to reach 57.60 first and then start another towards the above-mentioned target.
BTCUSD, “Bitcoin vs US Dollar”
BTCUSD is forming a wide consolidation range. Possibly, today the pair may fall to break the downside border at 9944.00 and then continue trading inside the downtrend with the predicted target at 9400.00.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The US dollar has started the week on a firm footing following a late sell-off on Friday. The decline came in response to comments from Fed Chairman Powell. Speaking at the Jackson Hole Symposium, Powell kept the prospect of further rate cuts very much alive. However, he noted the limited ability the Fed has to handle the downside impact from Trump’s trade war with China. USD index trades 97.85 last, having found support at the 97.51 level again.
EUR Weaker
EURUSD has been back under pressure over the European morning on Monday in light of the recovery in USD. This week, forex traders are waiting for the release of German and eurozone CPI. Weak readings are expected to add further pressure to expectations that the ECB will ease at the upcoming September meeting. EURUSD trades 1.1112 last as stagnation between 1.1025 – 1.1217 continues.
GBP Holding On
GBPUSD has been a little softer today also, weighed on by a recovery in USD. Price has been slowly grinding higher, away from the 1.20 level, though remains very much corrective. While below 1.2382, focus is on a further move lower eventually unless we see any positive Brexit headlines.
SPX500 Recovers
Risk assets have been rallying today despite the move higher in USD. Powell’s comments last week have reinforced the view that the Fed will ease again this year which, along with expectations for ECB easing, are helping keep equities underpinned. SPX500 trades 2872.25 last though remains capped by the 2941.01 level.
Safe Havens Fall
Safe havens have come under pressure today also in light of the recovery in risk appetite and a stronger US Dollar. Both JPY and gold have been lower against USD. USDJPY trades 105.86 last, with price having rebounded strongly off the 105.07 level. XAUUSD trades 1530.60 last with price still above the 1522.75 level, for now, keeping focus on further upside.
Crude Rallies
Oil prices have been higher today, despite the stronger USD. A recovery in risk sentiment and growing optimism that the US and China will continue trade negotiations is helping keep price bid today. Last week, the EIA reported a further drawdown in US crude stores which is also adding upside pressure. Crude trades 54.53 last though is still capped by the 56.76 level for now.
AUD Bounces Back
USDCAD is trading in the green today, though only slightly. A stronger USD has been offset by the recovery in risk appetite and better oil prices, which is helping boost CAD. USDCAD trades 1.3305 last, with price sitting just atop the 1.33 level for now. However, momentum to the topside has waned following the initial burst above the level earlier in the month.
AUDUSD has made a strong recovery today following an earlier move lower. The sell-off stalled just ahead of the .6677 level and price has since reversed back above the .6758 level with better risk appetite helping offset a stronger USD.
In the H4 chart, after completing a slight correction and breaking the previous high, XAUUSD is still trading upwards. The short-term targets are inside the post-correctional extension area between 138.2% and 161.8% fibo at 1555.95 and 1569.27 respectively; the long-term target is 76.0% fibo at 1616.45. The local support is the low at 1479.45.
As we can see in the H1 chart, there was a gap at the beginning of today’s trading session and the pair started a new short-term pullback, which has already reached 23.6% fibo. The next downside targets may be 38.2% and 50.0% fibo at 1531.05 and 1523.70 respectively. If the price breaks the local high at 1554.99, the uptrend will continue.
USDCHF, “US Dollar vs Swiss Franc”
As we can see in the H4 chart, the previous correctional uptrend has reached 61.8% fibo; right now, the price is falling towards the low at 0.9660. After breaking the low, the instrument may continue falling towards the post-correctional extension area between 138.2% and 161.8% fibo at 0.9586 and 0.9522 respectively.
In the H1 chart, after finishing the descending impulse, USDCHF is being corrected to the upside; it has already reached 38.2% fibo and may yet continue towards 50.0% fibo at 0.9795. The support is the low at 0.9713.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
Bitcoin’s new normal bottom is $10,000, predicts the CEO of one of the world’s largest independent financial advisory organizations.
The comment from Nigel Green, the chief executive and founder of deVere Group, the $12bn advisory giant that launched deVere Crypto in early 2018, comes as the world’s largest cryptocurrency has lingered around this mark for several days, before jumping up Monday.
Mr Green notes: “Looking at its performance this year, I believe that the new normal bottom price for Bitcoin is $10,000.
“It bounces at this price. If it fluctuates below this level, it shoots back up again. We have seen this in action on Monday when Bitcoin hit $10,500 in a matter of minutes.”
Earlier this month, the deVere CEO predicted that Bitcoin could hit $15,000 in the near future. It is a prediction he is doubling down on.
He says: “Bitcoin can be expected to imminently reach $15,000 for four main reasons.
“First, geopolitical issues, such as the U.S.-China trade war and Brexit, are intensifying and investors will increase exposure to decentralized, non-sovereign, secure digital currencies, such as Bitcoin, to shield them from the turmoil taking place in traditional markets.
“Second, technical network improvements are further improving performance. Bitcoin’s hash rate has smashed through another new all-time high recently and this fuels investor confidence.
“Third, the 2020 Bitcoin halving will help drive the price skywards. The code for mining Bitcoin halves around every four years and the next one is set for May 2020. When the code halves, miners receive 50 per cent fewer coins every few minutes. History shows that there is typically a considerable Bitcoin surge resulting from halving events.
“And fourth – and perhaps the most important one – is that public awareness is consistently growing. Cryptocurrencies, and in particular Bitcoin, are increasingly part of mainstream finance. This is evidenced not only in the financial sector, in which all major banks are increasingly looking at blockchain and crypto, but with big names within the tech and retail sectors too.”
The deVere CEO concludes: There is increasing global acceptance that cryptocurrencies, such as Bitcoin, are not only the future of money, but increasingly the money of today. This will be reflected in Bitcoin’s new normal bottom price of $10,000.”
About:
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
Last Friday saw a lot of action, making up for the quiet trading week. China announced that it was raising tariffs on $75 billion worth of goods imported from the United States.
This prompted President Trump to hit back strongly, calling for US companies to look for alternatives to China. Trump also raised the tariffs on $250 billion worth of goods from 25% to 30% in response. Equity markets fell as investors rushed to the safe-haven assets.
Euro Rises to a One-Week High
The euro rose to a one-week high, closing at $1.1143 by Friday’s close. The gains came largely due to a weaker USD following new trade spat developments between Washington and Beijing. Economic data from the eurozone was sparse. The uncertainty in regard to Italian politics remains, but the common currency managed to brush aside the regional developments.
EURUSD Tests Resistance, but Can it Break?
The currency pair has been trading flat, for the most part, this year. Once again, the flows from Friday have pushed the EURUSD to the short-term resistance area. If the resistance level at 1.1143 is breached convincingly, we expect to see further gains in store. The bullish divergence on the 4-hour chart time frame adds to this view. The bullish shift comes as the bearish flag pattern is now invalidated following the failure to clear the support at 1.1065.
Pound Sterling Catches a Bid on Weaker USD
The pound sterling managed to post gains, rising for a second consecutive day to a three-week high. The USD was largely responsible for this move. Fed Chair Jerome Powell said that the central bank was prepared to offer more stimulus to the economy if need be. His comments come in the midst of geopolitical events and the trade escalation between the US and China.
Further Upside Likely for GBPUSD
The currency pair has managed to lift-off following the descending wedge pattern formed over the past few weeks. After briefly slipping to test the support area of 1.2208 – 1.2170, cable is now likely to extend further gains. The next main resistance to the upside is at 1.2511 – 1.2533 level. A retest of this level could complete the correction to the upside in the medium term.
Gold Surges on Risk-Off Sentiment
The precious metal rose sharply on Friday and settled at 1526.78 to an ounce. The gains were led by the developments between the US and China. It was just earlier this week that investors were settling following the panic set off due to the inverted yield curve. Following the weekend developments, gold jumped higher on Monday’s open, rising to a new six-year high.
Will XAUUSD Rise Higher?
After posting a new six-year high at 1531, XAUUSD gapped higher this morning to a fresh six-year high. Gold posted intraday gains of 1555.00 at the time of writing. For the moment, the precious metal could pullback off these highs. There is a good chance that gold could ease back to fill the gap at 1526.78. But the bias remains to the upside for the moment.
Investors are looking to a relatively quiet trading week ahead in the run-up to the final few weeks of the summer months.
Focus will be shifting towards the United States which will have a somewhat busy week in comparison. On the cards is some top tier data, while elsewhere the G7 summit is scheduled to get underway.
The impact of this is expected to be limited. As a result, it would fall back on the economic data to drive the flows this week.
Germany to set the tone for the Eurozone
The week ahead will see quite a bit of data coming out of Germany. The outcome could give us a glimpse into how Europe’s leading economy has fared. It could also provide a broad idea of how the eurozone’s economy as a whole is getting on.
The recently released ECB minutes showed that policymakers saw a need for further stimulus. Economic data overall for the eurozone has, so far, been relatively subdued. A lack of any momentum is likely to see the ECB following through.
German Ifo Business Survey
The Ifo institute will be releasing the business survey report this week, on Monday. Forecasts point to a slight decline from 95.7 in July to 95.2 in August. The data would mark a decline in the index for the second consecutive month after registered 97.5 points in June. Within the survey, the manufacturing sector will be key to watch for. In the previous report, Ifo reported that the manufacturing sector was in a freefall.
Revised Q2 GDP Estimates to Remain Unchanged
The second-quarter GDP report will be due Tuesday. No changes are expected to this revision. This confirms that the German economy contracted 0.1% in the three months ending June 2019. On a year over year basis, the second-quarter GDP is expected to hold steady at 0.4%.
Eurozone Flash Inflation Estimates for August
The flash inflation estimates for August for the Eurozone is due on Friday. Headline inflation is expected to rise by 1.1% on the year ending August. This follows a revised 1.0% increase in consumer prices in July. Earlier, the flash estimates for July showed a 1.1% increase. The data, along with the German flash inflation reports, will likely strengthen the case for the ECB to act during its September monetary policy meeting.
Investors Could Overlook US Economic Data
Investors are focusing on larger themes such as trade wars, inverted yield curves, and monetary policy. Amid this backdrop, investors could likely overlook the economic reports coming out this week. Some of the high-ticket events include the revised GDP figures for the second quarter and the durable goods orders report. The US personal income and core PCE price index for July is also on the docket this week.
Durable Goods Orders to Rise 1.0%
Expectations are for the durable goods orders report for July to show a modest increase of 1.0% in July. This follows a 1.9% increase in June. Excluding transportation, durable goods orders are forecast to rise a mere 0.2% in July. This marks a slower pace of increase from a revised 1.0% registered in the month before.
US Q2 GDP Revisions
The second estimates for the GDP will be coming out on Friday. Economists are looking at a 2.0% increase in the three months ending June. This marks a slightly slower pace of GDP increase compared to the initial reports of a 2.1% increase. Besides the GDP data, the second quarter PCE and core PCE reports will also come under revision.
The decline in the GDP figures could likely not impact the market much. However, it would only strengthen the case for the Federal Reserve to cut rates once again, most likely in September this year.
