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How OPEC+ saved the oil market

10 April 2020

Today's review will begin with the fact that for most traders and investors, today is a public holiday. Australia and New Zealand were closed in connection with the celebration of Good Friday, which will then be followed by Europe, and the United States. As a result, today’s trading session will consist of thin liquidity, which, in turn, may be accompanied by the appearance of very strong price movements due to lack of liquidity in the market.

Most currency pairs remain in a narrow trading range, while the oil market is completely closed. Nevertheless, it remains the most talked about market, due to the significant volatility in price from Monday to Thursday.

OPEC+ agreed to reduce oil production by 10 million barrels, which was is in line with expectations. Nevertheless, this is not enough to balance the supply and demand, which has already led to a fairly strong collapse in oil prices. Let me remind you that a number of analysts and economists currently state that at current production levels, the oil market is oversupplied by 30 million barrels per day, as a result, a decrease in oil production by 10 million barrels per day is not able to compensate for the imbalance that has appeared.

Given all this, the oil market may open on Monday with a strong bearish gap. But much will depend on the position of the United States and whether they are ready to reduce their own production. Indeed, OPEC + refers to the need for the United States and Canada to also cut production by another 5 million barrels.

And now let's move on and begin analyzing the AUD/USD currency pair.

One of the fundamental factors for buying this pair was the fact that China resumed business activity in the manufacturing sector, which, in turn, contributes to an increase in demand for raw materials. Let me remind you that Australia is one of the main suppliers of raw materials for China. As a result, after the breakdown of the resistance level of 0.6200, it was decided to open a deal to buy.

Buy 1 lot from 0.6210, Take Profit 0.6310, Stop Loss 0.6185. I will draw your attention to the fact that the level of 0.6310 has been a technical level of resistance since March 13. The profit on this transaction amounted to $1000, while the risk was only $250.



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