It is not that well understood why certain Forex brokers are acceptable to Muslims and others are not. The reason is actually very simple. Islamic law prohibits any form of usury, meaning any financial transaction where one either pays or receives interest. If you keep a Forex trade open past a certain time, which is usually 5pm New York time, you will either receive or be charged a small amount of interest on your open trade, which is based upon the differential in the current respective market interest rates that make up the currency pair that has been traded. This is unacceptable under Islamic law.
As the number and wealth of the global Islamic community has increased over recent decades, there has been a growing response within the financial services industry worldwide to provide more financial products and services that are compliant with Islamic law. For example, many European and American banks now offer Islamic bank accounts, Islamic mortgages etc. Creative and fairly straightforward solutions are offered to avoid the actual payment or charging of interest.
Gold prices continued to fall during yesterday's session and closed the day at $1298.26 an ounce as a friendly risk environment have provided better investment opportunities elsewhere. Israeli and Palestinian leaders agreed to extend a five-day ceasefire by 24 hours and resume current negotiations. Hopes of diplomatic solution to the Ukraine crisis weighted on the market as well. Russian Foreign Ministry said issues related to the humanitarian convoy to southeastern Ukraine had been resolved.
Easing geopolitical risks dulled desire for safe haven diversification for now but we continue to monitor developments cautiously. We have a bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) cross and prices are below the Ichimoku clouds on the 4-hour chart. The XAU/USD pair is testing the support around the 1297 level during the Asian session, by the time I prepare this analysis. If the bears capture this camp, the next support to watch will be around the 1292 level which happens to be the bottom of the Ichimoku cloud on the daily time frame. A daily close below this level means the 1287/6 support could be the next stop.
The WTI Crude Oil markets fell during the course of the day on Monday, breaking to a fresh, new low. Because of this, it’s more than likely that we will continue to go lower, probably aiming for the $92.00 level first which I see as a significant support level on the longer-term chart. Below there, I see the $90.00 level as well, being a large, round, psychologically significant number. I think that a lot of buyers will be down there waiting for the market based upon perceived value.
A supportive candle somewhere in this region would be a decent buying opportunity in my opinion simply because the risk to reward ratio would be so great. With that, I would be a buyer and aiming for probably the $97.00 level, as it was once a significant support level. That being the case, it makes sense that it would now be a significant resistance barrier, with perhaps a little bit of resistance at the $95.00 handle as well, based upon the fact that it is a large number.
The EUR/USD pair fell during the day on Monday, but remained within the consolidation area that we had been trending in for a couple of weeks now. The 1.33 level below of course is very supportive, and as a result we need to get down below there before I would consider selling this market. At that point in time, I would assume this market to break down to the 1.30 handle relatively quick. On the other hand, this is an area where we could see a significant amount of support, so we always could have a buying opportunity based upon a supportive candle.
I also believe that the 1.35 level above will be resistive, just as the 1.3450 level is. With that being the case, this is going to be more of the typical EUR/USD pair type of behavior, meaning that the markets will simply grind sideways and do nothing in general. Short-term trading will continue to be the way, and as a result the markets should continue to be traded off the short-term charts in general.
The EUR/GBP pair fell during the session on Monday, closing below the 0.80 handle again. After forming two shooting stars in a row last week, this is not much of a surprise as it appears that the buyers have run out of steam a little bit at this point. However, we have a clear resistance level above that if it should get broken, should send this market much higher. The 0.8030 region shows significant resistance for the second time now, and as a result we feel that a move above there has this market going much higher.
Ultimately though, we believe that the downtrend could very well continue to push this market lower but we need to see a fresh, new low in order to be as confident as we once were. This could also be simple consolidation at the bottom of the marketplace, perhaps signaling either a continuation coming, or the so-called “accumulation phase”, when the smart money reenters the marketplace