Late stages of Crude Oil rally
Oil has lost its upside momentum. Despite reports of record gasoline prices in the UK and the US, crude prices are losing around 0.6% on Wednesday morning on speculation that the supply-demand balance point is approaching.
The price of Brent crude has retreated 3% and WTI 3.8% from late October peaks.
Graphical analysis suggests that the latest rally in oil prices, which started in August, has moved into its final stage, and we probably already saw a local price peak at the end of last month.
The oil market will likely need a reset in the coming weeks, potentially correcting to $78.5-81.5/bbl for Brent and $75.7-79 for WTI. Such a pullback could clear the way for further buying as part of the bullish momentum.
But it also cannot be ruled out that a more aggressive production build-up by the US and OPEC+ is on the way while the pace of demand growth slows. In that case, we could see a deeper correction with downside potential at $74 and $73, respectively.
Oil has lost its upside momentum. Despite reports of record gasoline prices in the UK and the US, crude prices are losing around 0.6% on Wednesday morning on speculation that the supply-demand balance point is approaching.
The price of Brent crude has retreated 3% and WTI 3.8% from late October peaks.
Graphical analysis suggests that the latest rally in oil prices, which started in August, has moved into its final stage, and we probably already saw a local price peak at the end of last month.
The oil market will likely need a reset in the coming weeks, potentially correcting to $78.5-81.5/bbl for Brent and $75.7-79 for WTI. Such a pullback could clear the way for further buying as part of the bullish momentum.
But it also cannot be ruled out that a more aggressive production build-up by the US and OPEC+ is on the way while the pace of demand growth slows. In that case, we could see a deeper correction with downside potential at $74 and $73, respectively.
The annual growth rate in UK house prices fell to 9.9%, returning to the single-digit territory after five months. At the same time, a 0.7% jump in prices in October signalled increased buyer’s demand.
Buyer interest is based both on accelerating inflation (actual and felt considering the jump in energy prices), which lowers the value of money, as well as a desire to lock in the current low mortgage interest rate. Financial markets are banking on a 0.15 percentage point rate hike by the Bank of England as early as tomorrow.
Yields on 10-year government bonds have doubled since August. Although long-term interest rates remain broadly in a multi-year bearish cycle, Britons generally follow Ray Dalio’s strategy of preferring to borrow in the current macroeconomic process, betting that inflation will eat away at the purchasing power of money.
Buyer interest is based both on accelerating inflation (actual and felt considering the jump in energy prices), which lowers the value of money, as well as a desire to lock in the current low mortgage interest rate. Financial markets are banking on a 0.15 percentage point rate hike by the Bank of England as early as tomorrow.
Yields on 10-year government bonds have doubled since August. Although long-term interest rates remain broadly in a multi-year bearish cycle, Britons generally follow Ray Dalio’s strategy of preferring to borrow in the current macroeconomic process, betting that inflation will eat away at the purchasing power of money.
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#WaveAnalysis
#Tripadvisor reversed from support level 32.10
• Likely to rise to resistance level 38.50
Tripadvisor recently reversed up from the pivotal support level 32.10 (which has been reversing the price from the end of January) – intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 32.10 stopped the earlier active impulse waves (iii) and 3.
Given the proximity of support level 32.10, Tripadvisor can be expected to rise further toward the next resistance level 38.50 (top of wave 2 from October).
#Tripadvisor reversed from support level 32.10
• Likely to rise to resistance level 38.50
Tripadvisor recently reversed up from the pivotal support level 32.10 (which has been reversing the price from the end of January) – intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 32.10 stopped the earlier active impulse waves (iii) and 3.
Given the proximity of support level 32.10, Tripadvisor can be expected to rise further toward the next resistance level 38.50 (top of wave 2 from October).
Is euro the weakest link in Europe’s FX market?
The pressure on the single currency remains high on the foreign exchange market. Much of the credit goes to ECB head Lagarde, who yesterday once again pointed out that it hasn’t met conditions for a key rate hike before the end of next year.
The final Eurozone composite PMI value was lowered to 54.2 in October, declining for the third month in a row. A couple of hours earlier, Germany had reported a rise in industrial orders in September of only 1.3% after a slump of 8.8% a month earlier.
Based on this central bank stance and an evident slowdown in growth after a rousing surge in the middle of this year, we should take the rise in Eurozone government bond yields as a sell-off of European sovereign debt. And this is already starting to resemble somewhat the initial conditions of the euro area debt crisis and causes a sell-off of the euro to its main competitors.
The pressure on the single currency remains high on the foreign exchange market. Much of the credit goes to ECB head Lagarde, who yesterday once again pointed out that it hasn’t met conditions for a key rate hike before the end of next year.
The final Eurozone composite PMI value was lowered to 54.2 in October, declining for the third month in a row. A couple of hours earlier, Germany had reported a rise in industrial orders in September of only 1.3% after a slump of 8.8% a month earlier.
Based on this central bank stance and an evident slowdown in growth after a rousing surge in the middle of this year, we should take the rise in Eurozone government bond yields as a sell-off of European sovereign debt. And this is already starting to resemble somewhat the initial conditions of the euro area debt crisis and causes a sell-off of the euro to its main competitors.
The EURUSD on Thursday morning returned to test the October low area near 1.1550. The EURGBP rebound choked yesterday, and the pair returned below 0.8500.
The pair has predominantly traded in a wide range of 0.8500-0.9200 since 2016 but has settled near its lower boundary this year. Is it not time for a hike downwards? Waning economic growth and the ECB’s ultra-soft stance markedly contrasts with a more optimistic picture elsewhere.
EURCHF is trading at 1.0540 - renewing lows from May 2020 and losing 3.6% in the last six weeks. All eyes here are on the 1.0500 level - and area of lows since 2015 from where the SNB bought the euro against the franc in the midst of the market downturn due to the lockdown.
The pair has predominantly traded in a wide range of 0.8500-0.9200 since 2016 but has settled near its lower boundary this year. Is it not time for a hike downwards? Waning economic growth and the ECB’s ultra-soft stance markedly contrasts with a more optimistic picture elsewhere.
EURCHF is trading at 1.0540 - renewing lows from May 2020 and losing 3.6% in the last six weeks. All eyes here are on the 1.0500 level - and area of lows since 2015 from where the SNB bought the euro against the franc in the midst of the market downturn due to the lockdown.
#WaveAnalysis
#IBM broke support level 124.00
• Likely to fall to support level 117.50
IBM opened today with the downward gap, breaking below the support level 124.00 (low of the previous impulse wave (iii)).
This breakout of the support level 124.00 accelerated the active short-term impulse wave C – which belongs to intermediate ABC correction (2) from March.
IBM can be expected to fall further toward the next support level 117.50 (previous monthly low from January and the target for the completion of the active impulse wave C).
#IBM broke support level 124.00
• Likely to fall to support level 117.50
IBM opened today with the downward gap, breaking below the support level 124.00 (low of the previous impulse wave (iii)).
This breakout of the support level 124.00 accelerated the active short-term impulse wave C – which belongs to intermediate ABC correction (2) from March.
IBM can be expected to fall further toward the next support level 117.50 (previous monthly low from January and the target for the completion of the active impulse wave C).
#WaveAnalysis
#EBAY reversed from support zone
Likely to rise to resistance level 80.00
EBAY recently reversed up with the daily Bullish Engulfing from the support zone located between the round support level 70.00, lower daily Bollinger Band and the 61.8% Fibonacci correction of the previous upward impulse from June.
This reversal started the active short-term impulse wave 5 – which belongs to wave (C) from March.
Given the clear daily uptrend, EBAY can be expected to rise further toward the next round resistance level 80.00 (top of the previous impulse wave (i)).
#EBAY reversed from support zone
Likely to rise to resistance level 80.00
EBAY recently reversed up with the daily Bullish Engulfing from the support zone located between the round support level 70.00, lower daily Bollinger Band and the 61.8% Fibonacci correction of the previous upward impulse from June.
This reversal started the active short-term impulse wave 5 – which belongs to wave (C) from March.
Given the clear daily uptrend, EBAY can be expected to rise further toward the next round resistance level 80.00 (top of the previous impulse wave (i)).
#WaveAnalysis
#GBPJPY broke support level 155.00
• Likely to fall to support level 152.60
GBPJPY currency pair continues to fall after the pair broke the support level 155.00, intersecting with the 38.2% Fibonacci correction of the previous sharp upward impulse wave 3.
The breakout of the support level 155.00 accelerated the active short-term corrective wave 4.
Given the prevailing sterling bearishness, GBPJPY currency pair can be expected to fall further toward the next support level 152.60 (target for the completion of the active wave 4).
#GBPJPY broke support level 155.00
• Likely to fall to support level 152.60
GBPJPY currency pair continues to fall after the pair broke the support level 155.00, intersecting with the 38.2% Fibonacci correction of the previous sharp upward impulse wave 3.
The breakout of the support level 155.00 accelerated the active short-term corrective wave 4.
Given the prevailing sterling bearishness, GBPJPY currency pair can be expected to fall further toward the next support level 152.60 (target for the completion of the active wave 4).
Bitcoin remains sideways, barely moving out of the $60-63.5 range for the past two weeks.
Interestingly, the price surge to the highs of October 20 was later counterbalanced by a proportional dip, making the area near $61.50K the centre of equilibrium for bitcoin over the past four weeks.
A similar balancing act can be seen in the cryptocurrency Fear and Greed Index, which has been moving at levels just above 70 since early October, showing a mark of 73 in the last 24 hours, firmly in Greed territory.
Against the backdrop of Bitcoin stabilisation and cryptocurrency “greed”, interest in altcoins continues to rise. Cryptocurrency market capitalisation ex BTC has added 26% over the past month, although it has faced several sharp declines.
Among the week’s top coins, Binance Coin (+21.7% in 7 days), Solana (+21.7%) and Polkadot (+22.6%) shone. On the other hand, Dogecoin was depleted by the battle, with Dogecoin losing 9.5% and Shiba Inu losing 28%.
Interestingly, the price surge to the highs of October 20 was later counterbalanced by a proportional dip, making the area near $61.50K the centre of equilibrium for bitcoin over the past four weeks.
A similar balancing act can be seen in the cryptocurrency Fear and Greed Index, which has been moving at levels just above 70 since early October, showing a mark of 73 in the last 24 hours, firmly in Greed territory.
Against the backdrop of Bitcoin stabilisation and cryptocurrency “greed”, interest in altcoins continues to rise. Cryptocurrency market capitalisation ex BTC has added 26% over the past month, although it has faced several sharp declines.
Among the week’s top coins, Binance Coin (+21.7% in 7 days), Solana (+21.7%) and Polkadot (+22.6%) shone. On the other hand, Dogecoin was depleted by the battle, with Dogecoin losing 9.5% and Shiba Inu losing 28%.
Today's October employment data could strengthen the dollar bulls' position by highlighting wage and hiring growth acceleration. Indirect indicators point to a high chance of such a scenario.
The number of new jobless claims in the USA has fallen steadily since October. Americans were in no hurry to go to work with the removal of the benefits supplements in September. In October, however, this process became more evident. The number of initial claims as of October 30 was 269K against 364K in the final week of September. The number of continued claims fell by 706K to 2.105M, although there was little change for September.
The fall in the number of insured unemployed is setting up an NFP gain of over 700K, against average market expectations near 450k. A positive surprise in the data promises to be a significant fundamental buying factor for the US currency, which has recently played the leading role amongst lagging majors.
The number of new jobless claims in the USA has fallen steadily since October. Americans were in no hurry to go to work with the removal of the benefits supplements in September. In October, however, this process became more evident. The number of initial claims as of October 30 was 269K against 364K in the final week of September. The number of continued claims fell by 706K to 2.105M, although there was little change for September.
The fall in the number of insured unemployed is setting up an NFP gain of over 700K, against average market expectations near 450k. A positive surprise in the data promises to be a significant fundamental buying factor for the US currency, which has recently played the leading role amongst lagging majors.
Robust labour market data will allow the states to regain their status as the engine of economic growth for the developed economies, creating attractive conditions for further dollar strength. This trend has been rising since the start of the year.
If markedly different from expectations, the employment news has enough potential to push the dollar index to renew more than a year high. A strengthening of the DXY by just 0.2% to 94.56 would be a renewal of the highs since September 2020, and a move above 94.8 would return the Dollar to its highest levels since last July. We could then see a sharp increase in buying of the US currency and a more active upward trend, which could mirror the declines of June-July last year.
If markedly different from expectations, the employment news has enough potential to push the dollar index to renew more than a year high. A strengthening of the DXY by just 0.2% to 94.56 would be a renewal of the highs since September 2020, and a move above 94.8 would return the Dollar to its highest levels since last July. We could then see a sharp increase in buying of the US currency and a more active upward trend, which could mirror the declines of June-July last year.
#WaveAnalysis
#SP500 reversed from key support level 4550.00
• Likely to rise to resistance level 4800.00
S&P 500 index continues to rise steadily after the price reversed up from the key support level 4550.00 (former resistance from the start of September).
The upward reversal from the support level 4550.00 started the active impulse wave 3 of the higher level impulse wave (3).
Given the prevailing daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 4800.00 (target for the completion of the active impulse wave 3))
#SP500 reversed from key support level 4550.00
• Likely to rise to resistance level 4800.00
S&P 500 index continues to rise steadily after the price reversed up from the key support level 4550.00 (former resistance from the start of September).
The upward reversal from the support level 4550.00 started the active impulse wave 3 of the higher level impulse wave (3).
Given the prevailing daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 4800.00 (target for the completion of the active impulse wave 3))
#WaveAnalysis
#USDCHF reversed from support level 0.9100
• Likely to rise to resistance level 0.9200
USDCHF currency pair continues to rise after the price reversed up from the support level 0.9100, intersecting with the 61.8% Fibonacci correction of the previous upward impulse from June and the lower daily Bollinger band.
The upward reversal from the support level 0.9100 stopped the previous corrective wave (ii).
Given the strength of the support level 0.9100, USDCHF currency pair can be expected to rise further toward the next resistance level 0.9200 (top of the earlier wave (iv)).
#USDCHF reversed from support level 0.9100
• Likely to rise to resistance level 0.9200
USDCHF currency pair continues to rise after the price reversed up from the support level 0.9100, intersecting with the 61.8% Fibonacci correction of the previous upward impulse from June and the lower daily Bollinger band.
The upward reversal from the support level 0.9100 stopped the previous corrective wave (ii).
Given the strength of the support level 0.9100, USDCHF currency pair can be expected to rise further toward the next resistance level 0.9200 (top of the earlier wave (iv)).
#WaveAnalysis
#BAE Systems reversed from support area
• Likely to rise to resistance level 6.00
BAE Systems continues to rise steadily after the price reversed up from the support area set between the key support level 5.465 (monthly low from September), lower daily Bollinger band and the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 5.465 started the active intermediate impulse wave (5).
Given the clear daily uptrend, BAE Systems can be expected to rise further toward the next round resistance level 6.00 (top of the previous impulse wave (3))
#BAE Systems reversed from support area
• Likely to rise to resistance level 6.00
BAE Systems continues to rise steadily after the price reversed up from the support area set between the key support level 5.465 (monthly low from September), lower daily Bollinger band and the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 5.465 started the active intermediate impulse wave (5).
Given the clear daily uptrend, BAE Systems can be expected to rise further toward the next round resistance level 6.00 (top of the previous impulse wave (3))
Growth in equities goes to smaller firms - a bullish sign
A rally in equities is getting underway in the US markets, with the Nasdaq100 adding 12.7% from its local lows of October 13, when the latest rally started. During the same period, the S&P500 and Dow Jones gained 8.9% and 6.7%, respectively.
Besides Nasdaq's bull run, it is worth noting the Russell 2000 climbing out of its sideways channel since March of this year. The growth of this index, which includes small stock market companies, is a significant signal of the strength of the current rally. It has gained 4.8% versus 3% for the Nasdaq, 2% for the S&P500 and 1.1% for the Dow Jones in the last five days.
The Russell 2000 made new highs a year earlier, with a 50% rise from November to March. We may not see the same amplitude of growth this time, but the timing sets up a strong finish to the year for equities.
A rally in equities is getting underway in the US markets, with the Nasdaq100 adding 12.7% from its local lows of October 13, when the latest rally started. During the same period, the S&P500 and Dow Jones gained 8.9% and 6.7%, respectively.
Besides Nasdaq's bull run, it is worth noting the Russell 2000 climbing out of its sideways channel since March of this year. The growth of this index, which includes small stock market companies, is a significant signal of the strength of the current rally. It has gained 4.8% versus 3% for the Nasdaq, 2% for the S&P500 and 1.1% for the Dow Jones in the last five days.
The Russell 2000 made new highs a year earlier, with a 50% rise from November to March. We may not see the same amplitude of growth this time, but the timing sets up a strong finish to the year for equities.