What awaits the ruble: an equation with unknowns
The Russian ruble rolled back yesterday with a sharp movement from the iconic round levels. Such a reversal often signifies the end of the previous trend and the beginning of a new movement.
If you look at USDRUB only as a course chart, then the corrective momentum has the potential to return the pair to 75 from the current 78 over the next couple of weeks.
Seasonality, or rather the macroeconomic environment, is also turning towards the ruble. Exporters will have to convert last year's record earnings to pay taxes, some of which are paid once a year. The weakening of the ruble since the beginning of the year is a good opportunity to add interest to profits due to exchange rate differences.
This is all in addition to record oil prices for 8 years and the suspension of foreign currency purchases for the Finance Ministry.
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The Russian ruble rolled back yesterday with a sharp movement from the iconic round levels. Such a reversal often signifies the end of the previous trend and the beginning of a new movement.
If you look at USDRUB only as a course chart, then the corrective momentum has the potential to return the pair to 75 from the current 78 over the next couple of weeks.
Seasonality, or rather the macroeconomic environment, is also turning towards the ruble. Exporters will have to convert last year's record earnings to pay taxes, some of which are paid once a year. The weakening of the ruble since the beginning of the year is a good opportunity to add interest to profits due to exchange rate differences.
This is all in addition to record oil prices for 8 years and the suspension of foreign currency purchases for the Finance Ministry.
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Crypto weekly review
Bitcoin gained 7.3% over the past week, ending last week near $37,700. Ethereum added 7%, while other leading altcoins in the top 10 showed mixed dynamics: from a decline of 25% over the week (Terra) to a rise of 4.6% (Binance Coin). Terra's collapse is linked to the scandal surrounding the Wonderland DeFi protocol.
The total capitalisation of the crypto market, according to CoinGecko, rose 1.7% to $1.79 trillion for the week.
The week didn't start encouragingly for bitcoin. The first cryptocurrency updated six-month lows below $33,000, but BTC sharply redeemed the short-term fall amid an equally sharp rebound in US stock indices.
The US stock market interrupted last week's decline and rose for the first time after three weeks of decline.
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Bitcoin gained 7.3% over the past week, ending last week near $37,700. Ethereum added 7%, while other leading altcoins in the top 10 showed mixed dynamics: from a decline of 25% over the week (Terra) to a rise of 4.6% (Binance Coin). Terra's collapse is linked to the scandal surrounding the Wonderland DeFi protocol.
The total capitalisation of the crypto market, according to CoinGecko, rose 1.7% to $1.79 trillion for the week.
The week didn't start encouragingly for bitcoin. The first cryptocurrency updated six-month lows below $33,000, but BTC sharply redeemed the short-term fall amid an equally sharp rebound in US stock indices.
The US stock market interrupted last week's decline and rose for the first time after three weeks of decline.
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❤1
Brent consolidates around $85-105
Oil has added more than 14% this month, and Brent spot contracts are trading near $90 a barrel.
Steady strengthening has been underway for the past two months after it became clear that the widespread Omicron strain is not leading to new travel restrictions.
The November correction in oil served the bulls well by unloading the market from an overhang of bullish positions. We now see a resistance breakout, which has reversed oil twice before, in 2018 and 2021.
On the fundamental analysis side, we also see a short-term bullish picture for oil. The Americans continue to ramp up drilling activity, bringing the number of working rigs to 610 last week. However, this is still not enough to significantly accelerate production.
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Oil has added more than 14% this month, and Brent spot contracts are trading near $90 a barrel.
Steady strengthening has been underway for the past two months after it became clear that the widespread Omicron strain is not leading to new travel restrictions.
The November correction in oil served the bulls well by unloading the market from an overhang of bullish positions. We now see a resistance breakout, which has reversed oil twice before, in 2018 and 2021.
On the fundamental analysis side, we also see a short-term bullish picture for oil. The Americans continue to ramp up drilling activity, bringing the number of working rigs to 610 last week. However, this is still not enough to significantly accelerate production.
📣Trade responsibly at fxpro.com 👈🏻
Major stock earnings to watch this week!🔝
Coming up this week, amongst several others, are the quarterly reports for some of the biggest companies in the world right now by market cap: Meta Platforms (Facebook), Amazon.com, Alphabet (Google), Alibaba Group Holding and Exxon Mobil Corp.
🔜Coming up first before the US market opens today is Alibaba
📅Check out the full calendar of upcoming earning releases and company dividends on our new and improved Earnings calendar to see the dates and any changes to margin requirements:
https://www.fxpro.com/trading-tools/earnings-calendar
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Coming up this week, amongst several others, are the quarterly reports for some of the biggest companies in the world right now by market cap: Meta Platforms (Facebook), Amazon.com, Alphabet (Google), Alibaba Group Holding and Exxon Mobil Corp.
🔜Coming up first before the US market opens today is Alibaba
📅Check out the full calendar of upcoming earning releases and company dividends on our new and improved Earnings calendar to see the dates and any changes to margin requirements:
https://www.fxpro.com/trading-tools/earnings-calendar
⚠️Be prepared for higher volatility!
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German inflation surprise good for EUR
Today we have seen the first slowdown in annual inflation in seven months, but the data is better than expected.
In January, consumer prices rose 0.4%, up 4.9% on the same month a year earlier. Analysts, on average, were expecting prices to fall by 0.2% and slow inflation to 4.3% YoY.
The harmonized price index (adjusted for tax changes) shows an even more significant gap between expectations and reality. The index rose by 0.9% (a fall of 0.4% was expected).
The figures clearly show that inflation has penetrated deeper into the economy and is increasingly taking on the features of permanent price increases.
Sustained inflation raises the expectation that the ECB will also tighten its rhetoric and proceed with policy tightening more quickly than previously promised.
The markets have priced in one rate hike of 0.25% by December. But with the Fed as an example, we can see how quickly things can change. These changes should be positive for the euro.
Today we have seen the first slowdown in annual inflation in seven months, but the data is better than expected.
In January, consumer prices rose 0.4%, up 4.9% on the same month a year earlier. Analysts, on average, were expecting prices to fall by 0.2% and slow inflation to 4.3% YoY.
The harmonized price index (adjusted for tax changes) shows an even more significant gap between expectations and reality. The index rose by 0.9% (a fall of 0.4% was expected).
The figures clearly show that inflation has penetrated deeper into the economy and is increasingly taking on the features of permanent price increases.
Sustained inflation raises the expectation that the ECB will also tighten its rhetoric and proceed with policy tightening more quickly than previously promised.
The markets have priced in one rate hike of 0.25% by December. But with the Fed as an example, we can see how quickly things can change. These changes should be positive for the euro.
#WaveAnalysis #BABA
Alibaba reversed from support zone
• Likely to rise to resistance level 135.90
Alibaba recently reversed up with two Dojis from the support zone lying between the key support level 116.00 (which has been reversing the pair from the start of December) and the lower daily Bollinger Band.
The upward reversal from this support zone stopped the earlier minor impulse wave 3.
Given the strength of the aforementioned support zone – Alibaba can be expected to rise further toward the next resistance level 135.90 (which stopped the previous waves (2) and 2).
Alibaba reversed from support zone
• Likely to rise to resistance level 135.90
Alibaba recently reversed up with two Dojis from the support zone lying between the key support level 116.00 (which has been reversing the pair from the start of December) and the lower daily Bollinger Band.
The upward reversal from this support zone stopped the earlier minor impulse wave 3.
Given the strength of the aforementioned support zone – Alibaba can be expected to rise further toward the next resistance level 135.90 (which stopped the previous waves (2) and 2).
#WaveAnalysis
#Gold reversed from support zone
• Likely to rise to resistance level 1810.00
Gold recently reversed up from the support zone lying between the key support level 1780.00 (which reversed the pair at the start of January) and the lower daily Bollinger Band.
The upward reversal from this support zone stopped the earlier minor corrective wave (ii).
Given the strength of the aforementioned support zone – Gold can be expected to rise further toward the next resistance level 1810.00 (former support from the middle of January).
#Gold reversed from support zone
• Likely to rise to resistance level 1810.00
Gold recently reversed up from the support zone lying between the key support level 1780.00 (which reversed the pair at the start of January) and the lower daily Bollinger Band.
The upward reversal from this support zone stopped the earlier minor corrective wave (ii).
Given the strength of the aforementioned support zone – Gold can be expected to rise further toward the next resistance level 1810.00 (former support from the middle of January).
What will happen to bitcoin in February?
Bitcoin lost about 17% in January, declining for the third month in a row. Meanwhile, February is seen as a more successful month for the first cryptocurrency in historical data.
Over the past 11 years, BTC has strengthened on eight occasions and only declined on three. The average gain over the eight years was 31%. If bitcoin shows a similar rise in February, it will end the month just above the $50,000 round mark.
On a historical basis, bitcoin has rarely declined for more than three months in a row. There have only been three such instances: in 2011, 2014 and during the crypto-winter in 2018. All this increases the chances of a BTC rebound in February.
On the chart, bitcoin remains within a down channel, but thanks to the rebound, it has made it to the upper end of the corridor over the past week. A consolidation above 39,000 would be the first signal of a trend break, while the ability to develop a rise above 40,000 could instill even more confidence in buyers.
Bitcoin lost about 17% in January, declining for the third month in a row. Meanwhile, February is seen as a more successful month for the first cryptocurrency in historical data.
Over the past 11 years, BTC has strengthened on eight occasions and only declined on three. The average gain over the eight years was 31%. If bitcoin shows a similar rise in February, it will end the month just above the $50,000 round mark.
On a historical basis, bitcoin has rarely declined for more than three months in a row. There have only been three such instances: in 2011, 2014 and during the crypto-winter in 2018. All this increases the chances of a BTC rebound in February.
On the chart, bitcoin remains within a down channel, but thanks to the rebound, it has made it to the upper end of the corridor over the past week. A consolidation above 39,000 would be the first signal of a trend break, while the ability to develop a rise above 40,000 could instill even more confidence in buyers.
New support level in gold
The latest FOMC comments have seen the price drop more than $70, from around $1850 to $1780. It looks like the latest level is a new steppingstone, which has withstood the bears' attack since the second half of December.
Prior to that, $1680 in March 2021, $1725 in August, $1760 in November and December were the impassable support levels. Buyers have activated on the declines towards $1780 since the last days of last year, and the return to that level late last week was also accompanied by increased buying.
At the same time, it is too early to talk about signs of a rally, and it is better to wait for local technical signals. One of those signals might be a fixation above $1805, through which the 200-day moving average passes.
Even more reliable is to wait for the 50-day (now at $1801) to return above the 200-day, which will give a "golden cross" signal.
The latest FOMC comments have seen the price drop more than $70, from around $1850 to $1780. It looks like the latest level is a new steppingstone, which has withstood the bears' attack since the second half of December.
Prior to that, $1680 in March 2021, $1725 in August, $1760 in November and December were the impassable support levels. Buyers have activated on the declines towards $1780 since the last days of last year, and the return to that level late last week was also accompanied by increased buying.
At the same time, it is too early to talk about signs of a rally, and it is better to wait for local technical signals. One of those signals might be a fixation above $1805, through which the 200-day moving average passes.
Even more reliable is to wait for the 50-day (now at $1801) to return above the 200-day, which will give a "golden cross" signal.
📅Major Market News to watch this February!
Keep an eye on the upcoming market events this month, which may significantly affect the markets. (🕒All times are in GMT)
✅3rd | 12:00 | Bank of England Monetary Policy Decision
✅3rd | 12:45 | ECB Monetary Policy Decision
✅4th | 13:30 | US Nonfarm Payrolls
✅10th | 13:30 | US Consumer Price Index
✅16th | 19:00 | FOMC Meeting Minutes
✅23rd | 01:00 | RBNZ Monetary Policy Decision
Stay up to date with market news in our Economic Calendar available on our website.
👉Register: https://bit.ly/3n8rYtz & Trade thousands #CFDs responsibly with FxPro.com
Keep an eye on the upcoming market events this month, which may significantly affect the markets. (🕒All times are in GMT)
✅3rd | 12:00 | Bank of England Monetary Policy Decision
✅3rd | 12:45 | ECB Monetary Policy Decision
✅4th | 13:30 | US Nonfarm Payrolls
✅10th | 13:30 | US Consumer Price Index
✅16th | 19:00 | FOMC Meeting Minutes
✅23rd | 01:00 | RBNZ Monetary Policy Decision
Stay up to date with market news in our Economic Calendar available on our website.
👉Register: https://bit.ly/3n8rYtz & Trade thousands #CFDs responsibly with FxPro.com
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Bitcoin testing downtrend resistance
Bitcoin rose 0.6% on Tuesday, ending the day around $38,700. Ethereum added 3.7%, while other leading altcoins in the top 10 are growing: from 0.5% (Binance Coin) to 12.8% (Solana). The total capitalisation of the crypto market, according to CoinGecko, rose 1.5% to $1.86 trillion overnight.
Over the last eight days, BTC gained almost 20%, recouping more than half of the failure of the second half of January, and buyers decided not to take risks.
Ahead is solid psychological resistance at the circular $40,000 level, which supported the first half of January.
Technically, Bitcoin has stalled its gains as it approaches the upper boundary of the descending channel. Traders are waiting for new signals about whether the recovery in risk demand will continue or whether the latest rebound will soon be choked off. The result of this struggle will determine whether we will see a break from the downtrend or whether the downtrend will continue again.
Bitcoin rose 0.6% on Tuesday, ending the day around $38,700. Ethereum added 3.7%, while other leading altcoins in the top 10 are growing: from 0.5% (Binance Coin) to 12.8% (Solana). The total capitalisation of the crypto market, according to CoinGecko, rose 1.5% to $1.86 trillion overnight.
Over the last eight days, BTC gained almost 20%, recouping more than half of the failure of the second half of January, and buyers decided not to take risks.
Ahead is solid psychological resistance at the circular $40,000 level, which supported the first half of January.
Technically, Bitcoin has stalled its gains as it approaches the upper boundary of the descending channel. Traders are waiting for new signals about whether the recovery in risk demand will continue or whether the latest rebound will soon be choked off. The result of this struggle will determine whether we will see a break from the downtrend or whether the downtrend will continue again.
#WaveAnalysis
#AUDUSD reversed from support zone
• Likely to rise to resistance level 0.7150
AUDUSD currency pair recently reversed up with the daily Bullish Engulfing the support zone lying between the round support level 0.7000 (previous monthly low from the start of December) and the lower daily Bollinger Band.
The upward reversal from this support are stopped the earlier minor impulse wave 3 of the impulse wave (3) from
Given the strength of the aforementioned support zone – AUDUSD can be expected to rise further toward the next resistance level 0.7150 (former support from the start of January).
#AUDUSD reversed from support zone
• Likely to rise to resistance level 0.7150
AUDUSD currency pair recently reversed up with the daily Bullish Engulfing the support zone lying between the round support level 0.7000 (previous monthly low from the start of December) and the lower daily Bollinger Band.
The upward reversal from this support are stopped the earlier minor impulse wave 3 of the impulse wave (3) from
Given the strength of the aforementioned support zone – AUDUSD can be expected to rise further toward the next resistance level 0.7150 (former support from the start of January).
#WaveAnalysis #BA
• Boeing reversed from powerful support level 186.70
• Likely to rise to resistance level 210.00
Boeing recently reversed up with the daily Morning Star from the support zone set between the powerful support level 186.70 (which has been reversing the price from November) and the lower daily Bollinger Band.
The upward reversal from this support area started the active minor corrective wave (ii).
Boeing can be expected to rise further toward the next resistance level 210.00 (target for the completion of the active corrective wave (ii).).
• Boeing reversed from powerful support level 186.70
• Likely to rise to resistance level 210.00
Boeing recently reversed up with the daily Morning Star from the support zone set between the powerful support level 186.70 (which has been reversing the price from November) and the lower daily Bollinger Band.
The upward reversal from this support area started the active minor corrective wave (ii).
Boeing can be expected to rise further toward the next resistance level 210.00 (target for the completion of the active corrective wave (ii).).
US manufacturing ISM slowed amid more hawkish Fed
The US manufacturing ISM, an essential indicator for America's business cycle, recorded a significant slowdown in January but managed to beat expectations. It had declined from 58.7 to 57.6 against expectations of 57.4.
The manufacturing ISM has slipped in the last two months from near 60, where it has held for most of last year, which coincides with the start of the Fed's QE rollback. It will be interesting to see if the rate hike that the markets and businesses expect as early as March leads to a short-term downturn in business activity.
Perhaps the Fed is deliberately seeking to cool the economy to slow inflation. But the interim results are highly questionable. The price component jumped from 68.2 to 76.1 last month. Falling manufacturing activity (from 59.4 to 57.8) and new orders (from 61.0 to 57.9) drove the index down.
The ISM release might be the first wake-up call that the process of suppressing inflation will suppress the economy first.
The US manufacturing ISM, an essential indicator for America's business cycle, recorded a significant slowdown in January but managed to beat expectations. It had declined from 58.7 to 57.6 against expectations of 57.4.
The manufacturing ISM has slipped in the last two months from near 60, where it has held for most of last year, which coincides with the start of the Fed's QE rollback. It will be interesting to see if the rate hike that the markets and businesses expect as early as March leads to a short-term downturn in business activity.
Perhaps the Fed is deliberately seeking to cool the economy to slow inflation. But the interim results are highly questionable. The price component jumped from 68.2 to 76.1 last month. Falling manufacturing activity (from 59.4 to 57.8) and new orders (from 61.0 to 57.9) drove the index down.
The ISM release might be the first wake-up call that the process of suppressing inflation will suppress the economy first.
CPI above expectations pushing EUR higher
In Europe, inflation accelerates, contrary to forecasts that the peak has passed. First estimates just released noted an acceleration in CPI from 5.0% to 5.1% y/y against average estimates of a slowdown to 4.4%.
An inflation rate creeping above 5% might wake the ECB from its slumber and put a suppression of inflation on its agenda, following such peers as the Fed and the Bank of England.
We must say that the ECB has enormous potential for advancement on this issue. Right now, the markets are laying down a slight chance of one rate hike before the end of the year, while the regulator's representatives so far remain in the position that there will be no hikes this year.
On the hawkish stance of the Fed, EURUSD fell to 1.1122 at the end of January. However, the pair moved above 1.1300 on German and Eurozone inflation data.
With the higher inflation, we might hear more about that tomorrow after the next meeting, and then the euro recovery could be on firmer footing.
In Europe, inflation accelerates, contrary to forecasts that the peak has passed. First estimates just released noted an acceleration in CPI from 5.0% to 5.1% y/y against average estimates of a slowdown to 4.4%.
An inflation rate creeping above 5% might wake the ECB from its slumber and put a suppression of inflation on its agenda, following such peers as the Fed and the Bank of England.
We must say that the ECB has enormous potential for advancement on this issue. Right now, the markets are laying down a slight chance of one rate hike before the end of the year, while the regulator's representatives so far remain in the position that there will be no hikes this year.
On the hawkish stance of the Fed, EURUSD fell to 1.1122 at the end of January. However, the pair moved above 1.1300 on German and Eurozone inflation data.
With the higher inflation, we might hear more about that tomorrow after the next meeting, and then the euro recovery could be on firmer footing.
According to the latest ADP data, employment in the USA fell by 301K in January. This is sharply weaker than the expected gain of 185K after a rise of 776K in December.
The shocking dip is caused by both the sharply deteriorating coronavirus situation and evidence of how hard it is for small businesses to gain momentum. Almost half of all job losses came from small companies. From another perspective, the leisure and hospitality sector lost more than 150K jobs.
This is alarming data before Friday's official statistics, where early forecasts had suggested a 165K increase in employment. If the official report is weak, we should expect the Fed to soften its stance and revise the market's expectations for the rate.
The markets are almost 100% betting on a 125-point Fed rate hike in 2022. A softening of these expectations could trigger a correction pullback in the dollar.
The shocking dip is caused by both the sharply deteriorating coronavirus situation and evidence of how hard it is for small businesses to gain momentum. Almost half of all job losses came from small companies. From another perspective, the leisure and hospitality sector lost more than 150K jobs.
This is alarming data before Friday's official statistics, where early forecasts had suggested a 165K increase in employment. If the official report is weak, we should expect the Fed to soften its stance and revise the market's expectations for the rate.
The markets are almost 100% betting on a 125-point Fed rate hike in 2022. A softening of these expectations could trigger a correction pullback in the dollar.
Texas snowstorm stops Bitcoin's rebound
The state's association of miners, the Texas Blockchain Council, decided to de-energise mining farms on Wednesday.
Texas is home to the main bitcoin network computing capacity in the US. The states themselves are the world's number one miner of the significant digital asset (around 49% of hash rate).
Bitcoin again proved that it remains in a downward channel, as the recovery bounce lost strength at the upper end of the range. In theory, a bearish reversal of bitcoin opens up the possibility of updating the January lows with potential targets near 30K.
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The state's association of miners, the Texas Blockchain Council, decided to de-energise mining farms on Wednesday.
Texas is home to the main bitcoin network computing capacity in the US. The states themselves are the world's number one miner of the significant digital asset (around 49% of hash rate).
Bitcoin again proved that it remains in a downward channel, as the recovery bounce lost strength at the upper end of the range. In theory, a bearish reversal of bitcoin opens up the possibility of updating the January lows with potential targets near 30K.
📣Trade responsibly at fxpro.com 👈🏻
CB and Bank of England meetings will highlight policy contrast
The Bank of England and the ECB will announce their monetary policy decisions today. They could reinforce the contrast in policy between these central banks and trigger a significant reassessment in the FX market.
The ECB is expected to confirm its plans to halt its emergency balance sheet buying programme in March. But it will keep the refinancing rate at zero and continue with 'regular' balance sheet purchases.
The ECB is likely to try to save face after yesterday's new inflation record and show more hawkish rhetoric than we are used to. Even so, the eurozone will fall seriously behind the US and UK in its fight against inflation, which can dent the euro.
📣Trade responsibly at fxpro.com 👈🏻
The Bank of England and the ECB will announce their monetary policy decisions today. They could reinforce the contrast in policy between these central banks and trigger a significant reassessment in the FX market.
The ECB is expected to confirm its plans to halt its emergency balance sheet buying programme in March. But it will keep the refinancing rate at zero and continue with 'regular' balance sheet purchases.
The ECB is likely to try to save face after yesterday's new inflation record and show more hawkish rhetoric than we are used to. Even so, the eurozone will fall seriously behind the US and UK in its fight against inflation, which can dent the euro.
📣Trade responsibly at fxpro.com 👈🏻
#WaveAnalysis #NTG
• Natural gas broke resistance zone
• Likely to rise to resistance level 5.50
Natural gas recently broke the resistance zone lying between the key resistance level 4.500 (top of the previous impulse wave 1) and the 50% Fibonacci correction of the previous sharp downward impulse from November
The breakout of this resistance zone accelerated the active minor impulse wave 3.
Natural gas can be expected to rise further toward the next resistance level 5.50 (previous strong resistance from November and the target for the completion of the active impulse wave 3.).
• Natural gas broke resistance zone
• Likely to rise to resistance level 5.50
Natural gas recently broke the resistance zone lying between the key resistance level 4.500 (top of the previous impulse wave 1) and the 50% Fibonacci correction of the previous sharp downward impulse from November
The breakout of this resistance zone accelerated the active minor impulse wave 3.
Natural gas can be expected to rise further toward the next resistance level 5.50 (previous strong resistance from November and the target for the completion of the active impulse wave 3.).
#WaveAnalysis #DJI
• Dow Jones reversed from support zone
• Likely to rise to resistance level 36400
Dow Jones index recently reversed up with the weekly Hammer from the support zone lying between the key support level 33425.00 (which has been reversing the index from the start of 2021) and the lower weekly Bollinger Band.
This support zone was further strengthened by the 50% Fibonacci correction of the previous sharp upward impulse from the start of last year.
Given the clear multi-year uptrend – Dow Jones index can be expected to rise further toward the next resistance level 36400 (which stopped the earlier waves 1 and (b)).
• Dow Jones reversed from support zone
• Likely to rise to resistance level 36400
Dow Jones index recently reversed up with the weekly Hammer from the support zone lying between the key support level 33425.00 (which has been reversing the index from the start of 2021) and the lower weekly Bollinger Band.
This support zone was further strengthened by the 50% Fibonacci correction of the previous sharp upward impulse from the start of last year.
Given the clear multi-year uptrend – Dow Jones index can be expected to rise further toward the next resistance level 36400 (which stopped the earlier waves 1 and (b)).