US Durable goods orders market strong business demand
US durable goods orders added 0.4% in April after rising 0.6% a month earlier, slightly weaker than the 0.6% increase expected. Excluding transportation, orders rose by 0.3% in April, following a 1.1% increase a month earlier. This series shows steady growth, easing fears of an impending US recession.
Companies and people tend to avoid making expensive purchases in anticipation of tough times ahead, so durable goods orders are considered one of the leading indicators of the economic cycle.
This indicator points to the resilience of business demand, which is outperforming inflation with a 12.1% y/y against 8.3% y/y inflation. Such data is supportive of the Dollar reducing speculation that the Fed will cause a recession soon with its rate hikes.
US durable goods orders added 0.4% in April after rising 0.6% a month earlier, slightly weaker than the 0.6% increase expected. Excluding transportation, orders rose by 0.3% in April, following a 1.1% increase a month earlier. This series shows steady growth, easing fears of an impending US recession.
Companies and people tend to avoid making expensive purchases in anticipation of tough times ahead, so durable goods orders are considered one of the leading indicators of the economic cycle.
This indicator points to the resilience of business demand, which is outperforming inflation with a 12.1% y/y against 8.3% y/y inflation. Such data is supportive of the Dollar reducing speculation that the Fed will cause a recession soon with its rate hikes.
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Snap and the entire IT sector: from favourites’ to market pariah
On Tuesday, Snap shares lost 43% of their value, bouncing back to $13.5, their lowest level since April 2020 and losing more than 80% of their peak valuation last September.
The stock looks extremely oversold at the moment. Given the business’s relatively stable performance and that the stock’s major blow has come from a deterioration in the near-term outlook, investors are tempted to rush to ‘buy the bottom’.
However, practice suggests that this may not be a good idea. A sharp fall of more than 15% in less than a day is a sign of a breakdown in investor sentiment. Giants such as Amazon, Twitter, Facebook, Netflix, and Roblox, losing on weak reporting since the start of the year, remain under pressure from sellers to date, significantly increasing their losses.
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On Tuesday, Snap shares lost 43% of their value, bouncing back to $13.5, their lowest level since April 2020 and losing more than 80% of their peak valuation last September.
The stock looks extremely oversold at the moment. Given the business’s relatively stable performance and that the stock’s major blow has come from a deterioration in the near-term outlook, investors are tempted to rush to ‘buy the bottom’.
However, practice suggests that this may not be a good idea. A sharp fall of more than 15% in less than a day is a sign of a breakdown in investor sentiment. Giants such as Amazon, Twitter, Facebook, Netflix, and Roblox, losing on weak reporting since the start of the year, remain under pressure from sellers to date, significantly increasing their losses.
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#WaveAnalysis
#EURGBP reversed from resistance level 0.8590
• Likely to fall to support level 0.8450
EURGBP currency pair recently reversed down from the key resistance level 0.8590 (which has been reversing the price from last November) strengthened by the upper daily Bollinger Band.
The downward reversal from the resistance level 0.8590 is currently forming the daily reversal pattern Bearish Engulfing.
Given the strength of the resistance level 0.8590, EURGBP can be expected to fall further toward the next support level 0.8450.
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#EURGBP reversed from resistance level 0.8590
• Likely to fall to support level 0.8450
EURGBP currency pair recently reversed down from the key resistance level 0.8590 (which has been reversing the price from last November) strengthened by the upper daily Bollinger Band.
The downward reversal from the resistance level 0.8590 is currently forming the daily reversal pattern Bearish Engulfing.
Given the strength of the resistance level 0.8590, EURGBP can be expected to fall further toward the next support level 0.8450.
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#WaveAnalysis
#EURCAD continues daily downtrend
• Likely to fall to support level 1.3600
EURCAD recently reversed down from the pivotal resistance level 1.3755 (which reversed the pair multiple times from April).
The resistance level 1.3755 is further strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci retracement of the previous downward impulse from March.
Given the prevailing daily downtrend, EURCAD can be expected to fall further toward the next support level 1.3600.
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#EURCAD continues daily downtrend
• Likely to fall to support level 1.3600
EURCAD recently reversed down from the pivotal resistance level 1.3755 (which reversed the pair multiple times from April).
The resistance level 1.3755 is further strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci retracement of the previous downward impulse from March.
Given the prevailing daily downtrend, EURCAD can be expected to fall further toward the next support level 1.3600.
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Bitcoin is stable, but Ether’s performance reflects the pressure
Bitcoin ignored the positive dynamics of US stock indices on Wednesday, further reducing the amplitude of its fluctuations. The first cryptocurrency has been moving in a $29.5-30.0K range since the start of active trading in New York. We caution that this reduction in volatility risks turning into an explosion in the near term, potentially setting off momentum for a few days or weeks.
A formal break of consolidation would be considered a consolidation beyond the previous local extremes, which are located at $30.2K and $29.3K. Going beyond those limits in a sharp move promises to trigger a wave of liquidation of positions that the bulls and bears have brought closer to the current price due to low volatility and bored speculators in recent days.
Outside of Bitcoin, the situation is more worrying.
Bitcoin ignored the positive dynamics of US stock indices on Wednesday, further reducing the amplitude of its fluctuations. The first cryptocurrency has been moving in a $29.5-30.0K range since the start of active trading in New York. We caution that this reduction in volatility risks turning into an explosion in the near term, potentially setting off momentum for a few days or weeks.
A formal break of consolidation would be considered a consolidation beyond the previous local extremes, which are located at $30.2K and $29.3K. Going beyond those limits in a sharp move promises to trigger a wave of liquidation of positions that the bulls and bears have brought closer to the current price due to low volatility and bored speculators in recent days.
Outside of Bitcoin, the situation is more worrying.
The total capitalisation of the crypto market, according to CoinMarketCap, has fallen 1.6% in the last 24 hours to $1.25 trillion. Bitcoin’s dominance index is 0.4 points to 45.1%.
Ethereum lost 3%, dropping to 1915, the lower end of a steady trading range for the past two weeks. The daily candlestick chart clearly shows a sequence of increasingly lower local highs. This dynamic is a sure sign of a sustained sell-off in crypto, temporarily covered by Bitcoin’s stability.
Bitcoin’s stability against such an external backdrop may be nothing more than a temporary consolidation of capital in the most liquid cryptocurrency and is supported by improved sentiment in stocks.
The cryptocurrency Fear and Greed Index was up 1 point to 12 by Thursday and remains in “extreme fear”.
Ethereum lost 3%, dropping to 1915, the lower end of a steady trading range for the past two weeks. The daily candlestick chart clearly shows a sequence of increasingly lower local highs. This dynamic is a sure sign of a sustained sell-off in crypto, temporarily covered by Bitcoin’s stability.
Bitcoin’s stability against such an external backdrop may be nothing more than a temporary consolidation of capital in the most liquid cryptocurrency and is supported by improved sentiment in stocks.
The cryptocurrency Fear and Greed Index was up 1 point to 12 by Thursday and remains in “extreme fear”.
Yuan could fall below 7.10 per Dollar in the next two months
The yuan has been losing 1.6% in the past two days amid fears of an economic slowdown. This is a solid move compared to how unexpected the bad news was. In our opinion, the appreciation of the last two days should be seen as a continuation of the trend that started at the beginning of April.
At that time, the renminbi definitively went against the current and succumbed to the Dollar’s general appreciation, and this weakening accelerated sharply at the end of April. The renminbi recovered some losses from May 12th to 24th, but it was just a recharge for yuan bears.
The yuan has been losing 1.6% in the past two days amid fears of an economic slowdown. This is a solid move compared to how unexpected the bad news was. In our opinion, the appreciation of the last two days should be seen as a continuation of the trend that started at the beginning of April.
At that time, the renminbi definitively went against the current and succumbed to the Dollar’s general appreciation, and this weakening accelerated sharply at the end of April. The renminbi recovered some losses from May 12th to 24th, but it was just a recharge for yuan bears.
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The depth of the retreat in the USDCNH coincided with a classic Fibonacci retracement of 61.8% of the initial move.
China’s slowdown leads to a loosening of monetary policy, and Xi Jinping’s worrying comments set up markets that could see more economic measures in the coming days or weeks.
This is especially important for the Chinese leader as 2022 is an election year, and the authorities will therefore try to create as favourable a macroeconomic backdrop as possible.
A weaker CNY could give the Chinese economy a helping hand to boost exports. In addition, the fact that monetary policy in China and the US is heading in opposite directions leads to a weaker renminbi.
According to the psychoanalysis, the USDCNH could now target levels around 7.15 - the highs for 2019 and 2020 - where the 161.8% level of the move mentioned above also passes and where the renminbi could reach mid-July.
China’s slowdown leads to a loosening of monetary policy, and Xi Jinping’s worrying comments set up markets that could see more economic measures in the coming days or weeks.
This is especially important for the Chinese leader as 2022 is an election year, and the authorities will therefore try to create as favourable a macroeconomic backdrop as possible.
A weaker CNY could give the Chinese economy a helping hand to boost exports. In addition, the fact that monetary policy in China and the US is heading in opposite directions leads to a weaker renminbi.
According to the psychoanalysis, the USDCNH could now target levels around 7.15 - the highs for 2019 and 2020 - where the 161.8% level of the move mentioned above also passes and where the renminbi could reach mid-July.
US GDP contracted more than expected, but no recession is in sight
A revised estimate for the first quarter showed that US GDP contracted at an annual rate of 1.5% (previously reported at -1.4% and expected -1.3%). A major factor in the decline was a jump in net imports, a situation that the sharply appreciating Dollar in recent weeks can mitigate.
However, it is worth noting that final consumer demand has continued its recovery, indicating a solid foundation in the economy. At least for the time being.
Strong domestic consumption is a positive signal for the Dollar. It allows the Fed to continue its fight against inflation and leads interest rates to be higher than in Europe.
US GDP has a high chance of returning to growth in the current quarter by avoiding a formal recession (two consecutive quarters of contraction).
On the other hand, today’s data is hardly ideal for the stock market as it suggests better retail conditions than risky growth sectors.
A revised estimate for the first quarter showed that US GDP contracted at an annual rate of 1.5% (previously reported at -1.4% and expected -1.3%). A major factor in the decline was a jump in net imports, a situation that the sharply appreciating Dollar in recent weeks can mitigate.
However, it is worth noting that final consumer demand has continued its recovery, indicating a solid foundation in the economy. At least for the time being.
Strong domestic consumption is a positive signal for the Dollar. It allows the Fed to continue its fight against inflation and leads interest rates to be higher than in Europe.
US GDP has a high chance of returning to growth in the current quarter by avoiding a formal recession (two consecutive quarters of contraction).
On the other hand, today’s data is hardly ideal for the stock market as it suggests better retail conditions than risky growth sectors.
#WaveAnalysis #NTG
• Natural gas broke round resistance level 9.0000
• Likely to rise to resistance level 9.65
Natural gas recently broke above the round resistance level 9.0000 (which stopped the earlier minor impulse wave 3 at the start of May, as can be seen below).
The breakout of the resistance level 9.0000 continues the active short-term impulse wave 5 of the multi-month upward impulse wave (C) from December.
Given the strong daily uptrend, Natural gas can be expected to rise further toward the next resistance level 9.65 (target for the end of the active sub-impulse (iii)).
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• Natural gas broke round resistance level 9.0000
• Likely to rise to resistance level 9.65
Natural gas recently broke above the round resistance level 9.0000 (which stopped the earlier minor impulse wave 3 at the start of May, as can be seen below).
The breakout of the resistance level 9.0000 continues the active short-term impulse wave 5 of the multi-month upward impulse wave (C) from December.
Given the strong daily uptrend, Natural gas can be expected to rise further toward the next resistance level 9.65 (target for the end of the active sub-impulse (iii)).
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#WaveAnalysis #SPX
• S&P 500 rising inside wave (iv)
• Likely to reach resistance level 4100.00
S&P 500 index earlier reversed up from the key support level 3900.00, standing near the lower daily Bollinger Band and the support trendline of the daily down channel from January.
The upward reversal from the support level 3900.00 started the active short-term correction (iv).
S&P 500 index can be expected to rise further toward the next resistance level 4100.00 (top of the earlier minor correction (iv)).
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• S&P 500 rising inside wave (iv)
• Likely to reach resistance level 4100.00
S&P 500 index earlier reversed up from the key support level 3900.00, standing near the lower daily Bollinger Band and the support trendline of the daily down channel from January.
The upward reversal from the support level 3900.00 started the active short-term correction (iv).
S&P 500 index can be expected to rise further toward the next resistance level 4100.00 (top of the earlier minor correction (iv)).
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Cryptocurrencies went down out of consolidation
On Thursday, Bitcoin was down 1.1%, ending the day at around $29.5K, despite a buoyant stock market performance. Selling resumed on Friday morning, pushing the price back to $28.9K.
The observed divergence is bucking the trend of close correlation that has developed over the last few days.
Yesterday’s sharp 5.5% dip in BTCUSD within hours to $28K was much less of a move than expected, as there was more than a 3% rise in the Nasdaq in the background. As a result, bitcoin was sharply recovered due to increased risk appetite.
As a result, on the intraday charts, the converging triangle has turned into a channel with more frequent tests of the lower boundary near $29K. In our view, the previous consolidation might be just another phase of consolidation, which, when completed, would quickly take the price to the next lower level, as it did from April to May.
On Thursday, Bitcoin was down 1.1%, ending the day at around $29.5K, despite a buoyant stock market performance. Selling resumed on Friday morning, pushing the price back to $28.9K.
The observed divergence is bucking the trend of close correlation that has developed over the last few days.
Yesterday’s sharp 5.5% dip in BTCUSD within hours to $28K was much less of a move than expected, as there was more than a 3% rise in the Nasdaq in the background. As a result, bitcoin was sharply recovered due to increased risk appetite.
As a result, on the intraday charts, the converging triangle has turned into a channel with more frequent tests of the lower boundary near $29K. In our view, the previous consolidation might be just another phase of consolidation, which, when completed, would quickly take the price to the next lower level, as it did from April to May.
The final target of the central mass of bears might be the area of $20-23k, but the movement there might be stretched in time and decomposed into stages.
Confirming that bears dominate the crypto market is Ethereum, which has lost about 10% in the last 24 hours to $1750, finding itself in a lower bound since April 2021. In ETHUSD, a final landing is seen in the $1200-1300 area.
Other altcoins in the top 10 have fallen from 2% (XRP) to 13.8% (Solana).
Total cryptocurrency market capitalisation, according to CoinMarketCap, fell 5% overnight to $1.20 trillion.
The cryptocurrency fear and greed index was unchanged by Friday, remaining at 12 points (‘extreme fear’) on the back of solid Bitcoin momentum.
Confirming that bears dominate the crypto market is Ethereum, which has lost about 10% in the last 24 hours to $1750, finding itself in a lower bound since April 2021. In ETHUSD, a final landing is seen in the $1200-1300 area.
Other altcoins in the top 10 have fallen from 2% (XRP) to 13.8% (Solana).
Total cryptocurrency market capitalisation, according to CoinMarketCap, fell 5% overnight to $1.20 trillion.
The cryptocurrency fear and greed index was unchanged by Friday, remaining at 12 points (‘extreme fear’) on the back of solid Bitcoin momentum.
Dollar: Brief correction or the start of a downturn?
The Dollar is continuing its retreat, which started precisely two weeks ago. Over this period, the Dollar Index has retreated 3.5% from the 20-year highs, losing about half of the gains from the last leg of the rally since late March.
And now the big question for investors and traders is whether we see a correction before a new wave of US currency strength or whether the highs reached were a peak for years to come, as they were in 2017 and 2020.
While the picture is mixed, there are more factors in favour that buying the Dollar at current levels is not good.
Many of the major central banks have verbally (Bank of England and ECB) or already actually (RBNZ, Bank of Canada) come out at the pace of the Fed’s rate hikes. Consequently, short-term bond yield spreads, which had driven the demand for the Dollar in the previous few months, are no longer driving the prices.
The Dollar is continuing its retreat, which started precisely two weeks ago. Over this period, the Dollar Index has retreated 3.5% from the 20-year highs, losing about half of the gains from the last leg of the rally since late March.
And now the big question for investors and traders is whether we see a correction before a new wave of US currency strength or whether the highs reached were a peak for years to come, as they were in 2017 and 2020.
While the picture is mixed, there are more factors in favour that buying the Dollar at current levels is not good.
Many of the major central banks have verbally (Bank of England and ECB) or already actually (RBNZ, Bank of Canada) come out at the pace of the Fed’s rate hikes. Consequently, short-term bond yield spreads, which had driven the demand for the Dollar in the previous few months, are no longer driving the prices.
The latest Fed minutes have indicated a “flexible approach” - a hint of willingness to reduce the pace of rate hikes in the event of economic problems.
Before the Dollar’s retreat, there was a peak in 10-year Treasury yields, which declined from 3.2% to 2.8%. Yields have been hovering around that level for the last three days, falling back to the 50-day moving average. A pullback below this line could be the first signal of a break in the uptrend. In that case, be prepared for increased pressure on the Dollar.
Elsewhere, there are rumours that China is cutting its more than trillion-euro investments in US Treasuries, following the Russian experience with blocking the Central Bank reserves. However, China may be reducing its holdings for another reason: capital outflows and pressure on the currency due to the economic slowdown.
Before the Dollar’s retreat, there was a peak in 10-year Treasury yields, which declined from 3.2% to 2.8%. Yields have been hovering around that level for the last three days, falling back to the 50-day moving average. A pullback below this line could be the first signal of a break in the uptrend. In that case, be prepared for increased pressure on the Dollar.
Elsewhere, there are rumours that China is cutting its more than trillion-euro investments in US Treasuries, following the Russian experience with blocking the Central Bank reserves. However, China may be reducing its holdings for another reason: capital outflows and pressure on the currency due to the economic slowdown.
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Is Bitcoin forming a reversal following stocks?
Bitcoin is down 2.5% over the past week, ending near $29,200. Ethereum lost 10.6%, while other leading altcoins in the top 10 fell from 1% (Polkadot) to 14.8% (Solana).
The total capitalisation of the crypto market, according to CoinMarketCap, sank 2.4% over the week to $1.26 trillion. Bitcoin’s dominance index jumped 1.3 points to 44.9% over the same time due to the better performance of the first cryptocurrency.
The cryptocurrency fear and greed index was down to 10 points by Monday. However, this drop does not consider the positive market performance in the early hours on Monday.
Bitcoin has closed lower for eight consecutive weeks, the longest sell-off streak in the first cryptocurrency’s existence. But the last two weeks have been very tentative declines.
On Monday morning, BTCUSD surpassed the $30K mark again and returned to last week’s highs, breaking above the downside resistance line in a strong move.
Bitcoin is down 2.5% over the past week, ending near $29,200. Ethereum lost 10.6%, while other leading altcoins in the top 10 fell from 1% (Polkadot) to 14.8% (Solana).
The total capitalisation of the crypto market, according to CoinMarketCap, sank 2.4% over the week to $1.26 trillion. Bitcoin’s dominance index jumped 1.3 points to 44.9% over the same time due to the better performance of the first cryptocurrency.
The cryptocurrency fear and greed index was down to 10 points by Monday. However, this drop does not consider the positive market performance in the early hours on Monday.
Bitcoin has closed lower for eight consecutive weeks, the longest sell-off streak in the first cryptocurrency’s existence. But the last two weeks have been very tentative declines.
On Monday morning, BTCUSD surpassed the $30K mark again and returned to last week’s highs, breaking above the downside resistance line in a strong move.
#WaveAnalysis
#AUDUSD broke resistance level 0.71000
• Likely to rise to resistance level 0.7250
AUDUSD currency pair recently broke the resistance level 0.7100 (which stopped the earlier minor wave A) intersecting with the 61.8% Fibonacci correction of the downward impulse 5 from the start of May.
The breakout of the resistance level 0.71000 accelerated the C-wave of the active ABC correction (2).
AUDUSD can be expected to rise further toward the next resistance level 0.7250 (top of wave 4 from the start of this month).
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#AUDUSD broke resistance level 0.71000
• Likely to rise to resistance level 0.7250
AUDUSD currency pair recently broke the resistance level 0.7100 (which stopped the earlier minor wave A) intersecting with the 61.8% Fibonacci correction of the downward impulse 5 from the start of May.
The breakout of the resistance level 0.71000 accelerated the C-wave of the active ABC correction (2).
AUDUSD can be expected to rise further toward the next resistance level 0.7250 (top of wave 4 from the start of this month).
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#WaveAnalysis
#CADJPY reversed from support zone
• Likely to rise to resistance level 101.00
CADJPY earlier reversed up from the combined support zone located between the support level 98.45, lower daily Bollinger Band and the upper trendline of the recently broken weekly up channel from last year,
The upward reversal from this support zone started the active intermediate impulse wave (3).
Given the clear weekly uptrend – CADJPY can be expected to rise further toward the next resistance level 101.00 (top of the earlier intermediate impulse wave (1)).
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#CADJPY reversed from support zone
• Likely to rise to resistance level 101.00
CADJPY earlier reversed up from the combined support zone located between the support level 98.45, lower daily Bollinger Band and the upper trendline of the recently broken weekly up channel from last year,
The upward reversal from this support zone started the active intermediate impulse wave (3).
Given the clear weekly uptrend – CADJPY can be expected to rise further toward the next resistance level 101.00 (top of the earlier intermediate impulse wave (1)).
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The S&P500’s bulls awakening. Will tech analysis beats fundamentals?
US stock indices developed a strong rebound all last week. The S&P500 spot index reached 4200, gaining more than 10% from the lows of May 20.
Such a rapid recovery has raised the question of whether we are seeing a brief bear market rally or whether the markets have passed the “bottom” of the correction. The situation looks like touching bear market territory was a red rag for the bulls, who have since turned to aggressive action.
Fundamental factors are now on the side of the former, while technical analysis favours the latter scenario.
Monetary authorities in the USA and other developed economies are increasing the pace of monetary policy tightening, focusing on fighting inflation rather than supporting economic growth.
US stock indices developed a strong rebound all last week. The S&P500 spot index reached 4200, gaining more than 10% from the lows of May 20.
Such a rapid recovery has raised the question of whether we are seeing a brief bear market rally or whether the markets have passed the “bottom” of the correction. The situation looks like touching bear market territory was a red rag for the bulls, who have since turned to aggressive action.
Fundamental factors are now on the side of the former, while technical analysis favours the latter scenario.
Monetary authorities in the USA and other developed economies are increasing the pace of monetary policy tightening, focusing on fighting inflation rather than supporting economic growth.
We continue to get bearish signals from this perspective, as the economy and markets have yet to feel the brunt of rates not seen in over ten years. Meanwhile, inflation and a slowdown in consumer demand due to high rates promise to eat into real corporate profits in the coming months. The tipping point in consumer activity is unlikely to come before we hear from the Fed that there will be no further rate hikes.
The S&P500 index has perfectly touched 61.8% of the rally from the lows of March 2020 to January 2022. We have seen some rallies in a falling market during the five-month decline. But so far, touching the formal bear market area (20% decline from the peak) in the S&P500 has attracted buyers.
The S&P500 index has perfectly touched 61.8% of the rally from the lows of March 2020 to January 2022. We have seen some rallies in a falling market during the five-month decline. But so far, touching the formal bear market area (20% decline from the peak) in the S&P500 has attracted buyers.
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💶EURUSD up above 1.077📈 to 1-month high over risk-on mood. BUY ⬆️ or SELL ⬇️ ?
Anonymous Poll
53%
BUY ⬆️
47%
SELL ⬇️
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