#WaveAnalysis
#AUDJPY broke key resistance level 96.65
• Likely to rise to resistance level 98.00
AUDJPY currency pair recently broke the key resistance level 96.65 (previous multi-month high from the start of June).
The breakout of the resistance level 96.65 should accelerate the active impulse waves 3 and (3).
Given the clear daily uptrend and continuation of the widespread yen sales – AUDJPY can be expected to rise further toward the resistance level 98.00 (target price for the completion of the active impulse wave (3)).
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#AUDJPY broke key resistance level 96.65
• Likely to rise to resistance level 98.00
AUDJPY currency pair recently broke the key resistance level 96.65 (previous multi-month high from the start of June).
The breakout of the resistance level 96.65 should accelerate the active impulse waves 3 and (3).
Given the clear daily uptrend and continuation of the widespread yen sales – AUDJPY can be expected to rise further toward the resistance level 98.00 (target price for the completion of the active impulse wave (3)).
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ECB tries to draw a line under the euro weakening
The European Central Bank, at the end of its regular meeting, raised the interest rate by a record 75 points after increasing it by 50 in July. The move was almost entirely priced into the debt market, as Bank officials have been pushing expectations in that direction for the last couple of weeks.
Perhaps that's why the historic move for the ECB triggered merely a short-term "sell the facts" reaction, taking EURUSD shortly 1% off the intraday highs. As a result, the pair is back below 1.0, although it has regained just under half of its rally from yesterday's lows.
But one should not underestimate the hawkishness of the regulator's tone that could bring back support for the single currency. At the very least, cushion its fall.
ECB president Christine Lagarde announced that the weak euro is pushing up inflation, which is the most direct statement on the FX subject. She also warned that even sharper rate hikes are possible in the future.
The European Central Bank, at the end of its regular meeting, raised the interest rate by a record 75 points after increasing it by 50 in July. The move was almost entirely priced into the debt market, as Bank officials have been pushing expectations in that direction for the last couple of weeks.
Perhaps that's why the historic move for the ECB triggered merely a short-term "sell the facts" reaction, taking EURUSD shortly 1% off the intraday highs. As a result, the pair is back below 1.0, although it has regained just under half of its rally from yesterday's lows.
But one should not underestimate the hawkishness of the regulator's tone that could bring back support for the single currency. At the very least, cushion its fall.
ECB president Christine Lagarde announced that the weak euro is pushing up inflation, which is the most direct statement on the FX subject. She also warned that even sharper rate hikes are possible in the future.
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Amongst the signals from ECB, there is an indication that the rate could rise at the following five meetings and that the next two meetings will end with a rate hikes.
It may be too early to tell, but the ECB may have unambiguously switched to vigilance mode regarding inflation, as was the case before Draghi's reign in the ECB's top position. Perhaps correctly, it should have been done about a year ago. By moving too late, the ECB will have to cope with more considerable tail effects and be forced to raise the rate higher than would have been necessary with timely measures.
Either way, we are seeing clear attempts to draw a line under the weakening of the euro. Now it cannot be ruled out that this will take the bears out of the rhythm who have managed to push the EURUSD down almost every month since June 2021. The very close case we saw in 2000, and then the ECB managed to win a couple or three months but not reverse the trend. There was a need for significant FX intervention to make the trend reverse.
It may be too early to tell, but the ECB may have unambiguously switched to vigilance mode regarding inflation, as was the case before Draghi's reign in the ECB's top position. Perhaps correctly, it should have been done about a year ago. By moving too late, the ECB will have to cope with more considerable tail effects and be forced to raise the rate higher than would have been necessary with timely measures.
Either way, we are seeing clear attempts to draw a line under the weakening of the euro. Now it cannot be ruled out that this will take the bears out of the rhythm who have managed to push the EURUSD down almost every month since June 2021. The very close case we saw in 2000, and then the ECB managed to win a couple or three months but not reverse the trend. There was a need for significant FX intervention to make the trend reverse.
Is Bitcoin making a comeback? It needs to be proven
Bitcoin was little changed on Thursday, ending around $19,400, but added more than 7% on Friday morning. So, in a period with relatively low liquidity, the BTCUSD has won back over two weeks of a slow slide down in one move.
Does this look like a reversal? For now, it is more like an attempt to make a pump in a low-liquid market. However, closing the week at current or higher levels would be a bullish sign, but it would be premature to turn bullish before.
The overall capitalisation of the crypto market is adding 5.7% as it has yet to keep up with the flagship. However, there is a local victory here as well - crossing the 1 trillion mark - which needs to be held at least until the end of the week before we can talk about a bullish victory.
Bitcoin was little changed on Thursday, ending around $19,400, but added more than 7% on Friday morning. So, in a period with relatively low liquidity, the BTCUSD has won back over two weeks of a slow slide down in one move.
Does this look like a reversal? For now, it is more like an attempt to make a pump in a low-liquid market. However, closing the week at current or higher levels would be a bullish sign, but it would be premature to turn bullish before.
The overall capitalisation of the crypto market is adding 5.7% as it has yet to keep up with the flagship. However, there is a local victory here as well - crossing the 1 trillion mark - which needs to be held at least until the end of the week before we can talk about a bullish victory.
#WaveAnalysis
#IBM reversed from strong support level 126.00
• Likely to reach resistance level 130.00
IBM recently reversed up from the strong support level 126.00 (which stopped all previous downward correction from April), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 126.00 started the active short-term correction (ii).
Given the strength of the support level 126.00 and the oversold daily Stochastic – IBM can be expected to rise further toward the next resistance level 130.00.
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#IBM reversed from strong support level 126.00
• Likely to reach resistance level 130.00
IBM recently reversed up from the strong support level 126.00 (which stopped all previous downward correction from April), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 126.00 started the active short-term correction (ii).
Given the strength of the support level 126.00 and the oversold daily Stochastic – IBM can be expected to rise further toward the next resistance level 130.00.
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#WaveAnalysis
#EURJPY reversed from key resistance level 144.30
• Likely to fall to support level 142.00
EURJPY currency pair recently reversed down from the key resistance level 144.30 (which has been reversing the price from the start of June) standing above the upper daily Bollinger Band.
The downward reversal from the resistance level 144.stopped the previous impulse waves (v), 3 and (3).
Given the overbought daily Stochastic – EURJPY can be expected to fall further toward the support level 142.00 (top of wave B from July).
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#EURJPY reversed from key resistance level 144.30
• Likely to fall to support level 142.00
EURJPY currency pair recently reversed down from the key resistance level 144.30 (which has been reversing the price from the start of June) standing above the upper daily Bollinger Band.
The downward reversal from the resistance level 144.stopped the previous impulse waves (v), 3 and (3).
Given the overbought daily Stochastic – EURJPY can be expected to fall further toward the support level 142.00 (top of wave B from July).
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#WaveAnalysis
GBPCHF broke key support level 1.1300
• Likely to fall to support level 1.1100
GBPCHF currency pair recently broke through the key support level 1.1300 (which stopped the earlier minor impulse waves (iii) and (i)).
The breakout of the support level 1.1300 accelerated the active impulse waves (iii), 5 and (3).
Given the clear daily downtrend and strong Swiss franc bullishness seen today – GBPCHF can be expected to fall further toward the support level 1.1100 (target for the completion of the active impulse waves (iii), 5 and (3)).
GBPCHF broke key support level 1.1300
• Likely to fall to support level 1.1100
GBPCHF currency pair recently broke through the key support level 1.1300 (which stopped the earlier minor impulse waves (iii) and (i)).
The breakout of the support level 1.1300 accelerated the active impulse waves (iii), 5 and (3).
Given the clear daily downtrend and strong Swiss franc bullishness seen today – GBPCHF can be expected to fall further toward the support level 1.1100 (target for the completion of the active impulse waves (iii), 5 and (3)).
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#WaveAnalysis #Japan225
Nikkei 225 reversed from strong support level 27500.00
• Likely to reach resistance level 28800.00
Nikkei 225 index recently reversed up with the daily Hammer from the strong support level 27500.00 (which has been reversing the price from the end of July), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 27500.00 started the active medium-term correction (2).
Nikkei 225 index can be expected to rise further toward the next resistance level 28800.00 (top of the previous short-term correction 2).
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Nikkei 225 reversed from strong support level 27500.00
• Likely to reach resistance level 28800.00
Nikkei 225 index recently reversed up with the daily Hammer from the strong support level 27500.00 (which has been reversing the price from the end of July), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 27500.00 started the active medium-term correction (2).
Nikkei 225 index can be expected to rise further toward the next resistance level 28800.00 (top of the previous short-term correction 2).
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#WaveAnalysis
#EURCHF falling inside impulse waves 5 and (3)
• Likely to reach support level 0.9600
EURCHF currency pair continues to fall inside the short-term impulse wave 5, which started earlier from the key resistance level 0.9800.
The short-term impulse wave 5 belongs to the higher order downward impulse sequence (3) from the start of May.
EURCHF can be expected to fall further toward the next support level 0.9600 (which stopped the sharp downtrend in August).
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#EURCHF falling inside impulse waves 5 and (3)
• Likely to reach support level 0.9600
EURCHF currency pair continues to fall inside the short-term impulse wave 5, which started earlier from the key resistance level 0.9800.
The short-term impulse wave 5 belongs to the higher order downward impulse sequence (3) from the start of May.
EURCHF can be expected to fall further toward the next support level 0.9600 (which stopped the sharp downtrend in August).
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#WaveAnalysis
#EURGBP reversed from key resistance level 0.8700
• Likely to fall to support level 0.8600
EURGBP currency pair recently reversed down precisely from the key resistance level 0.8700 (which stopped the previous sharp upward impulse wave (5) in the middle of June).
The resistance area near the resistance level 0.8700 was strengthened by the upper daily Bollinger Band.
EURGBP can be expected to fall further toward the next support level 0.8600 (which stopped the previous short-term correction 2).
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#EURGBP reversed from key resistance level 0.8700
• Likely to fall to support level 0.8600
EURGBP currency pair recently reversed down precisely from the key resistance level 0.8700 (which stopped the previous sharp upward impulse wave (5) in the middle of June).
The resistance area near the resistance level 0.8700 was strengthened by the upper daily Bollinger Band.
EURGBP can be expected to fall further toward the next support level 0.8600 (which stopped the previous short-term correction 2).
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The crypto market has taken a step up but has not yet fly
#Bitcoin has added 10% in the past seven days, trading at $21.7K. Ethereum jumped 10.3% to $1730. Top-10 altcoins add between 1.5% (Polkadot) and 9% (Solana).
Total cryptocurrency market capitalisation rose 7.9% for the week to $1.06 trillion.
Bitcoin showed substantial gains on Friday and avoided correction sentiment over the weekend. As a result, the coin is again testing the 50-day moving average, where fluctuations have become very small once again.
The market has removed excessive oversold from the BTCUSD but has yet to make a decisive move upwards. A strong move above the 50-day average could end the bear market.
Even so, it is unlikely that current buyers can expect quick multiples gains. A prolonged bear market (like the one we are now in) is usually followed by a protracted period of cautious and uneven price growth. Moreover, the bulls have not yet brought the price back above the 200-week average, which is now near $23.2K.
#Bitcoin has added 10% in the past seven days, trading at $21.7K. Ethereum jumped 10.3% to $1730. Top-10 altcoins add between 1.5% (Polkadot) and 9% (Solana).
Total cryptocurrency market capitalisation rose 7.9% for the week to $1.06 trillion.
Bitcoin showed substantial gains on Friday and avoided correction sentiment over the weekend. As a result, the coin is again testing the 50-day moving average, where fluctuations have become very small once again.
The market has removed excessive oversold from the BTCUSD but has yet to make a decisive move upwards. A strong move above the 50-day average could end the bear market.
Even so, it is unlikely that current buyers can expect quick multiples gains. A prolonged bear market (like the one we are now in) is usually followed by a protracted period of cautious and uneven price growth. Moreover, the bulls have not yet brought the price back above the 200-week average, which is now near $23.2K.
China's disinflation could put pressure on the yuan
China is at the other end of the spectrum, while the developed world is facing the highest inflation rate in two generations. The published CPI and PPI data for August marked another drop in inflationary pressures and fell well below expectations.
The consumer price index slowed from 2.7% to 2.5% y/y against an expected acceleration to 2.8%. The producer price index fell from 4.2% to 2.3%, substantially below the expected 3.2%. However, it is worth realising that such disinflation results from weak economic growth limited by multiple waves of lockdowns.
China is at the other end of the spectrum, while the developed world is facing the highest inflation rate in two generations. The published CPI and PPI data for August marked another drop in inflationary pressures and fell well below expectations.
The consumer price index slowed from 2.7% to 2.5% y/y against an expected acceleration to 2.8%. The producer price index fell from 4.2% to 2.3%, substantially below the expected 3.2%. However, it is worth realising that such disinflation results from weak economic growth limited by multiple waves of lockdowns.
Suppressed inflation due to limited consumer demand leads to expectations of further stimulus through bailout programmes, monetary policy easing and attempts to weaken the exchange rate. And this is terrible news for the renminbi, which could come under even greater pressure.
Earlier in the week, the #USDCNH stopped at 7.0, pulling back to 6.933 at the time of writing. Likely, we see a tactical break by the bulls near the round level, coinciding with the dollar's pullback in forex.
Potentially, USDCNH could move up to the 7.15 area, repeating the highs of 2019 and 2020, which would help strengthen export competitiveness from China, bringing GDP growth closer to the target.
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Earlier in the week, the #USDCNH stopped at 7.0, pulling back to 6.933 at the time of writing. Likely, we see a tactical break by the bulls near the round level, coinciding with the dollar's pullback in forex.
Potentially, USDCNH could move up to the 7.15 area, repeating the highs of 2019 and 2020, which would help strengthen export competitiveness from China, bringing GDP growth closer to the target.
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#Gold dynamic reverses smoothly on the daily charts, setting up a double-bottom formation.
Gold is forming a local uptrend after touching the lows near $1680 at the very beginning of the month. The daily charts show that the area near $1700 attracts buyers.
Notably, the trend reversal in gold occurred a couple of days earlier than in the currency market. This ability to swim against the current indicates solid underneath demand.
Steady buying in gold broke the trend near the same levels as in July. At the same time, the RSI index in the daily charts set higher lows than two months ago. This divergence between the index and the price signals that the sell-off intensity is diminishing. At the same time, the index came out of the oversold zone, further indicating that the bulls are taking the local initiative.
However, so far, we see a local tug of war. Gold needs to overcome several markers to talk about a more global trend change.
Gold is forming a local uptrend after touching the lows near $1680 at the very beginning of the month. The daily charts show that the area near $1700 attracts buyers.
Notably, the trend reversal in gold occurred a couple of days earlier than in the currency market. This ability to swim against the current indicates solid underneath demand.
Steady buying in gold broke the trend near the same levels as in July. At the same time, the RSI index in the daily charts set higher lows than two months ago. This divergence between the index and the price signals that the sell-off intensity is diminishing. At the same time, the index came out of the oversold zone, further indicating that the bulls are taking the local initiative.
However, so far, we see a local tug of war. Gold needs to overcome several markers to talk about a more global trend change.
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The first test of gold's bullish reversal would be in the cross of the 50-day moving average near the $1740 area. Since April, bears got the upper hand after the price nears this line, so now we are looking at how the price will behave there.
Silver, the gold's little sister, gained more than 3.5% on Monday and got well above its 50-day average. This is an additional bullish indicator of a reversal in market sentiment.
Should the bulls succeed locally, the next significant hurdle will be $1800, a psychologically significant round level and a local August peak. A consolidation above this level would confirm the formation of a "double bottom" and the completion of the downward momentum. In this case, the gold will open the road towards $1920-1970.
Silver, the gold's little sister, gained more than 3.5% on Monday and got well above its 50-day average. This is an additional bullish indicator of a reversal in market sentiment.
Should the bulls succeed locally, the next significant hurdle will be $1800, a psychologically significant round level and a local August peak. A consolidation above this level would confirm the formation of a "double bottom" and the completion of the downward momentum. In this case, the gold will open the road towards $1920-1970.
Outside the chart analysis, seasonality is also on the side of the gold, as the long-term trend reversal is in progress during August-September. Separately, we note the increase in trading volumes and impressive growth in equities in the sector. Barrick Gold shares added more than 9% to their lows at the start of September, while the smaller gold producer ETF has gained 10.5% over the same time frame.
#Bitcoin rose 2.6% to $22,300 in the past 24 hours. Ethereum losing 0.7% to $1715. Top altcoins performance ranged from -1.5% (Cardano) to +10% (Solana).
Total crypto market capitalisation, according to CoinMarketCap, rose 1% overnight to $1.06 trillion.
BTC is just a hair above its 50-day average, which should hardly be considered an encouraging bullish sign. The following intermediate stage of recovery that could revive the market is the 200-week average at $23.2K.
The latter dynamic suggests cautious market players, who are likely to shift their attention to global macro issues. The most critical of these today is the US inflation report, which could return optimism to the markets if price growth slows and sell-offs otherwise.
Solana posted the highest daily gain among top coins. Despite the overall market decline, the number of NFTs issued on the Solana blockchain rose sharply, reaching 312K. The trading volumes of collectable assets on the network have also jumped.
Total crypto market capitalisation, according to CoinMarketCap, rose 1% overnight to $1.06 trillion.
BTC is just a hair above its 50-day average, which should hardly be considered an encouraging bullish sign. The following intermediate stage of recovery that could revive the market is the 200-week average at $23.2K.
The latter dynamic suggests cautious market players, who are likely to shift their attention to global macro issues. The most critical of these today is the US inflation report, which could return optimism to the markets if price growth slows and sell-offs otherwise.
Solana posted the highest daily gain among top coins. Despite the overall market decline, the number of NFTs issued on the Solana blockchain rose sharply, reaching 312K. The trading volumes of collectable assets on the network have also jumped.
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The UK economy slowdown has lowered the trade deficit
Monthly estimates showed that the UK economy added 2.5% over the three months to July vs the same period a year earlier. The negative surprise was a 0.3% decline in Industrial Production in July compared to expectations of a 0.4% gain after a 0.9% slip in June. Production added a modest 1.1% compared to July last year.
Construction and industrial production indices are back in the 2019 range after a quick dip and subsequent recovery due to the pandemic. And they are stagnating for some time around these levels. Manufacturing and construction are at the forefront of the economic cycle, and their message is not optimistic at all.
Monthly estimates showed that the UK economy added 2.5% over the three months to July vs the same period a year earlier. The negative surprise was a 0.3% decline in Industrial Production in July compared to expectations of a 0.4% gain after a 0.9% slip in June. Production added a modest 1.1% compared to July last year.
Construction and industrial production indices are back in the 2019 range after a quick dip and subsequent recovery due to the pandemic. And they are stagnating for some time around these levels. Manufacturing and construction are at the forefront of the economic cycle, and their message is not optimistic at all.
Foreign trade is much more dynamic. Import values have fallen for two months after ballooning during the first five months of the year, while exports have remained close to the highs. These local dynamics have reduced the foreign trade deficit to its lowest level since December 2021.
The narrowing of the foreign trade deficit is positive for the Sterling as it reduces capital outflows from the country. On the other hand, if the weakness in imports is linked to stagnant domestic demand and production, it does not carry anything good in the medium term. GBPUSD seems to have pushed back from the bottom in the middle of last week, but this dynamic is more attributed to the USD profit-taking after the rally rather than investments in the pound.
The narrowing of the foreign trade deficit is positive for the Sterling as it reduces capital outflows from the country. On the other hand, if the weakness in imports is linked to stagnant domestic demand and production, it does not carry anything good in the medium term. GBPUSD seems to have pushed back from the bottom in the middle of last week, but this dynamic is more attributed to the USD profit-taking after the rally rather than investments in the pound.