#Bitcoin is up 7.7% over the past week, trading at $22.7K on Monday morning. Ethereum added less - only 4.1% to $1640. Other leading altcoins in the top 10 have gained between 0.4% (BNB) and 12.7% (Shiba Inu). The exception was Polygon (-1.8%).
The total capitalisation of the crypto market, according to CoinMarketCap, rose 5.1% to $1.045 trillion during the week. The bitcoin rally pulled up the entire crypto market.
Like in the good old days, the crypto market is feeding off the rise in stock indices but growing ahead of the curve. Moreover, at the expense of reduced liquidity, the price surpassed $23K for the first time since August last year.
Bitcoin has started a new bull market and is headed for $24.8K, where the psychologically important 200-week moving average and the 161.8% Fibonacci level of the momentum from the December lows are concentrated. The 50-week MA is headed to the same area. The market may need a long recharge and consolidation before a new upside wave begins.
The total capitalisation of the crypto market, according to CoinMarketCap, rose 5.1% to $1.045 trillion during the week. The bitcoin rally pulled up the entire crypto market.
Like in the good old days, the crypto market is feeding off the rise in stock indices but growing ahead of the curve. Moreover, at the expense of reduced liquidity, the price surpassed $23K for the first time since August last year.
Bitcoin has started a new bull market and is headed for $24.8K, where the psychologically important 200-week moving average and the 161.8% Fibonacci level of the momentum from the December lows are concentrated. The 50-week MA is headed to the same area. The market may need a long recharge and consolidation before a new upside wave begins.
Euro rally's last ditch
The EURUSD reached 1.09 early Monday, its highest level since April last year. A strong uptrend has been in place for the past four months, during which time the pair has risen from lows just above 0.95 to the current level of 1.0915, or +14.5%. While the overall uptrend in the pair is probably a long-term story, signs of accumulated fatigue need to be recharged.
On the daily EURUSD chart, the Relative Strength Index has been flirting with the overbought territory since mid-November. However, shallow and short-lived (three days) corrections have erased local overbought conditions. Such corrections have given the market room to grow.
The EURUSD reached 1.09 early Monday, its highest level since April last year. A strong uptrend has been in place for the past four months, during which time the pair has risen from lows just above 0.95 to the current level of 1.0915, or +14.5%. While the overall uptrend in the pair is probably a long-term story, signs of accumulated fatigue need to be recharged.
On the daily EURUSD chart, the Relative Strength Index has been flirting with the overbought territory since mid-November. However, shallow and short-lived (three days) corrections have erased local overbought conditions. Such corrections have given the market room to grow.
However, the market has now approached overbought conditions on the weekly chart. This often signals commodities and equity markets to prepare for a reversal. However, in the case of the EURUSD, touching the overbought/oversold area is just a strong enough signal for a correction in a couple of weeks, but not necessarily for a long-term reversal, so there is no point in looking too far ahead.
The market's focus on better-than-expected Eurozone data was a significant driver for the pair. The chances of avoiding a recession have been boosted by the hawkish tone of ECB officials, who have signalled that they will raise interest rates in 50-point increments at the next two meetings. Consumer confidence is also expected to improve thanks to lower energy prices and signs of easing inflationary pressures.
However, in our view, markets have been too dismissive of the Fed's signals that it is prepared for a prolonged fight against inflation rather than settling for a short-term victory.
The market's focus on better-than-expected Eurozone data was a significant driver for the pair. The chances of avoiding a recession have been boosted by the hawkish tone of ECB officials, who have signalled that they will raise interest rates in 50-point increments at the next two meetings. Consumer confidence is also expected to improve thanks to lower energy prices and signs of easing inflationary pressures.
However, in our view, markets have been too dismissive of the Fed's signals that it is prepared for a prolonged fight against inflation rather than settling for a short-term victory.
Fed officials have been saying they are prepared to raise rates further than the market expects and will not cut in 2023. But the markets are still betting on rate cuts before the end of the year.
We saw a similar divergence between expectations and the Fed's stance in June and August 2022, leading to a fresh wave of equity sell-offs and a rise in the dollar. Something similar now is brewing.
If we are right and a medium-term correction from 1.09 begins, it can take the pair below 1.06 (76.4% of the rally from the September lows). A deeper correction could take EURUSD back to 1.0400-1.0450.
The lower boundary of the range is the 61.8% retracement, while upper is the 50-week MA. A consolidation below it would call into question that the euro entered a long-term bull market in the last quarter of last year - when the news background was especially dramatic.
We saw a similar divergence between expectations and the Fed's stance in June and August 2022, leading to a fresh wave of equity sell-offs and a rise in the dollar. Something similar now is brewing.
If we are right and a medium-term correction from 1.09 begins, it can take the pair below 1.06 (76.4% of the rally from the September lows). A deeper correction could take EURUSD back to 1.0400-1.0450.
The lower boundary of the range is the 61.8% retracement, while upper is the 50-week MA. A consolidation below it would call into question that the euro entered a long-term bull market in the last quarter of last year - when the news background was especially dramatic.
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#WaveAnalysis
#AUDUSD reversed from support level 0.6885
• Likely to rise to resistance level 0.7060
AUDUSD currency pair recently reversed up with the daily Bullish Engulfing from the key support level 0.6885 (previous monthly high from the start of December).
The support level 0.6885 was further strengthened by the 38.2% Fibonacci correction of the previous upward impulse from the middle of December.
AUDUSD currency pair can be expected to rise further toward the next resistance level 0.7060 (top of the previous daily shooting star from last week).
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#AUDUSD reversed from support level 0.6885
• Likely to rise to resistance level 0.7060
AUDUSD currency pair recently reversed up with the daily Bullish Engulfing from the key support level 0.6885 (previous monthly high from the start of December).
The support level 0.6885 was further strengthened by the 38.2% Fibonacci correction of the previous upward impulse from the middle of December.
AUDUSD currency pair can be expected to rise further toward the next resistance level 0.7060 (top of the previous daily shooting star from last week).
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#WaveAnalysis
#CADJPY reversed from support level 96.00
• Likely to rise to resistance level 98.00
CADJPY currency pair recently reversed up from the pivotal support level 96.00 (which has been reversing the price from the middle of December) intersecting with the daily Bollinger Band.
The upward reversal from the support level 96.00 created the daily Hammer – which stopped the earlier impulse waves 5 and (C).
CADJPY currency pair can be expected to rise further toward the next resistance level 98.00 (top of the earlier sharp reversal pivot from last week).
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#CADJPY reversed from support level 96.00
• Likely to rise to resistance level 98.00
CADJPY currency pair recently reversed up from the pivotal support level 96.00 (which has been reversing the price from the middle of December) intersecting with the daily Bollinger Band.
The upward reversal from the support level 96.00 created the daily Hammer – which stopped the earlier impulse waves 5 and (C).
CADJPY currency pair can be expected to rise further toward the next resistance level 98.00 (top of the earlier sharp reversal pivot from last week).
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Deceptive oil growth
Oil briefly topped $82.50 per barrel WTI on Monday, testing the highs seen in the second half of November. The bulls are betting that China's lifting of restrictions will boost global demand for commodities and energy.
Although the US became the largest oil exporter at the end of last year, commercial inventories were 8.3% higher last week than a year earlier. Production growth over the same period was barely above 5%.
Drilling activity data released on Friday evening showed a further decline in the number of oil wells to 613, down from a peak of 627 just over a month ago. This is a slight dip but an apparent stagnation from the lower levels we saw at the peaks in early 2019 (just under 900) or late 2014 (around 1600).
Oil briefly topped $82.50 per barrel WTI on Monday, testing the highs seen in the second half of November. The bulls are betting that China's lifting of restrictions will boost global demand for commodities and energy.
Although the US became the largest oil exporter at the end of last year, commercial inventories were 8.3% higher last week than a year earlier. Production growth over the same period was barely above 5%.
Drilling activity data released on Friday evening showed a further decline in the number of oil wells to 613, down from a peak of 627 just over a month ago. This is a slight dip but an apparent stagnation from the lower levels we saw at the peaks in early 2019 (just under 900) or late 2014 (around 1600).
On the other hand, this could be evidence of increasing efficiency, both on the upstream, getting more out of a well, and on the consumption side. More and more electric cars are being sold, and internal combustion engines are becoming more economical. And this is reflected in the growth in petrol inventories at the same time as the economy is growing and production is stagnating.
The chart also shows that new highs in oil are becoming harder to come by. WTI has stalled for the third time since early December and is approaching $81.50. Near that level is a 50% retracement of the decline from the October and November highs. This is the same area where oil reversed lower in October 2021. It rallied on fears that Russian Crude would be removed from the global energy market. So, a dip lower looks like a return to normal.
The Fed meeting, and the speculation surrounding it, could be an essential turning point for oil, determining whether it can continue to rise above $81.50 or reverses course. If the Fed not only reduces the pace of rate hikes but also hints that they may stop sooner than previously promised, this will boost global demand for risk assets, including oil. If the committee confirms its plans, it could deflate much of the positivity that has been pumped into the markets since the beginning of the year.
The Fed meeting, and the speculation surrounding it, could be an essential turning point for oil, determining whether it can continue to rise above $81.50 or reverses course. If the Fed not only reduces the pace of rate hikes but also hints that they may stop sooner than previously promised, this will boost global demand for risk assets, including oil. If the committee confirms its plans, it could deflate much of the positivity that has been pumped into the markets since the beginning of the year.
Strong PMIs fail to save the euro from sliding
According to Markit's preliminary estimates of business activity, the Eurozone economy has moved out of contraction and is trying to claw its way into growth. The eurozone composite PMI rose from 49.3 to 50.2, better than the expected 49.8. The rebound was driven by growth in the region's services sector, which responded positively to lower inflation and falling gas prices.
These better-than-expected data were insufficient to support further gains for the Euro. On the contrary, its put pressure on the single currency, which subsequently increased with the release of aggregate data.
We are witnessing a classic sell-off reaction as traders took profits after yesterday's touch above 1.09. It should also be noted that the
Nor can we write off the accumulated fatigue from four months of dollar depreciation. In such an environment, the market may be less sensitive to bad news for the dollar and overly sensitive to good news.
According to Markit's preliminary estimates of business activity, the Eurozone economy has moved out of contraction and is trying to claw its way into growth. The eurozone composite PMI rose from 49.3 to 50.2, better than the expected 49.8. The rebound was driven by growth in the region's services sector, which responded positively to lower inflation and falling gas prices.
These better-than-expected data were insufficient to support further gains for the Euro. On the contrary, its put pressure on the single currency, which subsequently increased with the release of aggregate data.
We are witnessing a classic sell-off reaction as traders took profits after yesterday's touch above 1.09. It should also be noted that the
Nor can we write off the accumulated fatigue from four months of dollar depreciation. In such an environment, the market may be less sensitive to bad news for the dollar and overly sensitive to good news.
#WaveAnalysis
#AUDJPY reversed from key resistance level 92.00
• Likely to fall to support level 90.00
AUDJPY currency pair recently reversed down from the key resistance level 92.00 (which stopped the two of the previous minor waves -1 and b) intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the previous sharp downward impulse from October.
The downward reversal from the resistance level 92.00 stopped the earlier minor impulse wave 3 of wave (C) from December.
Given the strength of the resistance level 92.00, AUDJPY currency pair can be expected to fall further toward the next round support level 90.00.
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#AUDJPY reversed from key resistance level 92.00
• Likely to fall to support level 90.00
AUDJPY currency pair recently reversed down from the key resistance level 92.00 (which stopped the two of the previous minor waves -1 and b) intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the previous sharp downward impulse from October.
The downward reversal from the resistance level 92.00 stopped the earlier minor impulse wave 3 of wave (C) from December.
Given the strength of the resistance level 92.00, AUDJPY currency pair can be expected to fall further toward the next round support level 90.00.
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Despite positive performance in US stock indices, #Bitcoin continued its unsuccessful attempts to consolidate above $23,000 on Wednesday. The crypto market has, at least, paused after rallying since the beginning of the year.
Total capitalisation is down 2.9% over the last 24 hours but remains just above $1 trillion. Among the top altcoins, Ethereum loses 4.9%, while the rest are down between 2.9% (Litecoin) and 6% (Solana).
In Bitcoin, today's lows at $22.3K are part of a typical correction from the momentum of last week's lows. A break below $ 22.2K suggests a deeper correction to the $20.5-21.0K area.
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Total capitalisation is down 2.9% over the last 24 hours but remains just above $1 trillion. Among the top altcoins, Ethereum loses 4.9%, while the rest are down between 2.9% (Litecoin) and 6% (Solana).
In Bitcoin, today's lows at $22.3K are part of a typical correction from the momentum of last week's lows. A break below $ 22.2K suggests a deeper correction to the $20.5-21.0K area.
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#WaveAnalysis
#WTI crude oil reversed from resistance level 81.6
• Likely to fall to support level 78.0
WTI crude oil recently reversed down from the pivotal resistance level 81.6 (which has been reversing the price from the end of November) intersecting with the 50% Fibonacci correction of the previous downward impulse from November.
The downward reversal from the resistance level 81.6 stopped the earlier minor ABC correction 2.
Given the persistent daily downtrend, WTI crude oil can be expected to fall further toward the next support level 78.0.
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#WTI crude oil reversed from resistance level 81.6
• Likely to fall to support level 78.0
WTI crude oil recently reversed down from the pivotal resistance level 81.6 (which has been reversing the price from the end of November) intersecting with the 50% Fibonacci correction of the previous downward impulse from November.
The downward reversal from the resistance level 81.6 stopped the earlier minor ABC correction 2.
Given the persistent daily downtrend, WTI crude oil can be expected to fall further toward the next support level 78.0.
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This morning the FX market focused on a surprise out of Australia, where the CPI growth rate for the 4Q22 accelerated from 7.3% to 7.8% y/y, against the expected 7.5%. Inflation hit its highest level since 1990. Moreover, a 1.9% rise in prices in the final three months of last year shows that inflationary pressures have stayed the same.
The significant outperformance of the data compared to expectations triggered a wave of Aussie buying. AUDUSD climbed to 0.7120 by the start of the European session as traders reassessed the outlook for policy tightening, suggesting a higher interest rate.
From a broader perspective, the Australian data and today's stronger-than-expected numbers from New Zealand and earlier from Japan should remind the market that inflation is sticky. This is true now that employment levels in the developed world have been near their highest for decades. If high inflation is a global phenomenon, it has the potential to regain some of the traction the dollar has lost since October.
The significant outperformance of the data compared to expectations triggered a wave of Aussie buying. AUDUSD climbed to 0.7120 by the start of the European session as traders reassessed the outlook for policy tightening, suggesting a higher interest rate.
From a broader perspective, the Australian data and today's stronger-than-expected numbers from New Zealand and earlier from Japan should remind the market that inflation is sticky. This is true now that employment levels in the developed world have been near their highest for decades. If high inflation is a global phenomenon, it has the potential to regain some of the traction the dollar has lost since October.
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#WaveAnalysis
#EURNZD reversed from support level 1.670
• Likely to rise to resistance level 1.7000
EURNZD currency pair recently reversed up from the key support level 1.670 (which stopped the previous waves (a), A and (2)) intersecting with the lower daily Bollinger Band and the 38.2% Fibonacci correction of the previous sharp upward impulse (1) from December.
The upward reversal from the support level 1.670 continues the active intermediate impulse wave (C)
EURNZD currency pair can be expected to rise further toward the next resistance level 1.7000 (top of the sideways price range inside which the pair has been moving from December).
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#EURNZD reversed from support level 1.670
• Likely to rise to resistance level 1.7000
EURNZD currency pair recently reversed up from the key support level 1.670 (which stopped the previous waves (a), A and (2)) intersecting with the lower daily Bollinger Band and the 38.2% Fibonacci correction of the previous sharp upward impulse (1) from December.
The upward reversal from the support level 1.670 continues the active intermediate impulse wave (C)
EURNZD currency pair can be expected to rise further toward the next resistance level 1.7000 (top of the sideways price range inside which the pair has been moving from December).
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#WaveAnalysis
#GBPNZD reversed from support level 1.9000
• Likely to rise to resistance level 1.9330
GBPNZD currency pair recently reversed up from the round support level 1.9000 (which has been reversing the price from December) intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci retracement of the previous upward impulse from September.
The upward reversal from the support level 1.9000 stopped the B-wave of the previous ABC correction (B).
GBPNZD currency pair can be expected to rise further toward the next resistance level 1.9330 (which stopped the previous waves (ii) and A).
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#GBPNZD reversed from support level 1.9000
• Likely to rise to resistance level 1.9330
GBPNZD currency pair recently reversed up from the round support level 1.9000 (which has been reversing the price from December) intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci retracement of the previous upward impulse from September.
The upward reversal from the support level 1.9000 stopped the B-wave of the previous ABC correction (B).
GBPNZD currency pair can be expected to rise further toward the next resistance level 1.9330 (which stopped the previous waves (ii) and A).
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Pound hits ceiling
The British Pound is testing the $1.2400 level this week, above which it failed to consolidate in the middle of last month. The GBPUSD has yet to trade consistently higher since last June.
Looking at the entire rally from September's historic lows at 1.0327, the retreat from December's highs to 1.19 is a fairly common Fibonacci retracement to the 76.4% area of the original move, though not the classic 61.8%.
Technically, two important moving averages, the 50- and 200-day moving averages, acted as support in early January, preventing the pair from falling any further while allowing it to take some profits from the initial rally.
The pattern now suggests that GBPUSD has the potential to rise to 1.37-1.38, where the highs of last January and the 161.8% level of the first wave of the rally are concentrated. A move in this direction has every chance of becoming the main trend this year, although we expect a very significant battle for 1.300 over the next few quarters.
The British Pound is testing the $1.2400 level this week, above which it failed to consolidate in the middle of last month. The GBPUSD has yet to trade consistently higher since last June.
Looking at the entire rally from September's historic lows at 1.0327, the retreat from December's highs to 1.19 is a fairly common Fibonacci retracement to the 76.4% area of the original move, though not the classic 61.8%.
Technically, two important moving averages, the 50- and 200-day moving averages, acted as support in early January, preventing the pair from falling any further while allowing it to take some profits from the initial rally.
The pattern now suggests that GBPUSD has the potential to rise to 1.37-1.38, where the highs of last January and the 161.8% level of the first wave of the rally are concentrated. A move in this direction has every chance of becoming the main trend this year, although we expect a very significant battle for 1.300 over the next few quarters.
However, the tactical stance is more cautious. The pound has been hitting a glass ceiling just above 1.2430 for over a week now. The inability to rewrite the previous highs is not a formal signal for further growth.
At the same time, a divergence with the Relative Strength Index is forming on the daily timeframe, as the price's repeated highs are coming from the index's lower local peaks, which is a bearish signal.
Without a strong rally above 1.2430, we should be prepared for a deeper local correction. The area of the January lows, also crossed by the 200 SMA, looks like a good target for another pullback.
A deeper correction towards 1.1630, where 61.8% of the recent rally and last October's local peak are located, cannot be ruled out. Such a full-blown correction would fully recharge the pound bulls and pave the way for further growth.
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At the same time, a divergence with the Relative Strength Index is forming on the daily timeframe, as the price's repeated highs are coming from the index's lower local peaks, which is a bearish signal.
Without a strong rally above 1.2430, we should be prepared for a deeper local correction. The area of the January lows, also crossed by the 200 SMA, looks like a good target for another pullback.
A deeper correction towards 1.1630, where 61.8% of the recent rally and last October's local peak are located, cannot be ruled out. Such a full-blown correction would fully recharge the pound bulls and pave the way for further growth.
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