#WaveAnalysis #SPX
• S&P 500 reversed from support level 4080.00
• Likely to rise to resistance level 4200.00
S&P 500 index recently reversed up from the support level 4080.00 (former resistance from the end of January), standing near the 20-day moving average and the 38.2% Fibonacci correction of the upward impulse from January.
The upward reversal from the support level 4080.00 created the daily Japanese candlesticks reversal pattern Morning Star – which ended earlier wave a.
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• S&P 500 reversed from support level 4080.00
• Likely to rise to resistance level 4200.00
S&P 500 index recently reversed up from the support level 4080.00 (former resistance from the end of January), standing near the 20-day moving average and the 38.2% Fibonacci correction of the upward impulse from January.
The upward reversal from the support level 4080.00 created the daily Japanese candlesticks reversal pattern Morning Star – which ended earlier wave a.
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#Bitcoin has gained 1.5% in the past few hours to trade at around $22,000. The total market capitalisation of cryptocurrencies rose 2.3% to $1.03 trillion. In line with the Nasdaq100, bitcoin outperformed, falling less and strengthening more.
Once again, we are entering a phase where institutions are the brakes rather than the fuel of crypto's growth. This balance of power is a sure sign of retail investor optimism. However, this sentiment could quickly fade if the sell-off in equity markets continues.
The local technical picture suggests that bitcoin has most likely reached its upside correction targets from the beginning of the year, paving the way to the upside. However, it is worth keeping a close eye on the traditional markets, as a reversal to the downside could send the crypto back into sell-off mode.
Once again, we are entering a phase where institutions are the brakes rather than the fuel of crypto's growth. This balance of power is a sure sign of retail investor optimism. However, this sentiment could quickly fade if the sell-off in equity markets continues.
The local technical picture suggests that bitcoin has most likely reached its upside correction targets from the beginning of the year, paving the way to the upside. However, it is worth keeping a close eye on the traditional markets, as a reversal to the downside could send the crypto back into sell-off mode.
UK CPI fell by 0.6% last month, vs 0.4% drop expected. Annual inflation slowed from 10.5% to 10.1% (10.3% forecasted). The weaker-than-expected data put downward pressure on the Pound, as it eased some pressure on the Bank of England to raise interest rates.
The Input Producer Price Index was also weaker than expected, falling 0.1% m/m against +0.2% expected for a 0.2% rise and slowing to 14.1% - an impressive slowdown of more than ten percentage points from a peak of 24.6% in June.
However, there is a greater likelihood that UK inflation will be more 'sticky'. The retail price index held its annual rate at 13.4% in January. Producer prices rose by 0.5%, much more than the 0.1% expected.
Due to the base effect, the inflation rate is falling. However, it should be noted that there is still a long way to go to reach the 2% CPI target, as the unemployment rate is low and internal inflationary pressures are building up to replace the external inflation caused by last year's soaring commodity and energy prices.
The Input Producer Price Index was also weaker than expected, falling 0.1% m/m against +0.2% expected for a 0.2% rise and slowing to 14.1% - an impressive slowdown of more than ten percentage points from a peak of 24.6% in June.
However, there is a greater likelihood that UK inflation will be more 'sticky'. The retail price index held its annual rate at 13.4% in January. Producer prices rose by 0.5%, much more than the 0.1% expected.
Due to the base effect, the inflation rate is falling. However, it should be noted that there is still a long way to go to reach the 2% CPI target, as the unemployment rate is low and internal inflationary pressures are building up to replace the external inflation caused by last year's soaring commodity and energy prices.
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#Bitcoin has rallied over 9% in the past 24 hours, returning to August highs and peaking near $25,000. The move looked like a short squeeze following softer-than-feared comments from the SEC. At the same time, we note that the optimism was concentrated in Bitcoin and Ethereum.
The short-term technical picture has become even more bullish. Bitcoin has turned higher after correcting 61.8% of the rally since the beginning of the year and has rewritten previous highs with strong momentum. The next Fibonacci target is at 29,000, which coincides with the consolidation area from last May.
However, the picture on the weekly chart suggests that a serious tug-of-war may be taking place at current levels. A “death cross” pattern forms at 24.9, where the 50-week crosses the 200-week. And the price is now below that cross. History suggests that bitcoin gets stuck near this long curve for many weeks.
The short-term technical picture has become even more bullish. Bitcoin has turned higher after correcting 61.8% of the rally since the beginning of the year and has rewritten previous highs with strong momentum. The next Fibonacci target is at 29,000, which coincides with the consolidation area from last May.
However, the picture on the weekly chart suggests that a serious tug-of-war may be taking place at current levels. A “death cross” pattern forms at 24.9, where the 50-week crosses the 200-week. And the price is now below that cross. History suggests that bitcoin gets stuck near this long curve for many weeks.
After consumer prices, US producer prices delivered another hawkish surprise, adding 0.7% in January, stronger than the expected +0.4%. The year-on-year growth rate slowed from 6.5% to 6.0%, vs the expected 5.4%.
It is worth disregarding the slowdown in the annual inflation rate, as it is due to the high base effect of the previous year, while the monthly increase remains above the historical average.
Producer prices are a couple of months ahead of consumer prices, so today's release is a crucial hawkish signal for the Fed to continue raising rates without letting inflation expectations hang in the balance.
Aside from high inflation, the labour market also needs more reasons to take a breather. Initial jobless claims remained below 200k for the fifth week in a row, complementing the 3% rise in retail sales in January.
Overall, this mix of data suggests that the economy is in good shape. Still, it now risks triggering a reassessment of the monetary policy outlook, which is harmful to the markets.
It is worth disregarding the slowdown in the annual inflation rate, as it is due to the high base effect of the previous year, while the monthly increase remains above the historical average.
Producer prices are a couple of months ahead of consumer prices, so today's release is a crucial hawkish signal for the Fed to continue raising rates without letting inflation expectations hang in the balance.
Aside from high inflation, the labour market also needs more reasons to take a breather. Initial jobless claims remained below 200k for the fifth week in a row, complementing the 3% rise in retail sales in January.
Overall, this mix of data suggests that the economy is in good shape. Still, it now risks triggering a reassessment of the monetary policy outlook, which is harmful to the markets.
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#WaveAnalysis
#Tesla reversed from round support 200.00
• Likely to rise to resistance level 230.00
Tesla recently reversed up from the round support 200.00 (previous resistance from October and November), standing near the 20-day moving average.
The upward reversal from the support 200.00 continues the active primary upward impulse sequence from the start of January.
Tesla can be expected to rise further toward the next resistance level 230.00 (former multi-month high from October).
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#Tesla reversed from round support 200.00
• Likely to rise to resistance level 230.00
Tesla recently reversed up from the round support 200.00 (previous resistance from October and November), standing near the 20-day moving average.
The upward reversal from the support 200.00 continues the active primary upward impulse sequence from the start of January.
Tesla can be expected to rise further toward the next resistance level 230.00 (former multi-month high from October).
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#WaveAnalysis
#AIG broke daily down channel
• Likely to rise to resistance level 64.00
AIG recently broke the resistance trendline of the daily down channel from January – which accelerated the active impulse wave (3).
The breakout of this down channel is aligned with the clear multi-month uptrend from last October.
AIG can be expected to rise further toward the next resistance level 64.00 (top of B-wave of the previous ABC correction (2)).
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#AIG broke daily down channel
• Likely to rise to resistance level 64.00
AIG recently broke the resistance trendline of the daily down channel from January – which accelerated the active impulse wave (3).
The breakout of this down channel is aligned with the clear multi-month uptrend from last October.
AIG can be expected to rise further toward the next resistance level 64.00 (top of B-wave of the previous ABC correction (2)).
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#WaveAnalysis
#EURCAD reversed from support level 1.445
• Likely to rise to resistance level 4200.00
EURCAD currency pair recently reversed up from the support level 1.423 (previous monthly low from January), standing near the lower daily Bollinger Band.
The upward reversal from the support level 1.423 stopped the previous short-term ABC correction 2.
Given the clear daily uptrend, EURCAD can be expected to rise further toward the next resistance level 1.445 (previous minor high from the start of this month).
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#EURCAD reversed from support level 1.445
• Likely to rise to resistance level 4200.00
EURCAD currency pair recently reversed up from the support level 1.423 (previous monthly low from January), standing near the lower daily Bollinger Band.
The upward reversal from the support level 1.423 stopped the previous short-term ABC correction 2.
Given the clear daily uptrend, EURCAD can be expected to rise further toward the next resistance level 1.445 (previous minor high from the start of this month).
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#Bitcoin made a fresh attack on the $25K level on Thursday but failed to hold higher, followed by a local sell-off. The pressure on the first cryptocurrency can be attributed to the situation in traditional markets, where the pull towards defensive assets has increased due to inflation data and comments from Fed officials.
Cryptocurrency investors are reversing the decline below $23.5K, where January's local highs are located.
The short-term technical picture gives the bulls a chance, suggesting a mini correction as part of a new upward wave. However, a daily or weekend consolidation could be a harbinger of a more profound decline, forcing a renewed focus on the still bearish picture in the longer term, where the price remains below the popular 50 and 200-week moving averages.
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Cryptocurrency investors are reversing the decline below $23.5K, where January's local highs are located.
The short-term technical picture gives the bulls a chance, suggesting a mini correction as part of a new upward wave. However, a daily or weekend consolidation could be a harbinger of a more profound decline, forcing a renewed focus on the still bearish picture in the longer term, where the price remains below the popular 50 and 200-week moving averages.
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#WaveAnalysis
#Amazon reversed from resistance level 100.00
• Likely to fall to support level 91.50
Amazon recently reversed down from the round resistance level 100.00, intersecting with the former support trendline of the daily up channel from the start of January (acting as resistance after it was broken).
The downward reversal from the resistance level 100.00 is aligned with the clear multi-month downtrend that can be seen on the daily Amazon charts.
Amazon can be expected to fall further toward the next support level 91.50 (which stopped wave (ii) from the middle of January).
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#Amazon reversed from resistance level 100.00
• Likely to fall to support level 91.50
Amazon recently reversed down from the round resistance level 100.00, intersecting with the former support trendline of the daily up channel from the start of January (acting as resistance after it was broken).
The downward reversal from the resistance level 100.00 is aligned with the clear multi-month downtrend that can be seen on the daily Amazon charts.
Amazon can be expected to fall further toward the next support level 91.50 (which stopped wave (ii) from the middle of January).
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#WaveAnalysis
#GBPCAD reversed from key support level 1.6110
• Likely to rise to resistance level 1.63000
GBPCAD previously reversed once again from the key support level 1.6110 (previous monthly low from January) standing near the lower daily Bollinger Band.
The support level 1.6110 was further strengthened by the 50% Fibonacci correction of the previous sharp upward impulse from November.
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#GBPCAD reversed from key support level 1.6110
• Likely to rise to resistance level 1.63000
GBPCAD previously reversed once again from the key support level 1.6110 (previous monthly low from January) standing near the lower daily Bollinger Band.
The support level 1.6110 was further strengthened by the 50% Fibonacci correction of the previous sharp upward impulse from November.
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#WaveAnalysis
#GBPUSD reversed from support level 1.1915
• Likely to rise to resistance level 1.2200
GBPUSD currency pair recently reversed up from the strong support level 1.1915 (which has been reversing the price from the end of November) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 1.1915 stopped the previous short-term impulse wave (iii).
Given the oversold daily Stochastic, GBPUSD can be expected to rise further toward the next resistance level 1.2200.
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#GBPUSD reversed from support level 1.1915
• Likely to rise to resistance level 1.2200
GBPUSD currency pair recently reversed up from the strong support level 1.1915 (which has been reversing the price from the end of November) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 1.1915 stopped the previous short-term impulse wave (iii).
Given the oversold daily Stochastic, GBPUSD can be expected to rise further toward the next resistance level 1.2200.
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#Bitcoin gained 11.5% last week to close at $24.5K. The price stabilised near this level at the start of the new week. The cryptocurrency's market capitalisation rose 9.3% last week to $1.12 trillion.
Almost all of the growth came in the first half of the week, with smaller gains in the final days.
Sunday saw a fresh attempt to push BTCUSD above $25K. However, the bulls failed to form a nice weekly candle to close above a significant level, leaving the rate below the 200-week average and touching the 50-week. Buyers may be more cautious in the coming days as a death cross formed on the weekly timeframes last week, although it should not be taken as a sell signal.
#Ethereum grew 9.5% to $1680. Other leading altcoins in the top 10 gained between 1.2% (#XRP) and 16.7% (#Polygon). The exception was #BNB (-2.3%).
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Almost all of the growth came in the first half of the week, with smaller gains in the final days.
Sunday saw a fresh attempt to push BTCUSD above $25K. However, the bulls failed to form a nice weekly candle to close above a significant level, leaving the rate below the 200-week average and touching the 50-week. Buyers may be more cautious in the coming days as a death cross formed on the weekly timeframes last week, although it should not be taken as a sell signal.
#Ethereum grew 9.5% to $1680. Other leading altcoins in the top 10 gained between 1.2% (#XRP) and 16.7% (#Polygon). The exception was #BNB (-2.3%).
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#WaveAnalysis
#USDCHF reversed from resistance level 0.9300
• Likely to fall to support level 0.9145
USDCHF currency pair recently reversed down from the resistance level 0.9300, intersecting with the upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward impulse from January.
The downward reversal from the resistance level 0.9300 created the daily Japanese candlesticks reversal pattern Shooting Star.
Given the strong daily downtrend, USDCHF can be expected to fall further toward the next support level 0.9145 (low of the previous minor correction B).
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#USDCHF reversed from resistance level 0.9300
• Likely to fall to support level 0.9145
USDCHF currency pair recently reversed down from the resistance level 0.9300, intersecting with the upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward impulse from January.
The downward reversal from the resistance level 0.9300 created the daily Japanese candlesticks reversal pattern Shooting Star.
Given the strong daily downtrend, USDCHF can be expected to fall further toward the next support level 0.9145 (low of the previous minor correction B).
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#WaveAnalysis
#NZDUSD reversed from key support level 0.6220
• Likely to rise to resistance level 0.6400
NZDUSD currency pair recently reversed up from the key support level 0.6220, intersecting with the lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from November.
The upward reversal from the support level 0.6220 stopped the previous short-term ABC correction 2.
NZDUSD can be expected to rise further toward the next resistance level 0.6400 (top of the previous minor correction (b)).
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#NZDUSD reversed from key support level 0.6220
• Likely to rise to resistance level 0.6400
NZDUSD currency pair recently reversed up from the key support level 0.6220, intersecting with the lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from November.
The upward reversal from the support level 0.6220 stopped the previous short-term ABC correction 2.
NZDUSD can be expected to rise further toward the next resistance level 0.6400 (top of the previous minor correction (b)).
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#Bitcoin continues its attempts to break through resistance at $25K. Volatility was muted on Monday as the primary driver of it - US equity markets – was closed yesterday. Cryptocurrency market capitalisation rose 1.2%.
According to CoinShares, investments in cryptocurrencies fell by $32 million last week, the second consecutive week of declines and the highest in seven weeks. Investments in Bitcoin fell by $25 million and Ethereum by $7 million. Investment in funds that allow to short bitcoin increased by $4 million.
Despite bitcoin's unsuccessful attempts to consolidate above $25K, intraday pullbacks from this resistance are becoming smaller, indicating a continued buying-the-dip pattern. A break above $25K is only a matter of time, potentially opening the door to $28K.
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According to CoinShares, investments in cryptocurrencies fell by $32 million last week, the second consecutive week of declines and the highest in seven weeks. Investments in Bitcoin fell by $25 million and Ethereum by $7 million. Investment in funds that allow to short bitcoin increased by $4 million.
Despite bitcoin's unsuccessful attempts to consolidate above $25K, intraday pullbacks from this resistance are becoming smaller, indicating a continued buying-the-dip pattern. A break above $25K is only a matter of time, potentially opening the door to $28K.
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Macros continue to weigh on Crude Oil
For the third month, oil has barely moved out of its wide range of $73-82 for WTI barrel and $78-88 for Brent. This is not a balance and equilibrium of supply and demand forces but a tug of war.
This does not often happen in large liquid markets, but the range movement has more to do with political actions and statements than the market’s technical picture. The recent reversal from the upper end of the range coincided with the US postponing the start of the renewal of the strategic reserve. A move closer to the lower boundary in early February coincided with comments from Russian officials that production would be cut by 500K barrels per day.
The sideways movement forms a stable reflex for traders, but it is important to understand that this trading mode only lasts for a while. This is a case when macroeconomics can determine the exit direction from the range. And the current data snapshot suggests an exit from this sideways range.
The strong US labour market has not led to a significant increase in oil demand, and commercial inventories have risen from 420M to 471M in recent weeks. This is 14.6% higher than in the same week a year ago. Inventory levels above 500m have coincided with periods of extreme market tightness (March 2016, February 2017 and April 2020) associated with price falls before or after. More recently, the idea that the US government is acting as a strong potential buyer has temporarily supported prices.
It is worth being prepared that the fight against inflation is still ongoing, so it would be wise to expect oil purchases for reserves to start any time soon, as this would send a counterproductive signal.
Regardless, it is worth remembering that the recent robust labour market data and inflation surprises increase the chances that the Fed will go further in its rate hikes than previously hoped. The latter is bad news for oil, which is very sensitive to the dollar and interest rate movements.
For the third month, oil has barely moved out of its wide range of $73-82 for WTI barrel and $78-88 for Brent. This is not a balance and equilibrium of supply and demand forces but a tug of war.
This does not often happen in large liquid markets, but the range movement has more to do with political actions and statements than the market’s technical picture. The recent reversal from the upper end of the range coincided with the US postponing the start of the renewal of the strategic reserve. A move closer to the lower boundary in early February coincided with comments from Russian officials that production would be cut by 500K barrels per day.
The sideways movement forms a stable reflex for traders, but it is important to understand that this trading mode only lasts for a while. This is a case when macroeconomics can determine the exit direction from the range. And the current data snapshot suggests an exit from this sideways range.
The strong US labour market has not led to a significant increase in oil demand, and commercial inventories have risen from 420M to 471M in recent weeks. This is 14.6% higher than in the same week a year ago. Inventory levels above 500m have coincided with periods of extreme market tightness (March 2016, February 2017 and April 2020) associated with price falls before or after. More recently, the idea that the US government is acting as a strong potential buyer has temporarily supported prices.
It is worth being prepared that the fight against inflation is still ongoing, so it would be wise to expect oil purchases for reserves to start any time soon, as this would send a counterproductive signal.
Regardless, it is worth remembering that the recent robust labour market data and inflation surprises increase the chances that the Fed will go further in its rate hikes than previously hoped. The latter is bad news for oil, which is very sensitive to the dollar and interest rate movements.
A hypothetical bearish scenario looks viable if prices fall below $72 in the coming weeks. A consolidation would open the way to $62, where oil bottomed out several times since April 2021.
Conversely, a move above $83 would signal that a correction from the global lows of April 2020 to the highs of June 2022 has occurred and that a new mega-wave of growth awaits oil. This scenario is hard to believe, given that prices have dragged global economic growth over the past year.
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Conversely, a move above $83 would signal that a correction from the global lows of April 2020 to the highs of June 2022 has occurred and that a new mega-wave of growth awaits oil. This scenario is hard to believe, given that prices have dragged global economic growth over the past year.
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Trade of the week is with...
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Gold: End of correction or new downturn?
Gold has lost more than 6.5% from its early February highs, correcting the November-January rally. Now it's time to decide on the next trend. The coming days should show whether we will see a new wave of growth in gold or whether the decline will continue.
From the beginning of November to the first days of February, gold gained more than 21%. The February declines stabilised the price at 61.8% of the initial rally, a classic retracement. This pattern suggests buyers are returning and opens the potential for a rally to $2170 (161.8% of the initial rally). A more conservative view suggests that the path to new highs will only open up after a sharp rise above previous highs at $1960.
Another indicator, the Relative Strength Index (RSI) on the daily timeframe, suggests that there is still room for a decline. According to this indicator, gold has been overbought for most of January and has yet to reach the oversold zone.
Gold has lost more than 6.5% from its early February highs, correcting the November-January rally. Now it's time to decide on the next trend. The coming days should show whether we will see a new wave of growth in gold or whether the decline will continue.
From the beginning of November to the first days of February, gold gained more than 21%. The February declines stabilised the price at 61.8% of the initial rally, a classic retracement. This pattern suggests buyers are returning and opens the potential for a rally to $2170 (161.8% of the initial rally). A more conservative view suggests that the path to new highs will only open up after a sharp rise above previous highs at $1960.
Another indicator, the Relative Strength Index (RSI) on the daily timeframe, suggests that there is still room for a decline. According to this indicator, gold has been overbought for most of January and has yet to reach the oversold zone.
On the weekly timeframe, the reversal in February coincided with a touch of overbought conditions, and so far, the indicator remains above 50, indicating the potential for further declines.
In addition, we note that mid-month gold fell below the 50-day moving average, which has worked well as a short-term trend indicator over the past year. When gold breaks below this moving average without any resistance from buyers, it looks like a signal that bearish sentiment is prevailing.
It is worth being prepared for the fact that gold's decline has paused but not ended. Up to the $1775-1800 area, we do not see any significant barriers to the fall. A break there would also allow the overbought RSI to correct fully. Gold has reversed several times near $1800, especially last year.
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In addition, we note that mid-month gold fell below the 50-day moving average, which has worked well as a short-term trend indicator over the past year. When gold breaks below this moving average without any resistance from buyers, it looks like a signal that bearish sentiment is prevailing.
It is worth being prepared for the fact that gold's decline has paused but not ended. Up to the $1775-1800 area, we do not see any significant barriers to the fall. A break there would also allow the overbought RSI to correct fully. Gold has reversed several times near $1800, especially last year.
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