#Bitcoin fell to $28K on Thursday, losing 2.8% in the last 24 hours. The crypto market is shrinking roughly at the same rate, losing 2.5% to $1.19 trillion.
Bitcoin has completely wiped out the gains since 9th April and gave up 23.6% of the rally from the March lows. It is worth bracing for a more typical pullback of 38.2% from the rally to the 50-day average, near $26.7K. Such a drop promises to fray the nerves of crypto enthusiasts. A break below that level could quickly take the price to $25.6K - the all-important 200-week moving average, the capture of which allowed the bull market to be declared resurgent in March.
Similarly, the #Ethereum exchange rate returned to $1915 when the rally began on the 13th. Significant support is seen in the $1840-1850 area, where the lows of 9th April and the Fibonacci retracement are concentrated.
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Bitcoin has completely wiped out the gains since 9th April and gave up 23.6% of the rally from the March lows. It is worth bracing for a more typical pullback of 38.2% from the rally to the 50-day average, near $26.7K. Such a drop promises to fray the nerves of crypto enthusiasts. A break below that level could quickly take the price to $25.6K - the all-important 200-week moving average, the capture of which allowed the bull market to be declared resurgent in March.
Similarly, the #Ethereum exchange rate returned to $1915 when the rally began on the 13th. Significant support is seen in the $1840-1850 area, where the lows of 9th April and the Fibonacci retracement are concentrated.
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Japan Inflation: Higher than expected but slowing
Consumer price inflation in Japan is in no hurry to slow down. In March, prices rose 3.2% y/y, compared with 3.3% in February and an expected 2.6%.
The core price index excludes food and energy but has not yet peaked, reaching 3.8% y/y from 3.5% the previous month. The last time core inflation was this high in Japan was in 1981. Worse, this index has risen by 0.6% in just one month without any visible slowdown, as we see in most developed countries.
However, the situation calls for patience rather than immediate intervention. The Corporate Goods Price index slowed to 7.2% YoY in March, down from 8.3% in February and a peak of 10.6% in December. We will see the Corporate Service Price index next Tuesday, but the February pace was 1.8%, well within the inflation target.
Consumer price inflation in Japan is in no hurry to slow down. In March, prices rose 3.2% y/y, compared with 3.3% in February and an expected 2.6%.
The core price index excludes food and energy but has not yet peaked, reaching 3.8% y/y from 3.5% the previous month. The last time core inflation was this high in Japan was in 1981. Worse, this index has risen by 0.6% in just one month without any visible slowdown, as we see in most developed countries.
However, the situation calls for patience rather than immediate intervention. The Corporate Goods Price index slowed to 7.2% YoY in March, down from 8.3% in February and a peak of 10.6% in December. We will see the Corporate Service Price index next Tuesday, but the February pace was 1.8%, well within the inflation target.
For forex traders, higher-than-expected inflation is often a reason to buy currencies (in our case, sell USDJPY). However, with the overall growth rate in consumer and producer prices having peaked without active intervention from the BoJ, we should not expect the central bank to warm to raising interest rates now.
This interest rate differential between Japan and the rest of the world is working against the Yen.
From October 2022 to January 2023, the USDJPY gave back 50% of its rally from January 2021. Since then, the pair has returned to the upside. And we expect this moderate uptrend to be prevailing until interest rate cuts begin in the US and Europe.
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This interest rate differential between Japan and the rest of the world is working against the Yen.
From October 2022 to January 2023, the USDJPY gave back 50% of its rally from January 2021. Since then, the pair has returned to the upside. And we expect this moderate uptrend to be prevailing until interest rate cuts begin in the US and Europe.
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UK retail sales weak due to high prices
UK retail sales fell by 0.9% in March, or 1.0% excluding fuel. This compares with a fall of 3.1% year on year. More interestingly, the latest fall fits into a steady downward trend in the retail sales index, which peaked in April 2021 and has lost 9.5% since then.
At the start of this year, there were hopes that consumption had bottomed out, but the latest data cast doubt on this optimism.
Conventional logic suggests that March's high inflation figures are due to a rebound in final demand at the point of sale. But we see the opposite trend. Price rises are more the result of producers and retailers passing on higher costs to consumers rather than the result of excess demand.
UK retail sales fell by 0.9% in March, or 1.0% excluding fuel. This compares with a fall of 3.1% year on year. More interestingly, the latest fall fits into a steady downward trend in the retail sales index, which peaked in April 2021 and has lost 9.5% since then.
At the start of this year, there were hopes that consumption had bottomed out, but the latest data cast doubt on this optimism.
Conventional logic suggests that March's high inflation figures are due to a rebound in final demand at the point of sale. But we see the opposite trend. Price rises are more the result of producers and retailers passing on higher costs to consumers rather than the result of excess demand.
As a result, the British are opting for the economy. As a relatively affluent country, they have considerable room to save on unnecessary and premium goods. The positive effect is that weak retail sales work against inflation, allowing the central bank to ease pressure on interest rates.
On the other hand, this consumer behaviour can easily trigger a self-perpetuating spiral of price and cost-cutting that will weigh on the economy.
This consumer behaviour regarding retail activity and fashion trends suggests a shift in the narrative from conspicuous consumption to cost rationalisation. An example of such consumer behaviour was after the First World War, which contributed to the Great Depression, along with the active use of tariff wars and the fragmentation of the global economy (another sign of the times).
On the other hand, this consumer behaviour can easily trigger a self-perpetuating spiral of price and cost-cutting that will weigh on the economy.
This consumer behaviour regarding retail activity and fashion trends suggests a shift in the narrative from conspicuous consumption to cost rationalisation. An example of such consumer behaviour was after the First World War, which contributed to the Great Depression, along with the active use of tariff wars and the fragmentation of the global economy (another sign of the times).
#WaveAnalysis
#EURAUD reversed from support level 1.6235
• Likely to rise to resistance level 1.6440
EURAUD currency pair recently reversed up from the support level 1.6235 (former resistance from March) coinciding with the 20-day moving average and the 50% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 1.6235 created the weekly Japanese candlesticks reversal pattern Morning Star.
Given the clear daily uptrend, EURAUD can be expected to rise further toward the next resistance level 1.6440 (top of the previous impulse wave 3).
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#EURAUD reversed from support level 1.6235
• Likely to rise to resistance level 1.6440
EURAUD currency pair recently reversed up from the support level 1.6235 (former resistance from March) coinciding with the 20-day moving average and the 50% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 1.6235 created the weekly Japanese candlesticks reversal pattern Morning Star.
Given the clear daily uptrend, EURAUD can be expected to rise further toward the next resistance level 1.6440 (top of the previous impulse wave 3).
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#WaveAnalysis
#Nikkei225 reversed from resistance level 28645
• Likely to fall to support level 28250
Nikkei 225 index recently reversed down from the long-term resistance level 28645 (which has been steadily reversing the price from August of 2021).
The resistance level 28645 was strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 28645 and the overbought daily Stochastic, Nikkei 225 index can be expected to fall further toward the next support level 28250.
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#Nikkei225 reversed from resistance level 28645
• Likely to fall to support level 28250
Nikkei 225 index recently reversed down from the long-term resistance level 28645 (which has been steadily reversing the price from August of 2021).
The resistance level 28645 was strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 28645 and the overbought daily Stochastic, Nikkei 225 index can be expected to fall further toward the next support level 28250.
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#WaveAnalysis
#CADJPY reversed from resistance level 100.50
• Likely to fall to support level 98.00
CADJPY currency pair recently reversed down from the pivotal resistance level 100.50 (which has been reversing the price from the middle of December) coinciding with the upper daily Bollinger Band and the 38.2% Fibonacci correction of the downward impulse from October.
The downward reversal from the resistance level 100.50 stopped the previous minor ABC correction 2.
Given the strong daily downtrend, CADJPY can be expected to fall further toward the next support level 98.00.
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#CADJPY reversed from resistance level 100.50
• Likely to fall to support level 98.00
CADJPY currency pair recently reversed down from the pivotal resistance level 100.50 (which has been reversing the price from the middle of December) coinciding with the upper daily Bollinger Band and the 38.2% Fibonacci correction of the downward impulse from October.
The downward reversal from the resistance level 100.50 stopped the previous minor ABC correction 2.
Given the strong daily downtrend, CADJPY can be expected to fall further toward the next support level 98.00.
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#WaveAnalysis
#GBPUSD reversed from key support level 1.2335
• Likely to rise to resistance level 1.2530
GBPUSD currency pair recently reversed up from the key support level 1.2335 (which stopped the previous corrections 2 and (ii)).
The support level 1.2335 was strengthened by the 20-day moving average and by the 38.2% Fibonacci correction of the upward impulse from March.
Given the clear daily uptrend and strong dollar sales, GBPUSD can be expected to rise further toward the next resistance level 1.2530.
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#GBPUSD reversed from key support level 1.2335
• Likely to rise to resistance level 1.2530
GBPUSD currency pair recently reversed up from the key support level 1.2335 (which stopped the previous corrections 2 and (ii)).
The support level 1.2335 was strengthened by the 20-day moving average and by the 38.2% Fibonacci correction of the upward impulse from March.
Given the clear daily uptrend and strong dollar sales, GBPUSD can be expected to rise further toward the next resistance level 1.2530.
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The cryptocurrency market is down 0.6% over the past 24 hours, falling to $1.15 trillion, as we see reduced volatility and attempts to "buy the bottom".
Bitcoin is testing and attempting to hold above its 50-day moving average on Monday and Tuesday. As it does so, we, for now, see some reduced volatility and attempts to form a local bottom. It could be an attempt to return to buying after a corrective pullback or a consolidation before a new downward impulse.
Regarding technical analysis, bitcoin's correction will only become a new downtrend when the price consolidates below $26.5K, 61.8% of the upside momentum from the March lows and the bottom of last month's consolidation.
According to CoinShares, investments in crypto funds fell by $30 million last week after four weeks of gains. Bitcoin investments decreased by $53 million, while Ethereum rose by $17 million.
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Bitcoin is testing and attempting to hold above its 50-day moving average on Monday and Tuesday. As it does so, we, for now, see some reduced volatility and attempts to form a local bottom. It could be an attempt to return to buying after a corrective pullback or a consolidation before a new downward impulse.
Regarding technical analysis, bitcoin's correction will only become a new downtrend when the price consolidates below $26.5K, 61.8% of the upside momentum from the March lows and the bottom of last month's consolidation.
According to CoinShares, investments in crypto funds fell by $30 million last week after four weeks of gains. Bitcoin investments decreased by $53 million, while Ethereum rose by $17 million.
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#WaveAnalysis
#EURJPY reversed from strong resistance level 148.50
• Likely to fall to support level 146.60
EURJPY currency pair recently reversed down from the multi-month resistance level 148.50 (which stopped the previous impulse wave (A) in October).
The resistance level 148.50 was further strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 148.50 and the overbought daily Stochastic, EURJPY currency pair can be expected to fall further toward the next support level 146.60 (low of the previous correction (ii)).
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#EURJPY reversed from strong resistance level 148.50
• Likely to fall to support level 146.60
EURJPY currency pair recently reversed down from the multi-month resistance level 148.50 (which stopped the previous impulse wave (A) in October).
The resistance level 148.50 was further strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 148.50 and the overbought daily Stochastic, EURJPY currency pair can be expected to fall further toward the next support level 146.60 (low of the previous correction (ii)).
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#WaveAnalysis
#EURCAD under bullish pressure
• Likely to rise to resistance level 1.5090
EURCAD currency pair under the bullish pressure after the price broke the resistance level 1.4923 (which stopped the previous impulse wave 1 in the middle of March).
The breakout of the resistance level 1.4923 accelerated the active impulse wave 3 which belongs to the intermediate impulse wave (5) from February.
Given the clear daily uptrend, EURCAD can be expected to rise further toward the next resistance level 1.5090 (target for the completion of the active impulse wave 3).
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#EURCAD under bullish pressure
• Likely to rise to resistance level 1.5090
EURCAD currency pair under the bullish pressure after the price broke the resistance level 1.4923 (which stopped the previous impulse wave 1 in the middle of March).
The breakout of the resistance level 1.4923 accelerated the active impulse wave 3 which belongs to the intermediate impulse wave (5) from February.
Given the clear daily uptrend, EURCAD can be expected to rise further toward the next resistance level 1.5090 (target for the completion of the active impulse wave 3).
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#Bitcoin's rally accelerated late Wednesday after hitting $29K but ran into strong resistance as it approached $30K (the level passed on some exchanges). The inability to break above this level triggered a massive wave of capitulation. It quickly, but not for long, pushed the price back to $27K, the price at the start of the week. By Thursday morning, buying prevailed again, returning the price to $29K.
On a broader picture, the bulls have managed to push the price above the 50-day moving average, which is pointing up from $27K on Monday to $27.4K. At the end of March, the market bought Bitcoin near this level. In other words, we have strong indications that the first cryptocurrency maintains its uptrend.
Financial news is also helping the buying. The rally comes on the heels of reports of the stock collapse of troubled First Republic Bank, which was bailed out in March. Another bout of capital preservation fears has brought attention back to crypto.
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On a broader picture, the bulls have managed to push the price above the 50-day moving average, which is pointing up from $27K on Monday to $27.4K. At the end of March, the market bought Bitcoin near this level. In other words, we have strong indications that the first cryptocurrency maintains its uptrend.
Financial news is also helping the buying. The rally comes on the heels of reports of the stock collapse of troubled First Republic Bank, which was bailed out in March. Another bout of capital preservation fears has brought attention back to crypto.
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A gold bull cycle is not over yet
Gold has flirted with $2000 three times in the last three years. This time, however, it is more likely that the bulls will soon be able to hold higher for longer, as gold's rally now has a slightly different character.
In 2020, interest in gold was an investor response to unprecedented monetary and fiscal easing. When the price reached the psychologically important $2000 level, the gold rally was more than 70% of the cycle low.
The rally's most furious phase began when gold broke through significant resistance at $1800, but the new buying potential was largely exhausted. As a result, the liquidation of short positions that saw gold rewrite its all-time high at $2075 was followed by a prolonged period of profit-taking, despite the continued rally in other risky assets.
Gold has flirted with $2000 three times in the last three years. This time, however, it is more likely that the bulls will soon be able to hold higher for longer, as gold's rally now has a slightly different character.
In 2020, interest in gold was an investor response to unprecedented monetary and fiscal easing. When the price reached the psychologically important $2000 level, the gold rally was more than 70% of the cycle low.
The rally's most furious phase began when gold broke through significant resistance at $1800, but the new buying potential was largely exhausted. As a result, the liquidation of short positions that saw gold rewrite its all-time high at $2075 was followed by a prolonged period of profit-taking, despite the continued rally in other risky assets.
In early 2022, gold was in demand, first on fears of capital depreciation and soon after on geopolitics, and we saw a rise of over 15% in less than five weeks. It then failed to make new all-time highs and peaked at $2072. A decisive monetary policy reversal by the Fed and other central banks dragged the price down.
Gold bottomed in September-October on signals that the Fed was slowing the rate hikes and that interest rates might soon peak.
We then saw a very rapid return to historical highs - much faster than the other asset classes, which fell in 2022 and bottomed around the same time.
Early last month, we saw a more reliable reason to buy gold – the market's reaction to the banks' problems. Gold gained traction as the end of the tightening cycle approached. Moreover, bank problems leading to economic growth issues are a significant reason for the Fed to turn its policy towards easing.
Gold bottomed in September-October on signals that the Fed was slowing the rate hikes and that interest rates might soon peak.
We then saw a very rapid return to historical highs - much faster than the other asset classes, which fell in 2022 and bottomed around the same time.
Early last month, we saw a more reliable reason to buy gold – the market's reaction to the banks' problems. Gold gained traction as the end of the tightening cycle approached. Moreover, bank problems leading to economic growth issues are a significant reason for the Fed to turn its policy towards easing.
Gold rallied sharply in March, and the market possibly unwound this overheating in the recent 3% correction from the $2048 highs.
The sequence of lower highs in 2020, 2022 and 2023 is worrying. But the series of higher local lows over the past five weeks is worth noting.
Moreover, all this consolidation is taking place at higher levels than in previous similar episodes, reflecting more interest in buying gold.
The historical tendency for the dollar to weaken at a similar stage in the monetary cycle is also worth considering.
In addition to technical analysis, gold buying is also justified by geopolitics, which remains tense and keeps the idea of a move towards supranational stores of value.
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The sequence of lower highs in 2020, 2022 and 2023 is worrying. But the series of higher local lows over the past five weeks is worth noting.
Moreover, all this consolidation is taking place at higher levels than in previous similar episodes, reflecting more interest in buying gold.
The historical tendency for the dollar to weaken at a similar stage in the monetary cycle is also worth considering.
In addition to technical analysis, gold buying is also justified by geopolitics, which remains tense and keeps the idea of a move towards supranational stores of value.
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#WaveAnalysis
#Apple continues daily uptrend
• Likely to rise to resistance level 168.15
Apple recently reversed up from support trendline of the day up channel from March, intersecting with the 20-day moving average and the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from theses support levels continues the minor c-wave of the active correction (ii) from January.
Given the clear daily uptrend, Apple can be expected to rise further toward the next resistance level 168.15 (which reversed the price earlier this month).
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#Apple continues daily uptrend
• Likely to rise to resistance level 168.15
Apple recently reversed up from support trendline of the day up channel from March, intersecting with the 20-day moving average and the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from theses support levels continues the minor c-wave of the active correction (ii) from January.
Given the clear daily uptrend, Apple can be expected to rise further toward the next resistance level 168.15 (which reversed the price earlier this month).
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#WaveAnalysis
#GBPCHF reversed from long-term support level 1.1065
• Likely to rise to resistance level 1.1225
GBPCHF currency pair recently reversed up from the long-term support level 1.1065 (which has been reversing the pair from November), standing near the lower daily Bollinger Band.
The upward reversal from the support level 1.1065 stopped the C-wave of the medium-term ABC correction (B) from October.
Given the strong Swiss franc sales, GBPCHF currency pair can be expected to rise further toward the next resistance level 1.1225.
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#GBPCHF reversed from long-term support level 1.1065
• Likely to rise to resistance level 1.1225
GBPCHF currency pair recently reversed up from the long-term support level 1.1065 (which has been reversing the pair from November), standing near the lower daily Bollinger Band.
The upward reversal from the support level 1.1065 stopped the C-wave of the medium-term ABC correction (B) from October.
Given the strong Swiss franc sales, GBPCHF currency pair can be expected to rise further toward the next resistance level 1.1225.
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#WaveAnalysis
#USDCHF reversed from support level 0.8860
• Likely to rise to resistance level 0.9000
USDCHF currency pair recently reversed up from the key support level 0.8860 (which stopped the previous impulse wave (iii) at the start of this month).
The support zone near the support level 0.8860 was further strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.8860 and the bullish divergence on the daily Stochastic, USDCHF currency pair can be expected to rise further toward the next round resistance level 0.9000 (top of the previous correction (iv)).
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#USDCHF reversed from support level 0.8860
• Likely to rise to resistance level 0.9000
USDCHF currency pair recently reversed up from the key support level 0.8860 (which stopped the previous impulse wave (iii) at the start of this month).
The support zone near the support level 0.8860 was further strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.8860 and the bullish divergence on the daily Stochastic, USDCHF currency pair can be expected to rise further toward the next round resistance level 0.9000 (top of the previous correction (iv)).
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