The 200-day moving average was a critical resistance level in the second half of April. Oil failed to breach this line and remained within the bearish trend. At the beginning of the week, the price fell below the 50-day moving average in a sharp move. The dynamics of oil near key moving averages prove that the market remains bearish, with deteriorating macroeconomic conditions.
The $65-67 area looks like an attractive target for the bears. There are many pivot points from 2021 onwards. Before that, there was significant resistance in 2019. In addition, the 200-week moving average, the most crucial indicator of the long-term trend in commodities, is close to $67.
Nevertheless, sellers should remain cautious, as a sustained decline in prices will almost certainly attract the attention of OPEC.
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The $65-67 area looks like an attractive target for the bears. There are many pivot points from 2021 onwards. Before that, there was significant resistance in 2019. In addition, the 200-week moving average, the most crucial indicator of the long-term trend in commodities, is close to $67.
Nevertheless, sellers should remain cautious, as a sustained decline in prices will almost certainly attract the attention of OPEC.
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China cools more than expected
China's PMIs released over the weekend were much weaker than expected, with the manufacturing index signalling a downturn.
The official manufacturing PMI fell to 49.2 in April from 51.9 the previous month and 51.4 expected. This sudden drop suggests that the economy had lost momentum much more quickly than analysts had expected, following a brief boom at the end of last year after the end of the 0-covid policy. The publication's commentary suggests a contraction in manufacturing demand after several months of rapid growth.
Historically, last month's levels are nothing to write home about. Chinese manufacturing activity is close to stagnation or even contraction, with a downtrend in the PMI from 2018 despite a very bumpy road due to COVID-19.
The non-manufacturing sector feels much better, losing 1.8 percentage points over the month to 56.4. The long history clearly shows that the growth rate of the non-manufacturing sector has long been a drag on the economy.
China's PMIs released over the weekend were much weaker than expected, with the manufacturing index signalling a downturn.
The official manufacturing PMI fell to 49.2 in April from 51.9 the previous month and 51.4 expected. This sudden drop suggests that the economy had lost momentum much more quickly than analysts had expected, following a brief boom at the end of last year after the end of the 0-covid policy. The publication's commentary suggests a contraction in manufacturing demand after several months of rapid growth.
Historically, last month's levels are nothing to write home about. Chinese manufacturing activity is close to stagnation or even contraction, with a downtrend in the PMI from 2018 despite a very bumpy road due to COVID-19.
The non-manufacturing sector feels much better, losing 1.8 percentage points over the month to 56.4. The long history clearly shows that the growth rate of the non-manufacturing sector has long been a drag on the economy.
Traditionally, market participants pay more attention to production dynamics as it sheds light on global trends and allows for assessing export and import potential, affecting the renminbi exchange rate. Moreover, production often acts as a leading indicator of economic trends.
In this context, it is unsurprising that the renminbi fell, and the #USDCNH rose on Monday. Last week it broke above its 200-day MA at 6.95 but did not dare to break through. At the same time, the pullback level to 61.8% of the November and February declines is also in this area.
A decisive break of this long-term trend indicator is likely to be postponed by the outcome of the Fed meeting. A move lower in the USDCNH could be the prologue to a move lower to 6.30 in the coming months. A sharp move higher would reclassify the pair's rise in recent weeks from a correction to a new advance and could lead to a significant increase in the pair's volatility.
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In this context, it is unsurprising that the renminbi fell, and the #USDCNH rose on Monday. Last week it broke above its 200-day MA at 6.95 but did not dare to break through. At the same time, the pullback level to 61.8% of the November and February declines is also in this area.
A decisive break of this long-term trend indicator is likely to be postponed by the outcome of the Fed meeting. A move lower in the USDCNH could be the prologue to a move lower to 6.30 in the coming months. A sharp move higher would reclassify the pair's rise in recent weeks from a correction to a new advance and could lead to a significant increase in the pair's volatility.
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#WaveAnalysis
#NZDJPY broke resistance level 83.80
• Likely to rise to resistance level 85.00
NZDJPY currency pair recently broke above the resistance level 83.80 (which stopped the previous waves 2, (1), (a) and B).
The breakout of the resistance level 83.80 continues the active medium-term impulse wave (3) from the end of April.
NZDJPY currency pair can be expected to rise further toward the next resistance level 85.00 (top of wave (B) from the start of March).
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#NZDJPY broke resistance level 83.80
• Likely to rise to resistance level 85.00
NZDJPY currency pair recently broke above the resistance level 83.80 (which stopped the previous waves 2, (1), (a) and B).
The breakout of the resistance level 83.80 continues the active medium-term impulse wave (3) from the end of April.
NZDJPY currency pair can be expected to rise further toward the next resistance level 85.00 (top of wave (B) from the start of March).
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#WaveAnalysis
#EURCAD reversed from long-term resistance level 1.5095
• Likely to fall to support level 1.4800
EURCAD currency pair previously reversed down strongly from the long-term resistance level 1.5095 (which has been steadily reversing the pair from the start of 2021).
The resistance level 1.5095 was strengthened by the resistance trendline of the weekly up channel from the start of this year.
Given the triple bearish divergence one the weekly Stochastic indicator, EURCAD currency pair can be expected to fall further toward the next support level 1.4800.
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#EURCAD reversed from long-term resistance level 1.5095
• Likely to fall to support level 1.4800
EURCAD currency pair previously reversed down strongly from the long-term resistance level 1.5095 (which has been steadily reversing the pair from the start of 2021).
The resistance level 1.5095 was strengthened by the resistance trendline of the weekly up channel from the start of this year.
Given the triple bearish divergence one the weekly Stochastic indicator, EURCAD currency pair can be expected to fall further toward the next support level 1.4800.
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#Bitcoin fell all day yesterday, losing around 6% to $27.6K, raising the question of whether we are seeing the start of a prolonged decline.
Bitcoin closed below its 50-day moving average on Monday. The price stays below that curve and is stuck at $28.0K after rising 1.3% to today. If it can't quickly surpass it again, Bitcoin's fall below $27K will pave the way for a move to $22K, where the 200-day passes, which became a turning point in March.
Twitter analyst Bluntz, who predicted a bear market bottom for BTC in 2018, expects Bitcoin to fall to $25K. In his view, the first cryptocurrency is unlikely to break $30,000 soon. BTC has completed a 5-wave and is now in a corrective A-B-C formation.
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Bitcoin closed below its 50-day moving average on Monday. The price stays below that curve and is stuck at $28.0K after rising 1.3% to today. If it can't quickly surpass it again, Bitcoin's fall below $27K will pave the way for a move to $22K, where the 200-day passes, which became a turning point in March.
Twitter analyst Bluntz, who predicted a bear market bottom for BTC in 2018, expects Bitcoin to fall to $25K. In his view, the first cryptocurrency is unlikely to break $30,000 soon. BTC has completed a 5-wave and is now in a corrective A-B-C formation.
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RBA rate hike helps AUD form reversal
The Reserve Bank of Australia surprisingly did what it promised to the markets. The RBA this morning raised the rate by 25 points to 3.85%, warning that it may further tighten monetary policy.
The Bank had previously urged markets to be prepared for such a move, but analysts and traders did not expect the change.
As a result of the "surprise", AUDUSD gained more than 1.3% in the three hours after the decision was announced to 0.6715, rolling back to 0.6690 at the time of writing. The AUDUSD has been trying to form a 'bottom' below 0.66 for the past two months, and the RBA decision creates the necessary positive momentum that has a high chance of starting a trend in the coming days.
The Reserve Bank of Australia surprisingly did what it promised to the markets. The RBA this morning raised the rate by 25 points to 3.85%, warning that it may further tighten monetary policy.
The Bank had previously urged markets to be prepared for such a move, but analysts and traders did not expect the change.
As a result of the "surprise", AUDUSD gained more than 1.3% in the three hours after the decision was announced to 0.6715, rolling back to 0.6690 at the time of writing. The AUDUSD has been trying to form a 'bottom' below 0.66 for the past two months, and the RBA decision creates the necessary positive momentum that has a high chance of starting a trend in the coming days.
The pressure on the Aussie in the last hours has more to do with general market wariness, where there is a pull into defensive assets and the dollar ahead of the Fed decision tomorrow evening. A quarter-point rate hike is also expected there. The RBA's latest move seems like an attempt to curb the widening of yield spreads between Australia and the US and support the Aussie.
The strengthening of the domestic currency can curb inflation, which stood at 7% in the first quarter, a sharper-than-expected decline from a peak of 7.8% a quarter earlier.
Now the #AUDUSD is trying to consolidate above its 50-day moving average. An ability to close the day above 0.6685 would make a test of the 200-day moving average (currently at 0.6730) an issue. The ability to consolidate above would be an essential signal of a long-term trend reversal.
However, one should remember that a similar signal triggered the AUDUSD to rise for the next three weeks in January but gave up all gains later.
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The strengthening of the domestic currency can curb inflation, which stood at 7% in the first quarter, a sharper-than-expected decline from a peak of 7.8% a quarter earlier.
Now the #AUDUSD is trying to consolidate above its 50-day moving average. An ability to close the day above 0.6685 would make a test of the 200-day moving average (currently at 0.6730) an issue. The ability to consolidate above would be an essential signal of a long-term trend reversal.
However, one should remember that a similar signal triggered the AUDUSD to rise for the next three weeks in January but gave up all gains later.
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#WaveAnalysis
#GBPJPY reversed from long-term resistance level 172.00
• Likely to fall to support level 168.85
GBPJPY currency pair recently reversed down strongly from the long-term resistance level 172.00 (former multi-month high from October), standing above the upper daily Bollinger Band.
The downward reversal from the resistance level 172.00 stopped the previous short-term impulse waves 3 and (v) of wave C from March.
Given the overbought daily Stochastic, GBPJPY can be expected to fall further toward the next support level 168.85 (former resistance from November and December).
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#GBPJPY reversed from long-term resistance level 172.00
• Likely to fall to support level 168.85
GBPJPY currency pair recently reversed down strongly from the long-term resistance level 172.00 (former multi-month high from October), standing above the upper daily Bollinger Band.
The downward reversal from the resistance level 172.00 stopped the previous short-term impulse waves 3 and (v) of wave C from March.
Given the overbought daily Stochastic, GBPJPY can be expected to fall further toward the next support level 168.85 (former resistance from November and December).
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#WaveAnalysis
#Gold reversed from key support level 1970.00
• Likely to rise to resistance level 2050.00
Gold earlier reversed up sharply from the key support level 1970.00, standing close to the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 1970.00 started the active short-term impulse wave 3.
Given the clear daily uptrend, Gold can be expected to rise further toward the next resistance level 2050.00 (top of the previous impulse wave 1).
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#Gold reversed from key support level 1970.00
• Likely to rise to resistance level 2050.00
Gold earlier reversed up sharply from the key support level 1970.00, standing close to the 38.2% Fibonacci correction of the upward impulse from March.
The upward reversal from the support level 1970.00 started the active short-term impulse wave 3.
Given the clear daily uptrend, Gold can be expected to rise further toward the next resistance level 2050.00 (top of the previous impulse wave 1).
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Over the past 24 hours, the crypto market capitalisation rose 1.4% to $1.18 trillion.
On Tuesday, #Bitcoin recovered to $28.6K, over half of the previous day’s decline. Cryptocurrencies and gold gained momentum on the re-emerging woes of regional banks. This time it was PacWest Bancorp, Western Alliance and Metropolitan. However, we also note that the price stabilised before this news, suggesting that the selling momentum has subsided.
Bitcoin has steadily moved back above its 50-day moving average, proving that the break below was false. The upcoming Fed rate decision promises to increase volatility later in the day. A consolidation above $29.3K (the start of the sell-off) or a break below $28.2K (the 50-day moving average) could signal that the market has decided on a direction for the next few days or weeks.
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On Tuesday, #Bitcoin recovered to $28.6K, over half of the previous day’s decline. Cryptocurrencies and gold gained momentum on the re-emerging woes of regional banks. This time it was PacWest Bancorp, Western Alliance and Metropolitan. However, we also note that the price stabilised before this news, suggesting that the selling momentum has subsided.
Bitcoin has steadily moved back above its 50-day moving average, proving that the break below was false. The upcoming Fed rate decision promises to increase volatility later in the day. A consolidation above $29.3K (the start of the sell-off) or a break below $28.2K (the 50-day moving average) could signal that the market has decided on a direction for the next few days or weeks.
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Gold rose by almost 2% on Tuesday on reports of another regional bank's problems in the US. Quite quickly, the price stabilised around $2015, bouncing back from the lower end of the uptrend range, active since March 22. However, it is a less significant reaction compared to what we have seen since March 9, as it is uncommon for the financial markets to experience an equally strong surge in response to the same cause twice.
Before that, since the end of April, we have seen very persistent buying of gold on declines into the $1975 area. Yesterday's move brought the price back to the middle of the upside range, which has existed since March 22. Yesterday's momentum took the price to almost four-week highs, above several local highs in recent days.
The upper boundary of that range is now near $2065, which brings it very close to a third test of the all-time highs above $2070. But there is an important difference between the way the price has behaved the previous two times and now.
Before that, since the end of April, we have seen very persistent buying of gold on declines into the $1975 area. Yesterday's move brought the price back to the middle of the upside range, which has existed since March 22. Yesterday's momentum took the price to almost four-week highs, above several local highs in recent days.
The upper boundary of that range is now near $2065, which brings it very close to a third test of the all-time highs above $2070. But there is an important difference between the way the price has behaved the previous two times and now.
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In July 2020 and February 2022, gold entered the most violent phase of its rally from levels just above $1800. This acceleration is often the last phase of the rally when the market is driven by extreme greed and bearish capitulation. In both cases, the price declined for a long time after that, pulling back below $1700.
This year's rally started from roughly the same levels near $1800, but that was preceded by a prolonged correction after a failed attempt to take $2000 in January. In addition, since the end of March, the gold movement has become more cautious, and in April, it added just over 1%. Thus, the upward momentum in gold is not bearish capitulation but investor and speculator demand.
This year's rally started from roughly the same levels near $1800, but that was preceded by a prolonged correction after a failed attempt to take $2000 in January. In addition, since the end of March, the gold movement has become more cautious, and in April, it added just over 1%. Thus, the upward momentum in gold is not bearish capitulation but investor and speculator demand.
Notably, the buying boundary on declines - near $1975 - runs near a critical resistance level seen in August 2020 and April 2022, when sellers prevented gold from rallying again after the surge.
The market dynamics suggest that the recent retreat to the $2000 level is a prologue to further gains rather than the end of an extended rally, as was previously the case. This suggests we will soon see prices above $2050 (previous high area) and increased chances of going above $2075 with a renewal of historical highs in the coming weeks.
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The market dynamics suggest that the recent retreat to the $2000 level is a prologue to further gains rather than the end of an extended rally, as was previously the case. This suggests we will soon see prices above $2050 (previous high area) and increased chances of going above $2075 with a renewal of historical highs in the coming weeks.
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#WaveAnalysis
#AUDUSD reversed from key support level 0.6600
• Likely to rise to resistance level 0.6750
AUDUSD currency pair recently reversed up strongly from the key support level 0.6600 (which has been reversing the pair from November), standing close to the lower daily Bollinger Band and the 61.8% Fibonacci correction of the sharp upward impulse from October.
The upward reversal from the support level 0.6600 stopped the previous short-term impulse wave 3 of the impulse wave (3) from April.
AUDUSD can be expected to rise further toward the next resistance level 0.6750 (which stopped the previous waves 4, A, (2) and 2).
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#AUDUSD reversed from key support level 0.6600
• Likely to rise to resistance level 0.6750
AUDUSD currency pair recently reversed up strongly from the key support level 0.6600 (which has been reversing the pair from November), standing close to the lower daily Bollinger Band and the 61.8% Fibonacci correction of the sharp upward impulse from October.
The upward reversal from the support level 0.6600 stopped the previous short-term impulse wave 3 of the impulse wave (3) from April.
AUDUSD can be expected to rise further toward the next resistance level 0.6750 (which stopped the previous waves 4, A, (2) and 2).
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Almost all the gains have come since the start of the day, coinciding with a fresh bout of fear about US regional banks.
US index futures have risen modestly since the start of the day as the banking problems bring a monetary policy reversal closer. And that is another reason for buyers, in this case, medium-term buyers, to be happy.
The bulls in Bitcoin have pushed the price to $29K, consolidating above the 50-day MA. Short-term attention is focused on the $29.4K area, where Bitcoin fell earlier this month, and resistance runs through the local highs of mid to late April. A move higher would pave the way for another test of highs for almost a year.
According to Santiment, bitcoin whales increased their holdings of the first cryptocurrency by 64,000 BTC in April, contrary to the view that the final direction of the asset's movement has yet to take shape. Major investors continue to believe that there are growth prospects for BTC.
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US index futures have risen modestly since the start of the day as the banking problems bring a monetary policy reversal closer. And that is another reason for buyers, in this case, medium-term buyers, to be happy.
The bulls in Bitcoin have pushed the price to $29K, consolidating above the 50-day MA. Short-term attention is focused on the $29.4K area, where Bitcoin fell earlier this month, and resistance runs through the local highs of mid to late April. A move higher would pave the way for another test of highs for almost a year.
According to Santiment, bitcoin whales increased their holdings of the first cryptocurrency by 64,000 BTC in April, contrary to the view that the final direction of the asset's movement has yet to take shape. Major investors continue to believe that there are growth prospects for BTC.
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ECB slows rate hike, but unlikely to stop
The European Central Bank raised interest rates by a quarter of a percentage point to 3.75%, duplicating the Fed's move the day before.
This was the move that market analysts had been predicting, although some central bank officials had been talking about the need for a 50-point hike for weeks. The market may have priced in some probability of such a move, which put pressure on the Euro following the rate announcement.
In a published commentary, the ECB reiterated that inflation has been "too high for too long". The bank continues to focus on solid underline price pressures despite the decline in the headline annual rate.
The European Central Bank raised interest rates by a quarter of a percentage point to 3.75%, duplicating the Fed's move the day before.
This was the move that market analysts had been predicting, although some central bank officials had been talking about the need for a 50-point hike for weeks. The market may have priced in some probability of such a move, which put pressure on the Euro following the rate announcement.
In a published commentary, the ECB reiterated that inflation has been "too high for too long". The bank continues to focus on solid underline price pressures despite the decline in the headline annual rate.
Like the FOMC, the ECB today reminded us of the time lag between interest rate changes and their economic impact. The market took this as a willingness to pause on further hikes. However, we must be cautious with this interpretation, as this comment could also justify a smaller hike rather than signalling a pause.
The ECB has started to raise rates later than the Fed, with higher peak inflation. From this point of view, it is logical to expect that rate hikes will also end later. In 2007-2008, the ECB had a rate of 4% before raising it to 4.25% for six months in response to a surge in energy prices. This time, the ECB will likely continue raising rates sooner than in 2008.
The potential for further hikes in Europe and a pause in America could drive a gradual rise in European currencies against the dollar in the near future.
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The ECB has started to raise rates later than the Fed, with higher peak inflation. From this point of view, it is logical to expect that rate hikes will also end later. In 2007-2008, the ECB had a rate of 4% before raising it to 4.25% for six months in response to a surge in energy prices. This time, the ECB will likely continue raising rates sooner than in 2008.
The potential for further hikes in Europe and a pause in America could drive a gradual rise in European currencies against the dollar in the near future.
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#WaveAnalysis
#WTI reversed from key support level 64.40
• Likely to rise to resistance level 70.00.
WTI crude oil recently reversed up from the key support level 64.40 (previous monthly low from March) standing well below the lower daily Bollinger Band.
The upward reversal from the support level 64.40 is currently forming the daily Japanese candlesticks reversal pattern Hammer.
Given the oversold daily Stochastic, WTI crude oil can be expected to rise further toward the next round resistance level 70.00.
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#WTI reversed from key support level 64.40
• Likely to rise to resistance level 70.00.
WTI crude oil recently reversed up from the key support level 64.40 (previous monthly low from March) standing well below the lower daily Bollinger Band.
The upward reversal from the support level 64.40 is currently forming the daily Japanese candlesticks reversal pattern Hammer.
Given the oversold daily Stochastic, WTI crude oil can be expected to rise further toward the next round resistance level 70.00.
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#WaveAnalysis
#NZDCAD broke daily down channel
• Likely to rise to resistance level 0.8570
NZDCAD currency pair recently broke the resistance trendline of the daily down channel from December (which encloses the previous intermediate ABC correction (B)).
The breakout of this down channel continues the minor impulse wave 3 of the intermediate impulse wave (B) from the middle of last month.
NZDCAD can be expected to rise further toward the next resistance level 0.8570 (which reversed the pair multiple times in March, target price for the completion of the active impulse wave 3).
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#NZDCAD broke daily down channel
• Likely to rise to resistance level 0.8570
NZDCAD currency pair recently broke the resistance trendline of the daily down channel from December (which encloses the previous intermediate ABC correction (B)).
The breakout of this down channel continues the minor impulse wave 3 of the intermediate impulse wave (B) from the middle of last month.
NZDCAD can be expected to rise further toward the next resistance level 0.8570 (which reversed the pair multiple times in March, target price for the completion of the active impulse wave 3).
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