#WaveAnalysis
#EURCHF broke support zone
Likely to fall to support level 0.9500
EURCHF currency pair earlier broke the support zone lying between the key support level 0.9600 (which reversed the pair earlier this month) and the support trendline of the the daily down channel from March.
The breakout of this support zone accelerated the active impulse waves iii and (3).
Given the clear multi-month downtrend, EURCHF can be expected to fall further toward the next major support level 0.9500 (which reversed the price multiple times in last September).
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#EURCHF broke support zone
Likely to fall to support level 0.9500
EURCHF currency pair earlier broke the support zone lying between the key support level 0.9600 (which reversed the pair earlier this month) and the support trendline of the the daily down channel from March.
The breakout of this support zone accelerated the active impulse waves iii and (3).
Given the clear multi-month downtrend, EURCHF can be expected to fall further toward the next major support level 0.9500 (which reversed the price multiple times in last September).
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The crypto market is maintaining a wait-and-see approach, moving in a narrow range after the sell-off on Monday. The markets appear to be waiting for the directions after Fed's decision.
Bitcoin stuck to its 50-day moving average, trading just above $29.1K. One of the following sharp moves could stop the recent mini-lull, determining the future trend.
A drop under $28.8K would mark the transition to a deeper correction scenario down to $27K, where the 200-week average and the lower boundary of the ascending corridor lie.
However, Bitcoin has about the same chance of returning to growth. We will get more confidence when the price strengthens to $29.7K.
Dogecoin has added over 14% since the beginning of the week on the back of Twitter's logo change. The rebranding to "X" has increased networking activity and altcoin’s value. Elon Musk promised to make Twitter a financial hub.
Bitcoin stuck to its 50-day moving average, trading just above $29.1K. One of the following sharp moves could stop the recent mini-lull, determining the future trend.
A drop under $28.8K would mark the transition to a deeper correction scenario down to $27K, where the 200-week average and the lower boundary of the ascending corridor lie.
However, Bitcoin has about the same chance of returning to growth. We will get more confidence when the price strengthens to $29.7K.
Dogecoin has added over 14% since the beginning of the week on the back of Twitter's logo change. The rebranding to "X" has increased networking activity and altcoin’s value. Elon Musk promised to make Twitter a financial hub.
👀Watch out for market gaps caused by earnings!
Yesterday after the market close, we had reports from Google & Microsoft, causing both stocks to move pre-market.
📉Microsoft has fallen 4% after revenue guidance missed expectations, while Google (Alphabet) is rising +6% following an increase in digital ad and cloud revenue. 📈
🔜Coming up shortly, we have Visa, AT&T and Coca-cola set to report, followed later by Meta and others.
👉When you trade with FxPro, we give you a weekly breakdown of the top upcoming company stock earnings delivered right to your inbox! 📧
📅Check out our earnings calendar to see the full list of companies and reporting dates.
Yesterday after the market close, we had reports from Google & Microsoft, causing both stocks to move pre-market.
📉Microsoft has fallen 4% after revenue guidance missed expectations, while Google (Alphabet) is rising +6% following an increase in digital ad and cloud revenue. 📈
🔜Coming up shortly, we have Visa, AT&T and Coca-cola set to report, followed later by Meta and others.
👉When you trade with FxPro, we give you a weekly breakdown of the top upcoming company stock earnings delivered right to your inbox! 📧
📅Check out our earnings calendar to see the full list of companies and reporting dates.
Too dovish market expectations from FOMC?
After pausing at the last meeting, the Fed will announce its rate decision today with a widely expected 25-point hike to a range of 5.25%-5.50%. This event is 97% priced into interest rate futures, according to the FedWatch tool, and the main intrigue lies in the clues as to the Fed's next moves. And there is plenty of room for speculation.
In their speeches, FOMC officials keep reminding us that the fight against inflation is not over and will be a long one. Translated into the language of interest rates, this means the prospect of (at least) one more hike and a long (up to a year) plateau period.
Markets see the situation differently, assuming there will be no further hikes and that the first cut will come before a year.
Managing these expectations is a major challenge for the Fed. But does the US central bank have to? If so, it could disappoint markets and give the dollar a boost.
After pausing at the last meeting, the Fed will announce its rate decision today with a widely expected 25-point hike to a range of 5.25%-5.50%. This event is 97% priced into interest rate futures, according to the FedWatch tool, and the main intrigue lies in the clues as to the Fed's next moves. And there is plenty of room for speculation.
In their speeches, FOMC officials keep reminding us that the fight against inflation is not over and will be a long one. Translated into the language of interest rates, this means the prospect of (at least) one more hike and a long (up to a year) plateau period.
Markets see the situation differently, assuming there will be no further hikes and that the first cut will come before a year.
Managing these expectations is a major challenge for the Fed. But does the US central bank have to? If so, it could disappoint markets and give the dollar a boost.
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In addition to core and headline inflation, the Fed also looks at the labour market. The near multi-year low in the unemployment rate promises to keep upward pressure on prices, suggesting room for further tightening. Separately, house prices are rising for the third month in a row, despite multi-year highs in mortgage rates. Rental prices are rising even faster, reducing the backlog from previous years but acting as a critical pro-inflationary factor.
The Fed's hawkish tone later on Wednesday could trigger a broad correction in equities and provide a longer-term boost to the dollar, taking the DXY index into the 103.0-103.7 range. This could lead to widespread profit-taking in equities, taking the Nasdaq100 below 15000 and the S&P500 to 4400.
A softening of the Fed's stance would pave the way for a quick return of the DXY below 100 and set the stage for further gains in equities, with the potential to update multi-month highs in the coming weeks.
The Fed's hawkish tone later on Wednesday could trigger a broad correction in equities and provide a longer-term boost to the dollar, taking the DXY index into the 103.0-103.7 range. This could lead to widespread profit-taking in equities, taking the Nasdaq100 below 15000 and the S&P500 to 4400.
A softening of the Fed's stance would pave the way for a quick return of the DXY below 100 and set the stage for further gains in equities, with the potential to update multi-month highs in the coming weeks.
After FOMC: Markets heard just what they wanted
The Fed raised its key rate by 25 bps to 5.25-5.50%. The upper boundary of this range is the highest in 22 years. The lower boundary corresponds to the plateau level at which the Fed held rates from July 2006 to August 2007 before the onset of the mortgage and global financial crises.
The markets perceive this point as a rate peak and expect a reversal in monetary policy soon. Rate futures are pricing in the start of a decline as early as January next year and suggest that the Fed Funds rate will be 75 points below current levels a year from now and 125 points by the end of 2024.
This was the markets' reaction to comments that the Central Bank's next moves will be based on further data, as the policy tightening that has already taken place has not yet had a full impact on the economy.
The Fed raised its key rate by 25 bps to 5.25-5.50%. The upper boundary of this range is the highest in 22 years. The lower boundary corresponds to the plateau level at which the Fed held rates from July 2006 to August 2007 before the onset of the mortgage and global financial crises.
The markets perceive this point as a rate peak and expect a reversal in monetary policy soon. Rate futures are pricing in the start of a decline as early as January next year and suggest that the Fed Funds rate will be 75 points below current levels a year from now and 125 points by the end of 2024.
This was the markets' reaction to comments that the Central Bank's next moves will be based on further data, as the policy tightening that has already taken place has not yet had a full impact on the economy.
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That said, Powell, at the press conference, continued to promote the idea that there is no need to wait for an imminent policy reversal. The FOMC forecasts inflation above target until the end of 2024, hence the need to maintain restrictive policy when the key rate exceeds inflation.
Powell noted the unexpected combination of falling inflation and rising employment but asked us to avoid jumping to conclusions based on one good inflation report.
We, on the other hand, focus on the persistent domestic pro-inflation factors. A tight labour market shapes wage growth at 4.4% y/y, holding inflation down. And this is evident in the monthly rate of price growth, where the overall rate added 1.7% in the first six months of the year, bringing the annual rate to 3.4%, while the core rate added 2.3% in the six months, bringing the annual rate to 4.6%.
Separate from overall inflation, housing prices added for the third consecutive month despite high mortgage rates, and rental costs are becoming the trigger for inflation instead of global energy and food prices as they were a year ago.
If economic theory still works, it's too early for the Fed to rest on its laurels and continue working to cool the economy. Markets continue to believe in strong growth, lower inflation and Fed policy easing simultaneously. However, it is wise to choose up to two of these.
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Powell noted the unexpected combination of falling inflation and rising employment but asked us to avoid jumping to conclusions based on one good inflation report.
We, on the other hand, focus on the persistent domestic pro-inflation factors. A tight labour market shapes wage growth at 4.4% y/y, holding inflation down. And this is evident in the monthly rate of price growth, where the overall rate added 1.7% in the first six months of the year, bringing the annual rate to 3.4%, while the core rate added 2.3% in the six months, bringing the annual rate to 4.6%.
Separate from overall inflation, housing prices added for the third consecutive month despite high mortgage rates, and rental costs are becoming the trigger for inflation instead of global energy and food prices as they were a year ago.
If economic theory still works, it's too early for the Fed to rest on its laurels and continue working to cool the economy. Markets continue to believe in strong growth, lower inflation and Fed policy easing simultaneously. However, it is wise to choose up to two of these.
📣Trade responsibly with fxpro.com
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#WaveAnalysis
#CHFJPY reversed from key support level 158.80
Likely to rise to resistance level 162.00
CHFJPY currency pair recently reversed up from the key support level 158.80 (former resistance from June, which has been reversing the pair from the start of July).
The support level 158.80 was strengthened by the nearby lower daily Bollinger Band and the support trendline of the daily up channel from March.
Given the clear daily uptrend , CHFJPY can be expected to rise further toward the next resistance level 162.00.
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#CHFJPY reversed from key support level 158.80
Likely to rise to resistance level 162.00
CHFJPY currency pair recently reversed up from the key support level 158.80 (former resistance from June, which has been reversing the pair from the start of July).
The support level 158.80 was strengthened by the nearby lower daily Bollinger Band and the support trendline of the daily up channel from March.
Given the clear daily uptrend , CHFJPY can be expected to rise further toward the next resistance level 162.00.
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#WaveAnalysis
#Brent Crude oil broke two resistance levels
Likely to rise to resistance level 86.00
Brent Crude oil recently broke the two consecutive resistance levels – 81.00 and 82.75 (top of the previous wave B from the end of April).
The breakout of theses resistance levels coincided with the breakout of the multi-month resistance trendline from last November – which accelerated the active impulse waves v and 3.
Brent Crude oil can be expected to rise further toward the next resistance level 86.00 (former monthly high from February and March).
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#Brent Crude oil broke two resistance levels
Likely to rise to resistance level 86.00
Brent Crude oil recently broke the two consecutive resistance levels – 81.00 and 82.75 (top of the previous wave B from the end of April).
The breakout of theses resistance levels coincided with the breakout of the multi-month resistance trendline from last November – which accelerated the active impulse waves v and 3.
Brent Crude oil can be expected to rise further toward the next resistance level 86.00 (former monthly high from February and March).
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#WaveAnalysis #SPX
S&P 500 index reversed from support level 4535.00
Likely to rise to resistance level 4600.00
S&P 500 index recently reversed up from the key support level 4535.00 (which has reversed the price multiples time earlier this month as can be seen below).
The support level 4535.00 was strengthened by the lower daily Bollinger Band, 61.8% Fibonacci correction of the upward impulse from the middle of July and the upper trendline of the daily up channel from June.
Given the clear daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 4600.00 (which stopped the previous impulse wave i).
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S&P 500 index reversed from support level 4535.00
Likely to rise to resistance level 4600.00
S&P 500 index recently reversed up from the key support level 4535.00 (which has reversed the price multiples time earlier this month as can be seen below).
The support level 4535.00 was strengthened by the lower daily Bollinger Band, 61.8% Fibonacci correction of the upward impulse from the middle of July and the upper trendline of the daily up channel from June.
Given the clear daily uptrend, S&P 500 index can be expected to rise further toward the next resistance level 4600.00 (which stopped the previous impulse wave i).
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Crypto market capitalisation fell by 0.5% over the week, gradually recovering from last Monday’s dip. The Crypto Market Sentiment Index fell 5 points to 50, firmly in the middle of the scale.
For the week, bitcoin lost 1.2%, Ethereum lost 0.2%, and the top altcoins ranged from -5.7% (Polygon) to +10% (Dogecoin).
Bitcoin continues to move strictly to the right, with decreasing intraday volatility and passively closing slightly below its 50-day moving average, which is pointing up. In theory, this is a signal of a medium-term trend change. In practice, however, it may simply be market noise.
In such conditions, waiting for a significant impulse in any direction makes sense, assuming further movement in the same direction. In numerical terms, a return above $30.1K opens the way to $31.4K with a long-term target of $35.5K. A break below $29K would drop the main scenario to the near-term target of $28K and the long-term target of $27K.
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For the week, bitcoin lost 1.2%, Ethereum lost 0.2%, and the top altcoins ranged from -5.7% (Polygon) to +10% (Dogecoin).
Bitcoin continues to move strictly to the right, with decreasing intraday volatility and passively closing slightly below its 50-day moving average, which is pointing up. In theory, this is a signal of a medium-term trend change. In practice, however, it may simply be market noise.
In such conditions, waiting for a significant impulse in any direction makes sense, assuming further movement in the same direction. In numerical terms, a return above $30.1K opens the way to $31.4K with a long-term target of $35.5K. A break below $29K would drop the main scenario to the near-term target of $28K and the long-term target of $27K.
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Where Crude oil prices could pop
Oil has accelerated its gains over the past week, adding more than 20% to the lows of 28 June, when the latest rally began. Technical factors coming into play and excitement in the markets from robust macro data are adding fuel to the fire.
WTI broke above $81 on Monday and is making new multi-month highs after six weeks of strength. Last Monday, the price bounced sharply off its 200-day moving average, confirming the break of a downtrend that has been in place for more than a year.
The medium-term technical picture now points to a rise to the $83.50 area, centring on the May highs and the 161.8% Fibonacci retracement from the rally's start to the first touch of the 200-day MA. However, oil's rally may not stop there and could take it to levels above $90, the double top of October and November last year.
Oil has accelerated its gains over the past week, adding more than 20% to the lows of 28 June, when the latest rally began. Technical factors coming into play and excitement in the markets from robust macro data are adding fuel to the fire.
WTI broke above $81 on Monday and is making new multi-month highs after six weeks of strength. Last Monday, the price bounced sharply off its 200-day moving average, confirming the break of a downtrend that has been in place for more than a year.
The medium-term technical picture now points to a rise to the $83.50 area, centring on the May highs and the 161.8% Fibonacci retracement from the rally's start to the first touch of the 200-day MA. However, oil's rally may not stop there and could take it to levels above $90, the double top of October and November last year.
Fundamental factors also support higher prices than we are seeing now. Market investors are cheering lower inflation figures, suggesting that central banks will move more quickly to ease policy, supporting global demand for commodities.
Interestingly, the multi-week price rally has not changed US oil producers' mood. Oil inventories remained at 12.2M BPD last week - just below the average level since the start of the year, signalling a relatively cautious near-term sentiment. The number of active drillers fell to 528 (-2) for the week, the lowest since March last year.
That's a sign of long-term pessimism, which is surprising, given the news that oil consumption has surpassed all-time highs and the supply/demand balance moved into deficit in July. On top of that, the US continues adding jobs, and China is ramping up its stimulus to accelerate economic growth.
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Interestingly, the multi-week price rally has not changed US oil producers' mood. Oil inventories remained at 12.2M BPD last week - just below the average level since the start of the year, signalling a relatively cautious near-term sentiment. The number of active drillers fell to 528 (-2) for the week, the lowest since March last year.
That's a sign of long-term pessimism, which is surprising, given the news that oil consumption has surpassed all-time highs and the supply/demand balance moved into deficit in July. On top of that, the US continues adding jobs, and China is ramping up its stimulus to accelerate economic growth.
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Eurozone inflation is a persistent challenge
According to Eurostat's flash estimate, eurozone inflation slowed to 5.3% year-on-year in July, the lowest since January 2022.
The core index stood at 5.5%, above the headline rate for the first time since February 2021. The momentum of this core index is coming to the forefront, and so far, there is little good news here, as the data are beating forecasts and not showing as strong a turnaround as we see in producer prices and headline inflation figures. As in the US, the likely reason is growth in the services sector after the coronavirus. The only thing that can change this situation is further tightening by the central bank, which is likely to dampen demand. The latest GDP estimates for the second quarter show that there is still room to work in this direction.
The eurozone economy grew by 0.3% QoQ after two quarters of virtually flat growth. This was despite aggressive interest rate hikes in previous quarters to dampen final demand for credit.
According to Eurostat's flash estimate, eurozone inflation slowed to 5.3% year-on-year in July, the lowest since January 2022.
The core index stood at 5.5%, above the headline rate for the first time since February 2021. The momentum of this core index is coming to the forefront, and so far, there is little good news here, as the data are beating forecasts and not showing as strong a turnaround as we see in producer prices and headline inflation figures. As in the US, the likely reason is growth in the services sector after the coronavirus. The only thing that can change this situation is further tightening by the central bank, which is likely to dampen demand. The latest GDP estimates for the second quarter show that there is still room to work in this direction.
The eurozone economy grew by 0.3% QoQ after two quarters of virtually flat growth. This was despite aggressive interest rate hikes in previous quarters to dampen final demand for credit.
Better-than-expected price and GDP dynamics favour the euro, which rose for a second consecutive day on Monday after Thursday's sell-off following the ECB press conference. We note that inflationary trends in Europe are more resilient than in the US, reviving speculation that the former will either have to raise rates more or hold them for longer. If this turns out to be the case, the uptrend in EURUSD that has been in place since September 2022 will gain traction in the coming quarters.
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#WaveAnalysis
#GBPJPY reversed from key support level 179.45
Likely to rise to resistance level 184.00
GBPJPY currency pair recently reversed up from the key support level 179.45 (which stopped the previous waves a and b).
The support level 179.45 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from May.
Given the clear daily uptrend, GBPJPY currency pair can be expected to rise further toward the next resistance level 184.00 (which stopped the previous impulse wave 3).
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#GBPJPY reversed from key support level 179.45
Likely to rise to resistance level 184.00
GBPJPY currency pair recently reversed up from the key support level 179.45 (which stopped the previous waves a and b).
The support level 179.45 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from May.
Given the clear daily uptrend, GBPJPY currency pair can be expected to rise further toward the next resistance level 184.00 (which stopped the previous impulse wave 3).
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#WaveAnalysis
#GBPNZD reversed from pivotal resistance level 2.090
Likely to fall to support level 2.050
GBPNZD currency pair recently reversed down from the pivotal resistance level 2.090 (which has been steadily reversing the price from the end of June).
The resistance level 2.090 is likely to form today the Bearish Engulfing, strong sell signal for this currency pair – highlighting the strength of this price level.
Given the strength of the resistance level 2.090, GBPNZD currency pair can be expected to fall further toward the next support level 2.050 (which has been reversing the pair from June).
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#GBPNZD reversed from pivotal resistance level 2.090
Likely to fall to support level 2.050
GBPNZD currency pair recently reversed down from the pivotal resistance level 2.090 (which has been steadily reversing the price from the end of June).
The resistance level 2.090 is likely to form today the Bearish Engulfing, strong sell signal for this currency pair – highlighting the strength of this price level.
Given the strength of the resistance level 2.090, GBPNZD currency pair can be expected to fall further toward the next support level 2.050 (which has been reversing the pair from June).
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The crypto market has been selling off since Tuesday morning, losing 1.7% to 1.17 trillion in 24h. Bitcoin is down 1.6%, Ethereum is down 1.75%, while the top altcoins are losing between 0.9% for BNB and 3.7% for Solana.
The reason for the pressure is the collapse of Curve (CRV) amid a possible liquidation of the position of the company's founder, who pledged CRV to buy USDT. However, the story impacts the broader altcoin market and reduces confidence in the sector.
With a decline to $28.8K, BTCUSD took a step back from the 50-day MA, which has been supporting since last Monday.
The main scenario now is a drop to $28K. However, it is more likely that no significant demand will emerge at this level and that the price will retreat to $27,000, the lower boundary of the rising channel from November, where the 200-day average is passing.
Over the past 11 years, Bitcoin has only ended August higher five times and lower seven times. The average gain was 26%, and the average loss was 16%.
The reason for the pressure is the collapse of Curve (CRV) amid a possible liquidation of the position of the company's founder, who pledged CRV to buy USDT. However, the story impacts the broader altcoin market and reduces confidence in the sector.
With a decline to $28.8K, BTCUSD took a step back from the 50-day MA, which has been supporting since last Monday.
The main scenario now is a drop to $28K. However, it is more likely that no significant demand will emerge at this level and that the price will retreat to $27,000, the lower boundary of the rising channel from November, where the 200-day average is passing.
Over the past 11 years, Bitcoin has only ended August higher five times and lower seven times. The average gain was 26%, and the average loss was 16%.
Gold is now choosing its trend
Gold has been sticking to support at the 50-day moving average since July 13th but has not found enough strength to break away from it. The markets tested the uptrend again last Thursday amid a wave of dollar strength. On Tuesday morning, Gold is down 0.6%, falling back to $1953, just $6 above this curve.
Technically, the ability to hold above this line would be a significant tactical victory for the bulls. It would dispel buyers' doubts about the precious metal's ability to move higher in an environment with the highest interest rates in more than twenty years and investors' attempts to jump into equities after months of rallying.
The longer-term technical picture remains bullish, with gold trading above its 200-day average since last December and the corrective pullback of May and April representing a precisely calibrated Fibonacci retracement of 61.8% of the November-May advance.
Gold has been sticking to support at the 50-day moving average since July 13th but has not found enough strength to break away from it. The markets tested the uptrend again last Thursday amid a wave of dollar strength. On Tuesday morning, Gold is down 0.6%, falling back to $1953, just $6 above this curve.
Technically, the ability to hold above this line would be a significant tactical victory for the bulls. It would dispel buyers' doubts about the precious metal's ability to move higher in an environment with the highest interest rates in more than twenty years and investors' attempts to jump into equities after months of rallying.
The longer-term technical picture remains bullish, with gold trading above its 200-day average since last December and the corrective pullback of May and April representing a precisely calibrated Fibonacci retracement of 61.8% of the November-May advance.
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