Gold is probably ending a short-term bounce
#Gold's rally appears to be running out of steam after a 2% rally since the beginning of last week.
Gold has been at the mercy of sellers for a month since the 20th, losing over 5.2% from peak to trough. Gold began to look oversold in the short term after falling below $1885.
The price fell below the 50-day and then the 200-day moving averages in August. The rally in recent days has brought the price back above the long moving average, but the short moving average is effectively acting as resistance. The last time we saw this dynamic was in May last year, followed by five months of declines before a reversal to the upside.
The situation could repeat itself this time around. At the end of last week, the rally slowed considerably, and since the start of the day on Tuesday, gold is down 0.2%, having fallen to $1915 an ounce in the spot market.
#Gold's rally appears to be running out of steam after a 2% rally since the beginning of last week.
Gold has been at the mercy of sellers for a month since the 20th, losing over 5.2% from peak to trough. Gold began to look oversold in the short term after falling below $1885.
The price fell below the 50-day and then the 200-day moving averages in August. The rally in recent days has brought the price back above the long moving average, but the short moving average is effectively acting as resistance. The last time we saw this dynamic was in May last year, followed by five months of declines before a reversal to the upside.
The situation could repeat itself this time around. At the end of last week, the rally slowed considerably, and since the start of the day on Tuesday, gold is down 0.2%, having fallen to $1915 an ounce in the spot market.
The rally since the beginning of last week fits into the Fibonacci pattern, having lost upward momentum as it approached the 61.8% retracement of the initial drop.
Confidence in gold's further decline will be boosted by a quick return below the 200-day average, now above $1910. The final confirmation of this pattern would be a return to August's local lows at $1885, opening the way to $1820.
Separately, it is worth noting that gold has temporarily returned to a direct correlation with the equity market. In contrast, in the spring of this year and last, it was the other way round: equity sell-offs were accompanied by frenzied gold buying.
Last year, it was geopolitics, and this spring, it was fears about bank capital retention. The latter has fallen off the radar but is hardly exhausted, and it would not be surprising to see it back on the front pages of the financial press in September-October. This could be an essential pivot point for growth for gold, but no earlier.
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Confidence in gold's further decline will be boosted by a quick return below the 200-day average, now above $1910. The final confirmation of this pattern would be a return to August's local lows at $1885, opening the way to $1820.
Separately, it is worth noting that gold has temporarily returned to a direct correlation with the equity market. In contrast, in the spring of this year and last, it was the other way round: equity sell-offs were accompanied by frenzied gold buying.
Last year, it was geopolitics, and this spring, it was fears about bank capital retention. The latter has fallen off the radar but is hardly exhausted, and it would not be surprising to see it back on the front pages of the financial press in September-October. This could be an essential pivot point for growth for gold, but no earlier.
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#WaveAnalysis
#USDCHF reversed from pivotal resistance level 0.8830
Likely to fall to support level 0.8750
USDCHF currency pair recently reversed down from the pivotal resistance level 0.8830 (former multi-month low from May), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from May.
The resistance level 0.8830 was further strengthened by the resistance trendline of the wide daily down channel from the start of May.
Given the clear daily downtrend, USDCHF currency pair can be expected to fall further toward the next support level 0.8750.
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#USDCHF reversed from pivotal resistance level 0.8830
Likely to fall to support level 0.8750
USDCHF currency pair recently reversed down from the pivotal resistance level 0.8830 (former multi-month low from May), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from May.
The resistance level 0.8830 was further strengthened by the resistance trendline of the wide daily down channel from the start of May.
Given the clear daily downtrend, USDCHF currency pair can be expected to fall further toward the next support level 0.8750.
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#WaveAnalysis
#EURGBP broke resistance level 0.8590
Likely to test resistance level 0.8655
EURGBP currency pair recently broke above key resistance level 0.8590, intersecting with the 61.8% Fibonacci correction of the downward impulse from the start of August.
The breakout of the resistance level 0.8590 accelerated the active short-term correction ii.
Given the strong sterling sales across the FX markets, EURGBP currency pair can be expected to rise further toward the next resistance level 0.8655 , which has been reversing the pair since June.
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#EURGBP broke resistance level 0.8590
Likely to test resistance level 0.8655
EURGBP currency pair recently broke above key resistance level 0.8590, intersecting with the 61.8% Fibonacci correction of the downward impulse from the start of August.
The breakout of the resistance level 0.8590 accelerated the active short-term correction ii.
Given the strong sterling sales across the FX markets, EURGBP currency pair can be expected to rise further toward the next resistance level 0.8655 , which has been reversing the pair since June.
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As expected, the constricted crypto market is a compressed spring, which means more volatility ahead, not a lack of interest. On Tuesday, #Bitcoin jumped above $28.3K, adding over 2K in less than a couple of hours, on news that a US court had granted Grayscale Investments' motion in its case against the SEC.
In June, Grayscale, an investment management company, sued the regulator for refusing to convert its flagship GBTC trust into a bitcoin ETF. An appeals court ordered the SEC to reconsider its decision.
On Wednesday morning, Bitcoin pulled back to $27.4K, close to the 200-day and 200-week moving averages. The real battle for the long-term trend has just begun, and the next few days could provide a crucial signal for weeks and months ahead.
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In June, Grayscale, an investment management company, sued the regulator for refusing to convert its flagship GBTC trust into a bitcoin ETF. An appeals court ordered the SEC to reconsider its decision.
On Wednesday morning, Bitcoin pulled back to $27.4K, close to the 200-day and 200-week moving averages. The real battle for the long-term trend has just begun, and the next few days could provide a crucial signal for weeks and months ahead.
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Weak data a poor driver for stock rally
Financial markets have staged an impressive rally across a broad range of instruments. This is an essential signal that risk appetite improves after about a month of correction. But based on the idea that "the worse, the better", such a rally could be a trap.
Sentiment in the US equity market improved markedly on Tuesday after a cocktail of economic data was released. The Consumer Confidence Index fell from 114 to 106.1 in August, instead of the expected rise to 116. The number of job openings fell to 8.827 million in July, the lowest since April 2021, as demand for remote work cooled and the overall labour market saturated. At the same time, an increase to 9.5 million was expected.
The reports showed the economy slowing under the weight of interest rates at a time when markets are used to stronger-than-expected data. In the wake of the releases, expectations of a quick reversal in Fed policy and that we will see no further tightening were slightly reinforced.
Financial markets have staged an impressive rally across a broad range of instruments. This is an essential signal that risk appetite improves after about a month of correction. But based on the idea that "the worse, the better", such a rally could be a trap.
Sentiment in the US equity market improved markedly on Tuesday after a cocktail of economic data was released. The Consumer Confidence Index fell from 114 to 106.1 in August, instead of the expected rise to 116. The number of job openings fell to 8.827 million in July, the lowest since April 2021, as demand for remote work cooled and the overall labour market saturated. At the same time, an increase to 9.5 million was expected.
The reports showed the economy slowing under the weight of interest rates at a time when markets are used to stronger-than-expected data. In the wake of the releases, expectations of a quick reversal in Fed policy and that we will see no further tightening were slightly reinforced.
This is a bold expectation and contrasts with the overtly hawkish rhetoric of most FOMC members in recent days. A year ago in Jackson Hole, Powell called for pain to be endured to fight inflation. But that moment seems to have arrived only now. The thick layer of stimulus money easily explains the delay that households and businesses have accumulated throughout the pandemic. Government spending has remained high, with the US running a record budget deficit.
This does not look like a solid foundation for economic growth, and the joy of anticipating a soft Fed policy tends to be replaced by a quick realisation of the gravity of falling incomes.
Most surprisingly, the one-and-a-half per cent rally in the S&P500 was triggered by a change in the probability of a November rate hike from 62.2% to 50.7%. This compares with 42.2% a week ago.
This does not look like a solid foundation for economic growth, and the joy of anticipating a soft Fed policy tends to be replaced by a quick realisation of the gravity of falling incomes.
Most surprisingly, the one-and-a-half per cent rally in the S&P500 was triggered by a change in the probability of a November rate hike from 62.2% to 50.7%. This compares with 42.2% a week ago.
In the short term, traders will likely focus on the S&P500's momentum near the 50-day moving average at 4465, which the index crossed yesterday, on its way to the 4500 level. The ability to extend the advance will signal bullish dominance in the markets. A move below 4450 would suggest we saw a false breakout on Tuesday.
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Inflation remains a driver of European financial markets, and the latest estimates point to stubbornly high consumer prices in Germany despite a continued fall in import prices.
The German import price index fell by 0.6 per cent in July, the tenth consecutive month of decline. In the same month a year earlier, the fall was 13.2%. The figure was 0.3 percentage points lower than expected, which could act as an early indicator of a fall in headline inflation and reduce the chances of further tightening by the ECB.
However, preliminary estimates of consumer inflation for August later in the day showed an acceleration in Germany and Spain, setting up a robust CPI for the whole eurozone, which will be released on Thursday.
German consumer prices were around 6.1% higher in August than a year earlier, after three consecutive months of 0.3% increases. Consumer inflation in the eurozone’s largest economy has not fallen since May, although other price indices have moved into negative territory.
The German import price index fell by 0.6 per cent in July, the tenth consecutive month of decline. In the same month a year earlier, the fall was 13.2%. The figure was 0.3 percentage points lower than expected, which could act as an early indicator of a fall in headline inflation and reduce the chances of further tightening by the ECB.
However, preliminary estimates of consumer inflation for August later in the day showed an acceleration in Germany and Spain, setting up a robust CPI for the whole eurozone, which will be released on Thursday.
German consumer prices were around 6.1% higher in August than a year earlier, after three consecutive months of 0.3% increases. Consumer inflation in the eurozone’s largest economy has not fallen since May, although other price indices have moved into negative territory.
Consumer prices in Spain are rising at 2.6% year-on-year, up from 2.3% in July and 1.9% in June, which is unlikely to allow the ECB to loosen its grip next month.
This is good news for the single currency. EURUSD gained over 1.5% to 1.0940 in less than 24 hours on the news, highlighting the cooling of inflationary pressures in the US against positive surprises from the eurozone.
EURUSD started to gain support on the retracement to the 200-day MA and back to the upward channel formed at the end of last year.
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This is good news for the single currency. EURUSD gained over 1.5% to 1.0940 in less than 24 hours on the news, highlighting the cooling of inflationary pressures in the US against positive surprises from the eurozone.
EURUSD started to gain support on the retracement to the 200-day MA and back to the upward channel formed at the end of last year.
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#WaveAnalysis
#USDCAD reversed from key resistance level 1.3645
Likely to fall to support level 1.3500
USDCAD currency pair previously reversed down from the key resistance level 1.3645 (which has been repeatedly reversing the pair from January, as can be seen below).
The downward reversal from the resistance level 1.3645 stopped the previous minor impulse wave 3 of the intermediate impulse wave (C) from the start of August.
Given the strength of the resistance level 1.3645, USDCAD currency pair can be expected to fall further toward the next support level 1.3500 (low of the previous correction 2).
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#USDCAD reversed from key resistance level 1.3645
Likely to fall to support level 1.3500
USDCAD currency pair previously reversed down from the key resistance level 1.3645 (which has been repeatedly reversing the pair from January, as can be seen below).
The downward reversal from the resistance level 1.3645 stopped the previous minor impulse wave 3 of the intermediate impulse wave (C) from the start of August.
Given the strength of the resistance level 1.3645, USDCAD currency pair can be expected to fall further toward the next support level 1.3500 (low of the previous correction 2).
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#WaveAnalysis
#EURUSD broke daily down channel
Likely to rise to resistance level 1.1045
EURUSD currency pair recently broke the resistance trendline of the daily down channel from the middle of July (which enclosed the previous short-term ABC correction ii).
The breakout of this down channel should accelerate the active short-term impulse wave iii of the higher impulse waves 3 and (3).
Given the clear daily uptrend, EURUSD currency pair can be expected to rise further toward the next resistance level 1.1045 (top of the previous correction b).
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#EURUSD broke daily down channel
Likely to rise to resistance level 1.1045
EURUSD currency pair recently broke the resistance trendline of the daily down channel from the middle of July (which enclosed the previous short-term ABC correction ii).
The breakout of this down channel should accelerate the active short-term impulse wave iii of the higher impulse waves 3 and (3).
Given the clear daily uptrend, EURUSD currency pair can be expected to rise further toward the next resistance level 1.1045 (top of the previous correction b).
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Major Market News Events in September!
Keep an eye on the upcoming market events this month, which may significantly affect the markets. (🕒All times are in GMT)
✅ 01/09 - 12:30 - Non-Farm Payrolls
✅ 13/09 - 12:30 - US CPI’s
✅ 14/09 - 12:15 - ECB Rate Statement
✅ 20/09 - 18:00 - FOMC Statement
✅ 21/09 - 07:30 - SNB Policy Rate
✅ 21/09 - 11:00 BoE Rate Statement
📅 Stay up to date with the FxPro Economic Calendar!
Keep an eye on the upcoming market events this month, which may significantly affect the markets. (🕒All times are in GMT)
✅ 01/09 - 12:30 - Non-Farm Payrolls
✅ 13/09 - 12:30 - US CPI’s
✅ 14/09 - 12:15 - ECB Rate Statement
✅ 20/09 - 18:00 - FOMC Statement
✅ 21/09 - 07:30 - SNB Policy Rate
✅ 21/09 - 11:00 BoE Rate Statement
📅 Stay up to date with the FxPro Economic Calendar!
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The crypto market is cooling after a surge in buying on the 29th, losing 0.8% over the past 24 hours to $1.085 trillion, but still almost 4% higher than before the jump.
#Bitcoin briefly dipped to $27K on Wednesday, about half of its initial jump from $26K to $28K and back below its 200-day and 200-week averages. The decisive trend battle won't come until Friday evening at the earliest, with consolidation around current levels all the way through.
#XRP has performed worse than the cryptocurrency market over the past few days, erasing almost all gains of its latest leap. On a weekly timeframe, long-term support appears to have been taken over by the 200-week average (now $0.516). A fortnight ago, the sell-off stopped at the 50-week average ($0.457). Both curves are well above the multi-year uptrend line, which now runs through $0.39. This dynamic could attract more speculators soon, with an upside potential of $0.60 or even $0.80
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#Bitcoin briefly dipped to $27K on Wednesday, about half of its initial jump from $26K to $28K and back below its 200-day and 200-week averages. The decisive trend battle won't come until Friday evening at the earliest, with consolidation around current levels all the way through.
#XRP has performed worse than the cryptocurrency market over the past few days, erasing almost all gains of its latest leap. On a weekly timeframe, long-term support appears to have been taken over by the 200-week average (now $0.516). A fortnight ago, the sell-off stopped at the 50-week average ($0.457). Both curves are well above the multi-year uptrend line, which now runs through $0.39. This dynamic could attract more speculators soon, with an upside potential of $0.60 or even $0.80
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Oil is set to break up the price channel. Lucky this time?
Oil has risen in five of the last six trading sessions, gaining almost 4%. With a lower volatility, Crude may be preparing for a big move higher.
US commercial oil inventories plunged by 10.6M barrels last week and have fallen by almost 34M over the past five weeks. Inventories are now only 1.1% higher than the same week the previous year. This is despite the release of over 100M barrels, or 22%, of the US Strategic Petroleum Reserve during this period.
Oil has risen in five of the last six trading sessions, gaining almost 4%. With a lower volatility, Crude may be preparing for a big move higher.
US commercial oil inventories plunged by 10.6M barrels last week and have fallen by almost 34M over the past five weeks. Inventories are now only 1.1% higher than the same week the previous year. This is despite the release of over 100M barrels, or 22%, of the US Strategic Petroleum Reserve during this period.
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There is an oil shortage in the US market. Oil producers are trying to fill the gap by increasing production to 12.8 million BPD in August, up from 12.2 million a month and 12.1 million a year earlier.
But it is also clear that companies are in no hurry to invest in expanding production, as the number of active rigs has been falling almost every week since last November. Probably, this is the response to a sharp tightening of monetary conditions, pessimistic economic forecasts, and the US government's attempts to suppress prices by selling off its strategic stockpile. Add to this the lukewarm attitude to investment in conventional hydrocarbons as part of an environmental agenda.
It is also likely that the 'interest' of oil producers waned as the price settled into a range consistently below $80, while several attempts to push the price back above met with solid resistance.
August could be an essential turning point for prices in this regard. This is undoubtedly the case on the WTI price chart.
But it is also clear that companies are in no hurry to invest in expanding production, as the number of active rigs has been falling almost every week since last November. Probably, this is the response to a sharp tightening of monetary conditions, pessimistic economic forecasts, and the US government's attempts to suppress prices by selling off its strategic stockpile. Add to this the lukewarm attitude to investment in conventional hydrocarbons as part of an environmental agenda.
It is also likely that the 'interest' of oil producers waned as the price settled into a range consistently below $80, while several attempts to push the price back above met with solid resistance.
August could be an essential turning point for prices in this regard. This is undoubtedly the case on the WTI price chart.
Early last week, buyers supported oil immediately after falling below $78, the 61.8% Fibonacci retracement of the rally from the June lows (at $67) to the August highs (at $84). This correction has cleared the medium-term overbought condition, with the RSI on the daily chart moving back from over 70.
The reversal to the upside also coincided with the formation of a golden cross, where the 50-day moving average crosses the 200-day MA from below, impacting market sentiment.
The actions of OPEC+ to extend existing restrictions and the recent additional cuts are helping to create a bullish picture on the chart. These efforts have been fruitful so far, as Russia and Saudi Arabia have increased gross oil revenues despite lower production, as higher prices have offset lower sales volumes.
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The reversal to the upside also coincided with the formation of a golden cross, where the 50-day moving average crosses the 200-day MA from below, impacting market sentiment.
The actions of OPEC+ to extend existing restrictions and the recent additional cuts are helping to create a bullish picture on the chart. These efforts have been fruitful so far, as Russia and Saudi Arabia have increased gross oil revenues despite lower production, as higher prices have offset lower sales volumes.
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Personal spending by Americans in July points to increased risks of a return to inflation. Consumer spending rose 0.8% in July, following a 0.7% increase a month earlier. Meanwhile, incomes rose 0.2% in July and 0.3% in June. Disposable personal income was unchanged in July after increasing 0.2% a month earlier.
As a result, personal savings fell to 3.5% of income, the lowest since last October, down from 4.7% two months ago.
As a result, personal savings fell to 3.5% of income, the lowest since last October, down from 4.7% two months ago.
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These are signs of inflationary pressures in the US, contrary to the slump in many commodity prices that fuelled inflation last year. The price index accelerated growth from 3.0% to 3.3% in July. The core index accelerated from 4.1% to 4.2%— a turn upward from double the levels of the Fed's 2% target.
The conventional wisdom is that stronger-than-expected spending growth is good news for the dollar and (often) the stock market, demonstrating buyer confidence. For the dollar, that rule of thumb remains valid. But it could be bad news for the stocks, pressing down expectations that the Fed Funds rate has already peaked.
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The conventional wisdom is that stronger-than-expected spending growth is good news for the dollar and (often) the stock market, demonstrating buyer confidence. For the dollar, that rule of thumb remains valid. But it could be bad news for the stocks, pressing down expectations that the Fed Funds rate has already peaked.
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#WaveAnalysis #AMZN
Amazon reversed from support level 132.50
Likely to rise to resistance level 141.30
Amazon previously reversed up from the key support level 132.50 (former resistance from July) intersecting with the support trendline of the narrow up channel from March.
The support level 132.50 was further strengthened by the support trendline of the daily up channel from March and by the 61.8% Fibonacci correction of the upward impulse from July.
Given the clear daily uptrend, Amazon can be expected to rise further toward the next resistance level 141.30 (top of the previous correction 2).
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Amazon reversed from support level 132.50
Likely to rise to resistance level 141.30
Amazon previously reversed up from the key support level 132.50 (former resistance from July) intersecting with the support trendline of the narrow up channel from March.
The support level 132.50 was further strengthened by the support trendline of the daily up channel from March and by the 61.8% Fibonacci correction of the upward impulse from July.
Given the clear daily uptrend, Amazon can be expected to rise further toward the next resistance level 141.30 (top of the previous correction 2).
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