Weakened German industrial production
German industrial production contracted for the fourth consecutive month in August, missing expectations. Last month's loss was 0.2%, bringing the year-on-year decline to 2.0%.
Germany's industrial production index started on a downward path at the beginning of 2018, which is easier to link to the outbreak of trade wars with China than to coronavirus, expensive energy and high interest rates - crises that have succeeded each other over the past four years.
Monday was not packed with meaningful releases, so the publication of data from Germany was the second most significant reason for the euro movement today after the Middle East hostilities. EURUSD lost 0.3% on the publication of the statistics, pulling back to 1.0525.
German industrial production contracted for the fourth consecutive month in August, missing expectations. Last month's loss was 0.2%, bringing the year-on-year decline to 2.0%.
Germany's industrial production index started on a downward path at the beginning of 2018, which is easier to link to the outbreak of trade wars with China than to coronavirus, expensive energy and high interest rates - crises that have succeeded each other over the past four years.
Monday was not packed with meaningful releases, so the publication of data from Germany was the second most significant reason for the euro movement today after the Middle East hostilities. EURUSD lost 0.3% on the publication of the statistics, pulling back to 1.0525.
Birkenstock's IPO Takes Its First Steps in the Market! 👣
Birkenstock, the iconic sandal maker, is all set for its stock market debut this week.
They plan to offer 32.3 million shares, priced at $44 to $49 each, with a potential valuation of $9.2 billion.
Get ready to buy or sell #BIRK shares once they hit our MT5 platform and join us as we follow Birkenstock's footsteps in the financial world! 📈
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Birkenstock, the iconic sandal maker, is all set for its stock market debut this week.
They plan to offer 32.3 million shares, priced at $44 to $49 each, with a potential valuation of $9.2 billion.
Get ready to buy or sell #BIRK shares once they hit our MT5 platform and join us as we follow Birkenstock's footsteps in the financial world! 📈
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Oil's bounce at the start of the week's trading was an essential step in correcting the short-term oversold condition, but it may only fuel the interest of new sellers.
The oil price is down 12.8% in the six trading sessions since 28 September. A local low was recorded immediately after the release of the labour market data. However, interest in oil was soon fuelled by speculation that, along with a strong labour market in the US, there was no increase in inflationary pressure. On Monday, investors speculated about the risks of energy supply reduction due to the involvement of other Muslim countries in the conflict, which will put oil and gas supplies at risk.
But let's look at the situation without emotion and speculation - purely from a tech analysis perspective. From this point of view, the latest bounce was a critical correction that could clear the way for a subsequent decline.
The oil price is down 12.8% in the six trading sessions since 28 September. A local low was recorded immediately after the release of the labour market data. However, interest in oil was soon fuelled by speculation that, along with a strong labour market in the US, there was no increase in inflationary pressure. On Monday, investors speculated about the risks of energy supply reduction due to the involvement of other Muslim countries in the conflict, which will put oil and gas supplies at risk.
But let's look at the situation without emotion and speculation - purely from a tech analysis perspective. From this point of view, the latest bounce was a critical correction that could clear the way for a subsequent decline.
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Brent oil turned downwards from $95 and quickly reached $83, falling sharply under the 50-day moving average. Last Wednesday's dip signals that the bears are firmly in market control.
By Friday, the RSI on the daily charts began to flirt with the oversold area. Since the end of 2020, this signal has consistently triggered a reversal. The same thing happened this time around.
Thanks to the US data and the military conflict in the Gaza Strip on Monday, the price made a classic rebound to the 61.8% area from the initial decline. But its recovery stalled there. We also note that on Monday, the price tried to return above the 50-day average but closed the day lower.
There was no upward momentum in oil for most of the day on Tuesday despite the strengthening of stock indices, indicating a recovery in risk appetite.
By Friday, the RSI on the daily charts began to flirt with the oversold area. Since the end of 2020, this signal has consistently triggered a reversal. The same thing happened this time around.
Thanks to the US data and the military conflict in the Gaza Strip on Monday, the price made a classic rebound to the 61.8% area from the initial decline. But its recovery stalled there. We also note that on Monday, the price tried to return above the 50-day average but closed the day lower.
There was no upward momentum in oil for most of the day on Tuesday despite the strengthening of stock indices, indicating a recovery in risk appetite.
If the bears keep an upper hand over the oil market, we could see a gap close at the start of the week's trading in the next couple of days. The following support line in oil looks to be the 200-day moving average, now just below $82.
A more ambitious downside target is $75, where the most crucial separator of market cycles in the form of the 200-week average and the 161.8% level of the last downside impulse may cross by the end of the year.
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A more ambitious downside target is $75, where the most crucial separator of market cycles in the form of the 200-week average and the 161.8% level of the last downside impulse may cross by the end of the year.
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#WaveAnalysis
#AUDNZD reversed from resistance level 1.0665
Likely to fall to support level 1.0600
AUDNZD currency pair recently reversed down from the resistance level 1.0665 (former support from the start of October).
The downward reversal from the resistance level 1.0665 continues the C-wave of the active intermediate ABC correction (2) from the middle of June.
Given the strength of the active impulse wave C, AUDNZD can be expected to fall further toward the next support level 1.0600 (target for the completion of the active C-wave).
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#AUDNZD reversed from resistance level 1.0665
Likely to fall to support level 1.0600
AUDNZD currency pair recently reversed down from the resistance level 1.0665 (former support from the start of October).
The downward reversal from the resistance level 1.0665 continues the C-wave of the active intermediate ABC correction (2) from the middle of June.
Given the strength of the active impulse wave C, AUDNZD can be expected to fall further toward the next support level 1.0600 (target for the completion of the active C-wave).
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#WaveAnalysis
#GBPCHF reversed from support level 1.1070
Likely to rise to resistance level 1.1150
GBPCHF currency pair recently reversed up from the pivotal support level 1.1070 (lower border of the narrow price range, which has been reversing the price from the start of March), intersecting with the lower daily Bollinger Band.
The upward reversal from the support 1.1070 stopped the previous short-term impulse wave 3 from the end of September.
Given the bullish divergence on the daily Stochastic, GBPCHF can be expected to rise further toward the next resistance level 1.1150.
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#GBPCHF reversed from support level 1.1070
Likely to rise to resistance level 1.1150
GBPCHF currency pair recently reversed up from the pivotal support level 1.1070 (lower border of the narrow price range, which has been reversing the price from the start of March), intersecting with the lower daily Bollinger Band.
The upward reversal from the support 1.1070 stopped the previous short-term impulse wave 3 from the end of September.
Given the bullish divergence on the daily Stochastic, GBPCHF can be expected to rise further toward the next resistance level 1.1150.
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The #crypto market did not support the impressive rise in risk appetite on traditional finances. Their combined capitalisation fell 1.7% over the past 24 hours to $1.055 trillion - the lowest in almost two weeks.
#Bitcoin fell below $27K in early trading on Wednesday. This is the fifth consecutive day of decline after a failed attempt to consolidate above the 200-day MA late last week. Currently, BTCUSD has pulled back to the upward channel's lower boundary. The ability to push back from there will confirm the formation of an uptrend. For now, this is the preferred scenario.
A consolidation below $27K will likely intensify the sell-off and open the way for a quick drop to $26K (previous local highs) and further to $25K.
While Bitcoin tries to stay within an uptrend, #Ethereum has fallen to $1550, not far from the September lows. This dip below the 200-week MA could demonstrate the market's bearish bias. And Bitcoin's stronger momentum is a result of institutional buying.
#Bitcoin fell below $27K in early trading on Wednesday. This is the fifth consecutive day of decline after a failed attempt to consolidate above the 200-day MA late last week. Currently, BTCUSD has pulled back to the upward channel's lower boundary. The ability to push back from there will confirm the formation of an uptrend. For now, this is the preferred scenario.
A consolidation below $27K will likely intensify the sell-off and open the way for a quick drop to $26K (previous local highs) and further to $25K.
While Bitcoin tries to stay within an uptrend, #Ethereum has fallen to $1550, not far from the September lows. This dip below the 200-week MA could demonstrate the market's bearish bias. And Bitcoin's stronger momentum is a result of institutional buying.
US indexes may finish the correction
The major US indices staged an impressive intraday reversal on Friday and have been rallying ever since. The fundamental driver was the change in tone of the Fed's comments as one after another FOMC member has indicated that further policy tightening may not be necessary.
This is a significant change from policymakers in response to the rapid rise in long-term bond yields. Interestingly, this is an innovation on the part of the Fed, as similar shifts in policymakers' tone since 2007 have been triggered by turbulence in equity markets, not debt markets. The consensus forecast is now pricing in a 27% chance of a hike this year, down from 47% at the start of last week.
The technical picture also shows a nice reversal. The S&P 500 Index has repeatedly found support on dips to the 200-day MA in the early trading days of October. There was another attempt to sell lower on Friday, but it failed. Within six hours, the index had rallied 2.8%. That's a strong bid!
The major US indices staged an impressive intraday reversal on Friday and have been rallying ever since. The fundamental driver was the change in tone of the Fed's comments as one after another FOMC member has indicated that further policy tightening may not be necessary.
This is a significant change from policymakers in response to the rapid rise in long-term bond yields. Interestingly, this is an innovation on the part of the Fed, as similar shifts in policymakers' tone since 2007 have been triggered by turbulence in equity markets, not debt markets. The consensus forecast is now pricing in a 27% chance of a hike this year, down from 47% at the start of last week.
The technical picture also shows a nice reversal. The S&P 500 Index has repeatedly found support on dips to the 200-day MA in the early trading days of October. There was another attempt to sell lower on Friday, but it failed. Within six hours, the index had rallied 2.8%. That's a strong bid!
On Monday and Tuesday, the market extended its growth, confirming the end of the two-month correction after hitting a key support level. We also note that the S&P 500 closed on Tuesday above 61.8% of its downside amplitude from early August to 4 October.
Seasonality is also on the bulls' side, as October is often the start of a strong year-end.
The Nasdaq-100 index is as happy as the S&P 500 about the recent bullish momentum, having already recovered above the 50-day moving average.
For more confidence that the correction is finally over, waiting for another trio of signals would be wise.
The S&P 500 index has reached the 4370 level, a key support area in August, which has a good chance of becoming resistance.
Seasonality is also on the bulls' side, as October is often the start of a strong year-end.
The Nasdaq-100 index is as happy as the S&P 500 about the recent bullish momentum, having already recovered above the 50-day moving average.
For more confidence that the correction is finally over, waiting for another trio of signals would be wise.
The S&P 500 index has reached the 4370 level, a key support area in August, which has a good chance of becoming resistance.
The Nasdaq-100 is in a descending corridor, having broken its lower boundary in early October. However, only a move above 15400 will signal a break in the trend.
The Dow Jones 30 found support below 33000 on the way down, as it did in May.
However, it is now breaking the 200-day moving average on the downside at 33850. Only a consolidation above 34000 will signal a return to the long-term uptrend and an end to the correction.
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The Dow Jones 30 found support below 33000 on the way down, as it did in May.
However, it is now breaking the 200-day moving average on the downside at 33850. Only a consolidation above 34000 will signal a return to the long-term uptrend and an end to the correction.
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⏰US FOMC Meeting Minutes will be released at 18:00 GMT today. Investors and traders will look for hints that the Fed is done with rate hikes in this cycle.
💬The Federal Reserve meeting minutes help better understand the committee's reasoning during the meeting, what the committee paid more attention to and what the committee was less concerned about. The Minutes help market players understand the Fed's next steps.
💬The Federal Reserve meeting minutes help better understand the committee's reasoning during the meeting, what the committee paid more attention to and what the committee was less concerned about. The Minutes help market players understand the Fed's next steps.
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US producer prices are rising stronger than expected, bringing a new round of price acceleration back into investors' circle of concern.
Headline PPI rose 0.5% m/m instead of the expected 0.3%. In the same month a year earlier, the index was higher by 2.2% instead of the expected 1.6% y/y. This divergence in the estimates of annual rates is due to an upward revision of the previous months' figures. Simply put, producer price inflation turned out to be higher than expected.
Headline PPI rose 0.5% m/m instead of the expected 0.3%. In the same month a year earlier, the index was higher by 2.2% instead of the expected 1.6% y/y. This divergence in the estimates of annual rates is due to an upward revision of the previous months' figures. Simply put, producer price inflation turned out to be higher than expected.
An important factor is the growth of the index cleared from the volatile food and energy components. The growth accelerated from 2.5% to 2.7% instead of the expected slowdown of 2.3%.
The markets' attention remains focused on tomorrow's consumer price data. And we should now expect it to exceed the expected 3.6% y/y due to today's inflation surprise.
Looking longer term, the reversal to producer price acceleration will push consumer inflation, preventing it from getting back on track towards the 2% target. But the big question is whether this will force markets to abandon their expectation that the Fed is done raising rates, a scenario that has been gaining traction in investors' minds since early last week.
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The markets' attention remains focused on tomorrow's consumer price data. And we should now expect it to exceed the expected 3.6% y/y due to today's inflation surprise.
Looking longer term, the reversal to producer price acceleration will push consumer inflation, preventing it from getting back on track towards the 2% target. But the big question is whether this will force markets to abandon their expectation that the Fed is done raising rates, a scenario that has been gaining traction in investors' minds since early last week.
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⏰ The UK GDP estimate for August will be released at 06:00 GMT today. It is expected to show 0.2% growth 📈after 0.5% decline 📉 the previous month.
👁Also, markets will be looking at 🏭 Industrial Production (-0.2% expected after -0.7%) and ⛵️Trade Balance data (15.2B deficit expected after 14.1B earlier)
💷 Numbers above forecasts can positively impact GBP, sparking expectations for further rate hikes from the Bank of England🏦
👁Also, markets will be looking at 🏭 Industrial Production (-0.2% expected after -0.7%) and ⛵️Trade Balance data (15.2B deficit expected after 14.1B earlier)
💷 Numbers above forecasts can positively impact GBP, sparking expectations for further rate hikes from the Bank of England🏦
⏰ The US Consumer Price Index will be released at 12:30 GMT today. It is expected to slow from 3.7% to 3.6% y/y with 0.3% month-on-month growth after +0.6% one month earlier 📉
💭Also, keep an eye on Core CPI, which strips food and energy from its calculations. Here analysts, on average, expect to see slowing from 4.3% y/y to 4.1% 🛬
💲 Numbers above forecasts can positively impact USD, sparking expectations for further rate hikes from the Fed🏦
💭Also, keep an eye on Core CPI, which strips food and energy from its calculations. Here analysts, on average, expect to see slowing from 4.3% y/y to 4.1% 🛬
💲 Numbers above forecasts can positively impact USD, sparking expectations for further rate hikes from the Fed🏦
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#WaveAnalysis
#GBPUSD reversed from resistance level 1.2325
Likely to fall to support level 1.2055
GBPUSD recently reversed down from the key resistance level 1.2325 (former strong support from May) coinciding with the resistance trendline of the daily down channel from July.
The downward reversal from the resistance level 1.2325 created the daily Japanese candlesticks reversal pattern Evening Star Doji, which started the active impulse wave (3).
Given the strong GBPUSD bearish sentiment, GBPUSD can be expected to fall further toward the next support level 1.2055 (which stopped the previous impulse wave (1)).
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#GBPUSD reversed from resistance level 1.2325
Likely to fall to support level 1.2055
GBPUSD recently reversed down from the key resistance level 1.2325 (former strong support from May) coinciding with the resistance trendline of the daily down channel from July.
The downward reversal from the resistance level 1.2325 created the daily Japanese candlesticks reversal pattern Evening Star Doji, which started the active impulse wave (3).
Given the strong GBPUSD bearish sentiment, GBPUSD can be expected to fall further toward the next support level 1.2055 (which stopped the previous impulse wave (1)).
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#WaveAnalysis
#NZDJPY under bearish pressure
Likely to fall to support level 87.55
NZDJPY under the bearish pressure after the earlier downward reversal from the strong resistance level 89.70 (previous multi-month high from July) coinciding with the upper daily Bollinger Band.
The downward reversal from the resistance level 89.70 created the daily Japanese candlesticks reversal pattern Evening Star Doji, highlighted below.
Give the strength of the resistance level 89.70 and the strong NZD sales, NZDJPY can be expected to fall further toward the next support level 87.55 (former resistance from August).
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#NZDJPY under bearish pressure
Likely to fall to support level 87.55
NZDJPY under the bearish pressure after the earlier downward reversal from the strong resistance level 89.70 (previous multi-month high from July) coinciding with the upper daily Bollinger Band.
The downward reversal from the resistance level 89.70 created the daily Japanese candlesticks reversal pattern Evening Star Doji, highlighted below.
Give the strength of the resistance level 89.70 and the strong NZD sales, NZDJPY can be expected to fall further toward the next support level 87.55 (former resistance from August).
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