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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#Bitcoin fell towards $26.5K last week, but a more intense sell-off was avoided. At the start of the new week, this ability of the crypto market not to collapse into an uncontrolled sell-off caused a surge of buyer interest. As a result, the price quickly jumped to $28K - in the region of last week's highs.
From above, Bitcoin was subjected to a sell-off on the rise to its 200-week average and 200-day average but received new buyers on a dip to its 50-day average last week. Now, all eyes are on the ability to develop gains on rallies above $28K. Bitcoin seems to be sandwiched between two important moving averages. Our eyes are now on its momentum near those curves, and we are closely watching the behaviour near $28K.
An additional bullish signal is that the crypto market's volumes are growing along with the price, i.e., significant purchases are taking place. As a rule, such purchases confirmed by volumes can often be followed by a continuation of growth.
From above, Bitcoin was subjected to a sell-off on the rise to its 200-week average and 200-day average but received new buyers on a dip to its 50-day average last week. Now, all eyes are on the ability to develop gains on rallies above $28K. Bitcoin seems to be sandwiched between two important moving averages. Our eyes are now on its momentum near those curves, and we are closely watching the behaviour near $28K.
An additional bullish signal is that the crypto market's volumes are growing along with the price, i.e., significant purchases are taking place. As a rule, such purchases confirmed by volumes can often be followed by a continuation of growth.
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#WaveAnalysis
#AUDUSD reversed from support level 0.6300
Likely to rise to resistance level 0.6400
AUDUSD recently reversed up from the key support level 0.6300 (former monthly low from November) coinciding with the support trendline of the weekly down channel from February.
The support level 0.6300 was further strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.6300, AUDUSD can be expected to rise further toward the next resistance level 0.6400.
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#AUDUSD reversed from support level 0.6300
Likely to rise to resistance level 0.6400
AUDUSD recently reversed up from the key support level 0.6300 (former monthly low from November) coinciding with the support trendline of the weekly down channel from February.
The support level 0.6300 was further strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.6300, AUDUSD can be expected to rise further toward the next resistance level 0.6400.
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#WaveAnalysis
AUDCAD reversed from support level 0.8575
Likely to rise to resistance level 0.8735
AUDCAD recently reversed up from the pivotal support level 0.8575 (former monthly low from November) which formed the daily candlesticks reversal pattern Bullish Engulfing in September.
The price is also currently forming the daily Bullish Engulfing – strong bullish signal for this currency pair.
Given the strength of the support level 0.8575, continued AUD gains and the clear bullish divergence on the daily Stochastic, AUDCAD can be expected to rise further toward the next resistance level 0.8735.
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AUDCAD reversed from support level 0.8575
Likely to rise to resistance level 0.8735
AUDCAD recently reversed up from the pivotal support level 0.8575 (former monthly low from November) which formed the daily candlesticks reversal pattern Bullish Engulfing in September.
The price is also currently forming the daily Bullish Engulfing – strong bullish signal for this currency pair.
Given the strength of the support level 0.8575, continued AUD gains and the clear bullish divergence on the daily Stochastic, AUDCAD can be expected to rise further toward the next resistance level 0.8735.
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It's hard for oil to rise on risk alone
Oil made curious movements last week. After opening last week with a gap of 2.3% and quickly rising to 5.2%, the price stabilised and turned downwards. On Thursday, the gap at the week's opening was closed entirely. Given the current geopolitics, it is unlikely that many people at the beginning of the week could have expected such a quick closing of the gap.
Anyway, the closing of the gestalt technically cleared the space for oil to rise. Fundamentally, oil was actively bought on fears that other Islamic countries would get involved in the conflict. The markets are paying the most attention to statements regarding Iran, which produces over 3.1M BPD. Since the end of last week, Iran has been toughening its rhetoric, which was played back by the markets on Friday in the form of a 5% rise in quotations and a rise in price at the start of the new week.
Oil made curious movements last week. After opening last week with a gap of 2.3% and quickly rising to 5.2%, the price stabilised and turned downwards. On Thursday, the gap at the week's opening was closed entirely. Given the current geopolitics, it is unlikely that many people at the beginning of the week could have expected such a quick closing of the gap.
Anyway, the closing of the gestalt technically cleared the space for oil to rise. Fundamentally, oil was actively bought on fears that other Islamic countries would get involved in the conflict. The markets are paying the most attention to statements regarding Iran, which produces over 3.1M BPD. Since the end of last week, Iran has been toughening its rhetoric, which was played back by the markets on Friday in the form of a 5% rise in quotations and a rise in price at the start of the new week.
However, geopolitics is not the only fundamental driver of oil prices. Last week, the US ramped production to a record 13.2 million barrels. These reports, as well as a 10.2-million-barrel jump in commercial inventories, pressured quotes midweek.
Towards the end of the week, the Middle East again drew attention to the risks of geographic expansion of the conflict, which increased the risks of a decline in supplies.
However, one should not underestimate the factor of production growth in the US. Producers there have increased average daily production by 1 million barrels since August.
It seems that US oil producers, after the August OPEC+ assurances, have finally joined the fight for a share of global oil supplies. This comes after another round of assurances from Russia and Saudi Arabia that quotas and voluntary cuts on top of those quotas will remain in place for the foreseeable future.
Towards the end of the week, the Middle East again drew attention to the risks of geographic expansion of the conflict, which increased the risks of a decline in supplies.
However, one should not underestimate the factor of production growth in the US. Producers there have increased average daily production by 1 million barrels since August.
It seems that US oil producers, after the August OPEC+ assurances, have finally joined the fight for a share of global oil supplies. This comes after another round of assurances from Russia and Saudi Arabia that quotas and voluntary cuts on top of those quotas will remain in place for the foreseeable future.
It is also possible that the trigger was the price, which exceeded $80 per barrel of WTI in August and has been trading above $90 since the second half of September.
That said, oil prices may already be too high for consumers, and we may see a reduction in supply. In addition, the risks of supply cuts from Iran and other Middle Eastern countries are real but still risks. But at the same time, supply from the US is increasing while demand is giving up.
All this is a good enough reason to test the support at $80 per barrel WTI once again.
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That said, oil prices may already be too high for consumers, and we may see a reduction in supply. In addition, the risks of supply cuts from Iran and other Middle Eastern countries are real but still risks. But at the same time, supply from the US is increasing while demand is giving up.
All this is a good enough reason to test the support at $80 per barrel WTI once again.
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US Retail sales exceeded expectations. For September, sales rose 0.7% after rising 0.8% a month earlier. During six months of back-to-back spending increases, Americans added 3.4%.
This is new evidence that suppressing inflation is not easy for the central bank with a strong labour market (abundant income) and high inflation expectations (due to rising fuel prices). And it runs counter to expectations that high interest rates will cool demand in the economy. Perhaps not until the labour market turns around, forcing Americans to adopt a saving behaviour.
Fuel sales have risen sharply since July, reaching their highest level this year. In contrast, spending on building materials and home improvement has continued to trend downward, although at historically high levels.
This is new evidence that suppressing inflation is not easy for the central bank with a strong labour market (abundant income) and high inflation expectations (due to rising fuel prices). And it runs counter to expectations that high interest rates will cool demand in the economy. Perhaps not until the labour market turns around, forcing Americans to adopt a saving behaviour.
Fuel sales have risen sharply since July, reaching their highest level this year. In contrast, spending on building materials and home improvement has continued to trend downward, although at historically high levels.
The big question now for the markets is whether this data will change the Fed's mind. In the most general case, strong retail sales are a positive signal for risk demand. Over the past two months, the market has played up strong statistics as a negative for equities, expecting new Fed rate hikes or keeping them high for longer. However, over the last couple of weeks, it appears that markets have reverted to a classic pattern of behaviour where good news on the economy is good news for the market.
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#WaveAnalysis
#Silver reversed from support level 20.70
Likely to rise to resistance level 23.50
Silver recently reversed up with the weekly Hammer from the key support level 20.70 (which has been reversing the pair from the end of 2022 as can be seen below) intersecting with the 61.8% Fibonacci correction of the weekly uptrend from last year.
The upward reversal from the support level 20.70 stopped the previous intermediate ABC correction (2).
Given the strength of the support level 20.70, Silver can be expected to rise further toward the next resistance level 23.50.
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#Silver reversed from support level 20.70
Likely to rise to resistance level 23.50
Silver recently reversed up with the weekly Hammer from the key support level 20.70 (which has been reversing the pair from the end of 2022 as can be seen below) intersecting with the 61.8% Fibonacci correction of the weekly uptrend from last year.
The upward reversal from the support level 20.70 stopped the previous intermediate ABC correction (2).
Given the strength of the support level 20.70, Silver can be expected to rise further toward the next resistance level 23.50.
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