#WaveAnalysis
#USDCHF reversed from support level 0.8900
Likely to rise to resistance level 0.9085
USDCHF currency pair recently reversed up from the key support level 0.8900 (which has been reversing the pair from September) standing near the lower daily Bollinger Band.
The upward reversal from the support level 0.8900 stopped the previous sharp downward ABC correction (2).
Given the strength of the support level 0.8900, USDCHF currency pair can be expected to rise further toward the next resistance level 0.9085.
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#USDCHF reversed from support level 0.8900
Likely to rise to resistance level 0.9085
USDCHF currency pair recently reversed up from the key support level 0.8900 (which has been reversing the pair from September) standing near the lower daily Bollinger Band.
The upward reversal from the support level 0.8900 stopped the previous sharp downward ABC correction (2).
Given the strength of the support level 0.8900, USDCHF currency pair can be expected to rise further toward the next resistance level 0.9085.
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#WaveAnalysis #US30
Dow Jones index broke key support level 32875.00
Likely to fall to support level 32000.00
Dow Jones index recently broke the key support level 32875.00, which has been repeatedly reversing the index from the start of May.
The breakout of the support level 32875.00 coincided with the breakout of the 38.2% Fibonacci correction of the upward trend from October of 2022.
Dow Jones index can be expected to fall further toward the next support level 32000.00, former multi-month support cluster from March.
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Dow Jones index broke key support level 32875.00
Likely to fall to support level 32000.00
Dow Jones index recently broke the key support level 32875.00, which has been repeatedly reversing the index from the start of May.
The breakout of the support level 32875.00 coincided with the breakout of the 38.2% Fibonacci correction of the upward trend from October of 2022.
Dow Jones index can be expected to fall further toward the next support level 32000.00, former multi-month support cluster from March.
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The crypto market continues to settle at the levels it broke through at the beginning of last week. At the start of the day on Monday, the crypto market capitalisation was 7.7% higher than seven days ago, largely thanks to Bitcoin.
Greed is dominating the crypto market, according to the Crypto Fear and Greed Index, which spent the second half of last week above 70 - its highest since November 2021. However, prices remain well below the levels at that time.
Bitcoin is up over 11% in seven days but has mostly traded between $34.8-35.8K since Tuesday, after hitting highs in May last year. Technically, last week was a bullish signal as Bitcoin managed to move further into the 200-week moving average, which looks like a promising comeback after crypto winter.
A “golden cross” has formed on the daily timeframes, which could further boost bullish confidence by creating a short-term flow of buyers following these popular signals.
Greed is dominating the crypto market, according to the Crypto Fear and Greed Index, which spent the second half of last week above 70 - its highest since November 2021. However, prices remain well below the levels at that time.
Bitcoin is up over 11% in seven days but has mostly traded between $34.8-35.8K since Tuesday, after hitting highs in May last year. Technically, last week was a bullish signal as Bitcoin managed to move further into the 200-week moving average, which looks like a promising comeback after crypto winter.
A “golden cross” has formed on the daily timeframes, which could further boost bullish confidence by creating a short-term flow of buyers following these popular signals.
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The S&P 500 has cooled off. What are the signs of an upturn?
Futures on the S&P500 are rising early Monday after a correction last week. Markets are gearing up for a week of important events, from releasing the US Treasury's borrowing plans to the FOMC's comments on interest rates and the monthly employment report.
The S&P500 index lost over 10% from its late July peak to last Friday's close, which is informally considered the beginning of the correction.
Technically, the sell-off in equities intensified after the S&P500 failed to break through resistance at its 50-day moving average in mid-October. A quick pullback to the 200-day followed, but we saw only a brief consolidation, not a rebound.
This week has a good chance of setting the market dynamic for the rest of the year for several reasons.
Futures on the S&P500 are rising early Monday after a correction last week. Markets are gearing up for a week of important events, from releasing the US Treasury's borrowing plans to the FOMC's comments on interest rates and the monthly employment report.
The S&P500 index lost over 10% from its late July peak to last Friday's close, which is informally considered the beginning of the correction.
Technically, the sell-off in equities intensified after the S&P500 failed to break through resistance at its 50-day moving average in mid-October. A quick pullback to the 200-day followed, but we saw only a brief consolidation, not a rebound.
This week has a good chance of setting the market dynamic for the rest of the year for several reasons.
Firstly, the concentration of top events in the financial world. Wednesday will see the release of the US Treasury's quarterly borrowing plan. The Treasury's appetite could set the tone for the bond market, and Bloomberg says this release is more important than the Fed's comments.
The official FOMC statement and Powell's remarks at the press conference are a chance to shake up rate expectations. The market focuses on the odds of a December hike (now at 24%) and guidance on when the central bank might start cutting rates.
On Friday it will be the labour market: the September report was robust on job growth and weak on wages. Which will become a trend?
The official FOMC statement and Powell's remarks at the press conference are a chance to shake up rate expectations. The market focuses on the odds of a December hike (now at 24%) and guidance on when the central bank might start cutting rates.
On Friday it will be the labour market: the September report was robust on job growth and weak on wages. Which will become a trend?
Secondly, the market looks technically oversold in the short term, which opens the possibility of a bounce. The popular technical oscillator RSI touched oversold territory at Friday's close. A bounce before regular trading brought the market back out of oversold territory.
This could be a repeat of what we saw in early October. Last September, a return from oversold to normal levels also led to impressive inflows into equities.
Thirdly, after almost three months of declines, the market has pulled back from the extremes to prove attractive to buyers, paying attention to the exceptionally healthy consumer demand in the US.
This could be a repeat of what we saw in early October. Last September, a return from oversold to normal levels also led to impressive inflows into equities.
Thirdly, after almost three months of declines, the market has pulled back from the extremes to prove attractive to buyers, paying attention to the exceptionally healthy consumer demand in the US.
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Hypothetically, a dip below the 200-day could prove as false a break as in March. But buyers were encouraged by the Fed's determination to support regional banks. To confirm this hypothesis, however, we would need a clear signal from the Fed that there's no point in raising rates further despite solid data.
Even better, if there is confirmation on Friday in the form of a further slowdown in wage growth with further employment growth, it is risky to jump the gun, as we are formally in a downtrend.
From a technical point of view, a significant (more than 2%) rise in the daily result on Wednesday or Friday could be an important signal.
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Even better, if there is confirmation on Friday in the form of a further slowdown in wage growth with further employment growth, it is risky to jump the gun, as we are formally in a downtrend.
From a technical point of view, a significant (more than 2%) rise in the daily result on Wednesday or Friday could be an important signal.
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German inflation is normalising faster than expected
German inflation is cooling more than expected. According to preliminary estimates for October, price growth slowed to 3.8% y/y - the lowest in more than two years - and well below the expected 4.0%.
Harmonised (adjusted for tax difference), prices in Germany are now 3% higher than a year ago, which promises to drag down the figures for the entire eurozone.
However, the pressure on prices comes from several directions, from a shrinking economy to falling commodity prices. Germany's economy shrank 0.1% q/q, having contracted in three of the last four quarters, and is now 0.8% lower than a year ago.
Leading inflation indicators show further pressure on consumer prices in the months ahead. Recent data showed a 16.4% y/y decline in the import price index. The producer price index in October was 14.7% lower than in the twelve months prior.
German inflation is cooling more than expected. According to preliminary estimates for October, price growth slowed to 3.8% y/y - the lowest in more than two years - and well below the expected 4.0%.
Harmonised (adjusted for tax difference), prices in Germany are now 3% higher than a year ago, which promises to drag down the figures for the entire eurozone.
However, the pressure on prices comes from several directions, from a shrinking economy to falling commodity prices. Germany's economy shrank 0.1% q/q, having contracted in three of the last four quarters, and is now 0.8% lower than a year ago.
Leading inflation indicators show further pressure on consumer prices in the months ahead. Recent data showed a 16.4% y/y decline in the import price index. The producer price index in October was 14.7% lower than in the twelve months prior.
Lower import, producers and wholesale prices create room for selling price pressure while falling demand provides the necessary incentive to compete for customers.
A faster-than-expected return to normal inflation feeds the confidence that the ECB is finished with rate hikes and brings a potential easing date closer. This news is potentially negative for the single currency.
However, EURUSD adds to the strong investor interest in the single currency near 1.05 and close to multi-year EURCHF lows.
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A faster-than-expected return to normal inflation feeds the confidence that the ECB is finished with rate hikes and brings a potential easing date closer. This news is potentially negative for the single currency.
However, EURUSD adds to the strong investor interest in the single currency near 1.05 and close to multi-year EURCHF lows.
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#WaveAnalysis
#AUDUSD reversed from key support level 0.6300
Likely to rise to resistance level 0.6425
AUDUSD recently reversed up from the key support level 0.6300, which has been steadily reversing the index from the start of October.
The support level 0.6300 was strengthened by the lower daily Bollinger Band and by the support trendline of the weekly own channel from February.
Given the strong USD sales, AUDUSD can be expected to rise further toward the next resistance level 0.6425 (top of the previous correction ii).
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#AUDUSD reversed from key support level 0.6300
Likely to rise to resistance level 0.6425
AUDUSD recently reversed up from the key support level 0.6300, which has been steadily reversing the index from the start of October.
The support level 0.6300 was strengthened by the lower daily Bollinger Band and by the support trendline of the weekly own channel from February.
Given the strong USD sales, AUDUSD can be expected to rise further toward the next resistance level 0.6425 (top of the previous correction ii).
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#WaveAnalysis
#EURCHF broke resistance level 0.9530
Likely to rise to resistance level 0.9615
EURCHF recently broke the resistance level 0.9530 (top of the previous minor correction iv) coinciding with the 38.2% Fibonacci correction of the previous downward impulse v from September.
The breakout of the resistance level 0.9530 accelerated the active short-term ABC correction ii.
Given the widespread bearish Swiss franc sentiment, EURCHF can be expected to rise further toward the next resistance level 0.9615 (top of the previous minor wave ii).
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#EURCHF broke resistance level 0.9530
Likely to rise to resistance level 0.9615
EURCHF recently broke the resistance level 0.9530 (top of the previous minor correction iv) coinciding with the 38.2% Fibonacci correction of the previous downward impulse v from September.
The breakout of the resistance level 0.9530 accelerated the active short-term ABC correction ii.
Given the widespread bearish Swiss franc sentiment, EURCHF can be expected to rise further toward the next resistance level 0.9615 (top of the previous minor wave ii).
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The value of bitcoin has changed little over the past 24 hours, remaining at $34.3K - in the centre of the consolidation range of the past seven days.
This ability to hold at new, much higher levels is inspiring altcoin buyers, and the market capitalisation of the entire market has increased by 0.6% over the past 24 hours.
#Bitcoin is forming a triangle on the daily chart. It is generally believed that such consolidation formations end with an upward breakout. Confirmation, in this case, would be an exit above $35K.
#Ethereum followed Bitcoin's lead and broke out above its 200-week MA after a few weeks below it, breaking the shorter-term downtrend. In other similar cases, we've seen some solid and sustained gains.
The rebound from the drop below $1500 has confirmed a long-term broad uptrend, with the upper boundary now near $2400. The bulls are likely targeting this upper bound.
This ability to hold at new, much higher levels is inspiring altcoin buyers, and the market capitalisation of the entire market has increased by 0.6% over the past 24 hours.
#Bitcoin is forming a triangle on the daily chart. It is generally believed that such consolidation formations end with an upward breakout. Confirmation, in this case, would be an exit above $35K.
#Ethereum followed Bitcoin's lead and broke out above its 200-week MA after a few weeks below it, breaking the shorter-term downtrend. In other similar cases, we've seen some solid and sustained gains.
The rebound from the drop below $1500 has confirmed a long-term broad uptrend, with the upper boundary now near $2400. The bulls are likely targeting this upper bound.
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Gold storms $2000, but headwinds intensify
Gold broke through the $2000 mark in a decisive move at the end of last week. Corrective sentiment has intensified near this psychologically important level as some speculators rush to take profits from the roughly $200 rally from the $1810 level reached on the 6th of October.
Technically, gold remains in the overbought territory (70) on the daily RSI. And all the while, the price has been moving higher. At the beginning of last week, a brief dip below this line did not trigger a significant correction, and we saw a quick return of buyers towards the end of the week, pushing the price to new local highs.
Gold broke through the $2000 mark in a decisive move at the end of last week. Corrective sentiment has intensified near this psychologically important level as some speculators rush to take profits from the roughly $200 rally from the $1810 level reached on the 6th of October.
Technically, gold remains in the overbought territory (70) on the daily RSI. And all the while, the price has been moving higher. At the beginning of last week, a brief dip below this line did not trigger a significant correction, and we saw a quick return of buyers towards the end of the week, pushing the price to new local highs.
Gold has broken through $2000 three times over the last three years, and each time, it has rallied to $2070, followed by a pullback. In 2020 and 2021, gold was pushed back below $1800; in 2022, the price came close to $1620. A retreat in September took the price to $1810 but quickly reversed to the upside.
With horizontal resistance, one deep failure and two less profound drops, gold's dynamics resemble a distorted, inverted head and shoulders pattern. This is a bullish pattern, which in this case suggests a rise to almost $3000 an ounce, which could take up to 2 years.
But we give higher odds to the other, bearish scenario. We expect gold to follow the same pattern as in 2011-2012, when several attempts were made to consolidate above $1800. However, monetary policy reversals and a deteriorating macroeconomic outlook brought gold back to $1055 after three years of decline.
With horizontal resistance, one deep failure and two less profound drops, gold's dynamics resemble a distorted, inverted head and shoulders pattern. This is a bullish pattern, which in this case suggests a rise to almost $3000 an ounce, which could take up to 2 years.
But we give higher odds to the other, bearish scenario. We expect gold to follow the same pattern as in 2011-2012, when several attempts were made to consolidate above $1800. However, monetary policy reversals and a deteriorating macroeconomic outlook brought gold back to $1055 after three years of decline.
The attractive yield on government bonds justifies selling gold in the current circumstances. It shows increasing signs of peaking, which could trigger a flow of active capital out of gold and into bonds. This is doubly true as long as there is no real risk of default on US and major eurozone government bonds.
A necessary change is the fall in inflation. We are seeing more and more evidence that inflation is slowing, which is reducing interest in gold as a hedge against inflation. While this explanation is an investment myth, it has explained some retail interest. And this trend is becoming a thing of the past.
Another point is the changing expectations of market participants. As more and more major central banks switch from an active rate-hiking mode to a wait-and-see approach, the moment of policy reversal is approaching. This increases the attractiveness of long-dated bonds, gold's main competitor.
A necessary change is the fall in inflation. We are seeing more and more evidence that inflation is slowing, which is reducing interest in gold as a hedge against inflation. While this explanation is an investment myth, it has explained some retail interest. And this trend is becoming a thing of the past.
Another point is the changing expectations of market participants. As more and more major central banks switch from an active rate-hiking mode to a wait-and-see approach, the moment of policy reversal is approaching. This increases the attractiveness of long-dated bonds, gold's main competitor.
#WaveAnalysis
#USDJPY broke key resistance level 150.85
Likely to rise to resistance level 151.90
USDJPY recently broke the key resistance level 150.85 (top of the previous daily Evening Star reversal pattern from last week).
The breakout of the resistance level 150.85 accelerated the active medium-term impulse wave (3) from the March.
Given the clear weekly and daily uptrend, USDJPY can be expected to rise further toward the next resistance level 151.90 (which stopped the weekly uptrend in 2022) – from where the downward correction is likely.
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#USDJPY broke key resistance level 150.85
Likely to rise to resistance level 151.90
USDJPY recently broke the key resistance level 150.85 (top of the previous daily Evening Star reversal pattern from last week).
The breakout of the resistance level 150.85 accelerated the active medium-term impulse wave (3) from the March.
Given the clear weekly and daily uptrend, USDJPY can be expected to rise further toward the next resistance level 151.90 (which stopped the weekly uptrend in 2022) – from where the downward correction is likely.
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October was the second best-performance month for Bitcoin this year after January. BTC soared 27% to highs over the past year and a half above $34K.
Regarding seasonality, November is considered a moderately successful month for BTC. Over the past 12 years, Bitcoin has ended the month on seven occasions with an average gain of 24%. In cases of decline, the average drop was 17%.
The "Golden Cross" on Bitcoin's daily timeframes was formed at the end of October thanks to the price rally in the second half of the month. But this event did not trigger further buying. The same was true with the "Death Cross" in September which came the day after the local price bottom.
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Regarding seasonality, November is considered a moderately successful month for BTC. Over the past 12 years, Bitcoin has ended the month on seven occasions with an average gain of 24%. In cases of decline, the average drop was 17%.
The "Golden Cross" on Bitcoin's daily timeframes was formed at the end of October thanks to the price rally in the second half of the month. But this event did not trigger further buying. The same was true with the "Death Cross" in September which came the day after the local price bottom.
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Fed needs to be seriously hawkish to avoid more hikes
The rate decision and the Fed's comments promise to be the highlight in a week full of releases. The market is in no doubt that the pause in policy tightening is here to stay, with interest rate futures pricing in a near 100% probability of a hike. Comments from Fed officials in recent weeks have removed all intrigue, showing a consensus for keeping policy on hold to gather more data.
All the intrigue and potential for market movement is focused on sentiment about the path forward. According to the latest data, markets are pricing in a 27% probability of a December hike, which was as low as 20% recently.
Meanwhile, the US economy continues to churn out much stronger-than-expected numbers and gain momentum. Just look at the GDP growth rate of almost 4.9% in the last quarter; before the pandemic, we last saw this in 2014. What a stark contrast to expectations of a recession!
The rate decision and the Fed's comments promise to be the highlight in a week full of releases. The market is in no doubt that the pause in policy tightening is here to stay, with interest rate futures pricing in a near 100% probability of a hike. Comments from Fed officials in recent weeks have removed all intrigue, showing a consensus for keeping policy on hold to gather more data.
All the intrigue and potential for market movement is focused on sentiment about the path forward. According to the latest data, markets are pricing in a 27% probability of a December hike, which was as low as 20% recently.
Meanwhile, the US economy continues to churn out much stronger-than-expected numbers and gain momentum. Just look at the GDP growth rate of almost 4.9% in the last quarter; before the pandemic, we last saw this in 2014. What a stark contrast to expectations of a recession!
In such an environment, Fed chief Jerome Powell has little choice but to continue threatening the markets with a willingness to raise interest rates even further if inflation picks up. And these potential threats, it seems to me, should be open enough to reach markets that do not believe in further hikes and are pricing in a first cut as early as next summer.
These are perfectly reasonable predictions, but they require a sharp cooling soon to materialise. And that requires scaring the markets beyond belief. If Powell can convince the markets at the press conference that he is not bluffing when he threatens another hike, that will be the best news for the dollar.
These are perfectly reasonable predictions, but they require a sharp cooling soon to materialise. And that requires scaring the markets beyond belief. If Powell can convince the markets at the press conference that he is not bluffing when he threatens another hike, that will be the best news for the dollar.