#WaveAnalysis #SPX
S&P 500 reversed from support level 4930.00
– Likely to rise to resistance level 5050.00
S&P 500 index recently reversed up from the support level 4930.00 (former support from the end of January), intersecting with the 20-day moving average and the support trendline of the daily up channel from November.
The upward reversal from the support level 1.3530 stopped the previous minor correction (ii).
Given the clear daily uptrend, S&P 500 index can be expected to rise further to the next resistance level 5050.00.
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S&P 500 reversed from support level 4930.00
– Likely to rise to resistance level 5050.00
S&P 500 index recently reversed up from the support level 4930.00 (former support from the end of January), intersecting with the 20-day moving average and the support trendline of the daily up channel from November.
The upward reversal from the support level 1.3530 stopped the previous minor correction (ii).
Given the clear daily uptrend, S&P 500 index can be expected to rise further to the next resistance level 5050.00.
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#WaveAnalysis
#USDCAD reversed from resistance level 1.3530
Likely to fall to support level 1.3400
USDCAD currency pair recently reversed down from the key resistance level 1.3530 (which has been reversing the price from the middle of January), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward ABC correction (2) from the start of November.
The downward reversal from the resistance level 1.3530 stopped the previous impulse waves 3 and (3).
Given the strength of the resistance level 1.3530, USDCAD currency pair can be expected to fall further to the next support level 1.3400.
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#USDCAD reversed from resistance level 1.3530
Likely to fall to support level 1.3400
USDCAD currency pair recently reversed down from the key resistance level 1.3530 (which has been reversing the price from the middle of January), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward ABC correction (2) from the start of November.
The downward reversal from the resistance level 1.3530 stopped the previous impulse waves 3 and (3).
Given the strength of the resistance level 1.3530, USDCAD currency pair can be expected to fall further to the next support level 1.3400.
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The #crypto market is up 1.7% from 24 hours ago, with Bitcoin stuck between $51.5K and $52.5K. Buying interest has focused on the major altcoins such as #BNB (+3.6%), #XRP (+3.5%) and #Cardano (+4%), which were lagging the day before, but they are just trying to keep up with Bitcoin's rise. In our opinion, altcoins' time will come when the first cryptocurrency has reached its historic highs and looks too expensive. But it could be another year before that happens.
Moreover, history suggests the market will pick new altcoins with each new growth cycle. The stars of the past era don't always manage to rewrite their all-time highs, so there's no rush to pick altcoins at this stage of the cycle.
As a result of another recalculation, the difficulty of mining the first cryptocurrency increased by 8.24%. The indicator updated the historical maximum at 81.7 T. The average hashrate for the period since the previous change in value was 583.92 EH/s.
Moreover, history suggests the market will pick new altcoins with each new growth cycle. The stars of the past era don't always manage to rewrite their all-time highs, so there's no rush to pick altcoins at this stage of the cycle.
As a result of another recalculation, the difficulty of mining the first cryptocurrency increased by 8.24%. The indicator updated the historical maximum at 81.7 T. The average hashrate for the period since the previous change in value was 583.92 EH/s.
UK retail sales rose by 3.4% in January, almost recovering the previous month's dip. Last month's miss led to talk of a looming recession despite a strong labour market. The new data reduced the level of concern about stagnation, but it is too early to talk about a new impetus to consumption growth.
The current level of sales is 0.7% higher than in January last year. Moreover, the retail sales index has been hovering around its current level all this time, reflecting a prolonged period of stagnation. In the UK, retail sales stagnated between 2008 and 2013, following a period of above-trend growth. The unemployment rate was indeed around 8% at the time, compared with 3.8% today, which was close to cycle lows by historical standards.
It would not be surprising if, this time around, the retail sector were to go sideways for another year, cooled by high interest rates and the slowing stabilisation of price growth. Or, in the event of a contraction in the labour market, a further decline.
The current level of sales is 0.7% higher than in January last year. Moreover, the retail sales index has been hovering around its current level all this time, reflecting a prolonged period of stagnation. In the UK, retail sales stagnated between 2008 and 2013, following a period of above-trend growth. The unemployment rate was indeed around 8% at the time, compared with 3.8% today, which was close to cycle lows by historical standards.
It would not be surprising if, this time around, the retail sector were to go sideways for another year, cooled by high interest rates and the slowing stabilisation of price growth. Or, in the event of a contraction in the labour market, a further decline.
The latest retail sales figures, while beating expectations and easing worries about the UK economy, do not inspire long-term optimism. In terms of FX, this does not suggest a sustained strengthening of the Pound against its major rivals.
While GBPUSD got support on dips to its 200-day moving average, it will be complicated to develop an offensive from this point. In all the time since November that the GBPUSD has been above this trendline, it has failed to make gains and has remained under selling pressure.
Simply put, there is now a greater chance of a break below the 200-day and a consolidation below it, which would open the way to the 1.21 level we saw in October. However, if the problems in the UK economy continue to mount, a two-year decline towards 1.10 could begin.
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While GBPUSD got support on dips to its 200-day moving average, it will be complicated to develop an offensive from this point. In all the time since November that the GBPUSD has been above this trendline, it has failed to make gains and has remained under selling pressure.
Simply put, there is now a greater chance of a break below the 200-day and a consolidation below it, which would open the way to the 1.21 level we saw in October. However, if the problems in the UK economy continue to mount, a two-year decline towards 1.10 could begin.
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US housing starts plunged 14.8% to 1.331m in January, reversing four months of growth and taking the figure back to last year’s lows. This is in sharp contrast to analysts’ average expectations of 1.450m.
The number of building permits issued fell less dramatically, by 1.5% to 1.47 million, against expectations of 1.51 million.
The worse-than-expected data added to fears of a slowdown in final demand after the previous day’s disappointing retail sales data. This is bearish news for the dollar as it brings the date of monetary easing closer.
The number of building permits issued fell less dramatically, by 1.5% to 1.47 million, against expectations of 1.51 million.
The worse-than-expected data added to fears of a slowdown in final demand after the previous day’s disappointing retail sales data. This is bearish news for the dollar as it brings the date of monetary easing closer.
Working against this argument, however, is inflation. The core PPI rose 0.5% m/m and accelerated to 2.0% y/y last month. Economists, on average, expected a slowdown to 1.6% y/y. This is another inflation surprise after the upbeat CPI data earlier in the week.
Isn’t this the realisation of the Fed’s nightmare of accelerating inflation and economic slowdown at the same time? In our view, it is more likely that the FOMC will opt for an extended pause in this environment, which should be bearish for equities and bullish for the dollar.
Isn’t this the realisation of the Fed’s nightmare of accelerating inflation and economic slowdown at the same time? In our view, it is more likely that the FOMC will opt for an extended pause in this environment, which should be bearish for equities and bullish for the dollar.
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#WaveAnalysis
#Gold reversed from support level 1980.00
Likely to rise to resistance level 2050.00
Gold recently reversed up from the support level 1980.00 (which formed the daily Morning Star in December), intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from November.
The upward reversal from the support level 1980.00 created the daily Japanese candlestick reversal pattern Doji, which marked the end of the previous minor correction 2.
Given the clear daily uptrend, Gold can be expected to rise further to the next resistance level 2050.00 (which reversed the price twice from January).
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#Gold reversed from support level 1980.00
Likely to rise to resistance level 2050.00
Gold recently reversed up from the support level 1980.00 (which formed the daily Morning Star in December), intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from November.
The upward reversal from the support level 1980.00 created the daily Japanese candlestick reversal pattern Doji, which marked the end of the previous minor correction 2.
Given the clear daily uptrend, Gold can be expected to rise further to the next resistance level 2050.00 (which reversed the price twice from January).
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#WaveAnalysis
#EURUSD reversed from support level 1.0730
Likely to rise to resistance level 1.0850
EURUSD currency pair recently reversed up from the support level 1.0730 (previous monthly low from December), intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from October.
The upward reversal from the support level 1.0730 created the strong daily Japanese candlestick reversal pattern Morning Star.
Given the continuation of the USD outflows, EURUSD currency pair can be expected to rise further to the next resistance level 1.0850.
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#EURUSD reversed from support level 1.0730
Likely to rise to resistance level 1.0850
EURUSD currency pair recently reversed up from the support level 1.0730 (previous monthly low from December), intersecting with the lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from October.
The upward reversal from the support level 1.0730 created the strong daily Japanese candlestick reversal pattern Morning Star.
Given the continuation of the USD outflows, EURUSD currency pair can be expected to rise further to the next resistance level 1.0850.
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The crypto market cap reached $1.99 trillion, according to CoinMarketCap, an increase of over 10% in one week. Forbes estimates that the $2 trillion mark was reached last week. Over the last 24 hours, Bitcoin gained 1.4%, overtaken by Ethereum (+4.4%) and #Solana (+3.5%). #BNB (-0.6%) and #XRP (+0.9%) could not keep up with the current market.
#Bitcoin is approaching $52.5K, having quickly found buyers after Saturday's drawdown, bringing the price back to the range highs of the last five days. Technically, bitcoin has no meaningful resistance levels until the area approaches $64K.
#Ethereum is also trading in weak resistance territory after breaching the $2900 level. In April 2022, it plunged from levels near $3500 to $2000, with a complete capitulation at levels below $900. A recovery from $2000 to $3500 could be just as quick. This level is also close to 161.8% of the October to early December rally, which is a Fibonacci pattern.
#Bitcoin is approaching $52.5K, having quickly found buyers after Saturday's drawdown, bringing the price back to the range highs of the last five days. Technically, bitcoin has no meaningful resistance levels until the area approaches $64K.
#Ethereum is also trading in weak resistance territory after breaching the $2900 level. In April 2022, it plunged from levels near $3500 to $2000, with a complete capitulation at levels below $900. A recovery from $2000 to $3500 could be just as quick. This level is also close to 161.8% of the October to early December rally, which is a Fibonacci pattern.
The Japanese yen is hovering near 150 per dollar, retreating from last week's four-month highs of 151. The 150-152 area is hazardous for short-term traders, as this is the level from which the Japanese Ministry of Finance intervened in October 2022 and November 2023 to stop the currency from depreciating.
However, it would be too naive to expect a reversal from 151.8, as it has happened several times before. A weaker yen makes Japanese exports more competitive and thus stimulates the economy. In addition, the currency's weakness fuels imported inflation and puts downward pressure on prices.
By using this tool moderately, the country's finance ministry and central bank can address their long-term problem of a stagnant economy and deflation. The momentum of the yen's depreciation in 2022 was excessive, exceeding 30 per cent in seven months. Interventions and the unwinding of long positions in the market have given the yen back about half of this decline.
However, it would be too naive to expect a reversal from 151.8, as it has happened several times before. A weaker yen makes Japanese exports more competitive and thus stimulates the economy. In addition, the currency's weakness fuels imported inflation and puts downward pressure on prices.
By using this tool moderately, the country's finance ministry and central bank can address their long-term problem of a stagnant economy and deflation. The momentum of the yen's depreciation in 2022 was excessive, exceeding 30 per cent in seven months. Interventions and the unwinding of long positions in the market have given the yen back about half of this decline.
The second wave of pressure started in March 2023 and lasted about seven months, taking USDJPY back to the peak of the previous cycle. This time, it is harder to say whether we saw intervention or whether the market switched to buying the yen as the outlook for the dollar changed sharply. As with the first wave, the pullback has lost strength, giving back about half of the initial move, or about 7.5%.
The current phase of USDJPY gains began in early January and is taking the yen to extremes before the beginning of March. At the same time, bets on further Yen weakness have risen to their highest levels in over two years. This extreme positioning creates a breeding ground for a downside move, as is the case with such counter-trend strategies.
The yen's growth impulses have allowed the economy to adjust, so there is no need to defend precisely the 152 level. USDJPY is now 14% higher than a year ago. This is not a critical drop.
The current phase of USDJPY gains began in early January and is taking the yen to extremes before the beginning of March. At the same time, bets on further Yen weakness have risen to their highest levels in over two years. This extreme positioning creates a breeding ground for a downside move, as is the case with such counter-trend strategies.
The yen's growth impulses have allowed the economy to adjust, so there is no need to defend precisely the 152 level. USDJPY is now 14% higher than a year ago. This is not a critical drop.
In our experience, officials start to get worried about exchange rate movements when they approach 20% year-on-year.
In the case of the yen, one should be prepared for neither the Bank of Japan nor the Ministry of Finance to refrain from active action and perhaps even verbal intervention until the 160 yen/$ level, which is the next round level coinciding with the 1990 peak.
Officials may allow the yen to weaken thanks to slower inflation and lower commodity. Japan's economy has contracted for the past two quarters, suggesting a need for support.
Meanwhile, the outperformance of the stock market suggests confidence that the economy is not overly burdened by exchange rate volatility and will soon benefit from more competitive prices for its goods.
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In the case of the yen, one should be prepared for neither the Bank of Japan nor the Ministry of Finance to refrain from active action and perhaps even verbal intervention until the 160 yen/$ level, which is the next round level coinciding with the 1990 peak.
Officials may allow the yen to weaken thanks to slower inflation and lower commodity. Japan's economy has contracted for the past two quarters, suggesting a need for support.
Meanwhile, the outperformance of the stock market suggests confidence that the economy is not overly burdened by exchange rate volatility and will soon benefit from more competitive prices for its goods.
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Canada PPI unlikely to wake hawks
Producer prices in Canada fell by 0.1% in January after a cumulative drop of 2.9% in the previous three months. Prices are now 2.9% lower than a year ago, picking up the pace of decline.
Looking through all these large swings since the start of the pandemic, the PPI has shown a typical annual growth rate of 4% over these four years, above the average of 2.3% since 2000 but close to the average rate for the whole observation period since 1956.
The raw commodity price index was up 1.2% for the month, but that shouldn't worry the Bank of Canada’s hawks, as the index had lost 12.5% in the previous three months. In January last year, prices were down 6.4%. The average annual increase since the start of 2020 is a more impressive 8%, compared with an average of 5.3% since 2000 and 3.7% since 1981.
Canada's equally important CPI data will be released on Tuesday. The annual rate is expected to slow from 3.4% to 3.2% for the headline index and from 2.6% to 2.5% for the core index.
Producer prices in Canada fell by 0.1% in January after a cumulative drop of 2.9% in the previous three months. Prices are now 2.9% lower than a year ago, picking up the pace of decline.
Looking through all these large swings since the start of the pandemic, the PPI has shown a typical annual growth rate of 4% over these four years, above the average of 2.3% since 2000 but close to the average rate for the whole observation period since 1956.
The raw commodity price index was up 1.2% for the month, but that shouldn't worry the Bank of Canada’s hawks, as the index had lost 12.5% in the previous three months. In January last year, prices were down 6.4%. The average annual increase since the start of 2020 is a more impressive 8%, compared with an average of 5.3% since 2000 and 3.7% since 1981.
Canada's equally important CPI data will be released on Tuesday. The annual rate is expected to slow from 3.4% to 3.2% for the headline index and from 2.6% to 2.5% for the core index.
#WaveAnalysis
#NZDJPY reversed from support level 91.00
Likely to rise to resistance level 93.00
The NZDJPY currency pair recently reversed up from the support level of 91.00 (former resistance, which has been reversing the price from November).
The upward reversal from the support level 91.00 started the active short-term impulse wave iii of the higher impulse waves 3 and (3).
Given the clear daily uptrend, NZDJPY currency pair can be expected to rise further to the next resistance level 93.00 target price from the completion of the active impulse wave iii.
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#NZDJPY reversed from support level 91.00
Likely to rise to resistance level 93.00
The NZDJPY currency pair recently reversed up from the support level of 91.00 (former resistance, which has been reversing the price from November).
The upward reversal from the support level 91.00 started the active short-term impulse wave iii of the higher impulse waves 3 and (3).
Given the clear daily uptrend, NZDJPY currency pair can be expected to rise further to the next resistance level 93.00 target price from the completion of the active impulse wave iii.
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#WaveAnalysis
#GBPAUD reversed from resistance level 1.9400
Likely to fall to support level 1.9200
GBPAUD currency pair recently reversed down from the resistance level 1.9400 (which has been repeatedly reversing the pair from the middle of January).
The downward reversal from the resistance level 1.9400 created the 3rd consecutive candlesticks reversal pattern Bearish Engulfing.
Given the continuation of the bearish sterling sentiment seen across the FX markets today, GBPAUD currency pair can be expected to fall further to the next support level 1.9200 (low of the previous correction 2).
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#GBPAUD reversed from resistance level 1.9400
Likely to fall to support level 1.9200
GBPAUD currency pair recently reversed down from the resistance level 1.9400 (which has been repeatedly reversing the pair from the middle of January).
The downward reversal from the resistance level 1.9400 created the 3rd consecutive candlesticks reversal pattern Bearish Engulfing.
Given the continuation of the bearish sterling sentiment seen across the FX markets today, GBPAUD currency pair can be expected to fall further to the next support level 1.9200 (low of the previous correction 2).
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The #crypto market has corrected 0.46% in the last 24 hours, fluctuating within a narrow range without a clear direction. Bitcoin is down 1% but up 3.7% over seven days, Ethereum is flat for the day but up 10.6% over the week. The top coins are mixed with #BNB +2% and #Solana -2.5%.
#Bitcoin is currently drawing its fourth daily candle with opening and closing levels close to each other. Such sideways consolidations are characteristic of strong bull markets, as opposed to corrective pullbacks on smoother rallies.
#Ethereum hit local highs on rumours of a positive regulatory decision before the end of March. Bloomberg analyst James Seyffarth bet 4 ETH that the SEC will not approve a spot Ethereum ETF next month.
According to data from CoinShares, investment in crypto funds rose by a record $2.452 billion last week, following inflows of $1.116 billion the previous week. Bitcoin investments increased by $2.424 billion, Ethereum by $21 million, #Cardano lost $6 million, and Solana lost $1.6 million.
Since the beginning of the year, crypto funds have seen inflows of an impressive $5.2 billion, with total AUM rising to $67 billion, the highest since December 2021.
#Bitcoin is currently drawing its fourth daily candle with opening and closing levels close to each other. Such sideways consolidations are characteristic of strong bull markets, as opposed to corrective pullbacks on smoother rallies.
#Ethereum hit local highs on rumours of a positive regulatory decision before the end of March. Bloomberg analyst James Seyffarth bet 4 ETH that the SEC will not approve a spot Ethereum ETF next month.
According to data from CoinShares, investment in crypto funds rose by a record $2.452 billion last week, following inflows of $1.116 billion the previous week. Bitcoin investments increased by $2.424 billion, Ethereum by $21 million, #Cardano lost $6 million, and Solana lost $1.6 million.
Since the beginning of the year, crypto funds have seen inflows of an impressive $5.2 billion, with total AUM rising to $67 billion, the highest since December 2021.
#Gold rallied for the fourth consecutive session to reach $2023, recovering almost all the losses suffered the week before on the back of the inflation report. Gold's ability to rally suggests continued domestic demand, as some investors are clearly rushing to buy back any losses.
At the same time, however, we note that since the beginning of the year, gold has been characterised by solid selloffs on the news, forming a smooth downtrend. In the context of this downtrend, a rise to $2040-2045, which is the upper boundary of the bearish range, looks quite acceptable.
The area around $2035 - the highs of two weeks ago - also appears to be a crucial intermediate level. Confident buying from this level would be the first important signal that the recent correction is over and that gold is ready to make a fresh assault on the highs.
Much more important, however, will be the behaviour of gold as it approaches the $2050 level, where the reversal of the decline in late January took place.
At the same time, however, we note that since the beginning of the year, gold has been characterised by solid selloffs on the news, forming a smooth downtrend. In the context of this downtrend, a rise to $2040-2045, which is the upper boundary of the bearish range, looks quite acceptable.
The area around $2035 - the highs of two weeks ago - also appears to be a crucial intermediate level. Confident buying from this level would be the first important signal that the recent correction is over and that gold is ready to make a fresh assault on the highs.
Much more important, however, will be the behaviour of gold as it approaches the $2050 level, where the reversal of the decline in late January took place.
Consolidation at this level would confirm the breakdown of the downtrend and set the stage for a move towards $2100 and the subsequent renewal of historic highs.
However, as long as gold is trading within the downtrend, there is a greater chance of a breakdown or even an acceleration of the downtrend.
Among the fundamental factors, the potential for growth could be provided by the fall in the dollar if Fed officials show a softening of their position, bringing the start of interest rate cuts closer.
On the bearish side, equities could come under pressure following the optimistic rally in the tech giants and the news of a sharp slowdown in economic activity. We also do not rule out the possibility that the recent support measures for the Chinese stock market and property sector will cool demand for gold as a safe-haven for investors from that part of the world.
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However, as long as gold is trading within the downtrend, there is a greater chance of a breakdown or even an acceleration of the downtrend.
Among the fundamental factors, the potential for growth could be provided by the fall in the dollar if Fed officials show a softening of their position, bringing the start of interest rate cuts closer.
On the bearish side, equities could come under pressure following the optimistic rally in the tech giants and the news of a sharp slowdown in economic activity. We also do not rule out the possibility that the recent support measures for the Chinese stock market and property sector will cool demand for gold as a safe-haven for investors from that part of the world.
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#WaveAnalysis
#WTI crude oil reversed from resistance level 78.20
Likely to fall to support level 76.00
WTI crude oil recently reversed down from the key resistance level 78.20 (former support from August, which has been reversing the price from the start of November).
The resistance level 78.20 was strengthened by the 38.2% Fibonacci correction of the previous downward impulse from September.
Given the strength of the resistance level 78.20, WTI crude oil can be expected to fall further to the next support level 76.00, which stopped the earlier downward correction.
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#WTI crude oil reversed from resistance level 78.20
Likely to fall to support level 76.00
WTI crude oil recently reversed down from the key resistance level 78.20 (former support from August, which has been reversing the price from the start of November).
The resistance level 78.20 was strengthened by the 38.2% Fibonacci correction of the previous downward impulse from September.
Given the strength of the resistance level 78.20, WTI crude oil can be expected to fall further to the next support level 76.00, which stopped the earlier downward correction.
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