The #crypto market is quiet, hovering around a total capitalisation of $2.6 trillion for the third day. Bitcoin has so far failed to gain a foothold above $70K, and this is curbing the enthusiasm. It is losing 0.3% in 24 hours against Ethereum's 0.6% rise.
The top altcoins have comparatively subdued and varied dynamics, with fluctuations between -2% for #Dogecoin, -1.5% for #Solana and a 1.5% rise for #Toncoin.
Technically, #Bitcoin remains near the upper boundary of the descending range. The round level of $70K is also quite important for the young crypto market. Going higher would break two barriers at once. Short-term growth momentum could quickly take the price to the highs at $73.5K.
A more distant and important target could be in the $95K-$100K area, where the lower boundary is the 161.8% level of the January-March rise and the upper boundary is an important round level.
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The top altcoins have comparatively subdued and varied dynamics, with fluctuations between -2% for #Dogecoin, -1.5% for #Solana and a 1.5% rise for #Toncoin.
Technically, #Bitcoin remains near the upper boundary of the descending range. The round level of $70K is also quite important for the young crypto market. Going higher would break two barriers at once. Short-term growth momentum could quickly take the price to the highs at $73.5K.
A more distant and important target could be in the $95K-$100K area, where the lower boundary is the 161.8% level of the January-March rise and the upper boundary is an important round level.
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Upbeat PMIs brought buyers back into the Euro
Preliminary estimates of European business activity indices noted an overall acceleration in the Eurozone economy better than expected, helping the Euro find temporary support as it approaches 1.08.
Germany provided the biggest upside to expectations this time around after months of negative surprises. The manufacturing PMI rose from 42.5 to 45.4 vs. the forecast of 43.2. This is still in contraction territory (below 50), but the trend is clearly positive.
Germany's service sector is strengthening its expansion, as reflected in the rise in the corresponding PMI to 53.9, the highest since last June. This is a territory of healthy growth and where the index was from 2013 to 2019.
Germany's composite PMI is only on the cusp of normal levels due to weakness in manufacturing, but the positive trend is building optimism.
Preliminary estimates of European business activity indices noted an overall acceleration in the Eurozone economy better than expected, helping the Euro find temporary support as it approaches 1.08.
Germany provided the biggest upside to expectations this time around after months of negative surprises. The manufacturing PMI rose from 42.5 to 45.4 vs. the forecast of 43.2. This is still in contraction territory (below 50), but the trend is clearly positive.
Germany's service sector is strengthening its expansion, as reflected in the rise in the corresponding PMI to 53.9, the highest since last June. This is a territory of healthy growth and where the index was from 2013 to 2019.
Germany's composite PMI is only on the cusp of normal levels due to weakness in manufacturing, but the positive trend is building optimism.
It is not unusual for PMI releases to have a meaningful impact on the performance of the Euro or the region's stock indices. Today's release was no exception, and #EURUSD reversed to the upside after drifting downward for a week. However, the pair's loss of about a hundred points during this time looks like a correction after the acceleration since the beginning of the month.
Whether this is the case will be clear in case of consolidation above 1.09. A rise above the previous peaks will confirm the bullish trend, opening the way to 1.11 or higher.
We see an additional positive signal in the fact that EURUSD has received active support from buyers above the 1.0770-1.0780 area, where the 50- and 200-day moving average, as well as the former resistance line of the ascending channel, are located.
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Whether this is the case will be clear in case of consolidation above 1.09. A rise above the previous peaks will confirm the bullish trend, opening the way to 1.11 or higher.
We see an additional positive signal in the fact that EURUSD has received active support from buyers above the 1.0770-1.0780 area, where the 50- and 200-day moving average, as well as the former resistance line of the ascending channel, are located.
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#WaveAnalysis
#NASDAQ100 Index reversed from round resistance level 19000.00
Likely to fall to support level 18500.00
NASDAQ 100 Index today reversed down from the resistance area located between the round resistance level 19000.00 and the upper daily Bollinger Band.
The resistance level 19000.00 was strengthened by the resistance trendline of the daily up channel from the end of April.
Given the strength of the resistance level 19000.00 and the overbought daily Stochastic, NASDAQ 100 Index can be expected to fall further to the next support level 18500.00.
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#NASDAQ100 Index reversed from round resistance level 19000.00
Likely to fall to support level 18500.00
NASDAQ 100 Index today reversed down from the resistance area located between the round resistance level 19000.00 and the upper daily Bollinger Band.
The resistance level 19000.00 was strengthened by the resistance trendline of the daily up channel from the end of April.
Given the strength of the resistance level 19000.00 and the overbought daily Stochastic, NASDAQ 100 Index can be expected to fall further to the next support level 18500.00.
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#WaveAnalysis
#EURGBP reversed from long-term support level 0.8500
Likely to test resistance level 0.8550
EURGBP currency pair today reversed up from the major long-term support level 0.8500 (which has been steadily reversing all downward impulse of this pair from July of 2023) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.8500 stopped the previous impulse waves 3 and (3).
Given the strength of the support level 0.8500 and the oversold daily Stochastic, EURGBP currency pair can be expected to rise further to the next resistance level 0.8550.
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#EURGBP reversed from long-term support level 0.8500
Likely to test resistance level 0.8550
EURGBP currency pair today reversed up from the major long-term support level 0.8500 (which has been steadily reversing all downward impulse of this pair from July of 2023) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.8500 stopped the previous impulse waves 3 and (3).
Given the strength of the support level 0.8500 and the oversold daily Stochastic, EURGBP currency pair can be expected to rise further to the next resistance level 0.8550.
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The #crypto market lost 2.9% in the last 24 hours, retreating to a market capitalisation of $2.5 trillion. The market came under pressure as active trading began in the US on a fresh batch of strong economic data. News of the approval of spot ETFs on Ethereum only added to the pressure.
#Ethereum's sell-off on positive news is a typical "buy the rumours, sell the facts" reaction of speculators. We saw the same in January after the approval of the Bitcoin ETF, which took 19% off its price in the following two weeks before there was a spectacular reversal.
Similarly, the market may let off steam regarding Ethereum. We shouldn't be surprised if the price pulls back to the $3000 area again, returning to an important consolidation area. From these levels, large institutional investors can start building a position in ETFs.
#Ethereum's sell-off on positive news is a typical "buy the rumours, sell the facts" reaction of speculators. We saw the same in January after the approval of the Bitcoin ETF, which took 19% off its price in the following two weeks before there was a spectacular reversal.
Similarly, the market may let off steam regarding Ethereum. We shouldn't be surprised if the price pulls back to the $3000 area again, returning to an important consolidation area. From these levels, large institutional investors can start building a position in ETFs.
#Nasdaq100: not yet a correction
The Nasdaq100 index was once again the main driver of growth in US indices in May, indirectly also positively influencing markets elsewhere. On Thursday, the index was approaching the 19,000 level, adding over 11% to the 19 April lows. An impressive wave of selloffs hit the market, taking 2% off the index from peak to bottom. And now, the legitimate question is, are we seeing the beginning of a long correction?
Technically, the Nasdaq100 index is at the threshold of the overbought zone on RSI on daily timeframes. Contrary to the name, entering this area is more likely to see the most intense growth, although the least unpredictable.
Buyers' interest is supported by the fact that the index is now only 1% above the previous peak. After that peak, there was already an April correction that removed much of the market's short-term overheating.
The Nasdaq100 index was once again the main driver of growth in US indices in May, indirectly also positively influencing markets elsewhere. On Thursday, the index was approaching the 19,000 level, adding over 11% to the 19 April lows. An impressive wave of selloffs hit the market, taking 2% off the index from peak to bottom. And now, the legitimate question is, are we seeing the beginning of a long correction?
Technically, the Nasdaq100 index is at the threshold of the overbought zone on RSI on daily timeframes. Contrary to the name, entering this area is more likely to see the most intense growth, although the least unpredictable.
Buyers' interest is supported by the fact that the index is now only 1% above the previous peak. After that peak, there was already an April correction that removed much of the market's short-term overheating.
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The correction in July-October last year fits into a classic Fibonacci pattern, bringing the Nasdaq100 index close to 61.8% of the original rally and one hair away from the 200-day moving average. This should classically be followed by a rally to 161.8%, around 19200.
So, the Nasdaq100 is a little short of an important resistance area. But it is quite possible that it simply pauses to consolidate forces before a new leap upwards.
However, without a dramatic change in sentiment or a dramatic deterioration of economic data, we should not expect a steady decline in equity indices. The last downward impulse was short-term profit-taking provoked by a new batch of strong macroeconomic data. They suggest tighter monetary policy, but that is not a sufficient reason to start a bear market in equities.
Still, it is worth noting that a drop below the previous consolidation at the top near 18300 could be an important technical signal of a trend reversal.
So, the Nasdaq100 is a little short of an important resistance area. But it is quite possible that it simply pauses to consolidate forces before a new leap upwards.
However, without a dramatic change in sentiment or a dramatic deterioration of economic data, we should not expect a steady decline in equity indices. The last downward impulse was short-term profit-taking provoked by a new batch of strong macroeconomic data. They suggest tighter monetary policy, but that is not a sufficient reason to start a bear market in equities.
Still, it is worth noting that a drop below the previous consolidation at the top near 18300 could be an important technical signal of a trend reversal.
#WaveAnalysis
#Brent Crude oil reversed from strong support level 81.00
Likely to rise to resistance level 84.3
Brent Crude oil recently reversed up from the support area located between the strong support level 81.00, which has been reversing the price from February, and the lower daily Bollinger Band.
The support level 81.00 was strengthened by the nearby lower daily Bollinger Band and by the 61.8% Fibonacci correction of the upward impulse 1 from December.
Given the bullish divergence on the daily Stochastic, Brent Crude oil can be expected to rise further to the next resistance level 84.30.
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#Brent Crude oil reversed from strong support level 81.00
Likely to rise to resistance level 84.3
Brent Crude oil recently reversed up from the support area located between the strong support level 81.00, which has been reversing the price from February, and the lower daily Bollinger Band.
The support level 81.00 was strengthened by the nearby lower daily Bollinger Band and by the 61.8% Fibonacci correction of the upward impulse 1 from December.
Given the bullish divergence on the daily Stochastic, Brent Crude oil can be expected to rise further to the next resistance level 84.30.
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#Crypto market capitalisation rose 6.2% in seven days to $2.57 trillion, approaching the area of this year's highs above $2.7 trillion. Bitcoin's price, like the overall market cap chart, tests the upper boundary of the downward range that has been in force since March.
The break of this downtrend is the ability to consolidate above the last local high. For the crypto market, this is the $2.63 trillion area, and for #Bitcoin, it is $71.6K. An alternative negative scenario suggests a return to the lower end of the range, just above $2.12 trillion and around $60K for Bitcoin.
#Ethereum has not abandoned its attempt to overcome $4000, hovering above $3900 early in the day on Monday. The ability to overcome this psychologically important round level could quickly take the price to the highs of November 2021, in the $4600-4800 area.
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The break of this downtrend is the ability to consolidate above the last local high. For the crypto market, this is the $2.63 trillion area, and for #Bitcoin, it is $71.6K. An alternative negative scenario suggests a return to the lower end of the range, just above $2.12 trillion and around $60K for Bitcoin.
#Ethereum has not abandoned its attempt to overcome $4000, hovering above $3900 early in the day on Monday. The ability to overcome this psychologically important round level could quickly take the price to the highs of November 2021, in the $4600-4800 area.
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Precious metals are gaining on Monday in the second day of growth after last week's heavy sell-off. Platinum is recovering the most, jumping 2.9%. Palladium is gaining about 2%, also noting the recovery of buyers' appetite after the recent drawdown.
Exactly one week ago, Platinum reached a local peak at $1095, a two-year high. The subsequent 7% pullback was a classic 61.8% Fibonacci retracement of the initial rally from $897 in late April. According to this pattern, overcoming the last peak would allow us to consider the $1210-1220 area as the next potential target.
We also note that the price did not fall below the $1000 level, which effectively acted as resistance in December and April but has now turned into support. The platinum price may be ready to move a notch higher in the coming weeks, settling in the $1200-1400 area.
Exactly one week ago, Platinum reached a local peak at $1095, a two-year high. The subsequent 7% pullback was a classic 61.8% Fibonacci retracement of the initial rally from $897 in late April. According to this pattern, overcoming the last peak would allow us to consider the $1210-1220 area as the next potential target.
We also note that the price did not fall below the $1000 level, which effectively acted as resistance in December and April but has now turned into support. The platinum price may be ready to move a notch higher in the coming weeks, settling in the $1200-1400 area.
Last week's downward reversal pushed Palladium below the 200-day moving average, where it has been hovering since October 2022. Perhaps this downtrend is reaching its last days, as Palladium has formed very strong horizontal support in the $910-950 area since November. The combination of these forms the price movement within a triangle.
Classically, such a triangle should be resolved by a failure of the support and further price decline. But we believe that this is the case when we should expect an upward breakout.
Raw materials have a boundary below which exploration and mining are not interesting for companies. Palladium seems to have reached or strongly approached this boundary in the last six months. On the other hand, China's stimulation of its own economy is driving up commodity prices. Palladium should not be left behind, as it is actively used in the production of electric cars and has the biggest upside due to its distance from historic highs above $3400.
Classically, such a triangle should be resolved by a failure of the support and further price decline. But we believe that this is the case when we should expect an upward breakout.
Raw materials have a boundary below which exploration and mining are not interesting for companies. Palladium seems to have reached or strongly approached this boundary in the last six months. On the other hand, China's stimulation of its own economy is driving up commodity prices. Palladium should not be left behind, as it is actively used in the production of electric cars and has the biggest upside due to its distance from historic highs above $3400.
#WaveAnalysis
#Cisco broke support level 46.70
Likely to fall to support level 46.00
Cisco previously broke below the support level 46.70, which stopped the previous minor impulse wave I at the start of this month.
The breakout of the support level 46.70 should accelerate the active impulse waves 3 and (C).
Given the clear daily downtrend, Cisco can be expected to fall further to the next support level 46.00, target price for the completion of the active impulse wave 3.
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#Cisco broke support level 46.70
Likely to fall to support level 46.00
Cisco previously broke below the support level 46.70, which stopped the previous minor impulse wave I at the start of this month.
The breakout of the support level 46.70 should accelerate the active impulse waves 3 and (C).
Given the clear daily downtrend, Cisco can be expected to fall further to the next support level 46.00, target price for the completion of the active impulse wave 3.
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The improvement in Germany's business climate stalled in May, according to data released by Ifo. The index remained at the same level of 89.3 as a month earlier.
The indicator was last higher in May last year, but analysts, on average, were expecting a further increase to confirm the more positive PMI reading released last week.
Although markets reacted sluggishly to this publication, it probably accounts for the Euro's weaker performance against its major peers. EURUSD has pulled back below 1.0850, while EURGBP is testing the 0.8500 mark. The latter pair has not traded persistently lower since August 2022.
The steady decline over the past two weeks is mainly due to the belief that the Bank of England will extend the pause before the rate cut cycle starts and the ECB will ease policy at its next meeting on 6 June.
If the support at 0.8500 does not hold, the nearest next support will be the area of 0.8250-0.8300, but one should be prepared that the decline will not stop there.
The indicator was last higher in May last year, but analysts, on average, were expecting a further increase to confirm the more positive PMI reading released last week.
Although markets reacted sluggishly to this publication, it probably accounts for the Euro's weaker performance against its major peers. EURUSD has pulled back below 1.0850, while EURGBP is testing the 0.8500 mark. The latter pair has not traded persistently lower since August 2022.
The steady decline over the past two weeks is mainly due to the belief that the Bank of England will extend the pause before the rate cut cycle starts and the ECB will ease policy at its next meeting on 6 June.
If the support at 0.8500 does not hold, the nearest next support will be the area of 0.8250-0.8300, but one should be prepared that the decline will not stop there.
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#WaveAnalysis
#EURAUD reversed from resistance level 1.6365
Likely to fall to support level 1.6210
EURAUD currency pair previously reversed down from the key resistance level 1.6365, former support from April and January.
The resistance level 1.6365 was strengthened by the upper daily Bollinger Band and by the 38.2% Fibonacci correction of the previous downward impulse 1 from April.
EURAUD can be expected to fall further to the next support level 1.6210, which stopped the previous impulse wave 1.
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#EURAUD reversed from resistance level 1.6365
Likely to fall to support level 1.6210
EURAUD currency pair previously reversed down from the key resistance level 1.6365, former support from April and January.
The resistance level 1.6365 was strengthened by the upper daily Bollinger Band and by the 38.2% Fibonacci correction of the previous downward impulse 1 from April.
EURAUD can be expected to fall further to the next support level 1.6210, which stopped the previous impulse wave 1.
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The #crypto market cap is down 0.8% in 24 hours to $2.55 trillion. Bitcoin is losing 0.7%, Ethereum is down 1.1%, and the top altcoins are changing between -0.9% (Toncoin) and +1.1% (Solana).
Bitcoin's hashrate updated a record 676 Eh/s. Bitcoin miner capacity increased after the halving, although the opposite was expected.
#Bitcoin is losing ground on Tuesday. It is pulling back deep from the upper boundary of the trading range, trading at $68K. The lower boundary of the range (a potential target for bears) is below $60K. That said, the first cryptocurrency's ability to consolidate above $70K will break this bearish pattern.
The Disposer of MtGox has begun actively distributing funds. A total of 142,000 BTC ($9.7 billion), 143,000 BCH ($69.6 million) and 69 billion yen ($439 million) are scheduled to be distributed. This event temporarily pressurises the markets as the recipients of the assets can sell them immediately. However, this sell-off will finally close a longstanding phobia.
Bitcoin's hashrate updated a record 676 Eh/s. Bitcoin miner capacity increased after the halving, although the opposite was expected.
#Bitcoin is losing ground on Tuesday. It is pulling back deep from the upper boundary of the trading range, trading at $68K. The lower boundary of the range (a potential target for bears) is below $60K. That said, the first cryptocurrency's ability to consolidate above $70K will break this bearish pattern.
The Disposer of MtGox has begun actively distributing funds. A total of 142,000 BTC ($9.7 billion), 143,000 BCH ($69.6 million) and 69 billion yen ($439 million) are scheduled to be distributed. This event temporarily pressurises the markets as the recipients of the assets can sell them immediately. However, this sell-off will finally close a longstanding phobia.
The Nasdaq100 and S&P500 indices are showing measured gains, while volatility has declined to levels last seen in January 2020. Many traders are looking at this volatility compression as the calm before the storm, something we saw just over four years ago. The prudent strategy for this market is to "buy the dip." A sustained rise in the VIX above 20 would signal the start of a correction.
However, history suggests that a VIX decline alone is not enough to predict a market reversal. From May 2018 to January 2020, the index dipped below 12 several times. During that time, the S&P500 index added over 30%, and a "buy on downturns" strategy would have provided even more attractive returns.
Moreover, the VIX spent almost all of 2017 below 12, during which time the S&P500 added 20%, against a long-term average of 10-11%. In this episode, the market didn't encounter a powerful correction until early 2018, and the index returned to growth from higher levels than before the lull.
However, history suggests that a VIX decline alone is not enough to predict a market reversal. From May 2018 to January 2020, the index dipped below 12 several times. During that time, the S&P500 index added over 30%, and a "buy on downturns" strategy would have provided even more attractive returns.
Moreover, the VIX spent almost all of 2017 below 12, during which time the S&P500 added 20%, against a long-term average of 10-11%. In this episode, the market didn't encounter a powerful correction until early 2018, and the index returned to growth from higher levels than before the lull.
The same can be said for earlier periods: a VIX pullback into the 10-12 area is often followed by a transition to accelerated market growth, often with shallow corrections.
The distinction between short-term pullbacks and the start of a deeper correction can be made roughly through the 20 level of the VIX. Continued declines in equities and further increases in volatility mean the market switches into "fear" mode. In this case, but not before, it is worth changing tactics from "buying on downturns" to selling on growth.
In October 2023 and April 2024, the VIX temporarily rose above 20 but quickly pulled back, giving false early signals.
If the VIX continues to decline further, we will only get an "irrational optimism" signal when it drops below 9, but even then, it could be months before the S&P500 and Nasdaq100 reverse.
The distinction between short-term pullbacks and the start of a deeper correction can be made roughly through the 20 level of the VIX. Continued declines in equities and further increases in volatility mean the market switches into "fear" mode. In this case, but not before, it is worth changing tactics from "buying on downturns" to selling on growth.
In October 2023 and April 2024, the VIX temporarily rose above 20 but quickly pulled back, giving false early signals.
If the VIX continues to decline further, we will only get an "irrational optimism" signal when it drops below 9, but even then, it could be months before the S&P500 and Nasdaq100 reverse.