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.
#WaveAnalysis #ADBE
Adobe reversed from key resistance level 490,00
– Likely to fall to support level 460.00
Adobe recently reversed down from the key resistance level 490,00, former strong support from march.
The resistance level 490,00 was strengthened by the upper daily Bollinger Band and by the 50% Fibonacci correction of the previous downward impulse 1 from march.
Adobe can be expected to fall further to the next support level 460.00, which stopped the previous waves 3, 5 and ii.
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Adobe reversed from key resistance level 490,00
– Likely to fall to support level 460.00
Adobe recently reversed down from the key resistance level 490,00, former strong support from march.
The resistance level 490,00 was strengthened by the upper daily Bollinger Band and by the 50% Fibonacci correction of the previous downward impulse 1 from march.
Adobe can be expected to fall further to the next support level 460.00, which stopped the previous waves 3, 5 and ii.
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#WaveAnalysis
#WTI crude oil reversed from key support level 76.70
Likely to rise to resistance level 81.10
WTI crude oil recently reversed up from the support zone located between the key support level 76.70, which has been reversing the price from February.
The support level 76.70 was strengthened by the lower daily Bollinger Band and by the 61.8% Fibonacci correction of the upward impulse from February.
Given the bullish divergence on the daily Stochastic, WTI crude oil can be expected to rise further to the next resistance level 81.10.
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#WTI crude oil reversed from key support level 76.70
Likely to rise to resistance level 81.10
WTI crude oil recently reversed up from the support zone located between the key support level 76.70, which has been reversing the price from February.
The support level 76.70 was strengthened by the lower daily Bollinger Band and by the 61.8% Fibonacci correction of the upward impulse from February.
Given the bullish divergence on the daily Stochastic, WTI crude oil can be expected to rise further to the next resistance level 81.10.
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The #crypto market added 1.3% in 24 hours to $2.58 trillion. This is roughly the area where trading has been centred for the last week, despite attempts by speculators to rock the market. Volatility in the market has decreased, with prices of the major coins varying between -1.3% (Toncoin) and 3.3% (Solana), while Shiba Inu shot straight up 15% to its highest since early April.
#Bitcoin continues to hover near the upper edge of the descending range, building up strength before the next move. All we have to do is reiterate that an exit above $70K will break this bearish pattern. Until then, the classic development is a pullback to the lower boundary, but we see this as an alternative option, suggesting a further breakout after consolidation.
According to CoinShares, net inflows into crypto funds totalled $1.05bn last week, up from $932m a week earlier. Bitcoin investments were up $1.01bn, Ethereum was up $36m, and Solana was up $8m.
#Bitcoin continues to hover near the upper edge of the descending range, building up strength before the next move. All we have to do is reiterate that an exit above $70K will break this bearish pattern. Until then, the classic development is a pullback to the lower boundary, but we see this as an alternative option, suggesting a further breakout after consolidation.
According to CoinShares, net inflows into crypto funds totalled $1.05bn last week, up from $932m a week earlier. Bitcoin investments were up $1.01bn, Ethereum was up $36m, and Solana was up $8m.
Consumer inflation in Australia rose in April, contrary to the expected decline. Year-on-year price gains totalled 3.6% vs. 3.5% previously, and average forecasts of a decline to 3.4%.
The inflation rate reached a plateau late last year, falling to 3.4%, but has been ticking upward for the past two months.
Prices have added ten months out of the past 12. Their rise over the past four consecutive months removes the question of an imminent rate cut.
The inflation rate reached a plateau late last year, falling to 3.4%, but has been ticking upward for the past two months.
Prices have added ten months out of the past 12. Their rise over the past four consecutive months removes the question of an imminent rate cut.
Judging by the reaction of the currency market, traders are not laying down for a policy tightening. AUDUSD is facing stronger selling on attempts to rise above 0.6650.
This is an interesting development, given the rise in industrial metals prices and some recovery in trade with China in recent months.
The Australian currency's ability to break the multi-month resistance at 0.6650 would open the way to 0.6800, the pivot area of the past 12 months. The current currency market slack, alongside potentially bullish data, is also helping to create domestic pressure.
On the bears' side, however, is the weakness in retail sales, which saw a 0.1% m/m and 1.3% y/y rise in April.
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This is an interesting development, given the rise in industrial metals prices and some recovery in trade with China in recent months.
The Australian currency's ability to break the multi-month resistance at 0.6650 would open the way to 0.6800, the pivot area of the past 12 months. The current currency market slack, alongside potentially bullish data, is also helping to create domestic pressure.
On the bears' side, however, is the weakness in retail sales, which saw a 0.1% m/m and 1.3% y/y rise in April.
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German inflation confirmed an acceleration. Harmonised CPI rose to 2.8% vs 2.4% a month earlier and 2.3% in March. This is positive news for the Euro, which is lagging behind the Pound and relatively weak against the Dollar, based on expectations of a looser ECB monetary policy against rivals.
A fresh batch of data from Germany casts little doubt on the ECB members' widely announced policy easing on 6 June. Nevertheless, the acceleration in price growth, if sustained going forward, reduces the chances of the back-to-back cuts.
A sustained acceleration in inflation could revive interest in the euro, which earlier on Wednesday fell to its lowest in nearly two years. EURUSD has been hovering around 1.0850 for the past two weeks and could accelerate gains after a pause.
Potential weakness for the euro could come from the economic front, where an economic slowdown and sluggish lending, adding 0.2% to last year, the lowest since 2015, are increasingly evident.
A fresh batch of data from Germany casts little doubt on the ECB members' widely announced policy easing on 6 June. Nevertheless, the acceleration in price growth, if sustained going forward, reduces the chances of the back-to-back cuts.
A sustained acceleration in inflation could revive interest in the euro, which earlier on Wednesday fell to its lowest in nearly two years. EURUSD has been hovering around 1.0850 for the past two weeks and could accelerate gains after a pause.
Potential weakness for the euro could come from the economic front, where an economic slowdown and sluggish lending, adding 0.2% to last year, the lowest since 2015, are increasingly evident.
#WaveAnalysis #MCD
McDonald’s under strong bearish pressure
Likely to fall to support level 250.00
McDonald’s Corp under the strong bearish pressure after the price broke the key support level 261.40, which stopped the previous minor impulse wave i at the end of April.
The breakout of the support level 261.40 accelerated the active impulse wave c of the minor ABC correction 2 from January.
McDonald’s can be expected to fall further to the next support level 250.00, target price for the competition of the active impulse wave c.
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McDonald’s under strong bearish pressure
Likely to fall to support level 250.00
McDonald’s Corp under the strong bearish pressure after the price broke the key support level 261.40, which stopped the previous minor impulse wave i at the end of April.
The breakout of the support level 261.40 accelerated the active impulse wave c of the minor ABC correction 2 from January.
McDonald’s can be expected to fall further to the next support level 250.00, target price for the competition of the active impulse wave c.
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#WaveAnalysis
#USDJPY reversed from key support level 156.50
Likely to rise to resistance level 160.00
USDJPY currency pair recently reversed up from the key support level 156.50, former resistance which stopped the previous minor impulse wave i at the start of May.
The upward reversal from the support level 156.50 continued the active minor impulse wave iii.
Given the clear daily uptrend and the strong yen sales, USDJPY currency pair can be expected to rise further to the next resistance level 160.00 (top of wave 1 and the target for the completion of the active impulse wave iii).
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#USDJPY reversed from key support level 156.50
Likely to rise to resistance level 160.00
USDJPY currency pair recently reversed up from the key support level 156.50, former resistance which stopped the previous minor impulse wave i at the start of May.
The upward reversal from the support level 156.50 continued the active minor impulse wave iii.
Given the clear daily uptrend and the strong yen sales, USDJPY currency pair can be expected to rise further to the next resistance level 160.00 (top of wave 1 and the target for the completion of the active impulse wave iii).
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#WaveAnalysis
#GBPUSD reversed from resistance level 1.2800
Likely to fall to support level 1.2675
GBPUSD currency pair recently reversed down from the key resistance level 1.2800, which has been repeatedly reversing the price from December.
The downward reversal from the resistance level 1.2800 is likely to form the daily Japanese candlesticks reversal pattern Evening Star Doji.
Given the strength of the resistance level 1.2800, GBPUSD currency pair can be expected to fall further to the next support level 1.2675 (low of the previous correction ii).
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#GBPUSD reversed from resistance level 1.2800
Likely to fall to support level 1.2675
GBPUSD currency pair recently reversed down from the key resistance level 1.2800, which has been repeatedly reversing the price from December.
The downward reversal from the resistance level 1.2800 is likely to form the daily Japanese candlesticks reversal pattern Evening Star Doji.
Given the strength of the resistance level 1.2800, GBPUSD currency pair can be expected to fall further to the next support level 1.2675 (low of the previous correction ii).
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The #crypto market has lost almost 2% of its cap in the last 24 hours to $2.51 trillion. Bitcoin is holding up better than the market, pulling back only 0.7% to $67.6K. Many top coins have deeper drawdowns. Ethereum loses almost 3%, BNB loses 1.6%, and Solana loses 2.6%. Meme coins are under fiercer pressure. With no meaningful drivers of its own, the crypto market has come under indirect pressure due to the stock market.
So far, there are more indications that #Bitcoin is moving within a pullback scenario from the upper end of the range. In the most bearish scenario, the price could roll back to $60K. A more optimistic scenario suggests a decline to the $65K area, where the 50-day moving average lies.
Glassnode recorded signs of a recovery in buyer interest in Bitcoin. Long-term BTC holders (those holding the asset for more than 155 days) have resumed accumulation for the first time since December 2023 after months of selling.
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So far, there are more indications that #Bitcoin is moving within a pullback scenario from the upper end of the range. In the most bearish scenario, the price could roll back to $60K. A more optimistic scenario suggests a decline to the $65K area, where the 50-day moving average lies.
Glassnode recorded signs of a recovery in buyer interest in Bitcoin. Long-term BTC holders (those holding the asset for more than 155 days) have resumed accumulation for the first time since December 2023 after months of selling.
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Oil's upward trend that started in December stopped in April with an impressive 12% correction. But it failed to develop, and throughout May, we saw fluctuations around the $78 average level with increasing amplitude.
Technically, the failure to develop a rise above the 200-day average is a sign that the bears are in control. The same is evidenced by the 50-day average above price and reversing downward during May.
The news media has been thickening the colours by pointing out the fall in discipline within OPEC+, which is producing well above quota, so the market is not creating an oil shortage and lower inventories as the cartel's forecasts promise.
In 2014, Saudi Arabia, the leader of the cartel that provides the largest voluntary production cuts, had already surprised the world by suddenly expressing support for lifting the restrictions, which set off oil price wars.
Technically, the failure to develop a rise above the 200-day average is a sign that the bears are in control. The same is evidenced by the 50-day average above price and reversing downward during May.
The news media has been thickening the colours by pointing out the fall in discipline within OPEC+, which is producing well above quota, so the market is not creating an oil shortage and lower inventories as the cartel's forecasts promise.
In 2014, Saudi Arabia, the leader of the cartel that provides the largest voluntary production cuts, had already surprised the world by suddenly expressing support for lifting the restrictions, which set off oil price wars.
But that strategy failed, eventually bringing the cartel to OPEC+, which includes members who agree on their production quotas but are officially in it, led by Russia.
So far, there is little sign that Saudi Arabia or Russia will return to the practice of oil wars. Nevertheless, for a rather fragile market, even a signal that no further cuts are expected and that the agreed quotas will be gradually raised could be a sufficient reason to sell off.
Special attention, in our view, should be paid to the support in the form of the 200-week moving average, which invariably triggered the cartel's response. It is now nearly $75. A decisive decline below it will indicate a change in the market regime.
The bullish scenario assumes that the price's proximity to the sensitive zone for the meeting will force OPEC+ to choose a tougher tone in its comments and promises, bringing oil back to growth. In this case, an important marker would be the ability to rise above $80.
So far, there is little sign that Saudi Arabia or Russia will return to the practice of oil wars. Nevertheless, for a rather fragile market, even a signal that no further cuts are expected and that the agreed quotas will be gradually raised could be a sufficient reason to sell off.
Special attention, in our view, should be paid to the support in the form of the 200-week moving average, which invariably triggered the cartel's response. It is now nearly $75. A decisive decline below it will indicate a change in the market regime.
The bullish scenario assumes that the price's proximity to the sensitive zone for the meeting will force OPEC+ to choose a tougher tone in its comments and promises, bringing oil back to growth. In this case, an important marker would be the ability to rise above $80.
#WaveAnalysis
#CHFJPY broke key resistance level 172.50
Likely to rise to resistance level 174.00
CHFJPY currency pair recently broke above the key resistance level 172.50, which has been repeatedly reversing the price from the end of April.
The breakout of the resistance level 172.50 should accelerate the active minor impulse wave 3 of the higher order impulse wave (3) from the start of May.
Given the clear daily uptrend and the continuation of the yen sales, CHFJPY currency pair can be expected to rise further to the next resistance level 174.00.
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#CHFJPY broke key resistance level 172.50
Likely to rise to resistance level 174.00
CHFJPY currency pair recently broke above the key resistance level 172.50, which has been repeatedly reversing the price from the end of April.
The breakout of the resistance level 172.50 should accelerate the active minor impulse wave 3 of the higher order impulse wave (3) from the start of May.
Given the clear daily uptrend and the continuation of the yen sales, CHFJPY currency pair can be expected to rise further to the next resistance level 174.00.
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The cryptocurrency market increased modestly by 0.35% in 24 hours to $2.53 trillion. Bitcoin rose by 0.7% in that time, Ethereum changed a little, and many altcoins came under slight pressure.
#Bitcoin continues to hang out under the resistance of the descending corridor, where a temporary balance seems to have been found, having been here for 11 days.
Altcoins have a little more gloom. #XRP, Cardano, and Litecoin are moving downwards, sticking to their 50-day moving averages for more than a week now. The market is clearly taking its time getting rid of former stars. It's a logical process, but as applied to cryptocurrencies, it also says that we're not yet in FOMO mode when all the names are added up.
#Bitcoin continues to hang out under the resistance of the descending corridor, where a temporary balance seems to have been found, having been here for 11 days.
Altcoins have a little more gloom. #XRP, Cardano, and Litecoin are moving downwards, sticking to their 50-day moving averages for more than a week now. The market is clearly taking its time getting rid of former stars. It's a logical process, but as applied to cryptocurrencies, it also says that we're not yet in FOMO mode when all the names are added up.
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The US S&P500 and Nasdaq100 have declined for the past three days, with futures pointing to a negative opening on Friday. Dow Jones has almost erased the gains of the first half of May, losing for the past ten days. However, European indices are adding, clinging to significant support levels.
Germany's #DAX40 pulled back to its 50-day moving average earlier in the week, where buying activity intensified. Touching this line could be the fifth time since the beginning of the year which attracted bargain hunters. At this point, we can state at least a pause in the sell-off. The index near 18500 has now pulled back to the area of the previous peak at the end of March.
Under this scenario, the DAX40 will then aim to renew historical highs and overcome 19000.
The alternative scenario will be triggered in case of a sharp failure of the index under 18350, where the 50-day average now runs, which will be the first signal of the start of the correction. A move below 18250 would be the confirmation.
Germany's #DAX40 pulled back to its 50-day moving average earlier in the week, where buying activity intensified. Touching this line could be the fifth time since the beginning of the year which attracted bargain hunters. At this point, we can state at least a pause in the sell-off. The index near 18500 has now pulled back to the area of the previous peak at the end of March.
Under this scenario, the DAX40 will then aim to renew historical highs and overcome 19000.
The alternative scenario will be triggered in case of a sharp failure of the index under 18350, where the 50-day average now runs, which will be the first signal of the start of the correction. A move below 18250 would be the confirmation.