Gold: moonshot to $2800 or dive below $2000?
Gold volatility has fallen markedly in recent days as gold traders consider their next move, while many commodities are in a corrective decline.
In May, the gold price climbed towards $2450, above the peaks of April, but failed to consolidate near all-time highs. During the last two weeks, the price has changed in the range of $2330-2360, with a slight downward trend, which can be seen on the daily candlestick charts.
Right now, Gold has dropped to support in the form of the 50-day moving average, which is enjoying temporary interest from short-term buyers. The 50-day moving average has been effectively acting as uptrend support since last October.
It is easy to see the result of this support as the prices of other actively traded metals (silver, platinum, copper) have been steadily losing ground for the past week. But there is no guarantee that this will continue.
Gold volatility has fallen markedly in recent days as gold traders consider their next move, while many commodities are in a corrective decline.
In May, the gold price climbed towards $2450, above the peaks of April, but failed to consolidate near all-time highs. During the last two weeks, the price has changed in the range of $2330-2360, with a slight downward trend, which can be seen on the daily candlestick charts.
Right now, Gold has dropped to support in the form of the 50-day moving average, which is enjoying temporary interest from short-term buyers. The 50-day moving average has been effectively acting as uptrend support since last October.
It is easy to see the result of this support as the prices of other actively traded metals (silver, platinum, copper) have been steadily losing ground for the past week. But there is no guarantee that this will continue.
Further declines in prices for raw material assets may cause bulls in Gold to capitulate. This fight for the trend is in full swing.
The first signal that the bullish trend is breaking would be a sustained price drop below $2320. It is also worth closely watching the behaviour of Silver and Platinum. Their further plunge could tip the scales in Gold towards the sellers. A full-fledged correction could bring the gold price back to $2000 or lower before it becomes interesting for long-term buyers again.
However, it cannot be ruled out that Gold will be able to withstand the sell-off in related assets and subsequently pull them back up, as it did in January.
Such a turn of events would trigger a scenario of gold growth with the potential to take the price to the area of $2800. And it could be quite an aggressive fast rally rather than a smooth climb.
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The first signal that the bullish trend is breaking would be a sustained price drop below $2320. It is also worth closely watching the behaviour of Silver and Platinum. Their further plunge could tip the scales in Gold towards the sellers. A full-fledged correction could bring the gold price back to $2000 or lower before it becomes interesting for long-term buyers again.
However, it cannot be ruled out that Gold will be able to withstand the sell-off in related assets and subsequently pull them back up, as it did in January.
Such a turn of events would trigger a scenario of gold growth with the potential to take the price to the area of $2800. And it could be quite an aggressive fast rally rather than a smooth climb.
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#WaveAnalysis
#EURCHF reversed from support level 0.9675
Likely to rise to resistance level 0.9800
EURCHF currency pair recently reversed up from the pivotal support level 0.9675 (former resistance from November and strong support from April).
The support level 0.9675 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from December.
Given the strength of the support level 0.9675 and the oversold daily Stochastic, EURCHF currency pair be expected to rise further to the next resistance level 0.9800.
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#EURCHF reversed from support level 0.9675
Likely to rise to resistance level 0.9800
EURCHF currency pair recently reversed up from the pivotal support level 0.9675 (former resistance from November and strong support from April).
The support level 0.9675 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from December.
Given the strength of the support level 0.9675 and the oversold daily Stochastic, EURCHF currency pair be expected to rise further to the next resistance level 0.9800.
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#WaveAnalysis
#AUDJPY reversed from support level 103.00
Likely to rise to resistance level 104.50
AUDJPY currency pair recently reversed up from the key support level 103.00 (which has been reversing the price from the middle of May).
The support level 103.00 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from end of April.
Given the strength of the support level 103.00 and the clear daily uptrend, AUDJPY currency pair be expected to rise further to the next resistance level 104.50, which stopped the previous waves A and (B).
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#AUDJPY reversed from support level 103.00
Likely to rise to resistance level 104.50
AUDJPY currency pair recently reversed up from the key support level 103.00 (which has been reversing the price from the middle of May).
The support level 103.00 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from end of April.
Given the strength of the support level 103.00 and the clear daily uptrend, AUDJPY currency pair be expected to rise further to the next resistance level 104.50, which stopped the previous waves A and (B).
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The #crypto market stormed a two-month high. However, some players rushed to fix profits quickly despite the positive sentiment in the US stock markets.
#Bitcoin is trading near $71K, where it was a day ago, but #Ethereum (+1%) has moved up - a small but important step up from the consolidation range. These two coins account for over 70% of the total crypto market cap and show no signs of excitement so far.
It seems that the market preferred to climb smoothly to the March highs. So, we should not expect an acceleration of growth immediately after reaching them because, with smooth growth, traders will move stop orders higher.
#BNB and #TON updated their historical highs at $715 and $7.8, respectively. Toncoin jumped on the background of news about the addition of TON to the European trading platform Robinhood Crypto.
BNB's rise is likely due to the Simple Earn programme, which runs from June 5 to 25 and will allow you to lock in BNB or SUI.
#Bitcoin is trading near $71K, where it was a day ago, but #Ethereum (+1%) has moved up - a small but important step up from the consolidation range. These two coins account for over 70% of the total crypto market cap and show no signs of excitement so far.
It seems that the market preferred to climb smoothly to the March highs. So, we should not expect an acceleration of growth immediately after reaching them because, with smooth growth, traders will move stop orders higher.
#BNB and #TON updated their historical highs at $715 and $7.8, respectively. Toncoin jumped on the background of news about the addition of TON to the European trading platform Robinhood Crypto.
BNB's rise is likely due to the Simple Earn programme, which runs from June 5 to 25 and will allow you to lock in BNB or SUI.
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The ECB starts cuts earlier and may move faster than the Fed
The European Central Bank cut all three of its key interest rates by 25 points, which is in line with market expectations. The ECB has kept rates unchanged for the past nine months and tightened policy from July 2022 to September 2023, raising rates by a combined 450 basis points.
In May, overall eurozone inflation added 0.2 percentage points to 2.6%. However, that didn't stop the ECB, which has been preparing markets for months for today's move. However, the move to ease ECB policy is supported by other data.
Producer prices have been falling every month for the past six months, and in April were 5.7% lower than a year earlier. This decline creates room for final retail prices to fall.
The euro-region economy is also on the side of the doves at the ECB, as GDP for Q1 2024 added 0.3% after two quarters of contraction at 0.1% and is now higher by a modest 0.4% y/y.
The European Central Bank cut all three of its key interest rates by 25 points, which is in line with market expectations. The ECB has kept rates unchanged for the past nine months and tightened policy from July 2022 to September 2023, raising rates by a combined 450 basis points.
In May, overall eurozone inflation added 0.2 percentage points to 2.6%. However, that didn't stop the ECB, which has been preparing markets for months for today's move. However, the move to ease ECB policy is supported by other data.
Producer prices have been falling every month for the past six months, and in April were 5.7% lower than a year earlier. This decline creates room for final retail prices to fall.
The euro-region economy is also on the side of the doves at the ECB, as GDP for Q1 2024 added 0.3% after two quarters of contraction at 0.1% and is now higher by a modest 0.4% y/y.
This weak performance allows for little fear of inflationary risks from strong domestic demand. Rather than the opposite, Europe needs mild stimulus to avoid slipping further into recession due to tight policy.
The fall in prices of a wide range of commodities makes it unnecessary to fear a return of 2022-style inflation. However, recent trends in container shipping prices make us wary of a possible repeat of the logistical problems seen in 2020-2021.
It is almost certain that the ECB is not done with rate cuts this year, but whether we see two more rate cuts or more depends on inflation data. Current trends in inflation and economic activity are setting us up for the ECB to "reduce monetary policy tightness" faster than the Fed.
This could be an important pressure factor for EURUSD, preventing the single currency from moving up from the wide range of 1.05-1.10, where the pair has been predominantly trading since the beginning of 2023.
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The fall in prices of a wide range of commodities makes it unnecessary to fear a return of 2022-style inflation. However, recent trends in container shipping prices make us wary of a possible repeat of the logistical problems seen in 2020-2021.
It is almost certain that the ECB is not done with rate cuts this year, but whether we see two more rate cuts or more depends on inflation data. Current trends in inflation and economic activity are setting us up for the ECB to "reduce monetary policy tightness" faster than the Fed.
This could be an important pressure factor for EURUSD, preventing the single currency from moving up from the wide range of 1.05-1.10, where the pair has been predominantly trading since the beginning of 2023.
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#WaveAnalysis
#USDCAD reversed from resistance level 1.3740
Likely to fall to support level 1.3600
USDCAD currency pair recently reversed down from the key resistance level 1.3740 (upper boundary of the narrow sideways price range inside which the pair has been moving from the start of May).
The resistance level 1.3740 was strengthened by the upper daily Bollinger Band – which created the daily Shooting Star.
Given the strength of the resistance level 1.3740, USDCAD currency pair be expected to fall further to the next support level 1.3600, lower boundary of this sideways price range.
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#USDCAD reversed from resistance level 1.3740
Likely to fall to support level 1.3600
USDCAD currency pair recently reversed down from the key resistance level 1.3740 (upper boundary of the narrow sideways price range inside which the pair has been moving from the start of May).
The resistance level 1.3740 was strengthened by the upper daily Bollinger Band – which created the daily Shooting Star.
Given the strength of the resistance level 1.3740, USDCAD currency pair be expected to fall further to the next support level 1.3600, lower boundary of this sideways price range.
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#WaveAnalysis
#Brent Crude oil reversed from support level 76.95
Likely to rise to resistance level 80.55
Brent Crude oil recently reversed up from the key support level 76.95 (which has been repeatedly reversing the price from the start of this year).
The support level 76.95 was strengthened by the lower daily Bollinger Band and by the support trendline of the daily down channel from April.
Given the strength of the support level 76.95 and the oversold daily Stochastic, Brent Crude oil be expected to rise further to the next resistance level 80.55, former low of wave a from the end of May.
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#Brent Crude oil reversed from support level 76.95
Likely to rise to resistance level 80.55
Brent Crude oil recently reversed up from the key support level 76.95 (which has been repeatedly reversing the price from the start of this year).
The support level 76.95 was strengthened by the lower daily Bollinger Band and by the support trendline of the daily down channel from April.
Given the strength of the support level 76.95 and the oversold daily Stochastic, Brent Crude oil be expected to rise further to the next resistance level 80.55, former low of wave a from the end of May.
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The #crypto market capitalisation remained almost unchanged overnight at $2.63 trillion, showing a sharp decline in volatility. Bitcoin settled near the $71K level (+0.2%), while #Ethereum settled near $3800 (-0.9 %). Prices of top altcoins changed between -1.2 % (#Avalanche) and +2.7% (#Toncoin).
The lull in the crypto market is probably due to expectations of important macroeconomic data from the US and the Fed's reaction to them. An important test is Friday's labour market statistics, with the FOMC rate decision and inflation to follow next week.
Technically, #Bitcoin remains at an important resistance area, a break of which could trigger a FOMO rally with a quick update of historical highs. A reversal down from this area would send BTCUSD towards $60K.
The options market has bet on Bitcoin rising above $74,000 by the end of June, suggesting increased expectations of a "decisive breakout" of the all-time high, QCP Capital believes.
The lull in the crypto market is probably due to expectations of important macroeconomic data from the US and the Fed's reaction to them. An important test is Friday's labour market statistics, with the FOMC rate decision and inflation to follow next week.
Technically, #Bitcoin remains at an important resistance area, a break of which could trigger a FOMO rally with a quick update of historical highs. A reversal down from this area would send BTCUSD towards $60K.
The options market has bet on Bitcoin rising above $74,000 by the end of June, suggesting increased expectations of a "decisive breakout" of the all-time high, QCP Capital believes.
#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) standing near the upper daily Bollinger Band.
The downward reversal from the resistance level 1.2800 stopped the previous intermediate ABC correction (2).
Given the strength of the resistance level 1.2800, strongly bullish USD sentiment, and the overbought daily Stochastic, GBPUSD currency pair be expected to fall further to the next support level 1.2675, which stopped the previous waves ii and iv.
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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) standing near the upper daily Bollinger Band.
The downward reversal from the resistance level 1.2800 stopped the previous intermediate ABC correction (2).
Given the strength of the resistance level 1.2800, strongly bullish USD sentiment, and the overbought daily Stochastic, GBPUSD currency pair be expected to fall further to the next support level 1.2675, which stopped the previous waves ii and iv.
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The #crypto market is losing about 4.5% from its peak on Friday, having reversed to the downside after news positive for the dollar. This shift in sentiment has reduced risk appetite, hurting cryptos.
#Bitcoin failed its attempt to climb above $72K on Friday, pulling back below $70K. We haven’t yet seen an acceleration of the first cryptocurrency's rise after breaking downward resistance. On the other hand, selling is also not gaining momentum. Clearly, the cryptocurrency market remains in a state of buying on downturns. Meanwhile, headwinds such as a rising dollar and tighter monetary policy are prolonging the consolidation.
#Ethereum is sending a very worrying technical signal. Timid attempts to move up from consolidation around $3800 were replaced by a very impressive sell-off. The second-largest cryptocurrency fell below the previous local lows to $3650. The next potentially important support area could be $3300, an important pivot area from March.
#Bitcoin failed its attempt to climb above $72K on Friday, pulling back below $70K. We haven’t yet seen an acceleration of the first cryptocurrency's rise after breaking downward resistance. On the other hand, selling is also not gaining momentum. Clearly, the cryptocurrency market remains in a state of buying on downturns. Meanwhile, headwinds such as a rising dollar and tighter monetary policy are prolonging the consolidation.
#Ethereum is sending a very worrying technical signal. Timid attempts to move up from consolidation around $3800 were replaced by a very impressive sell-off. The second-largest cryptocurrency fell below the previous local lows to $3650. The next potentially important support area could be $3300, an important pivot area from March.
#WaveAnalysis #NVDA
NVIDIA under the bullish pressure
Likely to test resistance level 1250.00
NVIDIA under the bullish pressure after the earlier breakout of the resistance level 1150.00 (which stopped the previous impulse wave (3)).
The breakout of the resistance level 1150.00 accelerated the active intermediate impulse wave (5).
Given the strength the active uptrend, NVIDIA be expected to rise further to the next resistance level 1250.00, which reversed the price at the start of June.
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NVIDIA under the bullish pressure
Likely to test resistance level 1250.00
NVIDIA under the bullish pressure after the earlier breakout of the resistance level 1150.00 (which stopped the previous impulse wave (3)).
The breakout of the resistance level 1150.00 accelerated the active intermediate impulse wave (5).
Given the strength the active uptrend, NVIDIA be expected to rise further to the next resistance level 1250.00, which reversed the price at the start of June.
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America cuts drilling activity due to weak prices
Low oil prices are not attractive to producers in the US, where the number of active drillers has fallen to its lowest level since early 2022.
Drilling activity in the US has been falling since early May after a relatively long period of stagnation—a new round of declines in a long-term downward cycle. Notably, production has declined from 13.3m bpd to 13.1m in recent months, rejecting the hypothesis of efficiency gains, something we have seen for most of the story since 2014.
US producers appear to have lost interest in growing production and output. This can be attributed to the simultaneous effect of two factors: a rising inventory trend and a falling price. The upward trend in Strategic Petroleum Reserve (SPR) inventories has been in place since August and in commercial inventories since September. In both cases, this is a rebound from the "bottom", but it is an important signal that there is no shortage of oil in the US.
Low oil prices are not attractive to producers in the US, where the number of active drillers has fallen to its lowest level since early 2022.
Drilling activity in the US has been falling since early May after a relatively long period of stagnation—a new round of declines in a long-term downward cycle. Notably, production has declined from 13.3m bpd to 13.1m in recent months, rejecting the hypothesis of efficiency gains, something we have seen for most of the story since 2014.
US producers appear to have lost interest in growing production and output. This can be attributed to the simultaneous effect of two factors: a rising inventory trend and a falling price. The upward trend in Strategic Petroleum Reserve (SPR) inventories has been in place since August and in commercial inventories since September. In both cases, this is a rebound from the "bottom", but it is an important signal that there is no shortage of oil in the US.
Oil price dynamics are also giving oil producers little encouragement. Over the past ten weeks, the price has fallen more than 12%, reaching 17% early last week. The price of a barrel of WTI is testing the 200-week moving average - clearly separating bull and bear markets for the past five years. However, this largely applies to previous years as well.
Last week, the bulls managed to stop the sharp increase in the sell-off, but perhaps only this week's results will tell us whether oil has managed to push off the bottom or whether the market is on the verge of a similar regime switch as in Q1 2020 or Q3 2014.
Last week, the bulls managed to stop the sharp increase in the sell-off, but perhaps only this week's results will tell us whether oil has managed to push off the bottom or whether the market is on the verge of a similar regime switch as in Q1 2020 or Q3 2014.
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The current decline in oil prices may accelerate the filling of the SPR, allowing something of a "price floor" to form. But such a turn of events is a positive risk, not a fact. It is also worth being prepared that the US government would prefer to leave the price of oil and gas unsupported, improving the inflationary picture ahead of the November elections.
Also playing on the side of the bears in oil is OPEC+'s recent intention to increase production after some time, for which investments in production are already being made. The head of Russian oil giant Rosneft said that these "shadow barrels" that have not yet been produced are already putting pressure on the price.
Also playing on the side of the bears in oil is OPEC+'s recent intention to increase production after some time, for which investments in production are already being made. The head of Russian oil giant Rosneft said that these "shadow barrels" that have not yet been produced are already putting pressure on the price.
US Indices: something for optimists
The US indices, S&P500 and Nasdaq100, closed Wednesday at record highs, taking a decisive step up, adding over 1.1% and 2%, respectively. The Dow Jones index lagged, adding just 0.25% for the day and is 3% off all-time highs. The Nasdaq-100 and S&P500 defended tops on Thursday, which seems more like a rest before rising rather than a downward reversal signal.
While the Fed has backed away from its original plan and is in no rush to cut rates, other major central banks have roughly stayed on the trajectory announced at the start of the year. Earlier in the week, the ECB and Bank of Canada cut their rates. The SNB made its policy easing move in March.
These actual moves by their colleagues, in addition to less strong economic data, stabilised expectations for the Fed Funds rate. Now, market participants, on average, expect two cuts totalling 50 points by the end of the year.
The US indices, S&P500 and Nasdaq100, closed Wednesday at record highs, taking a decisive step up, adding over 1.1% and 2%, respectively. The Dow Jones index lagged, adding just 0.25% for the day and is 3% off all-time highs. The Nasdaq-100 and S&P500 defended tops on Thursday, which seems more like a rest before rising rather than a downward reversal signal.
While the Fed has backed away from its original plan and is in no rush to cut rates, other major central banks have roughly stayed on the trajectory announced at the start of the year. Earlier in the week, the ECB and Bank of Canada cut their rates. The SNB made its policy easing move in March.
These actual moves by their colleagues, in addition to less strong economic data, stabilised expectations for the Fed Funds rate. Now, market participants, on average, expect two cuts totalling 50 points by the end of the year.
This is a realistic midpoint in the range from the 5-6 rate cuts expected at the beginning of the year to the fears of a hike like we saw last month.
The start of a rate cut cycle and even a shift in medium-term expectations in that direction is favourable for risk appetite. This is the necessary fuel for further gains in equities.
With the S&P500 hovering near its highs, it is surprising to see the Fear and Greed Index degrade to "fear." It has fallen from 48 to 44 in one week as its Breadth and Strength components of stock price are in "extreme fear." Safe Haven Demand and Junk Bond Demand points to "fear".
This is a clear indication that a few heavyweights are now providing stock growth. The optimistic view is that these components have room to recover to normal, which can feed further index gains. A solid bounce off the 50-day average at the end of May is also in the bulls' favour.
The start of a rate cut cycle and even a shift in medium-term expectations in that direction is favourable for risk appetite. This is the necessary fuel for further gains in equities.
With the S&P500 hovering near its highs, it is surprising to see the Fear and Greed Index degrade to "fear." It has fallen from 48 to 44 in one week as its Breadth and Strength components of stock price are in "extreme fear." Safe Haven Demand and Junk Bond Demand points to "fear".
This is a clear indication that a few heavyweights are now providing stock growth. The optimistic view is that these components have room to recover to normal, which can feed further index gains. A solid bounce off the 50-day average at the end of May is also in the bulls' favour.