The pressure on the #crypto has been more sustained than on the stocks. Over the past 24 hours, the total crypto cap has fallen by 2.6%, with most of the downward momentum starting in the US session.
#Bitcoin retreated to $60.5K at the lows of the Asian session, partially recovering to $61K. However, it remains in a technical correction after the upward momentum. Only a drop below $58K will disrupt the bullish picture, breaking the concentrated support area in the form of the 61.8% level ($60.3K), the 200-day MA ($58.3K) and the previous low ($58.2K). In this case, be prepared for a drop to $51.0K with alarming consequences for the entire cryptocurrency market.
#Solana has been up over the last 24 hours but is down 3% since the start of the day on Wednesday, having found technical resistance in the form of its 50-day moving average. The fundamental picture is one of a worrying sell-off in the major cryptocurrencies despite the overall positivity in equities.
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#Bitcoin retreated to $60.5K at the lows of the Asian session, partially recovering to $61K. However, it remains in a technical correction after the upward momentum. Only a drop below $58K will disrupt the bullish picture, breaking the concentrated support area in the form of the 61.8% level ($60.3K), the 200-day MA ($58.3K) and the previous low ($58.2K). In this case, be prepared for a drop to $51.0K with alarming consequences for the entire cryptocurrency market.
#Solana has been up over the last 24 hours but is down 3% since the start of the day on Wednesday, having found technical resistance in the form of its 50-day moving average. The fundamental picture is one of a worrying sell-off in the major cryptocurrencies despite the overall positivity in equities.
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#Review
Fed Chairman Greenspan once said, ‘If I've made myself too clear, you must have misunderstood me’. It seems that over the past 15 years, the Fed has become increasingly transparent in its reasoning and expectations. Therefore, there is only a small chance that the markets misinterpreted Fed Chairman Powell's speech yesterday.
At the ECB conference on Tuesday, the current Fed’s chief noted that the US is back on a "disinflationary path". Of course, this was followed by caveats that more data is needed to decide on a rate cut. However, this is a very clear hint that a rate cut is imminent unless the data holds some unpleasant surprises.
This is a very bold assumption. The core price index growth rate is drifting downwards (3.4%), almost half the peak rate of 6.6% in September 2022. The Fed's preferred measure of inflation, the core PCE deflator, is slowing, falling to 2.6%, the lowest since April 2021. Meanwhile, the overall inflation rate has been in the 3.0-3.7% range for the past 12 months.
Fed Chairman Greenspan once said, ‘If I've made myself too clear, you must have misunderstood me’. It seems that over the past 15 years, the Fed has become increasingly transparent in its reasoning and expectations. Therefore, there is only a small chance that the markets misinterpreted Fed Chairman Powell's speech yesterday.
At the ECB conference on Tuesday, the current Fed’s chief noted that the US is back on a "disinflationary path". Of course, this was followed by caveats that more data is needed to decide on a rate cut. However, this is a very clear hint that a rate cut is imminent unless the data holds some unpleasant surprises.
This is a very bold assumption. The core price index growth rate is drifting downwards (3.4%), almost half the peak rate of 6.6% in September 2022. The Fed's preferred measure of inflation, the core PCE deflator, is slowing, falling to 2.6%, the lowest since April 2021. Meanwhile, the overall inflation rate has been in the 3.0-3.7% range for the past 12 months.
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However, we also note that current levels are still weighted above the 2% target. In addition, it is also worth considering that the Fed is targeting inflation at the long-run average. This means that it will take a long time to average out after more than three years of significant excess above the target.
An important reason for rising prices is the strong labour market, which is creating jobs faster than the trend rate. As a result, wages have been rising at a rate above 4% y/y for the past three years and above the rate of inflation for the past 13 months.
A tight monetary policy is likely to pressure the prices of food commodities and energy. Lower interest rates can quickly bring prices back to the upside, but stock markets seemed to have had enough, even with yesterday's speech.
An important reason for rising prices is the strong labour market, which is creating jobs faster than the trend rate. As a result, wages have been rising at a rate above 4% y/y for the past three years and above the rate of inflation for the past 13 months.
A tight monetary policy is likely to pressure the prices of food commodities and energy. Lower interest rates can quickly bring prices back to the upside, but stock markets seemed to have had enough, even with yesterday's speech.
The #Nasdaq100 added about 1.5% after Powell's speech, closing above 20,000, from where it has sold off twice in the past two weeks. The S&P500 also had a record close.
Also showing a noteworthy reaction was the dollar (#DXY), which lost 0.5%. This small but important reversal emphasised the strength of resistance around the June highs and raised doubts as to whether the dollar will be able to stay within an upward channel.
We may get the final answer to this when we see the market reaction to Friday's employment report.
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Also showing a noteworthy reaction was the dollar (#DXY), which lost 0.5%. This small but important reversal emphasised the strength of resistance around the June highs and raised doubts as to whether the dollar will be able to stay within an upward channel.
We may get the final answer to this when we see the market reaction to Friday's employment report.
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#EconomicComment
Weak data hammers USD
The US private sector created 150K jobs in June, according to fresh ADP estimates. This is slightly weaker than expected and the lowest growth since January. Once again, the leisure sector (+63K) led the growth.
Construction stands out, with net job growth of 27K for the month and nearly 3% growth in the last seven months of accelerated hiring, which is surprising given the collapse in lumber prices, the proxy for construction activity.
Falling employment in mining (-8K) and manufacturing (-5K) acts as a wake-up call. Impressive growth momentum remains in the service sector, continuing to be a pro-inflationary factor.
Weak data hammers USD
The US private sector created 150K jobs in June, according to fresh ADP estimates. This is slightly weaker than expected and the lowest growth since January. Once again, the leisure sector (+63K) led the growth.
Construction stands out, with net job growth of 27K for the month and nearly 3% growth in the last seven months of accelerated hiring, which is surprising given the collapse in lumber prices, the proxy for construction activity.
Falling employment in mining (-8K) and manufacturing (-5K) acts as a wake-up call. Impressive growth momentum remains in the service sector, continuing to be a pro-inflationary factor.
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Weekly jobless claims continue to signal a new phase in the labour market. The four-week moving average of initial claims climbed to 238.5K, adding 15.5K for the month. The same indicator for continued claims rose by 45K. Such indicators retain a theoretical chance of negative data on employment change of NFP numbers due on Friday. Remember that analysts, on average, expect +190K.
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Indicators of foreign trade activity present another batch of negative data. The trade deficit widened to 75.1bn in May—the highest since October 2022. The driver is the accelerated growth of imports (+6.2% y/y) vs exports (+4.3% y/y). Export volumes reached a plateau in September, while imports have been on an upward trend since last August.
Altogether, this is negative news for the dollar, suggesting increased pressure due to trade and signs of a reversal in the labour market trend, bringing a rate cut closer. According to FedWatch, the market gives a 68% chance of a rate cut in September versus 62% a week ago and 59.5% a month ago.
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Altogether, this is negative news for the dollar, suggesting increased pressure due to trade and signs of a reversal in the labour market trend, bringing a rate cut closer. According to FedWatch, the market gives a 68% chance of a rate cut in September versus 62% a week ago and 59.5% a month ago.
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#WaveAnalysis #UK100
FTSE 100 index reversed from key support level 8130;
Likely to rise to resistance level 8300.
FTSE 100 index recently reversed up from the key support level 8130 (which has been steadily reversing the price from the end of April) – strengthened by the lower daily Bollinger Band and the 50% Fibonacci correction of the sharp upward impulse from April.
The upward reversal from the support level 8130 stopped the previous short-term impulse wave 1.
Given the clear daily uptrend, FTSE 100 index can be expected to rise further toward the next resistance level 8300, top of the earlier correction B.
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FTSE 100 index reversed from key support level 8130;
Likely to rise to resistance level 8300.
FTSE 100 index recently reversed up from the key support level 8130 (which has been steadily reversing the price from the end of April) – strengthened by the lower daily Bollinger Band and the 50% Fibonacci correction of the sharp upward impulse from April.
The upward reversal from the support level 8130 stopped the previous short-term impulse wave 1.
Given the clear daily uptrend, FTSE 100 index can be expected to rise further toward the next resistance level 8300, top of the earlier correction B.
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#WaveAnalysis #AAPL
Apple broke key resistance level 218.50;
Likely to rise to the resistance level 225.00.
Apple recently broke the key resistance level 218.50 (which stopped two of the previous waves 1 and b in June, as seen from the daily Apple chart below).
The breakout of the resistance level 218.50 accelerated the active short-term impulse wave 3.
Given the strong daily uptrend, Apple can be expected to rise further toward the next resistance level 225.00, intersecting with the resistance trendline of the weekly up-channel from last year.
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Apple broke key resistance level 218.50;
Likely to rise to the resistance level 225.00.
Apple recently broke the key resistance level 218.50 (which stopped two of the previous waves 1 and b in June, as seen from the daily Apple chart below).
The breakout of the resistance level 218.50 accelerated the active short-term impulse wave 3.
Given the strong daily uptrend, Apple can be expected to rise further toward the next resistance level 225.00, intersecting with the resistance trendline of the weekly up-channel from last year.
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The #crypto market plunged 3.6% in 24 hours to $2.17 trillion, its lowest level since late February. A thinly liquid market added to the magnitude, sending Bitcoin briefly below $57.7K and #Ethereum to $3150. Top altcoins are losing from -0.7% (Tron) to -9% (Solana).
#Bitcoin has lost 9.5% in just over two days. The price touched a lower boundary of the descending channel and below the 200-day MA but has so far been able to bounce back above it, trying to stay within established patterns. However, this has not been entirely successful, as the price is already below the 61.8% retracement level and has updated the lows from early May. From the current position, a 12% drop to $51.5k (February consolidation area) is more likely than the same amount of growth to $65.8k (50-day MA).
#Solana underwent an intensified sell-off after touching the 50-day MA and is now testing support at the 200-day MA. As with Bitcoin, a break below would force the pair to target the late February lows as a potential next stop.
#Bitcoin has lost 9.5% in just over two days. The price touched a lower boundary of the descending channel and below the 200-day MA but has so far been able to bounce back above it, trying to stay within established patterns. However, this has not been entirely successful, as the price is already below the 61.8% retracement level and has updated the lows from early May. From the current position, a 12% drop to $51.5k (February consolidation area) is more likely than the same amount of growth to $65.8k (50-day MA).
#Solana underwent an intensified sell-off after touching the 50-day MA and is now testing support at the 200-day MA. As with Bitcoin, a break below would force the pair to target the late February lows as a potential next stop.
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#Review
Crude #Oil moved up but looks vulnerable
Crude oil inventories in US commercial storage fell by 12.2 million barrels last week, marking the sharpest decline since last July.
The decrease is attributed to preparations for the start of the US driving season. Not only was the change significant, but it was also drastically different from the expected 0.4 million decline, prompting impulse buying in Oil.
The price went from declining to rising shortly after the data release, swinging the price of a barrel of WTI from the day's lows at $81.90 to a high at $83.40, likely halting a corrective pullback after a week of gains. Potentially, this strengthens the odds that the price will further update three-month highs in the near term, heading towards $85.
Crude #Oil moved up but looks vulnerable
Crude oil inventories in US commercial storage fell by 12.2 million barrels last week, marking the sharpest decline since last July.
The decrease is attributed to preparations for the start of the US driving season. Not only was the change significant, but it was also drastically different from the expected 0.4 million decline, prompting impulse buying in Oil.
The price went from declining to rising shortly after the data release, swinging the price of a barrel of WTI from the day's lows at $81.90 to a high at $83.40, likely halting a corrective pullback after a week of gains. Potentially, this strengthens the odds that the price will further update three-month highs in the near term, heading towards $85.
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Meanwhile, there have been a few changes in the medium-term picture for Oil so far. Commercial inventories are 0.8% lower than a year ago, well within seasonal norms. Strategic inventories have changed a little, and there have been reports that the administration has been selling Oil to meet seasonal demand.
Interestingly, rising US production is not responding to the 15% month-over-month price increase or strong domestic demand. Production rates have remained at 13.2 million bpd for the past nine months.
Meanwhile, drilling activity continues to fall. The number of active oil rigs fell by 6 to 479 last week, the lowest since December 2021. Even with the expectation of improved production efficiency, there is little hope for a significant increase in the US share of global production.
Interestingly, rising US production is not responding to the 15% month-over-month price increase or strong domestic demand. Production rates have remained at 13.2 million bpd for the past nine months.
Meanwhile, drilling activity continues to fall. The number of active oil rigs fell by 6 to 479 last week, the lowest since December 2021. Even with the expectation of improved production efficiency, there is little hope for a significant increase in the US share of global production.
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On the chart, Crude price tests the upper boundary of the consolidation triangle, although it started in June with an attempt to break its lower boundary. Oil's ability to rise above the previous highs, near $86, will confirm the consolidation break. The chances of such an outcome will increase significantly with more dovish signals from the Fed, undermining the dollar's value.
In addition, it is worth monitoring crude oil and petrol inventories if we see the beginning of a downward trend rather than a one-off release.
History records many instances of June-July being the time when prices peaked for many months ahead. Thus, we should be very careful with Oil in the next couple of weeks, as it may be in for a serious bull-bear fight, which will determine the movement's medium-term prospects.
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In addition, it is worth monitoring crude oil and petrol inventories if we see the beginning of a downward trend rather than a one-off release.
History records many instances of June-July being the time when prices peaked for many months ahead. Thus, we should be very careful with Oil in the next couple of weeks, as it may be in for a serious bull-bear fight, which will determine the movement's medium-term prospects.
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#WaveAnalysis
#WTI broke resistance level 81.10;
Likely to rise to resistance level 86.00.
WTI crude oil recently broke the resistance level 81.10 (former top of the minor correction (b) from the end of May).
The breakout of the resistance level 81.10 coincided with the breakout of the 61.8% Fibonacci correction of the previous sharp ABC correction 2 from the start of April.
WTI crude oil can be expected to rise further toward the next resistance level 86.00, former strong resistance from April and the target price for the completion of the active impulse wave (iii).
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#WTI broke resistance level 81.10;
Likely to rise to resistance level 86.00.
WTI crude oil recently broke the resistance level 81.10 (former top of the minor correction (b) from the end of May).
The breakout of the resistance level 81.10 coincided with the breakout of the 61.8% Fibonacci correction of the previous sharp ABC correction 2 from the start of April.
WTI crude oil can be expected to rise further toward the next resistance level 86.00, former strong resistance from April and the target price for the completion of the active impulse wave (iii).
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#WaveAnalysis #NatGas
Natural gas under the bearish pressure;
Likely to fall to support level 2.200.
Natural gas is under bearish pressure after the earlier breakout of the key support level 2.600 (which stopped the previous medium-term ABC correction (4) from the end of May).
The breakout of the support level 2.600 coincided with the breakout of the 38.2% Fibonacci correction of the previous sharp upward impulse from February.
Natural gas can be expected to fall further toward the next support level 2.200, the target price for the completion of the active impulse wave (C).
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Natural gas under the bearish pressure;
Likely to fall to support level 2.200.
Natural gas is under bearish pressure after the earlier breakout of the key support level 2.600 (which stopped the previous medium-term ABC correction (4) from the end of May).
The breakout of the support level 2.600 coincided with the breakout of the 38.2% Fibonacci correction of the previous sharp upward impulse from February.
Natural gas can be expected to fall further toward the next support level 2.200, the target price for the completion of the active impulse wave (C).
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The #crypto market cap has fallen below $2 trillion, accelerating its decline and losing over 8%, while many altcoins have suffered double-digit losses within the last 24 hours.
#Bitcoin pulled down to $54.7K (-6.5%) today and hitting a low of $53.3K. The 200-day moving average failed to act as support, and we saw an acceleration in the sell-off after a break below this line. The current failure is an acceleration of the downtrend that has been in place since March. The fundamental pressure appears to be accelerating selling by miners and long-term "holders" such as the German and US governments, in addition to payments to Mt. Gox creditors.
On Friday morning, #Ethereum rewrote February's lows and briefly dipped to $2800. By the start of the active European trading day, the price had returned to the April and May lows, but it's hard to see signs of active buying yet. So far, the situation looks like a pause before a new downward impulse that could take the price back to $2300.
#Bitcoin pulled down to $54.7K (-6.5%) today and hitting a low of $53.3K. The 200-day moving average failed to act as support, and we saw an acceleration in the sell-off after a break below this line. The current failure is an acceleration of the downtrend that has been in place since March. The fundamental pressure appears to be accelerating selling by miners and long-term "holders" such as the German and US governments, in addition to payments to Mt. Gox creditors.
On Friday morning, #Ethereum rewrote February's lows and briefly dipped to $2800. By the start of the active European trading day, the price had returned to the April and May lows, but it's hard to see signs of active buying yet. So far, the situation looks like a pause before a new downward impulse that could take the price back to $2300.
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#UKElections
2024 has every chance of being the biggest election year, with well over half of the world's population going to the polls. The next chapter in this saga is today, with the announcement of the results of the UK general elections.
The results were generally in line with expectations without causing significant market volatility on the publication of the first results. However, Labour coming to power after 14 years of Conservative dominance will shift priorities somewhat. It could be good news for the Pound and the outperformance of the #FTSE250 over the #FTSE100 due to a greater bias towards the local market.
The Tories' main slogan, especially in the early years after the financial crisis, was austerity. Labour should be more focused on reducing income stratification through incentives for the poor and higher taxes for the rich.
Such an environment poses pro-inflation risks, which should force the Bank of England to hold the rate at a higher level than previously thought.
2024 has every chance of being the biggest election year, with well over half of the world's population going to the polls. The next chapter in this saga is today, with the announcement of the results of the UK general elections.
The results were generally in line with expectations without causing significant market volatility on the publication of the first results. However, Labour coming to power after 14 years of Conservative dominance will shift priorities somewhat. It could be good news for the Pound and the outperformance of the #FTSE250 over the #FTSE100 due to a greater bias towards the local market.
The Tories' main slogan, especially in the early years after the financial crisis, was austerity. Labour should be more focused on reducing income stratification through incentives for the poor and higher taxes for the rich.
Such an environment poses pro-inflation risks, which should force the Bank of England to hold the rate at a higher level than previously thought.
This is bullish for the Pound, which has lost over 50% against the Dollar from its peak in 2007 to a bottom in September 2022. GBPUSD has been testing the resistance of this long-term descending channel in recent months. Changes in Britain's politics may favour the bulls in this battle.
Technically, the #GBPUSD bullish bias will be confirmed with consolidation above 1.2850 – the area of this year's and last year's highs. The pound will also have a chance to recoup most of its losses to the euro after Brexit, as a break of #EURGBP support at 0.833 (1.20 on GBPEUR) could trigger a repositioning of the exchange rate to the 0.71 (1.40) area.
While the expensive pound could challenge the valuations of large global companies in the FTSE100, pro-inflationary sentiment and the expected benefits to the economy from rising expenses promise to improve the position of the FTSE250, dominated by local companies. Separate market hopes are pinned on a housing recovery with the arrival of Labour.
Technically, the #GBPUSD bullish bias will be confirmed with consolidation above 1.2850 – the area of this year's and last year's highs. The pound will also have a chance to recoup most of its losses to the euro after Brexit, as a break of #EURGBP support at 0.833 (1.20 on GBPEUR) could trigger a repositioning of the exchange rate to the 0.71 (1.40) area.
While the expensive pound could challenge the valuations of large global companies in the FTSE100, pro-inflationary sentiment and the expected benefits to the economy from rising expenses promise to improve the position of the FTSE250, dominated by local companies. Separate market hopes are pinned on a housing recovery with the arrival of Labour.
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