Sustained pressure on the dollar since early July has knocked it out of the upward channel formed by the lows of December and March and the highs of February and April. Moreover, a descending corridor is formed, with the upper boundary passing through the peaks of April and June and the lower boundary passing through the lows of June and July.
At last week's lows, DXY has stepped up from the lower boundary of the trading range, removing some of the local oversold conditions.
For the past ten days, the rise in the Dollar Index has encountered resistance near the 200-day moving average. The 50-day moving average is pointing downwards and threatens to form a "death cross" — a meaningful bear sign — next month.
At last week's lows, DXY has stepped up from the lower boundary of the trading range, removing some of the local oversold conditions.
For the past ten days, the rise in the Dollar Index has encountered resistance near the 200-day moving average. The 50-day moving average is pointing downwards and threatens to form a "death cross" — a meaningful bear sign — next month.
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Thus, the latest bounce looks like cautious profit-taking, with no signs of buying enthusiasm on the downturn.
If the 200-day resistance proves impossible for the bulls, the dollar index may turn down towards the intermediate target at 102.3 (-1.7% from the current level) in the March lows. More important now looks to be the 101 (-2.9%) area, where several of last year's lows are centred. Taking this support would effectively break the dollar bull run in 2021–2022, sending the DXY into the 90-92 area.
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If the 200-day resistance proves impossible for the bulls, the dollar index may turn down towards the intermediate target at 102.3 (-1.7% from the current level) in the March lows. More important now looks to be the 101 (-2.9%) area, where several of last year's lows are centred. Taking this support would effectively break the dollar bull run in 2021–2022, sending the DXY into the 90-92 area.
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#WaveAnalysis
#AUDCHF broke support level 0.5865;
Likely to fall to support level 0.5735.
AUDCHF currency pair recently broke the key support level 0.5865 (which stopped the previous correction (A) in the middle of June).
The breakout of the support level 0.5865 coincided with the breakout of the 50% Fibonacci correction of the previous sharp upward impulse from February.
AUDCHF currency pair can be expected to fall further to the next support level 0.5735 (former multi-month low from the middle of April).
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#AUDCHF broke support level 0.5865;
Likely to fall to support level 0.5735.
AUDCHF currency pair recently broke the key support level 0.5865 (which stopped the previous correction (A) in the middle of June).
The breakout of the support level 0.5865 coincided with the breakout of the 50% Fibonacci correction of the previous sharp upward impulse from February.
AUDCHF currency pair can be expected to fall further to the next support level 0.5735 (former multi-month low from the middle of April).
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The launch of the Ethereum ETF coincided with the most powerful drop in the Nasdaq index in months. The #crypto market lost 3.5% in the last 24 hours, pulling back at one point to $2.3 trillion, its lowest in 10 days.
#Bitcoin is down to $64.0K, once again approaching the 50-day MA where it consolidated for most of last week. There are small hopes that the first cryptocurrency will gain support near this level. However, this week could be just the beginning of a decline from the upper boundary of the BTCUSD downtrend channel. The important test of strength will be in the $60K area, a major milestone and the 200-day MA level.
#Ethereum is already testing the 200-day MA, having lost over 9% in less than 24 hours to 3150. In early July, the major altcoin steadily gained support after touching this curve. However, these purchases could be largely credited to the expectations of the ETF launch. Now, this speculative factor is out of play, multiplying sell-the-fact activity on top of global markets risk-off.
#Bitcoin is down to $64.0K, once again approaching the 50-day MA where it consolidated for most of last week. There are small hopes that the first cryptocurrency will gain support near this level. However, this week could be just the beginning of a decline from the upper boundary of the BTCUSD downtrend channel. The important test of strength will be in the $60K area, a major milestone and the 200-day MA level.
#Ethereum is already testing the 200-day MA, having lost over 9% in less than 24 hours to 3150. In early July, the major altcoin steadily gained support after touching this curve. However, these purchases could be largely credited to the expectations of the ETF launch. Now, this speculative factor is out of play, multiplying sell-the-fact activity on top of global markets risk-off.
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The markets have taken a beating with the rise in volatility on FX and equities around the world. Commodity markets have also been hit. Traders who have seen the markets move live since the global financial crisis must recognise the nature of the movement. It all looks like a typical risk-off trade, in which the higher the risk on an asset, the harder it falls. But there are also two small reasons to hang on to panic risk selling.
In some stocks, stop orders are clearly being triggered when we see more than 10% intraday declines in popular stocks like Tesla and Ford. However, tech giants - market darlings of recent years - have also been hit. The Nasdaq100 index lost about 3.5% on Wednesday as quarterly reports failed to meet expectations that had become inflated.
Technicals are also among the suspected reasons. The sell-off in the Nasdaq100 gained momentum after the index fell below its 50-day MA. In June and July, the index went high into overbought territory on daily RSI timeframes.
In some stocks, stop orders are clearly being triggered when we see more than 10% intraday declines in popular stocks like Tesla and Ford. However, tech giants - market darlings of recent years - have also been hit. The Nasdaq100 index lost about 3.5% on Wednesday as quarterly reports failed to meet expectations that had become inflated.
Technicals are also among the suspected reasons. The sell-off in the Nasdaq100 gained momentum after the index fell below its 50-day MA. In June and July, the index went high into overbought territory on daily RSI timeframes.
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From the high on 11 July to the intraday lows of the day on 25 July, which is exactly two weeks, the Nasdaq100 is down 9%, which is near informal correction territory (down over 10% from the peak).
The latest pullback fits into an uptrend formed since early 2023, with a potential pullback target at the lower boundary of this corridor, 18300-18500. This area is also interesting because there was active resistance here in March and April, and at the end of May, it was already working as support. A failure below would indicate that we are seeing more than a routine shakeout.
On the bullish side, the idea of rotation from Big-Tech to smaller companies is still on the table, as the Russell 2000 just started its rally on 11 July and is now 7.5% above the levels of that starting point. So, while the drawdown in many stocks is quite painful, it is due to their apparent overheating earlier.
The latest pullback fits into an uptrend formed since early 2023, with a potential pullback target at the lower boundary of this corridor, 18300-18500. This area is also interesting because there was active resistance here in March and April, and at the end of May, it was already working as support. A failure below would indicate that we are seeing more than a routine shakeout.
On the bullish side, the idea of rotation from Big-Tech to smaller companies is still on the table, as the Russell 2000 just started its rally on 11 July and is now 7.5% above the levels of that starting point. So, while the drawdown in many stocks is quite painful, it is due to their apparent overheating earlier.
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We also pay attention to the VIX index. It fell a little short of the 19 level on Wednesday, having reached a three-month high. In our observations, meaningful sell-offs have only occurred when the VIX jumped above 20.
July and August are often weak months as investors prefer to rebalance positions and prepare for the start of the new US financial and fiscal year in October.
Thus, the US market dynamics over the next few days will help determine whether we see a short-term correction, albeit a furious one, or whether this is the beginning of a bear market, which at worst could be a repeat of what we saw in 2000-2002 or 2007-2009.
July and August are often weak months as investors prefer to rebalance positions and prepare for the start of the new US financial and fiscal year in October.
Thus, the US market dynamics over the next few days will help determine whether we see a short-term correction, albeit a furious one, or whether this is the beginning of a bear market, which at worst could be a repeat of what we saw in 2000-2002 or 2007-2009.
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#WaveAnalysis
#EURJPY reversed from support level 165.00;
Likely to rise to resistance level 168.00.
EURJPY currency pair recently reversed up from the pivotal support level 165.00 (former strong resistance from March and April, which also stopped the previous correction 2 at the start of May).
The support level 165.00 was strengthened by the 50% Fibonacci correction of the previous sharp uptrend from December.
Given the clear uptrend, EURJPY currency pair can be expected to rise further to the next resistance level 168.00 (former strong support from May and June).
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#EURJPY reversed from support level 165.00;
Likely to rise to resistance level 168.00.
EURJPY currency pair recently reversed up from the pivotal support level 165.00 (former strong resistance from March and April, which also stopped the previous correction 2 at the start of May).
The support level 165.00 was strengthened by the 50% Fibonacci correction of the previous sharp uptrend from December.
Given the clear uptrend, EURJPY currency pair can be expected to rise further to the next resistance level 168.00 (former strong support from May and June).
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#WaveAnalysis
#USDCAD reversed from long-term resistance level 1.3850;
Likely to fall to support level 1.3760.
USDCAD currency pair is under bearish pressure after previously reversing from the long-term resistance level 1.3850 (which has been repeatedly reversing the price from the end of 2022, as can be seen below).
The resistance level 1.3850 was strengthened by the nearby upper daily and the weekly Bollinger Bands.
Given the strength of the resistance level 1.3850 and the clear bearish divergence on the weekly Stochastic indicator, USDCAD currency pair can be expected to fall further to the next support level 1.3760.
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#USDCAD reversed from long-term resistance level 1.3850;
Likely to fall to support level 1.3760.
USDCAD currency pair is under bearish pressure after previously reversing from the long-term resistance level 1.3850 (which has been repeatedly reversing the price from the end of 2022, as can be seen below).
The resistance level 1.3850 was strengthened by the nearby upper daily and the weekly Bollinger Bands.
Given the strength of the resistance level 1.3850 and the clear bearish divergence on the weekly Stochastic indicator, USDCAD currency pair can be expected to fall further to the next support level 1.3760.
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#Crypto market rallied 3.4% overnight to $2.4 trillion, taking advantage of the mixed performance of US indices, with the Russell2000 and Dow Jones up and the Nasdaq100 and S&P500 down. It's not a full recovery, but it's the second bounce in a week from just under $2.31 trillion.
#Bitcoin rose 4.4% over the last 24 hours to $67.0K, taking the crypto market with it. It bounced off the 50-day MA and continued to gain strength on Friday. This is an indication of the strength of the bulls, who have managed to defend the medium-term uptrend. At current levels, bitcoin has returned to the upper boundary of the descending channel formed in March.
#Ethereum is finding support near its 200-day MA, which also demonstrates the bulls' desire to keep the coin in a long-term growth trend and confidently buy on dips towards $3000. Ethereum is now trading near $3200 and has no technical hurdles ahead until the $3500 area where local profit-taking could occur.
#Bitcoin rose 4.4% over the last 24 hours to $67.0K, taking the crypto market with it. It bounced off the 50-day MA and continued to gain strength on Friday. This is an indication of the strength of the bulls, who have managed to defend the medium-term uptrend. At current levels, bitcoin has returned to the upper boundary of the descending channel formed in March.
#Ethereum is finding support near its 200-day MA, which also demonstrates the bulls' desire to keep the coin in a long-term growth trend and confidently buy on dips towards $3000. Ethereum is now trading near $3200 and has no technical hurdles ahead until the $3500 area where local profit-taking could occur.
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#Review
#Gold bent but not yet broken
Gold came close to closing lower for the second week in a row, falling to $2372 per troy ounce on Friday morning, $111 below its high on July 17th.
This decline occurred in two impulses, with an intermediate correction in between, and fits within a 61.8% Fibonacci retracement pattern from the initial decline. The extension of the pattern within the classic expansion suggests a downside target near $2320.
On the other hand, gold found buying support on Thursday and early on Friday at the crossover of the 50-day moving average near $2360. This also coincides with the consolidation centre of the repeated pullbacks from April to June. This means that the decline in this area is well within the framework of a correction, and it is not yet possible to claim that the gold rally has broken and that a top has been established for many months and years to come.
#Gold bent but not yet broken
Gold came close to closing lower for the second week in a row, falling to $2372 per troy ounce on Friday morning, $111 below its high on July 17th.
This decline occurred in two impulses, with an intermediate correction in between, and fits within a 61.8% Fibonacci retracement pattern from the initial decline. The extension of the pattern within the classic expansion suggests a downside target near $2320.
On the other hand, gold found buying support on Thursday and early on Friday at the crossover of the 50-day moving average near $2360. This also coincides with the consolidation centre of the repeated pullbacks from April to June. This means that the decline in this area is well within the framework of a correction, and it is not yet possible to claim that the gold rally has broken and that a top has been established for many months and years to come.
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Therefore, there are two possible lines of defence for gold in the short term: $2360 and $2320. It is worth keeping a close eye on the price action around these levels. If gold breaks through them with a strong move, we should be prepared for a prolonged decline. If the buyers manage to break the trend near one of these lines, the price may well continue to rise on buyers' encouragement.
Gold's ability to avoid a sell-off in June after breaking the 50-day probably helped it make new highs in July. This story could be repeated if the financial markets avoid another deep sell-off and return to growth even without an official correction (a fall of more than 10% from the peak).
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Gold's ability to avoid a sell-off in June after breaking the 50-day probably helped it make new highs in July. This story could be repeated if the financial markets avoid another deep sell-off and return to growth even without an official correction (a fall of more than 10% from the peak).
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#EconomicComment
Friday saw the release of the last important piece of the inflation puzzle ahead of next week's Fed meeting. The FOMC's preferred measure of inflation, the Core Personal Consumption Expenditures Price Index, rose 0.2% m/m and 2.6% y/y, keeping the annual rate of increase at its lowest level since March 2021.
Alongside the more neutral inflation data, we continue to see alarm bells ringing for US consumer activity. Personal spending rose by 0.3% in June, compared with income growth of 0.2%. Households saved $703bn, or 3.4% of disposable income, the lowest level in 18 months.
Friday saw the release of the last important piece of the inflation puzzle ahead of next week's Fed meeting. The FOMC's preferred measure of inflation, the Core Personal Consumption Expenditures Price Index, rose 0.2% m/m and 2.6% y/y, keeping the annual rate of increase at its lowest level since March 2021.
Alongside the more neutral inflation data, we continue to see alarm bells ringing for US consumer activity. Personal spending rose by 0.3% in June, compared with income growth of 0.2%. Households saved $703bn, or 3.4% of disposable income, the lowest level in 18 months.
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Aside from the pandemic in 2022, the only other time in US history that savings were this low was between 2005 and 2008, leading to the Global Financial Crisis.
After that, people's desire to save by rebuilding a financial safety cushion severely delayed the economic recovery.
At that time, the situation was largely rescued by the huge government spending that has since become the norm. Today, rising debt and chronic deficits severely limit the scope for government stimulus as the economy contracts, and this could be a multi-year problem.
After that, people's desire to save by rebuilding a financial safety cushion severely delayed the economic recovery.
At that time, the situation was largely rescued by the huge government spending that has since become the norm. Today, rising debt and chronic deficits severely limit the scope for government stimulus as the economy contracts, and this could be a multi-year problem.
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The recent data, which were close to traders' and analysts' average forecasts, did not lead to a significant reassessment of the markets.
At the same time, they kept the Dollar Index above its 200-day moving average, which the DXY has been trying to break daily since the 19th. At the same time, equity indices are seeing increased buying, with the Dow Jones and Russell 2000 posting gains of almost 1.3%. The latter is only 1.35% below its 2.5-year high of 17 July. The Dow Jones is trading above 40,000 but still close to this psychologically significant round level. The S&P500 is hovering around its 50-day average.
Next week promises to be a bellwether for market sentiment. It will be dominated by meetings from the Fed, Bank of Japan, and Bank of England, as well as the monthly NFP employment report.
This concentration of news, coupled with the proximity of key levels, has a good chance of setting the trend for the coming weeks.
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At the same time, they kept the Dollar Index above its 200-day moving average, which the DXY has been trying to break daily since the 19th. At the same time, equity indices are seeing increased buying, with the Dow Jones and Russell 2000 posting gains of almost 1.3%. The latter is only 1.35% below its 2.5-year high of 17 July. The Dow Jones is trading above 40,000 but still close to this psychologically significant round level. The S&P500 is hovering around its 50-day average.
Next week promises to be a bellwether for market sentiment. It will be dominated by meetings from the Fed, Bank of Japan, and Bank of England, as well as the monthly NFP employment report.
This concentration of news, coupled with the proximity of key levels, has a good chance of setting the trend for the coming weeks.
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The #crypto market cap has returned to $2.49 trillion, adding 3.3% in the last 24 hours. At this stage, the top coins are the lifting force for the market, with BTCUSD up 3.1%, Ethereum up 4.4%, and Solana up 5.5%.
#Bitcoin's price has reached $69.5K, its highest since mid-June. The Bitcoin 2024 conference tipped the scales in favour of the bulls. The technical picture speaks in favour of further upside, as the latest spurt came after a local shakeout that removed overbought conditions and broke the resistance of the descending channel.
#Ethereum is gaining momentum after pushing back from its 200-day MA for the second time this month. On Monday, the coin is testing the 50-day MA, rising to $3380, the taking of which opens a fast route to $3500 and then $4000.
#Solana is making steady progress upwards, reaching $192, its highest since early April. This shows a stronger recovery compared to Bitcoin and the broader market, where capitalisation is lower than the peak in early June.
#Bitcoin's price has reached $69.5K, its highest since mid-June. The Bitcoin 2024 conference tipped the scales in favour of the bulls. The technical picture speaks in favour of further upside, as the latest spurt came after a local shakeout that removed overbought conditions and broke the resistance of the descending channel.
#Ethereum is gaining momentum after pushing back from its 200-day MA for the second time this month. On Monday, the coin is testing the 50-day MA, rising to $3380, the taking of which opens a fast route to $3500 and then $4000.
#Solana is making steady progress upwards, reaching $192, its highest since early April. This shows a stronger recovery compared to Bitcoin and the broader market, where capitalisation is lower than the peak in early June.
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#Review #WTI
Oil Is a Step Away from Falling Off a Cliff
Oil is currently adding 0.6% to $76.45 per barrel WTI, but that's only half of the spurt at the start of trading after the weekend. An important technical signal is forming in oil, as it closed last week below its 200-week average (now at $77.19) for the first time since January 2020 and was unable to quickly get back above it.
Cautious traders will probably prefer to wait for a failure below $75, which would cement a technical break of support through the area of the past 16 months lows.
Oil Is a Step Away from Falling Off a Cliff
Oil is currently adding 0.6% to $76.45 per barrel WTI, but that's only half of the spurt at the start of trading after the weekend. An important technical signal is forming in oil, as it closed last week below its 200-week average (now at $77.19) for the first time since January 2020 and was unable to quickly get back above it.
Cautious traders will probably prefer to wait for a failure below $75, which would cement a technical break of support through the area of the past 16 months lows.
On the daily timeframes, the bears' local victory has already manifested itself in the active oil sell-off at the touch of the 200-day average last week. On the other hand, oil has so far managed to avoid a violent emotional sell-off on breaking this level, in contrast to how it was at the end of May, as well as in February and November.
Oil has so far failed to ride the favourable news background with the tightening geopolitical tensions in the Middle East. In the second half of last week, reports of a 3.7 million drop in commercial inventories to 436.5 million (-4.5% y/y) also failed to attract buyers.
Oil has so far failed to ride the favourable news background with the tightening geopolitical tensions in the Middle East. In the second half of last week, reports of a 3.7 million drop in commercial inventories to 436.5 million (-4.5% y/y) also failed to attract buyers.