downside momentum

USD/CAD has been trading downside and I found the breakout of the support cluster at the price of 1.3590, which is good sign for the further downside movement.   Due to the breakout of the support cluster and the increasing in the downside movement, I see potential for the further lower prices towards downside references.   Downside objectives are set at 1.3540 and 1.3490 MACD is showing increasing of the downside momentum, which is good sign for the further lower prices.... Key resistance is set at the price of 1.3650  

With the Moving Average condition of "Death Cross" on the daily chart of the NZD/CHF Cross currency pair and the price movement moving within its weekly channel, it is clear that the bias of this currency pair is in Bearish condition even so with the appearance of hidden deviations from the osMA indicator with movements the price implies that in a few days there will be an upward correction to test the 0.5574 level to get the downside momentum back.   As long as this level is strong enough to halt the upward correction and as long as it doesn't break above the 0.5634 level then NZD/CHF will continue its decline.    

Gold has been trading downside as I expected and I found re-break of the symmetrical triangle pattern in the background, which is good sign for the further downside movement. Due to the breakout of the upside channel and tight triangle in the background, I see potential for the further drop towards lower references. Downside objectives are set at the price of $1.861 and $1.819 MACD oscillator is showing increasing in the downside momentum, which is good confirmation for the further downside movement. Key resistance is set at the price of $1.967  

Oil prices hold in recent range Oil prices are edging higher again today after once again sliding back toward the range lows of the last few months. What’s interesting is that, as we’ve seen previously, Brent crude failed to reach the previous low. It’s now the fourth time that’s happened in recent months and suggests we are potentially in a prolonged period of consolidation, with little sign yet of further downside momentum building. That may of course change as the environment changes, which can happen quite rapidly these days, but for now it looks stuck in that lower range between $70-$80, perhaps even $72-$77.   Can gold hold above $1,900? Gold is slipping again this week after initially breaking below its recent range just over a week ago. It’s now falling to a new three-month low and appears to be closing in on $1,900 which could represent the next big test of support for the yellow metal. Appetite for gold has dwindled as investors have increasingly come around to the reality that not only could more rate hikes be in the pipeline, but rate cuts this year are now highly unlikely. Inflation is proving even more stubborn than expected on the way down and that’s bad news for gold.  

GBP/JPY The British pound has appreciated over 18% to the Japanese yen this year as stubborn inflation has bolstered the odds of aggressive central bank tightening by the BOE.  Pound-yen has steadily gathered strength in the first half of the year but exhaustion could be settling in.  The pound initially rallied earlier in London after weekly hourly earnings came in scorching hot, which should raise the prospects of a half-point rate hike at the August 3rd BOE meeting. The pound may get a major boost against the dollar if it can extend above the 1.30 level, but for some traders it is looking toppish against the yen. GBP/JPY may have a decent pullback if continued bearishness takes price below the bullish trendline that has been in place since March.  Pound downside momentum could target 176.50 against the yen if the bullish trend line (around the 179.75 ) is invalidated. Key resistance currently resides around the 184.20 level.  

Reopened after yesterday’s closure to due typhoon, shed -2% due to negative follow-through from yesterday’s weak China economic data. Short-term minor uptrend from the 7 July 2023 low remains intact. Short-term downside momentum reached oversold condition. One of China’s proxies benchmark stock indices, the Hang Seng Index plummeted today, 18 July at the open and shed -2% intraday at this time of the writing due to a negative follow-through from yesterday’s weak China data (Q2 GDP, retail sales, and youth unemployment) as the Hong Kong stock exchange was shut yesterday due to typhoon. The Hong Kong 33 Index (a proxy for the Hang Seng Index futures) has pierced below its 200-day moving average but so far has managed to hold at the minor ascending trendline support in place since the 7 July 2023 low of 18,222.       Short-term downside momentum may be dissipating   Fig 1: Hong Kong 33 minor short-term trend as of 18 Jul 2023 (Source: TradingView, click to enlarge chart) Short-term downside momentum has reached the oversold region as indicated by the hourly RSI and it is now inching upwards which suggests that downside momentum of the current slide from 14 July 2023 high to today’s 18 July intraday low of 18,947 may have waned. Watch the 18,900 key short-term pivotal support and clearance above the 200-day moving average now acting as an intermediate resistance at 19,245 sees the next resistances coming in at 19,570 and 19.900 (upper boundary of the medium-term range configuration). However, failure to hold above 18,900 damages the minor uptrend to expose the key medium-term support of 18,220/130.

Short-term downside momentum has waned       Fig 2: Gold (XAU/USD) minor short-term uptrend of 25 Jul 2023 (Source: TradingView, click to enlarge chart) As seen on the 1-hour chart of Gold (XAU/USD), its recent slide from its 20 July 2023 high of US$ US$1,987.53 has reached the lower boundary of a minor ascending channel from 6 July 2023 low now acting as near-term support at US$1,952.50. In addition, the hourly RSI oscillator has flashed a bullish divergence signal at its oversold region. These observations suggest that the downside momentum of the 5-day slide from the 20 July 2023 high has started to wane where a potential short-term bullish reversal may take shape. Watch the US$1,939 key short-term pivotal support (also close to the 50-day moving average) with the intermediate resistance at US$1,990, and clearance above it sees US$2,010 next (the upper boundary of the minor ascending channel). However, a break below US$1,939 invalidates the bullish reversal scenario to expose the medium-term support zone of US$1,913/1,896.  

AUD underperformed among the major currencies against the USD from 27 to 28 July 2023 ex-post FOMC, ECB, and BoJ. Split view among economists and interest rates traders on RBA monetary policy decision today. Short-term bearish downside momentum at this juncture as the AUD/USD failed to trade above the 200-day moving average. Key short-term resistance on AUD/USD is at 0.6740. This is a follow-up analysis of our prior report, “AUD/USD Technical: Rebounded right at 200-day moving average” published on 25 July 2023. Click here for a recap. The AUD/USD staged a rebound thereafter and reached an intraday high of 0.6821 on 27 July, just shy of the 0.6835 intermediate before it staged a bearish reversal and shed -198 pips ex-post FOMC, ECB, and BoJ to print an intraday low of 0.6623 on last Friday, 28 July. The Aussie has underperformed among the major currencies against the US dollar in the last two trading days of last week where the AUD/USD recorded an accumulated loss of -1.68% from 27 July to 28 July versus EUR/USD (-0.63%), GBP/USD (-0.71%), and JPY/USD (-0.65%) over the same period. The weak performance of the AUD/USD is likely to be attributed to the wishy-washy monetary policy guidance of the Australian central bank, RBA that led to a split forecast among economists and traders for today’s RBA monetary policy decision.   Split view among economists and traders on RBA decision According to polls, the consensus among economists is calling for a hike of 25 basis points hike to bring the policy cash rate to 4.35% after a pause in the previous meeting in July. In contrast, data from the ASX 30-day interbank cash rate futures as of 31 July 2023 has indicated a patty pricing of only a 14% chance of a 25-bps hike, down significantly from a 41% chance priced a week ago.     Fig 1: AUD/USD medium-term trend as of 1 Aug 2023 (Source: TradingView, click to enlarge chart) From a technical analysis standpoint, the price actions of the AUD/USD are still trapped within a major sideway range configuration with its range resistance and support at 0.6930 and 0.6580 respectively.   Short-term momentum has turned bearish   Fig 2: AUD/USD minor short-term trend as of 1 Aug 2023 (Source: TradingView, click to enlarge chart) The AUD/USD has managed to stage a minor rebound of 117 pips from its last Friday, 28 July intraday low of 0.6622 in conjunction with an oversold reading seen in the hourly RSI oscillator on the same day. Interestingly, the minor rebound has challenged and retreated at the key 200-day moving average yesterday, 31 July during the US session (printed an intraday high of 0.6739). Right now, the hourly RSI oscillator has broken below its ascending support after it hit an overbought condition yesterday which indicates that short-term momentum has turned bearish. Watch the 0.6740 key short-term pivotal resistance to maintain the bearish tone, and a break below 0.6625 intermediate support exposes the major range support of 0.6600/6580. However, a clearance above 0.6740 negates the bearish tone to see the next resistance at 0.6835 in the first step.

Medium-term downtrend phase of AUD/USD has reached an oversold condition with downside momentum easing. Key short-term support to watch will be at 0.6385. Intermediate resistance at 0.6490. The price actions of AUD/USD have been oscillating in a medium-term downtrend phase in place since the 17 July 2023 high which has been reinforced by the bearish breakdown of its former medium-term ascending trendline support from 13 October 2022 low on 9 August 2023. So far, the AUD/USD has plummeted by -530 pips from its 17 July 2023 high to its 17 August 2023 low of 0.6365, and the recent four weeks of decline have led to an oversold condition in terms of price actions     Fig 1:  AUD/USD medium-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) The daily RSI oscillator of the AUD/USD, a gauge that measures momentum, oversold, and overbought conditions on price actions reached an oversold condition recently on 17 August 2023 and shaped a bullish divergence condition (a higher low) thereafter on last Friday, 25 August. These observations suggest that the downside momentum of the ongoing medium-term downtrend of AUD/USD may have eased which supports a potential imminent minor countertrend/consolidation phase. These positive elements have also occurred at a key support of 0.6385 that coincided with the 10 November 2022 low and the 76.4% Fibonacci retracement of the prior medium-term up move from 13 October 2022 low to 2 February 2023 high.     Fig 2:  AUD/USD minor short-term trend as of 28 Aug 2023 (Source: TradingView, click to enlarge chart) Since its 17 August 2023 low, the price actions of AUD/USD have started to evolve into a minor range configuration with its key short-term pivotal support at 0.6385 and respective minor range resistance at 0.6490 (also the 20-day moving average). A clearance above 0.6490 sees the next resistances coming in at 0.6510 and 0.6600 (5 August/10 August 2023 minor swing highs areas, pull-back resistance of the former medium-term ascending trendline support from 13 October 2022 low & the 50-day moving average). However, failure to hold the 0.6385 key short-term support invalidates the minor countertrend rebound scenario for a continuation of the impulsive down move sequence of the medium-term downtrend phase towards the next supports at 0.6310 and 0.6270 in the first step.

The recent three weeks of -13.90% decline has reached a key medium-term support level of 17,530. The latest reading of its daily MACD trend indicator has indicated a possible pause in the medium-term downtrend movement. Key short-term support to watch will be at 17,970 with intermediate resistances at 18,600 and 18,910.   The Hang Seng Index is set to record its worst monthly performance since October 2022 as it recorded a month-to-date loss of -9.70% as of yesterday, 28 August 2023, on the track to be one of the worst-performing major benchmark stock indices in August. The current medium-term bearish onslaught has been primarily attributed to a heightened deflationary risk spiral in China and contagion risk from indebted property developers coupled with a lack of material stimulus measures to negate these negative repercussions. In the lens of technical analysis, price actions of liquid tradable financial assets do not move in a vertical movement where there are certain periods of time, consolidation or countertrend movements can occur within a longer period of trending phases as market participants infer and digest new information. Interestingly, the current price actions of the Hong Kong 33 Index (a proxy of the Hang  Seng Index futures) are suggesting a potential countertrend movement may be taking shape within a medium-term downtrend phase that is still intact since the 27 January 2023 high of 22,688.     Price actions tested key medium-term support with positive elements   Fig 1: Hong Kong 33 medium-term trend as of 29 Aug 2023 (Source: TradingView, click to enlarge chart) The recent three weeks of -13.90% decline seen in the Hong Kong 33 Index from its 31 July high of 20,381 has managed to stall and rebounded from a key medium-term support of 17,530 that is being confluence by several different elements; the 28 November 2022 swing low, lower boundary of the “Expanding Wedge” configuration, 76.4% Fibonacci retracement of the prior medium-term up move from 31 October 2022 to 27 January 2023 high.   In addition, the daily MACD trend indicator has managed to stall at parallel horizontal support (bullish divergence) while price actions traced out “lower lows” over a similar period. These observations suggest a possible slowdown in medium-term downside momentum which in turn increases the odds of a countertrend rebound scenario.     Watch the 17,970 key short-term support     Fig 2: Hong Kong 33 minor short-term trend as of 29 Aug 2023 (Source: TradingView, click to enlarge chart) The Index has staged a minor rebound of +5.65% from its 21 August 2023 low to print an intraday high of 18,539 yesterday, 28 August on the backdrop of a positive new measure to boost short-term investors’ sentiment in the China stock market where policymakers enacted a 50% reduction to stock trading levy, its first cut since 2008 Great Financial Crisis. If the 17,970 short-term pivotal support manages to hold ground, the Index may see a further bounce within its ongoing minor countertrend rebound phase towards the next intermediate resistances at 18,600 and 18,910 (also the 50-day moving average). On the flip side, a break below 17,970 invalidates the countertrend rebound scenario to expose the next immediate support at 17,570/17,370.