moving averages

  • Fed signals three rate cuts in 2024
  • ECB and BoE to announce decisions shortly
  • Dow hits record highs after the Fed

The most hotly anticipated central bank meeting of the year did not disappoint on Wednesday, with the Fed potentially delivering this year’s Santa rally.

I don’t think many will have expected the Fed to go as far as it did in forecasting three rate cuts next year only three months after suggesting the tightening cycle is not over. But clearly, it’s not just investors that have been impressed with the data we’ve seen so far in the fourth quarter and now they’re getting more carried away than before.

There’s been a lot of debate in recent weeks about whether investors are getting ahead of themselves, too optimistic about how quickly the Fed will cut rates but the message from the central bank is that is not the case. And in typical fashion, investors have now gone further, pricing in six rate cuts next year starting in March.

That’s also forced investo

Technical Analysis: Moving Averages - Did You Know This Tool?

Technical Analysis: Moving Averages - Did You Know This Tool?

Binance Academy Binance Academy 17.02.2022 07:46
Technical analysis (TA) is nothing new in the world of trading and investing. From traditional portfolios to cryptocurrencies like Bitcoin and Ethereum, the use of TA indicators has a simple goal: use existing data to make more informed decisions that will likely lead to desired outcomes. As markets grow increasingly more complicated, the last decades have produced hundreds of different types of TA indicators, but few have seen the popularity and consistent usage of moving averages (MA). Although there are different variations of moving averages, their underlying purpose is to drive clarity in trading charts. This is done by smoothing out the graphs to create an easily decipherable trend indicator. Because these moving averages rely on past data, they are considered to be lagging or trend following indicators. Regardless, they still have great power to cut through the noise and help determine where a market may be heading.   Different types of moving averages There are various different types of moving averages that can be utilized by traders not only in day trading and swing trading but also in longer-term setups. Despite the various types, the MAs are most commonly broken down into two separate categories: simple moving averages (SMA) and exponential moving averages (EMA). Depending on the market and desired outcome, traders can choose which indicator will most likely benefit their setup.   The simple moving average The SMA takes data from a set period of time and produces the average price of that security for the data set. The difference between an SMA and a basic average of the past prices is that with SMA, as soon as a new data set is entered, the oldest data set is disregarded. So if the simple moving average calculates the mean based on 10 days worth of data, the entire data set is constantly being updated to only include the last 10 days. It's important to note that all data inputs in an SMA are weighted equally, regardless of how recently they were inputted. Traders who believe that there's more relevance to the newest data available often state that the equal weighting of the SMA is detrimental to the technical analysis. The exponential moving average (EMA) was created to address this problem.   The exponential moving average EMAs are similar to SMAs in that they provide technical analysis based on past price fluctuations. However, the equation is a bit more complicated because an EMA assigns more weight and value to the most recent price inputs. Although both averages have value and are widely used, the EMA is more responsive to sudden price fluctuations and reversals. Because EMAs are more likely to project price reversals faster than SMAs, they are often especially favored by traders who are engaged in short-term trading. It is important for a trader or investor to choose the type of moving average according to his personal strategies and goals, adjusting the settings accordingly.   How to use moving averages Because MAs utilize past prices instead of current prices, they have a certain period of lag. The more expansive the data set is, the larger the lag will be. For example, a moving average that analyzes the past 100 days will respond more slowly to new information than an MA that only considers the past 10 days. That's simply because a new entry into a larger dataset will have a smaller effect on the overall numbers. Both can be advantageous depending on the trading setup. Larger data sets benefit long-term investors because they are less likely to be greatly altered due to one or two large fluctuations. Short-term traders often favor a smaller data set that allows for more reactionary trading. Within traditional markets, MAs of 50, 100 and 200 days are the most commonly used. The 50-day and the 200-day moving averages are closely watched by stock traders and any breaks above or below these lines are usually regarded as important trading signals, especially when they are followed by crossovers. The same applies to cryptocurrency trading but due to its 24/7 volatile markets, the MA settings and trading strategy may vary according to the trader profile.   Crossover signals Naturally, a rising MA suggests an upward trend and a falling MA indicates a downtrend. However, a moving average alone is not a really reliable and strong indicator. Therefore, MAs are constantly used in combination to spot bullish and bearish crossover signals. A crossover signal is created when two different MAs crossover in a chart. A bullish crossover (also known as a golden cross) happens when the short-term MA crosses above a long-term one, suggesting the start of an upward trend. In contrast, a bearish crossover (or death cross) happens when a short-term MA crosses below a long-term moving average, which indicates the beginning of a downtrend.    Other factors worth considering The examples so far have all been in terms of days, but that's not a necessary requirement when analyzing MAs. Those engaged in day trading may be much more interested in how an asset has performed over the past two or three hours, not two or three months. Different time frames can all be plugged into the equations used to calculate moving averages, and as long as those time frames are consistent with the trading strategy, the data can be useful. One major downside of MAs is their lag time. Since MAs are lagging indicators that consider previous price action, the signals are often too late. For instance, a bullish crossover may suggest a buy, but it may only happen after a significant rise in price.  This means that even if the uptrend continues, potential profit may have been lost in that period between the rise in price and the crossover signal. Or even worse, a false golden cross signal may lead a trader to buy the local top just before a price drop. These fake buy signals are usually referred to as a bull trap.   Closing thoughts Moving Averages are powerful TA indicators and one of the most widely used. The ability to analyze market trends in a data-driven manner provides great insight into how a market is performing. Keep in mind, however, that MAs and crossover signals should not be used alone and it is always safer to combine different TA indicators in order to avoid fake signals.
NASDAQ 100 (QQQ) Stock News and Forecast: Worries over Ukraine-Russia war dim index prospects

NASDAQ 100 (QQQ) Stock News and Forecast: Worries over Ukraine-Russia war dim index prospects

FXStreet News FXStreet News 28.02.2022 16:02
NASDAQ 100 is set to open sharply lower on Monday. Russia placing nuclear forces on high alert spooked markets. European gas prices continue to surge as stagflation beckons. Global financial markets remain on edge this morning as the Russia-Ukraine conflict looks to be in danger of spilling into a global threat. Over the weekend Russia placed its nuclear deterrent forces on high alert, while Germany pledged increased defense spending. Now further developments include Russia talking of placing nuclear missiles in Belarus and an apparent escalation of the rhetoric between global superpowers. Western governments have gone for tougher sanctions than many observers anticipated with the Russian Central Bank reserves being targetted as well as the global banking payment system SWIFT being closed to Russian banks. Russian ally Belarus held a referendum this morning that ditched its non-nuclear stance, paving the way for Russian nuclear missiles to be deployed there. NASDAQ 100 (QQQ) Stock News All this has naturally seen risk assets collapse. European equity markets fell sharply this morning. At one stage the German Dax was down nearly 3% but has staged a slight recovery to lose 2.4% currently. However the European benchmark, the Eurostoxx 50, is down over 3.5% at the time of writing. Yields continue to fall as money flows into safe-haven assets. Gold and the dollar have naturally profited. The odds on rate hikes from the European Central Bank and the Federal Reserve have diminished as the threat of recession grows. Europe has the most to lose due to its dependence on Russian gas supplies. European natural gas futures (TTF) rose over 50% on Friday and have followed that up with a 12% gain on Monday. There is likely more to come here. NASDAQ 100 (QQQ) Stock Forecast We do have a bearish divergence on the Relative Strength Index (RSI). The RSI has not made matching new lows despite the NASDAQ 100 doing so. Usually, this is significant, but the RSI does remain in a strong downtrend in line with the NASDAQ. Thursday and Friday's rally was impressive, but even that failed to break the 9 and 21-day moving averages. Demonstrating this downtrend is powerful. The obvious target is a break of 4,300 and a test of the significant lows from March 2021 at $299.51. Nasdaq (QQQ) chart, daily For short-term traders, opening below $348 indicates we are on a bearish track and preparing for further declines. Last support at $338 could see a sharp decline to $328 based on the volume gap. Nasdaq (QQQ) chart, 15-minute
The Put / Call Ratio - A Technique Used To Gauge Market Extremes

The Put / Call Ratio - A Technique Used To Gauge Market Extremes

Chris Vermeulen Chris Vermeulen 02.03.2022 21:32
Perhaps you’ve heard of the “Put / Call Ratio” (PCR) and been unsure of exactly what it is or when and how to use it.First, a quick review of what Calls and Puts are. Calls are option contracts that increase in value from a RISE in the price of the underlying stock or index. Puts are option contracts that increase in value from a DROP in the price of the underlying stock or index.Let’s jump in and see what’s “under the hood” and how we might use that to better inform our decision-making as traders and investors.What Is the Put / Call Ratio?The PCR is a contrarian indicator based on the idea that market participants tend to get too bearish or bullish shortly before a reversal is about to materialize. When the market is at a point of extreme bearishness, participants tend to buy more Puts than usual. Conversely, when the market is at a point of extreme bullishness, participants tend to buy more Calls than normal. Contrarian logic suggests that most participants tend to be wrong when the market is near inflection points.Mathematically the Put / Call Ratio is simply the number of Puts divided by the number of Calls. A value of 1 would indicate that the same number of Calls and Puts are being purchased. A value greater than 1 indicates more Puts than Calls purchased. It follows that a value below 1 means that more Calls than Puts are purchased.Sign up for my free trading newsletter so you don’t miss the next opportunity!The PCR can be calculated using either open interest or volume of contracts. It can be calculated for individual stocks and for indexes. Most trading and charting platforms have several versions of the PCR available for the major indexes. Indexes generally have charts available, while individual stocks may only have daily numerical value readily available. The PCR is generally more useful as an overall market sentiment indicator for the major indexes like the S&P 500. For most underlying, including major indexes like the S&P 500, the PCR tends to be below 1 much of the time. That makes some sense, as major indexes tend to have a long-term bullish bias. But in times of elevated fear, Put buying tends to be elevated in a rush to buy portfolio “insurance”. Outright bets on a market decline can add to that volume.How Do I Use the pcr?It helps to understand what “normal” behavior is for the number of Calls and Puts purchased for the particular index or stock. For an index like the S&P 500, a PCR of 0.9 or above suggests heavy Put buying and is typically seen as bullish from the contrarian view. For reference, at the height of the dot-com bubble in March 2000, the PCR dropped to as low as 0.39. Lots of calls were being purchased as the market was peaking.Let’s look at some recent examples where we see the Put / Call Ratio at extreme levels. Below we see a chart of the S&P 500 displayed with Heikin Ashi candles overlayed with the PCR (magenta line).In the first instance (circled in magenta), we see a low in the PCR where significantly more Calls than Puts were purchased. When interpreted as a contrarian indicator, that suggests bearishness to come. And indeed, we do see five days of bearishness to follow.We then see a sharp reversal to a relatively high PCR (blue circle), and we do see a bullish reversal that lasted for six days.At the yellow circle, we see a spike up in the PCR accompanied by a sharp increase in the underlying volume. However, we see a few days delay before the bullish reversal materializes in this instance. And the market was rather volatile on those days, as evidenced by the tall candles with long tails.At the green circle, we have a somewhat elevated PCR and another delayed reversal.ConclusionThe PCR is not particularly useful in sideways markets. But it can be useful at market extremes, albeit at times with some delay.Like many indicators, the PCR is far from 100% reliable unto itself. Used in conjunction with volume, volatility (VIX), support/resistance levels, trendlines, moving averages, and other technical indicators, the PCR can give us valuable clues about market sentiment and when a reversal may be in the making.Now That You Know more About the put / call ration, Read On To Learn More About Options TradingEvery day on Options Trading Signals, we do defined risk trades that protect us from black swan events 24/7. Many may think that is what stop losses are for. Well, remember the markets are only open about 1/3 of the hours in a day. Therefore, a stop loss only protects you for 1/3 of each day. Stocks can gap up or down. With options, you are always protected because we do defined risk in a spread. We cover with multiple legs, which are always on once you own.   If you are new to trading or have been trading stock but are interested in options, you can find more information at The Technical Traders – Options Trading Signals Service. The head Options Trading Specialist Brian Benson, who has been trading options for almost 20 years, sends out real live trade alerts on actual trades, such as TSLA and NVDA, with real money. Ready to subscribe, click here:  TheTechnicalTraders.com.Enjoy your day!
The Swing Overview – Week 10 2022

The Swing Overview – Week 10 2022

Purple Trading Purple Trading 14.03.2022 15:05
The Swing Overview – Week 10 The war in Ukraine has been going on for more than two weeks and there is no end in sight. However, the markets seem to have started to adapt to the new situation and the decline in the indices has stopped. Meanwhile, inflation in the Czech Republic rose to 11.1% and the ECB left rates unchanged as expected. There is extreme volatility in oil. After reaching 2008 price levels there has been a larger correction. The conflict in Ukraine   The high-profile meeting between Russian Foreign Minister Lavrov and his Ukrainian counterpart Kuleba did not bring a solution to end the war.  Russia continues to expect Ukraine to recognise Crimea as part of Russia, to recognise the independence of republics declared by pro-Russian separatists in eastern Ukraine, and not to join NATO. Kuleba commented that Ukraine will not surrender. So, unfortunately, the war continues.   The sanctions, which have caused the Russian economy a shock and which are being extended, should help to end the war. The US announced that it stopped taking Russian oil. However, European leaders have not agreed to stop taking Russian energy because of their current dependence on it. As a lesson from this war, the EU is preparing a plan to stop taking Russian gas by 2027.   Meanwhile, the markets have calmed down a bit and although a resolution to the conflict is nowhere in sight, the markets seem to have come to accept the war as a regional issue that will have a negative but limited impact on global economic growth. This can be seen in US 10-year bond rates, which have started to rise again.   Figure 1: 10-year government bond yield on the 4H chart and USD index on the daily chart   The US inflation at highest levels in 40 years Annual inflation in the US for February was 7.9%, the highest since January 1982. The biggest contributor to inflation is energy, which saw inflation reaching 25.6%, while gasoline prices were up 38%. These figures do not include recent developments in Europe. Continued supply-side logistics problems and strong demand, together with a tight labour market mean that higher inflation will last for a longer period. Figure 2: The inflation in the US   Next week, the US Fed will meet to respond to rising inflation. Interest rates are generally expected to rise by at least 0.25%.    The SP500 index Long-term investors in the SP 500 index track an indicator of the number of companies whose stock prices are above the 50-day average. Figure 3: The SP 500 Index and an indicator of the number of companies in the SP 500 Index above the 50-day moving average   This indicator has recently fallen to a value of 20. In the past, as the figure shows, reaching a value of 20 was mostly followed by an increase in the index. It is therefore likely that investors will now start buying the shares. Amazon shares gained significantly after the company announced a 20:1 stock split. The stock can thus be afforded by more retail investors. As for the current trend in the SP 500 index, it has been moving down recently. This may be a correction to the overall uptrend shown in Figure 3. In Figure 4 we have a short-term view.     Figure 4: SP 500 on H4 and D1 chart   From a technical analysis perspective, the moving averages suggest that the index is moving down. Investor interest in buying a dip has slowed this decline, which can be seen on the H4 chart where a higher low has formed.  Support is at 4,140 - 4,152. Resistance is at 4,288 - 4,300. The next resistance is at 4,385 - 4,415. The moving averages also serve as resistance.   The inflation in the Czech Republic has surpassed 11% Annual inflation in the Czech Republic for February 2022 was 11.1% (9.9% in January), higher than market expectations (10.3% was expected). This is the highest inflation in the Czech Republic since 1998. The largest contributors to inflation are housing (16%), electricity (22.6%) and gas (28.3%). This figure is likely to force the CNB to raise rates further. The Czech koruna has stalled against the euro at resistance around 25.80 - 25.90. The reason for the weakening of the koruna was geopolitical uncertainty regarding the war in Ukraine. Now it seems that the markets have absorbed this situation and this may be the reason for the appreciation of the koruna that occurred last week. If the war in Ukraine does not escalate further into new unexpected dimensions (such as the disruption of gas supplies to Europe from Russia), then the interest rate differential could again be an important factor, which, due to higher interest rates on the koruna, could lead to the koruna appreciation towards January levels.   Figure 5: EURCZK on the daily chart   Resistance: 25.80 - 25.90.  Support: 24.50 - 24.60 and then around 24.10   ECB and the euro The ECB left interest rates unchanged at 0%. At the same time, it surprised the market by ending its bond buying program in Q3, earlier than previous forecasts. The reaction to the news was a strong appreciation of the euro and it jumped to 1.1120 against the dollar. Eventually, however, the euro ended the session at around 1.10. The reason for this reversal is that tightening at a time when the economy is slowing could lead to stagflation. Strong US inflation data also contributed to the euro sell-off. The US is also much less vulnerable to sanctions against Russia than Europe.   Figure 6: EURUSD on the H4 and daily charts   From a technical point of view, we can see that the EURUSD has stalled right at the resistance band, which is at the 1.11-1.1130 level. The nearest support is 1.08-1.0850.   Crude Oil Brent crude oil reached $136 earlier this week, the highest level since July 2008. This was due to fears of a shortage of black liquid due to the conflict in Ukraine. However, Russia , which produces 7% of global demand, has announced that it will meet its contractual obligations. At the same time, Chevron said there was no shortage of oil and some other producers were ready to increase production if necessary. The EU has also announced that it will not impose an embargo on Russian oil imports, which would otherwise shock the market at a time when oil stocks are reaching multi-year lows, and will not join the US and the UK. Following this, oil began to retreat from its highs.   Figure 7: Brent crude oil on monthly and daily charts Resistance is in the 132-135 range. The nearest support is 103 - 105 USD per barrel. The next support is then in the band around USD 85 - 87 per barrel.  
What Is Going On Financial Markets Today? Russia Will Not Resume Deliveries Of Gas

"Boring" Bitcoin (BTC) And Gaining S&P 500 (SPX). Crude Oil Price Chart Shows A Green Candle At The Right Hand Side,

Monica Kingsley Monica Kingsley 18.03.2022 15:50
S&P 500 extended gains, and the risk appetite in bonds carried over into value rising faster than tech. Given the TLT downswing though, it‘s all but rainbows and unicorns ahead today. Not only that quad witching would bring high volume and chop, VIX itself doesn‘t look to slide smoothly below 25 today. Friday‘s ride would be thus rocky, and affected by momentum stalling in both tech and value. Real assets though can and will enjoy the deserved return into the spotlight. With much of the preceding downswing being based on deescalation hopes (that aren‘t materializing, still), the unfolding upswing in copper, oil and precious metals (no, they aren‘t to be spooked by the tough Fed tightening talk) would happen at a more measured pace than had been the case recently. Pay attention to the biting inflation, surrounding blame games hinting at no genuine respite – read through the rich captions of today‘s chart analyses, and think about reliable stores of real value. And of course, enjoy the open profits. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 looks likely to consolidate as the 4,400 – 4,450 zone would be tough to overcome, and such a position relative to both the moving averages shown, has historically stopped quite a few steep recoveries off very negative sentiment readings. Credit Markets HYG is likely to slow down here, as in really stall and face headwinds. The run had been respectable, and much of the easy gains happened already yesterday. Gold, Silver and Miners Precious metals upswing did indeed return – and the miners performance doesn‘t hint at a swift return of the bears, to put it mildly. The path to $1950s is open. Crude Oil Crude oil bottom was indeed in, and the price can keep recovering towards $110s and beyond. No, the economy isn‘t crashing yet, monetary policy isn‘t forcing that outcome, and the drawing of petroleum reserves is a telltale sign of upside price pressures mounting. It‘ll be an interesting April, mark my words. Copper Copper is duly rebounding, and not at all overheated. The move is also in line with other base metals. My yesterday‘s target of $4.70 has already been reached – I‘m looking for a measured pace of gains to continue. Bitcoin and Ethereum Cryptos are taking a small break, highlighting the perils of today. The boat won‘t be rocked too much. Summary S&P 500 bulls made the easy gains already yesterday, and today‘s session is going to be volatile, even treacherous in establishing a clear and lasting direction (i.e. choppy), and the headwinds would be out there in the plain open. These would come from bonds not continuing in the risk-on turn convincingly rather than commodities and metals surging head over heels. Both tech and value would feel the heat as VIX would show signs of waking up (to some degree). Today‘s session won‘t change the big picture dynamics of late, and I invite you to read more in-depth commentary within the individual market sections of today‘s full analysis. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
CFD Update: Oil, have sellers regained control?

CFD Update: Oil, have sellers regained control?

8 eightcap 8 eightcap 28.03.2022 07:44
Today we’re looking at oil. At the end of last week, sellers look to have regained control, pushing price lower on Thursday and stalling the recovery trend. Friday buyers did win the session, but the bar failed to test Thursday’s high. Today we saw price open 1.73% lower and quickly move back down to 109.50 before some buyer resistance emerged. 110 does show some short-term support, but our focus, for now, is on another pattern that has started to form. Looking at the daily chart, we were watching the recovery with interest to see if sellers could stall the rally and set up a Lower High pattern. That has started to come into fruition with last Thursday’s price stall and today’s move lower. From here, if you’re a bear, you would want to see selling continue with a close below the moving averages and through current ST support. The fast trend has also been broken, so if momentum continues and we see further selling, the medium-term trend line could be the next target, only if sellers can continue to get the ball rolling. Any counter-rallies from this point, we will want to see new lower highs form with lower lows after support is broken. If we see a new move from buyers that can close above last Friday’s close, that would be a warning, and a new move above 118.06 cancels out the LH and suggests buyers still remain in control. Oil D1 Chart The post CFD Update: Oil, have sellers regained control? appeared first on Eightcap.
The Swing Overview - Week 18 2022

The Swing Overview - Week 18 2022

Purple Trading Purple Trading 16.05.2022 10:51
The Swing Overview - Week 18 In the war against rising inflation, central banks in the US, the UK and Australia raised interest rates this week. Britain, meanwhile, warned of the risk of a recession. The CNB also raised rates. They have thus reached their highest levels since 1999. The key interest rate in the Czech Republic is now 5.75%.   The main stock indices have weakened strongly in response to the monetary tightening policies of the major economies and are at significant support levels. The negative sentiment on the indices is confirmed by the VIX fear indicator, which is above 30. The US dollar, on the other hand, continues to ride on the winning wave. The Fed raised interest rates by 0.5% The Fed raised rates by 0.5% points on Wednesday as expected, the highest jump in 22 years. This took the interest rate to 1%. The Fed chief announced that further half a percentage point rate hikes will continue at the next meetings in June and July. Powell also stated that the US economy is doing well and that it can withstand interest rate hikes without the risk of a recession and a significant increase in unemployment.   In addition to the rate hike, the Fed announced that in June it would begin reducing the assets on the bank's balance sheet that the central bank had accumulated during the pandemic. In June, July and August, the Fed will sell $45 billion of assets a month, and starting in September it will sell $95 billion a month.   Although Powell ruled out a 0.75% rate hike at the next meetings, interest rate futures markets continue to expect that possibility with about an 80% probability. Figure 1: The CME Fed Watch tool projections of the target interest rate for the next Fed meeting on June 15, 2022 Based on these expectations, US 10-year Treasury yields continue to strengthen and have surpassed the 3% mark. The US dollar is also strengthening and it is at the highest level since January 2017 and approaching 104.  Figure 2: The US 10-year bond yields and the USD index on the daily chart   Equity indices remain under pressure The SP 500 index initially rallied strongly following the announcement of the rate hike, after Powell ruled out a 0.75% rate hike in subsequent meetings. However, markets gave back all the gains the following day as interest rate futures continue to estimate an 80% probability that the next rate hike, which will take place in June 2022, will be 0.75%.   Figure 3: SP 500 on H4 and D1 chart Thus, in terms of technical analysis, the US SP 500 index continues to move in a downtrend below both the SMA 100 and EMA 50 moving averages with resistance, according to the 4 H chart, at 4,308 - 4,313. The next resistance, according to the H4 chart, is 4,360 - 4,365.  Strong resistance is at 4,500. The current support is 4 070 - 4 100.   German DAX index German industrial orders fell by 4.7% in March, which is more than expected. A major contributor to this negative result was a reduction in orders from abroad as the war in Ukraine hit demand in the manufacturing sector. The outlook is negative and some analysts suggest that the German economy is heading into recession. The reasons are the war in Ukraine, problems in supply chains and high inflation. The Dax index confirms these negative outlooks with a downward trend. Figure 4: German DAX index on H4 and daily chart The index continues to move below the SMA 100 on the daily chart and on the H4 chart, confirming the bearish sentiment. The nearest support according to the H4 is 13,600 - 13,650. Resistance is 14,300 - 14,330. The next resistance is 14,592 - 14,632.   The outlook for the euro remains negative HSBC bank on Thursday significantly cut its forecast for the euro, saying it expects the euro to weaken to parity against the US dollar this year, the first major investment bank to make such a prediction.   The post-pandemic economic environment, which has been damaged by the ongoing war in Ukraine, looks challenging for the European economy, potentially forcing the European Central Bank to tighten policy slowly compared to the U.S. Federal Reserve, which has begun an aggressive rate-hiking cycle.  This has raised the prospect of the single currency falling to levels not seen in two decades. HSBC said it expects the move to happen by the fourth quarter of 2022.   ECB board member Isabel Schnabel said this week that rates may need to be raised as early as July. The precursor to any rate hike must be an end to bond purchases and that could come in late June. Markets are pricing in a 90 basis point tightening in rates this year.   Figure 5: The EURUSD on H4 and daily chart The EUR/USD pair is in a clear downtrend with resistance at 1.0650 - 1.071. The important support is 1.05, but it has already been tested several times and could be broken soon. The next support is from January 2017 at around 1.0350 - 1.040.   The Czech koruna got another injection in the form of an interest rate hike The CNB raised the interest rate by 0.75%, which exceeded analysts' expectations who projected a 0.50% rise. The current rate now stands at 5.75%, the highest since 1999. Consumer price growth continues to rise and by raising the interest rate the central bank is trying to dampen this growth by raising the interest rate. Inflation is expected to reach 15% by mid-year. The CNB has an inflation target of 2% and inflation is expected to reach these levels in 2024.   The problem is economic growth, which is slowing significantly.  But maintaining price stability is clearly more important than the negative effects of higher rates on the real economy.  Figure 6: The USD/CZK and the EUR/CZK on the daily chart The Czech koruna has so far done best on the pair with the euro, as interest rates are zero on the euro. The koruna has been weakening significantly on the USD pair in recent days. The current significant resistance on the USD/CZK is CZK 23.50 per dollar and on the EUR/CZK it is 24.70.    Bank of England warned of recession and more than 10% inflation The Bank of England sent out a strong warning that Britain faces the twin dangers of recession and inflation above 10% when it raised interest rates by a quarter percentage point to 1% on Thursday. The pound fell more than a cent against the US dollar and hit its lowest level since mid-2020, below $1.24, as the gloominess of the BoE's new forecasts for the world's fifth-largest economy caught investors off guard.    The BoE also said it was also concerned about the impact of renewed COVID-19 lockdowns in China, which threaten to hit supply chains again and increase inflationary pressures.    The BoE's rate hike was the fourth since December, the fastest pace of policy tightening in 25 years. The central bank also revised up its price growth forecasts, which suggest it will peak above 10% in the final three months of this year. Previously, it had expected it to peak at around 8% in April. Markets expect interest rates to reach 2-2.25% by the end of 2022.  Figure 7: The GBP/USD on weekly and daily charts In terms of technical analysis, the GBP/USD is in a downtrend. The pound is trading at levels below 1.24 pounds per dollar and has reached to the support of 1.225-1.2330. The nearest resistance according to the weekly chart is at 1.2700-1.2750.   
The Swing Overview - Week 19 2022

The Swing Overview - Week 19 2022

Purple Trading Purple Trading 16.05.2022 10:59
The Swing Overview - Week 19 Stock indices continued to weaken strongly last week, while the US dollar has already surpassed the mark 104 and is at 20-year highs. However, a set of important data is behind us, which could bring some temporary relief to the equity markets. The Czech koruna weakened sharply after the appointment of the new CNB Governor Ales Michl, who is a proponent of a dovish approach. Thus, the rise in interest rates in the Czech Republic appears to be close to its peak.   Macroeconomic data The US consumer inflation for April was reported on Wednesday, which came in at 8.3% on year-on-year basis. Analysts were expecting inflation to be 8.1%. Although the figure achieved was higher than expectations, it was still lower than the 8.5% inflation figure achieved in March. On a month-on-month basis, the price increase in April was 0.3%, significantly lower than in March when prices rose by 1.5%.   On Thursday, industrial inflation was reported at 8.8% year-on-year and 0.4% month-on-month for April.   The positive thing about this data is that inflation declined from previous readings. However, it is important to note that the year-on-year comparison is based on data where inflation was also higher in the previous year due to the recovery from the Covid-19 pandemic.   The Fed chief reiterated that he expects another 0.50% point rise in interest rates at the next two Fed meetings. He also mentioned that a higher rate hike cannot be ruled out if necessary.   The US 10-year bond yields came down from their peak and made a slight correction. However, the US dollar continued to strengthen and broke the resistance at 104. The dollar is thus at 20-year highs. Figure 1: US 10-year bond yields and USD index on the daily chart   Equity indices heavily oversold The strong dollar, rising US bond yields, the war in Ukraine and the effects of the lockdown in China were the main reasons for the decline in equity indices. The SP 500 index hit 3,860, the lowest level since March 2021. This is also where long-term support is. However, the important macro data is behind us and the market has processed all the available fundamental information. This could bring temporary relief to the markets and the index could make an upward correction. The fall in 10-year bond yields, gives this move some boost as well.   Figure 2: The SP 500 on H4 and D1 chart However, from a technical analysis perspective, the US SP 500 index remains in a current downtrend as the markets have formed lower low and is also below both the SMA 100 and EMA 50 moving averages on the H4 and daily charts. The nearest resistance is 4040 - 4070. The next resistance is at 4,140 and especially 4,293 - 4,300. The support is at 3,860 - 3,900.   German DAX index In macroeconomic data, the German ZEW Economic Sentiment for May was reported last week and showed a reading of -34.3, an improvement from the previous month's reading of -41.0. Inflation in Germany for April is at 7.4% on year-on-year basis and up 0.8% from March (the previous month's increase was 2.5%). Figure 3: German DAX index on H4 and daily chart The index continues to move in a downtrend along with the major world indices. The price has reached the SMA 100 moving average on the H4 chart, which tends to signal resistance in a downtrend. The price is moving below the SMA 100 on both the daily chart and the H4 chart, confirming the bearish sentiment. The nearest support according to the H4 is 13,600 - 13,650. The resistance is 14,300 - 14,330. The next resistance is 14,592 - 14,632.   The big sell-off in the euro continues The euro fell to 1.0356 against the dollar, the lowest value since January 2017. This value is also an area of significant support where price could stall. Fundamentally, the euro's depreciation is due to the strong dollar and the Fed's hawkish policy, which contrasts with the ECB's policy of not raising rates yet.    Figure 4: The EURUSD on H4 and daily chart Eurozone inflation data will be reported next week, which could be an important catalyst for further movement. The significant support is priced around 1.0350 - 1.040. The current resistance is at 1.05.   Czech koruna weakened strongly on the new governor appointment The President Miloš Zeman surprised with the appointment of Ales Michl for the governor of the CNB. Michl is known for his dovish views, having spoken out against raising interest rates at recent meetings. His appointment was welcomed in the markets by a strong depreciation of the Czech koruna. However, the bank later intervened in the markets by selling part of its foreign exchange reserves to prevent further depreciation of the Czech koruna.   It is important to know that the Bank's monetary policy is decided by the seven-member Bank Board. So far, the proportion for voting on rate hikes has been 5:2. But by the end of June, the president must appoint 3 new board members. This could significantly change the voting ratio on the board and set a new course for the bank's policy, which would mean a halt to the rise in interest rates. However, it is likely that at the June board meeting the board, still with the old composition, will decide on further interest rate increases. Figure 5: The USD/CZK and the EUR/CZK on the daily chart The Czech koruna has reached 24.36 against the dollar and 25.47 against the euro, from which it started to descend after the CNB interventions.  
The Swing Overview – Week 20 2022

The Swing Overview – Week 20 2022

Purple Trading Purple Trading 02.06.2022 16:36
The Swing Overview – Week 20 The markets remain volatile and fragile, as shown by the VIX fear index, which has again surpassed the level 30 points. However, equity indices are at interesting supports and there could be some short-term recovery. The euro has bounced off its support in anticipation of tighter monetary policy and the gold is holding its price tag above $1,800 per troy ounce. Is the gold back in investors' favor again? Macroeconomic data The week started with a set of worse data from the Chinese economy, which showed that industrial production contracted by 2.9% year-on-year basis and the retail sales fell by 11.1%. The data shows the latest measures for the country's current COVID-19 outbreak are taking a toll on the economy. To support the slowing economy, China cut its benchmark interest rate by 0.15% on Friday morning, more than analysts expected. While this will not be enough to stave off current downside risks, markets may respond to expectation of more easing in the future. On a positive note, data from the US showed retail sales rose by 0.9% in April and industrial production rose by 1.1% in April. Inflation data in Europe was important. It showed that inflation in the euro area slowed down a little, reaching 7.4% in April compared to 7.5% in March. In Canada, on the other hand, the inflation continued to rise, reaching 6.8% (6.7% in March) and in the UK inflation was 9% in April (7% in the previous month). Several factors are contributing to the higher inflation figures: the ongoing war in Ukraine, problems in logistics chains and the effects of the lockdown in China. Concerns about the impact of higher inflation are showing up in the bond market. The benchmark 10-year US Treasury yield has come down from the 3.2% it reached on 9 May and is currently at 2.8%. This means that demand for bonds is rising and they are once again becoming an asset for times of uncertainty.  Figure 1: US 10-year bond yields and USD index on a daily chart   Equity indices on supports Global equities fell significantly in the past week, reaching significant price supports. Thus, there could be some form of short-term bounce. Although a cautious rally began on Thursday, which was then boosted by China's decision to cut interest rates in the early hours of Friday, there is still plenty of fear among investors and according to Louis Dudley of Federated Hermes, cash holdings have reached its highest level since September 2001, suggesting strong bearish sentiment. Supply chain problems have been highlighted by companies such as Cisco Systems, which has warned of persistent parts shortages. That knocked its shares down by 13.7%. The drop made it the latest big-stock company to post its biggest decline in more than a decade last week. The main risks that continue to cause volatility and great uncertainty are thus leading investors to buy "safe" assets such as the US bonds and the Swiss franc. Figure 2: The SP 500 on H4 and D1 chart From a technical analysis perspective, the US SP 500 index continues to move in a downtrend as the market has formed a lower low while being below both the SMA 100 and EMA 50 moving averages on the H4 and daily charts. The nearest resistance is 4,080 - 4,100. The next resistance is at 4,140 and especially 4,293 - 4,300. Support is at 3,860 - 3,900 level. German DAX index The index continues to move in a downtrend along with the major world indices. The price has reached the support which is at 13,680 – 13,700 and the moving average EMA 50 on the H4 chart is above the SMA 100. This could indicate a short-term signal for some upward correction. However, the main trend according to the daily chart is still downwards. The nearest resistance is at 14,260 - 14,330 level. Figure 3: German DAX index on H4 and daily chart The euro has bounced off its support The EUR/USD currency pair benefited last week from the US dollar moving away from its 20-year highs while on the euro, investors are expecting a tightening economy and a rise in interest rates, which the ECB has not risen yet as one of the few banks. Figure 4: The EURUSD on H4 and daily chart   Significant support is at the price around 1.0350 - 1.040. Current resistance is at 1.650 - 1.700.   The Gold in investors' attention again The gold has underperformed over the past month, falling by 10% since April when the price reached USD 2,000 per ounce. But there is now strong risk aversion in the markets, as indicated by the stock markets, which have fallen. The gold, on the other hand, has started to rise. Inflation fears are a possible reason, and investors have begun to accumulate the gold for protection against rising prices. The second reason is that the gold is inversely correlated with the US dollar. The dollar has come down from its 20-year highs, which has allowed the gold to bounce off its support.  Figure 5: The gold on H4 and daily chart The first resistance is at $1,860 per ounce. The support is at $1,830 - $1,840 per ounce. The next support is then at $1,805 - $1,807 and especially at $1,800 per ounce.
What Does Inflation Rates We Got To Know Mean To Central Banks?

What Does Inflation Rates We Got To Know Mean To Central Banks?

Purple Trading Purple Trading 15.07.2022 13:36
The Swing Overview – Week 28 2022 This week's new record inflation readings sent a clear message to central bankers. Further interest rate hikes must be faster than before. The first of the big banks to take this challenge seriously was the Bank of Canada, which literally shocked the markets with an unprecedented rate hike of a full 1%. This is obviously not good for stocks, which weakened again in the past week. The euro also stumbled and has already fallen below parity with the usd. Uncertainty, on the other hand, favours the US dollar, which has reached new record highs.   Macroeconomic data The data from the US labour market, the so-called NFP, beat expectations, as the US economy created 372 thousand new jobs in June (the expectation was 268 thousand) and the unemployment rate remained at 3.6%. But on the other hand, unemployment claims continued to rise, reaching 244k last week, the 7th week in a row of increase.   But the crucial news was the inflation data for June. It exceeded expectations and reached a new record of 9.1% on year-on-year basis, the highest value since 1981. Inflation rose by 1.3% on month-on-month basis. Energy prices, which rose by 41.6%, had a major impact on inflation. Declines in commodity prices, such as oil, have not yet influenced June inflation, which may be some positive news. Core inflation excluding food and energy prices rose by 5.9%, down from 6% in May.   The value of inflation was a shock to the markets and the dollar strengthened sharply. We can see this in the dollar index, which has already surpassed 109. We will see how the Fed, which will be deciding on interest rates in less than two weeks, will react to this development. A rate hike of 0.75% is very likely and the question is whether even such an increase will be enough for the markets. Meanwhile, there has been an inversion on the yield curve on US bonds. This means that yields on 2-year bonds are higher than those on 10-year bonds. This is one of the signals of a recession. Figure 1: The US Treasury yield curve on the monthly chart and the USD index on the daily chart   The SP 500 Index Apart from macroeconomic indicators, the ongoing earnings season will also influence the performance of the indices this month. Among the major banks, JP Morgan and Morgan Stanley reported results this week. Both banks reported earnings, but they were below investor expectations. The impact of more expensive funding sources that banks need to finance their activities is probably starting to show.   We must also be interested in the data in China, which, due to the size of the Chinese economy, has an impact on the movement of global indices. 2Q GDP in China was 0.4% on year-on-year basis, a significant drop from the previous quarter (4.8%). Strict lockdowns against new COVID-19 outbreaks had an impact on economic situation in the country. Figure 2: SP 500 on H4 and D1 chart The threat of a recession is seeping into the SP 500 index with another decline, which stalled last week at the support level, which according to the H4 is in the 3,740-3,750 range. The next support is 3,640 - 3,670.  The nearest resistance is 3,930 - 3,950. German DAX index The German ZEW sentiment, which shows expectations for the next 6 months, reached - 53.8. This is the lowest reading since 2011. Inflation in Germany reached 7.6% in June. This is lower than the previous month when inflation was 7.9%. Concerns about the global recession continue to affect the DAX index, which has tested significant supports. Figure 3: German DAX index on H4 and daily chart Strong support according to the daily chart is 12,443 - 12,500, which was tested again last week. We can take the moving averages EMA 50 and SMA 100 as a resistance. The nearest horizontal resistance is 12,950 - 13,000.   The euro broke parity with the dollar The euro fell below 1.00 on the pair with the dollar for the first time in 20 years, reaching a low of 0.9950 last week. Although the euro eventually closed above parity, so from a technical perspective it is not a valid break yet, the euro's weakening points to the headwinds the eurozone is facing: high inflation, weak growth, the threat in energy commodity supplies, the war in Ukraine. Figure 4: EUR/USD on H4 and daily chart Next week the ECB will be deciding on interest rates and it is obvious that there will be some rate hike. A modest increase of 0.25% has been announced. Taking into account the issues mentioned above, the motivation for the ECB to raise rates by a more significant step will not be very strong. The euro therefore remains under pressure and it is not impossible that a fall below parity will occur again in the near future.   The nearest resistance according to the H4 chart is at 1.008 - 1.012. A support is the last low, which is at 0.9950 - 0.9960.   Bank of Canada has pulled out the anti-inflation bazooka Analysts had expected the Bank of Canada to raise rates by 0.75%. Instead, the central bank shocked markets with an unprecedented increase by a full 1%, the highest rate hike in 24 years. The central bank did so in response to inflation, which is the highest in Canada in 40 years. With this jump in rates, the bank is trying to prevent uncontrolled price increases.   The reaction of the Canadian dollar has been interesting. It strengthened significantly immediately after the announcement. However, then it began to weaken sharply. This may be because investors now expect the US Fed to resort to a similarly sharp rate hike. Figure 5: USD/CAD on H4 and daily chart Another reason may be the decline in oil prices, which the Canadian dollar is correlated with, as Canada is a major oil producer. The oil is weakening due to fears of a drop in demand that would accompany an economic recession. Figure 6: Oil on the H4 and daily charts Oil is currently in a downtrend. However, it has reached a support value, which is in the area near $94 per barrel. The support has already been broken, but on the daily chart oil closed above this value. Therefore, it is not a valid break yet.  
Stock Market: Uber, Palantir And Moderna In Top 3...

Stock Market: Uber, Palantir And Moderna In Top 3...

Purple Trading Purple Trading 15.07.2022 13:08
TOP 3 most traded CFD stocks of this week Information is one of the most valuable commodities. No one can tell you with absolute certainty where any stock is headed. But sometimes you just need to know where, at what point, and why are investors taking the most positions to try to take advantage of the volume and volatility yourselves. We bring you a summary of this week’s top 3 most traded CFD stocks at Purple Trading. What is behind their popularity and what is the outlook for the future? You can find answers to these questions in today’s article. Uber Shares of the notoricaly loss-making taxi service are under a lot of pressure this year. They have lost more than half their value since January. Uber is now selling more than 50% below the price it was when it entered the stock markets in 2019. Comparing it to its all-time high of $63.18 in early January 2021 is even more dismal. The big drop in Uber stock isn't too surprising in the context of the company's financial results from the first quarter of the year. While Uber's revenue grew 136% year-over-year to $6.9 billion, its net loss came in at $5.9 billion due to failed investments in Grab, Aurora, and DiDi. Chart 1: Uber shares on the MT4 platform on the M15 timeframe along with the 100 and 200 day moving averages Uber has become the focus of investor attention in recent days due to leaked information about lobbying high-profile politicians such as French President Emmanuel Macron. The revelations of the scandal have made Uber shares very volatile, which traders have taken advantage of.   The outlook for the coming months is not very positive for the company - high fuel prices are making Uber's services more expensive and a possible recession could significantly affect the company's revenues. Uber's business can be described as rather cyclical and in times of recession the company could suffer as a result. Nor should we underestimate the impact of the growing coronavirus, which is once again beginning to plague the entire world.   However, Uber’s relatively low valuation (it is now trading near an all-time low) and its positive cash flow outlook for 2022 is what’s playing into Uber’s hands. The company will publish its 2Q earnings in early August, and no matter the outcome, Uber shares are likely to remain popular among traders.   Palantir Uber has become the focus of investor attention in recent days due to leaked information about lobbying high-profile politicians such as French President Emmanuel Macron. The revelations of the scandal have made Uber shares very volatile, which traders have taken advantage of.   The outlook for the coming months is not very positive for the company - high fuel prices are making Uber's services more expensive and a possible recession could significantly affect the company's revenues. Uber's business can be described as rather cyclical and in times of recession the company could suffer as a result. Nor should we underestimate the impact of the growing coronavirus, which is once again beginning to plague the entire world.   However, Uber’s relatively low valuation (it is now trading near an all-time low) and its positive cash flow outlook for 2022 is what’s playing into Uber’s hands. The company will publish its 2Q earnings in early August, and no matter the outcome, Uber shares are likely to remain popular among traders. Chart 2: Palantir shares on the MT4 platform on the M15 timeframe along with the 100 and 200 day moving averages Investors still have no idea where to classify Palantir - is it an army contractor or an IT company? The stock's performance so far this year would point more towards an IT company. Military contractors like Lockheed Martin and Raytheon Technologies have had a great year so far, outperforming the S&P 500 index significantly. Palantir's CEO visited Ukraine in June in an effort to expand the company's operations. This obviously pleased investors, but potential expansion is difficult to quantify.   Moreover, the company's capitalization is still more than 10 times its annual revenue, a giant number compared to its competitors. Competitor Booz Allen Hamilton is currently selling for about 1.5 times annual sales, and the company's stock is near this year’s low. The company has a long track record of growing sales and, unlike Palantir, is profitable. Palantir's 2Q earnings are due in the first half of August. The company is expecting 25% year-on-year revenue growth. However, in the same period a year ago, the company grew revenue by 49%. Thus, any surprise in the earnings could cause high volatility. Palantir is definitely a stock to watch.    Moderna Seeing the famous vaccine producer among this week’s most traded companies in our CFD stock offering is not much of a surprise. Yet, back in mid-June, things were not looking good for Moderna shares - as this company was about 50% below the price we could see at the beginning of the year. However, the last month has been great for Moderna and its shares have soared almost by 50%. The reasons for this steep rise are clear - the coronavirus is once again on the rise globally. Since the beginning of June, the number of daily covid cases have practically doubled globally. The World Health Organisation has warned that the pandemic is far from over. This is just more water on the mill for companies such as Moderna and BioNTech. In addition, Moderna's actions were also helped by the June approval of a vaccine for American children and adolescents aged 6 months to 17 years. Chart 3: Shares of Moderna in the MT4 platform on the M15 timeframe along with the 100 and 200 day moving averages After the outbreak of the coronavirus pandemic, Moderna was the darling of investors for obvious reasons. Shares thus reached an all-time high of almost USD 500. Since last September, however, it has gone south sharply. Looking at the P/E ratio (the ratio of share price to earnings per share), Moderna looks very attractive - the ratio is now around 5, which is a great number for a pharmaceutical company. In addition, Moderna is well funded - the selling of coronavirus vaccines have given it very interesting liquidity.   The biggest concern for investors, however, is the future of the company and its earnings once the coronavirus has passed. Apart from the vaccines mentioned above, at this moment the company does not sell any other products to the public. It has several other products in the testing phase, but their final approval and sales are uncertain. Thus, Moderna's stock may continue to thrive in the coming months thanks to further covid waves. In the long term, however, the company will need more products if it is to prosper.  
Which stock market sector is currently interesting due to its volatility?

Which stock market sector is currently interesting due to its volatility?

Purple Trading Purple Trading 18.07.2022 07:57
Which stock market sector is currently interesting due to its volatility While long-term investors in physical shares are not too interested in volatility, CFD traders can make potentially very nice profits from it. However, equity markets are vast and it can happen that an interesting title slips through one’s fingers. This article will make sure that it doesn't happen. What is volatility and how is it created If you were to equate the words volatility and nervousness (or moodiness) you would not be far off the mark. Indeed, volatility is really a measure of nervousness in the markets and where there is nervousness, there is also uncertainty. Uncertainty in the markets can arise for many different reasons, but it usually happens before the release of important macroeconomic news (on our economic calendar), you can identify those by the three bulls' heads symbols) or during unexpected events with a major impact on a particular market sector or the geopolitical order of the world (natural disasters, wars).   On the charts of trading platforms, you can recognize a highly volatile market by the dynamically changing price of the instrument, the market is said to be going up or down, and if you switch to a candle chart, you may notice large candles. Conversely, non-volatile, calm markets move sideways without any significant dips or rises. Volatility can also be historical or implied, but we'll write about that another time. Now, let’s talk about how can one potentially profit from volatility and where to find suitable markets to do so.   How to potentially profit from volatility For intraday and swing traders, volatility is the key to their potential success. For traders, often the worst situation is the so-called "sideways" market movement, where the asset in question goes "sideways" without significant movements either up or down. With small and larger price fluctuations, traders can potentially generate interesting profits. One of the most volatile markets is the stock market, where some news can trigger very significant price movements. Events such as important economic reports, a stock split, or an acquisition announcement, for example, can move the price of a given stock. In addition, traders using CFDs for share trading can also use leverage to multiply any gains (and losses) in a given volatility.   The key to potential success is choosing the right stock titles. Some stocks and sectors can be considered more volatile, while others can go longer periods of time without significant fluctuations. So how do you look for volatility? Several indicators measure price movements in stocks, perhaps the most well-known is beta, which measures the volatility of a given stock compared to a benchmark stock index (typically the S&P 500 for US stocks). The beta indicator is listed on most well-known stock sites, but we can calculate it using the following formula: Beta = 1 In this case, the stock is highly correlated with the market and we can expect very similar movements to the benchmark index.   Beta < 1 If the beta is less than 1, we can consider the stock to be potentially less volatile than the stock market.   Beta > 1 Stocks with a beta greater than 1 are theoretically more volatile than the benchmark index. So, for example, if a stock's beta is 1.1, we think of it as 10% more volatile. It is stock titles with a beta above 1 that should be of most interest to investors looking to take advantage of volatility. However, it is not enough to monitor the beta alone, traders should not forget to monitor important news and fundamentals related to the company and the market in general. Thus, it is advisable to choose a few companies whose stocks have been significantly volatile in the past and where we expect strong movements due to positive and negative news to continue. So which sectors may be worth following? In which sectors can you potentially benefit from high volatility? Energy sector The energy companies sector has historically been one of the most volatile, as confirmed by the course of 2022 so far. The price development of energy companies is of course strongly linked to the price of energy commodities. These have had a great year - both natural gas and oil have appreciated by several tens of percent since the beginning of the year. However, this growth has not been without significant fluctuations, often by higher units of percent per day. The current geopolitical situation and growing talk of recession promise to continue the volatility in the sector. In the chart below, you can see the movement of Exxon Mobil Corp shares in recent weeks. Chart 1: Exxon Mobil shares on the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages Travel industry Shares of companies related to the travel industry have always been very volatile. According to data from the beginning of the year (NYU Stern), even the companies classified as hotels and casinos were the most volatile when measured by beta. Given the coronavirus pandemic, this is not surprising. However, the threat of coronavirus still persists and there is currently the talk of another wave. However, global demand for travel is once again strong. Airlines and hotels are beginning to recover from the previous two dry years. As a result, both positive and negative news promises potential volatility going forward. In the chart below, you can see the movement of Hilton Hotels Corp shares in recent weeks. Chart 2: Hilton Hotels shares on the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages Technology Technology is a very broad term - some companies in a given sector can be considered "blue chip" stocks, which can generally be less volatile and have the potential to appreciate nicely over time. These include Apple or Microsoft, for example. However, even these will not escape relatively high volatility in 2022. Traders looking for even stronger moves, however, will be more interested in smaller companies such as Uber, Zoom Technologies, Palantir, or PayPal. In the chart below, we can see the evolution of Twitter stock, which has undergone significant volatility in recent weeks. This was linked to the announcement of the acquisition (April gap) and its recent recall by Elon Musk. With both opposing parties facing a court battle, similarly wild news is just more water on the volatility mill. Chart 3: Twitter shares on the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages There are, of course, more sectors that are significantly volatile. Traders can follow companies in the healthcare sector, for example, where coronavirus vaccine companies are among the most interesting ones. Restaurants or aerospace and chemical companies can also be worth looking at. But few things can move stock markets as significantly as the economic cycle. We'll look at the impact of expansion and recession on stocks in our next article.  
Bank of England's Rate Dilemma: A September Hike and the Uncertain Path Ahead

GBP/USD Trading Analysis: Entry Signals, Key Levels, and Commitments of Traders

InstaForex Analysis InstaForex Analysis 02.06.2023 11:08
Yesterday, several entry signals were made. Let's look at the 5-minute chart to get a picture of what happened. I considered entering the market from the level of 1.2414. A fall and a false breakout generated a buy signal. The price rose by more than 50 pips. In the American session, the pair dropped after the publication of US labor market data, but the bulls still protected 1.2449. After another buy signal, the pair advanced by 65 pips. Short positions at 1.251 brought no desired result.     When to open long positions on GBP/USD In the UK, the manufacturing PMI kept contracting in May although at a slower pace than in April. The pair barely reacted to those results. At the same time, the ISM manufacturing PMI in the US triggered a mass sell-off of the greenback and boosted the pound. Today, GBP/USD will still be in demand. In the American session, data on the US labor market will be in focus. Therefore, buying at current highs will hardly be a good idea. Rather, positions should be opened when a bearish correction occurs.   If the bulls protect 1.2475 support and a false breakout follows, a buy signal will be generated with the target at 1.2543 resistance. An additional buy signal targeting 1.2576 will come after a breakout and consolidation above the mark on disappointing macro data in the US. The most distant target stands at 1.2607 where I will lock in profit. If the price goes toward 1.2506 and there is no bullish activity there, pressure on the pound will increase, and the bears will get a chance to stop yesterday's growth. In such a case, a sell signal will come after protecting 1.2475 and a false breakout. I will buy GBP/USD on a bounce from 1.2449, allowing a correction of 30-35 pips intraday.   When to open short positions on GBP/USD: After triggering a row of bearish Stop Losses yesterday, the bulls will likely build a new uptrend today. That is why bearish activity may only increase near 1.2543 resistance and after a false consolidation above this range. This will generate a sell signal and trigger a small correction to 1.2506 support. A breakout and an upside retest of this range will occur only if US macro data comes upbeat. GBP/USD will face pressure, producing a sell signal targeting 1.2475. The most distant target is still seen at a low of 1.2449 where I will lock in profits.   If GBP/USD goes up and there is no activity at 1.2543, the bull market will continue. I will open short positions after a test of 1.2576 resistance. A false breakout will create a sell entry point. If there is no bearish activity there either, I will sell GBP/USD on a bounce from a high of 1.2607, allowing a bearish correction of 30-35 pips intraday.     Commitments of Traders: The COT report for May 23 shows a decrease in both long and short positions. Last week, the pound was bearish. However, with a drop in both longs and shorts, a shift in trading powers seems minimal. Traders had to close positions fearing the US debt ceiling deal would not be reached. Moreover, recession risks were still weighing on them. They were also concerned about the Bank of England's monetary policy stance. The regulator said it might pause tightening although inflationary pressures in the UK were still high. According to the latest COT report, short non-commercial positions dropped by 7,181 to 57,614, and long non-commercial positions decreased by 8,185 to 69,203. The non-commercial net position fell to 11,059 from 12,593 a week earlier. The weekly price dropped to 1.2425 from 1.2495.       Indicators' signals: Moving averages: Trading is carried out above the 30-day and 50-day moving averages, which indicates a bullish continuation.     Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart. Bollinger Bands Support stands at 1.2475, in line with the lower band. Indicators: Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart. Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart. Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9. Bollinger Bands. Period 20 Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements. Long non-commercial positions are the total long position of non-commercial traders. Non-commercial short positions are the total short position of non-commercial traders. Total non-commercial net position is the difference between the short and long positions of non-commercial traders.  
GBP/USD Trading Plan: Bulls Eyeing Further Growth, Resistance Level Holds Key, COT Report Signals Interest Rate Expectations

GBP/USD Trading Plan: Bulls Eyeing Further Growth, Resistance Level Holds Key, COT Report Signals Interest Rate Expectations

InstaForex Analysis InstaForex Analysis 13.06.2023 14:11
Forex Analysis & Reviews: GBP/USD: trading plan for the US session on June 13 (analysis of morning deals). The pound climbed above 1.2553. In my morning forecast, I highlighted the level of 1.2553 and recommended making trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The breakout and subsequent retest from above to below 1.2553 provided a buy signal, resulting in an upward movement of 18 pips. The technical picture has stayed the same for the second half of the day.       To open long positions on GBP/USD, the following conditions are required: As long as trading continues above 1.2553, further growth in GBP/USD can be expected. Buyers will particularly show themselves after news of a decrease in inflation in the US, leading to a surge in the pound to monthly highs of around 1.2596. Having another entry point around 1.2553 would be desirable, so protecting this level remains a priority task for the bulls. A breakout and retest from above to below 1.2596, similar to what I discussed earlier, will provide an additional signal to open long positions, strengthening the presence of bulls with a movement towards 1.2636, reinforcing the upward trend.   The ultimate target will be the area of 1.2674, where I will take profit. In the scenario of a pound decline towards 1.2553 and a lack of activity from buyers, pressure on the pair will return. The persistence of high inflation in the US will also limit the upside potential of the pair. In that case, I will postpone market entry until the support at 1.2516 is reached. I will only open long positions there on a false breakout.   I plan to buy GBP/USD on a rebound from 1.2479, targeting a 30-35 pip correction within the day. To open short positions on GBP/USD, the following conditions are required: Sellers were unable to show anything after the news that the unemployment rate in the UK dropped to a record 3.8%, which puts pressure on the Bank of England to continue raising rates. All hope now lies with strong inflation in the US, which will help defend 1.2596.   I will only open short positions after GBP/USD rises to monthly highs, forming a false breakout. This will allow a downward move towards support at 1.2553, which acted as resistance earlier in the morning. A breakout and retest from below to above this range will restore the chances of a downward correction and provide a signal to open short positions with a decline toward 1.2516. The ultimate target remains the minimum of 1.2479, where I will take profit.   In the case of further growth in GBP/USD and a lack of activity at 1.2596, which seems likely, buyers will continue to dominate. In that case, I will postpone selling until the resistance at 1.2636 is tested. A false breakout there will be an entry point for short positions. I plan to sell GBP/USD on a rebound from the May high of around 1.2674, but only with the expectation of a downward correction of 25-30 pips within the day.     The COT (Commitment of Traders) report for June 6th showed a reduction in both short and long positions. The pound has risen significantly recently. This indicates that many market participants continue to bet on an increase in interest rates by the Bank of England. Recent forecasts and expectations that the UK economy will avoid a recession this year also contribute to the demand for risk assets. We have paused the cycle of interest rate hikes by the Federal Reserve ahead, which will also support GBP/USD buyers.   The latest COT report states that short non-commercial positions decreased by 4,056 to 52,579, while long non-commercial positions fell by 5,257 to 65,063. This led to a slight decrease in the non-commercial net position to 12,454 from 13,235 the previous week. The weekly price rose to 1.2434 from 1.2398.     Indicator signals: Moving averages Trading is conducted above the 30-day and 50-day moving averages, indicating further growth in the pair. Note: The author considers the period and prices of the moving averages on the hourly chart (H1), which differ from the general definition of classical daily moving averages on the daily chart (D1).   Bollinger Bands In case of a decline, the lower boundary of the indicator, around 1.2479, will act as support. Description of Indicators: • Moving Average: Determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart. • Moving Average: Determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart. • MACD Indicator (Moving Average Convergence/Divergence): Fast EMA period 12, Slow EMA period 26, SMA period 9. • Bollinger Bands: Period 20. • Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements. • Long non-commercial positions represent the total long open position of non-commercial traders. • Short non-commercial positions represent the total short open position of non-commercial traders. • The net non-commercial position is the difference between non-commercial traders' short and long positions.      
Euro's Rally Stalls as Focus Turns to Inflation and Data Disappointments

EUR/USD Analysis: False Breakout at Key Level Sets the Tone for Trading Amid US Inflation Data

InstaForex Analysis InstaForex Analysis 13.06.2023 14:16
In my morning forecast, I highlighted the level of 1.0800 and recommended making entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The rise and formation of a false breakout at 1.0800 provided a sell signal for the euro, but there was no significant downward movement. The technical picture remained largely unchanged in the second half of the day.       Everyone awaits the US inflation figures, which will determine the market and the Federal Reserve's actions. If prices drop more than economists' expectations, the euro will have a chance to continue rising against the US dollar, as the central bank is likely to take the first pause in the interest rate hike cycle since 2021. If inflation remains high, we can expect renewed pressure on EUR/USD and a decline in the pair. In that case, I will act on the decline and the false breakout around the support level of 1.0767, formed based on yesterday's close and where the moving averages, favoring buyers, are located.   This will provide an opportunity to enter long positions with the target of another rise towards the level of 1.0800. A breakthrough and top-down test of this range are necessary for buyers, as it will strengthen the demand for the euro, creating an additional entry point for increasing long positions with an update to the next level of 1.0830. The ultimate target remains around 1.0870, where I will take profits. In the case of a decline in EUR/USD and the absence of buyers at 1.0767, the pressure on the euro will return. Therefore, only the formation of a false breakout around the next support level of 1.0734, the weekly low, will provide a signal to buy the euro.   I will open long positions after a rebound from 1.0705, with a 30-35 point upward correction target within the day. To open short positions on EUR/USD, the following is required: Bears managed to defend the market around the resistance level of 1.0800, but there was no significant downward movement. The US inflation data will determine everything. However, considering the bullish market with selling pressure in the second half of the day, it is better to take your time.   I will act only after another unsuccessful consolidation above the resistance level of 1.0800. A false breakout at this level will provide a sell signal capable of pushing the pair back to 1.0767, where the moving averages favoring bulls are located. Consolidation below this range and a reverse test from below to above will lead straight to 1.0734. The ultimate target will be around 1.0705, where I will take profits.       If EUR/USD moves upward during the American session and there are no bears at 1.0800, which is likely to be the case, the demand for the euro will only strengthen, potentially leading to a more powerful upward surge in the pair. In that case, I will postpone short positions until the new resistance level of 1.0830.   Selling can be done there, but only after an unsuccessful consolidation. I will open short positions immediately on a rebound from the maximum of 1.0870, with a 30-35 point downward correction target.   The Commitment of Traders (COT) report for June 6 showed a decrease in long positions and a slight increase in short positions. Despite this, the Federal Reserve's decision on interest rates this week can significantly change the market dynamics, so paying much attention to the abovementioned changes may be optional. If the Fed decides to pause the rate hike cycle, the euro will gain significant weight, and the US dollar will weaken.   Along with the European Central Bank's aggressive policy, despite the first signs of a slowdown in underlying inflationary pressure, all of this will lead to a continued rise in risk assets against the US dollar. According to the COT report, non-commercial long positions decreased by 5,757 to 236,060, while non-commercial short positions increased by 1,457 to 77,060. The overall non-commercial net position decreased to 158,224 from 163,054 by the end of the week. The weekly closing price decreased to 1.0702 from 1.0732.   Indicator signals: Moving averages. Trading occurs above the 30-day and 50-day moving averages, indicating a likelihood of the euro's rise. Note: The author considers the period and prices of the moving averages on the hourly chart (H1), which differs from the general definition of classical daily moving averages on the daily chart (D1).  
China's Supportive Measures and Metals Market Outlook

AUD/USD Technical Analysis: Short-Term Momentum Turns Negative, Key Resistance at 0.6720

Kelvin Wong Kelvin Wong 12.07.2023 13:24
Short-term momentum is likely to have turned negative as seen in the hourly RSI. Key short-term resistance stands at 0.6720. Intermediate supports to watch will be at 0.6630 and 0.6600/6580. This is a follow-up analysis of our prior report, “AUD/USD Technical: Positive momentum ahead of RBA” published on 4 July 2023. Click here for a recap. The price actions of the AUD/USD have staged the expected push-up and met the first resistance of 0.6720 as it printed a current intraday high of 0.6742 in today, 12 July Asian session. Short-term elements are suggesting the risk of a short-term retreat as the release of the US CPI data looms later today at 1230 GMT.   Reintegrated below 20 and 200-day moving averages Fig 1: AUD/USD medium-term trend as of 12 Jul 2023 (Source: TradingView, click to enlarge chart) The recent one and half week of rebound of +145 pips seen on the AUD/USD from its minor swing low of 29 June 2023 has stalled at the key 20 and 200-day moving averages which confluences with the 27 June 2023 swing high and the 38.2 % Fibonacci retracement of the prior minor decline from 16 June 2023 high of 0.6900 to 29 June 2023 low as well as the 1.236 Fibonacci extension of the rebound from 29 June 2023 low to 4 July 2023 high projected from 6 July 2023 low.     Short-term momentum has turned negative   Fig 2: AUD/USD minor short-term trend as of 12 Jul 2023 (Source: TradingView, click to enlarge chart) The hourly RSI oscillator has just exited its overbought region (above the 70 level) today and right now, it is attempting to break below its parallel ascending support at the 49 level which suggests that short-term momentum is likely to have turned negative. Watch the 0.6720 key short-term pivotal resistance to maintain a bearish tone; a break below 0.6630 exposes the next support at 0.6600/6580. However, a clearance above 0.6720 negates the short-term bearish tone to see the next resistance at 0.6790 (also, close to the 61.8% Fibonacci retracement of the prior minor decline from 16 June 2023 high of 0.6900 to 29 June 2023 low).  
Eurozone Services PMI Contracts, Global Bond Declines, Yen Rallies: Market Insights

China Big Tech Drives Momentum-Driven Rally in Stock Market

ING Economics ING Economics 13.07.2023 11:09
China Big Tech is leading the current momentum-driven rally in China stock market. Supported by a weaker USD/CNH that broke below key near-term support of 7.2160. Further hints from China’s top policymakers that the prior 3-year of stringent regulatory crackdowns on China’s leading technology companies have ended. Current momentum-driven rally of China Big Tech may still see a bumpy ride due to a weak external demand environment. Prior to yesterday’s release of the key US consumer inflation data for June that came out cooler than expected, China’s proxies stock indices have crept up higher since the start of this week; from Monday, 10 July to Wednesday, 12 July, the Hang Seng Index recorded a gain of 2.06%, Hang Seng Tech Index (+3.45%), Hang Seng China Enterprises Index (+2.3%). A higher positive momentum intensity is being seen in the Hang Seng TECH Index which comprises China’s Big Tech firms that reintegrated back above its 50 and 200-day moving averages. Also, a significant price action development in terms of relative momentum has taken shape on China’s Big Tech equities listed in the US stock exchanges (the ADRs) that have continued their outperformance over its peers, the US Big Tech since last week.   Relative positive momentum seen in China Big Tech The KraneShares CSI China Internet exchange-traded fund (ETF) has recorded an accumulated gain of 8% since the week of 3 July 2023 till yesterday, 12 July over a return of +0.86% seen in the Nasdaq 100 over the same period.       Fig 1:  Relative momentum trends of KraneShares CSI China Internet ETF & other China equities ETFs as of 12 Jul 2023 (Source: TradingView, click to enlarge chart) Also, positive relative momentum can also be seen against global equities, the ratio of the KranShares CSI China Internet ETF over the MSCI All Country World Index ETF has notched up four consecutive sessions of positive momentum readings based on a five-day rolling basis. Inter-market and sentiment are likely the factors that are the key catalysts for the ongoing short-term outperformance since in China Big Tech that is driving the momentum-induced rally in the Hang Seng benchmark stock indices.     USD/CNH broke below 7.2160 support triggering a positive feedback loop into China equities   Fig 2:  USD/CNH short & medium-term trends as of 13 Jul 2023 (Source: TradingView, click to enlarge chart)     Fig 3:  USD/CNH correlation with HSCEI & HSCTECH as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) The USD/CNH (offshore yuan) foreign exchange rate has a high degree of inverse correlation with the Hang Seng benchmark stock indices and China Big Tech theme play ETF; a rise in the USD/CNH (a weaker yuan) tends to see a fall the above-mentioned indices and ETF, and vice versa. In the past five days, the USD/CNH has inched lower since its seven-month high of 7.2745 printed on 6 July and broke below key near-term support of 7.2160 (also the 20-day moving average that price actions have traded above it since 19 April 2023) on the onset of yesterday’s US CPI data release. Also, reinforced by the narrowing of the premium of the US Treasury 2-year yield over China’s 2-year sovereign bond yield. These observations suggest a potential short-term downtrend phase is in progress for USD/CNH which triggers a positive feedback loop into the Hang Seng bench stock indices and China Big Tech equities.    
US Retail Sales Mixed, UK Inflation Expected to Ease: Impact on GBP/USD and Monetary Policy

Waiting for PBOC's Rate Cut: Disappointing Chinese Data and FTSE 100's Key Levels

Ed Moya Ed Moya 18.07.2023 08:23
Rate cut not coming yet from PBOC FTSE 100 nearing some key levels   It’s been a disappointing start to the week in Europe but I’m not sure investors will be too downbeat as a result given the strong gains recorded over the last five sessions. The Chinese data didn’t help kick things off in a more positive manner, with GDP figures for the second quarter falling well short of expectations as retail sales also decelerated sharply, recording their lowest increase since late last year. Of course, the data remains noisy due to varying base effects but the overall theme is clear, domestic demand is underwhelming and external demand isn’t inspiring either. Stimulus is likely going to be needed in the second half of the year backed up by some monetary support but we may have to wait a little longer for that to be announced. The MLF was left unchanged today at 2.65% which means the same will probably be true of the one and five-year LPRs later in the week. A cut could have helped offset some of the data disappointment although, in the absence of targeted fiscal measures, it may have ultimately been akin to pushing on a piece of string so waiting probably makes more sense.   Is a significant breakout coming? The small declines in the FTSE at the start of the week come on the back of Friday’s reversal which produced a shooting star candlestick around the two lows from last month. Whether that is a bearish signal, a confirmation of sorts, or simply a sign of some profit-taking isn’t yet clear. But it clearly hasn’t built on that negative momentum today.     If it does turn higher again then the area around 7,550 could be interesting from the perspective of it being roughly the high from earlier this month and the area of the 200/233-day simple moving average band. It’s worth noting that these MA bands haven’t been great as areas of support and resistance over the last year or so, which is normal when the price is ultimately trending sideways, but if we do eventually see it trend higher or lower, it may react to them more. Below, the rising trend line – from March 2020 lows – could be interesting as the price appeared to respond to it last week. A break below here may be significant, especially if followed by a move below 7,200. Ultimately, a lot of this could depend on the economic data, the most notable of which this week comes Wednesday in the form of the UK CPI data.  
Market Reaction to Eurozone Inflation Report: Euro Steady as Data Leaves Impact Limited

RBA's Policy Dilemma: Uncertainty Surrounding Future Moves as Markets Anticipate One More Hike

Craig Erlam Craig Erlam 19.07.2023 08:18
RBA undecided on future policy moves Markets expect one more hike but not sure when AUDUSD facing significant resistance despite a weaker dollar   It’s safe to say there’s quite a balanced debate taking place at the Reserve Bank of Australia right now, with policymakers torn on whether conditions have become restrictive enough and if a little more will do more harm or good. While markets appear confident that the RBA will hike once more this year, when that will come is far less clear. And as we’ve seen so much this year, expectations have a knack of changing quite considerably over a matter of weeks, let alone months. In other words, investors are no more certain than the policymakers themselves.   Can AUDUSD break higher amid greenback weakness? The mixed messages aren’t helping to deliver much direction for the Australian dollar, with recent moves against the greenback being more driven by the latter’s weakness more so than the strength of the former.     AUDUSD Daily It ran into resistance recently around 0.6850-0.69 which has historically been a major barrier of support and resistance, most recently in mid-June. If it can break above here, 0.70 could be one to watch being a big round figure as well as a key level earlier this year when it made up both shoulders in a head and shoulders pattern. If the price continues to pull back as it has in recent days, 0.67 could be very interesting with it being the level that the 55/89 and 200/233-day simple moving average bands merge. It would also fall around the rising trend line from the May lows.        
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Insights from Michael Stark: Analyzing the Current Oil Market Trends and Future Prospects

Michael Stark Michael Stark 01.08.2023 14:17
In a recent interview with FXMAG.COM, we had the opportunity to speak with Michael Stark, an experienced analyst from Exness, about the current state and future prospects of the oil market. With oil prices experiencing notable fluctuations in recent times, the question on everyone's mind is how long can the oil price rise and what factors are likely to influence its trajectory. Stark begins by sharing his insights on the potential for an extended uptrend in oil prices, particularly with Brent crude. He highlights the importance of market sentiment and the avoidance of recession fears as key factors that could drive oil prices higher. Drawing attention to oil's unique characteristic of being able to trend for prolonged periods compared to other popular CFDs, Stark suggests that if the current uptrend is indeed a new main trend, it might carry on well into the fourth quarter.   FXMAG.COM:  How long can the oil price rise? Michael Stark:  It’d be quite possible to see an extended uptrend with Brent retesting $97 later this year if sentiment in markets remains generally positive and fears of recession don’t clearly return. Oil can often trend for quite a long time compared to other popular CFDs, so if this is indeed a new main uptrend it might continue into the fourth quarter. However, sentiment will almost certainly change to some degree when significant activity returns to markets in September. Negatives for crude fundamentally include weaker economic data from China in recent months combined with Russia’s avoidance of sanctions by exporting through Saudi Arabia, though the latter specifically and OPEC+ generally seem to be determined to keep prices high. Equally, January’s high around $88.40 might be an important resistance which could resist testing. The main goal as a trader of oil during seasonally low volume is usually to avoid entries at extremes while trying to use support, moving averages and others to determine when a retracement becomes short-term downtrend.  
Summer's End: An Anxious Outlook for the Global Economy

AUD/JPY: Weak Medium-Term Momentum Points to Potential Downtrend Phase

Kelvin Wong Kelvin Wong 21.08.2023 12:22
Weak medium-term momentum may kickstart a medium-term downtrend phase for AUD/JPY. Key short-term resistance stands at 93.70 with a potential downside trigger at 92.80. This is a follow-up analysis of our prior report, “AUD/JPY: Minor downtrend remains intact” published on 28 June 2023. Click here for a recap. Since its 19 June 2023 high of 97.67, the price actions of the AUD/JPY have continued to shape lower highs despite a retest and rebound on its key 200-day moving average after it printed an intraday low of 91.79 on 28 July 2023 ex-post Bank of Japan (BoJ)’s flexible yield curve control announcement on the 10-year Japanese Government Bond. Technical analysis suggests that the AUD/JPY is now at heightened risk to evolve into a medium-term downtrend phase.   Fig 1:  AUD/JPY medium-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart) Last Friday, 18 August, AUD/JPY managed to stall its prior three days of decline at a key support/inflection level of 92.80 which is being defined by a confluence of elements; the former swing high areas of 26 January/14 February/21 February 2023, and medium-term ascending trendline from 24 March 2023 low of 86.06. However, elements are not showing signs of any bullish reversal at this juncture with bearish momentum reading seen in the daily RSI oscillator as it inched lower from the 50 level and has not reached oversold condition.     Fig 2:  AUD/JPY minor short-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart) The price actions of AUD/JPY have oscillated within a minor descending channel in place since 15 August 2023 minor swing high of 94.87 which suggested that further potential downside may materialize at least in the short-term horizon. Watch the 93.70 key short-term pivotal resistance and a break below 92.80 near-term support exposes the next support at 92.00 (also the 200-day moving average) in the first step. On the other hand, a clearance above 93.70 invalidates the bearish bias to see the next intermediate resistance at 94.90 (also the 50-day moving average).
WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

Kelvin Wong Kelvin Wong 21.08.2023 15:46
The recent decline of -6.8% from its 10 August 2023 high has not damaged the medium-term uptrend phase of WTI oil. Today’s price actions have indicated a revival of a short-term uptrend phase. Watch the key short-term support at US$80.90. This is a follow-up analysis of our prior report, “WTI Oil Technical: Time for a potential short-term pullback” published on 15 August 2023. Click here for a recap. The price actions of West Texas Oil (a proxy of WTI crude oil futures) have indeed shaped the expected minor short-term pull-back and broke below US$79.80 per barrel minor support as it printed an intraday low of US$79.11 last Thursday, 17 August. All in all, it has recorded an accumulated decline of -6.8% from its 10 August 2023 high of US$84.92 but from a technical analysis perspective, the medium-term uptrend phase in place since 28 June 2023 low of US$66.95 remains intact.       Fig 1:  West Texas Oil medium-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart) Recent price actions of West Texas Oil have led to the emergence of an imminent “golden crossover” bullish condition seen in the 50-day and 200-day moving averages. In addition, the daily RSI oscillator has also just staged a rebound right at a key parallel support at the 50 level. These observations suggest that medium-term bullish momentum may have resurfaced which in turn increases the odds of the continuation of a potential impulsive up move sequence within its medium-term uptrend phase in place since the 28 June 2023 low.   Evolving into a minor short-term uptrend     Fig 2:  West Texas Oil minor short-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart)  Today’s price action has just surpassed the 20-day moving average which suggests the potential start of a minor short-term uptrend phase for West Texas Oil. Watch the US$80.90 key short-term pivotal support to see the next intermediate resistance coming in at US$83.00 before a retest on the 10 August 2023 swing high of US$84.90. However, a break below US$80.90 negates the bearish tone to expose the US$79.55/79.10 support.  
CHF Strengthens Against USD: Bullish Exhaustion Signals Potential Downtrend Continuation

CHF Strengthens Against USD: Bullish Exhaustion Signals Potential Downtrend Continuation

Kelvin Wong Kelvin Wong 22.08.2023 09:14
The CHF is the second-best performing major currency against the USD based on a one-month rolling basis. The recent four weeks of up move of USD/CHF has flashed out bullish exhaustion conditions that advocate the potential continuation of its medium-term impulsive down move. 0.8800/8830 is the key resistance zone to watch on the USD/CHF. In the past four weeks, the Swiss Franc (CHF) is the second best-performing major currency against the USD where the CHF just depreciated by -1.40% with the GBP that has come in the first place (-0.67% against the USD) based on a one-month rolling calculation as of 22 August 2023 at this time of the writing.         Fig 1:  Rolling 1-month performance of USD against major currencies as of 22 August 2023 (Source: TradingView, click to enlarge chart) In the lens of technical analysis, the rally of +269 pips that was seen on the USD/CHF from its 27 July 2023 low of 0.8553 to the recent 21 August 2023 high of 0.8828 is likely to be a corrective rebound within a medium-term downtrend that is still intact since its 8 March 2023 due to the emergence of several bullish exhaustion elements.     Daily bearish candlestick emerged right at descending channel resistance     Fig 2:  USD/CHF medium-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart) Yesterday’s price action of USD/CHF has staged a bearish reaction right at the upper boundary of the medium-term descending channel that coincides with the downward-sloping 50-day moving average with both acting as a confluence of resistance at 0.8830.     Started to evolve into a minor downtrend     Fig 3:  USD/CHF minor short-term trend as of 22 Aug 2023 (Source: TradingView, click to enlarge chart) Since its 21 August 2023 high of 0.8828, the price actions of USD/CHF have started to oscillate into a minor downtrend in a series of “lower highs and lower lows”. Watch the 0.8800 key short-term pivotal resistance a break below 0.8755 near-term support (also the 20-day moving average) exposing the next support at 0.8700 (minor swing lows of 4/10 August 2023) in the first step. On the flip side, a clearance above 0.8800 negates the bearish tone to set sight again on the 0.8830 medium-term resistance.      
EUR/USD Fragile Amidst Strong US Data and Bleak Eurozone News

GBP/USD Analysis and Trading Signals: Technical Insights and Forecast

InstaForex Analysis InstaForex Analysis 22.08.2023 14:56
Yesterday, the pair formed several good signals to enter the market. Let's analyze what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.2726 as a possible entry point. A decline and false breakout at this mark generated a good buy signal. As a result, the pair rose by 15 pips. During the US session, a false breakout and retracement below 1.2753 gave a sell signal. As a result, the pair fell by 25 pips.     COT report: The Commitments of Traders (COT) report for August 15 recorded an increase in both long and short positions. Traders built up positions after the UK GDP report, which was better than economists' expectations. US inflation cooling also had an impact on the balance of power, supporting the pound, as well as persistent core pressure in the UK. Federal Reserve officials will hold their annual Jackson Hole symposium later this week, which could lead to even more strengthening of the British Pound in the short term. The focus will be on Fed Chair Jerome Powell's speech about US monetary policy. As before, the optimal strategy is to buy the pound on dips, as the difference in the policies of the central banks will affect the prospects of the US dollar, putting pressure on it. The latest COT report indicates that long positions of the non-commercial group of traders rose by 7,302 to 90,541, while short positions jumped by 3,334 to 39,553. As a result, the spread between long and short positions narrowed by 607. The weekly closing price dropped to 1.2708 compared to the prior value of 1.2749.     For long positions on GBP/USD: Today, the UK will publish reports on public sector net borrowing and the CBI's industrial trends orders. In the event of weak reports, it would be best to act on a decline and false breakout near the new support level at 1.2751. Just below this level are the bullish moving averages, which will form a good entry point for long positions leading to an upward move targeting the resistance at 1.2783. The pair has not been able to get out of this since August 17. A breakout and a downward retest of this range will form an additional buy signal and will reinforce the pound sterling, allowing it to reach a new high of 1.2812. If the pair goes above this range, it might break towards 1.2847, where I will take profits. If GBP/USD declines and there is no buying activity at 1.2751, especially if the UK publishes weak data, the pair will continue to trade within a sideways channel with the bulls having the upper hand. In this case, only the defense of the 1.2723 area and its false breakout would give a signal for opening long positions. I will open long positions immediately on a rebound from 1.2689, keeping in mind a daily correction of 30-35 pips.   For short positions on GBP/USD: Bearish traders did their best yesterday, but buyers are clearly interested in a lower value of the pound. In the first half of the day, it is important to keep the pair below 1.2783. A breakout of this level will produce a sell signal with a prospect of falling to the support at 1.2751, formed yesterday and where a real battle will unfold. A breakout of this level and its upward retest will create an entry point for short positions with a target of 1.2723. The ultimate target is the low at 1.2689 where I will be locking in profits. If GBP/USD trends upward during the European session and if no selling activity is observed at 1.2783, amid strong UK reports, the bulls will maintain control of the market, and will start an upward correction. In such a scenario, a false breakout near the next resistance at 1.2812 would provide an entry point for going short. If there is no downward movement there, I would sell the pound right on a rebound from 1.2847, keeping in mind an intraday correction of 30-35 pips.     Indicator signals: Moving Averages Trading is taking place above the 30-day and 50-day moving averages, which suggests that GBP/USD will recover. Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.     Bollinger Bands If GBP/USD grows, the indicator's upper border near 1.2780 will serve as resistance. If GBP/USD falls, the indicator's lower border near 1.2735 will serve as support.   Description of indicators: • A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart; • A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart; • MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period; • Bollinger Bands: 20-day period; • Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements; • Long non-commercial positions represent the total number of long positions opened by non-commercial traders; • Short non-commercial positions represent the total number of short positions opened by non-commercial traders; • The non-commercial net position is the difference between short and long positions of non-commercial traders.  
GBP/USD Analysis: Intraday Signals, Technical Levels, and COT Report Insights

GBP/USD Analysis: Intraday Signals, Technical Levels, and COT Report Insights

InstaForex Analysis InstaForex Analysis 24.08.2023 13:21
Yesterday, the pair formed several good signals to enter the market. Let's analyze what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.2726 as a possible entry point. A breakout and subsequent retest of this range generated a great sell signal, resulting in a 35-pip drop. A similar scenario with 1.2689, following weak PMI reports, produced a sell signal and the pair fell by 40 pips. During the US session, protecting the monthly low around 1.2627 and weak US reports generated a great buy signal. As a result, the pair rose by 50 pips. Selling from 1.2679 turned out to be a failure, but a breakout and a downward retest of 1.2679 was another buy signal, making it possible to gain 40 more pips.     For long positions on GBP/USD: Today brings some mid-tier data from the Confederation of British Industry, which is unlikely to have a significant impact on market volatility, so I expect the pair to remain under pressure. For this reason, I am not in a hurry to open long positions: only after a false breakout near the new support level at 1.2706, formed at the end of yesterday, will generate buy signal in hopes of updating the nearest resistance at 1.2733, also formed at the end of yesterday's European session. A breakout and consolidation above this range will reinforce the pound sterling, allowing it to reach the 1.2761 high. The ultimate target remains the area of 1.2797 where I will be locking in profits. If GBP/USD declines and there is no buying activity at 1.2706, the pound will be under pressure, but will continue to trade within the sideways channel. In this case, only the defense of the 1.2679 area and its false breakout would give a signal for opening long positions. I will open long positions immediately on a rebound from the monthly low of 1.2646, keeping in mind a daily correction of 30-35 pips.   For short positions on GBP/USD: The sellers lost all their advantage yesterday and now they need to start from scratch. Only an unsuccessful consolidation at 1.2733 after UK data will produce a sell signal with a prospect of falling to the intermediate support level at 1.2706, which was formed yesterday. A breakout of this level and its upward retest would significantly dent the bulls' positions, offering a chance for a more substantial decline towards the low of 1.2679. The ultimate target is the low at 1.2646 where I will be locking in profits. In this case, buyers can try to build the lower band of the new ascending channel. If GBP/USD moves upward during the European session and lacks bearish activity at 1.2733, which is possible given how aggressive the buyers were even after such a large sell-off yesterday, only a false breakout near the next resistance at 1.2761 would provide an entry point for going short. If there is no downward movement there, I would sell the pound right on a rebound from 1.2797, keeping in mind an intraday correction of 30-35 pips.   COT report: The Commitments of Traders (COT) report for August 15 recorded an increase in both long and short positions. Traders built up positions after the UK GDP report, which was better than economists' expectations. US inflation cooling also had an impact on the balance of power, supporting the pound, as well as persistent core pressure in the UK. Federal Reserve officials will hold their annual Jackson Hole symposium later this week, which could lead to even more strengthening of the British Pound in the short term. The focus will be on Fed Chair Jerome Powell's speech about US monetary policy. As before, the optimal strategy is to buy the pound on dips, as the difference in the policies of the central banks will affect the prospects of the US dollar, putting pressure on it. The latest COT report indicates that long positions of the non-commercial group of traders rose by 7,302 to 90,541, while short positions jumped by 3,334 to 39,553. As a result, the spread between long and short positions narrowed by 607. The weekly closing price dropped to 1.2708 compared to the prior value of 1.2749.     Indicator signals: Moving Averages Trading is taking place around the 30-day and 50-day moving averages, indicating a sideways market trend. Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart. Bollinger Bands If GBP/USD falls, the indicator's lower border near 1.2646 will serve as support.   Description of indicators: • A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart; • A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart; • MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period; • Bollinger Bands: 20-day period; • Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements; • Long non-commercial positions represent the total number of long positions opened by non-commercial traders; • Short non-commercial positions represent the total number of short positions opened by non-commercial traders; • The non-commercial net position is the difference between short and long positions of non-commercial traders.    
Market Analysis: EUR/USD Signals and Trends

Market Analysis: EUR/USD Signals and Trends

InstaForex Analysis InstaForex Analysis 24.08.2023 13:35
Yesterday, the pair formed several good signals to enter the market. Let's analyze what happened on the 5-minute chart. In my morning review, I mentioned the level of 1.0870 as a possible entry point. Growth and false breakout of this level generated a sell signal, and the pair fell by more than 60 pips. During the US session, safeguarding the support level at 1.0808 and weak US data produced a buy signal. As a result, EUR/USD managed to compensate for all morning losses and rose by more than 50 pips.   For long positions on EUR/USD: Softer-than-expected preliminary US PMI data exerted downward pressure on the dollar and the euro strengthened in the second half of the day. Obviously, there's a lot of market manipulation, making the situation increasingly tense before the Jackson Hole symposium. Yesterday's data made it clear: if the Federal Reserve continues its tight policy stance, the economic situation will only worsen. This has further confused market participants, who were expecting hawkish statements from Fed Chair Jerome Powell. In the absence of EU reports in the first half of the day, I expect EUR/USD to trade within the channel. Therefore, it is advisable to trade on a dip following a false breakout near the low of 1.0849, which is in line with the bullish moving averages. An immediate resistance target is set at 1.0889, formed on Tuesday.   A breakout and a downward test of this range will strengthen demand for the euro, suggesting a bullish correction around 1.0928. The ultimate target is found at 1.0958, where I will be locking in profits. If EUR/USD declines and bulls are idle at 1.0849, the bear market will persist. Only a false breakout around the next support at 1.0827 will signal to buy the euro. I will initiate long positions immediately on a rebound from the low of 1.0804, aiming for an upward correction of 30-35 pips within the day.   For short positions on EUR/USD: The sellers lost all their advantage yesterday and now they need to start from the beginning. Today, to maintain the bearish momentum, sellers will have to assert their strength at the new resistance of 1.0889. The pair may test this level soon. The absence of economic reports will help the bears with a false breakout of this level and will lead to another descent towards the 1.0849 support. However, only a breakout below this range, followed by an upward retest, will generate another sell signal, paving the way to the low of 1.0827, where I expect big buyers to emerge in hopes of building the lower band of the new ascending channel. The ultimate target is seen at 1.0804, where I will be locking in profits. If EUR/USD moves upward during the European session and lacks bearish activity at 1.0889, the bulls may try to re-enter the market. In such a scenario, I would go short only when the price tests the new resistance at 1.0928 that was formed yesterday. Selling at this point is possible only after a failed consolidation. I will initiate short positions immediately on a rebound from the high of 1.0958, considering a downward correction of 30-35 pips within the day.     COT report: The COT (Commitment of Traders) report for August 15 shows a notable increase in long positions and a drop in short positions. These figures already factor in the crucial US inflation data, which brought back some buyers to the market. The Federal Reserve meeting minutes released last week also indicated that not all committee members are aligned with the idea of raising interest rates to combat inflation. This keeps the chances of the euro's recovery alive, especially following the Jackson Hole symposium happening later this week where Federal Reserve Chairman Jerome Powell is scheduled to speak. His address might shed light on the central bank's future policy direction. It is important to note that the recent decline in the euro seems to be appealing to traders. The optimal medium-term strategy under current conditions remains buying risk assets on a dip. The COT report highlights that non-commercial long positions increased by 4,418 to stand at 232,466, while non-commercial short positions decreased by 5,634 to 72,603. Consequently, the spread between long and short positions surged by 1,125. The closing price was lower, settling at 1.0922 compared to 1.0981 the previous week.     Indicator signals: Moving averages: Trading is taking place around the 30-day and 50-day moving averages, indicating market uncertainty. Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart. Bollinger Bands If EUR/USD declines, the indicator's lower border near 1.0825 will serve as support.   Description of indicators: • A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart; • A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart; • MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period; • Bollinger Bands: 20-day period; • Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements; • Long non-commercial positions represent the total number of long positions opened by non-commercial traders; • Short non-commercial positions represent the total number of short positions opened by non-commercial traders; • The non-commercial net position is the difference between short and long positions of non-commercial traders.    
Budget Deficit Reduction in India: A Path to Sustainable Growth

BoE Hints at Balanced Debate for Next Meeting as Weakness Looms

Craig Erlam Craig Erlam 11.09.2023 11:27
BoE hints at balanced debate at the next meeting Employment survey points to further weakness GBPUSD nearing major support zone   A big couple of weeks are in store for the Bank of England and figures today may support the case for a more balanced debate on 21st September, as policymakers hinted this week. Inflation is by no means under control but it is falling fast and, if the BoE is to be believed, it is expected to fall markedly over the remainder of the year. If the MPC is going to be confident of inflation returning sustainably to 2%, the labor market will likely be key to it so there’ll likely be a much greater focus on it going forward. We’re already seeing some progress on this front but much more is likely needed. Today’s survey from KPMG and REC suggests more weakness is on the horizon. Permanent placements, availability, and salaries are all promising from a BoE perspective and may contribute to some lively debate in a couple of weeks. Of course, surveys alone won’t be enough to convince them. The UK jobs report next week could offer another helping hand and put the decision on the 21st much more in the balance. Markets are currently convinced that another hike is coming but that may change if unemployment ticks higher again and wages soften.   GBPUSD continues to slide toward key SMA band The pound has continued to fall this week, aided by the comments from the BoE and perhaps today’s survey.   GBPUSD Daily Source – OANDA on Trading View After breaking below the August lows earlier this week, shortly after running into resistance from the 55/89-day simple moving average band, the pair is continuing to edge closer to the 200/233-day SMA band. This falls around 1.23-1.24 and also coincides with the lows from the second quarter of this year. A break below here could be a very bearish development, especially if aided by a weaker UK jobs report or stronger US inflation release.  
ECB Faces Dilemma as European Commission Downgrades Eurozone Growth Forecasts

ECB Faces Dilemma as European Commission Downgrades Eurozone Growth Forecasts

ING Economics ING Economics 12.09.2023 10:48
EC downgrades eurozone growth for this year and next Will the ECB be deterred if their forecasts have similar downgrades? EURUSD slips below key support ahead of US inflation data and ECB   The European Commission downgraded its forecasts for the EU this year and next, weighed down by much weaker growth in Germany. The new forecasts won’t come as a major surprise and may even prove overly optimistic over time but they do come days ahead of the next ECB meeting and could tempt some policymakers into voting to pause the tightening cycle. ECB policymakers will obviously be armed with their own forecasts when it comes to the vote but it’s likely their growth expectations will be revised lower on the basis of recent releases. While markets are currently pricing in a pause this week, around 60/40 at the time of writing, I’m probably leaning more toward a final hike before pausing in October. It’s probably easier to justify a hike this week than it may be at the end of next month and I’m not sure there’s enough desire at the ECB to stop at the current rates. Weaker economic readings will probably drive a lively debate and they obviously won’t suggest, if they do hike, that it’s job done, rather more finely balanced. But they can’t ignore the progress in recent months, other economic indicators, and the lag effect of past moves.   A cautious breakout but perhaps still a significant one Recent strength in the US dollar has prompted a breakout against the euro in the last week which may prove to be very significant.   EURUSD Daily Source – OANDA on Trading View   While it continues to trade in a descending channel, the pair has broken below the 200/233-day simple moving average band for the first time since November. It then ran into support around 1.07 which has been a notable level of support in the past and the May low isn’t far below here. The interesting thing is that while the breakout hasn’t been the catalyst for a sharper move lower, yet, the decline isn’t lacking momentum. The MACD and stochastic are continuing to make new lows alongside price. Perhaps the MACD histogram is an exception but even this isn’t particularly clear. A break of the May low could confirm the move and see the sell-off accelerate. But with the US CPI to come on Wednesday and the ECB meeting on Thursday, there may be some apprehension among traders. That may even explain why it’s been more of a cautious breakout until this point.    
The Russell 2000 Breaks Below Key 200-Day Moving Average: Implications for the US Economy and Other Benchmarks

The Russell 2000 Breaks Below Key 200-Day Moving Average: Implications for the US Economy and Other Benchmarks

Ed Moya Ed Moya 14.09.2023 10:22
The small-cap Russell 2000 which is considered as a better proxy of the US economy has just broken below its key 200-day moving average. It is the worst-performing major US benchmark stock index since August 2023. Its recent major downtrend phase from 5 November 2021 to 16 June 2022 started ahead of the other indices; S&P 500, Nasdaq 100, and Dow Jones Industrial Average. Given such a leading element, a further down move in the Russell 2000 may trigger a similar negative feedback loop into the other US benchmark stock indices. Watch its key short-term resistance at 1,865.   Since the US regional banking crisis that imploded in early March this year, the performance of the small-cap Russell 2000 has not made any headway as it failed to break above its major “Symmetrical Triangle” range resistance at 2,009 in place since 16 August 2022. Also, in the past two months, it has been the worst-performing major US benchmark stock indices where it ended August with a loss of -5.17%, way below the S&P 500 (-1.77%), Nasdaq 100 (-1.62%), Dow Jones Industrial Average (-2.36%). For the current month-to-date performance as of 13 September, the Russell 2000 has remained in the doldrums with a loss of -3.10% and underperformed against the S&P 500 (-0.89%), Nasdaq 100 (-0.98%), Dow Jones Industrial Average (-0.42%) over the same period.   Broke below key 200-day moving average   Fig 1: US Russ 2000 major and medium-term trends as of 14 Sep 2023 (Source: TradingView, click to enlarge chart) The current price actions of the US Russ 2000 Index (a proxy for the Russell 2000 futures) have inched lower since the 1 August 2023 high of 2,009 and it is now almost at a similar price level during the onset of the US regional banking liquidity crisis that erupted on 9 March 2023. Technical analysis and momentum factor are now flashing signs of potential medium-term weakness as yesterday’s daily price action at the close has broken below its key 200-day moving average slightly at the end of yesterday, 13 September US session. Also, the US Russ 2000 Index is the sole US benchmark index that has breached below the key 200-day moving average ahead of the others (S&P 500, Nasdaq 100 & Dow Jones Industrial Average). Interestingly, in the prior major downtrend phase, the US Russ 2000 Index kickstarted the bearish movement ahead of the rest where its all-time high of 2,464 peaked on 8 November 2021 before the respective peak periods of all-time highs of the S&P 500 (4 January 2022), Nasdaq 100 (22 November 2021), Dow Jones Industrial Average (5 January 2022).   Therefore, if the US Russ 2000 starts to exhibit another bout of multi-week down move sequence thereafter and breaks below the major “Symmetrical Triangle” range support at 1,734, it may signal the start of another major downtrend phase for the US benchmark stock indices. Oscillating within a short-term minor downtrend   Fig 2: US Russ 2000 short-term minor trend as of 14 Sep 2023 (Source: TradingView, click to enlarge chart) Since its 1 September 2023 high of 1,931, the price actions of the US Russ 2000 Index have evolved within a minor descending channel and traded below a downward-slopping 20-day moving average which indicates a short-term minor downtrend is in motion. Watch the 1,865 key short-term pivotal resistance to maintain the short-term bearish scenario to see the intermediate supports coming in at 1,832 and 1,814 (Fibonacci extension from 1 September 2023 high, lower boundary of the minor descending channel & 3 April/19 April 2023 swing lows). On the flip side, a clearance above 1,865 negates the bullish tone for a squeeze up towards the 1,894/1,898 resistance zone (congestion area of 1 September/6 September 2023 & 61.8% Fibonacci retracement of the current minor down move from 1 September 2023 high to 13 September 2023, US session low).  
Technical Analysis of European Indices: DAX, AEX25, BEL20, CAC40, and SMI20 - September Update

Technical Analysis of European Indices: DAX, AEX25, BEL20, CAC40, and SMI20 - September Update

Saxo Bank Saxo Bank 14.09.2023 15:17
In this Technical Update: DAX / GER40, AEX25 / NETH25, BEL20 / BELG20, CAC40 / FRA40 and SMI20 / SWISS20 DAX is range bound between 16,060 and 15,482. Break out needed for direction. Negative sentiment on RSI is indicating break is to be to the down side, and with the 55 and 100 Moving Average slightly declining the underlying trend sentiment is bearish. If closing below key support at around 15,482 there is downside risk to around 15K.Breaking bullish can be a struggle with the two Moving Average acting as a ceiling. It could be a struggle for DAX to penetrate. But if it does a move to July peak around 16,500 is likely       AEX25/NETH25 is bouncing from key strong support at around 730. However, the trend is down and there is no RSI divergence supporting the view of lower AEX levels. If AEX is closing below 730 a swift sell-off down to around 716-710 support is likely.For AEX to demolish the bearish trend a close above 755 is needed.However, with the 55 Moving Average on the verge of breaking below the 100 while they are bot declining thus forming a Death Cross upside potential is limited. That is not bullish for AEX     BEL20/BELG20 is side stepping failing to close above key resistance at around 3,696.RSI sentiment is negative indicating BEL20 is likely to trade lower in coming days and weeks.A close below 3,610 could ignite a sell off down to around 3,600-3,550.A close above 3,696 is needed for BEL20 to reverse to uptrend         CAC40/FRA40 Index has been range bound since April with a bearish undertone. The 200 Moving Average is providing support  but upside potential seems limited with the Index moving below declining 55 and 100 Moving Averages. A re-test of key strong support at around 7,082 is in the cards.If CAC40 is closing below 7,082 there is no strong support until around 6,900       SMI20/SWISS20 is forming symmetrical triangle pattern. Break out is needed for direction.Break out direction is likely to be to the downside as indicated by the negative RSI sentiment and all Moving Averages decliningIf that is the scenario that will play out SMI has downside potential to around 10,515 before finding support.Minor support at around 10,750.If Bullish break out there is strong overhead resistance with the declining Moving Averages above the Index.A close above 11,173 is needed for bullish trend      
Rates Markets Shift Focus: ECB Reaches Peak as Fed Holds Steady Amid Resilient Data

Potential Corrections in EURUSD and GBPUSD, EURGBP's Descending Triangle, and Dollar Index Outlook

Saxo Bank Saxo Bank 14.09.2023 15:23
Downtrends in EURUSD and GBPUSD are a bit stretched. Corrections from key supports could be seen before downtrends are likely to resume. EURGBP forming Descending triangle pattern. Break out direction is 50/50. Dollar Index still has room up to 105.80 but a short-term correction seems likely   EURUSD is trading in a falling channel pattern and seems to be finding support around the middle of the Consolidation area at 1.0685. RSI divergence is indicating downtrend exhaustion which could result in a correction. A correction that could take EURUSD 0.382 retracement at 1.0911. However, the 100 and 55 Moving Averages are declining just around that area adding to the overhead resistance limiting the rebound potential.EURUSD rebound could run out of steam at the 200 Moving Average and the upper falling trendline.A break below 1.0685 is likely to test the Consolidation area low at 1.0635 and a close below paves the road towards 1.05.    If EURUSD is closing a week below 1.0635 the medium-term uptrend has been reversed – see weekly chart.However, there is strong support around the 1.0635 level, the weekly 55 Moving Average is coming up adding to that support.If closing below 1.0635 there is room down to around 1.05     GBPUSD has found support at the 200 Moving Average and could bounce from here.  A test of the upper falling trend line could be seen. If GBPUSD is breaking above the trendline a bullish move to the 0.382 retracement at 1.27 is quite likely However, the upside potential seems fairly limited with the 55 Moving Average and 100 Moving Average coming down adding some resistanceRSI is in negative sentiment without divergence indicating lower GBPUSD levels are likely thus a correction I very likely to be short-lived and limited. If GBPUSD breaks below 1.2430 the sell-off is likely to push the pair down to support at around 1.23     EURGBP is testing the upper falling trendline in what could be a Descending triangle like pattern. Break out is needed for direction and break out direction is 50/50 up/down.If breaking out bullish there is upside potential to around 0.8750-0.88 but the price should at least move to the highest peak in the triangle i.e., at around 0.87.Some resistance at around 0.8668If breaking bearish out of the triangle there is downside potential to 0.8350     Dollar Index uptrend is weakening indicated by RSI divergence, RSI values have been declining as Dollar Index has moved higher.A correction could be seen possibly down to the 0.382 retracement and strong support at 102.87 before uptrend is likely to resume.If the Dollar Index is taking out last week’s peak at 105.13 a spike up to strong resistance at around 105.80 is a quite likely outcome  
Rates Spark: No Respite in Sight as Risk Sentiment Sours

US Nasdaq 100 Analysis: Bearish Momentum Amid Rising Inflation Expectations

Kenny Fisher Kenny Fisher 19.09.2023 14:01
Bullish tone dissipated last Friday, 15 September ex-post Arm’s IPO spectacularly first-day positive performance as the Nasdaq 100 had a weekly close below the 50-day moving average for the 4th time in the past six weeks. Rising market-based inflationary expectations in line with recent magnificent rallies seen in oil prices may cause the Fed to be less dovish on the timing to enact the first interest rate cut in 2024. 15,540 is the key short-term resistance to watch. This is a follow-up analysis of our prior report, “Nasdaq 100 Technical: Bearish momentum reasserts” published on 25 August 2025. Click here for a recap. The price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) have whipsawed in the past four weeks, it cleared above the 15,135 short-term resistance (also the 20-day moving average) as highlighted in our previous report but the bulls failed to make any headway above the 15,460/15,540 medium-term resistance and staged a weekly close below its 50-day moving average on last Friday, 15 September. Last week’s bullish hesitancy is primarily driven by the fears that the US central bank, the Fed in the upcoming FOMC meeting this coming Wednesday, 20 September together with the latest “dot-plot” release may indicate a stance or guidance that a higher level of interest rate can persist for a longer period of time after the last hike on the Fed funds rate in 2023 (either in the November or December FOMC based on interest rates futures data from CME FedWatch tool as of 18 September 2023). Rising market-based inflationary expectations may catch dovish market participants off guard Fig 1: Correlation between WTI crude oil and US 5-year & 10-year breakeven inflation rates as of 19 Sep 2023 (Source: TradingView, click to enlarge chart) A potential Fed’s guidance that indicates a persistent longer period of higher interest rates for next year that stretches beyond Q2 of 2024 due to higher oil prices that have driven up market-based inflationary expectations (5-year & 10-year break-even inflation rates) may catch the market off guard as there is a high chance of 55% for the Fed to enact its first interest rate cut in June 2024 FOMC as inferred from the CME FedWatch tool. The US Nas 100 Index falls under the “long-duration” risk asset classification that is vulnerable to a higher interest rates environment that persists for a longer-term horizon where profit margins of the top component stocks; the magnificent seven mega-caps (Apple, Amazon, Alphabet, Meta, Microsoft, Tesla & Nvidia) are primarily dependent on longer-term revenues or cash inflows that are likely to be received further far out in the future which in turn tend to have lower present values if discounted by a higher interest rate factor, hence higher opportunity costs for holding such mega-cap stocks. To offset such potentially higher opportunity costs, the current lofty valuations (forward price to earnings ratios) of these mega-cap stocks need to come down considerably either by higher earnings growth or lower share prices. If the global demand environment remains lackluster or even slips into a recession or stagflation in 2024, the latter is more likely to occur which can put downside pressure on the US Nas 100 Index. Medium-term momentum remains bearish Fig 2: US Nas 100 medium-term trend as of 19 Sep 2023 (Source: TradingView, click to enlarge chart)   Last week’s close below the 50-day moving average of the US Nas 100 Index has occurred in conjunction with a bearish momentum condition reading as indicated by the daily RSI. The daily RSI has inched downwards and shaped a “lower low” right below a former key parallel ascending support now turns pull-back resistance at the 60 level which suggests a potential resurgence of medium-term bearish momentum. Price actions have broken down below the 20-day moving average Fig 3: US Nas 100 minor short-term trend as of 19 Sep 2023 (Source: TradingView, click to enlarge chart) Last Friday’s 15 September price actions of the Index staged a bearish breakdown below its 20-day moving average and yesterday’s 18 September minor rebound seen at the start of the US session has halted at the 20-day moving average. These observations suggest that short-term bearish momentum remains intact. Watch the 15,540 key short-term pivotal resistance and a break below 15,085 may trigger a further slide towards the next intermediate support at 14,750 in the first step. On the other hand, a clearance above 15,540 invalidates the bearish tone for the next intermediate resistance to come in at 15,800 (27 July/ 29 July 2023 minor swing highs).    
WTI and Brent Crude Oil Corrections Show Signs of Reversal, Potential Path to $100/brl

WTI and Brent Crude Oil Corrections Show Signs of Reversal, Potential Path to $100/brl

Saxo Bank Saxo Bank 27.09.2023 14:45
WTI and Brent Crude oil correction less than anticipated. Uptrend seems to be resuming. Can it reach USD100/brl? Natural gas slowly crawling higher closing in on key resistnace levels. Carbon Emission continuing its decline WTI Crude oil correction seems to be over. It didn’t even reach the 0.382 retracement at 87.58 before buyers seem to regain control. WTI is likely to have another go at the strong resistance at around 93.74.If it closes above there is no strong resistance until around 104.80. Minor resistance at around 98.62. Daily RSI is showing positive sentiment and no divergence indicating that a new high above 93.74 is quite likely. IF WTI slides back below 88.20 it could be hit with a sell-off down to test the lower rising trendline,  but a move down to support at around 83.58 could also be seen           Brent Crude oil Shooting star top and reversal candle is still intact but if Brent is closing above 95.96 it will be cancelled.The correction seems to have been cut short and the uptrend seems to be resuming.A bullish move to the strong resistance around 98.57-99.56 is in the cards. A break above that resistance level could fuel another rally to 105.48 If buyers cannot push Brent above 95.96 followed by a slide below 91.80 a correction down to test the lower falling trendline is likely. Possibly even down to t88.19-87.31       Henry Hub gas has found a solid base around 2.48 and is once again close to be testing key strong resistance at around 3.00.A close above could initiate a rally higher towards 3.60-3.70 level. RSI is showing positive sentiment supporting th4e bullish scenario of higher Gas prices   Dutch TTF gas is in an uptrend testing August peak at around 44.80. It is not a strong resistance and if broken Dutch gas is likely to move higher to 50.30-54.45 Positive sentiment on the RSI is supporting the bullish gas scenario. For Dutch gas to reverse its uptrend a close below 30.50 is needed     Carbon Emissions contract is trading in a falling trend channel. The Futures contract is trading below all Moving Averages; 55, 100 and 200 and RSI is showing negative sentiment which underline the bearish picture. Emissions could drop to the support area at around 78-77. For Carbon Emissions to reverse to bullish trend a close above 90.45 is needed. A close above 86.15 could be first indication of that scenario to play out      
Continued Growth: Optimistic Outlook for the Polish Economy in 2024

EURGBP Faces Pressure as Germany Nears Double-Dip Recession and Grapples with Budget Uncertainty"

Kenny Fisher Kenny Fisher 27.11.2023 15:40
German double-dip recession likely after 0.1% contraction in Q3 UK consumer confidence improves but remains weak EURGBP appears to fail again near range high German uncertainty weighing on the single currency The euro is slipping against the pound at the end of the week with economic data highlighting the challenges facing the bloc. Nowhere is that more evident than in Germany which appears to be on the brink of a double-dip recession and facing immense uncertainty over its budget for next year as it scrambles to patch up finances for this one. A supplementary budget next week alongside a proposal to suspend the debt brake now looks likely but even this is just a temporary solution that won’t give investors much confidence in the outlook for an economy already under significant strain. The economy was confirmed to have contracted by 0.1% in Q3 this morning and as we move into the final month of Q4, it’s looking likely data early next year will confirm the country is back in recession. The Ifo business climate survey was a little better and appears to be turning a corner which is hopefully a good sign but at 87.3, it’s still printing figures near historical lows. The early months of the pandemic were understandably much worse, as you’d imagine, but that aside, recent readings have fallen close to 2001 and 2009 levels. UK consumers buoyed by improving real earnings UK consumer confidence is also gradually improving, albeit from very weak levels. At -24, the Gfk survey is 25 points from last September’s lows but still some way below all surveys from mid-2013 through to the pandemic. Still, the direction of travel is more promising and inflation is now running below wage growth which should continue to support that.     A big test of technical support The euro has been struggling near range highs against the pound for a number of weeks but that now appears to be turning into some weakness in the pair. EURGBP Daily Source – OANDA on Trading View Not only did it not break the range highs, it’s now trading at a more than two-week low and testing what could prove to be a key support level. The lower part of the rising channel coincides with the bottom of the 200/233-day simple moving average band. A move below here could be viewed as a very bearish signal and would take the pair much deeper into correction territory. Arguably it could just reaffirm its position in a sideways channel, where it’s traded since May. And based on the size of the rising channel which could be viewed as a slanted double top, a breakout could be seen as a sign of a much deeper correction to come.  
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OPEC+ Tentatively Agrees to 2.2 Million Barrels per Day Cut, but Skepticism Prevails as Full Compliance Appears Unlikely

Kenny Fisher Kenny Fisher 04.12.2023 14:50
OPEC+ unofficially agree to 2.2 million barrel per day cut Full compliance with cuts already looks unlikely Brent continues to consolidate near recent lows Oil prices remain quite volatile but more importantly, not too far from their recent lows after traders judged yesterday’s announcement from OPEC+ with some skepticism. The lack of an official announcement, with details gradually appearing from individual member states indicated there’s no firm commitment to the 2.2 million barrel per day cut. And Angola insisting straight after it won’t comply further solidified that view. Saudi Arabia will be hoping that others will, in the main comply, after it committed to extending its one million barrel cut until the end of March, while Russia increased its export reduction from 300,000 to 500,000. But it seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient. Or, of course, that the lack of formal commitment hints at fractures within the alliance which could impact its ability to hit its targets, let alone cut further if necessary. If Brent breaks below its November lows, it will be perfectly clear what markets think of the deal.   rent was testing a big area of resistance ahead of the OPEC+ announcement but has since headed lower creating a very interesting setup. Brent Crude Daily Source – OANDA on Trading View An imperfect inverse head and shoulders appears to be forming with the neckline around the 200/233-day simple moving average band (red). It was also an important area of support over the last few months. A move below the recent lows around $77 though would be a very bearish development, especially against the backdrop of the OPEC+ deal.
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Analyzing EURCAD: Inflation Rates, Technicals, and Sentiment Indicators

Kenny Fisher Kenny Fisher 04.12.2023 14:51
This article goes over different tools and indicators covering EURCAD, in some cases, cross-pairs can provide trade setups of a different nature as the US Dollar is partially taken out of the equation. Trading in financial markets requires an overview of different types of tools and the same applies to forex trading. Talking points Inflation Rate Overview – European Union and Canada Daily Chart Technical analysis Sentiment Indicators: Commitment of Traders report, and OANDA’s order book. Relative Rotation Graph Inflation Rate Overview – European Union and Canada   Source: Bloomberg Terminal   Inflation Rates globally are declining faster than expected and as global Central banks continue to tread carefully, traders continue to speculate on Central banks’ moves and are sometimes overwhelmed by conflicting central bankers’ comments or analyst’s opinions. Many Market participants are convinced that the recent decline in inflation suggests that Central banks should consider rate cuts, but Central banks still have concerns about inflation returning in any form. The latest CPI report from the EU shows inflation continues to decline reaching 2.4%, close to The European Central Bank (ECB) target of 2%. The current CPI may suggest that the ECB can hold interest rates at its current level but doesn’t warrant any rate cuts. ECB Nagel commented this morning that “Inflation risks are skewed to the upside”. The next CPI release is scheduled for December 19th, 2023, please check the economic calendar and your local time. In Canada, it’s a slightly different story, although the inflation rate is also declining the same as it is globally, it is declining at a slower pace than the EU. The inflation rate currently stands at 3.1%, down from its highs of 8.0% seen in June 2022. Daily Chart Technical analysis   Source: Tradingview.com   EURCAD price broke and closed below an intermediate trendline identified on the above daily timeframe chart, with no pullback to retest the broken level so far. The broken level was also a confluence of Support represented by 3 commonly used Moving average periods, EMA9, MA,9, MA21, and the monthly pivot point at 1.4800 Applying the weekly Stochastic indicator onto the Daily timeframe to smooth the readings suggests that EURCAD may be overbought and shows that %K just crossed below %D along with the break below the intermediate trendline mentioned above. Applying Daily RSI with its default period of 14 shows that RSI is so far in line with price action, however, it is currently neutral near level 50. MACD line crossed below its signal line and the Histogram is also turning bearish.       Sentiment Indicators: Commitment of Traders report, and OANDA’s order book Source: Tradingview.com   The Commitment of Traders report offers insights about positioning changes in the futures market, although delayed, it still helps as a sentiment tool in a trader’s arsenal. Comparing Position levels on the latest COT report shows that Large Speculators on both currencies are favoring long positions, however, it also suggests that the Canadian Dollar is closer to its extreme than the Euro, thus a higher probability of Sentiment change. The above chart is for EURUSD and USDCAD side by side with the COT report applied to both. (COT for Canadian Dollar is inverted, CADUSD) OANDA’s Orderbook Indicator   Source: OANDA.com   Another sentiment tool is the OANDA Orderbook Indicator, the above image reflects an aggregate view of pending entry orders on EURCAD for OANDA’s clients, the data falls under the Retail Traders category. The above image suggests that Retail traders are looking to buy as the price falls and sell as it rises, this is the typical retail trader sentiment and needs to be thought of carefully as Retail Traders can sometimes be in the opposite direction in trendy markets. The order book also reflects price levels that have the highest number of pending orders, these levels can be critical as the price continues to move regardless of direction. It is also important to note that the order book percentages include exit orders such as Stops and limits, we can continue to follow up on position percentage changes. Relative Rotation Graph   Source: Optuma.com   The Relative Rotation graph RRG (A measurement for Momentum and Relative strength) on the daily time frame shows EURUSD, GBPUSD, AUDUSD, and NZDUSD are currently in the Leading Quadrant, with EURUSD leading the pack and CADUSD attempting to catch up from the Improving quadrant. The arrow direction for all pairs except CAD is so far pointing south towards the weakening quadrant.  
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Fed's Surprise: Three Rate Cuts in 2024 Propel Dow to Record Highs

Kenny Fisher Kenny Fisher 14.12.2023 14:36
Fed signals three rate cuts in 2024 ECB and BoE to announce decisions shortly Dow hits record highs after the Fed The most hotly anticipated central bank meeting of the year did not disappoint on Wednesday, with the Fed potentially delivering this year’s Santa rally. I don’t think many will have expected the Fed to go as far as it did in forecasting three rate cuts next year only three months after suggesting the tightening cycle is not over. But clearly, it’s not just investors that have been impressed with the data we’ve seen so far in the fourth quarter and now they’re getting more carried away than before. There’s been a lot of debate in recent weeks about whether investors are getting ahead of themselves, too optimistic about how quickly the Fed will cut rates but the message from the central bank is that is not the case. And in typical fashion, investors have now gone further, pricing in six rate cuts next year starting in March. That’s also forced investors to reassess whether they’re in fact too pessimistic with other central banks too, with the ECB now expected to cut rates by 150 basis points over the next 12 months and the BoE between 100 and 125 basis points. Both now have a lot to live up to today and Christine Lagarde, in particular, may not be thanking her US counterparts for whipping investors up into a frenzy right before their announcement and press conference. A repeat performance from the ECB could leave investors going into the end of the year in a much more festive mood.   New record highs in the Dow Markets got an early festive treat from the Fed, with the Dow hitting fresh record highs on the back of the Fed announcement almost two years after it last achieved that feat. US30 Daily Source – OANDA Now that it’s in uncharted territory, momentum indicators will be much more useful as we don’t have past levels to look to. And we are seeing some sign of exhaustion occurring in the MACD histogram, although not yet in the moving averages or stochastic.    

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