retracement

Technical Market Outlook: The GBP/USD pair had made the last swing low at the level of 1.2308 as the market is still under the bearish pressure, but the bulls have managed to retrace 61% of the last wave down and hit the level of 1.2540. The market is trading above the 50 and 100 MA already.   The intraday technical support is located at 1.2517. The momentum is strong and positive on the H4 time frame chart, which supports the bullish short-term outlook for GBP, however the extremely overbought market conditions had been hit, so the pull-back might occur any time soon.     Weekly Pivot Points: WR3 - 1.23581 WR2 - 1.23505 WR1 - 1.23473 Weekly Pivot - 1.23429 WS1 - 1.23397 WS2 - 1.23353 WS3 - 1.23277   Trading Outlook: A Bearish Engulfing candlestick pattern on the Weekly time frame chart 100 pips away from the 61% Fibonacci retracement located at the level of 1.2778 might indicate the corrective cycle to the upside had been terminated. Any sustained breakout below the technical support at 1.2444 will be the first indication of stronger bearish pressure.

EUR/USD: Yesterday, the euro and other currencies started trading lower, while volatility was weak. The main reason for the change in sentiment was the weak PMIs in the US. The May ISM Services PMI came in at 50.3, down from April's 51.9. The final Services PMI reading was lowered from 55.1 to 54.9. Factory orders increased by 0.4% in April, below the expected range of 0.8-1.1%. Industrial orders excluding transportation decreased by 0.2%. Market expectations for a Federal Reserve rate hike at the June 14th meeting decreased from 25.3% to 21.8%. The S&P 500 stock index declined by 0.20%.       From a technical standpoint, we see the price returning to the range of 1.0692-1.0738, from which unsuccessful breakouts have occurred in both directions over the past week. Take note that the price has not firmly established itself above or below the limits of the range, which complicates the situation since the next breakout could turn out to be false, particularly on the bullish side, as the global trend is bearish.   We acknowledge that resistance at 1.0804 could be tested if there is an upward breakout. The price may even surpass the level with the MACD line acting as a target, which would constitute a deep correction from the decline since May 4th.   Climbing to 1.0804 represents approximately a 38.2% retracement of the downward move since May 4th. However, as long as the price doesn't breach the 1.0738 level, we'll stick to the bearish scenario with 1.0613 as the target.   The Marlin oscillator has already risen enough (removed negative tension) and may now turn into a new downward wave.   On the four-hour chart, the MACD indicator line is gradually flattening out, and the signal line of Marlin is attempting to merge with the neutral zero line.   The trend is neutral and is likely to remain so for another week until the Fed meeting. However, on the 13th, there will be CPI data released, which could further confuse market participants.        

The EUR/USD pair has retraced 50% of the last wave down and hit the level of 1.0930. The next target for bulls is 61% Fibonacci retracement level located at 1.0949. The intraday technical support is located at 1.0865 and 1.0893.   The bulls are clearly in control of the market and there is no indication of a up trend termination or reversal, despite the fact that the corrective cycle was quite deep and solid. When the up trend is resumed, the next target for bulls is seen at the level of 1.1054 - 1.1097, which creates a supply zone for bears. Larger time frame trend remains up.    

EUR: 1.1275 is the next target for EUR/USD Soft US inflation data has been good news for all the pro-cyclical currencies including the euro. EUR/USD is comfortably trading at new highs for the year and the next technical target would be 1.1275 as it continues to retrace the 2021-2022 decline. For today, look out for the account of the 15 June European Central Bank meeting. Presumably, the ECB will see no advantage in trying to diffuse market pricing of two further 25bp rate hikes this year. Elsewhere, we note EUR/CHF breaking down to some new lows. We would not chase this too much lower since the Swiss National Bank will be getting a lot of their desired appreciation in the nominal trade-weighted Swiss franc from the big move lower in USD/CHF.

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.  

In a recent interview with FXMAG.COM, we had the pleasure of discussing the current state of the financial markets with Nour Hammoury, an esteemed analyst from Squared Financial. As investors closely watch the performance of the S&P 500 index and speculate about the future of Bitcoin, we sought Hammoury's expert insights on these crucial market trends. When asked about the possibility of new record highs for the S&P 500 index, Hammoury pointed out that the index is merely about 5% away from reaching a record high. The earnings reports from companies have been promising, with 65% of them showing better-than-expected performance while upgrading their guidance. These factors have contributed to maintaining the bullish momentum in the market. However, the analyst warned that a correction could be on the horizon, especially after the recent rally. The key factor to watch for the next retracement is the index's ability to break above the 4600 level. Despite this caution, Hammoury also acknowledged that the possibility of the S&P 500 reaching a new record high before the end of the year cannot be ruled out. Switching gears to the ever-volatile realm of cryptocurrencies, Hammoury shared insights on Bitcoin's price projection for the second half of 2023. The analyst believes that the Bitcoin bear market has concluded since March of this year. While the cryptocurrency has experienced recent declines, Hammoury sees them as short-term retracements before the upward trend resumes. The time/price method suggests that Bitcoin may experience another leg higher by September, and any downside retracement is expected to be limited above the 25K mark. On the upside, Hammoury identifies 34K as a potential target in the coming weeks.   FXMAG.COM:  Are we facing new record highs for the S&P 500 index? S&P500 is only about 5% away from record high. So far 65% of the companies that reported earnings showed a better-than-expected performance while upgrading their guidance, which keeps the bullish momentum in place. However, a correction is highly possible from the current level, especially after the recent rally. A failure to break above 4600 remains the key for the next retracement lower. At the same time, we can't rule out a record high before the end of the year.   FXMAG.COM: How do you think the price of Bitcoin will fall in the second half of 2023? Bitcoin bear market has been over since March of this year. Despite the recent decline, this is considered another short-term retracement before the upside trend resumes. The time/price method suggests another leg higher by September, while any downside retracement is likely to remain limited above 25K. On the upside view, 34K could be the next possible target within the next few weeks.

Higher yields push gold lower Could the US CPI be a game-changer? A break of June lows could be very bearish The second half of the summer hasn’t been kind to gold so far, with the yellow metal coming close to $2,000 once more before plunging back toward $1,900 where it spent most of late June and early July. Higher yields, particularly in the US, and a stronger dollar have been primarily responsible for this but there’s probably also an element of uncertainty in the economic data that’s making traders a little nervous. We’ve finally reached the end of the tightening cycles – or extremely close to it – and now we’re left wondering how long we’ll be stuck here. We’ve seen some significant improvement in some areas but not yet enough to convince policymakers that the case for rate hikes has passed, let alone that there is any case for easing again early next year. That narrative may change if we see some further improvement in the data, starting with the US CPI tomorrow, but for now, that nervousness is creeping back in.     For one, it would make the rotation on 20 July all the more significant and would confirm the rally that preceded it as a retracement, indicating the broader decline may still be in play. What’s more, a move below the 200/233-day simple moving average band – the lower end of which falls around $1,860 – could be viewed as another very bearish development.

Technical outlook: EUR/USD has carved a fresh low at 1.0845 last week remaining just shy of initial support around 1.0830. The single currency pair has pulled back since then and is seen to be trading above 1.0880 at this point in writing. The bulls are likely to push prices towards the 1.1000-50 area before the next leg resumes lower. EUR/USD has broken its one-year trend line support as seen on the daily chart here. The probability remains for a push through the backside of the support-turned-resistance zone, which is seen around the 1.1000-50 zone before turning lower towards the 1.0500 Fibonacci target. Also, note that the entire rally between 0.9535 and 1.1275 could be retraced with prices reaching 1.0200. EUR/USD seems to have also carved a lower-degree downswing between 1.1275 and 1.0845 which could be retraced in the next few trading sessions. The Fibonacci 0.618 retracement is seen passing through 1.1150 which could be tested before the next leg resumes lower again. A push through 1.0920 will confirm that a corrective rally is underway.       Trading idea: A potential rally towards 1.1150 in the near term remains possible.  

JOLTS job openings slip to 8.827m (9.465m expected, 9.165m previously) Consumer confidence also falls but the survey is volatile Is last week’s breakout stalling?   As we near the end of the summer, activity will start to pick up again and that may begin this week in the build-up to Friday’s jobs report. With Jackson Hole behind us, and not really living up to the usual hype, the focus now switches to the September central bank meetings and the key data releases that could sway them one way or another as policymakers ask themselves whether they’ve already done enough. From the Fed’s perspective, the week is off to a promising start with the JOLTS job opening report much softer than expected, alongside downward revisions to the previous month. The Fed needs to see a softer labor market to be confident that price pressures aren’t just abating but substantially and sustainably and this report is a move in the right direction. Job openings are now back at levels last seen in the summer of 2021 and not too far from where they were pre-pandemic. Further softness over the next few months looks very plausible which could contribute to a cooler labor market and sustainably lower wage growth. The CB consumer confidence number also suggests households are still wary, although the survey can be quite volatile and correlated with factors such as stock markets and gas prices, as we’ve seen the last couple of months alone.   Breakout to gather pace? Cable had been threatening to break lower throughout August and it finally happened at the end of last week, with the price moving below 1.26 and closing below the 55/89-day simple moving average band.       That could be viewed as a very bearish moving coming soon after a brief 38.2% retracement – July highs to early and mid-August lows – and a repeated test of that support. While it has consolidated a little higher since, that US data did briefly push it lower once more although it has since pared those moves. What’s interesting is the momentum indicators at the bottom as while the pair hasn’t accelerated lower following the breakout in a significant way, the MACD and stochastic look fairly healthy. There’s a lot of economic data this week though from the US that could sway this one way or another.      

Fed policymakers encouraged by recent data but won’t get complacent BoE interest rate expectations barely changed after UK Autumn Statement GBPUSD reverses near key resistance The two big events of the last 24 hours haven’t really packed the punch they occasionally can which perhaps explains why we aren’t seeing big moves today.   Fed determined to “proceed carefully” The FOMC minutes were arguably slightly on the dovish side, with the committee now seemingly of the view that no further hikes will be needed, with the language instead focusing on the need to proceed carefully. While we probably will still hear more of the higher for longer mantra from policymakers in public ahead of the December meeting, it’s clear now that the FOMC is pleased with the recent progress it’s seen and as long as it doesn’t go into reverse, rate hikes are a thing of the past. The question now is how long before the rate-cutting conversations begin. Markets are pricing in the first reduction around June but I can’t imagine policymakers will acknowledge that possibility for some time. The late pivot still looks highly likely as the Fed seeks to avoid underestimating inflation again. Markets still pricing in a possible UK rate cut in June The UK Autumn Statement wasn’t a big market-moving event today and perhaps in the current environment, that’s a good thing. Given the speculation in recent days around what measures Chancellor Jeremy Hunt would announce due to the additional fiscal headroom and proximity to the election, there have been some concerns that measures could run counter to the Bank of England’s goal of getting inflation back to 2%. The fact that the pound was fairly steady during today’s event and markets are still pricing in a 50% chance of a rate cut by June suggests investors are not concerned about any inflationary implications on the back of today’s announcements.   GBPUSD pulls back near key resistance The pair had rallied in recent weeks towards 1.26 which only recently had been a major technical level. GBPUSD Daily Source – OANDA on Trading View   Not only does it represent the 50% retracement of the move from the July highs to the October lows, but it coincides with the neckline from the head and shoulders it broke below in early September. Yesterday it was looking a little short of momentum which could be a red flag near such a potentially important technical level. It’s now rotated lower which doesn’t necessarily mean it’s failed and heading lower, but it may suggest the market views it as an important level.