swing high

Crypto Industry News:  When asked about the future of the Ethereum cryptocurrency, ChatGPT gave surprisingly good news. Of course, no one else could have done it - only his uncensored version of DAN. Nay. He estimated that Ethereum could be worth over $10,000. Perhaps even by the end of the year. It seems downright improbable. The information presented below is a curiosity. They do not constitute financial or investment advice or any other type of recommendation.   They are only a subjective opinion, and ChatGPT itself, like any algorithm, can be wrong. The first quarter of the new year has brought an end to the disastrous declines of cryptocurrencies so far.   Technical Market Outlook: The ETH/USD pair has broken below the technical support seen at the level of $1,865 and made a new local low at the level of $1,836. The market is still under the bearish pressure and bears managed to retrace 50% of the last wave up.The next technical support is seen at the level of $1,816. The 61% Fibonacci retracement of the last wave up is seen at $1,825.   The momentum is now slightly positive, but the market still trades below the short-term trend line resistance. Only a sustained breakout above the line would change the outlook to more bullish.     Weekly Pivot Points: WR3 - $1,848 WR2 - $1,826 WR1 - $1,817 Weekly Pivot - $1,803 WS1 - $1,795 WS2 - $1,780 WS3 - $1,758   Trading Outlook: The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August 2022 at the level of $2,029. This is the key level for bulls, so it needs to be broken in order to continue the up trend. The key technical support is seen at $1,368, so as long as the market trades above this level, the outlook remains bullish.  

Technical Market Outlook: The GBP/USD pair has rebounced from the lows seen at the level of 1.2690 and is heading higher towards the swing high located at 1.2846. The 50 MA will provide the dynamic resistance for bulls around the level of 1.2804.   The momentum is strong and positive, so the short-term outlook for GBP remains bullish. The intraday technical support is seen at the level of 1.2738 and 1.2690.    

According to the latest study by software company ConsenSys, as many as 92% of people around the world have heard of cryptocurrencies. In a study conducted on a group of 15,158 people in 15 countries, it turned out that despite high awareness, understanding of blockchain technology is much lower.   This proves that digital currencies such as Bitcoin have become a household name. However, only 8% of respondents could confidently say that they knew the general concept of Web3, the decentralized Internet of the future. Although cryptocurrencies and blockchain have gained mainstream awareness, most people do not fully understand what it is all about and need to update their knowledge on the subject. The results of the study show that developing regions of the world show the greatest awareness and interest in cryptocurrencies. Nigeria, South Africa and Brazil lead on this issue. With 99% of Nigerian respondents showing crypto awareness and over 70% correctly defining what blockchain is.     Technical Market Outlook: The BTC/USD pair has made a new swing high at the level of $31,002, but the Doji candlestick pattern was made at the top of the move on the H4 time frame chart. The market reversed and is now back inside the trading range. The intraday technical support is seen at the level of $29,556 and the intraday technical resistance is located at $30,328.   Moreover, the bulls had broken above the technical resistance located at $28,446 and now this level will work as the technical support. The momentum is strong and positive on the H4 time frame chart and on a Daily time frame chart, so the bulls are ready for another wave up. The next target for bulls is still seen at the level of $32,350.  

The Ministry of Foreign Affairs of Belarus is working on legal amendments to ban peer-to-peer (P2P) transactions in cryptocurrencies such as Bitcoin. On July 2, the ministry issued an official statement on Telegram regarding new regulations to ban individual P2P cryptocurrency exchanges.   The authorities cited the high level of cybercrime in Belarus, claiming that since January 2023, local prosecutors had suppressed the activities of 27 citizens who provided "illegal cryptocurrency exchange services." Their total illegal income amounted to almost 22 million Belarusian rubles ($8.7 million). The ministry argued that P2P cryptocurrency services are "in demand by scammers who withdraw and convert stolen funds and transfer money to organizers or participants in criminal schemes." To eliminate such illegal activity, the ministry will prohibit P2P transaction entities, only allowing them to exchange cryptocurrencies through exchanges registered in the Belarusian Technology Park (HTP).       Technical Market Outlook: The BTC/USD pair has made a new swing high at the level of $31,372 as the up trend has resumed and then pulled-back from the extremely overbought market conditions on the H4 time frame chart. The intraday technical support is seen at the level of $29,556. Moreover, the bulls had broken above the technical resistance located at $28,446 and now this level will work as the technical support and the line in sand for bulls. The momentum is strong and positive on the H4 time frame chart and on a Daily time frame chart, so the bulls are ready to continue the up move. The next target for bulls is still seen at the level of $32,350.  

Historical tightly inverse correlation between gold (XAU/USD) and US Treasury 10-year real yield (TIPS) has started to wane in the past four weeks. An uptick in geopolitical risk may be the factor that is supporting a resilient movement in gold despite higher 10-year TIPS. Watch the US$1,940 key intermediate resistance on gold (XAU/USD) for a potential bullish breakout. In the past week, a higher momentum movement is seen in longer-term sovereign yields over their shorter-term durations where the US Treasury 10-year yield recorded a weekly gain of 23 basis points (bps) over a meager return of + 5 bps seen on the US Treasury 2-year yield. If we stripped out inflation expectations, the US Treasury 10-year real yield, derived from the 10-year Treasury Inflation Protected Securities (TIPS) yield has a higher momentum intensity over the US Treasury 10-year nominal yield.     US Treasury 10-year real yield has broken above its Oct 2022 major swing high     Fig 1: US Treasury 10-year real & nominal yields major trends of 11 Jul 2023 (Source: TradingView, click to enlarge chart) Based on last Friday, 7 July closing prices, the US Treasury 10-year real yield increased to 1.79% and broke above its prior October 2022 key major swing high of 1.69% while the 10-year nominal yield rose to 4.07% but still below its October 2022 key major swing high of 4.22%. Thus, given the higher positive momentum factor seen in the longer-term real risk-free interest rate; US Treasury 10-year real yield, the opportunity costs of holding other long-duration riskier assets in fixed income and equities have increased which reinforced their weak performances seen last week; iShares Investment Grade Corporate Bond ETF (-2.40%), iShares High Yield Corporate Bond ETF (-1.63%), and iShares PHLX Semiconductor ETF (-2.54%). Interestingly, another “competing” asset, gold priced in US dollars (XAU/USD) did not record a similar magnitude of loss last week. In contrast, spot gold (XAU/USD) recorded a gain of +0.31% for the week ending 7 July.   The prior high degree of inverse correlation between gold and 10-year TIPS has waned   Fig 2: US Treasury 10-year real yield correlation trend with Gold (XAU/USD) as of 11 Jul 2023 (Source: TradingView, click to enlarge chart) The correlation between gold (XAU/USD) and US Treasury 10-yield real yield (TIPS) tends to be tightly inversely correlated in the past ten years; when 10-year TIPS rose, the price of gold (XAU/USD) staged a decline and vice versus due to zero interest income earned from holding gold and as a hedge on US government bonds, as gold has no counterparty risk. The 20-period rolling correlation coefficient between gold and the 10-year TIPS has been reduced to -0.60 from a recent high level of -0.84 recorded in early May 2023. What causes the current breakdown in the historical long-term tightly inverse correlation between gold and 10-year TIPS? It is likely due to the geopolitical risk factor where the price of gold, acting as a safe haven asset tends to increase when geopolitical risk increases. Before the Russian invasion of Ukraine that occurred on 24 February 2022, in the prior two months, the high degree of indirect correlation between gold and 10-year TIPS have dissipated as both started to move in direct correlation.   Geopolitical risk has ticked up to an eight-month high     Fig 3: Geopolitical Risk Index as of 30 Jun 2023 (Source: MacroMicro, click to enlarge chart) Based on quantified measures of geopolitical risk, the latest reading of the Geopolitical Risk Index (GPR) for the month of June 2023 compiled by US Federal Reserve economists Dario Caldara and Matteo lacoviello has started to tick up above the 100 level to 103.10, its highest level in eight months. The GPR measures the social mood of impactful geopolitical events, threats, and conflicts since 1985 by counting the keywords used in the press.     Watch the US$1,940 key intermediate resistance on gold (XAU/USD) for potential bullish breakout   Fig 4: Gold (XAU/USD) medium-term trend of 11 Jul 2023 (Source: TradingView, click to enlarge chart) Thus, the recent resilient price movement of gold (XAU/USD) that has managed to hold at the US$1,913/1,896 key medium-term support despite the steep up move seen in the 10-year TIPS is likely attributed to an uptick in geopolitical risk. Based on technical analysis, clearance above the US$1,940 key intermediate resistance sees the next resistance coming in at US$1,990 in the first step supported by a positive momentum reading seen in the daily RSI oscillator. On the flip side, a break below the US$1,896 key medium-term pivotal support invalidates the bullish tone to expose the next support at US$1,856 (also the 200-day moving average).

AUD is the biggest gainer (+0.22%) against the USD in today’s Asian morning session. The current rebound of the AUD/USD has taken shape right at the key 200-day moving now acting as support at 0.6700. Intermediate resistance for the AUD/USD stands at 0.6835. This is a follow-up analysis of our prior report, “AUD/USD Technical: Short-term bullish revival” published on 18 July 2023. Click here for a recap. Since the 20 July 2023 intraday high of 0.6847, the AUD/USD has declined by 132 pips to print a low of 0.6715 yesterday, 24 July in light of short-term bearish sentiment seen in China equities due to the continuation of bleak key economic data (Q2 GDP, retail sales, youth unemployment, housing prices) that indicates weak internal demand environment, and heightened risk of a deflationary spiral in China. Interestingly, the 132 pips slide has managed to find support on the key 200-day moving average and staged a bounce of 41 pips to print a current intraday high of 0.6756 in today’s Asian morning session. The Aussie dollar is the strongest currency against the USD with an intraday gain of +0.22% that surpassed the other majors, GBP (+0.13%), JPY (+0.13%), NZD (+0.11%), EUR (+0.08%), CHF (+0.05%), CAD (+0.02%) at this time of the writing during today, 25 July Asian morning session. Today’s outperformance of the AUD/USD has been reinforced by China’s top decision-making body, the Politburo which issued a statement of “hope” at the end of its meeting yesterday that vowed to implement counter-cyclical policy to boost consumption, more support for the property market, and ease local government debt.   The medium-term trend is still sideways   Fig 1: AUD/USD medium-term trend as of 25 Jul 2023 (Source: TradingView, click to enlarge chart) The medium-term trend of the AUD/USD is still trapped with a sideways range configuration between 0.6930 and 0.6580.   Held at key 200-day moving average with bullish short-term momentum   Fig 2: AUD/USD minor short-term trend as of 25 Jul 2023 (Source: TradingView, click to enlarge chart) In conjunction with the current rebound right at the 200-day moving average, the hourly RSI oscillator has traced out a series of “higher lows” after an exit from its oversold region and has yet to reach its overbought region. These observations suggest that short-term momentum has turned bullish. Watch the 0.6700 key medium-term pivotal support to maintain the bullish tone with intermediate resistance coming in at 0.6835 and a clearance above it sees 0.6890 next (also the 16 June 2023 swing high). On the flip side, failure to hold above 0.6700 negates the bullish tone to expose the next near-term support at 0.6630.

Recent bullish breakout from “Descending Wedge” has led to a 10% rally to reach a medium-term resistance zone of US$83.80/84.90. Technical elements are now advocating a potential corrective pull-back with supports coming in at US$79.80 and US$77.20. Today’s surprise three interest rate cuts by China’s central bank, PBoC has triggered a risk-off behaviour in cross-assets (FX, stock indices, commodities) via a negative reflexivity feedback loop.   This is a follow-up analysis of our prior report, “WTI Oil Technical: Potential bullish reversal Descending Wedge in play” published on 21 July 2023. Click here for a recap. The price actions of West Texas Oil (a proxy of WTI crude oil futures) have indeed shaped the bullish breakout from its “Descending Wedge” configuration on 24 July and rallied by +10% to print an intraday high of US$84.92 per barrel on last Thursday, 10 August which coincided with a medium-term resistance zone of US$83.80/84.90 (see daily chart). Today, West Texas Oil has shed almost -1% intraday at this time of the writing to print an intraday low of $81.60 that recorded an accumulated loss of -3.7% in the past two sessions since Thursday, 10 August high of US$84.92. The current weakness of oil has been in line with a broad-based risk-off behaviour seen in cross-assets today (FX, major stock indices & industrial metals commodities) attributed to the contagion fear in China’s financial system after a major trust fund failed to make timely payments to holders of its wealth management products that are backed by unsold properties of indebted property developers. Today’s unexpected interest rate cut by China’s central bank, PBoC on its 1-year medium-term lending facility (MLF) interest rate by 15 basis points (bps), more than the previous 10 bps cut implemented in June to bring it down to 2.50%, its lowest level since late 2009. The 1-year MLF rate is a benchmark interest rate in China where PBoC provides a credit line to major commercial banks which in turn acts as a guide for another two benchmark interest rates that commercial banks charged to customers: the 1-year and 5-year loan prime rates. Interestingly, PBoC enacted two more interest rate cuts today on the overnight standing lending facility (SLF) which was cut by 10 bps to 2.65% while the 7-day and 1-month SLF rates were cut by 10 bps each to 2.80% and 3.15% respectively. Three interest rate cuts in a single day are considered a “rare” event in China given that the current guidance from China’s top policymakers is in favour of targeted stimulus policies to address the current economic growth slowdown rather than enacting “opening the liquidity floodgate” measures. Hence, today’s surprise move on China’s more accommodative monetary policy stance is perceived as a heightened red alert on its financial system where trust firms’ default risks have risen that may trigger a systemic contagion which in turn created the negative reflexivity feedback loop seen today.     Daily RSI oscillator conditions suggest an imminent short-term pull-back   Fig 1:  West Texas Oil medium-term trend as of 15 Aug 2023 (Source: TradingView, click to enlarge chart) The daily RSI oscillator flashed a bearish divergence condition at its overbought region on 9 August 2023 which suggests that the medium-term upside momentum of West Texas Oil is overstretched, and its price actions face the risk of a corrective pull-back to retrace certain portions of the current 26% rally of its medium-term uptrend phase from 28 June 2023 low of US$66.95. A bearish breakdown below minor ascending channel support   Fig 2:  West Texas Oil minor short-term trend as of 15 Aug 2023 (Source: TradingView, click to enlarge chart) Today’s price actions of West Texas Oil have staged a bearish breakdown below its minor ascending channel support from the 28 June 2023 low. Watch the US$83.80 key short-term pivotal resistance to maintain the short-term bearish tone to see the next support coming in at US$79.80 and a break below it exposes US$77.20 next (also the key 200-day moving average). On the flip side, a clearance above US$83.80 invalidates the corrective pull-back scenario for a retest of the 10 August 2023 swing high area of US$84.90 and a clearance above it sees the next resistance coming in at US$87.00 (psychology level & Fibonacci extension).  

Last Friday’s price actions of spot Gold (XAU/USD) have managed to find support again at the 200-day moving average ahead of the US CPI data release & ECB monetary policy decision this week. The recent -5.15 % decline seen in Gold from its 20 July 2023 swing high of US$$1,987.53 has started to see some signs of short-term bullish reversal elements since 21 August 2023. The up-trending 10-year US Treasury real yield has also started to consolidate between 1.95% to 2.00% level which may negate the bearish tone on Gold at least in the short-term. US$1,910 support and US$1,932 resistance are the two key short-term technical levels to watch.   Since its 20 July 2023 swing high of US$1,987.53, spot Gold (XAU/USD) has declined by -5.15% to print a low of US$1,885 on 17 August 2023 in line with a rising longer-term 10-year US Treasury real yield which increased the opportunity costs of holding gold as it is a non-interest yielding asset.   Major uptrend remains intact Fig 1: Gold (XAU/USD) major trend as of 11 Sep 2023 (Source: TradingView, click to enlarge chart) Despite the underperformance of Gold seen in the past five weeks, its major uptrend phase in place since the 3 November 2022 low of US$1,616 remains intact as the -5.15% fall from the 20 July 2023 high of US$1,987.15 has managed to stall at the lower boundary of a major ascending channel from its 3 November 2022 major swing low and close to the 38.2% Fibonacci retracement of the prior major uptrend phase from 3 November 2022 low to 4 May 2023 high (see daily chair). Also, the up-trending 10-year US Treasury real yield (derived via the inflation-protected securities, TIPS of the same duration) has started to consolidate at the 1.95% to 2.00% level which may negate the bearish tone on Gold at this juncture.     Short-term momentum has tilted toward the bullish camp  

Recent price actions of the Nikkei 225 are still trading above its 20-day moving average despite the latest official downbeat assessment of Japan’s economy. Significant correlation flip between USD/JPY and Nikkei 225 may persist as a weaker JPY may not be a main driver to drive up the price actions of Nikkei 225. A strengthening JPY may see the outperformance of consumer-oriented TOPIX equities sectors such as Retail Sales and IT & Services. A new medium-term uptrend may have kickstarted in Nikkei 225, watch the 32,090 key medium-term support. Japan’s government on this Wednesday, 22 November downgraded its assessment for the first time in ten months, citing economic growth in Japan has recovered moderately but appeared to be pausing due to weak domestic demand. The benchmark Nikkei 225 has continued to trade above its upward-sloping 20-day moving average since the start of this month, November, and rallied by +11% from its key swing low area of 30,530 printed on 4 and 24 October 2024. The latest official downbeat economic assessment has not derailed the current bullish tone of the Nikkei 225 as it has managed to remain above the “gapped up” support of 32,820 formed on last Wednesday, 15 November; the effect in a global risk-on herding behaviour reinforced by the softer than expected US CPI print for October that was released on last Tuesday, 14 November (current level of Nikkei 225 is at 33,452 as of 22 November).   Significant correlation flip between Nikkei 225 & USD/JPY   Fig 1: Correlation trends between Nikkei 225, USD/JPY & S&P 500 as of 22 Nov 2023 (Source: TradingView, click to enlarge chart) Interestingly, the previous long-term traditional high direct correlation between the movements of the Nikkei and USD/JPY has broken down based on its latest 20-day rolling correlation coefficient reading of -0.15. From a fundamental standpoint, a persistently weaker JPY (where the JPY has depreciated by as much as 15.9% against the US dollar since the start of 2023) is likely to have a more detrimental effect now on Japan’s economy due to the risk of higher imported inflation which in turn drives up imported energy costs for resources-scare Japan. Moreover, oil prices are likely to remain sticky on the upside in the medium term as OPEC+ leading member, Saudi Arabia seems to be still in favour of extending current oil supply cuts into 2024. Therefore, a stronger JPY is much needed for Japan at this juncture to negate the risk of elevated imported inflation that can dent business and consumer confidence which in turn dampens internal domestic spending. Hence, this latest narrative explains the current “correlation flip” between USD/JPY and Nikkei 225.   Consumer-oriented TOPIX equities sectors may benefit from a stronger JPY   Fig 2: 1-month rolling performance of the 17 TOPIX sectors as of 22 Nov 2023 (Source: TradingView, click to enlarge chart)   In the past week, the JPY has started to strengthen against the US dollar driven by more of an increasing expectation of a dovish tilt from the US Federal Reserve rather than a hawkish Bank of Japan’s modus operandi. The JPY has been appreciated by as much as around +3% against the US dollar since last Monday, 13 November and it has started to translate to an uptick in bullish sentiment seen in the Japanese equities sectors that are tied to business and consumer confidence and domestic spending. Based on the one-month rolling performance of the 17 TOPIX sectors as of 22 November 2023, Retail Trade (+7.59%) and IT & Services (+7.13%) have started to show outperformance against the broader TOPIX index (+5.98%).   Potential start of new medium-term uptrend for Nikkei 225   Fig 3: Nikkei 225 medium-term trend as of 22 Nov 2023 (Source: TradingView, click to enlarge chart) In the lens of technical analysis, the recent bullish momentum seen in the Japanese stock market is likely to trigger the potential start of a medium-term (multi-week to multi-month) uptrend phase in the Nikkei 225 after the -9.5% corrective decline seen from 16 June to 24 October 2023. The current price action of the Nikkei 225 as of 22 November is retesting a 33-year swing high of 33,770 after an initial pull-back seen on Monday to Tuesday. Meanwhile, the daily RSI momentum indicator has continued to exhibit positive momentum readings after its earlier bullish momentum breakout and retest on 7 November 2023. If the 32,090 key medium-term pivotal support holds, a clearance above 33,770 is likely to see the next medium-term resistance coming in at 36,600. However, a break below 32,090 sees another round of corrective decline to retest the 200-day moving average that also confluences closely with swing low areas of 4/24 October 2023, acting as a support at 30,530.