Solid ECN | Professional Market Analysis | *Video*

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Key Releases​



United States of America

USD is weakening against JPY and has ambiguous dynamics against GBP and EUR.

Investors are focused on the comments of US Federal Reserve officials regarding the high growth of inflation in the country. Yesterday, in an interview with CNBC, Philadelphia Fed President Patrick Harker said the current price increase requires urgent action, as it was more resilient than previously expected. To rectify the situation during the year, the official expects three or four rate increases. Chicago Fed President Charles Evans expressed a similar opinion, but, in his opinion, three raises would be most acceptable. Indeed, all the latest data points to growing inflationary pressures in the US economy. Published yesterday, the December statistics on the producer price index were no exception, and the figure was 9.7% YoY. The core producer price index was 8.3%, exceeding market expectations. Today’s US December retail sales figures were poor. Their volume decreased by 1.9% instead of the expected 0.1%, which could result from the Omicron epidemic, which is seriously holding back purchases.

Eurozone​

EUR is weakening against GBP and JPY but has ambiguous dynamics against EUR.

Eurozone trade balance data released today was poor. In November, instead of growing to 7.6B euros, the indicator fell by 1.5B euros. At the same time, payments for imports rose by 32.0%, while export revenues grew by only 14.4% due to a serious increase in prices for oil and gas exported to European countries. As for the positive news, it is worth noting that European companies managed to survive the next wave of the coronavirus pandemic relatively successfully. According to Reuters sources, Eurozone finance ministers acknowledged this at a meeting on Monday. The number of bankruptcies in European companies was less than expected, thanks to the effectiveness of the national measures to support liquidity in the amount of 2.3T euros adopted in the Eurozone. According to the official, the measures to support businesses can be continued for a long time, as companies' total debt continues to grow.

United Kingdom​

GBP is strengthening against EUR, weakening against JPY, and has ambiguous dynamics against GBP.

Published today, data on UK GDP for November were positive. The British economy grew by 0.9% after slowing to 0.2% a month earlier, reaching pre-pandemic levels. However, some experts fear that in December-January, the GDP indicator may decrease again, as the new wave of the Omicron coronavirus will be taken into account in the calculations. The service sector and retail trade, which have been actively recovering so far, may suffer the most damage. Chancellor Rishi Sunak, commenting on these data, noted that the government would continue to support the economy, including through subsidies, loans, and tax breaks for businesses. In November, the volume of industrial production in the UK also continued to grow. It increased by 1.0% MoM and by 0.1% YoY.

Japan​

JPY continues to strengthen against its main competitors – GBP, USD, and EUR.

Today, the December data on the price index for corporate goods were published in Japan. It was –0.2% MoM and 8.5% YoY. This growth was the second largest after the November jump to 9.2%. An increase in wholesale prices could force Japanese firms to shift the burden of costs to the consumer, which would lead to an increase in consumer inflation, bringing it closer to the target level of 2.0%. The position of JPY is supported by media reports that officials of the Bank of Japan are discussing the possibility of raising the rate, despite the insufficient level of price growth in the country.

Australia​

AUD is weakening against its main competitors – EUR, GBP, USD, and JPY.

The pressure on AUD is exerted by continuing the Omicron coronavirus pandemic and data on Chinese imports, published today. According to statistics for December, the volume of imports of goods to China slowed down growth from 31.7% to 19.5%, which was significantly worse than forecasts of 26.3%. China remains Australia's leading trading partner, and recent data may indicate a reduction in Australian goods and raw materials sales to this country. The November data of the Australian housing market, published today, were positive. The volume of housing loans increased by 7.6%, while the volume of investment in real estate increased by 3.8%.

Oil​

Oil quotes are trying to grow.

Investors remain optimistic about the growth in oil demand this year, as the governments of the leading oil-consuming countries are in no hurry to introduce severe restrictions due to the Omicron pandemic, and the capacities of the participants in the OPEC+ agreement are not yet sufficient to meet the needs of the market. Soon, China may release part of the oil from its strategic reserves to the market, but this measure is unlikely to have a lasting effect on the oil market.​
 

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WTI Crude Oil, Elliot Wave Analysis​

The price may grow​

On the daily chart, the upward wave C forms, within which the first wave 1 of (1) of C develops. Now, the fifth wave of the lower level v of 1 of (1) is developing, within which the wave (iii) of 1 is forming. If the assumption is correct, the price will grow to the levels of 93.00–100.00. In this scenario, critical stop loss level is 65.93.​

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USD/CHF, the US currency is recovering​



Current trend
The US dollar shows strong growth against the Swiss franc during the Asian session, building on the "bullish" momentum that was formed at the end of last week, when the pair consolidated near the local lows of November 2, 2021. At the moment, the development of the uptrend is mainly supported by technical factors, while the block of data from the US released on January 14 turned out to be frankly weak.

In particular, investors were disappointed by the sharp drop in Retail Sales in December by 1.9% after rising by 0.2% in November. The Retail Sales Control Group fell to a record 3.1% over the same period after falling 0.5% in November. Michigan Consumer Sentiment Index in January fell from 70.6 to 68.8 points, while analysts had expected a decline to only 70 points.

Markets in the US are closed today to celebrate Martin Luther King, Jr. Day, so trading activity is likely to be somewhat reduced.

Support and resistance
Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is going down preserving a previous sell signal (located below the signal line). Stochastic, which has reached its lows, is trying to reverse upward, signaling in favor of the development of corrective growth in the nearest time intervals.

Resistance levels: 0.9157, 0.9175, 0.9200, 0.9220.
Support levels: 0.9125, 0.9100, 0.9073, 0.9036.​

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Netflix Inc, Elliot Wave Analysis



The price may fall.
On the daily chart, the third wave of the higher level (3) developed, and a downward correction started to develop as the fourth wave (4). Now, the wave and of (4) is forming, within which the third wave of the lower level iii of A has formed, and a local correction is developing as the wave iv of A. If the assumption is correct, after the end of the correction, the price will fall to the levels of 465.32–411.70. In this scenario, critical stop loss level is 620.94.


 

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USD/JPY: US dollar wins back its losses​


Current trend
The US dollar shows strong growth against the Japanese yen in Asian trading, quickly retreating from local lows, updated at the end of the last trading week. On Friday, the US currency updated its lows from December 20, 2021, dropping just below 113.50. Nevertheless, the instrument failed to consolidate at new levels, and already on the same day the US dollar won back most of its losses.

It is also worth noting that on Friday a large block of macroeconomic statistics was released in the US, which turned out to be quite weak, but did not cause the expected negative reaction on the market. Anyway, along with a significant drop in Retail Sales, the data also reflected a decline in Industrial Production in December by 0.1%, while analysts had expected it to grow moderately by 0.4%. Michigan Consumer Sentiment Index in January fell from 70.6 to 68.8 points, which turned out to be worse than forecasts for a decline to 70 points.

Support and resistance
In the D1 chart, Bollinger Bands are reversing horizontally. The price range is expanding from below, remaining spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is about to test the zero level for a breakdown. Stochastic, on the contrary, indicates the growth of the instrument. The indicator reversed upwards near its lows, reflecting the strongly oversold dollar in the ultra-short term.

Resistance levels: 114.50, 115.00, 115.50, 116.00.
Support levels: 114.00, 113.50, 113.00, 112.50.​

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SOLIDECN

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S&P 500: the beginning of the reporting season has disappointed investors


Current trend
Due to a not very positive start to corporate reporting, the leading index of the US economy, S&P 500, corrects downwards, trading around 4655.0.

Among the index's major components, financial conglomerate JPMorgan Chase & Co. was one of the first to publish its data, showing a quarterly income of $29.26B, which was below $29.65B a quarter earlier and $29.78B predicted by analysts. Despite the poor earnings performance, earnings per share were $3.33, well above the $3.01 expected. Bad news came from the large pharmacy chain Walgreens Boots Alliance. The company said some pharmacies would close over the weekend as the state is understaffed by the continued spread of the omicron strain. These reports come after fourth-quarter earnings of $33.9B were reported, well ahead of the $32.88B forecasted.

Securities again began to rise, putting additional pressure on the stock market. Leading 10-year US bonds are trading at 1.793%, up from Friday's 1.750%.

Growth leaders include Las Vegas Sands Corp. (+14.15%), Wynn Resorts Ltd. (+8.60%), and Discovery Inc. (+7.04%).

Among the decline leaders there are JPMorgan Chase & Co. (–6.15%), Monster Beverage Corp. (–4.73%), and Simon Property Group Inc. (–4.47%).

Support and resistance
The index quotes move within a global upward channel near the support line. Technical indicators reversed and gave a local sell signal: indicator Alligator's EMA fluctuations range expands downwards, and the histogram of the AO oscillator trades in the sell zone.

Resistance levels: 4710.0, 4800.0.
Support levels: 4593.0, 4500.0.​

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Tesla Inc, General Review


Current trend
The stocks of Tesla Inc., the world's leading manufacturer of electric cars, continue the global correction, trading at 1049.00.

Due to a large amount of incoming information, the instrument's volatility remains high. Yesterday, the corporation announced that the production of the long-awaited new Cybertruck was postponed again, and its start is postponed to Q1 2023. It was previously planned to start work in the second half of 2022, but the delay is caused by the desire of the developers to make changes to the features and functionality of the truck.

Global sales of leading US assets by large investors continue. Following the head of Tesla Inc., Elon Musk, they began to sell shares and large funds. On Thursday, the ARK Innovation ETF and ARK Generation Internet ETF sold a total of 87.756K shares of the company for over $90M.

The financial report will be published on 26 January. Analysts expect quarterly revenue to reach a record $16.79B despite the sell-off and negative news, and earnings per share could hit $2.21.

Support and resistance
Quotes are moving within the corrective downward channel, after which the global uptrend may continue. Technical indicators keep a poor buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram moves close to the transition level.

Resistance levels: 1105, 1200.
Support levels: 1000, 892.

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EURUSD Elliot Wave Analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward correction developed as the second wave 2 of (3), within which the wave c of 2 formed. Now, the development of the third wave 3 of (3) started, within which the first wave of the lower level (i) of i of 3 forms. If the assumption is correct, the pair will grow to the levels of 1.1687–1.1907. In this scenario, critical stop loss level is 1.1268.​

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SOLIDECN

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ETH/USD
Singapore government rhetoric reinforces the "bearish" trend

Current trend
The ETH/USD pair started the current week with a decline within the general market trend.

Medium-term pressure on the sector is exerted by investors' expectation of a tightening of the monetary policy of the US Federal Reserve. The completion of the emergency program of bond purchases and the first increase in interest rates may occur as early as March, leading to further strengthening of the US currency. An additional negative factor for ETH could be the tightening of regulation of the cryptocurrency industry in Singapore. The other day, the country's monetary authority (MAS) banned the widespread advertising of digital assets and the installation of cryptomats. Officials explained their decision to complicate access to tokens to prevent rash trade in them and protect their citizens. All firms working with digital assets, including banks, payment services, and exchanges, fall under the new rules.

Singapore is one of the leading countries in terms of the population's degree of acceptance of ETH. According to experts, more than 43% of local traders own this particular cryptocurrency, and tightening regulation of the sector may make it difficult to work with the asset.

Support and resistance
Resistance levels: 3437.50, 3750.00, 4140.00.
Support levels: 3125.00, 2812.50, 2500.00, 2300.00.

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Crude Oil, Market Analysis in 1 Minute


Current trend
During the Asian session, Brent Crude Oil prices are actively growing, testing the level of 87.00 for a breakout and renewing record highs since October 2018.

The quotes are moderately supported by the weakening of investors' fears that the rapid spread of the Omicron strain will negatively affect the pace of national economic recovery from the consequences of the coronavirus pandemic. In the meantime, indicators continue to stabilize, and the leading central banks are ready to continue the tightening monetary policy cycle. However, some skeptics still fear that the recovery in demand may not be able to keep with the increase in supply, given all the current risks.

On Monday, the quotes of "black gold" traded with restraint against the backdrop of news from Libya, where production volumes recovered to 1.2M barrels per day. Last week, it declined noticeably due to the blocking of several western fields.

Support and resistance
On the daily chart, Bollinger Bands steadily grow. The price range widens, but not as fast as the "bullish" sentiment develops in the short term. The MACD indicator grows, keeping a strong buy signal (the histogram is above the signal line). Stochastic keeps a confident upward trend but is close to its highs, indicating that the instrument may become overbought in the ultra-short term.

It is better to keep the current long positions until the signals from technical indicators are clarified.

Resistance levels: 87.00, 88.50, 89.50.
Support levels: 86.00, 84.50, 83.50, 82.64.​

 

SOLIDECN

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Gold is consolidating at $1800


Current trend
Gold prices are consolidating near the psychological support at $1800, developing a weak downtrend since the end of last trading week. Demand for the precious metal is moderately declining as investor activity recovers. Traders ignore the difficult epidemiological situation in the world and focus on the prospects for further tightening of monetary policy by leading financial regulators. First of all, one should expect a rate increase from the US Federal Reserve and the Bank of England, while the European Central Bank is in no hurry to take active steps, waiting for more clear signals from the economy.

The macroeconomic statistics from the US released the day before did not have a noticeable impact on the dynamics of the instrument; however, it attracted attention with a sharp drop in the new york Empire State Manufacturing Index. In January, the indicator fell from 31.9 to -0.7 points, while forecasts suggested a decline to only 25.7 points.

Today, investors are focused on the statistics from the US on the dynamics of the construction market and data from Canada on the Consumer Price Index for December. In turn, statistics on inflation in Germany and the UK will be released in Europe.​


Support and resistance
In the daily chart, Bollinger Bands are reversing horizontally. The price range is slightly narrowing from above, reflecting the correctional decline in the short term. MACD is declining keeping a weak sell signal. Stochastic shows a more confident decline, but at the moment it is quickly approaching its lows, indicating growing risks of the instrument being oversold in the ultra-short term.

Resistance levels: $1814, $1823, $1831.
Support levels: $1805, $1800, $1790, $1778.32​
 

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SOLIDECN

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XRP/USD Technical Analysis


Current trend
The XRP/USD pair continues to trade within the long-term descending channel.

Last week, the token price attempted to rise to the level of 0.7812 (Murray [0/8]), supported by the middle line of Bollinger Bands, but could not break above it and resumed the decline. Currently, the quotes are trying to gain a foothold below 0.7500 (Fibo retracement of 61.8%) in order to continue the downward trend to the area of 0.5860 (Murray [-2/8]) and 0.5110 (the area of the lows of July last year).

The 0.7812 level remains key for the "bulls". Its breakout will give the prospect of growth of the trading instrument to 0.9100 (Fibo retracement of 50.0%), however, this option of price movement seems less likely, since the indicators point out the continuation of the downward trend: the Bollinger Bands and Stochastic are directed downwards, the MACD histogram is stable in the negative zone.

Support and resistance
Resistance levels: 0.7812, 0.9100, 0.9766.
Support levels: 0.7500, 0.6836, 0.5860, 0.5110.​

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SOLIDECN

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GBP/USD
Political uncertainty weighs on the pound​


Current trend
This week, the GBP/USD pair corrected down to 1.3570, but today it is trying to restore lost positions. In general, the British currency is influenced by a number of opposite factors.

The December data on inflation in the United Kingdom published today confirmed its further growth: the consumer price index rose from 5.1% to 5.4%, reaching its highest since 1992. The negative dynamics due to the increase in the cost of energy carriers should prompt the Bank of England to raise the interest rate again in early February, which, in turn, will serve as a catalyst for strengthening the pound. In addition, the UK has signs of a gradual exit from the coronavirus pandemic caused by the Omicron strain. The incidence in the country is gradually decreasing, which allows officials to announce the mitigation of existing quarantine measures as early as next week.

On the other hand, the growth of quotations is hindered by the problems of the national labor market and the intensifying political crisis, which now occupy significant attention of investors. According to November data, wage growth in the UK is slowing down and is seriously not keeping up with the increase in inflation, which may negatively affect consumption and the state of the economy as a whole. Meanwhile, investors are following the development of the situation in the country's parliament: Boris Johnson is getting closer to losing the post of prime minister due to the scandal caused by his presence at the event, while strict coronavirus restrictions were in effect on the territory of the United Kingdom. Members of the Conservative Party have already begun collecting parliamentary requests to begin the procedure for removing a politician from office.

Under these conditions, the US currency looks more stable and attractive for investment, as the market expects a cycle of interest rate hikes by the US Fed, the first of which may take place as early as March.

Support and resistance
The price of the GBP/USD pair has returned to the framework of the descending channel and is close to 1.3549 (Murray [7/8], middle line of Bollinger Bands). Its breakdown will give the prospect of further decline to the area of 1.3427 (Murray [6/8]). In case of a breakout of the level of 1.3672 (Murray [8/8]), the upward dynamics of the trading instrument will be able to continue to 1.3740 (January highs) and 1.3795 (Murray [+1/8]). The indicators do not give a single signal, confirming the uncertainty of the market: the Bollinger Bands are directed up, the Stochastic is directed down, while the MACD histogram is decreasing in the positive zone.

Resistance levels: 1.3672, 1.3740, 1.3795.
Support levels: 1.3549, 1.3427, 1.3305.​

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SOLIDECN

Member
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Key Releases


United States of America
The US currency is weakening today against its main competitors – the yen, the pound and the euro.

The published December data of the American labor market turned out to be positive: the number of construction permits issued increased from 1.717M to 1.873M, and the number of new homes whose construction has just begun increased from 1.678M to 1.702M. Today, the head of the White House, Joe Biden, is due to speak at a press conference on the occasion of the anniversary of his inauguration. He will inform citizens about his new legislative initiatives, as well as about further plans to combat the coronavirus pandemic.​


Eurozone
The European currency is strengthening against the USD, weakening against the pound and has ambiguous dynamics paired with the Japanese yen.

December data on the consumer price index in Germany were published today, which recorded an acceleration of inflation in the country. On a monthly basis, the index increased from -0.2% to 0.5%, and on an annual basis – from 5.2% to 5.3%. The pressure in the German and European economies as a whole continues to increase. In these circumstances, investors are turning their attention to the decisions of the European Central Bank (ECB), hoping that the regulator's officials will begin a more active fight against price increases following their colleagues from the Bank of England and the US Fed. However, the matter does not go beyond comments and hints yet. Last week, ECB Head Christine Lagarde said that inflation in the eurozone this year should decrease from the record high levels currently observed, and the agency is ready to take any measures necessary to reduce it to the target of 2.0%. The official's rhetoric was interpreted by some investors as a hint at the possibility of raising rates, but more specifically, the regulator's intention will be known only in early February, when the first meeting of the current year will take place. The head of the French central bank and ECB member Francois Villeroy de Galhau noted that France's economic growth has not slowed down from the rapid spread of the COVID-19 Omicron strain, but inflation in the eurozone's second-largest economy is still too high.​


United Kingdom
The British currency today is strengthening against its main competitors – the euro, the yen and the USD.

The December data on inflation in the United Kingdom published today confirmed its further growth: the consumer price index rose from 5.1% to 5.4%, reaching its highest since 1992. The negative dynamics due to the increase in the cost of energy carriers should prompt the Bank of England to raise the interest rate again in early February, which, in turn, will serve as a catalyst for strengthening the pound. In addition, the UK has signs of a gradual exit from the coronavirus pandemic caused by the Omicron strain. The incidence in the country is gradually decreasing, which allows officials to announce the mitigation of existing quarantine measures as early as next week. On the other hand, the growth of quotations is hindered by the problems of the national labor market and the intensifying political crisis, which now occupy significant attention of investors. According to November data, wage growth in the UK is slowing down and is seriously not keeping up with the increase in inflation, which may negatively affect consumption and the state of the economy as a whole. Meanwhile, investors are following the development of the situation in the country's parliament: Boris Johnson is getting closer to losing the post of prime minister due to the scandal caused by his presence at the event, while strict coronavirus restrictions were in effect on the territory of the United Kingdom. Members of the Conservative Party have already begun to collect parliamentary requests to begin the procedure for removing the politician from office, but he himself does not intend to resign.​


Japan
The Japanese currency is weakening against the pound, strengthening against the USD and has ambiguous dynamics paired with the euro.

Today, the Japanese government has extended emergency measures to the capital Tokyo and more than a dozen other regions of the country to stop the rapid spread of the COVID-19 Omicron strain. These measures will allow local authorities to limit the mobility of the population and business activity, reducing the opening hours of bars and restaurants and other establishments of mass attendance. So far, the incidence in Japan remains at high levels, and officials fear that the national health system may not be able to withstand the increased number of hospitalizations. Tomorrow, bidders expect the publication of data on foreign trade for December. It is predicted that the volume of imports of Japanese goods may slow down growth from 43.8% to 42.5%, and exports – from 20.5% to 16.0%. The implementation of forecasts may put pressure on the Japanese currency.​


Australia
The Australian currency is strengthening against its main competitors – the euro, the pound, the yen and the USD.

The Australian dollar shows an upward trend in trading, despite the negative January data on the consumer sentiment index from Westpac: the indicator decreased from -1.0% to -0.2%. Australian citizens fear the deterioration of the epidemic situation and the tightening of quarantine restrictions, but Australian Prime Minister Scott Morrison said that the government does not plan to introduce additional sanitary measures, even despite the surge in the incidence. Moreover, the official announced the cancellation of visa fees for students and people who want to get a job at local enterprises for the next 12 weeks. These measures should reduce the labor shortage created during the pandemic.​


Oil
Oil quotes are making moderate attempts to decline today.

The pressure on prices was exerted by statements from representatives of the International Energy Agency (IEA). Officials of the ministry noted that the supply of oil will soon exceed demand, as some producers may reach historical production peaks in Q1 2022. In particular, the department believes that the USA, Canada, Brazil, Saudi Arabia and Russia can seriously increase production. During the day, investors also expect the publication of a weekly report on the amount of oil reserves in the USA from the American Petroleum Institute (API). The last time the indicator decreased by 1.077M barrels, and the continuation of this trend may support oil quotes.​
 
 
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