. Fundamental Analysis Report With Charting Trends- 12-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 12 MAY 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 12 MAY 2023

12 May 2023

FUNDAMENTAL REPORT FORECAST

MARKET UPDATE:

Markets Divergent Before the Weekend

Yesterday’s trading session on US stock markets was uneven as investor worry about a potential government default increased. The Nasdaq closed 0.2% while the Dow ended the day down 0.7% and the S&P down 0.2%. The US data fell somewhat earlier in the day as the monthly PPI came in lower than expected and the weekly Unemployment Claims increased by 20k more than had been predicted. The Bank of England had earlier hiked rates by 25bps as expected. As haven flows predominated, the Dollar gained value relative to many of the majors and US rates decreased.

Data Points Pointing to a Fed Pause

Investors must now process yet another piece of data, and this week’s emphasis on US data will strongly encourage the Fed to suspend its rapid tightening cycle at its upcoming meeting. The US CPI data, which was released on Wednesday, was a major focus of this week for a significant portion of the market. Although the results were generally as expected, the year-over-year change indicated that the Fed was moving in the correct direction.

3 Important Trading Sessions Upcoming

Many traders have already had a long trading week this week due to the lacklustre circumstances for the first few days and the generally range bound changes that followed data releases. However, there are still three sessions left, and the market does appear to be set for some movements. The release of the quarterly Kiwi Inflation forecasts will shift attention to the land of the long white cloud during today’s Asian session. The UK is once again in the spotlight during the London session due to the release of the GDP data, with no change anticipated for the month-over-month figure and an increase of 0.1% for the quarterly figure. The most recent University of Michigan sentiment and inflation figures will be revealed during the US session. 

What happened in the Asia Session?

New Zealand’s quarterly inflation predictions have dropped from 3.30% to 2.79%. The market may become more wary of the NZD because of this decrease, which might reduce the currency’s value. 

What does it mean for the Europe & US Session?

superior to expectations The Cable may attempt to retest the round number of 1.2600 on GDP m/m from the UK. In the absence of a break below 1.2500, the pair may approach 1.2440. In a similar vein, a stronger-than-anticipated US Prelim UoM Consumer Sentiment might push the GBP/USD rate down to 1.2400.

The Dollar Index (DXY)

Key news events today

Prelim UoM Consumer Sentiment

What can we expect from DXY today?

The value of the USD is anticipated to be impacted by the imminent release of the Preliminary UoM Consumer Sentiment data, which has a forecasted index of 63.0 compared to the previous reading of 63.5. A drop in consumer confidence can result in less spending and investment, which might weaken the USD.

Central Bank Notes:

  • The committee raised the target range for the federal funds rate to 5 to 5-1/4 per cent. The U.S. banking system is sound and resilient.
  • Tighter credit conditions for households and businesses may weigh on economic activity, hiring, and inflation.
  • The committee is committed to returning inflation to its 2% objective
  • The committee will adjust monetary policy as appropriate if risks emerge that could impede the attainment of goals
  • Next meeting is on 14 June 2023

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

No major news events.

What can we expect from gold today?

The US PPI data came in slightly below expectations, and the job market is getting worse, which could support gold as a safe-haven asset.

Next 24 Hours Bias

Weak bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Janet Yellen, a former U.S. Treasury Secretary, issued a warning that the world economy would be in danger in the event of a U.S. default. OPEC also expressed concern that economic uncertainties could counteract Chinese expansion overseas. These changes could have a big negative influence on oil prices.

Next 24 Hours Bias

Weak bearish

Global Markets:

Asian Stock Markets: Nikkei up 0.90%, Shanghai Composite down 1.12%, Hang Seng down 0.59%, ASX up 0.66%

European equities, the DAX futures up 0.63%, CAC 40 up 0.96%, FTSE up 0.46%.

US Stock Market: Dow jones down 0.66%, S&P 500 down at 0.17%, Nasdaq 100 up at 0.18%.   

Commodities: Gold at $2002.52 (-0.62%), Silver at $23.76 (-1.65%), Brent Oil at $74.92 (-0.08%), WTI Oil at $70.89 (+0.07%)

News & Data

  • (GBP) GDP (QoQ) (Q1) Actual 0.1%, Forecast 0.1%, Previous 0.1% at 11:30
  • (GBP) GDP (MoM) (Mar) Actual –0.3%, Forecast 0.1%, Previous 0.0% at 11:30 
  • (GBP) Manufacturing Production (MoM) (Mar) Actual 0.7%, Forecast 0.1%, Previous 0.0% at 11:30
  • (NZD) Inflation Expectations (QoQ) Actual 2.8%, Previous 3.3% at 08:30
  • (EUR) ECB`s De Guindos Speaks at 13:30

Technical Outlook

GBPUSD

There is currently a bearish momentum visible in the GBP/USD. A negative continuation in the direction of the first support is anticipated.

1.2448 is where the first support is situated. Being an overlap support, which means it has previously served as both a support and a resistance level, this level is notable. 

The second support point is at 1.2393. Because it has stopped the price fall numerous times in the past, this level is famous for being a multi-swing low support. This level may be reached if the price breaks through the first support.

1.2585 is the first resistance level. This level, which is an overlap resistance, has previously operated as both a support and a resistance level. This level can serve as the first big resistance to upward movement if the bearish trend changes and the price starts to increase.

1.2677 is the second resistance level. This level has historically served as a high point in the price swing, making it a swing high resistance level. 

EURUSD

The EUR/USD pair is currently showing signs of negative momentum, with the possibility of a bearish break off the first support and a decline towards the second support.

The first support level, which is at 1.0912, is significant since it has a history of many swings low supports. The price has repeatedly bounced back from this level throughout trading sessions, demonstrating the level’s dependability. 

The second level of support is at 1.0843. As a swing low support, this level has historically served as the bottom point of the price swing. 

1.1006 is the first resistance level. Previously acting as both support and resistance, this level now functions as an overlap resistance. It is a crucial level that may prevent a bullish price movement and cause the trend to change.

1.1052 is where the second resistance is located. This level functions as a multi-swing high resistance, suggesting that it has already stopped the price increase several times. Price may rise towards the second obstacle if it were to break through the first resistance. However, this possibility may be less plausible given the overall bearish momentum.

AUDUSD

Currently, the AUD/USD is showing a bearish momentum. The price may keep moving down in the direction of the first support.

At 0.6666 is where the first support level is located. Given that it is a pullback support, this area may see a price increase after a brief reversal of a recent higher trend. 

There is a second support level at 0.6641. This level has historically operated as both a support and a resistance level because it is an overlap support. This level can be reached if the price falls through the initial support before a potential rebound.

0.6753 is the first resistance level. It has previously served as both support and resistance, making it an overlap resistance. This barrier level can be reached if the price reverses the current bearish momentum and starts to increase.

At 0.6793 is where the second resistance level is located. This level is an overlap resistance, just like the first. Price could aim for this second hurdle if a bullish turnaround takes place and the price moves past the first resistance.

USDJPY

The momentum is now favourable for the USD/JPY. The price may carry on in this direction towards the first resistance.

133.53 is where the first support level is located. As a multi-swing low support, this level is indicated as having previously successfully prevented price losses. This price point may act as a strong deterrent to further price declines and may even result in a price recovery.

The 132.35 level is the second support level. It is also a multiple-swing low support, much like the first. Before a potential rebound, the price may drop to this level if it breaches the first support.

The first resistance level is located at 135.27 when moving upward. This degree of resistance has previously served as both support and resistance, making it an overlap resistance level. It also happens to be a 38.20% Fibonacci retracement, which strengthens this resistance. Price may ascend to this resistance level if it recovers from the support and gathers steam.

At 136.99 is where the second resistance level is located. Although it also coincides with a deeper, 78.60% Fibonacci retracement, this level serves as overlap resistance. The price may aim for this second resistance if the positive momentum holds and the first obstacle is broken.

S&P 500

The chart dynamics of the US500, also known as the S&P 500 Index, are currently showing a positive trend. The momentum suggests that a bullish reversal towards the first barrier level is possible.

The exact location of the first support level is 4108.73. The alignment of this level with the 50% Fibonacci retracement level further strengthens its designation as an overlap support level. 

A crucial overlap support level at 4062.33 is the second support level. This level’s significance is increased by the fact that it coincides with both the 61.80% Fibonacci projection and the 78.60% Fibonacci retracement. 

Looking upward, the price may approach the first resistance mark at 4158.44 if the positive trend continues. This overlap resistance level also coincides with the 78.60% Fibonacci retracement, making it a significant obstacle that must be passed for the bullish trend to continue.

The second resistance level, known as a swing high resistance, may be found at 4188.27. This level is crucial because historically, when the price reached it, the price would reverse its upward tendency and function as a ceiling.

WTI CRUDE OIL

The price of WTI (West Texas Intermediate) crude oil is now trending downward. But soon, it’s possible that the price may rise to the first resistance level before turning around and falling to the first support level.

The first level of support is located at 69.73. In addition to being a pullback support level, this level coincides with the 38.20% Fibonacci retracement level. This shows that if the negative trend persists, it might be a big area for price recovery.

At 67.49, the second support level is visible. The fact that this multi-swing low support is also the 61.80% Fibonacci retracement level may increase the power of this level as a support.

The first resistance level to watch for if the price manages a little gain is at 71.70. This overlap resistance level may present a significant barrier for the price to clear before it maintains its downward trend.

At 73.80, which is also an overlap resistance, is the second resistance level. Its alignment with the 50% Fibonacci retracement level emphasizes its ability to serve as a substantial price barrier.

GOLD

The gold price versus the US dollar, or the XAU/USD pair, is now trending downward. The price is below a major declining trend line, indicating a likely continuation of the bearish trend, which is a big reason causing this momentum.

2009.62 is the initial support level, which is also known as an overlap support. This level also falls at the 50% Fibonacci retracement level, indicating that if the current trend persists, it may be a key location for a potential price bounce-back.

The second level of support, which is a multi-swing low support, is located at 1976.65. Given its historical relevance, this might provide a solid platform for a price reversal.

The first resistance level on the upswing is at 2037.81 and is known as a swing high resistance. This level might represent a formidable obstacle to pricing increases.

A swing high resistance is found at 2068.40, the second resistance level.

BITCOIN

On its chart, the Bitcoin to US Dollar (BTC/USD) pair is currently showing signs of positive momentum and may be continuing towards its first resistance level.

The first level of support is located at 26530. It is regarded as a crucial point that serves as support for the overlap. This level is significant since it has historically provided both support and resistance.

At 25249, there is a second support level that acts as a retreat support. A level where the price may “retrace” during a slump before perhaps resuming its overall bullish trend is known as a pullback support.

On the other hand, if the bullish trend stays in place, the next objective might hit the first resistance level at 27224. This level functions as overlap resistance, meaning that it has previously served as a pivot where the price changed from an upward to a downward trend.

The second resistance level, known as a swing high resistance, is located at 28345. The price has already peaked at this level before turning down trend.