Fundamental Analysis Report With Charting Trends – 16 June 2023
16 Jun 2023
Central Banks Drive Market Surge – Dow Climbs 1.25%
Introduction
In an eventful trading day, global indices are set to soar, igniting a wave of optimism among investors. The European Central Bank’s anticipated rate hike has propelled the single currency to levels unseen in over a month, making it the focal point of a bustling day in the financial calendar. Following the Federal Reserve’s decision to pause, stock enthusiasts flocked to the US markets during its first full session, with the Dow leading the way, surging by 1.26%. The S&P and Nasdaq closely followed suit, ending the day up 1.22% and 1.15%, respectively. With mounting positivity, the dollar experienced a notable dip of nearly 0.8%, while gold embarked on a robust rally after initially hitting multi-month lows.
Bank of Japan and Upcoming Data
The Bank of Japan (BoJ) is scheduled to reveal its latest rate update, accompanied by the customary statement and press conference, further intensifying an already action-packed week on the economic front. Given the considerable volatility witnessed this week, traders are bracing themselves for more sharp movements in the yen surrounding this event. The European session is expected to be relatively calm, but as the US session commences, the University of Michigan Consumer Sentiment data and Federal Reserve Governor Christopher Waller’s announcements are bound to generate additional market activity.
US Session Highlights
- U.S. Core Retail Sales experienced a slight decline of 0.1%, in contrast to the previous 0.4%.
- The Empire State Manufacturing Index, soaring from -31.8 to 6.6, surpassed projections and indicated a robust resurgence in manufacturing.
- US retail sales showed a modest gain of 0.3%, surpassing expectations of a 0.2% decline.
- The number of unemployment claims in the US remained steady at 262K, suggesting a stable job market, albeit without rapid improvement.
Implications for the Asian Session
As the Bank of Japan prepares to announce its monetary policy decisions, the USD/JPY pair hovers just above the 140.00 mark. A hawkish outcome would likely push the pair down to 139.30 before reaching 139.00. Conversely, a climb to 141.00, followed by a retest of the recent intra-day highs around 141.50, is conceivable for the Dollar Yen.
The Japanese Yen (JPY)
Key News Events Today
- Monetary Policy Statement
- BOJ Policy Rate
- BOJ Press Conference
What Can We Expect from JPY Today?
The Monetary Policy Statement and press conference by the Bank of Japan hold significant weight in potentially influencing the JPY. The BOJ is widely expected to maintain its policy rate at -0.10% and adhere to its dovish stance on the economy. Any indications of a shift in this position during the announcement or press conference could impact the JPY’s value. The JPY may experience a decline if the BOJ maintains its dovish stance, whereas unexpectedly hawkish remarks could bolster the JPY.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%.
- Japan’s economy is expected to recover gradually.
- The bank will not hesitate to take additional easing measures if necessary.
- The next meeting is scheduled for June 16, 2023.
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key News Events Today
No major news events.
What Can We Expect from EUR Today?
The final and core Consumer Price Index (CPI) for the Eurozone both indicate inflation rates of 6.1% and 5.3%, respectively. Italy’s trade balance previously exhibited a surplus of 3.29 billion euros, and an anticipated surplus of 7.54 billion euros is projected. These figures imply a high inflation rate and a promising outlook for Italy’s trade activity, which may impact the EUR.
Central Bank Notes:
- The European Central Bank (ECB) raised the three key interest rates by 25 basis points.
- Economic growth projections have been slightly revised downward.
- The Governing Council will ensure interest rates are sufficiently restrictive to achieve the inflation target and will maintain these levels as long as necessary.
- Rate decisions will be data-dependent, considering the inflation outlook, economic data, underlying inflation dynamics, and the strength of monetary policy transmission.
- The next meeting is scheduled for July 27, 2023.
Next 24 Hours Bias
Bullish
Gold (XAU)
Key News Events Today
No major news events.
What Can We Expect from Gold Today?
Gold prices may be influenced by the Eurozone’s refinancing rate, which has risen to 4.00% from 3.75% and could potentially increase further in July. The higher rates lead to increased opportunity costs, initially exerting pressure on gold prices. However, gold, being a traditional hedge against inflation, might benefit from projected rate increases aimed at controlling inflation.
Next 24 Hours Bias
Weak bearish
Global Markets Overview
Asian Stock Markets:
- Nikkei is up 0.66%
- Shanghai Composite is up 0.63%
- Hang Seng up 0.94%
- ASX up 1.06%
European Equities:
- DAX futures are up 0.26%
- CAC 40 is up 0.56%
- FTSE up 0.55%
US Stock Market:
- Dow Jones up 1.26%
- S&P 500 up 1.22%
- Nasdaq 100 up 1.15%
Commodities:
- Gold at $1961.09 (+0.31%)
- Silver at $23.96 (+0.58%)
- Brent Oil at $75.66 (+0.03%)
- WTI Oil at $70.50 (-0.14%)
News & Data
- (JPY) BoJ Monetary Policy Statement at 08:30
- (JPY) BoJ Press Conference at 12:00
- (JPY) BoJ Interest Rate Decision: Actual -0.10%, Forecast -0.10%, Previous -0.10% at 08:17
- (EUR) CPI (YoY) (May): Forecast 6.1%, Previous 7.0% at 13:30
- (CAD) Wholesale Sales (MoM) (Apr): Forecast 1.6%, Previous -0.1% at 18:00
GBPUSD: Bearish Momentum Suggests Negative Market Trend
Introduction
In the world of forex trading, the GBP/USD chart has recently been showing strong bearish momentum, indicating a market trend moving in the negative direction. Traders and investors need to pay close attention to the current market conditions.
Resistance and Support Levels
- Resistance Level 1: 1.2685
- A potential bearish reaction may occur at this level, possibly leading to a subsequent slide towards the first support level.
- Support Level 1: 1.26952
- This level holds significance as pullback support, attracting buyers and offering market stabilization.
- Resistance Level 2: 1.28467
- The presence of the 61.80% Fibonacci Projection further emphasizes this level’s relevance as a potential resistance region.
Trade Suggestion
For traders considering a position in GBP/USD, a sell trade can be considered with the following parameters:
- Entry Point: 1.27865
- Take Profit: 1.27358
- Stop Loss: 1.28142
By following this trade suggestion, traders can potentially capitalize on the current bearish momentum in the market.
EURUSD: Positive Momentum Points to Rising Market Trend
Introduction
Turning our attention to the EUR/USD chart, positive momentum is observed, indicating a rising market trend. This presents opportunities for traders and investors to consider.
Ascending Trend Line and Price Movement
- Ascending Trend Line: Significance and Implications
- Price is above a significant ascending trend line suggesting the possibility of a more bullish movement and supporting the current momentum.
- Support Level 1: 1.09436
- It’s possible that the price may fall until this support level before rebounding and climbing towards the first resistance level.
- Resistance Level 1: 1.09942
- As a swing high resistance, this level signals a potential roadblock for upward price movements.
Support Levels
- Support Level 1: 1.09436
- A pullback support that can serve as an entry point for buyers.
- Support Level 2: 1.08605
- Also acts as a pullback support and aligns with the 38.20% Fibonacci Retracement level.
Resistance Levels
- Resistance Level 1: 1.09942
- An overlap resistance indicates a potential barrier to price increases.
- Resistance Level 2: 1.10611
- Corresponds to the 78.60% Fibonacci Retracement and serves as an additional level of resistance.
Trade Suggestion
Traders interested in the EUR/USD pair can consider a buy trade with the following parameters:
- Entry Point: 1.09436
- Take Profit: 1.09702
- Stop Loss: 1.09260
Executing this trade suggestion may allow traders to benefit from the positive momentum in the market.
AUDUSD: Bearish Momentum Indicates Lower Market Trend
Introduction
Analyzing the AUD/USD chart reveals a current bearish momentum, indicating a lower market trend. Traders should be cautious of the potential implications and plan their strategies accordingly.
Resistance and Support Levels
- Resistance Level 1: 0.68806
- Traders should consider the possibility of a bearish reaction at this level, which could lead to a decline towards the first support level.
- Support Level 1: 0.68538
- The presence of the 23.60% Fibonacci Retracement level confirms this as an overlap support, attracting buyers.
- Support Level 2: 0.68176
- This level coincides with the 38.20% Fibonacci Retracement and further acts as an overlap support.
Upside Resistance Levels
- Resistance Level 1: 0.68806
- Represents a swing high resistance, potentially limiting price movements upward.
- Resistance Level 2: 0.69188
- Along with the 127.20% Fibonacci Extension, this level acts as an additional resistance barrier.
Trade Suggestion
To potentially benefit from the current bearish momentum in AUD/USD, traders may consider a sell trade with the following details:
- Entry Point: 0.68842
- Take Profit: 0.68551
- Stop Loss: 0.69087
Implementing this trade suggestion can help traders capitalize on the prevailing bearish market sentiment.
USDJPY: Bullish Momentum Indicates Upward Market Trend
Introduction
Shifting our focus to the USD/JPY chart, we observe bullish momentum, pointing towards an upward market trend. Traders and investors should take note of the potential opportunities arising from this trend.
Possibility of Positive Continuation
- Resistance Level 1: 140.98
- Traders and investors need to consider the possibility of a positive continuation towards this resistance level.
- Support Level 1: 140.32
- Acts as an overlap support, indicating its significance as a potential entry point for buyers.
Support Levels
- Support Level 1: 140.32
- Marked as an overlap support, highlighting its importance for potential buyers.
- Support Level 2: 139.40
- Functions as a multi-swing low support, adding further significance.
Upside Resistance Levels
- Resistance Level 1: 140.98
- Represents a swing-high resistance that may limit future price increases.
Trade Suggestion
To align with the bullish momentum on the USD/JPY chart, traders can consider a buy trade with the following parameters:
- Entry Point: 140.856
- Take Profit: 141.682
- Stop Loss: 140.347
Executing this trade suggestion allows traders to potentially benefit from the current bullish market conditions.
DOW JONES: Bullish Momentum Indicates Rising Market Trend
Introduction
Examining the DJ30 chart reveals a bullish momentum, signifying a rising market trend. Traders and investors should consider the potential implications of this trend.
Resistance and Support Levels
- Support Level 1: 34446.67
- Investors need to be aware of the possibility of a positive recovery at this support level, triggering an upward movement towards the first resistance level.
- Resistance Level 1: 34769.41
- The presence of Fibonacci confluence, with the occurrence of the 127.20% Fibonacci Extension and 78.60% Fibonacci Projection, further supports this resistance level’s significance.
Support Levels
- Support Level 1: 34446.67
- Identified as the 61.80% Fibonacci Projection level and provides pullback support.
- Support Level 2: 34004.21
- Functions as a pullback support, adding to its importance as a support level.
Upside Resistance Levels
- Resistance Level 1: 34769.
41
- Represents a swing high resistance and is further supported by Fibonacci confluence.
- Resistance Level 2: 35152.02
- Functions as a 100% Fibonacci projection, adding to its significance as a resistance level.
Trade Suggestion
To potentially benefit from the current bullish momentum in the DOW JONES index, traders can consider a buy trade with the following details:
- Entry Point: 34756.76
- Take Profit: 35161.65
- Stop Loss: 34439.89
Executing this trade suggestion enables traders to potentially capitalize on the prevailing bullish market sentiment.
WTI CRUDE OIL: Bearish Momentum Suggests Market Decline
Introduction
Analyzing the WTI chart, we observe bearish momentum, indicating a market decline. Traders should consider the implications of this downward trend.
Possibility of Bearish Reaction
- Resistance Level 1: 70.74
- Traders should be mindful of a potential bearish reaction at this resistance level, which could result in a decline toward the first support level.
- Support Level 1: 67.79
- Traders should be aware of the likelihood of a decline toward this support level in response to a bearish reaction.
Support Levels
- Support Level 1: 67.79
- Represents the first support level, which may serve as a target for a price decline.
- Support Level 2: 64.47
- Referred to as multi-swing low support, providing additional support to the price.
Upside Resistance Levels
- Resistance Level 1: 70.74
- Represents an overlap resistance zone, potentially impeding upward price movements.
- Resistance Level 2: 74.68
- Functions as the second resistance level, contributing to the resistance against price increases.
Trade Suggestion
To align with the current bearish momentum in WTI crude oil, traders may consider a sell trade with the following parameters:
- Entry Point: 68.53
- Take Profit: 66.80
- Stop Loss: 69.91
Executing this trade suggestion can allow traders to potentially benefit from the prevailing bearish market conditions.
GOLD: Bearish Momentum Indicates Declining Market Trend
Introduction
Analyzing the XAU/USD chart, we observe movement within a descending channel, indicating bearish momentum. This suggests a general decline in the market trend.
Resistance and Support Levels
- Resistance Level 1: 1966.59
- This resistance level possesses the potential to trigger a negative reaction, leading to a price reversal and continued decrease towards the first support level.
- Support Level 1: 1933.93
- The first support level acts as a crucial level corresponding with earlier price levels, presenting potential entry points for buyers.
Support Levels
- Support Level 1: 1933.93
- Identified as the first support level, it also functions as a swing low support.
- Support Level 2: 1914.16
- Provides further support as an additional level corresponding with earlier price levels.
Upside Resistance Levels
- Resistance Level 1: 1966.59
- Functions as a significant roadblock for upward price movement and serves as a multi-swing high resistance.
- Resistance Level 2: 1981.44
- Acts as an overlap resistance, adding to its significance in impeding price increases.
Trade Suggestion
To potentially benefit from the current bearish momentum in gold
, traders can consider a sell trade with the following details:
- Entry Point: 1952.15
- Take Profit: 1936.38
- Stop Loss: 1962.27
Implementing this trade suggestion enables traders to potentially capitalize on the prevailing bearish market sentiment.
Ethereum: Bearish Momentum Signals Market Downtrend
Introduction
In the world of cryptocurrency, Ethereum (ETH) is currently experiencing a bearish momentum on the ETH/USD chart, indicating a downward market trend. Various factors, including the price falling below the bearish Ichi Moku cloud, contribute to this sentiment.
resistance and Support Levels
Resistance Levels
- First Resistance Level (1690.06): A chance for a negative reaction arises at this level. It may result in a decline toward the first support level.
- Second Resistance Level (1757.65): This level serves as a zone of overlap resistance and coincides with the 50% Fibonacci Retracement level.
Support Levels
- First Support Level (1619.25): Known as a swing low support, this level plays a significant role in providing stability during market downturns.
- Second Support Level (1577.42): Referred to as overlap support, this level holds importance in reinforcing Ethereum’s resilience.
Trade Suggestion: Capitalize on Market Conditions
To align with the prevailing market sentiment, a trade suggestion is provided:
- Trade Action: SELL Ethereum at 1668.1
- Take Profit (TP): Set TP at 1658.8
- Stop Loss (SL): Place SL at 1673.5
Conclusion
With central banks taking the spotlight, the global markets have witnessed a surge. The ECB’s rate hike and the upcoming announcement from the Bank of Japan have instilled optimism among investors. The US session provided mixed economic data, with manufacturing showing strength but retail sales experiencing a slight decline. As the Asian session unfolds, market participants eagerly await the outcome of the BoJ’s monetary policy decisions. The Euro and gold face potential impacts from the Eurozone’s CPI and refinancing rate, respectively. Overall, the markets remain dynamic, responding to various economic factors and central bank actions, shaping the course of global investments.
FAQs
Q: What does the bearish momentum in the WTI crude oil market indicate?
A: The bearish momentum suggests a decline in the WTI crude oil market, signaling a downward trend in prices.
Q: What are the potential support levels in the gold market?
A: The potential support levels in the gold market are at 1933.93 and 1914.16, which serve as important levels corresponding to earlier price levels.
Q: How can traders potentially benefit from the bullish momentum in the DOW JONES index?
A: Traders can potentially benefit from the bullish momentum in the DOW JONES index by considering a buy trade with the specified entry, taking profit, and stopping loss levels.
Q: What trade suggestion is provided for the AUD/USD pair?
A: The trade suggestion for the AUD/USD pair recommends selling at 0.68842 with a take profit at 0.68551 and a stop loss at 0.69087.
Q: What resistance level should traders be aware of in the GBP/USD market?
A: Traders should be aware of the first resistance level at 1.2685, which holds significant significance on the upside and can act as a potential barrier to price increases.
Q: What is the bearish Ichi Moku cloud in the ETH/USD chart?
A: The bearish Ichi Moku cloud in the ETH/USD chart is a technical indicator that suggests a bearish momentum and a lower market trend in Ethereum’s price.