. Fundamental Analysis Report With Charting Trends- 16-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 16 MAY 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 16 MAY 2023

16 May 2023

FUNDAMENTAL REPORT FORECAST

MARKET UPDATE:

Data and the debt ceiling limit gains as Dow and S&P push higher

The manufacturing statistics stoked fears about a slowing U.S. economy that could assist reduce inflation during continuing debt limit negotiations, while a jump in Meta shares helped lift the Nasdaq. As a result, the S&P 500 and the Dow concluded the day with moderate gains.

Stocks Rise as Traders Look for Direction

Yesterday’s financial markets were rather calm, but it ended well as US indices closed higher after the New York Federal Reserve’s Empire State Manufacturing Index sharply declined, reading -31.8 instead of the predicted -3.75. This increased the likelihood that the FOMC will take a break in June and sparked a market relief rally, with the Dow ending up 0.14%, the S&P up 0.3%, and the Nasdaq up 0.66%. However, the majors are still trading in very familiar territory, and US treasury yields edged higher.

Today’s emphasis is on data and debt.

However, we do have some key data releases today before we hit the US session and the most recent news from Washington. The US debt ceiling is still a major concern for the market, and as we near the probable June deadline, expect more volatility surrounding this topic. Following the release of the RBA’s Monetary Policy Meeting minutes in Sydney during the Asian session, which will provide traders with some further context for the surprise rate earlier in the month, comes the release of Chinese Industrial Production statistics. 

What happened in the US Session?

With a predicted value of -3.7 and a previous value of 10.8, the US Empire State Manufacturing Index data is currently recorded at 31.8. The numbers point to a major decline in manufacturing activity, which is bad news for the USD.

What does it mean for Asian Session?

Positive Australian and Chinese economic indicators may push the AUD/USD pair to a retreat resistance of roughly 0.6740. If not, a 100-pip decline to retest the most recent lows near 0.6640 may occur.

The Dollar Index (DXY)

Key news events today

Core Retail Sales m/m

Retail Sales m/m

What can we expect from DXY today?

The projected numbers point to an increase of 0.5% in core retail sales and a 0.8% gain in overall retail sales. According to the prior figures, both retail sales and core retail sales have decreased by 0.8% and 1.0%, respectively. If the actual data is as expected or better, this may point to increased consumer spending and economic growth, which would support 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 bullish

The Euro (EUR)

Key news events today

German ZEW Economic Sentiment

What can we expect from EUR today?

The imminent publication of German ZEW Economic Sentiment data, with a predicted value of -5.4, is anticipated to have a substantial effect on the Euro (EUR) currency. The Euro could be weakened if the actual data matches or exceeds the projection, showing pessimism.

Central Bank Notes:

  • The ECB has decided to raise the three key interest rates by 25 basis points as the inflation outlook continues to be too high for too long.
  • The ECB will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
  • Renewed financial market tensions and Russia’s war against Ukraine remain significant economic downside risks.
  • The continued resilience of the labour market could lead to higher growth than anticipated.
  • Next meeting on 15 June 2023

Next 24 Hours Bias

Weak bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

No significant news has an impact on the CHF today. Therefore, it is anticipated that subsequent data releases will have an impact on the direction of its price. Lower than the prior estimate of 4.53 billion CHF, the trade balance is anticipated to be 3.73 billion CHF. This decrease raises the possibility of a drop in Swiss exports or a rise in imports.

Central Bank Notes:

  • Raised policy rate to 1.5% to counter inflationary pressure and ensure price stability. The SNB may need to raise the policy rate further in the future
  • The SNB is providing liquidity assistance to Credit Suisse, and the crisis has been halted
  • The new inflation forecast assumes a policy rate of 1.5% and puts average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025.
  • Mortgage and real estate market vulnerabilities persist
  • Next meeting on 22 June 2023

Next 24 Hours Bias

Weak bearish

Global Markets:

Asian Stock Markets: Nikkei up 0.73%, Shanghai Composite down 0.60%, Hang Seng down 0.20%, ASX down 0.45%

European equities, the DAX futures down 0.01%, CAC 40 down 0.23%, FTSE up 0.02%.

US Stock Market: Dow jones up 0.14%, S&P 500 up at 0.30%, Nasdaq 100 up at 0.66%.   

Commodities: Gold at $2008.74 (-0.37%), Silver at $23.79 (-1.02%), Brent Oil at $75.48 (+0.33%), WTI Oil at $71.33 (+0.31%)

News & Data

  • (AUD)RBA Meeting Minutes at 07:00
  • (CNY) Industrial Production (YoY) (Apr) Actual 5.6%, Forecast 10.9%, Previous 3.9% at 07:30
  • (GBP) Average Earning Index + Bonus (Mar) Actual 5.8%, Forecast 5.8%, Previous 5.9% at 11:30
  • (EUR) German ZEW Economic Sentiment (May) Forecast –5.3%, Previous 4.1% at 14:30
  • (USD) Retail Sales (MoM) (Apr) Forecast 0.8%, Previous –0.6% at 18:00
  • (CAD) Core CPI (MoM) (Apr) Previous 0.6% at 18:00

Technical Outlook

GBPUSD

A substantial bearish momentum is now present in the GBP/USD pair, suggesting that the current downward trend may continue.

Our first barrier is located at 1.2536, which also happens to be a multi-swing high barrier and a 38.2% Fibonacci retracement. This implies that it might act as a formidable obstacle to any higher price movements.

The first support level, located at 1.2446, might be reached if there is a negative reaction from this first resistance level. At this time, there is a high likelihood that prices will remain stable because this level is a multi-swing low support.

However, our second support at 1.2392 might be used if the price is unable to stay above the first support. This level is critical to keep an eye on for prospective price rebounds because it also functions as a multi-swing low support.

Furthermore, a swing low support at an intermediate support level of 1.2464 further emphasises the present market movement’s bearish slant.

EURUSD

The EUR/USD pair is presently exhibiting a strong bearish momentum with high confidence, pointing to a likely continuation of the downward trend.

The first obstacle we face is at 1.0909. As a pullback resistance level that coincides with a 23.6% Fibonacci retracement, this level is important. This implies that it might be a substantial impediment to any future upward movement.

The initial support, a multi-swing low support level, can be found at 1.0846. This means that price stability at this level has a good chance of occurring.

Our second support at 1.0792 may come into action if the price is unable to maintain above the first level. This level is crucial to keep an eye on for prospective price rebounds because it acts as a swing low support.

Beyond the first barrier, our second barrier is located at 1.0942. Given that it is an overlap resistance level, it may be a formidable obstacle to any bullish momentum.

AUDUSD

The AUD/USD pair is currently exhibiting strong bearish momentum, suggesting that the downward trend may continue. The price may continue to decline in the direction of the first support level.

At 0.6635, our initial support level, which also acts as an overlap support, there is a good chance that prices will remain stable going forward.

But if the price is unable to hold above the first support, our second support around 0.6582 can be put into use. This level is critical to keep an eye on for prospective price rebounds because it acts as a multi-swing low support.

Looking upward, 0.6707 represents our first obstacle. The multi-swing high resistance level at this point coincides with a 38.2% Fibonacci retracement.

Our second resistance is located at 0.6751 beyond the first resistance. Given that it is a pullback resistance level and a 61.8% Fibonacci retracement, it may represent a formidable obstacle for any future upward momentum.

USDJPY

Strong positive momentum is currently being displayed by the USD/JPY pair, suggesting that the rising trend may continue.

Our initial level of support is at 135.28, which also happens to be a pullback support and a 38.2% Fibonacci retracement. This means that price stability at this level has a good chance of occurring.

However, given the present bullish trend, attention is on the likelihood that the price will surpass the first resistance level, which is located at 136.14.

The second obstacle, which is classified as a pullback resistance, is located at 136.99. It also occurs at a 78.6% Fibonacci retracement, indicating that any possible bullish momentum may face a formidable obstacle.

The second support at 134.80 may be used if the price is unable to stay above the first level. This level is critical to observe for future price returns since it acts as an overlap support and corresponds with a 61.8% Fibonacci retracement.

S&P 500

The price may fluctuate between the first resistance and first support levels at this time because the US500 index is showing neutral momentum.

The 50% Fibonacci retracement level and the overlap support level for the first level of support are both at 4099.43.

The second support level to be on the lookout for is 4061.62 if the price keeps dropping. This level, which has been designated as a multi-swing low support, has historically served as a floor for the price, indicating a possible region where purchasing activity could reappear.

The initial resistance on the upward is marked around 4149.07. As a multi-swing high resistance level that coincides with the 78.60% Fibonacci retracement, it suggests that it could be a big obstacle for bullish attempts.

The second resistance is located at 4172.70 higher up. Further limiting upside potential may be this overlap resistance level, where the price has historically oscillated between support and resistance.

WTI CRUDE OIL

West Texas Intermediate (WTI) Crude Oil’s current chart indicates a negative momentum, with the price perhaps continuing to decline towards the first support level.

The first level of support to keep an eye out for is at $69.32, an overlap support that has historically shown to be a major level. The price might bounce if this support holds. The second support level, at $67.52, which is a multi-swing low support level, might be reached if the price drops through this level.

The initial resistance level on the upside is located at $73.73. The 38.20% Fibonacci retracement level and this overlap resistance could present a challenge for any positive momentum.

The second resistance level, which overlaps the first resistance level and the 61.80% Fibonacci retracement level, is located at $76.90, which is further higher. Any bullish price movement may face this as a major obstacle, which could push the price back down.

Between these levels, there is an overlap resistance and intermediate resistance level at $71.73, which coincides with the 61.80% Fibonacci retracement level. This level can serve as a modest roadblock to price growth.

SILVER

The Silver chart’s overall momentum is negative, pointing to a likely continuation of this momentum into the first support level.

At 23.93, the first support is visible. This level is working as an overlap support, indicating that it has previously served as both a level of resistance and a level of support.

The price of the second assistance is $23.23. This level is also designated as an overlap support, which shows that it has previously resisted selling pressure on numerous times, hence highlighting its durability.

The initial resistance level is set at $24.56 on the upswing. This resistance level has experienced multiple swings, making it a high point that halts the decline in price. Given its historical significance, it might be difficult for buyers to purchase.

BITCOIN

The Bitcoin/US Dollar exchange rate’s overall trend is currently bearish, indicating that the decline towards the first support level is likely to continue.

The 61.80% Fibonacci retracement level and a pullback support are located around 26493.70, which is the initial level of support.

A further decline might approach the second support, represented by a prior swing low, at 25806.58. In this area, the market has previously seen sufficient buying pressure to halt a falling trend and start an upward movement. As a result, it can present a difficult obstacle for the bears.

The initial obstacle on the upswing is situated at 27661.81, which is a crossover resistance and coincides with the 78.60% Fibonacci retracement. This level represents a prior price region where selling pressure prevailed over buying pressure, therefore it might prevent any bullish attempts.

Further on, the second resistance is situated at 28280.22, This is also an overlap resistance and denotes a price zone that has previously served as both support and resistance.