Fundamental Analysis Report With Charting Trends – 20 June 2023
20 Jun 2023
Stock Markets Retreat from Yearly Highs.
In the wake of potentially significant risk events on the horizon, global stock indices have retreated from their yearly highs. While the US market remained closed yesterday, European markets ended the trading day in a sea of red. As investors eagerly await Jerome Powell’s testimony later this week and other central bank decisions, the market sentiment has shifted. In this article, we’ll explore the recent market developments and their implications.
Global Market Indices Experience Decline
European Market Indices
As investors brace for forthcoming risk events, European market indices have witnessed a decline. Despite a weaker US dollar against major currencies, the Yen continues to stand out, currently trading above the 142.00 level. Currencies, overall, have experienced narrow ranges. Additionally, oil prices have fallen once more, leading to WTI plummeting below $70 per barrel. Gold, too, has fallen below $1,950 per ounce in response to these developments.
Anticipation of Greater Movements
While today’s calendar appears relatively quiet in terms of macroeconomic data inputs, the return of the US market from its long weekend holiday is expected to bring greater movements later in the day. The focus will be on Australia early in the day as the Reserve Bank of Australia (RBA) releases the minutes of its Monetary Policy Meeting. In the Euro time zone, there won’t be much in terms of information, with only growing data adding to the confusion. However, as traders anticipate significant updates later in the week, including Fed Chair Jerome Powell’s testimony in Washington, DC, on Wednesday and Thursday, we can expect further market positioning.
US Session Highlights
The recent US session has seen a mix of positive and negative indicators:
U.S. Core Retail Sales
U.S. Core Retail Sales dropped by 0.1% from the previous 0.4%. Although this decline may be seen as a setback, it is important to note that the Empire State Industrial Index significantly outperformed expectations. Rising from -31.8 to 6.6, this index revealed a strong industrial recovery, providing a glimmer of hope amid the overall market decline.
Modest Increase in US Retail Sales
Contrary to expectations, US retail sales saw a modest increase of 0.3%, surpassing the forecasted decrease of -0.2%. This positive development indicates some resilience in the retail sector and suggests that consumer spending remains relatively stable.
Jobless Claims and Market Stability
The number of jobless claims in the US remained at 262K, indicating a stable job market. While the figures don’t reflect rapid improvement, they do offer reassurance about the current state of employment.
Asian Session Expectations
Bank of Japan’s Monetary Policy
The Bank of Japan (BOJ) has decided to maintain its policy rate at -0.10%, which aligns with previous expectations. The BOJ intends to continue its ultra-loose monetary policy to support economic development. However, concerns about inflation may arise, as the core Consumer Price Index is predicted to slow down in the coming months. Depending on whether the BOJ decides to tighten monetary policy to combat low inflation, the Japanese Yen (JPY) may either rise or fall.
Australian Dollar Outlook
Key news events today have a significant impact on the Australian Dollar (AUD). The reported employment change of 75.9K, surpassing the expected figure of 18.6K and the previous record of -4.0K, indicates a stronger AUD. Furthermore, the unemployment rate, currently at 3.6%, has improved from the anticipated and previous rate of 3.7%. These favorable employment indicators suggest a stable labor market and contribute to the overall strength of the Australian Dollar.
RBA’s Monetary Policy Notes
The Reserve Bank of Australia (RBA) has recently implemented several measures:
- The cash rate target has been increased by 25 basis points to 4.10%.
- While inflation in Australia has passed its peak, it remains high at 7% and needs to return to the target range.
- The RBA acknowledges the possibility of further tightening of monetary policy.
- The next RBA meeting is scheduled for July 23, 2023.
New Zealand Dollar Assessment
Business NZ Manufacturing Index
The release of the next Business NZ Manufacturing Index is eagerly anticipated as the previous reading of 49.1 indicated a minor decrease in New Zealand’s manufacturing sector. If the new data shows further shrinkage, the New Zealand Dollar (NZD) may face negative pressure. Conversely, a climb above 50 in the index could strengthen the NZD due to increased economic optimism.
Monetary Policy Committee’s Decision
The Monetary Policy Committee has raised the OCR (Official Cash Rate) from 5.25% to 5.50%. This decision reflects the committee’s belief that maintaining interest rates at a restrictive level will bring inflation back within the target range while supporting maximum sustainable employment. The next meeting is scheduled for August 22, 2023.
Eurozone’s Economic Outlook
Final and Core CPI for the Eurozone
The final and core CPI for the Eurozone indicates inflation rates of 6.1% and 5.3% respectively. Additionally, Italy’s trade balance surplus has grown from 3.29 billion euros to an anticipated 7.54 billion euros. These figures suggest high inflation rates and a promising future for Italy’s trade activity, potentially impacting the value of the Euro (EUR).
ECB’s Interest Rate Decision
The European Central Bank (ECB) has recently taken the following actions:
- The three key interest rates have been raised by 25 basis points.
- Economic growth projections have been slightly lowered.
- The Governing Council aims to ensure that interest rates are sufficiently restrictive to achieve the inflation target and will keep them at those levels as long as needed.
- Rate decisions will be data-dependent, considering factors such as the inflation outlook, economic data, underlying inflation dynamics, and monetary policy transmission strength.
- The next ECB meeting is scheduled for July 27, 2023.
Global Market Overview
Asian Stock Markets
Asian stock markets have witnessed mixed results:
- Nikkei: Down 1.00%
- Shanghai Composite: Down 0.29%
- Hang Seng: Down 1.75%
- ASX: Up 0.86%
European equities have also experienced declines:
- DAX futures: Down 0.96%
- CAC 40: Down 1.01%
- FTSE: Down 0.71%
US Stock Market
The US stock market has seen a slight downturn:
- Dow Jones: Down 0.35%
- S&P 500: Down 0.19%
- Nasdaq 100: Down 0.68%
Commodity prices have shown mixed movements:
- Gold: $1951.07 (+0.08%)
- Silver: $23.92 (-0.01%)
- Brent Oil: $75.72 (-0.49%)
- WTI Oil: $70.92 (-0.76%)
Notable News and Data
Here are some upcoming news and data releases:
- PBoC Loan Prime Rate (CNY): Actual 3.55%, Forecast 3.55%, Previous 3.65% at 06:45
- Building Permits (USD): Forecast 1.425M, Previous 1.147M at 18:00
- German PPI (MoM) (EUR): Actual -1.4%, Forecast -0.7%, Previous 0.3% at 11:30
- Industrial Production (MoM) (JPY): Actual 0.7%, Forecast -0.4%, Previous 1.1% at 10:00
- ECB’s Enria Speaks (EUR) at 13:30
In summary, global stock markets have retraced from their yearly highs due to anticipated risk events and upcoming central bank decisions. The Australian Dollar (AUD) has shown strength with positive employment data and the RBA’s monetary policy actions. The New Zealand Dollar (NZD) awaits the Business NZ Manufacturing Index release, while the Euro (EUR) is influenced by inflation rates and trade activity. Various factors and upcoming data releases will continue to impact the market in the next 24 hours.
GBPUSD: Range Trading Continues with Bullish Indicators
In the world of forex trading, the GBP/USD pair has been garnering attention due to its steady performance. Let’s delve into the current market scenario and analyze the technical indicators to gain insights into the pair’s future trajectory.
Consolidation within the Range
The GBP/USD pair has displayed a consistent trading pattern between 1.2300 and 1.2800 over the past few weeks. This range-bound movement indicates a period of consolidation, where neither buyers nor sellers have taken control.
Technical Indicators Point Towards Bullishness
To gauge the potential market direction, we turn our attention to the technical indicators. The Relative Strength Index (RSI) currently sits at 67, indicating bullish sentiment. Additionally, the Moving Average Convergence Divergence (MACD) indicator has crossed to the upside, further affirming the bullish outlook. Moreover, the moving averages align themselves in a manner indicative of a sideways trend.
Key Support and Resistance Levels
Notable support and resistance levels provide valuable reference points for traders. The primary support level lies at 1.2770, indicating a level at which the pair might find buying interest. On the other hand, the main resistance level stands at 1.2805, signifying a price point where selling pressure might intensify.
Future Prospects and Potential Breakout
Considering the current state of affairs, it is likely that the GBP/USD pair will continue trading within the established range in the near term. However, the possibility of a breakout exists if significant news or data emerges to drive market sentiment in a particular direction.
TRADE SUGGESTION: SELL AT 1.2773, TP AT 1.2735, SL AT 1.2805
With careful consideration of the prevailing market conditions and the aforementioned analysis, a potential trade suggestion arises. Traders may opt to sell the GBP/USD pair at 1.2773, setting a take profit (TP) level at 1.2735. To manage risk, a stop loss (SL) can be placed at 1.2805.
EURUSD: Positive Momentum Indicates a Bullish Trend
An Optimistic Outlook
The EUR/USD chart currently exhibits positive momentum, which signifies a market trend inclined towards the upside. Let’s explore the factors contributing to this sentiment and analyze the key levels to watch.
Ascending Trend Line and Upward Movement
A crucial ascending trend line in the EUR/USD chart reinforces the possibility of further upward movement. The presence of this trend line bolsters the positive sentiment and acts as a driving force for maintaining the prevailing momentum.
Support and Resistance Levels
As traders strategize their positions, it is vital to identify significant support and resistance levels. The first support level at 1.09266 presents a point where a temporary pullback may occur. Conversely, the first resistance level at 1.09407 signifies a potential roadblock for upward price movements.
Fibonacci Retracement Levels and Their Role
The 38.20% Fibonacci Retracement level coincides with the second support level at 1.09135, enhancing its significance. Furthermore, the 78.60% Fibonacci Retracement level aligns with the second resistance level at 1.09525, emphasizing its potential impact on price action.
TRADE SUGGESTION: BUY AT 1.09372, TP AT 1.09609, SL AT 1.09170
Considering the analysis and the prevailing bullish sentiment, a trade suggestion emerges. Traders may consider buying the EUR/USD pair at 1.09372 and aiming for a take-profit level of 1.09609. To manage risk, a stop loss can be placed at 1.09170.
AUDUSD: Bearish Momentum Suggests a Downtrend
Bearish Market Sentiment
The AUD/USD chart indicates a current bearish momentum, hinting at a downward market trend. Let’s examine the factors contributing to this sentiment and delve into the key support and resistance levels.
Resistance Levels Prompting Bearish Reaction
Traders should take note of the first resistance level at 0.68078, as it is likely to incite a bearish response. This anticipated reaction could potentially lead to a decline toward the first support level at 0.67880.
Fibonacci Retracement Levels and Overlap Supports
The presence of the 23.60% Fibonacci Retracement level at 0.68538 accentuates the significance of the first support level at 0.67880. Additionally, the second support level at 0.67671 aligns with the 38.20% Fibonacci Retracement level, reinforcing its role as an overlap support.
Swing High Resistances and Potential Reversals
On the upside, the first resistance level at 0.68078 denotes a swing-high resistance, potentially halting further upward price movements. Furthermore, the second resistance level at 0.68268 aligns with the 127.20% Fibonacci Extension, acting as an additional hurdle.
TRADE SUGGESTION: SELL AT 0.67880, TP AT 0.67700, SL AT 0.68041
In light of the bearish market sentiment and the outlined analysis, a trade suggestion is formulated. Traders may consider selling the AUD/USD pair at 0.67880, setting a take profit level at 0.67700. To manage risk effectively, a stop loss can be placed at 0.68041.
USDJPY: Bullish Momentum Signals an Upward Trend
A Positive Market Outlook
The USD/JPY chart currently displays bullish momentum, indicating a potential upward trend in the market. Let’s explore the factors contributing to this sentiment and identify the essential support and resistance levels.
Upside Potential and Key Resistance Level
Traders and investors should take note of the first resistance level at 141.65, as it presents the possibility of a positive continuation in price movements. This level acts as a potential barrier that may limit future increases.
Support Levels: Entry Points for Buyers
Highlighting the importance of the initial support level at 141.48, we observe it as an overlap support. Similarly, the second support level at 141.28 serves as a multi-swing low support, further solidifying its significance.
TRADE SUGGESTION: BUY AT 141.655, TP AT 142.849, SL AT 141.482
Considering the bullish momentum and the outlined analysis, a trade suggestion arises. Traders may opt to buy the USD/JPY pair at 141.655, setting a take profit level at 142.849. To manage risk, a stop loss can be placed at 141.482.
S&P 500: Bullish Momentum and Potential for a Strong Rebound
Bullish Market Sentiment
The S&P 500 chart currently showcases bullish momentum, indicating a rising market trend. Investors should take note of potential levels of support and resistance to better understand the market dynamics.
Strong Rebound at the Support Level
Traders should consider the likelihood of a strong rebound at the first support level of 4436.58, as it may pave the way for a rise toward the first resistance level at 4460.88.
Fibonacci Projections and Pullback Supports
The first support level at 4436.58, acting as a pullback support, holds particular significance as the 61.80% Fibonacci Projection level. Additionally, the second support level at 4398.11 functions as another pullback support.
Overlapping Resistances and Key Fibonacci Confluence
On the upside, the first resistance level at 4460.88, marked by Fibonacci confluence, presents a swing-high resistance that may impede further price advancements. Furthermore, the second resistance level at 4493.27 aligns with the 100% Fibonacci Projection, reinforcing its significance.
TRADE SUGGESTION: BUY AT 4407.10, TP AT 4423.75, SL AT 4391.64
Considering the bullish market sentiment and the outlined analysis, a trade suggestion is proposed. Traders may consider buying the S&P 500 at 4407.10, setting a take profit level at 4423.75. To manage risk effectively, a stop loss can be placed at 4391.64.
WTI CRUDE OIL: Bearish Momentum Indicates a Market Decline
Bearish Market Outlook
The WTI Crude Oil chart currently demonstrates bearish momentum, signaling a decline in the market. While the specific causes of this decrease are not mentioned, let’s explore the key support and resistance levels.
Potential Negative Reaction at Resistance Level
Traders should be aware that a negative reaction is possible at the first resistance level of 71.98, which could lead to a decline towards the first support level at 67.81.
Multi-Swing Low Support and Overlap Resistance Zone
The second support level at 63.84 is referred to as multi-swing low support, offering further reinforcement. On the upside, an overlap resistance zone is formed by the first resistance level at 71.98 and the second resistance level at 76.33.
TRADE SUGGESTION: SELL AT 72.27, TP AT 70.66, SL AT 73.37
Considering the bearish momentum and the provided analysis, a trade suggestion emerges. Traders may consider selling WTI Crude Oil at 72.27, aiming for a take profit level of 70.66. To manage risk effectively, a stop loss can be placed at 73.37.
SILVER: Ascending Channel and Bullish Momentum
Positive Market Momentum
The silver chart indicates a current bullish momentum, suggesting an upward trend in the market. Let’s delve into the details, including key support and resistance levels.
Movement within an Ascending Channel
Currently, silver is exhibiting a movement within an ascending channel, signifying a broad upward tendency in the market.
Resistance Levels and Potential Reversals
A positive reaction to the first resistance level at 24.00 has the potential to reverse the price trend and propel it further upward. Notably, additional resistance is observed at level 24.72, aligning with previous price peaks and indicating possible entry points for buyers.
Multi-Swing Low Resistance and Overlap Support
On the other hand, the initial support level at 23.24 acts as a significant roadblock for downward price movements. Being a multi-swing low resistance, it signifies considerable selling pressure. Further emphasizing its significance, the second support level at 22.42 serves as overlap support.
TRADE SUGGESTION: BUY AT 23.85, TP AT 24.17, SL AT 23.69
Considering the bullish momentum and the outlined analysis, a trade suggestion is formulated. Traders may consider buying silver at 23.85, setting a take profit level at 24.17. To manage risk effectively, a stop loss can be placed at 23.69.
BITCOIN: Bearish Momentum and Crucial Support Levels
Bearish Momentum Points to Downward Market Trend
The BTC/USD chart currently displays a bearish momentum, indicating a downward market trend. This sentiment is supported by the price’s position below the bearish Ichi Moku cloud. Traders should be cautious and evaluate potential support and resistance levels.
Support Levels for Potential Reversals
To identify potential reversal points for buyers, it is crucial to focus on significant support levels. The first support level at 25867, acting as a swing low support, is a key level to watch. Additionally, the second support level at 24809 serves as an overlap support, further indicating its significance.
Resistance Levels as Barriers to Price Increases
On the upside, the first resistance level at 26859 acts as a pullback barrier, potentially impeding future price increases. Furthermore, the second resistance level at 27851 corresponds to the 50% Fibonacci Retracement level, making it another zone of overlap resistance.
Trading Suggestion: Sell at 26700
Given the bearish momentum and technical analysis, a trade suggestion is to sell Bitcoin at 26700. Setting the TP at 26311 and the SL at 27057 helps manage risk effectively. As always, monitoring the market for any unexpected shifts is crucial.
In summary, the GBP/USD pair continues its range-bound movement with bullish indicators suggesting potential for future breakouts. The EUR/USD pair displays positive momentum, while the AUD/USD pair demonstrates a bearish trend. The USD/JPY pair indicates bullish momentum, and the S&P 500 showcases the potential for a strong rebound. Conversely, WTI Crude Oil exhibits a bearish outlook, and silver demonstrates ascending channel movement with bullish momentum. Traders should carefully evaluate these factors and consider the suggested trade strategies to make informed decisions in the forex and commodities markets.