. Fundamental Analysis Report With Charting Trends- 22-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 22-MAY-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 22-MAY-2023

22 May 2023

FUNDAMENTAL REPORT FORECAST 

MARKET UPDATE:

Due to concern over the debt ceiling, Wall Street declines

After cutting its FY projection, Foot Locker suffers, which hurts Nike.

Morgan Stanley declines as CEO prepares to leave

Regional banks end a losing skid of three weeks.

S&P 500 down 0.14%, Dow down 0.33%, and Nasdaq down 0.24%

The hope that a compromise could be made in the next few days to avoid a default was dampened as U.S. stocks ended the trading week on a sour note on Friday as early gains faded as U.S. debt ceiling negotiations in Washington were put on hold.

The benchmark S&P 500 (.SPX) had risen more than 2% over the previous two sessions as investors gained hope that a deal to raise the $31.4 trillion debt ceiling would be struck soon. However, a preliminary gain on Friday was retracted because of news that negotiations had been suspended while Federal Reserve Chair Jerome Powell addressed a monetary policy panel.

The Republicans have just staged a walkout, saying that their position is unacceptable, according to Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina. “The market seemed to be going into this weekend thinking that the talks were going to move towards the framework for an agreement… but what you’re seeing now is the Republicans saying, no, this is not acceptable, and they just staged a walkout,” he said.

What happened in the Asian Session?

In contrast to the predicted decline of 0.5% and the prior decline of -4.5%, the Core Machinery Orders m/m data for Japan revealed a decline of -3.9%. The Japanese yen is being negatively impacted, which points to a downturn in manufacturing activity.

What does it mean for Europe & US Session?

The EUR/USD pair may trade in a 30-pip range between 1.0800 and 1.0830 throughout the forthcoming data-light sessions. The Euro may rise to 1.0850 if European consumer confidence is higher than projected. The USD could fall if the US debt ceiling negotiations fail, which would push the pair to 1.0900.

The Kiwi Dollar (NZD)

Key news events today

Annual Budget Release

What can we expect from NZD today?

Since there are no significant news events affecting the NZD today, it is probable that previously available data will have an impact on the NZD’s market direction. The trade balance has improved from the previous publication of -1586M to 427M. The increase rate for credit card expenditure year over year is 11.4%, down from 19.7% in the previous year.

Central Bank Notes:

  • OCR increased by 50bps from 4.75% to 5.25%
  • Recent severe weather events in the North Island have led to higher prices, increasing the risk of inflation expectations exceeding the target range.
  • New Zealand’s economic growth is expected to slow through 2023 due to the slowing global economy, reduced residential building activity, and the ongoing effects of monetary policy tightening.
  • Next meeting is on 25 May 2023

Next 24 Hours Bias

Mixed

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The GBP will be impacted by the impending UK Rightmove House Price Index m/m, which earlier revealed a 0.2% increase. If the HPI rises above the previous 0.2% level, it may signal increased economic confidence and support for the pound. A number below 0.2%, however, would indicate a slowing economy, which could put pressure on the GBP.

Central Bank Notes:

  • The MPC of the BoE voted 7-2 to increase Bank Rate by 0.25 percentage points to 4.5%.
  • The updated projections show that CPI inflation is expected to decline slightly above 1% at the two and three-year horizons, below the 2% target.
  • CPI increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
  • Next meeting on 22 June 2023 

Next 24 Hours Bias

Mixed

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The Core Machinery Orders m/m data for Japan is projected to rise by 0.5%, which is expected to have a favourable effect on the JPY. This suggests that company investment and economic activity may improve. The total effect may be moderated, though, by the fact that the preceding report showed a fall of -4.5% in machinery orders.

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
  • Next meeting is on 15 June 2023 

Next 24 Hours Bias

Weak bullish

Global Markets:

Asian Stock Markets: Nikkei up 0.90%, Shanghai Composite up 0.40%, Hang Seng up 1.51%, ASX down 0.22%

European equities, the DAX futures up 0.69%, CAC 40 up 0.61%, FTSE up 0.19%.

US Stock Market: Dow jones down 0.33%, S&P 500 down at 0.14%, Nasdaq 100 down at 0.24%.   

Commodities: Gold at $1974.94 (-0.14%), Silver at $23.74 (+0.83%), Brent Oil at $74.94 (-0.86%), WTI Oil at $71.08 (-0.85%)

News & Data

  • (CNY) PBoC Loan Prime Rate Actual 3.65%, Forecast 3.65%, Previous 3.65% at 06:45 
  • (USD) FOMC Member Bostic Speaks at 20:20

Technical Outlook

GBPUSD

The price is above a significant ascending trend line, which supports the GBP/USD pair’s current bullish trend.

The first support level is at 1.2421 and acts as an overlap support, suggesting that it has historically been a strong level that has served as both resistance and support.

The second support is located at 1.2202 and functions as a pullback support, which means it has demonstrated the ability to sustain price movement during a pullback within the broader upward trend.

On the upside, 1.2766, functioning as a swing high resistance and a level where price has historically reversed and gone lower, is the first resistance level to keep an eye on.

At 1.2658, a middle resistance level has also been noted. This level exhibits multiple swing high resistance, indicating that it has previously been a price ceiling.

EURUSD

A break below an ascending support line, which implies a likely bearish move, suggests that the EUR/USD pair is on a bearish trend.

The pair may break lower from the first support at 1.0806, which would cause a decline to the second support.

The second level of support, which acts as a multi-swing low support, is located at 1.0516.

On the upside, resistance at 1.1033 can be encountered if the pair starts to buck its bearish trend. This level functions as an overlap resistance and may slow the bullish trend.

The second resistance level, which can serve as a swing high resistance, is located higher up at 1.1157. This indicates that it might act as a barrier to additional price increases because it has historically been a level at which pricing has reversed.

AUDUSD

There is now a bearish trend in the AUD/USD pair. As a result, it appears possible that the pair will keep falling towards the first level of support.

At 0.6548, the initial support level—which also serves as an overlap support—is located.

The second support level is located at 0.6389 and coincides with the 78.6% Fibonacci retracement level. It also functions as an overlap support.

The first resistance level on the upside, if the price reverses, is around 0.6792, which served as a multi-swing high resistance in the past.

As a pullback resistance, the second resistance level is located at 0.6893. This shows that the price has previously risen from this level following a minor retracement.

At 0.6626, there is a level of support that is in the middle. As a pullback support level that also happens to be at the 78.6% Fibonacci retracement level, it is significant in that it may prevent the price from falling any further.

USDJPY

Despite the price being above a significant rising trend line, the USD/JPY pair is currently in a bearish trend. This can imply that a possible reversal or consolidation is approaching.

At 135.30, the first level of support serves as a retreat support.

At 133.69, there is a second level of support that serves as an overlap support.

First resistance is located at 138.94 should the price turn around. Indicating a substantial barrier for the price if it continues to rise, this level overlaps resistance and coincides with the 50% Fibonacci retracement level.

At 142.11, the second resistance level additionally serves as an overlap resistance. It also lines up with the 61.8% Fibonacci retracement, which is sometimes seen as a crucial point in market retracements.

At 137.29, there is an intermediate level of support, which has previously served as a pullback support, demonstrating its capacity to arrest brief price declines during this general slump.

S&P 500

Currently displaying strong momentum, the US500 (S&P 500 Index) suggests potential for further higher.

The first support level, which acts as a pullback support and is where the price has previously recouped, is at 4172.85.

At 4074.82, the second support level is located. This level is crucial to observe since it acts as an overlap support, meaning it has previously functioned as both support and resistance.

The initial resistance level on the upswing is located around 4300.29. As a swing high resistance level, it has previously restrained price increases. As a result, it might be the object of any bullish actions.

WTI CRUDE OIL

The WTI (West Texas Intermediate) is displaying bearish momentum, pointing to the possibility of a decline continuation.

The initial support level is a multi-swing low support at 64.32.

At 67.90, there is an intermediate support level. Additionally, this is a multi-swing low support level, meaning the price has bounced off it more than once. It might serve as a stopgap for any subsequent decreases.

The initial resistance level on the upward is located at 73.41 The price has already encountered resistance at this level since it is an overlap resistance level. It might stop any upward movements.

At 79.01, there is a level of moderate opposition. The price may encounter some resistance at this additional overlap resistance level.

GOLD

The price is above a significant rising trend line on the XAU/USD chart, indicating the possibility of continued upward growth.

There is a chance of a bullish continuation in line with this bullish momentum towards the first resistance level at 2064.92.

There are two levels of support for this prospective upward advance. A 38.20% Fibonacci retracement and the fact that the initial support level at 1958.28 is designated as an overlap support point to its importance as a potential price floor.

The second level of support, which is at 1888.97, is acknowledged as an overlap support, adding to the general bullish attitude.

The initial resistance level, which is at 2064.92, is a multi-swing high resistance on the resistance side.

These levels of support and resistance point to possible regions where the price, as it maintains its bullish momentum, can find support or run into opposition.

BITCOIN

The price slide towards the first support level may continue, as the BTC/USD is now exhibiting a negative momentum.

The initial support level is at 2303 and acts as a pullback support. The price has previously risen from this level.

The multi-swing low support is located at the intermediate support level of 26583. This level has been the low point for several market movements and could offer solid support if prices continue to fall.

At 27651, the initial resistance level serves as overlap resistance. This level has historically been both support and resistance, making it a formidable barrier to price growth.

The second resistance level is at 29092, which has previously served as a multi-swing high resistance and stopped price increases numerous times. If there are any bullish reversals, this might be the goal.