. Fundamental Analysis Report With Charting Trends- 26-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 26-MAY-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 26-MAY-2023

26 May 2023

FUNDAMENTAL REPORT FORECAST 

MARKET UPDATE:

Good news supports markets

As the week’s trading sessions enter their final stages, investors are beginning to see some hope for this week’s trade. Progress on the debt ceiling in Washington and strong earnings reports have propelled the US stock markets upward. Following Nvidia’s sales prediction beat, the Nasdaq surged 1.71% in the lead, with the S&P up 0.88% and the Dow finishing down 0.11%. The Euro remained on the back foot as the dollar maintained its strong recent run versus the major currencies as German GDP figures revealed that the economy had entered a recession this year.

Another busy trading week’s end

After a successful day on Wall Street, the markets are expected to strengthen in the final three trading sessions of the week. With markets eagerly awaiting a resolution to the government debt crisis and the release of the FOMC’s preferred inflation gauge, the Core PCE Price Index data, the US will once again be in the spotlight for the day. The Asian session offers virtually nothing to worry the scoring, and traders will turn their attention to the UK on the European open when the most recent Retail Sales data is released. However, they should anticipate the main changes to occur in the final session of the week. Investors anticipate some big market movements if the Core PCE metric does not grow by 0.3% as expected. Despite this, investors still anticipate that the debt crisis will dominate sentiment.

What happened in the Asian Session?

Tokyo’s Core CPI registered at 3.2% year over year, behind both the 3.4% predicted and the 3.5% recorded previously. The Japanese Yen may suffer as a result of the weaker-than-expected statistics since it may cause the Bank of Japan to adopt a more dovish approach, possibly leading to the continuation of low interest rates.

What does it mean for Europe & US Session? 

If the US Core PCE Price Index m/m is much lower than 0.3%, profit-taking that has been occurring since the DXY’s recent increase may intensify. A decrease to 103.40 would not be unexpected. Otherwise, persistent US inflation might push the Dollar Index up to 105.00.

Gold (XAU)

Key news events today

No major news events.

What can we expect from gold today?

In line with recent dovish remarks from the Fed, the USD could decline if the Core PCE Price Index m/m is lower than anticipated. This would indicate a lower possibility of tightening monetary policy, which is good for gold and could have a favourable impact on the price of gold.  

Next 24 Hours Bias

Mixed

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Alexander Novak, the deputy prime minister of Russia, dismissed the probability that the OPEC+ alliance would further reduce production at their upcoming summit. The OPEC+ summit had earlier fuelled hope and supported oil prices since it was expected to address output changes. However, a drop in oil prices is inevitable because of Novak’s rejection of further reduction.  

Next 24 Hours Bias

Weak bearish

The Pound (GBP)

Key news events today

Retail Sales m/m

What can we expect from GBP today?

Following a prior fall of -0.9%, the UK’s Retail Sales m/m data is expected to show rise of 0.3% in the approaching release. This encouraging development means that the retail industry will experience higher customer spending and economic activity. The enhanced data is anticipated to be advantageous for 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

Weak bullish

Global Markets:

Asian Stock Markets: Nikkei up 0.37%, Shanghai Composite down 0.48%, Hang Seng down 1.93%, ASX up 0.23%

European equities, the DAX futures down 0.31%, CAC 40 down 0.33%, FTSE down 0.74%.

US Stock Market: Dow jones down 0.11%, S&P 500 up at 0.88%, Nasdaq 100 up at 1.71%.   

Commodities: Gold at $1950.02 (+0.57%), Silver at $23.04 (+1.41%), Brent Oil at $76.34 (+0.08%), WTI Oil at $72.02 (+0.19%)

News & Data

  • (AUD) Retail Sales (MoM) (Apr) Actual 0.0%, Forecast 0.3%, Previous 0.4% at 07:00
  • (GBP) Retail Sales (MoM) (Apr) Actual 0.5%, Forecast 0.4%, Previous –0.9% at 11:30
  • (USD) Core PCE Price Index (MoM) (Apr) Forecast 0.3%, Previous 0.3% at 18:00
  • (JPY) Tokyo Core CPI (YoY) (May) Actual 3.2%, Forecast 3.3%, Previous 3.5% at 05:00
  • (EUR) ECB`s Lane Speaks at 12:30

Technical Outlook

GBPUSD

The present bearish trend on the GBP/USD chart suggests the possibility of further downward movement.

Soon, the first resistance level at 1.2349 may have a bearish reaction, which would cause prices to fall towards the first support level at 1.2279. Further price increases may encounter opposition at this first resistance level, which is known as pullback resistance.

A second resistance level known as an overlap resistance is located at 1.2395 as well. This threshold might serve yet another barrier to any pricing increases.

On the other hand, the initial support level at 1.2279, often referred to as an overlap support, might be able to offer a solid base to stop additional price drops.

A second support level at 1.2191, which is another overlap support, is also there. This strengthens its ability to stop any future price decline.

EURUSD

The price is currently in a bearish descending channel on the EUR/USD chart, which is primarily why the trend is bearish.

A short-term negative reaction at the first resistance level at 1.0747 with a further slide to the first support level at 1.0694 is conceivable. As a pullback barrier, this resistance level is acknowledged as having the capacity to obstruct higher price movements.

At 1.0793, there is also another resistance level called as an overlap resistance that might prevent further price increases.

At 1.0623, there is another support level to be aware of. This level can serve as an overlap support, halting any additional price drops.

The Relative Strength Index (RSI) is showing positive divergence compared to the price, signalling a potential quick jump in price soon despite the overall bearish momentum.

AUDUSD

The AUD/USD currency pair is presently showing a positive trend.

There is a chance for a positive bounce from the first support level at 0.6508 in the near term, which could push the price in the direction of the first resistance level at 0.6578. 

This first level of support, sometimes referred to as a pullback support, is in line with the 127.20% Fibonacci Extension, which increases its ability to stop additional declines.

To further increase its capacity to thwart further price declines, a second support level at 0.6403, known as an overlap support, coincides with the 161.80% Fibonacci Extension.

The initial resistance level on the upside is at 0.6578, which serves as a pullback resistance and can act as a roadblock for price gains.

Additionally, a second resistance level around 0.6608, which also acts as a retreat resistance, is noticed, increasing the possibility of stifling any additional upward market momentum.

USDJPY

A bearish trend is currently visible on the USD/JPY trading instrument.

The price may likely continue to fall in the short term towards the first support level at 137.75. This support level, often referred to as an overlap support, could provide a strong foundation to stop additional price drops.

Its potential to stop further price declines is strengthened by the identification of a second support level at 136.25, which is likewise categorised as an overlap support.

However, if the price tries to turn around and move in the opposite direction, it can run across resistance at 139.40. The 50% Fibonacci retracement level coincides with this resistance level, which is also known as pullback resistance, and might make additional price gains difficult.

At 140.86, there is another resistance level to be aware of. This level can serve as a swing high barrier, restraining any upward price momentum.

Additionally, the price and Relative Strength Index (RSI) are diverging negatively, which suggests that the price will likely drop sharply in the near term.

DAX 40

There is now a negative trend visible on the GER30 chart, suggesting potential for further downward action. The price has broken below an ascending support line, signifying a likely negative move, which significantly contributes to this momentum.

The first resistance level of 15869.01 may have a short-term negative reaction, which could trigger a decline towards the first support level of 15672.9. The first support has the ability to serve as a strong foundation to stop additional price declines because it is an overlap support and it lines up with the 138.20% Fibonacci extension.

A second support level, designated as an overlap support, is located at 15504.9 and lines up with the 161.80% Fibonacci retracement. In the event of a price drop, this level might offer extra support.

In terms of resistance, the first level at 16046.6 is acknowledged as overlap resistance and may obstruct price growth. It is possible that the second resistance level, or pullback resistance, at 15995.00, which corresponds with the 50% Fibonacci retracement, will serve as a barrier to price growth.

WTI CRUDE OIL

The price is currently above a significant ascending trend line on the WTI chart, which suggests the possibility of additional upward movement. This positive momentum appears to be supported by the price.

A bullish bounce off the first support level at 71.67, followed by an upward movement towards the first resistance level at 74.32, may occur soon. As a pullback support, the initial support level could serve as a strong wall against future price declines.

In the event of a price decline, a second support level, also known as an overlap support, is there at 69.44, which could increase the likelihood of price support.

On the other hand, the overlap resistance at the initial resistance level of 74.7 may make future price gains difficult. A second resistance level at 76.59, which is also known as an overlap resistance, may present an extra obstacle to price increases.

GOLD

Bullish momentum can currently be seen on the XAU/USD (Gold) chart. It’s possible that the price could rise towards the first resistance level at 1952.43 after making a bullish bounce off the first support level at 1936.86.

An overlap support at the initial level of support, 1913.50, may serve as a strong base to halt additional price declines. A second support level, sometimes known as an overlap support, is there at 1913.50 in case the price declines much more.

The initial resistance level on the resistance side is at 1952.43, and it’s seen as pullback resistance because it’s exactly where the 38.20% Fibonacci retracement level sits on the chart. If the price breaches this barrier, it might encounter a second barrier at 1980.98, which is noted as a multi-swing high barrier. This critical level has undergone numerous tests and is therefore a strong resistance level.

Bullish divergence between the Relative Strength Index (RSI) and price is also present, which is frequently a hint of a potential bullish reversal. This means that the price of gold may rise quickly in the near future. However, when trading, always take into account other aspects and employ suitable risk-management techniques.

BITCOIN 

The BTC/USD chart is currently showing a negative trend, indicating the possibility of further decline.

There is a chance for a negative continuation in the near term approaching the first support level at 26308. This level acts as a pullback support and could offer a strong foundation to stop further price declines.

Additionally, there is a swing low support level at 25845, which is a second support level. In the event of a price drop, this level can provide an additional layer of support.

The overlap resistance and 50% Fibonacci retracement coincide with the initial resistance level on the resistance side, which is located at 26699. This underlines the importance of it as a potential price floor.

Furthermore, there is another resistance level around 27268 that is referred to as a pullback resistance. This level coincides with a 78.60% Fibonacci retracement, suggesting that an upward price movement may be prevented by it.