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Analysis

Forex Update: Trump Pressures Fed Ahead of Rate Decision

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1355 0.46%
GBP/USD 1.2629 0.36%
USD/JPY 112.72 -0.57%
AUD/USD 0.7177 0.03%
GOLD 1,250 0.64%
WTI Crude Oil 49.99 -2.38%
BTC/USD 3,543 10.91%

The US Dollar has been at the center of attention again, as the last full trading week of the year started off in a bearish fashion for risk assets. Although we saw a bounce following Theresa May’s statement on the Brexit process regarding a possible vote on the draft plan in January, risk-on currencies and other risk-on assets are clearly under pressure, with the US stock markets challenging their correction lows again, completing the bearish global shift.

The Dollar’s slight dip, which was triggered by another attack by Donald Trump on the Fed’s tightening schedule provided the most action in the otherwise quiet forex segment, with a lot of traders taking a step back before the Fed’s rate decision on Wednesday. The consensus estimate is still a rate hike on the central bank’s meeting, which would be the fourth tightening step this year, but now, the bond market signals no rate hikes next year and in the current cycle.

Technical Analysis

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair bounced higher in its broader trading range after last week’s bearish close, but it remains well below the key 1.1440 level, and the bearish long-term technical setup is unchanged, eve as the pair held up above the support zone between 1.1275-1.13.

The breakdown from the consolidation pattern has been aborted, and we will likely have to wait until Wednesday for the next meaningful move, but with the period of positive seasonality soon ending for the Euro, odds still favor new lows in January, barring a sharp dovish shift by the Federal Reserve.

USD/JPY, 4-Hour Chart Analysis

The Dollar also lost ground compared to the Japanese Yen, and the safe-haven currency was among the strongest majors especially in the second half of the day, as risk assets decisively turned lower. The USD/JPY pair continues to trade in a broad consolidation pattern, but today’s drop off the 113.50 level could be the start of a broader trend change, with all eyes on the October low near 111.50. Gold’s strength confirms the strong safe-haven flows, which could propel the Yen higher against all of the majors, even the Dollar.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair continues to be in an interesting technical setup with a likely move towards the October lows being likely underway. Today, the Aussie has been showing relative weakness due to the risk-off flows, and it’s virtually unchanged against the Greenback, despite the broad dip in the reserve currency.

Wednesday’s Fed decision and Thursday’s Australian Employment Report will likely cause volatile moves in the pair before the holidays, but bears are still clearly in control of the market both short- and long-term, especially given the weakness in Chinese assets.

Gold Futures, 4-Hour Chart Analysis

We have been following the key break-out attempt in gold, and today, the precious metal likely formed a crucial swing low that could propel it to a new swing high, which would signal a likely rally towards the resistance zone near the $1300 level. While a failed break-out attempt is still in the cards, given the bullish fundamentals, and the recent relative strength of gold, odds favor a confirmed trend change and the start of a bullish cycle here.

Key Economic Events Tomorrow

ChartBook

Forex

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

USD/CNH, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 444 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

3 Things You Need to Know About the Market Today

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1, Chinese GDP Growth Slows to Multi-Decade Low

Shanghai Composite, 4-Hour Chart Analysis

When even the strongly PR-optimized Chinese economic releases are showing severe weakness, it’s not at all surprising that the local stock market is in a deep bear market, and even the explosive oversold rally on Wall Street combined with the trade optimism of last week is not enough to meaningfully change the technical setup.

While economic growth slowed to an almost 30-year low on a yearly basis, retail sales and industrial production beat the consensus estimates by a hair, but that wasn’t enough to cause a material rally in equities, with the global sentiment leaning slightly bearish. This week’s most important question will be how risk assets will hold on to their recent gains, with a special attention on China and Europe, which continue to lag behind the US from a technical perspective.

The Shanghai Composite is more than 30% below its bull market highs, while the main European benchmarks are also around 20% below their respective highs, and that’s following one of the strongest short squeezes in history on Wall Street, mind you. The next few days could be crucial for markets, and we now advise caution even for short-term bulls.

2, Stocks Retreat after Friday Ramp with Wall Street Closed

German DAX 30 Index, 4-Hour Chart Analysis

Looking at Europe, the major indices failed to extend their gains from Friday, while US stock futures are also modestly lower after the European close. With the US markets being closed in observance of the Martin Luther King Jr. Day, trading volumes and activity has been predictably low, and things will likely get heated tomorrow, as the earnings season will also continue.

Johnson & Johnson (JNJ) and IBM (IBM0 will report earnings tomorrow, and all eyes will be on their overseas numbers and guidance amid the global economic slowdown. We had some negative reports regarding the US-Chinese trade talks, concerning the sensitive issue of Intellectual Property, and we still think that even though an agreement is likely in the coming months, implementation and enforcement will be borderline impossible.

3, Oil Tests December High

WTI Crude Oil, 4-Hour Chart Analysis

While risk assets, in general, had a slightly bearish half-session crude oil kept on pushing higher following Friday’s move to new correction highs, with the WTI contract entering the resistance zone that capped the December consolidation. The crucial commodity, which has been slightly lagging US stocks from a technical perspective is still squeezing late shorts, but we expect a short-term top very soon, possibly after a stop hunting rally above the $55 per barrel level.

What’s sure, is that we wouldn’t be buyers at these levels, even in light of the OPEC production cut, since over-supply remains a major issue, and the increase in US output continues. That said, the short-term uptrend is intact and the topping process could take a while, but we will keep a close eye on the day-to-day price action following the 25% rally off the December lows.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 444 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: 5 Altcoins to Watch This Week

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Four out of five of the altcoins that we included on last week’s list moved within our expectations. Ethereum (ETH/BTC) and NEM (XEM/BTC) have managed to stay above key support areas. In addition, Binance Coin (BNB/BTC) and 0x (ZRX/BTC) have maintained their bullish tone. Only Bitcoin Gold (BTG/BTC) disappointed as the market took out its key support.

For this week’s edition, we look at altcoins that are prime candidates for buying on dips. Here are the five altcoins to watch this week.

TRON (TRX/BTC)

TRON started the year on a high note as it breached 0.0000056 resistance on January 3, 2018. This triggered a strong rally that sent the market to as high as 0.00002047 on January 5, 2018. Although the market has been correcting since, we now have an idea where TRON might be headed. A look at the 12-hour chart shows that it is forming a falling wedge.

TRX/BTC 12-hour chart

If our read is correct, TRON might bounce off 0.0000056. This would allow the market to flip the resistance into support. Otherwise, a move below this level will likely send TRON down to 0.0000045.

Steem (STEEM/BTC)

Steem had a strong week as it rallied from near the range low of 0.0000675 on January 14, 2019 to take out the range high of 0.0001 on January 18. The market then flipped the resistance into support on January 20. This is awesome bullish price action.

However, the market looks overextended as the 12-hour RSI is flashing a bearish divergence. This should give you the chance to buy on dips.

STEEM/BTC 12-hour chart

If the market corrects, you can rely on the 200-MA on the 12-hour chart as a possible bounce area. Should the market move below the indicator, it has a support level at 0.0000888.

WAVES (WAVES/BTC)

To say that Waves ended 2018 strong would be an understatement. It grew by over 400% rallying from the low of 0.0002336 on November 21 to as high as 0.001209 on December 19. The market has been pulling back since. However, we are starting to see signs of a possible bounce.

Currently, Waves appears to be finding support at 0.0006842, which is the 61.8% Fibonacci level of our range. Also, the market has printed a double bottom pattern on the shorter time frames. Plus, we can see a bullish divergence on the 12-hour chart.

WAVES/BTC 12-hour chart

A bounce at the 61.8% Fibonacci level might send Waves all the way up to the range high of 0.0009645. Otherwise, it might fall back to the range midpoint of 0.0005979.

Dash (DASH/BTC)

Dash is one of our two bottom picking targets this week. It is currently creating a falling wedge on the 12-hour chart. It appears to be on its final wave down.

DASH/BTC 12-hour chart

If our read is correct, Waves will establish a bottom around 0.016. Put tight stops if you’re planning to go long on the market because there’s no known support below 0.016.

Wanchain (WAN/BTC)

Our second bottom-picking target is Wanchain. Just like Dash, it is forming a falling wedge on the 12-hour chart. It also appears to be on its last leg down.

WAN/BTC 12-hour chart

We expect Wanchain to bottom out at 0.0000775. Use tight stops as well if you’re considering to bottom pick Wanchain. Similar to Dash, WAN/BTC has no known support below 0.0000775.

Bottom Line

While Bitcoin continues to trade sideways, this gives many altcoins the opportunity to pump. TRON, Steem, and Waves have done so and that’s why we’re looking at them this week. On the other hand, Dash and Wanchain appear ready to bottom out. As always, use tight stops when buying on dips.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.8 stars on average, based on 311 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

Brent Crude Continues Rising

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

Brent recovered to the levels it last reached on December 7. Today, on Monday, January 21, 2019, the instrument is trading at $62.77 USD and tending to keep this positive momentum.

Over the last week, there were a lot of different and sometimes even opposite signals, but investors chose the ones more favorable to the bulls and oil prices started moving upwards. The US Department of Energy reported that Crude Oil Inventories declined slightly, but both distillates and gas increased significantly. While the refinery utilization declined, the oil extraction went up to 11.9M bpd (+200K barrels per week), which means that rather high oil prices (in comparison with December) are pretty comfortable for shale producers.

At the same time, numbers from Baker Hughes published last Friday weren’t really impressive. The Oil Rig Count was 852 units as the indicator lost 21 units. In the case of gas, the corresponding indicator lost 4 units. In total, the number of rigs in the USA decreased by 25 units and right now equals to 1,050 units.

Why does the indicator go down? Most likely, oil producers aren’t really sure that oil price movements over the last 5 weeks indicate a trend reversal instead of a long-term correction. As such, they turn patient and watch market developments unravel.

The USD got stronger a bit last week, but its behavior doesn’t seem to worry oil investors too much so far.

To more clearly see what is happening to Brent, one has to look at the daily chart. It can be seen that the candlestick of December 26th, 2018 formed Engulfing pattern and started a new correction to the upside. In addition to that, there was a convergence on MACD, which indicated a possible pullback. The price is getting closer to the retracement of 38.2% at $64.30. The next target is the retracement of 50.0% at $68.55.

The H4 chart shows a stable uptrend. However, it should be noted that after breaking the previous high the price may start a new pullback towards the support level at $61.50. Later, the instrument is expected to form a new rising impulse with the target at $65.60.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 23 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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