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Market Update by Solidecn.com

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EURUSD - The decision of the US Federal Reserve disappointed investors

This week, within the framework of an extraordinary meeting, the energy ministers of the EU countries reached a compromise on the issue of reducing the consumption of "blue fuel" by 15% from the average level over the past five years. The emergency plan, developed in the event of a complete cessation of energy supplies from Russia, assumes a decrease in the volume of gas used in the upcoming winter heating season, starting from August this year to the end of March 2023. The driver for the decision was the reduction in the volume of fuel transported through the Nord Stream gas pipeline to 1/5 of the throughput capacity due to technical work carried out on the gas turbine engine. The market took this as a signal of an escalation of political tension between Russia and the European Union. Nevertheless, despite the decrease in the volume of supplies, the filling of gas storage facilities continues and, according to experts, may reach 80% by November 1. As for the state of the economies of the EU countries, the situation continues to deteriorate, and, as shown by the German consumer climate index for August, the decline in the indicator increased to –30.6 points, which is the absolute minimum in the history of observations.

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The trading instrument moves within the global downward channel, rising towards the resistance line. Technical indicators hold a sell signal, which is weakening: fast EMAs on the Alligator indicator is approaching the signal line, and the AO oscillator histogram continues to form upward bars.

Support levels: 1.0112, 0.9952 | Resistance levels: 1.0259, 1.0494
 

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USDJPY - The epidemiological situation in Japan is rapidly deteriorating

According to the World Health Organization, Japan has come out on top in the world in terms of the daily increase in the incidence of coronavirus. More than 200.0K cases of infection were registered yesterday, which has already become the reason for limiting the work of several large industries. The country is fighting the seventh wave of the pandemic. The country's southernmost prefecture, Okinawa, has been hardest hit by the new outbreak, according to authorities, but Tokyo, Osaka, and Hokkaido prefectures in the far north are also on the rise. However, the government does not intend to introduce strict quarantine restrictions soon, citing low mortality and urging the population to get vaccinated. Macroeconomic indicators also show negative dynamics, with the leading indicators index down 1.7% after rising 2.1% in June, and foreign investment in Japanese stocks fell to 298.1B yen this week from 475.0B yen earlier.

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The trading instrument is within the global uptrend, declining to the support line. Technical indicators keep a buy signal, which is actively weakening: indicator Alligator's EMA oscillation range narrows and the AO oscillator histogram forms new downward bars, approaching the transition level.

Support levels: 134.74, 132.16 | Resistance levels: 136.86, 139.34
 

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NZDUSD, H4
On the four-hour chart, at the support level of 0.6223, a Marubozu pattern is forming, signaling that the buyers have seized the initiative. The appearance of two Hammer patterns also confirms the strengthening of the "bullish" sentiment. In the current situation, the continuation of the upward trend towards the resistance level of 0.6371 is possible, consolidation of the price above which will allow the asset to recover lost positions and head to the area of 0.6541− 0.6711. If the "bears" break the support level of 0.6223, the negative dynamics will develop to 0.5920.

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NZDUSD, D1
On the daily chart, there is a falling Wedge price pattern, from where the price of the trading instrument went upwards. Its development has not yet been completed, and the upward dynamics of quotations are intensifying. It is confirmed by forming a series of Hammer reversal patterns, signaling the bottom has been reached. Currently, the price is trying to break the resistance level of 0.6371. If successful, the quotes will continue to move to the area of 0.6541− 0.6711.

Support levels: 0.6223, 0.6106, 0.592 | Resistance levels: 0.6371, 0.6541, 0.6711

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The shares of Alcoa, an American steel company, are correcting around 50.

On the daily chart of the asset, the price left the global downwards channel with dynamic boundaries at 23 – 47, having broken the resistance line at 46 yesterday and consolidated in an uptrend. On a four-hour chart, it is seen that further global dynamics will most likely continue within an uptrend, and the May low at 53.7 is the key resistance, consolidation above which will allow the instrument to strengthen its positions.

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Technical indicators reversed and gave a new buy signal: indicator Alligator's EMA oscillation range expands upwards, and the histogram of the AO oscillator has moved into the buy zone, continuing to form rising bars.

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The shares of Walmart, the US company that operates the world's largest wholesale and retail chain, are in the 132 area.

On the daily chart of the asset, the price is correcting after a significant decline, forming a local ascending channel with boundaries of 120–135. On a four-hour chart, the asset approached the solid resistance line of the 134 range, formed at the end of January 2022, and continued growth is possible only if the quotes consolidate above it.

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Technical indicators confirm the continuation of the corrective upward dynamics, holding a buy signal: indicator Alligator's EMA oscillation range expands upwards, and the AO oscillator histogram forms ambiguous bars in the buying zone.
 

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GBPUSD - Trading within the global downward channel

At the end of last week, almost 80% of all train traffic in the country came to a halt, paralyzing the domestic supply chains of goods due to the strike of railway workers, caused by a sharp increase in prices for food and goods, which has been going on since the beginning of summer. Also, the British pound is negatively affected by macroeconomic statistics: the volume of mortgage lending in June fell to 5.27B pounds from 8.04B in May, while the volume of private net loans fell to 7.1B from 8.9B a month earlier. The reason for the negative dynamics of the indicator was the active increase in the interest rate, which prevents consumers from planning the cost of loans.

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The trading instrument is moving within the global downward channel, approaching the resistance line. Technical indicators reversed and gave a stable buy signal: indicator Alligator’s EMA oscillation range expands upwards, and the histogram of the AO oscillator is forming rising bars in the buying zone.

Resistance levels: 1.2268, 1.2652 | Support levels: 1.2063, 1.1757

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NZDUSD - New Zealand housing market is stable

Yesterday, Statistics New Zealand (Stats NZ) released its June report on the state of the housing market: building permits decreased by 3.0% from the May dynamics of –0.5%, and the adjusted value lost 2.3% compared to 0.5% recorded earlier. However, there is a positive trend: the actual number of houses built in June amounted to 50.736K, which is 14% more than last year, and the number of new houses per thousand residents is 9.9 units against 8.7 units. This statistic may indicate that the global construction market is stable, and the local slowdown does not seriously impact it.

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The trading instrument is moving within the global downtrend, rising towards the local resistance. Technical indicators reversed and gave a signal to buy: fast EMAs on the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram moved into the buying zone, forming several upward bars.

Resistance levels: 0.6332, 0.6555 | Support levels: 0.6237, 0.6081

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The shares of Caterpillar, a global manufacturer of construction and mining equipment, are trading within a global corrective trend, around 194.

On the daily chart of the asset, a global Expanding formation pattern with dynamic boundaries of 165–250 is forming, within which an upward wave with the target near the resistance line around 250 develops. A reversal has formed on the four-hour chart, and there is no doubt that the upward dynamics will continue. Since the current wave is the seventh, the probability of quotes going beyond the lower border of the pattern around 165 is extremely small.

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It is confirmed by technical indicators that have reversed and are holding a stable buy signal: fast EMAs on the Alligator indicator crossed the signal line and began to expand the range of fluctuations, and the AO oscillator histogram is forming new bars in the buy zone.

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USDCHF - American currency is actively losing ground

The dynamics of the franc are rather negative since there are still no factors for its growth, and investors perceive the published macroeconomic statistics as neutral: the index of economic expectations published monthly by the Leibniz Center for European Economic Research in Mannheim (ZEW) reached –57.2 in July, which was better than the absolute June anti-record of –72.7 points but it is still lower than the peak of the coronavirus pandemic in 2020. The Zurich Polytechnic Federal Institute (KOF) Switzerland's index of leading economic indicators has been declining for fifteen consecutive months, and in July, the indicator was 90.1 points, falling from 95.2 points in June. Given that it is a leading indicator of the gross domestic product (GDP) trend, it can be assumed that the growth of the Swiss economy will continue to slow down in the second quarter.

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On the weekly chart of the asset, the price is correcting within the possible Head and shoulders pattern, preparing to continue a local decline. Technical indicators have completely reversed and gave a sell signal: fast EMAs on the Alligator indicator crossed the signal line downwards, and the AO oscillator histogram moved into the sell zone, continuing to form down bars.

Resistance levels: 0.954, 0.97 | Support levels: 0.9462, 0.9304

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Gold is correcting at 1774 amid strengthening of the downtrend of the US dollar, which fell from 108 to 105 in the USD Index, acting as a catalyst for the movement of capital into safe-haven assets.

Swap dealers have seen a record liquidation of short positions since the week before last, and the continuation of this trend may mean that the trend in gold is likely to change soon. The report of the US Commodity Futures Trading Commission (CFTC) also showed a decrease of 5.153K contracts in this category, which significantly reduced the difference in the accumulated positions. Now buyers have 92.205K contracts, and sellers have 174.234K contracts.

The situation on the gold market is developing in such a way that the balance of sellers and buyers may soon change in favor of the latter. At the very least, the number of general speculative positions backed by money obviously slowed down the decline: if in early July they were adjusted by an average of 15 - 20K contracts per week, last week the reduction was only 2.3K contracts.

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On the global chart of the asset, the formation of a wide descending channel with dynamic boundaries 1780 – 1650 continues, and now the price is making its first attempt to overcome the resistance line. Technical indicators weaken a sell signal: fast EMAs on the Alligator indicator have almost approached the signal line, and the AO oscillator histogram is forming upward bars, approaching the transition level.

Support levels: 1753, 1696 | Resistance levels: 1787, 1847
 

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The shares of PayPal Holdings, an American debit payment processor, correct at 88.

On the daily chart of the asset, the price is moving above the resistance line of a wide downwards channel with dynamic boundaries of 50 – 80, holding at the local high of June 8 at 89. On the four-hour chart, it is seen that the probability of the continuation of the upward dynamics is quite high. If the breakout of the local high occurs soon, the quotes will head towards the annual peak around 122.

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Technical indicators confirm the high probability of growth, keeping a stable buy signal: fast EMAs on the Alligator indicator remain above the signal line, and the AO oscillator histogram forms rising bars in the buying zone.
 

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Crude Oil - Investors pending OPEC+ decisions

Today at 12:00 (GMT+2), the ministers of the OPEC+ member countries will gather for a meeting via videoconference. Investors are watching the upcoming meeting with interest for several reasons. First, a new secretary-general, Haytham Al Ghais will be introduced, succeeding Mohammad Barkindo. The second reason lies in the timing of the implementation of the OPEC+ agreement. The fact is that the participating countries plan to reach pre-crisis levels of oil production by September, and in order to meet this deadline, production levels gradually increased to 432 thousand barrels per day in June and up to 648 thousand barrels per day in July. However, OPEC+ is currently 2.84 million barrels per day behind schedule, according to the OPEC+ Technical Committee, which could force the organization to take more "hawkish" moves at today's meeting. Almost all parties to the deal are now at the limit of their production capacity, with only Saudi Arabia and the United Arab Emirates having spare capacity, which are likely to increase production levels further.

In this regard, there is no need to talk about a stable uptrend. In the event of a change in current plans, one should expect a continuation of a local decline in energy quotations, as world demand is not yet able to cope with such a high supply.

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On the global chart of the asset, the price is kept within the local downward channel and may make a new attempt to overcome the support level in the near future. 

Support levels: 91.68, 84.1 | Resistance levels: 97.57, 106.74

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ASX 200 - RBA adjusted monetary policy parameters

Earlier, the Australian regulator adjusted the interest rate by 50 basis points for the third time in a row, bringing it to 1.85%. Thus, the pace of monetary policy tightening has become the maximum since 1990 and, according to the head of the regulator, Philip Lowe, this is not the limit. The current increase is the bank's reaction to inflation, which, according to data for Q2, reached 6.1% in annual terms, having increased by 1.8% compared to Q1. According to Lowe, by the end of this year, we should prepare for the fact that consumer price growth will reach 8.0%.

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The price left the limits of the local descending channel and consolidated above the resistance line. Technical indicators reversed and gave a signal for the start of purchases: the fast EMAs of the alligator indicator are significantly higher than the signal line, and the histogram of the AO oscillator forms ascending bars while in the buying zone.

Support levels: 6926, 6712 | Resistance levels: 7045, 7280
 

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USDJPY - The medium-term trend reversed downwards

The USDJPY pair moved to growth as a result of escalating geopolitical tensions between the US and China against the background of the visit of the Speaker of the House of Representatives, Nancy Pelosi, to Taiwan. Now the trading instrument is around 133.16.

Despite serious threats from the PRC, no one interfered with the landing of the official’s plane, but her arrival in the country caused sharp condemnation from the Chinese authorities, who announced the start of large-scale military exercises around the island in response. Pelosi visited Parliament and expressed hope for increased political and economic cooperation with Taipei. In turn, official Beijing reacted by imposing trade sanctions against Taiwan, which is especially dangerous given the current crisis: in particular, the import of citrus fruits and two types of fish products, as well as the supply of sand, will be stopped. In the face of political tension, investors traditionally avoid risky assets and prefer to buy the US dollar and gold.

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The USDJPY pair rebounded from the key long-term uptrend support at 131.40, and the likely upward target is now the 50% Fibonacci retracement level (134.87) superimposed on July downside momentum. If it is held, the negative dynamics will continue in August, but in case of the breakout, buyers will target 137.18.

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The medium-term trend reversed downwards last week, and as a result of the fall, the target zone 2 (131.33–130.95) was reached, from where an upward correction is now developing, the target of which is to test the key trend resistance 134.64–134.24, after which new short positions can be considered with the target at the low of the current week.

Resistance levels: 134.87, 137.18 | Support levels: 131.40, 126.49
 

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The shares of Tesla, an American electric car maker, are correcting around 921.

On the daily chart of the asset, the price is moving within the global downward channel with dynamic boundaries 1050 – 560 and is trying to approach the resistance line. On the four-hour chart, the signal is being processed after overcoming the upper limit of the local Triangle pattern around 755. There may be obstacles in the way of further upward movement of quotes, and the first serious of them may be the local resistance level of 955, which the trading instrument can reach today.

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Technical indicators signal continued growth
Fast EMAs on the Alligator indicator are moving above the signal line, and the AO oscillator histogram is forming bars with an uptrend in the buying zone.

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GBPUSD - Markets expect the US Federal Reserve to continue raising the rate

Yesterday, the analysts of the large bank UBS Group published a forecast regarding the prospects for the national currency for the autumn period, suggesting a decrease in quotations to 1.1500. Among the key reasons for the negative dynamics, experts cite high prices for electricity and energy resources amid the escalation of the military conflict in Ukraine, as well as problems in supply chains. Macroeconomic statistics confirm the deterioration of indicators: according to data for July, Composite PMI fell to 52.1 points from 53.7 points in June, and Services PMI corrected to 52.6 points from 54.3 points a month earlier and this is the lowest value since March 2021.

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The trading instrument is moving within the global downward channel, coming close to the resistance line. 

Resistance levels: 1.2244, 1.2651 | Support levels: 1.2059, 1.1818

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USDCAD - Canadian unemployment forecast to rise

Analysts predict the first increase since May 2021 in the average unemployment rate from 4.9% to 5.0% in July, which may be caused by macroeconomic statistics: for example, business activity in the manufacturing sector in July fell to 52.5 points from 54.6 points a month earlier, and this is the fastest rate of decline since February 2021. Also, today will be published June data on building permits issued, the number of which may decrease by 1.5% after May's growth of 2.3%.

The US dollar is holding above 106 in the USD Index ahead of today's publication of unemployment data: Initial Jobless Claims may slightly increase to 259.0K from 256.0K, and against the background of poor last week's results, even such a slight increase will be perceived positively. Experts also note the negative forecasts regarding Friday's report on employment in the non-agricultural sector, where it is possible to reduce the number of jobs to 250.0K from 372.0K a month earlier.

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On the global chart of the asset, the price is moving within a wide ascending channel with dynamic boundaries of 1.26 – 1.32, trading in the middle of the range. Indicator Alligator's EMA oscillation range began to narrow again, and the histogram of the AO oscillator forms ascending bars in the sell zone.

Resistance levels: 1.29, 1.3041 | Support levels: 1.2785, 1.2643
 

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XAGUSD - The price resumed growth after a two-month fall

The Caixin July Services PMI in China edged up 1 point to 55.5 points, while the S&P Global July Composite PMI in the US came in above expectations at 47.5 points at 47.7 points, according to the latest data. The indicator in the US services sector in the United States also exceeded the forecast of 47.0 points and amounted to 47.3 points, while the volume of industrial orders for June increased by 2.0% MoM, which is higher than the analysts' forecast of 1.1%, and the previous indicator 1.8%. The economies of the two largest consumers of silver are showing optimistic data, which suggests an increase in demand for the precious metal, which is involved in various production chains.

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However, the trading instrument is still in a long-term downtrend, and the level of 20.51, tested this week, is a strong resistance level: if market participants hold this level, then the decline is likely to continue with the target at 18.22, and if this level is broken, level up, the price will tend to test the trend line at 22.39.

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Last week, the medium-term trend changed to an uptrend, and the quotes broke the target zone of 19.78–19.63. Now the growth target is zone 2 (21.28–21.13), and the key support is shifting to 19.00–18.85, upon reaching which investors will have the opportunity to consider new purchases of XAGUSD.

Resistance levels: 20.51, 22.39 | Support levels: 18.22, 17.10
 

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The shares of Starbucks, one of the largest companies in the world that owns the coffee chain of the same name, are trading around 87.

On the daily chart of the asset, the price has left the global downwards channel, breaking the resistance line at 76 and consolidating above the initial Fibonacci 23.6% correction at 81.6. On the four-hour chart, it is seen that the quotes have reached another key level — the basic correction of 38.2% Fibonacci around 88.30, consolidation above which will be the main signal for the continuation of the upward trend and reaching full correction of 61.8% Fibonacci at 99.50.

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Technical indicators have reversed and are holding a buy signal.
Fast EMAs on the Alligator indicator are above the signal line and continue to move away from it, while the AO oscillator histogram is forming new rising bars in the buying zone.

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NZDUSD - New Zealand labor market statistics disappointed investors

The dynamics were largely due to a disappointing report on the labor market in New Zealand: the Q2 unemployment rate rose to 3.3% from 3.2%, although analysts had expected a decline to 3.1%, and the percentage change in employment from the previous quarter did not happen at all with forecasts of growth of 0.4%. According to statistics, the share of the economically active population decreased to 70.80%, while preliminary estimates of the figure were 71.00%. To the labor market, the commodity price index has also shown negative dynamics for the fourth month in a row: the value lost 2.2% after falling by 0.4% a month earlier, and in such conditions, we cannot speak of stable growth of the NZDUSD pair.

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The trading instrument is moving within the global downtrend, correcting towards the local resistance. Technical indicators maintain a stable buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms rising bars in the buying zone.

Resistance levels: 0.6329, 0.6556 | Support levels: 0.6238, 0.6061

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