2023 Market Forecast by Solidecn.com

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141

Chart of the Day - GBPJPY

UK inflation data for January was released today at 7:00 am GMT. Release showed a bigger slowdown in price growth than expected, with headline CPI gauge moving down from 10.5 to 10.1% YoY (exp. 10.3% YoY). Core gauge dropped from 6.3 to 5.8% YoY (exp. 6.2% YoY). Unsurprisingly, lower inflation reading was taken as dovish with investors increasing bearish BoE bets. This, in turn, triggered a pull back on GBP market.

Taking a look at GBPJPY chart at H4 interval, we can see that the pair has managed to climb above the resistance zone ranging below 38.2% retracement of the downward move launched in October 2022 recently but this breakout was short-lived. Pair pulled back below it this morning but has bounced off the daily lows and it looks like another attempt to break above 38.2% retracement may be on the cards. However, if bulls fail and bears regain control, a deeper correction may be on the cards. In such a scenario, 156.76 zones will be a key support to watch. However, 23.6% retracement in the 159.30 area may also provide some support given that it saw numerous price reactions over the past 2 months.

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142

USDCHF Technical Analysis

The USDCHF pair provided new positive trades to test the key resistance 0.9250, showing bearish bias now to press on the EMA50, waiting to surpass this barrier to confirm the continuation of the expected bearish trend on the intraday basis, which its next targets located at 0.9120 followed by 0.9060.

Stochastic provides negative signals that we are waiting to support the continuation of the bearish bias in the upcoming sessions, reminding you that breaching 0.9250 will push the price to achieve additional gains and visit 0.9315 before detecting the next destination clearly.

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143

NZDUSD Technical Analysis

The NZDUSD pair confirmed breaking 0.6290 level after closing the daily candlestick below it, which supports the expectations of achieving more bearish correction on the intraday and short term basis, opening the way to head towards 0.6210 followed by 0.6140 levels as next main targets.

The EMA50 forms negative pressure that supports the continuation of the expected bearish trend, while stochastic begins to loses the positive momentum gradually. Therefore, we are waiting for more expected decline in the upcoming sessions, noting that the continuation of the bearish wave requires holding below 0.6290 and 0.6320 levels.

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144

Crude Oil Technical Analysis

Crude oil price bounced upwards clearly after the negative attempts that it witnessed yesterday, as it kept its stability above 78.00, to surpass 78.90 level and settles above it now, which leads the price to resume the bullish bias, affected by the inverted head and shoulders’ pattern, which has positive targets that start at 81.60 and extend to 84.25.

Therefore, the bullish trend will be expected for the upcoming sessions, supported by the EMA50 that carries the price from below, being aware that breaking 78.00 will cancel the mentioned positive formation and press on the price to turn to decline, to head towards visiting 75.65 areas mainly.

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145

Gold Technical Analysis

Gold price continued to decline to reach few pips away from the waited target at 1828.70, which represents 38.2% Fibonacci correction level for the rise measured from 1616.65 to 1959.77, which means that breaking it will push the price to visit the next correctional level at 1788.20.

Therefore, we suggest witnessing more bearish bias in the upcoming sessions, and the price needs negative motive that assists to achieve the required break and rally towards the suggested target. Taking into consideration that breaching 1878.80 will stop the negative scenario and push the price to rise again.

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146

USDJPY Technical Analysis

The USDJPY pair breached 133.30 level clearly and closed the daily candlestick above it, to open the way to continue the rise on the intraday and short term basis, to head towards achieving positive targets that start at 134.70 and extend to 135.70.

Therefore, we are waiting for more rise in the upcoming sessions, supported by the EMA50 that carries the price from below, noting that stochastic current negativity might cause some sideways fluctuation before resuming the expected bullish bias. On the other hand, we should note that breaking 133.30 will stop the positive scenario and press on the price to turn to decline.

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147

DAX 40 - the German stock market is preparing to continue its growth

The aircraft engine manufacturer MTU Aero Engines Holding published its financial results yesterday, reporting quarterly revenue growth to 1.51 billion euros from 1.35 billion euros in the previous period, while earnings per share increased from 2.14 euros to 2.23 euros. HR consulting company Randstad Holding NV released another positive report, reporting revenue of 7.01 billion euros, which beat analysts’ forecast of 6.96 billion euros, and earnings per share of 1.93 euros, the highest in the company’s history. Investors were disappointed only by the statistics of the brewing company Heineken NV, which recorded a drop in revenue from 7.79 billion euros to 7.42 billion euros.

On the daily chart, the price is trading in an uptrend, holding within the local ascending corridor with dynamic boundaries of 16300 – 15000, and the technical indicators maintain a steady buy signal.

Support levels: 15250, 14700 | Resistance levels: 15680, 16200

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148

Tesla’s 2023 Recal of Full Self-Driving Targets a ‘Fundamental’ Flaw

More than 360,000 vehicles will receive an over-the-air update after the US government said that Autopilot can be dangerous in some driving situations.

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149

EURUSD Economic Calendar: Quiet end to a busy week

  • European indices trade 0.3-0.5% lower ahead of the opening

  • Speeches from Fed and ECB members

  • Earnings from Deere & Co, AMC Networks

European indices trade lower on Friday, following a downbeat US and Asian sessions. Moods on the global markets deteriorated further yesterday as higher-than-expected PPI reading added to concerns over inflation and scale of still needed tightening. USD is the best performing G10 currency but has pared some gains ahead of the European cash session open. Commodities find themselves under pressure amid stronger USD with gold trading 0.6% lower and oil dropping 0.5%.

Economic calendar for today is very light. There are no macro releases scheduled for release that tend to move the markets. The UK retail sales report was released at 7:00 am GMT and showed an unexpected increase (+0.3% MoM vs -0.5% MoM expected). GBP has had a fairly muted reaction to the release. Speeches from Fed and ECB members may offer some FX volatility

1:30 pm GMT - US, export prices for January. Expected: -0.2% MoM. Previous: 0.4% MoM

Central bankers’ speeches

  • 11:30 am GMT - ECB Villeroy

  • 1:30 pm GMT - Fed Barkin

  • 1:45 pm GMT - Fed Bowman

Top US earnings

  • Deere & Company (DE .US) - before market open

  • AMC Networks (AMCX .US) - before market open

  • AutoNation (AN .US) - before market open

150

GBPJPY Keeps the Positivity

The GBPJPY pair kept its positive stability above the additional support 159.90, to confirm surrendering to the domination of the suggested bullish bias by touching 161 level, reminding you that it is important to gather the additional positive momentum to manage to breach the moving average that forms an obstacle at 162.10, to ease the mission of reaching the additional positive stations near 163 followed by 164.45.

The expected trading range for today is between 160.4 and 162.

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151

NZDUSD

  • Indices from Asia-Pacific traded mostly higher at the beginning of a new week. Nikkei and S&P/ASX 200 traded 0.1% higher, Kospi added 0.2% and Nifty 50 dropped 0.1%. Indices from China traded up to 2% higher.
  • DAX futures point to a higher opening of the European cash session today.
  • US index futures trade little change compared to Friday’s cash closing prices.
  • US and Canadian traders are off for holidays today so liquidity conditions in the afternoon may be thinner.
  • US Secretary of State Blinken said that US has information suggesting that China is considering providing Russia with ammunition and lethal weapons for war in Ukraine.
  • Bloomberg reports that meeting between Blinken and his Chinese counterpart Wang Yi over the weekend was rocky and far from encouraging.
  • People’s Bank of China left 1- and 5-year prime lending rates unchanged at 3.65 and 4.30%, respectively. Decision was in-line with expectations.
  • According to Reuters report, People’s Bank of China has reportedly asked domestic bank to slow issuance of loans this month.
  • North Korea fired two ballistic missiles today. UN Security Council will convene at 8:00 pm GMT today to discuss the situation.
  • Cryptocurrencies are trading mixed today with major coins experiencing rather small moves. Bitcoin drops 0.2%, Ethereum trades 0.3% higher and Dogecoin adds 0.4%.
  • Energy commodities trade mixed - oil gains 0.8-0.9% while natural gas pulls back around 2%.
  • Precious metals benefit from USD weakening at the beginning of a new week - gold and silver gain around 0.1% each while platinum adds almost 0.5%.
  • AUD and JPY are the best performing major currencies while CHF, EUR and USD lag the most.

NZDUSD bounced off the 0.62 support zone last week but failed to launch a major recovery move. There is a lot of uncertainty around NZD as RBNZ is set to announce rate decision this week (Wednesday, 1:00 am GMT) and some see a chance for rate hike cycle pause amid recent floods and cyclone hit.

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152

EURUSD - The price is in a correction and a fall is possible.

On the daily chart, the downward wave of the higher level А ended, and the development of the upward wave B started, within which the entry first wave of the lower level 1 of (А) of B formed. Now, a downward correction is developing as the second wave 2 of (А) of B, within which the wave a of 2 has formed, and the wave b of 2 is developing.

If the assumption is correct, the EURUSD pair will fall to the area of 1.0325 – 1.0163. In this scenario, critical stop loss level is 1.1040.

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153

GBPUSD - The price is in a correction and a fall is possible.

On the daily chart, the upward first wave of the higher level (1) formed, within which the wave 5 of (1) ended. Now, a downward correction is developing as the second wave (2), within which the wave of the lower level A of (2) has formed.

If the assumption is correct, after the end of the wave B of (2), the GBPUSD pair will fall to the area of 1.1400 – 1.1155. In this scenario, critical stop loss level is 1.2437.

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154

Benchmark Brent Crude Oil prices are correcting at 83.00.

The market remains stable against the background of incoming multidirectional, fundamental information. Thus, the export of Russian oil is actively redirected to new markets after the introduction of economic sanctions by the EU and members of the G7, and yesterday, India announced another record for energy purchases: total imports in January for the first time exceeded 5.0M barrels per day, and in second place in terms of supply is Russia, which sold a record 1.4M barrels per day, up 9.2% compared to December, while the share of oil from the Middle East in total oil imports India decreased to 48.0%, although at the beginning of last year, it exceeded 80.0%. Meanwhile, the US authorities are developing additional measures to block Russian oil exports. According to Bloomberg, the new bans are planned to be directed against the defense and energy sectors, focusing on compliance with current restrictions and preventing circumvention of price cap restrictions.

Thus, the supply of raw materials on the world market continues to grow, and the data on stocks from the Energy Information Administration of the US Department of Energy (EIA), which recorded a growth of 16.283M barrels, clearly confirm that it does not allow the asset quotes to return to growth.

On the daily chart, the trading instrument is moving within the local ascending corridor, completing the next wave of decline and getting ready for a reversal, and the technical indicators are uncertain, pointing to a local correction.

Resistance levels: 85.6, 91 | Support levels: 80, 75.5

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155

FTSE 100 - British stock market continues to rise

The British stock market continues its upward movement supported by corporate reporting, as well as by a positive macroeconomic background. According to the UK Office for National Statistics (ONS), Retail Sales rose 0.5% in January after falling 1.2% a month earlier, while the annual rate slowed the decline from -6.1% to -5.1%. In turn, the Core Retail Sales Index on a monthly basis was 0.4% after -1.4% in December, while the annual rate was -5.3% after -6.5% a month earlier.

The day before, financial conglomerate Standard Chartered Plc. published its results: revenue was 3.47 billion pounds, after 4.32 billion pounds in the previous quarter, and earnings per share amounted to 0.039 pounds, significantly less than 0.33 pounds, recorded in the previous period. In turn, the consulting company Relx Plc. reported earnings of 4.58 billion pounds, beating analysts’ estimates of 4.47 billion pounds, and earnings per share of 0.45 pounds, up from 0.39 pounds in the previous quarter.

On the daily chart, the index quotes continue their corrective growth, rising in the direction of the resistance line, and the technical indicators are holding a buy signal.

Support levels: 7925, 7714 | Resistance levels: 8055, 8250

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156

NZDJPY

NZDJPY may be entering a volatile week. The Reserve Bank of New Zealand is scheduled to announce the next monetary policy decision on Wednesday at 1:00 am GMT. There is a lot of uncertainty around this announcement. Money markets price in around 40 basis points of tightening and majority of economists polled by Bloomberg see 50 bp rate hike as the base case scenario. However, calls for a lower hike or even a pause have been mounting recently as New Zealand is facing floods and damage from a cyclone. A decision to pause rate hikes to wait and see what damage to the economy weather has done, would be surprising and would likely trigger a pullback on NZD market.

When it comes to the JPY-side, an event to watch this week is the confirmation hearing of Kazuo Ueda in the lower house of the Japanese parliament scheduled for Friday, February 24. Ueda has been nominated to succeed Kuroda as Bank of Japan head and this week’s confirmation hearing will be his first appearance since nomination. Any suggestions that the Bank of Japan may exit or roll down highly expansionary policy under his watch could trigger moves on the JPY market.

Taking a look at NZDJPY chart at D1 interval, we can see that the pair has been largely trading sideways as of late. The pair failed to break above the midpoint of the trading range in the 84.50 zone. Apart from previous price reactions, this zone is also marked with a 200-session moving average. Moves on the pair has been recently confined to the inner 82.50-84.50 range and high-volatility events scheduled for this week, especially RBNZ decision, could lead to a breakout, direction of which may determine the direction of the next big move.

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157

BTCUSD - Growth, but serious negative factors for the digital market remain

There were no serious fundamental reasons for the strengthening of BTC positions, so most experts believe that it was caused by speculative operations. In particular, on February 15, one of the large funds made an acquisition of cryptocurrency worth about 1.0B dollars, which could push the quotes up. Nevertheless, two main long-term negative factors, the monetary policy of the US Fed and the pressure of US regulators, which can lead digital assets to a new decline, still persist.

The latest data on inflation in the USA confirmed the too slow pace of its decline, which finally convinced investors that in the near future the cycle of interest rate increases will not be completed, which will lead to further strengthening of the position of the US currency in relation to alternative assets. On the other hand, US regulators are increasing pressure on the cryptocurrency sector, trying to prevent a repeat of the situation with the FTX exchange and the loss of investors’ investments. Currently, the main attention of officials is focused on the activities of cryptocurrency exchanges, which are systematically persecuted. In the middle of the month, the US Securities and Exchange Commission (SEC) accused the Kraken digital platform of selling a staking program unregistered by the regulator to customers and forced it to pay a fine of 30.0M dollars. Also last week, the Binance exchange was attacked again, although it was done through Paxos, the issuer of the Pax Dollar (USDP) and Binance USD (BUSD) stablecoins. The New York State Department of Financial Services (NYDFS) accused Paxos of insufficient control over its products and the possibility of their use by attackers. As a result, the issue of USDP and BUSD was stopped, but their turnover is still maintained. The consequence of these decisions has already been the termination of Paxos’ work on the creation of a stablecoin for PayPal Holdings Inc. and the severance of relations with Binance. The management of the crypto exchange, according to Bloomberg, is considering the possibility of terminating cooperation with all partners from the USA and even completely leaving the American market. Experts believe that the situation could be much more dangerous for the entire digital sector if the authorities decide to freeze or confiscate assets that link BUSD to the dollar. In this case, the world’s largest digital trading platform can expect bankruptcy.

Technically, the key for the “bulls” remains the level of 25000 (Murray level [8/8]), consolidation above which will cause continued growth to the levels of 26562.5 (Murray level [+1/8]) and 27400 (Fibo retracement 38.2%). In case of a breakdown of the level of 23000 (the middle line of the Bollinger Bands, Fibo retracement 23.6%), the decline will be able to resume to the levels of 21000, 20312.5 (Murray level [5/8]).

Resistance levels: 25000, 26562.5, 27400 | Support levels: 23000, 21000, 20312.5

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158

AUDUSD Approaches Major Resistance

The Australian dollar is the best performing G10 currency today as rising copper prices seem to support the resources-linked currencies amid subdued USD demand. AUDUSD bounced off the lowest level since January 6 touched on Friday and returned above 0.6900 level, however hawkish FED and simmering tensions between US and China may limit the upside movement. Currently the pair is approaching local resistance at 0.6925, which is marked with previous price reactions, 50% Fibonacci retracement of the last upward wave and 50 SMA (green line). Break higher would pave a way towards the next resistance at 0.6980, however if sellers manage to regain control and halt advances, then another downward impulse towards support at 0.6870 may be launched. Aussie may experience increased volatility in the evening and the coming Asian session, during the releases of flash PMI for February and RBA minutes.

One can observe a significant weakness of the US dollar, despite heightened geopolitical tensions.

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159

EURUSD

The bullish momentum of recent months eased in February. The last sessions have been marked by some indecision in the price that ended up consolidating.

On the dollar index chart, we can see that there may be room for further declines in the dollar. Friday’s daily candle rejected the 200-period EMA and if the price moves back below the 200- and 50-period EMAs, then the EUR could gain against US Dollar weakness.

AUD leads the gains this trading session.

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160

Silver

Major European indices finished today’s session mostly lower, with Dax closing slightly below the flatline as traders brace themselves for the release of critical PMI data for the eurozone and the US due tomorrow before the publication of FOMC minutes later on Wednesday. ECB’s Rehn said rates should be raised after March and the terminal rate could be reached this summer.

Silver bounced off the key support zone around $21.35-21.45 on Friday, which is marked with the lower limit of 1: 1 structure and 50% Fibonacci retracement of the last bullish wave. Moreover, a hammer formation has appeared on the D1 interval, which may be a sign that recent downward correction may have come to an end.

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