Forex, Commodities, Crypto Market Analysis by Solid ECN

Brent Crude Oil, correction may be temporary

Current trend
This week, the price of Brent Crude Oil has reached seven-year highs, rising to 89.50, but investors started fixing profits, supported by a weak report from the American Energy Information Administration (EIA), and the price adjusted to 85.70.

According to the statistics of the department, the reserves of “black gold” increased by 0.515M barrels instead of the expected decrease by 0.938M barrels, while gasoline reserves increased immediately by 5.873M barrels and only the distillate index decreased by 1.431M barrels. Nevertheless, the current correction is seen as temporary, since the general fundamental factors remain favorable for the oil market. Investors hope that the demand for “black gold” will continue to increase against the background of the refusal of the world’s leading consumers to introduce serious quarantine measures in connection with the development of the coronavirus pandemic caused by the Omicron strain. Moreover, in a number of regions, for example, in the UK, there are already signs of a decrease in the incidence rate.

Also, the growth of tension in the Middle East contributes to the strengthening of energy quotes, primarily due to the ongoing conflict in Yemen. Earlier, Yemeni Houthi rebels had already attacked infrastructure facilities in Saudi Arabia, but this week they launched a missile attack on the airport and industrial facilities of the capital of the United Arab Emirates (UAE), Abu Dhabi. As a result, oil terminals were damaged and several people were killed. The Houthi leaders said that attacks on the infrastructure of Saudi Arabia and the UAE would continue, which could lead to disruptions in the supply of oil to the market of the two leading OPEC producers.

It should also be noted that the International Energy Agency (IEA) said on Wednesday that the supply of oil in Q1 2022 may exceed demand, since some countries (for example, the USA and Canada) may bring production to record high levels, but the market did not attach serious importance to these warnings.

Support and resistance
Oil quotes fell below 87.50 (Murray [8/8]) and, judging by the exit of Stochastic from the overbought zone, the asset may continue to decline to the area of 84.40 (Murray [7/8]) and 82.75 (the middle line of the Bollinger Bands). The overall downward trend is unlikely to be broken, its persistence is confirmed by the growth of the Bollinger Bands and the MACD histogram in the positive zone. In case of a reverse breakout of 87.90 (Murray [8/8]), the price will be able to continue moving to the levels of 90.60 (Murray [+1/8]) and 93.75 (Murray [+2/8]).

Resistance levels: 87.50, 90.60, 93.75.
Support levels: 84.40, 82.75.

Cryptocurrency Market Review

This week, the cryptocurrency market resumed its decline, as a result of which most of the world’s digital assets lost value. Currently, BTC is trading around 38500.00 (-8.3%), ETH is at 2800.00 (-19.0%). The USDT token returned to the third place in capitalization (1.0002 (-0.01%)). BNB is at 420.00 (-18.8%), and USDC is around 1.0000 (+0.01%). The total market capitalization by the end of the week decreased to 1,829T dollars, and the share of BTC - to 40,2%.

Experts do not see a single reason for the current downward dynamics, most likely, it is caused by a complex of negative factors. One of them may be a decline in the US stock market, with which the cryptocurrency sector is actively correlated, as well as an increase in bond yields on the eve of an imminent increase in interest rates by the US Fed. Another factor that put pressure on the crypto sector was the report of the Bank of Russia entitled “Cryptocurrencies: Trends, Risks, measures”, in which the regulator proposed to ban the use and mining of cryptocurrencies in the country, citing threats to financial stability, the well-being of citizens and the sovereignty of monetary policy. At the same time, the possession of digital currencies is still allowed. The document also states that the growth of the cryptocurrency market is determined by speculation, and the assets themselves are widely used in illegal activities. Experts believe that the current ban will not greatly affect the market as a whole, since the volume of transactions in Russia is relatively small, which cannot be said about mining. Currently, the country ranks third in terms of BTC production after the USA and Kazakhstan, accumulating more than 10% of the global hashrate, and the restrictions imposed may create additional problems for the digital asset sector.

Also from the negative news, the tightening of the rules for advertising cryptocurrencies in several countries at once should be noted. British Finance Minister Rishi Sunak has proposed banning uncontrolled advertising that may mislead citizens. The official believes that control in this area should be entrusted to the Financial Conduct Authority of the United Kingdom (FCA), which will subsequently license the activities. During the week, the Monetary Authority of Singapore (MAS) also banned the widespread advertising of cryptocurrencies and the installation of cryptomats. Officials explained their decision by the desire to complicate public access to tokens in order to prevent reckless trading in them, as well as to protect citizens from loss of financial resources and unjustified risks. New rules were also announced in Spain. Among other things, advertisers will need to focus on the risks of trading digital currencies in order to warn about them before transactions with tokens.

It should be noted that ADA stood out among the leading currencies in the market during the week, it was actively growing at the beginning of the week, although it has lost its positions by now. Experts associate the strengthening of the token’s position with the creation of the Pavia application on the Cardano blockchain, as well as with the launch of the SundaeSwap (DEX) platform. Among other positive news, it is worth highlighting the beginning of a joint project of the cryptocurrency exchange Coinbase and the payment giant Mastercard Inc., which will allow its cardholders to buy NTF tokens, as well as the entry into the blockchain technology market of Google, which previously treated it rather coolly. According to Bloomberg, the digital giant is recruiting a staff of developers who will create blockchain solutions. In particular, support for cryptocurrencies can be added to the Google Pay payment service.

Next week, the quotes of most cryptocurrencies may consolidate or continue to decline.

EUR/USD, Elliot Wave analysis

The pair may grow.
On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward correction developed as the second wave 2 of (3), within which the wave c of 2 formed. Now, the development of the third wave 3 of (3) started, within which the first wave of the lower level (i) of i of 3 forms. If the assumption is correct, the pair will grow to the levels of 1.1687–1.1907. In this scenario, critical stop loss level is 1.1215.

Apple Inc Elliot Wave Analysis

The price is in a correction, a fall is possible.
On the daily chart, the third wave of the higher level 3 developed, within which the wave (5) of 3 formed. Now, a correction has developed as the wave 4 of (5), and a downward correction is developing as the fourth wave 4, within which the wave (A) of 4 is forming. If the assumption is correct, the price will fall to the levels of 148.43–127.03. In this scenario, critical stop loss level is 183.16.

XAU/USD: stabilization after last week’s decline

Resistance levels: 1840.00, 1847.63, 1860.00.
Support levels: 1831.66, 1823.09, 1814.06, 1805.50.

USDJPY Market Analysis

Support and resistance
Resistance levels: 114, 114.5, 115, 115.5.
Support levels: 113.5, 113, 112.5, 112.

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Brent Crude Oil: prices are holding near record highs

Current trend
Brent Crude Oil prices continue to rise during today’s trading, testing the $88.00 per barrel mark and returning to the previous record highs renewed last week. Earlier, the quotes reached their seven-year peaks, reacting to the active recovery of the global economy, as well as interruptions in the supply of oil and oil products in the Middle East. The current growth rate is only slightly lower than in 2009, and optimistic investors suggest that oil prices will be able to consolidate above $100 per barrel by the third quarter of 2022.

Today, traders are focused on an extensive block of macroeconomic statistics from the US. In particular, the markets will be interested in data on the dynamics of business activity indices from Markit for January. Also, during the day, the index of business activity in the industrial sector of the Dallas Fed, as well as the placement of 2-year bonds will be released.

Support and resistance
On the daily chart, Bollinger Bands show a steady growth: the price range is actively narrowing, reflecting the emergence of an ambiguous trading dynamics in the short term. MACD maintains a poor sell signal, being below the signal line but tends to change the trend. Stochastic, retreating from its highs, reversed into a horizontal plane, reacting to the return of the “bullish” dynamics at the end of the last trading week.

Resistance levels: 88.79, 90, 91.
Support levels: 87, 86, 84.5, 83.5.

BTC/USD, digital gold remains under pressure

Current trend
Last week, the BTC/USD pair was actively losing value and reached its lowest level since July last year, dropping below 34000.00. The pressure on the first cryptocurrency was caused by a complex of negative factors, although the opinions of investors differ regarding the central one.

Thus, the downward correction of the entire cryptocurrency sector is facilitated by the fall of the American stock market and the growth in the yield of American bonds in anticipation of the imminent increase in interest rates and the meeting of the US Federal Reserve scheduled for Wednesday. Investors fear that the rhetoric of regulator officials may become even more “hawkish” against the background of a record increase in inflation in the country, which could lead to further strengthening of the US currency against alternative assets.

Among other factors putting pressure on the digital market, experts cite the report of the Bank of Russia on cryptocurrencies, which recommends banning both their use and activities for the extraction of digital assets due to threats to financial stability, the well-being of citizens, and the sovereignty of monetary policy. If such a decision is made, BTC mining may suffer since the country accounts for more than 10% of the world’s hashrate, and Russia is one of the top three in terms of cryptocurrency mining.

Support and resistance
Now the price of the BTC/USD pair is around 35000.00 (Fibonacci correction 50.0%), consolidation below which allows a decline to 31250.00 (Murrey [5/8]), 28300.00 (Fibonacci correction 61.8%). The breakout of 37500.00 allows an upward correction to the area of ​​41700.00 (Fibonacci correction of 38.2%, which will unlikely break the currently observed downtrend. Indicators signal the possibility of a decrease: Bollinger bands are directed downwards, the MACD histogram is increasing in the negative zone.

Resistance levels: 37500.00, 41700.00
Support levels: 35000.00, 31250.00, 28300.00.

The “bears” prepare to renew the December low

Current trend
The NZD/USD pair maintains its downward trend amid the recovery of the US dollar, currently trading around 0.6705.

Investors expect decisive action from the US Federal Reserve to tighten monetary policy to curb inflation, which has reached record levels for almost 40 years. In December, representatives of the department announced the beginning of the curtailment of the program of emergency stimulus to the economy, after which a smooth cycle of interest rate adjustment will follow. It is expected that this year, it will be raised three times. Traders put the “hawkish” policy of the US Federal Reserve into dollar quotes, thereby helping to strengthen its rate against all major competitors.

Meanwhile, the Reserve Bank of New Zealand is in no hurry to take active steps to change monetary policy, despite the existing growth in consumer prices. Annual food inflation in the country reached 4.5% for December, the highest rate in a decade. Experts believe that the negative dynamics will become a catalyst for another sharp increase in the consumer price index, which will be released on Thursday, January 27. The figure is forecast to increase to 5.7% in 2021, while inflation for the fourth quarter of last year is expected to be 1.3%. At the moment, the difficult situation with the spread of coronavirus is a deterrent for the regulator in adjusting the current parameters. New Zealand Prime Minister Jacinda Ardern announced that the country is moving to a red, maximum alert level due to the discovery of 12 cases with the Omicron strain, with the introduction of appropriate sanitary restrictions. The new measures do not provide for the announcement of a lockdown but include a requirement to reduce the number of visitors to mass events to 100 people, provided they are vaccinated, and in the absence of such, to 25 and mandatory social distancing and wearing medical masks.

Support and resistance
The long-term trend in the NZD/USD pair is downwards. After testing 0.6864 in the first half of January, the instrument fell to the support level of 0.6700 and is preparing to break through it. In this case, further decline is possible, with the target at 0.6540.

The medium-term trend is downwards. After the test of the key resistance of 0.6910–0.6890, the correction was completed, and a new impulse began, as a result of which the price reached the first sell target — the level of 0.6707, which breakdown allows the “bears” to test the target zone 3 (0.6648–0.6629).

Resistance levels: 0.6864, 0.7055.
Support levels: 0.67, 0.654.

Silver, Elliot Wave Analysis

The pair may grow.
On the daily chart, the first wave of the higher level (1) of 3 formed, a downward correction developed as the wave (2) of 3, and the development of the third wave (3) of 3 started. Now, the first wave of the lower level i of 1 of (3) has formed, a local correction has developed as the wave ii of 1, and the wave iii of 1 is forming, within which the development of the wave (iv) of iii is ending. If the assumption is correct, after the end of the correction, the price will grow to the levels of 26.76–28.68. In this scenario, critical stop loss level is 22.72.

USD/JPY, Elliot Wave analysis

The pair is in a correction, a fall is possible.
On the daily chart, the third wave of the higher level 3 of (1) develops, within which the third wave iii of 3 formed. Now, a downward correction is developing as the fourth wave iv of 3, within which the wave of the lower level (а) of iv has formed, and the correctional wave (b) of iv is developing. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 112.60–111.96. In this scenario, critical stop loss level is 116.36.

EURUSD Technical & Fundamental Analysis
The euro is trying to return to decline

AUD/USD, the instrument renews local lows

Current trend
During the Asian session, the AUD/USD pair shows flat dynamics, holding near the level of 0.7130. Yesterday, the instrument steadily declined, having renewed local lows of December 20. However, by the time the daily session was closed, it partially restored lost positions.

The asset was supported by poor US macroeconomic data, which reduced the likelihood that the US Federal Reserve would raise rates more than four times in 2022. Thus, Markit Manufacturing PMI for January fell from 57.7 to 55.0 points, while analysts’ forecasts suggested a decline to 56.7 points. Service PMI fell from 57.6 to 50.9 points, which was worse than forecasts of 55.0 points.

On Tuesday, further development of the upward dynamics is facilitated by data from Australia. In the fourth quarter of 2021, the consumer price index increased by 1.3% QoQ and 3.5% YoY, which was better than analysts’ forecasts of +1.0% QoQ and +3.2% YoY.

Support and resistance
On the daily chart, Bollinger bands try to reverse into a horizontal plane. The price range expands from below, but not as fast as the “bearish” activity develops. The MACD indicator shows a moderate decline and keeps the same sell signal (the histogram is below the signal line). Stochastic keeps its downtrend but is quickly approaching its lows, indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 0.7160, 0.7200, 0.7250, 0.7300.
Support levels: 0.7128, 0.7100, 0.7050, 0.7000.

GBP/USD, the “bearish” momentum intensifies

Current trend
The British pound remains under pressure due to the difficult epidemiological situation in the country and poor macroeconomic data, and the GBP/USD pair may continue to decline towards the 1.3418–1.3365 area. Thus, Composite PMI in industry and services in the UK fell to 53.4 points from 53.6 points a month earlier, while analysts expected the index to rise to 55.0 points.

The long-term trend in the GBP/USD pair is downwards. After the breakdown of 1.3610, the rate decreases to ​​1.3418–1.3365. If this area is broken, further development of negative dynamics to the lows of December 2021 is possible.

The medium-term trend remains upwards. A correction is developing within its trend, the target of which is to test the key support at 1.3405–1.3370, after which new purchases can be considered with the target at the year’s high.

Support and resistance
Resistance levels: 1.3610, 1.3710, 1.3820.
Support levels: 1.3418, 1.3365, 1.3200.

New Zealand Dollar under pandemic pressure

Current trend
This week, the NZD/USD pair continued to decline and reached three-month lows around 0.6645. The decline in the trading instrument is due to two main factors: the expectation of a serious tightening of monetary policy by the US Fed and the deterioration of the epidemiological situation in New Zealand.

In general, the country’s economy is recovering moderately, as evidenced by December statistics: retail sales increased by 0.4%, and the business activity index in the manufacturing sector increased from 50.6 to 53.7 points, but in the near future it may be under pressure due to the increase in the incidence of the COVID-19 Omicron strain. Since Sunday, new quarantine restrictions have come into force, a mask regime is being introduced, and the work of public institutions is limited. These measures may create pressure on the service sector and slow down the economic recovery.

The USD now looks preferable to its New Zealand competitor, as investors expect decisive action from the US Fed. The agency may announce plans to adjust monetary policy during a two-day meeting of the regulator on Wednesday. Experts believe that a serious increase in inflation may cause tougher actions by officials, and they will raise the rate more than four times in 2022. At the same time, it is unlikely that the current downturn in the stock markets will force the agency to soften its position. In these conditions, prerequisites are being created for the further strengthening of the USD against alternative assets.

Support and resistance
Resistance levels: 0.6780, 0.6835, 0.6958.
Support levels: 0.6592, 0.6500.

US Fed meeting results determine the dynamics of the pair

Current trend
This week, the EUR/USD pair actively fell due to the strengthening of the American currency, currently trading around 1.129.

The dollar is rising as investors await the outcome of the first meeting of the US Federal Reserve this year, which will end today. It is predicted that officials of the department will leave the rate at the same level in January but will announce their readiness to raise it in March. Most experts believe that to combat inflation, which was fixed at 7.0% for December, the regulator may need four or more adjustments this year. Another issue will be the reduction of the department’s balance sheet, which has more than doubled during the pandemic. Most likely, the process will be launched as early as May or June after completing the emergency asset purchase program. In general, the market is tuned to the “hawkish” rhetoric of the US Federal Reserve, which, in turn, should contribute to further strengthening of the US currency but may create additional pressure on the stock market.

Support and resistance
The consolidation below 1.1290 allows the EUR/USD pair to decrease to 1.1230 - 1.1185 . The key “bullish” level is 1.1350, Fibonacci correction, 23.6%, the middle line of Bollinger bands, which breakout will become a catalyst for upward dynamics to the area of ​​1.1470 , Fibonacci correction 38 .2%. The indicators do not give a single signal: Bollinger bands are horizontal, the MACD histogram is near the zero line, its volumes are insignificant, and Stochastic reverses upwards.

Resistance levels: 1.1350, 1.1413, 1.1475.
Support levels: 1.1290, 1.1230, 1.1185.

The instrument is preparing to continue growing

Current trend
At the beginning of the current trading week, the USD/JPY pair corrected to January’s low around 113.50 but stopped the decline and is now regaining lost positions in anticipation of the US Federal Reserve rate decision.

It is expected that in January, the agency will leave the parameters of monetary policy at the same level and the rate at 0.25%. However, forecasts for the near future will be extremely important for the market. As a result of the January meeting, which will end on Wednesday, the US regulator may signal to the markets that it is ready to start raising interest rates in March to combat rising inflation in the country. Traders are taking a cautious stance ahead of today’s publication of the agency’s decision at 21:00 (GMT+2) and the subsequent press conference at 21:30 (GMT+2), hoping that officials’ rhetoric will allow the asset to break out of the 114.10–113.50 range. If the expectations of tightening monetary policy come true, then the strengthening of the positions of the US dollar is expected, and, consequently, the instrument may grow to the levels of 115.40 and 116.10.

Support and resistance
The long-term trend in the asset is upwards, with the targets at 115.40 and 116.10. To start a new upward, traders need to break through the resistance level of 114.10.

The medium-term trend is upwards. This week, the USD/JPY pair renewed the low of January 14 but failed to consolidate below it, so the growth of the trading instrument with the target at the level of 116.25 is supposed.

Resistance levels: 114.10, 115.40, 116.10.
Support levels: 113.50, 112.73, 111.95.

Decline under pressure from rising oil prices

Current trend
After the USD/CAD pair couldn’t break the resistance level of 1.2650, it resumed its downward dynamics to 1.2500. The pressure on the asset is exerted by the growth of quotations for WTI Crude Oil, which reached $86 per barrel. Further strengthening of the oil prices to 90.00 will contribute to the continued decline of the USD/CAD pair and allow the “bears” to reach the level of 1.2500.

The long-term trend in the USD/CAD pair is upwards. At the moment, a correction is developing, and the breakdown of 1.2500 allows reaching the key support near 1.2295.

The medium-term trend is downwards. This week, the pair corrected to the key resistance 1.2706–1.2683, which allowed the “bulls” to close positions at favorable prices, and the “bears” — to form new sales with the targets at the last week’s lows. The breakout of the key resistance of the trend allows growth to ​​the target zone 2 (1.2950–1.2926).

Support and resistance
Resistance levels: 1.2650, 1.2850, 1.2936.
Support levels: 1.2500, 1.2295, 1.2161.

Brent Crude Oil
Further price growth is in the future

Current trend
Quotes of Brent Crude Oil are consolidating around 87.50, but they still cannot consolidate above it, despite active attempts. Short-term support for the asset was provided by a report published by the American Petroleum Institute (API), which reflected a reduction in US inventories by 0.872M barrels, significantly exceeding the market’s expected to decline by 0.400M barrels.

In the long term, oil prices are strengthening due to geopolitical tensions in the Middle East and Ukraine. The infrastructure of the leading oil producers in Saudi Arabia and the United Arab Emirates is still under the threat of Yemeni Houthi missile attacks, which threatens to disrupt the oil supply to the market. The last attack took place on Monday but did not have serious consequences. Also, the increase in geopolitical tension around Ukraine, and even more so the start of an open military conflict, can lead to interruptions in the supply of oil and gas to consumers. The negative outlook also supports global energy prices, but their serious growth is hindered by today’s US Federal Reserve meeting on monetary policy. The regulator may announce an adjustment to the existing parameters, strengthening the dollar and putting pressure on the oil market.

Support and resistance
Resistance levels: 87.50, 90.60, 93.75.
Support levels: 83.50, 81.25, 78.12.

USD/CAD, Elliot Wave Analysis by Solid ECN

The pair may grow.
On the daily chart, a downward correction developed as the wave of the higher level 4, and the development of the fifth wave 5 started, within which the wave (1) of 5 forms. Now, the third wave of the lower level 3 of (1) is developing, within which the wave i of 3 has formed, and a local correction has ended as the wave ii of 3. If the assumption is correct, the pair will grow to the levels of 1.3200–1.3410. In this scenario, critical stop loss level is 1.2446.