Dow Jones - The US market continues to rise
Tomorrow, investors will pay attention to the financial publications of two retail market leaders, Walmart Inc. and Home Depot Inc. From Walmart Inc. analysts expect revenue of 150.93 billion dollars, well above the 141.57 billion dollars shown in the previous quarter. At the same time, Home Depot Inc. also could well outperform the first quarter of 38.91 billion dollars to 43.36 billion dollars, and EPS could reach 4.94 dollars, which has never happened before in the company’s history.
Quotes of the index left the limits of a wide downward channel, having overcome the resistance line last week. Technical indicators have already reversed and are holding a steady buy signal: the range of EMA fluctuations on the Alligator indicator expands in the direction of growth, and the histogram of the AO oscillator is forming new ascending bars in the purchase zone.
Support levels: 33290, 31626 | Resistance levels: 34050, 35274
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NZDUSD - Technical analysis
On the four-hour chart, at the resistance level of 0.6453, there is the formation of an Evening Doji Star reversal candlestick pattern, as well as a Three Black Crows pattern, which included a Bear Marubozu candlestick. The combination of these figures indicates pressure on the price from sellers and indicates a continuation of the downtrend with the target of 0.6279, overcoming which will allow the “bears” to continue moving to the area of 0.6107–0.5944. An alternative scenario can be realized if the quotes consolidate above 0.6453; then the asset will be able to restore its positions in the range of 0.6598–0.6748.
After the uptrend on the daily chart at the level of 0.6453, a Bearish Harami candlestick pattern appeared, which signals an imminent price reversal, and there is also a red long Engulfing reversal candle, warning the “bulls” of the upcoming trend change. In this situation, it is more likely that the quotes will fall to the support level of 0.6279, consolidation below which will allow the “bears” to head to the area of 0.5944.
Support levels: 0.6279, 0.6107, 0.5944 | Resistance levels: 0.6453, 0.6598, 0.6748
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USDJPY - Japan’s economy grew in the second quarter
The yen continues to resist the recovery of the dollar, but at yesterday’s trading retreated somewhat from its local highs after the publication of macroeconomic statistics. Japan’s Gross Domestic Product (GDP) added 0.5% in the second quarter, compared to a 0.6% growth forecast, and grew 2.2% year-on-year, also slower than the 2.5% expected by analysts. Nevertheless, experts assessed the released data positively, as the Japanese economy became one of the few that showed positive dynamics in the second quarter of 2022. The outlook for the future, however, is negative due to the new coronavirus outbreak and higher commodity prices. In addition to GDP, Consumer Spending also rose, adding 1.1% in the second quarter after rising 0.1% in the previous period. The main positive moment of the report was the data on the volume of Industrial Production, which grew by 9.2% in July, despite the fact that analysts expected a reduction of 7.5%.
USDJPY is trading within the global uptrend, being at the support line. Technical indicators keep a stable sell signal, which has recently intensified: the range of EMA fluctuations on the Alligator indicator is still wide and the histogram of the AO oscillator is forming new descending bars, being in the sales area.
Support levels: 131.57, 126.8 | Resistance levels: 134.97, 138.95
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Crude Oil - Reports of a reduction in oil exports from the Russian Federation lead to lower prices
According to Bloomberg, in general, the volume of “black gold” transported by sea from Russia decreased to 3.24 million barrels per day from 3.32 million barrels per day, and exports to Asian countries decreased to 1.75 million barrels per day from 2.1 million barrels per day earlier. First of all, experts attribute the decline in imports to Asian countries’ purchases of about 16.0 million barrels of cheaper American oil, which turned out to be much more profitable for them than the new proposal from Saudi Arabia, which significantly increased selling prices at the beginning of the month, adding a premium of 10.8 dollars per barrel.
On the weekly chart of the asset, the price remains within the local descending channel, declining towards the support line. Technical indicators keep a clear sell signal, which excludes the possibility of a reversal of quotes: fast EMAs of the Alligator indicator are moving away from the signal line, and the AO oscillator histogram, being in the sell zone, is forming new descending bars.
Support levels: 92.1, 85.6 | Resistance levels: 96.35, 105.23
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Nasdaq 100 - the US stock market recovers
Yesterday, the chief executive officer of investment fund Third Point LLC announced the buyout of a substantial stake in entertainment company The Walt Disney Co. and plans to discuss strategic changes with its management, as a result of which the papers of the corporation began to grow actively. Another leader in the information background is the manufacturer of electric vehicles Tesla Inc., whose head Elon Musk is preparing to appear in court and argue his refusal to purchase the social network Twitter Inc. Already, the businessman is trying to form a positive fundamental background around his company so that if a decision is made in favor of the plaintiff, he will be able to pay penalties. In particular, he said that Tesla Inc. has already produced more than 1.0M vehicles at the new plant in Shanghai, which was the reason for the growth of its stock quotations by more than 3.0%.
The trading instrument continues its positive dynamics, leaving the limits of the downwards channel. Technical indicators keep a buy signal: fast EMAs on the Alligator indicator are moving above the signal line, expanding the range of fluctuations, and the AO oscillator histogram is steadily rising in the buying zone.
Resistance levels: 13891, 15148 | Support levels: 13318, 12574
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USDJPY - Technical analysis
H4
On the four-hour chart, the quotes of USDJPY are moving in an uptrend channel. After a false breakout of its lower border at the level of 132.54, a Hammer reversal pattern is formed. Next, a Three Advancing White Soldiers pattern was formed, signaling the continuation of the uptrend; however, the emerging Long-Legged Doji pattern warns market participants about the existing uncertainty and signals a possible downward reversal. In this situation, a likely scenario may be a decrease in the quotes of the trading instrument to the support level of 132.54, consolidation of the price below which will allow the “bears” to go lower, to the area of 130.45–126.78. An alternative scenario can be realized if the price consolidates above the resistance level of 135.39. Then the quotes may recover to the range of 136.85 – 139.46.
D1
On the daily chart, at the resistance level of 135.39, there is the formation of a Tower Top candlestick analysis pattern, which is formed in the area of high prices and is a downward reversal pattern. At the moment, the price is moving in an uptrend; however, a possible scenario could be that it overcomes the lower border of the trend channel and consolidates below the level of 132.54, which will strengthen the downtrend to the area of 130.45 – 126.78.
Support levels: 132.54, 130.45, 126.78 | Resistance levels: 135.39, 136.85, 139.46
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EURUSD - Rising gas prices put pressure on the euro
Since the beginning of the week, the European currency continues its downtrend, under pressure from rising natural gas prices and weak macroeconomic statistics. Now the quotes of the EURUSD pair are in a corrective trend, trading around 1.0182.
Earlier, the governments of the eurozone countries adopted a resolution under which they will voluntarily reduce gas consumption by 15% until the end of March next year in order to reduce fuel shortages due to supply restrictions from Russia. Against the background of this decision, the prices for “blue fuel” are showing a sharp increase, at the moment reaching record March levels in the region of 2.6 thousand euros per 1.0 thousand cubic meters. In turn, macroeconomic statistics turned out to be quite weak: the August ZEW Survey on Current Situation in Germany fell to –47.6 points, and ZEW Economic Sentiment was –55.3 points, while the same indicator in the eurozone adjusted to –54.9 points from –51.1 points a month earlier.
The EURUSD pair is holding within the global downward channel, reversing to the downside again. Technical indicators, having reversed in the direction of growth, once again gave a signal to sell. The fast Alligator indicator EMAs crossed the signal line from above, and the histogram of the AO oscillator is forming descending bars approaching the transition level.
Support levels: 1.0111, 0.9951 | Resistance levels: 1.0260, 1.0406
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XAGUSD - Global demand for silver is under threat again
The key negative factor that influenced the dynamics of the asset was the statistical data from China, as the price of the precious metal correlates with demand from the industry. Thus, according to the July statistics, the indicator fell to 3.8% instead of 4.6% expected by analysts, which led to a decrease in annual growth rates to 3.5%, while retail sales adjusted to 2.7% from 3.1 % a month earlier. Thus, the consequences of the recent coronavirus outbreak in China are still reflected in the dynamics, which is a negative signal for silver.
Investor demand for the metal increased over the past week: according to the US Commodity Futures Trading Commission (CFTC), net speculative positions increased to 2.9K contracts from 1.0K contracts a week earlier. It should be noted that this indicator reflects only the total demand for aggregate positions, but if you pay attention to the balance of short and long deals, last week was left for sellers, who increased the number of contracts by 2,472K, while buyers showed a decrease by 160 contracts. Globally, the “bearish” position also prevails and amounts to 30.211K against 7.398K for the “bulls.”
The trading instrument continues its upward correction and is approaching the resistance line of the global downward channel.
Resistance levels: 20.81, 22.31 | Support levels: 19.80, 18.40
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USDCAD - Technical analysis
H4
On the four-hour chart, a Bullish Flag price pattern is forming, the completion of which is expected above the resistance level of 1.2960, since the breakout of its upper border was carried out by impulsive green candles in the form of a Three Advancing White Soldiers pattern. However, the movement slowed down with the appearance of a Hanging Man reversal candlestick pattern below the level of 1.2960, which is observed in the area of prevailing “bullish” activity. Therefore, to confirm a reversal at the local top, the formation of other “bearish” signals is required. Since the asset continued to grow after the formation of this pattern, one can assume that the quotes will continue their uptrend or consolidation in a narrow range of 1.2900–1.2960. If the “bulls” manage to successfully overcome the level of 1.2960 and consolidate above it, one should expect the quotes to continue moving towards the area of 1.3228–1.3630. An alternative scenario is possible in case of overcoming the support level of 1.2762 by the “bears”. Then the negative dynamics may intensify up to the level of 1.2295.
D1
On the daily chart, there is a Falling Wedge price pattern. At the moment, it is clear that the price has broken through its upper limit, but confirmation of this has not yet been received. In addition, at the support level of 1.2762, one of the varieties of the Morning Star candlestick pattern has formed, which indicates the prevailing “bullish” sentiment. In case of successful testing of the broken level and fixing the price above 1.2960, the quotes will most likely go higher, to the area of 1.3228–1.3630.
Support levels: 1.2762, 1.2534, 1.2295 | Resistance levels: 1.296, 1.3228, 1.363
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XAUUSD - Investor demand for gold is actively increasing
The XAUUSD pair is correcting in a downtrend at 1764 amid strengthening US dollar positions: the quotes rose from 105.3 to 106.6 in the USD Index due to several factors, including confirmation of the US Federal Reserve’s plans to tighten monetary policy. Thus, the minutes of the meeting of the Federal Open Market Committee (FOMC), published yesterday, outlined the department’s plans for September, which include raising interest rates by at least 50 basis points to combat record inflation.
Another factor in the local downward dynamics of gold was data on industrial production in China: the figure was 3.8%, which is lower than 3.9% a month earlier and significantly lower than 4.6% expected by analysts, which confirmed investors’ fears about the stability of the economy of one of the largest importers and producers of precious metals.
On the weekly chart of the asset, the price is above the resistance line of the global downward channel with dynamic boundaries 1780 – 1650. Despite the local slowdown, technical indicators strengthen the buy signal: fast EMAs on the Alligator indicator are moving above the signal line, while the AO oscillator histogram remains in the buy zone.
Resistance levels: 1782, 1847 | Support levels: 1753, 1696
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GBPUSD - UK inflation tops 10%
The pound continues to lose positions against the backdrop of weak macroeconomic data and at the moment GBPUSD is correcting around 1.2039. Consumer inflation in the UK, the first among developed countries, exceeded the 10% threshold and amounted to 10.1%, rising from 9.4% a month earlier, with a monthly increase of only 0.6%. Even more worrisome is the Core CPI excluding Food and Energy, climbing to 6.2% from 5.8%, catalysing the Bank of England to be more “hawkish” in terms of monetary tightening.
In turn, the US dollar is holding above 106 in the USD Index, sagging slightly after yesterday’s US Retail Sales data. The index in July fell to 0.0% from 0.8% in the previous month, which disappointed analysts who had expected a rise of 1.0%. Obviously, the continuing decline in Retail Sales is a direct consequence of rising prices, which the US Federal Reserve is unable to seriously influence. The Core Retail Sales Index, in turn, also slowed to 0.4% from 0.9% a month earlier.
GBPUSD continues to trade within the global downward channel, retreating somewhat from the resistance line. Technical indicators are ready to reverse and give a signal for the start of sales: the range of the Alligator indicator EMAs fluctuations is expanding in the direction of decline, and the histogram of the AO oscillator forms descending bars.
Support levels: 1.2000, 1.1756 | Resistance levels: 1.2218, 1.2588
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S&P 500 - Strong corporate reporting supports the index
The leading US economy index S&P 500 is correcting upwards at around 4261. The US stock market continues to correct, and its dynamics depends on both corporate reporting and the news background, which was supported by yesterday’s report by the US Federal Reserve. The authorities of the regulator noted that the tightening of monetary policy will continue, and designated the level of “sufficiency” at which the interest rate will be held for some time; however, the department stressed that this level has not yet been reached.
The day before, Walmart Inc., the largest US retail chain, published its financial report, reflecting the growth in earnings per share to 1.77 dollars from 1.30 dollars a quarter earlier. The company’s revenue increased to 152.86 billion dollars from 141.57 billion dollars in the previous quarter. In addition, Home Depot Inc. released its financial results, with revenue up to 43.79 billion dollars from 38.91 billion dollars in the previous quarter, and earnings per share of a record 5.05 dollars, up from 4.09 dollars in the first quarter.
The index quotes are trading above the resistance line of the descending channel, having overcome the resistance line. Technical indicators maintain a steady buy signal: the fast EMAs of the Alligator indicator are above the signal line, and the histogram of the AO oscillator is trading in the buy zone, forming multidirectional bars.
Support levels: 4182, 3900 | Resistance levels: 4330, 4631
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EURUSD - Employment data in the EU reassured investors
The EURUSD pair moves within a corrective trend around 1.0169. Despite a significant increase in fuel and energy tariffs, the EU economies remain stable, as evidenced by macroeconomic data for the second quarter, published yesterday: gross domestic product (GDP) grew by 0.6% QoQ and by 3.9% YoY in terms of 0.7% and 4.0% predicted but still a positive result. The overall employment rate in the region rose to 163.412M from 162.977M, showing a quarterly increase of 0.3%. However, analysts believe that the economic outlook in the euro area is negative: in the second half of the year, GDP will begin to contract under the pressure of high inflation and disruptions in supply chains, but for now, the European Central Bank (ECB) has enough cushion to raise interest rates in order not to provoke a recession, and this may provide some support for the European currency.
The US currency is held at levels above 106 in the USD Index, as investors have gained some confidence in the further actions of the US Federal Reserve. The minutes of the last meeting of the Federal Open Market Committee (FOMC) released yesterday indicate that the agency will continue its hawkish course until inflation returns to its 2.0% target, so a 50.0 base interest rate hike is tentatively scheduled for September. Considering that price growth in July slightly decreased to 8.5% instead of 9.1% earlier, a slowdown in monetary policy tightening can be justified.
The trading instrument moves downwards within the global downward channel, reversing at the resistance line. Technical indicators maintain a poor sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars, approaching the transition level.
Resistance levels: 1.0260, 1.0408 | Support levels: 1.0116, 0.9957
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AUDUSD - Technical analysis
H4
On the four-hour chart, under the resistance level of 0.7030, a Three Black Crows candlestick analysis pattern was formed, after which the trading instrument showed a decrease to the area of 0.6912. In addition, the Bear Marubozu pattern was included in this model, emphasizing the predominance of sellers. Currently, quotes have formed a Hanging Man figure, which in this situation may mean a continuation of the downtrend. A likely scenario is a decline to the support level of 0.6862, overcoming which will allow the “bears” to go lower, to the levels of 0.6680, 0.6420. An alternative scenario can be realized if the “bulls” hold their positions and the quotes recover to the resistance level: a breakout of the key level of 0.7030 will open the way for buyers to the range of 0.7184–0.7400.
D1
On the daily chart, under the resistance level of 0.7184, a reversal candlestick pattern Evening Doji Star is observed, after which the asset began to decline down to the level of 0.6912. This pattern is a strong signal to alert traders to declining long positions, giving the “bears” an opportunity to correct the price down. A more likely scenario at the moment is a downtrend towards the key support level of 0.6862. A breakdown of this level will mean the final weakening of the “bulls”, which will strengthen the downtrend of the instrument to the zone of 0.6680–0.6420.
Support levels: 0.6862, 0.668, 0.642 | Resistance levels: 0.7030, 0.7184, 0.74
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USDCAD - Canada loses revenue due to lower export fuel prices
The Canadian currency lost its leading position against the US dollar amid a decline in revenues received by the country from energy exports. According to Statistics Canada, the Commodity Price Index lost 7.4% in July. Similar dynamics led to inflation adjusting to 7.6% from 8.1%, but food prices, which are the second key component of the indicator, continued to rise, adding 0.9% in July. This movement is clearly seen in the calculation of Core CPI, excluding Food and Energy prices: the figure corrected to 6.6% from 6.5% a month earlier, and is now the main problem for the Bank of Canada.
In turn, the US dollar continues to grow, the day before exceeding 107 in the USD Index. The main reason for the positive dynamics was the report on Initial Jobless Claims, which for the first time in a long time showed a decrease in the number of applications to 250 thousand after 252 thousand recorded a week earlier, while analysts expected an increase in the number of applications to 265 thousand.
On the weekly chart of the asset, the price is trading within a wide ascending channel with dynamic boundaries of 1.2600–1.3200, rising again towards the resistance line. The EMA fluctuation range on the Alligator indicator signals a possible growth, and the AO oscillator histogram forms new rising bars, being in the sell zone.
Support levels: 1.2900, 1.2739 | Resistance levels: 1.2985, 1.3133
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USDCHF - Growth after the release of positive statistics from the US
The situation in the Swiss economy is relatively stable: the labor market is showing strength, which is confirmed by data from the Federal Statistical Office (FSO). Thus, the number of employed in the second quarter increased by 1.6% compared to last year, and the number of hours worked per week increased by 3.0%, while the unemployment rate calculated by the International Labor Organization was 4.1%, having decreased from 5% a year earlier.
On the weekly chart of the asset, the price is correcting within the downwards Triangle pattern, preparing to continue the decline. Technical indicators maintain a weakening sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram is forming up bars in the sell zone.
Resistance levels: 0.9620, 0.9816 | Support levels: 0.9553, 0.9408
The EURUSD pair is trading in a downtrend, currently at 1.003.
On the daily chart of the asset, the price is falling within the global corridor with dynamic boundaries 1.024 – 0.97, getting ready to test the key historical support around 1. The four-hour chart shows that the potential for a downward movement is quite high, and the nearest solid support for the trading instrument can only be the initial trend of 61.8% of the Fibonacci extension around 0.9814. If the quotes fix below it, the downward dynamics may continue up to the basic trend of 100.0% on the Fibonacci extension around 0.9494.
Technical indicators keep a sell signal: indicator Alligator’s EMA oscillation range expands downwards, and the AO oscillator histogram forms downward bars in the sell zone.
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NZDUSD - Technical analysis
H4
On the four-hour chart, there is the formation of a Three Black Crows candlestick analysis pattern, which means a continuation of the downtrend. In addition, under the resistance level of 0.6239, another Three Black Crows figure appeared, which confirms the previous pattern and emphasizes the strength of the “bears”. However, at the moment, one can see the construction of the Morning Star reversal pattern above the level of 0.6152, which means that a strong support line has formed at the current level, where buyers have activated, but in order to fully confirm the reversal, the “bulls” should consolidate above the resistance level of 0.6239. In this case, the asset can restore positions to the zone of 0.6362 – 0.6475. If the trading instrument reaches the key support level of 0.6102 and consolidates below it, one should expect further downward movement to the range of 0.5929 – 0.5785.
D1
On the daily chart, at the level of 0.6362, there is the formation of a Hanging Man reversal pattern, after which the asset showed a decrease to the level of 0.6189. In addition, the movement was accompanied by the formation of the Three Black Crows candlestick analysis model, which included the Shooting Star candlestick. The combination of these figures may mean a continuation of the negative dynamics for the instrument after a short-term price rebound. It is likely that the NZD/USD pair will continue to lose positions after an upward correction to 0.6239, thus testing the broken down level, overcoming which will allow quotes to reach the area of 0.6102, where the buying zone is concentrated. If the “bulls” fail to hold this level, the asset may fall down to the level of 0.5785.
Support levels: 0.6102, 0.5929, 0.5785 | Resistance levels: 0.6239, 0.6362, 0.6475
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Against the background of the growth of the American currency, the GBPUSD pair is correcting around 1.1826.
On the daily chart of the asset, the price is falling within the long-term channel with dynamic boundaries of 1.14 – 1.214, preparing to test the year’s low at 1.1741. The four-hour chart shows that the year’s low coincides with the initial trend of 61.8% on the Fibonacci extension (1.1741), and in the case of consolidation below it, the downward movement may continue and reach the basic trend of 100% on the Fibonacci extension around 1.1400, which corresponds to the support line of the downward channel.
Technical indicators confirm the high probability of a downward trend and keep a sell signal: indicator Alligator’s EMA oscillation range expands downwards, and the AO oscillator histogram forms downward bars in the sell zone.
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Due to the continued growth of the US dollar, the AUDUSD pair is correcting, trading around 0.6899.
According to the Australian Bureau of Statistics, the seasonally adjusted unemployment rate fell again. It stood at 3.4% in July, indicating an acute labor shortage in the national labor market. However, the number of unemployed amounted to 474K, less than 480.0K vacancies. Tomorrow, investors are waiting for the publication of data on business activity indices in the leading sectors of the economy, and there are no signals yet that the decline in indicators will stop. Thus, the value for the service sector may fall below 50.9 points, and for the manufacturing sector – less below 56.2 points.
Another reason for the downward dynamics of the AUDUSD quotes is the growth of the US dollar, which overcame the key mark of 108 in the USD Index yesterday, reacting to the first signs of a change in the trend in the US housing market. The fact is that rates on 30-year mortgage loans, which have been continuously growing since the beginning of the year, corrected in August to 5.13% from 5.22% a month earlier amid a slowdown in inflation from 9.1% to 8.5%, which, in turn, may have a positive impact on the statistics on the housing market, which is experiencing a demand crisis, being at its lows since May 2020.
On the global chart of the asset, the trading instrument is correcting within the local downward channel, falling towards the support level. Technical indicators are preparing for a new reversal and have almost given a new sell signal: fast EMAs on the Alligator indicator are preparing to cross the signal line downwards, and the AO oscillator histogram has come close to the transition level.
Resistance levels: 0.6968, 0.7122 | Support levels: 0.6853, 0.6711
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