Daily Elliott Waves Forecast: GER30, GBPUSD, USDJPY (08.06.22)

DAX seems to be printing a correction to the upside near the 15k or above. The completion of the ABC pattern is expected to provide traders bearish signals unless the main scenario gets invalidated to an ending diagonal.

The British pound has probably ended its correction in wave B against the dollar and this hints at a short-term upside but only in wave (4). Once the correction ends, the pair could start sliding back to multiyear low levels.

The greenback has reached multiyear record highs against the Japanese yen but its volumes are low, suggesting the 5th might be in sooner than many expect. It seems that the 135 zone is major resistance. Can it hold, and first, can it get there?

Share this on:

Daily Elliott Waves Forecast: SP500, GER40, USDCHF (19.05.22)

The SPX index reversed lower and it did this quite forcefully, hinting at further downside. Can the impulsive-looking leg surprisingly turn into a correction that leads to a reversal instead? Wave C seems unfinished for now.

The German DAX, on the other hand, has a more clear correction printing out. And it’s downward. However, it most probably is part of a larger degree correction to the downside. Otherwise, the short-term structure might be a leading diagonal.

The Swiss franc has started to strengthen finally but it doesn’t look like this is a reversal, at least against dollar. The rejection at parity was widely expected, but it’s unlikely to hold in the medium-term due to the depth of flat wave b.

Share this on:

Top Market Opportunities 25.04.2022 – 01.05.2022

This week we will get releases on the US and EU GDP figures, inflation data from EU countries, and the bank of Japan’s central banking meeting.

Last week’s corporate earnings was badly performed by Netflix. There is now concern on whether Meta, Alphabet and Amazon will be able to beat expectations this week as IMF cut growth forecasts.

BOJ to hold

Japan’s Bank is expected to keep its policy unchanged on April 28 – likely maintaining rates at -0.10% and its QQE with yield curve control to flexibly target 10yr JGB yields at 0.0%. Most analyst will still focus on the Fed meeting on May where a 50bps rate hike is expected along with the start of QT.

Traders will be attentive to any possible changes in growth and inflation forecasts though due to effects from the Ukrainian war.

NZDJPY reversed at 87.32 last week, and broke the 85 level following divergence signals from both the RSI and MACD indicators. 84.25 is the near-term support should the decend continues. However, a bounce could be seen there. If traders are caught by a surprise, 82.53 is a major support. On the flip side. Interim 5esistance to the top lies at 86.30, Friday’s open.

Fed gets PCE

United States’ GDP is expected to show that the rate of economic growth slowed in the first quarter to 1% percent on Thursday. However consumer spending is expected to remain strong as both business investment and residential investment are expected to continue improving.

The Fed’s favorite inflation indicator is expected to show that prices are increasing by 3% in March. While the annual rate is only rising by 0.6%, this is not much less than what analysts predicted. The Fed uses the March report as an estimate of how inflation will change during the next month.

AUDUSD has been weakening since the 76.6c top a couple of weeks ago, finding golden support near 0.7230 after the indicators printed bearish divergence. Due to its bearishness, it is more likely it reaches 0.71 than 0.7363 (last Friday’s open) now, however, support can be observed at 0.72 too. Breaking 71c might lead prices below the 70c. Although unlikely, upward price action exposes resistance at 0.7458 as well.

EU inflation unstoppable

On Friday, Eurozone Q1 GDP will be updated in addition to Germany’s flash Q1 GDP figures. Q1 has been closely watched because of the spillover effects from the Russia-Ukraine conflict. March PMI data showed that growth continued at a slow pace even as business sentiment slumped and prices on average rose.

In addition, CPI figures will be provided. Inflation March data saw HICP soar to 7.4% from 5.9%, driven primarily by surging energy prices. Furthermore, pressure was also seen in the core reading following a pick-up in goods and services. Food prices will also contribute largely to the headline inflation rate.

DAX reached a critical support at 14k and could see a relief rally up to 14371 – the 23.6% Fibo retracement. Above there, 14589 is the next resistance. However, losing 14k will likely take the index to 13884, and if that gives in, the 50% Fibo can be marked as the next big support. Both indicators look bearish as the RSI is below its 50% and the MACD has pulled of a crossover.

Big 4 Report

The top 4 biggest companies by market capitalization are due to report earnings during week in the S&P 500 index. The latest earnings report comes amid increased fears the economy will take a turn for the worse due to the uncertainties of raised rates and inflation.

NASDAQ has reached the 61.8% Fibo extension at 13344, and if proven to be a false break, traders might see a relief rally towards 13471, 631 or even 14k if bulls make a decent attempt to recapture the round level. Should they let prices slide, however, the index risks to plummet down to 13k. Will this be easy, though, given the indicators are somewhat oversold?

Share this on:

Top Market Opportunities 21.03.2022 – 27.03.2022

Covid is back!

Following the conclusion of a rather busy week for banks the focus will shift to March’s Flash PMI. The latest release will reflect the economic impact of the war in Ukraine. Headlines around the war itself won’t dissipate, however, they’re unlikely to spook the markets as they did a month or even a week ago. What might do, is the increasing covid cases in China, after the 2nd anniversary of the virus last week.

Busy week for UK and Sunak

The UK releases several reports this week, starting with CPI data and the Spring Statement on Wednesday, going to PMIs on Thursday, and finally Consumer Confidence and Retail Sales on Friday. Undoubtedly, this is a very busy week for London traders and economists as the war is expected to push inflation higher, right after the BoE hiked once more.

CPI forecasts see year-on-year inflation coming out at 6.1%. This is 0.6% above the previous print. Aside from the actual March print, Sunak will probably have to increase inflation forecasts as gas and electricity prices have surged since the conflict sparked up. Will this change the government’s plans going forward, and how much will it squeeze household income? Answers to these questions will set the tone for the few weeks to come, unless PMIs, Gfk, or Retail Sales surprise massively to the upside. Some attention will be put towards wage growth and unemployment.

After a decent rally up to 1.8175 during last week’s trading session, GBP/AUD made a 180-degree turn down to 1.7772. If Sunak’s statement shows no good attempts to ease the cost of living, the pair could continue to fall towards 1.75. In a contrary scenario, 1.8175 makes a strong resistance.

Germany to get a glimpse of war’s impact

On Thursday Germany releases its own PMI figures. Despite the previous Manufacturing report has showed some improvement due to the omicron wave fading, March’s data will be impacted by the latest geopolitical environment that saw commodity and energy prices spike. The forecast is only 2.2 points below last month’s print, so, missing it will be easier than not. Interestingly, the forecast for Germany’s Ifo consumer sentiment data due on Friday is closer to reality as the expectation is for a decline to 92.2; from 98.9.

Along with risk assets experiencing some relief on somewhat positive developments between Ukraine and Russia last week, Germany’s DAX index saw a decent upside. However, despite its continuation hanging mainly on risk appetite, the two economic releases will have an intraday impact on the index.

Any upside will be met with resistance by the 50 and 200-day averages at 14887 and 15465, respectively. Inversely, a downward move could see rejection by 13842 and 13029 supports. Losing the latter psychological level will open up the door to 11500.

SNB undeterred by inflation

Following BoJ’s ultra-loose policy reiteration last week, SNB is expected to repeat the narrative. However, the Swiss bank expects inflation to be unchanged at 0.6% in 2023, which might be the reason they remain undeterred from maintaining the policy. Another one might be the expectation that GDP growth will be 0.5% above previous estimates in 2022, despite rising inflation from supply bottlenecks. In fact, on Tuesday trades must take a look at the SNB’s annual report and extract some figures to see how appropriate its policy decision will be on Thursday.

EUR/CHF has been moving up over the course of the past two weeks. A dovish bank will probably allow the pair to push higher towards the previous week’s high at 1.0406. But depending on how loose the rhetoric is following the decision, a spike up to 1.0598 would be no surprise. Only if the SNB is hawkish can we expect a slide down to the previous week’s low at 1.01917, which is unlikely unless the event is massively priced in already. Now if the euro turn bearish though, the dynamics could change, with major support observed down at 1.0012.

Although it’s not a busy week for the US, market participants will look forward to receiving US GDP revisions and several Fed members’ appearances throughout the week. The main speech would be Monday’s Powell speech. It’s not expected to move the markets drastically, however, traders will look for some confirmation of the Fed’s path to policy normalization, and whether FOMC members reiterate their intentions going forward. On a different note, the GDP revision will show how much the war in Ukraine is expected to dent growth, a somewhat important piece of data released on Thursday.

The monthly chart of USD/JPY shows that the next major resistance lies at 121.25. In the inter, the round level fog 120 and 121 could offer some rejection shorts, however, it’s unlikely to be a full-blown reversal given the current dollar strength against the Japanese counterpart. Down on the daily, trades can observe supports at 118.50, 117.32, and 116.34, with the latter being an unlikely option.

Share this on: