Australia S&P/ASX 200 index up 0.54% at 7652.10

EURUSD holds the 100-day MA and bounces. Buyers made a save against the MA level.

The EURUSD yesterday had an up-and-down move yesterday. On the way down, the price moved back below the 200 bar MA on the 4-hour chart at 1.08367, the 200-day MA at 1.08246, but found support buyers at the 100-day MA at 1.08028. Buyers saved the day by leaning against the 100-day MA.

Going forward, the MA will be the close risk/bias defining level for the pair going into the new trading day. As long as the price can remain above that 100-day moving average I would tilt the bias more in favor of the buyers.

Having said that there is work to do. The 200-day moving average comes in at 1.08246 and needs to be broken along with its 200-bar moving average on the 4-hour chart at 1.08367. Of note is that yesterday the price did move above those moving averages but failed.

So it’s not “green grass and high tides forever” for the buyers, but holding the 100-day moving average was a key save and The buyers in play and the bias tilted more in that favor.

23.02.24 Macro Morning

Wall Street put in a new record high as the latest Nvidia earnings and buzz around AI pushed the whole edifice up, dragging along European stocks as well as the latest global PMI readings came in better than expected. This saw bond markets sell off again as yields rose across the complex while the USD pulled back slightly with Euro putting in a new high while the Australian dollar again stuck at the mid 65 cent level.

10 year Treasury yields pushed through the 4.3% level, flattening the yield curve while oil prices continue to edge slightly higher as advanced past the $83USD per barrel level. Meanwhile slipped back to fall back down to the $2020USD per ounce level.

Mainland and offshore Chinese share markets are continuing their post break rally with the up 1.2% while the is up nearly 1% to 16651 points.

The daily chart is starting to look more optimistic with price action bunching up and now exceeding the 16000 point level, ready to possibly burst out here and make a run for the end of 2023 highs at 17000:

Japanese stock markets were playing catchup with a big rally as the closes 2.2% higher at 39098 points.

Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:

Australian stocks were flat with the ASX200 closing just above the 7600 point level at 7611 points.

SPI futures are indicating at least a 0.4% rise on the open given the big upside volatility on Wall Street overnight. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. As I said previously, watching for any continued dip below the low moving average could see a significant pullback but watch ATR support which has been defended so far:

European markets rallied hard across the continent, with the also playing catchup with the Eurostoxx 50 Index eventually finishing some 1.7% higher at 4855 points.

The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures a pullback this evening. This is looking to turn into a larger breakout but watch for any falls below the low moving average or ATR support proper:

Wall Street put in a new record high, lead by tech stocks with the NASDAQ soaring nearly 3% while the S&P500 finished over 2% higher in a very strong session, bursting through the magical 5000 point level to close at 5087 points.

The four hourly chart previously showed short term momentum trying to get out of oversold territory with a nascent bearish double head pattern plus a break below the daily trend line from the January lows broken. This is all put aside as price soars back above the 5000 point level with a new breakout above the previous weekly highs:

Currency markets are still somewhat anti USD given the calm reaction to the latest FOMC minutes with Euro still on track although it managed a round trip around the 1.08 handle proper.

The union currency had already been at a new weekly low almost below the 1.07 level but this was taken out and then some for a new monthly low, hovering over that level this morning. Short term momentum has reversed into overbought mode, with price action now above trailing ATR resistance:

The pair remains stable with a small breakout above the descending triangle pattern on the four hourly chart that takes it to the mid 150 handle but basically unchanged since the minor late bounce last week.

This was looking very optimistic as Yen sells off due to BOJ meanderings with momentum now retracing to slightly negative settings in the short term, so I’m watching for any major pullback to the 150 level proper as part of a mid trend consolidation:

The Australian dollar is no longer experiencing its recent pressure cooker following the US inflation prints and some possible direction from the RBA, with some deflation overnight from its recent two week high above the mid 65 cent level as it again fails to breach the 66 handle.

The has been under medium and long term pressure for sometime with the short term moves above the 65 level setting up for another breakout the mid 65 cent area:

Oil markets tried to lift much higher but Brent crude stayed stubbornly at just above the $83USD per barrel level as it continues to reject the previous weekly high overnight.

After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:

Gold is still trying to get out of its formerly depressed state following the US CPI print last week with this rebound slipping slightly in the later session overnight after almost breaching the $2030USD per ounce level.

Daily momentum is no longer oversold with short term support at the $2000 level the critical area to watch with a further session highs and a bounce above short term ATR resistance required to stay on trend:

AUDUSD technical analysis: Support near 100 day MA holds strong

The AUDUSD had an up-and-down day yesterday that initially saw the pair move above its key 200-day moving average, 200-bar moving average on the 4-hour chart, and 50% midpoint of the trading range since the October 2023 low. All those levels came between 0.65609 and 0.65699.

However, momentum could not be sustained, and the price rotated back to the downside but bounced from buyers near its 100-day moving average of 0.65447.

Going into the new trading day, the price is currently below the 200-day moving average 0.65609, but above the 100-day moving average of 0.6544. Those levels will act as barometers for buyers and sellers. Push above the 200-day moving average of 0.65609 and that would tilt the bias more to the upside. Move below the 100-day moving average of 0.65447, and the bias would tilt the opposite way (to the downside).

For a detailed look at the technicals, click on the video above.

GER 40 Index Back at Record Highs

  • The German 40 index hits a record high within bullish formation
  • Might be sailing within overbought waters, but there is still some bullish power

Despite the disappointing manufacturing PMI data, the German 40 index (cash) managed to spike to a record high of 17,388 on Thursday, rising above the important resistance line which has been blocking the bulls during 2023.

The index has been resilient above its short-term simple moving averages (SMAs) over the past month, but with the price set to close comfortably above the upper Bollinger band and trading around the upper edge of a short-term bullish channel, a downside correction cannot be excluded. Still, the RSI and the stochastic oscillator have not confirmed overbought conditions yet, suggesting that the bulls might stay in play for a bit longer before the next bearish wave takes place.

On the upside, the 161.8% Fibonacci extension of the previous downleg at 17,410 is within breathing distance, while slightly higher, the ascending trendline from March 2023 at 17,590 could be another tough barrier. Surpassing the latter, the door could open for the 17,900-18,000 territory.

Alternatively, a negative reversal could initially halt near the 17,200 constraining zone. If the bears claim that region, the price could slide to stabilize around the channel’s lower band at 16,963 or near the 50-day SMA at 16,800. If selling tendencies intensify from there, the index may head down to meet July’s high of 16,530.

Overall, the German 40 index has restored its bullish trajectory, and only a drop below 16,960 would downgrade the outlook back to neutral.

BTCUSD Consolidates Near More than 2-year High

  • BTCUSD moves sideways after steep advance pauses
  • Holds comfortably above 50,000 psychological mark
  • Momentum indicators look overbought

BTCUSD (Bitcoin) had been in a steep advance following its break above the 50-day simple moving average (SMA) on February 7. However, the rally seems to have paused for now, with the price consolidating a tad below its more than two-year peak of 52,989.

If Bitcoin storms to fresh highs, the November 2021 support zones of 53,300 and 55,500 could now provide initial resistance. Conquering the latter, the bulls might attack 59,440, which served as both support and resistance in the November-December 2021 period. Even higher, the December 2021 resistance of 64,300 might curb further upside attempts.

On the flipside, should the tight range break to the downside, the previous peaks of 49,051 and 44,785 could act as the first lines of defence. A violation of the latter could open the door for the inside swing low of 41,420. Failing to halt there, the price may slide towards the 2024 bottom of 38,460.

In brief, BTCUSD appears to be in a consolidation phase, waiting for developments that could provide fresh directional impetus. That being said, the momentum indicators remain in their overbought zones, increasing the odds for an impending pullback.

USD/PKR Analysis: Sideways Price Action as Concerns Loom for Traders – 22 February 2024

The USD/PKR has traded in a rather sideways motion the past month; this after a national election occurred and as concerns regarding foreign cash reserves are heard.

  • The USD/PKR is trading near the 279.5860 ratio as of this writing.
  • Trading in the currency pair has been rather consistent and the 279.7000 level has proven to be rather durable resistance, in fact the lower mark of 279.6000 can be pointed at and said to have worked as a place where speculators may claim to have been able to sell the USD/PKR as a value which has ignited reversals lower.
  • Spikes occur in the USD/PKR and traders need to be prepared for outliers happening.

USD/PKR Analysis Today - 22/02: Stable Amid Concerns (Graph)

Support levels for the USD/PRK recently have tested the 279.0020 earlier this morning and on Friday of last week. Speculators who are using stop loss ratios may be wise to set a price near the 279.0000 or 278.9990 levels to try and withstand any moves lower if they are wagering on the USD/PKR to move upwards after touching what is perceived as current technical support. Conservative leverage is urged.

Traders who want to pursue the USD/PRK need to understand that the currency pair is not widely traded. Its volume is lackluster at best when compared to other major currencies. The State Bank of Pakistan is respected, but the current foreign cash reserves within Pakistan remain troubling and this creates a constant state of affairs in which certain ‘parties’ are trying to obtain USD.

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Having said this the USD/PKR needs to be acknowledged for achieving a significant bearish trend after hitting all-time highs in early September of 2023, this when the USD/PKR traded near the 307.3400 vicinity momentarily. In the middle of November the USD/PKR was trading near the 288.1500 area, this after reversing higher from a low around 275.7370 on the 17th of October. The USD/PKR then traversed lower from the middle of November and has been challenging depths around 279.0000 since the 30th of January.

The recent national election in Pakistan has achieved a coalition government which was announced a couple of days ago. While concerns have been heard about the transparency of the election and method of vote counting it appears a government has been agreed upon. Inflation remains above the 28% level in Pakistan and is a cause for concern. The government will also have to negotiate an agreement with the International Monetary Fund in order to create a more stable foreign cash reserve capability moving forward.

  • Traders of the USD/PKR must use risk taking tactics that include entry price, stop loss and take profit orders. They must remember the potential of sudden spikes exists.
  • The current price range of the USD/PKR includes a large spread between ‘bid and ask’ ratios that traders need to be aware of in order to wager on direction within the USD/PKR.

Current Resistance: 279.5940

Current Support: 279.5590

High Target: 279.6650

Low Target: 279.0020

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USD/INR Analysis: Slight Incremental Trend Lower as Trading Calms – 22 February 2024

The USD/INR has traded lower in early price action this morning as financial institutions continue to display a calmer behavioral sentiment in the broad Forex markets.

  • The USD/INR is trading near the 85.8800 ratio as of this writing, but traders need to check on the price of the currency pair to compare actual price to the written price in this article, because rather fast fluctuations are being displayed due to a rather large bid and ask early display.
  • However, recent momentum in the USD/INR has certainly shown an incremental move lower.

USD/INR Analysis Today - 22/02: Dips as Market Calms (Graph)

While the Reserve Bank of India is known to exert a heavy hand regarding the value of the Indian Rupee, the USD/INR has been able to show a rather solid correlation to the broad Forex market the past week. Traders of the USD/INR must acknowledge that the Reserve Bank of India seems to decide on a price range in which the currency pair will be permitted to trade, but with limited intervention. Meaning the USD/INR traders in a semi-free manner and the results from the past week technically in the USD/INR demonstrates this claim.

Technical traders who look at one week and month charts will see that on last Wednesday the USD/INR reacted with a surge higher. This swift bullish move from the 82.9220 ratio towards a high of nearly 83.1200 was fast, but the swift price action certainly mirrored Forex results among other major currencies teamed against the USD. The Consumer Price Index report from the U.S had been published and surprised financial institutions with stronger inflation than had been anticipated making the USD stronger.

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Nervous trading persisted the remainder of last week, but intriguingly the 83.0000 level became a target again. The USD/INR has traded below the important psychological level of 83.0000 on a rather consistent basis since the start of February. As the USD/INR came off its highs last week, the ability to work towards this price level was a sign the currency pair was being sold in a stronger fashion, but it also correlated to global Forex sentiment which showed the USD was considered as having been overbought.

Early this week the USD/INR was able to penetrate the 83.0000 lower and has sustained the price action lower. Monday saw the USD/INR drop below the ratio, a retest occurred on Tuesday, but yesterday’s trading proved that current price action is showing some bearish tendencies. What needs to be noted is that the USD has gotten slightly weaker in the broad Forex markets too this week.

  • The short-term price range of the USD/INR is showing a lot of fluctuation and traders are urged to use entry price orders to achieve a fill they expect.
  • Current support for the USD/INR may provide traders with an opportunity to take advantage of the lower price range and test whether the Reserve Bank of India wants the current price levels to be maintained.

Current Resistance: 82.89800

Current Support: 82.8450

High Target: 82.9690

Low Target: 82.8190

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XAU/USD Gold Analysis: Amid a New Uptrend Channel – 22 February 2024

XAU/USD rides uptrend to $2032 amid weak USD. Fed’s rate caution boosts gold; eyeing resistance at $2055, $2070, supports at $2012, $2000.

  • Gold prices are trading higher for the sixth consecutive session, riding a wave of US dollar weakness, which has fallen sharply over the same period.
  • The weak US dollar makes it cheaper for foreign investors to buy the dollar-denominated precious metal, boosting demand for it.
  • Technically, today’s gold price gains reached the resistance level of $2032 per ounce. Gold Analysis Today - 22/02: Amid a New Uptrend Channel (Graph)

Clearly, this recovery was tested with the release of the minutes of the Federal Open Market Committee (FOMC) meeting. The minutes echoed statements by Fed officials who argue against early cuts in US interest rates. As the US dollar and yields could rebound, which could in turn be negative for bullion and halt its streak of gains. 

In general, traders closely watched the minutes of the recent Federal Reserve meeting, which showed that officials are in no hurry to lower US interest rates. In the minutes of the January 30-31 meeting released yesterday, most Fed officials also said they were concerned about moving too quickly to cut the benchmark interest rate before it was clear that inflation was returning sustainably to its 2% target. Moreover, there were only two “members” who were concerned about the opposite risk — that the Fed might keep U.S. interest rates too high for too long and cause the economy to weaken significantly or even slide into recession. 

Meanwhile, some officials pointed to the risk that progress toward price stability would stall, especially if aggregate demand strengthens, or that progress in improving supply chains might falter. Also, officials pointed to disruptions in shipping in the Red Sea, caused by conflict in the Middle East, as a trend that could lead to an acceleration in prices. Generally, the sentiments expressed in yesterday’s minutes help explain the Federal Reserve’s decision last month to indicate that its policymakers will need more confidence that US inflation is under control before cutting the key interest rate. At the January meeting, the US Federal Reserve decided to keep the key interest rate unchanged at about 5.4%, the highest level in 22 years, after 11 interest rate hikes starting in March 2022. 

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Swiss gold exports rose in January to their highest level since December 2016, according to customs data. Monthly export volumes from the world’s largest refining and bullion transportation hub increased by 49% compared to last year, driven by strong sales to China and Hong Kong. The “Year of the Dragon” has led to increased demand for jewelry as the year is traditionally seen as an auspicious one for gold purchases in China. Overall, gold prices have remained near their highest levels in several years since December. Moreover, the latest Reuters poll of analysts expects the precious metal to average $2,053.50 an ounce in 2024. 

According to the performance on the daily chart above, an ascending channel has formed for the price of gold, and confirmation of bullish control over the trend will occur if prices move towards the resistance levels of $2055 and $2070 respectively. Obviously, this may happen if the weakness of the US dollar persists and geopolitical tensions increase, which supports the inclination to buy gold bullion as a safe haven. So far, buying gold from every dip remains preferable, with the nearest support levels for gold currently at $2012, $2000, and $1985 respectively. 

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GBP/USD Analysis: Uptrend Awaiting Strong Momentum – 22 February 2024

Awaiting PMI data for uptrend momentum, with resistance at 1.2775. BoA optimistic on GBP, projecting 1.31 mid-year, 1.37 year-end.

  • Attempts to rebound higher for the GBP/USD currency pair still lack strong momentum to confirm a return to the upward path.
  • Technically, the currency pair is stable around the resistance level of 1.2645 at the time of writing the analysis.
  • Regarding the expected price of the pound sterling in the coming days, one of the largest banks on Wall Street raised its expectations for the pound, saying that it could benefit from its new status as the “European dollar.” 

GBP/USD Analysis Today - 22/02: Awaiting Surge (Graph)

In this regard, Bank of America says that strong labor data and improved fundamentals are leading to expectations that the Bank of England will keep interest rates at 5.25% for longer than other central banks, which will ensure that the pound sterling benefits from “carry” trading. The term “carry” refers to when investors borrow in a currency with a low interest rate to fund assets in a currency with a higher interest rate, creating a supply of that currency. It has been one of the strongest driving forces in the Forex currency markets since central banks started raising interest rates, and its influence appears to dominate as interest rates decline. 

Kamal Sharma, an analyst at Bank of America in London, says: “Our increasingly constructive view on the pound is now formally incorporated into our 24-25 profile.” The analyst has often appeared in financial news pages for his analysis of the pound after Brexit, where he once described its behavior as similar to that of an emerging market currency. 

Now, he has another interesting comparison for the British pound: “GBP = US dollar in Europe.” 

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The analyst added, saying, “What was relevant in the United States can be similarly applied to Britain, as both economies suffer from high inflation in services and tight labor markets.” Added, “Although growth in the United States of America was stronger for a longer period compared to Britain, the nuance here is that expectations about the macroeconomy in Britain were very low. Also, “As the domestic economy continues to improve, it is difficult to reconcile a pessimistic reading of British growth.” 

According to the platforms of Forex currency trading brokers, the dollar and the British pound performed well in 2024, as the markets reduced their expectations for the pace of interest rate cuts in the Bank of England and the US Federal Reserve, which reflects the market’s clear view that what is good for the US dollar is good for the British pound. 

Overall, Bank of America’s forecasts reveal that it is more optimistic about the GBP/USD and GBP/EUR pairs than the consensus: the pound-to-dollar exchange rate is now expected to reach 1.31 resistance by mid-year, up from 1.26 previously. The year-end target is 1.37, up from 1.33 previously. The EUR/GBP exchange rate is expected to reach 0.84 by mid-year, down from 0.87 previously, and 0.84 by the end of the year, down from 0.88 previously. 

Attempts to rebound higher for the GBP/USD pair continue to lack strong momentum, as mentioned before. The resistance at 1.2775 will remain crucial for any upward trend reversal to occur. Clearly, this could happen if readings from the Purchasing Managers’ Index (PMI) for the manufacturing and services sectors in the UK come in stronger than expected, along with improved investor sentiment and the performance of global financial markets. On the other hand, according to the performance on the daily chart above, the support level at 1.2560 will continue to confirm that the bears are ready to resume their downward momentum. 

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