Forex Updates by Solid ECN

[Solid ECN]

The European currency shows moderate growth against the US dollar during the Asian session, developing a "bullish" signal formed the day before, when the instrument retreated from its March 7 local lows.

The growth of buying activity in the single currency is facilitated by technical factors, as well as some correction of the US dollar after the publication of consumer and industrial inflation, which, as expected, renewed record highs. The Producer Price Index released the day before rose by 1.4% in March after rising by 0.9% a month earlier. Analysts expected an acceleration of only up to 1.1%. In annual terms, the growth rate of producer prices accelerated from 10.3% to 11.2%, which was also higher than the market forecast at 10.6%. Such statistics once again confirm the fact that many politicians and economists were mistaken last year, arguing that the rapid rise in prices is only a temporary phenomenon.

Support for the single currency is also provided by the meeting of the European Central Bank (ECB), which will be held today. Despite the fact that analysts' forecasts do not imply any changes in the vector of the monetary policy of the European regulator, the comments of its representatives will be extremely important. Traders are primarily interested in the timing of the start of the rate increase, since the central banks of developed countries have already managed to resort to tightening monetary policy. Investors will focus on a statement by the ECB President Christine Lagarde, including information on how long after the end of the quantitative easing program a cycle of rate hikes could begin, given the complex combination of inflation far above the target and a slowdown in the national economic recovery due to a sharp jump in energy prices.



On the D1 chart, Bollinger Bands demonstrate a tendency to reverse into a horizontal plane. The price range is also trying to consolidate, but within a fairly wide range, fully consistent with the observed dynamics. MACD is reversing upwards and forming a new buy signal (located above the signal line). Stochastic is showing the same dynamics being located in the middle of its area.

Resistance levels: 1.09, 1.0957, 1.1, 1.1051 | Support levels: 1.086, 1.0835, 1.08, 1.0767

 

[Solid ECN]

USDJPY - Currency pair continues to rise

The downward dynamics of the national currency are developing despite the measures to purchase assets for record amounts taken by the Bank of Japan. However, there is still hope for early stabilization of the yen: the elections to the country's parliament ended yesterday, in which the party of the current Prime Minister Fumio Kishida won. The government's approval rating rose to a record high of 63.2%, which means that aggressive monetary policy is likely to continue. Also, investors are encouraged by positive macroeconomic indicators: the corporate goods price index in June rose by 0.7%, which is higher than the 0.5% expected by analysts, and by 9.2% YoY, which exceeds the forecast of 8.8% and only 0.1% lower than last month.

The trading instrument is moving within the global uptrend, holding slightly below the year's high at 137.40. Technical indicators maintain a stable buy signal: indicator Alligator's EMA oscillation range remains wide, and the AO oscillator histogram forms new bars high in the buy zone.

Resistance levels: 137.44, 140 | Support levels: 134.9, 131.45

 

[Solid ECN]

ADAUSD - Technical analysis

The ADAUSD pair is moving within a long-term downtrend, and this week it was able to break below the level of 0.43, which it had unsuccessfully tested several times for a month and a half. In the future, the price decline may continue to 0.3906 and 0.3418. If the middle line of Bollinger bands is broken upwards, the quotes may rise to 0.4882 and 0.5371.

Further negative dynamics seem more likely, as technical indicators confirm the continuation of the downward trend: Bollinger bands are directed downwards, the MACD histogram is increasing in the negative zone, and Stochastic has entered the oversold zone and is directed horizontally.

Resistance levels: 0.4600, 0.4882, 0.5371 | Support levels: 0.3906, 0.3418, 0.2929

 

[Solid ECN]

Crude Oil - The price may fall.

If the assumption is correct, Brent Crude Oil price will fall to the levels of 77.08–62.5. In this scenario, critical stop loss level is 109.83.

 

[Solid ECN]

AUDUSD: US dollar continues to trade at highs

Thus, according to data for June, the unemployment rate in Australia fell to a record value of 3.5%, which was facilitated by a monthly increase in employment by 88.4K people after an increase of 60.6K in May. The share of the economically active population increased to 66.8% from 66.7% a month earlier. Also, the University of Melbourne unexpectedly lowered its inflation expectations, suggesting that in the next quarter, the figure will drop to 6.3% from 6.7% current.

Despite the decline, on the global chart of the asset, the price remains inside the Expanding formation pattern, holding around its support line. Technical indicators do not weaken the sell signal, and the downside potential is still high. Still, the possibility of an upward correction should not be ruled out: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms alternating bars in the sell zone.

Resistance levels: 0.6805, 0.6967 | Support levels: 0.668, 0.655

 

[Solid ECN]

Gold - The pair is in a correction, a fall is possible.

On the daily chart, a downward correction develops as the fourth wave of the higher level (4), within which the wave C of (4) forms. Now, the fifth wave v of C is developing, within which the third wave of the lower level (iii) of v of C is ending the formation.

If the assumption is correct, after the end of the correctional wave (iv) of v of C, the XAUUSD pair will fall to the levels of 1681.1–1621.9. In this scenario, critical stop loss level is 1811.8.

 

[Solid ECN]

NZDUSD technical analysis

H4
On the four-hour chart of the asset, at the level of 0.6107, there is a formation of a Hammer candlestick pattern, which signals a possible change in the trend to an upward one, as well as a "bullish" Engulfing pattern at the level of 0.6174, which means a reversal of quotes at the bottom. In the current situation, the priority scenario is an increase from the level of 0.6246 to the zone of 0.6559−0.6869. An alternative scenario is possible if the buyers fail to hold the key support level of 0.6107, then the price may drop even lower to the range of 0.5929–0.5755.

D1
On the daily chart, a Falling Wedge price pattern is observed, and at the moment, an upward exit from the "bearish" trend channel is being implemented. A positive signal for the asset is the appearance of a Hammer reversal pattern at the support level of 0.6107, which can act as a catalyst for the uptrend from the level of 0.6246 up to the level of 0.6869. If the price consolidates below the level of 0.6107, the trading instrument may show a decrease to the zone of 0.5929−0.5755.

Support levels: 0.6107, 0.5929, 0.5755 | Resistance levels: 0.6246, 0.6559, 0.6869

 

[Solid ECN]

Crude Oil - The probability of decline remains.

On the daily chart, the formation of the first wave of the higher level 1 of (1) of C has completed, and a downward correction is observed as the second wave 2 of (1) of C, in which the wave of the lower level a of 2 is developing. At the moment, the wave (i) of a has already been formed, the correctional wave (ii) of a has completed, and the third wave of the lower level (iii) of a is also developing.

If the assumption is correct, the price of WTI Crude Oil will fall to 82.3 – 67. The level of 105.93 is critical and stop-loss for this scenario.

 

[Solid ECN]

Netflix - The possibility of growth remains.

On the daily chart, wave A of the higher level has formed, and the development of a downward correction as wave B has also completed. At the moment, wave C is being built, where the first leading wave of the lower level 1 of (1) of C has already appeared, the local correction as wave 2 of (1) of C has been completed, and the development of the third wave 3 of (1) of C has begun.

If the assumption is correct, the price will rise to the levels of 326.97 – 397. The level of 163.03 is critical and stop-loss for this scenario.

 

[Solid ECN]

EURUSD - the euro takes every opportunity to correct

Tomorrow, market participants will follow the June macroeconomic data on consumer prices in the EU, which will determine the rhetoric of the European Central Bank (ECB) in terms of tightening monetary policy in the near future. Analysts expect inflation to remain at the May level of 8.6%, which is nonetheless unlikely given the sharp rise to 5.8% in France and 10.2% in Spain. If the experts' forecasts come true, one should expect more "dovish" signals from the financial authorities and an increase in the interest rate with a standard step of 0.25% or 0.50%.

The trading instrument is within the global descending channel, near the support line. Technical indicators maintain the global sell signal: the fast EMAs of the Alligator indicator are significantly below the signal line, and the histogram of the AO oscillator is trading in the sell zone, forming new correction ascending bars.

Support levels: 1, 0.98 | Resistance levels: 1.0197, 1.037

 

[Marlhyk]

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[Solid ECN]

USDCHF - lateral channel correction

The strengthening of the franc was supported by data on Imports volumes, which in June reflected an increase of 0.3% compared with the previous month, while the Producer Price Index reached 109.8 points, adding 6.9% compared to the same period a year earlier. The real estate market is mixed, with Civil Construction Spending up 0.1% year-over-year and Construction Overall Spending reduced by 0.4%, resulting in a 0.1% decrease in Total Investment in the sector.

On the global chart of the asset, the price is correcting within the side channel, preparing to continue the global growth. Technical indicators maintain a steady buy signal: the fast EMAs of the Alligator indicator are significantly above the signal line, and the histogram of the AO oscillator is held in the buy zone, forming local corrective bars.

Support levels: 0.9699, 0.9529 | Resistance levels: 0.9819, 1

 

[Solid ECN]

BTCUSD

The BTCUSD pair continues to trade within the framework of a long-term downtrend, however, in the last few weeks the decline has slowed down, and the price has formed a sideways range of 18750 - 22500, within which it remains at the present time. Now the quotes of "digital gold" are testing its upper limit, the breakout of which will allow us to continue moving to the levels of 25000 and 28125. The key for the "bears" is the mark of 18750, at the breakdown of which the downward dynamics will resume to the range of 15625, 12500 and 10000.

In general, the long-term downward trend is still maintained, but in order for it to continue, quotes need to break through the current side channel. Judging by the indicators illustrating the uncertainty of the market, a trend change is unlikely in the near future, and the price will continue to move sideways.

Resistance levels: 22500, 25000, 28125, 31250 | Support levels: 18750, 15625, 12500, 10000

 

[Solid ECN]

S&P 500 - positive momentum after the publication of corporate reports

One of the world's largest investment banks, a financial conglomerate Goldman Sachs Group, reported income of 11.86 billion dollars, which significantly exceeded the 10.85 billion dollars predicted by analysts. Earnings per share came in at 7.73 dollars amid early market estimates of 6.64 dollars. In turn, the software and consulting services company IBM Corp. showed quarterly revenue of 15.54 billion dollars instead of 15.09 billion dollars expected by experts. Earnings per share came in at 2.31 dollars, also well above the 1.4 dollars reported a quarter ago. The only major market participant that noted negative dynamics in its report was Bank of America Corp.: its revenue fell to 22.69 billion dollars from 22.72 billion dollars and earnings per share were 0.73 dollars, compared to the projected 0.74 dollars.

The index quotes continue to trade in the global downward channel, being in the middle of the range. Technical indicators are holding a steady signal to open short positions: the fast EMAs of the Alligator indicator are below the signal line, and the histogram of the AO oscillator is trading in the sell zone, forming multidirectional bars.

Support levels: 3781, 3600 | Resistance levels: 3916, 4100

 

[Solid ECN]

Silver - H4
On the four-hour chart of the asset at the level of 18.22, there is a formation of a Long-Legged Doji candlestick analysis pattern, signaling uncertainty in the market or a possible reversal, which is also confirmed by the formation of the Morning Star pattern, after which the trading instrument showed a price recovery to the level of 19.07. At the moment, the quotes are moving in the sideways range of 18.62–19.07, where the Hammer and Bullish Belt Hold patterns have already appeared. Their combination signals that the asset has probably reached a low and is reversing. At the moment, the uptrend to the resistance level of 19.50 is seen as a priority, consolidation above which will allow the "bulls" to head to the zone of 20.95–24.19. An alternative scenario may be realized if the price breaks the key support level at 18.22, then the decline may intensify up to the level of 14.77.

D1
On the daily chart, there is the formation of a Falling Wedge price pattern, which may end at the support level of 18.22, and a Hammer, the appearance of which indicates that the price has reached the bottom. In the current situation, the scenario with an upward movement from the level of 18.22 is seen as a priority. Overcoming the upper border of the Falling Wedge and consolidation of the quotes above 19.50 will mean a final upward reversal and will allow the "bulls" to restore their positions in the range of 20.95–24.19.

Support levels: 18.22, 16.74, 14.77 | Resistance levels: 19.50, 20.95, 24.19

 

[Solid ECN]

USDCAD - Technical analysis

H4
On the four-hour chart of the asset, at the level of 1.2971, there is a formation of the Three Black Crows candlestick analysis pattern, which signals the continuation of the negative dynamics of the quotations of the trading instrument, and at the level of 1.2921, the Tweezer Top pattern has been fixed, indicating another local resistance for buyers. In the current situation, a scenario with a downward movement to the support level of 1.2814 is more likely, overcoming which will allow the "bears" to continue the decline to the area of 1.2626−1.2458. An alternative scenario is possible if buyers manage to hold positions at 1.2814 and reverse the situation in their favor, and then the asset will be able to recover in the range of 1.2971–1.3243.

D1
On the daily chart, there is a Three Mountain Tops candlestick analysis pattern with the appearance of formed Tops, which, in turn, emphasizes the overbought asset and the fact that above these levels the "bulls" meet strong resistance. The sellers' activity confirms the appearance of the Hanging Man reversal pattern at the level of 1.2971. A further decline in quotations to the area of 1.2814 is expected, after which the "bears" will be able to continue moving upwards to the level of 1.2458.

Support levels: 1.2814, 1.2626, 1.2458 | Resistance levels: 1.2971, 1.3177, 1.3443

 

[Solid ECN]

Gold - The probability of decline remains.

On the daily chart, a downward correction continues as the fourth wave of the higher level (4), within which wave C of (4) is being formed. At the moment, the fifth wave v of C is developing, the formation of the third wave of the lower level (iii) of v of C is being completed.

If the assumption is correct, after the completion of the correctional wave (iv) of v of C, XAUUSD will fall to the levels of 1621.9–1515.1. The level of 1771.3 is critical and stop-loss for this scenario.

 

[Solid ECN]

EURUSD - the ECB raised its base rate for the first time since 2011

Euro quotes reacted ambiguously to the decision of the European Central Bank (ECB) to tighten monetary policy at a more aggressive pace. The result of the meeting of the regulator, which took place the day before, was an increase in all three key indicators by 50 basis points at once for the first time after an 11-year break. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022. In addition, the ECB noted the expediency of continuing the "hawkish" course. In particular, the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) will continue, and the launch of Transmission Protection Instrument (TPI) will be announced, which will minimize discrepancies in borrowing costs for euro area countries. As a result, it is obvious that the ECB considers the current time to be suitable for a more serious increase in rates and hopes in this way to significantly reduce the rapid inflation by autumn, bringing it to the target of 2.0% in 2023.

Despite the external pressure, EUR/USD is holding within the global downward channel and is now forming another wave of corrective growth. Technical indicators gave a signal for the beginning of the correction: fast EMAs on the Alligator indicator are actively approaching the signal line, and the AO oscillator histogram is forming upward bars.

Support levels: 1 , 0.9752 | Resistance levels: 1.0277, 1.0586

 

[Solid ECN]

EURTRY - The strengthening of the euro may be temporary

Thus, the Central Bank of Turkey left the discount rate at 14.0% for the seventh month in a row, even despite the continuing increase in inflation in the country, which reached 78.62% and the change in the global trend towards tightening monetary parameters taken by the world financial institutions. At the same time, officials said that the price growth is caused by an increase in the cost of energy, geopolitical risks and non-economic reasons and hope for an improvement in the situation at the beginning of next year. The European Central Bank (ECB), on the contrary, began to take decisive steps in the fight against the unprecedented rise in consumer prices, which led to the strengthening of the position of the single currency. Officials raised rates for the first time in 11 years, and immediately by 50 basis points. The main interest rate is now 0.50%, the margin rate is 0.75%, and the deposit rate is 0.00%. ECB Head Christine Lagarde said that the adjustment of indicators is caused by the rapid pace of inflation, which affects more and more economic sectors, as well as forecasts of further preservation of indicators at high levels. The beginning of the rate hike cycle has strengthened the euro's position against its main competitors, but the positive dynamics may be short-lived, as the European economy continues to experience increased pressure from the Ukrainian crisis and interruptions in energy supplies.

The price is testing the 17.96, consolidation below which will allow quotes to continue moving to the levels of 17.5781 (the middle line of the Bollinger Bands) and 17.18. The key for the "bulls" is the mark of 18.3593, with a breakout of which growth will be able to resume to the area of 18.75, 19.14. Technical indicators do not give a single signal: the Bollinger Bands are reversing horizontally, the Stochastic is preparing to leave the overbought zone and form a sell signal, and the MACD histogram is increasing in the positive zone.

Resistance levels: 18.35, 18.75, 19.14 | Support levels: 17.96, 17.57, 17.18

 

[Solid ECN]

AUDUSD - Upward correction in the asset

At the recent Australian Strategic Business Forum – Melbourne, the head of the Bank of Australia, Philip Lowe, announced a preliminary forecast that inflation in the country would accelerate, and new anti-records may be reflected in the quarterly report, after which another peak in consumer prices will probably have to at the end of the year. Analysts suggest that in the second quarter, the figure will increase from the current 5.1% to 6.3% against the continued decline in key sectors of the economy. Thus, in June, Manufacturing PMI fell to 55.7 points from 56.2 points, and Service PMI – to 50.4 points from 52.6 points a month earlier. In his speech, the head of the financial department also said that the neutral key rate at the current inflation rate should be at least 2.5%, while now it consolidates at 1.35%. Faster labor productivity growth will likely be a catalyst for the higher value.



The price remains inside the Expanding formation pattern on the global chart, rising within the local trend. Technical indicators signal the presence of an upward correction: fast EMAs on the Alligator indicator have almost reached the signal line, and the AO oscillator histogram has approached the transition level.

Support levels: 0.6855, 0.671 | Resistance levels: 0.6978, 0.712