Forex Updates by Solid ECN

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EURUSD Technical Analysis: Nearing a Key Level​

The EURUSD is approaching the upper boundary of the bullish flag in the 4-hour chart, just as anticipated. This critical juncture offers a compelling opportunity for buyers, with risks situated below the R2 level.

Should the R2 mark be breached, it would undermine the current bullish scenario.​

 

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USDJPY

The USDJPY currency pair has made a notable move, breaking through the median line of the bullish flag. Simultaneously, the RSI indicator surged above the 50 level. This signals a strong bullish momentum in the pair. As it remains above the pivot, bulls are likely setting their sights on the upper channel line.

However, this bullish scenario would be invalidated if the pair closes below the pivot. Keep an eye on these developments for key trading insights.​

 

[Solid ECN]

EURUSD

On November 14, the EURUSD pair saw a big increase, shown by a long bullish candle on the chart. This shows that prices are going up, a trend supported by the Ichimoku cloud. Now, the EURUSD is doing well above the cloud and is getting close to the 50% Fibonacci level. The important point here is that a key trendline is now helping push the price up. If the price stays above this line, it might reach the 61.8% Fibonacci level.

A significant aspect of this scenario is the shift in a key trendline from a barrier to a support factor, encouraging the currency pair's upward trajectory. The stability of the EURUSD price above this trendline fuels expectations among investors for it to reach even higher, particularly aiming for the 61.8% level on the Fibonacci scale.

However, if the price goes below this line, it could drop to the 38.2% Fibonacci level. But overall, as long as the price is above the Ichimoku cloud, the market looks positive for traders and investors.​

 

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EURUSD Technical Analysis​

The EURUSD currency pair experienced a rise from the 1.083 pivot point, aligning with expectations. The Average Directional Index (ADX) is currently above the level of 30, demonstrating the strength of the bullish market. The next target for the EURUSD bulls is the R1 resistance level, which stands at 1.1. This target is attainable if the price can sustain itself above the pivot point.

 

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GBPUSD Technical Analysis ​

In line with expectations, the GBPUSD currency pair experienced a bounce back from the top boundary of its bullish flag pattern. This upward movement was further supported by the ADX indicator surpassing the 20 level, indicating an intensifying trend. As the pair holds above the flag's upper line, the bulls targeting GBPUSD are now likely setting their sights on the 50% Fibonacci retracement level as their next goal.

On the flip side, if the pair falls below the 1.24 threshold, it would negate the current bullish outlook, potentially leading to a downward trajectory towards the lows seen in October.​

 

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Analyzing GBPJPY Forex Pair: Key Levels and Market Trends

The GBPJPY pair presents a notable scenario as it approaches the S1 support point at 184.89. This particular level gains additional significance due to its association with the Ichimoku cloud, which serves to strengthen the support indication. Recently, the GBPJPY pair has slipped beneath the level of a previously surpassed bullish flag, hinting at a possible shift towards a bearish trend in the near term. For this bearish trend to gain traction and draw in more sellers, it's crucial for the pair's price to settle and remain consistently below the cloud.

Conversely, maintaining a position above 184.6 could signal a different turn for the GBPJPY pair, possibly indicating the start of a market correction phase. In this event, traders might expect the pair to reach the 38.2% Fibonacci retracement level, with a further possibility of advancing to the 50% Fibonacci level.​

 

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USDJPY

In our latest review of the USDJPY currency pair, we've noticed a continued downward movement, going past the 23.6% Fibonacci level. The ADX indicator shows low market volatility, but the Super trend indicator points to a further drop in USDJPY.

SolidECN analysts believe this downward trend could reach the 38.2% Fibonacci level, indicating a short-term bearish outlook for the pair.​

 

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USDCAD

The USDCAD currency pair is trading close to the lower line of the bullish flag. The market is ranging in this area, as indicated by the ADX indicator hovering below the 20 level on the daily chart. The bullish trend is supported by the super trend indicator and the flag, as depicted in the image below.

As long as the pair is ranging above 1.3678, the bullish trend is valid, and the pair may rise to test the 78.6% of the Fibonacci level again. Please note, if the ADX rises above the 20 level, this scenario will gain more credibility.

On the flip side, if the bears cross down the bullish flag, the ranging area may extend to the Fibonacci 0 level. If this level breaks down, the bullish trend can be considered over, and we would witness a trend reversal in the USDCAD pair.​

 

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USDCHF

The USDCHF pair shows a pronounced bearish trend, with the pair drawing close to the 61.8% Fibonacci retracement mark. This particular level might serve as a pivotal support point, likely to decelerate the current downward trend. This slowdown is further hinted at by the RSI indicator approaching the oversold area.

If the pair successfully stays above the 61.8% threshold, we could see USDCHF entering a phase of correction, aiming for the 50% Fibonacci level, a known zone of resistance. At this juncture, the resistance could become a crucial point for bearish traders to consider new entries, especially in a market that's heavily leaning towards short positions.​

 

[Solid ECN]

USDCHF

The USDCHF pair shows a pronounced bearish trend, with the pair drawing close to the 61.8% Fibonacci retracement mark. This particular level might serve as a pivotal support point, likely to decelerate the current downward trend. This slowdown is further hinted at by the RSI indicator approaching the oversold area.

If the pair successfully stays above the 61.8% threshold, we could see USDCHF entering a phase of correction, aiming for the 50% Fibonacci level, a known zone of resistance. At this juncture, the resistance could become a crucial point for bearish traders to consider new entries, especially in a market that's heavily leaning towards short positions.​

 

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Bitcoin

Examining today's Bitcoin technical analysis reveals that the cryptocurrency, often dubbed 'digital gold', is currently exhibiting a bullish flag pattern. Notably, Bitcoin's price has positively responded to the flag's lower boundary, with the market's bulls now challenging a critical threshold at $36,712. Should they successfully breach this mark, it could amplify the upward trend, potentially elevating the next target to R1, valued at $38,665.

On the flip side, the S1 mark plays a crucial role as a supportive base within this bullish context. However, if this support level were to be broken, it could signal a continuation of the downtrend that initiated on November 16, possibly leading the price towards the S2 level, located near $33,483.​

 

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Oil

The price of crude oil has recently experienced a decline, reaching the median line of its bearish channel. This downward trend aligns with expectations set when a bearish engulfing pattern emerged close to the bullish flag's upper boundary.

It's anticipated that the oil price may stabilize somewhat near the bearish flag's central line. Nevertheless, the projected target appears to be the S1 level, corresponding to a support point around $72.​

 

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Analyzing the Stability of Italian Stocks​

Modest Movements in the Italian MarketThe Italian stock market, specifically the FTSE MIB index, showed minimal changes on a recent Thursday, hovering around the 20,200 level. This steady trend mirrored the overall cautious sentiment prevailing in European markets at the time. Investors and traders were in a phase of evaluating new information, particularly the latest PMI surveys. These surveys revealed that the rate of contraction in the Eurozone's business activities for November was slowing down, a detail that held significant interest for market participants.

Influence of Political DevelopmentsAdditionally, the financial world was closely monitoring political events, notably the victory of a right-wing populist party in the Dutch elections. Political events like these can have far-reaching impacts on the stock market, influencing investor confidence and future economic policies.

Corporate Highlights and Their Impact​

Leonardo's Strategic MovesOne of the standout performers in the Italian market was Leonardo, which saw its stocks increase by 1.2%. This rise came after Mariani, the co-director general of Leonardo, confirmed the company's active pursuit of partnerships in the land armaments sector. Such strategic alliances often indicate growth potential and can positively affect a company’s stock price.

Challenges for Diasorin and PrysmianConversely, companies like Diasorin and Prysmian experienced a downturn, each losing about 1% in their stock value. Fluctuations like these are common in the stock market and can result from various factors, including company performance, sectoral trends, or broader market sentiments.

Economic Implications​

Effect on the EconomyThe stability of the Italian stock market, as seen in this instance, generally indicates a balanced economic environment. While modest movements in major indexes like the FTSE MIB don't signal significant growth, they also suggest that the market isn't facing immediate instability or decline. This kind of stability can be reassuring for investors and beneficial for long-term economic planning.

The Bigger PictureThe interaction of corporate performance and political events with stock market trends provides crucial insights into the health and direction of the economy. For instance, Leonardo's growth in stock value might signal a strengthening in the defense sector, whereas the losses for Diasorin and Prysmian could point to challenges in their respective industries.

 

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Turkish Manufacturing Confidence Hits a Low​

In recent months, Turkey has witnessed a notable decline in business morale, reaching its lowest point in nearly a year as of November 2023. This downturn is primarily reflected in the manufacturing confidence index, which saw a decrease from 103.3 in October to 100.2 in November. This figure is significant as it represents the lowest level since December of the previous year, indicating a shift in the business climate.
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Analyzing the Key Factors​

Several factors contribute to this decline in confidence. Firstly, there's a noticeable drop in expectations for production, which decreased from 106.6 in October to 108.5. This decline suggests a reduction in anticipated manufacturing output, which can impact the overall economic productivity. Secondly, the outlook for export order books also showed a downturn, moving from 107.9 to a lower 100.3. This change hints at a possible decrease in foreign demand for Turkish products, which can affect the country's trade balance and revenue from exports.

However, it's not all negative. There's a silver lining as the anticipations for total employment over the next twelve months have risen slightly from 109.5 to 111. This increase could mean that businesses are still planning to expand their workforce, possibly indicating a belief in future growth or stability.

Another area of concern is the decrease in fixed investment expenditure, which fell from 118 to 115.6. This reduction may imply a hesitancy in committing to long-term investments, possibly due to uncertainty in the market or economic forecasts. Additionally, the general business situation also experienced a slight downturn, moving from 92.8 to 91.7.
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Economic Implications​

The decline in business confidence in Turkey can have both direct and indirect effects on the economy. Lower confidence can lead to reduced investment and production, which in turn can slow down economic growth. The decrease in export expectations suggests potential challenges in the international market, which could affect Turkey's trade balance and foreign exchange earnings. However, the increase in employment expectations might cushion some of these negative impacts by supporting consumer spending and economic activity.
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Assessment and Recommendations​

While the decrease in business morale poses certain challenges, it also opens opportunities for strategic planning and adaptation. Businesses might need to diversify their markets, improve efficiency, or innovate to maintain competitiveness. Policymakers could also consider measures to boost business confidence, such as providing financial incentives, improving trade relations, or investing in infrastructure.​

 

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NZD Gains Strength as RBNZ Focuses on Inflation

The New Zealand dollar experienced a notable increase this Friday, maintaining a value around $0.605. This marks the second week of significant growth, fueled by expectations that the nation's central bank will maintain its aggressive stance against persistent inflation in their upcoming end-of-year monetary policy meeting.

In October, the Reserve Bank of New Zealand (RBNZ) kept the cash rate steady at 5.5% for the third time in a row. However, they warned that consumer price inflation was still too high. To manage this, they suggested that interest rates might need to remain high for an extended period to bring inflation within the target range of 1 to 3%.

Meanwhile, the recent changes in government in Wellington have led to a shift in policy direction. The new coalition government has revised the central bank's dual mandate, which previously included both inflation and employment concerns, to now solely focus on price stability.

Over in China, government advisors are preparing for an important annual meeting in December. They're expected to set the GDP growth targets for the upcoming year, with projections ranging between 4.5% and 5.5%. This move is part of Beijing's broader strategy to stabilize demand and address the challenges in the real estate sector.​

 

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Swiss Franc Climbs High: November 2023's Financial Outlook

In November, the Swiss franc reached 0.88 against the US dollar, marking its strongest position in over two months. This rise was primarily influenced by the widespread weakening of the dollar, spurred by a series of weaker economic indicators. These indicators have led to increased speculation that the Federal Reserve might start reducing interest rates by the second quarter of 2024.

Within Switzerland, the economic landscape also contributed to the franc's trajectory. The country's restrained inflation rate, which remained under 2% for the fifth month running in October, coupled with a stagnating economy, limited the support from monetary policy for the franc. Specifically, the Gross Domestic Product (GDP) of Switzerland showed no growth in the second quarter.

Moreover, the easing of tensions in the geopolitical conflict between Israel and Gaza played a role in reducing the demand for the franc as a safe-haven currency. This situation led to the franc trading near its lowest in four months against the euro. Despite these various factors, the franc is projected to end 2023 stronger against both the dollar and the euro. This strength is largely attributed to the Swiss National Bank's (SNB) reduction in foreign currency reserves, which dropped to their lowest in nearly six years in October.​

 

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What to Expect Next Week - Nov 27th​

The US will have a busy week with many important economic indicators and events. The main ones are:​

• PCE prices, personal income and spending: These will show how much inflation, income and consumption changed in October. They are closely watched by the Fed and the markets as they reflect the health of the economy and the impact of the pandemic.​
• ISM Manufacturing PMI: This will measure the activity and sentiment of the manufacturing sector in November. A reading above 50 indicates expansion, while below 50 signals contraction. The manufacturing sector has been recovering from the Covid-19 shock, but faces challenges from supply chain disruptions and labor shortages.​
• Fed speeches: Several Fed officials, including Chair Powell, will speak at different events throughout the week. They will likely provide more insights into the Fed’s views on the economic outlook, inflation, and the tapering of its asset purchases.​

Other notable releases and events in the US include:​

• CB Consumer Confidence: This will gauge the level of confidence and optimism of consumers in November. Consumer confidence is a key driver of spending and growth, especially during the holiday season.​
• Q3 GDP growth rate (2nd estimate): This will revise the preliminary estimate of the annualized growth rate of the US economy in the third quarter. The first estimate showed a 2% increase, below market expectations of 2.6%.​
• New and pending home sales: These will report the number of new and existing homes sold in October. They are indicators of the demand and supply conditions in the housing market, which has been affected by rising prices, low inventory, and higher mortgage rates.​
• Q3 corporate profits: This will reveal the earnings of US corporations in the third quarter. Corporate profits are a measure of the profitability and performance of the business sector.​

Meanwhile, other countries and regions will also have some significant developments to watch. These include:​

• Monetary policy decisions: The central banks of South Korea and New Zealand will announce their interest rate decisions. Both are expected to keep their rates unchanged, but may signal their future policy stance amid rising inflation pressures and Covid-19 risks.​
• Speeches from ECB and BoJ officials: Several officials from the European Central Bank and the Bank of Japan will deliver speeches at various occasions. They will likely comment on the economic situation and outlook of their respective regions, as well as their monetary policy actions and plans.​
• Inflation rates: Several countries and regions will release their inflation data for October. These include Germany, the Euro Area, France, Italy, Spain, the Netherlands, Poland, and Australia. Inflation has been rising globally due to higher energy and commodity prices, supply chain bottlenecks, and pent-up demand.​
• GDP growth rates: Some countries will publish their GDP growth rates for the third quarter. These include Turkey, India, Canada, and Switzerland. These will show how their economies performed amid the pandemic and its variants, as well as the vaccination progress and the fiscal and monetary support.​
• China’s Manufacturing and Services PMIs: These will indicate the level of activity and confidence of the manufacturing and services sectors in China in November. China’s economy has been slowing down due to the Delta variant, regulatory crackdowns, power shortages, and debt woes.​
• Manufacturing PMIs: Other countries will also release their manufacturing PMIs for November. These include South Korea, India, Russia, Italy, and Canada. These will reflect the state and outlook of the manufacturing sector in these countries, which are influenced by the global demand and supply conditions.​
• Germany’s GFK consumer confidence and retail sales: These will measure the confidence and spending of German consumers in November and October, respectively. Germany is the largest economy in the Euro Area and its consumer behavior has implications for the rest of the region.​

 

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Turkish Lira Hits Record Low Despite Aggressive Rate Hikes​

The Turkish lira remains stagnant at an all-time low, sitting at 28.9 against the US dollar. This comes even after Turkey's central bank made an unexpected move, raising interest rates significantly by 500 basis points in its latest November meeting. This decision surpassed investors' expectations, who had predicted a rise of only 250 basis points.

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Trend of Depreciation​

In the last three months, the Turkish lira has been on a steady decline, setting new daily lows. The average daily loss has been slightly over 0.1%. This pattern suggests a controlled devaluation, likely orchestrated by the central bank. To manage this situation, the bank has implemented stricter reserve requirements for the lira. This step is aimed at pulling liquidity from the interbank market, thereby increasing local interest rates and aligning them more closely with the costs of borrowing lira internationally.
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A Steep Drop in Value​

Since the beginning of 2023, the Turkish lira has seen a dramatic depreciation, losing over 50% of its value when compared to the US dollar. This significant drop highlights the ongoing economic challenges faced by Turkey.​

 

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AUDUSD Bullish Trend: A Closer Look at the Rising Tide​

The current trading session has witnessed a significant rise in the AUDUSD's value. Notably, the Australian dollar (AUD) has broken above the crucial 50% Fibonacci retracement level, a move that aligns with the top edge of the bullish flag pattern on the daily chart.

As the Relative Strength Index (RSI) edges closer to overbought conditions, the AUDUSD pair might be gearing up for a phase of range-bound trading, especially above the 65.8% resistance level. Given the heightened demand driving up the AUDUSD price, now may not be the best time for investors to take on long positions.

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A Word of Caution for Retail Investors​

Retail traders should approach with caution. A prudent strategy would be to wait for the AUDUSD pair to dip back to the midpoint of the bullish flag pattern. This area, coinciding with the 38.2% Fibonacci level, presents a potentially favorable entry point for those looking to buy.​

 

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GBPJPY: A Strong Bullish Momentum

During the most recent trading session, the GBPJPY pair maintained its upward trajectory, achieving a significant milestone by surpassing the median line of its bullish flag pattern. This development strongly highlights a continued positive trend for GBPJPY, signaling a robust bullish momentum.

With this upward movement, the focus for traders is now set on the GBPJPY pair reaching the upper boundary of the bullish flag. This target is the next critical point for the ongoing bullish trend.

The prevailing trend for GBPJPY can be described as distinctly bullish, especially as the pair remains actively trading within the boundaries of the bullish flag. This trend is expected to persist as long as the pair continues its movements within this pattern.​