Market Update by Solidecn.com

[Solid ECN]

Oil Loses 1.5% as China's Growth Disappoints


China's GDP growth came out below market expectations! Looking at expectations from the Bloomberg survey, only one economist expected that the country's growth could be at such a “low level”. Of course, looking at the dynamics, growth of 6.3% y/y does not seem weak, although more was expected (growth of 7.1% y/y). In the first quarter, growth was 4.5% y/y. It's worth remembering that in the second quarter of last year, China introduced very restrictive covid measures, including in the Shanghai region, which then severely limited economic growth. That is why the market expected that economy would grow much stronger.


In quarterly terms, growth came out at 0.8% q/q, in line with market expectations and the growth in the previous quarter was 2.2% q/q. Industrial production for June grew stronger than expected at 4.4% y/y and retail sales were slightly below expectations at 3.1% y/y. So where is the problem with the Chinese economy? In the real estate market and in the "strong" yuan. The yuan is not weak enough to boost subdued exports. On top of that, real estate market sentiment remains very weak. At the same time, it seems that GDP data is not weak enough to lead to a further cut in interest rates. PBOC will decide on interest rates on July 20 and despite weak data, there is no expectation that the bank will cut rates once again. Recently, the PBOC surprised negatively by cutting rates less than expected.


Oil is losing nearly 1.5% today, mainly due to data from China, as the country is responsible for a very large share of expected demand growth this year. At the beginning of the year, imports were disappointing due to high inventories. Now that inventories are running out and China should import more oil. However, without a stronger stimulation of the economy, China's demand growth may fall short of expectations. At the same time, looking from the side of oil itself - a very cheap dollar may support the continuation of the rebound, although a "tactical correction" cannot be ruled out.





Brent oil is testing the area of $78.5 per barrel. If this level is broken, a test of the area around $77 per barrel cannot be ruled out. The size of the range of the previous downward wave also falls slightly lower. Seasonality indicates that further decline may be seen until the end of July. Nevertheless, for the moment, the uptrend remains unbroken.

[Solid ECN]

GBPUSD


UK economists at Goldman Sachs are predicting a 50 basis point increase in the Bank of England's interest rate during the August meeting, with a projected peak of 6% by November. The current interest rates are at 5.0%. The forecast for a further 100 basis point increase is based on continued strong inflationary pressure, wage growth, and a slower-than-expected response of outstanding mortgages to changes in interest rates.





Additionally, GBPUSD rates have been supported by speculation that the Federal Reserve (FED) may have to revise its hawkish policy due to lower-than-expected inflation readings. This shift in sentiment, combined with upcoming inflation and retail sales data in the UK, may lead to larger movements in the GBP/USD pair this week.

[fnforex1]

4. Continuous Improvement

Profitable forex traders are committed to continuous improvement. They analyze their trades, keep a trading journal, and seek feedback from experienced traders. Continuous improvement allows traders to identify weaknesses, refine their strategies, and adapt to changing market conditions.

[fnforex1]

Emotional Control

Emotional control is crucial for profitable forex trading. Successful traders do not let fear or greed dictate their trading decisions. They remain calm and composed, sticking to their trading plan and strategy. Emotional control helps traders avoid impulsive decisions and stay focused on their long-term goals.

[fnforex1]

Money Management

Money management is the process of controlling risk and allocating capital effectively. Successful traders use money management techniques such as position sizing, diversification, and setting stop-loss orders to protect their capital and maximize returns. Money management is essential for long-term profitability in forex trading.

[fnforex1]

1. Risk-Reward Ratio

The risk-reward ratio measures the potential profit of a trade compared to the potential loss. Successful traders aim for a favorable risk-reward ratio, where the potential reward outweighs the potential risk. By maintaining a positive risk-reward ratio, traders can be profitable even if they have more losing trades than winning trades. fnforex1.com

[fnforex1]

Key Factors That Contribute to Profitability in Forex Trading

While successful forex trading requires a combination of knowledge, skills, and strategies, certain factors contribute to profitability. Here are some key factors that traders should consider: fnforex1.com

[fnforex1]

Fundamental Analysis

Fundamental analysis involves analyzing economic indicators, central bank policies, and geopolitical events to make trading decisions. Traders who employ fundamental analysis aim to identify undervalued or overvalued currencies based on economic factors. Fundamental analysis requires a deep understanding of macroeconomics and the ability to interpret economic da

[fnforex1]

Range trading is a strategy that takes advantage of price oscillations within a defined range. Traders identify levels of support and resistance and enter trades when the price reaches these levels. Range trading can be profitable in sideways or consolidating markets.

[Solid ECN]

Oil

• Saudi Arabia and Russia's supply cut announcement fails to offset concerns over manufacturing activity slowdown worldwide
• Deceleration in China, Eurozone, and the US manufacturing PMI data contribute to the downward pressure on WTI prices

Despite the supply cut efforts by Saudi Arabia and Russia, WTI crude oil prices continue to face downward pressure due to concerns about a global economic slowdown. The slowdown in manufacturing activity worldwide, as evident from PMI data, has overshadowed the impact of the supply cuts. China's manufacturing PMI indicates a modest expansion but a continued deceleration, while the Eurozone and Germany are experiencing deceleration and a technical recession. The US manufacturing PMI suggests a slowing economy, which could have implications for the rate hike decisions of the US Federal Reserve. Additionally, Russia's plan to reduce exports to boost oil prices is overshadowed by China's slow reopening.





Amidst the deteriorating global manufacturing sector, the bearish sentiment for crude oil persists. Despite OPEC+ cuts and monetary stimulus from China, oil prices remain range-bound. The resistance at $73 has led to repeated rejections, maintaining a bearish bias. There is a possibility of testing the support level at $67.44 or further at $64, and a break below this level could trigger a significant downward movement towards the $57 level. Currently, the price is likely to test the $67.44 support, where buyers might enter the market. Otherwise, if buyers step in, the price may find support and potentially rally towards the $73 resistance zone.