Market Update by Solidecn.com

[Solid ECN]

US30 Chart of the day

Investor confidence in the US stock market has been declining since the latter half of the third quarter. This is partly due to the Federal Reserve's aggressive stance and Chairman Powell's statements, which have led to a rise in bond yields. In fact, 10-year treasury yields have hit a 16-year high of 4.54%. If the economy remains stable, these yields could continue to rise.

The stock market, including the Dow Jones Industrial Average (DJIIA or US30), is losing value as the risk-free rate increases and the economic growth outlook becomes uncertain. Major institutions like S&P and the Conference Board predict a slowdown in US GDP growth in 2024.




There are also concerns about China's real estate market, particularly the default of Evergrande, and potential political crises in the US over the federal budget. A government shutdown, which has happened 18 times since 1977, could slow economic growth and delay the release of economic data. Credit rating agency Moody's warns that such events could lead to a downgrade of the US credit rating.

Looking at the US30 chart, the price is close to the 200-day Simple Moving Average (SMA200) level, which is around 33,932 points. The price has also fallen below the 100-day Simple Moving Average (SMA100) for the first time since May. If the price doesn't rebound, it could test the 23.6% Fibonacci retracement of the March 2020 upward wave at 32,400 points. Historically, the price's behavior around the SMA100 and SMA200 has often indicated buying opportunities or periods of weakness.

[Solid ECN]

EURUSD Analysis

The German Ifo Institute, a research group that studies economic trends, released its latest indices today at 9:00 am BST. These indices are a measure of the business climate in Germany and are based on a survey of about 7,000 companies.

The main index, known as the Business Climate Index, remained unchanged from last month, coming in at 85.7 for September. This was higher than the expected figure of 85.2, indicating a more positive business sentiment than anticipated.

Here's a breakdown of the Ifo indices for August:

• Business Climate: The index came in at 85.7, which was the same as the previous month and higher than the expected 85.2. This index measures the overall business sentiment in Germany.
• Current Conditions: This index, which assesses the current business conditions, was 88.7, slightly higher than the expected 88.0 but lower than the previous month's 89.0.
• Expectations: This index measures business expectations for the next six months. It came in at 82.9, slightly lower than the expected 83.0 but higher than the previous month's 82.6.

In summary, the indices suggest that the business climate in Germany is stable, with expectations for the future slightly improving.

[Solid ECN]

USD 100 - Chart of the day

With the BoJ's decision, the cycle of publishing monetary decisions of major central banks this week comes to an end. The markets reacted volatile to them, but overall, the indices recorded losses on a weekly basis. The relatively hawkish Fed and its published new dot-plot indicated the possibility of one more hike this year and the postponement of the first-rate cuts. The overtones of this conference broadly affected sentiment around the US100 index and TNOTE.

The US100 index has been recording declines, which have reached, from the perspective of technical analysis, important support zones set by the 100-day exponential moving average (purple curve), which, it is worth mentioning, have not been tested for nearly 6 months. Moreover, the declines themselves are directly driven by the selloffs observed in the debt market, which has historically shown a correlation with the listings of technology companies.

[Solid ECN]

GBPUSD Analysis

The GBPUSD, also known as Cable, dropped to its lowest level since May 26 on Tuesday. This was due to the UK's inflation rate in August being lower than expected.

The yearly CPI (Consumer Price Index) fell to 6.7%, which is the lowest it's been since February 2022. This was a drop from 6.8% in July and was lower than the predicted increase of 7.0%. The core inflation rate, which doesn't include fluctuating components, also fell to 6.2% in August. This was lower than the predicted 6.8% and the 6.9% from the previous month.

Even though inflation is still high (more than three times the target of 2%), the data from August gives some hope. It also gives some relief to the Bank of England, which was expected to raise interest rates for the 15th time in a row at a policy meeting on Thursday. Now, there's a 50-50 chance that they might not raise rates this time.

However, there's still a risk of inflation increasing again. This is because oil and food prices are still going up, which keeps adding to inflation and might lead to more policy tightening.



The daily chart shows a bearish trend. However, the price is nearing a key short-term support level at 1.2307 (the lowest point on May 25), and this could slow down the downward trend because the market is oversold.

Any increase in price is likely to be limited by the broken 200-day moving average (1.2432) to keep the overall downward trend intact. If the price falls below the 1.2307 level, it could lead to a deeper correction of the larger uptrend from 1.0348 to 1.3141, and could potentially reach 1.2074 and 1.2000 (a key psychological level).

On the other hand, if the price consistently stays above the 200-day moving average, it could signal a stronger correction. A rise above the important 1.2500 level could indicate a possible trend reversal.

The market is waiting for the Federal Reserve's decision (expected later today and likely to remain unchanged) and a more important decision from the Bank of England on Thursday. The British pound could face more downward pressure if the Bank of England decides not to raise interest rates this time. However, if the central bank decides to raise rates again and maintains a hawkish stance, it could boost the currency.

Resistance levels: 1.2432; 1.2482; 1.2504; 1.2522.
Support levels: 1.2332; 1.2307; 1.2274; 1.2190.

[Solid ECN]

EURUSD Technical Analysis

The euro has been moving sideways and has had trouble getting past the 1.0700 mark. People are waiting for the FOMC statement today. The cost of living in the Eurozone has dropped a little, from 5.3% to 5.2%, which might mean inflation is slowing down. This could make the euro weaker. People think the Fed will stop increasing interest rates in September, but some believe there might be one more increase this year. This is helping the dollar.




The EURUSD is trading above a level that it's been below for a long time; if it goes above 1.0700, that's a good sign for the euro. The MAACD and RSI indicators suggest the trend might be changing.

The levels to watch are:

Resistance (where it might have trouble going higher): 1.0700, 1.0760.
Support (where it might bounce back up): 1.0640, 1.0540.

[Solid ECN]

USDCAD Technical Analysis

Inflation rates have increased due to a rise in gasoline prices. The inflation rate for the year ending in August was 4.0%, up from 3.3% in July. This was slightly higher than what economists predicted, which was 3.8%. From July to August, inflation increased by 0.4%, which was a bit more than the expected 0.3%, but less than July's 0.6%.

Core inflation, which excludes volatile items like food and energy, also increased to 3.3% from 3.2% in July, but it was less than the expected 3.5%. On a monthly basis, core inflation decreased to 0.1% from 0.5%.

Despite these changes, it's still expected that the Bank of Canada (BoC) will not change interest rates at their next meeting. However, the chances of a rate increase have gone up to about 43%. But with unemployment rates rising since May and signs of slower economic growth, a rate hike is still not likely.




The USDCAD currency pair has recently experienced a bounce from the support area at 1.338. This upward movement suggests that bullish traders might be gearing up to test the resistance level at 1.35. However, it’s important to note that the overall trend appears to be bearish.

The bearish outlook remains valid as long as the pair continues to trade within the daily downward channel. This means that despite the recent bounce, we could still see a continuation of the downward trend.

[Solid ECN]

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[Solid ECN]

CHN.Cash - Chart of the Day

Today, Chinese stock markets are falling sharply, with CHN.cash down almost 1%. Economic data is weaker than expected. Excluding oil, exports from Singapore, the world's biggest port, dropped 3.8% month over month, which is worse than the 4.2% growth predicted and the previous 3.2% drop. This shows that some economic indicators are weakening for a longer period. China, which depends a lot on demand from Western countries, especially the US, could suffer greatly if demand from developed economies decreases, for instance, due to a recession. The fact that fewer goods are leaving China each month might indicate a wider problem. How a declining Chinese market affects global fund managers' portfolios is a big question because China's economic weakness is somewhat separate from other 'emerging markets'.

Another risk factor was the nearly 20% drop in Evergrande shares at the start of the Chinese session. Although they recovered their losses, it raised wider concerns about China's real estate sector. Country Garden, which is financially troubled, faced two major challenges: the initial deadline for interest payments on more than $50 million in dollar bonds and the end of a creditor vote on a proposal to extend repayment of debt in yuan. While property sales in China increased month over month in August, other key indicators like new housing starts, total construction area and real estate investment continued to fall. Data from the 70 biggest cities show that property prices fell in most cities.



Looking at the CHN.cash chart, we see that supply is maintaining the overall downward trend line and became active again last time at 7000 points. The rebound lost momentum at 6700 and now sellers are back in control again, who may want to test the 61.8 Fibonacci retracement of the upward wave from fall 2022 at 6000 points again. Alternatively, if this support breaks downwards it could lead to a test of 6750 points, which are near 5750 points - 61.6 Fibo retracement. To break the current trend, buyers would have to push the index above the SMA200, which is now at 6672 points.

[Solid ECN]

US30 - Chart of the Day

As we will learn a number of macro data from the US economy today and today, we have 'Freaky Friday' so elevated volatility among Wall Street indices may continue. Although the share of industrial companies in the Dow Jones Industrial Average (US30) is quite limited these days, it is still substantial (including Boeing, Honewyell and General Electric) - it is today that we will learn data from US industry. The industrial production reading at 2:15 PM BST may show whether consumer and business demand is indeed strong enough to stimulate production, and data on consumer sentiment and inflation expectations will complete the picture of overall prosperity in the U.S. economy.

In the results of the rollover in the options and derivatives market, today's volatility on US30 may accelerate - and if investors' new positioning will be in line with the current upward trendline there are chances for a strong session on Wall Street. A Bank of America survey indicated a record $26.4 billion in inflows into US equity market this week, the vast majority of which ($18.7 billion) flowed into large-cap companies. Analysts pointed out that the market consensus is reassuring of a successful scenario for the stock market - a soft landing of the economy in the United States.



Looking at the Dow Jones (US30) contracts, we see that they are quite close to historical highs, and it is possible that the bulls will eventually reach record levels above 36,000 points. The upward trend line is maintained, and the index has not approached the SMA 200 (red line) since September 2022, demand reacted quickly in the 23.6 Fibonacci retracement zone at 32,400 points. So far, the current week has been exceptionally successful for the Dow Jones, as illustrated by the green candle with a large body. Seasonally, September has often proved to be a suitable time for stock accumulation for the last, usually successful 'Christmas quarter.' Bulls are hoping that this will also be the case this time.

[HubuFX]

EURUSD Forecast

Upon examining the daily chart for the EURUSD currency pair, it is evident that the bears have exerted significant downward pressure on the price. This has resulted in a substantial decline, pushing the price all the way down to a crucial support zone. This zone, which extends from 1.0664 to 1.0636, is of paramount importance in the current market dynamics.

This particular level is noteworthy as it offers a substantial bid for buyers, making it an attractive point for potential market entry. However, it's important to bear in mind the inherent risk of being stopped out should the price fall below this support level. Therefore, careful consideration and risk management strategies are essential when trading at this juncture.



If this support level proves to be robust and withstands further bearish pressure, we could potentially see a reversal in the EURUSD price trend. This could usher in a period of correction, during which the price may retrace some of its recent losses. In such a scenario, it's plausible that the EURUSD price might aim to test the previously broken support level around 1.072 on the daily chart. This level could serve as a key target for this potential corrective phase.

In conclusion, monitoring these key levels on the EURUSD daily chart can provide valuable insights for traders and investors alike. It's also worth noting that these observations are based on current market conditions and are subject to change as new market data becomes available.