Market Update by Solidecn.com

[Solid ECN]

GBPUSD


GBPUSD pair’s decline halted at the 1.2675 level, where it found solid support. It then began to rise and attempt to recover on an intraday basis, which suggests that it is heading towards building a new bullish wave. The targets of this wave begin with testing the broken support of the main bullish channel that has now turned into resistance at 1.2815. It is worth noting that breaching this level will push the price back to the mentioned channel and achieve additional gains that reach 1.2900 areas.





Therefore, we expect to witness more bullish bias in the upcoming sessions, supported by the technical indicators’ positivity. It is important to consider that breaking 1.2675 will stop the bullish wave and push the price to achieve bearish correction on an intraday and short-term basis.

[Solid ECN]

Oil - Morning Wrap

• Feud between Russian Ministry of Defense and PMC Wagner escalated into a rebellion over the weekend with the latter taking control of a few Russian cities and marching an armored convoy towards Moscow
• However, a deal between Kremlin and PMC Wagner was brokered by Belarusian president Lukashenko and the short-lived rebellion was ended
• Given lack of any significant resistance from the Russian army against Wagner's advance on Moscow, war analysts wonder whether the uprising was staged
• As Wagner's mutiny started and ended before the opening of markets, we do not see any major reaction to the events. Oil and precious metals opened slightly higher
• Indices from Asia-Pacific traded mixed during the first session of a new week. Nikkei dropped 0.1%, S&P/ASX 200 declined 0.4%, Kospi gained 0.4% and Nifty 50 gained 0.1%. Indices from China traded 0.3-1.5% lower
• European index futures point to a more or less flat opening of the cash session on the Old Continent
• SNB Chairman Jordan said that recent rate hikes were likely not enough to bring inflation down
• Chinese travel activity has still not recovered after a pandemic. Data for recent Dragon Boat Festival holiday (June 22-24) showed travel was 22.8% below pre-pandemic 2019
• Summary of Opinions from BoJ June meeting showed that CPI inflation is not expected to drop below target towards the end of the year. On top of that, one member saw it as appropriate to make changes to yield curve control mechanism
• OPEC expects global oil demand to reach 110 million barrels per day by 2045
• Saudi Aramco head said that China and India account for over 2 million barrels of oil demand growth
• S&P Global lowered its Chinese GDP growth forecast for 2023 from 5.5 to 5.2%
• Cryptocurrencies are trading lower - Bitcoin drops 0.6%, Ethereum trades 0.9% lower and Dogecoin slumps 1.6%
• Energy commodities gain - oil trades 0.2% higher while US natural gas prices jump 2%
• Precious metals advance - gold trades 0.4% higher, silver jumps 1.6% and platinum adds 1.4%
• GBP and NZD are the best performing major currencies while USD and CHF lag the most

OIL.WTI opened higher following a short-lived Russian coup but all of the gains have been erased already.

[Solid ECN]

DE30


Release of flash PMIs for June from France and Germany turned out to be a disappointment. French data showed a slump in service gauge from 52.0 to 48.0, meaning that the sector was contracting. Meanwhile, German data showed a plunge in the manufacturing index from 43.2 to 41.0 - the lowest level since May 2020 when sentiment in the industry was slumping amid Covid-19 pandemic and resulting lockdowns. While DE30 saw a positive reaction to French data and moved slightly higher, the index took a hit following release of German data as it hinted at continued struggles of the German economy's main motor - manufacturing.





Taking a look at the DE30 chart at the H4 interval, we can see that the index is currently trading near a psychological 16,000 pts level. A point to note is that the index plunged back into the recently broken 15,810-16,085 trading range. Nevertheless, the ongoing pullback has not yet exceeded the range of the correction that occurred in the second half of May 2023 and, according to the Overbalance methodology, remains in an uptrend. Should declines deepen traders should watch the 15,850 pts area, where the lower limit of the Overbalance structure can be found.

[Solid ECN]

UK100


Britain's main benchmark UK100 is the weakest European index today, losing more than 1%. The upcoming - likely hawkish - decision by the Bank of England by no means signals the end of tightening in the British economy. While it is uncertain whether rates will rise by 25 or 50 bps, the market will almost certainly have to swallow a higher 50 bps BoE hike - today or in August. Yesterday's reading indicated that UK inflation in May appears to have stabilized at excessively high levels. Core CPI was unchanged at 8.7% y/y - the market had expected 8.4% y/y. Also, the core CPI , which was expected to remain unchanged at 6.8% y/y, accelerated to 7.1% y/y - the highest level in 30 years.


The difficult situation could prompt the Bank of England to an extremely restrictive cycle if the BoE prioritizes the fight against inflation. In such a situation, the baseline scenario seems to be economic damage, which is generally not good for the performance of firms and consequently the stock market. With inflation anchored too high and a period of below-trend growth, a stagflationary scenario is a sizable threat to the British economy. As long as the labor market remains relatively strong, the market has no reason to be overly concerned, however, macro uncertainty has been reflected in the quotations of British indices recently.





Looking at the chart of FTSE (UK100) contracts, however, we see that the upward trend line is maintained although the index has dropped below the SMA200 (red line) indicating a possible further weakening of momentum. In addition, looking at the index's quotations since February, this year, we can juxtapose them with the technical formation of a rising wedge from which a breakout usually takes place at the bottom. RSI indicators near oversold and MACD confirm considerable weakness in the bulls - further decline without an upward correction would therefore have to be outright 'capitulation'. The market's reaction to the BoE minutes and decision may prove crucial.

[Solid ECN]

EURUSD Confirms the Breach


EURUSD pair confirmed breaching 1.0966 after ending yesterday above it, starting today with more positivity to reach 1.1000 barrier, which supports the continuation of the expected bullish trend on the intraday and short term basis, and the way is open to achieve our next main target at 1.1072.





The positive effect of the inverted head and shoulders’ pattern still active, and supports the continuation of the bullish wave, which gets continuous support by the EMA 25 and EMA50, noting that the continuation of the bullish wave requires holding above 1.0940.

[Solid ECN]

USDJPY


The USDJPY is forming a double top pattern on the 1H chart, reacting to the resistance at 142.24. The pair couldn’t close above the aforementioned level.




By zooming out to the 4H chart, we see an "upper long wick" candle giving a signal with a risk of getting stopped above the last high and a 1 to 1 ratio reward around 141.27.

[Solid ECN]

US500

• Wall Street trades slightly lower on the opening
• Investors eagerly await the results of Powell's testimony
• FedEx declined due to lower-than-expected forecasts for the year 2024

Investors remained cautious after a pause in interest-rate hikes, as Federal Reserve Chair Jerome Powell's remarks indicated the expectation of higher interest rates to control inflation and reduce US growth. The second-quarter stock rally appeared to be fizzling out due to factors such as crowded bullish positioning, high valuations and a growth outlook.


Wall Street opened with losses as investors showed concern over signs of rampant inflation in major economies, indicating that central banks may not be close to winding down their tightening cycles. The S&P 500 and Nasdaq 100 both fell 0.4%, while the Dow Jones Industrial Average declined 0.5%.
A surge in US housing starts in May indicated strong demand outstripping supply, potentially fueling economic growth. Citigroup analysts believe core inflation is unlikely to return to target in such an environment.





The S&P 500 (US500), with the current price at 4,415 points, has experienced a 0.4% decline today. The price retraced from a resistance level of 4,500 points, which was approximately 6.5% below the all-time high. As the market undergoes a correction, the next level to monitor is at 4,400 points. If this level is broken, the subsequent support level to watch is at 4,300 points.


The recent strong gains in the market suggest that it may be overheated, as indicated by the Relative Strength Index (RSI) around 70. Therefore, a period of consolidation and correction is deemed reasonable under these circumstances.

[Solid ECN]

GBPCAD


Looking at the daily chart, the GBPCHF pair consequently dropped value from 1.6917. We have the "upper long wick" candle in the daily time frame suggesting possible decrease in the price with SL above the wick.





Zooming to the 4H time frame, the price reacted to 1.67992 - 1.67921 support area. The market for this instrument is considered bullish as long as this level is intact, and another rise to 1.6917 would be possible.





Trigger chart is the 1H time frame. Entry price is 1.6806 with the first target at 1.6847 followed by 1.6917.

[Solid ECN]

Bitcoin near 29,000



"Bulls" return to crypto. The market is reacting to more moves by financial institutions📈


The cryptocurrency market has had some really good days. Fear over the Binance exchange and regulations has given way to positive sentiment due to the recent actions of investment funds. It's thanks to them that the market is reassured that cryptocurrencies 'won't disappear' from Western financial markets, and Bitcoin can finally count on interest from institutions. As a result, the largest cryptocurrency is struggling to break through $29,000 today.

• Following news of a Bitcoin Trust ETF from BlackRock and a similar fund application from Fidelity Investments, investors were optimistic about Deutsche Bank's application to provide digital trust services.
  
• In the evening, the market also reacted to news of the opening in the US of a new crypto exchange EDX Markets. For the moment, however, the entity will specialize in serving institutions and cannot be compared to Binance or Coinbase
  
• EDX is backed by Citadel Securities and Virtu Financial, among others, some of the largest market makers in the world, as well as Charles Schwab , Fidelity Investments fund and other Wall Street institutions.
  
• Today's reports from the US indicate that another institution, Invesco, has once again applied to the SEC for approval of a spot Bitcoin ETF
  
• A Nomura survey indicated that 96% of professional institutional investors managing nearly $5 trillion (303 institutions) are willing to invest in cryptocurrencies, and 82% had a positive view of the long-term prospects of Bitcoin and Ethereum
  
• As a result of Bitcoin's sudden rise in the market, the largest wave of short position liquidations since May 28 took place (Approx. $40 million liquidation in the last 24 h according to CoinGlass)

On-Chain data shows the fastest increase in Bitcoin flows to institutions with very little or even zero trading history in more than 6 months. This behavior of the network may indicate an accumulation trend on the part of long-term investors.





Bitcoin (BITCOIN) stock chart, W1 interval. The largest cryptocurrency has rebounded from the lower limit of the uptrend sustained since the beginning of this year and is currently heading towards the upper resistance barrier, set by the zone of local peaks from April this year.

[Solid ECN]

USDCHF Technical Analysis



USDCHF pair is currently rising and is expected to breach the 0.8996 (50 SMA in Yellow) level and attack 0.9093. However, caution is advised for upcoming trading as breaching the last level will cancel the negative effect of the double top pattern and lead the price to start a new bullish wave. The targets for this wave begin at 0.9032.





Therefore, due to the contradiction between the technical indicators, it is recommended to stay aside until the price confirms breaching 0.8996 resistance or breaking 0.8956 (25 SMA in Blue) support. It should be noted that breaking this support will push the price to resume the bearish trend and head towards 0.89071 followed by 0.88869 areas mainly.




Price action signal

• Sell with SL above the LUW (long upper wich) candle at 0.9007
  
• TP 1: 0.8956
  
• TP 2: 0.8901