Bulls and Bears Focus on the Contest for the Head and Shoulders Bottom, but Recovery Will Be Very Long

Eva Chen

Forex

Central Bank

Economic

Summary:

Since mid-June, the GBPUSD has been steadily falling. At present, the downward trend seems to have slowed down because the momentum indicator is oversold. Whether the price can rebound remains uncertain.

BUY GBPUSD

Close Time

CLOSED

1.23300

Entry Price

1.27000

1.22680

1.25573 +0.00575 +0.46%

62.0

Pips

Loss

1.22680

1.22670

Exit Price

1.23300

Entry Price

1.27000

Fundamentals

The Bank of England's (BOE) inflation survey in August revealed how the public viewed the inflation trend and what the BOE might do.

The public's view of the current inflation rate seems to have eased, and the median estimate is 8.6%. This is a full percentage point lower than 9.6% in May. This shows that the public may think that the worst period of soaring inflation has passed.

However, expectations for short-and medium-term inflation have risen slightly. The median inflation expectation for next year is 3.6%, slightly higher than 3.5% three months ago. Looking further ahead, it is expected to rise from 2.6% in the last survey to 2.8% in the next 12 months.

Regarding the BOE's policy path, 63% of people expect it to raise interest rates next year, up from 57% in May. At the same time, 19% said they expected rates to stay about the same over the next year, which is slightly lower than the previous 20%.

Before the release of August inflation data in the UK, traders lowered their bets on the BOE's further tightening policy. Traders' expectations of the BOE's further rate hike are less than 37 basis points, suggesting that the market is basically evenly divided in the expectation of a second rate hike of 25 basis points during the year.

According to the median expectation of more than 30 analysts surveyed by the agency, the UK inflation data due to be released on Wednesday may show that the inflation rate rose to 7% last month from 6.8% in July. The core inflation rate, which is closely watched by officials and excludes food and energy, is expected to drop by 0.1 percentage points to 6.8%. The market's expectation for this week's interest rate hike is about 22 basis points, suggesting that the market generally expects to raise interest rates by 25 basis points. At the same time, the UK market is facing quite a few challenges this week. If the BOE follows the ECB's "dovish rate hike", it will put pressure on the GBP and increase the price pressure on the margin.

At present, the intraday price trend of the GBPUSD shows some signs of relative strength. In the 4H timeframe, a long lower shadow is formed, and the resistance level of 1.24 needs to be clearly broken in the later period to show whether the GBPUSD has bottomed out successfully.

Bulls and Bears Focus on the Contest for the Head and Shoulders Bottom, but Recovery Will Be Very Long_1

Technical Analysis

The GBPUSD has been forming a structure of declining highs since breaking below the late June low of 1.2591.

Currently, the Relative Strength Index is hitting the oversold threshold of 30 and the Stochastic Oscillator is in the 20 oversold zone, both indicators suggesting that the recent downtrend may have been overdone.

If the bulls reappear and push up the price, the GBPUSD may face the suppression of the 1.2440 resistance level, which was a support level in early September. The next resistance level is the supply range of 1.2485, and breaking through this range may trigger further recovery momentum. Even higher, the bulls may test the final target level of 1.2684, but any subsequent rise should be limited below 1.2747 to maintain the decline pattern (in a big cycle) after falling below the 200-day SMA.

On the other hand, the May bottom at 1.2307 could become the first line of defense if the downward momentum is extended. If it breaks below that level, the price could slide further towards the 1.2000 psychological barrier. If the bottom collapses, the focus could turn to the March low of 1.1800.

Overall, the GBPUSD downward momentum has not been completely exhausted, but with the GBPUSD having reached oversold conditions, a rebound should therefore not be ruled out as imminent. It is recommended to buy the dips.

Trading Recommendations

Trading direction: Long

Entry price: 1.2330

Target price: 1.2700

Stop loss: 1.2268

Deadline: 2023-10-03 23:55:00

Support: 1.2370, 1.2307, 1.2275

Resistance: 1.2447, 1.2505, 1.2548

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Eva Chen

Commodity

Central Bank

Economic

Summary:

Gold prices are trading in a narrow range in a subdued market as the direction remains elusive, pressured by the 89-day SMA. Despite the positive short-term momentum, the medium-term trend remains at risk of a pullback.

SELL XAUUSD

Close Time

CLOSED

1940.00

Entry Price

1884.00

1966.00

2623.41 +28.97 +1.12%

112.7

Pips

Profit

1884.00

1928.73

Exit Price

1940.00

Entry Price

1966.00

Fundamentals

Before the New York session on Tuesday, the price of gold rose slightly. Today, the precious metals market is supported by moderate external markets, including the weakening of the U.S. Dollar Index (USDX) and the rise of crude oil prices, but trading remains sluggish before the important meeting of the Federal Open Market Committee.

As the market expects the Fed to keep its monetary policy unchanged after Wednesday's meeting, the price of gold has recently resumed its upward trend. After the bulls found interest in buying near the key 200-day SMA, the price of gold was at a two-week high of about US$1,935. At the same time, the price of gold has risen above the 20-day and 50-day SMAs, indicating that the short-term trend has turned bullish.

However, it is still difficult for the market to ponder whether the short-term rise can turn into a reversal momentum. As the Fed has repeatedly warned, the strong economic data in the U.S. has aroused people's concerns about the long-term high-interest rate, which prompted the gold price to fall back to the psychological threshold of US$1,900 earlier.

The question now facing the market is whether the Fed is willing to admit (as we heard from the European Central Bank (ECB) last week) that the interest rate hike cycle may have ended, or whether it will continue to insist that it may raise interest rates again. The Fed's dot plot will be the key, but the market will continue to pay attention to Powell's every word. If the Fed's tone is tough again, there may be a risk that gold prices will return to the threshold of US$1,900 again.

Go Short at the Highs as Further Rallies Are Not Favored_1

Technical Analysis

In the past few trading days, the price of gold has fluctuated upward in stages and rebounded strongly from the previous decline below the 200-day SMA (US$1,901). Currently, short-term oscillators suggest that the bullish forces are not completely over as prices are testing an important trendline connecting the recent lower highs.

If buying interest persists, bulls may try to break through the psychological threshold of US$1,940 and then test the recent peak of US$1,945; If bulls' interest increases, the price may rise to the peak of US$1,958 in February. However, the last line of defense for bears at US$1,966 will limit further price rallies. Otherwise, the medium-term bearish trend will be broken.

Alternatively, if gold extends its move lower at current levels (US$1,935), the recent support at US$1,919 will be the first line of defense. A break below this level would set the stage for further declines towards the June low of 1,892. The bearish trend would then continue until new lows.

Overall, the bulls are currently heading towards a crowded zone, which includes restrictive areas and psychological thresholds. Going forward, a clear break of the bullish/bearish watershed at US$1,966 is needed to determine its medium-term direction. Otherwise, continued bullishness is not favored. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 1940

Target price: 1884

Stop loss: 1966

Deadline: 2023-10-03 23:55:00

Support: 1930, 1923, 1919

Resistance: 1945, 1958, 1966

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

The expectation that the Organization of Petroleum Exporting Countries (OPEC) will cut production again provides strong support for crude oil, because OPEC may be keen to support prices in the expectation of a global economic recession or soft landing.

SELL WTI

Close Time

CLOSED

91.685

Entry Price

87.500

95.000

69.447 +0.305 +0.44%

318.0

Pips

Profit

87.500

88.505

Exit Price

91.685

Entry Price

95.000

Fundamentals

At present, WTI crude oil is heading for the top of the range of US$93.71, which is expected to continue the strong rally driven by the flexible demand and supply restrictions by OPEC+ core countries Saudi Arabia and Russia.

In recent trading days, while the oil price has risen, the spread of key time points has risen sharply, indicating that the market supply is insufficient and bullish options have become more expensive. The price of Brent crude oil has increased by about 10% this year because OPEC+ member countries have restricted production, the demand outlook has improved, and the U.S. may avoid economic recession. In this context, speculators pushed the net bullish bets on Brent crude oil and WTI crude oil to a 15-month high.

We have always believed that the oil market will be increasingly tight in the second half of 2023, and this tightening has now arrived. It seems only a matter of time before we see the oil price testing US$95.00 per barrel. At the same time, if the further rise in oil prices brings upward pressure on bond yields, it may adversely affect risk appetite.

We believe that the continuous rise in oil prices may increase inflationary pressure at the end of the year, which may lead to the deterioration of the global economic growth and inflation combination. The optimism of global economic growth is already high, and it is unlikely to heat up further. The option market thinks that the possibility of Brent crude oil prices staying above US$90.00 per barrel by January 2024 is 45%. Other strategists predict that OPEC+ is unlikely to pursue oil prices above US$100.00 per barrel, but they have noticed the short-term bullish risk brought by recent developments.

In other events, the decisions to be made by the central banks this week may seriously affect market sentiment, because another round of interest rate hikes by the Federal Open Market Committee and the Bank of England (BOE) may make investors wary of rising borrowing costs. Conversely, as businesses and consumers cut back on spending activities, this may lead to a weakening demand for fuel and energy commodities.

API and EIA inventory data may also affect the trend of crude oil prices because these data will provide more insights into supply and demand. Reduced inventory can reassure investors that demand is still high. The increase in inventory may indicate that demand is slowing down or production can keep up with consumption, which may lead to a decline in crude oil prices.

Go Short at the Highs as Bears Appear to Be in A Sniper's Range_1

Technical Analysis

WTI crude oil continued to gain bullish momentum on Tuesday, approaching the next potential ceiling of around US$92.50. If this resistance level holds, crude oil prices could fall to the previous inflection point around US$80.00.

However, the 100 SMA is attempting to form a bullish crossover with the 200 SMA in the 1D timeframe to confirm that the path of least resistance is to the upside. The crude oil is also trading above both SMAs, further confirming the bullish pressure.

A break above the resistance level could mean a sharper rally for the commodity. However, the stochastic indicator is in the overbought zone, so selling pressure could make a comeback. The Relative Strength Index also suggests that the bulls are exhausted, which means that falling prices could confirm that the bears have officially taken over.

Finally, both oscillators have enough room for a significant retracement, so the price may follow the trend as bearish momentum comes into play. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 92.50

Target price: 87.50

Stop loss: 95.00

Deadline: 2023-10-03 23:55:00

Support: 89.78, 88.57, 87.67

Resistance: 91.72, 92.50, 93.71

Risk Warnings and Disclaimers

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Warren Takunda

Forex

Traders' Opinions

Summary:

The GBPNZD currency pair has encountered a short-term corrective pullback from its recent multi-year highs, presently trading at 2.0950...

BUY GBPNZD

EXP

EXPIRED

2.10000

Entry Price

2.20000

2.07000

2.22070 +0.00069 +0.03%

Pips

EXPIRED

2.07000

2.04821

Exit Price

2.10000

Entry Price

2.20000

Short-Term Weakness

In recent trading sessions, GBPNZD has experienced a short-term retracement, stepping back from its multi-year highs reached in August. Currently trading at 2.0950, this currency pair may continue its corrective movement over the next few days. Investors and traders are closely monitoring this short-term weakness for potential opportunities.

Medium-Term Trend

Despite the short-term correction, the medium-term trend for GBPNZD remains fundamentally bullish. A crucial technical indicator supporting this view is the 200-day MA. As long as the exchange rate holds above this moving average, the broader trend is perceived as positive. The 200-day MA serves as a critical level for discerning medium-term market sentiment.

New Zealand Data Focus

One of the key influencers of GBPNZD's trajectory in the upcoming days is New Zealand's GDP data for the June quarter. Market expectations point toward 0.4% growth. This release is of utmost significance as it has the potential to impact the New Zealand Dollar significantly. Furthermore, market participants will closely scrutinize the GDT dairy auction, which includes whole milk powder prices, given its implications for New Zealand's export-driven economy.

Current Account Deficit

New Zealand's long-standing current account deficit remains a concern, although it has started to narrow in 2023. It is imperative to monitor this deficit, as a sustained imbalance can exert downward pressure on the New Zealand Dollar. Changes in trade dynamics and external economic conditions are critical factors affecting the deficit's trajectory.

Bank of England and UK Inflation

Events in the United Kingdom also play a pivotal role in influencing GBPNZD's movements. The Bank of England (BoE) is expected to raise interest rates by 25 basis points. However, market participants will be keen to discern whether the central bank signals a pause in the rate-hiking cycle, a factor that could significantly impact GBPNZD. Additionally, UK inflation data will be released, with expectations of 7.1% year-on-year. A stronger-than-expected inflation figure may bolster the Pound, while a below-consensus print could favor GBP in the longer term.

Technical Analysis and Future Momentum

Price action has recently tested a critical support zone and failed to breach it. This development suggests that the currency pair has a solid chance of continuing its bullish run. However, the upcoming week's news events, including economic data releases and central bank decisions, will likely dictate the magnitude and direction of this momentum.

As GBPNZD navigates short-term headwinds within a broader bullish trend, traders and investors will be closely monitoring these catalysts to make informed decisions in the dynamic forex market.

TRADE RECOMMENDATION

BUY GBPNZD

ENTRY PRICE: 2.100

STOP LOSS: 2.0700

TAKE PROFIT:2.200

Risk Warnings and Disclaimers

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Warren Takunda

Forex

Traders' Opinions

Summary:

The AUD/JPY currency pair is off to a muted start as the new trading week commences. In the European session, the Australian dollar is trading at 95.077, reflecting a modest 0.11% increase...

BUY AUDJPY

Close Time

CLOSED

95.000

Entry Price

101.000

93.000

97.776 -0.392 -0.40%

29.2

Pips

Profit

93.000

95.292

Exit Price

95.000

Entry Price

101.000

Reserve Bank of Australia (RBA) Minutes

One of the focal points for the AUD/JPY pair is the upcoming release of the RBA's minutes. In its recent policy decision, the RBA maintained the official cash rate at 4.10% for the third consecutive month. Traders and analysts are keenly observing the minutes for any indications of the central bank's future rate movements. While former Governor Philip Lowe acknowledged that inflation had peaked, he also emphasized that it remained elevated and was expected to stay so for a considerable duration. This stance raises the prospect of an RBA rate cut in 2024, marking a more dovish shift compared to the central bank's prior statements.

New RBA Governor

The AUD/JPY pair's dynamics are also influenced by the recent transition in RBA leadership. Michelle Bullock has assumed the role of RBA Governor. Although immediate policy changes are not anticipated, Bullock has underscored that future rate decisions will hinge on data-dependent factors. Her tenure begins at a juncture when calls for a more streamlined and transparent RBA operation are mounting.

US Economic Data

The preceding week in the United States was marked by mixed economic data. While the Empire State Manufacturing Index surpassed expectations, consumer sentiment showed signs of deceleration, and inflation expectations exhibited a decline. These developments are seen as supportive of the Federal Reserve's inclination to maintain its current policy stance during its upcoming meeting.

Technical Analysis

From a technical standpoint, the AUD/JPY pair is currently in a bullish flag pattern. Such patterns typically entail profit-taking following a robust uptrend, devoid of severe selloffs. Key elements to watch for include the need for the initial pole to exhibit a forceful upward move. Furthermore, a breakout from the flag should ideally be accompanied by a surge in trading volume. In the weeks ahead, traders will closely monitor how this pattern evolves. This could serve as a valuable learning opportunity and a template for future trades.

The potential upper limit for the AUD/JPY pair stands at 101, although it's important to anticipate fluctuations along the way. A crucial aspect to observe is the formation of higher lows, which would substantiate the bullish flag pattern.

A notable factor on the lower timeframes is the emergence of a robust trend, which could expedite the breach of resistance levels, potentially causing a swifter upward trajectory.

TRADE RECOMMENDATION

BUY AUDJPY

ENTRY PRICE : 95.00

STOP LOSS : 93.00

TAKE PROFIT : 101.00

Risk Warnings and Disclaimers

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Peterson

Commodity

Summary:

Today's oscillation range will be 1925-1940, and it is better to buy at lows.

BUY XAUUSD

Close Time

CLOSED

1925.00

Entry Price

1950.00

1922.00

2623.41 +28.97 +1.12%

36.8

Pips

Profit

1922.00

1928.68

Exit Price

1925.00

Entry Price

1950.00

Fundamentals

During Tuesday's (September 19th) Asian session, spot gold narrowly oscillated upward, and it is currently trading near 1932. Overnight, U.S. bond yields and the USDX have fallen slightly, and gold prices benefited from the decline. Then, gold continued to strengthen, crossed above 1930, the upper edge of the previous oscillation range, and finally stabilized. This week, gold bulls may be more confident as the USD is expected to fall. Yesterday, the European Central Bank released a signal in advance, that the interest rate hike may be ended. Besides, in the second half of the week, the Fed, the Bank of England, and the Bank of Japan could release their key monetary policies, and thus the market will remain cautious today.

News: U.S. Treasury Secretary Janet Yellen said there are no signs that the U.S. economy is about to fall into recession. She confirmed that it is too early to judge the possible impact of the U.S. auto industry strike. The labor market has weakened but is still in a "healthy" state, industrial output is growing, and "inflation is falling". Moreover, ECB Governing Council member Peter Kazimir claimed that he hopes the September rate hike will be the last one, but further rate hikes are possible. According to sources, ECB policymakers hope to start discussions soon on how to address the trillions of euros of excess liquidity, and raising the reserve ratio could be the first step.

Today's focus: The U.S. monthly building permits for August, and the monthly rate of housing starts for August.

Technical Analysis

Daily chart: There is little retracement in yesterday's gold price. It once declined to 1922 and then rebounded to 1930 with oscillations, standing above 1930 stably during the U.S. session. It was mentioned on Monday that gold would keep ascending, and investors needed to go long after it fell. It was not as good as expected as the retracement was not enough. Gold has appreciated for 3 sessions and is standing above the 5-day, 10-day, and 20-day SMAs. Furthermore, the SMAs are lining upward, indicating a strong pattern and confirming a bullish trend. However, it may oscillate significantly during the session, and investors should not chase the appreciation but wait until a retracement takes place. Today, the support could be at 1928, and the next target will be the 20-day SMA (1925). If gold declines to the two support levels in the Asian session, investors can go long. But if the trend moves swiftly, the target will be at 1940 during the Asian session, and gold may surge to 1950 in the U.S. session.

Trading recommendations: Buy at lows. If gold falls to 1925, investors can go long with small positions, and set the stop-loss at 1922. To take profits, the first target will be at 1940, where they can move the stop-loss to breakeven, and the second target can be fixed at 1950. To Surge Again after Short Consolidation_1

To Surge Again after Short Consolidation_1

Trading Recommendations

Trading direction: Long

Entry price: 1925

Target price: 1950

Stop loss: 1922

Support: 1922.000/1903.000

Resistance: 1940.000/1953.000

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Traders' Opinions

BUY WTI

Close Time

CLOSED

90.000

Entry Price

100.000

85.000

69.447 +0.305 +0.44%

51.1

Pips

Profit

85.000

90.511

Exit Price

90.000

Entry Price

100.000

Brent Crude oil prices have embarked on a spectacular rally, surging approximately 15% in a mere three weeks. Currently, they are trading at levels last witnessed in November, rapidly approaching the coveted $100 mark. This article delves into the driving forces behind this impressive oil price rally, highlighting the roles played by Saudi Arabia and Russia, the dynamics of voluntary production cuts, and the potential impact of demand fluctuations on the sustainability of this rally. Additionally, it discusses the significance of psychological factors and historical resistance as oil prices approach the $100 threshold.

Impressive Rally and Current Levels:

Brent Crude oil has undertaken a remarkable rally in a short span of three weeks, marking an approximate 15% surge. Presently, oil prices are scaling heights not seen since November and are tantalizingly close to the $100 milestone.

Driving Forces: Saudi Arabia and Russia:

At the heart of this oil price rally are Saudi Arabia and Russia. These key players have taken decisive actions to curtail oil supply, thus tightening the market considerably. Their concerted efforts have propelled oil prices well beyond their previous trading range for most of the year.

Voluntary Production Cuts:

Saudi Arabia and Russia have voluntarily implemented production cuts, contributing significantly to the surge in prices. These cuts are expected to persist until year-end, although their future course could hinge on evolving demand dynamics in the months ahead.

Demand Dynamics:

The longevity of the oil price rally is contingent on demand fluctuations. If demand falters as these additional cuts expire, it could put the brakes on rising prices. The article raises pertinent questions about whether these cuts have gone too far and whether demand will soften enough to trigger a price pullback.

Momentum Indicators:

Notably, momentum indicators, including the Stochastic and MACD (Moving Average Convergence Divergence), do not currently indicate signs of divergence. This suggests that the rally remains robust, despite the significant price upswing.

Psychological Factors:

The article underscores the psychological dimension of oil prices nearing the $100 threshold. Market psychology often exerts influence, and this psychological milestone could become a focal point of discussion should prices continue to ascend.

Historical Resistance:

An interesting historical perspective is provided, as oil prices have previously struggled to breach the $100 level, with limited success in October and November. The article suggests that $98 may also hold significance, but the spotlight is likely to shift toward whether oil prices can surmount the triple-digit barrier once again.

Technical Analysis:

On the weekly chart, oil prices appear poised for continued ascent. Daily fluctuations show an upward trajectory, emphasizing a prevailing bullish sentiment. Intra-day, the four-hour chart exhibits upward fluctuations, while the hourly chart indicates range-bound trading. Overall, the dominant theme for the day appears to be oscillations with an upward bias, particularly in the 88-91 price range.

As Brent Crude oil prices continue their ascent towards $100, market participants are closely watching these key drivers and technical indicators to gauge the resilience of this impressive rally.

TRADE RECOMMENDATION

BUY USOIL

ENTRY PRICE : 90.00

STOP LOSS : 85.00

TAKE PROFIT : 100.00

Risk Warnings and Disclaimers

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Bulls and Bears Focus on the Contest for the Head and Shoulders Bottom, but Recovery Will Be Very Long

Fundamentals

Technical Analysis

Trading Recommendations

Go Short at the Highs as Further Rallies Are Not Favored

Fundamentals

Technical Analysis

Trading Recommendations

Go Short at the Highs as Bears Appear to Be in A Sniper's Range

Fundamentals

Technical Analysis

Trading Recommendations

Short-Term Weakness Amid Long-Term Positivity

Short-Term Weakness

Medium-Term Trend

New Zealand Data Focus

Current Account Deficit

Bank of England and UK Inflation

Technical Analysis and Future Momentum

TRADE RECOMMENDATION

RBA, New Leadership, and Technical Analysis

Reserve Bank of Australia (RBA) Minutes

New RBA Governor

US Economic Data

Technical Analysis

TRADE RECOMMENDATION

To Surge Again after Short Consolidation

Fundamentals

Technical Analysis

Trading Recommendations

Navigating the Surge Towards $100

Impressive Rally and Current Levels:

Driving Forces: Saudi Arabia and Russia:

Voluntary Production Cuts:

Demand Dynamics:

Momentum Indicators:

Psychological Factors:

Historical Resistance:

Technical Analysis:

TRADE RECOMMENDATION

Risk Disclosure