Bearish Pressure Emerges From Key Moving Average

Central Bank

Economic

Summary:

The EUR/GBP has rebounded from the low of 0.8310 reached on September 30 and, two days ago, hit a local high of 0.8432, where it faced strong resistance.

SELL EURGBP

Close Time

CLOSED

0.84035

Entry Price

0.83200

0.84400

0.82976 +0.00098 +0.12%

48.3

Pips

Profit

0.83200

0.83552

Exit Price

0.84035

Entry Price

0.84400

Fundamentals

At the beginning of the week, the UK's Gross Domestic Product (GDP) report revealed disappointing results. The economy expanded by 0.5% quarter over quarter in the second quarter, slightly below both the expected growth rate and the previous increase of 0.6%. On an annual basis, GDP rose by 0.7%, also falling short of the anticipated growth rate of 0.9%

Andrew Bailey indicated that the UK central bank could adopt a more aggressive approach to interest rate cuts as inflation remains contained. Bailey's comments have sparked expectations of a quarter-point reduction in November and a strong possibility of a consecutive cut in December.

Financial markets are currently anticipating a rate reduction from the Bank of England (BoE) later this year, particularly during its upcoming meetings. The sustained inflation rate within the UK’s services sector significantly contributes to this cautious outlook on interest rates.

In August, annual services inflation—a crucial indicator that the BoE closely monitors—rose to 5.6%, up from 5.2% in July. Furthermore, Bailey's remarks during the European trading session on Tuesday suggested that the BoE’s easing cycle will proceed at a careful pace.

From an economic perspective, the preliminary S&P Global/CIPS UK Purchasing Managers’ Index (PMI) for September showed a slight decline but remained above the pivotal 50.0 mark that distinguishes expansion from contraction. The report revealed that overall private business activity dropped to 52.9, down from 53.8 in August, attributed to a sharper-than-anticipated slowdown in both the manufacturing and services sectors.

Lower-than-anticipated inflation data from the Eurozone has notably impacted the region's economic sentiment. The Harmonized Index of Consumer Prices (HICP) rose by 1.8% year-on-year in September, missing the 2.2% recorded in the previous month and the anticipated 1.9%. Core inflation also dipped slightly, coming in at 2.7% year-on-year, down from 2.8% in August, and below market forecasts.

These numbers suggest that overall inflation has now fallen below the European Central Bank's (ECB) target of 2.0%, while core inflation is also trending in that direction. This situation increases the likelihood of further rate cuts by the ECB, potentially leading to capital outflows and a weaker Euro.

Within the ECB, policymakers who favor further easing are preparing to propose another interest rate reduction next month, following a series of disappointing economic reports. However, this initiative may encounter resistance from more conservative members of the governing council, according to various sources.

Initially, ECB officials considered an additional rate cut at the October 17 meeting to be unlikely, as borrowing costs had already been lowered earlier this month. Their reasoning was based on sluggish growth forecasts and expectations of a continued but uneven decrease in inflation over the coming year.

Nonetheless, weak business activity across the Eurozone, combined with declining confidence data from Germany and a significant slowdown in wage growth, has encouraged "dovish" policymakers to advocate for further easing measures. This momentum is now perceived as a strong possibility given the recent economic setbacks. Bearish Pressure Emerges From Key Moving Average_1

Bearish Pressure Emerges From Key Moving Average_1

Technical Analysis

The EUR/GBP has rebounded from the low of 0.8310 reached on September 30 and, two days ago, hit a local high of 0.8432, where it faced strong resistance. It encountered the 100-period moving average and approached the 200-period moving average, indicating that EUR/GBP may find demand in the moving average zone. The second candle on the D1 timeframe retraced after touching the 100-period moving average.

As shown in the chart, a local downtrend line has formed, coinciding with the area where the price has resumed downward momentum, targeting the low reached last week. Conversely, if the price breaks solidly above 0.8432, we could see a new upward movement.

Trading Recommendations

Trading direction: Sell

Entry price: 0.8404

Target price: 0.8320

Stop loss: 0.8440

Validity: Oct 14, 2024 15:00:00

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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Manuel

Economic

Central Bank

Summary:

The EUR/CAD has recently tested the lower boundary of its descending channel, bouncing off the resistance at 1.4890.

BUY EURCAD

Close Time

CLOSED

1.49276

Entry Price

1.51200

1.48700

1.49869 +0.00688 +0.46%

57.6

Pips

Loss

1.48700

1.48675

Exit Price

1.49276

Entry Price

1.51200

Fundamentals

The lower-than-expected inflation data from the Eurozone significantly contributed to the sharp decline in the region's economic sentiment. The Harmonized Index of Consumer Prices (HICP) increased by 1.8% year-over-year in September, falling short of the 2.2% recorded in the previous month and below the 1.9% forecast. Core inflation also declined slightly, registering at 2.7% year-over-year, down from 2.8% in August, and falling short of market expectations.

These figures highlight that overall inflation has now dropped below the European Central Bank's (ECB) 2.0% target, while core inflation is trending toward that direction. This scenario raises the probability of further rate cuts by the ECB, which could potentially lead to capital outflows and a weakening Euro.

Monetary policymakers within the ECB who advocate for further easing are gearing up to propose another interest rate cut next month, following a string of economic reports that have consistently underperformed. However, this effort may face pushback from more conservative members of the governing council, according to reports from various sources.

Initially, ECB officials viewed an additional rate cut at the October 17 meeting as unlikely, given that borrowing costs had already been reduced earlier this month. Their rationale was based on sluggish growth forecasts and expectations of a continued but uneven decline in inflation over the next year.

However, weak business activity across the Eurozone, along with deteriorating confidence data from Germany and a notable slowdown in wage growth, has emboldened "dovish" policymakers to push for further easing measures. This momentum is now seen as a strong possibility given the recent economic disappointments.

In contrast, Bank of Canada (BoC) Governor Tiff Macklem expressed optimism regarding inflation’s drop to the 2% target, emphasizing the importance of maintaining price stability. At an event in Toronto, he suggested that further rate cuts could be in the pipeline, given the progress on inflation. Statistics Canada recently reported an annual inflation rate of 2% for August, the lowest in over three years. The BoC aims to further cool core inflation and housing prices before making additional policy decisions.

The BoC's next rate announcement is scheduled for October 23, and current market expectations predict a 25 basis point cut at each of the next seven meetings, with a 50% probability of a 50 basis point cut within the next two meetings. This could amount to a total reduction of 175 basis points by mid-2024. Buying at Resistance Amid a Potential Pullback_1

Buying at Resistance Amid a Potential Pullback_1

Technical Analysis

The EUR/CAD has recently tested the lower boundary of its descending channel, bouncing off the resistance at 1.4890 and initiating an upward movement that could extend toward the upper boundary of the channel, above 1.5100. The RSI is approaching overbought levels, signaling a potential retracement in the near term.

On the D1 chart, both the 100 and 200 period moving averages are positioned just above 1.5000, indicating the possibility of consolidation in this area. The first upside target lies at this level, and if the price manages to break above the moving averages, we could see momentum continue toward 1.5140.

One of the downside risks involves the ongoing rise in oil prices due to the conflict in the Middle East, which could strengthen the CAD. If the pair breaks below the previous low, a bearish move could unfold, potentially pushing the price below 1.4800.

Trading Recommendations

Trading direction: Buy

Entry price: 1.4930

Target price: 1.5120

Stop loss: 1.4870

Validity: Oct 14, 2024 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Stocks

Summary:

The premium on high-quality US stocks is declining as economic conditions normalize. If the employment data released by the US Department of Labor on Friday is strong, US stocks could see significant portfolio rebalancing.

SELL US30

Close Time

CLOSED

42005.92

Entry Price

39828.00

43000.00

42944.90 +428.45 +1.01%

9940.8

Pips

Loss

39828.00

43000.42

Exit Price

42005.92

Entry Price

43000.00

Fundamentals

The three major US stock indexes lacked direction during Wednesday's trading session, with major indices fluctuating near the flatline throughout the day and closing slightly higher.

The Dow Jones Industrial Average rose 39.55 points, or 0.1%, to 42,196 points.The Nasdaq Composite gained 14.76 points, or 0.1%, to 17,925 points.The S&P 500 rose 0.79 points, less than a tenth of a percent, to 5,709 points.

Wall Street's weakness partly reflects concerns over the escalation of tensions in the Middle East following Iran's ballistic missile attack on Israel on Tuesday. Meanwhile, the premium on high-quality US stocks is declining as economic conditions normalize, leading to stagnant growth.

Previously, the premium on "high-quality" stocks was at historical highs, reflecting strong demand for companies with excellent capital returns, profit margins, and balance sheets. The widening gap in profitability across S&P 500 stocks has been a key driver of this valuation premium.

Currently, the profitability gap, particularly the gap in Return on Equity (ROE) between the highest and lowest stocks, has reached 45 percentage points, nearly its widest point since the 1980s.

These excessively high premiums may begin to revert to historical norms. Against the backdrop of strong GDP growth and the Fed starting an interest rate cut cycle, paying excessive premiums for profitability and other "quality" factors does not seem reasonable.

Falling labor costs and interest rates may support ROE in the short term, thereby reducing investors' willingness to pay a premium for quality. The market is now focused on the US employment report due on Friday. A strong jobs report may prompt some investors to reduce expectations of a significant weakening in the labor market, leading them to shift funds from expensive "quality" stocks to less favored lower-quality companies.

We expect US stocks to possibly decline in the coming weeks, but a rebound may occur by the end of the month ahead of the US elections. Data since 1928 shows that the S&P 500 has risen an average of 4% from October 27 through year-end. The rotation effect will continue to drive other indices upward simultaneously. US stocks often rise as investors return to the market after related risks dissipate.

Wall Street Focuses on NFP Report as Premium Capability Declines_1

Technical Analysis

The Dow Jones Industrial Average pulled back after hitting a record high again last Friday. It has now been consolidating around the 42,000-point mark for four consecutive trading days and remains near the upper boundary of the ascending channel.

Technically, the stochastic oscillator being overbought was the direct factor leading to the market pullback, while the RSI remaining above the neutral level of 50 supports the current high-level trading.

If the price continues upward, the immediate resistance level is at 42,120, which is the 161.8% Fibonacci extension level of the decline from the January 2022 high of 36,950 to the October 2022 low of 28,580. A further breakout above last Friday's high of 42,628 could pave the way for bulls to test the 43,000 level.

On the downside, a break below the previous high of 41,627 could lead the market to the 50-day SMA around the 41,090 level. Even lower, the 41,090 to 40,000 range could be a key area for bears.

Overall, the Dow Jones Industrial Average hitting new highs confirms the long-term bullish structure; however, the short-term upward trend is affected by the "topping" signs indicated by long upper shadows in the daily chart, which may drive the market further downward.

Trading Recommendations

Trading Direction: Sell

Entry Price: 42000

Target Price: 39828

Stop Loss: 43000

Valid Until: Oct 18, 2024 23:55:00

Support: 41831, 41689, 41431

Resistance: 42120, 42387, 42628

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

Gold prices have retreated after posting its best quarterly performance since the first quarter of 2016. With safe-haven buying in precious metals exhausted, gold prices are under pressure to fall, with the next bearish target at...

SELL XAUUSD

Close Time

CLOSED

2645.96

Entry Price

2513.00

2683.00

2623.41 +28.97 +1.12%

357.5

Pips

Profit

2513.00

2610.21

Exit Price

2645.96

Entry Price

2683.00

Fundamentals

Gold prices continued to decline on Thursday due to a stronger US dollar and quarter-end flows putting pressure on the precious metals market. Despite the recent drop, gold still posted its best quarterly performance since Q1 2016, rising more than 16% in a single quarter.

On the other hand, gold continues to find support due to its safe-haven appeal and the anticipation of upcoming rate cuts, which keeps the market at high levels.

However, the decline earlier this week may have been caused by a combination of overlapping factors, such as profit-taking, repositioning, and the recent rebound in Chinese stock markets and emerging markets.

Gold is currently facing numerous challenges, both positive and negative. For example, institutional position management and a stronger dollar have caused gold bulls to remain cautious.

Investors are now turning their attention to the US jobs report set to be released on Friday. Any signs of weakness could increase expectations for significant rate cuts by the Fed. Currently, the market consensus is that there is a roughly 40% chance of a 50 basis point rate cut in November, down from 53% the day before, which could be part of the reason behind the drop in gold prices.

A series of US data will be released this week, including initial jobless claims, but the biggest volatility is expected with the US jobs report on Friday. Signs of improved employment figures and a decrease in the unemployment rate could drive precious metal prices lower.

Exhausted Buying Pressure Indicates Pullback_1

Technical Analysis

Gold prices have recently moved lower due to the exhaustion of safe-haven buying. Although geopolitical risks often lead to a resurgence in gold buying, this could turn into a reversal if these risks recede.

Gold prices faced further pressure on Thursday and approached the support level of the intraday bullish channel, which has now risen to $2,620, providing good support in conjunction with the EMA50 to prevent further declines.

Bears continue to gain negative momentum to push prices towards additional downside and break through the aforementioned support, targeting the next bearish level at $2,604.

Overall, we continue to recommend maintaining bearish trades in the upcoming period. However, a bullish breakout above $2,649 would halt the expected downtrend and could lead prices to resume the primary bullish trend. The expected trading range today is between the $2,615 support level and the $2,650 resistance level.

Trading Recommendations

Trading Direction: Sell

Entry Price: 2649

Target Price: 2513

Stop Loss: 2675, 2683

Valid Until: Oct 18, 2024 23:55:00

Support: 2640, 2624, 2614

Resistance: 2649, 2663, 2674

Risk Warnings and Disclaimers

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Alan

Central Bank

Forex

Summary:

The US economy is performing steadily, while Canada's economic confidence index has increased. The Canadian dollar is supported by rising oil prices due to the Middle East situation. Technically, USDCAD has formed a head and shoulders pattern, maintaining a bearish outlook.

SELL USDCAD

Close Time

CLOSED

1.35281

Entry Price

1.32900

1.35700

1.43695 -0.00268 -0.19%

41.9

Pips

Loss

1.32900

1.35701

Exit Price

1.35281

Entry Price

1.35700

Fundamentals

United States:

US economic data shows steady but resilient performance. In September, US manufacturing activity shrank for the sixth consecutive month, with the ISM Manufacturing Index at 47.2, indicating weak orders and a decline in employment and further reflecting the ongoing sluggishness in manufacturing. However, the real GDP for the second quarter grew at an annual rate of 3% and showed some resilience in the economy.

The mixed economic conditions have led to divergent expectations about the Fed's monetary policy. Some believe the Fed might continue cutting interest rates to prevent deterioration in the labor market, while others think high borrowing costs and election uncertainties will limit economic growth, adding uncertainty to the US dollar's trajectory.

Canada:

On September 27, Canada reported a national economic confidence index of 55.6, slightly higher than the previous value of 55.39.

Canada is a resource-rich country, and fluctuations in commodity prices significantly impact the Canadian dollar exchange rate. The ongoing escalation in the Middle East, especially the sudden Iranian attack on Israel on the night of October 1, has boosted oil prices. If the situation continues to worsen, oil prices may keep rising, providing sustained support for the Canadian dollar.

Technical Analysis

Selling at Highs Recommended as Head and Shoulders Pattern Formed Under Strong Resistance_1

From the overall trend perspective, USDCAD has broken its uptrend from December last year to August this year and has turned bearish. It initially fell to the 1.3440 support level before rebounding, only to face strong resistance at 1.3600 and weaken again, hitting a new low on September 25. It is evident that the asset's highs and lows continue to decline, which shows that the downtrend remains intact.

In the daily chart, bulls rebounded below the strong resistance level of 1.3600 and continued to weaken, forming a head and shoulders pattern that indicates strong bearish momentum. If the price continues to fall and breaks below the previous low of 1.3419, the downside potential will expand further. Therefore, it is recommended to sell at highs.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3530

Target Price: 1.3290

Stop Loss: 1.3570

Valid Until: Oct 17, 2024 15:00:00

Support: 1.3480, 1.3459, 1.3418

Resistance: 1.3530, 1.3543, 1.3589

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

USD/CHF is currently trading around $0.8502, continuing its downtrend after failing to break above the $0.8515 resistance level. Technical signals and price patterns suggest that USD/CHF could continue to decline...

SELL USDCHF

Close Time

CLOSED

0.85020

Entry Price

0.83740

0.85480

0.89276 -0.00488 -0.54%

46.0

Pips

Loss

0.83740

0.85484

Exit Price

0.85020

Entry Price

0.85480

USD/CHF is maintaining a long-term downtrend due to the impact of the interest rate differential between the Fed and the Swiss National Bank (SNB). The Fed continues to maintain high interest rates to control inflation, while the SNB pursues a more cautious policy. This puts the USD under selling pressure against the Swiss Franc.

Meanwhile, global financial markets continue to monitor the US monetary policy moves, with expectations that US economic data, especially inflation data and industrial production index, may continue to put pressure on USD/CHF. This has led to the USD weakening in recent trading sessions, as demand for the Swiss franc, a safe-haven asset, has increased.

Market psychology

The market sentiment on USD/CHF is currently tilted to the negative side, as investors gradually shift away from the USD as expectations of a tightening monetary policy by the Fed have been fully priced in. Many large traders have shifted capital flows to safer assets such as the Swiss Franc, amid concerns about global macroeconomic fluctuations.

The data showed that market sentiment is being influenced by high-risk factors, including inflation and the US jobs report. Many investors are concerned that if the upcoming data is positive, it could prompt the Fed to keep interest rates higher for longer, putting further pressure on the USD. Conversely, the Swiss franc, which is considered a safe haven, is being sought by investors when markets become volatile.

Additionally, the RSI indicator is falling near oversold levels, reflecting caution and bearish sentiment among investors. Many investors expect USD/CHF to continue falling if there is no change in key macroeconomic factors.

Technical analysis

USD/CHF: Xu Hướng Giảm Dài Hạn và Đề Xuất Giao Dịch Bán_1

USD/CHF is hovering near the middle line of the Bollinger Bands, indicating a potential further decline as it faces pressure from the strong resistance at $0.8515. If the price continues to fall below $0.8374, the downtrend could extend to $0.8332, where there is an important support level.

The RSI indicator is falling and approaching the oversold zone, indicating that selling pressure is increasing strongly. This is a negative signal, reinforcing the possibility of further price declines in the short term.

On the chart, a triangle pattern is forming with resistance at $0.8515. If the price fails to break this level, USD/CHF is likely to continue its downtrend in the triangle pattern, with a potential target below $0.8374.

Trading Recommendations

Based on technical analysis, a sell strategy is reasonable in the current situation, with the expectation that USD/CHF will continue to correct downwards.

Entry: 0.8502 USD (near current resistance).

Take Profit: 0.8374 USD (major support level) and further 0.8332 USD.

Stop Loss: 0.8548 USD (if price breaks the resistance level and turns to uptrend).

Risk Warnings and Disclaimers

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Adam

Cryptocurrency

Summary:

As of October 3, 2024, BTC/USD is hovering around $60,870, down from recent resistance at $61,000. The market is heavily influenced by US economic data and other macro factors such as the Fed's monetary policy and global geopolitical situation...

BUY BTC-USDT

Close Time

CLOSED

60888.1

Entry Price

61500.0

60200.0

96193.8 -1330.3 -1.36%

688.1

Pips

Loss

60200.0

60192.0

Exit Price

60888.1

Entry Price

61500.0

Market Overview

Bitcoin has seen a slight decline since hitting $61,000. However, in the current context, the decline is not entirely unexpected, as factors such as inflation and US jobs reports can put pressure on risk assets like Bitcoin. It is worth noting that the market is still closely watching for signs of interest rate policy from the Fed, and if upcoming economic reports are weaker than expected, Bitcoin prices could receive short-term support from safe-haven flows.

Geopolitical factors are also having a major impact on Bitcoin prices. Tensions in the Middle East and ongoing conflicts have increased demand for safe-haven assets like gold and Bitcoin. Although the trend is currently down, market uncertainty means that Bitcoin prices could spike unexpectedly.

Market psychology and influencing factors

Currently, market sentiment is mixed, with investors bullish on Bitcoin’s long-term potential and those concerned about short-term factors such as Fed policy. Most large investors have begun to divert money into safer assets. This has led to Bitcoin’s correction from $61,000.

It is worth noting that the employment data from the US ADP report is expected to have a strong influence on the next trend of Bitcoin. If the data is positive, this could boost the strength of the USD and put more selling pressure on Bitcoin. However, if the data is less positive, a short-term Bitcoin price increase is possible, especially when the price is in an important support zone.

Technical analysis

Currently, BTC/USD is trading near the lower band of the Bollinger Bands, suggesting that the price may soon bounce from the support around $60,600. If the price holds this level, we could see a short-term recovery to the nearest resistance at $61,500. However, if the price falls further, the next important support level is $60,000.

The Stochastic indicator is currently in oversold territory (below 20), suggesting that Bitcoin may be about to see a short-term bounce. This is usually a strong signal that selling pressure has weakened and investors may consider opening a short-term long position.

The 20-period moving average suggests a slight bearish short-term trend, but the long-term MA (200-period) still supports the price at $60,600, suggesting that this level will be the deciding point for whether the price will bounce back or not.

Based on the technical analysis and current market sentiment, a short buy strategy is recommended, with the prediction that Bitcoin price could bounce from the $60,600 support level.

Trading Recommendations

Entry: $60,890 (near current support).

Take Profit: $61,500 (nearest resistance) or higher at $62,000 if price continues to rise.

Stop Loss: $60,200 (if price drops further and breaks support).

Risk Warnings and Disclaimers

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