Head-and-Shoulders Top Confirmed, May Extend Decline

Economic

Forex

Summary:

Eurozone December PMI data reveals ongoing contraction in overall economic activity; analysts broadly reduce growth forecasts for the Eurozone's future prospects.

SELL EURUSD

EXP

TRADING

1.04153

Entry Price

1.00700

1.05200

1.03939 -0.00112 -0.11%

0.0

Pips

Flat

1.00700

Exit Price

1.04153

Entry Price

1.05200

Fundamentals

Last Monday, the Eurozone's December PMI readings showed that overall economic activity remains in decline. Eurozone Composite PMI came in at 49.5, above forecasts of 48.2 and marginally better than the previous reading of 48.3, but still below the 50 threshold, signifying contraction. Manufacturing PMI stood at 45.2, matching the prior figure, reflecting a twenty-first consecutive month of falling output, with the December decline the sharpest in one year, indicating deep-rooted manufacturing sector weakness.

Germany and France, key Eurozone economies, also displayed signs of economic lethargy. German business activity shrank for a sixth straight month and the manufacturing recession lingered, input costs and output prices accelerated to eight-month and ten-month highs respectively. French manufacturing PMI reached a fifty-five-month nadir.

Furthermore, a recent survey revealed a broad downgrade of Eurozone growth expectations for 2025 and 2026 by analysts, signaling a weaker-than-previously-projected growth scenario.

Technical Analysis

Head-and-Shoulders Top Confirmed, May Extend Decline _1

Analyzing the 4-hour chart, EUR/USD remains entrenched in a downtrend. Meanwhile, the formation of a clear head-and-shoulders top is observable, and the breakdown of the neckline at 1.0470 has opened up further downside space for the asset.

Post breaching the neckline of the head-and-shoulders formation, EUR/USD descended to the 1.0334 support level, rebounding temporarily. However, weakening signs reappeared as it approached beneath the neckline again, confirming the head-and-shoulders pattern, hinting at an increased likelihood of continuation of declines ahead.

Selling at highs is recommended.

Trading Recommendations

Trading direction: Sell

Entry price: 1.0420

Target price: 1.0070

Stop loss: 1.0520

Valid Until: January 06, 2025 23:00:00

Support: 1.0334/1.0222/1.0000

Resistance: 1.0452/1.0533/1.0629

Risk Warnings and Disclaimers

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Winkelmann

Forex

Central Bank

Summary:

Recent remarks from Fed officials lean towards supporting a slower pace of future rate cuts, potentially prolonging the strong US dollar's run.

BUY USDX

EXP

TRADING

107.590

Entry Price

109.800

106.200

107.960 +0.140 +0.13%

0.0

Pips

Flat

106.200

Exit Price

107.590

Entry Price

109.800

Fundamentals

Last week, the Fed delivered a 25-basis-point rate cut as expected. However, divisions emerged and the decision was described as "hard-fought. " Powell expressed caution over future rate cuts, and many officials leaned towards slowing the pace of rate cuts. The 2025 rate cut trajectory may prove shallower than previously anticipated, bolstering the US dollar to reach a near-two-year high.

A dip emerged earlier this week. It was primarily driven by a slowdown in the Fed's preferred inflation measure, with November PCE rising just 0.1% MoM and remaining at 2.4% YoY. This showed milder inflation than anticipated, prompting adjustments to Fed rate cut expectations. However, Trump's new policies might amplify inflation risks, and the consensus on the hawkish rate outlook persists, with reduced rate cut expectations continuing to underpin the U.S. dollar.

Technical Analysis

"Hawkish Rate Cuts" Outlook Continues to Support Dollar _1

From a weekly perspective, the US dollar has sustained the uptrend initiated following the Fed's September initial rate cut, soaring to a near-two-year peak, opening further room for upside gains. Despite retreating somewhat from highs over the weekend through today, the pullback seems limited, suggesting a potential further advance toward the 110.0 level.

"Hawkish Rate Cuts" Outlook Continues to Support Dollar _2

On the 4-hour chart, USDX rallied sharply, breaking the recent consolidation phase. It experienced a minor pullback, but the price still rests upon the former consolidation zone with strong support. The correction has largely stabilized, leaving the possibility for renewed upward movement. Nevertheless, trading volumes may be light coinciding with the holiday season in Europe and America, moderating any extreme moves.

Buying at lows is recommended. Try to buy when USDX hits 107.3 and put the target price at 110.0. The stop-loss should stay at 106.4.

Trading Recommendations

Trading direction: Buy

Entry price: 107.3

Target price: 109.8

Stop loss: 106.2

Support: 106.4/107.0

Resistance: 108.0/110.0

Risk Warnings and Disclaimers

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Alan

Cryptocurrency

Summary:

The Fed, in line with market expectations, has reduced the federal funds rate by 25 bps, while also signaling a deceleration in the pace of rate cuts anticipated for the future. Moreover, Chairman Powell’s statement that the Fed has no intention of holding Bitcoin has contributed to a sell-off in the crypto-currency.

BUY BTC-USDT

EXP

TRADING

93227.2

Entry Price

102000.0

89500.0

98009.6 -297.2 -0.30%

0.0

Pips

Flat

89500.0

Exit Price

93227.2

Entry Price

102000.0

Fundamentals

On December 8th, the Fed lowered the federal funds rate by 25 bps as anticipated by market participants. However, the accompanying dot plot indicated a reduction in the number of rate cuts projected for 2025, with the median federal funds rate forecast for the end of 2025 being revised higher to 3.9%, exceeding the market’s prior expectation of 3.4%. This hawkish signal has led to a tightening of market expectations for future liquidity, a decrease in investor risk appetite, and consequently, a sell-off in risk assets such as Bitcoin.

Additionally, Powell unequivocally stated that the Fed has no intention of holding Bitcoin, attributing the matter to the jurisdiction of Congress, which has dampened market confidence in cryptocurrencies.

Nevertheless, as the inauguration of President Trump draws near, should he fulfill his campaign promises regarding the crypto market, the “Trump trade” could potentially continue to bolster Bitcoin’s strength.

Technical Analysis

On the Edge of Volatility - The Short-Term Tug of War_1

From a daily chart perspective, Bitcoin has experienced a sustained decline following the hawkish signals from the Fed, with a significant drop of 3.59% on December 19th alone. The downward trend is expected to persist today.

On the Edge of Volatility - The Short-Term Tug of War_2

On the 4-hour chart, Bitcoin’s market has seen an accelerated decline to the key support level near $94,000, indicating that bears have begun to sell off more aggressively. Consequently, the potential for further downward movement is limited, and the likelihood of a corrective rebound to the upside is gradually increasing.

Furthermore, Bitcoin’s current position is on the Fibonacci retracement 1.0, resonating with the horizontal support level at $94,000. Given the strengthened support at this level, the potential for Bitcoin to reverse and move higher has increased.

Trading Recommendations

Trading Direction: Buy

Entry Price: 93000

Target Price: 102000

Stop Loss: 89500

Deadline: January 3, 2025, 23:00:00

Support: 93900/90800/89711

Resistance: 98770/10280/10380

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The USD/CAD pair surged toward 1.4467, a level last seen in March 2020, driven by robust US economic data and a cautious Federal Reserve stance.

BUY USDCAD

EXP

TRADING

1.44000

Entry Price

1.45300

1.43000

1.43570 -0.00147 -0.10%

0.0

Pips

Flat

1.43000

Exit Price

1.44000

Entry Price

1.45300

The USD/CAD currency pair has extended its bullish momentum, closing in on the 1.4467 level—a peak not witnessed since the turbulent days of March 2020. As of Friday’s Asian trading session, the pair hovered near 1.4410, signaling resilience in the US Dollar amid a backdrop of robust economic performance and hawkish undertones from the Federal Reserve. In stark contrast, the Canadian Dollar (CAD) is grappling with bearish forces driven by weaker crude oil prices and a growing likelihood of accommodative monetary policy from the Bank of Canada (BoC).

The US Dollar Index (DXY), a barometer of the USD’s performance against a basket of six major currencies, sustained its strength near a 25-month high of 108.49, achieved on Thursday. The catalyst for this rally was a series of robust economic indicators that exceeded market expectations. The US economy grew at an annualized rate of 3.1% in the third quarter, beating the consensus forecast of 2.8% and outpacing the prior quarter’s 2.8% expansion. This robust growth underscores the resilience of the world’s largest economy despite tighter financial conditions. Initial Jobless Claims also fell to 220,000 for the week ending December 13, marking a sharp decline from the previous week’s 242,000 and coming in well below market estimates of 230,000. The report highlights a labor market that, while softening, remains far from distressed.

Amid this economic strength, the Federal Reserve has signaled caution regarding additional rate cuts. Fed Chair Jerome Powell emphasized that inflation remains stubbornly above the 2% target, necessitating a prudent approach to further monetary easing. While the Fed’s statement acknowledged robust economic activity, it also noted some softening in labor market conditions, underscoring the complexity of its policy calculus.

In contrast to the USD’s bullish narrative, the CAD is facing significant headwinds. As a commodity-linked currency, the CAD is particularly sensitive to crude oil price movements. Recent declines in oil prices have compounded bearish sentiment, as Canada—the largest oil exporter to the US—sees its export revenues and, by extension, its currency, pressured.

Monetary policy dynamics further weigh on the CAD. Market expectations suggest that the BoC may lean toward additional rate cuts in 2025, although the era of aggressive monetary easing appears to be over. The BoC’s dovish stance contrasts sharply with the Fed’s cautious approach, amplifying the USD/CAD’s upward trajectory.

Traders will be closely monitoring pivotal economic releases from both countries. In Canada, October Retail Sales data, due on Friday, could offer insights into consumer spending trends and the broader economic outlook. A weak print could add to the CAD’s woes. Meanwhile, in the United States, attention will focus on the Personal Consumption Expenditures (PCE) Inflation report, a key Fed inflation gauge, and the Michigan Consumer Sentiment Index. Positive readings could further bolster the USD’s strength.

Technical Analysis

From a technical perspective, USD/CAD has resumed its upward trajectory after testing the support base near 1.4370. The pair’s current momentum suggests a move toward new positive targets at 1.4500, with the potential to extend gains to 1.4530. Key technical indicators support this bullish outlook, as the stochastic oscillator’s current positivity suggests continued upward momentum in the short term. The expected trading range for the day is between the 1.4380 support and the 1.4510 resistance levels. A break below 1.4370, however, could trigger a corrective bearish phase.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.4400

STOP LOSS: 1.4300

TAKE PROFIT: 1.4530

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The USD/CHF pair trades near 0.8980 during Friday’s early European session, bolstered by the Federal Reserve’s hawkish signals and robust US economic data.

BUY USDCHF

Close Time

CLOSED

0.89699

Entry Price

0.91500

0.89100

0.90100 +0.00258 +0.29%

59.9

Pips

Loss

0.89100

0.89095

Exit Price

0.89699

Entry Price

0.91500

The USD/CHF pair maintained its upward trajectory on Friday, hovering around the 0.8980 mark during early European trading hours. The pair’s movement reflects a complex interplay of factors, including the Federal Reserve’s policy signals, strong US economic data, and geopolitical uncertainties. While the Greenback finds support from the Fed’s hawkish stance and upbeat economic metrics, the Swiss Franc’s appeal as a safe-haven currency amid global tensions could cap gains for the pair.

The Federal Reserve’s latest policy moves have played a pivotal role in strengthening the US Dollar. On Wednesday, the central bank implemented a widely anticipated 25 basis point interest rate cut. However, the accompanying tone was decidedly hawkish, with the Fed signaling a more cautious approach to future easing. According to the updated Summary of Economic Projections (SEP) or "dot plot," policymakers now anticipate only two quarter-percent rate cuts in 2024, down from four in the prior forecast. This reduced pace of monetary easing underscores the Fed’s commitment to curbing inflation while balancing economic growth.

Additionally, US economic data released on Thursday further reinforced the Greenback’s strength. The Bureau of Economic Analysis reported that third-quarter Gross Domestic Product (GDP) growth was revised upward to an annualized rate of 3.1%, surpassing the earlier estimate of 2.8%. Labor market data also painted a resilient picture, with Initial Jobless Claims declining to 220,000 for the week ending December 14, well below market expectations of 230,000 and the previous week’s 242,000.

On the other side of the equation, the Swiss Franc remains supported by its safe-haven status. Recent geopolitical tensions, including the escalating Middle East conflict and ongoing hostilities between Russia and Ukraine, have amplified demand for safer assets. Notably, Israel’s military carried out airstrikes on Houthi targets in Yemen on Thursday in retaliation for missile and drone attacks attributed to the Iran-backed group. These developments, coupled with broader geopolitical risks, could bolster the CHF and limit the USD/CHF pair’s upside potential.

From a monetary policy perspective, the Swiss National Bank (SNB) is expected to continue its easing cycle into 2025. Following a 50 basis point rate cut last week, market participants anticipate another reduction to 0.25% in March 2025. Alexander Koch, Head of Macro and Fixed Income Research at Raiffeisen, remarked, “The SNB’s softened forward guidance suggests limited room for further cuts, but the recent move has solidified expectations for lower rates.”

Technical Analysis

On the technical front, the USD/CHF pair faces immediate resistance near the 0.9014 level. Failure to breach this barrier has resulted in some bearish pressure, with the pair testing a support base around 0.8955. Sustained trading above this level is critical to maintaining the bullish outlook.

A decisive break above 0.9014 could open the door to further gains, targeting 0.9150 as the next significant resistance. Conversely, a drop below 0.8955 would expose the pair to additional downside risk, with 0.8883 emerging as the next support level before any potential recovery.

For the day ahead, the expected trading range is between 0.8930 (support) and 0.9050 (resistance), with the broader trend forecast leaning bullish.

TRADE RECOMMENDATION

BUY USDCHF

ENTRY PRICE: 0.8970

STOP LOSS: 0.8910

TAKE PROFIT: 0.9150

Risk Warnings and Disclaimers

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Winkelmann

Commodity

Summary:

Weak global oil demand still makes crude prices stuck within a range, favoring a bearish bias in the short term.

SELL BRENT

EXP

TRADING

72.500

Entry Price

70.800

74.500

72.984 +0.326 +0.45%

0.0

Pips

Flat

70.800

Exit Price

72.500

Entry Price

74.500

Fundamentals

Recently, the geopolitical tension has cooled off, with limited impacts on oil prices. Crude oil has mostly stayed within a trading range without any substantial shifts in supply-demand fundamentals. However, robust GDP figures and unemployment claims data, along with growing concerns over inflation risks, suggest that the Fed might not need to cut interest rates aggressively. Potential rate cuts next year could be less frequent and smaller than anticipated, leading to a stronger US dollar and consequently weighing on dollar-denominated oil prices.

Moreover, the Bank of England and the Bank of Japan have left interest rates unchanged. Meanwhile, Trump, elected as US president, pledged to impose additional tariffs, casting a shadow over the global economy, particularly impacting export-dependent countries like Japan. Adding to these concerns, global energy transition initiatives are expected to dampen global oil demand severely. Despite OPEC+'s extended production cut plan, non-OPEC+ major producers like the US continue to ramp up output, leaving the market widely anticipating oversupply in the oil market for next year, keeping downward pressure on oil prices, especially in the near term.

Technical Analysis

Crude Oil Runs in Range, Bears Regain Momentum _1

Brent has swung for months in the 4h chart. Albeit with slightly lower highs, a 'Head & Shoulders Bottom' pattern has occurred. Besides, with the neckline breached, the short-term trend leans bearish. Attention should now turn to channel support around 70.8 to determine its effectiveness. Should the channel break, a fresh downside path could open for oil prices.

Selling at highs is suggested. Try to sell when Brent rebounds to the neckline at 72.5 and set the target level at 70.8. The stop-loss should stay above 74.0.

Trading Recommendations

Trading direction: Sell

Entry price: 72.5

Target price: 70.8

Stop loss: 74.5

Support: 70.8/69.0

Resistance: 72.5/74.0

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Summary:

Over the past hour, Bitcoin has remained tightly ranged between $101,696 and $102,057 on December 19, 2024, maintaining a robust market cap of $2.01 trillion.

SELL BTC-USDT

Close Time

CLOSED

98500.0

Entry Price

92000.0

106000.0

98009.6 -297.2 -0.30%

3103.0

Pips

Profit

92000.0

95397.0

Exit Price

98500.0

Entry Price

106000.0

Bitcoin, the world's largest cryptocurrency, continues to captivate market participants with its volatile yet potentially lucrative price movements. As of December 19, 2024, Bitcoin’s price has consolidated within a narrow band, trading between $101,696 and $102,057 in the last hour. Despite this apparent calm, a deeper look at the charts reveals a story of fierce intraday volatility and technical setups hinting at pivotal price action in the coming sessions.

Bitcoin began the day on an optimistic note, reaching an intraday peak of $104,967 before succumbing to selling pressure that pulled it back toward $98,839.87, the day’s low. The digital asset’s market cap remains formidable at $2.01 trillion, supported by an impressive $104 billion in trading volume over the past 24 hours. This liquidity underscores Bitcoin’s enduring appeal among retail and institutional traders alike, even as technical charts suggest caution is warranted. Will Bitcoin Break $104K or Sink Below $98K?_1

Will Bitcoin Break $104K or Sink Below $98K?_1

Bitcoin’s daily chart reveals a dramatic rally from $87,000 to nearly $108,000 earlier this month, a move that faced stiff resistance near the upper threshold. The pullback to $98,000 has since tested the resilience of this critical support level. So far, the level has held firm despite heightened selling activity, signaling it could serve as a springboard for another upward push. Key indicators provide mixed signals. The Commodity Channel Index (CCI) at 32 highlights a largely neutral momentum, while the Relative Strength Index (RSI) at 57 remains in bullish territory. However, the Moving Average Convergence Divergence (MACD) has turned bearish, with a potential sell signal forming on the horizon. Will Bitcoin Break $104K or Sink Below $98K?_2

Will Bitcoin Break $104K or Sink Below $98K?_2

Zooming into the 4-hour timeframe, the charts paint a less optimistic picture. Bitcoin’s descent from $108,000 to $98,000 has been marked by lower highs, indicative of a short-term bearish trend. Volume analysis corroborates this narrative, with strong sell-offs during the decline and muted buying interest during recovery attempts. Both the 10-period Exponential Moving Average (EMA) and Simple Moving Average (SMA) are issuing sell signals, amplifying concerns of continued downward pressure. Traders are eyeing a breakout above $103,000 or a breakdown below $98,000 as pivotal moments for the next major move. Will Bitcoin Break $104K or Sink Below $98K?_3

Will Bitcoin Break $104K or Sink Below $98K?_3

On the hourly chart, Bitcoin is oscillating between $101,000 and $103,000, with $98,000 serving as a crucial intraday support level. Declining trading volume during this consolidation phase suggests that a breakout may be imminent. Momentum oscillators provide additional insights. The Stochastic oscillator sits at 63, a neutral position, while the Awesome Oscillator (AO) registers 6,305, indicating balanced sentiment. Momentum at 4,280 is flashing a buy signal, suggesting latent bullish potential if Bitcoin manages to breach $103,000 with robust volume. A sustained push above $103,000 could pave the way for a bullish breakout, potentially retesting the $104,000-$108,000 resistance zone. Conversely, a slip below $101,000 would likely trigger a revisit to $98,000, with the risk of further downside if selling pressure intensifies.

The oscillators present a complex picture. While momentum and the MACD lean bearish, longer-term moving averages such as the EMA (50) and SMA (50) remain supportive of a bullish outlook. This divergence highlights the importance of monitoring price action closely for confirmation of any directional bias. Shorter-term moving averages, including the EMA (10) and SMA (10), reinforce the notion of bearish pressure in the immediate term. Their sell signals, coupled with the emergence of lower highs on shorter timeframes, underscore the risk of a near-term pullback.

For traders, the $98,000 support level is critical. A decisive breakdown below this threshold, accompanied by strong volume, could accelerate selling toward the next major support zone around $92,000. On the flip side, a breakout above $103,000 with increased buying activity would signal a shift in momentum, potentially reigniting the bullish trend toward $108,000 and beyond.

TRADE RECOMMENDATION

SELL BTCUSDT

ENTRY PRICE: 98500

STOP LOSS: 106000

TAKE PROFIT: 92000

Risk Warnings and Disclaimers

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Head-and-Shoulders Top Confirmed, May Extend Decline

Fundamentals

Technical Analysis

Trading Recommendations

"Hawkish Rate Cuts" Outlook Continues to Support Dollar

Fundamentals

Technical Analysis

Trading Recommendations

On the Edge of Volatility - The Short-Term Tug of War

Fundamentals

Technical Analysis

Trading Recommendations

USD/CAD Surges to Multi-Year High as Oil Prices Weaken and Fed Holds Firm

Technical Analysis

USD/CHF Holds Mild Gains Amid Fed’s Hawkish Stance and Strong US Data

Technical Analysis

Crude Oil Runs in Range, Bears Regain Momentum

Fundamentals

Technical Analysis

Trading Recommendations

Will Bitcoin Break $104K or Sink Below $98K?

Risk Disclosure