Surge to New Highs, Buying at the Uptrend Is Not Desirable

Commodity

Summary:

Gold prices are at record highs, but are severely overbought. Given the risk of news and data from the upcoming Powell speech and non-farm payrolls, it would be a little more cost-effective to go short at highs.

SELL XAUUSD

Close Time

CLOSED

2140.00

Entry Price

2100.00

2155.00

2676.69 +6.88 +0.26%

150.0

Pips

Loss

2100.00

2155.02

Exit Price

2140.00

Entry Price

2155.00

Fundamentals

Recently, after the hawkish remarks constantly released by Fed officials, the market now almost has the same expectation of a rate cut with the Fed. However, the data released last Friday showed that the ISM manufacturing PMI in the U.S. contracted significantly more than expected in February, which consolidated the possibility of the Fed's interest rate cut in June and stimulated the enthusiasm of gold bulls, making gold break through the "triple top" near the US$2,080 threshold in one fell swoop.

The non-manufacturing PMI released on Tuesday also slipped to 52.6 from 53.4 in January, and the slowdown in service sector activity further boosted gold's surge, approaching an all-time high of 2144, which was set in early December last year. In addition, with concerns about the Israeli-Palestinian conflict and tensions in the Red Sea, as well as the global central bank gold-buying frenzy, gold may go even higher.

However, this Friday will usher in the non-farm payrolls, and Powell will testify in Congress for two consecutive days. The persistently strong job market is still likely to exceed expectations, and the Fed has not yet turned dovish. Powell's speech is still likely to downplay the interest rate cut, which will limit the surge in gold prices.

Technical Analysis

Surge to New Highs, Buying at the Uptrend Is Not Desirable_1

In the 4H timeframe, the XAUUSD has risen sharply for three consecutive days, and the bulls are very strong. It seems that there is no sign that the gains have paused. However, it is seriously overbought. After soaring to the previous high yesterday, it quickly fell by more than US$10, and it is still slowly adjusting. Standing in the current position, it is actually not suitable to continue to buy at the uptrend. Given the characteristics of the past top patterns, technical adjustment, the intervention of speculative bears and the bulls' demand for profit-taking may all lead to the reversal of gold at the previous high.

It is recommended to go short at the historical highs, and for the aggressive, you can go short near 2130, targeting the lower psychological barrier near 2100, with a stop loss above 2150.

Trading Recommendations

Trading direction: Short

Entry price: 2140.0

Target price: 2100.0

Stop loss: 2155.0

Support: 2100/2080

Resistance: 2140/2150

Risk Warnings and Disclaimers

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Jason

Summary:

Powell's speech before Congress is expected to weigh on market expectations. That means, the dollar index may rise as a result.

BUY USDX

Close Time

CLOSED

103.600

Entry Price

104.370

103.200

109.050 +0.110 +0.10%

40.0

Pips

Loss

103.200

Exit Price

103.600

Entry Price

104.370

Fundamentals

The US dollar index traded in a narrow range overnight, closing slightly down 0.06%. The US dollar index fell sharply by 0.21% in the short term after the release of the US ISM non-manufacturing PMI for February, updating the February 27 low to 103.58. According to the released data, the service sector has cooled. As the "stubborn" part of inflation, the cooling of the service sector is welcome to be seen by both the Fed and the market. However, the overall environment and the progress in the disinflation process are not very optimistic, which also contributed to the rebound of the dollar index from its low levels.

US ADP data for February will be released within the day. At the same time, Powell will also make semi-annual testimony statements before the Senate. Until then, the market is expected to be cautious and the dollar index will fluctuate within a narrow range.

Due to the surprise of the January jobs report, the market realized that the slowdown in the US labor market may not be as optimistic as expected, which made the market cautious about the ADP data. At the same time, Powell's speech before Congress is expected to be the same, as Fed officials have been dampening market expectations in recent speeches, reinforcing the message that there is no rush to cut rates. Therefore, the dollar index may rise as a result.

Technical Analysis

In the 4-hour chart, the US dollar index remained stable and moved in a small upward channel. Traders need to focus on levels 103.636 (the bottom of the oscillating range in the historical trend) and 103.710 (the bottom of the upward channel). The short-term strong resistance is 104.374, which is both the 0.382 Fibonacci retracement line and the top of the upward channel. An effective breakthrough of this line will prompt the US index to rise further.

Indicators: The benchmark line and the turning line in Ichimoku Kinko Hyo have expanded, and the current candlestick is trying to hit the turning line, which indicates that the dollar index may rally after a slight decline. In the DMI, +DI is below -DI, intending to cross above -DI, indicating that the dollar index will start to rise in the future.

Overall, traders can consider taking long positions on the US dollar index during the day.

Trading Recommendations

Trading Direction: Long

Entry price: 103.60

Target price: 104.370

Stop loss: 103.20

Support: 103.793/103.636/103.461

Resistance: 103.957/104.168/104.370

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

PMI surveys show increased price pressures in the UK Inflation in the UK's non-energy-intensive services sector is more sticky, threatening to keep the Bank of England (BOE) on its toes.

BUY GBPUSD

EXP

EXPIRED

1.26500

Entry Price

1.29300

1.24990

1.22888 -0.00165 -0.13%

Pips

EXPIRED

1.24990

1.27079

Exit Price

1.26500

Entry Price

1.29300

Fundamentals

The PMI survey released on Tuesday showed that the UK companies performed their strongest month in February since May last year, suggesting that the economy has stepped out of a short recession, but inflationary pressure will keep the BOE on its toes.

The UK's Composite PMI edged up to 53.0 in February from 52.9 in January. The final services PMI fell to 53.8 from 54.3 in January, slightly weaker than the initial value of 54.3 in February, but it was still the second-highest level since May 2023.

Tim Moore, S&P's Director of Economics, said, "Business activity across the services sector expanded strongly again in February, further suggesting that the UK economy has turned a corner after entering a technical recession in the second half of 2023."

However, the BOE is likely to note that input prices saw the fastest rise in the composite survey since August last year, while the rise in business prices also picked up the pace to the joint-fastest rate of growth since July last year.

MARKET WATCH: UK services inflation fell to 6.5% in January from a peak of 7.4% in July, which is encouraging, although still double the long-term average of 3.5%. However, much of this decline was driven by energy-intensive sectors, while inflation in non-energy services was more sticky, falling to 5.6% only from 5.8% in July. It only fell to 5.6% from 5.8% in July. This could be worrying for BOE policymakers, as inflation in non-energy intensive services is probably the most persistent factor in price rises, which is linked to wage growth, and therefore poses the biggest threat to a sustained fall in inflation back to 2%.

Upward Momentum Signals a Rejection Amid Fears of Further Pullbacks_1

Technical Analysis

The GBPUSD is regaining lost ground but remained below 1.2700 during the European session on Tuesday. The rebound of the GBPUSD was curbed by a revival of safe-haven demand for the USD as concerns about China's economy resurfaced in the market.

On the bright side, a break above the 1.2708 resistance level would indicate that the retracement at 1.2826 is complete. The intraday bias will be back to the upside for a retest of 1.2826.

However, in the 4H timeframe, the GBPUSD seems to be struggling to break above the 1.2700 resistance level. The upward momentum is signaling rejection and threatens to face further retracements. If the GBPUSD reacts to the downside and breaks below the key bullish trend line, (support at 1.2650 and 200 SMA) it will test the 1.2620 support level. Failure to hold this support will lead to a decline towards the 1.2575 level. A decisive break below 1.2499, on the other hand, would indicate that the overall rise since 1.2036 has been completed and lead to a bearish outlook in the near term.

From a broader perspective, the price action from the intermediate-term top at 1.3141 is seen as a corrective pattern to the uptrend that started at 1.0351. The rise from 1.2036 is seen as the second wave of the trend, which may still be in progress. However, the upside should be limited by 1.3141 to bring the third wave of the trend of the pattern. Meanwhile, a break below the 1.2499 support level would indicate that a third wave of decline has begun, once again into 1.0351 (2022 low).

Overall, the upward momentum of the GBPUSD signals a rejection amid fears of further pullbacks. Buying at the uptrend is not desirable while holding the bullish outlook. It is recommended to set the foundation.

Trading Recommendations

Trading direction: Long

Entry price: 1.2650

Target price: 1.2930

Stop loss: 1.2499

Deadline: 2024-03-19 23:55:00

Support: 1.2650, 1.2620, 1.2575

Resistance: 1.2700, 1.2773, 1.2826

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

On Tuesday, the EURUSD continued to oscillate in a narrow range of 1.0850. The EURUSD is on the defensive as the USD takes hold in a risk-averse market environment.

BUY EURUSD

EXP

EXPIRED

1.07600

Entry Price

1.10160

1.06500

1.02950 -0.00037 -0.04%

Pips

EXPIRED

1.06500

1.08567

Exit Price

1.07600

Entry Price

1.10160

Fundamentals

The eurozone services purchasing managers' index (PMI) ended February at 50.2, up from 48.7 in January and at a seven-month high. The Composite PMI ended at 49.2, up from 47.9 in January and at an eight-month high.

Country-specific data showed varying degrees of activity, with Ireland leading the way with a 12-month high Composite PMI of 54.4. Spain and Italy followed with 9-month highs of 53.9 and 51.1 respectively. However, not all the news was positive, with France and Germany lagging, as Germany posted a 4-month low of 46.3 and France recorded a 9-month low of 48.1.

Cyrus de la Rubia, Chief Economist at Commerzbank Hamburg, highlighted two important insights from the PMI survey at the upcoming ECB meeting on March 7th.

First, service sector output prices continued to "accelerate", driven by "wage inflation", underscoring that inflationary pressures have yet to abate.

Second, when the economic recovery is slow and the growth rate is expected to be lower than 1% in 2024, the service industry's "pricing power is unexpectedly strong", which indicates that there is a risk of "wage-price spiraling and stagflation", and the structural labor shortage affects productivity and exacerbates this situation.

Cyrus de la Rubia noted, "Those advocating a late rate cut are likely to be corroborated by the results of the PMI survey."

MARKET WATCH: The eurozone services sector is likely to get off to a better start than expected in 2024. For the first time in seven months, activity in the sector expanded rather than contracted. Although the growth rate was small, it was complemented by positive developments in other PMI sub-indicators. Particularly encouraging was the increase in the hiring of new employees by service providers, surpassing the slow growth seen in recent months. Moreover, the steady state of new business suggests a possible inflection point in demand conditions.

Set the Foundation as the Market Is Choosing the Direction_1

Technical Analysis

The EURUSD is currently witnessing a mild recovery after retracing from the December high of 1.1139 to the 2024 bottom of 1.0693. However, the EURUSD's rebound has stalled within a congested range that includes the 50-day SMA and upside pressure.

Considering that both the Relative Strength Index and MACD are providing cautiously positive signals, the EURUSD could accelerate higher after breaking above the 50-day SMA and testing the January-February resistance at 1.0897. Thereafter, the November resistance at 1.0965 could be the next resistance for bulls to overcome. A break above this range could pave the way for November highs at 1.1016.

However, as the consolidation continues and heavyweight data is about to be released, the exchange rate can also flip lower. If the EURUSD falls back below the 200-day SMA, it could find immediate support at the threshold of 1.0795. Below that level, prices could challenge the December bottom at 1.0723.

Overall, although the EURUSD rebound has come to a halt, the 200-day SMA is preventing further declines. Therefore, any break above or below the near-term range defined by the SMA is likely to be followed by a sharp move in the same direction. We believe that with the successive release of heavyweight data, in the choice of direction, it is logical to focus on setting the foundation for the path of least risk.

Trading Recommendations

Trading direction: Long

Entry price: 1.0760

Target price: 1.1016

Stop loss: 1.0650

Deadline: 2024-03-19 23:55:00

Support: 1.0820, 1.0800, 1.0740

Resistance: 1.0850, 1.0920, 1.0980

Risk Warnings and Disclaimers

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Ukadike Micheal

Commodity

Traders' Opinions

Economic

Summary:

Crude oil exhibited fluctuations, with technical support providing insulation against prevailing risk-off sentiment in broader markets. West Texas Intermediate initially declined by up to 1.6% but later rose by 0.5%, surpassing $79 per barrel.

BUY WTI

Close Time

CLOSED

78.500

Entry Price

90.000

77.500

73.959 +0.246 +0.33%

100.0

Pips

Loss

77.500

Exit Price

78.500

Entry Price

90.000

Crude oil experienced fluctuations, finding support from technical levels amid a risk-off sentiment in broader markets. West Texas Intermediate (WTI) initially declined by 1.6% but later rebounded, rising 0.5% and surpassing $79 per barrel. Equities faced declines as traders assessed mixed economic data ahead of Federal Reserve Chair Jerome Powell's congressional testimony. The 200-day moving average for crude, standing at approximately $77.84, acted as a crucial support level during the market's movements.

Market participants expressed concerns about the potential impact of the Federal Reserve's interest rate decisions on crude prices. According to Dennis Kissler, Senior Vice President at BOK Financial, the expectation of the Fed maintaining interest rates into mid-year creates pressure on crude prices. Higher interest rates are perceived as a headwind for crude exports, as they contribute to an elevated US dollar.

Despite these challenges, crude oil has seen a gradual ascent, with WTI gaining approximately 11% this year. Strength in physical markets, global shippers avoiding the Red Sea, and OPEC+'s efforts to limit supply have contributed to this upward trajectory. However, optimism is tempered by robust production from non-OPEC sources, uncertain demand in China, and expectations that central banks may delay monetary easing.

In parallel, China has set its annual growth target at around 5%, signaling potential stimulus measures to boost confidence in its slowing economy. The nation has also established a more ambitious target for reducing energy intensity, aiming to enhance efficiency in economic expansion.

TECHNICAL VIEWPOINT

WTI 4 HOUR CHART

Crude oil currently hovers within a crucial demand zone, setting the stage for a potential upward movement towards $90 per barrel. A strategic entry point for buyers would be marked by a bounce from the current level, coupled with a decisive close above. Observations over the past hours reveal the resilience of the price, consistently maintaining above the $78 threshold, signaling strong buyer interest. However, a breach and subsequent close below this level could shift the trajectory towards the accumulation zone around $77 or lower, awaiting renewed buyer engagement. Traders are closely monitoring these technical levels to navigate potential opportunities in the dynamic oil market. As the battle between buyers and sellers unfolds, the market awaits a definitive move, emphasizing the importance of strategic entry points in this volatile landscape.

The oil market's response to shifting geopolitical and economic factors is crucial. The 200-day moving average serving as a support level underscores the significance of technical indicators in guiding market behavior. The interplay between Fed decisions, global demand, and OPEC+ dynamics adds complexity to forecasting oil price movements. Traders and analysts navigate this intricate landscape, weighing various factors to anticipate market trends.

The oil market remains influenced by a delicate balance of technical support, geopolitical developments, and economic indicators. As central banks and major economies grapple with policy decisions, the trajectory of crude prices reflects the broader challenges faced by the energy sector. The coming months will likely see continued vigilance from market participants, emphasizing the need for a nuanced understanding of both macroeconomic trends and technical signals to navigate the complexities of the oil market.

TRADING RECOMMENDATION

BUY WTI

ENTRY: 78.50

STOPLOSS: 77.50

TARGET: 90.00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

Following last week's record close, the gold market has seen strong follow-through buying activity. Not only did the price of gold break above US$2,100, but its technical pattern has room to rise.

BUY XAUUSD

Close Time

CLOSED

2124.49

Entry Price

2190.00

2106.00

2676.69 +6.88 +0.26%

655.1

Pips

Profit

2106.00

2190.10

Exit Price

2124.49

Entry Price

2190.00

Fundamentals

Gold has been looking for a breakout to the upside after posting a record close last week as the price action has produced some very bullish technical patterns.

The uncertain economic backdrop coupled with geopolitical risks has led to a rise in investor demand. At this juncture, a possible shift in monetary policy towards easing is a boon for non-yielding assets such as gold.

Meanwhile, the physical market saw strong buying, with inflows into the gold-backed SPDR Gold Shares ETF increasing for the first time in nine sessions.

From a purely technical point of view, in the short term, the expected target for gold is US$2,190, with a pullback after a test of US$2,250. Technically, gold looks very good, but overbought technical indicators warrant caution for bulls.

Gold Bulls Still Bet to the Upside, with Overall Bullish Sentiment Undiminished_1

Technical Analysis

The price of gold continued to hold firm on Tuesday, with the XAUUSD having seen five consecutive trading days in a bullish pattern since last Tuesday. The price was trading near a two-month high earlier this week.

Gold prices soared after the market got a clearer picture of the outlook for U.S. interest rates, as the latest economic data increased expectations that the Federal Reserve will start cutting rates in June, making gold more attractive to investors.

A new signal was generated after Friday's close slightly above the 61.8% Fibonacci threshold of US$2,081 from US$2,147 to US$1,984. The bulls hold the integer threshold of US$2,100 and will look for another all-time high.

Although some price correction is expected in the coming trading sessions. Despite the 1D timeframe showing overbought, so far the bulls are not showing signs of fatigue.

Ideally, limited declines should be contained to the US$2,052 range to keep bulls intact.

Trading Recommendations

Trading direction: Long

Entry price: 2120

Target price: 2190

Stop loss: 2106

Deadline: 2024-03-19 23:55:00

Support: 2100, 2090, 2079

Resistance: 2130, 2147, 2090

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Commodity

Summary:

Oil prices initially dipped despite an OPEC+ decision to extend supply cuts, but signs of strong demand and technical breakouts suggest potential for further gains.

BUY WTI

Close Time

CLOSED

79.000

Entry Price

84.000

77.000

73.959 +0.246 +0.33%

200.0

Pips

Loss

77.000

76.998

Exit Price

79.000

Entry Price

84.000

Crude oil prices started lower during Monday's trading session, despite indications of potential gains last week. The breakout on Friday occurred even before OPEC+ made its decision to extend supply cuts over the weekend. Investors likely anticipated this extension, buoyed by signs of robust demand from Asia, which boosted crude prices on Friday.

This week, the financial markets will be influenced by several factors, including top-tier data releases and central bank decisions. Of particular note is the monthly US non-farm payrolls report scheduled for Friday. Unless there are unexpected signs of weakness in global data indicating subdued oil demand, crude prices are expected to continue their upward trend, supported by last week's bullish breakout and the overall positive macroeconomic environment, largely due to ongoing intervention by the OPEC+ group.

OPEC+ extended oil supply reductions until the middle of the year to prevent a global surplus and bolster prices. Leading this effort were Saudi Arabia and Russia, aiming to counterbalance seasonal declines in fuel consumption and increased production from competitors such as US shale producers.

Traders now face the decision of whether to invest in oil following OPEC's decision or adopt a wait-and-see approach to assess whether bullish sentiment will persist. Despite widely anticipated decisions by OPEC and economic uncertainties in China, caution prevails.

It's clearly in the best interest of OPEC+ nations to see higher oil prices. However, despite disruptions in Middle Eastern shipping routes, ample supplies have kept oil prices hovering around $80 per barrel. Yet, this level may not satisfy many OPEC+ members like Saudi Arabia and Russia, which require higher prices for economic and strategic reasons.

For Saudi Arabia, oil prices above $90 per barrel are crucial to support economic diversification efforts, while Russia seeks to sustain revenue for various activities, including the conflict in Ukraine. Russia, previously exempted, will now prioritize reducing crude production in the upcoming quarter. This commitment might ease tensions with Saudi Arabia, which had expressed disappointment in Moscow's reluctance to directly curtail production, and could be more effective in supporting prices.

The primary risk lies in the potential increase in US supplies offsetting OPEC+ efforts to support prices. Consequently, investors have not rushed to purchase oil each time OPEC has extended its supply cuts. The International Energy Agency suggests that ongoing reductions will be necessary beyond June due to slowing global oil demand growth and increased supply from the Americas.

Technical Analysis

Friday's rally saw crude oil break through a significant resistance zone between $78.00 to $79.10, which had previously acted as a barrier since November. With this clean break, the technical outlook favors further upside movement.

Bulls need to maintain their position here to sustain bullish momentum. If successful, WTI could target the next resistance area around $82.00, with a further bullish target at $84.40, corresponding to the 61.8% Fibonacci retracement level from September's downturn.

My key level to watch is now around $78.00, where last week's rally occurred. A break below this level would invalidate last week’s breakout signal and could trigger a sharp correction as bids are withdrawn.

TRADE RECOMMENDATION

BUY WTI

ENTRY PRICE : 79.00

STOP LOSS : 77.00

TAKE PROFIT : 84.40

Risk Warnings and Disclaimers

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Data

Surge to New Highs, Buying at the Uptrend Is Not Desirable

Fundamentals

Technical Analysis

Trading Recommendations

Powell's Speech Will Boost the Dollar

Fundamentals

Technical Analysis

Trading Recommendations

Upward Momentum Signals a Rejection Amid Fears of Further Pullbacks

Fundamentals

Technical Analysis

Trading Recommendations

Set the Foundation as the Market Is Choosing the Direction

Fundamentals

Technical Analysis

Trading Recommendations

Oil Experiences Fluctuations amid Technical Support Amidst Risk-Averse Sentiment

TECHNICAL VIEWPOINT

WTI 4 HOUR CHART

TRADING RECOMMENDATION

Gold Bulls Still Bet to the Upside, with Overall Bullish Sentiment Undiminished

Fundamentals

Technical Analysis

Trading Recommendations

Crude Oil Breaks Resistance, Eyes Further Upside Potential

Risk Disclosure