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China’s Caixin Manufacturing PMI dropped to 50.5 in December, down from 51.5 and below market expectations of 51.6, signaling a moderation in the sector's growth.

While supply and demand expanded modestly, external demand remained a significant drag, according to Wang Zhe, Senior Economist at Caixin Insight Group.

Zhe highlighted several challenges, noting that external demand was "sluggish", while job market suffered a "notable contraction." Additionally, sales prices were weak, and market optimism continued to decline.

The survey pointed to "prominent downward pressures", stemming from subdued domestic demand and challenging external conditions, which have squeezed profit margins and dented confidence.

The report also suggested that the impact of previous policy stimulus measures has yet to yield consistent results, with more time needed to gauge their effectiveness.

Full China Caixin PMI manufacturing release here.

Key Highlights

• GBP/USD failed to start another increase above the 1.2800 resistance zone.
• A major bearish trend line is forming with resistance at 1.2600 on the 4-hour chart.
• EUR/USD is at risk of more losses below the 1.0340 support.
• Crude Oil prices gained bullish momentum and climbed above $71.50.

GBP/USD Technical Analysis

The British Pound started another decline from the 1.2800 resistance zone against the US Dollar. GBP/USD declined below 1.2720 and 1.2650 to enter a bearish zone.

Looking at the 4-hour chart, the pair settled below the 1.2650 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The pair even retested the 1.2480 support zone before it started a consolidation phase.

On the upside, the pair is facing hurdles near the 1.2570 level. The first major resistance is near the 1.2600 level. There is also a major bearish trend line forming with resistance at 1.2600 on the same chart.

The next major resistance is near the 1.2630 level and the 100 simple moving average (red, 4-hour). A close above the 1.2630 level could set the tone for another increase. In the stated case, the pair could rise toward the 1.2750 resistance.

On the downside, immediate support sits near the 1.2475 level. The next key support sits near the 1.2420 level. Any more losses could send the pair toward the 1.2350 level.

Looking at EUR/USD, the pair is consolidating losses below 1.0420 and might continue to move down in the near term.

Upcoming Economic Events:

• Euro Zone Manufacturing PMI for Dec 2024 – Forecast 45.2, versus 45.2 previous.
• UK Manufacturing PMI for Dec 2024 – Forecast 47.3, versus 47.3 previous.
• US Manufacturing PMI for Dec 2024 – Forecast 48.3, versus 48.3 previous.

• NZDUSD broke key support 0.5600
• Likely to fall to support level 0.5500

NZDUSD currency pair under the bearish pressure after breaking the key support 0.5600, which stopped the previous long-term ABC correction (2) earlier this month.

The breakout of the support 0.5600 strengthened the bearish pressure on this currency pair.

Given the multi-month downtrend, NZDUSD currency pair can be expected to fall to the next major support level 0.5500 (which stopped multiyear downtrend in 2022) – from where the upward correction is likely.

EURCHF reversed from resistance zone
•  Likely to fall to support level 0.9350

EURCHF currency pair today reversed down from the resistance area located between pivotal resistance level 0.9430 (which has been steadily reversing the price from the start of October) intersecting with the upper daily Bollinger Band.

The downward reversal from the resistance level 0.9430 will create the daily Shooting Star candlesticks reversal pattern – if the pair closes today near the current levels.

Given the predominant daily downtrend, EURCHF currency pair can be expected to fall to the next support level 0.9350.

The Canadian dollar may be consolidating a corrective pullback from multi-year highs.

The USDCAD pair, which approached 1.45 in mid-December, is ending the year near 1.4350. The momentum of the last few days looks like a trend reversal, as there have been two unsuccessful attempts to storm the highs.

The upside momentum is losing strength after the extreme overbought conditions built up during the rally since September. The rally has been so extended that the RSI indicator on the weekly chart peaked at 75, only the third such episode in the last 10 years. In the previous two instances, the top was formed after oil.

This time, oil is smoothly forming a bottom, but it is already enough to stop the sell-off. Obviously, it is difficult for the market to push USDCAD higher without external support when the pair is already in multi-year extremes.

On the daily timeframe, USDCAD has reached overbought levels, with the RSI above 80, and the recent pullback indicates the start of a broad correction.

If we see a bottom in oil, this could attract buyers to the Canadian Dollar. The potential for a corrective pullback in USDCAD is around 2% from current levels to the 1.4080 area. The 50-day moving average and the upper boundary of the consolidation from the second half of November are now in place.

At the same time, history suggests that from such highs as we have seen in this pair, the chances of a long-term trend reversal, i.e. a return to the 1.34-1.38 area, are much higher.

Hello traders ! In this technical article, we’re going to take a quick look at the Elliott Wave charts of the SPX index, published in the members area of the website. As our members know, SPX remains overall bullish, currently correcting the cycle from the August 5118.95 low. In this article, we will explain the forecast and the best way to trade SPX.

SPX H1 Update 12.24.2024

The index is bouncing against the 6098.045 high, and currently the recovery appears incomplete at the moment. We’ve seen a sharp rally from the lows, which looks impulsive. The current view suggests another leg up toward the 6051.2 area to complete a 3-wave bounce in the (X) blue recovery. From there, we could see another leg down in the (Y) blue wave to complete the 4-hour pullback against the August 5118.9 low. As our members know, we favor the long side in indices and do not recommend selling during any proposed pullbacks. If we see the proposed leg down, we will use it as a new buying opportunity.

SPX H1 Update 12.31.2024

SPX has completed the proposed leg up, forming a 3-wave recovery at the 6051 high. We consider the (X) recovery complete at that level. As long as the price remains below this high, we expect further weakness in the (Y) leg. A break of the (W) blue low at 5831.6 is needed to confirm the proposed scenario. We do not recommend selling against the main bullish trend and will view the (Y) leg as a new buying opportunity if the next extreme zone is reached.

• Gold prices on course to end 2024 with a 27% gain, the best yearly performance since 2010.
• 2025 outlook is positive due to geopolitical risks, central bank buying, and safe-haven demand.
• Trump administration policies present both risks and opportunities for gold prices.
• Technical analysis shows potential for further gains, but a deeper correction before reaching new highs is possible.

Gold prices slipped yesterday as a stronger US Dollar, anticipation of a hawkish Fed and thin liquidity all contributed. Uncertainties around tariffs and challenges in 2025 are keeping the precious metals appeal going for now and capping further losses.

Gold prices are on track to end the year with a remarkable 27% increase, marking their best yearly performance since 2010.

Currency Strength Chart: Strongest – Weakest – JPY, GBP, EUR, AUD, CHF, USD, NZD, CAD – 

Source: FinancialJuice (click to enlarge)

2025 Outlook For Gold

Looking at the year ahead and 2025 and it will no doubt be interesting. Geopolitical risk remains a threat with the Middle East still on edge and the Russia-Ukraine situation no closer to a resolution. Just yesterday there were rumors that a proposal by the incoming Trump administration to delay Ukraine joining NATO by 10 years will not be accepted by the Kremlin.

Anyone with knowledge of the situation there will know that this will not change as the main reason for the conflict (at least from a Russian perspective) is Ukraine joining NATO. These developments are likely to keep some geopolitical risk premium in play and keep safe haven demand going.

Global Central Banks were one of the main drivers of the Gold price rise in 2024. This is expected to continue in 2025. The World Gold Council survey revealed in the second half of 2024 that Central Banks are likely to purchase more Gold in the next 12 months. This should further bolster demand for the precious metal.

When it comes to risks affecting Gold prices moving forward, it does get challenging. The reason for this is the incoming Trump administration is expected to do good things for the economy but some policies could lead to higher interest rates. This could weigh on Gold prices.

This is a double-edged sword however, in that the increased risk of uncertainty from Trump policy and concern around the impact of tariffs could actually bolster the demand for safe haven assets and thus Gold.

All in all analysts are largely pricing in further gains for the precious metal in 2025, personally I do see the potential for upside as well. However, I would not rule out a deeper correction before price does actually breach the current ATH resting around the 2790 handle.

The Week Ahead

Today could potentially be a slow day with the New Years holiday tomorrow. In such a case we could see a similar repeat to yesterday’s price action with a slow grind to the downside.

The holiday tomorrow will be followed by a return on Thursday January 2, 2025 which could bring about some volatility to markets as liquidity is expected to start returning to normal. Friday brings the last piece of high impact data from the US with the ISM Manufacturing PMI release.

The data is unlikely to change the overall narrative of the USD and thus any moves inspired by the data is likely to remain short-lived.

Technical Analysis Gold (XAU/USD)

Gold appeared poised for a move higher last week and it very much obliged. The precious metal ran into the first key area of resistance around the 2639 before falling to close the week around 2620.

The two-hour chart below shows the clear change in structure after topping out at 2639 on December 26. Since then, price has printed a series of lower highs and lower lows, breaching the 2600 psychological level briefly yesterday.

There is a descending trendline in play on the two-hour chart with a candle break and close above the trendline potentially leading to a retest of 2639.

A break below the $2600 handle may find support at the long-term ascending trendline which rests around the 2592-2596 range.

Gold (XAU/USD) Two-Hour (H4) Chart, December 31, 2024

Source: TradingView (click to enlarge)

Support

• 2600
• 2592
• 2575

Resistance

• 2620
• 2639
• 2650

• WTI oil futures gain positive momentum above short-term SMAs.
• Next challenge could occur within the $71.90-$72.50 area.

WTI oil futures are poised for a bullish start to the new year, having cemented the base around the $66.70 level, which successfully halted selling pressure for the fourth time in December. More recently, prices have climbed above both the 20-day and 50-day simple moving averages (SMAs), reinforcing the possibility that the recent rebound could gather further momentum.

The rising RSI and MACD endorse the positive scenario, but traders are unlikely to push the price higher unless they see a solid close above the nearby resistance of $71.90-$72.50. This level coincides with the 38.2% Fibonacci retracement of the July-September decline and the descending trendline from June. A breakout higher could initially pause near the 50% Fibonacci of $74.10 and then move toward the 200-day SMA and the long-term trendline from September 2023 both seen within the $75.20-$76.40 region. Beyond that, the next key level is October’s high of $77.68.

Should the bears pop up near the $72.00 number, the price may again seek shelter within the $69.00-$70.00 area. If selling interest persists, the spotlight will turn to the critical $66.70-$67.40 region, a break of which could cause an aggressive decline toward the 2024 low of $64.60 and the $64.00 level.

Summing up, WTI oil futures are poised for a new bullish cycle, with the confirmational signal likely coming above $71.90-$72.50.