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Daily Pivots: (S1) 1.1107; (P) 1.1126; (R1) 1.1144; More...

EUR/USD's fall from 1.1274 short term top is in progress and intraday bias stays on the downside for deeper decline. But outlook will remain bullish as long as 1.1011 resistance turned support holds. Above 1.1146 minor resistance will turn bias back to the upside for retesting 1.1274 high first. However, firm break of 1.1011 will argue that larger correction is underway.

In the bigger picture, rise from 0.9534 is still expected to continue as long as 1.1011 resistance turned support holds. Decisive break of 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 will solidify the case of bullish trend reversal and target 1.2348 resistance next. However, firm break of 1.1011 will bring deeper fall back to 1.0634 support next.

Daily Pivots: (S1) 1.2811; (P) 1.2858; (R1) 1.2899; More...

GBP/USD's decline from 1.3141 short term top continued today and intraday bias remains on the downside. Deeper fall would be seen to 55 D EMA (now at 1.2697) next. On the upside, break of 1.2963 minor resistance will turn bias back to the upside retest 1.3141 high instead.

In the bigger picture, as long as 1.2678 resistance turned support holds, rise form 1.0351 (2022 low) is expected to continue. Next target is 100% projection of 1.0351 to 1.2445 from 1.1801 at 1.3895. However, sustained break of 1.2678 will argue that it's at least correcting this rally, with risk of bearish reversal.

Euro and British Pound face some downward pressure today, following dismal PMI data that raises concerns about the prospect of further economic contraction in Eurozone and UK. With the German Ifo business climate index on the horizon tomorrow and ECB rate decision due on Thursday, Euro is likely to face additional scrutiny.

Meanwhile, Dollar seems to be in a marginally better position than both the Euro and Sterling. However, it's worth noting that the Greenback is currently seeing a lack of dedicated buying interest. On the other hand, in an interesting twist, Japanese Yen is making a comeback, bolstered by the decline in US and European benchmark treasury yields.

As for commodity currencies, New Zealand and Canadian Dollars appear to be leading the pack. However, Australian Dollar is noticeably lagging behind. Swiss Franc, while performing well against its European counterparts, presents a mixed picture overall.

Technically, Bitcoin's break of 55 DMA should confirm short term topping at 31815. Risk will now stay on the downside as long as 30337 resistance holds. Deeper fall should be seen to trend support support at around 26500. While it's premature to conclude that the corrective rebound from 15,452 has run its course, bearish divergence observed in D MACD is a cautionary signal.

In Europe, at the time of writing, FTSE is down -0.23%. DAX is down -0.12%. CAC is down -0.53%. Germany 10-year yield is down -0.089 at 2.407. Earlier in Asia, Nikkei rose 1.23%. Hong Kong HSI fell -2.13%. China Shanghai SSE dropped -0.11%. Singapore Strait Times dropped -0.40%. Japan 10-year JGB yield dropped -0.0148 to 0.451.

UK PMI composite fell to 50.7, reigniting recession fears

UK's economic landscape appears increasingly precarious, as evidenced by disappointing July PMI readings. Manufacturing PMI plunged to a 38-month low of 45.0, from 46.5 and underperforming expectation of 46.1. the Services PMI dipped to a 6-month low of 51.5, falling short of the anticipated 53.1, and down from 53.7. Composite PMI, encapsulating both sectors, dropped to a 6-month low of 50.7 from 52.8.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, expressed significant concern over these figures. "The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries," he noted. "July's flash PMI survey data revealed a deepening manufacturing downturn accompanied by a further cooling of the recent resurgence of growth in the service sector."

Further bolstering this pessimistic outlook, forward-looking indicators, such as order book inflows, levels of work-in-hand, and future business expectations, suggest a potential weakening of growth in the coming months. Williamson warned, "these all point to growth weakening further in the months ahead, adding to a risk of GDP falling in the third quarter."

While this decline in growth and demand paints a gloomy picture, there's a silver lining in the form of cooling inflationary pressures. "Although ongoing upward wage pressures mean service sector price growth remains elevated, the survey data signal further, potentially marked, falls in consumer price inflation in the months ahead," added Williamson.

Eurozone PMI manufacturing down o 38-mth low, PMI services at 6-mth low

Eurozone's economic outlook appears increasingly gloomy as latest PMI readings for manufacturing and services sectors disappoint, suggesting further contraction may lie ahead. Manufacturing PMI declined to 42.7 in July from 43.4, a 38-month low and below expectations of 43.5. Simultaneously, Services PMI dropped to a 6-month low of 51.1, short of the projected 51.5, and down from 52.0. Composite PMI, reflecting both sectors, sank to an 8-month low of 48.9, down from 49.9.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, expressed his concern, stating, "Manufacturing continues to be the Achilles heel of the eurozone. Producers have cut their output again at an accelerated pace in July, while the services sector's activity is still expanding, though at a much slower rate than earlier in the year." He further warned, "The eurozone economy will likely move further into contraction territory in the months ahead, as the services sector keeps losing steam."

This less than encouraging data will surely unsettle ECB, as cost pressures in the private sector remain persistent, particularly in the substantial services sector. "The latest PMI reading is not going to please ECB officials...Thus, ECB president Christine Lagarde will certainly stick to her guns and hike interest rates by 25 bp at the next monetary meeting at the end of July," de la Rubia explained.

Meanwhile, France's manufacturing PMI slid to a 38-month low at 44.5, down from 46.0, while its services PMI fell to 47.4, a 29-month low, from 48.0. The composite PMI followed suit, dropping to a 32-month low at 46.6, down from 47.2.

Germany's manufacturing PMI took a dive from 40.6 to 38.8, also a 38-month low. Services declined to a 5-month low at 52.0 from 54.1, and the composite PMI fell to an 8-month low of 48.3, down from 50.6.

Japan PMI manufacturing slipped to 49.4, resurgence in price pressures

Japan's PMI Manufacturing dropped slightly from 49.8 in June to 49.4 in July, falling short of the forecasted 50.1. Despite this, PMI Manufacturing Output showed a minor uptick, climbing from 48.1 to 48.4. PMI Services saw a small decline, edging down from 54.0 to 53.9. Composite PMI, indicative of the overall health of the economy, was unchanged at 52.1.

Usamah Bhatti, an Economist at S&P Global Market Intelligence, highlighted that activity among private sector firms in Japan extended its growth streak for the seventh consecutive month. The persistence of this trend is largely attributable to steady and considerable improvement in service providers, while manufacturers reported a softer downturn at the dawn of Q3.

However, Bhatti underscored a less robust demand situation among private sector firms compared to the previous survey period. The latest data points to only a marginal increase in new orders, signaling a possible slowdown in demand.

Notably, the second half of 2023 has seen "renewed strengthening in price pressures" within the private sector. Pace of input price inflation has quickened for the first time since January. This trend is reflected across both manufacturing and service sectors, with both reporting steeper rates of output price inflation.

Australia PMI composite fell to 48, but still on narrow path for soft landing

Australia's PMI Manufacturing recorded a mild uptick in July, rising from 48.2 to 49.6, marking a 5-month high, but still falling short of the expansionary threshold of 50. Concurrently, PMI Services took a downward turn from 50.3 to 48.0, hitting a 7-month low. Consequently, Composite PMI, a measure of combined sectors, dipped from 50.1 to 48.3, which is also a 7-month low.

Warren Hogan, Chief Economic Advisor at Judo Bank, attributed the soft July figures predominantly to a dip in business activity in the services sector, which had previously been on a recovery path in 2023. But the "Australian economy remains on the 'narrow path' for a soft landing."

The July Flash report raised some concerns regarding inflation. Despite the slowdown in activity, price indicators trended higher, particularly within the services sector. These inflationary signals remain elevated, pointing to a potential inflation rate of around 4-5%, substantially exceeding RBA's target of 2% to 3%.

Hogan noted that the disinflationary trend evident throughout 2022 "appears to have ceased". As such, July figures will provide critical insights into whether Australia's inflation aligns with the declining trends seen in other countries recently, or if the nation is "set to experience a more sticky inflation trend in 2023/24."

NZ goods exports up 1.3% yoy in Jun, imports down -14% yoy

In June 2023, New Zealand's goods exports observed a modest rise of 1.3% yoy, an equivalent of NZD 84m, taking the total to NZD 6.3B. Conversely, the nation witnessed a significant drop in goods imports by -14.0% yoy, or NZD -1.1B, reducing the total to NZD 6.3B. This left the monthly trade balance at a surplus of NZD 9m, notably below market expectations of NZD 235m.

A deeper look into the country's top trading partners unveiled mixed outcomes in exports. June 2023 saw a decline in total exports to China by NZD -124m (-7.2% yoy), and to EU by NZD -98m (-20%). Moreover, exports to Japan also slipped by NZD -56m (-13%). On a positive note, exports to Australia and US increased by NZD 190m (30%) and NZD 91m (13%) respectively.

In terms of imports, there were notable reductions across the board. China, one of New Zealand's principal import partners, witnessed a drop by NZD -232m (-16% yoy), while EU observed a decrease of NZD -100m (-9.2%). Furthermore, imports from Australia and US fell by NZD -93m (-12%) and NZD -96m (-14%) respectively. South Korea recorded the most substantial decline in exports to New Zealand, with a drop of NZD -136m (-26%).

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2811; (P) 1.2858; (R1) 1.2899; More...

GBP/USD's decline from 1.3141 short term top continued today and intraday bias remains on the downside. Deeper fall would be seen to 55 D EMA (now at 1.2697) next. On the upside, break of 1.2963 minor resistance will turn bias back to the upside retest 1.3141 high instead.

In the bigger picture, as long as 1.2678 resistance turned support holds, rise form 1.0351 (2022 low) is expected to continue. Next target is 100% projection of 1.0351 to 1.2445 from 1.1801 at 1.3895. However, sustained break of 1.2678 will argue that it's at least correcting this rally, with risk of bearish reversal.

Economic Indicators Update

EURCHF is trading at a new 2023 low as the breakout from the 10-month-old rectangle appears to be valid. This is the lowest EURCHF print since September 30, 2022 with the pair not being very far from the all-time low of 0.9403. Bearish pressure has been dominating the price action since mid-January 2023, with the bulls appearing unable to stage a significant recovery, particularly after the mid-March events.

In the meantime, the Average Directional Movement Index (ADX) confirms the strength of the current downleg as it trades to the highest level since late-April. Crucially, the stochastic oscillator remains stuck in its oversold territory and exhibits a tendency to record a lower low. This indicator can stay in this region for a while. A valid bullish breakout is needed for the market to start considering a possible reversal in EURCHF.

Should the bears decide to push EURCHF even lower, the first target standing in their way is the August 23, 2022 low at 0.9552. If successful in breaking this level, the door would then open for a more sizeable move towards the 0.9403 area, and the chance to record a new all-time low.

On the other hand, the bulls are probably frustrated by their inability to record a decent rally. They would like to reclaim the key 0.9650-0.9665 range that is defined by the January 15, 2015 low and the 23.6% Fibonacci retracement of the June 9, 2022 – September 26, 2022 downtrend respectively. Even higher, the 0.9706-0.9724 area should prove stronger to overcome, but if successful, the bears could then have a go at pushing EURCHF back inside the aforementioned rectangle.

To sum up, the bears remain in control of the market with the momentum indicators on their side. However, any sign of complacency is bound to be picked upon by the bulls as they are desperate for a rally towards the 0.9706 area.

Hello fellow traders. In this technical article we’re going to take a look at the Elliott Wave charts of CADJPY forex pair, presented in members area of the of our website. As our members know, CADJPY is showing impulsive bullish sequences in the cycle from the 94.069 low. Consequently , we recommended members to avoid selling the pair and keep favoring the long side.The pair is bullish against the 98.36 low. Recently we got nice 3 waves pull back that unfolded as Elliott Wave Double Three Pattern. The pair found buyers right at the equal legs and made rally as expected. In further text we are going to explain Elliott Wave Forecast and Double Three Pattern.

Before we take a look at the real market example, let’s explain Elliott Wave Double Three pattern.

Elliott Wave Double Three Pattern

Double three is the common pattern in the market , also known as 7 swing structure. It’s a reliable pattern which is giving us good trading entries with clearly defined invalidation levels.
The picture below presents what Elliott Wave Double Three pattern looks like. It has (W),(X),(Y) labeling and 3,3,3 inner structure, which means all of these 3 legs are corrective sequences. Each (W) and (Y) are made of 3 swings , they’re having A,B,C structure in lower degree, or alternatively they can have W,X,Y labeling.

CADJPY Elliott Wave 4 Hour Chart 07.17.2021

The pair has made 5 waves up in the rally from the 98.38.71 low which is considered to be wave (3) of larger bullish cycle. Current view suggests the pair can be still doing (4) blue correction that is unfolding as Elliott Wave Double Three Pattern with WXY red inner labeling. First leg W is showing corrective sequences – 3 waves down ((a))((b))((c)). Then we got 3 waves bounce in X red in shallow correction. The price has already reached extreme zone at 104.835-103.136. However wave Y red still can see another wave down to complete the pattern. We expect buyers to appear soon.

CADJPY Elliott Wave 4 Hour Chart 07.22.2021

Current view suggests the pair completed wave (4) blue pull back as a 7 swing pattern at the 104.24 low. The buyers appeared and we got nice reaction from the equal legs area. As far as the pivot at 104.24 low holds, the pair should ideally continue trading higher. Break of (3) blue is needed to confirm next leg up is in progress.

Cable edged lower in early Monday and hit new marginally lower two-week low, after bears probed through pivotal supports at 1.2866/48 (Fibo 50% of 1.2590/1.3141 / 20DMA) though losses were limited and near-term action influenced by Friday’s Doji candle, being so far in the same shape.

Bears pressure next pivot at 1.2801 (Fibo 61.8%) violation of which would further weaken near-term structure for deeper pullback.

On the other hand, oversold stochastic and neutral RSI, suggest that bears may take a breather above 1.2800 zone, with bearish bias expected to remain intact while the price action stays below broken Fibo 38.2% level at 1.2931, while acceleration through upper pivots at 1.2974/1.3000 (10DMA / psychological) would revive bulls and signal an end of corrective phase.

Res: 1.2866; 1.2904; 1.2931; 1.2974.
Sup: 1.2801; 1.2750; 1.2720; 1.2673.

• Last week, Nasdaq 100 underperformed against the other major US stock indices.
• Nasdaq 100 failed to have a weekly close above 15,690 key medium-term resistance and ended with a weekly bearish “Shooting Star” candlestick pattern.
• Key near-term support will be at 15,270 (20-day moving average).

Last week, the year-to-date highly flying technology-concentrated Nasdaq 100 underperformed with a weekly loss of -0.90% versus weekly gains seen in other major US stock indices; S&P 500 (+0.69%), Dow Jones Industrial Average (+2.08%), and Russell 2000 (+1.51%).

The underperformance of the Nasdaq 100 has been caused by the “Magnificent Seven” cohort with weekly losses seen in Telsa (-7.59%), Alphabet (-4.30%), Meta (-4.73%), Amazon (-3.48%), and Nvidia (-2.55%).

Nasdaq 100 failed to have a weekly close above 15,690 key medium-term resistance  

Fig 1:  Nasdaq 100 major trend as of 24 Jul 2023 (Source: TradingView, click to enlarge chart)

The initial price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) breached above the 15,690 key medium-term resistance in the first half of last week but reintegrated below it last Thursday, 20 July, and failed to have a weekly close above 15,690.

In addition, it has formed a weekly bearish “Shooting Star” candlestick pattern which indicates that the bullish sentiment of the medium-term up move in place since the March 2023 low is likely to be exhausted (see weekly chart).

Also, the weekly RSI oscillator has traced out a bearish divergence signal at its overbought region which suggests medium-term and major upside momentum has started to wane. These observations increase the risks of a potential multi-week corrective decline below 15,690.

Price actions evolved into a minor downtrend phase

Fig 2:  Nasdaq 100 minor short-term trend as of 24 Jul 2023 (Source: TradingView, click to enlarge chart)

Since its 19 July 2023 intraday high of 15,937, the price actions of the Index have traced out a series of “lower highs and lower lows” which indicate a minor downtrend phase is in progress.

Watch the 15,690 key pivotal resistance to maintain the minor downtrend with the next near-term support coming in at 15,270 (also the 20-day moving average).

However, a clearance above 15,690 negates the bearish tone to see the next resistance at 15,945.

EURUSD has been on a downward path since registering on July 18 a new 2023 high, which is also the highest print since February 25, 2022. Seven consecutive red candles reveal the euro bulls’ inability to hold onto the impressive gains  recorded during the first half of July. In addition, the convergence of the 50- and 100-day simple moving averages (SMAs) could be seen as a sign that the elevated market volatility is not close to abating soon.

In the meantime, the Average Directional Movement Index (ADX) is dropping aggressively towards its 25-threshold and thus confirming the end of the recent bullish move, and the RSI is again trading a tad above its midpoint. More interestingly, the stochastic oscillator is moving lower in a vertical fashion and building a good gap from its moving average. A continuation of this move and, particularly a drop below the latest stochastic’s trough would be considered a stronger bearish signal.

Should the bears feel energized by the latest drop, they would aim for a move below the busy 1.1032-1.1095 range that is populated by the February 2, 2023 and April 26, 2023 highs respectively. They could then have a go at the 1.0888-1.0896 area. This appears to be a strong support region as it is defined by the 50- and 100-day SMAs. Even lower, the path remains tricky with the next key area coming at the 1.0698-1.0809 range.

On the flip side, the bulls are anxiously trying to set up their defense and regain market control. If they manage to keep EURUSD above the September 28, 2022 upward sloping trend trendline, they might feel confident in breaking the March 31, 2022 high at 1.1184, and then have the chance of recording a new 2023 high above the current high of 1.1275.

To conclude, EURUSD bears are on a mission, but they need to clear some key levels and get some help from the momentum indicators in order to reverse the medium-term bullish trend.

Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts. However, despite the positive results, share prices haven't rallied, partly due to macroeconomic events like stress on the US banking sector and sticky inflation.

Analysts predict a bottoming out of US earnings in the middle of the year, with potential recovery towards the end of 2023. Consumer spending remains positive, and if inflation eases and interest rates stabilize future earnings seasons could show a more positive outlook.

US100 - W1 Timeframe

US100 on the weekly timeframe has reacted from the pivot zone with an interesting close to the previous week - a pin bar candlestick pattern. Considering that the 50-period moving average is also currently below the 100-period moving average, and the pivot zone falls around 78% of the Fibonacci retracement of the previous drop, I am actively searching for selling opportunities to trade towards the retest of the 100-period moving average.

Analyst’s Expectations:

• Direction: Bearish
• Target: 13809.06
• Invalidation: 15808.39

US500 - W1 Timeframe

US500 is sleek; the price is at a rally-base-drop supply zone around the 88% Fibonacci retracement of the previous drop, and the 50-period moving average is below the 100-period moving average. This suggests that the drop will continue from there, with the 100-period moving average as its likely target.

Analyst’s Expectations:

• Direction: Bearish
• Target: 4232.30
• Invalidation: 4615.15

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

GBP/USD is trading near the 1.2800 support zone. USD/CAD is rising and might gain pace above the 1.3230 resistance zone.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound started a fresh decline from the 1.3120 resistance zone.
• There is a key bearish trend line forming with resistance near 1.2870 on the hourly chart of GBP/USD at FXOpen.
• USD/CAD is rising steadily from the 1.3120 support zone.
• There was a break above a major bearish trend line with resistance near 1.3200 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.3120 zone. The British Pound traded below the 1.3050 support and moved into a bearish zone against the US Dollar.

The pair even traded below 1.2970 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2815 level. A low is formed near 1.2816 and the pair is now consolidating losses. It is testing a key bearish trend line with resistance near 1.2870.

The first major resistance on the GBP/USD chart is near the 23.6% Fib retracement level of the downward move from the 1.3124 swing high to the 1.2816 low at 1.2890.

The next major resistance is near the 1.2970 level. It is close to the 50% Fib retracement level of the downward move from the 1.3124 swing high to the 1.2816 low. Any more gains could lead the pair toward the 1.3050 resistance in the near term.

Initial support sits near 1.2840. The next major support sits at 1.2815 or 1.2800, below which there is a risk of a sharp decline. In the stated case, the pair could drop toward 1.2650.

USD/CAD Technical Analysis

On the hourly chart of USD/CAD at FXOpen, the pair formed a strong support base above the 1.3120 level. The US Dollar started a decent increase above the 1.3150 resistance against the Canadian Dollar.

The pair broke above the 50-hour simple moving average and a major bearish trend line with resistance near 1.3200. It is now consolidating near the 1.3230 resistance zone. A clear upside break above 1.3230 could trigger another steady increase.

The next major resistance is the 1.3300 level. A close above it might send the pair toward the 1.3350 pivot level. Any more gains could open the doors for a test of 1.3500.

Conversely, the pair could start a downside correction. Initial support is near the 1.3200 level and the broken trend line on the same USD/CAD chart. It is close to the 23.6% Fib retracement level of the upward move from the 1.3123 swing low to the 1.3228 high.

The next major support is near the 50-hour simple moving average at 1.3175. Any more losses might send the pair toward the 76.4% Fib retracement level of the upward move from the 1.3123 swing low to the 1.3228 high at 1.3150.

A downside break below 1.3150 could push the pair further lower. The next major support is near the 1.3120 support zone, below which the pair might visit 1.3000.

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