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Key Highlights

• EUR/USD is consolidating losses above the 1.0600 support.
• A key bearish trend line is forming with resistance at 1.0670 on the 4-hour chart.
• GBP/USD extended losses and traded below 1.2420.
• Crude oil prices declined below the $82.50 support zone.

EUR/USD Technical Analysis

The Euro extended losses and traded below the 1.0650 support against the US Dollar. EUR/USD tested the 1.0600 zone and recently started a consolidation phase.

Looking at the 4-hour chart, the pair traded as low as 1.0601 and settled well below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

It is now consolidating and attempting a recovery wave above 1.0640. EUR/USD is testing the 23.6% Fib retracement level of the downward move from the 1.0885 swing high to the 1.0601 low and facing resistance at 1.0665.

There is also a key bearish trend line forming with resistance at 1.0670 on the same chart. The first key resistance is near the 1.0750 zone. It is close to the 50% Fib retracement level of the downward move from the 1.0885 swing high to the 1.0601 low and the 100 simple moving average (red, 4-hour).

A clear move above the 1.0750 resistance could send the pair further higher. In the stated case, EUR/USD bulls could even aim for a move toward 1.0840.

Immediate support is near the 1.0620 level. The next major support is at 1.0600. If there is a downside break below the 1.0600 support, the pair might test 1.0550. The main support is now forming at 1.0520. Any more losses might send the pair toward 1.0485.

Looking at Oil, the bears remained in control amid the Israel-Iran war situation. There was a drop below $82.50, and the bears could aim for more downsides.

Gold price fell around 2% on Monday as safe haven demand faded on calmer tones from the Middle East, which ease fears for conflict escalation.

Traders partially collected profits after gold repeatedly failed to sustain gains above psychological $2400 level and bull-trap pattern is forming on daily chart.

Fresh bears pressure the first pivots at $2320 zone (recent range floor / Fibo 23.6% of $1984/$2431), loss of which would add to initial negative signals (the price broke below 10DMA and is sharply losing bullish momentum) and allow for deeper pullback.

Psychological $2300 level and Fibo 38.2% ($2260) mark next significant supports, with the latter marking a pivotal support, which should contain extended dips to mark a healthy correction and not harm larger bulls.

Conversely, clear break of $2260 pivot to sideline bulls and shift near-term focus to the downside.

Res: 2363; 2400; 2417; 2431.
Sup: 2320; 2300; 2260; 2222.

Markets

Eurostat today published deficit and debt data for the years 2020-2023 in E(M)U). The euro area government deficit declined marginally from 3.7% of GDP in 2022 to 3.6% in 2023. The government debt to GDP ratio decreased over the same period from 90.8% to 88.6%. Zooming in on Belgium, Eurostat reported an increase of the deficit from 3.6% of GDP to 4.4% of GDP with the debt ratio rising from 104.3% to 105.2%. Other notable underperformers in the euro zone include France (-5.5% deficit & 110.6% debt), Italy (-7.4% & 137.3%) and Slovakia (-4.9% & 56%). Bloated public finances are one of the key drivers of our fundamental bearish view on (long term) interest rates. Especially since the ECB left the scene as unlimited, price-insensitive buyer of government bonds under its asset purchase programmes. Credit risk premia make their comeback while the snowball effect and some global trends (energy transition, ageing, defense,…) raise structural spending needs. In June, Europe will again launch excessive debt procedures against some countries (including Belgium) after easing measures in the wake of the Covid-pandemic. The (very) long end of European yield curve continued underperforming today while there was no one-on-one correlation with the timing of today’s figures. German yields currently add up to 3.6 bps (30-yr) with (minor) new YTD highs for tenors ranging from 5-yr until 30-yr. The German 2-yr yield tested the psychological 3% mark for a second session running. Risks related to tomorrow’s April EMU PMI’s seem asymmetric with anything apart from a huge negative surprise possibly sufficient to push yields beyond these recent levels. Changes on the US yield curve were more or less similar varying between -1 bp (2-yr) and +3.3 bps (30-yr). UK Gilts continue their outperformance following Friday’s reset. Bank of England comments cumulated into a shift in market thinking, putting the Bank of England more on par with the ECB than with the Fed. Short term UK yields lose up to 4 bps and contribute to follow-up losses in sterling. EUR/GBP rises from 0.8602 to 0.8638, the highest level since the first trading day of the year. The November top at 0.8768 is the next real reference. GBP/USD underperforms given today’s USD strength, losing a big figure to GBP/USD 1.23. Losses for EUR/USD are technically insignificant with the pair changing hands at 1.0630.

News & Views

The Swiss National Bank announced that it will raise the minimum reserve requirements for domestic banks. The change will start from July 01 2024 on. The new regulation includes the SNB increasing the minimum reserve ratio from 2.5% to 4%. The central bank also broadened the basis for calculating the minimum reserve. Liabilities arising from cancellable customer deposits (excluding those tied to pension provision) will now be included. The SNB said that the adjustments will ensure that the implementation of the SNB’s monetary policy remains effective and efficient. The new setup will reduce the SNB’s interest rate cost after the bank recorded a loss in 2023. The SNB states that the amendments will not affect the current monetary policy stance. After a protracted decline of the Swiss franc between New Year (EUR/USD <0.93) and early April (EUR/CHF 0.984), CHF recently found a new short-term equilibrium near EUR/CHF 0.97.

Belgian consumer confidence dipped slightly in April from -5 to -6. The decline masked a clear deterioration in employment expectations (unemployment indicator rose from 17 to 24). According to the assessment of the NBB, the announcement of the bankruptcy and closure of several companies and retailers did not go unnoticed by consumers, who indicated that they are much more concerned about how the job market will develop in the next three months. For the second month in a row, the deterioration in this component was clear to see (17 from 10 in March). On the other hand, consumer expectations regarding the general economic situation in Belgium improved (-18 from -20). On a personal level, households revised slightly upwards their expectations of their own financial situation (-1 from -2) along with their saving intentions (18 from 17).

Graphs

EMU 10-yr swap yield tests the YTD top. Can PMI’s trigger a break tomorrow?

EUR/CHF: higher reserve requirement by SNB doesn’t impact CHF

Geopolitical tensions move to the background and so do Brent crude prices

GBP/USD: sterling extends losses after BoE signals willingness to go the ECB’s way.

Daily Pivots: (S1) 1.0618; (P) 1.0648; (R1) 1.0686; More...

EUR/USD is staying in consolidation from 1.0601 and intraday bias stays neutral. Upside of recovery should be limited by 1.0723 support turned resistance. Break of 1.0601 will resume the fall from 1.1138 to 100% projection of 1.1138 to 1.0694 from 1.0980 at 1.0536 next.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Current fall from 1.1138 is seen as the third leg. While deeper decline is would be seen to 1.0447 and possibly below, Strong support should emerge from 61.8% retracement of 0.9534 to 1.1274 at 1.0199 to complete the correction.

Daily Pivots: (S1) 0.9032; (P) 0.9084; (R1) 0.9156; More....

USD/CHF is extending the consolidation pattern from 0.9151 and intraday bias stays neutral. Further rally is expected as long as 0.8996 support holds. Break of 0.9151 will resume the larger rise from 0.8332 to 0.9243 resistance. However, firm break of 0.8996 will turn bias to the downside for 55 D EMA (now at 0.8939).

In the bigger picture, price actions from 0.8332 medium term bottom as tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8728 support holds. But upside should be limited by 0.9243 resistance, at least on first attempt. However, decisive break of 0.9243 will argue that the trend has already reversed and turn medium term outlook bullish.

Daily Pivots: (S1) 153.93; (P) 154.30; (R1) 155.02; More...

Intraday bias in USD/JPY stays neutral and outlook is unchanged. On the upside, break of 154.77 will resume larger up trend. But considering bearish divergence condition in 4H MACD, strong resistance should be seen from 155.20 fibonacci level to bring correction on first attempt. On the downside, break of 153.58 will turn bias to the downside, for deeper pull back to 55 D EMA (now at 150.97).

In the bigger picture, current rise from 140.25 is seen as the third leg of the up trend from 127.20 (2023 low). Next target is 61.8% projection of 127.20 to 151.89 from 140.25 at 155.20. Outlook will remain bullish as long as 146.47 support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.2336; (P) 1.2402; (R1) 1.2437; More...

GBP/USD's decline extends further to as low as 1.2301 so far today. Intraday bias stays on the downside for 161.8% projection of 1.2892 to 1.2538 from 1.2708 at 1.2207 next. On the upside, above 1.2391 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Fall from 1.2892 is seen as the third leg. Deeper decline would be seen to 1.2036 support and possibly below. But strong support should emerge from 61.8% retracement of 1.0351 to 1.2452 at 1.1417 to complete the correction.

British Pound faced broad selloff today, continuing its decline in response to comments made last Friday by BoE Deputy Governor Dave Ramsden. Ramsden expressed he is now much less worried about inflation, and expects upcoming data to show significant slowdown in April. More importantly, he emphasized that UK inflation trends are likely to realign more closely with Eurozone rather than with the US.

The comments now set some expectation, contingent on April CPI data, monetary policy easing by BoE preceding similar moves by Fed and following ECB. This would place the August BoE meeting squarely in focus as a possible juncture for the initial rate cut.

Elsewhere in the currency markets, Euro is trailing as the second worst by some distance. Commodity currencies remain in pole position, supported by the strong rebound in risk sentiment, as seen in major European stock indexes and US futures. Dollar, Swiss Franc and Yen are trading in middle positions, bounded in tight range against each other. Attention in the currency markets is now turning to forthcoming PMI data from Australia, Japan, the Eurozone, the UK, and the US, which is expected to provide further direction.

Technically, GBP/AUD is one of the top movers for the day at this point. Immediate focus is now on 1.9111 support. Decisive break there should confirm that rebound from 1.8984 has completed at 1.9567 already. The corrective pattern from 1.9967 (2023 high) should have then started the third leg. Deeper fall would be seen back to 1.8584 support, or even further to 100% projection of 1.9967 to 1.8584 from 1.9567 at 1.8184 in the medium term.

In Europe, at the time of writing, FTSE is up 1.84%. DAX is up 0.79%. CAC is up 0.40%. UK 10-year yield is down -0.005 at 4.225. Germany 10-year yield is up 0.011 at 2.517. Earlier in Asia, Nikkei rose 1.00%. Hong Kong HSI rose 1.77%. China Shanghai SSE fell -0.67%. Singapore Strait times rose 1.53%. Japan 10-year JGB yield rose 0.0492 to 0.886.

Germany's BDI expects production decline and stagnant exports this year

Germany's industrial sector continues to faces another challenging year ahead, with Federation of German Industries (BDI) issuing a warning about the downturn in industrial production and the stagnation of exports for 2024. According to BDI's latest forecasts, industrial production is anticipated to drop by -1.5% this year. Additionally, exports are expected to remain flat.

BDI President Siegfried Russwurm highlighted the persistent struggles of the German industry, which has not fully recovered from "cost and demand shocks," driven by spikes in energy prices and inflation pressures.

Russwurm expressed concern over the long-term trend, noting that, despite some signs of a moderate recovery, the "overall production figures" have been following a "worrying downward trend" for several years.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2336; (P) 1.2402; (R1) 1.2437; More...

GBP/USD's decline extends further to as low as 1.2301 so far today. Intraday bias stays on the downside for 161.8% projection of 1.2892 to 1.2538 from 1.2708 at 1.2207 next. On the upside, above 1.2391 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Fall from 1.2892 is seen as the third leg. Deeper decline would be seen to 1.2036 support and possibly below. But strong support should emerge from 61.8% retracement of 1.0351 to 1.2452 at 1.1417 to complete the correction.

Economic Indicators Update

Hello fellow traders. In this technical article we’re going to take a look at the Elliott Wave charts charts of Bitcoin BTCUSD published in members area of the website. Our members are aware of the numerous positive trading setups we’ve had in the crypto market recently. One of them is BTCUSD, which experienced a pullback, unfolding as an Elliott Wave Double Three Pattern. It completed clear 7 swings from the peak on March 14th and concluded the correction right at the Equal Legs zone (Blue Box Area). In the following text, we’ll delve into the Elliott Wave pattern and trading setup.

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.

BTCUSD H4 weekend update 04.14.2024

BTCUSD is currently d0ing a wave (4) correction, unfolding in a 7-swing pattern. The pullback is identified with WXY red labeling. The first leg, W red, exhibits a clear 3-wave structure ((a))((b))(c)) black, followed by a 3-wave bounce in X red. Consequently, we anticipate the pullback to evolve as a Double Three pattern, indicating a projection of 3 waves in Y red as well. As of now, the structure remains incomplete. BTCUSD should ideally see another leg down toward the buying zone: 59644.73 to 56551.93. We expect the crypto to rally from there toward new highs or alternatively in a 3-wave bounce. Once the price retraces to the 50% Fibonacci level against the X red connector, we’ll secure positions, set the stop loss at breakeven, and take partial profits.

Official trading strategy on How to trade 3, 7, or 11 swing and equal leg is explained in details in Educational Video, available for members viewing inside the membership area.

Quick reminder on how to trade our charts :

Red bearish stamp+ blue box = Selling Setup
Green bullish stamp+ blue box = Buying Setup
Charts with Black stamps are not tradable. 🚫

BTCUSD H4 update 04.21.2024

Bitcoin found buyers as expected. It made decent rally from the Blue Box. Bounce already reached 50 fibs against the X red connector which confirms cycle from the peak is done. Consequently, any long positions from the equal legs area are risk free by now and we have taken partial profits. We call wave (4) completed at the 59507.9 low.