May 2022

Dow Jones Bears are taking a breather on Friday, as traders collects profits after a sharp fall this week (the index was down over 3% during Mon/Thu period. Stock markets were slashed by worries of high inflation and aggressive monetary policy tightening, as Fed signaled a series of rate hikes in coming months to contain the raging inflation. Today’s bounce from new multi-month low (the lowest since Feb 2021) eases immediate downside pressure, but the Dow is still on track for strong weekly loss ( the sixth consecutive weekly close in red). Corrective action was signaled by Thursday’s long-tailed daily candle and oversold conditions, with fresh bulls trading above initial resistance at 31824 (Fibo 23.6% of 34017/31146 bear-leg), but needs more work at the upside and violation of pivotal Fibo barrier at 32243 (38.2%) to generate initial reversal signal. Turbulent geopolitical and economic conditions are likely to keep traders away from risky assets, suggesting that current correction is likely to be limited and offer better selling opportunities, with the base of thick weekly cloud (32781) expected to cap and keep larger bears in play. Res: 31958; 32152; 32243; 32501. Sup: 31678; 31561; 31456; 31338.

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg… Read More »Dollar and yen surge

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg… Read More »Dollar and yen surge

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg… Read More »Dollar and yen surge

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg… Read More »Dollar and yen surge

The USDX and the precious metals market are like reverse images. Thus, it's possible to guess what gold and silver will do as the dollar gallops up. Miners and silver declined in a truly epic manner, and yes, the same is likely to take place in the following months, as markets wake up to the reality, which is that the USD Index and real interest rates are going up. Speaking of the USD Index, after invalidating the breakout below the multi-year head-and-shoulders pattern, the USDX was poised to soar, just like I’ve been expecting it to do for more than a year, and that’s exactly what it did. The RSI is currently above 70, but since the USDX is in a medium-term rally and is already after a visible correction, it can rally further. Please note that we saw the same thing in 2008 and 2014. I marked the corrections with blue rectangles. Still, the USD Index is now practically right at its next strong resistance – at about 104. I previously wrote the following about this target: It doesn’t mean that the USD Index’s rally is likely to end there. It’s not – but the USDX could take a… Read More »Much to gold’s dissatisfaction, the USD index seems unstoppable

In this technical blog we’re going to take a quick look at the Elliott Wave charts of NZDUSD forex pair. As our members know, the pair shows bearish sequences in the cycle from the February 2021 peak. The pair has made 3 waves bounce recently, that has reached our selling zone and gave us good trading opportunities. In the further text we are going to explain the Elliott Wave Forecast and the trading strategy. NZD/USD H1 Elliott Wave Analysis 05.11.2022 NZDUSD is correcting the cycle from the 0.65682 peak. Recovery has already reached blue box at 0.63552-0.64021 area to complete 2 red recovery. We recommended members to avoid buying the pair while we’re favoring the short side from the blue box. Strategy is selling the pair at the marked zone. Invalidation for the trade would be break above 1.618 fibs extension: 0.64021. As the main trend is bearish we expect sellers to appear at the blue box for 3 waves pull back at least. Once pull back reaches 50 Fibs against the ((b)) black low, we will make short position risk free ( put SL at BE) and take partial profits. As our members know Blue Boxes are no enemy… Read More »NZD/USD selling the rallies at the blue box area

It’s going to be a full-on week for economic indicators with a barrage of data due that should keep the guessing game going on how much central banks will tighten this year. Australia and the UK report jobs numbers, the latter will also release CPI readings along with Canada and Japan. Retail sales will be watched in the UK and US, as well as in China, while the Q1 GDP estimate will be important in Japan.

Overview: Equities are recovering from dramatic losses. Today, the Nikkei, Hang Seng, and Kospi surged by more than 2%. The large markets in the region advanced except India. Europe's Stoxx 600 is up about 1.2% near midday after falling 0.75% yesterday. It is nearly flat on the week after falling for the past four weeks. US futures are 1%+ higher. Benchmark 10-year yields are firmer across the board. The 10-year US Treasury yield is slightly below 2.90%, while European yields are 4-8 bp higher and the peripheral premiums are a little wider. The dollar is mixed with the Scandis, Canadian dollar, and Swiss franc posting modest upticks. The euro, sterling, and yen are struggling. Emerging market currencies are mixed with little obvious rhyme or reason geographically. The freely accessible emerging market currencies are also mixed. Gold extended yesterday's sell-off to test the $1812 area before stabilizing. Now near $1821, gold is off about 3.3% this week. June WTI posted an upside reversal in the middle of the week, after falling to $98.20. It is extending yesterday's gains and testing the $108 area. US natgas is edging higher. It has not fallen since Monday. Europe's benchmark surged 12% yesterday as Russia… Read More »Sentiment remains fragile, and the euro and sterling can barely sustain even modest upticks

Outlook: The calendar today has import and export prices and revisions to various other data, but the only potential market-mover is the preliminary May University of Michigan's consumer confidence index. As we complain quite often, it’s based on a tiny sample and doesn’t deserve the headline. Weirdly, the market didn’t focus on PPI, which rose 0.5% m/m in April, pretty much in line with forecasts and better than 1.6% the month before–but only on the m/m basis. Trading Economics reports “Year on year, wholesale prices rose 11%, above market expectations of a 10.7% gain and compared to 11.5% in March. Still, producer inflation is running at the highest rate in 40 years and the report didn’t show much sign that price pressures will ease considerably in the near future.” The important news also went by with little notice–Fed chief Powell said we should expect 50 bp hikes at each of the next two meetings, meaning July as a well as June. He also said whether the US gets a recession is due to factors outside the Fed’s ability to control. We are glad to hear this–maybe it will shut up some of the more stupid commentators. Perhaps Powell is a… Read More »All the cryptos are tanking