Technical Tuesday 10/17/23Last Technical Tuesday went really well for 380 pips. Waited patiently for any set ups I like, fundamentally and technically speaking this all Im liking at the moment. Feels like Gold should continue upward momentum.
Fundamentalanalsysis
Breaking the trendline, GOLD recovery before the sell trendAs gold breaks through key resistance levels, investors are closely monitoring the market for further signals of a bullish trend. However, it's important to stay informed about factors like geopolitical events, central bank decisions, and economic data, as they can significantly impact the gold market. Traders should exercise caution, practice risk management, and remain adaptable to changing market dynamics to make informed decisions in this evolving environment.
GOLD, ShortGold has been able to fill liquidity to 1879.800 and could correct to 1845 to fulfill Fibonacci retracement to 50% before a possible surge up to 1900 in the coming days.
The PPI News on Wednesday, 11th October was a positive news for the greenback (Dollar index) and the CPI and UoM Consumer Sentiment News is coming on Thursday and Friday, 12th/13th October.
Usually, the CPI news is negative for Gold so let's see how it could determine the direction of the gold market.
Bitcoin (BTC) technical and fundamental analysisThe price of Bitcoin has entered the 4-hour Imbalance zone, as we warned in all our recent ideas. Consequently, the price has broken above the global descending trendline and moved out of the previous price range. This BTC rally is associated with a significant accumulation of short positions, with the total volume of shorts reaching up to 85% compared to longs. During the upward impulse, short positions totaling over $100 million were liquidated.
Currently, we anticipate trading within the 4-hour Imbalance zone to fill gaps in horizontal trading volume levels. If the price fails to consolidate itself above the resistance block, it's likely go to correction of the recent upward impulse to the 0.61-0.78 Fibonacci levels. During this correction, it may also retest EMA50 and the descending trendline.
However, if buyers manage to maintain their strength and continue the upward movement, we anticipate a test of the next significant resistance block around the psychological level 30,000.
📉 Global view of the Bitcoin market
On the daily logarithmic chart, Bitcoin's price is testing the intersection of the 200-day and 200-week moving averages. If it consolidate above these moving averages, the next target for the upward movement could be a retest of the upward trendline above which lies the 1-week Imbalance zone. In this zone, gaps in horizontal trading volume levels need to be filled. However, to achieve this, buyers will need to overcome the significant resistance block at 30,000-32,000.
It's important to note that the RSI indicators on the 4-hour and 1-day timeframes are already entering the oversold territory, indicating a potential trend reversal on the horizon.
Additionally, it's worth remembering that the Bitcoin price has not yet fully played out the breakout from the bearish wedge pattern. Furthermore, there hasn't been a proper correction of the entire uptrend since the beginning of this year. These factors suggest that the market may still experience significant volatility and potential price movements in the near future. Traders should closely monitor these and be prepared for various scenarios.
Levels long positions:
23,000 - level of the cost zone control point (POC)
22,000 - 0.61 Fibonacci retracement level
20,000 - 0.78 Fibonacci retracement level
17000-19000 - Imbalance zone 1H
Levels for short positions:
29,000-30,000 - 0.78 Fibonacci retracement level
32 000-35000 - Imbalance zone 1W
36,000-38,000 - zone of possible retest of the trend line
40,000 - psychological resistance level
The index of fear and greed is in the neutral zone - 50.
The total capitalization of the cryptocurrency market increased to $1083 billion, and the Bitcoin dominance index increased to 50.53.
According to the analysis of the accumulation of large blocks in order books, the supply and demand zones are located at the following levels:
🟢 Demand zone: 20000 - 26000
🔴 Offer zone: 29000 - 32000
📊 Fundamental analysis
Historical data has shown that October has traditionally been a favorable month for Bitcoin price growth. Currently, there's an active hashtag campaign on social media called #Uptober, indicating optimism among cryptocurrency enthusiasts for a positive trend in October.
Large investors continue to accumulate Bitcoin. According to on-chain analysis, addresses holding between 10 and 10,000 BTC are accumulating coins. This suggests that institutional investors remain bullish on Bitcoin.
In the world of U.S. politics, a compromise bill was passed, preventing a government shutdown at least until November 17th. This news has provided support to all risk asset markets, including cryptocurrencies.
The American stock market initially responded to this news with a slight upward impulse in the S&P500 index, but it was later overshadowed by a decline. Meanwhile, the U.S. Dollar Index (DXY) continues to rise. These factors highlight the dynamic and interconnected nature of the financial markets, with political developments, institutional interest, and seasonal patterns all playing a role in influencing market sentiment and asset prices.
🌐 Upcoming macroeconomic events
The following dates are expected to bring increased volatility in both the stock and cryptocurrency markets:
➤ October 3rd at 17:00 - Job Openings and Labor Turnover Survey (JOLTS) data for August.
➤ October 12th at 15:30 - U.S. Consumer Price Index (CPI).
➤ November 1st at 21:00 - New Federal Reserve interest rate decision.
DXY, Ready to ShortThe last week DXY movement fulfilled my idea which I predicted price to hit the key level at 105.8
For the past 13 -14 weeks, the DXY has been on an ascending trend from 99.23 to 105.756. The current resistance has been a key level since 1st December 2022.
Price is currently reacting on a resistance trendline of the main ascending channel since 26th September 2022.
The resistance trendline coincides with the 105.834 key resistance which has historically driven the DXY down.
The DXY could initiate a BEARISH WAVE first to 103.100 to retest the Daily EMA-200 & 50.
The FED could consider a rate hike in the last quarter of 2023 in the midst of a possible DXY bearish waves.
DXY, to continue price ascending to 105.834Last week's DXY index candle bullishly closed with a strong rejection with from the 104.643 support because all of the USD fundamentals (The CPI, Core PPI, Core Retail Sales, etc.) which occurred last week went to strengthen the dollar.
The DXY is expected to consolidate between current level of 105.351 and 105.00 since there is not important fundamentals between Monday and Tuesday before a potential rise to 105.834
There are important fundamentals coming up this week form Wednesday to Friday
-FOMC Statement and press conference
-Federal Funds Rate
-Unemployment Claims
-Flash Manufacturing PMI
EUR USD IdeaWe are currently observing the US Dollar trading in a sideways pattern, situated just behind the daily supply and demand zones. This situation has resulted in the accumulation of a significant number of stop-loss orders on both the sell and buy sides. Additionally, there are fundamental drivers expected to impact the Dollar later this week.
Given this scenario, it's crucial for us to carefully evaluate our trading strategy. We need to determine the most logical approach to trade the EUR/USD lower and the Dollar higher. Up to this point, we have refrained from initiating a short position, as we missed the opportunity to enter at the supply zone last week.
However, if we witness the market triggering the yellow stops on the chart and subsequently targeting the white liquidity zones on the chart, it could strongly suggest institutional involvement. Let's continue to closely monitor the market to see how this situation develops.
Dollar Bullish Momentum Continues Despite Global Challenges
The global economy is facing a number of challenges, including rising inflation, slowing growth, and geopolitical tensions. These challenges have led some economists to warn of a potential stagflation environment, characterized by high inflation and low economic growth. Overall, the dollar had a few battles with other intermarket factors that tried to halt its bullish momentum, which has been ongoing for months.
The euro had many indications last week that it plans to strengthen its currency by increasing interest rates in the near future. Germany, which is the eurozone's largest economy, supported this with its ZEW economic sentiment, which came back better than expected, causing short-term weakness during the New York session. Fuel was then thrown on the fire, making the dollar aggressively bullish with the statements made during the ECB press conference. In addition, the unemployment claims and retail sales being better than expected fueled the dollar's ongoing bullish momentum.
With the upcoming Fed rate, where do you think is the next destination for the dollar?
Has Oil Reached Peak Demand? Unveiling the Unique OPEC+ DealIntroduction:
In recent years, the global oil market has witnessed significant shifts that have left traders and analysts questioning the future of this vital commodity. One of the most intriguing developments is the unique Russia-Saudi Arabia OPEC+ deal, which has sparked speculation about whether we have reached peak oil demand. In this article, we will delve into the details of this groundbreaking agreement and encourage traders to question their long-term perspectives on oil in a cautious tone of voice.
Understanding the Russia-Saudi Arabia OPEC+ Deal:
The Russia-Saudi Arabia OPEC+ deal, initiated in 2016, aimed to stabilize oil prices by managing production levels. This unprecedented alliance brought together the world's largest oil producers, including Russia, Saudi Arabia, and other OPEC members, to collectively adjust their output to balance supply and demand. The agreement's primary objective was to prevent a repeat of the 2014 oil price crash, which had severe repercussions for the global economy.
Peak Demand: A Paradigm Shift:
However, the dynamics of the global energy landscape have evolved since the inception of the Russia-Saudi Arabia OPEC+ deal. Heightened concerns over climate change, coupled with the rapid growth of renewable energy sources, have led to a paradigm shift in the way we perceive and consume energy. As a result, the notion of peak oil demand has gained traction, suggesting that global oil demand may have reached its peak and is now on a downward trajectory.
Call-to-Action: Questioning Longs on Oil:
In light of these emerging trends, traders must reevaluate their long-term perspectives on oil. While the oil demand will likely persist for years to come, the Russia-Saudi Arabia OPEC+ deal and changing global dynamics necessitate a cautious approach. Here are a few key points to consider:
1. Diversify Your Portfolio: As the energy landscape transforms, it becomes crucial to diversify investment portfolios to include renewable energy sources, clean technologies, and other sustainable sectors. This will help mitigate potential risks associated with a declining demand for oil.
2. Stay Informed: Keep a close watch on market trends, technological advancements, and government policies that promote renewable energy. Understanding the evolving landscape will enable traders to make informed decisions and adapt to changing market conditions.
3. Embrace Innovation: Explore opportunities within the renewable energy sector, such as investing in solar, wind, or hydrogen technologies. These sectors are expected to experience significant growth and may provide alternative avenues for profitable investments.
Conclusion:
The unique Russia-Saudi Arabia OPEC+ deal has undoubtedly played a crucial role in stabilizing oil prices and ensuring market equilibrium. However, the rise of renewable energy sources and growing concerns over climate change have led to the notion of peak oil demand. As traders, it is essential to question our longs on oil and adopt a cautious approach while diversifying our portfolios, staying informed, and embracing innovation. By doing so, we can navigate the evolving energy landscape and seize opportunities that arise from this transformative period in the history of the global oil market.
USDX UPATEhi all
My understanding is that the usdx has already been price in.
The FOMC meets eight times a year and issues projections in march, june, september, and december.
FED announces two rate hikes in June. 1st increases the rate in July to 5.50.
Since the impact from oil barely began in September, I don't think the FOMC will raise interest rates this week to 5.75. Therefore, the FOMC will raise rates for the 2nd time in September, to 25 basis points, once the CPI data in September reveals just how severe the harm is. I expect the USDX strengthening at that time.
**My trading strategy is not intended to be a signal. It's a process of learning about market structure and sharpening my trading skills**
Thanks a lot for your support
USOIL WEEKLY TRADE IDEAhi all
Since Saudi Arabian oil output was expected to be reduced on August 28, the price of US oil has been rising steadily for four days.
Not only will the US economy be impacted by this oil decrease, but also the primary currency. The CPI is approaching, and the FED announced a raise 0.25 bps at its meeting in September.
So, from a technical standpoint, I expect a pullback around 38 - 50 fibo retracement before continuing long oil until cpi and fomc.
Let me know what you think In the comments!
**My trading strategy is not intended to be a signal. It's a process of learning about market structure and sharpening my trading skills**
Thanks a lot for your support
XAUUSD, correction to 1932 Gold may correct upwards to 1932 before potentially declining further to 1920 and possibly to 1914.
EURUSD, to decline further The price movement fulfilled my previous idea publication.
What do I expect next??
EURUSD is expected to potentially fulfill a Fibonacci retracement to the 1.07658 resistance level before declining further to the next significant support level at 1.06375.
BluetonaFX - Forex Weekly RecapHi Traders!
Forex Weekly Recap for 28 August–01 September, 2023:
Fundamentals
The European Central Bank’s (ECB) Holzmann noted that he supports a rate hike in September barring any downside surprises before the meeting; his other key mentions were:
Not in the clear yet on inflation.
The ECB should start a debate soon on ending pandemic emergency purchase programme (PEPP) reinvestments.
Reserve Bank of Australia's (RBA) Bullock noted that inflation will be her main priority as the new RBA’s Governor; her other key mentions were:
The bank may have to raise rates again, but she is watching the data carefully.
All central banks are grappling with how much further to hike.
Climate change is likely to lead to more volatile inflation outcomes.
The Federal Reserve's Mester noted that progress on inflation and the labour market is improving; her other key mentions were:
The job market is still strong amid signs of rebalancing.
The 3.8% jobless rate is still low.
The main Fed debate is how restrictive policy needs to become and for how long.
Future policy decisions will be based on incoming data.
The Fed must balance risks when setting rate policy.
Bank of Japan's (BoJ) Nakamura noted that Japan is no longer in deflation; his other key mentions were:
The BoJ must patiently maintain an easy policy for the time being.
Japan's economy is recovering moderately.
The BoJ is closely watching the impact of yen moves on the economy and prices.
Weak yen benefit exports and tourism but is negative for domestic-driven firms and households.
The decision on when to end negative rates depends on economic developments.
If Japan achieves sustained economic recovery, they won't need yield curve control (YCC), but now is not the time to get rid of YCC.
Key Data
Preliminary data for Australian July retail sales
Retail sales M/M came in better at 0.5% vs. 0.3% expected and -0.8% prior.
Retail sales Y/Y came in worse at 2.1% vs. 2.3% prior.
Japan Unemployment Rate missed expctations
The unemployment rate came in worse at 2.7% vs. 2.5% expected and 2.5% prior.
The US job openings for July missed expectations.
Job openings came in worse at 8.827M vs. 9.465M expected and 9.165M prior (revised from 9.582M).
The US Non-Farm ADP came in worse at 177K vs. 195K expected and 371K prior (revised from 324K).
Japan's retail sales came in better across the board.
Retail sales Y/Y came in better at 6.8% vs. 5.4% expected and 5.6% prior (revised from 5.9%).
Retail sales M/M came in better at 2.1% vs. -0.4% prior.
The Eurozone's August preliminary CPI came in better, and the core CPI came out as expected:
CPI Y/Y came in better at 5.3% vs. 5.1% expected and 5.3% prior.
CPI M/M came in better at 0.6% vs. 0.4% expected and -0.1% prior.
Core CPI Y/Y came in as expected at 5.3% and 5.5% prior.
Core CPI M/M came in as expected at 0.3% and -0.1% prior.
The Eurozone unemployment rate came in at 6.4%, as expected.
The US jobless claims beat expectations for initial claims but missed expectations for continuing claims.
Initial claims came in better at 228K vs. 235K expected and 323K prior (revised from 230K).
Continuing claims came in worse at 1725K vs. 1703K expected and 1697K prior (revised from 1702K).
US Non-Farm Payroll beat expectations; however, there was an increase in the unemployment rate:
NFP came in better at 187K vs. 170K expected and 157K prior (revised from 187K).
The unemployment rate came in worse at 3.8% vs. 3.5% expected and 3.5% prior.
The US ISM Manufacturing PMI came in better at 47.6 vs. 47.0 expected and 46.4 prior.
Technicals
The US dollar started off weak but ended up with a strong finish near the end of the week against most of its counterparts.
AUDUSD 1W Chart
AUDUSD has rebounded off its new 2023 low at 0.63646 but is still nearing its 2022 low at 0.61702. The symmetrical triangle on the 1W chart was broken to the downside, and the price action is indicating a possible re-test of the trendline support break.
USDJPY 1W Chart
Another strong end to the week for USDJPY, as the pair tested the 145.073 resistance level for the third week in a row. The 147 level was finally reached this week and found resistance at 147.378, which is just short of our resistance level of 147.572.
EURUSD 1W Chart
EURUSD has now broken below the support line of the rising wedge. We got the swings with less momentum and for them to have lower highs and lower lows to show signs of possible reversal and break the wedge to the downside. There is potential for a continuation towards 1.07000 and possibly 1.06750.
GBPUSD 1W Chart
GBPUSD has looked bearish since the ascending channel break. The bearish outlook is also supported by the bollinger-band indicator, as the market looks like it will fail to break and close back above the middle band. If the bearish momentum continues, there is potential support at 1.23081.
The key focus for the upcoming trading week will be:
Tuesday: Reserve Bank of Australia Policy Decision
Wednesday: Eurozone Retail Sales, US ISM Services PMI, Bank of Canada Policy Decision
Thursday: US Jobless Claims
Friday: Japan Wage Data, Canada Jobs Report
We will be back with another Forex Weekly Recap report next week.
Best of luck for the upcoming trading week ahead. Trade safely and responsibly.
BluetonaFX
BluetonaFX - Forex Weekly RecapHi Traders!
Forex Weekly Recap for 21–25 August, 2023:
Fundamentals
The Federal Reserve's Harker noted that they probably have done enough on interest rates and can hold steady into the next year. Other key mentions from him were:
The low-income consumer is clearly slowing down.
Consumer credit card delinquencies are starting to tick up.
Student loans won't have a big economic effect, but they will have a psychological effect.
I want to see softening in the labour market, notably in the services sector.
At this point, he sees the Fed holding steady this year while next year is data-driven.
They need to see inflation fall before they are willing to cut rates.
The European Central Bank's (ECB) Centeno called for caution at the next meeting as downside risks to the economy have materialised. Other key mentions from him were:
The transmission of policy is up and running.
The ECB has been data-dependent in its decisions.
Plenty of data is still to come ahead of the September decision.
Downside risks to the economy have materialised.
Federal Reserve Chair Powell delivered his speech at the Jackson Hole Symposium, which for the most part repeated the same as his previous speech in that the Fed is data-dependent and all options are on the table. There’s a particular focus on the labour market, and it looks like the Fed is no longer targeting inflation but the labour market. Other key mentions from him were:
They are prepared to raise rates further if appropriate and will proceed carefully.
The Fed will proceed carefully when deciding whether to hike again or hold steady.
The Fed is attentive to signs that the economy is not cooling as expected.
Economic uncertainty calls for 'agile' monetary policymaking.
Inflation remains too high.
Two months of good data are only the beginning of what they need to see to build confidence in the inflation path.
Policy is restrictive, but the Fed can't be certain what the neutral rate level is.
They will not change their 2% inflation target.
Lowering inflation is also likely to require softer labour markets.
Signs that the job market is not cooling could also warrant more Fed action.
Key Data
New Zealand retail sales came in mixed across the board:
Retail sales Q/Q came in at -1.0% vs. -2.6% expected and -1.4% prior.
Retail sales Y/Y came in worse at -3.5% vs. 3.1% expected and -4.1% prior.
Wednesday was Global PMI Day, where there were a lot of missed expectations, especially on the services side:
Australia's manufacturing PMI came in worse at 49.4 vs. 49.6 expected and 49.6 prior.
Australia Services PMI came in worse at 46.7 vs. 47.9 expected and 47.9 prior.
Japan's manufacturing PMI came in better at 49.7 vs. 49.5 expected and 49.6 prior.
Japan Services PMI came in better at 54.3 vs. 53.9 expected and 53.8 prior.
France's manufacturing PMI came in better at 46.4 vs. 45.0 expected and 45.1 prior.
France Services PMI came in worse at 46.7 vs. 47.5 expected and 47.1 prior.
Germany's manufacturing PMI came in better at 39.1 vs. 38.7 expected and 38.8 prior.
Germany's services PMI came in worse at 47.3 vs. 51.5 expected and 52.3 prior.
The Eurozone Manufacturing PMI came in better at 43.7 vs. 42.6 expected and 42.7 prior.
The Eurozone Services PMI came in worse at 48.3 vs. 50.5 expected and 50.9 prior.
The UK manufacturing PMI came in worse at 42.5 vs. 45.0 expected and 45.3 prior.
UK Services PMI came in worse at 48.7 vs. 51.0 expected and 51.5 prior.
US Manufacturing PMI came in worse at 47.0 vs. 49.3 expected and 49.0 prior.
US Services PMI came in worse at 51.0 vs. 52.3 expected and 52.3 prior.
Canada's retail sales were mixed, with core retail sales coming in worse and retail sales coming in better:
Core Retail Sales M/M came in worse at -0.8% vs. 0.3 expected and -0.3% prior.
Retail sales M/M came in better at 0.1% vs. 0.0% expected and 0.1% prior.
The US jobless claims came in better across the board:
Initial claims came in better at 230K vs. 240K expected and 240K prior (revised from 239K).
Continuing claims came in better at 1702K vs. 1708K expected and 1711K prior (revised from 1716K).
Technicals
It was a mixed week for the US dollar, with some strength and weakness against its major counterparts.
AUDUSD 1W Chart
AUDUSD has rebounded off its new 2023 low at 0.63646 but is still nearing its 2022 low at 0.61702. The symmetrical triangle on the 1W chart was broken to the downside, and if the 2022 low of 0.61702 is also broken, then the long-term target level will be the psychological level of 0.60000.
USDJPY 1W Chart
A strong end to the week for USDJPY as the pair tested the 145.073 resistance level for a second week in a row. A break in this area, and we have a resistance level of 147.572.
EURUSD 1W Chart
EURUSD has reached the bottom support line of the rising wedge. We are looking for swings with less momentum and for them to have lower highs and lower lows to show signs of possible reversal and break the wedge to the downside.
GBPUSD 1W Chart
GBPUSD's potential head and shoulders pattern has formed on the 1W chart; the head and left shoulder have been formed, and the right shoulder has now formed. The market has now broken below the 20 EMA support. The 1.26800 support has not had a close under it for 2 months, so for the potential reversal to occur, there must be a break and close under 1.26800. A close of this week's candle will give us a bearish outlook.
The key focus for the upcoming trading week will be:
Monday: Australian Retail Sales
Tuesday: Japan's Unemployment Rate, US Job Openings
Wednesday: US Non-Farm ADP
Thursday: Japan Retail Sales, Eurozone CPI, Eurozone Unemployment Rate, US Jobless Claims
Friday: US Non-Farm Payroll, US ISM Manufacturing PMI.
We will be back with another Forex Weekly Recap report next week.
Best of luck for the upcoming trading week ahead. Trade safely and responsibly.
BluetonaFX
BluetonaFX - Forex Weekly RecapHi Traders!
Forex Weekly Recap for 14–18 August, 2023:
Fundamentals
The Reserve Bank of Australia (RBA) released the minutes of the August 2023 policy meeting, where the central bank kept the interest rate unchanged at 4.1%. The key notes from the meeting were:
The board considered raising rates by 25 basis points, although they saw a more credible path back to the inflation target with cash rates at the current 4.1%.
The need for further hikes would depend on data and the assessment of risks.
The board agreed it was possible some further tightening might be needed.
Inflation is heading in the right direction, though service inflation is still too high.
The Federal Reserve's Kashkari noted the steady progress on inflation in the US due to the positive inflation readings but stated that inflation is still too high and that he remains wary of the risks of letting go too early, as they do not want to make the same mistakes as they did in the 19070s when they stopped hiking interest rates too early. He did also note, however, that at some point next year, the Federal Reserve may need to lower rates and that the economy is currently exceeding expectations.
The Reserve Bank of New Zealand (RBNZ) kept the interest rate unchanged at 5.5%, as expected. Key notes from their policy statement were:
New Zealand's economy is progressing as anticipated.
Headline inflation and inflation expectations have declined, but measures of core inflation are still too high.
The Committee is confident that with interest rates remaining at a restrictive level for some time, consumer price inflation will return to within its target range of 1 to 3% per year.
In the following press conference, RBNZ Governor Orr noted that he is encouraged to see inflation fall, although it is still too high. He also noted that they are very comfortable with where the current interest rate is and that there was not much discussion of a rate cut; therefore, it was easy to reach consensus on the unchanged decision.
The Federal Reserve released the minutes of the July FOMC meeting. The key notes were:
Most participants said inflation risks could require further interest rate hikes.
A number of participants warned of the risks of accidentally tightening policy too much.
A couple of participants favoured holding interest rates steady at the July meeting.
Most participants said inflation was still 'unacceptably high,' and more evidence is needed to be confident that price pressures are diminishing.
They no longer see the economy entering a mild recession this year.
A number of participants said the labour market is still 'very tight,' although signs are emerging that labour demand is in better balance.
Key Data
Australian wage data for Q2 came in worse across the board:
The Wage Price Index Y/Y came in worse at 3.6% vs. 3.7% expected and 3.7% prior.
The Wage Price Index Q/Q came in worse at 0.8% vs. 1.0% expected and 0.8% prior.
The UK July Jobs Report showed another increase in wage growth, with the unemployment rate rising again.
The unemployment rate came in worse at 4.2% vs. 4.0% expected and 4.0% prior.
Average weekly earnings came in better at 8.2% vs. 7.3% and 7.2% prior (revised from 6.9%).
The US July retail sales came in better across the board:
Retail sales M/M came in better at 0.7% vs. 0.4% expected and 0.3% prior (revised from 0.2%).
Retail sales Y/Y came in better at 3.17% vs. 1.5% expected and 1.6% prior (revised from 1.49%).
The UK July CPI figures were mixed across the board:
CPI Y/Y came in expected at 6.8% and 7.9% prior.
CPI M/M came in worse at -0.4% vs. -0.5% expected and 0.1% prior.
Core CPI Y/Y came in better at 6.9% vs. 6.8% expected and 6.9% prior.
Core CPI M/M came in better at 0.3% vs. 0.2% expected and 0.2% prior.
The Australian Jobs Report figures came in worse across the board:
Employment change came in worse at -14.6K vs. 15.0K expected and 32.6K prior.
Full-time Employment came in worse at -24.2K vs. 39.3K prior.
The unemployment rate came in worse at 3.7% vs. 3.5% expected and 3.5% prior.
The US initial jobless claims came in better, while continuing claims came in worse.
Initial jobless claims came in better at 239K vs. 240K expected and 250K prior (revised from 248K).
Continuing jobless claims came in worse at 1716K vs. 1700K expected and 1684K prior.
Japan's CPI Y/Y came in better at 3.3% vs. 2.5% expected and 3.3% prior.
The UK retail sales came in worse across the board:
Retail sales M/M came in worse at -1.2% vs. -0.5% expected and 0.6% prior (revised from 0.7%).
Retail Sales Y/Y came in worse at -3.2% vs. -2.1% expected and -1.6% prior (revised from -1.0%).
Technicals
The US dollar had gained some ground against its major counterparts across the board this week.
AUDUSD 1W Chart
AUDUSD has broken its 2023 low at 0.64583 and is approaching its 2022 low at 0.61702. The symmetrical triangle on the 1W chart was broken to the downside, and if the 2022 low of 0.61702 is also broken, then the long-term target level will be the psychological level of 0.60000.
USDJPY 1W Chart
A strong start to the week for USDJPY as the pair broke the 145.073 resistance level and also broke 146 before finding resistance at 146.564. The market is now on a pullback and is trading back in the 145 area; 145.073 will most likely be support now.
EURUSD 1W Chart
EURUSD is approaching the bottom support line of the rising wedge. We are looking for swings with less momentum and for them to have lower highs and lower lows to show signs of possible reversal and break the wedge.
GBPUSD 1W Chart
GBPUSD's potential head and shoulders pattern is still forming on the 1W chart; the head and left shoulder have been formed, and the right shoulder is now forming very well. The market has now reached the 20 EMA support; therefore, the reversal of the bullish trend may come quicker than expected. The 1.26800 support has not had a close under it for 2 months, so for the potential reversal to occur, there must be a break and close under 1.26800.
The key focus for the upcoming trading week will be:
Wednesday: New Zealand Retail Sales, Global PMIs, Canada Retail Sales
Thursday: US Jobless Claims
We will be back with another Forex Weekly Recap report next week.
Best of luck for the upcoming trading week ahead. Trade safely and responsibly.
BluetonaFX
SHIB Can it recover or Is the Steam Already GoneI've been in my SHIB position for a while now. I am thinking price will be able to push higher if it is able to survive the onslaught of Central Bank Rate Hikes and the negative crypto news that have been coming out lately. There are things in work for SHIB, but it all comes down to if people what to get in the coin or not. For now, without the easy that was there back in 2021, it is difficult to say that SHIB can climb higher, even with things like the crypto burns and Shibrium (I think that's how you spell it). But here is how I am going at it. First I am ok with losing the money I placed on it. Which means that I don't have my whole life's savings on this coin and I am not doing that "Yolo" stuff. So I got my mindset in the correct path. I am look for price to push lower, to the 0.000008 lvl to purchase some more coin. I am thinking price might hit the 0.000005 and at this lvl, I'll purchase some additional coin. I am thinking people who are already in the coin are going to hold anyways since what else is to do, sell?? They have likely came to terms with, if the coin tanks, I already knew this was going to happen. Moving on, one I get into my final position, that's it. I just wait and see what price does. The coin will just need to last until 2024 and if it does, I think price will be able to start pushing higher and hit 0.00001 sometime in late 2024 or mid 2025.
Of course there are many other things that come into play that could affect the coin. One being the regulations that are attempting to be pushed out to deal with crypto. Then you got the geo political issues and whatever else is being cooked up across the globe. But I must say, if price does push higher, I'll be one happy camper, indeed. Y'all have a great trading year out there.
Virgin Galactic (SPCE) - Q2 Interest - Potential Accumulation 📊 Fundamental Analysis:
Virgin Galactic has been gaining attention in the market due to a positive Q2 performance. The company's strong quarterly results have sparked interest among investors, potentially indicating positive growth prospects ahead.
📈 Technical Analysis:
The chart above illustrates a potential Wyckoff accumulation phase for SPCE. The price action appears to be forming a classic Wyckoff pattern, suggesting a potential bullish reversal. We've seen a series of higher lows forming over time, indicating increasing buying interest.
🔄 Anticipating the Spring Phase:
The final confirmation for the Wyckoff accumulation pattern often comes with the "Spring" phase, which involves a liquidity grab at the bottom. In this case, we're watching for a potential dip to the 0.272 Fibonacci level around $2.36. This could act as the liquidity grab, setting the stage for a potential bullish move.
📈 Bullish Confirmation:
To confirm the bullish scenario, we're looking for a higher high (an outbreak) in the price action, potentially around the $8 to $10 range. This breakout would validate the accumulation phase and signal a potential trend reversal.
🔍 Key Levels to Watch:
Support: 0.272 Fibonacci at $2.36
Breakout Confirmation: $8 to $10 range
Let's discuss in the comments below! What are your thoughts on SPCE's potential accumulation phase and breakout scenario? Share your insights!
Rio Tinto: A Mid- to Long-Term InvestmentRio Tinto
Rio Tinto is a British-Australian multinational mining and metals company headquartered in London, England. It is one of the world's largest mining companies, with operations in over 30 countries. Rio Tinto's primary products are iron ore, copper, aluminium, diamonds, and uranium. The company's market capitalization is approximately $100 billion. Rio Tinto is listed on the London Stock Exchange and the Australian Securities Exchange.
Current and Future Projects Rio Tinto has a number of current and future projects in the pipeline. These include:
The Gudai-Darri iron ore project in Australia, which is expected to be the world's largest iron ore mine when it comes into production in 2023.
The Simandou iron ore project in Guinea, which is one of the world's largest undeveloped iron ore deposits.
The Oyu Tolgoi copper-gold mine in Mongolia, which is one of the world's largest copper mines.
The Jadar lithium project in Serbia, which is one of the world's largest undeveloped lithium deposits.
Stock Rating
Rio Tinto's stock is currently trading at around $80 per share. I believe that Rio Tinto's stock is a good buy for the mid- to long-term. The company has a strong track record of profitability and growth, and it is well-positioned to benefit from the growing demand for metals in the global economy.
Risks
There are a few risks to consider before buying Rio Tinto stock. These include:
The cyclical nature of the mining industry.
The political risks associated with the company's operations in some countries.
The environmental risks associated with the mining industry.
Conclusion Overall, I believe that Rio Tinto is a good investment for the mid- to long-term. The company has a strong track record, it is well-positioned to benefit from the growth of the global economy, and it is trading at a reasonable valuation.
Risk Warning
Trading stocks and options is a risky activity and can result in losses. You should only trade if you understand the risks involved and are comfortable with the potential for losses.
Rating: Buy
Risk Disclaimer!
The article and the data is for general information use only, not advice!
The Trade Academy Team
Risk Disclaimer!
General Risk Warning: Trading on the Financial Markets, Stock Exchange and all its asset derivatives is highly speculative and may not be suitable for all investors. Only invest with money you can afford to lose and ensure that you fully understand the risks involved. It is important that you understand how Trading and Investing on the stock exchange works and that you consider whether you can afford the high risk of loss.
GBPUSD - GBP Now Stronger Then The USD?Analysis:
This has been a beautiful pair to trade recently and now we've got another opportunity setting up. Firstly looking at the chart it's clear to tell that we're in an upwards trend. We're forming higher highs and higher lows which confirms what we're seeing. We also have an upwards trendline which is being respected, again showing us that we're in an upwards trend so we're only interested in long positions. Price has made a move to the downside which may seem bearish, however this is just a pullback in an upwards trend. Where we're at currently looks like a great possible place to enter. We've got a previous area of resistance and as we know resistance often becomes support once broken so we expect that this will happen this time around. This isn't just our only confluence though. At this level we also have the middle between the 50% fib retracement level and the 61.8% fib retracement level, which is often called the "golden zone". All this means is that we expect bullish momentum to be in this area which would in turn push price to the upside making our level more attractive to buy at. To add further bullish strength to this level we also have an upwards trendline. This trendline has been respected multiple times in the past and every time its been touched we've seen strong bullish momentum. With trading history often repeats itself which is why we expect price will respect this upwards trendline again. Finally to further our point on the technical aspect we've been seeing slowing bearish momentum indicating to us that the bears are taking a step back and it's time for the bulls to step in and push price higher. This morning we did have some news come out for the GBP which was worse then expected, however this news isn't comparable to the bullish strength that we have so this doesn't really matter to us. Taking a look at the fundamentals as well we can see that the GBP actually overtook the USD in strength, meaning the GBP is now the 2nd strongest major currency whereas the USD is the 3rd strongest major currency, so this just furthers our bullish thesis, however we still have more bullish confluences to add to our idea. As of the most recent report for institutional positioning for the GBP we saw an increase in short positions of 18K which may seem bearish, however we also saw an increase of 24K long positions so this is very bullish for the GBP. This isn't the same for the USD however. As of the most recent report on institutional positioning for the USD we saw an increase of 7K long positions, but we also saw an increase of 8K short positions, meaning this is bearish for the USD. Overall we have all of our confluences pointing to bullishness on this pair and we're also sat at a strong level which we expect to hold, giving us a strong reason to be bullish!
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read and responded to. We any comments at all so thank you!
Stay Safe - The JPI Team
Disclaimer:
This does not constitute as financial advise. We are not responsible for any monetary loss that you endure. Trading is hard to be profitable with and we take losses just like everyone else does too. Our ideas won't always be correct which is why we urge you to always do your own analysis first before entering into the market but please feel free to use our analysis to assist you with yours.
Time For GA To Fall..GBP/AUD - I believe it is time, the analysis is above, but if we are being honest, this looks like it will be a clear double top, by EOP on Monday, before RBA decide their interest rate within the Asia session on Tuesday, and I only see AUD growing stronger.
Especially with all the tension surrounding the UK interest rate itself this week, I don't see the pound holding strong whatsoever, so I am short on that naturally. This however, I can see a potential 100+ pip play breaking out.
✅ Daily Market Analysis - WEDNESDAY JULY 26, 2023Key News:
USA - Building Permits
USA - New Home Sales (Jun)
USA - Crude Oil Inventories
USA - FOMC Statement
USA - Fed Interest Rate Decision
USA - FOMC Press Conference
Cautious Optimism in European Markets as FTSE 100 Reaches Two-Month High
European markets have started the week with a cautiously optimistic tone, fueled by hopes of additional stimulus measures from Chinese authorities in response to recent poor economic data. The sentiment has had a positive impact on the FTSE 100, which experienced a significant boost, reaching a two-month high on the previous day.
Investors in the region are closely monitoring developments in China, as concerns over its economic slowdown have weighed on global markets. The prospect of further stimulus measures from Chinese authorities is seen as a potential boost for both the Chinese economy and international markets, including Europe.
In response to the recent challenges in the Chinese economy, there are expectations that authorities may introduce measures to support growth and stability. Such actions could include monetary easing, fiscal support, or targeted measures to address specific economic sectors.
The positive market sentiment in Europe, particularly in the UK represented by the FTSE 100, is a reflection of investors' hopes for a potential economic rebound in China. As one of the world's major economies, any improvement in China's economic outlook could have significant ripple effects on global trade and investment.
However, market participants remain cautious as uncertainties persist, and the situation in China remains fluid. The impact of any stimulus measures on the broader global economy is yet to be seen, and geopolitical factors continue to influence market sentiment.
As the week progresses, investors will closely watch for any official announcements from Chinese authorities regarding stimulus measures and assess their potential implications for the European and global markets. In the meantime, cautious optimism prevails, with the FTSE 100's recent performance reflecting the market's hopeful outlook for economic recovery.
FTSE 100 daily chart
Optimism Grows as Short-Term Yields Retreat, Earnings Reports Impress
The improved sentiment in the markets has been further bolstered by a retreat in short-term yields, as investors believe that central banks may not need to implement aggressive rate hikes as previously anticipated just a few weeks ago. This development has eased concerns and contributed to a more positive outlook in the financial landscape.
Both German and UK 2-year yields have experienced a sharp decline from their earlier highs this month, largely attributed to the indication that inflation is slowing down more rapidly than initially projected. This trend has provided reassurance to investors, alleviating some of the fears of abrupt rate hikes that could potentially hamper economic recovery.
In the United States, stocks are witnessing moderate gains on Tuesday, driven by several factors contributing to a favorable market environment. Firstly, the release of a better-than-expected Consumer Confidence survey has boosted investor confidence in the strength of the US economy. The survey's positive results signal that consumers are optimistic about economic prospects, which bodes well for future spending and business activity.
Additionally, a series of earnings reports has surpassed expectations, further uplifting market sentiment. Strong corporate performance is a key driver of market growth, and companies' ability to outperform forecasts indicates robust economic conditions and the potential for continued expansion.
The combination of upbeat economic data and encouraging earnings reports has reinforced the notion that the global recovery is on track, and the worst impacts of the pandemic are subsiding. These positive developments have contributed to the improved sentiment in the markets and the appetite for risk among investors.
As the financial landscape continues to evolve, market participants will closely monitor central bank actions and economic indicators for further clues on the trajectory of interest rates and inflation. In the meantime, the current positive market sentiment is supporting moderate gains in US stocks and providing a sense of optimism for investors in the midst of an ever-changing economic landscape.
NASDAQ indices daily chart
SPX indices daily chart
DJI indices daily chart
Wall Street Rally: Factors Fueling Optimism in the US Market
The current Wall Street rally has been fueled by a convergence of positive factors, creating a favorable environment for investors and driving market sentiment. Several key elements are contributing to this optimistic outlook.
Strong US Consumer Confidence: One of the driving forces behind the rally is the strong US consumer confidence. The recent surge in consumer confidence has instilled optimism in the economy's resilience and growth prospects. This positive sentiment is indicative of consumers' confidence in their financial well-being and their willingness to spend, which can have a significant impact on economic activity and corporate performance.
Growing Belief in an Economic 'Soft Landing': Investors are increasingly becoming more confident in the notion of an economic 'soft landing,' wherein the economy transitions from a period of rapid growth to a more sustainable and stable pace. This reassurance has been underpinned by various economic indicators and data, suggesting that the economy is gradually moderating, rather than facing a sharp contraction.
Optimism Surrounding Artificial Intelligence Initiatives: The growing focus on artificial intelligence (AI) initiatives is also contributing to the positive sentiment on Wall Street. Investors are recognizing the potential of AI technologies to drive innovation, efficiency, and productivity in various industries, creating exciting opportunities for companies at the forefront of AI adoption.
Better-than-Anticipated Earnings Results: The ongoing earnings season has seen better-than-anticipated results from major tech companies, further boosting investor confidence. These positive earnings reports signal strong corporate performance and underscore the robustness of the US economy.
Busy Earnings Season: This week marks the start of the two busiest weeks of the earnings season, with a significant number of US companies reporting their earnings. Investors are closely monitoring these reports for insights into corporate performance and future prospects. The initial reactions to earnings releases from companies like Microsoft and Alphabet have been positive, adding to the overall optimism in the market.
Resilient US Economy and Federal Reserve's Monetary Policy: The overall resilience of the US economy and indications that the Federal Reserve is nearing the end of its rate-hiking cycle have contributed to the positive sentiment. A stable monetary policy outlook provides confidence to investors, as it suggests that the central bank is striking the right balance between managing inflation and supporting economic growth.
In conclusion, the current Wall Street rally is the result of multiple factors aligning to create an environment of optimism and confidence. Strong consumer confidence, expectations of an economic 'soft landing,' enthusiasm for AI initiatives, and positive earnings results are all contributing to the positive sentiment. As the earnings season unfolds, investors will continue to closely monitor corporate performance and central bank actions, which will further shape market dynamics in the weeks to come.
GOOGL stock daily chart
MSFT stock daily chart
Fed's 25bps Rate Hike Likely to Be the Last in 2023 Amid Inflation Concerns
The much-anticipated 25 basis points rate hike by the Federal Reserve today is expected to mark the final increase for the year, despite any potential arguments by Fed policymakers for additional hikes. Last month's pause in rate increases seems to set the tone for a more cautious approach towards monetary tightening.
Recent trends surrounding US inflation, particularly the likelihood of the Producer Price Index (PPI) turning negative in July, may pose challenges for the Fed's case for further rate hikes. Inflation dynamics have been a key concern, and the prospect of PPI potentially going negative adds to the complexities of justifying additional tightening measures.
Federal Reserve Chairman Jerome Powell may voice support for more rate hikes, but prevailing market sentiment seems to favor a prolonged period of higher rates. The focus will be on the Fed's projections regarding when it expects to reach its 2% inflation target. Despite the headline Consumer Price Index (CPI) currently sitting at 3%, core prices remain elevated, capturing attention from both the Fed and the market.
Investors and analysts will closely monitor the Fed's communication on its outlook for inflation and its strategy to achieve its price stability mandate. Any indication that the Fed is reassessing its approach to monetary policy amid inflation concerns could impact market sentiment and influence future rate expectations.
As the Fed delivers its decision today, the financial community will scrutinize not only the rate hike itself but also the nuances in the accompanying statements and remarks made by Chairman Powell during the press conference. Clarity on the Fed's stance and commitment to addressing inflation will be crucial for shaping market expectations and guiding investor decisions in the coming months.
US inflation rate
Challenges Ahead for the Fed as Headline CPI Declines, Causing Uncertainty in Gold Prices
As headline Consumer Price Index (CPI) continues its downward trend, the Federal Reserve may encounter difficulties in convincing the markets to support further rate hikes under the current economic conditions. The declining CPI adds to the uncertainties surrounding the central bank's future monetary policy decisions.
Gold prices have been experiencing fluctuations this week as investors remain cautious ahead of the Federal Reserve's meeting later in the day. The widely anticipated 25 basis points rate hike during the meeting has already been factored into the market expectations. However, the focus lies on any indications or signals regarding the central bank's stance on future rate hikes for the remainder of the year.
The precious metal's prices have remained within a narrow range amid the uncertainty surrounding the Fed meeting. Investors are closely monitoring any clues from the Federal Reserve regarding their outlook on inflation and potential further tightening measures. Market participants are keen to understand the central bank's assessment of economic conditions and whether additional rate hikes are warranted amid the evolving inflation dynamics.
As the Federal Reserve makes its announcement, the markets will be carefully analyzing the statements and remarks by Fed officials, especially Chairman Jerome Powell, during the press conference. Any hints of a shift in the Fed's approach to monetary policy could trigger volatility in gold prices and influence investor sentiment.
In this climate of uncertainty, gold prices are likely to react to the nuances of the Fed's communication, as traders and investors gauge the central bank's intentions and how it plans to address inflationary pressures. The upcoming meeting will provide critical insights into the central bank's strategy, and any surprises or shifts in their messaging could have significant implications for gold prices and the broader financial markets.
XAU/USD daily chart
Gold's Recovery Stalls Amidst Uncertainties Ahead of Central Bank Meetings
Gold has experienced a robust recovery over the past month, primarily driven by weak US economic data, particularly concerning inflation figures. Speculations arose that the Federal Reserve's ability to continue raising interest rates would be limited, providing support for the precious metal's price surge. However, in recent sessions, this rebound has stalled as uncertainties loom in anticipation of the outcome of the Fed's meeting.
Investors are closely watching the Federal Reserve's meeting, as it will provide crucial insights into the central bank's monetary policy outlook and how it plans to address inflation concerns. The speculations surrounding the Fed's future rate hikes have added to the cautious sentiment in the gold market, leading to a pause in the metal's upward momentum.
Beyond the Fed meeting, investors are also keeping an eye on decisions from the European Central Bank (ECB) and the Bank of Japan (BOJ) later in the week. The ECB is expected to raise rates by 25 basis points on Thursday, signaling a shift in its monetary policy stance. On the other hand, the BOJ is likely to maintain its ultra-dovish approach on Friday, emphasizing its commitment to supporting the Japanese economy.
These upcoming central bank meetings have introduced further uncertainties into the market, causing investors to exercise caution and reassess their strategies. Gold, often sought as a safe-haven asset during times of economic uncertainty, is particularly sensitive to changes in interest rates and monetary policies, leading to the recent hesitation in its price movement.
As the central banks announce their decisions and provide guidance on their future policy trajectories, the gold market is expected to see increased volatility. The outcomes of these meetings will shape investor sentiment, potentially leading to new trends in the precious metal's price. In such a dynamic environment, traders and investors need to remain vigilant and closely monitor central bank communications to make informed decisions amid the evolving economic landscape.
EUR/USD daily chart
GBP/USD daily chart
Euro and Pound Weaken Against US Dollar Amidst Weak PMI Surveys from Europe
The euro and pound have been trading at moderately weaker levels against the US dollar, experiencing further declines following the release of weaker-than-expected PMI surveys from Europe. The data revealed a slowdown in economic activity, raising concerns about the region's recovery prospects.
Investors are closely monitoring the developments surrounding central bank meetings, particularly the Federal Reserve and the European Central Bank (ECB). The prevailing market sentiment suggests that the Fed is likely to implement a single rate hike and then pause, signaling a more cautious approach to addressing inflationary pressures. On the other hand, the ECB may have further rate adjustments to make as it grapples with economic uncertainties in the Eurozone.
These differing expectations for the two central banks could lead to significant fluctuations in the value of the euro in the currency markets. Investors are keeping a keen eye on any shifts in either or both of these views, as they can have a profound impact on the euro's trajectory.
The weakening of the euro and pound against the US dollar indicates growing concerns about the economic outlook for Europe. The region's PMI surveys have highlighted challenges in various sectors, and this has put pressure on the currencies.
In such a dynamic environment, currency traders need to remain vigilant and responsive to changing market sentiment and economic data. Any surprises or shifts in central bank policies can lead to rapid movements in currency pairs, presenting both opportunities and risks for traders.
As the central banks proceed with their monetary policy decisions, market participants will closely analyze their communications and guidance. Any indications of future rate adjustments or policy shifts could spark volatility in the currency markets, making it essential for traders to stay informed and adaptable in their strategies.
HOW TO CHOOSE STOCKS STEP-BY-STEP APPROACHHOW TO CHOOSE STOCKS STEP-BY-STEP APPROACH
1. Systematic approach:
It's crucial to have a good strategy to identify stocks that align with your investment goals and risk tolerance.
Let's learn the full process.
2. Identify Companies with Strong Fundamentals:
Evaluate the following metrics while selecting stocks.
• Price-to-Earnings (P/E) Ratio • Return on Equity (ROE)
• Debt-to-Equity Ratio
• Dividend Yield
• Free Cash Flow (FCF)
Here's an evaluation of each of the mentioned metrics
a. Price-to-Earnings (P/E) Ratio:
The Price-to-Earnings ratio (P/E ratio) is one of the most commonly used valuation metrics. It compares a company's stock price to its earnings per share (EPS). The formula is:
P/E Ratio = Stock Price / Earnings Per Share (EPS)
A high P/E ratio may indicate that investors have high expectations for the company's future growth potential, while a low P/E ratio may suggest that the stock is undervalued. However, a high P/E ratio could also mean the stock is overvalued or that the company is experiencing temporary issues.
b. Return on Equity (ROE):
Return on Equity measures a company's profitability relative to shareholders' equity. It is calculated as:
ROE = (Net Income / Shareholders' Equity) * 100
ROE represents how efficiently a company is using shareholders' capital to generate profits. A higher ROE generally indicates better financial performance and management effectiveness. However, it's essential to compare ROE within the same industry, as different industries may have varying capital structures and profitability expectations.
c. Debt-to-Equity Ratio:
The Debt-to-Equity ratio (D/E ratio) assesses a company's financial leverage by comparing its total liabilities to shareholders' equity. The formula is:
D/E Ratio = Total Debt / Shareholders' Equity
A high D/E ratio may suggest that the company relies heavily on debt to finance its operations, which can increase financial risk. On the other hand, a low D/E ratio may indicate a more conservative capital structure. A balance between debt and equity is generally preferred, depending on the industry and the company's overall financial health.
d. Dividend Yield:
The Dividend Yield is a financial ratio that shows the annual dividend income as a percentage of the current stock price. The formula is:
Dividend Yield = (Annual Dividend Per Share / Stock Price) * 100
Dividend-paying stocks with a higher yield can be attractive to income-focused investors. However, it's essential to consider the sustainability of the dividend and the company's ability to maintain or increase it over time.
e. Free Cash Flow (FCF):
Free Cash Flow represents the cash a company generates from its operating activities after accounting for capital expenditures. It provides insight into a company's financial flexibility and ability to invest in growth opportunities or return cash to shareholders. The formula is:
FCF = Operating Cash Flow - Capital Expenditures
A positive and growing FCF is generally a positive sign, as it suggests the company can fund its operations and invest in future growth without relying on excessive debt or equity issuance.
Strong fundamentals indicate a company's ability to generate consistent earnings and withstand market fluctuations.
3. Analyze Competitive Position:
Assess a company to see if they have a competitive edge in the market.
Factors like brand strength, patents, unique technology, or dominant market share can contribute to a company's competitive edge.
4. Study Historical Performance and Future Growth Potential:
Look for consistent revenue and earnings growth over time.
Additionally, assess the company's growth for future by considering factors like new product launches, expansion plans, and market opportunities.
5. Monitor and Review:
After selecting stocks, it's crucial to monitor and review your investments regularly.
Evaluate your portfolio's performance and make adjustments as necessary to ensure it remains aligned with your investment goals.
Here are some additional tips for choosing stocks:
6. Diversification:
Diversification is a key principle in stock investing. It involves spreading your investment across different companies, industries, or asset classes. By diversifying, you reduce the risk associated with any single stock or sector performing poorly, as losses in some areas may be offset by gains in others. Diversification can be achieved through mutual funds, exchange-traded funds (ETFs), or by individually selecting stocks from various sectors.
7. Risk Assessment:
Understanding and assessing the risks associated with a particular stock or investment is essential. Each stock carries its own set of risks, including market risk, sector-specific risks, company-specific risks, and broader economic risks. Consider your risk tolerance and the amount of risk you are willing to take on before investing in any stock.
8. Technical Analysis vs. Fundamental Analysis:
Investors use two main approaches to analyze stocks: technical analysis and fundamental analysis. Technical analysis involves studying historical price and volume patterns to make predictions about future price movements. On the other hand, fundamental analysis, which was partially covered in step 2, involves evaluating a company's financial health, performance, and potential for growth. Understanding the differences between these approaches can help you decide which one aligns better with your investment strategy.
9. Long-term vs. Short-term Investing:
Decide whether you want to be a long-term investor or a short-term trader. Long-term investing involves holding onto stocks for extended periods, often years, to benefit from potential long-term growth. Short-term trading involves buying and selling stocks over shorter periods, typically to take advantage of short-term price movements. Your choice will depend on your investment goals and risk tolerance.
10. Consider Dividends:
Dividends are payments made by some companies to their shareholders from their profits. If you are seeking a regular income stream or want to reinvest in more stocks, consider choosing companies that offer dividends. Dividend-paying stocks can be an essential component of an income-focused investment strategy.
11. Stay Informed:
Stay updated on market trends, economic indicators, and company news. Being informed about the latest developments can help you make more informed investment decisions. Read financial news, follow reputable analysts, and keep track of relevant events that could impact the stock market.
12. Avoid Emotional Investing:
Avoid making investment decisions based on emotions, such as fear or excitement. Emotional investing can lead to impulsive decisions that may not align with your overall strategy. Instead, stick to your systematic approach and investment plan, considering the long-term objectives you set.
13. Understand Tax Implications:
Consider the tax implications of your investments. Different countries have different tax rules for stocks, and holding periods can also affect taxation. Understanding the tax implications can help you optimize your investment returns and minimize tax liabilities.
14. Seek Professional Advice:
If you are new to investing or find it challenging to select stocks, consider seeking advice from a financial advisor or investment professional. They can provide personalized guidance based on your financial situation, risk tolerance, and investment goals.
15. Stay Patient and Disciplined:
Stock market investing requires patience and discipline. The market may experience ups and downs, but it's essential to stay focused on your long-term goals and avoid making impulsive decisions based on short-term market fluctuations.
Advice before making any investment decisions:
Do your research. Before you invest in any stock, make sure you do your research and understand the company. This includes reading the company's financial statements, following the news about the company, and talking to other investors.
Diversify your portfolio. Don't put all your eggs in one basket. By diversifying your portfolio, you can reduce your risk.
Don't panic sell. When the market takes a downturn, it is important to stay calm and not panic sell. Remember, the market will eventually recover.
