12/06/23 Weekly outlookLast weeks high: $27401.2
Last weeks low: $26363.7
Midpoint: $25326.2
A massive week in the markets this week:
Tuesday - US inflation data to be released tomorrow (Inflation rate YoY, MoM and core inflation YoY.)
Wednesday - PPI MoM, FED interest decision, FOMC economic projections & FED conference.
Thursday - Initial jobless claims & US retail sales
All these events happening so closely together signals huge volatility to be expected. This coupled with the SEC news the crypto space is balancing on a knife edge. We've already seen alts bleed extensively but BTC and even ETH have yet to seen similar sell-offs. Perhaps we will see it this week.
As it stands price is near last weeks low, with the incoming volatility I think we can safely assume that price will break lower, it's a question of how far below it will go.
PPI
GBPUSD I FOMC trading plan and levels to watch Welcome back! Let me know your thoughts in the comments!
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EURUSD - A review of this week's newsWe're beginning to see a Tale Of Two Economies emerge, as US data this week shows the path of disinflation continues, albeit slowly, giving investors hope that the Fed's interest rate increases are making an impact. Meanwhile across the pond, all quotes from the ECB are warning that the fight against inflation rages on and further rate hikes will be coming.
However, one major factor hanging over the Dollar is the news that there is "significant risk", according to the CBO, that the US won't be able to pay all of it's obligations as soon as the beginning of June, leading to the possibility of a default unless Congress votes to raise or suspend the Debt Ceiling.
From a technical perspective we see EURUSD failed a number of attempts to break through at the highs and has now begun to create lower highs and lows with it's violent moves down in recent days. Key trendlines and support levels have been broken and all signs point to the countertrend move having begun. While we appear overextended on lower timeframes, it may be prudent to wait patiently for a new lower high for a viable short entry.
It seems likely that we're witnessing a breakout to the upside on the DXY combined with profit taking and shift in sentiment for the Euro due to continued inflationary pressure in contrast to US inflation.
United States (US):
US CPI YoY 4.9% (Forecast 5%) : Consumer prices rose 4.9% on an annual basis, below forecast.
US Core PPI YoY Actual 3.2% (Forecast 3.3%, Previous 3.4%): The US core Producer Price Index (PPI) rose by 3.2% year-on-year, slightly below the forecasted 3.3%.
US PPI MoM Actual 0.2% (Forecast 0.3%, Previous -0.5%): The US Producer Price Index (PPI) increased by 0.2% on a monthly basis, slightly below the forecasted 0.3%.
US Initial Jobless Claims Actual 264k (Forecast 245k, Previous 242k): The number of Americans filing for initial unemployment benefits rose to 264,000, exceeding the forecasted 245,000. This increase suggests ongoing challenges in the US job market.
The “single biggest threat” to the economy now is the US hurtling towards a default on its obligations, said Karine Jean-Pierre, press secretary.
European Central Bank (ECB):
ECB: Consumers see 5% inflation over the next 12 months vs 4.6% in February : The European Central Bank (ECB) reports that consumers in the Eurozone expect inflation to reach 5% over the next 12 months. This represents an increase from the previous estimate of 4.6% in February, reflecting growing concerns about rising prices.
ECB's Nagel says the "latest interest rate hike won't be the last".
ECB's Lagarde spoke on Thursday, saying "the fight against inflation isn't over".
April's CPI Surprise: Can Bulls Charge Forward For Now?SPDR S&P 500 FUTURES ( CME_MINI:ESM2023 ) & ETF ( AMEX:SPY ) - Market Update - 10/10/23
The April Consumer Price Index (CPI) report showed a 0.4% increase last month, driven by rising shelter, used vehicle, and gas prices. This increase met Wall Street expectations, and the annual inflation rate of 4.9% came in slightly below estimates, providing hope for a lower trend. For workers, real average hourly earnings, adjusted for inflation, rose 0.1% for the month but were still down 0.5% from a year ago. These CPI figures provided a stick save for ES_F.
A massive 60-point range started with a failed breakout at 4176, and ES_F tested the overnight low, flushing to the 4114 support level. An intraday bull flag formed at the 4118-4123 support zone, with bulls getting long at the 4129-4134 range. A broadening formation (megaphone) pattern emerged at 4114, with resistance at 4176-4180. The rising uptrend channel from the March 2023 low is highlighted in yellow, establishing new support at 4134.
Bull Case:
On any pullback, look for re-entry to go long at the 4145-4146 level. If we move above 4145, the new magnet zone is 4176-4181. The 4166 support level is also a good magnet.
Bear Case:
On any pullback, look for re-entry to go short below 4134.
Economic Factors:
Keep an eye on the PPI-Final Demand and Jobless Claims data released at 8:30AM (EST) today.
Bonds:
The US10Y supports the bull case on the 4-hour chart with a new lower low. A symmetrical triangle pattern with a 5-day rising support range is visible, extending from 3.0308% to 3.311%.
Support Levels:
4134-32 (major), 4122, 4114-16 (major), 4111, 4105, 4092, 4082-78 (major), 4061, 4048 (major - broadening formation support), 4037, 4020-22 (major), 4011 (major), 3997, 3984 (major), 3978, 3952 (major), 3942, 3935 (major), 3904 (major), 3892 (major)
Resistance Levels:
4146 (major), 4154, 4166, 4176-81 (major, broadening formation support), 4188-92 (major), 4200, 4210, 4218-20 (major), 4230 (major - broadening formation support), 4243-46 (major), 4256
Final Thoughts:
As the market continues to digest April's CPI surprise, traders should remain vigilant and watch key support and resistance levels. The bull case still has potential, but it is crucial to monitor economic factors, such as PPI-Final Demand and Jobless Claims data, as well as bond market developments.
Not Investment Advice:
Please note that the information and strategies shared in this newsletter are for informational and educational purposes only. They should not be considered investment advice, nor should they be used as a basis for making any investment decisions. Always consult a financial professional before making any investment decisions, and ensure you understand the risks involved in trading and investing.
Swiss franc falls despite SNB Jordan's hawkish messageThe Swiss franc has fallen considerably on Thursday. In the North American session, USD/CHF is trading at 0.8950, up 0.59% on the day.
Swiss National Bank President Jordan reiterated a hawkish message on Wednesday that he sent out a week ago. Jordan said that he could not rule out further rate hikes, noting that current monetary policy was not restrictive enough. In other words, the SNB is unhappy with inflation levels, which although relatively low at 2.6%, have been above the Bank's target of 0-2% since February 2022. Inflation fell from 2.9% to 2.6% in April, and there is one final inflation report before the SNB's next meeting on June 22nd. The SNB has not shied away from being aggressive and delivering oversize hikes as high as 0.75% in the current rate-hike cycle, and we could see another hike if inflation doesn't fall close to 2.0% in the next release.
The Swiss franc continues to appreciate, much to the consternation of SNB policymakers, as a stronger Swissy makes exports more expensive. The Swiss franc has soared about 500 points since March 1st and Jordan made sure to remind his listeners that the central bank was prepared to intervene in the forex markets if necessary.
In the US, unemployment claims surprised to the upside, rising to 264,000, up from 245,000 and higher than the consensus estimate of 242,000. This was the highest total since January 2022, and although it's just one report, it will likely raise speculation that the labour market is showing cracks. On the inflation front, the Producers Price Index, taking the lead from CPI, softened in April. The headline reading fell from 2.7% to 2.3% (2.4% est). The core rate dropped from 3.4% to 3.2% (3.3% est).
USD/CHF has pushed past resistance at 0.8907. The next resistance line is 0.8994
0.8819 and 0.8732 are providing support
NQ Power Range Report with FIB Ext - 5/11/2023 SessionCME_MINI:NQM2023
- PR High: 13415.50
- PR Low: 13403.50
- NZ Spread: 27.0
PPI pre-RTH at 08:30 EST
- AMP Broker increased margins expecting high volatility
Weekly supply lifted, breaking and holding above daily range since April. Should excite some bulls and trigger some short stops.
Watching to see if we continue higher or fail back inside the range.
Evening Stats (As of 12:05 AM)
- Weekend Gap: N/A
- Session Open ATR: 193.34
- Volume: 18K
- Open Int: 255K
- Trend Grade: Bear
- From ATH: -19.9% (Rounded)
Key Levels (Rounded - Think of these as ranges)
- Long: 13531
- Mid: 12959
- Short: 12392
Keep in mind this is not speculation or a prediction. Only a report of the Power Range with Fib extensions for target hunting. Do your DD! You determine your risk tolerance. You are fully capable of making your own decisions.
PPI News Release tomorrow. What is it? The U.S. Producer Price Index (PPI) MoM release is tomorrow (14:30).
In this idea I will talk about what it is and how we can make money of this as traders :)
What the # is PPI?
The Producer Price Index (PPI) measures the price change on the manufacturing side.
In contrast to CPI, Consumer Price Index, which measures what consumers pay for their stuff!
So, the PPI covers the price changes of the sellers and that is why it is widely considered as one of the most important indicators for inflation.
How does PPI influence the dollar?
When the PPI rises, this sends a message to the fed that inflation may be taking place so they should raise interest rates to 'fight' this inflation.
The interest rates hikes generally lead to higher value of the dollar.
Rising PPI = signal of inflation = policy of higher interest rates = more attractive to investors = dollar is more in demand = increase in value
Same things goes for the other side:
Low PPI = low indicator for inflation = message to fed to ease up with the rate hikes = lower interest rate = Generally bearish for the dollar.
So always buy the dollar when PPI rises?
NO! You should also take a look at the monetary policy of the counter currencies countries. Because lower interest rates in USA generally DON'T mean a decrease in the dollar value for USD/JPY if the interest rates are even MORE lowered in japan.
Conclusion
To be honest, the best way to 'make' money in the long term during major news events is to not trade at all. Because of the major volatility spike you can lose money very quickly and there is also have very high risk of slippage on your trades. Trading big news events is like gambling and that's not what we do. Maybe you experience a little bit of FOMO when you see the beautiful big moves that you 'could have gotten into' but it WILL pay off in the long run to avoid trading during major news events.
I give daily ideas about market analysis, trading psychology and trading in general.
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I wish you all good trading!
USDCAD, post BoC & PPI data releaseFundamental Analysis
Key points:
For the fourth day in a row, USD/CAD has been under some selling pressure on Thursday.
The USD is under pressure as a result of expectations for a pause in the Fed's rate-hike program.
Despite expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair, selling of the US Dollar (USD) continues incessantly for the third consecutive day. In point of fact, the markets appear to be convinced that the US central bank will stop tightening its monetary policy after one more hike next month, as evidenced by the lower-than-expected US Producer Price Index (PPI) numbers released earlier today, Thursday 13th April 2023.
Technical Analysis
From a Technical Analysis standpoint, this is actually a follow-up from our initial bearish analysis that we shared on Friday 24 March (please see link at bottom of this analysis), since then price has been dropping (first top black arrow) from $1.38000 price level. Subsequently we shared another two updates on March 30th and April 3rd, explaining that we were anticipated a pullback and further drop from $1.35555 level (2nd lower black arrow), for more details, please feel free to go back and review those analysis. Since all that time our target was and still is the $1.31200 price zone as shown on weekly chart of the 30th March update.
So now, Price is coming to a zone from where it is likely to bounce off from and make another pullback, before moving down again. That pullback maybe deeper than expected, and we also don’t negate the fact that price may very well go through this level and if so that we should expect a bigger reaction from $1.33000 price level (see projections on chart). All in all, we believe USD/CAD is still bearish regardless if makes a pullback or creates some range in between.
PPI, XLF No Bear follow through, Rate Hikes, QQQ Lead Bull- PPI data came in better then expected increasing the likelihood of a pause to 50-60%
- XLF gapped down new lows but closed around cash open area, meaning there wasnt a lot of bear follow through after the gap down. The first sign bulls want to see is XLF holding its lows and start to bounce or even just going sideways is good for tech bulls. Bears want to see new lows.
- QQQ lead bull held up the SPY. making 15m higher lows each time while SPY was making new lows in the end afternoon once XLF started bouncing just even a little bit you saw both SPY and NASDAQ had a nice rip higher.
- Looking for SPY to form its daily uptrend then i would be playing on the bull side for swings on TQQQ or SPXL, for now im still scalping day trades and going all cash before end of the day.
- Next FOMC meeting is going to be a lot more key then any other previous ones to see if Powell actually pauses or hike 0.25BPS even if he hikes 0.25 we still want to see what he say in his speeches is he going to say this is the last hike and we are pausing after this 0.25.
SPY: Due for more downside?I've got a supply zone staring at $394 that I think will serve as a temporary top for the remainder of this week. We also have a strong resistance at $393. I may look to enter puts but I am more likely going to try to play UVXY calls with the extra volatility. I'm expecting this to get under $380 fairly quickly and ultimately down o $378 where I see a gap.
PPI Data, Rate Hikes, QQQ / SPX Support and Resistance- CPI data came in expected today, excpet core is 0.1% hotter market didn't really care since we need something really hot to not get a 0.25bps
- PPI data likely will come in expected as well today, since CPI was pretty aligned so technical matter more now
- SPX came close to 200 MA today rejected the 3940 area but QQQ is above 200 MA
- QQQ and SPX reject resistance at the same time
- QQQ broke 294.5 support (yesterdays triple top resistance) in the afternoon and bears didn't follow through bulls V shaped into close
- KRE and XLF both still in daily bear flag territory.
KEY QQQ & SPX BOTH is still under resistance even though we V shaped we closed right under it, so still in the chop range, I am neutral now yesterday i was bull lean and played the bull move this morning as i mentioned when we broke the triple top resistance at 294.5 QQQ I am going long. Now at this range its anyone's game since there are both bear thesis and bull thesis that are both correct at these levels. currently all cash took profit this morning likely scalping depending on which side we break tomorrow.
EUR/USD at 3-week low after strong US dataThe euro is down for a third straight day and fell earlier to 1.0629, its lowest level since Jan. 23. In the European session, EUR/USD is trading at 1.0639, down 0.30%.
The US dollar is showing some strength this week against the majors, as US data continues to shine. Retail sales impressed with a 3% gain earlier this week, and PPI and unemployment claims were both better than expected. Is the disinflation process stalled?
The markets didn't expect such good numbers, but the economy has proved to be surprisingly resilient to rising interest rates. The Fed has been preaching 'higher for longer' for some time, but the markets stuck to their dovish stance, expecting that the Fed would have to pivot and even cut rates later in the year. The host of strong US numbers has forced investors to recalibrate, and the markets have revised upwards their peak rate forecast to above 5%.
The US dollar has been the big winner of the shift in market thinking, and US Treasury yields are at their highest level this year. Fed member Mester said she saw a strong case for raising rates by 50 basis points at the last Fed meeting, a sign that the Fed could move away from the moderate 25-bp hikes if inflation isn't falling quickly enough. Mester said that she didn't see inflation falling to 2% until 2025, which points to a long disinflation process.
The ECB raised rates by 50 basis points in February and has signalled that it will do the same at the Mar. 16 meeting. The main financing rate is currently at 3%, well below the Fed (4.5%) and other major central banks. It's not clear what the Bank has planned after the first quarter, but with inflation running at 8.5%, the risk for further rate hikes is skewed to the upside. The ECB has made it clear that rates will remain high until there is evidence that inflation is falling toward the target, which means that the current rate-tightening cycle isn't anywhere near its end.
EUR/USD is testing support at 1.0629. Below, there is support at 1.0581
1.0762 and 1.0847 are the next resistance lines
Key Levels and Market overview into the Asian session openA look at the price action from the European and US sessions and what that may mean for the Asian market open after PPI out in the US was stronger than expected adding fuel to the inflation fire. I feel data is still showing 'sticky inflation' which eventually leads to higher interest rates and lower spending which will cap the indexes. Intraday the US could not hold up off the lows and was hit hard into the close with potential to continue lower. I look at some key levels to watch and the price action setups I expect to play out.
Markets covered :-
DOW
Nasdaq
DAX
FTSE
ASX200
Hang Seng
USD Index
Gold
Oil
Copper
BTC (1h) vs CPI and PPI announcementsBTC price action on the days of #CPI and #PPI announcements for Oct 2022 through Jan 2023.
Yellow = #CPI announce dates
Pink = #PPI announce dates
Oct announce (for Sept)
#CPI = BTC up
#PPI = BTC up
Nov announce (for Oct)
#CPI = BTC up
#PPI = BTC up
Dec announce (for Nov)
#CPI = BTC up
#PPI = BTC down
Jan announce (for Dec)
#CPI = BTC up
#PPI = BTC down
***
Notes
December PPI was announced before CPI, probably due to holiday season for gov .
Used hashtags to prevent TV from auto linking #CPI and #PPI to charts for indexes/stocks with same ticker
NQ Power Range Report with FIB Ext - 2/16/2023 SessionCME_MINI:NQH2023
- PR High: 12750.50
- PR Low: 12731.25
- NZ Spread: 43.25
Evening Stats (As of 1:40 AM)
- Weekend Gap: N/A
- 8/19 Session Gap: -0.04% (open > 13237)
- Session Open ATR: 275.31
- Volume: 27K
- Open Int: 271K
- Trend Grade: Bear
- From ATH: -23.8% (Rounded)
Key Levels (Rounded - Think of these as ranges)
- Long: 12959
- Mid: 12392
- Short: 11820
Keep in mind this is not speculation or a prediction. Only a report of the Power Range with Fib extensions for target hunting. Do your DD! You determine your risk tolerance. You are fully capable of making your own decisions.
GOLD SHORT TERM INTRADAY IDEAIntraday Analysis - ( 16 FEB 2023 )
Strong retail sales did not hold any weight yesterday which was not expected. Overall dollar has made new intraday highs and is in a retest for better buy side liquidity for further upside to targeted region of 105.5. Gold is in a retest as seen to better sell zones as marked out based off FM key levels. There will be PPI tonight and if it comes out as per forecast, we would see another leg down on gold. Overall my bias for gold stands with it being bearish and dollar being dominant.
HRHR SELLS AT 1850-1852
MRMR SELLS AT 1836
SAFEST SELLS BELOW 1830
TARGET LOOKING AT 1820 POSSIBLY EVEN 1810s region
Everyone Believes What They Want to BelieveRealty != Belief
The secret to this market is to lower your expectation continually.
Bulls do not realize they are sitting in the largest bull trap ever setup.
Macro bottom still pending... it's more of the same: drop, consolidate, drop.
A wise Bera once said:
Resistance is infinite and unbounded.
When a level is broken, there will always be more resistance higher up.
Support is not though, support is capped at 0.
The Fed's view:
www.federalreserve.gov
What does the Beveridge curve tell us about the likelihood of a soft landing?
"It would be unprecedented for job vacancies (openings) to decline by a large amount without the economy falling into recession. We are, in effect, saying that something unprecedented can occur."
Lagging Crash
Lehman Brothers filed for bankruptcy on September 15, 2008.
The broader stock market did not begin its crash until a week later.
Everyone initially thought Lehman wasn't a systemic risk.
You say crypto crash can not crash stocks with a LAG?
The doom loop is accelerating.
Few understand this.
BTC Futures Rising Wedge Forming, confluence with newsI frequently chart the BTC CME Futures chart alongside a normal BTC Exchange chart. The difference between them is that CME is closed for the weekend and operated by a regulated group. This means the CME chart can frequently show different trends/patterns as it removed a lot of the noise, unnecessary wicks, etc that can come from exchanges trading over the weekend.
I'm watching the early stages of this rising wedge forming. It's a bit early to call it a confirmed pattern still but worth putting on the radar. I often like to find confluence in charts aligning with news; I don't trade news but news is often a perfect catalyst for patterns to breakout. So what I have shown in the chart is a pattern that comes to an apex in about a week's time. And we have February right around the corner with a lot of news coming out, specifically the FOMC meeting minutes releasing on February 1st. This would be the perfect catalyst to create some volatility, quickly eliminate overleveraged longs and shorts, and then push for a pattern break of the rising wedge.
Marking this idea as short as I am bearish overall and ready for a market reset, but note that this chart displays an idea where BTC gets one more push higher at the beginning of this week.
Happy to answer any questions people have on this idea!
AUD/USD slides after soft Aussie job reportThe Australian dollar has extended its slide on Thursday. AUD/USD is trading at 0.6884 in Europe, down 0.82%.
Australia's December employment report was weaker than expected, sending the Australian dollar sharply lower. The headline reading showed a loss of 14,600 in total employment, which may have soured investors. The release wasn't all that bad, as full-time jobs showed gains of 17,600, with part-time positions falling by 32,200. The unemployment rate remained at 3.5%, but this was a notch higher than the forecast of 3.4%.
On the inflation front, recent releases point to inflation moving higher. November CPI rose to 7.3%, up from 6.9%, and the Melbourne Institute Inflation Expectations climbed to 5.6%, up from 5.2%. We'll get a look at the all-important quarterly inflation reading next week. Inflation came in at 1.8% q/q in Q3, and an acceleration in Q4 would force the Reserve Bank of Australia to consider raising rates higher and for longer than it had anticipated. The cash rate is currently at 3.10%, and I expect the RBA will raise it to 3.50% or a bit higher, which means we are looking at further rate hikes early in the year.
The US dollar seems to take a hit every time there is a soft US release, and this week has had its share of weak data. The Empire State Manufacturing Index sank to -32.9, while headline and core retail sales both fell by -1.1%. PPI came in at -0.5%. All three releases were weaker than the November readings and missed the forecasts, indicating that cracks are appearing across the US economy, as the bite of higher rates is being felt.
The markets are clinging to the belief that softer numbers will force the Fed to ease up on its pace of rate hikes and possibly end the current rate-cycle after a 25-bp increase in February. The Fed has done its best to dispel speculation that it will pivot, but I expect the US dollar to lose ground if key releases are weaker than expected.
AUD/USD is testing support at 0.6893. Below, there is support at 0.6810
0.6944 and 0.7027 are the next resistance lines
US PPI DropsAre you feeling the relief at the checkout? Wholesale goods and services prices have dropped sharply in December, indicating inflation may be easing.
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S&P 500 (SPX)/Producer Price Index (PPIACO) Leading Market LowerToday, I wanted to share a chart setup that was inspired by @Badcharts that highlights the ratio of S&P 500 (SPX) / Producer Price Index (PPIACO) correlatio n — which, as @Badcharts recently highlighted on a Twitter space led (or very closely correlated) with the downturn in the S&P 500 (SPX SPY ES1!) starting in late 21’.
In addition to this, I wanted to layer on the S&P 500 (SPX), Unemployment Rate (UNRATE), & U.S. Recessions as these (3) inputs seem to have a very intersting correlation to the relative predictive timing of previous recessionary periods — both in 01’ & 08’.
I’ve also added the “MACD Indicator” (bottom indicator) & the “Distance from Moving Average” (first indicator), using the SMA 144 & 200 Bar Lookback as these help highlight overbought/oversold conditions in the ratio of S&P 500 (SPX) / Producer Price Index (PPIACO) — which could help you identify tactical market positioning opportunities (long or short).
Here is the chart key for this setup: 📊🔑
Black/White Bars = S&P 500 (SPX) / Producer Price Index (PPIACO)
Blue Line = SPX (SPY ES1!)
Orange Line = Unemployment (UNRATE)
Vertical Black Dotted Line = Pre-Recession Ratio Peak (SPX/PPIACO)
Vertical Orange Dotted Line = Pre-Recession Unemployment Trough (UNRATE)
Vertical Blue Dotted Line = Pre-Recession S&P 500 Peak (SPX)
1990 - 2023 Overview (Monthly) 📊
*2001 Recession* (Monthly & Weekly) 📊
*NOTE: First indicator peak/trough to last indicator peak/trough = 5 bars (months)*
Peak (SPX/PPIACO) = Mar. 00’
Trough (UNRATE) = Apr. 00’
Peak (SPX) = Aug. 00’
*2008 Recession* (Weekly & Daily) 📊
*NOTE: First indicator peak/trough to last indicator peak/trough = 5 bars (months)*
Trough (UNRATE) = May 07’
Peak (SPX/PPIACO) = June 07’
Peak (SPX) = Oct. 07’
2023 Recession? (Weekly & Daily) 📊
*NOTE: First indicator peak/trough to last indicator peak/trough = 7 bars (months), but no “technical recession”…*
Peak (SPX) = Dec. 21’
Peak (SPX/PPIACO) = Jan. 00’
Trough (UNRATE) = July 22’
What are your initial thoughts & observations from this chart setup? Let me know in the comments below! 👇🏼