2024-01-08 11:30

Article by IG Senior Market Analyst Axel Rudolph FTSE 100, DAX 40, And Nasdaq 100 Analysis and Charts FTSE 100 to open lower as Asian markets decline The FTSE 100 continues to decline amid pared back rate cut expectations and nears its current 7,648 to 7,641 January lows which may offer support. While this is the case, Monday’s intraday high at 7,696 may be revisited, a rise above which would put the mid-December high at 7,725 back on the map. Downside pressure should be maintained while this level isn’t being exceeded. Above it lies resistance between the September and December highs at 7,747 to 7,769. A fall through the 7,648 to 7,641 support zone could lead to the mid-October low at 7,584 being reached, together with the 200-day simple moving average (SMA) at 7,575. FTSE 100 Daily Chart DAX 40 tries to stem decline The DAX 40 index initially slid to 16,444 on Friday following a Eurozone’s inflation reading, which rose to 2.9% year-on-year (primarily due to the removal of energy aids in some countries), and as US nonfarm payrolls came in stronger than expected, before recovering. They did so as the eleventh month out of twelve showed that numbers had been revised lower and that the employment number fell, re-igniting hopes for more significant rate cuts and leading to US equity indices rising. The DAX 40 needs to overcome Friday’s Dragonfly Doji high at 16,648 for an interim bottom to be formed. In this case, recent highs at 16,809 to 16,812 could be reached this week. If exceeded, the December record high at 17,003 may be back in focus as well. Support can be spotted at Wednesday and Thursday’s lows at 16,500 to 16,477 ahead of last week’s low at 16,444. DAX 40 Daily Chart Nasdaq 100 hovers above last week’s low The Nasdaq 100’s decline at the beginning of this year on lowered rate cut expectations and general risk-off sentiment due to heightened tensions in the Middle East led to a significant drop of around 3.5% and the index hitting a near one-month low at 16,178. It was made close to the 22 and 29 November highs at 16,167 to 16,126 which are expected to offer support, if tested. A rise above Friday’s high at 16,420 is needed, for a bullish move to gain traction. In this case, the 20 December low at 16,552 would be back in sight. Nasdaq 100 Daily Chart https://www.dailyfx.com/news/ftse-100-dax-40-and-nasdaq-100-hold-above-last-week-s-lows-20240108.html

2024-01-08 10:14

Gold Price Analysis and Charts Gold eyes a new multi-week low. Geopolitical tensions fail to support the precious metal. Gold is trading close to last Friday’s low despite ongoing tensions in the Red Sea. According to a CNBC report, Chinese state-owned shipping company Cosco suspended shipping via the Red Sea over the weekend citing operational fears. Danish container shipping giant Maersk announced late last week that it would not be using Red Sea shipping routes for the foreseeable future, due to ongoing Houthi attacks. Last Friday’s US jobs data sparked a bout of volatility. The US NFP report came in higher than expected, pushing the US dollar higher as rate expectations were pared back, before the latest US ISM Services report disappointed. The Services PMI fell from 52.7 to 50.6, while the Employment reading fell sharply from 50.7 to 43.3, deep in contraction territory. On Thursday this week, we have the latest US inflation reading. Core inflation y/y is seen dropping to 3.8% from 4.0%, while headline inflation is seen nudging up by 0.1% to 3.2%. Gold has been moving lower this year and continues to print lower highs and lower lows. The precious metal is also trading below the 20-day simple moving average and a prior horizontal support at $2,032/oz. The next level of support is seen at $2,014/oz. (50-dsma) before a prior swing high at $2,009/oz. A break higher sees $2,043/oz. (20-dsma and prior horizontal resistance) come into focus. Gold Daily Price Chart Chart via TradingView Retail trader data shows 59.29% of traders are net-long with the ratio of traders long to short at 1.46 to 1.The number of traders net-long is 6.29% higher than yesterday and 0.75% higher than last week, while the number of traders net-short is 0.97% lower than yesterday and 13.42% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. See how changes in IG Retail Trader data can affect sentiment and price action. What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/gold-price-update-xau-usd-testing-recent-lows-geopolitical-tensions-remain-20240108.html

2024-01-07 18:30

Gold prices and U.S. equities posted moderate losses as the curtain rose on the first trading week of 2024, pressured by a significant rally in Treasury yields and a rise in the U.S. dollar, a move that was bolstered by the strong December U.S. jobs report. In late 2023, traders got ahead of themselves and priced in deep rate cuts for the coming year. While the U.S. central bank signaled it would cut borrowing costs over the medium term, economic resilience and extreme easing in financial conditions could delay the start of the easing cycle, setting up markers for a deeper reversal in the coming weeks. If the typical mean reversion of returns unfolds, gold and risk assets could be in for a rude awakening after their strong performance in the fourth quarter. The euro, British pound and Japanese yen could also weaken against the greenback, erasing some of the gains of the latter stages of 2023. Different and complex market dynamics are likely to play out at the onset of 2024, creating attractive trade opportunities and setups for key assets. For a deeper dive into catalysts that could affect currencies, commodities (gold, silver, oil) and cryptocurrencies in the near term, check out DailyFX's Q1 technical and fundamental forecasts. For a complete overview of the U.S. dollar’s technical and fundamental outlook, request your complimentary Q1 trading forecast now! TECHNICAL AND FUNDAMENTAL FORECASTS FOR Q1 British Pound Q1 Technical Outlooks – GBP/USD and EUR/GBP This article focuses on the Q1 technical outlook for the British pound and examines important FX pairs such as GBP/USD and EUB/GBP, analyzing price action dynamics and market sentiment. Australian Dollar Q1 Fundamental Forecast: Monetary Policy Will Take Center Stage This article zeroes in on the Q1 fundamental outlook for the Australian dollar, investigating key catalysts that could serve as guiding forces for the currency in the months to come. Bitcoin Q1 Technical Outlook: Chart Signals Remain Constructive Bitcoin had a strong performance in 2023, with the bottoming-out pattern between November 2022 and January 2023 prompting a wave of higher lows and higher highs. This trend may extend into Q1, 2024. Euro Q1 Fundamental Forecast: Euro Reveals Green Shoots of Optimism This article concentrates on the Q1 fundamental outlook for the euro, delving into pivotal catalysts that may shape the currency's trajectory in the upcoming months. Crude Oil Q1 Technical Forecast: Broad Trading Range Looks Set to Stick This article centers on the Q1 technical outlook for oil, closely scrutinizing both price action dynamics and market sentiment to unveil insights into the next big possible moves. Japanese Yen Q1 Fundamental Forecast: Yen Likely to Gain, But Thanks to Fed, Not BoJ This article places its focus on the Q1 fundamental outlook for the Japanese yen, examining pivotal catalysts that could mold the currency's trajectory over the next three months. Gold, Silver Q1 Technical Forecast: Price Action Setups for the Near Term The article focuses on the technical outlook for gold and silver in the first quarter, analyzing price action dynamics and interesting trading setups that could signal bullish continuation patterns. Equities Q1 Fundamental Outlook: Rate Cuts and Geopolitics in Focus This article focuses on analyzing the Q1 fundamental outlook for U.S. equity indices, delving into crucial catalysts that may spur volatility and determine the stock market trajectory in the coming months. US Dollar Q1 Technical Forecast – Setups on DXY, EUR/USD, USD/JPY, GBP/USD This article centers on the Q1 technical outlook for the U.S. dollar, delving into key FX pairs like EUR/USD, USD/JPY, and GBP/USD while dissecting price action dynamics that may provide insight into the market trajectory. Fine-tune your trading skills and stay proactive in your approach. Request the EUR/USD forecast for an in-depth analysis of the euro’s fundamental and technical outlook! https://www.dailyfx.com/news/forex-markets-q1-outlook-gold-stocks-eur-usd-gbp-usd-usd-jpy-eye-fed-us-yields-20240107.html

2024-01-07 11:00

This article focuses on the technical outlook for the U.S. dollar index and some of the major FX pairs. If you are interested in reading about the fundamental prospects for the US currency, be sure to request the full Q1 forecast. DXY TECHNICAL ANALYSIS The U.S. dollar, as measured by the DXY index, trekked upwards and climbed to its best level since November 2022 early in the fourth quarter, but then stalled and unexpectedly pivoted lower when prices were unable to decisively overcome confluence resistance near 107.3. This technical rejection paved the way for a prolonged sell-off that extended into late December, as seen in the chart below, sending the greenback to its weakest point in more than four months. After recent losses, DXY is probing a key support zone ranging from 102.00 to 101.70 – an interval where a major long-term rising trendline aligns with the 50% Fibonacci retracement of the Jan 2021/ Sep 2022 advance. Preserving this floor is vital; a failure to do so might amplify downward pressure, exposing the 100.75 mark. On further weakness, the focus shifts to 99.65, then 99.98, where the 61.8% Fib retracement converges with the 200-week simple moving average and the July swing lows. In the event of a bullish reversal from current levels, initial resistance is located around the 50-week simple moving average, but additional gains could be in store for the U.S. dollar on a push above this ceiling, with the next area of interest at 104.70. Overcoming this hurdle will pose a formidable challenge for the bulls, but a successful breakout could expose trendline resistance at 105.75. On continued strength, a retest of this year's high should not be dismissed. US Dollar (DXY) Weekly Chart Source: TradingView, Prepared by Diego Colman Fine-tune your trading skills and stay proactive in your approach. Request the EUR/USD forecast for an in-depth analysis of the euro’s fundamental and technical outlook! EUR/USD TECHNICAL ANALYSIS After a prolonged sell-off during much of the third quarter, EUR/USD rebounded off trendline support early in the fourth quarter, rallying past its 50-week simple moving average. If bullish momentum is sustained in Q1 2024, which seems a reasonable proposition, resistance lies at 1.1100/1.1150. Successfully piloting above this area will expose 1.1275 – a key ceiling where the 2023 peak aligns with the 61.8% Fib retracement of the 2021/2022 decline. Subsequent gains could lead to a move to 1.1500, followed by 1.1700. Conversely, if sentiment shifts in favor of sellers and prices head lower, the 50-week SMA will serve as the first line of defense against a bearish assault, followed by confluence support near 1.0630, where a key trendline converges with the 38.2% Fib retracement of the Sep 2022/Jul 2023 climb. Prices may bottom out around these levels on a pullback before staging a comeback, but the chances of a descent towards 1.0425 and later 1.0222 will grow in the case of an unexpected breakdown. EUR/USD Weekly Chart Source: TradingView, Prepared by Diego Colman USD/JPY TECHNICAL ANALYSIS USD/JPY retested its 2022 high located near the psychological 152.00 level in the fourth quarter, but failed to breach it, with sellers staunchly defending this technical barrier and ultimately repelling prices lower, as seen in the weekly chart below. While the pair remains in an uptrend, the underlying bias could become less constructive if the exchange rate dips beneath its 50-week simple moving average at 141.00. In such a scenario, prices could gravitate towards 137.50, followed by 133.20 – a major Fibonacci threshold. USD/JPY may establish a base in this region on a pullback, but a breakdown could usher a move toward trendline support at 130.00. Looking lower, attention turns to 127.33, which represents the 50% retracement of the Jan 2021/Oct 2022 rally. Shifting our focus to the bullish outlook, if the bears capitulate and buyers reclaim full control of the market, the first line of defense capping the upside is situated at 145.30, with the next subsequent ceiling situated at 148.50. Bulls are likely to encounter staunch resistance in this zone, but a successful breakthrough could drive prices toward the peak observed in 2023. On further strength, all eyes will be on the 15800 handles. USD/JPY Weekly Chart Source: TradingView, Prepared by Diego Colman Access exclusive insights and tailored strategies for GBP/USD by requesting the British pound Q1 trading guide! GBP/USD TECHNICAL ANALYSIS GBP/USD rallied in the fourth quarter, hitting its best levels since late August and coming close to breaking through a Fibonacci threshold at 1.2765, denoting the 61.8% retracement of the 2021/2022 selloff (as of late December, this ceiling has not yet been breached). Heading into 2024, if cable manages to climb above this barrier, the focus will be on the 200-week simple moving average, followed by trendline resistance at 1.2900. On continued strength, buyers could be empowered to initiate an assault on 1.3145 and 1.3500 thereafter. On the flip side, if the tide turns against the British pound and the U.S. dollar stages a comeback, GBP/USD might gradually decline towards technical support at 1.2450, near the 50-week simple moving average. Cable may bottom out in this region on a pullback before mounting a rebound, but if prices pierce through this floor, a descent toward trendline support at 1.2340 is conceivable. On persistent weakness, a retest of the October lows could be on the horizon, followed by 1.1800. GBP/USD Weekly Chart Source: TradingView, Prepared by Diego Colman https://www.dailyfx.com/news/forex-usd-dollar-q1-technical-forecast-setups-on-dxy-eur-usd-usd-jpy-gbp-usd-20240107.html

2024-01-07 08:00

If you're looking for an in-depth analysis of U.S. equity indices, our first-quarter stock market forecast is packed with great fundamental and technical insights. Get the full trading guide now! 2023 in Review US equities held their own throughout 2023, surging toward the end of the year with the Nasdaq 100 printing fresh all-time highs. A surprise given the narrative throughout the year and concerns around a potential recession around the globe and the US as well. The narrative has shifted since, and after the Federal Reserve meeting in December, market hopes for a soft landing have resurfaced. Given all the hope and market expectations it is important to keep things in perspective as the global economy continues its post-pandemic recovery. Just looking at the broader economic activity, the US economy has grown by less than 1.8% a year since the pandemic. This is well below what the Central Bank expected and much slower than the forecasts made pre-pandemic. This has brought up some key questions regarding a structural change in the global economy with higher interest rates, higher inflation and rising debt levels leaving the Global economy in an interesting place heading into 2024. Federal Reserve Rate Cuts in Q1 2024 Heading into 2024 and markets are now no longer debating on how high rates will go but rather when rate cuts will begin in 2024. Markets continue to price in around double the amount of rate cuts which the Fed sees in 2024 with Fed Policymaker Rafael Bostic terming the market response as ‘interesting’. Bostic himself has maintained a balanced approach stating that the Fed won’t jump at the first data point as he believes inflation still has a way to go. Q1 in my opinion is likely to be a quarter where we continue to see anticipation and constant repricing of rate cuts with the chance of easing remaining slim. Markets are pricing in the first-rate cuts from the US Federal Reserve in May/June 2024 and this continues to change as data is released. Central banks have been quick to stress that market participants and consumers need to come to terms that we are going through a structural change with a higher rate environment likely to be the new norm. All in all, rate cut expectations are likely to sway back and forth as data is released in Q1. Below we have a table indicating the current probabilities for rate cuts in 2024. Source: CME FedWatch Tool The Magnificent 7 Continue to Outpace the Rest of the S&P 500 The growing disconnect between the Magnificent 7 (Apple, Amazon, Alphabet, NVIDIA, Meta, Microsoft, and Tesla) and the S&P 493 (remaining 493 companies) is now 63%. The gap continues to grow and does not seem like it is about to narrow anytime soon with the rise of AI only exacerbating the matter. The anomalies do not stop there however with 81% of stocks in the S&P 500 currently trading higher than their 100-day moving average. This has taken place twice in 2023 already while December saw the SPY ETF recorded a daily record inflow of around $20 billion on Friday, December 15. The total for the week came to $24 billion which continued on December 19 with another big day of around $10 billion of inflows. Now I consider this extremely interesting given the rise since mid-November in US Equities which are now trading either at all-time highs or near all-time highs. The total here means the S&P 500 ETF recorded $35 billion of inflows in a 6-day period at an average of $5.8 billion per day. Digging deeper into the numbers, year-to-date total inflows for the SPX ETF are at $50 billion. This means that around 70% of YTD inflows for the SPX ETF have happened over the 6 trading days mentioned above. This is another sign of market expectations for a soft landing and rate cuts in 2024. Are market participants overly optimistic? Source: The Kobeissi Letter Want to understand how retail positioning can impact the S&P 500’s journey in the near term? Request our sentiment guide to discover the effect of crowd behavior on market trends! The Rise of AI and the Potential Impact Looking at what we discussed above and the growth of the major technology companies in 2023, a lot of this is down to the rise of AI in the second half of 2023. Given the developments since then the ride is definitely not over yet with its impact on revenue growth and profitability likely to increase as AI adoption does as well. Many companies have begun using AI and incorporating it in day-to-day processes which is another sign of the mass adoption that is likely to become a reality. The Key factor I will be monitoring in this regard will be corporate earnings from Q4 2023. There were signs of it in the Q3 earnings season but I think Q4 will give a better indication as a lot more companies continue to adopt the technology. Investors are bullish on AI over the longer term the question here is how much will likely be priced in and how much it may boost US Equities in Q1. The concern over the short-term was the high-rate environment, potential Government regulation and a potential recession. The higher rate situation seems to be in the past but the risk of a recession and potential regulation remain. Now there is a possible comparison with the mass implementation of PCs at the end of the last century. Based on research the S&P 500 index priced the innovations’ impact as the productivity boom was realized, returning 26% annually between 1994 and 1999, near the peak in productivity growth. The risks are there as well with many analysts using the dot-com boom as an example. During the late 1990s, many companies failed to live up to market expectations and thus saw their share price and valuations plummet. It is important to note that during this period sales actually grew but the fact that market expectations were not met weighed on the sector. This is something to keep in mind as investor expectations over the last 18 months have gotten even more optimistic than usual, in my humble opinion. This is also shown by the Fear and Greed index which reached the 80 mark, a sign of extreme greed. This is the first time since July 27th 2023 that this occurred and paints an intriguing picture when one tie in the SPX ETF inflows as well. Source: FinancialJuice A risk which may play a huge role in effective AI adoption as well as the speed at which it is adopted is the growing calls for regulation. Similar to crypto markets and AI faces growing calls for regulatory oversight given the potential implications (SKYNET Anyone). For now, this seems a way off given that the US regulators are still grappling with crypto regulation which is taking a long time. Given the intricacies, benefits and potential challenges of AI this is not something that can and should be glossed over but rather should be approached with a sense of care and diligence. Given these challenges all I would say maybe we should not count our chickens before they hatch. Rising Geopolitical Tensions Could Weigh on Global Markets December has rekindled fears that the Global Geopolitical Dynamics remain more fragile than ever. The rise in tensions between the Yemeni Houthi Rebels, Hezbollah and Israel is threatening to spillover, something which Central Bankers and the IMF warned remains a key risk for 2024. One of the factors is already playing out as BP recently announced suspending ships using the Red Sea with other companies following suit. Maersk, one of the largest shipping and logistics companies also mentioned that using a different route could add up to two weeks of shipping time. The concern here is that increased shipping time could lead to a rebound in inflationary pressures with Oil prices rising as a result of this news. If this persists it could have a profound impact on risk sentiment and thus negatively impact rate cut expectations in 2024. The situation in the Middle East is constantly evolving and definitely needs to be considered moving forward. https://www.dailyfx.com/news/equities-q1-fundamental-outlook-rate-cuts-and-geopolitics-in-focus-20240107.html

2024-01-07 02:00

For a complete overview of gold and silver’s technical and fundamental outlook for the coming months, make sure to grab your complimentary Q1 trading forecast now! Patience Required Ahead of Bullish Continuation From a technical standpoint the bullish outlook on gold is a little more complicated than the fundamental thesis suggests. A lot of positive momentum has already been priced in, providing a less impressive risk-to-reward ratio. It is with this in mind that an extended pullback would be favourable prior to assessing bullish continuation setups. The first level of support that could provide a springboard for gold is the zone around $2010, with a deeper pullback highlighting $1956. The medium-term uptrend has provided notable periods where gold prices cooled before continuing higher and therefore, it would be reasonable to foresee the potential for another pullback developing in Q1 of 2024. To the upside, levels of interest appear at $2075 and if price action can muster up enough momentum, a retest of the new all-time-high of $2146.79 appears as the next level of resistance. This trade idea requires discipline to wait for a better entry into what remains a bullish trend. Gold (XAU/USD) Weekly Chart Source: TradingView, Prepared by Richard Snow Silver Appears Less Responsive to Bullish Sentiment Ahead of Q1 Silver, unlike gold, failed to register a new all-time high and even missed out on printing a new yearly high. As such silver plays the part of the laggard when assessing the likelihood of a bullish advance in the first quarter of 2024. Silver broke out of the prior descending channel only to drop back within it again and as 2023 draws to a close, another upside breakout appears on the cards trading around the 50% Fibonacci retracement of the major 2021 to 2022 decline at $23.85. As with gold, a pullback would offer a better entry level, highlighting the 38.2% Fibonacci retracement level of $22.35 or even $21.43 as potential launchpads for a move higher. The prior level of resistance at $25.00 flat provides one potential key level to the upside with $26.10 having capped weekly prices throughout 2023. The $25 level has also come into play, halting bulls at the back end of 2021 and in September this year. Weekly Silver (XAG/USD) Chart Source: TradingView, Prepared by Richard Snow https://www.dailyfx.com/news/gold-silver-q1-technical-forecast-price-action-setups-for-the-near-term-20240107.html