2023 Market Forecast by Solid ECN

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BTCUSD: probable bankruptcy of Silvergate Bank – the driver of the decline in crypto assets

According to most experts, the pressure on the digital assets sector was exerted by reports of the probable bankruptcy of Silvergate Bank, which actively worked with cryptocurrency firms. Last Friday, representatives of the main company Silvergate Capital Corp. announced the delay in the publication of the annual financial report for the U.S. Securities and Exchange Commission (SEC). It was also stated that the reasons for extending the audit were, in particular, accounting for losses on bonds issued at the beginning of this year. These statements aroused suspicions in the cryptocurrency community that due to a number of negative events in the market, Silvergate's capitalization could have suffered greatly, and the bank is now financially insolvent. Against this background, many digital companies hastened to distance themselves from Silvergate, stating a minimal degree of cooperation or even a break in relations. This was done, for example, by Coinbase, Paxos, Galaxy Digital, Bitstamp, Bakkt, Gemini, Tether and a number of other companies.

New financial problems of a large company associated with the cryptocurrency sector increase investors' distrust of the industry and cause a decline in prices. In addition, monetary factors may exert additional pressure on the market this week. Thus, the head of the US Fed Jerome Powell will address Congress with a semi-annual report on the activities of the regulator, and February employment data will also be published. In the event that they turn out to be strong again, officials get another argument in favor of extending the cycle of interest rate increases.

Technically, the price is trying to resume serious growth, but for this the quotes will need to break above the resistance zone of 23000 - 23500 (Fibo retracement 23.6%, the middle line of the Bollinger Bands, the Murray level [7/8]). In this case, the growth targets will be 25000 (Murray level [8/8]) and 26562.5 (Murray level [+1/8]). The key for the "bears" is the level of 21875 (Murray level [6/8]), with its breakdown, the decline will continue to the level of 20312.5 (the Murray level [5/8]).

Resistance levels: 23500, 25000, 26562.5 | Support levels: 21875, 20312.5​

 

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GBPCAD​

The GBPCAD pair confirmed its affection by the domination of the correctional bullish bias by moving away from 1.6060 support line and forming strong positive waves, to notice its consolidation near 1.6390 level, also, the moving average 55 fluctuation below the current price will increase the chances of resuming the correctional bullish trend, to assist to renew the pressure on 1.6510 barrier.

Note that succeeding to breach the targeted level will confirm moving to new bullish track to start recording additional gains that might extend towards 1.6625 followed by reaching 1.6750.​

 

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AUDUSD

AUDUSD is pulling back as today's RBA statement was seen as less hawkish than the last time. The pair is attempting to make a break below the support zone marked with 200-session moving average (purple line) and a 38.2% retracement of the downward move launched in April-2022.

 

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USDCAD

The USDCAD pair fluctuates around 1.3600 level, noticing that the price continues to record lower highs, while stochastic shows new negative overlapping signal now.

Therefore, we believe that the chances valid to resume the expected bearish bias on the intraday basis, which its targets begin by breaking 1.3570 to confirm rallying towards 1.3500, reminding you that the continuation of the bearish wave depends on the price stability below 1.3630 and 1.3680 levels.​

 

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GBPUSD​

The tight range dominates the GBPUSD pair’s trades since yesterday, keeping its stability above the breached resistance of the correctional bearish channel, thus, no change to the expected bullish trend for the upcoming period, which its next target located at 1.2145.

Note that the continuation of the bullish wave depends on the price stability above 1.1990 and the most important above 1.1940.​

 

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Gold​

Gold price retested the breached neckline of the inverted head and shoulders’ pattern and keeps its stability above it, to start providing positive trades in attempt to move away from this level that represents key support at 1843.70, to keep the bullish trend scenario valid and active for the upcoming period, which targets testing 1878.80 mainly.

Stochastic shows clear positive signals now, while the EMA50 continues to provide the positive support to the price, to get positive motives that we are waiting to assist to push the price to achieve the waited rise. On the other hand, we should note that breaking 1843.70 followed by 1828.70 levels will stop the expected bullish trend and push the price to return to the correctional bearish track again.​

 

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AUDUSD​

AUDUSD is pulling back as today's RBA statement was seen as less hawkish than the last time. The pair is attempting to make a break below the support zone marked with 200-session moving average (purple line) and a 38.2% retracement of the downward move launched in April-2022.

 

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Gold​

• US indices finished yesterday's trading significantly lower following a hawkish testimony from Fed Chair Powell. Powell hinted that Fed is ready to accelerate rate hikes if situation requires it​
• Some banks and institutions are now seeing chance of Fed hiking rates to 6% and holding them there for a longer period of time​
• 2y-10y and 2y-30y yield curves are the most inverted in over 4 decades with both spreads exceeding -100 bps​
• S&P 500 dropped 1.53%, Dow Jones moved 1.72% lower and Nasdaq declined 1.25%. Small-cap Russell 2000 traded 1.11% lower​
• Indices from Asia-Pacific traded mostly lower today. S&P/ASX 200 dropped 0.8%, Kospi plunged 1.3%, Nifty 50 dipped 0.5% and indices from China traded 0.3-2.3% lower. Nikkei was outperformer and managed to finished 0.5% higher​
• DAX futures point to a slightly lower opening of the European cash session today​
• RBA Governor Lowe said that rate hike cycle may be paused at the next meeting if incoming data warrants it​
• OPEC Secretary General Al Ghais said that Russian oil production remains resilient​
• According to poll conducted by Reuters, majority of economists surveyed expect Bank of Japan to end yield curve control this year​
• According to Washington Post, US is preparing to lift Covid-19 travel testing restrictions for arrivals from China​
• API report pointed to a 3.83 million barrel drop in US oil inventories (exp. -0.5 mb)​
• Cryptocurrencies are pulling back today. Bitcoin and Dogecoin drop around 0.5% each while Ethereum trades flat​
• Energy commodities trade higher - oil gains 0.4-0.5% while US natural gas prices climb 0.5%​
• Precious metals trade mixed - silver drops 0.1%, gold trades flat and platinum adds 0.5%​
• AUD and USD are the best performing major currencies while JPY and CHF lag the most​

GOLD took a hit yesterday on hawkish Powell testimony and plunged around 2%. Precious metal erased most of the gains made over the previous week and is once again trading near the support zone ranging above $1,800 mark.​

 

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EURGBP​

The EURGBP pair succeeded to renew the positive attempts by rallying above the additional support at 0.8795 recently, achieving big gains by moving towards the additional barrier 0.8925.

Now, the continuous positive momentum coming by the major indicators allows us to wait to confirm breaching the current barrier to open the way to target more positive stations, to expect moving towards 0.8955 soon, followed by attempting to touch the next main target at 0.9000.​

 

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USDCAD

USDCAD is one of the pairs that will be on watch this afternoon. There is a number of events scheduled that could move the pair. ADP employment report for February at 1:15 pm GMT will be the first one of these and it will also be the final hint ahead of Friday's NFP report. ADP release will be followed by trade balance data for January from US and Canada at 1:15 pm GMT. However, the biggest USDCAD volatility today is expected around 3:00 pm GMT when Powell holds the second day of his semi-annual testimonies and Bank of Canada announces rate decision.

While speech from Powell and BoC rate decision are key events of the day, traders should keep in mind that there is also risk that they will turn out to be non-events. Powell will deliver the same speech as he did yesterday and the only thing that may differ are questions from lawmakers. Meanwhile, the Bank of Canada is expected to live up to its pledge of pausing rate hike cycle and leave rate unchanged at a meeting today.

Taking a look at USDCAD chart at H4 interval, we can see that the pair has been trading in an upward channel recently. The pair reached the highest level since early-November 2022 but the upward move slowed today as investors seem to be in wait-and-see mode ahead of USDCAD volatility events later in the day. As Powell is unlikely to make any major statements we have not heard during the first day of testimonies, surprise from Bank of Canada could be a massive volatility trigger. However, BoC has been quite clear about a plan to pause rate hike and failing to do so could have a negative impact on its credibility. Not to mention that situation in the Canadian economy did not change too much from the previous meeting.​