2023 Market Forecast by Solid ECN

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GBPUSD Technical Analysis ​

In line with expectations, the GBPUSD currency pair experienced a bounce back from the top boundary of its bullish flag pattern. This upward movement was further supported by the ADX indicator surpassing the 20 level, indicating an intensifying trend. As the pair holds above the flag's upper line, the bulls targeting GBPUSD are now likely setting their sights on the 50% Fibonacci retracement level as their next goal.

On the flip side, if the pair falls below the 1.24 threshold, it would negate the current bullish outlook, potentially leading to a downward trajectory towards the lows seen in October.​

 

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Analyzing GBPJPY Forex Pair: Key Levels and Market Trends

The GBPJPY pair presents a notable scenario as it approaches the S1 support point at 184.89. This particular level gains additional significance due to its association with the Ichimoku cloud, which serves to strengthen the support indication. Recently, the GBPJPY pair has slipped beneath the level of a previously surpassed bullish flag, hinting at a possible shift towards a bearish trend in the near term. For this bearish trend to gain traction and draw in more sellers, it's crucial for the pair's price to settle and remain consistently below the cloud.

Conversely, maintaining a position above 184.6 could signal a different turn for the GBPJPY pair, possibly indicating the start of a market correction phase. In this event, traders might expect the pair to reach the 38.2% Fibonacci retracement level, with a further possibility of advancing to the 50% Fibonacci level.​

 

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USDJPY

In our latest review of the USDJPY currency pair, we've noticed a continued downward movement, going past the 23.6% Fibonacci level. The ADX indicator shows low market volatility, but the Super trend indicator points to a further drop in USDJPY.

SolidECN analysts believe this downward trend could reach the 38.2% Fibonacci level, indicating a short-term bearish outlook for the pair.​

 

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UK Public Sector Borrowing Hits Near-Record High in October 2023

In October 2023, the UK's public sector borrowing (excluding banks) rose to £14.9 billion, a significant jump from last year's £10.5 billion in the same month and surpassing the anticipated £13.7 billion. This represents the second-highest borrowing for October since records started in 1993. There was a 7.7% increase in total spending, reaching £99.8 billion, mainly due to higher expenses like increased benefit payments, despite the end of energy price-related payments from October 2022. On the revenue side, there was a modest 3.3% increase to £85.2 billion, largely driven by a £2.7 billion increase in central government tax receipts.​

 

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USDCAD

The USDCAD currency pair is trading close to the lower line of the bullish flag. The market is ranging in this area, as indicated by the ADX indicator hovering below the 20 level on the daily chart. The bullish trend is supported by the super trend indicator and the flag, as depicted in the image below.

As long as the pair is ranging above 1.3678, the bullish trend is valid, and the pair may rise to test the 78.6% of the Fibonacci level again. Please note, if the ADX rises above the 20 level, this scenario will gain more credibility.

On the flip side, if the bears cross down the bullish flag, the ranging area may extend to the Fibonacci 0 level. If this level breaks down, the bullish trend can be considered over, and we would witness a trend reversal in the USDCAD pair.​

 

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Canadian Bond Yields Stabilize Amid Economic Shifts

In November, the Canadian 10-year government bond yield stabilized below 3.7%, marking its lowest point in over two months. This trend reflects growing beliefs that both the Bank of Canada and the Federal Reserve might pause their rate hike cycles. Recent statistics reveal a drop in domestic inflation to 3.1% in October, surpassing expectations. This decline is a notable improvement from the Bank of Canada's initial projection of CPI inflation lingering around 3.5% until the latter half of 2024.

Such data reinforces the notion that the central bank may hold back on increasing its policy rate. This comes as the unemployment rate reaches its highest in almost two years, coupled with early indications suggesting a continued stagnation of the Canadian GDP throughout the third quarter.​

 

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USDCHF

The USDCHF pair shows a pronounced bearish trend, with the pair drawing close to the 61.8% Fibonacci retracement mark. This particular level might serve as a pivotal support point, likely to decelerate the current downward trend. This slowdown is further hinted at by the RSI indicator approaching the oversold area.

If the pair successfully stays above the 61.8% threshold, we could see USDCHF entering a phase of correction, aiming for the 50% Fibonacci level, a known zone of resistance. At this juncture, the resistance could become a crucial point for bearish traders to consider new entries, especially in a market that's heavily leaning towards short positions.​

 

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Positive Outlook for European Markets​

European stock markets are poised to kick off Wednesday's trading session on a positive note, buoyed by an uptick in risk appetite. Market participants are still digesting the implications of the recent Federal Reserve meeting minutes. The US central bank has hinted at maintaining a tight monetary policy, with no immediate plans to reduce interest rates.


Key Events to Watch
In the UK, all eyes will be on Chancellor of the Exchequer Jeremy Hunt, who is set to present his "Autumn Statement". This important announcement will outline the government's economic strategy moving forward. Meanwhile, Russia is due to release data on producer inflation, which could influence market trends.


Market Indicators
In the premarket trade, futures for the Euro Stoxx 50 and FTSE 100 indices were seen slightly higher, both showing a modest increase of around 0.1%. This suggests a cautiously optimistic start to the trading day in Europe.​

 

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Bitcoin

Examining today's Bitcoin technical analysis reveals that the cryptocurrency, often dubbed 'digital gold', is currently exhibiting a bullish flag pattern. Notably, Bitcoin's price has positively responded to the flag's lower boundary, with the market's bulls now challenging a critical threshold at $36,712. Should they successfully breach this mark, it could amplify the upward trend, potentially elevating the next target to R1, valued at $38,665.

On the flip side, the S1 mark plays a crucial role as a supportive base within this bullish context. However, if this support level were to be broken, it could signal a continuation of the downtrend that initiated on November 16, possibly leading the price towards the S2 level, located near $33,483.​

 

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Oil

The price of crude oil has recently experienced a decline, reaching the median line of its bearish channel. This downward trend aligns with expectations set when a bearish engulfing pattern emerged close to the bullish flag's upper boundary.

It's anticipated that the oil price may stabilize somewhat near the bearish flag's central line. Nevertheless, the projected target appears to be the S1 level, corresponding to a support point around $72.​