2023 Market Forecast by Solid ECN

Market Dynamics: DAX 40's Ascending Trajectory​

The Frankfurt DAX 40 index witnessed a moderate uplift of 0.4%, reaching near-record levels amidst varied earnings reports. This upward movement comes as the market holds its breath for Nvidia's impending quarterly disclosures and the forthcoming details from the US Federal Reserve's January assembly.

This situation reflects the investors' balancing act between optimism driven by promising corporate performances and caution due to economic uncertainties. Adding value to this context, understanding the impact of such high-profile earnings reports and Federal Reserve minutes can offer insights into market sentiment and future trends, potentially guiding investor strategies in the short to medium term.

Healthcare Sector Highlights: Fresenius' Mixed Fortunes​

Fresenius emerged as a topic of interest in the healthcare domain, with its shares experiencing minimal fluctuations after an initial surge due to a robust quarterly performance. The German healthcare conglomerate reported a 13% increase in its fourth-quarter operating earnings, surpassing its 2023 cost-efficiency goals. This success story demonstrates Fresenius' operational resilience and strategic planning and offers a learning point on the importance of fiscal management and innovation in healthcare.

Conversely, Fresenius Medical Care faced challenges, with a notable dip in its market standing, attributed to analysts' concerns over dwindling patient volumes, highlighting the sector's vulnerabilities and the critical need for adaptive business models in changing market conditions.

Anticipations and Speculations: Allianz's Promising Horizon​

Meanwhile, anticipation surrounds Allianz as its shares climbed to a peak not seen in over twenty years, ahead of its upcoming earnings release. This optimism among investors signifies confidence in Allianz's financial health and prospects. The scenario underscores the influence of forward-looking economic indicators and the weight of investor expectations on stock prices.

Additionally, this anticipation suggests a broader trend where robust financial health and positive future outlooks of companies like Allianz can act as catalysts for market confidence, potentially driving sector-wide gains and offering opportunities for investors to diversify and strengthen their portfolios in the face of market uncertainties.​
 

U.S. Dollar Index Tests Fibonacci Support: A Technical Analysis​

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Solid ECN – The U.S. Dollar index is testing the $10,341 mark, below the 23.6% Fibonacci support level. Subsequently, the DXY index is experiencing a decline within the bearish flag following its breakdown from the bullish channel, as depicted in the 4-hour chart. The technical indicators also show similar patterns in alignment with this new trend. Specifically, the RSI indicator is floating below 50, and the bars of the awesome oscillator are in red.

Therefore, from a technical standpoint, the trend is downward as long as the index trades below the Ichimoku cloud. If the bears maintain their positions, the next target could be the 38.2% Fibonacci support level, followed by the $10,240 mark.

On the flip side, if the bulls push the price above the Ichimoku cloud, the bearish scenario mentioned earlier would be invalidated. In such a scenario, the index would likely test the February 14th higher high at the $10,460 mark.

Happy trading!​
 

Euro’s Struggle Against the U.S. Dollar Amid Fibonacci Resistance​

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Solid ECN – The Euro is trading above the 38.2% Fibonacci resistance against the U.S. Dollar, which stands at 1.085. This level is clinging to the upper band of the bearish flag. Interestingly, the RSI indicator has stepped into the overbought zone. This could be interpreted as a sign that the uptick in momentum, which began on February 12, might ease near this level.

From a technical standpoint, the primary trend is bearish. However, this could be invalidated if the bulls manage to cross and stabilize the price above the 1.08639 ceiling.

On the other hand, if the 1.08639 level holds, the EURUSD pair will likely turn downward again. In this scenario, the 23.6% Fibonacci support would be tested once more.

Happy trading!​
 

Pound Rises Against Dollar, Eyes Key Levels​

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Solid ECN – The British pound is on an upward trajectory against the U.S. Dollar, with the exchange rate hovering around 1.2600. The Relative Strength Index (RSI) is poised to enter the overbought zone, suggesting that the pair might soon test the 61.8% Fibonacci retracement level before potentially launching on another bullish wave.

Furthermore, the 61.8% level, or the 1.2668 support, presents a favorable opportunity for traders to place bids in the GBPUSD bullish market. Should the 61.8% level hold, the next target for buyers could be the February high, around the 1.277 resistance mark.

Conversely, a failure to maintain levels above 1.2668 could result in the price descending to test the 50% Fibonacci support. This shift would signify a notable change in market sentiment, potentially leading to reevaluating the current bullish trend.​
 

Bitcoin's Uptrend Amid Range-Bound Trading and EMA Support​

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Solid ECN – Bitcoin has been between $50,000 and $53,000 and has stayed above the 50 EMA, as shown in the 4-hour chart. When writing, the BTCUSD is trading around $51,600, with the technical indicators promising a continuation of the uptrend.

The RSI indicator flips above 50, and the AO bars have turned green.

The $50,583 level serves as the support to the primary bullish trend. Therefore, from a technical standpoint, if this minor support holds, the uptrend will likely continue, with $53,020 as its first target, followed by the psychological resistance level at $55,000.

On the flip side, if the BTCUSD price falls below the 50 EMA, the 23.6% Fibonacci retracement level will be the first barrier for the bears to confront. This level is further backed up by the Ichimoku cloud, which makes it an exciting price area for the bulls to add new bids.​
 

Offshore Yuan's Rise Amid Weakening Dollar​

Solid ECN – The offshore yuan has seen a notable appreciation, reaching its highest level in three weeks, climbing toward 7.20 against the dollar. This rise is primarily attributed to the dollar's decline amid increasing uncertainties regarding future interest rate decisions in the United States. Additionally, the Chinese currency is riding a wave of positive sentiment as investors show renewed interest in Chinese markets.

This is evidenced by the significant upswing in mainland stocks, which have soared their highest points in two months. This surge in investor confidence and currency value reflects a broader trend of optimism in Chinese financial assets.​

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China's Aggressive Monetary Easing​

In a move that surprised many, the People's Bank of China (PBOC) significantly reduced its five-year loan prime rate by 25 basis points, bringing it down to 3.95%. This decision exceeded the expectations of a modest 15 basis points cut and marked the most substantial reduction since this rate's inception in 2019. The aggressive cut underscores China's intensified efforts to stimulate economic growth amidst various domestic and global challenges.

However, the PBOC opted to maintain the one-year loan prime rate at 3.45%, indicating a nuanced approach to monetary policy. These measures are part of a broader strategy to invigorate the Chinese economy, reflecting a balanced mix of short-term stability and long-term growth initiatives.​

Unleashing Capital for Growth​

Earlier in the month, the PBOC took another significant step by reducing the reserve requirements for banks by 50 basis points. This strategic decision has released approximately 1 trillion yuan in long-term capital, aiming to lubricate the economy's gears by enhancing liquidity and encouraging lending. This substantial capital is anticipated to bolster economic activities, support small and medium-sized enterprises, and stimulate consumer spending.

By easing the reserve requirements, the PBOC is providing banks with a greater capacity to finance business projects and consumer needs, thereby fueling the overall growth trajectory of the Chinese economy amidst evolving global financial landscapes.​
 

Euro Faces Bearish Trends Against U.S. Dollar​

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Solid ECN – The Euro trades around 1.083 against the U.S. Dollar in today's trading session, remaining within the bearish channel. Despite an upward jump in Friday's session, the bears quickly pushed the price back down, firmly within the channel, indicating that the bulls' attempt to break out of the bearish channel might have failed.

From a technical standpoint, as long as the pair trades below the 38.2% Fibonacci resistance level, the downtrend will likely persist. The 1.0802 level acts as minor support; if this level is breached, the decline is expected to continue. In this scenario, the following targets for the bear market would be around the 1.076 mark.

Conversely, the 38.2% Fibonacci level serves as the primary resistance point. Should the price sustain itself above this level, it could invalidate the current bearish scenario.​
 

GBPUSD Bullish Trend Faces Slowdown​

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Solid ECN – The GBPUSD trades inside the bullish channel and above the 50 exponential moving average (EMA). This indicates that the primary trend is bullish. However, the awesome oscillator shows signs of a slowdown in the trend.

From a technical standpoint, the 50%Fibonacci retracement level supports the bull market, and the bottom line of the flag further supports this zone. Therefore, as long as the pair trades above it, the technical analysis for the GBPUSD predicts more upward momentum. In this case, the channel's upper band can be considered the next bullish target. It is worth noting that the price must exceed the declining trendline, depicted in blue, to reach the target.

Conversely, the above technical analysis would be invalidated if the price falls below %50 Fibonacci. If this scenario continues, traders should wait to see how the price reacts to the 50 EMA and the Ichimoku cloud support zone.​
 

AUDUSD Trading Analysis: Clinging to Fibonacci Support and 50 EMA​

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Solid ECN – In today's trading sessions, the Australian dollar trades around 0.655 against the U.S. Dollar, clinging to the 23.6% Fibonacci support and the 50 EMA. However, other technical indicators are providing a bearish signal. The RSI indicator has crossed below the median line, and the bars of the awesome oscillator have turned red and are about to flip below the signal line.

From a technical standpoint, the 0.6532 level supports the bullish momentum, which broke out from the descending trendline, depicted in blue on the AUDUSD 4-hour chart. If the price stays above this level, the 38.2% Fibonacci support could still be the target. This resistance level is further supported by the upper line of the bullish flag, depicted in red on the chart.

Despite these factors, the bullish scenario seems weak for this pair. This can be figured from the candlesticks, where the number of full-bodied bear candles exceeds the bull candles.

Conversely, if the AUDUSD price falls below the 50 EMA, the decline from 0.6594 could lead to the bottom of the bullish flag. This scenario is more likely to play out.

Therefore, traders should monitor the 50 exponential moving average closely.​
 

US Building Permits Dip Slightly in January 2024​


Solid ECN – In January 2024, the US saw a slight drop in building permits by 0.3%, adjusting to 1.489 million from the previous month's 1.493 million, yet this was still above the early estimate of 1.470 million. The permits for more significant developments, specifically those with five or more units, decreased significantly by 5.8% to 419 thousand, marking the lowest point since October 2020.

However, there was a positive turn in the permits for single-family homes, which climbed 2.2% to reach a 20-month peak of 1.021 million. Geographically, permit numbers went down in the South by 7.8% to 793 thousand but rose in other areas: 0.3% to 339 thousand in the West, 5.6% to 208 thousand in the Midwest, and a substantial 52% to 149 thousand in the Northeast.​
 
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