Solid ECN | Daily Technical | Video | Major Products

[SOLID ECN LLC]

General Electric Co.: shares develop upward dynamics​

---

Current trend
General Electric Co. shares are experiencing a 2.7% corrective decline from a monthly high. The growth of the company's shares from the 11-month low of December 20 exceeded 12.5%, and over the past week the quotes strengthened by 3.30%, while the S&P 500 index declined by 2.62%.

Credit Suisse analysts initiated a "better than the market" rating on the issuer's shares with a target price of 122 dollars, reflecting a growth potential of more than 22% of the current price. The company's stocks lost more than 14% in value after the decision to split into three divisions – healthcare, energy and aviation, while the issuer plans to retain about 20% in the healthcare sector. Investment bank analysts believe that the pullback has created the potential for faster growth in 2022 after the cyclical recovery of General Electric Co. in 2022.

The company also announced the publication of a quarterly report on January 25. The Wall Street analysts forecast a 2.8% decline in revenue to 21.31B dollars with a 29.7% increase in earnings per share to 0.83 dollars. According to the results of the last two statistics exceeded market expectations for earnings per share by 39% and 67%, respectively.

Support and resistance
Recent trading sessions in the company are very active, at the same time there is no unidirectional trend. At the moment, the quotes are consolidating in the range of 95.00-102.00. Indicators do not give clear signals: the price is fixed between MA (50) and MA (200), the MACD histogram is located in the positive zone. Positions are to be opened from key levels.

Comparing company's multiplier with its competitors in the industry, we can say that the issuer's shares are neutral.

Resistance levels: 102.00, 107.00, 115.00.
Support levels: 95.00, 89.00, 80.00.

​

 

[SOLID ECN LLC]

USD/JPY
the market is waiting for the US inflation data​

---

Current trend
The US dollar is showing weak gains against the Japanese yen in Asian trading, trying to recover from a noticeable correction late last week.

The instrument is testing 115.35 for a breakout; however, market activity remains subdued as investors await the publication of the updated US inflation statistics for December today. According to forecasts, the annual rate of growth in consumer prices could reach 7%, which will be an absolute record in the last 40 years. In turn, the US Fed is ready to raise interest rates, and the first adjustment in the coming year may take place already at the March meeting. The Fed's Chair Jerome Powell, speaking at the US Congress the day before, confirmed the regulator's readiness to prevent further entrenchment of inflation, which until recently was called a "temporary phenomenon".

Statistics from Japan released today has an ambiguous impact on the dynamics of the instrument. The Eco Watchers Survey on Current Situation in December rose slightly from 56.3 to 56.4 points, but the Survey on the Economic Outlook for the same period fell sharply from 53.4 to 49.4 points.

Support and resistance
In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, pointing at the multidirectional nature of trading in the short term. MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic keeps a confident downward direction but is rapidly approaching its lows, which indicates the oversold USD in the ultra-short term.

Resistance levels: 115.50, 116.00, 116.50, 117.00.
Support levels: 115.00, 114.50, 114.00, 113.50.​

 

[SOLID ECN LLC]

AUDUSD
Elliot Wave Analysis​

---

The pair may fall.
On the daily chart, the first wave of the higher level (1) of C developed, and a downward correction forms as the wave (2) of C. Now, wave C of (2) is developing, within which the first wave of the lower level i of C has formed, a local correction has ended as the wave ii of C, and the development of the third wave iii of C has started. If the assumption is correct, the pair will fall to the levels of 0.6742–0.6446. In this scenario, critical stop loss level is 0.7277.​

 

[SOLID ECN LLC]

Key Releases​

---

​

United States of America​

USD strengthens against JPY, has ambiguous dynamics against EUR, and is weakening against GBP.

Investors continue to discuss yesterday's comments by the head of the US Federal Reserve, Jerome Powell, before the Senate Committee on Banking, Housing, and Urban Affairs. In general, he did not say anything fundamentally new to the market and limited himself to confirming the regulator's plans, which had already been outlined earlier. Powell said that if the current economic situation persisted, the department would begin to normalize monetary policy. In March, the purchase of assets will be stopped, then an increase in rates and a reduction in the balance sheet will begin. The official also noted that the US economy no longer needs the support measures provided to it in connection with the pandemic, and therefore tightening of monetary policy is inevitable. However, there is still a long way before its final normalization. The December data on inflation in the country were published today, which recorded a further increase in the indicator. The CPI rose from 6.8% to 7.0% YoY, confirming experts' calculations, and the core CPI increased from 4.9% to 5.5% instead of the expected 5.4%. A further rise in prices strengthens investors' confidence that the US Federal Reserve will not back down from tightening monetary policy.​

---

Eurozone​

EUR is weakening against GBP and has ambiguous performance against JPY and USD.

Published today, November data on the volume of industrial production in the Eurozone countries were ambiguous. Production rose by 2.3% MoM, beating the 0.5% expected but declined by 1.5% YoY instead of the expected 0.6% increase. The German wholesale price index data for December recorded a slowdown in the growth. The indicator decreased from 1.3% to 0.2% MoM and from 16.6% to 16.1% YoY. Nevertheless, inflationary pressures in the German and generally European economies remain high. Today, the German Trade Association (BGA) warned of the possibility of new massive supply chain disruptions due to the rapid spread of the omicron coronavirus variant, but a long-term supply chain collapse is considered unlikely.​

---

United Kingdom​

GBP is strengthening against its main competitors – JPY, EUR, and USD.

Due to a lack of significant economic news, politics has become the focus of investors' attention. Today, British Prime Minister Boris Johnson officially admitted that he had attended a party with the participation of members of the government in May 2020 and thereby violated the quarantine rules in force at the time. Johnson apologized to the citizens and noted that he considered the event a working meeting, which required his presence. Labor Party members will accuse Johnson of cheating, and many experts believe the scandal could cost him his prime minister seat. Dissatisfaction with Johnson has been brewing for a long time, including among conservatives. He is accused of the inability to maximize the benefits of Brexit, unreasonable tax hikes, and insufficient activity in leveling economic conditions between different parts of the country. If Boris Johnson resigns, the UK will face a period of political uncertainty, which could negatively affect the position of GBP.​

---

Japan​

JPY is weakening against its main competitors – GBP, USD, and EUR.

Investors are focused on today's Bank of Japan's quarterly report on the regional economy. For the first time since October 2013, the regulator revised the estimates for all regions upward compared to the previous October economic report. The document says the impact of the coronavirus pandemic is waning, and Japan's economy continues to grow, especially in the private sector. However, the risks associated with the Omicron strain remain. Officials admitted that some regions remain in dire straits, but the overall economy is gradually recovering in all country regions. The Bank of Japan's optimistic assessment of the state of the economy increases the likelihood that the regulator will revise its forecasts for GDP growth and inflation for the current year upward.​

---

Australia​

AUD is strengthening against its main competitors – EUR, JPY, GBP, and USD.

AUD is growing despite the worsening epidemiological situation in the country. The daily number of sick citizens remains at record levels, putting serious pressure on the health care system, but the government is not introducing additional quarantine measures. The continued deterioration of the situation may negatively affect the Australian economy as a whole and, above all, slow down the service sector's recovery. The virus is currently scaring away customers of the airlines, entertainment, and hospitality sectors, which have already suffered from several blockages in the past two years.​

---

Oil​

Oil quotes continue to rise.

The API report published yesterday recorded a decline in US oil reserves by 1.077M barrels, slightly less than the expected volume of 1.950M barrels. Nevertheless, the decline has been going on for seven weeks in a row, which speaks of the sustainability of demand for "black gold" despite the Omicron pandemic. Investors are awaiting the release of a similar report from the EIA today. Oil reserves are expected to decline by 1.904M barrels. Implementation of the forecast may support the oil market.​

 

[SOLID ECN LLC]

USDCHF Wave Analysis​

---

The pair may fall.

On the daily chart, the first downward wave of the higher level (1) of 3 formed, and an upward correction developed as the second wave (2) of 3, within which the wave C of (2) formed. Now, the development of the third wave (3) of 3 has started, within which the first wave of the lower level i of 1 of (3) is forming. If the assumption is correct, the pair will fall to the levels of 0.8921–0.8758. In this scenario, critical stop loss level is 0.9277.​

 

[SOLID ECN LLC]

NZD/USD
The instrument is updating record highs​

---

Current trend

The New Zealand dollar continues to rise, updating local highs from December 1 and testing 0.6860 for a breakout.

The statistics from the US on the dynamics of consumer inflation published yesterday did not provide any support to the American currency, partly due to the fact that the numbers came out close to the forecasts. The market, in turn, has already taken into account the rise in inflation to 40-year highs and is awaiting more tangible confirmation of a possible increase in the interest rate by the US Fed in March. One way or another, the core inflation rate in December increased from 0.5% to 0.6%. On an annualized basis, the Consumer Price Index excluding Food and Energy increased from 4.9% to 5.5%, beating forecasts of 5.4%.

Additional support for the instrument during Thursday morning trading was provided by positive statistics from New Zealand. Building Permits issued in November rose 0.6% after declining 2.1% in October.

Support and resistance
Bollinger Bands in D1 chart show insignificant growth. The price range expands, freeing a path to new local highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). Stochastic keeps its upward direction but is rapidly approaching its highs, which reflects the risks of overbought NZD in the ultra-short term.

Resistance levels: 0.6866, 0.6900, 0.6950, 0.7000.
Support levels: 0.6840, 0.6800, 0.6763, 0.6732.​

 

[SOLID ECN LLC]

American Express Co.
Elliot Wave Analysis​

---

The price may grow.
On the daily chart, the fifth wave of the higher level (5) develops, within which the wave 3 of (5) forms. Now, the third wave of the lower level iii of 3 has formed, a local correction has developed as the fourth wave iv of 3, and the fifth wave v of 3 is forming, within which the wave (iii) of v is developing. If the assumption is correct, the price will grow to the levels of 200.00–210.00. In this scenario, critical stop loss level is 153.31.​

 

[SOLID ECN LLC]

Key Releases

---

United States of America
The US currency is weakening today against its main competitors – the euro, the pound and the yen.

The focus of investors' attention remains the December inflation data released in the USA. The consumer price index increased from 6.8% to 7.0%, and the basic consumer price index increased from 4.9% to 5.5%. In general, inflation is holding near forty-year highs, price growth is provided by an increase in the cost of renting housing and cars. A serious rise in prices has caused a number of experts to fear that the measures announced by the US Fed to tighten monetary policy may not be enough to bring inflation to the target of 2.0% this year. Moreover, supply disruptions, staff shortages, contributing to price increases, may intensify due to the growing coronavirus pandemic caused by the Omicron strain. The data published today on initial applications for unemployment benefits in the USA turned out to be weak, the indicator increased from 207K to 230K. But the total number of citizens receiving unemployment benefits continued to decline this time from 1,753M to 1,559M.​

---

Eurozone
The European currency is weakening against the yen today, but is strengthening against the USD and the pound.

In the absence of significant economic releases, investors' attention is focused on the comments of officials of the European Central Bank, especially interesting in the context of a serious increase in inflation. So, today the vice-president of the European regulator Luis de Guindos said that the price growth in the eurozone is not as short-term as previously assumed, and risks exceeding the forecasts of officials this year. De Guindos noted that high energy prices and continuing problems in the supply of raw materials and components will contribute to an increase in inflation. In the long term, according to the official, inflationary pressure will weaken, and in 2023-24 it will be below the target level of 2.0%. It should be noted that earlier concerns about the prolonged price increase were already expressed by the head of the Bundesbank Joachim Nagel and ECB board member Isabel Schnabel. In general, there are more and more supporters of tightening monetary policy within the European regulator, which makes taking more active measures to combat inflation in the eurozone more realistic.​

---

United Kingdom
The British currency is strengthening against the USD today, but is weakening against the euro and the yen.

The focus of British investors' attention remains the political crisis associated with the figure of Prime Minister Boris Johnson. Earlier, he admitted that he attended a party with members of the government in May 2020 and thereby violated the quarantine rules in force at that time. The media suggest that such parties may have been held more than once. Johnson's apology failed to calm either public opinion or the Prime Minister's political opponents. Moreover, he was called upon to resign by prominent members of the Conservative Party. They believe that Johnson undermines the trust of citizens in the conservatives, which can have negative consequences in the elections, so it is necessary to get rid of the prime minister, who has lost his former popularity, before it is too late. Boris Johnson himself is not going to leave yet, believing that he did not violate the rules of isolation. It should also be noted that today the British Minister of Health Sajid Javid is due to address Parliament with comments on the government's position on reducing the quarantine period from 7 to 5 days. According to officials, such a measure is necessary to alleviate the situation of employers affected by staff shortages.​

---

Japan
The Japanese currency is strengthening against its main competitors – the pound, the USD and the euro.

Today, preliminary December data on the volume of orders in the engineering sector were published, which continued to slow down the growth rate. In December, it grew by 40.5%, which is less than the November increase of 64.0%. Economy Minister Daishiro Yamagiwa said that the government seeks to revive the economy by encouraging innovation in the private sector, rather than interfering in monetary policy. This may mean the official's departure from maintaining serious monetary incentives in the economy.​

---

Australia
The Australian currency is strengthening against the USD today, but is weakening against the pound, the euro and the yen.

In the absence of significant economic releases, the focus of investors' attention remains the pandemic situation in Australia, which continues to worsen. Today, more than 147K infected citizens have been recorded in the country, which is a record for the entire time of the pandemic. The number of hospitalizations is also growing, although, according to officials, so far the health system is coping with the situation. High morbidity forces local authorities to soften the isolation criteria for citizens who have been in contact with the sick, as the business continues to suffer from a shortage of staff. Prime Minister Scott Morrison will hold a government meeting today to decide on new measures to support businesses and reduce pressure on supply chains.​

---

Oil
Oil quotes are making moderate attempts to decline today.

The EIA report on oil and petroleum products reserves in the USA published earlier turned out to be mixed. A serious reduction in oil reserves by 4,553M barrels was offset by an increase in gasoline reserves by 7,961M barrels and distillate reserves – by 2.537M barrels.​

 

[SOLID ECN LLC]

EUR/USD: inflation data weakened the dollar

Current trend
Since the end of November, the EUR/USD pair has been trading within a sideways range of 1.1350–1.1230 but left it yesterday, rising to the area of 1.1450.
Positive dynamics followed the publication of US December inflation data, which confirmed its significant growth. The consumer price index increased from 6.8% to 7.0%, while the core consumer price index increased from 4.9% to 5.5%.

In general, inflation is holding around forty-year highs, and price growth is provided by increasing the cost of renting housing and cars. The situation raises concern among several experts who believe that the measures announced by the US Federal Reserve to tighten monetary policy may not be enough to bring inflation to the target of 2.0% this year. Also, supply disruptions and staffing shortages, driving up prices, could be exacerbated by the escalating omicron coronavirus pandemic.

The European currency was in a better position, supported by data on industrial production, which rose by 2.3% for November, exceeding forecasts. European investors are also hoping that European Central Bank (ECB) officials will give in to pressure and announce new measures to reduce economic stimulus. For December, EU CPI rose by 5.0%, exceeding the regulator's estimates. These data strengthened the position of supporters of tightening monetary policy within the ECB, in particular, representatives of the Bundesbank. They can take over, after which the regulator will take more active measures to curb price growth, which will lead to the strengthening of the euro.

Support and resistance
The price approaches 1.1475 (Murrey [1/8], Fibonacci retracement 38.2%). Its breakout allows growth to 1.1535 (Fibonacci correction 50.0%), 1.1605 (Murrey [6/8], Fibonacci correction 61.8%). The key "bearish" level is 1.1350 (Murrey [2/8], Fibonacci correction 23.6%). Its breakdown allows a decline to 1.1230 (Murrey [0/8]), 1.1200. Soon, positive dynamics seem more likely, as Bollinger bands and Stochastic reversed upwards, and the MACD histogram grows in the positive zone. The exit of the price chart beyond the upper Bollinger band does not exclude a downward correction, but its potential is limited.

Resistance levels: 1.1475, 1.1535, 1.1605.
Support levels: 1.1350, 1.1230, 1.1200.​

 

[SOLID ECN LLC]

Brent Oil, Elliot Wave Analysis

The price is in a correction, a fall is possible.
On the daily chart, the upward wave C forms, within which the first wave 1 of (1) of C developed. Now, a downward correction is forming as the second wave 2 of (1) of C, within which the wave of the lower level a of 2 has formed, and the wave b of 2 is ending. If the assumption is correct, after the end of the correction, the price will fall to the levels of 66.31–58.99. In this scenario, critical stop loss level is 86.68.​