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USD/CAD
Negative trend in the US labor market intensifies


Current trend
The Canadian currency continues to resist the growth of the US dollar quite successfully, and USD/CAD has been relatively neutral throughout the current trading week. The instrument demonstrates local lateral dynamics against the background of the publication of economic statistics from Canada and is located in the area of 1.2522.

The key inflation indicator, the Consumer Price Index, remained at the level of 4.8% in December, having fallen by 0.1% compared to the November indicator; however, the Core CPI showed an increase to 4.0% in annual terms, which reflects high net consumer demand within the country, signaling the active pace of economic recovery in this direction. Statistics on the volume of Wholesale Sales also turned out to be positive: the indicator increased by 3.5% against the forecast of 2.7%. In general, one can already observe a slowdown in inflation, which indicates the effectiveness of the actions of the Bank of Canada in the field of monetary policy.

American investors expect decisive action from the US Federal Reserve as well, as annual inflation in the country has reached its highest level in almost 40 years, but many experts doubt that the tightening of monetary policy will have a positive impact, given the maximum amount of economic stimulus introduced by the authorities during the pandemic. In addition, since the beginning of the year, a negative trend has been observed in the national labor market, where an increase in jobless claims is observed. Initial Jobless Claims rose to 286K from 231K a week earlier, according to data yesterday, beating economists' expectations of 220K. Continuing Jobless Claims increased to 1.635M, well above last week's 1.551M and putting quite a bit of pressure on the US dollar.​


Support and resistance
On the global chart of the asset, the price has finished working out the Head and Shoulders pattern and is ready to fix it with a reverse retest of the Neckline. Technical indicators are in a global sell signal state: the EMA fluctuation range on the Alligator indicator is still quite wide, and the AO oscillator histogram is forming up bars, hinting at a possible correction.

Support levels: 1.2467, 1.2315.
Resistance levels: 1.2556, 1.2637.​

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SOLID ECN LLC

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107
EUR/USD
The dollar continues to dominate the pair​


Current trend
Quotes of EUR/USD are being corrected, trading around 1.1322 after updating of the local lows of January 10 yesterday. The European currency continues unsuccessful attempts to consolidate in the uptrend, but the growth of quotations is hindered by weak macroeconomic statistics from the eurozone, which once again pointed to record inflation rates in the region.

According to published data, in December, the growth of consumer prices in annual terms reached 5.0%, while the monthly rate was fixed at 0.4%. Representatives of the European Central Bank (ECB) continue to assure that the current situation is the result of high energy prices, and the indicator of the Core Consumer Price Index, which does not include this category of goods, indirectly confirms this, remaining at the level of 2.6%. For this reason, the regulator is in no hurry to adjust the parameters of monetary policy and, in particular, to raise interest rates, limiting itself only to curtailing the asset purchase program (PEPP) until the end of March, which undoubtedly hinders the growth of the euro.

In the meantime, the US currency cannot decide on the priority direction of movement. On the one hand, investors hope for the beginning of a cycle of raising interest rates, and on the other hand, the labor market is again actively declining. According to statistics, the number of Initial Jobless Claims increased by 55K, amounting to 286K against 220K expected by analysts. It is also alarming that the negative dynamics have been observed for the fourth week in a row.

Support and resistance
Despite all attempts to grow, EUR/USD remains within the framework of the global Flag pattern, the implementation of which has not yet begun. The EMA fluctuation range on the Alligator indicator narrowed almost completely, and the AO oscillator histogram began to form descending bars again.

Support levels: 1.1271, 1.1050.
Resistance levels: 1.1378, 1.1525.​

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SOLID ECN LLC

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United States of America
The US currency is weakening against the euro and the yen today, but is strengthening against the pound.

The comments of US Treasury Secretary Janet Yellen, made the day before, remain in the focus of the market's attention. She noted the significant strengthening of the national labor market over the past twelve months, during which more than 6.4M new jobs were created, and the unemployment rate fell below 4.0%. The official also said that, in case of victory over the pandemic, inflation in the USA will begin to decline and by the end of the year will approach the target level of 2.0%, in addition, Janet Yellen supported the course of the US Fed to tighten monetary policy. As for the situation caused by the spread of the Omicron virus, positive changes are also observed here. In a number of American states, the incidence is beginning to decline, but the number of hospitalizations still remains at consistently high levels, which does not yet give grounds to talk about a complete reversal of the trend.​


Eurozone
The European currency is strengthening against its main competitors – the yen, the pound and the USD.

Investors are focused on the comments of the head of the European Central Bank (ECB) Christine Lagarde, made during today's videoconference held by the World Economic Forum in Davos. In particular, she stressed that inflation in the eurozone will not reach the same high rates as in the USA, and economic conditions in the two countries are too different, so the European regulator will not follow the US Fed in tightening monetary policy. Christine Lagarde also confirmed that, according to European officials, energy prices will stabilize in 2022, and supply disruptions will weaken, which will lead to a serious slowdown in inflation.​


United Kingdom
The British currency is weakening today against its main competitors – the euro, the yen and the USD.

The pound came under pressure against the background of the publication of December retail sales data in the United Kingdom: on a monthly basis, their volume decreased by 3.7%, and on an annual basis – by 0.9%. Experts believe that residents of the country carried out most of their Christmas purchases back in November, reducing activity in the last month of the year, which naturally led to a decrease in sales. The unfavorable epidemiological situation caused by the spread of the COVID-19 Omicron strain also contributed to the negative dynamics. It is noted that the least often residents of the UK bought clothes, household goods and fuel. The weak statistics on the GfK consumer confidence index shoul also be noted: in January, the value decreased from -15 to -19 points, and this is the weakest indicator since February last year. Consumers fear the deterioration of their economic situation due to a serious increase in inflation.​


Japan
The Japanese currency is weakening against the euro, but is strengthening against the USD and the pound.

The December inflation data published today in Japan turned out to be mixed: the nationwide consumer price index rose from 0.6% to 0.8%, while the base value of the indicator remained at the same level of 0.5%, yielding 0.6% predicted by analysts. It should also be noted that today Prime Minister Fumio Kishida called on the Bank of Japan to develop a strategy for the country's withdrawal from a large-scale economic stimulus program due to a serious increase in the cost of living of the population. At the same time, the official expressed hope that the agency will continue to make efforts to bring inflation to the target level of 2.0% as soon as possible, however, he stressed that the Bank of Japan will continue its current monetary policy in the near future and will not follow the example of other developed countries that are starting to tighten it.​


Australia
The Australian currency is weakening against the USD, euro and yen today, but has ambiguous dynamics paired with the pound.

In the absence of significant economic releases, the Australian dollar is trading under the influence of external factors. Investors continue to monitor the development of the pandemic, the situation with which in Australia remains difficult. Today it became known that the authorities of the state of Western Australia canceled plans to open the borders of the region, which was scheduled for February 5. The reason for the decision is the risks to the health of citizens due to the surge in morbidity in neighboring states. Experts have already said that the delay in opening borders in Western Australia could worsen the shortage of labor in the mining industry located here. Thus, the pandemic continues to put pressure on the Australian economy.​


Oil
Oil quotes are making attempts to grow today after a decline earlier.

The report published by the US Energy Information Administration (EIA) recorded an increase in reserves of "black gold" by 0.515M barrels instead of the expected decrease by 0.938M barrels, while gasoline reserves increased immediately by 5.873M barrels and only the distillate index decreased by 1.431M barrels. Nevertheless, the current correction is seen as temporary, since the general fundamental factors remain favorable for the oil market. Investors hope that the demand for "black gold" will continue to increase against the background of the refusal of the world's leading consumers to introduce serious quarantine measures in connection with the development of the coronavirus pandemic caused by the Omicron strain. Moreover, in a number of regions, for example, in the UK, there are already signs of a decrease in the incidence rate. Also, the growth of tension in the Middle East contributes to the strengthening of energy quotes, primarily due to the ongoing conflict in Yemen. Earlier, Yemeni Houthi rebels had already attacked infrastructure facilities in Saudi Arabia, but this week they launched a missile attack on the airport and industrial facilities of the capital of the United Arab Emirates (UAE), Abu Dhabi. As a result, oil terminals were damaged and several people were killed. The Houthi leaders said that attacks on the infrastructure of Saudi Arabia and the UAE would continue, which could lead to disruptions in the supply of oil to the market of the two leading OPEC producers.​
 

SOLID ECN LLC

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EUR/USD: wave analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward 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) started, within which the first wave of the lower level (i) of i of 3 forms. If the assumption is correct, the pair will grow to the levels of 1.1687–1.1907. In this scenario, critical stop loss level is 1.1215.​

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SOLID ECN LLC

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GBP/USD, Elliot Wave analysis

The pair is in a correction and may grow.
On the daily chart, the first wave of the higher level (1) formed, and a downward correction developed as the wave (2), within which the wave C of (2) formed. Now, the development of the third wave (3) started, within which the first entry wave of the lower level i of 1 of (3) has formed. If the assumption is correct, after the end of the local correction ii of 1, the pair will grow to the levels of 1.4000–1.4246. In this scenario, critical stop loss level is 1.3160.

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SOLID ECN LLC

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Apple Inc Elliot Wave Analysis

The price is in a correction, a fall is possible.

On the daily chart, the third wave of the higher level 3 developed, within which the wave (5) of 3 formed. Now, a correction has developed as the wave 4 of (5), and a downward correction is developing as the fourth wave 4, within which the wave (A) of 4 is forming. If the assumption is correct, the price will fall to the levels of 148.43–127.03. In this scenario, critical stop loss level is 183.16.​

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SOLID ECN LLC

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Brent Crude Oil: prices are holding near record highs


Current trend
Brent Crude Oil prices continue to rise during today's trading, testing the $88.00 per barrel mark and returning to the previous record highs renewed last week. Earlier, the quotes reached their seven-year peaks, reacting to the active recovery of the global economy, as well as interruptions in the supply of oil and oil products in the Middle East. The current growth rate is only slightly lower than in 2009, and optimistic investors suggest that oil prices will be able to consolidate above $100 per barrel by the third quarter of 2022.

Today, traders are focused on an extensive block of macroeconomic statistics from the US. In particular, the markets will be interested in data on the dynamics of business activity indices from Markit for January. Also, during the day, the index of business activity in the industrial sector of the Dallas Fed, as well as the placement of 2-year bonds will be released.

Support and resistance
On the daily chart, Bollinger Bands show a steady growth: the price range is actively narrowing, reflecting the emergence of an ambiguous trading dynamics in the short term. MACD maintains a poor sell signal, being below the signal line but tends to change the trend. Stochastic, retreating from its highs, reversed into a horizontal plane, reacting to the return of the "bullish" dynamics at the end of the last trading week.

Resistance levels: 88.79, 90, 91.
Support levels: 87, 86, 84.5, 83.5.​

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SOLID ECN LLC

Solid ECN Representative
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107
BTC/USD, digital gold remains under pressure

Current trend

Last week, the BTC/USD pair was actively losing value and reached its lowest level since July last year, dropping below 34000.00. The pressure on the first cryptocurrency was caused by a complex of negative factors, although the opinions of investors differ regarding the central one.

Thus, the downward correction of the entire cryptocurrency sector is facilitated by the fall of the American stock market and the growth in the yield of American bonds in anticipation of the imminent increase in interest rates and the meeting of the US Federal Reserve scheduled for Wednesday. Investors fear that the rhetoric of regulator officials may become even more "hawkish" against the background of a record increase in inflation in the country, which could lead to further strengthening of the US currency against alternative assets.

Among other factors putting pressure on the digital market, experts cite the report of the Bank of Russia on cryptocurrencies, which recommends banning both their use and activities for the extraction of digital assets due to threats to financial stability, the well-being of citizens, and the sovereignty of monetary policy. If such a decision is made, BTC mining may suffer since the country accounts for more than 10% of the world's hashrate, and Russia is one of the top three in terms of cryptocurrency mining.

Support and resistance
Now the price of the BTC/USD pair is around 35000.00 (Fibonacci correction 50.0%), consolidation below which allows a decline to 31250.00 (Murrey [5/8]), 28300.00 (Fibonacci correction 61.8%). The breakout of 37500.00 allows an upward correction to the area of 41700.00 (Fibonacci correction of 38.2%, which will unlikely break the currently observed downtrend. Indicators signal the possibility of a decrease: Bollinger bands are directed downwards, the MACD histogram is increasing in the negative zone.

Resistance levels: 37500.00, 41700.00
Support levels: 35000.00, 31250.00, 28300.00.​

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