2023 Market Forecast by SolidECN

[SOLIDECN]

Bitcoin​

Cryptocurrencies are retreating from recent record highs as the sell-off on the Nasdaq gains strength and concerns around a slowing US economy have increased. A weakening consumer could mean lower risk appetite and a narrower range of potentially interested buyers of speculative assets. A recession would likely do nothing good for the crypto market. With its declining reaction in recent days, bitcoin has confirmed that its role as a recession or banking crisis hedging asset is still uncertain. Is the king of cryptocurrencies in for a trend change?

​

A change in the crypto trend?​

The on-chain market sentiment vector is pointing to levels close to greed, which could signal an impending correction. It's also worth noting that BTC's volatility has been drying up in recent days, which has historically heralded an imminent, sudden price movement.

Looking at the chart of BITCOIN on the D1 interval, we can see that the RSI indicator has risen since the beginning of the year, but since then it has been recording lower and lower levels, although the price of the largest cryptocurrency has been steadily rising. This phenomenon is called a bearish divergence, and it can signify the weakening strength of buyers and a change in the trend. The closest support level for declines is the 23.6 Fibonacci retracement of the upward wave initiated on March 11, when the cryptocurrency rebounded sharply amid the collapsing SVB.​

 

[SOLIDECN]

EURUSD​

USD is trading slightly higher today but EURUSD remains above 1.09 mark and maintains the uptrend. The latest drop in US yields shows that USD still has room to drop. If NFP data shows sub-200k jobs gain, it would be a strong sign of the labour market cooling down. However, it will not be a sign of a crisis yet. Nevertheless, readings that are significantly below 200k would likely encourage the Fed to pause the rate hike cycle and not raise rates at the May meeting. On the other hand, should we once again see strong job gains and strong earnings growth, rate hike at the May meeting may be still in play.

 

[SOLIDECN]

USDJPY​

• The first market session after the release of US jobs data is mixed as investors are wondering about the future policy path from the Fed. It looks like we are observing a re-trading of the data from Friday as most markets were closed then.​
• NFP came out at 236k and the unemployment rate fell to 3.5%. Wages dynamic decreased to 4.2% YoY but they are still not consistent with an inflation rate of 2%​
• Most Asian stocks reversed earlier gains but on the other hand, US yields decreased also. Nikkei 225 and Kospi are the only indices that are up in the morning trading. Nikkei gains 0.4% and Kospi is higher by 0.9%​
• US indices futures continue their sell-of after Friday’s NFP release that suggests another hike from the Fed in May. US100 is trading 0.5% lower and US500 is down by about 0.3%​
• The US dollar is rising against all of the G10 currencies and the yen is one of the weakest, falling nearly 0.4%​
• It is important to know for all investors that at 10:15 GMT (11:15 BST and 12:15 CET) the new governor of the Bank of Japan will hold the inaugural press conference which means that Kuroda era is finally ended. The market is wondering whether Ueda would decide to end or change its yield curve control program. On the other hand, Ueda said in February that an accommodative policy in Japan is still needed.​
• The gold price digests the US job market data and decreases below 2000 USD per ounce in early morning trading​
• Trading may be choppy today as most markets are still closed in observance of Easter Monday​

The USDJPY currency pair is up nearly 0.4% as investors are reassessing the US jobs market report from Friday and are waiting for the first public news conference of the new BoJ's governor Ueda.​

 

[SOLIDECN]

Gold​

Gold is lower by about 0.6% from the perspective of the first session of the week. It is the first trading day for gold after the release of NFP jobs data from Friday when the market for gold was closed. Data from the US labor market showed that a rate hike from the Fed in May is still in the game. The data showed a further strong rise in employment above 200k and a decline in the unemployment rate to 3.5%. From the perspective of monetary policy in the US, inflation data due for release on Wednesday will be crucial. Although wages data decreased more than expected, it is still inconsistent with the inflation target of 2%.

In response to good data from the US, gold reacted to a stronger dollar (USDJPY). Gold opened with a bearish gap that later was closed. Gold is currently trading below $2,000 an ounce. There is a support of around 1985 USD per ounce that is confirmed by 50 period SMA and the upper limit of the triangle pattern.​

 

[SOLIDECN]

Oil​

Oil prices are stabilizing after the big price jump last week in response to OPEC+ decided to further cut production. The volatility decreased significantly as demand uncertainty in China and US offsets OPEC+ production cut. Of course, we could notice a further inventory draw last week but perspective of future demand is cloudy as the chance for the next interest rate hike is increasing.

As we can see the price range from the Monday a week ago is less than 3 dollars. The most important support is at 79.00 USD per barrel that is also a higher limit of bullish gap. On the other hand the nearest resistance lies at 82 USD per barrel that is also a higher limit of consolidation that starter on 1st December. In case of breaking the mentioned support, the price may decrease even to vicinity of 75 USD per barrel which is also a lower limit of the bullish gap.​

 

[SOLIDECN]

EURUSD​

EURUSD decreased significantly below 1.0900 with increasing probability of Fed hike

The dollar gained over 0.3% today and EURUSD fell below 1.0900 and tested a vicinity of 1.0850. The dollar is finally higher after Friday's good data from the US labor market. Due to the fact that Friday was a day off in the US, investors can fully assess the data from the US labor market only today. The data increases the likelihood of a rate hike in May to 70%.

EURUSD not only breaks out of the uptrend but falls below the 200-hour moving average. The pair is trading at its lowest level since April 3. Another important support lies around the 1.0800 level.​

 

[SOLIDECN]

DE30​

European stock market indices launched the first cash trading session after Easter break higher. Blue chips indices from Western Europe trade 0.5-1.0% higher, following an upbeat Asian session earlier today. However, part of gains has been erased already with DAX dropping back below 15,700 pts. Taking a look at DAX futures at H1 interval (DE30) we can see that bulls failed to break above 15,900 pts area and a double top has been painted. Today's bullish price gap has been filled already and should ongoing pullback deepen further, the 15,650 pts support zone will be the first potential target for sellers. This zone is not only marked with previous price reactions but also with the neckline of the aforementioned double top. Textbook range of the downside breakout from this pattern shows a possibility of a drop to as low as 15,360 pts.

 

[SOLIDECN]

NATGAS​

US natural gas prices (NATGAS) trade around 2.5% higher today. NATGAS has already jumped more than 10% off the Thursday low. New set of weather forecasts for the United States can be named as a reason behind improved sentiment towards natural gas this week. As one can see on the image below, a new set of forecasts (issued on April 10, 2023) shows that temperatures in many US states, including the key Midwest heating region, are expected to be below-average in the next 8-14 day period. Above-average temperatures are only expected to hold in the southern states while forecasts issued on April 3, 2023 were for above-average temperatures in almost all across the United States.

Taking a look at NATGAS chart at H1 interval, we can see that the price climbed to and tested $2.24 per MMBTu resistance zone today, marked with previous price reactions and a 23.6% retracement of the downward impulse launched in early-March 2023. However, the first attempt to break above it turned out to be a failure.

Weather outlook for the United States grew colder over the past week (April 3 forecast - left, April 10 forecast - right).​

 

[SOLIDECN]

US Index​

US Dollar weakened after International Monetary Fund's (IMF) global economy outlook report, and the current US situation at the Washington summit was also commented by US Treasury Secretary Janet Yellen. The content of the commentary was in line with what today's Axios analysis and didn't surprised financial markets. Yellen emphasized the resilience and strength of the U.S. economy and the stability of the banking sector but the comment failed to help the dollar index (USDIDX).

The situation in the US economy was again commented on by John C. Williams, head of the New York Fed. The dollar index is weakening as investors following the IMF analysis saw the Fed's rate hike cycle coming to an end which may herald the lack of significant support for the dollar's strength that has been building since 2022, with US systemic uncertainty in the background. Although the chances of a hike in May increased after the NFP data, its fate is still uncertain and its impact on USD strength almost 'theoretical'.
​

IMF​

• IMF head of markets research Gourinchas conveyed that the Fed, the European Central Bank and the Bank of England are nearing the end of their rate hike cycles;​
• The IMF expects U.S. economic growth to reach 1.6% in 2023, compared to the 1.4% estimated in January, and 1.1% y/y growth in 2024 (a staggered slowdown).​

​

Yellen​

• The banking system in the United States is healthy, with strong capital and liquidity positions, the global financial system is resilient;​
• Given the war in Ukraine and recent pressures on banking systems, we remain cautious on inflation risks;​
• Price pressures in the United States remain excessive, but have declined over the past six months.​

​

Fed Williams​

• I don't think we need to change our balance sheet policy in the near term. QT is proceeding at a rapid pace;​
• The banking system has really stabilized after the last crisis. If inflation falls, we will have to lower interest rates.​
• One more rate hike is reasonable but we will watch the data including retail sales and CPI inflation;​
• If inflation becomes more persistent, we will have to adjust policy accordingly;​
• Bank failures have increased uncertainty about the outlook. We need to see a decline in core inflation;​
• We have brought policy to a restrictive level. The impact of the credit turmoil in the banks is uncertain and it is too early to estimate its impact.​

USDIDX chart, H4 interval. The dollar index reacted by falling below the 38.2 Fibonacci retracement of the wave started in Q1 2021, near 105 points. Since mid-March, when investors learned the extent of the banking sector's problems, the bulls have had a clear problem with rising above the SMA100 (black line).​

 

[SOLIDECN]

Solana​

The Solana is gaining 12% today, thanks to Thursday's scheduled launch of the Saga phone, running Android powered by Solana's blockchain. Solana developers can create decentralized financial applications (DeFi) and token projects (NFT) on its blockchain. The rally supported Bitcoin's rise above $30,000, which sent a bullish signal for the entire crypto market. Nevertheless, altcoin's gains remain somewhat muted:​

• Solana's rapid rise was supported by liquidations of $2.7 million worth of short positions on the contracts. The market expects the Saga smartphone to allow users to create their own NFTs from anywhere and access an ecosystem of Solana-based applications and projects driving adoption. The estimated price of the device in June is expected to be around $1,000;​
• The total blocked value (TVL) in DeFi applications increased by nearly 40% from $208 million in Q1 2022 to $294 million according to DeFiLlam. It is worth pointing out that the increase came at a very difficult time for the cryptocurrency market as a whole. On the other hand, however, the volume of NFT token trading fell from around $30 million in January to $20 million in March​

Weekly trading volume of NFT tokens on Solan.

SOLANA chart, H4 interval. The price of the cryptocurrency has climbed above the SMA200 and the 23.6 Fibonacci retracement of the December 2022 downward wave. Bulls may want to test $26 level, which indicates the local peaks after the cascading sell-off caused by the collapse of FTX.​

 

[SOLIDECN]

US500​

Today, investors' attention turns primarily to the US CPI inflation report, which, along with the labor market data we have learned, will be a major factor in determining what the Fed will do at the next FOMC meeting in May.

Analyst consensus assumes that the headline reading for CPI inflation will drop significantly, coming in at 5.2% y/y versus the last reading of 6% y/y. The opposite is true for core inflation, which is expected to rise to 5.6% y/y vs. the last reading of 5.5%. While the headline reading is highly likely to show a decline (due in part to the high base effect), the core reading remains less certain.

The standard deviation of the consensus compiled by Bloomberg is close to 0.1%, and the analysts themselves mathematically lean more in favor of the scenario of keeping inflation unchanged/increasing to 5.6%.

How will the market react? A lower inflation reading may support market bulls, who will react positively to the resulting lower reading lowering expectations for a continuation of the interest rate hike cycle. On the other hand, however, if inflation remains high and the underlying reading manages to surprise the consensus with a reading significantly above the expected value, markets on Wall Street may react with declines, in the face of condensed uncertainty stemming from weak macro data, the prospect of further tightening and the deepening specter of recession.

From a technical point of view, the US500 index remains in the zone outlined by medium-term trend patterns, which in the past have been important zones of support and resistance. The reaction to today's data and the Fed's Minutes reading scheduled for this evening may determine the future direction of this market.​

 

[SOLIDECN]

EURUSD​

The US CPI report for March was released today at 1:30 pm BST. Report was expected to show a steep deceleration in headline price growth as well as slight acceleration in core measure. However, as headline CPI was expected to drop below core CPI for the first time since late-2020, it was the core gauge that was especially on watch today.

Actual report showed headline inflation more than expected, from 6.0% to 5.0% YoY, while core gauge matched expectations by accelerating to 5.6% YoY. It looks like investors acted on softer headline reading with market reaction being clearly dovish - USD slumped while US index futures jumped.

Markets odds for a 25 basis point Fed rate hike at May meeting dropped from around 73% prior to data release to around 60% now.
​

US, CPI inflation for March​

• Headline (annual): 5.0% YoY vs 5.2% YoY expected (6.0% YoY previously)​
• Headline (monthly): 0.1% MoM vs 0.2% MoM expected​
• Core (annual): 5.6% YoY vs 5.6% YoY expected (5.5% YoY previously)​
• Core (monthly): 0.4% YoY vs 0.4% MoM expected​

Headline US CPI inflation slowed below the pace of core US CPI inflation in March.

EURUSD jumped above April 4 highs following softer than expected US CPI data for March.

US500 caught a bid following US CPI data and is attempting to make a break above the resistance zone ranging between 50% retracement and 4,165 pts mark.​

 

[SOLIDECN]

USDCAD​

The Bank of Canada did not change interest rates as widely expected. Current interest rate remains at 4.50%. This is the second meeting during which interest rates have not been raised. According to analysts, a series of aggressive hikes has yet to be fully reflected within the economy therefore, there is no need to continue raising interest rates at the moment.

The Latest inflation data fell sharply to 5.2% in February compared to the 5.9% in January. And according to forecasts, the next inflation data in April is expected to be even lower, between 4.1 and 4.4%. On the other hand labour market remains tight fueling the economic growth, which in the first quarter seems to be stronger that it was projected in January.

BoC stated that it continues to assess whether monetary policy is sufficiently restrictive to reliece price pressures and remains prepare to raise interest rates further if needed. Governing Council stressed that bringing back inflation target to the 2% has the highest priority.

CAD firms after Bank of Canda Policy decision. USDCAD is down 0.2% at 1.34379 versus 1.34670 ahead of the decision.​

 

[SOLIDECN]

AUDUSD​

• US indices finished yesterday's trading lower with major indices erasing all of the gains from the beginning of the session. S&P 500 dropped 0.41%, Dow Jones moved 0.11% lower and Nasdaq declined 0.85%. Russell 2000 dropped 0.72%​
• FOMC minutes showed that some Fed officials saw holding rates unchanged as appropriate at the March meeting amid banking turmoil. However, decision to hike by 25 basis points was ultimately unanimous​
• Markets are pricing in an almost-70% chance of 25 basis point rate hike at next FOMC meeting in May​
• Indices from Asia-Pacific traded mixed today - Nikkei gained, Kospi traded flat while Nifty 50 and S&P/ASX 200 pulled back. Indices from China traded slightly lower​
• DAX futures point to a slightly lower opening of the European cash session today​
• North Korea launched what seemed to be a new weapon system, possibly ICBM, towards the East Sea. Japanese authorities ordered residents of Hokkaido island, where the missile could land, to seek shelter inside buildings or underground. Evacuation order was later lifted​
• BoJ Governor Ueda said that inflation in Japan is likely to slow and the BoJ will continue with monetary easing until inflation target is reached stably and sustainably​
• RBA Deputy Governor Bullock said that pause in rate hikes in driven by job preservation and policy lags, rather than being a reaction to banking turmoil​
• AUD caught a bid after a solid jobs report for March - employment increased by 53k (exp. +20.6k) while the unemployment rate stayed unchanged at 3.5% (exp. 3.6%)​
• Chinese exports in USD terms increased 14.8% YoY in March (exp. -7.1% YoY) while imports were 1.4% YoY lower (exp. -6.4% YoY)​
• Cryptocurrencies are trading mixed - Bitcoin gains 0.4%, Ethereum drops 0.1% while Dogecoin adds 0.6%​
• Energy commodities traded lower - oil drops 0.3-0.4% while US natural gas prices decline 0.2%​
• Precious metals trade a touch higher with gold adding 0.1%​
• AUD and GBP are the best performing major currencies while CHF and JPY lag the most​

AUDUSD jumped following solid jobs data for March from Australia. However, bulls failed to sustain a break above the 0.6710 price zone and a return below this area can be observed at press time.​

 

[SOLIDECN]

NATGAS​

US natural gas prices took a hit yesterday as analysts mounted their calls that the end of the heating season in the United States is near. While recent weather forecasts pointed to a period of below-average temperatures, average temperatures in this period of the year are usually high enough for demand for heating to drop significantly. Expectations for today's EIA natural gas storage report (3:30 pm BST) also strongly hint that the heating season in the US is drawing to close - median estimate is for a 25 billion cubic feet increase in stockpiles. If confirmed, this would be the second inventory build of 2023 and the first one since mid-January.

Taking a look at NATGAS chart at H4 interval, we can see that price has halted recent upward correction at the resistance zone marked with $2.24 handle and the 23.6% retracement of the downward move launched at the beginning of March 2023. Price launched a pullback and move back to the $2.08 per MMBTu. After a few hours of struggle in the area, sellers managed to push the price below the $2.08 mark this morning. Volatility on the NATGAS market is likely to be elevated around 3:30 pm BST when the EIA report is released. Should analysts be mistaken with their forecasts and US natural gas inventories actually drop, NATGAS could see a price spike.​

 

[SOLIDECN]

AUDUSD​

Looking technically at the chart of the AUDUSD currency pair, the quotation broke out of the downward channel at the top some time ago, and we are currently observing a test of the key resistance in the area of 0.6785. If it is overcome, the way towards 0.6885 may be opened.

 

[SOLIDECN]

Palladium​

Looking technically at the chart, PALLADIUM price is approaching key short-term resistance at $1578, which penetrates from the upper limit of the local 1:1 pattern, as well as previous price reactions. In the event of an upward breakout, an upward movement toward $1730 could be triggered.

 

[SOLIDECN]

NZDUSD​

The New Zealand dollar is the best performing currency in the G10 today. This is mainly due to the weakness of the USD, which discounted following the release of PPI inflation data from the US, which showed a decline in the headline reading from 4.6% to 2.7% y/y. Thus, the NZDUSD pair took advantage of the favorable technical situation and filled the inverted head-and-shoulders, bearish pattern that appeared on the H1 interval.

This type of price formation usually heralds a trend reversal - in this case to an upward one. After crossing the level of 0.6455, the upward movement accelerated, and the stock is currently struggling with the 61.8% measurement set on the last downward wave. In the case of a breakout above, the bulls can direct their attention towards the next resistance zone at 0.6335. On the other hand, in the event of a pullback and selling pressure, support remains at the level of 0.6245.
​

 

[SOLIDECN]

CHNCOMP​

Indices from Asia-Pacific gained during the first trading session of a new week. Chinese indices were top-performers with CHNComp gaining over 3% and CH50cash adding 2.4%. Hong Kong shares also performed well with HKComp adding over 2%. There were no specific news behind the jump. However, there was data from China on new home prices for March released over the weekend. While on an annual basis prices were 0.8% YoY lower, month-over-month data showed a 0.5% MoM increase, This was the third monthly increase in a row and the fastest pace of price growth in 21 months. It could be a hint that demand and overall situation in the Chinese property market may be improving.

Indices from China may also see some moves during the next Asian session as some top-tier economic reports from the country are scheduled for release. Monthly activity data for March (industrial production, retail sales and urban investments) as well as Q1 GDP report will be released at 3:00 am BST. Economists expect improvement in monthly readings for March, especially in retail sales and industrial production. Also, Q1 GDP growth is seen reaching 2.2% QoQ, after a lack of growth (0.0% QoQ) in Q4 2022. On an annual basis, Chinese GDP is expected to have grown by 4% YoY in Q1 2023.

Taking a look at CHNComp chart at D1 interval, we can see that the index is making another attempt at breaking above the resistance zone marked with 23.6% retracement in the 7,120 pts area. From a technical point of view, a break above could trigger an upward move towards the 7,850 pts area - above a year-to-date high from late January.​

 

[SOLIDECN]

Alphabet price dips after Samsung deal concerns!​

Alphabet Inc. (Googl.US) stock price declines nearly 4% due to the concerns raised by the potential loss of revenue from Samsung. Googl.US price is currently trading at $105. According to the news that came out this morning, Google's employees reportedly panicked after discovering that Samsung Electronics is considering replacing Google Search with Microsoft's Bing AI as the default search engine on its devices. This change would practically mean the end of a 12 year partnership with Google.

This switch could potentially lower an estimated $3 billion in annual revenue for Google. Despite Google’s deal with Samsung being significantly less valuable than the deal with Apple, the similar contract with Apple is up for renewal this year. This contract is tied to an estimated $20 billion. Apple will likely keep a close eye on Samsung’s negotiations with Google, which could potentially allow Apple to strengthen its bargaining power with both contractors.

Google is now racing to build an all-new search engine powered by AI and upgrading the existing one with new features as competitors like Bing are posing a serious threat to the tech giant’s search business. Despite negotiations still ongoing, Google developers are working on a brand new set of features named "Magi" for the upcoming search engine. Google sees a significant risk related to the rise of AI-powered competitors like recently demonstrated ChatGPT by OpenAI.

(Googl.US) Stock price action is currently trading in rising consolidation channel with 200d SMA close to crossover 50d SMA signaling trend reversal.​