2023 Market Forecast by SolidECN

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Tracking the Dip: U.S. Oil's Technical Outlook​

Solid ECN – Oil is trading within a bullish flag pattern, indicating potential for future gains. However, it's crucial to note that it remains above the 50-day Exponential Moving Average (EMA 50), a key indicator that suggests bullish momentum is intact. Nevertheless, the plot has a twist as the technical indicators hint at a bearish trend. The Relative Strength Index (RSI) has dipped below 50, and the Awesome Oscillator shows red bars declining toward the signal line. This combination of signals might indicate a potential shift towards bearish territory, especially if prices continue to fall towards the 50% Fibonacci level, which coincides with the EMA 50.​

Short-Term Forecast and Trading Suggestions​

The market appears to be entering a consolidation phase, with a possible decline to the lower boundary of the bullish flag at $76.0. For the bearish trend to gain momentum, prices must breach significant support levels, including the EMA 50 and the psychological $80.0 mark. Traders should keep a close eye on these levels as they could dictate the market's short-term direction.

Today's expectations are that the downward trend could extend to the $80.0 support level. Should this level fail, further declines could push the price to approximately $77.0 per barrel. Keeping up-to-date on these developments is crucial for traders and market analysts alike.​

 

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GBPUSD Sideways Movement: Bearish Signals Despite Consolidation​

Solid ECN—The GBPUSD currency pair trades sideways between 1.249 and 1.240. The Bollinger Bands are squeezed and clearly demonstrate the range area on the 4-hour chart. Other technical indicators, except Standard Deviation, signal and promise a bullish trend while the uptick momentum is weak, and we don't see strength from the buyers.

From a technical standpoint, the primary trend is bearish while the pair hovers below EMA 50 and the Ichimoku cloud. However, the current consolidation phase might test the EMA 50 again in today's trading session, potentially forming a double-top pattern on the 4-hour chart.

Consequently, a failure to stabilize the price above 1.2499 will likely lead to a decline, and initially, the pair would test this week's low at 1.240 support.​

 

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Analyzing the Canadian Dollar's Recent Performance​

Solid ECN – The Canadian dollar gained ground against the U.S. dollar in today's trading session, while its value had been declining for almost three weeks. Currently, the USDCAD trades at about 1.37, clinging to the lower band of the bullish flag and testing the 78.6% Fibonacci support.

The technical indicators are bearish. The Relative Strength Index hovers below 50, while the Awesome Oscillator shifts below the signal line, signaling a continuation of the downtrend. However, the bear market faces a barrier at 1.374, followed by the EMA 50. If the price maintains its position above these levels, the uptrend will likely resume, initially targeting April's high at 1.3844.​

 

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AUDUSD Faces Key Resistance: Bearish Outlook​

Solid ECN – The AUDUSD currency pair climbed to EMA 50 on Monday and tested the 0.6455 resistance for the second time this month. As of writing, the pair is trading around 0.645 and declining, trying to stabilize itself below the 23.6% Fibonacci resistance level. Interestingly, the 4-hour chart formed a bearish long wick candlestick pattern, interpreted as a continuation of the downtrend.

The technical indicators are giving mixed signals. The relative strength index hovers below 50, indicating a bearish trend, but the awesome oscillator bars are green and about to flip above the signal line.

From a technical standpoint, the AUDUSD pair is in a bearish trend as long as it trades below the EMA 50. Based on the current data on the chart, the bearish trend should continue, aiming for last week's low, the 0.6361 mark.

The bearish scenario should be invalidated if the Australian dollar climbs above the 50% Fibonacci resistance level.​

 

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Navigating USDCAD's Bearish Momentum & Reversals​

Solid ECN – The USDCAD price dipped below the bullish flag and the EMA 50. The pair is currently trading at about 1.372. This level coincides with the Ichimoku cloud resistance area, which is also close to the 38.2% Fibonacci level. While the RSI indicator hovers below the 50 level, it still has room to drop to 30 or become oversold. Therefore, it can be interpreted that the downward momentum will likely continue but might pause when it reaches the 38.2% Fibonacci level.

From a technical standpoint, going against the primary trend is risky. Traders should wait and monitor the price action around the 38.2% Fibonacci support level and the bearish flag in the 4-hour chart, depicted in black.

We suggest waiting patiently for the price to climb above the EMA 50 and the 23.6% Fibonacci level and join the bullish trend if there is a new breakout.​

 

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Watching Bitcoin's Key Fibonacci Levels for Trends​

Solid ECN – Bitcoin has shifted above the EMA 50, and the digital gold has stabilized itself above the 38.2% Fibonacci level and the Ichimoku cloud. However, the BTCUSD price still needs to overcome the upper band of the bearish flag before further growth.

From a technical standpoint, with the Bitcoin price sustained below the 50% Fibonacci support level, the bearish outlook remains valid. In this scenario, the downward pressure should continue, and the initial target will likely be the 23.6% Fibonacci support level.

On the other hand, if the bulls break out from the flag, the uptrend should continue, paving the way to $72,000.

Traders should watch the price action and market behavior around the 50% Fibonacci level.​

 

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Gold Prices Dip Below Key Technical Levels​

Solid ECN—In today's trading session, the yellow metal dipped below the 23.6% Fibonacci support level and the Ichimoku cloud. When writing, the XAUUSD price is floating around $2,336, stabilizing below the EMA 50.

The technical indicators are bearish, with the relative strength index hovering below 50, and the awesome oscillator bars are in red and below the signal line.

From a technical standpoint, the gold market might have entered a consolidation phase that could extend to the 50% Fibonacci level at the $2,289 mark.

Conversely, should the price of gold flip above the cloud, we can consider that the uptrend will likely continue.​

 

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Bitcoin Faces Resistance: Can It Break the $67K Barrier?​

Solid ECN – Bitcoin, often called digital gold, has reached a critical resistance level around the $67,236 mark. The upper band of the wide bearish flag and the 50% Fibonacci support level support this barrier.

Technical indicators are signaling the bull market will continue. The BTCUSD price is above the Ichimoku cloud, and the relative strength index and the awesome oscillator hover above 50.

For the uptrend to continue, the price must close and stabilize itself above the 50% Fibonacci level, a task it has failed to achieve in today's trading session. Interestingly, the BTCUSD 4-hour chart has formed a bearish engulfing pattern, a signal that suggests a shift in trend from a bull to a bear market.

Therefore, if the price remains below the flag, a dip in the Bitcoin price is still possible.

We suggest monitoring the price behavior around the 50% Fibonacci level and the EMA 50 in today's trading session.​

 

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Bearish Signs for NZD/USD​

Solid ECN—The New Zealand dollar traded below the Ichimoku Cloud and the 50 EMA against the U.S. Dollar, sitting at around 0.59 during Tuesday's U.K. trading session.

The technical indicators give mixed signals, but they have a more bearish than bullish outlook. The Relative Strength Index hovers below the 50 level, but Awesome Oscillator bars are green and hovering above the signal level. It is worth noting that the AO indicator signals divergence in its bars, which can be interpreted as either a consolidation phase or a potential trend reversal on the horizon. Therefore, traders and investors should approach the NZD/USD market with caution.

From a technical standpoint, the primary trend is bearish as long as the pair stays below the 0.5938 resistance level, as depicted in the 4-hour chart above. In this scenario, the downtrend will likely resume, and the initial target would be to test April's low at the 0.5852 support level.

Conversely, the bearish outlook is invalidated if the NZD/USD price crosses and stabilizes above the 0.5938 mark.​

 

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GBPJPY Tests Resistance: Potential Bullish Breakout​

Solid ECN – The GBPJPY currency pair rebounded from the lower band of the bullish flag today and is now testing the 192.8 barrier.

The technical indicators are bullish, and the pair will likely break out. If this scenario plays out, it would allow GBP buyers to reach the upper band of the flag against the Japanese Yen.​

 

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U.S. Oil Eyes $87 High as Bullish Trends Hold​

Solid ECN Blog – Yesterday, U.S. Crude oil prices formed a bullish long-wick candlestick pattern, as depicted in the daily chart above. This development occurred near the 50% Fibonacci retracement level, coinciding with the 50-day Exponential Moving Average (EMA 50).

The Relative Strength Index (RSI) is poised to rise above 50, signaling a potential uptrend continuation.

From a technical perspective, U.S. Oil remains in an uptrend, supported by the EMA 50. As long as this level holds, the outlook remains bullish, with the next target potentially being the March high of $87.0.

Conversely, should prices fall below the EMA 50, the bullish scenario would be invalidated, potentially leading to a decline toward the lower flag band at the $78 threshold.​

 

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Euro Gains Amid Strong Europe PMI Data​

Solid ECN – The euro's value increased to over $1.065, though it stayed near its lowest point since the beginning of November. This movement came as investors evaluated surprisingly strong preliminary PMI data from some of Europe's biggest economies. Recent surveys showed that business activity in the Eurozone increased more in April than in almost a year.

Germany saw economic growth for the first time in nine months. Regarding monetary policy, European Central Bank (ECB) officials indicated a readiness to start lowering borrowing costs possibly by June, with some predicting up to three rate cuts by the end of 2024. However, the overall market mood has changed slightly.

Expectations for rate reductions by the ECB and the U.S. Federal Reserve have lessened this year, driven by ongoing high inflation and signs of a sturdy economy in the U.S.​

 

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UK Pound Near Low as Investors Eye Rate Cut Soon​

Solid ECN – The British pound has traded just above $1.24, hovering near its lowest level since mid-November. This comes as investors process robust UK PMI data and consider how it might influence future economic policies.

The most recent data shows a significant boost in British business activity in April, the highest since May 2023, primarily due to a surge in services output. Regarding monetary policy, expectations have shifted, predicting an initial decrease in borrowing costs as early as August, sooner than the earlier forecast of September.

This shift followed comments from Deputy Governor Dave Ramsden, who noted a decreased risk of persistently high British inflation and the possibility that it could drop below the Bank of England's latest projections.

Conversely, Chief Economist Huw Pill acknowledged that the new economic reports suggest an impending rate cut, though he cautioned that it might still be some distance away.​

 

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Australian Dollar Peaks as Inflation Surprises​

Solid ECN – Recently, the Australian dollar climbed above $0.65, reaching its highest point in nearly two weeks. This increase came after unexpectedly strong inflation data within Australia, suggesting that the Reserve Bank of Australia might keep interest rates stable. In the first quarter, Australia's consumer price index dropped to 3.6% from 4.1% in the previous quarter. Although this marks the fifth consecutive quarterly decline, it was still higher than the predicted 3.4%.

Additionally, Australia's monthly CPI rate rose to 3.5% in March, up from 3.4% in February, which was surprising as analysts expected it to remain unchanged. Earlier in the week, new data revealed that Australia's private sector growth hit a two-year high in April, driven by near-stable manufacturing and continued service growth.

Meanwhile, the Australian dollar also gained from a weakening US dollar, which fell as business activity in the US slowed in April, pointing towards a less aggressive monetary policy by the Federal Reserve.​

 

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NZ Dollar Rises as US Dollar Weakens, Inflation Drops​

Solid ECN – The New Zealand dollar has recently seen a slight increase, trading just over $0.594, as a result of improved market confidence and a slight weakening of the US dollar. Investors are feeling more optimistic, moving away from last week's urgent rush to safer investments, fueled by expectations that the tensions between Iran and Israel won't escalate further.

Additionally, the Kiwi gained from a dip in the US dollar, which occurred after recent figures indicated a decrease in US manufacturing and a slowdown in service sector growth, which could support lowering interest rates. In New Zealand, the Reserve Bank maintained the official cash rate at 5.5% for the month, stating that a tight monetary policy is necessary to bring inflation back within the target range of 1-3%.

The nation's annual inflation rate has dropped to 4% for the first quarter of 2024, marking the lowest rate since the second quarter of 2021.​

 

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WTI Crude Oil Prices Stay High Amid Falling US Stocks​

Solid ECN – WTI crude oil prices stayed over $82 per barrel on Wednesday, following a near 2% increase the day before. This rise came unexpectedly due to a drop in U.S. crude oil supplies, suggesting strong demand. According to the Energy Information Administration, U.S. crude stocks fell by 6.368 million barrels last week, marking the most significant decline in three months.

This decrease contrasted with predictions of a 1.6 million barrel increase. Confirmatory government data aligned with previous industry reports from the American Petroleum Institute. Additionally, weaker U.S. business activity hints at possible interest rate cuts by the Federal Reserve, further boosting demand prospects.

Meanwhile, investors are also keeping an eye on tensions in the Middle East, particularly as Israel intensifies its actions in Gaza. Despite robust PMI data in Europe, expectations are growing that the UK and EU may soon reduce their economic stimulus.​

 

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Gold Prices Stable as Investors Eye US Economic Data​

Solid ECN – Gold prices remained stable at around $2,320 per ounce last Thursday. Investors focused on upcoming U.S. economic updates to get more precise insights into the Federal Reserve's future actions. This interest grew after recent economic reports were reviewed. Orders for long-lasting goods slightly exceeded forecasts in March. However, data released on Tuesday showed a slowdown in growth in the U.S. private sector.

Now, traders are looking forward to the GDP report for the first quarter and the personal consumption expenditures (PCE) data for March, which will be released on Friday. These reports follow a period of higher-than-expected consumer inflation, which has altered the expectations for interest rate reductions. Federal Reserve officials have recently indicated no immediate plans to lower rates, with most market participants expecting a rate cut in September at the earliest.

As interest rates stay elevated, the appeal of gold, which does not yield interest, diminishes. Additionally, decreasing tensions in the Middle East have led investors to opt for riskier assets, further affecting gold prices.​

 

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Japanese Yen Hits 34-Year Low as BOJ Meets​

Solid ECN – On Thursday, the Japanese yen fell below 155 per dollar, reaching its lowest point in 34 years. This happened as the Bank of Japan (BOJ) began a two-day meeting to discuss its monetary policy. Although the BOJ stopped using negative interest rates in March, rates are not expected to change now.

However, investors are looking for signs that the bank might take action because the yen has weakened significantly. This weakness has hit a critical point that many believed would cause officials in Tokyo to step in.

BOJ Governor Kazuo Ueda mentioned at last week’s G20 summit that the bank might increase interest rates again if the yen’s drop continues to push up prices by making imports more expensive. He reiterated this possibility this week, stating that rates could rise if inflation trends towards the 2% target as predicted. On the other hand, Japan’s Finance Minister Shunichi Suzuki chose not to comment on the currency levels.​

 

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Swiss Franc Recovers Amid Policy Changes and Low Inflation​

The Swiss franc has stabilized around 0.91 against the USD, recovering from significant losses earlier in the year that pushed it to a six-month low. This happened due to major differences in the monetary policies anticipated for the U.S. and Switzerland. In March, Switzerland saw its lowest inflation in over two years, dropping to 1%. This supports the Swiss National Bank's (SNB) claim that inflation pressures are easing.

Amid low business confidence and falling retail sales, the SNB is expected to increase interest rates in its June meeting. After the SNB's surprising rate cut in March—the first central bank to do so amid global inflation concerns—the franc had fallen sharply.

Additionally, the lower inflation forecast has enabled the central bank to ease its support of the franc. Consequently, foreign currency reserves have grown for the third consecutive month since hitting a seven-year low in November.​

 

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Canadian Dollar Rises Amid Eased Global Tensions​

Solid ECN – The Canadian dollar surged beyond 1.37 against the USD this April, bouncing back from its five-month nadir of 1.382 on April 16th. This improvement came as concerns about global risks eased with resolving tensions in the Middle East, and unimpressive US economic data weakened support for the US dollar.

In Canada, the prices of industrial products increased by 0.8% in March, aligning with forecasts and a slight dip from the prior month’s revised increase of 1.1%. Furthermore, new house prices in March held steady, defying expectations of a slight rise, with the annual change in the New Housing Price Index showing a decline of 0.4%. In the US, demand for the dollar as a safe-haven asset declined following assurances from Iran of no retaliatory strikes against Israel, coupled with a slowdown in the US manufacturing and services industries that heightened anticipation of interest rate reductions.

For further clues, the focus now shifts to upcoming US economic reports, including the GDP data on Thursday and the Federal Reserve’s PCE price index on Friday.​