Diverse macroeconomic indicators revealed the losing momentum in the fourth quarter. Notwithstanding retail and industrial activity surpassing initial projections, there are observable indications of a decline.
Last week’s inflation report showed that growth has slowed in all economies. The quarterly annualized decline in Japan's GDP for the third quarter was 2.1%, which was more than anticipated. Moreover, the annual rate of inflation in the United Kingdom decreased substantially to 4.6% in October.
Treasury yields decreased as markets assimilated October inflation data that lagged behind expectations. The yield on a 10-year Treasury note has decreased from 4.65% one week ago to 4.45% at present. The inflation reports also indicated that the FOMC's cycle of rate hikes has come to an end.
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Forex Technical Outlook for 20 November 2023 to 24 November 2023
Let’s see the list of events to look at this week:
- BOE Gov Bailey Speaks on Tuesday
- RBA Gov Bullock Speaks on Tuesday
- CAD CPI m/m on Tuesday
- FOMC Meeting Minutes on Tuesday
- RBA Gov Bullock Speaks on Wednesday
- Revised UoM Consumer Sentiment on Wednesday
- German & French PMIs on Thursday
- German ifo Business Climate on Friday
- US Flash Manufacturing PMI on Friday
Let’s see the market outlook from the weekly forecast:
The EUR/USD continued pushing higher but still traded below the two-month high of 1.0895 level. The weaker US Dollar became supportive to EUR/USD bulls as the softer CPI in October indicates that the rate hike cycle is going to an end.
The buying pressure in the EUR/USD price is potent from the weekly chart, as the current candle indicates a buyers’ defeat at the 100-week Simple Moving Average. Moreover, the Momentum Indicator showed a bullish possibility as it reached the 100.00 level. Meanwhile, the 14-week RSI is steady above the 50.00 line, which is a confluence bullish signal.
According to the daily chart, the price trades comfortably above the 100-day SMA, while the 20-day EMA shows an upward slope. Moreover, the price trades at the 50% Fibonacci Retracement level of the 1.1275 to 1.0447 swing.
Based on the daily outlook, an upward continuation might find resistance at the 1.1000 psychological level. However, a bullish daily candle above this level could indicate a trend continuation towards the 1.1120 support. On the bearish side, a correction and a bearish daily candle below the 20-day EMA could be a short opportunity, targeting the 1.0170 level.
After the recent down week, Pound Sterling grabbed buyers' attention, supported by the weaker US Dollar. Moreover, the upside potential came from the central bank’s expectation, where upcoming PMIs could provide more clues about the GBP/USD momentum.
In the short-term GBP/USD outlook, the upward bias is potent as the 14-day RSI is stable above the 50.00 line.
Adding to the bullish momentum, the 20-day Exponential Moving Average moves above the 50 SMA. Moreover, the weekly close came solid above last week’s high, which indicates a valid bull cross.
Based on the daily outlook of GBP/USD, an upward continuation with a daily candle above the 200-day SMA could grab buyers' attention towards the 1.2600 level before reaching the 1.2713 high.
On the bearish side, the confluence support is present at the 1.2255 level, where a break below this level could extend the downside pressure towards the 1.2100 demand area.
AUD/USD closed bullish in the previous week, where the bullish trend reversal is not confirmed. Investors should wait for this week’s RBA Meeting Minutes, which could work as a bullish factor for AUD.
In the weekly AUD/USD chart, the sideways market is still active, where a range breakout is needed before finding a stable trend. Moreover, the weekly RSI moved to the 50.00 level, which indicates more space toward the buyers' side.
In the daily chart, the rectangle pattern is still valid, where the recent price showed a bullish reversal from the near-term demand zone. However, a stable market is present above the dynamic 20-day EMA, with an upward pressure in the 14-day RSI.
Based on the daily outlook, a daily candle above the 0.6550 level could be a long opportunity, where the main aim is to test the 0.6800 level. The alternative approach is to find an immediate bullish spike and bearish reversal from the 0.6542 level. In that case, a bearish daily close below the dynamic 20 DMA could resume the existing trend, aiming for the 0.6200 psychological level.
The muted sentiment from BoJ had a long bull run in the USD/JPY price, where the recent volatility at the 150.00 psychological level is a crucial price to look at.
In the weekly price of USD/JPY, a bearish two-bar reversal is visible above the 150.00 level, where the secondary candle failed to make a new low. Meanwhile, the weekly RSI shifted the direction below the 70.00 line, while the bearish correction is potent from the mean reversion with the dynamic 20 EMA.
In the daily chart, a bearish channel breakout is seen with a daily close below the dynamic 20 EMA. Moreover, the RSI moved below the 50.00 line, with a downward slope in the Momentum Indicator.
Based on the daily outlook of USD/JPY, the long-term trend is still valid, where a valid downside pressure below the 148.18 level would be the first sign of a bearish trend. On the other hand, an immediate bullish recovery from the 149.20 to 148.10 area could indicate a trend continuation, targeting the 153.00 level.
The XAU/USD continued the bullish momentum and gained more than 2.5% in a week. The upward pressure came from the weaker US Dollar and US Treasury bond yield. However, the upcoming days don't have significant macroeconomic events, which might provide an opportunity for technical traders.
The weekly XAU/USD candlestick shows an immediate rebound from the opening price but failed to breach the 1992.62 resistance. However, the long-term upward trend is still active, where the price is likely to move above the 2000.00 psychological level.
In the daily chart, the 14-day RSI moved above the 60.00 line, which is a sign of an upward trend continuation. Moreover, the 20-day EMA is below the price with an upward slope, which could work as a confluence support for bulls.
Based on the daily market outlook, an upward continuation is potent, where a daily close above the 2000.00 level could advance the price above the 2040.00 level.
On the bearish side, sellers need a stable market below the 20-day EMA, whereas a D1 candle below the 1955.00 is crucial for targeting the 1920.00 and 1900.00 support levels.
After the US Securities and Exchange Commission (SEC) postponed the decision-making process concerning the Bitcoin (BTC) exchange-traded fund (ETF), the cryptocurrency encountered an abrupt surge in value.
A substantial likelihood of approval for a spot ETF by January 10, 2024, is indicated by analysts. It is expected that this development, should it come to fruition, will profoundly benefit the entirety of the cryptocurrency ecosystem. A significant influx of capital has occurred in response to this prospective development, which has contributed to heightened market volatility.
Until the ETF decision is confirmed, investors are advised to exercise caution regarding the price volatility of Bitcoin. Bitcoin could potentially surpass the critical support level at $35,000 and re-enter the support range of $30,000. This could occur within minutes. The repercussions of such an action could be liquidations totaling millions of U.S. dollars and pervasive panic.
Moreover, the Bitcoin 30-day MVRV fluctuated around 16% on October 24, signifying that 16% of investors realized a profit. Notwithstanding, a decline in unrealized profits due to an increased number of holders recording gains generates a bearish divergence and indications of an impending sell-off.
In the daily chart, the BTC/USD price became volatile at the 161.8% Fibonacci Extension level with an RSI divergence.
In that case, a downside correction might happen towards the 31,524.55 support level, which needs validation by having a D1 candle below the 35,500.00 level.
On the other hand, a bullish continuation is possible, which needs a valid bullish rejection from the dynamic 20-day EMA.