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GameStop Corp. tumbled as bearish investors appeared to cover their positions while…

GameStop Corp. tumbled as bearish investors appeared to cover their positions while retail traders flocked to other corners of the market

20210202
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Market Focus

Stocks had their biggest rally in about 10 weeks as several strategies said the recent explosion of speculative buying won’t derail the bull market inequities. In a broad-based advance led by retailers and tech companies, the S&P500 rebounded from last week’s route as the Nasdaq 100 jumped 2.5%. Amazon.com Inc. and Alphabet Inc., which are set to report earnings Tuesday, climbed at least 3.6%. Tesla Inc. soared after an analyst more than doubled his price target on the electric-car maker, claiming “fireworks aren’t over.” GameStop Corp. tumbled as bearish investors appeared to cover their positions while retail traders flocked to other corners of the market. Silver climbed to an almost eight-year high.

The battle between retail traders and hedge funds is unlikely to cause a significant setback for markets, according to JP Morgan Chase & Co. Major drawdowns have usually occurred when there’s a worse outlook for growth, as well as signs of overvaluation beyond price-earnings ratios and credit spreads. Few markets show signs of extraordinary price momentum or excessive leverage.

Market Wrap

Main Pairs Movement

EURUSD pair bounced from the 1.2060 regions but fails to break above 1.21. The dollar eases slightly as equities stage a modest comeback as retail investors’ frenzy temporarily cooled. Aussie, on the other hand, finished Monday nearly unchanged as the pair is trapped between the greenback’s demand and rising equities. RBA is expected to keep the monetary policy on hold, and the market is eyeing its rate decision to be released on Tuesday. USDCAD is higher by around 0.4% on Monday, having rallied from late Asia Session lows in the 1.2760s to current levels in the 1.2820s, up around 50 pips from last Friday’s closing levels in the 1.2670s.

DXY picks up extra pace and trades at shouting distance from the key 91.00 thresholds at the beginning of the week. Crude oil prices continue to fluctuate in a relatively tight range on Monday after closing the previous week little changed. A barrel of West Texas Intermediate was up 2.57% daily.

Technical Analysis

USDJPY (4 Hour Chart)

USDJPY rose above 105.00 and is trading comfortably above that multi-monthly high price zone. Bouncing back from the worst equity market performance of last week, the market today has seemed to be fueled with investors that are risk positive, which means the safe-haven JPY would lack sufficient demand. Additionally, the greenback has regained some substantial demand as the DXY has risen over the multi-month high of 91.00 despite the upbeat equity market. Given that there will be no major macroeconomic data awaiting to be released on Tuesday that associates with JPY or USD, and that the risk-positive sentiment is likely to persist if nothing major can potentially reverse the ongoing sentiment, it is reasonable to expect the rise of USDJPY would extend.

Technically speaking, the surge of USDJPY is supported by both its 15-Day SMAVG and MACD histogram. However, because the RSI for USDJPY has surpassed the overbought region, a downward correction can be expected. On the upside, if the USDJPY can continue to be traded above the 105.00 resistance level, the USDJPY bulls can cap their gains in the 105.21 zone. On the flip side, the bears are eyeing critical support levels at 104.62, 104.30, and 104.07.

Resistance: 105.00, 105.21, 105.38

Support: 104.62, 104.30, 104.07

GBPUSD (4 Hour Chart)

GBPUSD topped above 1.3755 in the late European session but gradually tumbled and bottomed at 1.3657 in the American session. Although there is a shortage of fundamental news in the market, it is inferable that the sudden decrease in the GBPUSD pricing may be a result of the bears failing to advance above the key 1.3761 resistance. Given that the 1.3761 resistance is a multi-year high price level, the bulls’ failure to extend the pair’s bullish trend offered the bears an opportunity to place additional short-selling positions that ultimately pull down the Cable’s price. Not to mention the fact that a recent rise in DXY also contributed to the plummet of GBPUSD.

From a technical perspective, the GBPUSD is still supported by the 15-Day SMAVG; however, as the RSI is dipping down to the low 40s, the selloff trend in the pair seems to have formed, but the duration may not be too long, and that is because the upcoming BoE Interest Rate decision is expected to be left unchanged, which in turn, can resume the rally of GBPUSD.

Resistance: 1.3731, 1.3745, 1.3761

Support: 1.3693, 1.3645, 1.3606

XAUUSD (4 Hour Chart)

On Monday, the yellow metal has surged extensively from the lows of $1849 and climbed up to $1871.85 amid a strengthened demand in the greenback. Afterward, the XAUUSD pair failed to advance further and remained consolidative between the $1875 and $1858 range.

From a technical perspective, the precious metal is under bearish pressure as indicated by the 60-Day SMAVG. Additionally, because the surge of XAUUSD heavily relies on the slumping US 10-year yields on Monday, the bullish run of the pair is choppy. This can be found in the pair’s spinning top candlestick patterns and the 50ish RSI reading of the yellow metal. If the XAUUSD can break above the $1875 resistance, the next resistance level would be near $1891.On the flip side, if the XAUUSD reverses its bullish trend, the first cushion of the pair can be found at $1858, followed by $1850, then around $1843.

Resistance: 1875, 1891, 1906

Support: 1858, 1850, 1843

20210202
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The S&P 500 Index fell almost 2%, turning negative for the year…

The S&P 500 Index fell almost 2%, turning negative for the year and posting its biggest weekly decline in three months

20210201
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Market Focus

Global equities slumped in a broad retreat that extended across industries amid lingering concerns that retail trading was creating havoc and as traders mulled an uncertain outlook for deploying coronavirus vaccines. Treasury yields rose.

The S&P 500 Index fell almost 2%, turning negative for the year and posting its biggest weekly decline in three months as day traders’ bids for heavily shorted stocks fueled speculation hedge funds would need to reduce their market exposure. GameStop Corp. and AMC Entertainment Holdings Inc. soared in a return of volatility for stocks popular in the internet chat room as brokerages said they would start to ease trading restrictions imposed after wild swings this week.

Global stocks also fell the most since late October, partly on the turmoil caused by hordes of day traders hatching stock bets that roiled hedge funds and strained trading platforms. Meanwhile, investors were left to ponder the outlook for the pandemic as Johnson & Johnson said its one-shot vaccine generated strong protection against Covid-19, though it was less effective against the South Africa variant. The European Union escalated the fight over vaccine supplies with an emergency plan to restrict exports.

According to Carsten Brzeski, global head of macro at ING Group, “Extended and stricter lockdowns do not bode well for the economy. Demand from China could also weaken on the back of lockdowns.”

Market Wrap

Main Pairs Movement

EURUSD is trading above 1.2100, reversing losses after the German GDP beat estimates with 0.1% QoQ in Q4. US dollar clings to gains amid a downbeat mood fueled by the Wall Street retail-trader craze. Focus shifts to the US data, Yellen’s speech. Japan’s Tokyo inflation came in at -0.5% YoY, better than anticipated in January. Equities trade in the red in Asia and Europe amid individual investors’ frenzy. USDJPY rallies despite risk aversion, as demand for the greenback prevails. The USDCAD pair came under renewed bearish pressure in the early American session on Friday and touched a fresh two-day low of 1.2749.

The US Dollar Index extends the rejection from weekly highs below the 91.00 mark, shedding ground for the second session in a row on Friday. Crude Oil market indecision has continued on the final trading day of the week; front-month WTI futures have very much stuck to the week’s prior established range of between the $52.00 and low $53.00s.

Technical Analysis

AUDUSD (4 Hour Chart)

On Friday, the Aussie tumbles to its most immediate support at 0.7634 on the back of the resumption of the demand for greenback with risk aversion sentiment dominating the global markets. The Aussie first began to show signs of losing positive traction in the early American session with the bulls failing to find acceptance above the 0.7700 resistance area. The risk-averse market environment is reflected by the broad-based decline across Wall Street’s main indexes, which in turn, helped DXY to stage a rebound.

From a technical perspective, the bearish trend of the pair is supported by the 60-Day SMAVG. The tumbling of AUDUSD has brought down the RSI as the RSI for AUDUSD is now fluctuating around the low 40s, suggesting a bearish bias in investors’ trading pattern has now been triggered. If the risk aversion sentiment continues, the AUDUSD would be on the back foot and could be forced down to 0.7607 and 0.7568 if the support at 0.7634 is broken below. On the flip side, if the market sentiment is reversed, the Aussie pair would first touch the 0.7696 resistance, followed by 0.7761 and 0.7798.

Resistance: 0.7696, 0.7761, 0.7798

Support: 0.7634, 0.7607, 1.7568

GBPUSD (4 Hour Chart)

The Cable bulls are eyeing the critical resistance level at 1.13745 once again on Friday as the pair has staged a couple attempts to break above the 1.3745 resistance zones during the early America session. Even though the greenback regained some momentum at the time of writing, the GBPUSD seems less affected than most other greenback’s rivals. The strength of GBP is probably supported by the statements released by UK PM Johnson’s spokesman earlier on Friday. The spokesman reiterated on Friday that “we will continue to distribute vaccines fairly across all UK nations”.

Given that the Cable remains supported by the 15-Day SMAVG and that the GBPUSD pair has been rising on the higher lows since the start of 2021, it is reasonable to expect the GBPUSD bulls are waiting for a sign to break through the 1.3475 resistance level. Conversely, if the pair reverses the trend, a few cushions, which can be found at 1.3694, 1.3643, and 1.3606 would provide some essential support for the investors.

Resistance: 1.3745, 1.3767

Support: 1.3694, 1.3643, 1.3606

XAUUSD (4 Hour Chart)

The gold experienced a drastic up-and-downs on Friday, interchanging its daily highs at $1875 to $1847 within an eight-hour span. The broad-based weakness of the greenback earlier today helped boost the XAUUSD, but upon the American session, the risk-averse sentiment immediately kicked off as all three major indexes in the US equity markets today had shown to slump approx. 2% at the time of writing. The change in the market sentiment subsequently increased the demand for the greenback and undermined the early surge of the yellow metal.

Technically speaking, the gold is under a slightly bearish trend given that the 60-Day SMAVG has just staged a death-cross against the 20-Day SMAVG. However, because the RSI is now hovering around the 50s, it is inferable that the market is trading XAUUSD on a neutral ground. That said, it would not be prudent to place an additional short position on the XAUUSD pair before any confirmative signal settles as it seems like the market is now undecisive. On the upside, if the Gold resumes its bullish trend, the bulls will need a break above the $1875 level before they can cap their gains at the $1891 price zone. On the downside, if the bears can dive below the $1851 cushion, the next support levels are $1840 and $1824.

Resistance: 1875, 1891, 1906

Support: 1851, 1840, 1824

20210201
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The benchmark 10-year Treasury yield rose after touching the lowest level since…

The benchmark 10-year Treasury yield rose after touching the lowest level since Jan. 5

20210129
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Market Focus

U.S. equities mounted a comeback from their worst loss since October as moves to limit retail traders’ speculation in some companies opened the door for hedge funds to load up on stocks they had been ditching.

The S&P 500 Index rose 1% after trading platforms restricted activity in stocks whipsawed by internet chatter, from GameStop Corp. to AMC Entertainment Holdings Inc. and American Airlines Group Inc. Hedge funds that had shorted the stocks were burned in recent days, forcing them to reduce holdings in shares they loved to cut risk.

That dynamic reversed Thursday and a Goldman Sachs basket of stocks favored by hedge funds jumped the most since early November, halting a five-day slide. An index of the most-shorted shares tumbled more than 7%, the most since June. GameStop whipsawed, rising as much as 39% in early trading before plunging as much as 68%. It closed down 44%. AMC sank 57%, American was up 9.3% and Tootsie Roll Industries lost 9.5%.

The trading restrictions sparked outrage on the WallStreetBets forum where day traders have convened to drive the manic rallies that burned hedge funds across Wall Street. Washington took notice of what some have called inequitable rules, with Democratic and Republican lawmakers criticizing restrictions imposed on retail investors.

All 11 industry groups in the S&P 500 traded higher, with sentiment also boosted by solid corporate earnings from the likes of Mastercard Inc. and Comcast Corp. and a surprise drop in jobless claims.

Stocks have seen volatile trading after a prolonged rally that spurred talk of possible asset bubbles and predictions of a pullback given a raging pandemic and patchy rollout of vaccines. The turmoil created by internet chat rooms has stoked fears of broader consequences for Wall Street, particularly hedge funds, but that fear seemed to fade on Thursday.

The Stoxx Europe 600 Index edged higher. Earnings beat from STMicroelectronics NV and Diageo Plc were accompanied by a miss from Swatch Group AG and a revenue drop at EasyJet Plc.

The benchmark 10-year Treasury yield rose after touching the lowest level since Jan. 5. Bitcoin climbed past $32,000.

Market Wrap

Main Pairs Movement

The dollar fell against all of its Group-of-10 peers except the yen as risk sentiment improved, with U.S. equities rallying after their worst rout since October.

A gauge of the dollar traded near session lows after rising to a five-week high earlier. The Norwegian krone and New Zealand dollar were the best performers against the greenback Equity markets rose following moves to curb trading on a few stocks that had swung wildly on retail demand, which allowed hedge funds to load up on names they had ditched. Better-than-expected earnings results and solid economic data, including the first increase in new-home sales since July, also supported risk sentiment.

AUD/USD rebounds from a decline of almost 1%, rising 0.4%; NZD/USD up 0.4% after losing as much as 0.8%; GBP/USD climbs 0.4% to 1.3742, near session highs of 1.3746.

Technical Analysis

GBPUSD (4 Hour Chart)

The Cable once slipped to the lower bound of the upward trend channel which at 1.3645 level then pull up to the first pivot resistance as we measure previously. Cable climbed as much as 0.37% to 1.3729, near session highs of 1.3746 and it was amongst the top three best performing G10 currencies on the day. Risk appetite took a turn for the better in wake of better-than-expected weekly initial jobless claims data dropping to 847k from 914k, beat expectations of 875k. In terms of domestic U.K. fundamentals, there hasn’t been too much news stuff today.

From a technical perspective, short and long-term SMAVG indicators are both boosting to a higher level while the short-term indicator is accelerated their upward momentum. Additionally, the RSI indicator is located at a bullish trend suggestion area at 57 figures which left the amount space for further downwind momentum. On up way perspective, 1.3745 level is still a powerful resistance at a current stage which curb the bullish movement in recent days. On the slid way, just focus on whether it would go down below the lower bound of the upward trend channel. We expect that the cable is still lacking a decisive way and momentum trigger; therefore, first pivot support and resistance are more comfortable for cable at the current stage.

Resistance: 1.3745, 1.3767

Support: 1.3693, 1.3645, 1.3606

EURUSD (4 Hour Chart)

The eurodollar has seen a gradual grind to the upside for the majority of Thursday, with the gains accelerating slightly before the US cash open amid an extension of US dollar weakness. The pair now trades comfortably above the 1.2100 level again and in the 1.2120s, up from lows of the day around 1.2080 sets just before the EU cash open. Gains on the day have for now been capped at the 1.2140 marks. Like cable, the euro creep up amid the better-than-expectation labor market data, and risk appetite has improved.

Technically speaking, short and long-term SMAVG indicator were both in a negative slope position then it close to the death cross, suggesting a bearish momentum ahead. On the other hand, the RSI indicator has turned back its status from yesterday low to 46 around. Therefore, combing suggestions above that first critical support on the downside still on 1.21, like yesterday’s estimate. If market momentum turns positive side, it would please above the 1.213 level and propel further is more likelihood above the second resistance at 1.2165.

Resistance: 1.2131, 1.2165, 1.2182

Support: 1.21, 1.2077, 1.2054

USDJPY (4 Hour Chart)

The yen slid versus the greenback for a second day, sending the USD/JPY to the highest since December. USD/JPY has been unreliable as a haven pair since the COVID pandemic began in early 2020. On the other hand, the choppy shares market is seemingly driven by carry-trade investors redemption yen-dollar from selling shares at the top probably. USD/JPY up +0.1% at 104.23, after climbing to 104.46, highest since Dec. 10.

From a technical perspective, the RSI indicator undermines from the overbought zone to 67 figures which still suggest the bullish trend ahead. Additional, short- and long-term SMAVG is just a golden cross that propels the market in torrid. On price action, day high reached to last time highest approximately. Therefore, we believe the market is awaiting more clues for further upward momentum. Conversely, the first pivot support is eyes on 104.02 which is seen to support the current bullish movement, the last crucial support would be 103.56.

Resistance: 104.58, 104.73

Support: 104.02, 103.8, 103.56

20210129
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