Buy Low and Sell High During Fluctuation

Central Bank

Commodity

Summary:

Powell hinted that the Fed is considering a rate cut, but would not give a specific date. This uncertainty is driving up volatility in the rate-sensitive precious metals market.

SELL XAUUSD

Close Time

CLOSED

2383.44

Entry Price

2300.00

2427.00

3215.52 +38.15 +1.20%

435.6

Pips

Loss

2300.00

2427.12

Exit Price

2383.44

Entry Price

2427.00

Fundamentals

Federal Reserve Chairman Powell testified on Tuesday morning before a Senate Banking, Housing, and Urban Affairs Committee hearing, reaffirming key messages from the June FOMC meeting including a dovish stance on the federal funds rate.

In his opening remarks, Powell stated, "The Fed remains focused on our dual mandate of promoting maximum employment and stable prices for the benefit of the U.S. people." He highlighted significant progress over the past two years towards achieving the Fed's 2% inflation target, with labor market conditions remaining robust while cooling slightly. These developments have helped better balance the risks to achieving our employment and inflation objectives." These factors are seen as key drivers behind speculation of a rate cut in September, though Powell refrained from disclosing a specific date. Such uncertainty is fueling increased volatility in rate-sensitive precious metal markets.

Boosted by rising expectations of a Fed rate cut, gold prices continued their uptrend on Wednesday, reaching as high as US$2,375 during the European session as investors awaited the release of U.S. inflation data, keeping gold in the spotlight.

Furthermore, inflows into Exchange-Traded Funds (ETFs) have surged, enhancing gold's appeal with positive cash flows for the second consecutive month. This investment trend underscores gold's role as a safe haven asset amid financial market uncertainties.

Buy Low and Sell High During Fluctuation_1

Technical Analysis

Amid uncertain expectations of a Fed rate cut, the situation continues to impact the interest rate-sensitive precious metals market, leading to increased volatility. As of the time of writing, the spot gold price has surpassed US$2,380.

In the 4H timeframe, the gold price has rebounded four times from the key level of 2,350 since last Friday, forming a more complex top pattern. Despite the intraday gains in gold prices, from a broader perspective, it remains within the consolidation range that has encompassed most of the price trend since the beginning of April. We still recommend to buy low and sell high within the range.

Overall, the gold price shows a short-term uptrend, yet in a broader time frame, it is still consolidating. To achieve a positive outlook, a decisive break above the psychological threshold of 2,400 is needed.

Trading Recommendations

Trading Direction: Sell

Entry Price: 2387

Target Price: 2300

Stop Loss: 2427

Deadline: 2024-07 - 25 23:55:00

Support: 2329, 2337, 2330, 2319

Resistance: 2371, 2378, 2387, 2400

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

Nominal wages in Japan rose 1.9% YoY, the highest level in 11 months. The yen may stay weak in the short term, but it should climb later this year as real wages improve.

BUY GBPJPY

EXP

TRADING

206.927

Entry Price

211.620

203.500

193.686 -0.814 -0.42%

0.0

Pips

Flat

203.500

Exit Price

206.927

Entry Price

211.620

Fundamentals

In May, Japan's average total cash earnings per worker increased by 1.9% YoY, surpassing April's 1.6%. Despite marking the 29th consecutive month of growth and the largest increase in 11 months, it still fell short of the expected 2.1%.

Base pay witnessed a significant YoY surge of 2.5%, the best growth rate since January 1993, while overtime pay rebounded by 2.3%, marking its first increase in six months.

However, the rise in nominal wages was overshadowed by a sustained decline in real wages. Real wages fell by 1.4% YoY, marking the 26th consecutive month of decline. This represents a deterioration compared to the 1.2% decrease in April.

In its regional economic report, the Bank of Japan (BOJ) maintained its economic assessments for five out of nine regions in Japan, upgrading assessments for two regions and downgrading assessments for two regions. Apart from the Hokuriku region, eight regions indicated a mild recovery, upturn, or moderate upswing in their economies, despite some lingering signs of weakness in certain regions.

The BOJ pointed out: "Many regions have reported that the phenomenon of major companies significantly increasing wages in this year's wage negotiations is spreading to small and medium-sized enterprises." This indicates that large companies are having a positive spillover effect on small businesses.

The BOJ also noted that overall consumption is "robust," mainly benefiting from strong spending by inbound tourists. Strong tourism consumption helps offset weak household consumption affected by rising living costs.

MARKET WATCH: Real wages in Japan continued to decline for the 26th consecutive month in May, which could make it difficult for the BOJ to raise interest rates. However, with robust wage agreements taking effect, real wages are expected to rebound in the third or fourth quarter. This expectation supports the anticipation of further interest rate hikes by the BOJ later this year. We expect that from a monthly perspective, the USDJPY will remain around the level of about 162.00, while the GBPJPY will stay in the range of 210.00 - 208.00, and it should rebound later this year.

Technical Analysis

Following adjustments from a fluctuating trading session, the GBPJPY remained firm on Wednesday. It is expected that with bulls continuing to rely on the intact weak support level at 204.95, further upside movement will follow.

On the upside, a sustained break of 206.56 at the 138.2% Fibonacci retracement will lead to a further uptrend towards the target at 208.78, the end of the symmetrical pattern. On the downside, breaking below the weak support level at 204.97 will turn it to the downside for further retracement.

However, looking at the bigger picture, the long-term uptrend is still intact. The next target is at 210.17, with the ultimate target at 211.62. As long as the support level at 197.18 holds, even in the event of a significant pullback, the outlook remains bullish.

Trading Recommendations

Trading Direction: Buy

Entry Price: 206.30

Target Price: 211.62

Stop Loss: 203.50

Deadline: 2024-07 - 25 23:55:00

Support: 203.17, 202.32, 201.00, 200.00

Resistance: 206.56, 208.12, 210.17, 211.62

Risk Warnings and Disclaimers

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Peterson

Forex

Summary:

The short-term oscillation range for USDJPY is expected to be 156.7-163.0, primarily adopting a selling strategy at highs.

SELL USDJPY

EXP

PENDING

162.000

Entry Price

160.200

163.000

145.805 -0.932 -0.64%

Pips

PENDING

160.200

Exit Price

162.000

Entry Price

163.000

Fundamentals

On Wednesday (July 10) during the Asian session, USDJPY experienced narrow fluctuations, currently trading around 161.5. Fed Chair Powell's speech yesterday leaned neutral and resulted in a slight rise in the USD. However, USDJPY's upward momentum was stronger, once again surpassing the 161 level. During the Asian session today, it briefly rose to 161.6 and approached the previous high of 161.9. According to the latest currency market forecasts, there is approximately a 60% chance that the Bank of Japan will raise interest rates by 10 basis points at its July 31 meeting. Despite this, the yield spread remains significant against the 4.3% US 10-year Treasury yield. The volatility of USDJPY has notably decreased. If USDJPY continues to rise, investors need to be wary of any official intervention by Japanese authorities, which could limit the upside in the short term. Likewise, a significant downward trend is unlikely in the short term, with the key support level to test being around 160.2.

Technical Analysis

In the daily chart, USDJPY closed with another bullish candle, marking two consecutive gains following a doji. The MACD death cross has begun to occur at a high level, which causes some hesitation among bulls and limits the upside potential. From the chart below, USDJPY seems to be forming a double-top pattern, with a peak around 162. Should the pair reach this level successfully, it would trigger bearish momentum. This is something to be cautious of, and aggressive investors might consider shorting opportunities.

USDJPY Approaches Previous Highs on Dollar Rallies_1

Trading Recommendations

Trading Direction: Sell

Entry Price: 162.0

Target Price: 160.2

Stop Loss: 163.0

Support: 160.2, 156.7

Resistance: 161.9, 163.0

Risk Warnings and Disclaimers

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Warren Takunda

Forex

Summary:

The GBP/JPY currency pair soared to a new multi-year high on Wednesday, breaking through the 206.70 barrier for the first time in over 16 years.

BUY GBPJPY

Close Time

CLOSED

206.800

Entry Price

208.400

206.000

193.686 -0.814 -0.42%

112.5

Pips

Profit

206.000

207.925

Exit Price

206.800

Entry Price

208.400

On Wednesday, the GBP/JPY currency pair surged to fresh multi-year highs, decisively breaking above the 206.70 mark for the first time in over a decade and a half. This remarkable ascent underscores the extended weakness of the Japanese Yen (JPY), which has been persistently losing ground against major currencies due to a range of macroeconomic factors.

The Yen’s prolonged depreciation can be attributed to the Bank of Japan’s (BoJ) ultra-loose monetary policy stance, which continues to keep interest rates at rock-bottom levels. The BoJ’s commitment to maintaining low rates and its substantial bond-buying program have significantly widened the interest rate differential between Japan and other major economies, exacerbating the Yen’s decline. This policy divergence has left the Yen with limited upward momentum, allowing the GBP/JPY pair to reach levels not seen since 2008.

Adding to the Yen's woes is the current economic landscape in Japan, which remains relatively subdued. Despite some sporadic data releases, there has been little indication that the BoJ is considering any imminent policy adjustments. Traders are on high alert for any signs of direct market intervention by Japanese authorities, who have expressed ongoing concerns over the Yen’s performance. However, any potential intervention remains speculative at this stage, with the BoJ’s stance on direct market action remaining cautious and reactive rather than proactive.

In the United Kingdom, economic data for the week is anticipated to be relatively moderate. GBP traders are focusing on forthcoming Industrial and Manufacturing Production figures due for release on Thursday. Analysts forecast a rebound in Industrial Production for May, expecting a recovery to 0.2% MoM from April’s -0.9% contraction. Similarly, Manufacturing Production is projected to improve by 0.4% MoM, recovering from the previous month's -1.4% decline. These data points are expected to offer some insight into the current state of the UK economy, though no major policy shifts are anticipated from the Bank of England (BoE) in the immediate term.

Technical Analysis

From a technical perspective, the GBP/JPY pair has demonstrated clear bullish momentum, opening today’s trading session with notable strength that propelled it past the 206.50 resistance level. This breakthrough reinforces expectations for a continuation of the bullish trend, with the next key target seen at 208.40. The pair's current trajectory is supported by the formation of a well-defined bullish channel, suggesting that further gains are plausible in the short to medium term.

Traders should monitor the 206.15 level closely, as a break below this threshold could signal a shift in momentum and potentially lead to some short-term bearish correction. However, the prevailing trend remains decidedly bullish, with the expected trading range for today anticipated to span between 205.80 and 207.50.

The bullish outlook for GBP/JPY hinges on the continuation of Yen weakness and favorable conditions for the British Pound. If the current trend holds, the GBP/JPY pair may well push towards the 208.40 resistance level, and beyond that, traders might look to test even higher levels. Conversely, a breach of the 206.15 support could prompt a temporary correction, but such a move would be seen as a buying opportunity within the broader uptrend.

TRADE RECOMMENDATION

BUY GBPJPY

ENTRY PRICE: 206.80

STOP LOSS: 206.00

TAKE PROFIT: 208.40

Risk Warnings and Disclaimers

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Jason

Summary:

Powell's speech provided limited support for rate cut expectations. With CPI data approaching, the market is becoming increasingly cautious, and the US dollar index (USDX) will likely be driven by technical factors in the short term.

BUY USDX

EXP

EXPIRED

105.000

Entry Price

105.442

104.700

100.730 -0.130 -0.13%

Pips

EXPIRED

104.700

104.480

Exit Price

105.000

Entry Price

105.442

Fundamentals

The much-anticipated testimony of Fed Chair Jerome Powell to Congress has concluded. Although interpreted as dovish, the overly "official" language provided little useful information, disappointing the market. Consequently, the USDX only saw a slight dip at the start of his speech, followed by a rebound to end the day with a modest 0.1% gain.

Overall, Powell's speech was nothing new, which is understandable given the current election context. Powell faces opposing pressures: Democrats may push for rate cuts, while Republicans may press for continued inflation combat (delaying rate cuts). Under these circumstances, Powell's best option is to describe the current situation rather than express personal opinions. Indeed, Powell repeatedly avoided answering questions about specific rate-cut timing from congressmen during the Q&A session, stating he would not signal the timing of future actions.

Nevertheless, Powell did provide some key insights: "Elevated inflation is not the only risk we face. We've seen that the labor market has cooled really significantly across so many measures.… It's not a source of broad inflationary pressures for the economy now."

It is important to note that Fed officials have long viewed an overheated labor market as a major risk to curbing inflation. Powell's remarks suggest that the labor market's impact on inflation has significantly diminished, making the disinflation process smoother without this "obstacle", which is why the market interpreted the speech as dovish.

Yet, with three more inflation reports and two employment reports before the September policy meeting, much could change. Although Powell's speech boosted rate cut expectations, the effect was limited, as evidenced by the USDX's recent movements.

Moreover, with the June CPI data release imminent, if inflation continues to slow, the market may amplify the impact of Powell's speech combined with the CPI data, which could lead to significant volatility in the USDX. Conversely, if inflation does not slow, the impact of Powell's speech will be entirely negated.

Technical Analysis

In the 4-hour chart, the USD is temporarily capped at the upper edge of its historical range. If it climbs above this level, it may rise to the 0.236 Fibonacci retracement level (105.517). Another break above this level would re-enter the upward trend. The short-term strong support is at 104.768; falling below this level will test the 0.382 Fibonacci retracement level (104.383). The key support is at the bottom of the ascending channel. Another fall below it will initiate a downtrend.

In terms of indicators, the Ichimoku Cloud shows the baseline and the conversion line running horizontally, with the current price above both to indicate an uptrend. This suggests the USDX may fall after a slight rise. In the DMI, +DI and -DI are intertwined, with +DI showing a downward trend at 19.5, suggesting limited short-term downside potential for the USDX, but it is expected to rise after a slight decline.

Overall, while Powell's speech has boosted rate cut expectations, the effect is limited. With the CPI data release approaching, the market will likely adopt a wait-and-see approach. Therefore, the USDX's short-term movement will primarily be driven by technical factors. It is recommended to consider going long after the index declines.

Short-Term Rally in Progress, Long Positions Recommended_1

Trading Recommendations

Trading Direction: Buy

Entry Price: 105.0

Target Price: 105.442

Stop Loss: 104.7

Support: 104.768, 104.383

Resistance: 104.159, 105.517

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Silver’s bullish patterns and recent NFP data suggest a strong upcoming rally, with technical indicators pointing to further gains.

BUY XAGUSD

Close Time

CLOSED

31.201

Entry Price

35.000

29.000

32.418 +0.212 +0.66%

220.1

Pips

Loss

29.000

Exit Price

31.201

Entry Price

35.000

Silver is poised for a significant rally, signaling a potential surge towards the $50 mark, driven by favorable technical patterns and economic factors. Last week's rebound in silver following the Nonfarm Payrolls (NFP) announcement suggests a robust upward trajectory, reflecting a bullish sentiment that could see prices soar in the coming months.

The recent NFP data revealed an increase of 206,000 jobs in June, accompanied by a higher unemployment rate and declining wage inflation. This data has heightened the likelihood of a Federal Reserve rate cut in September. The anticipation of a rate cut, coupled with political uncertainties in France and the People's Bank of China's pause in gold purchases, sets a complex economic stage. These factors collectively influence market dynamics, driving investor behavior towards silver.

Historically, silver has shown strong bullish formations, such as the inverted head and shoulders pattern evident in the chart below. In 2020, a similar pattern resulted in a substantial price rally towards the $30 region. The consolidation phase from 2020 to 2023 has also seen the formation of inverted head and shoulders, successfully breaking the neckline. This breakout and subsequent retracement to the neckline signal a strong buy opportunity, initiating a rally to higher levels.

The recent NFP announcement has had a significant impact on the market. Lower interest rates tend to weaken the dollar, making precious metals like silver more attractive to investors. The potential rate cut by the Federal Reserve, coupled with the heightened global economic uncertainty and potential shifts in central bank purchasing strategies, is likely to drive demand for silver as a safe-haven asset. This, in turn, supports higher silver prices in the coming months.

Technical Analysis

The technical outlook for silver is overwhelmingly bullish. The breakout from the neckline and subsequent retracement to the neckline provide a strong buy signal. The key resistance level for silver is at $32.50. A breakout from this level could trigger a strong rally towards the $50 mark, with an initial target of $35. Last week's NFP release resulted in a bullish weekly candle, underscoring the possibility of a robust rally.

Investors should consider buying the dips in silver, as the price's recent trades are confined within a bullish pennant pattern visible on the chart. To activate the positive effect of this pattern, the price needs to breach $31.00, followed by a rally to achieve the next positive targets starting at $31.50 and then $32.00.

Therefore, the bullish trend is expected to continue in the upcoming period. However, it is crucial to monitor the support level at $30.55. A break below this level would halt the expected rise and push the price into a decline.

The expected trading range for today is between $30.60 support and $31.50 resistance. The trend forecast remains bullish, with the potential for significant gains in the near future.

TRADE RECOMMENDATION

BUY SILVER

ENTRY PRICE : 31.20

STOP LOSS : 29.00

TAKE PROFIT : 35.00

Risk Warnings and Disclaimers

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Peterson

Commodity

Summary:

Today's oscillation range should be $2340 - $2372, and it is better to buy low and sell high.

SELL XAUUSD

Close Time

CLOSED

2373.11

Entry Price

2350.00

2388.00

3215.52 +38.15 +1.20%

111.8

Pips

Loss

2350.00

2384.29

Exit Price

2373.11

Entry Price

2388.00

Fundamentals

During Wednesday's (July 10th) Asian session, spot gold oscillated slightly, and it is now trading at $2362.

During Powell's testimony to Congress, he emphasized the need to balance the risks between the dual policy tasks and said "more good data" is required to enhance confidence in disinflation. It would be risky to cut interest rates too early or too late. Market expectations for rate cuts have not changed much. The USDX closed slightly higher, and 10Y U.S. bond yields closed at 4.3%. Meanwhile, gold maintained oscillating, once rising to $2371 but followed by a sharp drop to $2350. Finally, gold closed slightly higher. As Powell's testimony was neutral, investors should focus on the U.S. CPI data for June to be released on Thursday evening, which may offer some instructions for rate cuts.

Technical Analysis

In the daily chart, Bollinger bands are converging, and the current gold price stays inside the bands. Despite the decline being slow, gold may come down to $2320 and $2295. In addition, the weak trend can be confirmed if the daily candle drops below the Bollinger middle band.

Regarding the 4H chart, gold is oscillating but resilient. After dropping below $2350 twice this week, the Bollinger lower band is converging, suggesting clear support. Hence, a descending trend needs stimulation from the market. Based on the current oscillating trend, we should wait for a clear direction. If gold cannot rise above $2372, investors should keep going short on it, with the target at $2350. If it rises above $2372, gold will move up, with the target at $2388.

Gold Oscillates Slightly Following Powell's Neutral Speech_1

Trading Recommendations

Trading direction: Sell

Entry price: 2372

Target price: 2350

Stop loss: 2388

Support: 2350.000/2342.000

Resistance: 2372.000/2393.000

Risk Warnings and Disclaimers

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Risk Disclosure