Head and Shoulders Top Formation Imminent, Short-Term Bearish Outlook

Forex

Summary:

Recent economic data from the Eurozone highlights signs of economic deterioration, with markets betting on continued interest rate cuts by the European Central Bank (ECB), potentially pressuring the euro lower.

SELL EURUSD

Close Time

CLOSED

1.13541

Entry Price

1.08900

1.15800

1.16517 +0.00091 +0.08%

20.7

Pips

Profit

1.08900

1.13334

Exit Price

1.13541

Entry Price

1.15800

Fundamentals

On April 23rd, Eurozone economic data revealed worsening economic conditions. The Eurozone's April Composite PMI dipped to 50.1, nearing the expansion-contraction threshold. The Services PMI unexpectedly contracted to 49.7 (below the expected 50.5), while German private sector activity shrank for the first time in four months, and France's Services PMI hit its lowest since 2020.

Additionally, uncertainty over U.S. President Trump's tariff policies has weighed on European businesses. Activity driven by factories fulfilling prior orders led the backlog index to slide to 46.8 in April from 47.7 in March, marking a three-month low. Cyrus de la Rubia, Chief Economist at Hamburger Commercial Bank, noted: "Activity has shrunk instead of growing, which it had been doing almost continuously since February 2024. This has pushed the whole economy into stagnation territory."

Markets anticipate the ECB may resume interest rate cuts to counter recession risks, potentially lowering policy rates further to 1.5%, which would weigh on the euro.

Technical Analysis

Head and Shoulders Top Formation Imminent, Short-Term Bearish Outlook _1

Regarding the weekly chart, after rising to just below the 1.1610 resistance level, the euro's bullish momentum waned, with sustained weekly declines. An inverted hammer candlestick pattern is emerging. If confirmed after this week's close, it could signal a short-term top, increasing the likelihood of further downside.

Head and Shoulders Top Formation Imminent, Short-Term Bearish Outlook _2

The EUR/USD price structure suggests a potential head and shoulders top formation in the 4H chart. A breakdown below the neckline at 1.1270 would confirm this pattern, raising the probability of continued declines. The first target is 1.0850.

Selling at highs is recommended.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1360

Target price: 1.0890

Stop loss: 1.1580

Valid Until: May 09, 2025, 23:00:00

Support: 1.1270/1.1090

Resistance: 1.1473/1.1572

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This movement has formed a classic double top pattern—widely regarded as a bearish reversal formation.

SELL GBPUSD

Close Time

CLOSED

1.33127

Entry Price

1.30400

1.35140

1.33210 -0.00102 -0.08%

30.9

Pips

Profit

1.30400

1.32818

Exit Price

1.33127

Entry Price

1.35140

On Thursday, a spokesperson for China’s Ministry of Commerce urged the United States to lift all tariffs on Chinese imports, stating that doing so would be essential “if it truly wants to solve the issue.” While U.S. President appeared open to launching new trade talks, Treasury Secretary Scott Bessent quickly dampened investor enthusiasm by making it clear that unilaterally cutting tariffs was not an option currently under consideration.

Meanwhile, in the economic data sphere, U.S. durable goods orders saw a sharp increase in March, jumping from 0.9% to 9.2%—a surge primarily driven by robust aircraft bookings. Initial jobless claims for the week ending April 19 rose to 222,000, in line with expectations and slightly above the previous week’s 216,000.

Earlier this week, President Trump clarified that he has no intention of removing Jerome Powell from his role as Chair of the Federal Reserve. However, recent verbal attacks by Trump targeting the Fed’s independence and its reluctance to further ease monetary policy have led investors to reassess the U.S. dollar’s reputation as a safe haven. This shift has triggered risk-off moves in U.S. assets in recent trading sessions.

On Thursday, Federal Reserve Governor Christopher Waller emphasized during a Bloomberg interview that tariffs have become a central issue in economic discussions. He highlighted how ongoing trade uncertainty has left many businesses in a state of paralysis, awaiting clarity before committing to investment decisions.

Also weighing in on the matter, Fed Governor Adriana Kugler noted that elevated U.S. import tariffs are likely to add upward pressure on prices. She advocated for holding short-term interest rates steady until inflation risks display more definitive signs of easing. Minneapolis Fed President Neel Kashkari echoed this sentiment, stating that tariffs are acting as a drag on growth and warning that the Fed must remain vigilant to prevent trade policies from igniting long-term inflationary pressures.

Across the Atlantic, Bank of England (BoE) Governor Andrew Bailey has also expressed concern about the threat that trade conflicts pose to global economic growth. Speaking on the sidelines of the IMF spring meetings on Wednesday, Bailey emphasized the importance of closely monitoring trade-related risks, particularly ahead of the BoE’s May policy meeting. “We must take the threat to growth very seriously,” he stated, adding that the central bank is currently weighing its next rate decision, which is due in two weeks.

Market expectations have now shifted strongly in favor of a 25-basis-point rate cut by the BoE in May, which would bring the benchmark rate down to 4.25%. For the remainder of the year, the International Monetary Fund (IMF) has projected three rate cuts by the BoE and downgraded its U.K. GDP growth forecast for 2025 to 1.1%, down from its previous estimate of 1.6%, citing global uncertainty triggered by Trump-era trade policies.

Looking ahead, investors will turn their focus to U.K. retail sales data for March, set to be released on Friday. Retail sales—a key measure of consumer spending—are expected to have fallen by 0.4% month-over-month after a 1% rise in February. On a year-over-year basis, consumer spending is projected to have increased by 1.8%, a slowdown from the previous reading of 2.2%. Selling Pressure Could Emerge if the Double Top Holds_1

Selling Pressure Could Emerge if the Double Top Holds_1

Technical Analysis

The GBP/USD pair recently approached a critical resistance zone near the local high of 1.3433, recorded on September 25 of last year. This movement has formed a classic double top pattern—widely regarded as a bearish reversal formation. As the pair tested this level, it began to retreat, signaling that a corrective move may be underway.

This pullback could extend toward the rising trendline that has been in place since January 13. The 1.3035 level, which intersects with this trendline, stands out as a potential downside target if bearish momentum persists.

Supporting this view is the Relative Strength Index (RSI), which has climbed to 71, entering overbought territory. This condition often draws in sellers who anticipate a reversal driven by momentum exhaustion.

Further reinforcing the bearish case is the position of the 100- and 200-period moving averages, currently located at 1.2701 and 1.2834, respectively. These averages are beginning to converge near the upward trendline, creating a zone of potential technical confluence. As the price approaches this area from above, the former resistance near 1.3035 may transition into a support level in the event of a deeper correction.

Trading Recommendations

Trading direction: Sell

Entry price: 1.3312

Target price: 1.3040

Stop loss: 1.3514

Validity: May 06, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This drop was followed by the formation of strong bullish candles, suggesting a possible local bottom and the early stages of a bullish reversal.

BUY AUDCHF

Close Time

CLOSED

0.53038

Entry Price

0.56000

0.50500

0.53373 -0.00034 -0.06%

24.6

Pips

Profit

0.50500

0.53284

Exit Price

0.53038

Entry Price

0.56000

U.S. President Donald Trump pushed back on Chinese claims that no dialogue has taken place between the two economic giants to ease their ongoing trade conflict. Speaking to reporters on Thursday, Trump insisted that discussions were indeed happening, stating, “They had a meeting this morning,” although he declined to specify who was involved. “It doesn’t matter who ‘they’ are. We’ll reveal that later,” he added. “But there were meetings this morning, and we’ve been in contact with China.”

Earlier this month, the White House imposed steep 145% tariffs on Chinese goods, prompting Beijing to retaliate with its own measures, including tighter export controls on critical minerals to the U.S. These developments may indirectly support the Australian dollar, which is closely tied to China both economically and through broader shifts in risk sentiment.

Meanwhile, the Reserve Bank of Australia (RBA) continues to adopt a cautious tone in its monetary policy. Minutes from its March 31–April 1 meeting suggest that while the upcoming May meeting may offer an opportunity to reassess policy, no firm commitments have been made regarding future interest rate changes. This reserved stance reflects the mixed signals emerging from Australia's economy.

Australia's labor market is showing signs of strain. The unemployment rate inched up to 4.1% in March, slightly below the 4.2% consensus, while the economy added just 32.2K jobs, falling short of the expected 40K. Additionally, the Westpac Leading Index, which tracks future economic momentum, slowed to 0.6% in March from 0.9% the previous month—highlighting a cooling trajectory.

The RBA emphasized that both upside and downside risks remain in play, reiterating its data-driven approach in weighing inflation pressures against growth potential.

Signs of easing U.S.-China trade tensions have lent a generally upbeat tone to global equity markets. In turn, this has slightly undermined demand for safe-haven assets like the Swiss franc (CHF), which had previously strengthened sharply following Trump’s aggressive tariff stance. The CHF’s recent gains prompted speculation that the Swiss National Bank (SNB) could intervene in foreign exchange markets or revisit its policy of negative interest rates if ongoing currency strength continues to hurt exports. Bulls May Regain Control After a Rebound from Record Lows_1

Bulls May Regain Control After a Rebound from Record Lows_1

Technical Analysis

The AUD/CHF pair remains in a well-defined descending channel. However, it recently broke through the lower boundary, reaching a historical low around 0.5000. This drop was followed by the formation of strong bullish candles, suggesting a possible local bottom and the early stages of a bullish reversal. On the D2 chart, the RSI dipped to 18—clearly in oversold territory—indicating that bearish momentum may be waning and that bulls could seize control.

The 100- and 200-period moving averages sit at 0.5653 and 0.5745, respectively—levels that align with the upper boundary of the descending channel and previous zones of price accumulation and rejection. These areas could act as resistance but also serve as potential targets for bullish momentum. The next significant objective may lie around the 0.5605 level, should buyers maintain pressure.

Trading Recommendations

Trading direction: Buy

Entry price: 0.5303

Target price: 0.5600

Stop loss: 0.5050

Validity: May 06, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The Bank of Japan (BOJ) has significantly delayed its anticipated rate hike timeline, with some experts now projecting that the central bank may not increase rates until next year.

BUY USDJPY

EXP

EXPIRED

141.500

Entry Price

147.120

137.700

155.446 +0.101 +0.07%

Pips

EXPIRED

137.700

145.158

Exit Price

141.500

Entry Price

147.120

Fundamentals

The USDJPY pair traded below the 143.00 level on Wednesday, continuing its corrective decline from the highs reached over a week ago.

A recent survey of economists conducted by a leading financial news agency revealed that the BOJ is likely to maintain its key interest rate unchanged until at least June (a yen-negative development). While a marginal majority of respondents anticipate a 25-basis-point rate hike from the BOJ in the next quarter, this proportion has declined from the more than two-thirds of respondents who expected a rate increase in the previous month's survey.

Additionally, nearly 90% of respondents indicated that the risk of a recession in Japan remains very low. This reflects the consensus among economists that despite the disruptions caused by President Trump's unpredictable tariff actions, the BOJ's path toward policy normalization has not been derailed. Many central banks globally are currently cutting rates to support their economies and mitigate the impact of the ongoing trade tensions initiated by the United States.

Meanwhile, Nada Choueiri, Deputy Director of the Asia and Pacific Department at the International Monetary Fund (IMF), told Reuters that the heightened uncertainty surrounding US tariff policies has affected business confidence and economic outlooks, potentially leading the BOJ to delay further rate hikes.

She noted that many Japanese companies are currently hesitant to proceed with investment plans, opting to wait for greater clarity on global trade conditions. "This hesitation also delays investment decisions," Choueiri said, adding that downside risks to economic growth and inflation are increasing.

She stated, "We do see that if our baseline scenario materializes, the BOJ's rate hike will be postponed."

Choueiri also commented on the recent appreciation of the yen, reaffirming its status as a "safe-haven currency" and noting that the yen is supported by the country's economic stability and predictability.

Technical Analysis

After falling to the September low of 139.88, USDJPY climbed to a high of 143.56 on Wednesday.

The USDJPY pair has formed two robust bullish patterns at the bottom of its recent plunge. Coupled with the recovery of technical indicators from oversold levels, this suggests that the asset may continue to rise in the short term. However, as long as the 38.2% Fibonacci retracement level of the 158.86 to 139.87 range (147.12) holds as resistance, the overall risk remains skewed to the downside. On the downside, a confirmed break below 139.26 would have a more significant bearish impact on the market.

In a downside scenario, if the current selling pressure persists, attention will shift back to the psychological level of 140.00 and the support at 139.30. The resistance zone around 138.00 may keep sellers on guard, slowing the momentum towards the 134.65-135.00 area.

Trading Recommendations

Trading Direction: Long

Entry Price: 141.50

Target Price: 147.12

Stop Loss: 137.70

Valid Until: May 9, 2025, 23:55:00

Support: 142.17/141.15/139.92

Resistance: 143.57/144.24/145.72

Risk Warnings and Disclaimers

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Eva Chen

Stocks

Economic

Summary:

US President Donald Trump acknowledged on Wednesday the stance previously hinted at by Treasury Secretary Bessent on Tuesday. Given the significant market pressure resulting from tariffs on Chinese imports, the Trump administration is contemplating a reduction in tariffs on China.

BUY US30

Close Time

CLOSED

39684.97

Entry Price

40534.00

38400.00

48015.92 +16.02 +0.03%

5289.5

Pips

Profit

38400.00

40213.92

Exit Price

39684.97

Entry Price

40534.00

Fundamentals

US equities experienced a robust rally in early trading on Wednesday, although gains were partially retraced during the session. However, the market ultimately maintained a strong upward trajectory, with major indices closing significantly higher. The Nasdaq Composite Index was particularly strong.

The Nasdaq Composite Index initially surged by as much as 4.5% in early trading but subsequently retraced some gains. It ultimately closed higher by 407.63 points, or 2.5%, at 16,708 points. The S&P 500 Index also advanced by 88.10 points, or 1.7%, to 5,375 points. The Dow Jones Industrial Average (DJIA) rose by 419 points, or 1.1%, to 39,606 points.

The initial rally was driven by President Trump's apparent softening stance toward Federal Reserve Chairman Jerome Powell. On Tuesday, Trump told reporters, "I have no intention of firing him." However, he reiterated his desire for Powell and the Fed to resume interest rate cuts.

Trump's recent attacks on Powell, including labeling him a "big loser" on Monday, had raised concerns on Wall Street about the Fed's independence.

Trump also indicated a willingness to adopt a less confrontational approach in trade negotiations with China. He projected that the current 145% tariffs on Chinese imports would "significantly decline."

Treasury Secretary Bessent further bolstered positive market sentiment by stating that there is "an opportunity for a significant agreement" between the US and China. However, investor concerns about recent market volatility—largely triggered by Trump's comments—led to a gradual waning of buying interest throughout the trading session.

This volatility has created a divergence between professional fund managers, who have turned more cautious, and retail investors, who have been actively buying stocks in anticipation of a rebound.

According to the latest client cash flow data released by Bank of America on April 22, institutional and hedge fund clients were net sellers of US stocks in the week ending last Friday, while retail investors were net buyers. This trend has been consistent over the past two weeks. In fact, retail investors have increased their US stock holdings for 19 consecutive weeks, marking the longest period of sustained buying at the start of a year since Bank of America began tracking such data in 2008.

However, Trump's policies have gradually eroded confidence in the US economy both on Wall Street and among international investors, despite the US economy's role as a major driver of global growth in recent years.

Market Bullish Despite Rising Uncertainties_1

Technical Analysis

As of Wednesday's close, the Dow Jones Industrial Average oscillated around the 39,600 level. Technical indicators displayed a mild bullish signal, although signs of overbought conditions and resistance from medium- and long-term moving averages warrant caution. In the short term, upward momentum is being capped by the Stochastic overbought condition, while the medium-term trend remains constrained by the 200-day moving average. On the chart, the index is consolidating in a symmetrical triangle pattern, which could lead to significant volatility upon breakout.

Trading Recommendations

Trading Direction: Long

Entry Price: 39223

Target Price: 40534

Stop Loss: 38400

Valid Until: May 9, 2025, 23:55:00

Support: 39259/38823/38419

Resistance: 39856/40405/40825

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Gold prices climb back above $3,300 as renewed safe-haven demand returns on the back of fading US-China trade optimism, weakening US economic data, and heightened expectations for Federal Reserve rate cuts.

BUY XAUUSD

Close Time

CLOSED

3339.99

Entry Price

3500.00

3240.00

4207.30 +9.39 +0.22%

12.7

Pips

Profit

3240.00

3341.26

Exit Price

3339.99

Entry Price

3500.00

The price of gold (XAU/USD) is regaining its luster, rallying above the $3,300 level in early European trading on Thursday, as investors recalibrate their expectations amid a complex mix of geopolitical tensions, dovish central bank bets, and a shaky US economic outlook. After a modest pullback from record highs earlier in the week, bullion has found its footing again, driven by renewed safe-haven flows following cautious comments from top US officials and fresh signs of a slowing US economy.

Gold’s renewed bullishness is underpinned by remarks from US Treasury Secretary Scott Bessent, who poured cold water on market hopes for an imminent breakthrough in US-China trade relations. On Wednesday, Bessent firmly denied rumors that the White House is considering unilateral tariff rollbacks on Chinese goods. Instead, he emphasized that any reductions would need to be mutual a position that suggests the trade deadlock may persist longer than markets previously expected. The resulting uncertainty has once again positioned gold as a prime hedge against geopolitical and economic instability.

At the same time, the Federal Reserve’s latest Beige Book painted a less-than-rosy picture of the US economy. The report highlighted increasing concerns over President Trump’s erratic tariff strategies and their chilling effect on business sentiment. Moreover, it noted that consumer spending remains uneven, and labor markets long considered a pillar of US resilience are beginning to show signs of fatigue. Several Fed districts reported stagnating or even declining employment trends, bolstering the argument that the US economy may be approaching a period of deceleration.

Further stoking demand for gold is a weakening US Dollar, which has given up a portion of its recent gains. The greenback’s retreat follows growing speculation that the Fed could resume its rate-cutting cycle as early as June, with markets currently pricing in at least three cuts by year-end. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, increasing their relative attractiveness in investor portfolios.

Despite these supportive macro factors, gold’s ascent has not been without resistance. A generally positive tone in broader markets fueled in part by tentative signs of easing trade tensions and confidence in the Fed’s independence has capped bullion’s gains for now. Equities remain buoyant, reflecting investors’ hope that any downturn in US growth will be met with swift policy intervention.

But in our view, this optimism may be overstretched. With each new economic data release pointing to waning momentum, the question isn’t whether the Fed will cut rates but rather how aggressively it will act. Already, preliminary S&P Global PMI readings for April suggest uneven expansion across sectors. While manufacturing has managed to stay in growth territory, the services sector arguably the backbone of the post-pandemic recovery appears to be losing steam.

Against this backdrop, gold remains an attractive proposition. The ongoing ambiguity surrounding monetary policy and the fragility of trade negotiations continue to elevate downside risks for risk assets, while providing a tailwind for safe havens.

Technical Analysis

From a technical perspective, gold’s rebound from the $3,290 support level appears to be gaining traction. This level has acted as a strong floor, reinforced by the 50-period EMA on the 4-hour chart, which provided a double layer of support and helped reverse the recent corrective dip. Adding further conviction to the bullish setup is a positive divergence on the Relative Strength Index (RSI), signaling that downside momentum may have been exhausted.

Currently, immediate resistance is seen at $3,340 the mid-channel level on the 4-hour timeframe and a prior congestion zone. A successful break above this region could open the door to $3,360, with the next major psychological target at $3,380. Beyond that, if momentum persists and macro conditions align, $3,500 remains a potential medium-term target.

On the downside, the key area to watch is the $3,320–$3,330 support zone. A sustained drop below this range could bring $3,300 back into play and even invite further profit-taking. However, as long as prices remain above $3,320, the short-term bias remains bullish.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3340

STOP LOSS: 3240

TAKE PROFIT: 3500

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Silver prices slipped nearly 1% on Thursday, falling to around $33.30 per ounce as traders took profits following a sharp rally in the previous session.

BUY XAGUSD

Close Time

CLOSED

33.400

Entry Price

34.500

31.900

58.405 +0.088 +0.15%

150.0

Pips

Loss

31.900

31.897

Exit Price

33.400

Entry Price

34.500

Silver (XAG/USD) prices retreated on Thursday, dipping by close to 1% to trade around $33.30 per ounce in what appears to be a textbook technical correction following a strong 3.1% rally the previous day. That surge had propelled the metal to a three-week high, driven largely by safe-haven buying and renewed interest in precious metals amid global macroeconomic uncertainty. However, the latest downturn underscores silver’s notoriously volatile nature one that reflects its dual identity as both a precious metal and an industrial commodity.

While gold has traditionally served as the flagship safe-haven asset in times of uncertainty, silver often carves its own path, influenced not only by monetary policy and inflation expectations but also by industrial demand and broader economic sentiment. That divergence has become increasingly apparent over recent sessions, as gold prices maintained gains while silver corrected sharply, indicating investors may be recalibrating expectations amid evolving geopolitical dynamics.

At the center of this recalibration is the shifting narrative around US-China trade relations a key driver for industrial metals like silver, which are heavily reliant on the global manufacturing and electronics sectors. Earlier in the week, markets were buoyed by reports suggesting that the Trump administration is weighing potential tariff cuts as a prelude to restarting stalled negotiations with Beijing. That optimism, however, was quickly tempered when US Treasury Secretary Scott Bessent dismissed reports of any imminent or unilateral tariff rollbacks.

Bessent clarified that while the White House remains open to talks, formal discussions have not yet begun, and no concrete steps have been taken toward easing existing duties. Adding to the uncertainty, Chinese officials have reportedly conditioned any renewed engagement on a clear pause in US threats another sign that trade rapprochement may remain elusive in the near term.

Technical Analysis

From a technical perspective, silver’s latest decline appears to be a healthy pullback after an overextended rally. The price is now approaching a key support level at $32.95 a previously tested pullback area that could provide a springboard for renewed bullish momentum. This level also coincides with a near-term rising trendline and is supported by recent price action, reinforcing its significance.

A break below this level, however, could open the door to deeper losses, with $31.90 acting as the next major support. This area aligns with a multi-swing low and the 23.6% Fibonacci retracement of the recent rally, making it a crucial inflection point. On the upside, resistance is eyed at $34.48, a level that capped price gains in late March and now stands as a key barrier to a sustained recovery.

Technical traders are watching these levels closely, with many eyeing $32.95 for potential long entries, placing stops at $31.90 and targeting the $34.50 region for profit-taking.

TRADE RECOMMENDATION

BUY SILVER

ENTYR PRICE: 33.40

STOP LOSS: 31.90

TAKE PROFIT: 34.50

Risk Warnings and Disclaimers

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