Breaking 1900 Successfully, But Wary of Retracement Risks in Short Term

Summary:

The dollar index fell to a new low of more than seven months, helping the gold price rise to a high of nearly eight months. As the "spring" is stretched too long, chasing a bullish trend is easy to "hurt".

SELL XAUUSD

Close Time

CLOSED

1915.00

Entry Price

1850.00

1945.00

2042.21 +1.26 +0.06%

159.5

Pips

Loss

1850.00

1930.95

Exit Price

1915.00

Entry Price

1945.00

Fundamentals

Spot gold oscillated slightly lower during the Asian session on Friday (Jan. 13) and is currently trading near $1,906/oz. Data overnight showed a slowdown in U.S. inflation growth, and the market raised expectations that the Fed would reduce the rate hike. The dollar index fell to a new low of more than seven months, helping gold prices rise to a high of nearly eight months. But the current 1,900 integer mark is still forming pressure on the gold price, and the Fed officials stressed the anti-inflation determination and said may maintain higher interest rate levels for a longer period. Investors need to be wary of the risk of a retracement in the gold price in the short term.

Technical Analysis

In the daily chart, the SMAs are nearing a bullish alignment. The MACD has formed a golden cross and the bulls are in the ascendancy. If the price can stabilize at the 1900 integer mark, it is expected to further up to test the resistance near the 1920 mark, the high point of April 29; the resistance is relatively strong, and a further break in the short term has some difficulty, at which time the gold price may usher in a movement of oscillation at highs. In addition, there is also some resistance near the high point of May 5, 1909.73.

In addition, MACD has run into an overbought area. The temporary suppression of the 1900 integer mark on the gold price is rather obvious, and the gold price faces a greater risk of retracement in the short term. The January 11 high support is near 1886.50, initial support is near the 5-day SMA at 1885.68, and Thursday's low support is near 1873.22; the 10-day SMA support is near 1864.40, and if the support is unexpectedly lost, the topping signal will be increased in the short term. XAUUSD: Breaking 1900 Successfully, But Wary of Retracement Risks in Short Term_1

XAUUSD: Breaking 1900 Successfully, But Wary of Retracement Risks in Short Term_1

Trading Recommendations

Trading direction: Short

Entry price: 1915.000

Target price: 1850.000

Stop loss: 1945.000

Support: 1853.320/1827.500

Resistance: 1910.000/1920.000

Risk Warnings and Investment Disclaimers

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Bullish Trend Continues, Still Suitable for Going Long After Retracement

Damon

Commodity

Summary:

In terms of trend, the oil price rallies again into the upper resistance range, with the need for adjustment in the short term. If there is no further favorable stimulus, it is difficult to continue the big rise in the short term.

BUY WTI

EXP

EXPIRED

76.500

Entry Price

81.500

73.000

76.873 +0.284 +0.37%

Pips

EXPIRED

73.000

80.640

Exit Price

76.500

Entry Price

81.500

Fundamentals

The CPI data was released in the US on Thursday, with both headline and core inflation in the US lower in December as expected. This is further evidence that price pressures are easing and provides room for the Fed to slow the pace of rate rises next month. Risk appetite has picked up to drive dramatic volatility across various assets, with the oil price remaining relatively strong after the pull. This week, the oil price recovered continuously, and especially on Wednesday in the background of bearish inventory data, the oil price rose sharply to clear the gloom over the oil market. As a result, the confidence of the bulls was obviously boosted, recovered most of the lost ground in the first two trading days of the year, and the pattern of the range oscillation is clearer.

Overall, the global market will usher in a recovery phase from the lows in crude oil demand at the end of 2022. With the "re-liberalization" of China, the likelihood of another significant deterioration in demand indicators is greatly reduced. Whether demand will be as strong as expected at this stage remains to be verified; yet again the market will not be able to falsify this in the short term. The oil price needs time to digest the upper resistance at lows, and it is expected to maintain the "see-saw pattern" at lows before this time. In terms of trend, the oil price rallies again into the upper resistance range, with the need for adjustment in the short term. If there is no further favorable stimulus, it is difficult to continue the big rise in the short term, or range oscillation is dominant.

Technical Analysis

In the daily chart, the price is rising unilaterally. The bullish divergence signal of the MACD continues with a golden cross and the SMAs are nearing a bullish alignment, with a bullish bias in the short term. The oil price is expected to test upward the resistance near the 80-integer mark. In the short term, there will be resistance near the December 1 high of 83.28; strong resistance is near the 93 mark, and the high resistance of November 7 last year is also near that position. Initial support below is near the 5-day SMA at 77 and strong support near the 10-day SMA at 76.5; if the price falls back to this position, a topping signal for the short term will be added. WTI: Bullish Trend Continues, Still Suitable for Going Long After Retracement_1

WTI: Bullish Trend Continues, Still Suitable for Going Long After Retracement_1

Trading Recommendations

Trading direction: Long

Entry price: 76.500

Target price: 81.500

Stop loss: 73.000

Support: 77.000/72.500

Resistance: 81.500/83.500

Risk Warnings and Investment Disclaimers

CPI Cools Down: XAUUSD Hits 1900

Ricardo Nguyen

Commodity

Summary:

Yesterday’s CPI showed that inflation is cooling down. The U.S. CPI in December was -0.1% MoM, 6.5% YoY, down for the sixth consecutive month, and the core CPI was 5.7% YoY.

BUY XAUUSD

Close Time

CLOSED

1895.00

Entry Price

1920.00

1885.00

2042.21 +1.26 +0.06%

250.0

Pips

Profit

1885.00

1920.18

Exit Price

1895.00

Entry Price

1920.00

Fundamentals

On Thursday, the U.S. CPI showed that inflation is cooling down, bolstering expectations of less aggressive interest rate hikes from the Fed.

The U.S. dollar index fell nearly 1%, hitting its lowest level in more than 7 months. The U.S. bond yields weakened sharply, touching a 4-week low. Gold prices surged 1.6% at 1900, advancing for the fourth consecutive week.

The U.S. CPI showed an easing in inflation in December, which may allow the Fed to continue to cut rates by 25bps at the FOMC meeting in February. The probability of the Fed raising interest rates by 25bps in February is 93.2%, according to CME Fed Watch.

However, St. Louis Bullard, the president and hawk of the Fed, said on Thursday that the Fed should quickly raise interest rates above 5%, so the Fed still faces a risk of raising interest rates by 50 bps. At the top of the list is the "terminal rate," according to Thursday's report, there is no reason to believe that the Fed has changed its mind about raising interest rates above 5%.

The "terminal rate" will be the focus of the market in the future.

Technical Analysis

The U.S. bond yields fell following the CPI data. It is currently at 3.467%. Following yesterday's CPI data, the Fed’s interest rate hike expectations have dropped significantly and the Fed’s February interest rate hikes are under consideration.

The Fed raised interest rates in February with a probability of 25 bps is as high as 93.2%.

According to CME Fed Watch, the probability of the Fed raising interest rates by 25bps at 4.50%-4.75% in February is 93.2%, the probability of raising interest rates by 50bps is 6.8%, the probability of cumulative interest rate hikes by 25bps in March is 18.9%, the probability of cumulative interest rate hikes by 50bps is 75.7%, and the probability of cumulative interest rate hikes by 75bps is 5.4%.

The dollar plunged yesterday. In today’s Asian session, it had an upward correction of 0.06%.

In terms of technical analysis, the price has broken the previous horizontal price movement and is running at new levels now. At this stage, the price is likely to continue at its horizontal price movement, especially before the Fed raises interest rate in February.

The price is at 101.9179, which is also the trend of the H4 frame. It is likely at its horizontal price movement and has a slight upward correction then drops sharply.

After the CPI data was released yesterday, XAUUSD dipped near $14, then quickly recovered and broke through 1900 for the first time since last May. Sometimes it rolled back and drop below $1890/oz, then rebounded and finally rose 1.14% to $1896.86/oz.

In terms of technical analysis, gold price extends its upward momentum, the market is expected to break through the resistance level of 1900,and continue to test 1920.

Trading Recommendations

Trading Direction: Long

Entry Price: 1895

Target Price: 1920

Stop Loss: 1890

Support: 1885

Resistance: 1920

Risk Warnings and Investment Disclaimers

The Momentum of the Rally Has Weakened, with the Appearance of a Doji

King Ten

Commodity

Summary:

Given the recent rise in copper prices and very sluggish fundamentals, a short-term correction is expected to be more likely.

SELL COPPER

Close Time

CLOSED

9184.000

Entry Price

8200.000

9500.000

8472.695 +20.400 +0.24%

31600.0

Pips

Loss

8200.000

9500.005

Exit Price

9184.000

Entry Price

9500.000

Fundamentals

Macro: For the United States, its December CPI has fallen for three consecutive months, but it did not grow at a slower than expected pace in the previous two months. Meanwhile, Patrick Harker, a voting member of the Fed’s interest-rate committee this year，said he supported a 25 bps rate hike. For China, its December CPI rose 1.8% year-on-year and PPI fell 0.7% year-on-year. For the whole year of 2022, China's CPI rose by 2.0% over the previous year, PPI by 4.1%, and industrial producer purchase prices rose by 6.1%.

Industry: According to the China Association of Automobile Manufacturers(CAAM), the production and sales of Chinese automobiles in December 2022 have reached 2.383 million units and 2.556 million units respectively, down 18.2% and 8.4% y/y. Among them, the production and sales of new energy vehicles have reached 795,000 units and 814,000 units respectively, an increase of 51.8% y/y, with the market share reaching 31.8%. Besides, vehicle exports in the month were 324,000 units, up 45.4% y/y, of which 82,000 NEV exports were 82,000 units, up 3.6 times y/y.

Overall, the US CPI for December released last night extended its decline as expected, with the dollar reaching a new low, but the boost to copper prices has weakened significantly. Given the recent rise in copper prices and sluggish fundamentals, a short-term correction is expected to be more likely.

Technical Analysis

Trading at the daily chart, copper prices climbed all the way from the position near 8200 to a high of around 9180 on January 5, which has risen nearly 1000 points or 12%. Driven by the current sentiment, copper prices have seen six consecutive long white bodies, with a Doji appearing yesterday. Therefore, the top may be expected. From the trend side, the bears around 8200 in the early stage may have been eliminated. Besides, the demand pulled by bulls has weakened yesterday, that is, the bulls show signs of taking a profit. As the price is currently on the upper edge of the box, it is necessary to beware of copper price correction.

Trading Recommendations

Trading Direction: Short

Entry Price: 9184

Target Price: 8200

Stop Loss: 9500

Support: 8500/8200

Resistance: 9200/9500

Risk Warnings and Investment Disclaimers

USD/JPY: Reaction of US Inflation Numbers

Chandan Gupta

Forex

Summary:

Cautious stability still dominates the performance of the USD/JPY currency pair.The bulls' control of the trend will not increase, according to the performance on the daily chart below, without moving above the resistance 135.00.On the other hand, breaking the support level 131.30 will be important for control.Bears are in the trend, and whatever the results of the US inflation numbers today, I still prefer buying the currency pair from every downward level.

SELL USDJPY

Close Time

CLOSED

130.000

Entry Price

124.000

131.500

147.259 -0.198 -0.13%

150.0

Pips

Loss

124.000

131.500

Exit Price

130.000

Entry Price

131.500

Fundamentals

Markets and investors will be looking forward to the release of US inflation data on Thursday to boost the tone for risk appetite. American data occupies a prominent position in driving the markets, not only of the dollar pair against the Japanese yen, but of all currencies against the US currency. US inflation data is due at 13:30 GMT and growth is expected on a monthly basis at 0%, on a yearly basis at 6.5%, down from 7.1% in December.

If inflation is less than expected, the rest of the currencies may benefit against the dollar, but a stronger-than-expected figure could strengthen the US dollar, and it should test stronger bullish levels and compensate for its recent losses. However, markets may choose to focus more on core inflation which is expected to come in at 5.7% for December, which would be a further slowdown from the previous reading of 6.0%.

Technical Analysis

The USD/JPY exchange rate moved sideways on Thursday morning as the market waited for the crucial US inflation data. It was trading at 132.50, which was a few pips above this week’s low of 131.31. This price is also a few points above this month’s low of 129.71.

Immediate focus is now on 129.49 support in USD/JPY. Firm break there will resume whole decline from 151.93. Intraday bias will be back on the downside for 61.8% projection of 151.93 to 133.61 from 138.16 at 126.83. On the upside, however, break of 132.86 resistance will indicate short term bottoming, and bring rebound to 134.76 resistance and above.

USD/JPY: Reaction of US Inflation Numbers_1

Trading Recommendations :

Trading Direction: short

Entry Price: 130.00

Target Price: 124.00

Stop Loss: 131.50

Risk Warnings and Investment Disclaimers

U.S. December CPI Rapid Retreat Limits USD Gains and Favors CAD

Eva Chen

Forex Central Bank Economic

Summary:

U.S. CPI declined 0.1% month-on-month in December, below expectations of 0.0%. The core CPI (excluding food and energy) rose 0.3% month-on-month, in line with expectations. Over the past 12 months, U.S. CPI slowed from 7.1% to 6.5%, in line with expectations. This is also the lowest level since October 2021. Core CPI slowed to 5.7% from 6.0%, in line with expectations.

SELL USDCAD

Close Time

CLOSED

1.34233

Entry Price

1.32490

1.36150

1.35674 -0.00047 -0.03%

67.9

Pips

Profit

1.32490

1.33554

Exit Price

1.34233

Entry Price

1.36150

Fundamentals

The U.S. Bureau of Labor Statistics reported Thursday that inflation is ending 2022 on a rapid retreat, with December's consumer price index posting the largest one-month decline since the pandemic.

The consumer price index, which measures the cost of a basket of goods and services, fell 0.1% for the month, in line with market expectations. However, even with the decline, the headline CPI is still up 6.5% from a year ago, highlighting the ongoing burden of rising living costs on U.S. households.

Excluding volatile food and energy prices, the core CPI rose 0.3%, also in line with expectations.

A steep decline in gasoline prices was the primary reason for the monthly decline. Fuel oil fell 16.6% for the month, also contributing to a 4.5% overall decline in the energy index.

Food prices rose 0.3% in December, while housing prices also rose sharply by 0.8% again during the month and are now 7.5% higher than a year ago. Housing accounts for about one-third of the total CPI index.

Used vehicle prices, also an important initial driver of inflation, were off 2.5% for the month and are now down 8.8% year over year. Medical care services increased 0.1% after dropping for two straight months, while apparel prices rose 0.5% and transportation services were up 0.2% and are still 14.6% higher from a year ago. However, airline fares fell 3.1% for the month though are still up 28.5% from a year ago.

The market reacted modestly to the news and is closely watching the Fed's subsequent moves as officials battle inflation, which peaked at a 41-year high. Supply chain bottlenecks, the Russia-Ukraine conflict, and trillions of dollars in fiscal and monetary stimulus have fueled price spikes across much of the economy.

Policymakers are weighing how much further they need to go with interest rate hikes used to slow the economy and tame inflation. The Fed so far has raised its benchmark borrowing rate by 4.25 percentage points to its highest level in 15 years. Officials have indicated the rate is likely to exceed 5% before they can step back to see the impact of the policy tightening.

Following the CPI report, market pricing suggests an increased likelihood that the Fed will raise rates by 25 basis points on Feb. 1. That would mark a significant slowdown in the Fed's pace of rate hikes after four consecutive 75-basis-point increases last year.

USDCAD: U.S. December CPI Rapid Retreat Limits USD Gains and Favors CAD_1

Technical Analysis

The CAD surged after the U.S. December CPI release, as the USD fell sharply. Fresh selling pressure pushed the pair to test again the lows since the beginning of the year at 1.3347, which indicates a lack of support. The daily level and the December low at 1.3390 is a key bottom and a break below this level could lead to a bearish reversal of the pair below 1.3300. With the RSI turning down again, the consolidation area could trigger another sell-on-high behavior.

Finally, we expect trends in a range of variables to continue to favor the CAD, which is currently trading well below the fundamental equilibrium level (1.3249) indicated by our fair value model, which might limit the upside for the USD. It is recommended to short USDCAD at highs.

Trading Recommendations

Trading Direction: Short

Entry Price: 1.3400

Target Price: 1.3249

Stop Loss: 1.3615

Valid Until: 2023-01-26 23:55:00

Support: 1.3417, 1.3316, 1.3249

Resistance: 1.3450, 1.3522, 1.3615

Risk Warnings and Investment Disclaimers

Markets Ignore Record Inventory Report, Bull Correction May Set off Again

Eva Chen

Central Bank Commodity

Summary:

U.S. EIA crude oil inventories increased by 18.96 million barrels in the week to January 6, significantly higher than market expectations and the third largest weekly increase on record. Expectations of increased demand continue to provide some support for oil prices as economies in emerging markets get back on track. It is believed that once the current wave of infections tops out and economic activity picks up, oil prices will rise again.

BUY WTI

EXP

EXPIRED

77.000

Entry Price

84.900

72.500

76.873 +0.284 +0.37%

Pips

EXPIRED

72.500

81.125

Exit Price

77.000

Entry Price

84.900

Fundamentals

The latest EIA inventory report showed a surprising increase in inventories. The market had previously expected a 2 million barrel decrease, but the actual report showed an increase of 18.96 million barrels. WTI crude oil resumed its rally as risk appetite returned on hopes of the reopening Chinese economy. At the same time, investors seem less willing to see the explosive economic reboot that crude bulls are hoping for. This is because a sharp rise in prices may push up their trading costs.

The upcoming U.S. CPI report for December could spur oil prices later today as it will influence hopes for Fed tightening and overall market sentiment. Strong data could reinvigorate expectations for more rate hikes, which could put pressure on oil prices.

In terms of the market, the crude oil market closed sharply up 3% overnight. Market trading logic is focused on the expected strengthening of the Chinese economy, driving up global crude oil demand. The market's current disagreement is centered on whether Chinese demand can materially strengthen and whether the Fed's monetary policy is turning. Powell said on Tuesday that the inflation storm is not over and monetary policy will not turn easily.

Today the U.S. will release CPI data for December, and the market is currently expecting inflation growth to slow to 6.5%, compared to the previous value of 7.1%. If the data is in line with expectations, the market will tend to slow down interest rate hike expectations, which will play a supportive role in the crude oil market.

In addition, the inventory data is relatively bearish. Although the crude oil storage increased by 18.96 million barrels last week, which is the third largest weekly increase on record and the largest increase since February 2021 when inventories rose by a record 21.6 million barrels, the sharp increase in inventory data suppressed the rebound space of crude oil. However, we suspect that the sharp increase in crude oil inventories was caused by some refinery outages. Once refineries resume operations, the inventory numbers will slow down sharply.

WTI: Markets Ignore Record Inventory Report, Bull Correction May Set off Again_1

Technical Analysis

WTI crude oil is starting to trend higher in its short-term time frame, forming higher lows and higher highs connected by a rising channel. Price is now topping out at resistance and the bull correction may set off from here.

Applying the Fibonacci retracement tool shows that the 61.8% level is closest to the bottom of the channel around the $75.68 per barrel mark, which might be the line in the sand for a correction. A shallow pullback could be met with lower buying near the middle of the channel at $76.50 per barrel.

Stochastic is in the overbought region to reflect exhaustion among buyers, so turning lower would mean that selling pressure is kicking in. The oscillator has plenty of room to move south before reaching the oversold territory.

Similarly, RSI looks ready to turn lower after some time in the overbought region, so prices could follow suit as bearish pressure returns.

However, in the broader trend, the 100 SMA is still below the 200 SMA, indicating that the path of least resistance is to the downside or that selling pressure will continue to be in play. At the same time, the gap between the indicators is narrowing to reflect slower bearish momentum and a potential bullish crossover. It is recommended to buy the dips.

Trading Recommendations

Trading Direction: Long

Entry Price: 77.00

Target Price: 84.90

Stop Loss: 72.50

Valid Until: 2023-01-26 23:55:00

Support: 76.71, 75.90, 74.28

Resistance: 79.27, 81.45, 83.31

Risk Warnings and Investment Disclaimers

King Ten

Analyst

Focus on macroeconomic analysis with extra attention to the geopolitical impact on financial markets.

Ranking

Articles

316

Win Rate

0.00%

P/L Ratio

0.34

Focus on

XAUUSD, WTI, COPPER

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Breaking 1900 Successfully, But Wary of Retracement Risks in Short Term

Fundamentals

Technical Analysis

Trading Recommendations

Bullish Trend Continues, Still Suitable for Going Long After Retracement

Fundamentals

Technical Analysis

Trading Recommendations

CPI Cools Down: XAUUSD Hits 1900

Fundamentals

Technical Analysis

Trading Recommendations

The Momentum of the Rally Has Weakened, with the Appearance of a Doji

Fundamentals

Technical Analysis

Trading Recommendations

USD/JPY: Reaction of US Inflation Numbers

Fundamentals

Technical Analysis

U.S. December CPI Rapid Retreat Limits USD Gains and Favors CAD

Fundamentals

Technical Analysis

Trading Recommendations

Markets Ignore Record Inventory Report, Bull Correction May Set off Again

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure