Follow the Trend as the Strong Momentum of Bear Covering

Summary:

The drop in U.S. Treasury Securities yields severely affected the USD and supported gold prices. While the Fed's tough expectations will limit the gains, the impact of bear covering's impulse will push gold prices through previously unfinished tests.

BUY XAUUSD

Close Time

CLOSED

1721.21

Entry Price

1745.00

1685.00

2019.65 +5.62 +0.27%

362.1

Pips

Loss

1685.00

1684.89

Exit Price

1721.21

Entry Price

1745.00

Fundamentals

Gold is gaining momentum through its overnight (U$1,680-$1,690) supply zone. In the early European session, strong follow-through buying pushed gold prices to their highest level in three weeks. Meanwhile, the USD's further retreat from the 20-year high it touched last week has been a key factor driving the dollar-denominated gold price higher. And the Bank of England (BOE) stepped in to buy up to GBP 5 billion of long-term British government bonds, which pulled U.S. Treasury Securities yields away from multi-year highs and continued to weigh on the USD.

On top of that, heightened fears of a further downturn in the U.S. and European economies provided additional support for safe-haven gold. Monday's disappointing U.S. data further fueled concerns. The data showed a slight increase in manufacturing activity in September, but the growth was the lowest rate in recent years. In terms of the details, new orders fell more than 4 points, while employment fell 5.5 points, possibly signaling a weak non-farm payrolls report on Friday.

The weakness in the data has, to a greater extent, helped to offset risk sentiment and has done little to weaken the generally bullish sentiment surrounding gold prices. That said, the prospect of more aggressive tightening by major central banks will act as a headwind for unyielding gold, dampening any further gains, at least for now.

Market participants are now looking forward to the U.S. September non-farm payrolls report scheduled for release on Friday. The report will play a key role in influencing the Fed's future path of interest rate hikes. In turn, this will help investors determine the next direction for the USD and gold prices.

At the same time, traders will also get more trading leads from the broader risk sentiment, which will include turnover data for JOLTS vacancies on Tuesday and factory orders and U.S. Treasury Securities yields.

XAUUSD: Follow the Trend as the Strong Momentum of Bear Covering_1

Technical Analysis

Gold prices formed an initial bullish continuation signal after breaking out of the US$1680-1690 supply zone yesterday. This follows two trading days with a double Doji Star oscillation trend without direction.

A weaker dollar has helped push gold prices back into strength, but the near-term bullish structure remains fragile and the rally will be short-lived as strong Fed rate hike signals will continue to support the USD, thus weighing on gold prices.

However, in the 1D timeframe, although still deep in negative territory. The gold prices rose based on the Bollinger middle band and uptrend golden cross of the (5,10) SMAs, strengthening the short-term bullish momentum. From the previous two days of the "double Doji Star" after the close of the trend pattern, at present, the bulls occupy the absolute leading position. And from a more distant technical development, the US$1745 level that the bulls had to defend previously (although it has failed) will be tested in the next round of rallies. If this is the case, the idea is completely clear. It is recommended to try to go long.

Trading Recommendations

Trading direction: Long

Entry price: 1711

Target price: 1745

Stop loss: 1685

Deadline: 2022-10-18 20:00:00

Support: 1690, 1687, 1680

Resistance: 1723, 1730, 1740

Risk Warnings and Investment Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

Weak Economic Data, but No Change in Oscillation Pattern

King Ten

Summary:

Weak economic fundamentals and tight supply continue to gamble; it is recommended to adopt an oscillating mindset in the short term.

BUY COPPER

Close Time

CLOSED

7530.000

Entry Price

8000.000

7250.000

8430.245 +49.750 +0.59%

859.5

Pips

Profit

7250.000

7538.595

Exit Price

7530.000

Entry Price

8000.000

Fundamentals

On the macro front, ISM released its September data on October 3 local time. ISM manufacturing PMI recorded 50.9, a new low since May 2020 and a larger decline from 52.8 in August, with the manufacturing new orders index at 47.1 and the manufacturing prices paid index at 51.7. The manufacturing PMI, while still above the boom-or-bust line, continued to expand, but the growth rate was the lowest since the resurgence of the pandemic. Meanwhile, the manufacturing new orders index contracted for the third time in four months, which also indicates weaker demand.

In terms of inventories, the three major global exchanges are at historically low levels. And the extremely low inventory situation in the previous period gradually improved after mid-September. For LME inventories, after the wave of domestic copper exports, LME inventories stepped on a downward path, with European inventories being particularly tight. Since mid-September, LME inventories have steadily picked up, with a weekly increase of 22,725 tons to 124,725 tons, though still 101,450 tons lower than the same period last year. Comex inventories fell 989 short tons weekly to 45,262 short tons, 7581 short tons less than the same period last year. The total inventory of the three major exchanges is 202,683 tons, 318,742 tons lower than the same period last year. Compared with the same period in previous years, the inventory is still low, which will constitute some support for copper prices.

Overall, the weak economic fundamentals and tight supply continue to gamble. Still, the pattern of oscillation is generally maintained during the year, with copper prices ranging from 7200-8200 unchanged.

Technical Analysis

In the daily chart, copper prices are oscillating at the Lower side of this round, and the K-line pattern is rather solid, currently standing on the 20-day SMA. It is recommended to try to go long relying on the position near the 20-day MA.

COPPER: Weak Economic Data, but No Change in Oscillation Pattern_1

Trading Recommendations

Trading direction: Long

Entry price: 7530

Target price: 8000

Stop loss: 7250

Support: 7400/7250

Resistance: 7600/8000

Risk Warnings and Investment Disclaimers

Stagnate at 145.0 Mark, with Risk of Triggering Another Government Intervention

Winkelmann

Central Bank

Summary:

The depreciation of the JPY has eased significantly after the Japanese government intervened in the currency market. The JPY is below the trigger point of intervention at the 145.0 mark. Whether this level can be held will determine the subsequent direction of the JPY.

SELL USDJPY

Close Time

CLOSED

145.000

Entry Price

140.000

148.100

148.319 -0.311 -0.20%

310.0

Pips

Loss

140.000

148.178

Exit Price

145.000

Entry Price

148.100

Fundamentals

Since this year, while the Federal Reserve (Fed) and many other central banks have raised interest rates, the Bank of Japan (BOJ) has persisted with its loose monetary policy. While Japanese inflation has risen above 2%, BOJ officials have not seen confirmation that Japan will see sustained wage increases. There are still challenges to achieving the BOJ's 2% inflation target. Meanwhile, the JPY has been weak among G10 currencies. With the Fed continuing to reinforce its hawkish stance, the US-Japan yield spread continued to widen, boosting the USDJPY to new yearly highs.

However, the market is gradually digesting expectations of a 75 basis point interest rate hike by the Fed in November, and the decrease in manufacturing PMI has increased market fears of a recession in the US. The US dollar (USD) then weakened significantly. In addition to the recent strong intervention by the Japanese government, the depreciation of the JPY has taken a breather. Japanese Minister of Finance Shunichi Suzuki recently stated that the foreign exchange movements will continue to be monitored and that necessary countermeasures will be taken against excessive foreign exchange fluctuations at any time. It indicates that Japan is becoming increasingly active in attempting to maintain the JPY exchange rate. With reference to the previous trigger point for intervention at the 145.0 mark, it is highly critical for this level to be held.

Technical Analysis

Since this year, the USDJPY has been rising, once approaching the 146.0 mark and refreshing the highs of more than 20 years. However, the short-term ascending momentum has weakened, and the USDJPY has been resisted at 145.0 for four consecutive weeks. The 145.0 level is a strong resistance level and a trigger point for BOJ intervention. Meanwhile, the 4-hour chart shows that USDJPY continues to hover sideways at highs, and the indicator RSI shows continuous negative divergence, increasing the possibility of a sharp pullback in the short term.

With a weakening USD, it is recommended to go short at highs. You can try to go short when the price rallies and then stabilize without breaking above 145.0. The target is set near the support level at 140.0, with a stop-loss above 147.67.

Trading Recommendations

Trading direction: Short

Entry price: 145.0

Target price: 140.0

Stop loss: 148.1

Support: 142.0/140.0

Resistance: 146.0/145.0

Risk Warnings and Investment Disclaimers

Weak Rally Still an Opportunity for Short at Highs

Damon

Summary:

The BTC 4-hour chart has gradually formed a descending triangle pattern since the August highs, and there is still some time before the convergence change node.

SELL BTC-USDT

Close Time

CLOSED

20003.4

Entry Price

19000.0

20800.0

37336.0 +587.1 +1.59%

467.2

Pips

Profit

19000.0

19536.2

Exit Price

20003.4

Entry Price

20800.0

Hot Spots

1. Genesis is no longer acting as an authorized participant in the Grayscale Crypto Trust product.

2. The Central Bank of Russia requires banks to record bitcoin and cryptocurrencies as assets in their accounts.

3. Japan's Prime Minister said Japan's government would “promote efforts to expand the use of Web 3.0 services that utilize the metaverse and NFTs.

Sentiment

The Cryptocurrency Fear/Greed Index is currently at 20 and is extreme fear. Yesterday and the day before were at 24 and 24 respectively. The market is following the US stock rally but the sentiment is still depressed.

Technical Analysis

Yesterday followed the U.S. stocks to open the rally, bitcoin recently once again up to 20,000 nearby, with multiple strong resistance levels above 20,000. you can choose the opportunity to make a bearish entry; moreover, the BTC 4-hour chart has gradually formed a descending triangle pattern since the August high, and there is still some time before the convergence change node.

BTC 4-hour level chart

BTC-USDT: Weak Rally Still an Opportunity for Short at Highs_1

BTC daily level chart

BTC-USDT: Weak Rally Still an Opportunity for Short at Highs_2

Trading Recommendations

Trading direction: Short

Entry level: Market price

Target level: 19000

Stop loss level: 20800

Downside support: 18,800, 18,500

Upside resistance: 20300, 20800

Risk Warnings and Investment Disclaimers

Euro Soars More than 90 Points in Short Term, Try Shorting at highs

Jason

Summary:

The UK government abandoned its plan to abolish the top rate of income tax, coupled with market expectations of a slowdown in interest rate hikes by the Fed heating up, making the euro go higher in the short term; but the energy shortage problem has put a haze on the outlook for the euro. If market expectations for the Fed to slow down interest rate hikes continue to heat up, the euro is expected to continue to rise; conversely, will return to the downward trend.

SELL EURUSD

Close Time

CLOSED

0.99107

Entry Price

0.98283

0.99513

1.09677 +0.00192 +0.17%

40.6

Pips

Loss

0.98283

0.99514

Exit Price

0.99107

Entry Price

0.99513

Fundamentals

The euro rose slightly by 0.25% on Monday as the UK government abandoned plans to abolish the top rate of income tax. The plan had reduced the 45% top income tax imposed on people earning more than 150,000 pounds a year to 40%. The policy also sparked market turmoil in the past week. The pound was boosted by the news and once rallied to 1.1250, and the euro also strengthened accordingly.

After the opening of the day, the euro continued to strengthen as U.S. data released yesterday showed that the Fed's interest rate hike was taking effect. Meanwhile this has also raised market expectations that the Fed may be slowing down interest rate hikes, leading to a slightly weaker dollar.

Nevertheless, given the unstable energy situation in Europe, there are reports that the OPEC and the OPEC+, an alliance of OPEC, are discussing a possible production cut of more than 1 million barrels per day. In addition, the International Energy Agency released its quarterly gas market report on October 3, which showed that gas consumption in EU countries needs to be reduced by 9% to 13% compared to the average level over the last five years to ensure that natural gas reserves are always sufficient by the end of the heating season. According to this criterion, and in the case of low LNG imports, EU countries' natural gas reserves will be maintained at a level of 25% to 30%. However, if Russia completely stops supplying natural gas from November this year, the level of natural gas reserves may drop to less than 5%, which will increase the risk of complete disruption of natural gas supply if cold snaps hit. In other words, Europe will face an "unprecedented" risk of natural gas shortage this winter.

This has certainly cast a fog over the outlook for the euro. For now, if the market continues to heat up expectations of the Fed slowing down its interest rate hikes, the euro is expected to continue to move up; conversely, it will return to a downward trend.

Technical Analysis

In the 4H chart, the euro temporarily breaks the 38.2% Fibonacci Retracement (0.98283) and is blocked by the bottom of the oscillation range 1.00449 - 0.99107 in the historical trend. And since the euro fell below this support on September 21, it ran all the way to the bottom of the downward channel; only when this line is broken, the euro will be considered to stop falling in the real sense. As for indicators, Stoch, and DMI are showing that the euro will fall in the short term; the baseline and conversion line in the Ichimoku are both sharply upward, indicating that the euro is currently rising strongly. Considering that there is no important economic data for the day and the euro has risen nearly 90 points, the profit brought by continuing to go long is not much. It is suggested to go short at highs.

EURUSD: Euro Soars More than 90 Points in Short Term, Try Shorting at highs_1

Trading Recommendations

Trading direction: Short

Entry price: 0.99107

Target price: 0.98283

Stop loss: 0.99513

Support: 0.98518/0.98283/0.98000

Resistance: 0.98771/0.99107/0.99521

Risk Warnings and Investment Disclaimers

New Policy Twists and Turns, Pound's Road to Recovery Still a Long Way to Go

Winkelmann

Summary:

The UK economy continues to deteriorate. Faced with many challenges, the new fiscal package of the UK government has seen twists and turns, intensifying the disorderly volatility of the financial markets in the short term. Although the pound has rebounded strongly, it is difficult to reverse its bearish trend.

SELL GBPUSD

Close Time

CLOSED

1.14300

Entry Price

1.09300

1.17800

1.26463 +0.00210 +0.16%

500.0

Pips

Profit

1.09300

1.09298

Exit Price

1.14300

Entry Price

1.17800

Fundamentals

Since the UK government announced its tax cut plan, the pound and UK government bond yields have been amid violent volatility. Under the action of the Bank of England to intervene in the bond market, U.S. bond yields were implicated to fall, and some central banks, including the Bank of Japan, have become increasingly aggressive in defending their currencies. The dollar gave back gains and the previously hard-hit pound rallied strongly. Now, with the UK government abandoning plans to cancel the top income-tax rate to calm the public and financial markets, the pound has gotten a further boost.

Nevertheless, a series of problems such as the Russia-Ukraine conflict, energy crisis, Brexit haze, and high inflation have formed a serious negative impact on the UK economic growth. Although the UK government still insists on introducing fiscal stimulus programs, this will undoubtedly increase the UK government's debt burden and may create new inflation, undermining the Bank of England's efforts to fight inflation.

The UK economy is currently deteriorating, with rising interest rates continuing to erode investment and consumer demand. Meanwhile, the "policy farce" in the recent week has damaged the credibility of the UK government agencies, and the Bank of England's bond purchase program of intervention may not be sustainable. Therefore, with the Fed still set to maintain aggressive interest rate hikes, a short-term rally is hardly enough to restore confidence in the pound.

Technical Analysis

In the daily chart, GBPUSD is in a V-shaped rally. The previous decline has almost completely recovered. The short squeeze market after this wave of plunge is really amazing, yet the overall trend reversal has not been established, and the current rise can only be seen as a rebound repair. There is a risk of the pound falling again.

GBPUSD: New Policy Twists and Turns, Pound's Road to Recovery Still a Long Way to Go_2

In the 4H chart, GBPUSD maintains a strong rally. As the indicator RSI continues to extend upward, the exchange rate is expected to make further gains to the key pressure level of around 1.1450. However, as the price has risen too much in the short term, beware of the risk of a retracement in the overbought area after the price surges higher.

It is recommended to go short with small positions after the price rallies to around 1.1450, with the target set at the lower support level around 1.0900 and the stop loss set above 1.1750.

Trading Recommendations

Trading direction: Short

Entry price: 1.1430

Target price: 1.0930

Stop loss: 1.1780

Support: 1.1060/1.0900

Resistance: 1.1450/1.1360

Risk Warnings and Investment Disclaimers

Long Positions Counterattack Strong, Accelerating Push to the Short

Winkelmann

Central Bank

Summary:

The geopolitical situation escalated, and the short-term USD fell sharply in adjustment, with gold prices expected to rebound further after breaking through 1680.The geopolitical situation escalated, and the short-term USD fell sharply in adjustment, with gold prices expected to rebound further after breaking through 1680.

BUY XAUUSD

Close Time

CLOSED

1691.00

Entry Price

1720.00

1675.00

2019.65 +5.62 +0.27%

79.8

Pips

Profit

1675.00

1698.98

Exit Price

1691.00

Entry Price

1720.00

Fundamentals

Recently, with the governments of Japan and the UK intervening in the debt and currency markets one after another, reflecting the side effects of countries' dissatisfaction with a stronger dollar, the market has also gradually digested the expectations of the Fed's aggressive rate hike, and the dollar and U.S. bond yields have weakened sharply from their highs. Coupled with the escalating situation in Russia and Ukraine and the heightened risk of a global recession, risk aversion and low buying have given gold the opportunity to rally.

The U.S. ISM Manufacturing PMI in September released overnight was sharply lower than expected, falling to 50.9 from the previous value of 52.8, being the lowest since May 2020. The new orders sub-index shrank further, and the sharp slowdown in manufacturing activity sparked fears of a recession next year, helping gold prices to surge further.

However, the prospect of interest rate hikes by central banks remains the biggest obstacle for gold to rise, especially with the Fed most likely to raise rates again by 75 basis points in November. Although there are hints of cooling inflation, underlying price pressures are still too high and the Fed still has a lot of work to do, and recent hawkish speeches by Fed officials continue to reinforce this point, and the upside of gold prices may be limited.

Technical Analysis

XAUUSD: Long Positions Counterattack Strong, Accelerating Push to the Short_1

From the daily chart, XAUUSD bottomed out, with a strong short-term rebound, which has broken through the key pressure near 1660 and 1680 in succession, and even once on the 1700 mark. The RSI indicator still has a tendency to extend further to the overbought area, although the overall short trend remains unchanged, it is not advisable to go against the trend in the short term; however, it is still necessary to wait for a further rebound after the opportunity to go short.

XAUUSD: Long Positions Counterattack Strong, Accelerating Push to the Short_2

From the 4H chart, XAUUSD long positions have a strong counter-attack, and there is an obvious backfill of the short; after a slight adjustment in the short term, there is still some room for a rebound. Focus on the key pressure level above near 1724, and then look for opportunities to go short.

For the short-term, you can try to take a small position to go long near 1690, with a target of 1724 and a stop loss below 1680.

Trading Recommendations

Trading direction: long

Entry level: 1691.0

Target: 1720.0

Stop loss level: 1675.0

Downside support: 1660/1680

Upside resistance: 1700/1724

Risk Warnings and Investment Disclaimers

Eva Chen

Analyst

Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

Ranking

Articles

836

Win Rate

69.20%

P/L Ratio

0.56

Focus on

WTI, XAUUSD, GBPUSD

Related Analysis

Buy Low and Sell High with Trading Risk Premium

TRADING

Continuation of Downward Movement Expected After Correction Ends

PENDING

Bullish Trend Remains Intact but with Limited Upside Potential

PENDING

Range Trading Dominated by Selling High and Buying Low

TRADING

Possible Short Squeeze in the Market, Emphasizing Buying the Dips

PENDING

Home News AI Signals Analysis Columns 7x24 Economic Calendar Quotes Data Warehouse Pro Video User Agreement Privacy Policy About Us

Risk Disclosure

The risk of loss in trading financial assets such as stocks, FX, commodities, futures, bonds, ETFs or crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No consideration to invest should be made without thoroughly conduct your own due diligence, or consult with your financial advisors. Our web content might not suit you, since we have not known your financial condition and investment needs. It is possible that our financial information might have latency or contains inaccuracy, so you should be fully responsible for any of your transactions and investment decisions. The company will not be responsible for your capital lost.

Without getting the permission from the website, you are not allow to copy the website graphics, texts, or trade marks. Intellectual property rights in the content or data incorporated into this website belongs to its providers and exchange merchants.

Palestinian-Israeli conflict

Russia-Ukraine Conflict

Tensions in Northern Myanmar

Daily News

FastBull Featured

Devin

Mohammad Omar

Jan Aldrin Laruscain

Recent Searches

Trending Searches

News

Analysis

7x24

Quotes

Economic Calendar

Video

Data

Share to get 1-year PRO for free

Share the link to get membership

Scan QR code with mobile phone

Upgrade to FastBull Pro

Follow the Trend as the Strong Momentum of Bear Covering

Fundamentals

Technical Analysis

Trading Recommendations

Weak Economic Data, but No Change in Oscillation Pattern

Fundamentals

Technical Analysis

Trading Recommendations

Stagnate at 145.0 Mark, with Risk of Triggering Another Government Intervention

Fundamentals

Technical Analysis

Trading Recommendations

Weak Rally Still an Opportunity for Short at Highs

Hot Spots

Sentiment

Technical Analysis

BTC 4-hour level chart

BTC daily level chart

Trading Recommendations

Euro Soars More than 90 Points in Short Term, Try Shorting at highs

Fundamentals

Technical Analysis

Trading Recommendations

New Policy Twists and Turns, Pound's Road to Recovery Still a Long Way to Go

Fundamentals

Technical Analysis

Trading Recommendations

Long Positions Counterattack Strong, Accelerating Push to the Short

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure