• No reason for BOE to move rates in lockstep with either Fed or ECB

Cable is up from around 1.2355 to 1.2385 on the day now as Pill is trying to temper with market expectations. The BOE had previously said they were comfortable with markets pricing in a move in August. However, traders had recently pushed to test that narrative by pricing in a June move – which is now at near 50% (it was 62% before the PMI data today). I reckon we’re seeing a bit of a walk back in that regard now.

This article was written by Justin Low at www.forexlive.com.

• Policy outlook has not changed substantially since March
• There has been little news in recent months on inflation persistence
• Now seeing signs of a downward shift in the persistent component of inflation dynamic
• A cut in the bank rate would not entirely undo the restrictive policy stance
• Will need to maintain a degree of restrictiveness in policy stance to squeeze out inflation persistency
• Absence of news and passage of time have brought a bank rate cut somewhat closer

This is pretty much the step before the step to cut rates. As such, the language is angling towards a move in the next few months. As for market pricing, a move in June is ~51% priced in. Meanwhile, an August move is ~98% priced in after the PMI data today.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI almost
  jumping back into expansion while the Services PMI ticked slightly lower
  remaining in expansion.
• The
  market expects the first rate cut in February 2025.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD fell
below the 0.64 handle but eventually bounced back to retest the previous lows
where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to step in with a defined risk above the
Fibonacci level to position for a drop into the 0.6272 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 0.65 resistance zone
where we have also the red 21 moving average for
confluence.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the latest leg
lower diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it led to a pullback into the resistance around the
0.6475 level. If the price were to break higher, the chances for a reversal
will increase and we could see a quick rally into the 0.6520 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor upward trendline defining the current bullish momentum with the
red 21 moving average acting as dynamic support. The buyers are leaning on this
trendline to
keep bidding up the pair into new highs. The sellers, on the other hand, will
want to see the price breaking lower to pile in and position for a drop into
new lows.

Upcoming Events

Today we get the US Flash PMIs. Tomorrow, we have
the Australian CPI data. On Thursday we will see the latest US Jobless Claims
figures, while on Friday we conclude the week with the US PCE report.

This article was written by FL Contributors at www.forexlive.com.

Well, that’s quite a bummer in European morning trade. There was a bit of life after the PMI data earlier but things have quickly settled back down. Dollar pairs are sitting within 10 pips of one another, showing very little change on the day.

That speaks to the lack of conviction we’re seeing for the time being. Hopefully that will change when we get to the US PMI data later, to help set the tone for the sessions ahead as well. Otherwise, it might stay quieter until we get to the US Q1 GDP data on Thursday and the PCE price index on Friday.

If anything else, USD/JPY remains one to pay close attention to as it holds close to the 155.00 mark.

In other markets, gold is still down a little over 1% at $2,300 while equities are hoping to post back-to-back daily gains this week. S&P 500 futures are up 0.2% but things are still looking a little nervy, as seen in US trading yesterday. Nonetheless, investors managed to snap the run of six straight days of losses so let’s see if they can keep the bounce going for now.

This article was written by Justin Low at www.forexlive.com.

It was a quick one at that, as EUR/USD backs away from the earlier high of 1.0695 to fall to 1.0655 on the day. The data doesn’t change the ECB’s plan for a move in June but it is perhaps a first step in keeping their options open after that. For now at least, traders are more focused on the next move.

And as mentioned earlier:

„Taking that into consideration, the euro bounce we’re seeing might not have much legs to it. But at least from the near-term chart above, EUR/USD is working above both its 100 and 200-hour moving averages again. That sees the near-term bias turn more bullish at least. But we’ll see if price can hold above the high last week at 1.0690 for the day. If that doesn’t last, I’m inclined to fade this move for a quick one.“

A good ol‘ fade the pop trade in the bag. Now, we’re back to square one on the day. And with price action continuing to consolidate in and around the key hourly moving averages, we’ll have to wait on the US PMI data to settle the score.

This article was written by Justin Low at www.forexlive.com.

It all started with the dollar making some headway two weeks back, before a drop below 1.2500 made things really tough for GBP/USD. There was a brief consolidation phase below the figure level but we’re seeing sellers pick up the momentum again in the last two days. And now, the pair is down another 0.4% to 1.2315.

From a technical perspective, there is very little support in stopping the drop here. The next key support target will be the October low itself at 1.2037. That’s still nearly 300 pips away from here.

Unless the mood music changes up for the dollar, it might be tough to argue otherwise. And that is despite the recent inflation data from the UK, as argued last week here.

While the BOE is still poised for a potential August rate cut, the Fed’s timeline has readjusted quite significantly. We’re looking at one potentially in September but even that isn’t as much as a given as compared to the BOE for August. And that pretty much outlines the risk balance for both the dollar and pound currently.

I mean, if sterling can’t even compose itself even with a better risk mood today, that’s not a good sign in the short-term especially with the chart looking as it is above.

This article was written by Justin Low at www.forexlive.com.

Last week,
the Nasdaq Composite got under pressure amid geopolitical fears and a general
risk off sentiment. The latest developments saw Israel retaliating against Iran
but the latter downplaying the airstrikes. This episode might be behind our
backs, although it’s worth to keep an eye on it if it were to become a concern
again. On the macro side, the Fedspeak turned more hawkish, especially in the
latter part of the week as the inflation progress looks to be stalled. Overall,
the last week had plenty of bearish catalysts weighing on the market, so we
will probably need some positive data on the inflation front this week to turn
the sentiment around.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite broke through another key level at 15453 and extended the selloff
into the 15162 support. We can
also notice that the price got a bit overstretched as depicted by the distance
from the blue 8 moving average. In
such instances, we can generally see a pullback into the moving average or some
consolidation before the next move. The buyers might start to pile in more
aggressively around these levels to position for a rally into a new all-time
high with a better risk to reward setup. The sellers, on the other hand, will
want to see the price breaking lower to increase the bearish bets into next
support at 14477.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price got overstretched on this timeframe as well. The buyers might want to
start piling in around these levels or wait for a catalyst which could be
either the Flash US PMIs tomorrow or the US PCE on Friday. The sellers should
continue to sell the rallies though to position for the ultimate target around
the 14477 level. There’s not much else to glean from this chart, so we need to
zoom in to see some more details.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have
a trendline
defining the current downward momentum where we can find the red 21 moving average for confluence. If we
get a pullback, we can expect the sellers to step in around the trendline with
a defined risk above it to position for new lows. The buyers, on the other
hand, will want to see the price breaking higher to pile in and position for a
rally into the 15929 level.

Upcoming
Events

This week is a bit empty on the data front with just a
few notable releases. We begin tomorrow with the US PMIs. On Thursday, we get
the US Q1 GDP and the latest US Jobless Claims figures. On Friday, we conclude
the week with the US PCE report.

This article was written by FL Contributors at www.forexlive.com.

• There isn’t a set path

That said, it is pretty clear that the ECB is angling for a move in June. And they will likely only be more explicit about that after the Q1 wages data in May.

This article was written by Justin Low at www.forexlive.com.

The price action in gold lately has been one that has been hovering just under the $2,400 mark mostly. Buyers tried for a firm break of the key level but ultimately failed to hold a daily close above that. The mood music was also helped by recent geopolitical tensions between Israel and Iran. But as those fears ebb a little now, we’re seeing gold slip back. But has that changed the recent momentum?

Well, if you go by the hourly chart, it might be suggestive of a change in fortunes. That at least in the near-term for gold price action. During the run higher this month, price was largely defended by the key hourly moving averages. If not at the 100-hour moving average (red line), then at least at the 200-hour moving average (blue line).

That helped to keep buyers poised but now we’re seeing those key near-term levels falter in trading today.

Price is now down to $2,360 and trading below both key levels, suggesting that the near-term bias has shifted to being more bearish instead. I’d still put some emphasis on the minor support around $2,320-25 but if that gives way, we could be looking at a quick retracement to $2,200 for gold next.

The structural view still dictates that there is plenty of upside potential for gold though. I mean, this run higher comes despite markets having significantly pulled back on rate cut bets. So, if that starts to come back in again, there’s certainly fuel to add to the fire for gold in the big picture.

But just as how equities have retraced slightly after the bustling gains since last November, gold might be overdue that as well at some point.

This article was written by Justin Low at www.forexlive.com.

I am eyeing Tesla stock before tommorow’s earnings report, and starting to buy now

As equity traders, we’re always on the lookout for opportunities that promise a good return against measured risk. Tesla Inc. (TSLA), the innovative electric vehicle and clean energy company, presents such an opportunity. Ahead of its earnings release tomorrow, post-market close, let’s delve into why Tesla stock might be gearing up for a favorable entry point.

Tesla’s stock performance has been a rollercoaster of highs and lows. Since its all-time peak — where the company’s value skyrocketed by over 100% — the price has corrected significantly, hovering around 52% below that zenith. This correction has captured the attention of traders looking for discounted entries into high-potential stocks.

The technical perspective at TSLA stock, see my video

From a technical analysis standpoint, there’s an interesting setup forming. Tesla’s price action is approaching the lower band of a Pitchfork pattern, coinciding with a gap formed post the earnings announcement on January 23. These technical indicators often attract traders who look for historical patterns to repeat themselves.

A net of buy orders predefined and ready, with the Levitan Method

Most traders do not know the Levitan method for dip buying so here goes… Although they might see this as an auspicious moment to consider entry as the downtrend is in play, that is clear. As the video shows a range where we target our buys, one might look to initiate a position at $142.61, closely aligned with the current premarket price. The plan involves scaling into the position — buying more shares at calculated lower points — and employing a disciplined stop-loss and take-profit strategy to manage risk.

A contrarian bet with calculated risk

One could argue that much of the negative news surrounding Tesla might already be priced in. If true, this contrarian approach might just pay off handsomely, especially for those willing to endure short-term volatility for long-term gains. With a stop loss set at 5% below the entry point and a take-profit target at a hefty 35% above, the risk-reward ratio stands at an attractive 7:1.

Long-term optimism but sharp risk management

While traders might decide to take partial profits along the way, holding a portion of Tesla stock for the long haul could be wise. If Tesla were to revisit its all-time high — a prospect that is not out of the question — the upside could be substantial.

You can enlarge the below image to see the details of the buying method and trade plan or TSLA stock.

Trade Plan for TSLA using the Levitan Method

1. Identify Potential Dip Points: Analyze the stock chart of TSLA to identify potential dip points below the current market price where demand may increase, using technical analysis indicators and historical price levels.

2. Determine Buy Levels and Shares: Plan to enter three separate buy orders at these dip points, with the number of shares based on a Fibonacci series. For instance:

   • First Buy Order: 33 shares (33 x 1)
   • Second Buy Order: 66 shares (33 x 2)
   • Third Buy Order: 99 shares (33 x 3)

3. Calculate Weighted Average Entry Price: If all three buy orders are filled, calculate the weighted average price of the shares purchased. This price will serve as the reference point for setting stop loss and take profit levels.

4. Set Stop Loss and Take Profit: Set a stop loss at 5% below the weighted average entry price to limit potential losses. Set a take profit level at 35% above the average entry price to lock in profits, aiming for a 7:1 reward-to-risk ratio.

5. Adjustments and Partial Profits: Traders may choose to take partial profits at a 2:1 reward-to-risk ratio if the price reaches a 20% gain. Additionally, consider leaving a portion of the position (e.g., 20%) to potentially benefit from long-term growth in TSLA stock.

6. Risk Management: Allocate a specific portion of the trading budget to this strategy, and do not exceed it to manage risk effectively.

7. Monitor the Trade: Keep a close eye on TSLA’s price action, news, and overall market sentiment, ready to adjust the trade plan as needed.

8. Document and Review: Record the details of all trades and review them regularly to refine the strategy over time.

Investing in Tesla right now is a classic contrarian bet, rooted in technical analysis and a belief in the company’s market position. As with all trading, there’s an inherent risk, and it’s crucial to trade based on one’s own research and risk tolerance. For those with an appetite for risk and an eye for potential, Tesla’s dip could be a launching pad for significant returns. Stay tuned to ForexLive.com for further analysis and updates on this developing story.

Remember, trade at your own risk. This article is not financial advice but rather a perspective on market opportunities based on current conditions. Always conduct thorough research or consult with a financial advisor before engaging in equity trading.

This article was written by Itai Levitan at www.forexlive.com.