<p class=“MsoNormal“>As the Fed came out more
hawkish than expected, the market sold off on higher risks of
overtightening and a worse than expected recession, bringing the Russell 2000 index into focus.</p><p class=“MsoNormal“>Bear Market Headwinds for Broader Market, Russell 2000</p><p class=“MsoNormal“>These are two of the
worst possible things for the stock market and should result in a
continuation of the bear market. The <a target=“_blank“ href=“https://www.forexlive.com/news/china-takes-the-final-step-to-embrace-living-with-covid-20221227/“ target=“_blank“ rel=“follow“>China
reopening news</a> during the Christmas holidays can have two
implications:</p><p class=“MsoListParagraphCxSpFirst“>·
It may help with global growth and reduce the
chances of a hard landing.</p><p class=“MsoListParagraphCxSpLast“>·
Increase inflationary pressures.</p><p class=“MsoNormal“>Both the options though, lead
to the Fed possibly being forced to go higher than their expected terminal rate,
which brings us back to the original risks: overtightening and deep recession.</p><p class=“MsoNormal“>RUSSELL
2000 Technical Analysis</p><p class=“MsoNormal“>In the
daily chart above, we can see how the Russell 2000 price, after falling off a cliff out of
the FOMC meeting, pulled back to the nearest swing low <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> area at 1788-1798. </p><p class=“MsoNormal“>That looks
like a strong barrier as we saw several tests without successful breaks. If the buyers manage to breach
that level, the next possible upside target may be in the 1880-1900 region. If
the price fails though, the October low at 1642 will be the clear target.</p><p class=“MsoNormal“>In the 1-hour chart above, we
can see more closely the current rangebound price action with a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> near the 1800 handle and a
support at 1730. Ideally, you would want to stay out of such a market and
wait for a clear breakout before deciding what to do next. </p><p class=“MsoNormal“>Nevertheless,
one can try to play the Russell 2000 range selling at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> and buying at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> until the game stops.</p><p class=“MsoNormal“>Drilling down to the 15 minutes
chart, we can see that there’s a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at the moment (orange line). This level should define
where the price may be headed next. In the first scenario, the price may
retest the level and run to the upside testing again the resistance. In the
second scenario, the price breaks down and falls to the support.</p>

This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>Not quite the case in its entirety with oil being down by nearly 2% on the day, but it applies to almost everything else in broader markets. Equities are higher with European stocks leading the way, helped out by softer German and French inflation numbers this week. US futures are also slightly higher, so the overall market mood today is keeping steadier.</p><p style=““ class=“text-align-justify“>Meanwhile, bonds are also continuing their good form as a result with 10-year Treasury yields down to 3.70% from the open at around 3.83% yesterday. In Europe, 10-year German bund yields are down to 2.31% and that is a far cry from the peak at the end of last week at 2.56%.</p><p style=““ class=“text-align-justify“>As for the dollar, it is down across the board with some of the losses outpacing the gains from yesterday among major currencies. EUR/USD is up 0.8% to 1.0630 with GBP/USD up 0.9% to 1.2070 and pushing past its 200-day moving average, seen at 1.2027. USD/JPY is also being pinned lower by 0.5% to 130.30 levels after running into another test of 130.00 at the start of the session.</p><p style=““ class=“text-align-justify“>But the standout performer is the aussie, which is up by over 2% against the dollar with buyers pushing for a technical break as outlined earlier <a target=“_blank“ href=“https://www.forexlive.com/news/audusd-up-over-2-as-dollar-fumbles-after-yesterdays-hot-start-20230104/“ target=“_blank“ rel=“follow“>here</a>.</p>

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

<p style=““ class=“text-align-justify“>Is the 1.0700 mark just one step too far for EUR/USD buyers? Well, they seem poised at first on the break above the 200-day moving average (blue line) heading into December and then there was that break above the key trendline resistance (white line) since May 2021. It looked optimistic but today’s price action is a major blow for buyers, if the chart is anything to go by.</p><p style=““ class=“text-align-justify“>The pair is down 1.3% and looks set for its biggest daily drop since 23 September last year. The move today owes much to a broad bid in the dollar, which is seen gaining over 1% against almost all other major currencies as well.</p><p style=““ class=“text-align-justify“>It’s the new year and flows are the story in European trading today.</p><p style=““ class=“text-align-justify“>From a technical perspective though, the drop back below the broken trendline resistance is something to note as sellers also regain near-term control of the pair. It was a quick drop earlier in the session below both the 100 and 200-hour moving averages, seen at 1.0650 and 1.0637 respectively.</p><p style=““ class=“text-align-justify“>As such, sellers are in near-term control now and are seeking a further downside push to vindicate their agenda.</p><p style=““ class=“text-align-justify“>If we do see a daily hold below the broken trendline support noted above, and also below the 1.0500 mark, that will pave the way for a further drop towards the 200-day moving average next potentially – seen at 1.0319 currently.</p>

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

<p style=““ class=“text-align-justify“>For large parts of 2022, the theme in markets was to buy the dollar, sell everything else. And as we got closer towards year-end and the increasing likelihood of a Fed pivot, it was the other way around as the tables turned.</p><p style=““ class=“text-align-justify“>But to kick start the new year, stocks and bonds are bid today but that is somehow translating to a higher dollar as flows win out instead of the prevailing narrative that we have been so accustomed to last year. Here’s a snapshot of broader markets:</p><ul><li>Eurostoxx +1.4%</li><li>Germany DAX +1.3%</li><li>France CAC 40 +1.2%</li><li>UK FTSE +2.0%</li><li>S&P 500 futures +0.9%</li><li>Nasdaq futures +0.9%</li><li>Dow futures +0.8%</li><li>10-year Treasury yields down 8.7 bps to 3.745%</li><li>10-year German bond yields down 8.2 bps to 2.357%</li><li>10-year Italy bond yields down 10.5 bps to 4.447%</li></ul><p>On any other day in the final two months of last year, this would’ve been a more risk on sort of day. But not today, as the dollar and yen are running rampant across the board with the greenback notably picking up a strong bid in European morning trade.</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-catches-a-bid-to-start-the-session-20230103/“ target=“_blank“ rel=“follow“>Dollar catches a bid to start the session</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-turns-positive-on-the-day-now-20230103/“ target=“_blank“ rel=“follow“>USD/JPY turns positive on the day now</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-under-pressure-of-cracking-lower-as-dollar-sees-strong-bid-on-the-day-20230103/“ target=“_blank“ rel=“follow“>GBP/USD under pressure of cracking lower as dollar sees strong bid on the day</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/audusd-stumbles-lower-as-dollar-takes-charge-to-start-the-new-year-20230103/“ target=“_blank“ rel=“follow“>AUD/USD stumbles lower as dollar takes charge to start the new year</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/nzdusd-down-to-fresh-five-week-low-as-dollar-stays-on-a-tear-today-20230103/“ target=“_blank“ rel=“follow“>NZD/USD down to fresh five-week low as dollar stays on a tear today</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/audjpy-on-track-to-revisit-key-support-level-to-start-the-new-year-20230103/“ target=“_blank“ rel=“follow“>AUD/JPY on track to revisit key support level to start the new year</a></li></ul>

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

<p class=“MsoNormal“>Bitcoin
Market picture</p><p class=“MsoNormal“>
Bitcoin
has declined slightly over the past 24 hours – the bulls have still not decided
to go on the offensive. Perhaps it is because of an overhang of selling orders
from struggling miners.</p><p class=“MsoNormal“>The first cryptocurrency
is trading near $16.7K to start the day on Tuesday, having retreated from its
50-day moving average but maintaining a positive bias towards the upside within
the trend of several trading days. US exchanges return to action today to
increase liquidity, including in cryptocurrencies.</p><p class=“MsoNormal“>Traders
should be prepared that there may be attempts to form new market trends from
the new year. And it could be a decisive move upward or another sell-off after
a lull.</p><p class=“MsoNormal“>Regarding
seasonality, January is considered a neutral month for BTC. Over the past 12
years, Bitcoin has ended with growth on six occasions. The
average growth over the last 12 years has been 22%, while the average decline
has been 17%.</p><p class=“MsoNormal“>In the first
case, BTC could end January at around $20,100. Second, it could finish at about
$13,700, updating November’s lows. Meanwhile, in the last eight years, bitcoin
has declined in January on six occasions, giving buyers of the first
cryptocurrency little chance.</p><p class=“MsoNormal“>
Bitcoin News background</p><p class=“MsoNormal“>
The
popular YouTube blogger Coin Bureau believes that bitcoin still needs to bottom
out. In his opinion, we should expect BTC to drop to $10,000 during the first
three months of 2023.</p><p class=“MsoNormal“>Negative
sentiment in the crypto market will dominate until spring 2023, said the crypto
fund QCP Capital.</p><p class=“MsoNormal“>The Italian
parliament passed a bill to tax cryptocurrency traders. Traders will now pay
26% on profits made from digital trading assets. </p><p class=“MsoNormal“>On the other
side of the coin, Britain is introducing tax breaks for foreigners trading
through local brokers to make London a crypto trading hub, as it is now with
currencies and metals.

</p><p class=“MsoNormal“>This
article was written by <a target=“_blank“ href=“https://www.fxpro.com/“ target=“_blank“ rel=“follow“>FxPro</a>’s Senior
Market Analyst Alex Kuptsikevich.</p>

This article was written by FxPro FXPro at www.forexlive.com.

<p style=““ class=“text-align-justify“>This is consistent with the other state readings seen <a target=“_blank“ href=“https://www.forexlive.com/news/bavaria-december-cpi-92-vs-109-yy-prior-20230103/“ target=“_blank“ rel=“follow“>here</a> and as mentioned then, it would seem like we might get something along the lines of 8.4% to 8.7% for the national reading later today instead of the 9.1% estimated.</p>

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

<p class=“MsoNormal“>UPCOMING
EVENTS:</p><p class=“MsoNormal“>Wednesday:
US ISM Manufacturing PMI, FOMC Minutes.</p><p class=“MsoNormal“>Friday: US
NFP, US ISM Services PMI.</p><p class=“MsoNormal“>Welcome to
2023 everyone! If 2022 was a nice year in terms of trading opportunities,
this year is going to be even better, so get ready. Let’s first start from
where we left and continue from there…</p><p class=“MsoNormal“>Inflation is
showing signs of moderating. The last two <a target=“_blank“ href=“https://www.forexlive.com/news/us-november-cpi-71-yy-vs-73-expected-20221213/“ target=“_blank“ rel=“follow“>US
CPI reports missed expectations</a>, and since the CPI is a lagging indicator
and leading indicators were already pointing to a slowdown in the inflation
rate, we can expect the disinflationary trend to continue. </p><p class=“MsoNormal“>The <a target=“_blank“ href=“https://www.forexlive.com/news/us-november-non-farm-payrolls-263k-vs-200k-expected-20221202/“ target=“_blank“ rel=“follow“>labour
market</a> is one of the most lagging indicators and it kept on
showing strength throughout the 2022, which disappointed the Fed as they wanted
to see cracks in the data and a pickup in unemployment. In fact, they keep
complaining about the “extremely tight labour market” and this isn’t giving
them much confidence in letting go from their tightening process. </p><p class=“MsoNormal“>There were
expectations that the Fed would be less hawkish in its last FOMC meeting in
December as the CPI data missed expectations two times in a row, BUT the Fed
was more hawkish than expected in 3 key things:</p><p class=“MsoListParagraph“>· Following
the miss in the CPI report, Fed members had the chance to revise the Dot Plot
until Tuesday evening, so that is after the CPI report, BUT they chose not
to do it.</p><p class=“MsoListParagraph“>· The <a target=“_blank“ href=“https://www.forexlive.com/centralbank/fomc-dot-plot-and-central-tendencies-from-dec-2022-meeting-eoy-2023-48-20221214/“ target=“_blank“ rel=“follow“>Dot
Plot</a> showed an overwhelming consensus from the Fed members in hiking rates
to 5% or higher and remaining higher for longer as no cuts are expected
for 2023 and a 4.1% rate is expected in 2024. </p><p class=“MsoListParagraph“>· <a target=“_blank“ href=“https://www.forexlive.com/centralbank/powell-opening-statement-we-have-more-work-to-do-20221214/“ target=“_blank“ rel=“follow“>Fed
Chair Powell sounded resolute</a> in keeping at it and pushed back against
expectations for rate cuts in 2023. </p><p class=“MsoNormal“>As mentioned
earlier, the Fed won’t have the confidence in letting go until they see
unemployment picking up. The issue here is that they forecast unemployment
to rise to 4.6% in 2023 with no cuts expected. </p><p class=“MsoNormal“>This means
that they will pause hikes somewhere in the 5% area and likely stay there
unless unemployment deviates from their forecasts in which case it would be
too late as the domino effect takes hold. In the chart below you can see
how the Fed always underestimated the pain in the labour market.</p><p class=“MsoNormal“>This points
to a deep recession coupled with a possible overtightening from the Fed. So, the 2023
playbook, in my opinion, would be again to stay defensive as I expect the safe
haven currencies (USD, CHF <a target=“_blank“ href=“https://www.forexlive.com/centralbank/boj-is-considering-raising-its-inflation-outlook-thisd-pave-the-way-for-a-policy-pivot-20230101/“ target=“_blank“ rel=“follow“>and
this time also JPY</a>) to be preferred, the stock market and commodities to
fall further and the bond market to switch into a bull market. </p><p class=“MsoNormal“>On a side
note, the long US Dollar was the most crowded trade in 2022 and in such
instances, we can generally see huge unwinding once the narrative shifts. This
happened in the past months as the market looked forward to slowing
inflation and earlier than expected “Fed pivot”. </p><p class=“MsoNormal“>The Fed
ended this narrative, and the US Dollar should come back. In fact, the US
Dollar positioning went to the highest net short since July 2021 and lately
specs trimmed their net short positions. The long US Dollar trade is no longer
overcrowded, which is something you want to see if you want to go long again. </p><p class=“MsoNormal“>Technically,
in the DXY (US Dollar Index) chart below you can see a falling wedge pattern forming
(or an ending diagonal if you’re an elliottician). This is a reversal
pattern and signals a loss of momentum. Generally, the first target is the
top of the pattern, which would be in the 108 area, but all else being equal,
we should see it going even higher. This week we may see another spike
downwards if the market takes bad data as good news, but I expect that to be
faded eventually. </p><p class=“MsoNormal“>Wednesday: The US ISM Manufacturing PMI is expected to
dip further into the contractionary territory from 49 to 48.5. The trend is
expected to continue as the Fed keeps on tightening monetary conditions and the
recession worsens. Prices paid sub-index is something to keep an eye on as
it generally a leading indicator for inflation. </p><p class=“MsoNormal“>The FOMC
Minutes should just be a reminder for the market that the Fed is not on their
side, and they just want to get inflation back to their target. They also want
to break the market mentality of the “Fed Put”.</p><p class=“MsoNormal“>Friday: I expect
the US NFP to be the main market mover from now on. Even more than the CPI.
The report is expected to show 200K jobs added, down from the previous 263K but
still a solid number, and the unemployment rate to stay unchanged at 3.7%. Good
data should be bad for risk assets, but I expect also bad data to be bad for
risk assets as the risks shift to the overtightening and a deep recession
rather than the Fed pausing earlier or even cutting anytime soon. </p><p class=“MsoNormal“>The average
hourly earnings are expected to come at 5% Y/Y, down from the prior 5.1% and at
0.4% M/M, down from the prior 0.6%. If wages beat expectations again, I expect
risk assets to suffer as it will make the Fed even more uncomfortable. A miss
would be a welcome news, but the overtightening narrative coupled with the
recession should come first in the market’s mind. </p><p class=“MsoNormal“>The US ISM
Services PMI is expected to dip to 55 from the prior 56.5 reading. The services
sector has been showing resilience throughout the 2022 and worst part is that
the prices paid sub-index hasn’t come down as fast as its manufacturing
counterpart. </p><p class=“MsoNormal“>This is
something that keeps the “higher inflation for longer” narrative alive as the
inflation rate may come down but not enough for the Fed to achieve their target. Although I
expect the NFP to be much more important, keep an eye on this report as well as
it may exacerbate or reverse the NFP reaction depending on the outcome. </p><p class=“MsoNormal“>This article
was written by Giuseppe Dellamotta.</p>

This article was written by ForexLive at www.forexlive.com.

<p>Technical analysis of Bitcoin evaluates the crypto king by assessing previous prices and volume,. Technical analysts don’t analyze a security’s inherent worth, but instead utilize charts and other tools to uncover trends.</p><p>Technical analysis also uses patterns to predict future price changes. These patterns may be bullish, bearish, or neutral, indicating a price increase, decrease, or consolidation. <a target=“_blank“ href=“https://www.forexlive.com/Education/the-head-and-shoulders-pattern-20221209/“>Head-and-shoulders pattern</a>, <a target=“_blank“ href=“https://www.forexlive.com/Education/how-to-trade-by-triangle-strategy-20220120/“>triangles</a>, flags and pennants are <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“>typical chart patterns</a>.</p><p>Many times, in technical analysis we’ve also got ‚key levels‘, or key price levels: Important price level is a chart point where the price has found support or resistance and/or it is expected, in a probability of more than 50% (and hardly more than 85%), that these price points will expedite new and inrcreased market participation. On the mechanical under the hood, there are buy and sell orders that are typically waiting above and below key levels. So, these levels may be used to determine entry and exit locations for trading.</p><p>In the follow technical analysis vodthese procedures to analyze Bitcoin technically, according to key levels.</p><ul><li>A daily candle closing below $15500 would start a new chapter for the bears (more decline for BTCUSD) but in the meantime…</li><li>The decentralized digital currency seems to be at an interesting spot for early speculative traders or buyers that can be well paid later in terms of the high reward vs. risk ratio. </li><li>The video shows trade ideas with 2.6 and over 6 reward vs. risk ratios for new bulls. </li><li>Bitcoin above $18255 would mark another „confirmation“ for the bull case.</li></ul><p>Last but not least, after a terrible 2022 for Bitcoin, there are still strong market influencers that may think that BTC is done with the dip and may be interested to start a new year with a new increased price sentiment. While this is not technical analysis, it is also something to keep an eye out for.</p><p>Trade BTCUSD at your own risk and do visit <a target=“_blank“ href=“www.forexlive.com“>ForexLive.com</a> for additional perspectives.</p>

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

<p class=“MsoNormal“>Bitcoin has
added 1.4% in the last 24 hours, reaching the 16.7K level. It is a new attempt
to test the 50-day moving average on a general lull and an effort by the bulls
to paint a more optimistic technical picture with less strength while liquidity
remains depressed.</p><p class=“MsoNormal“>Bitcoin Technical
Analysis</p><p class=“MsoNormal“>This tactic
is already successful, as the total capitalisation exceeds 800 billion (+1.6%
in 24 hours).</p><p class=“MsoNormal“>The current
dynamic looks like an attempt to draw a line under a bearish 2022. We also note
that the December lows were higher than the November lows. But to argue for a
reversal, it is more prudent to wait for a renewal of the local highs rather
than relying only on the waning declines.</p><p class=“MsoNormal“>Closing the
day above the 50-day average (around 16750) might give new momentum to the
upside, and consolidation above 17K might be notable news in the quiet
information flow and serve as a decoy for the bulls.</p><p class=“MsoNormal“>At the same
time, we recall that since July 2022, overcoming the 50-day average served as a
trigger for selling on impressive volumes, and bitcoin soon renewed lows.</p><p class=“MsoNormal“>This article was written <a target=“_blank“ href=“https://www.fxpro.com/“ target=“_blank“ rel=“follow“>by FxPro</a>’s Senior Market Analyst Alex
Kuptsikevich.</p>

This article was written by FxPro FXPro at www.forexlive.com.

<ul><li>Prior 46.2</li></ul><p style=““ class=“text-align-justify“>The downturn in Germany’s important manufacturing sector eases in December, with an improvement in supply conditions helping to alleviate some of the pain from price pressures. That said, new orders were down for a ninth consecutive month as the outlook remains dim despite manufacturers being less pessimistic towards the end of the year. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“Some of the gloom surrounding the German manufacturing sector has been lifted, with December’s PMI survey showing the downturn in factory output levels easing, and less concern towards the year-ahead outlook. </p><p style=““ class=“text-align-justify“>“The survey signalled better availability of materials and with it an easing of the decline in production. Still, rapidly falling new orders remains an issue for many manufacturers, particularly intermediate goods producers (i.e. makers of components for other businesses), with high stocks being just one of the factors weighing on demand. </p><p style=““ class=“text-align-justify“>“With expectations remaining pessimistic, it suggests that in companies‘ minds the downside risks to future production continue to outweigh any growth opportunities. The outlook has, however, improved compared to the situation a few months ago, with concerns towards gas prices and supplies having subsided somewhat. </p><p style=““ class=“text-align-justify“>“On the price front, we’re seeing further evidence of disinflationary forces in the manufacturing PMI survey. Although still historically elevated, the rate of factory gate price inflation has more than halved from its peak in the spring of last year, as supply chain bottlenecks ease and firms face greater difficulty passing on cost increases to customers.“</p>

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