NASDAQ 100 futures technical analysis before the FOMC meeting today

ForexLive.com, January 31, 2024

NQ technical analysis video

The NASDAQ 100 futures market has been in a trading range and just crossed down its value area low at 17500, which I also mentioned is an important price level to watch in my previous video, and if we CLOSE 2 CONSECUTIVE days below it, then bears regain control. This has not happened yet. The market may decline till an area of a potential double support level formed by a trend line and the bottom standard deviation of the value area. WATCH 17025 TO 17250 for a possibly reversal up.

FOMC Meeting

The Federal Open Market Committee (FOMC) is meeting today to discuss interest rates.While a ’snoozer; is expected, meaning that it may not change anything in the market yet, this type of an event is always a wildcard simply due to a word or two that may come in play with Jerome Powell.

Earnings Results influencing NQ till end of this week

Earnings results have been a major factor in the recent selloff in the NASDAQ 100 futures market. Google and AMD both reported disappointing earnings this week, and their stocks have fallen. Other tech stocks are also under pressure, as investors worry about the impact of rising interest rates on corporate profits.

1. AMD is declining apx 7%, GOOG is declining apx 5.5%
2. MSFT is declining apx 1.5% but may surprise a bit a turn greenish till the end of the week
3. We stll have major earnings reports by META, APPL and AMZN, till the end of the week

Unemployment Report on Friday, 02 Feb 2024

The Bureau of Labor Statistics will release the January unemployment report on Friday. The market is expecting the unemployment rate to remain at 3.9%. However, a weaker-than-expected report could trigger a selloff in the stock market.

The NASDAQ 100 futures market is facing a number of headwinds, including disappointing earnings results, rising interest rates, and the FOMC meeting. However, I am staying contrarian and still believe that there is a good chance for the market to reach my target of 18,000. Traders should stay adaptive to the market and be prepared to adjust their trading strategies accordingly. ALWAYS TRADE AT YOUR OWN RISK.

Additional Resources

• NASDAQ 100 Futures Technical Analysis
• NASDAQ 100 Futures Chart
• Google Earnings
• AMD Earnings
• FOMC Meeting
• Unemployment Report

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

When most people
hear about Forex trading, they imagine a bustling currency exchange office with
streams of people constantly exchanging one currency for another.

In the digital age,
however, the reality of Forex trading stretches far beyond these physical
spaces. It’s an expansive world where the uninitiated may feel like sailors
entering choppy seas without a map. Yet, for those who take the time to learn
the ropes, these waters hold the potential for fascinating journeys and
rewarding destinations.

Charting a Course Through Dynamic Forex Markets

Navigating the Forex
market requires understanding its unique characteristics – it’s about knowing
various currency pairs, leveraging positions for maximum potential, and
tracking market hours that span the globe.

Moreover,
geopolitical events can send ripples across the market, influencing currency
values and opening windows of opportunity for the astute trader. To ride these
waves, one must become adept at reading technical indicators and making timely
decisions, sometimes with the help of automated trading tools that work around
the clock.

While Forex trading
may seem unpredictable, a trader who masters the art of technical and
fundamental analysis can anticipate market trends. Access to real-time global
news, an understanding of market sentiment and a solid grasp on economic
calendars can arm a trader with necessary insights.

Traders who equip
themselves with comprehensive market knowledge stand to navigate the Forex
waves with confidence and precision, transforming seemingly random fluctuations
into strategic trading decisions.

Exploring Opportunities in Metal Trading

Forex trading often
involves more than just currencies. Many traders also find allure in the world
of precious metals. Assets like gold, silver and platinum can offer a variety
of trading opportunities. Economic indicators such as inflation rates or employment data often reflect
in the fluctuating prices of these metals.

Thus, incorporating
them into a diversified trading portfolio might serve both as a buffer against
inflation and a play on market sentiment. Interestingly, metal commodities also
exhibit seasonal trends, which seasoned traders might leverage to their advantage.

Notably, trading in
metals can complement currency trades, offering a way to hedge against currency
risks. Furthermore, recognizing correlations between currencies and commodities
such as gold or oil, often referred to as ‚commodity currencies‘, can open up a
new dimension in trading strategies.

By understanding
this dynamic interplay, traders can craft a multi-faceted approach to the
market, considering both currency and commodity trends for a more robust
investment portfolio.

Diverse Account Options for Customized Trading
Strategies

The trading
experience can vary significantly based on the type of account one chooses.
Novice traders might benefit from demo accounts where they can practice without
risk, while experienced traders may prefer accounts with options for higher
leverage.

Some platforms offer
VIP services suited to high-volume traders, providing additional tools and
resources to those willing to delve deeper into the trading realm. The key is
to match your trading style with the right account type, ensuring that the
benefits of leverage and margin requirements are balanced against your risk
tolerance.

Savvy traders often
take a tailored approach to Forex trading by carefully selecting account
features that best suit their trading style. From accounts designed for those
who prefer extensive analysis and manual trading to those optimized for
automated trading systems, the choice heavily influences the trader’s journey.

Identifying personal
goals and risk tolerance is paramount in constructing a suitable trading
environment that promotes both growth and security.

Global Markets at Your Fingertips: Navigating
International Trading Opportunities

The modern trader is
no longer confined to their local economy – they can tap into international
trading opportunities that span the globe. By participating in these global
markets, traders can introduce themselves to new currencies and the risks and
benefits associated with them.

Seasoned traders
often find exotic currency pairs appealing due to their potential for high
volatility and large swings, which can translate to substantial profits if
navigated wisely. To thrive in this diverse marketplace, understanding
cross-border partnerships and regulations becomes crucial.

Diving into
international markets can be enriching, as exposure to diverse economies can
offer a broader perspective on global finance. Successful traders pay close
attention to international economic reports, central bank
announcements and shifts in trade relationships to seize trading opportunities
whenever they arise.

Hence, an astute
approach to these markets will involve staying abreast of a complex web of
international developments that drive currency values on a global stage.

Balancing Risk and Reward in CFD Trading

Among the
instruments available to Forex traders are Contracts for Difference (CFDs),
which allow participants to speculate on the price movements of currencies,
indices, commodities and more without the need to own the underlying asset.

Though CFDs can
amplify gains, they also increase the risks, which makes risk management tools
indispensable in these trades. By understanding when to take long or short
positions, and employing strategies to minimize exposure, traders can balance
the risk and reward inherent in CFD trading and strive for successful market
engagements.

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

The JOLTS job openings yesterday here showed that markets are susceptible to data releases even as we await the Fed policy decision later today. It is jobs week in the US after all and this builds up towards the non-farm payrolls report on Friday. For today, there is the ADP employment data that will be released.

More often than not, the data here feels like going to the roulette table. It isn’t the best, or even a good, indicator of what to expect on Friday. However, it is still a release that traders tend to react towards and that will make it an appetiser before the Fed later.

In December, the ADP employment change showed an increase of 164k and that was above estimates of 145k. For the January release, it is expected to show an increase of 145k.

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

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in May.

JPY

• The BoJ kept its monetary policy unchanged as expected with interest rates at
  -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
• Governor Ueda repeated once again that they won’t
  hesitate to take easing measures if needed but he’s becoming more optimistic on
  achieving their 2% target.
• The Japanese CPI eased further across all measures
  which makes it even harder to expect a rate hike from the BoJ anytime soon.
• The latest Unemployment Rate ticked lower hovering around cycle
  lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The latest Japanese wage data missed expectations by a big margin
  and as a reminder the BoJ is focusing on wage growth to decide whether to tweak
  its monetary policy.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, fell much more than expected.
• The market expects the BoJ to hike
  rates in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY rejected
the cycle high at 188.67 as the sellers stepped in with a defined risk above
the level to position for a drop into the 184.28 support. The
price has been consolidating around the cycle high but recently we got a
breakout, which might be a bad omen for the buyers.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been trading inside a rising channel into the cycle high and once we got the
breakout, the pair started to consolidate between the cycle high and the 187.30
level. This week though the price broke out and the sellers should now increase
their bearish bets into the 184.28 support. The buyers, on the other hand, will
want to see the price getting back above the support now turned resistance to
invalidate the bearish setup and position for a rally back into the cycle high
targeting a breakout.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bearish setup with the price breaking out of the range and rallying
back to retest the resistance before falling back again. If the price were to
break below the 186.90 level, we can expect even more offers coming into the
market.

Upcoming Events

Today we have the US ADP and the US Employment Cost
Index before the FOMC rate decision later in the day. Tomorrow, we have the BoE
rate decision followed by the latest US Jobless Claims figures and the ISM
Manufacturing PMI. On Friday, we conclude the week with the US NFP report.

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

USD

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The US GDP beat
  expectations by a big margin.
• The US PCE came mostly in line with expectations and
  the Core 3-month and 6-month annualised rates are now below the Fed’s 2%
  target.
• The labour market continues to soften but remains
  resilient with US Jobless Claims missing expectations last week but hovering around
  cycle lows.
• The latest US PMIs beat expectations by a big margin for
  both the Manufacturing and Services measures.
• The US Retail Sales beat expectations across the board.
• The University of Michigan Consumer Sentiment report jumped to the highest levels since
  2021.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market sees a 50/50 chance of a rate cut in
  March.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in May.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD bounced
on the key support around
the 1.2610 level and rallied into the resistance around the 1.2800 handle
before consolidating again. There’s not much to glean from this timeframe as
the price trades right in the middle of the range, so we need to zoom in to see
some more details.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
broke through the upward trendline
yesterday but bounced back strongly following the lower than expected US
Treasury quarterly refunding estimate. The sellers though leant on the red 21 moving average and the
pair this morning fell again below the trendline. The target should be the
support zone around the 1.26 handle with a further breakout likely leading to a
drop into the 1.25 level.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that besides
the 4-hour 21 moving average, the sellers had also the previous swing high for confluence. If
the price were to reverse and rally again, the sellers will likely lean on the
downward trendline while the buyers will want to see the price breaking higher
to increase the bullish bets into the resistance zone.

Upcoming Events

This week is going to be a really busy one with the FOMC
rate decision and lots of economic data on the agenda. We begin today with the
US Job Openings and the US Consumer Confidence reports. Tomorrow we will see
the US Employment Cost Index and the ADP data before the FOMC rate decision
later in the day. On Thursday, we have the BoE rate decision and later in the
day the latest US Jobless Claims figures and the ISM Manufacturing PMI.
Finally, on Friday, we conclude the week with the US NFP report.

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

• Rate cuts by 25 bps amount is preferable
• But it is not a given that rate cuts would happen at every meeting, pauses are possible
• GDP data supports view that Eurozone economy is facing soft landing scenario

In the big picture, one can agree to his remarks above. However, considering what markets have priced in now, there is a decent correction to be had if the first move actually does come in June. The odds of a April rate cut are now at ~92%, down slightly after having been fully priced in yesterday.

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

What are ETFs?

The term ETF stands for Exchange Traded Fund, which is a
fund containing Bitcoin and is traded on the stock market as shares. These
shares directly track the price of Bitcoin, meaning your gains and losses are
directly tied to Bitcoin’s price movements. The supply and demand for these
shares, when the stock market is active, directly influence the price of
Bitcoin. It’s noteworthy that the SEC is responsible for overseeing these
funds.

The
purpose of creating Bitcoin spot ETFs

Institutional/organizational investors
faced two main risks when investing in Bitcoin. Recent unfavorable events in
the crypto industry, such as the CoinEx exchange hack, the dissolution of HTX
(formerly Huobi), the closure of FTX, and vulnerabilities occasionally observed
in wallets, have naturally raised concerns about custody or holding large
volumes of Bitcoin.

Moreover, regulatory and legal risks
posed by regulators are also a concern for organizations intending to invest in
Bitcoin. Now, Bitcoin ETFs provide a solution to mitigate these two risks for
organizations. Companies like BlackRock, Fidelity, and Ark Invest offer their
own Bitcoins in the form of shares on the market. It seems that organizations
and major investors intending to invest in Bitcoin entrust these companies with
the responsibility of holding their Bitcoins, thereby safeguarding them from legal
and regulatory challenges.

Is Bitcoin spot ETF the only Bitcoin fund up to now?

For a long time, we’ve witnessed the
activity of Bitcoin futures ETFs and Bitcoin trust funds in the United States;
let’s examine both separately! Well, Bitcoin futures ETFs were essentially
future contracts traded, for example, on the Chicago Mercantile Exchange,
without the need for actual Bitcoin transactions. Consequently, upon the
approval of Bitcoin futures ETFs a few years ago, not only did we not have a
positive impact on the price of Bitcoin, but also due to manipulations that
occurred, a volatile and heavy price cycle was created. In Bitcoin trust funds,
companies like Grayscale purchased a limited number of Bitcoins and converted
them into shares. The price of these shares aligned with the movement of
Bitcoin prices, and we consistently witnessed a gap between the share prices
and the actual price of Bitcoin. The share prices were determined by their own
supply and demand, hence having no specific impact on the price of Bitcoin.
However, the story differs with Bitcoin spot ETFs, where the supply and demand
of Bitcoin shares directly impact the price of Bitcoin!

A few years ago, with the approval of
gold spot ETFs, we witnessed an explosive growth in the price of gold. Are we
envisioning something similar for Bitcoin?

No, from a technical perspective,
these two asset classes are not directly comparable! The first difference
relates to the market value of these two assets, and secondly, at that time,
gold was widely accepted as a fiat reserve in many countries. Therefore,
comparing these two is fundamentally flawed.

An overlooked aspect during the approval of Bitcoin spot
ETFs

Before Bitcoin spot ETFs were accepted on January 10th,
all applicant companies were striving to have actual Bitcoin for their proposed
Bitcoin shares. However, the SEC did not approve this, and companies were
compelled to have cash for the Bitcoin shares they intended to offer. It is
worth noting that major financial companies like BlackRock, with their
intelligent advisors and analysts, were well aware that their demand would
likely boost Bitcoin prices. Consequently, they strategically made their
purchases at lower prices in advance! Given that they cannot use the actual
Bitcoins they purchased, it becomes easier for them to sell or save profits.

The reason of decline in Bitcoin shortly after the
approval of Bitcoin spot ETFs

Firstly, financial markets generally respond more to
expectations than to events. The market expected a significant influx of
capital into Bitcoin with the approval of Bitcoin spot ETFs, which did not
materialize. „In financial markets, one should generally ‚buy the rumor
and sell the news.'“

Secondly, we observed continuous and substantial outflows
from Grayscale’s Bitcoin ETF, which could have two reasons:

a) Investors
seek ETFs with better performance and liquidity.

b) Grayscale’s
sale of Bitcoin shares due to the bankruptcy of FTX exchange, With the
permission of the court.

Reflection of Bitcoin Spot ETF Activity

With the introduction of Bitcoin ETFs to the U.S. stock
market, we expect increased volatility in the crypto market during the New York
trading session! The New York session, based on the global clock, spans from
13:00 to 22:00, reaching its peak fluctuations from 20:00 due to approaching
the daily close.

Since the approval of Bitcoin spot ETFs implies Bitcoin’s
entry into the U.S. stock market, it will significantly increase the
correlation between the crypto market and the stock market compared to before!
Consequently, if stocks experience a decline, it will have a clear negative
impact on Bitcoin prices.

In the U.S. stock market, given macroeconomic issues and
the fact that the start of the annual candle was bullish, I don’t anticipate a
favorable situation for the U.S. stock market in 2024!

Advantages and Disadvantages of Bitcoin Spot ETFs

1. By
mitigating custody and regulatory risks for organizations, a positive impact on
Bitcoin’s long-term outlook is expected. However, the mid-term and short-term
price behavior will depend on the capital flow into these ETFs and will be
influenced by various factors.

2. The
United States has long sought ways to control the crypto market, even
introducing tools like CBDC (Digital Dollar) for this purpose, which has
remained unsuccessful so far. Now, imagine a future where a massive amount of
Bitcoin is accumulated by giant U.S. companies. The result would make market
control by the government easier, contradicting the decentralized nature of the
crypto industry!

3. From
a technical perspective, Bitcoin spot ETFs are not attractive.

Suppose, in the future, Bitcoin spot ETFs attract
significant capital:

· Reduced
network transactions

· miner’s
income decrease (the heart of the Bitcoin network)

· Decreased
mining profitability

· Influence on network health and miner capitulation

Evaluating the overall performance of Bitcoin ETFs so far

Grayscale, as the world’s largest Bitcoin fund, decided
to sell about 600,000 of its collected Bitcoins in the spot market after the
approval of Bitcoin spot ETFs. Over the past two weeks, Grayscale has sold
around 150,000 of its Bitcoins on the Binance spot market. Interestingly,
Bitcoin ETFs in the U.S. stock market have bought approximately the same
amount.

Should we wait for other crypto ETFs?

it seems unlikely that the U.S. Securities and Exchange
Commission (SEC) will approve additional ETFs soon. They are likely to evaluate
the performance of approved ETFs before considering more approvals. Currently,
some major financial management companies, such as Grayscale and BlackRock,
have applied to establish Ethereum spot ETFs. As of the writing of this
article, all applications are delayed by the SEC, with a 50% chance of a final
decision on Ethereum ETFs in May. If no decision is made in May, the final
decision by the SEC will likely be postponed until after the U.S. presidential
elections in November.

Additionally, recent mysterious and indirect statements
in interviews with Larry Fink (CEO of BlackRock) and the CEO of Ripple
regarding the possibility of establishing an XRP ETF have strengthened
speculations about the potential formation of such ETFs in the future.

How do the United States Securities and Exchange
Commission (SEC) and Commodity Futures Commission (CFTC) look at spot bitcoin ETFs?

Mr. Rostin Behnam, the head of the
CFTC, expressed concerns about the risks and dangers of spot Bitcoin ETFs,
recently approved by the SEC. Acknowledging his Iranian origin, he emphasized
the need for accelerated legislative efforts to regulate the crypto industry.
It’s noteworthy that 2024 is considered the year of regulatory framework
establishment in the crypto field.

Gary Gensler, after approving spot
Bitcoin ETFs, remains cautious in his press statement, highlighting Bitcoin’s
potential involvement in illegal activities such as money laundering, financing
terrorism, and circumventing sanctions. Gensler warned about the overall
investment risks associated with Bitcoin. In a specific part of his statement,
he clarified that approving the listing of Bitcoin ETFs doesn’t necessarily
imply SEC’s endorsement or rejection of Bitcoin, emphasizing SEC’s disclaimer.

Should we expect the launch of Bitcoin
spot ETFs in other countries?

One of the countries we anticipate to
grant approval for Bitcoin spot ETFs in the first quarter of 2024 is Hong Kong.
Despite its initial appearance as a small country in East Asia, Hong Kong holds
significant financial importance, serving as a special administrative region
for China. Despite China’s general prohibition and adversarial stance towards
the crypto industry, Hong Kong is considered a unique financial testing ground,
being a financial window for China.

It’s noteworthy that the Securities
and Futures Commission (SFC) in Hong Kong has specified that trading permission
is granted only to cryptocurrencies with a minimum presence in two out of five
indices: Nasdaq, Bitwise, 21Shares, Galaxy, and WisdomTree. Therefore, if
future ETFs, besides Bitcoin, are to be approved, they are likely to be limited
to cryptocurrencies that meet these criteria in Hong Kong.

These alternative coins may include:

▪️ ADA

▪️ AVAX

▪️ MATIC

▪️ LINK

▪️ ETH

▪️ LTC

▪️ BCH

▪️ DOT

▪️ SOL

▪️ XRP (uncertain)

This article was written by Elnaz Javanshir.

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

• Economic confidence 96.2 vs 96.2 expected
• Prior 96.4
• Industrial confidence -9.4 vs -9.0 expected
• Prior -9.2
• Services confidence 8.8 vs 8.0 expected
• Prior 8.4

Economic sentiment eased slightly on the month as concerns are still lingering in the manufacturing sector. But at least services sector sentiment is improving, helping to offset a little the overall pessimism in the economy.

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

• Prior -0.1%

The Eurozone economy narrowly avoids a technical recession in the final quarter of last year. That is largely thanks to stronger growth in the periphery nations, with the standouts being Spain and Portugal. The more promising performances there helped to offset the poor showing in the region’s largest economy as seen earlier here.

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

The dollar might be trading a bit more sluggishly today but the euro is underperforming even more. Traders have stepped up ECB rate cut bets slightly on the day and that is enough to put a drag on the single currency. EUR/USD is down 0.3% to 1.0818 and is now threatening a break under its 200-day moving average (blue line).

The key technical support level is seen at 1.0841 currently. And it has acted as a floor for price action on the daily chart in recent weeks. The daily closes have come in above that as buyers are trying to stay in the game. But are we due for a downside break today or some time this week?

It’s going to be a crucial week for both the euro and dollar, in adding to the technical development above.

For the euro, we’re going to be getting key economic data in the days ahead. The preliminary Q4 GDP releases will be alongside the more anticipated inflation data and all of that will play a part in impacting the ECB rates outlook.

As for the dollar, the big one to watch will be the FOMC meeting. While the policy decision in itself is a non-event, Powell’s press conference could deliver some fireworks. Besides that, there is also jobs data this week with the non-farm payrolls on Friday in the spotlight.

So, what does this mean for EUR/USD?

While we are observing a potential technical break as seen above, there are going to be many other factors in play during the course of the week. For now, a firm break under the 200-day moving average will put the 1.0800 mark in play next. Beyond that, the 100-day moving average (red line) could still add some support for buyers; vice versa – especially if other events line up later this week.

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