Markets Tread Water in Slow Day, Sterling Recovering

The markets are quiet today with a light economic calendar and slow news flows. European majors are generally higher, in particular with Sterling and Euro paring some earlier losses. Commodity currencies turned softer, but Yen is the weaker one. Dollar is mixed in between. Trading could remain subdued till Friday when UK GDP and Canadian job data are released.

Technically, AUD/NZD resumed near term rally from 1.0469 as supported by the hawkish RBA rate hike. It’s now pressing 61.8% projection of 1.0469 to 1.0935 from 1.0735 at 1.1023. Sustained break there could prompt upside acceleration to 100% projection at 1.1201. However, rejection by 1.1023, followed by break of 1.0885 will argue that the rebound has completed, and bring deeper fall to 1.0735 support and possibly below.

In Europe, at the time of writing, FTSE is up 0.66%. DAX is up 0.81%. CAC is up 0.47%. Germany 10-year yield is up 0.31 at 2.374. Earlier in Asia, Nikkei dropped -0.29%. Hong Kong HSI dropped -0.07%. China Shanghai SSE dropped -0.49%. Singapore Strait Times rose 0.23%. Japan 10-year JGB yield rose 0.0015 to 0.497.

More upside still in favor in sluggish ethereum and bitcoin

Crytocurrencies have been rather sluggish since the near term rebound lost momentum in late January. Yet, for now, there is no clear sign of a bearish reversal.

For Ethereum, further rally is expected as long as 1533 support holds. Current rise from 1071 is seen as the third leg of the pattern from 878.5. It might eventually turn out too be a sideway consolidation pattern. But stronger raise to 2028.9 resistance could be seen, or even further to 100% projection of 878.5 to 2028.9 from 1071.0 at 2221.4. But of course, break of 1533.0 will indicate short term topping. Further break of 55 day EMA would pave the way back to 1071 or even to 878.5.

As for Bitcoin, further rally is expected as long as 22314 resistance support holds. Rise from 15452 would target 25198. Strong resistance might be seen there to cap upside, at least on first attempt. On the downside, break of 22314 support will suggest short term topping and bring pull back to 55 day EMA.

WTI crude oil staying bearish despite strong rebound

WTI crude oil rebounded strongly yesterday, as lifted by news of outage of an oil export terminal after the earthquake in Turkey. But upside is capped below 55 day EMA, and far below 82.31 resistance.

For the near term, further decline is expected as long as 82.31 resistance holds. Price actions from 94.25 could be developing into a terminal triangle pattern, as the fifth wave of the whole down trend from 131.82.

If that’s the case, WTI should continue to lose downside momentum in the next decline, as reflected in persistent bullish condition in daily MACD. The end point of the down trend could be somewhere around 61.8% projection of 124.12 to 76.61 from 94.25 at 64.88, and 62.90 long term support.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1975; (P) 1.2035; (R1) 1.2109; More…

Intraday bias in GBP/USD remains neutral for the moment. Fall from 1.2446, as the third leg of the corrective pattern from 1.2445, could still extend lower. Below 1.1960 will target 1.1840 support and possibly below. But downside should be contained by 38.2% retracement of 1.0351 to 1.2445 at 1.1645 to bring rebound. On the upside, firm break of 4 hour 55 EMA (now at 1.2189) will bring retest of 1.2445/6.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Economic Indicators Update