Daily Market Outlook, August 4, 2022

Daily Market Outlook, August 4, 2022 Overnight Headlines Bank Of England On Precipice Of Largest Rate Hike Since 1995 Fed’s Kashkari: Very Unlikely Will Cut Interest Rates Next Year Taiwan Braces For Impact From China Military Post Pelosi Trip White House Lobbies Dems Against Aims Deepen Taiwan Ties China Locks Down Part Of Tropical Tourist Hub, Covid Spreads Sinema Seeks Private Equity Breaks Hold, Curb Corporate Tax Eyeing Russia, US Senate Backs Finland, Sweden Joining Nato Ukraine Pres Seeks Direct Talks With Xi Amid War With Russia Iran, US Set To Resume Talks In New Bid To Save Nuclear Deal Truss To Look At Changing Bank Of England Inflation Mandates Brazil Hikes By 50Bps To 13.75%, Signal Another Hike Possible Walmart Slashes 200 Corporate Jobs As Costs, Inventory WeighThe Day Ahead Most Asian equity markets are up this morning seemingly lifted by optimism regarding profit reports and possibly buoyed by yesterday’s rise in US equities. The oil price has moved sharply lower overnight as reports of rising inventory levels in the US spark concerns that demand for oil is slowing. Several Federal Reserve speakers yesterday stressed that lowering inflation remained the US central bank’s number one priority and that interest rates were likely to move higher. Today’s policy update from the Bank of England’s Monetary Policy Committee (MPC) is likely to be the key event of the week for UK markets. A sixth successive increase in Bank Rate is widely expected, but there is some uncertainty over its size. Our base case forecast is for another 25 basis point rise, but there is a strong chance that the MPC will deliver a larger increase of 50bp and markets appear to be almost fully discounting such an outcome. There were hints of this at the time of the last update in June and since then comments from some BoE policymakers, including BoE Governor Bailey confirmed it as a possibility. Economic data since the June update have actually been mixed. Nevertheless, the possibility of at least a small majority of MPC members supporting a larger hike is high. However, if they do so they will probably describe it as front-loading tightening rather than a sign that rates need to rise by much more than previously indicated. In addition to the policy rate announcement, expect the BoE’s updated forecasts to again highlight that market-based measures of interest rate expectations, which currently see Bank Rate peaking around 2.75-3.00%, are excessive. Notably, while the BoE will probably again lift its forecast for the near-term peak in inflation, to around 12% (in October), expect their medium-term projection based up on the market-implied interest rate path to still show inflation moving below 2%, and potentially by more than shown in the forecasts from May. Meanwhile, the BoE’s GDP growth forecasts for 2022 and 2023 are likely to be downgraded, not least due to the more persistent hit to households’ spending power from higher inflation. Finally, the MPC will also provide an update on its strategy for ‘active’ gilt sales. It seems likely that a vote to commence such sales may take place at the September MPC meeting, which would pave the way for them to potentially begin in October. Today the MPC may confirm timings and give some indication of the intended pace of selling, at least for the near term.FX Options Expiring 10am New York Cut EUR/USD: 1.0100 (1.22B), 1.0150 (2.40B), 1.0200-05 (1.46B), 1.0215 (622M) EUR/USD: 1.0225-30 (1.06B), 1.0295-1.0300 (1.31B). EUR/JPY: 134.00 (403M) USD/JPY: 133.00 (1.41B), 134.80-85 (1.08B), 135.00-05 (2.14B) EUR/GBP:0.8400-05 (370M), 0.8415 (300M), 0.8560 (350M) USD/CHF: 0.9780 (500M). USD/CAD: 1.2750 (745M), 1.2900 (540M) AUD/USD: 0.6975 (354M), 0.7000 (584M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 Choppy range trading continues – large 1.0150 strikes 1.0150 2.396 BLN and 1.0200/15 2.218 BLN are today's close strikes Off 0.1% after closing a touch firmer in choppy offshore markets EUR/USD has been in a range since mid July, as the holiday season kicks in Pair needs a trigger to spark a move - upcoming NFP data a potential catalyst Resistance 1.0250/60 stronger offers seen to 1.0350/60, support 1.0100-05, 1.0070-75 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2280 Softer as market awaits 50pt BoE hike -0.1% early with the USD a touch firmer after closing off 0.1% Bank of England widely expected to deliver a 50pt hike Raging inflation, vulnerable sterling, aggressive Fed, ECB suggest 50pt Stalling economy could add a note of caution in BoE statement and speech Offers sited at 1.2280/1.23 bids 1.2090 20 Day VWAP is bullish, 5 Day bearishUSDJPY Bias: Bearish below 134 Looks to be about options today, below and above USD/JPY off from 134.14 earlier this morning to 133.43 before bouncing Massive option expiries today from 134.25 look to have played a part Some bounce from the EBS low, well ahead of massive expiries at 133.00 Total $960 mln in expiries between 134.25-45, $1.1 bln 134.80-85, more above 133.00 sees $1.4 bln in expiries today, also 134.00-05 total $481 mln Tomorrow to see $1.7 bln in expiries at 134.00 strike, 133.25-30 $532 mln Bears target a test of 130 Offers seen at 135.10 20 Day VWAP is bearish, 5 Day bullishAUDUSD Bias: Bearish below .7050 Higher as Wall Street rallies US yields ease AUD/USD opens +0.46% and was best performing major currency Wednesday Strong Wall Street gains and fall in US 10-year yield helped to underpin AUD up on all crosses despite fall in key commodities Offer at .70 being eroded as price is accepted above .70 bulls target .71 test AUD/USD support now sited at .6890 20 Day VWAP is bullish, 5 Day bearishBTCUSD Bias: Bearish below 25.3K BTC chopping around 23k Risk-on mood in Asia buoys crypto, but Nasdaq futures -0.2% Increased regulation may accelerate crypto maturity Bulls need a close above 25k to gain significant upside momentum Closing below 21k would be a noteworthy downside development 20 Day VWAP is bullish, 5 Day bearish

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Bitcoin and Gold are on the Rise

Bitcoin has formed the flag and broke the trendline. Now, the asset is trying to break the level of 23500. Bitcoin is on the rise and might hit the level of 25500 soon.Gold has pulled from the downtrend and dropped. The asset is likely to pull back from the broken monthly trend denoted by the thick blue line on the chart and face resistance at the level of 1800.The currency pair EUR/USD broke the local uptrend resembling a bearish flag.Currently, the asset’s price is trying to remain behind the broken pattern and might jump soon. So, let’s wait and see what is about to happen next.

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John Wood Group: needs polish, but has plenty of potential

Oilfield engineer John Wood’s share price has underperformed, its prospects are solid and it looks too cheap

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China’s property downturn deepens

Chinese house prices have fallen for ten months in a row, made worse by a residential “mortgage strike”.

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Enjoy the bear market rally while it lasts

Investors seem to think that a weaker US economy will cool inflation and see the Fed relent on interest rate rises. But that optimism may be misplaced, with July’s stockmarket gains looking very much like a bear-market rally.

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Britain’s resilient blue chips – a refuge in the inflationary storm

The UK's blue-chip FTSE 100 index has been the best-performing major stockmarket index so far this year.

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Daily Market Outlook, August 3, 2022

Daily Market Outlook, August 3, 2022 Overnight Headlines White House Aim To Calm Tensions Over Pelosi Taiwan Visit Pelosi Vows US Won’t Abandon Taiwan In Faces Of Pressure Fed’s Bullard: Can Slow Inflation Without Sparking Recession Fed's Mester: More Work To Do As Inflation Not Yet Peaked China Imposes Taiwan Economic Curbs With Sand, Fruit Ban China Services Activity Expand, Quickest Pace In 15 Months Chinese Hub Yiwu Introduce Covid Restrictions, Locks Down US Senate Votes Today On Finland, Sweden Nato Accession Candidate Truss Extends Lead Over Sunak In Leadership Bid UK Survey Report Now In Recession, Outlook For Stagflation OPEC+ Watchers Sceptical Biden’s Call For Oil To Be Heeded Samsung, SK Hynix Turn China Exposure Following Chips ActThe Day Ahead Most Asian equity markets are up this morning. That may in part reflect relief that while the Chinese authorities have criticised the visit by US Congressional leader Pelosi to Taiwan they have not yet announced any major retaliatory actions. Indeed, reports suggest that the US and Chinese Presidents may still meet in person near term. In contrast to the weak outturns for other Chinese PMI data in July the services PMI unexpectedly rose to its highest level in more than a year. Meanwhile, Australian retail sales rose by more than expected in Q2. OPEC meets today but reports suggest that it is unlikely to significantly boost oil supply targets given the fall in the price over the past month. Today’s data calendar is dominated by July PMI updates for the services sector. However, in the case of the UK and the Eurozone these are second readings and they are not expected to be revised significantly from their respective initial outturns. Those first estimates for July showed the UK services activity index at a 17-month low (53.3), although more positively it still held above the 50 level that signals expansion and some firms said they expected the slowdown to be short lived. There were also some signs of inflationary pressures easing, but wage pressures remained “intense”. The initial July reading for the Eurozone services activity index held only just above the 50 level, as it recorded a 15-month low (50.6). The main drag was a fall in activity in Germany. Input cost inflation slipped to a five-month low but wage pressures still seemed to be elevated. Also, out in the Eurozone today is June retail sales. Already released data for German sales, which showed a sharp monthly decline, points to possible downside risks compared to a consensus forecast of no growth. The US ISM services index for July is new data. Markets will be looking for signs of faltering activity and easing inflationary pressures to justify the recent sharp fall in Treasury bond yields. After the input price reading in the ISM manufacturing index fell to its lowest level in almost two years there is some expectation that the services measure may also slip sharply. Factory orders for June will provide a further indication of output trends with already released data for durable goods orders pointing to a sizeable rise. Three Fed policymakers are scheduled to speak today. They are likely to repeat the rhetoric from other US central bank officials this week, that inflation remains their number one concern and so further interest rate hikes remain on the cards.FX Options Expiring 10am New York Cut EUR/USD: 1.0100 (695M), 1.0150 (687M), 1.0195/1.0200 (1.86B), 1.0250 (578M) USD/JPY: 131.25 (530M), 131.50 (495M), 132.50 (550M) EUR/JPY: 135.85 (325M), 136.00 (340M). AUD/USD: 0.7150 (1.01B) USD/CHF: 0.9445 (350M), 0.9550 (401M). EUR/CHF: 0.9700 (520M), 0.9820 (1.05)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 Hawkish Fed speak sent US yields higher Mood shifted when US 10-year yield eased to below 2.71% now 2.76% EUR/USD back to moving on swings in US Treasury yields Key US data this week likely to dictate moves in bonds and FX Resistance 1.0250/60 stronger offers seen to 1.0350/60, support 1.0100-05, 1.0070-75 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2280 Modest risk on as China response to Taiwan mostly verbal so far NIESR warns millions will join breadline in recession-hit UK UK July final service PMI due at 0830 GMT BoE rate decision Thursday; 50 bps hike is consensus forecast Offers sited at 1.2280/1.23 bids 1.2090 20 Day VWAP is bullish, 5 Day bullishUSDJPY Bias: Bearish below 134 Market thin however, break of range not unthinkable on fresh flows Big, one-off flows seen responsible for recent volatility Japanese importers back in this morning, good buys into Tokyo fix Talk of good, one-off sale from Japan player yesterday Tokyo talk that the sales actually came from a Chicago hedge fund Also talk Japanese long US assets bought back hedges on hold above 130.00 Bears target a test of 130 Offers seen at 134 20 Day VWAP is bearish, 5 Day bearishAUDUSD Bias: Bearish below .7050 Recovers all of early losses as US yields off highs AUD/USD is back above 0.6920 after trading down to 0.6886 earlier USD was bid early and AUD/USD stops below 0.6900 became an easy target With RBA decision out of the way, AUD/USD will be driven by external factors Offer at .70 being eroded as price is accepted above .70 bulls target .71 test AUD/USD support now sited at .6890 20 Day VWAP is bullish, 5 Day bearishBTCUSD Bias: Bearish below 25.3K BTC chopping around 23k Michael Saylor steps down as MicroStrategy CEO Saylor will assume the role of an executive chairman, focusing more on the company's Bitcoin acquisition strategy and other crypto-related initiatives Bulls need a close above 25k to gain significant upside momentum Closing below 21k would be a noteworthy downside development 20 Day VWAP is bullish, 5 Day bearish

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Market Update – August 3 – Market “pushed and pulled”

The market was pushed and pulled by geopolitical risks and uncertainties, earnings ups and downs, Fed tightening angst and recession risks.

USDIndex bounce to 106.38 currently steady at 106, Yields which spiked sharply higher with selling persisting into the close (10yr 2.746% having challenged 2.51% overnight) dragged by hawkish Fedspeak and the safe arrival of Pelosi. The safe-haven Yen continued its slide. US Stocks ended in the red. Asian markets mixed as China has its warheads trained on Taiwan but on the flipside markets try to weigh growth risks and the Fed outlook (Hang Seng & Nikkei 0.5%, CSI 300  -0.2%). European FUTS also lower. (-0.6%).  Oil at $94, Gold holds over $1750  and BTC down under $23k.

Fed’s Mester said below trend growth is not a bad outcome, and it is necessary to get inflation under control. Fed President Daly said the FOMC is is likely to raise rates and keep them high for a while, in her comments in a LinkedIn interview – ‘Nowhere Near’ Finished With Inflation Fight.

Data: A surprisingly strong bounce in German exports, left the German trade balance with a solid surplus.  China Services PMI readings also looked pretty strong – acceleration in activity. Swiss CPI inflation held steady at 3.4% y/y.

• USDIndex managed to climb back over 106.000 but it was weaker overnight, holding the 105.000 handle for a third straight day. YEN has given up some of its haven bid & EUR and GBP have also slumped.
• Equities – USA30 tumbling -1.23% (32.4K), the USA500 off -0.67% (4.1K) and the USA100 -0.16% lower (below 13K).
• Yields 10-year has already corrected -3.5 bp at 2.71% today and the 10-year Bund yield is down -1.8 bp at 0.79%.
• Oil – steady at $94.00 from $96.30 ahead of the OPEC+. It is likely to keep output unchanged in September, or raise it slightly.
• Gold – rose in the morning to$1768 after a  sharp decline yesterday.
• Bitcoin directionless, at 22.98K.
• FX Markets – EURUSD dip to 1.0155 zone, USDJPY is at 133.18, as haven flows into the yen have recede. Cable turns below over 1.2200 again.

Today – OPEC+ meeting, EU Retail Sales and US ISM Services . Earnings: CVS Health, Booking Holdings, Moderna, Regeneron etc.

Biggest FX Mover @ (06:30 GMT) USDZAR (-0.70%) posted an evening start pattern this morning at 16.70. MAs flattened, MACD lines held negative , RSI 53, OS & falling,  H4 ATR 0.12128, Daily ATR 0.26199.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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US30USD, H4 | Potential Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 33475.75Pivot: 32512.78Support: 31874.79Preferred Case:On the H4, with price breaking out of an ascending trendline and reversing off the stochastic resistance, we have a bearish bias that price will drop from our pivot at 32512.78 where the pullback support is to the 1st support at 31874.79 where the pullback support, 38.2% fibonacci retracement and 78.6% fibonacci projection are.Alternative Scenario:Alternatively, price could break pivot structure and rise to 1st resistance at 33475.75 where the swing high resistance and -61.8% fibonacci expansion are.

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Should you buy an annuity as rates start to rise?

Pensioners who want to use their retirement savings to buy an annuity for a guaranteed yearly income can now earn more as interest-rates rise.

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Earnings Season: Booking Holdings Inc

Booking Holdings Inc. is a company dedicated to the implementation of technology for tourism such as search engines and an online travel agency that includes flight reservations, lodging, and car rental among other services. The company owns and operates several travel fare aggregators including booking.com (their main source of revenue), kayak.com, momondo, rentalcars.com, etc. It operates in 200 countries with approximately 100 million active users and a capitalization of 78.63B.

Booking Holdings Inc. is expected to release its second quarter 2022 earnings report this Wednesday, August 3 after the market close.

Price and surprise EPS
Source: https://www.zacks.com/stock/chart/BKNG/price-eps-surprise

According to Zacks, Booking ranks #4 (Sell) at position #146/#251 in the internet-commerce industry. Expected EPS is $17.73-$17.85, after last quarter’s EPS of $3.90 with a Surprise EPS of 2885.71%. Compared to the same quarter of last year with $-2.55 this would be an increase of +795% y/y and with an ESP of +0.67% this would be the 6th time that it has exceeded expectations. Net sales are expected at $4.35B compared to the same quarter of last year, at $2.16B, an increase of +101% y/y. EPS has had 0 upward revisions and 3 downward revisions in the last 30 days.

EPS Booking Holdings for this quarter Source:https://www.nasdaq.com/es/market-activity/stocks/bkng/earnings

Despite Booking shares being down 30% from their current high, the company has been on the mend as the pandemic subsides and travel spending is reinstated on increased demand despite the economic contraction plaguing the world due to inflation. All indications are that global travel spending will eventually return to pre-pandemic levels and the company should continue to deliver growing bookings and other beneficial business metrics going forward as a continued recovery. The problem however is that the markets have priced in most of the rally higher, which explains the overall market sell off.

In the first quarter of the year, the company presented a record in its reservations reaching $27B (+7% compared to 1Q 2019), mainly thanks to Booking.com which contributed 34% of its reservations processed by its own payment platform. For the summer, reservations on the platform increased by 15% compared to 2019, while Europe and North America increased by more than 30%. It is expected that for this quarter there will also be an operating profit.

Booking has also dabbled in a bid to appeal to younger generations, creating its first TikTok marketing campaign.

Booking’s goal is to inspire people to travel, create positive interactions with the brand and make them think of the company as travel leaders.

-Laura Kaye, Director of Social Media at Booking.com

A current obstacle to consider for Booking and all travel companies is that not only are there outbreaks of Covid in several countries that are once again placing restrictions on their populations (such as in China) but also that the world is facing a new virus that could cause problems, although to a lesser extent. Monkeypox, which started a viral outbreak in the United Kingdom at the beginning of the year, already has more than 22k cases worldwide, with health authorities very attentive and alert to its progress. In the US there are more than 5k cases and last week an emergency was declared in NY and San Francisco accelerating the planning for the control of the outbreak, which although it has not yet caused lockdowns, if it continues with the current rate of spread there is a chance of them happening in the future, albeit a low one.

On the other hand and following the recovery, Booking.com has had a 12.5% increase in website performance compared to last month with a total of 424.6 million visits with a 39.57% bounce rate. There has been a consecutive increase, with 347.8M in April, 377.5M in May and 424.6M in June, with the US being the main contributor with 16.92% of the total, followed by Germany with 7.74%.

Technical analysis

Booking Holdings Inc has been in a downtrend for 6 months from its high at 2,713.64 and is currently trading at 1,906.11 with a rebound from last month’s low at 1,666.98. Price is currently at the 50% Fibo at 1,909.35 of the bullish momentum that started from 1,105 in March 2020 to all-time high in February this year.

The price could not stay above 2,500 and last month it broke the psychological level of 2,000; despite the fact that last month it rose more than 3% the price has not managed to recover the psychological mark and for the moment remains below it.

Support is at the 20 period SMA D1 at 1,797.57, a wide support range of 1,600-1,700, the psychological level at 1500.00 and lastly the lows of the current cycle at 1,105; from there support is at the nearby highs of April-May 2012 at 770.00. Current resistances are at the 50-period D1 SMA at 1,956.19, the 2k psychological mark, the 100-period daily SMA at 2,068.84, the 38.2% Fibo at 2,099, the 200-period D1 SMA which currently coincides with the downtrend at 2,200, highs of June at Fibo 23.6% at 2,334.05, psychological mark of 2,500 and up to all-time highs. Daily RSI at 54.73 with a bullish bias, although down from 57 to 54.

Click here to access our Economic Calendar

Aldo Zapien

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Sources: 

1. https://www.nasdaq.com/es/market-activity/stocks/bkng/earnings
2. https://www.zacks.com/stock/quote/BKNG
3. https://www.zacks.com/stock/news/1960224/booking-holdings-bkng-outpaces-stock-market-gains-what-you-should-know?art_rec=quote-stock_overview-zacks_news-ID03-txt-1960224
4. https://www.nasdaq.com/articles/booking-holdings-bkng-outpaces-stock-market-gains%3A-what-you-should-know

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ETHUSD, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 1783.95Pivot: 1646.5Support: 1464.71Preferred Case:On the H4, with price moving above the ichimoku indicator, we have a bullish bias that price will rise to our pivot at 1646.5 where the overlap resistance is. Once there is upside confirmation of price breaking pivot structure, we would expect bullish momentum to carry price to 1st resistance at 1783.95 where the swing high resistance, 127.2% fibonacci extension and 61.8% fibonacci projection are.Alternative Scenario:Alternatively, price could drop to 1st support at 1464.71 where the pullback support, 100% fibonacci projection and 38.2% fibonacci retracement are.

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Moderna: Bullish Flag Ahead of Q2 2022 Earnings Report

Pharmaceutical company AstraZeneca plc last week reported second-quarter 2022 fiscal year revenue of $10.8 billion, a 31% jump over the same period last year. Reported earnings per share (EPS) for the quarter fell 45% y/y to $0.23, while core EPS skyrocketed 92% y/y to $1.72.

On Wednesday, Moderna Inc., a company operating in the same sector as AstraZeneca plc, will also report its fiscal year 2022 second quarter earnings, prior to the market open. Moderna is expected to report its first drop in sales since it started making big money selling its Covid-19 vaccine.

In its previous Q1 2022 report, Moderna Inc. reported diluted earnings per share (EPS) soaring 202% y/y to $8.58, while net income also jumped 200% to reach $3.7 billion. The company reported revenue for the quarter jumped 213% to $6.1 billion. Sales of Moderna’s COVID-19 vaccine products in the first quarter of 2022 were $5.9 billion, compared with $1.7 billion in the same quarter of 2021.

The market remains uncertain about what will happen this year for Moderna. According to Zacks Investment Research forecasts, the biotechnology company will post quarterly earnings of $4.50 per share, representing a year-over-year change of -30.3%. Revenue is expected to be $3.89 billion, down 10.7% from last year’s quarter. The Zacks Consensus forecast suggests that analysts have recently become bearish on the company’s earnings outlook. This has resulted in an ESP Income of -0.22%, with the stock currently having a Zacks Rating of #3(hold).

As the pandemic has subsided, the hype surrounding Covid-19 vaccine makers has waned and attention will turn to how demand is shaping up and whether the government is still committed to tackling the sub-variants. Moderna said it expects to secure slightly more orders in the second half, compared to the first. The company announced one major new deal this year after agreeing to sell 66 million doses of its vaccine (appr. $1.74 billion) to the US government while continuing its booster program, with the government having the option to buy another 234 million doses based on the initial round price (worth $6.2 billion).  That would give some insight, though, that the government remains committed to continuing ongoing vaccination. Moderna hopes to release three respiratory medications in the next two to three years, if all goes to plan. A new vaccine targeting the BA.4/5 sub-variant is in progress.

Technical Overview

Moderna shares are currently trading around the $165.00 area in a bullish flag pattern, having hit their highest level in more than two months at $180 last month. The $180 level could be a tough barrier to break, if the expected earnings report misses expectations. But on the other hand, if these key figures are better than expected, the stock price will be helped. The main barriers to the $115.48 rebound are at the $187.98 structural resistance and the 200-day EMA. If both barriers are crossed, Moderna’s price could be in reversal mode for the short term and potentially pursue the 38.2% retracement level around $260.00.

Earlier, a break of the resistance at 152.61 last month brought  technical attention to a broken bearish structure, that the rebound still has at least some strength to creep to the upside. On the downside, a move below the $151.43 minor support would bring the bias back to the downside to test the 135.33 price and the 115.48 low.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Weekly Market Update 01 August 2022

The new month kicks off with the Dollar on the defence, as investors digest the weak Q2 GDP data (-0.9%) which has put the US in a technical recession.

Dollar

The Greenback begins the week under significant pressure largely driven by the GDP data that came out last week, confirming two consecutive quarters of negative growth. This key development, along with the likelihood of the FED responding with further tightening in the coming months, has weakened the outlook for the Dollar in the short-term and as a result we saw the index hit a three-week low in the morning session. Going into the week, investors will be looking at key economic data such as final manufacturing PMI and initial jobless claims as well as the Non-Farm Payroll.

Technical Analysis (H4)

Technical Analysis (H4)

In terms of market structure, price has confirmed the formation of the bearish continuation pattern (Bear Flag) that we discussed last week and has gone on to break the major trendline that has been holding the uptrend since 29 May 2022. The impulsive nature of the break puts sellers in control to potentially hit the first technical level around the 104.55 area.

Euro

The Euro began this week trading at three-week highs at the 1.02678 area, on the back of weaker dollar demand and improved risk-sentiment in the market. Since bottoming out at parity, the Euro has been buoyed somewhat and some commentators are linking this to the ongoing US recession fears that have been on the horizon for a while now. However, this lift could be short-lived as investors will be monitoring the supply of Russian gas flows because of the larger economic effect it will have on the European Union as a whole, with potential shortages which are leading to sky-high prices that could last until 2024.

Technical Analysis (H4)

In terms of market structure, price is still locked in the potential bullish continuation pattern (Bull Flag) that we identified last week. An impulsive break above the structure at the 1.02786 area will be the catalyst for the confirmation of this pattern and will put buyers in the driving seat to challenge the 1.04518 area. On the flipside, if the above-mentioned scenario fails, price could potentially revisit last week’s lows around the 1.01320 area.

Pound

Sterling kicked off the week continuing its three-week bullish momentum hitting a three-week high on Monday in the London session. A key factor driving this exuberance is the sentiment that monetary policies between the BoE and the US FED are narrowing as the BoE positions itself for a 50bps rate hike on Thursday in contrast to the cautious stance that the FED is beginning to take going into the latter half of the year.

Technical Analysis (H4)

In terms of market structure, price confirmed the bullish continuation pattern (Bull Flag) that we identified last week, by printing out an impulsive break to the upside. As it stands, buyers are in firm control of price and will likely challenge the 1.23332 area henceforth.

Gold

The yellow metal came out the gate holding onto gains from last week, hitting a three-week high on Monday morning during the London session. These gains are heavily linked to Dollar weakness, as a cheaper dollar makes Gold more accessible to buyers, as well as the growing recession fears which have driven some of the exuberance we are seeing from investors in the safe-haven asset.

Technical Analysis (H4)

In terms of market structure, price has confirmed the bullish continuation pattern (Falling Wedge) by subsequently printing out an impulsive wave above the structure. Going forward, price could potentially stall around current areas at the $1,777 level as it could be a point of interest for sellers. Nevertheless, if bulls continue to drive price up and break above this level impulsively, we could see buyers go on to challenge the $1,812 area.

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Ofentse Waisi

Market Analyst 

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