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BTC/USD Bulls Take a Breather After Fresh ATH


Bitcoin (BTC/USD) Talking Points:

  • Bitcoin (BTC/USD) loses steam after climbing to fresh all-time highs
  • Risk sentiment and institutional interest continues to support the recent rise
  • Is BTC/USD poised for bullish continuation or is a correction in order?

The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section

Bitcoin Falls From Fresh ATH

Following the release of the first futures based Bitcoin ETF (‘BITO’), bulls trading BTC/USD drove the price of the first major cryptocurrency to a fresh all-time high of around $67,076 before falling back to the $65,000 handle.

With inflation pressures on the rise, the launch of the first ETF which tracks the price of Bitcoin futures boosted the demand for digital assets as institutions increased their holdings.

Visit DailyFX education to learn more about technical and fundamental analysis

Thus far, low interest rates have driven investors to higher yield assets, supporting both the equity market and cryptos. However, the release of the Proshares Bitcoin Strategy ETF Bito suggests that regulators may potentially be more open to the idea of allowing large institutions to use Bitcoin as a form of currency over time.

Bitcoin (BTC/USD) Price Action

After four consecutive weeks of gains, Bitcoin prices surpassed the prior high, in an attempt to claim the key psychological level of $70,000 which will likely continue to hold as resistance for the short-term move.

With price action currently tracking the 8-period EMA (exponential moving average) on the weekly time-frame, the CCI (commodity channel index) has risen into overbought territory, above the normal range of -100/+100.

Bitcoin (BTC/USD) Weekly Chart

Chart prepared by Tammy Da Costa using TradingView

Meanwhile on the daily chart, BTC/USD price action is currently trading below $63,500 with the rising channel supporting current prices.

After a steep rally above the prior high, the upward trajectory lost momentum temporarily, allowing bears to drive prices back below $65,000.

Bitcoin (BTC/USD) Daily Chart

Bitcoin Outlook: BTC/USD Bulls Take a Breather After Fresh ATH

Chart prepared by Tammy Da Costa using TradingView

Bitcoin (BTC/USD) Key Levels

As with the weekly chart, the CCI on the daily chart remains in overbought territory with the 8-period EMA providing support at approximately $62,000.

For the imminent move, resistance continues to hold at $65,000 with the recent high providing an additional layer of resistance at $67,500.

However, should bears manage to break below trendline support, it may be probable for prices to fall back below $60,000 and back towards $55,000.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707





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Yen Pullback Begins: EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY


JPY, EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY Talking Points:

  • The Japanese Yen has been in a consistent sell-off so far in Q4, going along with the rates theme out of the US.
  • I had looked into the Yen on Monday, plotting for pullbacks in EUR/JPY with an eye towards support in AUD/JPY and GBP/JPY.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

When the Japanese Yen gets to moving in a trend, it can really put in some significant strength or weakness in a very short period of time, and this was on full display after the FOMC rate decision in September.

When the Fed signaled faster potential rate hikes, along with a possible taper announcement at their next meeting in November, rates markets began to respond very quickly. As I had shared in the Japanese Yen Technical Forecast shortly on the heels of that FOMC rate decision, that rates theme could bring back themes around Yen-weakness, very similar to what had showed in Q1 of this year.

I then picked on GBP/JPY for my Top Trade for Q4, looking to harness weakness in the Japanese Yen by meshing it up with the British Pound, a currency backed by a Central Bank that’s expected to raise rates perhaps even faster and sooner than the Fed. This amounted to a run of almost 900 pips in October trade and that market remains in a very bullish state, as I’ll look at below.

But, generally speaking, the Yen seems oversold given how quickly this move had priced-in, and that can create an environment conducive for pullbacks. I had looked into this on Monday, zeroing in on EUR/JPY as a possible pullback candidate and that’s started to show up with the pair off more than 100 pips from yesterday’s high.

But, the question remains – can JPY pose an even deeper pullback? And if so, which markets might be more attractive for that theme and, on the other hand, which markets are more attractive should JPY weakness come rushing back in?

EUR/JPY

This was the pullback candidate that I looked at earlier this week, largely drawn from the deduction that the topside move had lagged behind those seen in GBP/JPY or AUD/JPY.

At this point, the pair has set a fresh lower-low on the four-hour chart with a move below the 14.4% Fibonacci retracement. Lower-high resistance can be sought around that level, which is confluent with yesterday’s swing low and last week’s swing-high.

EUR/JPY Four-Hour Price Chart

Chart prepared by James Stanley; EURJPY on Tradingview

GBP/JPY

I remain bullish in GBP/JPY but the problem here appears to be timing. The pair has set a fresh five-year-high at 158.21 and despite two separate tests on Tuesday and Wednesday, was unable to break through. Price action has since retreated to trendline support, and below that is a confluent zone that runs from 156.35-156.58.

If matters really come undone, deeper support with possible invalidation of the bullish trend could be sought out around the 155.00 psychological level, which is about 25 pips above the 38.2% Fibonacci retracement of the recent bullish move.

To learn more about Fibonacci or psychological levels, check out DailyFX Education

GBP/JPY Four-Hour Price Chart

Yen Pullback Begins: EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY

Chart prepared by James Stanley; GBPJPY on Tradingview

AUD/JPY

AUD/JPY was setting up for a breakout at the 85 psychological level earlier this week, with one major level sitting ahead at 85.81. I talked about this setup in that Monday article and the breakout took hold on Tuesday with prices setting a fresh three-year-high yesterday.

At this point, the daily chart is working on a non-completed bearish engulfing pattern which, if today finishes like this, could point to even deeper retracement potential.

For now, the 85 level looms large again but this time as possible support. With that said, if this level comes into play today, then we’re likely looking at that bearish engulf setup which would not be ideal for setting up long positioning. So this level would need to come into play either Friday or Monday as support in order to avoid the bullish setup in front of the bearish engulfing print.

To learn more about the bearish engulfing pattern, check out DailyFX Education

AUD/JPY Daily Price Chart

Yen Pullback Begins: EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY

Chart prepared by James Stanley; AUDJPY on Tradingview

CAD/JPY

AUD/JPY and CAD/JPY share quite a few similarities at the moment. And if one thinks of themes and drivers, it makes sense: Both AUD and CAD are commodity currencies and commodities have generally been ripping (except for Gold), and when this has been meshed up with the short-Yen theme on the back of the rates premise, this has made for some really strong trends in both markets.

I had looked into CAD/JPY yesterday, trying to plot for some support potential, and the first level of note may be soon coming into play. But, given the way that this has shown, like AUD/JPY above, a warning is in order as price action is working on a non-completed bearish engulfing pattern on the daily chart. If this completes that way, it could be a lousy signal for long positions, and may instead point to the possibility of a deeper pullback. And a level that is very visible for such a scenario is around the 90.00 handle, which has yet to be tested as support in the pair after last week’s breakout.

CAD/JPY Daily Price Chart

Yen Pullback Begins: EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY

Chart prepared by James Stanley; CADJPY on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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Is the cannabis sector in reversal mode?


  • Tilray trends higher on Thursday after Tuesday rally.
  • Cannabis sector has been in a downtrend since February.
  • TLRY stock was buoyed by the hiring of a new executive.

 

Is the cannabis drought finally over? Tuesday certainly looked the part of a turnaround day for the sector as many of the biggest names in cannabis posted high single-digit returns. Canopy Growth Corporation (CGC) scored an 8.6% stock gain, while Cronos Group (CRON) rose 8.4% and the ETFMG Alternative Harvest ETF (MJ) clocked in at 5.1%.

By far the biggest winner in the sector on Tuesday, however, was Tilray (TLRY). The Canadian conglomerate posted a 15.8% gain after announcing a new president in charge of sales, marketing and operations for its Canadian cannabis units.

Wednesday saw the sector consolidate overall, but most names held onto the vast majority of Tuesday’s rally. With the sector opening slightly higher on Thursday, could this be the start of a rally for the entire sector, as well as TLRY? The latter traded up 3.2% on Thursday at the time of writing.

Cannabis News: a sector in the dumps

Five years into cannabis being a stock market sector in its own right, investors can be forgiven for giving up. The MJ ETF is down by about half from its price five years ago. Similarly, the AdvisorShares Pure Cannabis ETF (YOLO) is down 36% since its debut in April 2019.

A brief 2020 rally in the sector died around February of this year. Since then there have been few bright spots for the industry, and most sector-related ETFs have spent the year selling off. While legal marijuana sales continue to climb in both Canada and the US, sector-wide revenue growth has not been translating to profits overall. Few if any companies appear to have competitive brands that confer pricing power.
 

Tilray Stock News: new executive spurs breakout

The new executive, Blair MacNeil, comes by way of Bacardi, where he managed alcohol sales for the whole of Canada. His experience in the consumer goods industry is broad with stints at Stoli, Pepsi and River Bend. The news was enough to help TLRY stock break out of a descending price channel it has been locked in since late June.

Earlier this month the company reported a loss of $34.6 million for Q1 of fiscal 2022, a slight miss based on expectations from FactSet. Revenue also came in below forecasts but still resulted in 43% growth YoY.

The merger with Aphria completed earlier this year is expected to return $81 million in pre-tax cost synergies and give TLRY a solid foothold in the US and European markets.

Tilray Technical Analysis: TLRY breaks out of trend and above moving average

Tilray is well off its 52-week high of $67 from February and currently sits just below $12 per share. On Tuesday, however, TLRY stock broke above the 20-day moving average, which has acted as resistance for much of the year, and the overhead descending trendline that has kept TLRY under wraps since June 29. The next barrier to break for bulls is the nearby 50-day moving average at $12.10.

Beyond that, September demonstrated tough resistance at $14. If TLRY shares break the 50-day average, then $14 will be the next target to test. Above here only the start of the recent descending trend line at $18.67 offers any serious resistance, though the 78.6% Fibonacci level at $15.46 may also be a point for buyers to take profit.

 

TLRY 1-day chart



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Yen’s bounceback to drag USD/JPY down to 112.00 and EUR/JPY to 131.00 – TDS


Economists at TD Securities think a modest bounceback in the yen is starting to look a bit more likely. EUR/JPY looks stretched – this should weigh on USD/JPY but 112 looks to be formidable support.

There is a solid case for yen weakness

“As much as yen weakness is likely to persist over the medium-term, we think there is scope for a tactical reprieve as front-end receivers look more attractive in our view.” 

“EUR/JPY has stalled around 133, which is just shy of its cyclical high around 134.”

“Given our view on the ECB and our bias for the EUR to remain relatively soggy, a retracement to 131 seems probable. This would also coincides with the 50% retracement of the high/lows since June. This should help pull USD/JPY lower, though we are inclined to think that 112 should be rather solid support.”

 



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USD/TRY Spikes After Turkish Central Bank Delivers Larger Than Expected Cut


USD/TRY, CBRT Price Analysis & News

  • USD/TRY Hits as Fresh Record High
  • Turkish Central Bank Delivers Larger Than Expected Cut

The Turkish Central Bank cut its weekly repo rate to 16%, marking a 200bps cut vs expectations for a 50-100bps reduction. In reaction to the larger than expected rate cut, the USD/TRY soared to a fresh record high of 9.4780. Keep in mind, that this rate cut comes amid an environment of rising inflationary pressures, a softer currency, while other EM central banks are tightening policy. However, due to Erdogan’s unorthodox views that lower interests rate equates to lower inflation, the Turkish Central Bank find itself in an easing cycle. Not a good recipe for an already weak Turkish Lira.

The Bank noted that due to supply-side transitory factors, this leaves limited room for the downward adjustment to the policy rate until year-end. A reminder that earlier in the year, the Governor stated that the policy rate will remain above the inflation rate. However, with President Erdogan the de factor Governor of the central bank I wouldn’t rule out such possibility that rates will not be lowered again.

Turkish Interest Rates vs Inflation Rate

Source: Refinitiv

In light of the larger than expected rate cut, it will be hard to argue that USD/TRY cannot reach the psychological 10.00 level in the coming months.

USD/TRY Chart: Daily Time Frame

USD/TRY Spikes After Turkish Central Bank Delivers Larger Than Expected Cut

Source: Refinitiv

As a side note, volatility in the Turkish Lira is important for equity traders, namely those who have exposure to Spanish Banks and the IBEX 35, which we have highlighted previously.





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AUD/USD Reversal Levels, AUD/JPY at the Extremes


AUD/USD, AUD/JPY Analysis & News

AUD/USD | Key Hurdles for Extended Gains

Earlier in the month, I highlighted the potential for a breakout in the Australian Dollar on the topside, thanks to encouraging seasonality for risk appetite, alongside Australia’s improved terms of trade at a time where markets were excessively short the AUD. Now that the Aussie has reclaimed the 0.7500 handle, the concern lies with whether there is much more fuel in the tank for an extended push higher in the short run or is it time we start to see some profit-taking.

Keep in mind, that the near 5% rise from circa 0.7220 to north of 0.7500 has seen very little in the way of setbacks to even other any chance for dip-buying. Looking at copper, the price has failed continue higher, falling over 4% from the October peak. Tonight, RBA Governor Lowe is scheduled to speak (20:00BST) and given the sizeable repricing in front-end rates with money markets signalling near 50bps of tightening by the end of next year, despite the RBA remaining adamant that they will not raise rates I suspect there will be some pushback by the Governor.

On the technical front, there are key hurdles that can challenge further upside in the short run. The 55WMA at 0.7515 and the 200DMA above at 0.7563, which may offer an area for a pullback. Should the pair close above 0.7615-20 however, this would be a level to reassess the view of a pullback.

AUD/USD Chart: Daily Time Frame

Source: Refinitiv

AUD/JPY | At the Extremes

Since the beginning of the month, it has been a one-way trade with Yen crosses, which are trading at elevated levels across the board. Yesterday, the daily RSI in AUD/JPY crossed above 81 for only the fifth time since the beginning of 2010, which in turn, highlights just how extreme the move has been in the cross.

Admittedly, the sample size is small (only 5th time), it has, however, typically been a bearish signal for AUD/JPY. That being said, with Bitcoin and US equities around the ATHs and while yields remain elevated, there has been little motivation for a dip in Yen-crosses and thus I will be keeping a close eye for a turn in those assets to look for a dip.

Australian Dollar Forecast: AUD/USD Reversal Levels, AUD/JPY at the ExtremesAustralian Dollar Forecast: AUD/USD Reversal Levels, AUD/JPY at the Extremes

Source: Refinitiv, DailyFX (X+1 = 1-day after AUD/JPY RSI crosses 81)

AUD/JPY Daily RSI

Australian Dollar Forecast: AUD/USD Reversal Levels, AUD/JPY at the Extremes

Source: Refinitiv





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Bitcoin’s All-Time High Sparks Life Into The Alt-Coin Market, Solana Pumps


Bitcoin (BTC/USD) Prices, Charts, and Analysis

  • Bitcoin (BTC) consolidates after Wednesday’s hefty gains.
  • Ethereum (ETH) and Solana (SOL) pressing higher.

Bitcoin printed a fresh all-time high on Wednesday as the crypto market leader continued its recent bull charge. Bitcoin has been outperforming other notable cryptocurrencies, including Ethereum and Solana, of late with traders pointing to the launch this week of the ProShares Bitcoin futures ETF as the dominant driver. With this now out of the way, traders are looking to grab some alpha by revolving back into some of the heavyweight alt-coins, including Ethereum and Solana. Ethereum is still around 4% below its ATH ($4,379), while Solana is currently changing hands around 20% below its September high print ($216). The Solana breakout looks strong with little in the way of resistance on the charts before the September 9 high.

Solana (SOL/USD) Daily Price Chart – October 21, 2021

Chart via TradingView

The alt-coin market capitalization (total market cap minus Bitcoin market cap) is now probing recent highs and looks set to break higher.While Bitcoin continues to dominate the market (46.6% dominance) the expected ‘alt-coin season’ may be nearing with alts seen outperforming Bitcoin at least in the short-term. This does not stop Bitcoin from moving higher, it just suggests that alt-coins will outperform BTC as traders look for extra alpha.

Cryptomarket Capitalization Minus Bitcoin – October 21, 2021

Bitcoin’s All-Time High Sparks Life Into The Alt-Coin Market, Solana Pumps

Bitcoin is now consolidating its recent gains around $66k after touching $67k on Wednesday. We have been positive on Bitcoin – and the crypto market as a whole – for some time now and see no reason to change course. Volatility is likely to pick up as BTC enters a zone of price discovery with any downturns likely to be seen as an opportunity to buy cheaper coins. The overall sentiment in the cryptocurrency market is heavily positive, which could add extra volatility on any downturn, and with little in the way of technical resistance levels, the market looks set to float higher.

Bitcoin (BTC/USD) Daily Price Chart – October 21, 2021

Bitcoin’s All-Time High Sparks Life Into The Alt-Coin Market, Solana Pumps

What is your view on Bitcoin (BTC) – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.





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Supply bottlenecks starting to weigh on Italian economy


European Central Bank (ECB) Governing Council member Ignazio Visco said on Thursday that supply bottlenecks are starting to weigh on the Italian economy and added that they could last for longer than expected, per Reuters.

Additional takeaways

“Household and business bank deposits have increased by more than 200 billion euros, will decrease as consumption resumes.”

“European Union should consider joint management of at least the last two years of countries’ debt, with sink fund to purchase national bond offers.”

“Pandemic showed limits of the European Union without a common budgetary capacity.”

“Public debt crucial to counter the crisis but cannot be used to finance current expenditure.”

Market reaction

The shared currency remains on the back foot after these comments and the EUR/USD pair was last seen losing 0.1% on the day at 1.1640.



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GBP/USD Struggling to Break Above 1.38


GBP/USD price, news and analysis:

  • GBP/USD continues to find it difficult to break convincingly above 1.38, which is not just providing “round number” resistance but is also where an important trendline checks in.
  • The latest UK public sector net borrowing (PSNB) figures were better than expected in September but haven’t changed expectations of an imminent UK interest rate increase.

GBP/USD struggling with resistance

GBP/USD continues to find it difficult to break convincingly above “round number” resistance at 1.38, which is also where a downward-sloping trendline connecting the recent lower highs checks in.

GBP/USD Price Chart, Two-Hour Timeframe (September 30 – October 21, 2021)

Source: IG (You can click on it for a larger image)

Bullish outlook for GBP

Nonetheless, GBP is still well underpinned by market expectations that the Bank of England’s monetary policy committee will increase UK interest rates next month. According to overnight index swaps (OIS) prices, there is an 80% chance of a 25 basis point rate rise being agreed when the MPC next meets on November 3/4 and publishes its monetary policy report.

That expectation has not been changed by the latest UK public sector net borrowing data for September, excluding public sector banks, that show a smaller than expected deficit of £21.8 billion, better than the £22.6 billion forecast by analysts but worse than a revised £16.8 billion in August. It was still the second-highest September figure since monthly records began in 1993.

The data are unlikely to change expectations for the UK budget and spending review due on October 27. Chancellor of the Exchequer Rishi Sunak will likely announce several measures to try to balance the books after spending billions to lift the economy from the downturn caused by the Covid-19 pandemic.

Bullish sentiment signal for GBP/USD

Turning to sentiment, IG client positioning data are sending out a positive signal for GBP/USD. An analysis of the positions of retail traders using the company’s platforms shows that 44.61% of them are net-long, with the ratio of traders short to long at 1.24 to 1. The number of traders net-long is 0.46% higher than yesterday but 16.42% lower than last week, while the number of traders net-short is 7.24% higher than yesterday and 1.12% higher than last week.

Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may rise. Moreover, traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.

— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex





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Japanese Yen Leaps Higher as Nikkei Falls and China Looks for Energy Answers. Will the Trend Resume?


Japanese Yen, USD/JPY, Crude Oil, OPEC+, US Yields, Bitcoin, China – Talking Points

  • Crude oil prices maintain lofty levels as new supply is unlikely
  • APAC equities were mixed as China tries to isolate Evergrande
  • Nikkei 225 falls as Yen rallies. Where to USD/JPY from here?

Yields continued higher overnight with US Treasury 10-years at 1.67% and APAC bonds followed suit with New Zealand government 10-years at 2.48%, up over 5 basis points today.

In currency land, the Japanese Yen is the strongest across the board, reversing recent trends. Rising yields and a stronger Yen undermined the Nikkei 225.

Asian equities were mixed after a patchy US session. The Evergrande saga continues with Hopson pulling out of buying a controlling interest in the profitable business of property management services.

It appears there is an effort to ringfence Evergrande from other property groups. There have been a number of Chinese officials commenting in the last 24 hours that the risks in the property market are controllable and that funding conditions for the sector are returning to normal.

China have worked on trying to tame runaway energy prices. It may have had some effect as Chinese coal futures were 11% off their highs at one stage today.

A Saudi Arabian government official has said that OPEC+ are powerless to impact energy prices. Both Brent and WTI crude oil are holding near 7-year highs. The Canadian Dollar paused today against the US Dollar after rallying for most of the month.

Bitcoin made a record high, trading above US$ 66,000 for the first time. The ETF launched yesterday grabbed a lot of attention and seems to have created a lot of enthusiasm for the cryptocurrency.

USD/JPY Technical Analysis

USD/JPY made a new high for the year in late September and has been in a steep ascending trend channel since. The previous high in 2017 at 114.735 may offer resistance.

The consistent upward trajectory has seen short, medium and long-term simple moving averages (SMA) all develop a positive gradient. All the SMAs are in order according to their tenure with the shorter term SMA above the medium term SMAs and the medium term SMAs above the long term SMAs. The price is above all SMAs.

If this arrangement holds, bullish momentum might continue to evolve A move below these SMAs could signal a pause in bullishness.

Potential support may lie at the previous lows of 113.88 and 113.004. Below that, pivot points at 112.079 and 110.802 are possible support levels.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter





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