2023 Market Forecast by Solid ECN

Oil

• Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei, S&P/ASX 200 and Nifty 50 traded flat, Kospi dropped 0.9% and indices from China traded 0.3-1.3% lower
• DAX futures and S&P 500 futures trade slightly lower
• Russia warned that it will terminate Black Sea grain deal if G7 moves to impose a total ban on exports
• BoJ Governor Ueda said that inflation forecasts strong and close to 2% for bank to consider changing its yield curve control mechanism
• Financial Times reports that United States asked South Korea not to increase chip sales to China if chips of US company Micron get banned as part of Chinese investigation
• Cryptocurrencies traded mostly sideways over the weekend. Small gains can be seen today - Bitcoin gains 0.8%, Ethereum adds 0.3% and Dogecoin jumps 1.2%
• USD and CHF are the best performing major currencies while AUD and JPY lag the most
• Precious metals pull back amid USD strengthening. Gold drops 0.2%, silver trades 0.7% lower and platinum plunges 2.3%
• Energy commodities trade lower as well - oil drops 1.2% while US natural gas prices decline 0.5%

Brent (OIL) is inches away from closing a bearish price gap triggered by an unexpected OPEC+ output cut.

US100

Taking a look at US100 chart at H1 interval, we can see that the index has been trading in a triangle pattern for some time with a 13,000 pts area serving as the lower limit of the pattern. This is a continuation pattern so traders should be aware of a potential for a downside breakout, especially as price has reached a lower limit recently. In case of a break below 13,000 pts, textbook range of breakout from the pattern suggests possibility of an around 350-points drop, to 12,650 pts area.

BTC

Recently, many events have overlapped and influenced the prevailing sentiment on the cryptocurrency market.

On the one hand, we observe weakening bulls on the broader financial market after high index results in the first quarter of this year. Investors are trying to price in new quarterly reports published by the largest technology companies in the US and deteriorating macroeconomic data, which are starting to forecast the upcoming recession on the financial markets.

On the other hand, a lot has happened in the crypto market space. The recent hearing of SEC chairman Gary Gancler did not bring any new news. The SEC chairman continued his narrative without any explanation that all cryptocurrencies except BTC should be considered security - despite many questions from Congress Representatives.

Another wave of declines came today after the news about Coinbase suing the SEC. According to the information provided, Coinbase has taken legal action in a US federal court to force the country's securities regulator to give a definitive response to a petition it submitted in July. The petition sought clearer regulatory guidelines for the cryptocurrency industry in the US.



On the 4-hour timeframe, the BTC price continued to consolidate below $28,000, with the largest cryptocurrency by market capitalization trading at around $27,240, down 0.55% in the past 24 hours. BTC has already dropped by 13% from its recent highs of $31000. The price broke through the key support level around $28,600, indicating a bearish trend in the short term. Currently, the price is at the equilibrium level of the last consolidation range, indicating that the market is in a state of indecision. However, further price action downwards is expected, with the next resistance level likely to be at $26,650. This level acted as a support in the past. Overall, the short-term trend for Bitcoin appears bearish and traders should exercise caution when taking long positions. It is essential to keep an eye on any major news events or developments in the cryptocurrency space that may impact the price of Bitcoin.

Bitcoin

Bitcoin chart, D1 interval and US500 (yellow chart). Bitcoin again showed a negative correlation with the S&P500 and started an upward movement when US500 contracts weakened, influenced by weakness in the banking sector. The RSI indicator is still at relatively neutral levels indicating that the bulls still have plenty of room to possibly continue their attack. The first significant resistance level appears to be around $30,000 - $31,000, last seen in early summer 2022. The bulls has defended the bullish momentum at 23,6 Fibonacci retracement.

USDJPY

USDJPY is one of the FX pairs that may see elevated volatility until the end of the week. This is because of a number of top-tier releases and events from the United States and Japan, scheduled for the final two days of the week. Traders will be offered a flash release of Q1 GDP report from the United States today at 1:30 pm BST and PCE inflation data for March tomorrow at 1:30 pm BST. In between those two releases, the Bank of Japan will announce its monetary policy decision.

The US GDP report is expected to show a slowdown in annualized growth rate from 2.6% in Q4 2022 to 2.0% in Q1 2023. PCE inflation for March is expected to show deceleration in core measure from 4.6 to 4.5% YoY. However, a rate decision from the Bank of Japan is potentially the biggest volatility event of the three. This will be the first BoJ meeting after Ueda took over as governor and because of that there are hopes that he may push for a change in BoJ's ultra-loose monetary policy. While it looks rather unlikely that any major policy change will be delivered tomorrow, one cannot rule out significant changes in an accompanying statement. Any hints at a hawkish shift could be a significant driver for USDJPY moves.



Taking a look at USDJPY chart at H4 interval, we can see that the pair has been trading in an upward channel since late-March. Advance was halted recently at 61.8% retracement of the downward move launched on March 8, 2023 (134.77 area) and the pair started to pull back. However, unless we see a break below the lower limit of the channel and below the lower limit of the Overbalance structure later on, technical picture continues to favor buyers.

EURUSD

EURUSD saw a fairly dramatic reversal late in 2022 when it turned out that the energy crisis in Europe was softer than feared. The pair was trading close to 0.95 at the end of September but has rallied all the way to 1.10 since then. Could it be primed for a larger correction?

When looking at the D1 interval one can spot a nearly completed 5- wave structure. The current wave runs along the upwards corridor and while we saw 2023 highs last week, the pair currently tests the lower limit of the channel. A breakout lower could therefore result not just in profit taking but possibly in a larger ABC corrective structure. One should be vigilant for a larger move amid reduced volatility during the Labour Day.



A breakout lower ? should it occur ? could be a warning signal for other markets as well as the EURUSD rally accompanied gains on other risk-on markets, especially European equities. With DE30 at the highest since January 2022 and not too far off ATH the stakes are high. Should the pair break lower out of the channel, a larger corrective structure could be initiated.

Gold confirms the breach

Gold prices confirmed breaching the symmetrical triangle?s resistance line and settled with a daily close above it, to resume the main bullish track and head towards achieving positive targets that start by testing the recently recorded high at 2048.70, supported by moving above the EMA50.



Therefore, we are waiting for more expected rise in the upcoming sessions, and the price needs to hold above 1992.20 to guarantee the continuation of the bullish wave, as breaking this level will press on the price to return to the correctional bearish trend again and open the way to visit 1957.30 areas on the near term basis.