2023 Market Forecast by Solidecn

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GBPUSD

The GBPUSD currency pair, also known as "Cable", is currently around 1.23. It has been trying to get past the 1.2328 level, but it's been tough. This level is important because it's a key point on the chart that traders look at. Despite some not-so-great news about the UK's economy, the pound is still doing okay. The US dollar might get weaker because the US Federal Reserve (the Fed) is being careful with its money policies due to global economic issues and uncertainty. This could help the pound.

Later today, we'll get some data about US inflation (how much prices are rising). If inflation is as expected or lower, it could make the US dollar weaker and help the pound.

On the chart, things are looking up for the pound. However, there are some signs that it might be tough for the pound to keep going up. If the pound can get past 1.2328, it could keep going up. If it can't, it might start going down. Here are some key levels to watch:

Resistance: 1.2328 - 1.2386 - 1.2418 - 1.2443
Support: 1.2276 - 1.2240 - 1.2207 - 1.2187​

 

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AUDUSD​

In the past few days, the Australian Dollar has been trying to increase its value. This attempt has seen some success, but not consistently across all major currencies. When we look at the daily chart for AUDUSD, we can see that it has started to rise slowly. This rise was hinted at by a positive RSI divergence. RSI divergence is a technical indicator that shows if the momentum of a price change is increasing or decreasing. In this case, it was positive, which means the momentum for a decrease in price was getting weaker. This suggested that the Australian Dollar might start to increase in value.

At this moment, the exchange rate of AUDUSD is just below the 50-day moving average. The 50-day moving average is a line on the chart that shows the average exchange rate over the past 50 days. It helps traders to see the overall trend of the exchange rate. In August, a technical pattern called a 'Death Cross' appeared between the 20-day and 50-day moving averages. This pattern is usually seen as a sign that the exchange rate might start to decrease.

So, even though the Australian Dollar has gained some value recently, the overall technical trend suggests that it might decrease again. Apart from the 50-day moving average, another important level to watch is the 0.6459 mark. This level acted as a turning point for the exchange rate in May.

If AUDUSD breaks above this level, it could go up to the next turning point at 0.6568, which was established in March. On the other hand, if AUDUSD starts to decrease, it could go down to the November low of 0.6272.​

 

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CPI: Not the most welcome outcome​

Recent inflation reports have exceeded expectations, potentially offsetting the cautious tone from Federal Reserve officials. However, the focus seems to be on the duration of current interest rates rather than their height. Thus, a slightly higher inflation rate may not significantly disrupt the market.

The "Fed rhetoric shift" is becoming evident, with Christopher Waller's comments suggesting that the rise in yields could substitute for a rate hike. This indicates a possible shift towards a more dovish monetary policy.

The future hinges on economic indicators. Unless inflation rises unexpectedly or labor market imbalances lead to a wage-price spiral, the Fed may maintain a less hawkish stance. This could boost demand for longer-duration assets and foster a "Santa rally".

The market's reaction to today's CPI print is uncertain, but it may not be what investors were hoping for.​

 

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Crude Oil Market Analysis

Crude Oil rose from $80, which is in the Ichimoku cloud, and is currently testing the broken support around $84. Bears successfully broke out of the channel and the outlook of the current market is bearish, with the RSI hovering below the 50 line in the Crude Oil daily chart.

The bearish bias of Crude oil is more vivid in the 4H chart, as the black gold is trading below the pivot and within the bearish channel.

With the price holding below the 84.36 pivot, we expect the decline in Crude oil to continue and target the 80 support followed by 77.86.

On the flip side, if the oil price closes above the bearish channel in the 4H chart, the short-term bearish scenario will be over, and bulls are likely to drive up the price to test the daily resistance around $88 in upcoming sessions.​

 

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XAUUSD​

Gold prices are looking to increase as we move into early European trading hours. With a rise of over 2.4 percent, the gold to US dollar rate (XAUUSD) is on track for its best week since mid-March. This comes as recent comments from the Federal Reserve have been increasingly cautious.

If we look at the daily chart, the first level of resistance seems to be at 1884.89, a key point from August. Resistance levels are prices at which sellers are expected to enter the market in sufficient numbers to take control from buyers.

Just above that, gold will encounter the 50- and 200-day moving averages. A moving average is a commonly used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random short-term price fluctuations.

There was a bearish crossover in September, which suggested a general downward trend. A bearish crossover occurs when a short-term moving average crosses below a long-term moving average, signaling potential downward price movement.

So, XAUUSD is facing important resistance levels as we approach the weekend. If prices start to fall, the midpoint of the Fibonacci retracement level is at 1848.37, followed by the 1804.78 – 1815.30 point. Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on Fibonacci numbers, each level is associated with a percentage, showing how much of a prior move the price has retraced.​

 

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In-Depth Analysis of XAGUSD​

Silver prices, much like their golden counterpart, are experiencing a similar trend. The XAGUSD pair has seen an impressive surge this week, with an increase of nearly 2 percent. This level of aggressive push in the value of this precious metal hasn't been witnessed since mid-September.

Looking ahead, the immediate resistance that the XAGUSD pair might face is twofold. Firstly, it's the previous rising range of support that was observed in September. Secondly, it's the 38.2% Fibonacci retracement level which stands at 22.85. These resistance levels could potentially hold their ground, thereby reinstating the broader bearish bias that has been prevalent since early May.

However, in the event of a downward turn, the immediate support seems to be situated at the midpoint of the Fibonacci retracement, which is at 21.84. If losses extend beyond this point, the focus then shifts to the 61.8% level at 20.83.

A clearance below this latter level could potentially open up the possibility for a resumption of the downtrend. This would be a significant development as it would indicate a continuation of the bearish bias in the market.

In conclusion, while silver prices have shown a promising increase this week, there are several key resistance and support levels to watch out for. These levels will play a crucial role in determining whether the current uptrend can sustain itself or if a return to the bearish bias is on the horizon.​

 

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Frax's New Product sFRAX: A Game Changer in Decentralized Finance​

Frax, a decentralized finance protocol, has introduced a new product called sFRAX. This product allows holders of Frax's stablecoin, FRAX, to earn interest at a rate similar to the U.S. Federal Reserve's interest rate on reserve balances, which is currently around 5.4%. The product started with an annual percentage yield (APY) of 10%, but it will eventually match the Federal Reserve's rate.

Since its launch, over 150 users have invested more than $35 million in sFRAX. This has caused the price of Frax's governance token, FXS, to increase by 7% to $5.66, although it has since dropped slightly to $5.49.

Meanwhile, lending protocol MakerDAO has been successful in attracting interest in the U.S., investing over $2 billion in short-term bonds since February 2022 and offering a 5% savings rate on its own stablecoin, DAI. This has led to a significant increase in the value of its token, MKR, which has risen by over 168% this year.

In comparison, FXS has only increased by 32% this year. However, some people in the crypto community believe that FXS will soon catch up with MKR.​

 

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USDJPY: Temporary Pause, but Uptrend Persists

The USDJPY rally has recently hit a pause as it lingers near the firm resistance at the psychological level of 150, not too distant from the 2022 peak of 152. Nonetheless, there is no clear indication of a reversal in the ongoing uptrend. The price action for this month, thus far, can best be described as moving sideways, with the lower boundary finding support around the 200-period moving average, near the early-October low of 147.35.

Considering that USDJPY is currently within the intervention zone observed last year, breaking through the 150.00-152.00 range could be a challenging endeavor. This challenge is further accentuated by the views of some Federal Reserve officials who have suggested that interest rates may have peaked. For a more comprehensive understanding of the fundamental outlook, refer to the article "Japanese Yen Aided by Fed Pause View, Geopolitics; USDJPY, GBPJPY, AUDJPY," which was published on October 11. On the flip side, a drop below the 147.00-147.50 range would confirm a fading of the broader upward pressure. Such a decline could potentially pave the way towards the early-September low of 144.50.​

 

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USDINDEX

In the wake of the escalating conflict in the Middle East, secure assets like gold and the US Dollar have seen a significant rise.

The intensifying conflict in the Middle East has led to a notable increase in the value of secure assets such as gold and the US Dollar. The situation on the Israel-Lebanon border has worsened, resulting in over 2,000 civilian casualties in the Gaza Strip. In an attempt to alleviate the situation, the US has initiated covert negotiations with Iran. However, the possibility of a direct clash between Israel and Iran, a major backer of Hamas, is causing alarm. In tandem with these US-Iran discussions, oil prices have skyrocketed due to fears of impending oil sanctions. According to Bloomberg Economists, this situation could drive oil prices up to $150, potentially pushing the global economy into a recession.

The US Dollar is maintaining its upward trajectory, driven by strong inflation figures from the US. The rising geopolitical unrest in the Middle East has also strengthened the appeal of the greenback as a preferred safe-haven asset. Although the Dollar’s overall trend is subject to potential swings, the forthcoming speech by Fed Chairman Jerome Powell is a significant event to watch.

Currently, the Dollar Index is experiencing an uptrend while it tests the resistance level. However, the MACD indicates a decrease in bullish momentum, and with the RSI at 59, it suggests that the index may undergo a technical correction as the RSI has sharply withdrawn from overbought conditions.

Resistance levels: 106.60, 107.15.
Support levels: 105.65, 104.80.​

 

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EURUSD

The EURUSD pair is currently undergoing a test of the Tenkan-Sen line. The pair is trending downwards, beneath the Ichimoku Cloud, indicating a potential bearish trend. It's anticipated that there will be a test of the Cloud's upper boundary at 1.0565, which will then be followed by a drop to 1.0365. A bounce off the bullish channel's lower boundary will serve as an additional signal to confirm this downward trend. However, if there's a breakout at the Cloud's upper boundary and the price stabilizes above 1.0605, this scenario will be invalidated, suggesting a possible rise to 1.0705.

 

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NZDUSD

The NZDUSD pair, "New Zealand Dollar versus US Dollar", has managed to stay above the indicator's signal lines. The pair is trending downwards as it moves beneath the Ichimoku Cloud. It's anticipated that it will test the Cloud's lower boundary at 0.5935 before falling to 0.5845. A bounce off the bearish channel's upper boundary will serve as an additional signal confirming this downward trend.

However, if the price breaks out and settles above the Cloud's upper boundary at 0.5965, this scenario will be invalidated, indicating a potential rise to 0.6055. On the other hand, a breakout below the bullish channel's lower boundary and a settling price below 0.5905 could confirm the downward trend.​

 

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SOLUSD Analysis​

Amidst the ETF rumors, Solana’s price experienced a significant surge, peaking at $27, a trend that was mirrored by other cryptocurrencies. This spike in SOLUSD’s price resulted in it reaching the $24 - $27 resistance zone, causing both the RSI indicator and Stochastic oscillator to enter the overbought region.

Technical indicators suggest an impending market correction. With SOLUSD breaking the upper band of the Bollinger Bands, it’s anticipated that Solana will correct its recent gains and potentially decline to $22.4, aligning with the middle band of the Bollinger Bands.

This scenario is contingent on SOLUSD closing below the middle line of the Bollinger Bands on the 1-hour chart, which is currently around $23.5. If bearish momentum is observed, we can expect SOLUSD’s bearish trend to persist, with initial targets set at $23.24, followed by the $22 pivot point.​

 

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EURUSD

The European currency is stable between 1.05-1.06 levels due to lack of new data. Yesterday, there were no surprises due to the absence of significant economic data. The focus remains on the Middle East, but there are no signs of major escalation, bringing stability to international stock markets and reducing the need for dollar purchases.

It's too early to predict if de-escalation is likely. The European currency is under pressure due to ongoing concerns. Today's agenda includes U.S. retail sales data, which may confirm the U.S. economy's stronger momentum compared to Europe.

After a two-month downward trend, the European currency shows signs of stability. Unless there's a major market shock, it's likely to remain stable this month. As the market direction is unclear, it's best to wait and see. I'm considering buying more European currency after significant dips and new lows.​

 

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EURJPY

At the time of this EURJPY market analysis, the EURJPY is navigating a bullish channel, with the RSI indicator maintaining a position above the 50 level. On October 3, the pair managed to stay above the Ichimoku cloud, resulting in the continuation of the EURJPY uptrend. The primary hurdle for the EURJPY bulls is at the 158.64 mark.

For the bullish trend to persist, it’s crucial for the EURJPY bulls to achieve a close above the 158.64 level. Should this occur, the next target for this currency pair would be projected towards the 162.0 area.​

 

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GBPUSD

The British Pound (GBP) against the US Dollar (USD) is showing a decline in the European market on Tuesday. This is undoing some of the 0.65% increase we saw on Monday. The reason for this decline is weaker than expected growth in UK salaries, which is causing concern for those who want another rate hike from the Bank of England (BoE).

Everyone is waiting for the UK's inflation report for September, which will be released on Wednesday. The forecast is 6.5% year-on-year, compared to 6.7% in August, and the core is forecasted at 6.0% compared to 6.2% in August.

If the September figure meets or falls below expectations, it will further discourage a hawkish view on rates and keep the pound on the defensive.

The recent drop in value is putting pressure on the initial support level at 1.2141 (the upward trend line from the 1.2037 low), before a crucial point at 1.2122 (Friday's low). If it falls below this, it could signal further decline and risk retesting the October 4 low at 1.2037.

The converged 10/20 day moving averages at 1.2200/13 are a crucial barrier. If it breaks through this level and stays above it, it could sideline immediate downside threats and pave the way for a new recovery.​

 

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Bitcoin

Bitcoin has successfully breached the $28,000 threshold. This significant level had previously maintained Bitcoin’s price within a range of $28,000 to $25,000 since mid-August 2023.

Upon examining the BTCUSD 4-hour chart, it’s evident that Bitcoin, often referred to as ‘digital gold’, is trading within a bullish channel. However, the Relative Strength Index (RSI) indicator is currently in the overbought zone. The critical level that sustains BTCUSD’s bullish trend is $27,952. As long as the price remains above this level, Bitcoin is likely to trade above the median line of the bullish channel. Given that the RSI is in the overbought territory, a minor decline to the R1 level is anticipated. This level presents a substantial supply zone for BTCUSD bulls.

If the R1 level is breached, the next bearish target for the bulls would be the $27,237 pivot point, followed by the lower boundary of the bullish channel.​

 

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Crude Oil

The price of WTI oil increased by almost 1.5% during the Asian and early European trading sessions on Wednesday. This was due to renewed fears about oil supply after a deadly explosion at a hospital in Gaza increased tensions in the region.

The price started to rise again from the low of $81.52 on October 6 after a two-day pause. This rise is seen as a positive sign as it broke through an important level at $88.26.

If the price stays above this level, it could speed up towards the next key levels at $89.85 and $90.00.

However, some technical indicators on the daily chart are giving mixed signals. For example, the 14-day momentum is negative and the market is overbought. But, the rising daily Ichimoku cloud and moving averages turning bullish are supporting the price rise.

As long as the price stays above supports at $88.26 and $87.72, the positive outlook is expected to remain. But, if the price falls and closes below $86.67, there could be more downside risk.

Resistance levels: 89.05; 89.85; 90; 91
Support levels: 88.26; 87.72; 86.67; 85.59​

 

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EURUSD​

Last week, the EUR/USD tried to rise above a downward trend channel but didn’t succeed, so the channel is still active. The highest point reached was 1.0640, but it ended the day below the downward trend line, which might mean the trend line is still valid.

If it rises above the trend line, it could face resistance at 1.0620, 1.0640 and 1.0675, which are previous high points. Further up, there could be resistance at an earlier peak of 1.0737, which is currently where the 55-day simple moving average (SMA) is. Beyond that, another earlier high point near 1.0770 could also offer resistance.

A bearish triple moving average (TMA) pattern happens when the price is below the short-term SMA, which is below the medium-term SMA, which is in turn below the long-term SMA. All SMAs also need to be decreasing.

When looking at any combination of the 21-, 34-, 55- and 100-day SMAs, if they meet these conditions, it might suggest that a bearish momentum is developing.

On the downside, support might be found near the low points of early 2023 that were tested at the start of this month, with 1.0480 and 1.0440 as potential important levels.​

 

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EURJPY: Navigating the Fluctuations and Identifying Trading Opportunities

The EURJPY currency pair seems to have returned to its usual fluctuations after resisting a downward trend two weeks ago, which saw it drop to a three-month low at 154.39.

This decline went below the low of September and the 100-day Simple Moving Average (SMA), but managed to close above these levels in the following sessions.

This situation could present opportunities for a range trading strategy. For more insights on range trading, explore our related resources.

In terms of support, it could be found at the breakpoint and a recent low around 156.50. If there’s a continued downward trend, keep an eye on the previous lows and breakpoints at 154.39, 153.45, 151.60, 151.40, and 151.07.

Looking upwards, resistance might be encountered at recent highs and breakpoints near 158.65, 159.50, and 159.75.​

 

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Gold

Gold (XAUUSD) did great last week, reaching a high of 1930/32. It managed to hold a small resistance at 1940/45 all morning before breaking above 1950. This gave another buy signal aiming for 1962/65. We saw the day's high right there, and things still look good even though it's quite overbought. I don't see any reason to sell yet.

If it breaks above 1965, it could aim for 1970/75 & 1980/82, maybe even up to 1986/88. I'll keep an eye out for any sell signals.

There's solid support at 1938/33. If you're going long, you should put your stops below 1928.​