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Market Sentiment, Seasonality and Other Factors
By
PetrFiala, in Market News & Analysis
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By makuchaku
Hi everyone,
This is my maiden analysis using volume profile - so please don't hesitate to share your feedback.
As per the attached analysis, I think that SPY is primed for a short - for many reasons
- Multiple strong rejection of long positions exist at Resistance R1 and R2 : seems like sellers defending their positions
- Very strong short volume seen at R2 : further signifying sellers who are ready at that level
However, once the price reaches Support S1, there seems to be a strong buying sentiment which has rejected previous shorts. You can see trading ranges & pullbacks to S1 where buyers and sellers seem to agree on a price range, often leading to a buyer dominance.
What do you think?
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By HFblogNews · Posted
Date: 18th December 2024. UK Inflation Climbs: All Eyes on the Fed’s Next Move! US Retail Sales increase by 0.7% in November surpassing expectations of +0.6%. The US Dollar Index rose in value on Tuesday after starting the day with a bearish price gap. This week the US Dollar Index trades sideways as traders await the Fed’s rate decision. The Federal Reserve will confirm their rate decision this evening with most experts expecting a 0.25% adjustment. The UK’s inflation rate increases from 2.3% to 2.6% meeting the market’s previous expectations. The GBP quickly increases in value against all currencies. Analysts expect the Bank of England to pause but expect at least 2 monetary policy members to vote for a rate cut. GBPUSD - Both The Fed and BoE Are Scheduled To Announce Their Interest Rate Decisions! The GBPUSD rose up to 0.40% in value on Tuesday before slightly retracing and closing the day with a 0.21% gain. The increase in value is primarily due to the UK’s employment data which shows signs of stability and salary growth. The Bank of England is concerned the growth in salaries will continue to provide support for inflation. As a result, the BoE will likely pause in today’s rate decision. During this morning's Asian session, the GBP saw a sudden bullish spike after the UK made public its inflation rate. The UK’s inflation rate increased from 2.3% to 2.6% which is an 8 month high. The higher rate of inflation along with high salary growth is likely to prompt the Bank of England to keep the rate unchanged at tomorrow’s meeting and for the upcoming months thereafter. During this morning's Asian session, the GBP saw a sudden bullish spike after the UK made public its inflation rate. The UK’s inflation rate increased from 2.3% to 2.6% which is an 8 month high. The higher rate of inflation along with high salary growth is likely to prompt the Bank of England to keep the rate unchanged at tomorrow’s meeting and for the upcoming months thereafter. October's labor market data, which came in positive, continues to improve sentiment towards the Pound and UK. The unemployment rate held steady at 4.3%, employment rose by 173,000 instead of the expected drop of 12,000. Average wages, both with and without bonuses, grew by 5.2%, beating forecasts of 4.6% and 5.0%, respectively. On Tuesday, the GBP rose in value against the US Dollar, Swiss Franc and the Euro, but fell in value against the JPY. During this morning’s Asian session, the GBP is increasing in value against all currencies except against the Euro. However, traders will monitor if the GBP is able to maintain momentum against the US Dollar. Bank of England Supporting The GBP! As inflation in the UK over the past 3 years rose to a level substantially higher than the US and the Eurozone, the Bank of England is aiming to cut interest rates at a slower pace. The UK’s inflation peak was at 11.1%, the US inflation peak was 2% lower and the EU 0.5% lower. As a result, the GBP is maintaining its value and has been supported by this factor over the past 2 days. All experts currently believe the Bank of England will keep its base rate at 4.75% and cut rates at a slower pace than the Federal Reserve. However, investors believe that of the 9 members within the Monetary Policy Committee, 2 will vote for a rate cut. If more than 2 vote to cut rates, the Pound may come under short term pressure. Federal Reserve The Federal Reserve is due to make a decision on the Federal Fund Rate. Currently, the market believes the FOMC will vote to adjust rates by 0.25%. The CME FedWatch Tool indicates there is a 95% chance of the Federal Reserve opting to cut to 4.25-4.50% and the slightly lower bond yields also indicate a cut. However, when taking into consideration the rise in consumer and producer inflation, resilient employment sector and yesterday’s strong retail sales data, the possibility of a pause remains. The US Retail Sales increased by 0.7% in November surpassing expectations of +0.6%. The increase was the strongest in 4 months, however, Core Retail Sales only rose by 0.2%. One of the main elements which traders will be monitoring is if the Fed will indicate 2 or 3 cuts. Currently, the market is pricing in another 2 rate cuts. If the Chairman, Mr Powell, indicates the central bank could cut up to 3 times, the US Dollar is likely to come under pressure. Some traders fear that the Fed may suggest a full pause in the easing cycle or a significant slowdown in 2025. This concern has arisen because of inflation and newly elected US President Donald Trump's trade tariff policies on imports. If traders sense this hawkish tone within the Chairman’s Press Conference this evening, the US Dollar could see significant gains. Particularly as this will trigger higher bond yields which are already trading close to 6 month highs. For further information on the Federal Reserve and Bank of England’s rate decision traders can join HFM’s Live Analysis on YouTube (Today at 12:00 GMT). GBPUSD - Technical Analysis In terms of technical analysis, the GBPUSD maintains its slightly bullish bias as per yesterday’s market analysis article. However, even though the price has risen since yesterday, the GBPUSD has yet to hit the 1.27464 level mentioned earlier. The price movement will depend strongly on the Federal Reserve’s rate decision and the guidance they provide for the upcoming 1-2 quarters. If the GBPUSD is able to maintain bullish price movement and rise again back up to the day’s high (1.27264), the exchange rate may maintain its buy indications from Moving Averages, RSI and price action. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou HFMarkets 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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