Charting the Markets - June 22, 2023 (2023)

Introduction

Charting the Markets: 22 June - Dow, Nasdaq 100 and Nikkei come under pressure following hawkish Powell testimony. EUR/USD rallies, GBP/USD slips while USD/JPY trades near 7-month high. And Brent crude oil, copper and natural gas grind higher post Powell speech.

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Video

Foreign foreign thank you good morning and welcome to charting the markets on Thursday, the 22nd of June 2023.

Today we have a full economic calendar ahead of us and at 12 p.m.

Uk time we've got the bank of England and it will uh tell us whether it is going to hike its rates by another 25 basis, points or perhaps even 50 basis.

Points, as about 50 percent of economists, now seem to expect since yesterday's much higher than expected.

Uk inflation data- and basically this would take us to five percent if we were to see a 50 basis upon rate high in the UK, with the possibility of seeing further rate Heights by the end of this year, taking us to six percent.

Now we can analyze the impact of that later on and see what that also does to the ftse 100 in the short term.

But let's continue uh, because at 1, 30 PM we've got initial jobless claims out of of the US and then more importantly, in the U.S at 3 pm.

We also have Jerome Powell's testimony to Congress, and there like he did yesterday, he will tell us what the potential Outlook is with regards to the Federal Reserve and it hiking its rates further at 3 pm.

We also in Europe have the Eurozone consumer confidence sentiment index out.

So, let's begin by having a look at the UK, as I said, the bank of England is going to probably hike its rates for 13's time and today.

The question is whether it's going to be by 25 or 50 basis points, and if we look at the ftse 100 either way it doesn't really like.

What's going on and as you can see here, we've been coming off for the last four days and, interestingly enough from a technical perspective.

I already said so on Friday and again, I reiterated that on Mondays charting the market, that, for me the ftse was looking bearish and the reason from a technical perspective was that on Friday we tried to break through this previous resistance error between 7655 and 7679, the mid May low and early June high, but failed on this chart here and formed a shooting star here on the Candlestick chart, which was Then, followed by the decline we've seen taking us back down again towards the May low at 7433.

So the ftse 100 is really really continuing to under perform its European peers and actually all major markets around the globe, and this is probably to do with the fact that it doesn't contain any tech stocks and is a very heavily geared towards um, uh commodity stocks and with commodities not really performing that much recently.

It is taking the brunt, as you can see here so technically speaking, unless we now hold at today's low at 7 457 and manage to heave ourselves back up again above the red line here above the 200-day simple moving average at 7552.

We are likely to continue to head back down again so only if we were to rise today and close above 7552 and then tomorrow see some follow-through to the upside.

Could we retest not just the April to June downtrend line, but also this key resistance area that I mentioned uh since last week, but as I say, provided that resistance area actually caps? Further downside is for me, technically speaking, in store for the ftse 100 moving on to Germany.

What we've seen here is also very interesting because Germany surged over ahead last week to a new record all-time high on this daily Financial bet here at 16 428, but since then has actually had so far four consecutive days of falling prices, taking it down to the 55-day simple moving average here in Orange at 15 944 around which we are currently trading.

So basically, in last four days, we have um taken out nearly the last two two weeks of gains, and this is technically significant, because not only did we see negative Divergence as the new all-time record high and what I mean by that is that? Can you see here the high? We made last week at 16: 428 is smartly higher than the May height 16 333.

But if you look at the relative strength index the oscillator on the lower end of my chart here, you can see that the high, which corresponds with last week's high, is below the high scene in May.

So here the oscillator is turning down.

Whilst the market made a new high.

That is telling us that the odds are pretty high about 70 percent, that there is some future weakness going to see going to happen in that chart, and this is exactly what it's taken shape since then, um with the Dax 40 falling quite rapidly.

Now, from a medium-term perspective, there isn't any danger yet.

But as I mentioned since the beginning of this week, if we were to continue to fall and if we were to fall through the May and June lows, seen here between 5 15, 625 and 15 659, then we could form a major top and that could then take us all the way back down again towards the 200-day simple moving average of 14 755.

So watch this space in the days and weeks ahead, because this support here is really really critical for the Dax 14.

as long as it holds.

What we're seeing is just a correction in a longer term uptrend, which is just something that markets do especially over the summer months.

So it's nothing to worry about per se, but just watch out for those key support levels with regards to the medium term Trend in the days and weeks ahead, and the story is quite similar.

With regards to the NASDAQ 100 I mean the NASDAQ has been the greatest outperformer this year.

So far, um Rising very rapidly uh nearly to 25 percent, I believe and uh forming this High, which was uh to levels last seen in uh April of 2022 at 15 283.

But even here on the back of Jerome Powell's, testimony to U.S Congress yesterday and him basically reiterating the Hawker Style off the Federal Reserve.

Even though he did say that the FED would have to look at the data and perhaps slow down the pace of rate hikes, he did remain hawkish and that basically led to risk off sentiment.

As you can see here, taking the NASDAQ 100 through its May to June uptrend line for the first time in about two months and we'll have to see whether today, because right now we're just in the overnight session, whether today we can close below that, if so short term, it would be relatively negative, and that would mean we would probably retest the late May high at 14 530.

Here.

The support to look for is basically the late May and Karen June lows which take us back down towards um.

Let me just have a look here exactly 14 209 on this daily Financial bet.

So basically, what I'm saying is if we were to slide through 14 209 on a daily chart closing basis, then a top could be formed right now.

It's just a consolidation phase, a correction in a very healthy uptrend, Jerome Powell's speech yesterday in front of the US Senate Banking Committee has led to a fall in the U.S dollar, even though he basically continued to talk about hawker's stance to do with further rate hikes by the Federal Reserve, but he did say that there might be a Slowdown in those rate hikes and on that the US dollar depreciated quite rapidly pushing euro dollar the inverse here, much higher, and for the first time now, since May mid-may, we are trading back at the psychological 110 Mark with regards to euro dollar, and you can see here, the uptrend is very healthy.

We've had another search higher yesterday and now.

The next upside targets are the 10th of May, higher 1 1007, and then the 8th of May high at 1, 10, 53 and then above there you've got this key resistance area between the mid and late April highs between 1 10, 75 and 95.

So this is what we're aiming at right now with regards to euro dollar further upside in store and basically provided for me from a technical perspective.

We stay above this Tuesday's low.

As you can see here, we made a small um uh doji pattern here, where the open and close is more or less at the same level on The Stadium chart just above the orange line here, the 55-day simple, moving average at 108.87.

So basically, provided we stay below that last reaction.

Low, a reaction low is nothing else than a low which is lower than the one to the left and to the right on these candles, and this one here was made at 108.93 so, provided we say about 108.93 further upside should take us towards this key resistance area with regards to euro dollar.

Now the bridge pound is very interesting because um, despite uh, yesterday's much stronger than expected, UK inflation reading at 8.7 percent for May, and also core inflation hitting levels like traded back in March of 1992 at 7.1 percent.

Despite that, the exchange rate with regards to the British pound versus the US dollar actually declined uh short term before regaining some ground on those hawkish Commons by uh, the uh Fed chair, Jerome Powell and on the weaker US dollar, basically propping a cable here at the British pound against the US dollar up again, and you can see that we basically retested the June uptrend line yesterday, tested it exactly bounced off it, and today we are now grinding high again ahead of the 12 o'clock rate decision by the bank of England.

Where now, since yesterday's higher than expected, inflation reading about 50 percent of economists expect a 50 basis, point rate hike.

In that case, we would be hitting um five percent with regards to the base rate in the United Kingdom.

It would be the 13th straight hike, we've seen so far in this hiking cycle, so interesting to see whether we'll see 25 basis, point or 50 basis points later on at 12 o'clock, either way from a technical perspective, provide we stay above yesterday's low at 126.92 on cable.

Further upside should be seen and take us back up of the mid-june high 128 48 towards the 130 area.

But if we were to fall through 120 692, then we could perhaps retest the May high 126.79 and maybe slip back all the way down towards the mid-april early June highs between 1, 25, 99 and 44.

But right now the trend is your friend and it is pointing higher overnight.

In Japan, we had the bank of Japan Governor Jose weather, also, basically talk about the bank of Japan's still dovish stars and that led to dollar Yen short-term, coming off versus the US dollar, also, the testimony by Jerome Powell at the U.S Congress and the US.

Basically, the FED sticking to its whole response led to some volatility in trade, taking us to 142, Yen and 37 Cent, and if I move out onto a weekly chart taking us back to levels last scene in November of 2022, and here, if you can see, we have been rising on that interest rate, differential and future outlook with regards to the hawkerstans of the fed and that still double stance off the bank of Japan.

The currency pair has risen from 129 40 65 back in April in March, actually to the current high 142-37.

If that would be taking it to be taken out, then we would be heading towards a 145 um yen in the next few days and weeks now.

Here, short-term support is at uh, Tuesday's, low, 141.22 and Below.

There we've got the May to June uptrend line uh at 1, 40 64, and also the late May hire one 1493 as potential support.

But again, even though we're slowing down with regards to the upside here, the trend is still pointing higher for dollar yen.

The price of bread, crude oil is creeping back up again, as hopes of an improving economies, pushing uh the oil price higher and as the potential demand out of China could perhaps pick up again, but at the end of the day, if you look at this chart on Brent crude oil, you can see that we are just trading within a sideways trading range here and it really flips between these extremes, between 78.52 cents on the upside and 71.40, on the downside.

Basically, the high since and lows early May and uh, it's sort of um goes up.

A bit goes down a bit we're just trading sideways, but the push at the moment is to take us back up again towards the one month, resistance line and also the orange line at the 55-day simply moving average between 77.66 and 70 cents.

So that's where we are at at the moment.

If we fail there once again, as we have done three times in a row since early May, perhaps so we could slide back down again towards the May and junos around the 71 dollar mark But.

If we were to finally break through these levels, I've just mentioned at 77.70, we could then retest the May and June ice between 78.17 and 52 cents.

But let's see what happens with regards to that in the days ahead, uh and um right now, there's not much really going on.

With regards to the price of crude oil.

Moving on to Copper, uh copper has been really interesting.

Our flight, the price of copper, has been rising from its May low at 7 867 per ton and is now actually taking out all of my levels here.

So I need to remove that high here and uh.

We are currently testing the April early April low, that is at 866, and if we were to manage to rise above there, we could then be heading back up again towards the late March and April highs between 9094 9182 dollars.

So right now, as you can see here, we've had uh literally since um, the middle of June uh.

Only positive closes here more or less on the copper price, so copper, Rising again uh on hopes that maybe the global economy is not doing as badly as was feared a few weeks ago.

Moving on to natural gas and what we've seen here is also very interesting.

Let me just make this chart a little bit clearer to read what we've seen here is uh over the course of last week.

A very sharp acceleration to the upside on worries that um the supply to Europe with regards to Natural Gas, could not be met by demand from the top exporter Norway, as it had some output issues and that basically took us to 2.76 last or actually earlier this week to Motley below the May high at seven, a 2.78 cents, and since then the production in Norway has been ramped up again, apparently, but we so far dropped to 2.51 cents and now now heading back up again towards that resistance.

There I just mentioned between 2.76 and 78 cents, now interest.

Interestingly enough here, we've also been trading the Southwest trading range, but if, when the next upside Target would be the psychological three dollar Mark and then also the March height three dollars and five cents so provided we stay above yesterday's low at 2.51 cents, further upside looks to be likely with regards to the price of natural gas.

Thank you very much for watching charting the markets with me.

Axolotov, please feel free to follow me on Twitter my Twitter handle is Axel r, underscore IG.