NASDAQ, S&P 500, Dow Jones Analysis – NASDAQ Rallies As Meta Gains 28%

Key Insights

  • Tech stocks rallied as traders focused on the outstanding performance of Meta stock. 
  • S&P 500 and NASDAQ tested new highs and settled at levels that were last seen back in the summer of 2022.
  • Dow Jones underperformed as healthcare stocks found themselves under significant pressure.

S&P 500

S&P 500
S&P 500 020223 Daily Chart

S&P 500 tested new highs as Meta rallied 28% after the release of the earnings report. The company missed analyst estimates on earnings and beat them on revenue. Traders focused on the $40 billion buyback announced by Meta.

Today, traders also had a chance to take a look at the Initial Jobless Claims and Factory Orders reports.

Initial Jobless Claims report indicated that 183,000 Americans filed for unemployment benefits in a week, compared with the analyst consensus of 200,000. The report indicated that job market remained in a decent shape.

Factory Orders increased by 1.8% month-over-month in December, while analysts expected that they would grow by 2.2%.

NASDAQ

NASDAQ
NASDAQ 020223 Daily Chart

NASDAQ rallied as traders focused on the strong performance of Meta stock. The index is up by 20% from December lows, so one could argue that NASDAQ is about to enter a bull market.

Tesla, Amazon, and Alphabet are up by roughly 7% in today’s trading session as traders rush to buy mega cap stocks. The market sentiment is extremely bullish, and demand for tech stocks is strong. From the technical point of view, RSI is in the overbought territory, so the risks of a pullback are increasing.

Dow Jones

Dow Jones
Dow Jones 020223 Daily Chart

Dow Jones is the laggard among major indices today. Dow Jones’ performance is negatively impacted by the sell-off in healthcare stocks like UnitedHealth Group and Merck.

UnitedHealth Group is under strong pressure as Medicare Advantage proposed lower-than-expected rates for 2024. Merck stock declined after the release of the earnings report as the company expects that its COVID-related sales will drop in 2023.

For a look at all of today’s economic events, check out our economic calendar.

NASDAQ, S&P 500, Dow Jones Analysis – Stocks Keep Moving Higher As Appetite For Risk Grows

Key Insights

  • S&P 500 is trying to get to the test of the 4100 level. 
  • NASDAQ moved to new highs as Tesla stock rallied.
  • Dow Jones’ gains were limited due to the strong sell-offs in Chevron and Intel stocks. 

S&P 500 (SPX500)

S&P 500
S&P 500 270123 Daily Chart

S&P 500 is currently trying to settle above the 4080 level. Today, traders focused on the economic data from the U.S. PCE Price Index met expectations, while Consumer Sentiment and Pending Home Sales exceeded analyst forecasts. The economy remains in a decent shape despite recession worries, which is bullish for stocks.

The Fed decision, which will be released on February 1, will be the key event for markets in the near term. At this point, traders are not worried about hawkish Fed. The market expects that Fed will raise the rate by 25 bps at the next meeting and will not be able to push the rate above the 5.00% level in 2023. The encouraging economic reports did not change this consensus, which was bullish for S&P 500.

Today’s move is not broad, and several market segments are moving lower. Energy stocks got hit due to the pullback in oil markets.

American Express is the biggest gainer in the S&P 500 today. The stock is up by 12% after the strong earnings report.

Intel  is among the biggest losers in today’s trading session as the company missed analyst estimates on both earnings and revenue and presented disappointing guidance for the first quarter.

NASDAQ (NAS100)

NASDAQ
NASDAQ 270123 Daily Chart

NASDAQ rallied to new highs as Tesla gained 10% amid reports about high demand for Model Y in the U.S.

The general risk appetite is rising, which is bullish for the tech-heavy NASDAQ. Currently, NASDAQ is trying to settle above the resistance at 12,200. In case this attempt is successful, NASDAQ will move towards the next resistance level at 12,450.

Dow Jones (US30)

Dow Jones
Dow Jones 270123 Daily Chart

Dow Jones is today’s laggard due to the sell-off in Intel and Chevron shares. Chevron is down by 4% today as traders take profits near all-time highs and react to the pullback in oil markets.

For a look at all of today’s economic events, check out our economic calendar.

ETH Needs Upbeat Shanghai Hard Fork Testing News to Return to $1,650

Key Insights:

  • It was a bearish Thursday for bitcoin (BTC) and ethereum (ETH), while BTC wrapped up the day at $23,000 for the second time since August.
  • Updates from FTX bankruptcy proceedings left the pair in negative territory for the session.
  • Bearish sentiment continued to leave the pair in the red ahead of a busy US economic calendar.

Ethereum (ETH) fell by 0.74% on Thursday. Partially reversing a 3.66% rally from Wednesday, ETH ended the day at $1,601. ETH wrapped up the day a $1,600 for the sixth time in seven sessions.

A bullish start to the day saw ETH rise to an early high of $1,634. Coming up short of the First Major Resistance Level (R1) at $1,665, ETH slid to a late afternoon low of $1,578. However, steering clear of the First Major Support Level (S1) at $1,538, ETH revisited $1,612 before easing back.

On Thursday, bitcoin (BTC) slipped by 0.22%. Partially reversing a 1.89% gain from Wednesday, BTC ended the day at $23,004. Notably, BTC held onto the $23,000 handle for the second time since August 18.

A bullish start to the day saw BTC rise to an early high of $23,273. BTC broke through the First Major Resistance Level (R1) at $23,803 before sliding to a late afternoon low of $22,853. However, steering clear of the First Major Support Level (S1) at $22,315, BTC revisited $23,148 before easing back into the red.

BTC and ETH Continued to Decouple from the NASDAQ on FTX News

US economic indicators and corporate earnings failed to deliver BTC and ETH price support. Tighter labor market conditions and better-than-expected growth in Q4 tested buyer appetite ahead of today’s inflation numbers.

The bearish sentiment came despite softer inflationary pressure fueling bets of a less aggressive Fed interest rate trajectory.

Tesla Inc. (TSLA) earnings also delivered a bullish NASDAQ Index session, with Tesla recording record revenue. The NASDAQ Index rallied by 1.76% on Thursday.

From the crypto market, updates from FTX bankruptcy proceedings weighed on investor sentiment on Thursday and this morning. The release of a 116-page FTX creditor list drew investor interest.

While FTC cash & cash equivalents and non-strategic assets may make creditors whole, the list delivered investors a reality check, with Apple Inc (AAPL) among the long list of creditors. US lawmakers and regulators could likely see the list as an opportunity to clamp down on corporate America’s appetite and access to crypto assets.

This afternoon, investors should monitor the crypto news wires for updates on FTX and Genesis bankruptcy proceedings and other events that could move the dial.

Updates on the Ethereum Shanghai hard fork will draw plenty of interest. This week, testing began on the shadow Shanghai hard fork, with the community expecting the hard fork to take place in March. Reports of glitches and any suggestions of a delay to the March hard fork would test buyer appetite for ETH.

However, US inflation figures will influence this afternoon. Softer inflation figures would support a Fed pivot and the appetite for riskier assets. Personal income and spending numbers will also draw interest after two sharp monthly declines in retail sales.

While the prospect of a Fed pivot is price positive, the threat of a hard landing remains.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 1.14% to $1,583. A mixed start to the day saw ETH rise to an early high of $1,607 before falling to a low of $1,550.

ETH briefly fell through the First Major Support Level (S1) at $1,575 before finding support.

ETH sees early red.
ETHUSD 270123 Daily Chart

Technical Indicators

ETH needs to move through the $1,604 pivot to target the First Major Resistance Level (R1) at $1,631 and the Thursday high of $1,634. A return to $1,600 would signal a breakout session. However, the crypto news wires and US stats will have to be crypto-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,660. The Third Major Resistance Level (R3) sits at $1,716.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,575 in play. However, barring a broad-based crypto market sell-off, ETH should avoid sub-$1,550 and the Second Major Support Level (S2) at $1,548. The Third Major Support Level (S3) sits at $1,492.

ETH support levels in play below the pivot.
ETHUSD 270123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat at the 50-day EMA, currently at $1,585. The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering bullish signals.

A breakout from the 50-day EMA ($1,585) would support a move through R1 ($1,631) to target R2 ($1,660). However, a pullback from the 50-day EMA ($1,585) would support a fall through S1 ($1,575) to give the bears a run at S2 ($1,548) and the 100-day EMA ($1,532). A move through the 50-day EMA would send a bullish signal.

EMAs remain bullish.
ETHUSD 270123 4 Hourly Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.12% to $22,977. A bearish start to the day saw BTC fall from an early high of $23,061 to a low of $22,533.

BTC fell through the First Major Support Level (S1) at $22,814 and the Second Major Resistance Level (S2) at $22,623 before finding support.

BTC recovers early losses.
BTCUSD 270123 Daily Chart

Technical Indicators

BTC needs to move through the $23,043 pivot to target the First Major Resistance Level (R1) at $23,234 and the Thursday high of $23,273. A return to $23,000 would support a bullish session. However, the crypto news wires and US economic indicators should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,463 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $23,883.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,814 in play. In case of an extended sell-off, BTC would likely test the Second Major Support Level (S2) at $22,623 and support at $22,500. The Third Major Support Level (S3) sits at $22,203.

BTC support levels in play below the pivot.
BTCUSD 270123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,380. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($22,380) would support a breakout from R1 ($23,234) to target R2 ($23,463) and $23,500. However, a fall through S1 ($22,814) would give the bears a run at S2 ($22,623) and the 50-day EMA ($22,380). A fall through the 50-day EMA would send a bearish signal.

EMAs are bullish.
BTCUSD 270123 4 Hourly Chart

XRP to Target $0.42 on US Stats as Investors Await SEC v Ripple Rulings

Key Insights:

  • On Thursday, XRP fell by 1.86% to end the day at $0.40947.
  • FTX bankruptcy news weighed on investor sentiment, while SEC v Ripple updates took a back seat.
  • However, the technical indicators remain bullish, with XRP sitting above the 100-day EMA, signaling a return to $0.45.

On Thursday, XRP fell by 1.86%. Partially reversing a 2.26% gain from Wednesday, XRP ended the day at $0.40947. Despite the bearish session, XRP avoided a return to sub-$0.40 levels.

Bearish throughout the session, XRP fell from an early high of $0.41729 to a late afternoon low of $0.40549. However, steering clear of the First Major Support Level (S1) at $0.4020, XRP revisited $0.41347 before falling back into the deep red.

FTX Credit List Overshadows Upbeat US Economic Indicators

There were no updates from the ongoing SEC v Ripple case to distract investors on Thursday. The lack of updates left XRP in the hands of US economic indicators, corporate earnings, and the crypto news wires.

US Q4 GDP and jobless claims beat expectations supporting a bullish NASDAQ Index session. However, tighter labor market conditions and a better-than-expected Q4 could give the Fed hawks more wriggle room to lift rates higher, which curtailed an attempted afternoon recovery.

While corporate earnings supported the NASDAQ Index, FTX news weighed on crypto investor sentiment. The release of the FTX creditor list delivered the crypto market with a reality check, raising the threat of more draconian-style regulatory measures to limit the impact of the crypto market on more traditional asset classes.

Regulation by enforcement continues to weigh on investor sentiment as the SEC looks to bring the digital asset space under its purview. Losing the case to Ripple would likely hand the reins to the CFTC, which would be the more favored outcome for the crypto market.

William Hinman Speech-Related Documents Remain a Focal Point

Considering the SEC’s position in the SEC v Ripple case, the William Hinman speech-related documents could decide which regulatory authority regulates the digital asset space. A ruling in favor of the Defendants could force the SEC down the settlement path or face disclosing the content of the speech-related documents.

As background, former SEC Director of the Division of Corporation Finance William Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities. The contentious issue with the speech related to Hinman’s connection with Simpson Thacher, which is part of a group that promotes Enterprise Ethereum. After leaving the SEC, Hinman returned to Simpson Thacher.

Before the filing for redactions, the SEC had made at least six attempts to shield the speech-related documents under attorney-client privilege. Last week, Ripple CEO Brad Garlinghouse had this to say about the Hinman documents,

“When those come to light, I think you will see more kind of like, how is it possible for the SEC to decide to bring a case against Ripple given what they were saying within their own walls.”

The Day Ahead

Today, investors should monitor updates from the SEC v Ripple case. However, a lack of updates would leave the broader crypto market to provide direction. FTX and Genesis updates will remain key drivers. US economic indicators will draw interest this afternoon. Inflation, personal spending, and personal income are in focus.

A pickup in spending and inflation would weigh on the NASDAQ Index and the broader crypto market.

XRP Price Action

At the time of writing, XRP was down 1.39% to $0.40379. A mixed start to the day saw XRP rise to an early high of $0.41052 before falling to a low of $0.39899. XRP fell through the First Major Support Level (S1) at $0.4042 to test the Second Major Support Level (S2) at $0.3990.

XRP sees red.
XRPUSD 270123 Daily Chart

Technical Indicators

XRP needs to move through S1 and the $0.4108 pivot to target the First Major Resistance Level (R1) at $0.4160. A return to $0.4100 would signal a bullish session. However, the broader crypto market and SEC v Ripple chatter would need to support a breakout.

In the case of another extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4226 and resistance at $0.4250. The Third Major Resistance Level (R3) sits at $0.4344.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $0.3990 in play. However, barring another extended sell-off, XRP should avoid sub-$0.3900 and the Third Major Support Level (S3) at $0.3872.

XRP support levels in play.
XRPUSD 270123 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) sent a bullish signal.

At the time of writing, XRP sat above the 100-day EMA, currently at $0.39461. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA. The signals were mixed.

A breakout from the 50-day EMA ($0.40570) would support a move through R1 ($0.4160) to target R2 ($0.4226) and $0.4250. However, a fall through S2 ($0.3990) and the 100-day EMA ($0.39461) would bring S3 ($0.3872) into view. A move through the 50-day EMA would send a bullish signal.

EMAs remain bullish.
XRPUSD 270123 4 Hourly Chart

BTC Fear & Greed Index Enters the Greed Zone on Bullish BTC Sentiment

Key Insights:

  • It was a bearish Thursday, with BTC falling by 0.22% to end the day at $23,004.
  • FTX updates and US economic indicators weighed on BTC and the broader crypto market, which continued to decouple from the NASDAQ Index.
  • However, the Fear & Greed Index rose from 54/100 to 55/100 and entered the Greed zone for the first time since March 2022.

On Thursday, bitcoin (BTC) slipped by 0.22%. Partially reversing a 1.89% gain from Wednesday, BTC ended the day at $23,004. Notably, BTC held onto the $23,000 handle for the second time since August 18.

A bullish start to the day saw BTC rise to an early high of $23,273. Coming up short of the First Major Resistance Level (R1) at $23,803, BTC slid to a late afternoon low of $22,853. However, steering clear of the First Major Support Level (S1) at $22,315, BTC revisited $23,148 before easing back into the red.

FTX Creditor List Spooks Crypto Investors

It was a busier day on the US economic calendar, with US GDP and jobless claims figures in focus. Better-than-expected numbers weighed on investor sentiment, with initial jobless claims falling unexpectedly from 192k to 186k. In Q4, the US economy expanded by 2.9%, according to prelim figures, down marginally from 3.2% in Q3.

The latest numbers showed that the US economy faired better than previously anticipated but faces the risk of an economic contraction. US retail sales figures for November and December painted a grim outlook. In December, retail sales slid by 1.1%, following a 1.0% decline in November.

In response to the stats, the NASDAQ Composite Index rallied by 1.76%, with US corporate earnings supporting a bullish session. Tesla Inc (TSLA) reported record revenue to support the NASDAQ rally. This morning, the NASDAQ mini was down 80 points, weighing on BTC and the broader crypto market.

NASDAQ correlation.
NASDAQ – BTCUSD 270123 Hourly Chart

While US economic indicators and corporate earnings delivered NASDAQ support, the crypto news wires left BTC and the broader crypto market on the defensive.

On Thursday, FTX was in the spotlight. The release of a 116-page FTX creditor list drew investor interest. While FTX cash & cash equivalents and non-strategic assets may make creditors whole, the list delivered investors a reality check, with Apple Inc (AAPL) among the long list of creditors.

Significantly, the list will give US lawmakers and regulators reasons to introduce tight regulatory controls to limit the impact of the crypto market on corporate America and more traditional asset classes.

Today, US economic indicators will draw interest again, with personal spending and inflation in the spotlight. A pickup in spending and inflation would test buyer appetite.

However, investors need to continue monitoring the crypto news wires. Updates from FTX and Genesis bankruptcy proceedings will remain the key drivers, with regulatory chatter likely to draw interest after the release of the FTX creditor list.

The Fear & Greed Index Enters the Greed Zone

Today, the BTC Fear & Greed Index rose from 54/100 to 55/100. Despite a bearish BTC session, the Index entered the Greed zone for the first time since March 2022. The move signals a near-term BTC return to $25,000.

While bearish, BTC held onto the $23,000 handle for the second consecutive session, supporting the Index’s move into the Greed zone. Easing FTX and Genesis contagion risk continued delivering support.

However, regulatory risk remains a headwind. The latest FTX list raises the threat of draconian-style measures to regulate the digital asset space.

Near-term, the Index needs to remain within the Greed zone (55/100) to support a BTC run at $25,000.

Fear & Greed Index returns to the Greed zone.
Fear & Greed 270123

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.83% to $22,812. A bearish start to the day saw BTC fall from an early high of $23,061 to a low of $22,533. BTC fell through the First Major Support Level (S1) at $22,814 and briefly through the Second Major Resistance Level (S2) at $22,623.

BTC sees early red.
BTCUSD 270123 Daily Chart

Technical Indicators

BTC needs to move through S1 and the $23,043 pivot to target the First Major Resistance Level (R1) at $23,234 and the Thursday high of $23,273. A return to $23,000 would support a bullish session. However, the crypto news wires and US economic indicators should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,463 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $23,883.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $22,623 in play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,500 and the Third Major Support Level (S3) at $22,203.

BTC support levels in play.
BTCUSD 270123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,327. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S2 ($22,623) and the 50-day EMA ($22,327) would support a breakout from S1 ($22,814) to target R1 ($23,234). However, a fall through S2 ($22,623) would give the bears a run at the 50-day EMA ($22,327) and S3 ($22,203). A fall through the 50-day EMA would send a bearish signal.

EMAs remain bullish.
BTCUSD 270123 4 Hourly Chart

NASDAQ, S&P 500, Dow Jones Analysis – Markets Gain Ground As Tech Stocks Rally

Key Insights

  • S&P 500 moved towards the 4050 level as tech stocks enjoyed strong support. 
  • The tech-heavy NASDAQ tested the 12,000 level. 
  • Dow Jones underperformed as IBM shares declined by more than 4% after the company’s report missed analyst expectations.

S&P 500 (SPX500)

S&P 500
S&P 500 260123 Daily Chart

S&P 500 moved to new highs as traders reacted to the better-than-expected GDP data. The New Home Sales report also exceeded analyst expectations and provided additional support to stocks.

Tesla was up by more than 9% in today’s trading session after beating earnings estimates. The company’s encouraging production outlook provided additional support to the stock.

Western Digital gained 5% as Bloomberg reported that merger talks with Kioxia Holdings were progressing well.

From the technical point of view, S&P 500 managed to get above the recent resistance level and continues to rebound. The next significant resistance level for S&P 500 is located at 4100.

NASDAQ (NAS100)

NASDAQ
NASDAQ 260123 Daily Chart

NASDAQ gained strong upside momentum as demand for tech stocks remained strong. NASDAQ was the best performer among major U.S. indices today.

Big names like Apple, Microsoft, NVIDIA, Alphabet, and Meta have enjoyed strong support today, so NASDAQ tested multi-week highs.

Dow Jones (US30)

Dow Jones
Dow Jones 260123 Daily Chart

Dow Jones moved higher but failed to gain strong upside momentum due to the sell-off in IBM shares.

IBM stock declined by more than 4% in today’s trading session as traders reacted to the disappointing earnings report, which missed analyst expectations. The company announced that it would cut 3,900 jobs.

Interestingly, job cuts did not provide support to IBM stock. The market remains cautious, and traders do not believe that job cuts will lead to material improvements in the financial performance.

Chevron was up by more than 4% as the company announced a $75 billion buyback. The record buyback plans pushed Chevron stock closer to all-time high levels.

For a look at all of today’s economic events, check out our economic calendar.

Tesla Earnings Are a Hit, but Economic Headwinds Still Linger

Revenue of $24.3bn for the electric car company was slightly higher than the $24.07bn predicted by analysts and 33% growth year over year, suggesting that the automaker may be doing better than expected in the face of a number of concerns, such as a slipping demand for its cars, logistical holdups, an aged product portfolio, and heightened rivalry from competing manufacturers.

Tesla‘s stock price fell precipitously in 2022, dropping as much as 65% over the course of the year. According to Bloomberg, the collapse significantly reduced Musk’s personal wealth, earning him the unpleasant distinction of becoming the first person in history to suffer a $200 billion loss.

A post-market rally sent Tesla shares up by more than 4% following the release of the report. During Wednesday’s trading session, the stock price reversed upward, rising 0.4% to $144.34 according to ActivTrades’ data. The ActivTrades’ market sentiment indicator shows that its traders are highly bullish on the share, as 92% of all traders are buyers and 8% only are sellers.

Daily Tesla Chart – Source: ActivTrades online trading platform

Inside the Latest Tesla Earnings

On Wednesday, during the conference call with investors, Musk stated that demand this year had been the greatest the company has experienced so far. In comparison to the $2.32 billion, or 68 cents per share earned from a year earlier, net profit for the final quarter of 2022 was $3.69 billion, or $1.07 per share.

Annual revenue rose to $81.46 billion, up 51% from $53.82 billion in the previous fiscal year. In 2022, the automotive side of the business generated $71.46 billion of the total $81.46 billion in revenue. The operating margin came in at 16.8% for the year, compared to 12.1% the previous year. Earnings from carbon emission reductions also rose 21%, totaling $1.78 billion.

The majority of these yearly outcomes may be attributed to Q4 than any other quarter, with sales of $24.32 billion (up +37.0% on Q4/2021), with $21.31 billion attributable to the car sector, and a GAAP surplus of $3.69 million (+59.0% Year-over-Year).

The amount of EVs that Tesla delivered during the fourth quarter of 2022 was 405,278. This brought the total number of vehicles shipped out throughout the whole year to 1,313,851, a rise of 40% compared to 2021. Even more impressive is the 47% rise in production despite headwinds from shortages of parts and factory closures in China.

The market leader in EVs said that it will raise production “as quickly as possible” and claimed it was on target to produce around 1.8 million cars in 2023 in keeping with earlier predictions for average annual growth of 50%. However, the company also gave itself some leeway, indicating that, depending on a variety of unexplained circumstances, it may expand more quickly or more slowly.

Margins Are Getting Tighter as a Price War Takes Off

Tesla recently lowered the price of its vehicles across multiple major markets including the US, Europe, South Korea, Japan, Australia, and Singapore, starting a pricing war for EVs that will undoubtedly increase Tesla’s deliveries and put other established manufacturers to the test.

Late last year, Musk said that “radical interest rate changes” had driven up the cost of all vehicles, both new and used, and that Tesla would drop prices to maintain volume growth, even though doing so would also reduce profits.

The carmaker earlier this month announced a reduction in pricing for its Model Y and Model 3 vehicles by up to 20% in its most recent attempt to boost demand after many quarters of underwhelming delivery.

Tesla looks to be surrendering the profit margins that Wall Street praised while the business was facing production restrictions in order to keep expanding and fully use the factories that it has established or expanded in the previous year.

With the new Tesla pricing and the U.S. subsidy that kicked in this month, a customer in the United States may save 31% on a long-range Model Y. Moreover, Tesla’s new action expanded the range of its automobiles that qualify for the Biden administration’s tax credit.

Tesla shares somewhat recovered their losses in January after the announcement of price drops. It would seem that the price cuts helped convince investors that Tesla had a strategy to continue to maintain its dominant position in the electric vehicle market.

CEO Stretched Thin

Musk’s schedule was already packed as the CEO of Tesla and SpaceX, but when he became Twitter’s CEO in October 2022, it understandably became a major source of stress for him. Musk in November last year stated during an on-stage interview with billionaire mutual fund manager Ron Baron, whose business, Baron Capital Group, sponsored the conference, that his work week increased from 70 to 80 hours to a staggering 120.

Musk has said before that he would step down as Twitter CEO once a successor is found, but up until now the public has not been given any new information on the search.

The CEO is no stranger to getting tangled up in controversy over some of his Twitter antics. He happens to be in court at the moment, defending himself from an infamous tweet from five years ago about taking Tesla private. After investors claimed the 2018 tweet cost them millions of dollars when a transaction fell through, the CEO of the electric vehicle firm is now on trial for fraud.

According to Musk, a meeting with a Saudi Arabian sovereign wealth fund revealed support for a transaction, but he acknowledged that he never brought forward a precise financing figure in the first place.

After tweeting on August 7, 2018, that he had a deal organized to take Tesla private for $420 (£341) per share, and that there was “funding secured,” Mr. Musk is accused of misleading investors.

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Tesla Up Over 5.52% on Earnings Beat, But Low Gross Margins Raise Concerns

Tesla is up slightly in afterhours trading Wednesday evening after the company beat Wall Street targets for fourth-quarter revenue and profit despite a sharp decline in vehicle profit margins. Additionally, remarks in the report sought to reassure investors that it can cut costs and continue to generate cash as competition intensifies in the year ahead.

The company said revenue was $24.32 billion for the three months ended Dec. 31, compared with analysts’ average estimate of $24.16 billion, according to IBES data from Refinitiv.

Additionally, Net profit for the quarter was $3.69 billion, or $1.07 per share, compared with $2.32 billion, or 68 cents per share, a year earlier. Adjusted earnings per share of $1.19 topped the Wall Street analyst average of $113.

At 00:05 GMT, Tesla is trading 5.52% higher.

Daily Tesla

Executives Address Profit Margins, Musk Says Recession is Probable

Tesla executive forecast that prices would stay relatively low, at an average $47,000, and that automotive profit margins, which dropped to a two-year low of 25.9% in the reported quarter, would be above 20%, according to Reuters.

After the report, Chief Executive Elon Musk, while addressing concerns that a weak economy would throttle buyers’ interest, said Tesla Inc’s aggressive price cuts have created a wave of demand for its electric vehicles.

Musk Optimistic About Demand

Deep price cuts in January have positioned Tesla as the initiator of a price war, but its forecast of a 37% rise in car volume for the year, to 1.8 million vehicles, was down from 2022’s pace.

Tesla investors are focusing on the company’s long-term target of a compounded 50% annual rise in sales, but this could prove difficult due to the possibility of a weak global economy.

Musk addressed this issue at the start of a conference call with investors and analysts. “These price changes really make a difference for the average consumer,” he said, adding that demand was roughly double production in January and that sales in 2023 could hit 2 million vehicles, absent external disruption.

Musk also said recession was probable, but while acknowledging concerns about the uncertain economy, he said it is “accelerating our cost reduction roadmap and driving towards higher production rates” in the near term.

Some Investors See More Upside to Profitability

Today’s early gains suggest investors are optimistic about Tesla’s future because of the company’s profitability. Analysts had said Tesla’s profitability gave it room to cut prices and pressure rivals. Hence, the so-called price war.

For example, consider that the company’s $9000 in net profit per vehicle in the past quarter was more than seven times the comparable figure for Toyota Motor Corp in the third quarter. Although this figure was down almost $9,700 in the third quarter.

Some Investors See Red Flags

Tesla boss Elon Musk has introduced big discounts to car prices, a potential sign of panic amid weakening demand – or an opportunistic move to knee cap rivals, according to Reuters.

Even the most bearish investors acknowledge that the $450 billion car company’s industry-leading profit margins give it plenty of ammo. However, they see potential headwinds if the global economy turns gloomy. If this were to happen, even strong profit margins may not be enough to prevent a derailing of Elon Musk’s plan for total market domination.

Wednesday’s earnings report did beat the estimates but it also raised a red flag, profits fell from their peak.

For a look at all of today’s economic events, check out our economic calendar.

ETH and a Return to $1,650 in the Hands of US Corporate Earnings

Key Insights:

  • It was a bearish Tuesday for bitcoin (BTC) and ethereum (ETH), with the ETH ending the day at sub-$1,600 for the first time in five sessions.
  • Binance news and a bearish NASDAQ Composite Index led to a broad-based crypto pullback.
  • However, it was a bullish start to the Wednesday session.

Ethereum (ETH) slid by 4.36% on Tuesday. Following a 0.06% decline on Monday, ETH ended the day at $1,556. ETH ended the day at sub-$1,600 for the first time in five sessions.

A bullish start to the day saw ETH rise to an early high of $1,642. Coming up short of the First Major Resistance Level (R1) at $1,656, ETH slid to a late low of $1,529. ETH fell through the First Major Support Level (S1) at $1,591 and briefly through the Second Major Support Level (S2) at $1,555 before ending the day at $1,556.

On Tuesday, bitcoin (BTC) slid by 1.24%. Reversing a 0.87% gain from Monday, BTC ended the day at $22,627. Notably, BTC revisited $23,000 for the fourth consecutive session.

A bullish start to the day saw BTC rise to an early high of $23,154. Coming up short of the First Major Resistance Level (R1) at $23,220, BTC slid to a final-hour low of $22,437. BTC briefly fell through the First Major Support Level (S1) at $22,548 before ending the day at $22,627.

The NASDAQ Composite Index and Binance Weigh on Investor Sentiment

Market sentiment toward an FTX revival and smooth Genesis bankruptcy proceedings failed to deliver support on Tuesday.

News of Binance commingling customer funds with reserve funds in a single wallet weighed on market sentiment. While Binance was addressing the issue, investor sensitivity to negative news led to a sharp pullback, with regulatory risk also a headwind for investors to consider.

US economic indicators and the NASDAQ Index added to the bearish mood, with the US private sector continuing to contract in January.

Today, investors need to continue monitoring Genesis and FTX news updates, with Shanghai hard fork chatter also needing consideration. In the afternoon session, US corporate earnings will also provide direction. Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

We expect the earnings results and outlooks to influence riskier assets.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.05% to $1,557. A choppy start to the day saw ETH slide to an early low of $1,514 before rising to a high of $1,559.

ETH finds mid-morning support.
ETHUSD 250123 Daily Chart

Technical Indicators

ETH needs to move through the $1,576 pivot to target the First Major Resistance Level (R1) at $1,622 and the Tuesday high of $1,642. A return to $1,620 would signal a breakout session. However, the crypto news wires will have to be crypto-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,689 and resistance at $1,700. The Third Major Resistance Level (R3) sits at $1,802.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,509 in play. However, barring another broad-based crypto market sell-off, ETH should avoid the Second Major Support Level (S2) at $1,463. The Third Major Support Level (S3) sits at $1,350.

ETH support levels in play below the pivot.
ETHUSD 250123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 100-day EMA, currently at $1,516. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering mixed signals.

A move through the 50-day EMA ($1,583) would support a breakout from R1 ($1,622) to target R2 ($1,689) and $1,700. However, a fall through the 100-day EMA ($1,516) and S1 ($1,509) would give the bears a run at S2 ($1,463). A move through the 50-day EMA would signal a bullish move.

EMAs remain bullish.
ETHUSD 250123 4 Hourly Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.46% to $22,732. A mixed start to the day saw BTC fall to an early low of $22,324 before rising to a high of $22,761. The First Major Support Level (S1) at $22,325 delivered early support.

BTC finds early support.
BTCUSD 250123 Daily Chart

Technical Indicators

BTC needs to move through the $22,739 pivot to target the First Major Resistance Level (R1) at $23,042 and the Tuesday high of $23,154. A return to $23,000 would support a bullish session. However, the crypto news wires should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,456 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $24,173.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,325 in play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,022 should limit the downside. The Third Major Support Level (S3) sits at $21,305.

BTC support levels in play below the pivot.
BTCUSD 250123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,006. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($22,006) would support a breakout from R1 ($23,042) to target R2 ($23,456) and $23,500. However, a fall through S1 ($22,325) would give the bears a run at S2 ($22,022) and the 50-day EMA ($22,006). A fall through the 50-day EMA would signal a shift in sentiment.

EMAs are bullish.
BTCUSD 250123 4 Hourly Chart

ADA Price Prediction: Bulls to Target $0.400 on Djed Launch Date

Key Insights:

  • ADA saw red for a second consecutive session on Tuesday, sliding by 4.27% to end the day at $0.359.
  • A lack of algorithmic stablecoin launch news left ADA in the hands of a bearish crypto market.
  • However, the technical indicators are bullish, signaling a return to $0.400.

ADA slid by 4.27% on Tuesday. Following a 0.27% decline on Monday, ADA ended the day at $0.359. Notably, ADA revisited the $0.38 handle for the fourth consecutive session.

A bullish start to the day saw ADA rise to a late-morning high of $0.383. Coming up against the First Major Resistance Level (R1) at $0.383, ADA slid to a late low of $0.355. ADA fell through the First Major Support Level (S1) at $0.368 and the Second Major Resistance Level (S2) at $0.361 to end the day at $0.359.

Network Updates Took a Backseat in a Broad-Based Crypto Pullback

On Tuesday, Input Output (HK) (IOHK) released the latest on the Lace platform, announcing that the 0.5.1 release of the Lace Platform is ready for public testing. IOHK also circulated the Cardano Community Digest for January 23. Focal points of the Digest included,

  • Toolkit launch for developing custom sidechains on Cardano.
  • Update on temporary disruption of nodes.
  • 1-year celebration of Cardano Catalyst Women.
  • DropDropz open-sourcing their on-Chain voting system.
  • Top 15 most engaged Cardano topics on Reddit, including the first automotive project with e-Tuk-Tuk in Davos.

The latest Digest gave investors a snapshot of the level of activity on the Cardano network. However, the updates weren’t enough to prevent a sharp pullback, with news of Binance commingling customer and reserve funds in a single wallet and a bearish NASDAQ Index weighing on investor sentiment.

Bearish sentiment toward the temporary disruption of nodes likely continued to contribute to the bearish mood.

Today, investors should continue monitoring network updates and the crypto news wires. Today, COTI announced the launch date of the Djed algorithmic stable, which should deliver near-term price support. COTI will launch the Djed algo stablecoin next week. However, updates from Binance and on FTX and Genesis bankruptcy proceedings will also influence.

In the afternoon session, US corporate earnings and the NASDAQ Index will likely influence investor sentiment. Better-than-forecasted earnings results and positive outlooks would support riskier assets. Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

ADA Price Action

This morning, ADA was down 1.39% to $0.354. A bearish start to the day saw ADA fall from an early high of $0.359 to a low of $0.347. The First Major Support Level (S1) at $0.348 limited the downside.

ADA sees red.
ADAUSD 250123 Daily Chart

Technical Indicators

ADA needs to move through the $0.366 pivot to test the First Major Resistance Level (R1) at $0.376 and the Tuesday high of $0.383. A return to $0.370 would signal a breakout session. However, Cardano updates and the broader crypto market would need to support a bullish session.

In the event of a breakout, ADA would likely test the Second Major Resistance Level (R2) at $0.394 and resistance at $0.400. The Third Major Resistance Level (R3) sits at $0.422.

Failure to move through the pivot ($0.366) would leave the First Major Support Level (S1) at $0.348 in play. Barring another broad-based crypto sell-off, ADA should avoid sub-$0.340 and the Second Major Support Level (S2) at $0.338. The Third Major Support Level (S3) sits at $0.310.

ADA support levels in play below the pivot.
ADAUSD 250123 Hourly Chart

This morning, the EMAs and the 4-hourly candlestick chart (below) sent a bullish signal.

ADA sat above the 100-day EMA, currently at $0.342. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering mixed signals.

A move through the 50-day EMA ($0.360) would support a breakout from R1 ($0.376) to target R2 ($0.394) and $0.390. However, a fall through S1 ($0.348) would bring the 100-day EMA ($0.342) and S2 ($0.338) into view. A move through the 50-day EMA would signal a bullish move.

EMAs remain bullish.
ADAUSD 250123 4-Hourly Chart

XRP Bulls Need a Surprise SEC v Ripple Court Ruling to Deliver $0.45

Key Insights:

  • On Tuesday, XRP joined the broader crypto market in the red, sliding by 3.92% to end the day at $0.40802.
  • Sentiment toward the SEC v Ripple case took a backseat, with investors responding to the latest Binance news and a bearish NASDAQ session.
  • However, the technical indicators remain bullish, with XRP sitting above the 50-day EMA, signaling a return to $0.45.

On Tuesday, XRP slid by 3.92%. Partially reversing a 5.97% rally from Monday, XRP ended the day at $0.40802. XRP visited $0.43 for the second time since November 8.

A bullish start to the day saw XRP rally to a late morning high of $0.43106 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $0.4384, XRP slid to a late low of $0.40314. XRP briefly fell through the First Major Support Level (S1) at $0.4056 before ending the day at $0.40802.

SEC v Ripple Sentiment Takes a Backseat as Binance Faces Scrutiny

It was another quiet session on Tuesday. A lack of updates from the ongoing SEC v Ripple case left XRP in the hands of the broader crypto market.

Binance was in the news on Tuesday, with reports of Binance commingling customer and reserve funds in a single wallet, causing investor angst. Amidst increased regulatory scrutiny in the wake of the FTX collapse, more negative news brings the crypto market unwanted attention.

However, hopes of a smooth end to the Genesis bankruptcy proceedings and an FTX revival will continue to provide price support.

Today, the broader crypto market will likely continue to guide XRP. FTX, Genesis, and Binance will remain focal points. However, XRP would need Court rulings from the SEC v Ripple case to support a decoupling from the broader crypto market.

While there are no US economic indicators to consider, US corporate earnings will influence investor sentiment. Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

XRP Price Action

At the time of writing, XRP was down 1.01% to $0.40391. A bearish start to the day saw XRP fall from an early high of $0.40744 to a low of $0.39770.

XRP sees red.
XRPUSD 250123 Daily Chart

Technical Indicators

XRP needs to move through the $0.4141 pivot to target the First Major Resistance Level (R1) at $0.4250 and the Tuesday high of $0.43106. A return to $0.42 would signal a bullish session. However, the broader crypto market and SEC v Ripple chatter would need to support a breakout.

In the case of another extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4420. The Third Major Resistance Level (R3) sits at $0.4699.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3971 in play. However, barring another extended sell-off, XRP should avoid sub-$0.3950 and the Second Major Support Level (S2) at $0.3862. The Third Major Support Level (S3) sits at $0.3582.

XRP support levels in play below the pivot.
XRPUSD 250123 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) sent a bullish signal.

At the time of writing, XRP sat above the 50-day EMA, currently at $0.40328. The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA. The signals were bullish.

A hold above the 50-day EMA ($0.40328) would support a breakout from R1 ($0.4250) to target R2 ($0.4420). However, a fall through the 50-day EMA ($0.40328) would bring S1 ($0.3971) and the 100-day EMA ($0.39024) into view. A pullback from the 50-day EMA would be a bearish signal.

EMAs remain bullish.
XRPUSD 250123 4 Hourly Chart

BTC Fear & Greed Index Stays Neutral Signaling a BTC Return to $23,000

Key Insights:

  • It was a bearish Tuesday, with BTC sliding by 1.24% to end the day at $22,627.
  • Binance news and a bearish NASDAQ session left BTC in the red for the second time in six sessions.
  • The Fear & Greed Index slipped from 52/100 to 51/100 but remained within the neutral zone.

On Tuesday, bitcoin (BTC) slid by 1.24%. Reversing a 0.87% gain from Monday, BTC ended the day at $22,627. Notably, BTC revisited $23,000 for the fourth consecutive session.

A bullish start to the day saw BTC rise to an early high of $23,154. Coming up short of the First Major Resistance Level (R1) at $23,220, BTC slid to a final-hour low of $22,437. BTC briefly fell through the First Major Support Level (S1) at $22,548 before ending the day at $22,627.

Binance News, Regulatory Chatter, and the NASDAQ Index Send BTC South

It was a busy Tuesday session, with US economic indicators testing buyer appetite.

While prelim PMI numbers for January beat forecasts, the latest numbers revealed a continued contraction in the private sector, leaving uncertainty over whether the Fed can avoid a hard landing. The manufacturing PMI rose from 46.2 to 46.8, with the services PMI up from 44.7 to 46.6.

Responding to the stats and corporate earnings, the NASDAQ Index fell by 0.27%, with the S&P 500 seeing a 0.07% loss. The NASDAQ mini was down 87 points this morning, signaling a bearish US session.

While US stats and the NASDAQ Composite Index influenced, Binance was back in the news, weighing on investor sentiment. News of Binance commingling customer funds with reserve funds caught investors by surprise. The latest news comes at the wrong time for investors that continue to grapple with the collapse of FTX and the Genesis bankruptcy.

In December, Binance came under pressure, with a FUD campaign and proof-of-reserve issues raising fears of a liquidity crunch. While market conditions improved this month, investor sensitivity to negative news remains.

Today, Genesis and Binance will remain in the spotlight. However, further talk of an FTX revival and upbeat US corporate earnings would deliver support. Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

NASDAQ Correlation.
NASDAQ – BTCUSD 250123 Hourly Chart

The Fear & Greed Index Remains Neutral Despite a Bearish BTC

Today, the BTC Fear & Greed Index slipped from 52/100 to 51/100. Despite the decline, the Index remained within the Neutral zone. BTC revisited $23,000 for the fourth consecutive session, providing support and the Index move toward the Greed zone.

Uncertainty toward the US economic outlook and Fed monetary policy has pegged the Index back. On Tuesday, the latest Binance news and the ongoing Genesis bankruptcy proceedings also left investors on a cautious footing.

Investors anticipate a material shift in the crypto regulatory landscape. More negative crypto news would incentivize US lawmakers and regulatory bodies to introduce more draconian measures to protect investors. However, a favorable outcome to the Genesis bankruptcy and an FTX revival should support an Index return to the Greed zone.

Near-term, the Index would need to return to the Greed zone (55/100) to support a BTC run at $25,000. The Index last visited the Greed zone in March 2022.

Fear & Greed Index remains neutral.
Fear & Greed 250123

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.27% to $22,566. A mixed start to the day saw BTC rise to an early high of $22,699 before falling to a low of $22,324.

BTC sees early red.
BTCUSD 250123 Daily Chart

Technical Indicators

BTC needs to move through the $22,739 pivot to target the First Major Resistance Level (R1) at $23,042 and the Tuesday high of $23,154. A return to $23,000 would support a bullish session. However, the crypto news wires should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,456 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $24,173.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,325 in play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,022 should limit the downside. The Third Major Support Level (S3) sits at $21,305.

BTC support levels in play below the pivot.
BTCUSD 250123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $21,973. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($21,973) would support a breakout from R1 ($23,042) to target R2 ($23,456) and $23,500. However, a fall through S1 ($22,325) would give the bears a run at S2 ($22,022) and the 50-day EMA ($21,973). A fall through the 50-day EMA would signal a shift in sentiment.

EMAs remain bullish.
BTCUSD 250123 4 Hourly Chart

GBP to USD Forecasts: PPI Input Numbers to Test Buyers at $1.2300

It is a busy day ahead for the GBP/USD. Early in the session, wholesale inflation figures for December will be in the spotlight. Softer inflationary pressure would ease pressure on the Bank of England to maintain a hawkish policy stance to bring inflation to target.

On Tuesday, the UK Composite PMI survey highlighted a further decline in cost pressures, which eased back to their lowest since April 2021. However, firms cited wage pressures as the key driver behind rising business expenses, which may leave the BoE hawkish near term.

Average prices charged increased sharply in January, with firms attempting to pass on the upward trend in staffing costs. With wage growth being the key contributor, a pickup in wholesale inflationary pressures will keep pressure on the BoE.

Economists forecast the Producer Price Index Input component to soften from an annual rate of 19.2% to 18.0% while expecting the Output component to pick up from 14.8% to 16.4%. An unexpected rise in the input component would draw more interest.

Hotter numbers would force the BoE to take a more assertive steps to bring inflation under control. However, a more aggressive interest rate trajectory would also have a more adverse affect on the UK economy.

While inflation is back in the spotlight, no Monetary Policy Committee Members are speaking today, leaving investors to monitor chatter with the media.

GBP/USD Price Action

At the time of writing, the Pound was down 0.07% to $1.23259. A mixed start to the day saw the GBP/USD rise to an early high of $1.23367 before falling to a low of $1.23110.

GBP to USD sees early red.
GBPUSD 250123 Daily Chart

Technical Indicators

The Pound needs to move through the $1.2337 pivot to target the First Major Resistance Level (R1) at $1.2411 and the Tuesday high of $1.24134. A return to $1.24 would signal an extended breakout session.

In the event of an extended rally, the GBP to USD would likely test the Second Major Resistance Level (R2) at $1.2487. The Third Major Resistance Level sits at $1.2638.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2260 in play. However, barring a data-fueled sell-off, the GBP/USD should avoid sub-$1.2200 and the second Major Support Level (S2) at $1.2187.

The Third Major Support Level (S3) sits at $1.2036.

GBP to USD support levels in play below the pivot.
GBPUSD 250123 1 Hourly Chart

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 50-day EMA, currently at $1.23034. The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.23034) would support a breakout from R1 ($1.2411) to target R2 ($1.2487) and $1.25. However, a fall through the 50-day EMA ($1.23034) would bring S1 $1.2260 and the 100-day EMA ($1.22390) into view. A fall through the 50-day EMA would send a bearish signal.

EMAs remain bullish.
GBPUSD 250123 4-Hourly Chart

The US Session

It is a quiet day ahead on the US economic calendar. There are no US economic indicators for investors to consider, leaving corporate earnings to influence market risk sentiment.

Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

However, there are also FOMC members speaking today to influence, with the Fed having entered the blackout period on Saturday.

BTC Fear & Greed Index Inches Higher to Signal a Bullish BTC Session

Key Insights:

  • It was a bullish Sunday, with BTC rising by 0.87% to end the day at $22,910.
  • Genesis bankruptcy court news and a bullish NASDAQ Index delivered a fourth gain from five sessions.
  • The Fear & Greed Index rose from 50/100 to 52/100 but remained within the neutral zone.

On Monday, bitcoin (BTC) rose by 0.87%. Reversing a 0.27% loss from Sunday, BTC ended the day at $22,910. Notably, BTC revisited $23,000 for the third time since August.

After a range-bound morning, BTC fell to a mid-afternoon low of $22,497 before finding support. Steering clear of the First Major Support Level (S1) at $22,325, BTC rose to a late afternoon high of $23,169. BTC broke through the First Major Resistance Level (R1) at $23,087 before easing back to end the day at $22,910.

The Genesis Bankruptcy and the NASDAQ Index Deliver BTC Support

It was a busier session. The first day of Genesis bankruptcy proceedings drew interest in the afternoon session.

Genesis lawyers and creditors were reportedly optimistic about resolving the disputes with creditors. Genesis lawyers also told the Court that they are exploring the possibility of selling the firm to make creditors whole. It was a crypto market-friendly start to bankruptcy proceedings, supporting the bullish start to the week.

The NASDAQ Index also delivered support, with tech stocks in rally mode. The bullish start to the week came ahead of a busy earnings calendar, with Microsoft (MSFT) and Tesla (TSLA) among the big names to release earnings this week.

The NASDAQ Index rose by 2.01%, with the S&P 500 rising by 1.19%.

Today, Genesis and FTX news will remain key drivers. However, in the afternoon session, US economic indicators and corporate earnings will also provide direction. Prelim January private sector PMIs will need to be better than expected to support a bullish session. Microsoft will release earnings results that will also draw interest.

The NASDAQ Index was down 14.5 points this morning.

NASDAQ correlation.
NASDAQ – BTCUSD 240123 Hourly Chart

The Fear & Greed Index Remains Neutral Despite a Bullish BTC

Today, the BTC Fear & Greed Index rose from 50/100 to 52/100. Despite the increase, the Index remained within the Neutral zone, with BTC unable to hold onto the $23,000 handle. Nonetheless, the third visit to $23,000 since August provided support and a move toward the Greed zone.

Uncertainty toward the US economic outlook and Fed monetary policy has pegged the Index back. The Genesis bankruptcy is another near-term headwind. A favorable outcome to the Genesis bankruptcy and an FTX revival should support an Index return to the Greed zone.

Near-term, the Index would need to return to the Greed zone (55/100) to support a BTC run at $25,000. The Index last visited the Greed zone in March 2022.

Fear & Greed Index climbs toward the Greed zone.
Fear & Greed 240123

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.11% to $22,936. A mixed start to the day saw BTC fall to an early low of $22,857 before rising to a high of $22,958.

BTC finds early support.
BTCUSD 240123 Daily Chart

Technical Indicators

BTC needs to avoid the $22,859 pivot to target the First Major Resistance Level (R1) at $23,220 and last week’s high of $23,353. A return to $23,000 would support a bullish session. However, the crypto news wires and US stats and earnings should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,531. The Third Major Resistance Level (R3) sits at $24,203.

A fall through the pivot would bring the First Major Support Level (S1) at $22,548 into play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,187 should limit the downside. The Third Major Support Level (S3) sits at $21,515.

BTC resistance levels in play above the pivot.
BTCUSD 240123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $21,733. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($21,733) would support a breakout from R1 ($23,220) to target R2 ($23,531) and $24,000. However, a fall through S1 ($22,548) would give the bears a run at S2 ($22,187) and the 50-day EMA ($21,733). A fall through the 50-day EMA would signal a shift in sentiment.

EMAs are bullish.
BTCUSD 240123 4 Hourly Chart

Crypto Market Daily Highlights – XRP Leads a Mixed Top Ten

Key Insights:

  • It was a mixed Monday session for the crypto top ten. ADA and ETH bucked a bullish trend.
  • The NASDAQ Index and Genesis bankruptcy news updates delivered a bullish session.
  • The crypto market cap rose by $9.02 billion to end the day at $1,000 billion.

It was a mixed session for the crypto top ten on Monday. ADA and ETH bucked a bullish top-ten trend while XRP led the way. Notably, BTC revisited $23,000 for the third time since August while failing to strike a new 2023 high.

A bullish NASDAQ Index session delivered support on Monday, with tech stocks in rally mode. The bullish start to the week came ahead of a busy earnings calendar, with Microsoft (MSFT) and Tesla (TSLA) among the big names to release earnings this week.

The NASDAQ Index rose by 2.01%, with the S&P 500 rising by 1.19%.

From the crypto news wires, Gemini announced plans to cut its workforce by 10%, while Genesis lawyers and creditors were reportedly optimistic about resolving the disputes with creditors. Genesis lawyers also told the Court that they are exploring the possibility of selling the firm to make creditors whole.

It was a crypto market-friendly start to bankruptcy proceedings, supporting the bullish start to the week.

Today, US economic indicators and corporate earnings will likely provide the NASDAQ Index and the crypto market with direction in the afternoon session.

Prelim January private sector PMIs will need to be better than expected to support a bullish session. Microsoft (MSFT) will release earnings results that will also draw interest. However, updates on FTX and Genesis will likely have more influence on the broader crypto market.

This morning, the NASDAQ mini was down 11.75 points.

NASDAQ correlation.
Total Market Cap – NASDAQ – 240123 Hourly Chart

Crypto Market Wraps Up the Day at $1 Trillion

It was a bullish Monday session. After a bullish morning, the crypto market cap rose to an early afternoon high of $1,014 billion before hitting reverse. The reversal saw the crypto market cap fall to a low of $979.69 billion. However, a bullish end to the session left the crypto market cap at $1,000 billion for the day, marking a $9.02 billion increase.

Crypto market wraps up the day at $1 trillion.
Total Market Cap 240123 Daily Chart

The Crypto Market Movers and Shakers from the Top Ten and Beyond

It was a mixed session for the crypto top ten.

XRP rallied by 5.97% to lead the way, with BNB (+0.69%), BTC (+0.87%), DOGE (+0.11%), and SOL (+0.45%) finding support.

However, ADA (-0.27%) and ETH (-0.08%) bucked the trend with modest losses.

From the CoinMarketCap top 100, it was a mixed session.

STEPN (GMT) rallied by 17.69% to lead the way, with lido DAO (LDO) and celo (CELO) seeing gains of 14.25% and 9.52%, respectively.

However, aptos (APT) fell by 4.66%, with the sandbox (SAND) and uniswap (UNI) seeing losses of 1.83% and 2.49%, respectively.

24-Hour Liquidations See Modest Decline Despite a Bullish Session

Over 24 hours, crypto liquidations remained at lower levels despite a choppy session. Long positions saw a larger share of liquidations, accounting for 56.3% of total liquidations. At the time of writing, 24-hour liquidations stood at $103.65 million versus $118.57 million on Monday morning.

Liquidated traders over the last 24 hours were also lower. At the time of writing, liquidated traders stood at 30,122 versus 39,186 on Monday morning. Crypto liquidations were lower over 12 and four hours and over one hour.

Crypto liquidations slip
Total Crypto Liquidations 240123

According to Coinglass, 12-hour liquidations stood at $73.73 million, down from $79.72 million on Monday, with four-hour liquidations falling from $16.66 million to $8.56 million. One-hour liquidations fell from $1.50 million to $0.824 million.

The chart below shows market conditions throughout the session.

Crypto market sees a choppy afternoon session,
Total Market Cap 240123 Hourly Chart

 

NASDAQ, S&P 500, Dow Jones Analysis – Markets Test New Highs As Tech Stocks Rally

Key Insights

  • S&P 500 moved towards the 4030 level amid a strong rally in the tech stock segment. 
  • The tech-heavy NASDAQ is trying to settle above 11,900 as appetite for risk is growing at a robust pace. 
  • Dow Jones is today’s laggard as traders are focused on buying tech stocks. 

S&P 500 (SPX500)

S&P 500
S&P 500 230123 Daily Chart

S&P 500 tested new highs as tech stocks rallied. Traders bet that big tech earnings reports, which will be released this week, will exceed analyst estimates.

The rally is broad, and all market segments are moving higher. The appetite for risk is growing, so traders ignore rising Treasury yields, which could have put some pressure on the yield-sensitive tech stocks.

Western Digital, AMD, and Tesla are up by more than 7% in today’s trading session. Traders stay focused on buying stocks that have suffered strong pullbacks in 2022.

From a big picture point of view, traders bet that analysts have pushed their earnings estimates to low levels so companies will easily beat them.

NASDAQ (NAS100)

NASDAQ
NASDAQ 230123 Daily Chart

The tech-heavy NASDAQ rallied as leading tech stocks gained strong upside momentum.

Traders have shrugged off recession worries and focused on the upcoming earnings reports. This week, traders will have a chance to take a look at the reports from Microsoft, Tesla, and Intel.

Microsoft’s report will be released tomorrow after the market close and will have a significant impact on NASDAQ dynamics. Today, the stock is up by 1.5%.

Dow Jones (US30)

Dow Jones
Dow Jones 230123 Daily Chart

Dow Jones continues to underperform as traders stay focused on buying tech stocks. While S&P 500 and NASDAQ are testing new highs, Dow Jones has settled below January highs.

Intel, Apple, and Salesforce are the biggest gainers among Dow Jones components today. Procter & Gamble is down by 0.7% as the stock remains under pressure after the recent earnings report.

For a look at all of today’s economic events, check out our economic calendar.

Q4 Earnings and Inflation Updates To Influence Fed’s Move

The S&P 500 is currently trading at or around the same level it was trading at back in mid-May of last year. Technically, however, the bears are quick to point out that we are still in the cycle of posting lower-highs and lower-lows.

Corporate Earnings

This time around most in the trade seem to be less focused on the Fed and now more focused on much of an impact higher rates and high inflation is going to have on US corporate earnings. On the earnings front, several big names are on the calendar this week but there will be added focus on big tech names in particular as layoffs in the sector continue to dominate headlines.

Amazon, Google, and Microsoft added to the industry’s latest round of job reductions last week.

Economy

Keep in mind, while tech companies make up about 20% of the S&P 500 and account for around 10% of US GDP, they only provide a small fraction of US jobs. In total, the tech sector accounts for roughly 9 million jobs, versus the 159.24 million people employed in the US as of December 2022.

The total number of jobs cut by the sector since January of 2022 is about 190,000. Google executives last week explained that the company had hired for a different economic reality, similar to reasons given by other tech companies that went on hiring sprees to keep up with surging demand during the pandemic.

Most tech firms have far more employees than they did at the beginning of 2020. In many cases, companies are reducing staff by downsizing or eliminating unprofitable businesses, which is overall viewed as a good thing by Wall Street.

Data to Watch

Key tech results this week include Microsoft on Tuesday, IBM and Tesla on Wednesday, and Intel on Thursday.

Today’s top US results come from Baker Hughes, Crane, Logitech, and Synchrony Financial.

Turning to economic data, investors are anxious to see both Flash PMIs on Tuesday and the Producer Price Index (PPI) on Friday.

The PMI data will be for January so is a more up-to-date read than PPI, which is through December. The PPI report holds more sway over the Fed, though, with so-called “core” PPI (strips out food and energy) being one of the Fed’s favorite gauges. On a year-over-year basis, the PCE Price Index for November was up +5.5%, versus +6.1% in October, and the core-PCE Price Index was up +4.7%, versus +5.0% in October.Multiple Fed officials last week expressed support for slowing the pace of interest rate hikes at the January 31-February 1, pointing to the recent decline in inflation.

That would mean a 25-basis point hike as opposed to 50-basis points previously. However, most officials also still support the Fed pushing rates slightly above 5%. The Fed funds rate currently stands at 4.25-4.50%. That means perhaps 3 to 4 more hikes of 25-basis points each.

The real question is how long the Fed will need to hold rates at those levels in order to bring inflation back down to the Fed’s target level of 2%… Then how long can companies that are short on cash continue to hold their breath underwater and how will overall profit margins be impacted?

Market Insight for The Final Full Week of January – Week Ending 27 January

Despite a slow start to the week, as US banks closed their doors in observance of Martin Luther King Jr. Day, there is much to consider.

In the US, producer prices (PPI) eased in December to -0.5%, following November’s downwardly revised 0.2% figure. Retail sales also shows that US consumers tightened their purse strings in the month of December, falling -1.1% from an upwardly revised -1.0% previous. In terms of housing, the Starts measure weakened by -1.4% in December (lower than the min forecast range of 1.25%) and for building permits we realised a decline of -1.6%. Softness was seen in the Empire survey earlier in the week with the release showing its worst output since mid-2020 (chart below). However, the Philly Fed’s survey was somewhat tame, improving in January to -8.9 from -13.7 in December.

Thursday had Fed Vice chair Lael Brainard, a vocal member of the FOMC, take part in a speech at the University of Chicago Booth School of Business, Chicago, Illinois. Brainard noted that ‘even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.’ The full speech can be found here: https://www.federalreserve.gov/newsevents/speech/brainard20230119a.htm.

Jobs data out of the UK saw the unemployment rate remain at 3.7% in November, in line with economists’ expectations and matching the previous print. Though do bear in mind that this is a lagging indicator. The UK claimant count increased by 19,700 in the 12 months to December, following November’s 16,100 rise.

Another widely reported economic event last week was the UK’s latest inflation release. Consumer prices eased for a second consecutive month to 10.5% in the 12 months to December, down from November’s 10.7% print. Notably, annual inflation peaked at 11.1% in October.

Also of note, the Governor of the Bank of England (BoE) was out and about last week. On an official visit to South Wales, Bailey aired a more optimistic tone for the UK economy. Although not commenting on future policy moves, he did note that the central bank believes inflation should begin to decline more rapidly in 2023 and that although a recession is likely, it is expected to be shallow. The BoE are set to meet on 2 February with a near-70% probability priced in for another 50 basis-point rate hike (markets pricing in a terminal rate of around 4.5%).

The Bank of Japan (BoJ) stood pat on rates and resisted expanding YCC further, defying market expectations of further policy tweaks. This decision, of course, leaves the central bank’s policy rate at -0.10%. The immediate aftermath of the announcement witnessed the US dollar aggressively rally against the Japanese yen, advancing more than 2.3% after topping out at a high of ¥131.57.

Interestingly, Friday watched the USD/JPY take on higher levels again, following comments from the BoJ Governor Kuroda at the World Economic Forum in Davos who essentially reaffirmed the BoJ’s policy stance. The World Economic Forum was a key talking point last week. European Central Bank (ECB) Christine Lagarde vowed to ‘stay the course’ and continue increasing interest rates. Asked about the possibility that the ECB might limit future rate increases, Ms. Lagarde said she would advise investors to ‘revise their position’ (WSJ).

Canada also released its latest inflation data, cooling to 6.3% in the 12 months to December, its lowest rate since February of 2022. Yet, this is still three times greater than the central bank’s 2% target, therefore there is still some way to go.

Equity Space

Major equity indices in Asia ended the week higher across the board, with the Nikkei 225 jumping 1.7%. Over in Europe, it was a different story as all major indexes fell. The UK’s FTSE 100 dropped nearly 1.0%, followed closely by the Euro Stoxx 50 falling 0.7%. The US saw the Dow dip 2.7% along with the S&P 500 losing 0.7%. Nasdaq, however, ended the week on the front foot by 0.7%. All three remain in the green year to date.

Earnings season is well and truly underway. Shares of Netflix (NFLX) ended the week firm after adding 7.66 million subscribers in Q4 of 2022, smashing the 4.6 million expected. It is also a busy earnings session this week, with Johnson & Johnson (JNJ) releasing their latest Q4 earnings in pre-market trading on Tuesday, alongside Microsoft (MSFT) after the market close. Tesla (TSLA) takes to the earning’s stage on Wednesday (aftermarket hours), together with International Business Machines (IBM).

Cryptocurrency Making a Comeback?

Last week witnessed Bitcoin, Ethereum, Litecoin and Ripple stage an impressive run against the US dollar, up 9.6%, 6.7%, 1.7% and 3.8%, respectively. Bitcoin broke the $22,000 mark on Friday, with the major crypto trading comfortably above its 200-day simple moving average.

Economic Radar this Week

Note that banks in China are closed in observance of the Spring Festival (In terms of China, and the country’s economic outlook, Nordea Corporate do a good job of reporting current conditions here: https://corporate.nordea.com/article/80006/china-full-of-surprises).

Tuesday 24 January

Eurozone, UK and US Flash Manufacturing and Services PMIs for January between 8:15 am and 2:45 pm GMT

Yearly New Zealand Inflation Rate for Q4 at 9:45 pm GMT

Wednesday 25 January

Annual Inflation Rate for Australia for December at 12:30 am GMT

Bank of Canada (BoC) Interest Rate Decision at 3:00 pm GMT—short-term interest rate markets are currently pricing in a 70% probability for a 25 basis-point hike, pulling the overnight rate from 4.25% to 4.50%. Markets also expect the central bank to hit the pause button on future rate hikes at 4.50%

Thursday 26 January

Quarterly US Growth Rate (GDP – Advance) for Q4 at 1:30 pm GMT

Friday 27 January

Month-Over-Month US Core PCE Price Index for December at 1:30 pm GMT—this is a key event for the week and the Fed’s preferred measure of inflation

Technical View for the Week Ahead

US Dollar Index

Despite wrapping up the week largely unmoved, the US dollar is on track to finish a fourth consecutive month under water, according to the US Dollar Index.

Following a one-sided deterioration in Q4 of 2022 from an ascending channel resistance, extended from the high 103.82, price action on the monthly scale is threatening to confront the lower perimeter of a decision point at 101.30-103.91.

As communicated in the previous weekly briefing, the research team underlined the following (italics):

Clearing the aforementioned monthly decision point reopens the risk of a further decline to monthly Quasimodo resistance-turned possible support at 99.67, closely tailed by a mild Fibonacci cluster just south of 99.00. In terms of the RSI, we can also see scope to drop in on the 50.00 centreline, a barrier that could offer indicator support. But, despite the above, while bears are clearly in the driving seat right now, trend direction has remained to the upside since early 2008 and the recent down move could just be another correction.

Meanwhile on the daily timeframe, trend direction continues to favour shorts. This is shown through the recent Death Cross. Fashioned through the 50-day simple moving average (104.64) crossing under the 200-day simple moving average (106.45), this signals the potential for a major trend reversal (though this is a lagging indicator and reflects past price movement). In addition to this, since establishing a peak (see monthly analysis), a series of lower lows and highs materialised (traditional bearish trend structure).

Knowing monthly price is treading water deep within a decision point, buyers and sellers on the daily chart are currently squaring off between Quasimodo support-turned resistance at 102.36 and Quasimodo support from 101.65 (merging with channel support, extended from the low 103.45).

The recent consolidation, given the lack of buying on the monthly scale and the downtrend evident on the daily chart, is poised to breakout to the downside this week. Technically speaking, the aforesaid supports are the last line of defence for the monthly timeframe’s decision point. As a result, a breakout lower may encourage renewed selling, targeting at least daily demand at 100.27-100.77.

Finally, aligned with the daily downside bias, the daily timeframe’s RSI shows a temporary overbought region between 60.00 and 50.00. This is common in strong downtrends; therefore, this might be a location to keep an eye on over the coming weeks for signs of negative divergence and bearish failure swing signals.

US Dollar Index monthly and daily charts. Source: TradingView

EUR/USD

Europe’s common currency finished the week hesitantly against its US counterpart, reaching highs not seen since April 2022. Interestingly, with the weekly Quasimodo support-turned resistance at $1.0888 currently holding price, is this enough to underpin a bearish scene this week? The weekly timeframe has been entrenched within a downtrend since topping in 2021 and the pullback off the late September lows at $0.9536 might be viewed as a sell-on-rally opportunity. Hence, $1.0888 will be key to monitor this week as rupturing the level exposes resistance coming in at $1.1174.

It was noted in previous technical research that prime resistance on the daily timeframe at $1.0954-1.0864 supports the current weekly resistance level. Albeit healthy confluence, bumping higher this week unearths Quasimodo resistance at $1.1138 while dropping from the aforementioned prime resistance has support in view at $1.0602.

The research team wrote the following in recent writing regarding the daily chart’s trend and momentum (italics):

On the daily chart, an uptrend is clear through the recent series of higher highs/lows, as well as price crossing above its 200-day simple moving average, currently fluctuating around $1.0308. We can also see that the moving average is starting to level off from its down move: another sign of a potential trend reversal to the upside. The Relative Strength Index (RSI), nonetheless, is seen printing early negative divergence, effectively backing a downside move from the daily prime resistance.

Away from the bigger picture, short-term price action exhibits a clear-cut range between $1.0780 and $1.0868, active since 12 January. Outside of the consolidation, eyes will be on $1.09 resistance and Quasimodo resistance-turned possible support from $1.0764.

Given the active weekly and daily resistances, and the weekly timeframe’s bearish narrative still hanging on (just), a break of the H1 timeframe’s range could be seen to the downside. Such an event materialising might see short-term breakout sellers surface south of the H1 Quasimodo resistance-turned potential support at $1.0764, targeting H1 Quasimodo support from $1.0743 and the $1.07 figure. Alternatively, a bearish scenario could unfold at the upper edge of the H1 range ($1.0868), in line with the mentioned structure. The concern, nevertheless, is the US Dollar Index gearing up for a potential leg lower which would reinforce the EUR/USD for a breakout to the upside.

On account of the above, conservative traders will likely continue to play the extremes of the current H1 range this week until a decisive breach materialises, a move that would open the door to breakout trading opportunities.

EUR/USD weekly (top left), daily (bottom left) and 1 hour (right) charts. Source: TradingView

S&P 500

Snapping a two-week winning streak, last week welcomed a bearish showing, down 0.7%.

While further underperformance is a possibility, recognising that price declined from trendline resistance last week (drawn from the high at 4,818), bulls might still have the upper hand and a break north could be on the table.

The monthly timeframe is simple. Here is a reminder of the research team’s notes in recent analysis (italics):

The monthly chart has remained in a dominant uptrend since early 2009. We had two notable corrections in that time, one in early 2020 (COVID), dropping 35%, and one in play since early 2022 (down 27% from 4,818, as of writing) which was accompanied by negative divergence out of the Relative Strength Index (RSI).

The following was noted on the weekly timeframe’s technical structure in the latest analysis (italics):

Across the page on the weekly timeframe, price action has respected trendline resistance (drawn from the high mentioned above at 4,818) during the latest correction mentioned on the monthly chart. Still, following the rebound from support at 3,589 and a 50.0% retracement at 3,512 in mid-October (2022), price appears set to dethrone the noted trendline resistance (lack of bearish interest). Technically, a disruption here would help reaffirm the monthly chart’s uptrend.

Adding to this, the RSI, since March 2022, has been establishing an ascending triangle between 53.60 and 30.47. While these patterns are frequently seen in uptrends, they can represent reversal structure in downtrends. Consequently, a breakout above both the triangle formation, together with the noted trendline resistance, may underpin a longer-term bid in this market.

Directing attention to the daily timeframe, price is working between support at 3,796 and resistance drawn from 4,087. Harmonic traders may also note the possible AB=CD bearish formation at 4,137, marked by a 100% projection, and a nearby 78.6% Fibonacci retracement ratio at 4,146.

Finally, on the H1 timeframe, support between 3,848 and 3,860 was left unchallenged in recent trading after the index bottomed at 3,885 on Thursday. This area consists of 78.6% and 61.8% Fibonacci retracement ratios, alongside an ascending support, drawn from the low of 3,764, and a descending support, taken from the high of 3,889. Overhead, following the resistance breach at 3,950, January peaks are targeted at 4,015, followed by Quasimodo resistance at 4,032. Breaching 3,950 also helps confirm bullish intent, bolstering the possibility of further buying on the daily timeframe this week and, by extension, a break of the weekly trendline resistance.

S&P 500 monthly, weekly and daily charts. Source: TradingView
S&P 500 1 hour chart. Source: TradingView

XAU/USD (Gold)

It was another positive week for the yellow metal, adding 0.3% and chalking up a fifth consecutive week in the green.

The key development on the weekly timeframe was the break and retest of resistance at $1,916 and reaching highs of $1,937, levels not seen since April 2022. Fashioning support from the aforementioned resistance places the technical spotlight on the double-top pattern’s peaks at around $2,070. However, it’s important to note that the Relative Strength Index (RSI) is at the doorstep of overbought territory, consequently further outperformance could be lethargic.

Elsewhere on the daily timeframe, the decision point at $1,867-1,886 was left unopposed last week. While still a valid area of technical interest, Quasimodo resistance is now on the radar at $1,966, accompanied by a 78.6% Fibonacci retracement at $1,973 (blue). Nevertheless, similar to the weekly chart, the daily timeframe’s RSI is registering overbought conditions, therefore the pace of buying might slow despite scope to approach resistance.

As a reminder of trend direction on the daily chart, here is where the research team stands at the moment (italics):

The trend is now technically higher. The reversal presented itself in early December last year following the break of the $1,786 previous high in November 2022. Since then, the precious metal also recently welcomed what is known as a Golden Cross, which is the 50-day simple moving average ($1,810) crossing above the 200-day simple moving average ($1,777). This is a pattern trend followers tend to watch and can signal the possibility of a long-term uptrend.

Friday’s technical briefing noted the following in terms of the H1 scale (italics):

Despite marginally violating trendline support on the H1 chart (green), drawn from the low $1,825, buyers found grip and reclaimed position north of the ascending line on Thursday. Another technical observation on the H1, which also bolsters a bullish case for the yellow metal, is that the first leg lower from $1,929 (16 January) bottomed at $1,896, while the second leg south from $1,925 (18 January) failed to form a lower low at $1,901. This informs market participants that buyers are gaining traction and a break above the local descending resistance (etched from $1,929) could be seen today.

As evident from the H1 chart, we have indeed seen the metal push higher, breaking the local descending resistance which welcomed a retest in the form of support on Friday. This—coupled with weekly price breaking/retesting breached resistance and scope to rally on both weekly and daily timeframes—bolsters the case for another leg higher and places H1 resistance on the radar at $1,939 this week.

Gold weekly, daily and 1 hour charts. Source: TradingView

BTC/USD

Thanks to bitcoin powering higher versus the US dollar on Friday (+7.5%), BTC/USD is on track to wrap up the week in positive double figures.

Concerning the weekly timeframe, the research team noted much of the following in Friday’s technical briefing (italics):

The weekly timeframe shows BTC/USD gained some grip north of support at $11,855 and hammered through the upper limit of a falling wedge pattern (reversal structure), drawn between $25,214 and $17,567. You will note this was accompanied by the Relative Strength Index (RSI) chalking up positive divergence ahead of oversold territory (the indicator also recently crossed above its 50.00 centreline [positive momentum]). Aside from the local tops (evident on the daily chart), the falling wedge pattern profit objective is set at $25,698, closely trailed by resistance at $28,844.

Meanwhile, the daily timeframe shows the price of the major cryptocurrency convincingly scaled through resistance at $21,924, which is now marked as support. As of writing, though, the unit is seen attempting to overthrow the $22,800 13 September high (2022) which if dethroned could pave the way for follow-through buying to as far north as Quasimodo resistance at $24,666. Note that this level is arranged just south of the weekly timeframe’s falling wedge pattern profit objective at $25,698. Also, while the weekly timeframe’s RSI is exploring above its 50.00 centreline, the daily chart’s RSI confronted indicator resistance at 89.35, testing levels not seen since the beginning of 2021.

Still on the daily scale, we can see that the recent outperformance in early January forged a fresh higher high (breaking the $18,385 14 December high), and crossed above both the 50-day and 200-day simple moving averages, currently trading at $17,775 and $19,578, respectively. Therefore, the trend is showing early signs of an upside reversal.

From the H1 timeframe, following a test of a Quasimodo resistance-turned support at $22,490 at the weekend, resistance is seen in play at $23,267. In line with scope to advance on the bigger picture, H1 buyers pushing for moves above here to at least $23,598 resistance is likely, followed by $24,000.

Bitcoin weekly, daily and 1 hour charts. Source: TradingView

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The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

NASDAQ, S&P 500, Dow Jones Analysis – Stocks Rally As Netflix Exceeds Expectations

Key Insights

  • Netflix’ results boosted market sentiment ahead of the weekend. 
  • Alphabet’s decision to cut jobs served as an additional positive catalyst. 
  • Dow Jones underperformed in today’s trading session. 

S&P 500 (SPX500)

S&P 500
S&P 500 200123 Daily Chart

S&P 500 rebounds as traders rush to buy stocks after the recent pullback. Netflix, which is up by 7% in today’s trading session, is among the biggest gainers in the S&P 500 today.

Netflix gained strong upside momentum despite an earnings miss as the company added more subscribers than expected in the fourth quarter. Co-founder Reed Hastings will step down as chief executive, which was also interpreted as a bullish catalyst for Netflix stock.

Healthcare, real estate, and utilities stocks have found themselves under pressure in today’s trading session. The strong rebound in Treasury yields hurt the performance of safer, dividend-focused stocks.

NASDAQ (NAS100)

NASDAQ
NASDAQ 200123 Daily Chart

NASDAQ rallied as traders focused on the strong performance of Netflix and Alphabet, which will cut 12,000 jobs.

Tesla , which is up by more than 3% today, has also provided material support to NASDAQ. Tesla stock is moving higher as traders bet that the company’s earnings report, which will be released on January 25, will beat market’s expectations.

The strong performance of the tech-heavy NASDAQ highlights the rising appetite for risk. The nearest material resistance level for NASDAQ is located at 11,600. If NASDAQ manages to settle above this level, it will move towards the next significant resistance at 11,800.

Dow Jones (US30)

Dow Jones
Dow Jones 200123 Daily Chart

Dow Jones is underperforming in today’s trading session. While Dow Jones managed to rebound from recent lows, it failed to gain material upside momentum.

Goldman Sachs, which remains under significant pressure, is the biggest loser in the Dow Jones today. American Express, Disney, and Salesforce are up by 3% in today’s trading session.

For a look at all of today’s economic events, check out our economic calendar.

NASDAQ, S&P 500, Dow Jones – Tech Stocks Gain Ground As Treasury Yields Decline

Key Insights

  • Goldman Sachs’ results put significant pressure on the Dow Jones. 
  • S&P 500 settled near the important 4000 level. 
  • NASDAQ tested new highs as demand for tech stocks increased. 

S&P 500 (SPX500)

S&P 500
S&P 500 170123 Daily Chart

S&P 500 is swinging between gains and losses as traders react to the earnings reports from Morgan Stanley and Goldman Sachs. Morgan Stanley is up by 8% after the release of the earnings report, while Goldman Sachs is down by 7%.

Tech stocks are among the best performers in the S&P 500 today, while basic materials stocks have found themselves under pressure amid a broad pullback in commodity markets.

From the technical point of view, S&P 500 continues its attempts to settle above the 4000 level. A move above this level will provide S&P 500 with an opportunity to gain additional upside momentum.

NASDAQ (NAS100)

NASDAQ
NASDAQ 170123 Daily Chart

NASDAQ moved to new highs today as tech stocks enjoyed strong support. The pullback in Treasury yields provided material support to yield-sensitive tech stocks.

Tesla and NVIDIA were among leaders in the NASDAQ today. The strong performance of these stocks shows that the appetite for risk is growing, which is bullish for the broader market.

Traders continue to bet on a less hawkish Fed and buy beaten mega cap stocks, which have been under significant pressure in 2022. NASDAQ has already managed to move above the 11,500 level and has a good chance to get to the test the next resistance at 11,700.

Dow Jones (US30)

Dow Jones
Dow Jones 170123 Daily Chart

Dow Jones is down by 0.9% today due to the strong sell-off in the Goldman Sachs stock, which has found itself under huge pressure after the disappointing earnings report.

It should be noted that 22 out of 30 Dow Jones components are losing ground today, so Goldman Sachs’ performance is not the only reason for Dow Jones’ weakness. McDonald’s, which is gaining 2%, is the only bright spot in the Dow Jones today.

For a look at all of today’s economic events, check out our economic calendar.