Technical Analysis: Weekly Market Strategy
This is the next installment of a weekly, exclusive, series of technical analyses that DeFinity is proud to share with its community.
The analysis is completed by renowned, experienced financial analyst and successful global podcaster, Paul Rodriguez.
Paul Rodriguez lectured at the City University in London on the subject of Technical Analysis whilst working as an award winning analyst at NatWest Global Financial Markets (Now RBS) in the 1990’s, pioneering and promoting the education and use of technical analysis to City professionals and private investors. Paul set up Think Trading to continue that education and consultancy having appeared frequently on financial news channels seeking his views. He set up the State of The Markets Podcast with fund Manager Tim Price three years ago, which consistently tops the top 50 UK business podcasts and has a global audience. He provides bespoke research and consultancy to market-leading firms.
SUMMARY:
Our bearish US dollar view remains as more signals align to confirm a top. Weakness is broadening with commodity currencies pushing higher, supported by a rise in base and precious prices. We have been calling this ‘phase one’ of a major trend change and it is prudent to expect a short-term reversal as metals are becoming overbought and the DXY enters a key support zone. This may impact our bullish SP500 view temporarily, where we continue to target the main downward trendline (circa 4366).
US 10-year yields have paused the decline and two-year yields are holding firm. Despite this, interest rate expectations from September onwards continue to adjust towards our doveish view and we will be watching for confirmation signals that the trend will continue lower, supporting our macro technical views.
Crypto assets continue to rally in line with expectations. ETH has been a leader, but BTC has the potential to play catch-up despite the relatively weaker performance and muted appearance of its price action. Overall the bias is positive, but we are on the approach to some significant resistance that will represent a major crossroads. How the markets react will set the tone for the remainder of the year.
DXY
We continue to track a break of the accelerated trendline in order to increase the scale of the reversal, as the market is currently resting on this key technical metric. We maintain a bearish view and look for a test of 103.42 and then 102.35 as the next stopping points. The size of the developing downward trendline still indicates we are in phase one of the reversal. A break of this fledgling trendline would be a potential trend reversal warning.
US 10 Year Yield
Yields are consolidating close to the developing downward trend. We maintain a bearish bias for 2.25% with a resumption of the trend soon. A break of the downward trendline would dent the bearish bias, but only rally through 3.24% would suggest a return to rising yields.
Gold
Gold has breached the main downward trendline, but has yet to close significantly through it. Despite this, we remain bullish and are allowing for a corrective pull-back to 1760 prior to the resumption of the trend. Precious metals, in general, have synchronised upwards, and whilst a larger consolidation could be at hand, we are anticipating phase two of the trend to begin in the coming weeks, meaning the market should stay bullish into 2023.
SP500
We continue to target the main downward trendline (4366 and declining) and are encouraged by the break of the short-term resistance between zone 4160/4199. This line is converging with the 200-day m.a, giving a compelling reversal zone for the trend. A further squeeze higher would extend the R.S.I further in overbought territory, but it is possible to run ‘hot’ during strong trends. We stay strategically bullish whilst above upward trendline ‘A’.
Ethereum
We remain bullish on ETH and are encouraged by the early break of significant resistance at 1720. The next major resistance zone is at 2144 and whilst ETH has led the way, the differential compared to BTC may encourage a rotation in BTC and a consolidation phase in ETH. We stay bullish whilst above the developing upward trendline shown.
Bitcoin Daily
Price action has been muted compared to ETH, however structure of the consolidation is bullish and a squeeze through 25,401 would imply an acceleration of the trend -this should occur this week. We continue to target 28,547 and will remain bullish whilst above the developing upward trendline shown.
Bitcoin Weekly
BTC is now looking to put a support buffer between the 200-week m.a. by accelerating the upward trend this week. Short-term resistance is at 25,401 but we maintain targets at 28,547. A close below the main upward trendline at 20492 (and rising) would negate the bullish bias.
This report is superficial in nature and may contain errors. No warranty is given to the accuracy of the data or text and any reader must understand that it should not in anyway form part of an investment process — that is reserved for that individual/business and an investment professional. No positions should be taken, exited or otherwise considered on the basis of this research. This is a condition of reading this document. The main function is of education into how different chart patterns might indicate a future trend (or lack thereof) and not for the purposes of speculation or investment.
Transcribed to Medium
Original Technical Analysis provided by
Paul Rodriguez — ThinkTrading.com
DeFinity Crypto Market Anomaly Detection!
DeFinity token holders can now gain free & exclusive access to deep learning AI-powered risk management insights ordinarily reserved for top tier institutional investors, via the clarity app.
https://clarity.definity.network
Stay up to date with DeFinity:
· Telegram Official Community — https://t.me/DeFinity_Community
· Telegram Announcements — https://t.me/DeFinity_ANN
· Medium — https://medium.com/definity-network
· LinkedIn — https://www.linkedin.com/company/definitynetwork
· Twitter — https://twitter.com/definitynetwork
