2023 Commodities Forecast by Solidecn.com

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Ethereum​

Ethereum gains after US lower PPI reading and finished Shanghai update​

• Risky assets 'anti-dollar' on wave of weak dollar, after lower than expected PPI inflation reading from US​
• The highly anticipated Shanghai Hard Fork did not cause Ethereum's declines​
• Vitalik Buterin, the Ethereum founder, indicated that after the Shanghai update, the project has already passed the main milestones necessary for further development​
• The second largest cryptocurrency, Ethereum soared above key resistance on a wave of rising risk sentiment. The headline PPI inflation reading from the U.S. came in well below expectations, coming in at 2.7% versus 3% forecast and 4.6% previously. The data supported sentiment among risk assets and increased the chances of no Fed rate hike in May. Along with the cryptocurrency market, Wall Street index futures also gained today.​

The Ethereum Shanghai modification introduced yesterday, contrary to the predictions of many analysts including JP Morgan, did not cause a cascading sell-off and rapid withdrawals of Ethereum from the Beacon chain. In the face of a definite increase in risk sentiment, the market did not see the Ethereum fork as a 'catalyst' for profit realization. The modification has ensured that investors will get the opportunity to 'staking' Ethereum smoothly, without having to lock up their funds on the network for years to come. By many analysts, Ethereum is pointed out as the main candidate to 'dethrone' Bitcoin in the next few years, mainly because of its technological superiority and utility functions. Among other things, decentralized applications and smart contracts are built on the ETH blockchain.

Looking at the chart of ETHEREUM, on the H4 interval, we see that Ethereum has reached the euphoria peak of the summer of 2022. On March 13, the price broke above the SMA200 (red line) signaling a further bullish trend. Since the beginning of the year, the price of ETH has risen nearly 67% against Bitcoin's 82% rise.​

 

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Palladium​

Looking technically at the chart, PALLADIUM price is approaching key short-term resistance at $1578, which penetrates from the upper limit of the local 1:1 pattern, as well as previous price reactions. In the event of an upward breakout, an upward movement toward $1730 could be triggered.

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DOGECOIN​

Elon Musk has told Morgan Stanley analysts that he wants to make Twitter the world's largest financial institution. Although the process is a long way off and its finale uncertain, Twitter announced yesterday that it will indirectly make stock and cryptocurrency trading available to users. The beneficiary of this news was Dogecoin, a cryptocurrency associated with Elon Musk and Twitter. The likeness of a dog that is the symbol of Dogecoin, recently at the initiative of Musk himself, momentarily changed the well-known Twitter logo.

The platform is set to begin a partnership with eToro and will start sharing price information from TradingView. Musk noted that almost all of the companies that have left the platform in recent months have already returned to it although Stellaantis and Volkswagen are still dangling. Ultimately, Twitter is expected to offer investors a range of functions through travel arrangements to financial services. In China, for example, payments giant Tencent offers payments through its WeChat messaging app. Cryptocurrency investors are hoping that Dogecoin will find its unique place on Musk's platform. The market is anticipating the next move from Musk, and any news of a possible promotion of Dogecoin payments on Twitter could result in a euphoric bump.​

 

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German index breaks above 16 000 pts for the first time in 15 months​

New week on the global financial markets began in upbeat moods with indices from Asia-Pacific, especially China, trading higher today. European futures also traded higher throughout the Asian session but have caught an additional bid after opening of the European cash session. German DAX (DE30) is trading 0.5% higher and trades above the 16,000 pts mark for the first time in 15-months! The next resistance zone in-line is marked with all-time highs in the area ranging below 16,300 pts mark - less than 2% above current market price.

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Oil​

OIL.WTI is retreating by almost 2.5% today as a result of several factors. One is the US dollar, which has not been this strong for a long time as a result of rising yields. Another is the US reserve sales of over 1 million barrels last week. This is not much, but it shows that the US may want to stabilize the oil market. Perhaps the most important factor is Russia's powerful exports at levels last seen before the attack on Ukraine. Russia's exports are doing well, primarily to Asian countries, including India, from where fuel in turn flows to Europe in record volumes.

A massive bump in WTI oil. After a test of 80 USD, the upper limit of the upward gap can be expected to be tested.​

 

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Bitcoin Dips Below $30K​

On Wednesday in morning trading hours Bitcoin and other cryptocurrencies plummeted below significant levels. Despite a strong decline in prices no fundamental information was released to the public. Drop occurred in 20 minutes and led to the liquidation of over $25 million worth of BTC futures long positions.

BTC fell below $30k level and ETH back below $2000. Long squeeze may be caused by investors digesting Gary Gensler Congressional Hearing, which took place yesterday.

BTC dips and is trading near support level marked with green zone. On MACD indicator a bearish divergence occurred which suggest that bullish momentum is weakening.​

 

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Gold falls back to early April levels!​

Currently, the probability for a 25bp hike in May is rated at 88%, but on the other hand, the probability for a hike in June is rated at 29%, so adding up the probability, it is expected that a hike will happen anyway.

From the current market perspective, we are seeing a decidedly stronger dollar, which is gaining along with treasury yields, which are above 3.6% for 10-year treasury yields. In addition to this, the BoJ is hinting that there should be no change in the yield curve management program at its April meeting, which is also propping up the dollar. In response, gold is losing heavily and falling not only below $2,000 per ounce, but already below $1,980 per ounce. Silver, on the other hand, is below $25 per ounce and losing almost 2%.

Gold is falling to its lowest level since early April. The next important support near the 23.6 Fibo retracement at $1950 per ounce.​

 

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Bitcoin ​

The major cryptocurrency has once again been pushed off the $30,000 level signaling a possible backdrop for a larger correction of the huge upward movement. Should the declines deepen, the 23.6 Fibonacci retracement of the upward wave, which began in November 2022, at $27,400, and the SMA100 (black line), which may overlap with the 38.2 Fibo at the psychological zone of $25,000, may prove to be important levels.

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Oil​

The US Energy Information Administration released an official weekly report on US oil inventories at 3:30 pm BST today. API estimates released yesterday in the evening showed crude inventories falling more or less in-line with estimates. However, government report showed quite major deviations from both expectations and yesterday's API releases. Crude oil inventories dropped 4.58 mb - much more than expected. On the other hand, gasoline inventories data showed a surprising 1.3 mb build while distillate inventories dropped much less than expected.

EIA report on US oil inventories​

• Oil inventories: -4.58 mb vs -2.5 mb (API: -2.67 mb)​
• Gasoline inventories: +1.3 mb vs -1.9 mb (API: -1.0 mb)​
• Distillate inventories: -0.35 mb vs -1.8 mb (API: -1.9 mb)​

Oil is trading slightly higher following the release. However, scale of the move did not exceed 0.3% and does not change much in the overall technical picture. Taking a look at OIL.WTI at D1 interval, we can see that price dropped below $80 mark today and even briefly moved into territory of a bullish price gap that was triggered by the most recent OPEC cuts.​

 

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DE30​

The German leading index is coming under increasing pressure.
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W1 chart​

The DAX future / DE30 is falling today, pulling back from the high for the year, which was reached yesterday at 16,056 points. The record high remains the key resistance - the gap is around 400 points. In case of further losses, the breakout level at 15,698 points and the intermediate high at 15,463 points could be targeted.

The German leading index is coming under increasing pressure.

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M15 chart​

The DAX future / DE30 slipped below the low at 15,901 points, falling to its lowest level in six days. The technical situation has deteriorated in pre-market trading today - see crossover and lower lows and lower highs. With no sign of life from the bulls, the index remains vulnerable to further losses.​

 

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OIL.WTI is pulling back and looks to close bullish price gap​

Oil prices are pulling back and are one their way to close the bullish price gap that was triggered by unexpected OPEC+ decision to cut output. Taking a look at WTI (OIL.WTI) at D1 interval, we can see that the recent price advance was halted near the $82 resistance zone, marked with the upper limit of the Overbalance structure. While prices have traded briefly above this hurdle, bulls failed to uphold momentum and a pullback was launched. Moreover, the price dropped below the 100-season moving average today, which further brightens the outlook for bears. While lower limit of the bullish price gap from April 3 is still more than 2% below current market price, it looks like closing it may be just a matter of time, given current market volatility.

Taking a look at the chart at lower interval (H1), we can see that WTI is trading in a short-term downtrend. Key resistance to watch in the near-term can be found in the $78.35 area. Unless we see a break above this level, bulls may struggle to launch a longer-lasting upward impulse.

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Bitcoin​

Cryptocurrencies are losing ground against higher chances of a Fed rate hike, a stronger dollar, and regulatory risk.​

• Stronger-than-expected PMI indices in the US have increased the chances of a 25 basis point increase in Fed rates in May.​
• The stronger dollar has driven down risky assets, including Bitcoin, and weakened bullish sentiment in gold.​
• Coinbase CEO Brian Armstrong has indicated that the company may leave the US, which has raised concerns about the shrinking global crypto market.​

Bitcoin has lost for the third day in a row. According to Coinglas data, leveraged positions worth nearly $160 million were liquidated in the past day, of which 80% were bullish bets. The value of liquidated positions on cryptocurrency derivatives this week has already exceeded $400 million. Data from Santiment shows that the number of leveraged positions in the crypto market has increased with the rising price of Bitcoin, driving optimism, but ultimately leading to a reversal in sentiment and a sharp correction. Other altcoins, including Ethereum, Ripple, and Litecoin, are also falling along with the largest cap BTC.

Higher-than-expected PMI readings in the US have increased the likelihood of another Fed rate hike, which the market currently values at nearly 90% probability. Hawkish statements by Fed members have also contributed to this increase. Gold, which was correlated with Bitcoin during the banking crisis, has also come under pressure. Due to regulatory uncertainty, the market may once again pay attention to the associated risks. Some US investors and traders may leave the decentralized market for safety reasons if Coinbase, the largest crypto exchange in the US, closes its operations in the country.

The Bitcoin chart, on an H1 interval, shows that bulls are struggling to defend the $28,000 level, and a drop below the 23.6% Fibonacci retracement of the uptrend that began in early March suggests that the next significant support level may only be at $26,700, where we see a 38.2% Fibonacci retracement.​

 

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Oil​

• Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei, S&P/ASX 200 and Nifty 50 traded flat, Kospi dropped 0.9% and indices from China traded 0.3-1.3% lower​
• DAX futures and S&P 500 futures trade slightly lower​
• Russia warned that it will terminate Black Sea grain deal if G7 moves to impose a total ban on exports​
• BoJ Governor Ueda said that inflation forecasts strong and close to 2% for bank to consider changing its yield curve control mechanism​
• Financial Times reports that United States asked South Korea not to increase chip sales to China if chips of US company Micron get banned as part of Chinese investigation​
• Cryptocurrencies traded mostly sideways over the weekend. Small gains can be seen today - Bitcoin gains 0.8%, Ethereum adds 0.3% and Dogecoin jumps 1.2%​
• USD and CHF are the best performing major currencies while AUD and JPY lag the most​
• Precious metals pull back amid USD strengthening. Gold drops 0.2%, silver trades 0.7% lower and platinum plunges 2.3%​
• Energy commodities trade lower as well - oil drops 1.2% while US natural gas prices decline 0.5%​

Brent (OIL) is inches away from closing a bearish price gap triggered by an unexpected OPEC+ output cut.​

 

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US100​

Taking a look at US100 chart at H1 interval, we can see that the index has been trading in a triangle pattern for some time with a 13,000 pts area serving as the lower limit of the pattern. This is a continuation pattern so traders should be aware of a potential for a downside breakout, especially as price has reached a lower limit recently. In case of a break below 13,000 pts, textbook range of breakout from the pattern suggests possibility of an around 350-points drop, to 12,650 pts area.

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BTC

Recently, many events have overlapped and influenced the prevailing sentiment on the cryptocurrency market.

On the one hand, we observe weakening bulls on the broader financial market after high index results in the first quarter of this year. Investors are trying to price in new quarterly reports published by the largest technology companies in the US and deteriorating macroeconomic data, which are starting to forecast the upcoming recession on the financial markets.

On the other hand, a lot has happened in the crypto market space. The recent hearing of SEC chairman Gary Gancler did not bring any new news. The SEC chairman continued his narrative without any explanation that all cryptocurrencies except BTC should be considered security - despite many questions from Congress Representatives.

Another wave of declines came today after the news about Coinbase suing the SEC. According to the information provided, Coinbase has taken legal action in a US federal court to force the country's securities regulator to give a definitive response to a petition it submitted in July. The petition sought clearer regulatory guidelines for the cryptocurrency industry in the US.

On the 4-hour timeframe, the BTC price continued to consolidate below $28,000, with the largest cryptocurrency by market capitalization trading at around $27,240, down 0.55% in the past 24 hours. BTC has already dropped by 13% from its recent highs of $31000. The price broke through the key support level around $28,600, indicating a bearish trend in the short term. Currently, the price is at the equilibrium level of the last consolidation range, indicating that the market is in a state of indecision. However, further price action downwards is expected, with the next resistance level likely to be at $26,650. This level acted as a support in the past. Overall, the short-term trend for Bitcoin appears bearish and traders should exercise caution when taking long positions. It is essential to keep an eye on any major news events or developments in the cryptocurrency space that may impact the price of Bitcoin.​

 

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Oil

Oil continues to trade near but has not yet managed to close a bullish price gap, triggered by an unexpected OPEC+ output cut announcement. A bearish sentiment can be spotted on the crude market since mid-April and is trading less than $1 per barrel away from closing a bullish gap. Taking a look at OIL.WTI at the D1 interval from a technical point of view, we can see that downward move accelerated after the price failed to break above $82 resistance. According to the Overbalance methodology, this hints that the long-term trend remains bearish. Moreover, price dropped back below 100-period EMA, what further supports the bearish outlook.

Taking a look at WTI at a lower interval (H1), we can see that price tested a recently-broken support as a resistance and, after a failure to break above it, downward move was resumed. Currently, we are observing OIL.WTI testing recent local lows in the $76.85 per barrel area and should we see a break below this zone, the way towards $75.50 - lower limit of bullish price gap - will be left open.

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Bitcoin

Bitcoin chart, D1 interval and US500 (yellow chart). Bitcoin again showed a negative correlation with the S&P500 and started an upward movement when US500 contracts weakened, influenced by weakness in the banking sector. The RSI indicator is still at relatively neutral levels indicating that the bulls still have plenty of room to possibly continue their attack. The first significant resistance level appears to be around $30,000 - $31,000, last seen in early summer 2022. The bulls has defended the bullish momentum at 23,6 Fibonacci retracement.

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Gold​

Risky assets, like equities or commodity currencies, dipped shortly before the Wall Street cash session opened following a report from CNBC on First Republic Bank. According to the media piece, the US government is currently unwilling to intervene to save First Republic Bank. First Republic Bank is on watch after Q1 earnings release highlighted the bank was close to collapse during recent US banking turmoil and that this risk has not waned yet.

S&P 500 futures (US500) dropped around 0.2% on the news. Interestingly, we also saw a move lower in USD with GBPUSD jumping above 1.25 mark and EURUSD moving closer to 1.11 handle. Safe haven flows as well as weaker USD provided fuel for around-0.5% jump on gold market, with precious metal climbing above the $2,000 mark.

GOLD jumped above the 200-hour moving average and $2,000 mark following CNBC report on First Republic Bank.​

 

[Solid ECN]

US500

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• Wall Street indices finished yesterday's trading mixed - Dow Jones and S&P 500 dropped while Nasdaq gained fueled by solid performance of Microsoft and NVIDIA​
• US index futures caught a bid after close of the session following better-than-expected earnings release from Meta Platforms​
• Meta Platforms jumped over 11% in the after-hours trading, following Q1 earnings release. Company reported Q1 EPS at $2.20 (exp. $2.03), revenue at $28.65 billion (exp. $27.65 billion) and revenue per user at $9.62 (exp. $9.30)​
• Meta had 2.04 billion daily active users in Q1 2023 (exp. 2.01 billion) while monthly active users were reported at 2.99 billion - in-line with expectations. Meta's Reality Lab reported a $3.99 billion operating loss and company expect this losses in the unit to increase this year​
• Indices from Asia-Pacific traded mostly higher today - Nikkei and Nifty 50 gained 0.1%, Kospi moved 0.4% higher and indices from China traded up to 0.7% higher. S&P/ASX 200 was a laggard and dropped 0.4%​
• DAX futures point to a slightly lower opening of the European cash session today​
• The US House of Representatives passed a bill on spending cuts and debt ceiling. However, bill still needs to win backing in the Senate​
• New prime minister of New Zealand Hipkins said that there will be no major tax changes in the upcoming budget announcement (May 18, 2023)​
• Russian deputy prime minister Novak said that OPEC+ cooperation may be extended beyond this year (current agreement is valid until end-2023)​
• Chinese industrial profits dropped 21.4% YoY in the January-March period. Profits were down 19.2% YoY in March alone​
• Cryptocurrencies are trading higher - Bitcoin gains 1.6% while Dogecoin and Ethereum jump 1.7%​
• Energy commodities trade little changed this morning - oil gains 0.3% while US natural gas prices drop 0.1%​
• Precious metals benefit from USD weakness and trade higher - gold adds 0.6%, silver gains 0.7% and platinum jumps 1.1%​
• AUD and NZD are the best performing major currencies while JPY and USD lag the most​

US500 recovered part of yesterday's losses after Meta reported better-than-expected earnings. Nevertheless, the technical picture remains bearish following the recent failure to break above the upper limit of the Overbalance structure at 4,190 pts.​

 

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DE 30

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• Friday marked the end of April trading and it ended with solid gains, sending DE30 to the highest level since January 2022 and US indices to back to resistance zones. For DE30 it was the fourth straight green monthly candle meaning that each month of 2023 has been positive so far.​
• Monday trading has been subdued as trading is halted on most markets due to the Labour Day holiday. US indices are trading close to Friday's session highs and JAP225 is adding around 0.5%.​
• The Chinese PMIs were released over the weekend and they both were below expectations. The services index slid from 58.2 to 56.4 points but more worryingly the manufacturing one dropped from 51.9 to as low as 49.2 points, just around 4 months after the China reopening. It suggests that while domestic demand picked up on reopening, the global manufacturing keeps struggling.​
• Adding to those concerns, the Australian PMI dropped from 49.1 to 48 points. However, manufacturing PMI in India expanded from 56.4 to 57.2 points in a rare showing of manufacturing strength.​
• Investors were reminded of the US banking issues last week when the First Republic Bank kept suffering deposit flight and eventually the regulator announced that the Bank would be sold. The idea was to sell the Bank over the weekend, however, the process continues as of the Monday morning.​
• The markets did not seem overly concerned though, using strong earnings reports from Microsoft and Meta to catapult stocks towards the 2023 highs.​
• FX markets are bit mixed as of today with AUD being the strongest and the JPY the weakest currency. The JPY could be under pressure after the BoJ did not change the course of monetary policy with the new chairman at the helm.​
• Crypto markets are sliding after strong gains in recent weeks while the majority of the commodity markets are down as well.​
• The calendar for today is mostly focused on the US releases with the ISM (4pm CET) the key release.​
• The week has a chance to be very eventful with the FOMC (Wednesday) and the NFP report (Friday) the main points on the calendar.​

There's a large divergence between the US500 that is at the resistance and AUDUSD just picking up off the support zone. The Fed meeting this week should clarify the picture for the markets.​