Traders again chose to buy Tesla shares and ETH/USD this week. These assets added significant value. Why is this happening, and should we expect a correction? Read on in our digest!
- Alibaba -4.58%. Trading down with $100 and X20 multiplier, you could have easily made $91.60.
- ETH/USD +14.28%. Trading up with $100 and X10 multiplier, you could have easily made $142.80.
- AUD/CHF -1.75%. Trading down with $100 and X500 multiplier, you could have easily made $875.
The British pound was the worst-performing currency this week. GBP/USD fell by 0.89%, EUR/GBP gained 0.79%, GBP/CHF dropped by almost 1.7%, and GBP/JPY lost 0.87%. Surprisingly, all of this is happening against the background of quite good fundamental statistics from the UK. IHS Markit released national manufacturing activity data on Monday. Manufacturing PMI rose to 57.8 points, and services PMI also rose to 59.1 points.
Apparently, the reason for the decline of the British pound is that the Bank of England has not yet indicated a specific timetable for a transition to a restrictive monetary policy or of possible tapering. Currently, the money supply situation in the UK looks no better than in other developed economies. The M2 monetary aggregate continues to grow.
It is also worth paying attention to the structure of British imports. The 5th place in imports (5.4% of the total volume) is occupied by oil and other energy carriers. Given the current energy crisis, risks for the sterling remain pretty high.
After trading flat during the last week of October, GBP/USD reversed to the downside. The current downside target for the British pound is the key 61.8% Fibonacci retracement level at 1.35740.
Currently, more analysts are paying attention to the inversion of the yield curve in the U.S. At the moment, the yield on 30-year Treasuries is 1.934%, while the yield on 20-year Treasuries is 1.9419%.
The inversion of the curve is increasingly hinting at a recession. Goldman Sachs is now forecasting the start of the emergency stimulus tapering as early as this month. The tightening should end in mid-2022.
Last week, US stock indices performed quite well. As of November 3rd, the Dow Jones index managed to add 1.58%, the Nasdaq gained 2.7%, and the S&P 500 gained 1.7%.
Tesla was the leader of growth. The company’s capitalization added close to 12.92%. The driver for the growth of the shares is the company’s news about the launch of the new project in the Netherlands, which provides access to the Supercharger network for other electric car manufacturer owners. Therefore, Musk’s company is not only the leader in the production of electric cars, but it is also taking a leading position in the market for related services.
From a technical point of view, there was a strong acceleration in the trend. However, on the 1DTF, a red candle has already started to form, which may be the beginning of an “engulfing” or “dark cloud cover” pattern. The RSI indicator is deep in the “overbought” zone. Consequently, next week will likely see a correction in the price of the company’s shares.
After a prolonged uptrend, Brent oil continued to decline. In a week, the price of oil fell to $83 per barrel. Remember that in the previous digest, we predicted a downward movement to $78/bbl. There are several causes for oil’s decline right now. First of all, OPEC countries increased their oil production by 190K barrels per day in October.
Secondly, there is an increase of oil. According to the U.S. API, oil inventories increased nearly 3.6 million barrels for the week.
Meanwhile, the price of gold bounced from the 200 moving average and started to decline. The price is now at around $1,780 per troy ounce. If the correction continues, the 61.8% Fibonacci retracement at $1760 will become the next target.
Bitcoin continues to travel in a range. The support level for the cryptocurrency is $60,000. Resistance remains at $63,500 – $64,000. Over the last week, Etherium added momentum again with a growth of about 12%.
It seems that a solid bullish trend has been established on Binance. On November 2nd, ETH/USD surpassed its historical high of $4,352.11 and climbed further. However, we are still waiting for a rebound from $4,500. Trend line support is at $4,250, which could be the target for the correction.
There were no significant changes during the past week. While there is a flat market for Bitcoin, ETH is leading the growth in crypto assets. As for the stock market, most traders are again paying attention to Tesla. The company is expanding its business and, quite possibly, will soon allow the use of its charging stations to manufacturers of other electric cars.