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FinanceWorld Markets Review: 17th November 2023 – GBPUSD, Gold, S&P 500, Bitcoin

The GBP/USD pair has experienced a decrease in relation to soft UK retail sales.

The British pound is trading lower on Friday, with GBP/USD at 1.2381 in the European session, down 0.27%. The pound has shown sharp swings this week, with a 1.78% jump on Tuesday after US inflation was weaker than expected. UK retail sales were expected to bounce back in October, but instead, they declined by 0.3% m/m, missing the market consensus of 0.3%.

This was the third decline in four months, and fuel sales were down, and consumers were more cautious in their spending. On a yearly basis, retail sales slid by 2.7%, down from a revised 1.3% and much weaker than the market consensus of -1.5%. This marked a 19th straight decline, pointing to a dismal picture of consumer spending which could result in a contraction in fourth-quarter GDP.

Consumer confidence remains deeply pessimistic, as high interest rates and high inflation continue to batter consumers. In the US, the latest economic data points to a gradual slowdown, with unemployment claims rising to a three-month high. There are hopes for a soft landing for the US economy, as inflation is falling while growth remains strong, which is the so-called Goldilocks scenario.

Gold is experiencing a drop due to the strengthening US dollar, while the Euro is facing bearish pressure.

Gold (XAU) initially rose on Wednesday but fell after the release of the U.S. Producer Price Index (PPI) report, which was lower than expected. The US producer prices declined by 0.5% in October, the largest monthly decrease since April 2020, contradicting expectations of a 0.1% rise. This drop was largely influenced by a 1.4% decrease in goods prices caused by a significant 15.3% fall in gasoline prices, the first drop since May.

The most recent U.S. data indicates a reduction in inflation pressures, with Retail Sales numbers declining for the first time in seven months. The US dollar increased, raising the gold cost for international purchasers. XAU/USD was rising during Asian and early European trading sessions. Traders should focus on U.S. macroeconomic reports as they will likely drive the gold price in the near term. The Euro (EUR) corrected throughout Wednesday and lost 0.3% after a substantial rise on Tuesday.

Strong Retail Sales report and indications of easing inflation bolstered the US dollar, contributing to beliefs about a'soft landing' of the U.S. economy. Eurozone Industrial Production figures showed a month-over-month decrease of 1.1% in September, a drastic difference compared to a previous increase. In today's Asian trading session, EUR/USD lost momentum as increased US dollar demand exerted bearish pressure on the pair.

E-Mini generated a high 1 buy signal, prompting speculation on whether to go long or short.

The S&P 500 E-Mini generated a High 1 buy signal bar yesterday, closing near its high. Bulls are hopeful that buyers will be above yesterday's High 1 and today will have an upside breakout. However, there is an increased risk of sellers above yesterday's high leading to a pullback before the bulls can get trend resumption. If sellers are above, the pullback will likely be brief and lead to buyers near the bottom of yesterday's High 1.

The bears need more selling pressure to develop for any reasonable expectation of getting a reversal. They need to make the market go sideways and accumulate more bear bars if they want a successful reversal. The market is close to the September 1st high, so it will probably reach it soon, even if there is a pullback first.

The Emini 5-minute chart shows that the Emini is up 3 points in the overnight Globex session and has rallied in a weak bull channel for most of the overnight session. The bears recently formed a downside breakout with follow-through on the 15-minute chart. Yesterday was a High 1 buy signals bar on the daily chart, meaning yesterday's high will be an important magnet going into today's open.

Traders should expect a lot of trading range price action on the open, and most traders should consider not trading the first 6-12 bars unless they are comfortable with wide stops and limit orders. There is at least an 80% chance of an opening swing trade beginning before the end of the second hour.

Today is Friday, so the weekly chart will be important going into the close of today. Traders should be prepared for a possible surprise breakout late in the day as institutions decide on the close of the weekly chart.

The looming Bitcoin halving may propel the cryptocurrency to new highs.

Bitcoin halving is an event that occurs approximately every four years, where the reward for mining new Bitcoin transactions is cut in half. This means that miners receive 50% less Bitcoin for verifying transactions and adding them to the blockchain. The halving is built into Bitcoin's code and serves to slow down the rate at which new Bitcoins are created, making it more scarce over time. This is often compared to a reduction in supply, like cutting the production of new gold in half, which could affect the price if demand remains the same or increases.

Previous halvings have shown that Bitcoin prices have increased significantly, with the highest price reached to date being $68,900, up 711% from the price on May 11, 2020. Logarithmic charts are useful for understanding Bitcoin prices because they help see percentage changes more clearly than just absolute number changes. In a logarithmic chart, the scale changes so that the same distance on the chart represents the same percentage change, not the same absolute dollar change. This makes it easier to compare relative growth rates over time.

Past performance is not indicative of future results, and the historical trend of an asset does not guarantee the same trajectory in the future. However, if we bought Bitcoin 5 months before the halving dates, we were positive on each occasion. The main takeaway is that following each halving, there was a considerable increase in Bitcoin's price, reflecting the classic economic principle of supply and demand. With each subsequent halving, the price both before and after the event was notably higher, suggesting increasing confidence and investment in the cryptocurrency market.

Although past halvings have set a precedent of bullish , each follows its own unique path influenced by various factors. Risk-takers and math lovers may consider going extra long on Bitcoin.

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