Daily Market Analysis By FXOpen
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What Is Market Capitulation, and How Can You Trade It?
Market capitulation occurs when investors collectively surrender to market fears, leading to a sharp decline in asset prices. This article delves into the mechanics of capitulation, how to identify it, and ways to trade effectively during these tumultuous times.
Understanding Market Capitulation
Market capitulation refers to a phenomenon where a large number of investors simultaneously give up on the market, leading to a rapid and substantial decline in asset prices. This mass surrender is driven primarily by panic and fear of further losses. Capitulation often marks the peak of a bearish trend and is typically characterised by a significant spike in trading volumes and sharp price declines.
Stock capitulation occurs when investors, overwhelmed by fear and uncertainty, rush to sell their assets to avoid further losses. This behaviour is often triggered by prolonged market downturns or significant economic events. For instance, during the COVID-19 pandemic in March 2020, the S&P 500 experienced a nearly 5% drop in a single day, a classic example of market capitulation. This event led to a subsequent 17% rebound in the index over the following week, highlighting how capitulation can precede a market turnaround.
TO VIEW THE FULL ARTICLE, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Market capitulation occurs when investors collectively surrender to market fears, leading to a sharp decline in asset prices. This article delves into the mechanics of capitulation, how to identify it, and ways to trade effectively during these tumultuous times.
Understanding Market Capitulation
Market capitulation refers to a phenomenon where a large number of investors simultaneously give up on the market, leading to a rapid and substantial decline in asset prices. This mass surrender is driven primarily by panic and fear of further losses. Capitulation often marks the peak of a bearish trend and is typically characterised by a significant spike in trading volumes and sharp price declines.
Stock capitulation occurs when investors, overwhelmed by fear and uncertainty, rush to sell their assets to avoid further losses. This behaviour is often triggered by prolonged market downturns or significant economic events. For instance, during the COVID-19 pandemic in March 2020, the S&P 500 experienced a nearly 5% drop in a single day, a classic example of market capitulation. This event led to a subsequent 17% rebound in the index over the following week, highlighting how capitulation can precede a market turnaround.
TO VIEW THE FULL ARTICLE, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
I doubt anyone is going to read it.
There are thousands of such service providers.
So you have to tell us how you are compared to thousands of other service providers.
You also have to tell us your track records.
Best regards
Max solo team
The Nikkei 225 Index Has Plummeted to a Nine-Month Low
As shown by the Nikkei 225 (Japan 225 on FXOpen) chart:
→ In less than a month, the index price has dropped by more than 25%, providing grounds to suggest the start of a bear market;
→ The price has approached the psychological level of 30,000 points – the last time the price was this low was in autumn 2023.
Bearish sentiment is being driven by a combination of the following factors:
→ Negative news from the US labour market, published on Friday – this has significantly increased discussions about the likelihood of a recession;
→ The Bank of Japan’s interest rate hike last Wednesday to support the excessively weak yen.
As we wrote on 15 July, while analysing the Nikkei 225 index (Japan 225 on FXOpen):
→ Signs of bearish activity were observed around the 41,330 level;
→ The upward channel may break in the second half of the year.
It turned out that the bullish channel was broken much earlier and in an extremely aggressive manner – the bulls attempted to resume the trend from its lower boundary (shown by the black arrow), taking advantage of the 38,000 support, but were defeated.
What could happen next?
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
As shown by the Nikkei 225 (Japan 225 on FXOpen) chart:
→ In less than a month, the index price has dropped by more than 25%, providing grounds to suggest the start of a bear market;
→ The price has approached the psychological level of 30,000 points – the last time the price was this low was in autumn 2023.
Bearish sentiment is being driven by a combination of the following factors:
→ Negative news from the US labour market, published on Friday – this has significantly increased discussions about the likelihood of a recession;
→ The Bank of Japan’s interest rate hike last Wednesday to support the excessively weak yen.
As we wrote on 15 July, while analysing the Nikkei 225 index (Japan 225 on FXOpen):
→ Signs of bearish activity were observed around the 41,330 level;
→ The upward channel may break in the second half of the year.
It turned out that the bullish channel was broken much earlier and in an extremely aggressive manner – the bulls attempted to resume the trend from its lower boundary (shown by the black arrow), taking advantage of the 38,000 support, but were defeated.
What could happen next?
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
The Nikkei 225 Index Has Plummeted to a Nine-Month Low
As shown by the Nikkei 225 (Japan 225 on FXOpen) chart:
→ In less than a month, the index price has dropped by more than 25%, providing grounds to suggest the start of a bear market;
→ The price has approached the psychological level of 30,000 points – the last time the price was this low was in autumn 2023.
Bearish sentiment is being driven by a combination of the following factors:
→ Negative news from the US labour market, published on Friday – this has significantly increased discussions about the likelihood of a recession;
→ The Bank of Japan’s interest rate hike last Wednesday to support the excessively weak yen.
As we wrote on 15 July, while analysing the Nikkei 225 index (Japan 225 on FXOpen):
→ Signs of bearish activity were observed around the 41,330 level;
→ The upward channel may break in the second half of the year.
It turned out that the bullish channel was broken much earlier and in an extremely aggressive manner – the bulls attempted to resume the trend from its lower boundary (shown by the black arrow), taking advantage of the 38,000 support, but were defeated.
What could happen next?
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
as mentioned, I doubt anyone is going to read.
You failed to post this article 1, 2 or 3 days earlier.
Nowadays newbies don't want to learn.
They want to teach/preach.
It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by maxinger nor is it to be considered financial advice.
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EUR/USD Analysis: The Rate Has Risen to a Nearly 5-Month High
As shown by today’s EUR/USD chart, the rate rose this morning to 1.096 – its highest level since mid-March.
On one hand, this was driven by the weakness of the dollar. The USD fell sharply against other currencies following the release of labour market news on Friday (data from ForexFactory hereafter):
→ The unemployment rate reached 4.3% – the highest since autumn 2021;
→ In July, employers created only 114,000 jobs (excluding the agricultural sector) compared to the forecast of 175,000. Last month’s figure was 179,000;
→ Wage growth is showing signs of slowing down.
The rapid deterioration of the labour market is an early sign of a recession. This is indicated by the rule of Claudia Sahm, who worked at the Federal Reserve for over 10 years.
On the other hand, the EUR/USD is rising due to the strength of the euro. Today, the Purchasing Managers' Index (PMI) figures were released in Europe – all are above the 50.0 level, indicating growth in the Eurozone economies.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
As shown by today’s EUR/USD chart, the rate rose this morning to 1.096 – its highest level since mid-March.
On one hand, this was driven by the weakness of the dollar. The USD fell sharply against other currencies following the release of labour market news on Friday (data from ForexFactory hereafter):
→ The unemployment rate reached 4.3% – the highest since autumn 2021;
→ In July, employers created only 114,000 jobs (excluding the agricultural sector) compared to the forecast of 175,000. Last month’s figure was 179,000;
→ Wage growth is showing signs of slowing down.
The rapid deterioration of the labour market is an early sign of a recession. This is indicated by the rule of Claudia Sahm, who worked at the Federal Reserve for over 10 years.
On the other hand, the EUR/USD is rising due to the strength of the euro. Today, the Purchasing Managers' Index (PMI) figures were released in Europe – all are above the 50.0 level, indicating growth in the Eurozone economies.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
How Do Dovish and Hawkish Monetary Policies Affect Markets?
In the intricate dance of global finance, central banks play a leading role, their policies echoing through markets and economies. The terms "dovish" and "hawkish" encapsulate their strategies towards interest rates and money supply, each with profound implications for currency values and investor strategies.
This FXOpen article explores how these stances offer valuable insights for traders in understanding the forex market’s movements and the broader economic landscape.
Understanding Dovish vs Hawkish
In the world of economics, central banks use monetary policy to navigate between stimulating growth and controlling inflation. This delicate balance is often characterised by two primary stances: dovish and hawkish. Understanding these policies is crucial for traders, as they significantly influence domestic economic conditions and the forex market.
TO VIEW THE FULL ARTICLE, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.
In the intricate dance of global finance, central banks play a leading role, their policies echoing through markets and economies. The terms "dovish" and "hawkish" encapsulate their strategies towards interest rates and money supply, each with profound implications for currency values and investor strategies.
This FXOpen article explores how these stances offer valuable insights for traders in understanding the forex market’s movements and the broader economic landscape.
Understanding Dovish vs Hawkish
In the world of economics, central banks use monetary policy to navigate between stimulating growth and controlling inflation. This delicate balance is often characterised by two primary stances: dovish and hawkish. Understanding these policies is crucial for traders, as they significantly influence domestic economic conditions and the forex market.
TO VIEW THE FULL ARTICLE, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.
Dollar Adjusts After Disappointing Labour Market Data
The release of very weak data on average wages and the number of new jobs in the US contributed to the dollar's decline and sharp fluctuations in the currency and stock markets. On Friday, the NonFarm Payrolls report showed that:
A weak labour market coupled with slowing inflation could signal that the Federal Reserve may begin to lower the base interest rate in the coming months.
USD/CAD
At the start of this week, the USD/CAD pair tested two-year highs around 1.3950-1.3900. It has not yet managed to strengthen above this level, but if buyers can hold the price above 1.3800, the pair might attempt to resume growth towards the psychological resistance level of 1.4000. A break of the support at 1.3800-1.3780 could lead to a deeper downward correction towards 1.3740-1.3700.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
The release of very weak data on average wages and the number of new jobs in the US contributed to the dollar's decline and sharp fluctuations in the currency and stock markets. On Friday, the NonFarm Payrolls report showed that:
- The number of new jobs stood at 114K, while the forecast was 176K;
- The average wage increase was recorded at 0.2%, whereas 0.3% was expected;
- Unemployment rose (4.3% against 4.1%).
A weak labour market coupled with slowing inflation could signal that the Federal Reserve may begin to lower the base interest rate in the coming months.
USD/CAD
At the start of this week, the USD/CAD pair tested two-year highs around 1.3950-1.3900. It has not yet managed to strengthen above this level, but if buyers can hold the price above 1.3800, the pair might attempt to resume growth towards the psychological resistance level of 1.4000. A break of the support at 1.3800-1.3780 could lead to a deeper downward correction towards 1.3740-1.3700.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Nasdaq Composite Index: A Ray of Hope
On July 31, we noted that the Nasdaq Composite Index (US Tech 100 mini on FXOpen) had reached significant support, highlighting trendline A and warning of potential volatility spikes due to fundamental news from the Federal Reserve and earnings season.
Since then, the price of the Nasdaq Composite Index (US Tech 100 mini on FXOpen):
→ Jumped to the 19540 level;
→ But encountered resistance there (indicated by an arrow), as this was previous support;
→ And returned to trendline A.
Thus, we have an argument that can be interpreted as the bulls' inability to resume the upward trend. The bears seized the opportunity to take control and break below trendline A on August 2.
Contributing factors included:
→ The decline in the Japanese stock market, which we wrote about yesterday. It is possible that the extremely strong sell-off of Japanese company shares affected sentiments in the US.
→ Increasing talks of a recession due to very weak US labour market data (published on Friday, which we also covered yesterday).
At the low point yesterday, the Nasdaq Composite Index (US Tech 100 mini on FXOpen) dropped by 7% from Friday's close. Of course, this isn't comparable to March 16, 2020, when the index fell by 12.32%, or October 19, 1987 (known as "Black Monday"), when it dropped by 11.35%. Nonetheless, the mood was grim – as CNBC reports, the stock market had its worst day in about two years. The RSI index fell to the oversold boundary.
But not all is bleak.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
On July 31, we noted that the Nasdaq Composite Index (US Tech 100 mini on FXOpen) had reached significant support, highlighting trendline A and warning of potential volatility spikes due to fundamental news from the Federal Reserve and earnings season.
Since then, the price of the Nasdaq Composite Index (US Tech 100 mini on FXOpen):
→ Jumped to the 19540 level;
→ But encountered resistance there (indicated by an arrow), as this was previous support;
→ And returned to trendline A.
Thus, we have an argument that can be interpreted as the bulls' inability to resume the upward trend. The bears seized the opportunity to take control and break below trendline A on August 2.
Contributing factors included:
→ The decline in the Japanese stock market, which we wrote about yesterday. It is possible that the extremely strong sell-off of Japanese company shares affected sentiments in the US.
→ Increasing talks of a recession due to very weak US labour market data (published on Friday, which we also covered yesterday).
At the low point yesterday, the Nasdaq Composite Index (US Tech 100 mini on FXOpen) dropped by 7% from Friday's close. Of course, this isn't comparable to March 16, 2020, when the index fell by 12.32%, or October 19, 1987 (known as "Black Monday"), when it dropped by 11.35%. Nonetheless, the mood was grim – as CNBC reports, the stock market had its worst day in about two years. The RSI index fell to the oversold boundary.
But not all is bleak.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Apple (AAPL) Share Price Influenced by Psychological Factors
The first factor is the news that Warren Buffett is halving his position in AAPL shares. Whether this indicates that the legendary investor foresees the company losing its market leadership or a recession threat, Buffett's authority may create a psychological effect on retail investors and prompt them to sell their shares.
The second factor is the breach of the $200 psychological level. After the strong rise above $200 per share in June, it seemed the price had securely settled above this round number. However, it's not uncommon for breakout tests to occur, stop-loss orders to be triggered, and the supply-demand balance to shift, resulting in price growth. For example, yesterday's price action saw the bulls nearly close a 7% bearish gap.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
The first factor is the news that Warren Buffett is halving his position in AAPL shares. Whether this indicates that the legendary investor foresees the company losing its market leadership or a recession threat, Buffett's authority may create a psychological effect on retail investors and prompt them to sell their shares.
The second factor is the breach of the $200 psychological level. After the strong rise above $200 per share in June, it seemed the price had securely settled above this round number. However, it's not uncommon for breakout tests to occur, stop-loss orders to be triggered, and the supply-demand balance to shift, resulting in price growth. For example, yesterday's price action saw the bulls nearly close a 7% bearish gap.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.