Trading Outlook – US Dollar, Gold/Silver Price, S&P 500 & More
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In today’s webinar, we discussed a few different markets and where they may be headed over the short-term. First up, we looked at the US Dollar Index (DXY) and its continuing grind higher, with a resolution to the recent grind coming soon. Maybe next week with the FOMC rate decision on the 15th. USDCHF has a rising wedge which is soon set to break, and with that we would look for the EURUSD to make good on what appears to be a bottoming formation. GBPUSD is falling towards a support zone of critical mass. The question is, will the grind lower turn into a capitulation style move, or is it the sign of lack of conviction by sellers. We looked at a prior period from last year where price action was similar and it led to a squeeze higher; a strong daily turn would be our cue that this will be the case once again.
The rout in precious metals continues, with gold and silver not having any good support levels for a little distance lower. However, selling into this sharp decline doesn’t hold good risk/reward and will want to wait and see how a correction unfolds before possibly looking to take advantage of further weakness into noted support levels.
Crude oil finally made a strong break from the ascending wedge it had been building for quite some time. The drop comes as no surprise given how long large futures speculators are. There is trend-line support in the area, but given the momentum on the initial drop out of a period of congestion, there looks to be more downside on the way, possibly down as far as the low 40s.
The Nikkei 225 is perking up again, looking like 20k wants to come soon. The DAX has once again defended the December trend-line, and is in the process of completing a rising wedge. Appetite for stocks, globally, remains healthy and so an upside break looks probable towards the 2015 record highs, but a downside break could bring a lot of momentum as longs liquidate quickly. The S&P 500 tested some good support yesterday, now looking to shove higher or possibly consolidate for a period of time. Generally, the bias remains bullish at this time.
For full technical considerations, please see the video above.
---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.