Top 2022 Trading Lesson: Macro Relationships and Technical Chart Patterns

2022 has been littered with remnants of COVID-19 trauma, political uncertainty and aggressive central banks. Foreign exchange markets reflected these factors while also highlighting the dominance and safe-haven appeal of the U.S. dollar relative to other currencies and asset classes alike. While the responsive nature of the commodities complex to shifts in supply and demand brought about large fluctuations in commodity pricing and really drove home the importance of hedging exposures.

China in particular remained under the controls of the coronavirus harmfully seeping through to many emerging market economies and commodity exporting nations. The Chinese influence over global trade truly stood out this year due to its limited state of operational capacity however, a swing in the opposite direction could be on the cards should the weight of COVID-19 be removed in 2023.

Central bank guidance has been largely non-existent with frequent changes leaving financial markets left to form their own opinions regularly leading to unconventional market movements. Interest rates and inflation have dominated market themes worldwide resulting in multiple instances of the ‘stagflation’ rhetoric cropping up.

From a trading perspective, risk management has never been more crucial to a sound trading strategy to withstand such volatile market conditions. Utilizing a positive risk-reward ratio will aid in mitigating significant potential downside while allowing for consistent trading activity within tough trading environments. In addition to risk management, 2022 provided many technical chart formations including several wedges, triangles, flags and pennants, often developing in text book fashion. These chart patterns are sometimes looked over but after observing their effectiveness in 2022, I will continue to brush up on my technical analysis educational knowledge to never miss another chart pattern opportunity again!