The American
Stock market continues to move deeper into the negative zone. Last week was the
most devastating since March 2020, when the COVID-19 pandemic hit the global
economy. The S&P 500 broad market index lost 6% last week, posting 11
negative weeks out of the last 12 weeks.
This short
trading week is filled with statements by two major Central Bankers that may significantly affect markets. The
President of the European Central Bank Christine Lagarde is set to testify
today in front of the EU Parliament. Any details to do with interest rate
changes and any estimations and forecasts to do with the leveling up of the EU nations’
debt yields would be of a particular interest. Mrs. Lagarde speech may generate
elevated volatility in the markets, especially during the Juneteenth holiday
when U.S. exchanges are closed.
The Federal
Reserve (Fed) Chairman Jerome Powell is going to testify to U.S. Congress on
Wednesday and Thursday when he will deliver his semi-annual update on monetary
policy. His speech is unlikely to generate additional volatility since the Fed
has already announced its hawkish plans several times, so Powell is likely to
repeat the same statements already made. Nevertheless, his speech may have a
moderate negative effect on the markets.
Macro
statistics, like PMI indications, are likely to have a minor effect on markets.
Overall, we may expect a slight downside for stocks this week as the S&P
500 index is strongly supported at current levels. The index is moving within
an aggressive downside pattern with delivered primary targets at 3650-3750
points. It may slightly bounce at the
beginning of the week to 3750-3850 points, but this bounce could be unstable.
If the bounce stalls below 3850 points before Thursday, the index may drop
towards extreme targets at 3450-3550 points.
Brent crude
prices bounced off the $124 per barrel resistance level to $112-115 level that
was broken through four weeks ago. It could be a short squeeze when major
market players are trying to push away traders that had long positions open as
they were betting on oil prices climbing further. Nevertheless, there is at
least two weeks ahead for Brent crude prices to jump towards $160-180 per
barrel.
Gold prices
continue to move down and may move in the downtrend until the end of July.
Prices are hovering around $1840 per troy ounce. The first downside target is
located at $1730-1750 per ounce. Any short trades opened at $1860-1880 per
ounce are intact. New short positions could be opened when the prices recover
to the latter area.
The FX
market went into consolidation after elevate volatility last week. EURUSD
remain within the upside pattern with the target at 1.07000-1.08000, which is
looking very attractive for those who opened long positions at 1.04500-1.05000
last Friday. However, it would be better to move stop loss orders to 1.04750 to
protect your position. It is too early for new trades to be opened.
GBPUSD
looks unstable at the current levels. Thus, opening new trades are better to be
avoided now. Short positions would be interesting to open from 1.23300-1.23600
while opening long position at 1.19500-1.20000 is currently at attractive area.
It is worth remembering that even these indicated levels to open trades have a very
low reliability rate.