Almost ideal beginning of a new trading week. European stock indexes are
in the safely trading in the green zone. U.S. stock indexes managed to override
the downturn of the last week, bouncing by 1% up from Friday lows.
Gold and crude prices are up by 0.9%.
It seem like a good time to relax and expect a good green week ahead of
us. However, it is too early to be lulled into complacency as we might have a
“Monday” before U.S. Non-Farm Payrolls due to be released this Friday. Price
movements at the beginning of such week could be misleading with the only
purpose to entrap investors ahead of essential data on U.S. labor market
release.
Even if the market demonstrates correct price movements that would be
justified after the release of U.S. labor data at the end of this week it would
be wise to assess the overall situation in the market to compose guidelines to
follow this week. Technical picture suggest S&P 500 broad market index has
significant probability of correction to 3600 points. Concerns over possible
WallStreetBets followers’ interference in the market like it was with GameStop
shares and some other assets keep investors on the edge of their seats.
If
there is something more behind of the crowd’s interruption in the market and
the correction of the last week, we may see a rapid drop in S&P 500 prices
below 3720-3750 area. Then nor positive earnings reports of Alphabet or Amazon,
neither U.S. Securities and Exchange Commission promises to investigate
WallStreetBets interference in the market would not be of great help, and the
index may easily extend its losses to the first target of 3600 points.
As
for oil market, any decline in stocks would not have an immediate effect on it.
Brent crude prices are still struggling to break the resistance at $56 per
barrel and is not rushing for a correction towards $53-54 level. Nonetheless,
by the contrast with the last week Brent crude may have a little chance to
climb to $60 landmark. Despite fundamentals are not in favour of such rise.
Gold prices are seen to hold their positions at the upper margin of $1800-$1880
per troy ounce area. But, any sell positions from $1880 level are less
attractive and even as safe now. So, it is better to wait for a safer signals
to pin-point selling entry point with the target at $1650-1700 levels.
The situation of the FX market ahead of U.S. Non-Farm Payrolls requires
to use weekly support and resistance levels for intraday trading. The EUR/USD
has a support level at 1.21200 level. Any temporary slide below it with strong
buy signals could be flagging a good buy position. In contrary, any spike above
1.22100 level (or at 1.23600) followed by clear sell patterns could be a good
selling point.
The Cable has its own triggers for volatility as Bank of England is
going to announce its interest rate decision. GBPUSD current support level is
at 1.36500 and resistance levels – at 1.38850. But, traders should be extremely
careful while opening positions close to the levels.
The Japanese Yen continues to lose its strength as USD/JPY is heading
towards the resistance level at 105.60 offering an excellent sell opportunity.
If this level would be reached it may be a handsome addition to a possible U.S.
stock market downward correction.