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General market view

  

Since the year is coming to an end, we like to summarize a few ideas, which might move markets in the coming weeks ahead, based on charting and fundamental analysis. In today’s article we won’t focus on direct trading ideas but rather on potential general market moves, which might continue.

In general, rising oil prices could cause the EURCAD currency pair to lose some further steam, stock markets might tumble due to rising interest rates and a stronger Dollar and the Japanese Yen might celebrate a revival soon, as the Bank of Japan might adjust their interest rate – at least slightly.

US Dollar

The US Dollar has recently lost some momentum based on several factors. First of all, the FED was getting a lot of “competition” from other Central banks, which have also continued raising interest rates further and hence the interest rate differential is not as big any more. Worth noting also that the ECB has increased rates again last week. Furthermore, Christine Lagarde pointed out that “several rate increases” will follow in order to tackle inflation.

This, in turn won’t mean that the reign of the US Dollar is finally over, in particular with stock markets starting to weaken for now. Falling stock markets mostly lead to a stronger Dollar or vice versa with also volatility rising.

EURUSD on the weekly chart: the market looks saturated

The weekly chart on the EURUSD currency pair looks like it would be ready to flip to the downside. Further bearish selling pressure could intensify towards the 1.0225 support level.

Trade idea:

We like to sell the currency pair at 1.0515 (sell stop), as we expect further bearish momentum to take over for now.

⛔️Stop loss: 1.0700
🎯profit 1: 1.0390
🎯profit 2: 1.0245

XAGUSD

The Silver market is about to rock the show again as this market has long been “forgotten” and hence not offering any momentum to the upside. Yet, since the recently bearish momentum in the US Dollar took over, precious metals have regained some strength, moving towards much higher levels. The demand for yield as compared to the stock markets downturn could be one reason as well as the general slight positive sentiment for the economy. Inflationary momentum has faded as recent CPI numbers from the US have stated (Consumer price index) and also demand for renewables is still showing some steady input, which could also support prices for precious metals and in particular Silver.

XAGUSD: bullish uptrend intact

The Silver market looks well supported and we like to use any retracement lower to increase our buy positions here. Should the markets break the USD 24.80 resistance level, further buying pressure towards the USD 26.00 and USD 28.00 might be observed.

Trade idea:

We bought XAGUSD at 22.80, as we expect the uptrend to continue.

⛔️Stop loss: 22.50
🎯profit 1: 24.90
🎯profit 2: 25.75

VIX

Stock markets have not been able to regain further strength again and are currently showing some negative pressure. Not only central banks believe that further rate increases are being needed in order to bring down inflation but also this pressure adds to higher borrowing costs and hence less profitability. The indices like the S&P 500 heading lower and the NASDAQ 100 index losing steam we expect markets in general remaining shaky, causing some further turbulence.

This is exactly what the VIX is measuring: basically, a rising VIX (volatility index) means that stock markets are likely heading towards lower levels. The VIX measures the volatility on the S&P 500 index.

VIX on the weekly chart: the market clearly defending its uptrend

We can clearly observe on the weekly chart, that the volatility has been rising since early December and has also never lost steam all over 2022. Now with the Dollar potentially taking over again we expect the volatility to rise again, causing stock markets to fall.

Trade idea:

We like to sell this market at 24.50.

⛔️Stop loss: 21.45
🎯profit 1: 26.00
🎯profit 2: 28.40


Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

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