Happy Friday, traders! Are you ready to trade at the end of the week? Here’s what you need to know before you start:
Trading on geopolitics on March 14-18
Geopolitical factors and inflation remain the main drivers of financial markets. Let’s see how to use that in trading!
Last week we got confirmation that the US annual inflation is increasing: the indicator made the biggest advance in 40 years. This week, we’ll finally get policy updates from the Federal Reserve and the Bank of England, so get ready to trade USD and GBP. As for the European Central Bank, it opened the door for an interest rate hike before the end of 2022 but downgraded its growth forecasts because of the Russia-Ukraine conflict. As a result, EURUSD failed to go above 1.11. If sentiment in Europe remains gloomy, the pair may slide to 1.0800 and lower. For GBPUSD, the key support is 1.30. For USDJPY, the resistance is at 117.50.
Oil, gas & metals
The world is now dealing with the energy crisis. US President Joe Biden has imposed an immediate ban on Russian oil, and XBRUSD touched $130 a barrel. Oil supply has declined, and it’s not possible in the short term to replace all the missing Russian production with other sources. As a result, price swings have increased to 8-10% a day – consider it while setting Stop Loss and Take Profit levels. Support for oil is at $100: from this area, we expect new spikes towards $120. Gold rose to the highest level since its covid-19 surge in 2020 at $2070. It seems like that level is too high for now. We expect the price to swing between $1950 and $2030 in the upcoming days. The decline below $1950 will trigger a 'Head and Shoulders' pattern and open the way down to $1925.
Good news for those interested in the US stock market. Amazon announced a 20-for-1 stock split. This means that the stock will become cheaper for traders and investors. The new price for the stock will be available in June. Notice that stocks tend to perform well after split news. As for stocks in general, this asset class is considered risky, so the indices such as US500, US100, and EU50 don’t feel well. The current setup is more favorable for sell trades, so look for bearish reversal candlestick patterns and breakout of support levels to make your entry.
The first week of November promises to be eventful, as we have the Fed meeting, the BOE update, and the NFP release. Read more details here.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.