Although Jerome Powell’s speech sounded hawkish on Wednesday, September 22, markets did not get scared and the main stock indices got bought back. The US dollar index reached 93.5, but corrected after unemployment claims data were worse than expected (351K vs. 322K). The reaction of the markets was astonishing. It looks like stock market participants are ready to “buy the dip” during every correction. Will it last longer? Let's look at the main trade opportunities for the upcoming week.
Trade ideas
Forex
This week, the main focus will be on the main currencies, such as the JPY, USD, EUR, and GBP. Traders of these currencies await the “Policy panel” at the ECB Forum of Central Banking on Wednesday.
If speakers keep talking in a hawkish way, these currencies will strengthen against commodity-linked and risky currencies, such as the AUD and CAD. AUD/USD, for example, got rejected from the 200-day moving average, and if the bearish momentum continues the price might reach the closest support levels of 0.7225, and 0.711. EUR/CAD broke through the 200-period moving average, and it looks like buyers are ready to push the pair up to 1.505. Otherwise, the closest support level is 1.477.
Also, CAD traders await the Canada GPD report. If the statement is better than the expectations, the CAD will get stronger. In this case, CAD/CHF might reach 0.7335 and 0.7374. On the other hand, if the report disappoints the pair might drop as low as 0.72!
Stocks
The indices started last week on an extremely bearish note. However, Wednesday’s Powell speech boosted investor's confidence and pushed stocks higher. Nevertheless, it looks like bears took control over the market and the correction is not over yet. S&P500 closest big support is 4250, NASDAQ – 14700. Generally, this correction looks temporary and the market has already passed through half of it. We expect buyers to enter the game on these levels and the stock market rally to continue. Chinese index HK50 is still in a strong downtrend, if it breaks through the previous low of 24750, it will drop to 23200. Otherwise, we might see a pullback to 25750.
Oil & metals
Gold is above the support zone at 1755 in the post-FOMC session, targeting the next obstacle at 1777. Keep in mind that the change in the USD strength may pull the metal lower to the support of 1730. As for oil prices, they tested higher levels with WTI near 73.5 and Brent at 77. The next levels for buyers of WTI are located at 73.9 and 74.9, while bulls of Brent will appreciate the spike to 80. The support levels for WTI and Brent lie at 72.30 and 75.6, respectively.
Risk warning
The following information is not investment advice. Remember that trading is risky. Manage your funds carefully and remember that you can use Take Profit and Stop Loss orders to maximize your gains and limit your losses.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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