The last 2 weeks have been historic: bitcoin reaching $14,000, gold reaching a 7-year high above $1,400 and the sun finally appearing in London and New York respectively. However as we head into the weekend, the scorching temperature isn’t the only occupying factor many of us face.
The G20 summit has commenced, and with several geopolitical points on the agenda, and the markets closed over the weekend, the first week of trading in July looks set to mirror the weather forecast. Heatwave pending.
The US/China trade deal is still the pressing issue, with whispers of a potential final showdown leading to a deal. Nuclear tensions with Iran and North Korea have muted all talks of Russia recently. However with crude approaching $60 per barrel, concerns may be raised in a similar fashion to February, when Trump's tweet on $60+ oil sent the market down 3%.
So with the fundamentals still unknown, what does the technical analysis tell us? Below I analyse two key markets which could be impacted by the fall-out of this weekend.
What goes up must come down? A run which many first expected to happen the second Trump won the 2016 election. However with his US first approach, the markets grew and the world didn’t end and gold traded in the $1100s as a result.
The sentiment has changed, with current uncertainty on several fronts, along with the diminishing economy, gold hit a 7-year high of $1,440. The volumes now show this as being overbought, with RSI trading above the 70 level. With 10/25 day moving averages also positioning for a potential downwards cross. Could a deal or eased trade tensions lead to a big sell-off next week?
Created using Tradeview MT4 platform
In addition to trade, talks of a currency war reached our ears in recent days with the US opposing a weaker CNY. This opposition coming in the form of yet another Trump tweet, where he also had some choice words for Draghi’s latest easing comments. As a result we saw the bull run in USDCNY halted at which was also a resistance of 6.950.
As we now fall towards the 50% Fibonacci level, could we see sell stop orders triggered leading to a bear run?
Created using Tradeview MT4 platform
One thing is for sure and two things are for certain of this weekend: it will be hot. We will also have further information on how global current affairs may or may not settle. As a trader. will you be proactive in finding your own trading opportunities?