The markets were rather indecisive last week, as there is still no clarity on the Russia-Ukraine situation. The fall in benchmark treasury yields and rally in Gold suggest some risk-off undertone. But then, the selloff in equities was not very committed. Meanwhile, crude oil price gyrated in established range on conflicting developments.
In the currency markets, New Zealand Dollar ended as the strongest one, followed by Aussie. But Yen and Swiss Franc were picking up towards the end of the week. Euro was the worst performing one, followed by Canadian, and then Dollar. Sterling was mixed in the middle.
S&P 500 gyrated lower but remained resilient
S&P 500 gyrated lower on risk aversion last week, but there was not disaster yet. Prior rejection by 55 day EMA is a bearish sign. But it’s holding on to 4278.94 support, as well as 55 week EMA so far. Price actions from 4818.62 high could still develop into a sideway consolidation pattern, and firm break of 55 day EMA (now at 4541.30) will bring retest of 4818.62.
However, sustained trading below 4278.94 and 55 week EMA (now at 4304.51) will argue that it’s already in a deep medium term correction. The fall from 4818.62 would target 38.2% retracement of 2191.86 to 4818.62 at 3815.19 at least, before forming a bottom.
NASDAQ to defend 12552 fibonacci support
Also, it should be noted that NASDAQ’s development was more bearish, as it has already taken out equivalent support level at 1481.69 and 55 week EMA for some time. Correction from 16212.22 is already in proximity to 38.2% retracement of 6631.42 to 16212.22 at 12552.35.
For now, we’d still expect strong support from 12552.35 to bring rebound. But sustained break there would open up deeper medium term correction to 61.8% retracement at 10291.28. That, if happens, could drag S&P 500 through the above mentioned 4278.94 support zone.
10-year yield failed 2% handle again
10-year yield failed to close by 2% handle again last week and retreated. 2.065 looks like a short term top now and there should be some consolidations below this level for the near term. But downside should be contained above 1.743 support to bring another rally. We’d expect a test on key resistance zone in 2.159/87 cluster level, or at least an attempt.
The 2.159/87 zone represents 61.8% retracement of 3.248 to 0.398 at 2.159, and 61.8% projection of 0.398 to 1.765 from 1.343 at 2.187. This level is not expected to be taken out decisively, unless markets believe that inflation would spiral out of control of Fed’s hands. Meanwhile, firm break of 1.743 support would be an indication of a drastic turn in overall risk sentiment, which is still not likely.
Dollar index to stay in range between 94.29/97.44
Dollar index remain stuck in range between 94.62/97.44 last week. For now, it appears that there won’t be enough momentum to break through 61.8% retracement of 102.99 to 89.20 at 97.72 for the near term, even in case of rise resumption. Instead, DXY would gyrate sideway, in range above 38.2% retracement of 89.20 to 97.44 at 94.29.
Medium term bias will remain on the upside as long as 94.29 holds. But a firm break there will set up deep pull back to 61.8% retracement at 92.34, or even reverse the whole up trend from 89.20.
Gold resumed rally, heading to 1946 projection level
Gold’s rally resumed last week and breached 1900 handle. Outlook will stay bullish as long as 1944.30 support holds. Rise from 1682.60 is in progress and further rise should be seen through 1916.30 resistance to 100% projection of 1682.60 to 1877.05 from 1752.12 at 1946.57.
It should also be noted that firm break of 1916.30 should confirm completion of the correction from 2074.84 at at 1682.60. Further break of 1946.57 will suggest medium term up side acceleration. In this case, retest of 2074.84 high should be quickly within reach.
WTI crude oil still in favor to target 100 handle
WTI crude oil originally dipped on news of a Iran nuclear deal, but then rebounded on risk aversion again. For now, WTI is holding above 88.66 support. Thus, near term outlook stays bullish for another rise through 95.98 towards 100 handle. However, break of 88.66 will now argue that it’s in a deeper correction to 38.2% retracement of 66.46 to 95.98 at 84.70.
Bitcoin to head back to 33k support after as rebound completed
Bitcoin’s decline last week suggests that rebound from 33000 has completed at 45862. That came after rejection by 38.2% retracement of 68986 to 33000 at 46476. The development suggests that the larger down trend from 68986 is not over. Break of 32980 support will bring deeper fall back to 33000 support, and then to 29261 support next.
EUR/CHF Weekly Outlook
EUR/CHF’s decline from 1.0610 extended lower last week and break of 1.0439 support argues that rebound from 1.0298 low has completed at 1.0610. The came after rejection by 38.2% retracement of 1.1149 to 1.0298 at 1.0623. Initial bias is now on the downside this week fir retesting 1.0298 low. On the upside, above 1.0480 minor resistance will turn intraday bias neutral first.
In the bigger picture, a medium term bottom was formed at 1.0298 on bullish convergence condition in daily MACD. Rebound from there is still tentatively viewed part of a corrective pattern. That is, larger down trend from 1.2004 (2018) could still extend through 1.0298 to 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. However, sustained trading above 55 week EMA (now at 1.0667) will argue that the down trend is over, and bring stronger rise back to 1.1149 next.
In the long term picture, prior rejection by 55 month EMA (now at 1.0947) maintains long term bearishness. Down trend from 1.2004 could still extend lower as long as 1.1149 resistance holds.
