Week Commencing March 23rd 2020

TradeviewSpreads2020

Market Overview

Last week saw Central Banks step in again to help calm the COVID-19 panic. This started by the FED once again cutting rated, the ECB coming in with a €750bn asset purchasing package, and the UK Treasury led by Rishi Sunak announcing further fiscal tools to be used to help all those affected by the on-going crisis. Markets which kept falling, saw some of these drops turn into consolidation, as the moves made started to somewhat ease concerns.

Gold which has been one of the big gainers on these concerns hit a 4 month low as fiscal policies began to take effect, meaning traders were back to looking for short and longer term opportunities in money markets, as they hope to take advantage of recent dips in price.

Market Preview

This week, the US has announced that the National Guard will be present in up to 28 cities, including New York State which now has over 15,000 reported COVID-19 cases. This news along with the Senate not finalising the stimulus plan, saw the futures market suffering huge sell offs, with limit downs put into effect.

Although this current crisis has acted as one big fundamental event, this coming week also sees several key announcements set to take place. UK CPI numbers and US Durable Goods orders come out on Wednesday, with the BoE having a super Thursday, where rates are to be decided along with Asset Purchase targets.

Irrespective of any of these potential moves, you are welcome to follow the trade opportunities they create on TradeGateHub!

Fundamental view

Wednesday: USD Durable Goods Orders (FEB P)
Thursday: GBP Bank of England Bank Rate (MAR 26)
Friday: USD U. of Mich. Sentiment (MAR F)

See more

Technical view

GBPUSD – Daily Chart

After a huge gain by GBP last week against USD, mainly led by the actions of Rishi Sunak, cable hit lows not seen since 1985. This drop has also meant that lows in volume have surpassed the 30 oversold level. This may mean that bulls are awaiting the perfect time to reenter. The moving  averages which have now firmly crossed over downwards also sees the momentum starting to show signs of consolidation. However what we have noticed in recent times is that with such markets, there may be further downwards moves, and bull traps may be set, to avoid them, traders may want to look at the longer term time frames.

02-21

XAUUSD – Monthly Chart

The safe haven instrument for traders, Gold which initially took off in the storm of the Crisis, has been on the decline. We have seen the recent action by the FED in cutting rates twice in 3 weeks start to increase market confidence, and as a result traders have fled shelter.  With markets now in the $1500s range, this has historically been a support point. Many now wait to see if there will be a breakout of this point into lower levels, or will we see a bounce up. The momentum and volumes seem as though we could be positioned for furter falls, as we have passed overbought territory, could we be heading to as low as $1100 if this crisis begins to stabilize?

03-20

Crude Oil – Monthly Chart

Crude Oil has had one of its worst months in recent years, maybe since the 2014 price crash. This decline mainly owing to the fact that demand for the energy has reduced, plus Saudi ramping up supply and cutting prices.  Now trading at $22 per barrel, many believe that volumes could go to as low as 27 on the RSI, a point which was reached 4 years ago in March 2016. If history were to repeat we may see prices fall to as low as $17 per barrel.

04-15
To stay up to date with the many possibilities, we encourage traders to view our Trade Gate Hub, for more daily insight into Crude, and many other markets.

Charts analysed and narrated by Eliman Dambell – edambell@tvmarkets.com