Dave Floyd
Aspen Trading Group
Good Day Traders.
Now that the dust is settling after a VERY wild week of trading, it’s time to survey the landscape and get a handle on what might be coming next.
As I have mentioned in previous updates, charts alone do not often provide enough insights to gain an edge. Do not get me wrong, charts remain my primary indicator from a timing perspective however they rarely tell the whole story. Quantitative and fundamental analysis will often highlight key data points that either refute or confirm what the charts show.
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Inverted yield curve: the longer a yield curve stays inverted, the higher the likelihood of a recession within one-year. While this does not mean that returns (mainly equity) will be lower, it does (historically) mean that price action across all asset classes will be very volatile.
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US data such as the unemployment rate, ISM Manufacturing and Consumer Confidence are at levels where ‘perfection’ is priced in. This is a bit dangerous because ….. and lends itself to the markets being disappointed going forward.
Based on these above data points and the technical backdrop, we see a weaker Dollar Index (DXY) looking ahead. Naturally this would mean a higher EUR/USD.
The charts below highlight where prices are likely to be heading looking in the days/weeks ahead.
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Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.