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Market Observations
The main theme of the past week has been the debt ceiling negotiations, and at the time of writing it appears that there is an agreement in principle (big surprise there!). Legislators need to put this in place and sign off on the final agreement before the 5th of June deadline.
As mentioned in my previous reports, I covered my short position on BTC at the 27000 level. I would not be surprised if we saw this decline extend further, but I’d rather cash out and see what happens next.
The U$ index saw a rally last week as the markets followed the debt ceiling negotiations ahead of a 1st June deadline. This will probably end up being another political event, with a solution found just before D-Day.
I am pleased that I came into the investment business when we paid brokers for advice, as if I had to rely on the stuff issued across social media, I would never learn a thing.
After the spike above the down trendline, the market has sold off and we are now seeing a period of consolidation. Currently holding above the 50-day moving average, as the market digests the economic landscape.
After selling off to below 33,000 earlier in the week, the market has turned up and looks like it wants to retest the trendline resistance. The market is digesting FOMC and the latest employment data.
Many market participants are talking about the retest of the broken weekly trendline and that this could present a good USD turning point.
After a choppy range bound week, we can see the market testing the short-term uptrend line, currently around 4110/15 area. A break here would put a test of the 4070 level.
Inter-market analysis can be extremely helpful in building out a technical picture across asset classes. Last week we saw potential completion of a 5 wave up moves in EUR/USD and XAUUSD, and a series of outside day* chart patterns, technical divergences or indicators rolling over across other markets.
Happy Easter all! The major theme across asset classes has been a consolidation of recent ranges, with the exception of the surprise OPEC production cuts, oil gapping up at last week’s open and silver breaking out from a series of lower tops with trendline resistance breaking at the 24.10/15 area.