SGT Chart Book

Market Observations|12 Jun 2023

A few points to note by way of introduction:

The premium investors demand to be compensated for taking the additional risks associated with equities compared to treasuries is the lowest level it has been in 15 years;
Markets may be a little cautious with a huge central bank calendar next week with not only the Fed, but also the European Central Bank and Bank of Japan in action; and
The SEC going after Binance and Coinbase citing they have unregulated exchanges. This will be an interesting story to watch as it unfolds.

US Equites:

Even a quick look at the 2 indices reveals a strong rally seen in the tech sector, but many market participants are still mentioning the lack of breadth in the rally and suggest caution. The continued ‘will there, won’t there’ be a US recession remains a hot topic.

Dow (USA30)

Nasdaq (USA100)

VIX:

A good way to evaluate stock market sentiment is via the VIX, as it measures stock market volatility. The VIX has declined by over 50% in the past couple of months and dropped to its lowest levels since before Covid.

USDJPY:

Tracing out a broad-based up-channel, a break above the small downtrend line is required to test the top end on larger channels, meaning plenty of room to downside for the bears.

EURGBP:

Having followed this pair for the last few weeks, we have identified a downside bias with indicators showing oversold readings as identified by RSI. This is not reason alone to cover shorts, but something to watch this coming week. Rallies should be capped at the 0.8620/40 area, and support is in the 0.8520/40 zone.

XAUUSD:

Not much has changed in the past week. The daily uptrend line is currently holding, and the market has been consolidating, allowing the RSI to unwind from an overbought reading. However, trendline hold rallies are still on the cards.

US 10YR:

Testing the top end of the channel, and an important week with the FOMC meeting coming up.

BTCUSD:

BTC is confined by 25,200 support using previous resistance as new support and a trend line connecting a series of lower highs, that comes in around 27,800. Last week we asked the question was BTC a laggard after some other cryptos began breaking the topside.

Happy trading - until next time,
SGT Trade Desk

Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.