There's been some major moves across all asset classes at the start of this week with stock indices tumbling on their worst day of the year so far and "safe haven" markets enjoying strong gains that have seen Gold surge up to its highest level in 6 years!
Watch our short video below covering the latest technical situation on US500, DE30, Gold, Silver, USDJPY and Bitcoin:
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Our top 3 charts of the week are as follows:
Summary:
- Trade war escalation triggers panic on indices
- GBPUSD bounces off the support level at 1.2100 handle
- AUDUSD hits 10-year low
The stock market under selling pressure
Let’s start from US broad market index - US500 (S&P 500 futures underlying). The escalation of the trade war triggered dynamic declines on global stock exchanges. The US index plunged 250 points or over 8% over the past week. While we can observe a bounce higher off the lower limit of the Overbalance structure, the pace of recent declines was very steep. The 2800 pts handle remains the nearest support level to watch and in case it is breached, a more solid support level can be found at around 2740 points (previous low and 38,2% Fibo). If this cannot stop the selling pressure, a break below would indicate a possible trend reversal.
Looking at the past corrections, such a steep sell-off usually heralded a deeper/longer corrections. Source: xStation5
GBPUSD bounces from the key support
The GBPUSD saw tumultuous trading as well over the past few days - the pair declined by more than 300 pips. Technically speaking, the price is currently bouncing off the support level at 1.2100 handle, where the lows from 2016 and 2017 can be found. The situation on the W1 interval does not hint at any impending corrections. However, one should keep in mind that there is still a lot of time until the week ends and much can change over the next few days. Please note that break below the aforementioned support zone (1.2100) could trigger a resumption of the downward move with the previous momentum. What the bulls hope for is that extremely oversold conditions could be enough to trigger some kind of relief rally.
GBPUSD attempts to rebound from the key support at 1.2100. Source: xStation
AUDUSD at 10-year lows
Last but not least, let’s move to the AUDUSD currency pair. After recent declines, the currency pair is trading at the lowest levels in a decade. Only a break above the 0.6870 handle would invalidate the downward trend. Of course, a short-term correction could occur but keep in mind the overall trend. A trend reversal would occur once the resistance zone at 0.7050 handle is broken - this is where the 23.6% Fibo level and latest local highs are locatalized. In case an upward move is extended, it is worth to keep track off the 40-period moving average as it was acting as a resistance during recent declines.The Australian dollar has been trading lower recently due to an escalation of the US-China trade war that resulted in steep declines of copper and iron ore prices - the two commodities important for exports.
AUDUSD sinks under the key support zone at 0.6870 Source: xStation
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