Markets rebound  between OPEC and FOMC announcements

This article was last updated on April 16, 2022

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Market Insights

World stock markets have been trading moderately higher overnight clawing back some of Mondays losses. US index futures are up 0.3% while the FTSE is up 0.5%, the Dax is up 0.7% and Italy’s FTSEMIB is up 1.7%.

The reaction to overnight news reports has varied from tepid to cautiously optimistic. Italy’s rally has been sparked by the ‎arrival of new PM Gentiloni who is keeping the same finance minister indicating continuity.  Chinese stocks were flat although positive China retail sales and industrial production reports have boosted copper to a 0.3% gain.

Crude oil continues to climb with WTI up 0.7% and Brent up 0.9%. The International Energy Agency indicated it expects ‎the oil market to shift from surplus to deficit in the first half of 2017 if OPEC and non-OPEC producing countries to stick to their agreements.

Currency markets are steady today with US Dollar traders on pins and needles ahead of tomorrow’s Fed interest decision and monetary policy outlook. A rate hike this week looks like a done deal. Traders may look to the dot plot, statement, economic projections and press conference. The US dollar rally has priced in a more aggressive campaign of 2017 interest rate increases leaving it vulnerable if the Fed is not as hawkish as the street.

Chart Signals

Chart Signals: Reversal and base building patterns emerge

Technical signs continue to emerge suggesting that many of the trends that have been in place since the US election appear to be near exhaustion with significant corrections possible. Morning or Evening stars have been forming in the SPX, gold and JPY, while WTI crude has broken out of a huge ascending triangle/head and shoulders while GBPUSD is approaching the top of an ascending triangle base.

I remain concerned about US 30 which appears to be locked in a tractor beam being drawn toward the 20,000 level. Traders may recall that a Silver rally was similarly drawn toward the $50.00 level a few years back and once achieved quickly ended in tears with a big correction.

North American and European Indices

US 30 still appears to be getting drawn toward the 20,000 round number but upward momentum has slowed a bit with the index levelling off near 19,860. RSI remains really overbought and the index could be vulnerable in a correction with initial support near 19,740 then 19,600.

US SPX 500 is overbought on the RSI and appears to be forming an Evening Star candle pattern trading below Monday’s high near 2,270. Initial support in a correction possible near 2,245 then 2,230.

US NDAQ 100 is still struggling with channel resistance in the 4,900 to 4,920 range while RSI remains unable to break out of a long-term downtrend. Should this change, the index could be drawn toward the 5,000 round number. Initial downward support possible near 4,815 and the 50-day average.

UK 100 has stabilized above a higher low near 6,865. With RSI still above 50, it appears Monday’s decline was a normal trading correction within an uptrend that has resumed. The index is testing 6,925 with next resistance near 6,975 then 7,000. 

Germany 30 has shrugged off Monday’s retreat as a trading correction. Support has come in at a higher low near 11,145 up from 11,000 and the pair has rallied back up into the 11,250 to 11,290 area. Next potential resistance near 11,340 then 11,445.

Commodities

Gold is building on yesterday’s hammer bullish reversal candle trading above $1,152 with support rising toward $1,158, the price just above $1.160 and next resistance possible near $1,165 then $1,172. Oversold RSI indicates potential for a rebound. 

Crude Oil WTI is consolidating its recent breakout rally. Following a successful retest of the $52.00 breakout point, the price has rallied from $52.30 toward $53.20 with support rising toward $53.00 and next resistance in place near $54.00 then $56.00 on trend. Rising RSI indicates upward momentum still increasing.

FX

US Dollar Index has stabilized near 101.00 for now with resistance falling toward 101.20 from 101.75. RSI holding 50 suggests so far this looks like a pause within an ongoing uptrend. Next downside tests in a correction possible near 100.30, 100.00 and 99.75 two Fibonacci levels and a round number.

USDJPY may be forming an evening star trading near the low end of Monday’s bearish shooting star candle. These formations combined with a negative RSI divergence suggest upward momentum may have peaked. The pair looks increasingly vulnerable to a correction trading near 115.20 down from a peak near 116.20 with next support near 114.70 then 113.90.

EURUSD has encountered some resistance near $1.0640 with more possible near $1.0685 a Fibonacci retracement level. Signals are mixed with a lower high in the RSI suggesting distribution but a higher low for the pair near $1.0600 up from $1.0500 suggests accumulation.

EURGBP keeps steadily drifting downward with the pair sliding toward 0.8340 while resistance drops toward 0.8370 from 0.8460. Next potential support tests near 0.8300 and the 200-day average then 0.8260 a Fibonacci level. 

GBPUSD remains under accumulation advancing on $0.2700 a Fibonacci level with rising RSI confirming upward momentum is increasing. Next potential resistance near $1.2800 the top of a big ascending triangle base. 

USDCAD is having an inside day, pausing to consolidate recent declines and work off an oversold RSI. The pair has levelled off in the $1.3100 to $1.3160 with next rebound ressitsance3 n

CADUSD continues to climb but just as RSI nears overbought territory, the pair approaches a series of significant tests, a downtrend resistance line near $0.7625, the 200-day average near $0.7650 and a Fibonacci cluster near $0.7725. Initial support rises toward $0.7600.