Trading Week Ahead: 13th-17th January 2020
Key Events This Week
CAD BOC Business Outlook Survey
NZD NZIER Business Confidence
USD US CPI Core CPI
GBP UK CPI
EUR ECB Monetary Policy Meeting Accounts
USD US Retail Sales Core Retail Sales
RMB China GDP
GBP UK Retail Sales
The continued surge of US Indices
Last Tuesday, Iran launched a retaliatory attack on an airbase in Iraq that housed US troops, which set off a sell-off that quickly reversed once Trump confirmed tariff sanctions against the state. As a result of this, the US indices quickly pulled back all of their losses and raced to new records. Nasdaq posted further record highs in the following session, peaking at 9,215.95.
This takes us to a detailed look at the current Nasdaq weekly chart. We’re in no way calling a top but you have to think is this rally becoming parabolic? The angle of the trend is starting to become straight, and the price has moved a very fair distance from the moving averages. Currently, there’s a distance of 7.7% between the price and the midpoint of the MAs, and just over 15% since it touched the midpoint back in Oct 19. The last time we saw a move away like this was in March 19. The end of the move resulted in a 9% pullback. If this rally continues to extend at this rate the odds of a decent correction could also increase, and while no one can pick it precisely, the odds increase the sharper the move continues. I am a believer in the market principle that price does like to return to nominal value points.
Are traders dumping black gold?
Last week was another to remember for oil. After breaking September’s high on Wednesday which saw price hit $65.21, traders dumped black gold as tensions abated following Iran’s attack in Iraq. Selling was nothing short of breathtaking as we saw the 4% jump cut down and a further 4% taken off the price. Oil settled 8.10% lower with a daily range of 10.50%. Looking forward, we can see that sellers are testing/breaking the trend channel. We have seen breaches before so it’s now up to buyers to hold and move back into the channel. if we see this there’s a decent chance that the overall trend could continue. If we see a new rally to lower high and test of $59.80 $50, it could mean that sellers are building something bigger here. We’ve marked two possible scenarios on the chart we will be watching for this week.