Gold and Wall Street 30

As we head into the business end of the week markets are testing support and resistances in an effort to find their position within the overall global outlook. This week marks the key meetings at the FED and the ECB. The FED decision will be released this evening followed by a press conference. The expectation is that the board of governors will leave rates on hold at <0.25%. The release of Advance GDP before the meeting may also impact on markets. The US Advance GDP reading is expected to show a fall to -4.0% from 2.1% previously. This shows the impact of the Covid-19 virus on the economy. The lockdown has closed businesses but the virus itself has forced those who have become unwell from their jobs and placed a drain on resources. Whether the FED will do anything to support the economy today remains to be seen. The FED funds rate midpoint is at the effective lower bound of 0.125% and QE is expected to run far into the future. Some of the new special facilities to ease market strains are not even operational yet, but are expected to be coming online shortly. This week the earning reports from the five biggest companies are due to hit the market. Alphabet reported yesterday with the company beating Q1 Revenue despite the downturn in the economy. Facebook and Microsoft are set to report later today along with Boeing, Tesla and Mastercard. Apple and Amazon are to report their earnings tomorrow along with Twitter and Visa. Traders with be watching the reports from the big five this week and we have already seen considerable movement on the Alphabet report overnight. Markets rallied overnight on the beat in earnings from the company. The other four companies, Facebook, Microsoft, Apple and Amazon may be a focus for trader sentiment this week and all five have weathered the Covid-19 downturn well. However there was some profit taking yesterday ahead of the earning release as traders de-risked before the news dropped. Gold is trading around 1709.00 this morning after finding support at 1687.80 yesterday. USDJPY broke through the 107.000 support level and is now trading at 106.550. European futures are pointing to positive gains of around 0.5% ahead of the open. US Futures are pointing to a higher open are slight losses in yesterday’s session. The USD is down against the majors.

German CPI readings are set to be released through the session today. In the afternoon, US Advance GDP is expected to show a fall to -4.0% from 2.1% previously. This evening the US FED is expected to leave rates unchanged at <0.25%.

Gold  

 

The Gold chart shows that the commodity is trading the range between the 1750.00 area as resistance and the 1660.00 area as support. The chart is showing that price reached a high of 1747.00 and backed off ahead of the 1750.00 level. The price moved back down under the 1700.00 level and tested the 1660.00 level as support. The 1650.00/1641.00 area may be used as support below this higher low. A breakout above the resistance at the 1720.00 area may find price seeking to engage the 1747.00/1750.00 area, which may open the way for a test on the 1785.00 level followed by the 1800.00 and 1820.00.

The 1640.00 area has been used as support on the chart and is followed by the 1600.00 round number and 1567.50 higher low. A loss of the lower support at 1557.00, may allow a test on the next level of support around 1535.00. This is followed by the 1500.00 area. Below this the new higher low at 1455.00 may be supportive and this is then followed by the 1400.00 area. A continued move to test the 1400.00 round number may indicate a more significant pullback to test the falling trend lines and open up the 1400.00 region. Price consolidated in this area with support at 1380.00 for much of last summer before breaking out. The 1360.00 area may also be used as support in the event of a deeper selloff.

Wall Street 30 Index

 

The Wall Street 30 Index fell back from resistance at 24550.00 this week but is finding a degree of support around the 24000.00 area. Price is currently trading at 24275.00 with support at 24000.00 followed by 23884.00. Further support may be seen at the 23565.00 area followed by 23500.00 and 23175.00. A loss of these support levels may suggest that the retracement is in danger of failing, particularly if the 23000.00 area gives way, and it may open the way for a test on 22000.00 area, followed by 21370.00. The 22685.00 area may be supportive as a former resistance level. A break under the 20264.00 higher low may open the way to 20000.00. A break below this area may see a move into the support of the 19920.00. Below this a loss of the 19000.00 area may instigate a deeper selloff to test the low at 18200.00.

A break back higher may push price to re-engage the high at the 24550.00 area and allow price push up and test 24680.00 followed by the 25000.00 area. This area featured as an area of previous support and then resistance in March. Resistance for the index has now potentially formed at the 25000.00 level and a break back above this level may open the path for a test on the 26000.00. A failure to get above the 25000.00 area may push the index into the 23500.00 area. A break higher from there, may seek to reengage the 26300.00 area and the lower high at 27100.00.

Phillip Konchar

Core Spreads

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