Increased Volatility, Gold bounce - is it a Fake Out?
S&P500
Markets witnessed an aggressive selling yesterday (April 26th). It brought the tech-heavy Nasdaq down by 4% to its lowest level of 2022, Dow Jones dropped by 2.98% and S&P 500 declined by 2.81%. Starting Thursday last week, S&P500 has dropped down from 4510 to 4175 points now, a sharp decline of about 7.42 %. The Index is now trading just above the Key Support level on the chart at 4160.
Apparently, there is common sense prevailing amongst the investors of what the internals of the equity markets is telling. The growth engine is slowing down. Average S&P 500 Stocks are already in the bear market. And the Index itself is heading toward a pullback of 20% from the All-time peak of 4820 to 3856 points. Ten of the 11 S&P 500 sectors finished lower. In such an environment defensive sectors such as healthcare, real estate, and utilities still perform well. But they all have struggled in this selloff. On the other hand, the Treasury yields dropped to 2.76%. The US Dollar jumped above $102 its highest in over two years Crude oil jumped back above the $100 per barrel mark. Yesterday, around all the bearish sentiments CBOE Volatility Index (VIX) jumped back above 33.52 about 24.06% higher.
S&P 500 Index
USO/USD
Crude oil managed to bounce back above the $100 level. Even though there is a broad bearishness and demand-side fear prevailing in the oil markets - Chinese Zero Covid Policy and Lockdown fear. Oil is steadying and is back above $100 now after it dropped down towards the Key Support level at $95.00 by 25th April. Investors will also keep an eye on the inventory data this week to gauge the supply side of the price mechanism.
Technical analysis
The Oil prices have bounced back above the 23.60% of Fibonacci level on the chart between the March peak and 11th April low. While just trading above the Pivot point on the chart at $102.00 seems oil has found strong support around the $95 mark. RSI indicator is flat at around 50.00 points. And indicates every drop is a good buying opportunity at this stage.
Trade Insights – USO/USD –
Viable Long positions above the Pivot point at $102. Level targeting the Key Resistance level at $109. Then advancing towards the Resistance zone between $116 to $118 levels (Tradingview).
Alternatively, Short positions below the $100 mark heading towards the Key Support Level at $95.00. If oil prices fail to gain momentum and demand further declines from the Chinese side. Due to the lockdowns or any supply squeeze that appears in the inventory data this week.
USOIL / WTI Crude Oil chart
XAU/ USD
Gold prices bounced back off amid equity markets volatility. The pair quickly bounced back above the $1900 level as Bulls are pushing hard to keep prices above support. However, it seems a fake-out. And the way things are unfolding Gold could drop back towards the key support level at $1890 and lower. There are a lot of mixed signals and factors at play here - equity markets are melting down, Chinese Zero Covid backed lockdown, rising dollar, weakening yield, and rising oil prices.
Gold is sitting just near the confluence point of 61.80% Fibonacci and Key Support level on the chart. About three times gold has already bounced back up from this support zone. RSI is heading south towards the 30-point oversold zone and seems Demand could kick in at any point.
Trade Insights – XAU/USD – Viable Long positions above the Key Support level at $1890 targeting the Pivot at $1925 and then the Key Resistance level at $1950, then advancing towards the Resistance zone between $1980 to $1990 levels.
Alternatively, Short positions below the Key Support level at $1890 heading towards the Support Cluster at $1850 to $1840.
The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.
Market Insight -S&P500 -Growth Engine Slowing Down
Market Insight – April 27th, 2022.
S&P500
Markets witnessed an aggressive selling yesterday (April 26th). It brought the tech-heavy Nasdaq down by 4% to its lowest level of 2022, Dow Jones dropped by 2.98% and S&P 500 declined by 2.81%. Starting Thursday last week, S&P500 has dropped down from 4510 to 4175 points now, a sharp decline of about 7.42 %. The Index is now trading just above the Key Support level on the chart at 4160.
Apparently, there is common sense prevailing amongst the investors of what the internals of the equity markets is telling. The growth engine is slowing down. Average S&P 500 Stocks are already in the bear market. And the Index itself is heading toward a pullback of 20% from the All-time peak of 4820 to 3856 points. Ten of the 11 S&P 500 sectors finished lower. In such an environment defensive sectors such as healthcare, real estate, and utilities still perform well. But they all have struggled in this selloff. On the other hand, the Treasury yields dropped to 2.76%. The US Dollar jumped above $102 its highest in over two years Crude oil jumped back above the $100 per barrel mark. Yesterday, around all the bearish sentiments CBOE Volatility Index (VIX) jumped back above 33.52 about 24.06% higher.
USO/USD
Crude oil managed to bounce back above the $100 level. Even though there is a broad bearishness and demand-side fear prevailing in the oil markets - Chinese Zero Covid Policy and Lockdown fear. Oil is steadying and is back above $100 now after it dropped down towards the Key Support level at $95.00 by 25th April. Investors will also keep an eye on the inventory data this week to gauge the supply side of the price mechanism.
Technical analysis
The Oil prices have bounced back above the 23.60% of Fibonacci level on the chart between the March peak and 11th April low. While just trading above the Pivot point on the chart at $102.00 seems oil has found strong support around the $95 mark. RSI indicator is flat at around 50.00 points. And indicates every drop is a good buying opportunity at this stage.
Trade Insights – USO/USD –
Viable Long positions above the Pivot point at $102. Level targeting the Key Resistance level at $109. Then advancing towards the Resistance zone between $116 to $118 levels (Tradingview).
Alternatively, Short positions below the $100 mark heading towards the Key Support Level at $95.00. If oil prices fail to gain momentum and demand further declines from the Chinese side. Due to the lockdowns or any supply squeeze that appears in the inventory data this week.
XAU/ USD
Gold prices bounced back off amid equity markets volatility. The pair quickly bounced back above the $1900 level as Bulls are pushing hard to keep prices above support. However, it seems a fake-out. And the way things are unfolding Gold could drop back towards the key support level at $1890 and lower. There are a lot of mixed signals and factors at play here - equity markets are melting down, Chinese Zero Covid backed lockdown, rising dollar, weakening yield, and rising oil prices.
Gold is sitting just near the confluence point of 61.80% Fibonacci and Key Support level on the chart. About three times gold has already bounced back up from this support zone. RSI is heading south towards the 30-point oversold zone and seems Demand could kick in at any point.
Trade Insights – XAU/USD – Viable Long positions above the Key Support level at $1890 targeting the Pivot at $1925 and then the Key Resistance level at $1950, then advancing towards the Resistance zone between $1980 to $1990 levels.
Alternatively, Short positions below the Key Support level at $1890 heading towards the Support Cluster at $1850 to $1840.
Click to see our Chart of The Week: Chart Of The Week - AUD/CAD At The Confluence Point In The Horizontal Channel
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The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Vishal, R.
April 27, 2022
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