S&P 500 climbed relentlessly for 20 months starting in April 2020. The upward march started from the trough of 2181 to the peak of 4820 by January 2022, it is almost a 121% increase in the Index market value. January is also the month when the Index dropped to touch 4222 a 13.22% decline in just one month. Now mid-February we are witnessing huge ups and downswings during consolidation.
S&P 500Index
In this week’s FOMC statement released on 16th February, which covers the minutes of the January meeting saw officials' concern over inflation and risk to the economy due to variants of Covid Virus. At this stage the committee has decided to keep the Federal Funds rate at 0.25% However, as the US inflation rate has accelerated to 7.5% in January 2022 well above the Fed target rate of 2% the statement reads “the Committee expects it will soon be appropriate to raise the target range for the federal funds rate”. The other important point in the statement is the “Committee decided to continue to reduce the monthly pace of its net asset purchases, bringing them to an end in early March.”
Us Inflation Rates
Chart of The Week - Technical Analysis
XAU/USD – Downside Ahead?
Resistance Zone: $1910 to $1920
Key Resistance Level: $1875
Major Pivot Point: $1850
Key Support Level: $1825
Support Zone: $1800 to 1790
Last Analysis Date: Blue Vertical Lines
200 Day EMA – Green Line
50 Day EMA – Red Line
CBOE VIX – Volatility Index @ 24.29 -1.41 (+5.49%)
Trade Insights – XAU/USD – Chart shows viable short positions below the Key Resistance level of $1875, first targeting Pivot at $1850 and then the Key Support level at $1825 and this support is broken too then further head towards the Support Zone between $1800 to $1790.
Alternatively, Long positions above the Key Resistance level at $1875 targeting the Resistance Zone at $1910 to $1920.
XAU/USD Daily Chart
Chart Analysis:
Directional bias: 2 Weeks EUR/USD
XAU/USD pair is trading just under the key resistance level at $1875 and has touched an 8-month high at $1879. Gold touched this peak back on 14th June 2021. Interestingly, the pair bounced sharply from the low of $1780 on 28th Jan underpinned by the US/Russia Geopolitical Risks that have driven high demand of yellow metal from the investors.
The Resistance level between $1875 to $1880 is proving difficult while Gold is consolidating just under at $1868 at the time of analysis. The bears can take control of the price action anytime if bulls fail to push the prices across the $1880 mark.
A close above $1880 could mean the next resistance zone between $1910 to $1920 would become relevant as the pair crossed it back in the month of June and dropped sharply from there. It seems that Gold is now slowly moving towards the overbought zone and could renter the upward parallel channel soon. Once the prices are inside the channel there could be a sharp drop in the pair heading towards the Support zone at $1800 to $1790. There could also be a scenario where prices might drop to $1850 Support level to consolidate and jump higher towards the Resistance Zone at $1910 to $1920.
The RSI indicator is just at 64 points and Gold still has room for touching more highs before heading back towards the support levels. The XAU/USD pair is trading well above the 50-Day EMA red line and heading towards the 200-day EMA green line indicating a Bullish Bias of the market. However, as soon as the Red Line turns downwards the drop in gold prices could be sharp and quick.
Fundamental Overview: The FOMC minutes were released from the Jan 25th – 26th meeting that largely focused on planned interest rate hikes to combat inflation. however, market expectations are that Feds will have to take a hawkish stance and go for a rate increase in March than later and a 50 bps increase is already priced in by the equity markets. On the other hand, the standoff between Russia and Ukraine has unfolded sooner than we expected and there are signs of cooling down in the confrontation, but the risk remains elevated.
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.
Technical Analysis & Market Insights - Feb 18
Market Insight – S&P Reversal? FOMC Minutes, Rate Hike.
S&P 500 climbed relentlessly for 20 months starting in April 2020. The upward march started from the trough of 2181 to the peak of 4820 by January 2022, it is almost a 121% increase in the Index market value. January is also the month when the Index dropped to touch 4222 a 13.22% decline in just one month. Now mid-February we are witnessing huge ups and downswings during consolidation.
In this week’s FOMC statement released on 16th February, which covers the minutes of the January meeting saw officials' concern over inflation and risk to the economy due to variants of Covid Virus. At this stage the committee has decided to keep the Federal Funds rate at 0.25% However, as the US inflation rate has accelerated to 7.5% in January 2022 well above the Fed target rate of 2% the statement reads “the Committee expects it will soon be appropriate to raise the target range for the federal funds rate”. The other important point in the statement is the “Committee decided to continue to reduce the monthly pace of its net asset purchases, bringing them to an end in early March.”
Chart of The Week - Technical Analysis
XAU/USD – Downside Ahead?
Trade Insights – XAU/USD – Chart shows viable short positions below the Key Resistance level of $1875, first targeting Pivot at $1850 and then the Key Support level at $1825 and this support is broken too then further head towards the Support Zone between $1800 to $1790.
Alternatively, Long positions above the Key Resistance level at $1875 targeting the Resistance Zone at $1910 to $1920.
Chart Analysis:
Directional bias: 2 Weeks EUR/USD
XAU/USD pair is trading just under the key resistance level at $1875 and has touched an 8-month high at $1879. Gold touched this peak back on 14th June 2021. Interestingly, the pair bounced sharply from the low of $1780 on 28th Jan underpinned by the US/Russia Geopolitical Risks that have driven high demand of yellow metal from the investors.
The Resistance level between $1875 to $1880 is proving difficult while Gold is consolidating just under at $1868 at the time of analysis. The bears can take control of the price action anytime if bulls fail to push the prices across the $1880 mark.
A close above $1880 could mean the next resistance zone between $1910 to $1920 would become relevant as the pair crossed it back in the month of June and dropped sharply from there. It seems that Gold is now slowly moving towards the overbought zone and could renter the upward parallel channel soon. Once the prices are inside the channel there could be a sharp drop in the pair heading towards the Support zone at $1800 to $1790. There could also be a scenario where prices might drop to $1850 Support level to consolidate and jump higher towards the Resistance Zone at $1910 to $1920.
The RSI indicator is just at 64 points and Gold still has room for touching more highs before heading back towards the support levels. The XAU/USD pair is trading well above the 50-Day EMA red line and heading towards the 200-day EMA green line indicating a Bullish Bias of the market. However, as soon as the Red Line turns downwards the drop in gold prices could be sharp and quick.
Fundamental Overview: The FOMC minutes were released from the Jan 25th – 26th meeting that largely focused on planned interest rate hikes to combat inflation. however, market expectations are that Feds will have to take a hawkish stance and go for a rate increase in March than later and a 50 bps increase is already priced in by the equity markets. On the other hand, the standoff between Russia and Ukraine has unfolded sooner than we expected and there are signs of cooling down in the confrontation, but the risk remains elevated.
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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
February 18, 2022
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