SPX Poised to Prints New All-Time Highs

Despite Omicron cases enabling fresh lockdowns, consumer confidence remains undeterred as we draw to the end of 2021. As a result, the US Dollar saw a dismal close last week on risk sentiment increasing, with stocks reaching all-time highs regardless of Fed’s hawkish rhetoric.

While still on, weak liquidity is likely to let markets run their seasonal course this week as participation deteriorates and volatility risks rise.

The economic calendar is not heavy in the US, primarily focusing on the Jobless Claims on Thursday.

Following a series of positive sessions for the SPX last week, traders will remain cautious around the all-time highs as technical indicators hint at a bearish signal.

Although the index is very likely to print a fresh all-time high, investors should be cautious of price action near the 4786 resistance, as the 61% Fibonacci extension of the 4269-4745-4493 combination lies.

A break above the previous high at 4751 will be seen as a bullish sign, whereas a move towards the 50% Fibonacci at 4635 might add to fears of a crash, ending up offering a deeper correction to 4493 and lower.

Cable Continues to Hang on the Greenback

The pound soared last week despite the UK govt starting a new round of lockdowns, mainly on the dollar’s weakness and on downwardly revised GDP. With the British struggling to produce an equally strong momentum to other countries, the pound would have otherwise come under renewed pressure. However, the BoE has stepped in too soon to avoid deepening struggles.

Although the calendar is light for the UK, too, a quick eye on the House Price Index can indeed offer a potential macro-related opportunity for London traders. The weekly price action will likely hang on how the greenback holds its’ strength against its counterparts. Overbought and struggling to get past the 38% Fibonacci at 1.3420, a technical correction can be expected down to around 1.3350 or lower. Should momentum continue to rise, however, GBPUSD might head to the 50% Fibonacci next near 1.35.

WTI Traders More Focused on Supply Disruptions

Risk appetite supported a lift-off in the prices of oil. However, the black gold had been on a bullish takeover as the API, and EIA reports showed a falling crude inventory last week. Market participants seemed more interested in buying the Omicron dip on Monday, completely disregarding the risk of transmissibility, following news around Libya disrupting the oil supply.

WTI rose from $66 on Monday to $74 on Friday but met the said resistance at the 50% Fibonacci. It re-entered a bullish channel, so it might head higher since airline travel has recorded a double-figure compared to last Christmas. The next level up is at $76.50, then $80. If, however, the API and EIA release poor results come mid-week, sentiment for crude might switch to bearish. In such a scenario, traders will eye the $70 support, and if hell breaks loose, $68 and $63 – but it’s unlikely.

Yellow Metal Higher but Only Marginally

With oil on the rise, gold prices did reasonably well as the commodity received positive flows from a falling US dollar. However, the upside in gold was soft as last week’s sentiment was not about inflation as much as it was about risk appetite from recovering from the pandemic faster than expected. And that’s likely to continue being the case this week as markets will mainly focus on seasonality effects rather than inflation or Omicron. However, bulls will need to make a decent attempt to break the $1815 handle as it keeps prices in control.

A technical break of the said level – the 50% Fibonacci of the $1877-$1752 downside leg – can drive gold to the next resistance at $1830, where a cluster between the bearish bullish Fibonaccis has formed.

If bulls miss $1850 in a strong case, things might reverse swiftly, with the $1815 making a decent case of a polarity change. Although no signals indicate a bearish signal, a failure to break $1815 will be seen as a negative, and prices of gold might fall temporarily back to $1784.

Amega

Trade with an award-winning broker! Lowest spreads on the market for Forex, Precious Metals, Energies. No re-quotes, no rejection of orders & instant withdrawals.

Open account

www.amega.finance