By Deepta Bolaky
Global stocks rallied overnight on the back of heightened expectations of more stimulus, improving economic data and the outperformance of the technology stocks ahead of the much-awaited Jackson Hole Economic Symposium.
Major US equity benchmarks closed in positive territory led by tech stocks. S&P500 and Nasdaq Composite continue to record new highs:
In the FX space, major currencies were mixed against the greenback. Major pairs continued to trade within familiar ranges as all eyes are on the Fed Chair Jerome Powell speech at the Economic Symposium. The US dollar was unable to firm against major currencies despite improving economic data.
The Antipodeans and commodity-linked currencies were among the best performers on Wednesday. Today, Adam Taylor CTEe takes a look at the AUDJPY pair on the 4hr time frame:
Despite a more robust Aussie Dollar recovery since March earlier in the year, there appear to be warning signs that this bullish move could run out of steam in the short to medium-term.
Firstly, we can note the overall strength of the move higher by how well the price action has managed to stay above the 200 moving-day average line in blue, acting as a key support indicator several times this year.
However, if we study what happens when the bulls attempt a run at the 76.80 region highlighted by the arrow in white, it’s clear that the pair may be facing somewhat of a price ceiling after five failed attempts to break above this level since June.
As the pair heads back into this price territory, buyers will be assessing whether there is sufficient momentum left in this longer-term rally to carry the Aussie Yen towards higher ground or if sellers have gained the upper hand at these levels. A breach of 76.80 would most probably look to target the 80.00 price point seen in the earlier part of last year.
Finally, the last point to mention is the ever-so-slight bearish divergence forming on the chart’s RSI indicator. It’s another potential sign of an oncoming reversal. It may see the pair retest the 200-day moving average once again (currently sitting around 75.70) before drifting lower towards 74.50 and flattening the overall trend and looking like more of a range-bound picture longer-term.
On the economic front, attention was on the US Durable Goods. New orders for manufactured durable goods in July increased $23.2 billion or 11.2 percent to $230.7billion. This is the third consecutive months of increase.
Crude oil prices traded higher as Hurricane Laura intensified. Traders are balancing the rally in the equity market, improving economic data and weekly oil reports. The EIA reported a bigger-than-expected draw in US crude oil inventories. Crude oil stocks change was -4.7 million barrels in the week ending August 21st, compared to analysts’ estimate of -3.7 million barrels. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were firmer around $43.38 and $45.69 respectively.
Gold rebounded on Wednesday as investors brace for more market volatility ahead of the Jackson Hoel Symposium. As of writing, the XAUUSD bounced from two-week low and is trading around the $1,950 level.
Source: GO MT4
By Deepta Bolaky
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|Friday, 28 August 2020
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