Disappointing economic data from the world’s 2nd largest economy, pandemic infection rates uptick and tapering talks put a damper on global economic growth.
Economic data from China indicated weaker industrial output, retail sales grew at their slowest pace since August 2020 and businesses were struggling with lockdown regulations. Economic growth concerns are elevated, and Beijing is expected to continue its stimulus plan over the coming months.
U.S CPI data which showed its smallest gain in six months also added to speculation that the Fed might be under less pressure to start tapering its enormous asset purchases.
“There is uncertainty in markets at the moment as investors wait to see what the Federal Reserve will do about tapering their asset purchases, which depends on the state of the labour market and the inflation situation,” said Sean Debow.
Here is what’s expected this week:
The Wall Street 30 Technical Analysis
The seasonal factors for the month of September seem to be playing out this year as global markets feel the pinch of sluggish economic growth. If historic seasonality is anything to go by then on average, September has been the worst month for the stock market from 1925 to 2021.
The current price correction on the Wall Street 30 (WS30) saw a short term rebound from our 34671-support level of interest (pink line) as discussed in our previous WS30 note. The price action is making lower highs and lower lows which could indicate more downside to come if the support level at 34671 does not hold.
- The price action is making lower highs and lower lows on the 4H chart which could indicate a short erm trend lower.
- Volatility is expected to continue over the week which brings our 34237-support level into focus as a short term possible lower target level.
- The 50-day SMA (blue line) is sloping down and acting as resistance to price.
- The Relative Strength Index (RSI) is hovering above the oversold level on the 4H chart but this does not indicate a reversal in price, as oversold levels could persist for weeks on end.
Chart Source: Wall Street 4H Timeframe - GT247 MT5 Trading Platform
Trading Term of the day:
Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year. Any predictable fluctuation or pattern that recurs or repeats over a one-year period is said to be seasonal. – Investopedia
Take note: The outlook and levels might change as this outlook is released during the current days (Wednesday the 15th of September 2021) U.S Market open.
Sources – MetaTrader5, Reuters, Investopedia.
Barry Dumas | Market Analyst at GT247.com
Barry has 12 years of experience in the financial markets. He enjoys educating clients on trading / investing and providing punchy technical analysis on securities. He currently holds a Wealth Management qualification and is studying towards becoming a Chartered Market Technician® (CMT) designation holder.
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