Global markets continue lower as new inflation worries sparked by rising U.S Treasury yields could see U.S Federal Reserve tighten its monetary policy.
Asian markets continued lower on Wednesday session as the notion of increased U.S interest rate hikes fuel U.S Treasuries to reach new highs last seen two years ago. We also saw a rotation out of tech stocks which drove the volatile sell-off in the equity markets. Oil was also in the spotlight throughout Tuesday’s session as Oil prices reached their highest level since 2014.
Here is what’s expected this week:
The Wall Street 30 Technical Analysis
As discussed in our previous Wall Street 30 (WS30) note, that if the bears take control and price cannot stay above 36257, then we could see the 35635-support level targeted.
The price action on the 4H chart has broken the uptrend (green arrow) and continued lower towards an interim support level of 35038. If we see fundamental factors continue to drive global markets lower, then we could see the bears target the 34692-support level. We could also expect a bounce from lower levels in the European session as banks come online to try and drive prices higher.
The 50-day simple moving average of price (blue line) is on a downward slope supporting lower prices while the Relative Strength Index (RSI) is at oversold levels.
The RSI being oversold is at no point an indication that a reversal in price is imminent as oversold RSI level can continue for weeks on end and supports the sell-off.
Current State / Chart Source: Wall Street 4H Timeframe - GT247 MT5 Trading Platform
Trading Term of the day:
Tight Monetary Policy
Tight, or contractionary monetary policy is a course of action undertaken by a central bank such as the Federal Reserve to slow down overheated economic growth, to constrict spending in an economy that is seen to be accelerating too quickly, or to curb inflation when it is rising too fast. – Investopedia.
Take note: The outlook and levels might change as this outlook is released during the current days (Wednesday the 19th of January 2022) U.S Market open.
Sources – MetaTrader5, Reuters, Investing.com, 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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