- US500 keeps moving toward its all-time high
- Turkish lira under downward pressure
- Oil prices come back toward their 200DMA
This year has abounded in many interesting events so far offering a lot of volatility across financial markets. Equity investors may be happy seeing their rates of return as a majority of equities have performed well as of yet. However, the latest tweet of Donald Trump has changed this upbeat backdrop to some extent after he suggested that tariffs on Chinese goods would be lifted this Friday. As a consequence, we saw massive declines in Asian markets while US indices were less affected. Looking at the daily chart of the US500 one may look for analogy of what happened in 2007 when the US stock market crashed after reaching its all-time high. However, this time seems to be a bit different, taking into account the time needed to the current levels (the latest price increase has been much more stable). Technically the most important support remains 2800 points. If this level is broken, then investors may scratch their head if the current pullback could evolve into the bear market.
The Turkish lira is another market of note as the currency has fallen prey to a President Erdogan’s desire to rerun elections in Istanbul. The TRY plunged yesterday after cancelling the general elections’ outcome in the Turkish capital where the ruling AKP failed to win. It could mean that Turkey may be embroiled in another political crisis, and if so, it could lead to much more downward pressure on both the currency and the bond market. Looking at the chart presented below one may notice that the TRY has been in a downtrend since the start of this year. On Tuesday, the price broke above the psychological level of 6.00. In turn, today’s trading has brought a further decline in the TRY with the USDTRY crossing the 50% retracement. Should this level be broken, then a rise toward 6.35 could be on the cards. There is no doubt that politics will play a remarkably important role there.
Oil is the last market we want to glance at. First of all, let us notice that oil prices realized the targets stemming from the inverted head and shoulders (red rectangles) as well as the flag pattern (green rectangles). After doing so, oil prices have begun declining after new revelations that US sanctions on Iran may be less harmful for the entire OPEC (it means a shortage of Iranian oil could be quite easily replenished by other countries like Saudi Arabia). Since then, oil prices have come back to the 200DMA being supported by the channel of 50-moving averages. This area ought to constitute the important support for bulls. Therefore, a breakdown of this zone could be the first warning signal for buyers. Another support of note may be found in the vicinity of $64.2, the level coincides with the highs seen in late 2018.