Top charts for this week

Summary:

  • Dow Jones moves above the 200DMA

  • USDPLN tests this year’s highs

  • Gold prices with room to continue heading higher

The first weeks of this year have been particularly favourable for the US stock market. Looking at the Dow Jones (US30) one may notice that US blue chips have already erased 70% of the slide from a bottom in the fall in 2018. Since a bottom in December the index has risen almost 18%. There is no doubt that US stocks are being supported by a dovish stance of the Fed, rising hopes regarding a trade deal between the US and China. As a result, the Dow Jones managed to break through the 200DMA being eagerly observed by US investors. On top of that, the price also moved through the bearish trend line and the next resistance could be found around 25800/26000 points. This level coincides with the 78.6% retracement of the entire bearish movement.

Source: xStation5

The US dollar has thrived in recent days, the move began after the Fed’s meeting in January. This has also coincided with downward pressure on EM FX including the Polish zloty. Note that EM FX in Europe are also burdened with fears regarding a GDP growth slowdown, particularly in Germany. As a consequence, the USDPLN moved higher in the past hours and left the channel. Based on this pattern one may expect the price could go toward 3.92, albeit bulls need to crack this year’s highs before heading north. On the other hand, a negative correlation between the US dollar and the Polish zloty implies that  the pair could see a move downwards toward the upper bound of the broken channel.

Source: xStation5

Despite the strong greenback precious metals have performed quite well. Gold prices look particularly interestingly as they stayed above $1300. Given the sharp rises we saw last month, we may expect the price could see some increases if downward pressure on the dollar mounts again. Naturally, higher US bond yields, increased appetite for risk and hopes for a resumption of monetary tightening in the US could act to the detriment of gold prices. The key resistance is placed at $1325. If gold prices break $1300 the channel of three moving averages as well as the upper limit of the channel could be pivotal levels to watch.

Source: xStation5
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