Markets are going crazy right now as volatility increases twofold since the beginning of the year, based on the Volatility Index (VIX). Heightened volatility can be risky, but it also brings forth plenty of lucrative trading opportunities.
The featured trade idea for the day is a death-cross on the SP500. A death cross refers to when the 50-day moving average crosses below the 200-day moving average, and it has been a pretty reliable predictor for some of the biggest bear markets in the past century.
SP500 Daily Chart
From the chart, we can see that the death-cross has just been created on Monday, and prices are trading in a descending channel, with lower lows and lower highs being created consecutively.
Fundamental-wise, the markets were in a risk-off mode as the war took place. Investors pulled away from riskier assets and make the flight to safe havens, hence we see the decline in stocks markets and a rose in gold prices and the US dollar. However, markets are slowly beginning to price in the macro developments amidst ongoing negotiations between Russia and other involved parties. Oil and gold have made significant retracement where crude oil is down 24% from its recent peak at $126 to $95 while gold is down 6.76%, from $2070 to $1930, at the time of writing.
We should also not forget that there is a prospective rate hike from the Fed this Wednesday which may shake the market even further. USD should be gaining strength from the event, while gold may lose its appeal as the opportunity cost of holding gold increases.
Back to SP500, it could be a good opportunity to go long, as when everything goes back to normal, and companies begin to post positive earnings, etc, stocks should go back to their bullish track.
Technical levels for SP500
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Welf
Technical Analyst, Trader
The risk-on mood extends for the second straight day this Tuesday, as most Asian stock markets are rallying, in anticipation of the ECB and BOC monetary policy decision. Meanwhile, a likely delay in the Fed’s tapering plan and hopes of more stimulus from China keep investors cheerful.
Prevailing an upbeat mood weighs on the US Treasuries, lifting the yields, in turn checking the renewed downside in the US dollar across the board. The greenback is attempting another bounce, as markets move past the effects of a disappointing US NFP report. The futures tied to the US stocks also edge higher, suggesting a positive start on Wall Street, as traders return after a three-day weekend.
Amid the resurgent dollar’s demand, most major currency pair have turned south, with the Antipodeans emerging as the main laggards. AUD/USD drops back towards 0.7400 after spiking to 0.7470, in an initial reaction to the RBA policy decision. The RBA kept the rates on hold at 0.10% while sticking to its tapering plans.
EUR/USD’s recovery faltered at 1.1885 amid rallying yields, as it now edges lower towards 1.1850. Investors shift their focus towards the German ZEW Survey and Eurozone GDP final revision.
The S&P 500 futures are alternating between gains and losses around 4,535 while the US 10-year Treasury yields consolidate Friday’s sharp rally above 1.30%. The US dollar is staging an impressive bounce, taking cues from the recovery in the Treasury yields.
GBP/USD is retreating below 1.3850 despite the upbeat Brexit news. The UK and EU extended the post-Brexit grace period over Northern Ireland indefinitely. The UK’s Brexit Minister David Frost revealed a fresh extension, with no new deadline set for the completion of talks, per The Guardian.
Gold price is retreating towards $1815, having failed to find acceptance above $1830, as all eyes remain on the ECB outcome on Thursday.
Cryptocurrencies are on the defensive. Bitcoin trades close to four-month highs above $52,000.
Overview
In recent months, there has been significant proliferation of affordable, reliable, fast internet across
the African continent, resulting in a remarkable increase in the rate of forex trading in most
countries.
However, it is not surprising that widespread internet access would result in businesspeople,
entrepreneurs, and others finding new ways to grow their wealth online, but Africa has a unique set
of factors which have resulted in it outpacing other regions where forex trading adoption is
concerned.
Factors involved in Africa’s boost in forex trading adoption
Forex trading has seen an unprecedented spike in numbers across Africa in the last few years,
especially since the start of the Covid-19 pandemic, which has been bolstered by fast internet and
adopted by younger people who are seeking new, entrepreneurial ways to make a living.
By June 2020, forex trading in Africa had already increased by 477% as result of lockdowns across
Africa which forced people to remain home, finding new ways to make a living. Resulting in forex
trading becoming a vital way for Africans to beat increasing unemployment rates.
The median age of many Africans is 19, and this dynamic, adaptive demographic has shown
increasing interest in Forex trading to help them grow their wealth without having to rely on
employment opportunities and growth, which is set to remain sluggish as economies struggle to
return to pre-pandemic levels says Senior Market Analyst Louis Schoeman from Forexsuggest.com
Other factors which have led to the widespread adoption of forex trading in Africa include:
The size of the forex market, low transaction costs, and easy accessibility
An increase in the number of regulated forex brokers that allow African traders
The number of trading opportunities and ways of trading
Huge focus on webinar training for beginner traders.
The Forex Market
The forex market is the largest, most liquid, and volatile financial market which sees more than $5
trillion in currencies being traded between millions of market participants daily.
The forex market offers a significant number of trading opportunities to forex traders of all trading
levels and presents a range of sessions in which African traders can partake.
There are certain conditions that influence exchange rates of currency pairs traded in forex and
traders who learn to speculate on prices and the direction in which they will move, can become
extremely profitable.
Regulated Forex Brokers
There are hundreds of forex brokers in the world offering their services to African traders. However,
the rule to remember when choosing a forex broker is to only use a well-regulated broker to
facilitate trades.
African traders have a choice between some of the best, reputable, and well-regulated forex brokers
in the world that facilitate accounts from most African countries. In using the services of a regulated
forex broker, African traders know that their funds are safe and that they can trade in a safe, secure
trading environment.
Trading Opportunities and ways to trade
An advantage of the forex market is that traders have access to many forex trading strategies,
trading platforms, a choice in currency pairs, and access useful trading tools such as leverage.
All these components make for an immersive, exciting experience in trading forex, and offers African
traders with multiple ways to earn great profits.
The greenback ended the day with modest gains against most major rivals. Geopolitical tensions in Afghanistan and comments from US Federal Reserve Robert Kaplan, who said that September would be the time to outline tapering and start it in October, were behind the slump. James Bullard, another member of the central bank, also made comments in the same direction.
Comments from Fed officials fueled speculation about some announcement from US Federal Reserve Chief Jerome Powell on Friday, within the Jackson Hole Symposium. Powell will likely refrain from anticipating a shift in monetary policy but instead reserve any announcement to the upcoming Fed September meeting. Market participants, however, maintain high expectations ahead of his speech.
The US published the second version of Q2 Gross Domestic Product, which was upwardly revised to 6.6% QoQ from the previous estimate of 6.5%, missing the expected 6.7%. Core PCE inflation in the same quarter was confirmed at 6.1%, as previously estimated.
The EUR was among the strongest USD rivals, while the GBP was the weakest. EUR/USD trades around 1.1750, while GBP/USD pierced the 1.3700 figure. Commodity-linked currencies edged lower on a daily basis, but retain most of their weekly gains. The USD/JPY pair hovered directionless around 110.00.
Gold prices seesawed between gains and losses but ended the day little changed at around $1,792 a troy ounce. Crude oil prices were also stable with WTI settling at $67.80 a barrel.
The market mood has improved amid speculation that the Fed refrains from early tapering amid the rapid spread of the Delta covid variant. The safe-haven dollar is reversing some of its gains. Preliminary PMIs are high on the agenda, and Bitcoin is on the rise.
After a week dominated by concerns that the Federal Reserve would announce a tapering of its bond-buying scheme, investors are now foreseeing a delay. Robert Kaplan, President of the Dallas branch of the Fed, said he would consider postponing such a move in response to the impact of the Delta covid variant. Kaplan is a hawk and had previously pushed for withdrawing stimulus.
The focus is on the Fed’s Jackson Hole Symposium and the speech by Chair Jerome Powell on Friday. Over the weekend, the bank announced that the event would be held virtually, a move seen as acknowledging the severity of the current wave of the disease.
Some speculate that Powell could use the Jackson Hole speech to signal a delay in withdrawing stimulus rather than bringing it forward. Markets are cheered by reports that the White House would extend Powell’s term as Fed Chair by another four years.
US coronavirus cases have hit a daily average of 149,000, ten times more than in early June. Hospitals in several southern states remain stressed. On the other hand, China said it has eliminated the spread of the Delta strain, allowing the lifting of lockdowns in the world’s second-largest economy.
The upbeat mood in markets has pushed the safe-haven dollar down with EUR/USD recapturing 1.17. Markit’s preliminary Purchasing Managers’ Indexes for August are due out during the morning and are set to remain on high ground.
UK PMIs are of interest to the pound, which is struggling with stubbornly high British covid cases. GBP/USD is trading around 1.3650.
The improved market mood is also supporting oil prices, with WTI topping $63. Gold is hovering around $1,785, within familiar ranges.
Cryptocurrencies had a successful weekend, with Bitcoin surging above $50,000, the highest levels since May. Ethereum is trading above $3,300 and other digital assets such as Cardano and Dogecoin are on the move.
The American dollar retained its dominance across the FX board, ending the day up against most of its major rivals. The greenback suffered a temporal setback mid-US afternoon, following the release of the FOMC Meeting Minutes.
The document showed that some participants suggested that it would be prudent for the committee to prepare for starting to reduce its pace of asset purchases relatively soon. At the same time, “many participants noted that, when a reduction in the pace of asset purchases became appropriate, it would be important that the Committee clearly reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in the target range for the federal funds rate.”
After investors finished digesting the news, Wall Street took a turn to the worse, with all major indexes closing in the red. The DJIA lost 380 points, while the S&P shed 40 points. Government bond yields ticked lower, with that on the 10-year note down to 1.26%.
The EUR/USD pair fell to a fresh 2021 low of 1.1693 on Wednesday, ending the day at 1.1710. GBP/USD settled at 1.3750. The AUD/USD pair stands at 0.7230, near a fresh 2021 low, while USD/CAD trades at 1.2650, its highest for the month.
Gold advanced, ending the day at $1,785.70 a troy ounce. Crude oil prices plunged alongside stocks, with WTI ending the day at $64.30 a barrel.
On Tuesday, the US reported disappointing Retail Sales figures for July, adding to the gloomy mood and keeping the safe-haven dollar bid. Headlines sales dropped by 1.1% in July.
The Reserve Bank of New Zealand surprised markets by leaving its interest rates unchanged at 0.25% instead of raising them. While the RBNZ is set to hike borrowing costs later this year, its response to New Zealand’s fresh lockdown has broader implications for markets.
EUR/USD is trading close to 1.17, the August low, as the dollar gains ground. Final eurozone inflation figures are due out later in the day. Europe has seen its covid caseload gradually decrease.
GBP/USD is trading below 1.3750, at the lowest in three weeks amid dollar strength and after the UK Consumer Price Index missed expectations with 2% YoY in July compared with 2.3% projected.
USD/CAD is hovering above 1.26 as oil prices struggle to recover and ahead of both crude inventory data and Canada’s inflation statistics.
Gold has been trading around $1,791, stable amid limited moves in US Treasury yields.
Bitcoin is hovering above $45,000 consolidating gains seen earlier this month. Ethereum has retreated from the highs but holds above the $3,000 level.
Fear about slowing global growth and rising covid cases is weighing on sentiment and supporting the safe-haven dollar. The Fed’s Meeting Minutes are eyed after the RBNZ surprised by leaving rates unchanged. Gold remains below $1,800 and cryptocurrencies have been edging lower.
US COVID-19 cases continue rising, nearing a daily average of 140,000, resulting in pressures on hospitals in some undervaccinated areas.
Federal Reserve Chair Jerome Powell refrained from making any significant comments in his speech on Tuesday, saying only that Delta covid variant causes uncertainty. He leaves the focus on Wednesday’s FOMC Meeting Minutes.
