The S&P 500 broad market index continues its steady but slow climb towards its target at 4600-4650 points. Investors are hastily using their chances to increase positions before the Federal Reserve (Fed) could bombard markets with all its anti-inflation artillery, including raising interest rates by 50 basis points at once and unloading its massive $9 trillion balance sheet.
In this context investors could be mentally crippled by the thought of the risk of high inflation risks forcing ++ the Fed to maximize monetary tightening in May making long positions quite favorable to open before such decisions could be made. This disposition could be true unless a force majeure of Chinese military invasion of Taiwan or cyberattacks of the United States would become realities.
A crude prices rally may look positive for stocks in this regard together with rising interest rates and Fed members’ hawkish statements. All this could trigger investors’ greed until a thunderstorm could strike in May. This maybe twisted logic, but without force majeure it may drive the market up slowly toward previous records. This is obviously not the reason for new long positions. All those who wanted to attend this spring rally had this opportunity last week when the S&P 500 index dropped briefly to 4375 points.
However, the current disposition may move downside expectations for May, and may be also create a chance to relax for a moment with a glance on a possible geopolitical tensions.
The oil market has been witnessing efforts to raise Brent crude prices towards $160-180 per barrel this March. Prices have already tested the important resistance level at $120 per barrel. However, to continue to the upside prices need to close above this level this week making a freeway towards the major resistance level at $132 and further up within coming few weeks.
Gold prices surged above the important level at $1920-1930 per troy ounce. However, any rise to $1950-1960 may look like rather a better position to sell towards $1840 with a possible downside to $1750-1760 per ounce in the second half of April.
EURUSD continues to ascend within the upside pattern towards 1.13000-1.14000. But many technical indicators signal a high possibility of the downside correction below 1.08000. So, there is no clear direction to open trades. Short positions, which were not closed, opened at 1.10450 and they could be maintained at this level. The closes support is at 1.09700 and it has been tested twice without any success so far. Good chances for a downside may appear next week when support could move down to 1.08500.
GBPUSD is also in an upside pattern with a target at 1.34000-1.35000. However, some indicators signal a possible downside. However, there is some good news as an aggressive upside pattern is seen to be formed in the case that the Cable closes next Monday above 1.32500. With such contradictory indications, neither positions should be opened before the picture becomes less puzzling.