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  • Weekly Summary: The Peak of the Crisis Has Been Moved to 2023

Weekly Summary: The Peak of the Crisis Has Been Moved to 2023

This year was extremely difficult for everybody in the world. It brought with it hopes that a recession would pass over the year and that 2023 would be a perfect time for peace and recovery. But the market decline seems to be slow and long lasting with lows likely to be reached in the second quarter of 2023, plus we may have another quarter of chaos right ahead of us.

This week volatility remained compressed. The S&P 500 broad market index declined by 0.3%, while the U.S. Dollar lost 0.5%, which is confusing. Everything is signaling to high pressure in the markets that will most likely remain until something important will release this spring into action. The year will traditionally start with the Non-Farm Payrolls and the first week itself will likely experience moderate volatility.

The technical picture for most of the markets has remained unchanged. The S&P 500 index is moving within the downside formation with targets at 3650-3750 that have already been met. The index is looking towards 3400-3500 points with a possible further decline below 3000 points.

Russia has finally revealed its response to the EU’s price cap of $60 per barrel on Russian’s seaborne oil.. Vladimir Putin has ordered that all oil exports to any country that supports this price cap should be stopped starting from February 2023. This move had a minor effect on prices since current prices are lower than this level and no country that would import Russian oil would literally declare it as being true in contrast to showing their support towards this cap. Brent crude prices are rolling back to the resistance level of $78-80 per barrel which is pressured by recession fears and the COVID-tsunami in China. Brent crude prices over $78-80 per barrel are seen to be a temporary departure that would end a new selloff wave to the nearest support at $68-70 per barrel. The lowest targets are currently seen at $60-70 per barrel.

Gold prices are charting an upside formation with targets at $2000-2100 per troy ounce by the middle of 2023. A short-term primary scenario suggests prices may roll back towards $1700-1720 per ounce by the middle of January. Only then may the gold rally be resumed.

The situation in the money market is seen to be more dramatic as the U.S. Dollar continues to deteriorate despite many upside factors. This may indeed signal some possible weaknesses of the Greenback that may be combined with the falling stock market at the beginning of 2023. The U.S. Dollar upside trades should be performed with caution in this regard.

The money market continues to experience elevated volatility that prevents the use of short-term signals. So, it is better to place orders that are attached to longer perspectives. Short trades of AUDUSD that were opened at 0.68000-0.68500, and for EURUSD at 1.05000-1.05500 in December, should be closed by the end of this Friday despite negative results of these trades.