S&P 500 on a fragile recovery path

New trading week has started mixed as stock markets are climbing with European stock indices gaining around 2% and U.S. stock indices advancing even higher by more than 2% to 3,900 points.

On the other hand crude prices are going down forming potentially reverse pattern. The U.S. Dollar is strengthening against other major currencies.

This controversial picture may point to a false rise of stock indices.

However, this week may bring a stabilization in the stock market as investors would likely to wait for NonFarm payrolls data this Friday before opening any investment positions. So, we may expect sideways trading before this set of data would be released.

This Thursday Federal Reserve Chairman Jerome Powell will attend the discussion at The Wall Street Journal Jobs Summit. Powell would make another try to convince markets the Fed would adhere loose monetary policy for a long time. Albeit he failed this mission last week as Treasuries’ yields soared after his speech.

Apparently, with existing technical picture Mr. Powell is unlikely to succeed this time too. Corporate earnings reports would not be of great help the market as it is almost over. Zoom Video Communication Inc. financial results would be interesting to follow with the reaction of the market on Tuesday. Worse than expected results may reverse S&P 500 index down to 3840 and 3765 support levels.

The reverse pattern is forming in the oil market ahead of the OPEC+ meeting this Thursday where crude production may be increased. However, so far it is hard to say whether this pattern would be completed before the meeting. But if so, we may get a decline in Brent crude prices to the support levels at $63.4; $62.2 and further down at $61.20 per barrel. If the pattern would be broken we may see a brief spike of the price up to $67 per barrel that would be a good opportunity to seek for a short entry point.

Gold prices have tumbled to mid-term target of $1650-1700 per troy ounce. It is likely prices would continue to slide further in the coming days.

FX market this week would become more and more complex nearing the Non-Farm Payrolls data this Friday. So, intraday trading with close targets could be a wise strategy to follow. It is better to avoid leaving any open trades when the data would be released.

The EURUSD may be interesting for a short-term selling from the resistance at 1.21600 and 1.22700. But traders should monitor the support level at 1.20250. Once broken the Euro may plunge towards 1.16200 mark.

The British Pound may be interesting to sell at 1.40400 and 1.41600. But traders should closely monitor the support level at 1.39200. Once it would be broken the GDPUSD may drop to the 1.35000 level.

The Japanese Yen is trading close to the important resistance level at 106.50. A breakthrough may cause an upward movement to 110.50. However, it USDJPY fails to break it any sell positions opened close to 106.50 level with a target at 104.10 would be interesting to consider.