The new trading week is seen to be less dangerous and more complacent, definitely much more relaxed than the previous one. It may seem that large investors have decided to take a break in August to prepare themselves for a tough autumn. Thus, the best sell opportunities may emerge in August, when the S&P 500 broad market index and other stock market benchmarks will complete their correction cycles.
Nevertheless, this week there are trading opportunities to be monitored. The expected primary data is the Non-Farm Payrolls this Friday, PMI readings that are set to be published throughout this week, the Bank of England (BoE) interest rates decision on Thursday, and the OPEC+ meeting close to the end of the week. The Q2 2022 corporate reporting season is seen to be rather disappointing and could hardly change market sentiment.
The S&P 500 index survived within the aggressive upside formation, moving close to the target points of 4150-4250. But sit and wait tactics is seen more justified ahead of the expected turmoil this autumn. Only when the first signs of this turmoil emerge, short positions could be considered.
Brent crude prices failed to breakthrough $107-108 per barrel resistance level amid the negative news environment, which includes the fact that the Chinese PMI dipped to 49.0 points which translates into a contraction of the economy in China. In other news, Libya restored crude production to 1.2 million barrels per day, while the United Kingdom decided not to block insurance coverage of vessels with Russian oil. However, the upside scenario with primary targets at $135-145 per barrel of the Brent crude benchmark and extreme secondary targets at $160-170 are intact.
Gold prices continue to climb towards the resistance at $1800-1820 per troy ounce. Gold prices may continue to rise by the beginning of September but are likely to plummet in November towards $1350-1450 per ounce. So, it would be wise to wait for the prices to reach the resistance level at $1800, and consider opening small, short positions in September.
EURUSD continues to move inside an aggressive upside formation with targets at 1.03500-1.04500 by the middle of next week. The support level at 1.01800-1.02000 could look like a good time to open long positions. But considering the upcoming Non-Farm Payrolls data, these positions may not be profitable either.
GBPUSD is looking even more complicated after the pair met targets at 1.21500-1.22500. There are more extreme secondary targets at 1.23500-1.24500, but this scenario could be spoiled by the BoE’s interest rate decision. So, wait and see tactics could be the best option here as well.