Weekly Market recap 4: We need patience here
The glimpse of optimism
The market got back to the explicit state of the "certain uncertainty". You can see that the H&S pattern in DXY failed to push the USD higher. DXY couldn't even hold above the key 94.00 level for a considerable time.
The sentiment shifted from risk aversion to some hints of optimism as S&P500 managed to recover from the correction and even came close to all-time highs. Brent oil made a fake breakout of the 39.00 level showing signs of strengths as it's still consolidating near the key level 44.00.
AUD has been the weakest risk-asset currency recently. Even though it showed attempts to resume the long-term uptrend as optimism grew.
When things get blur
For the last week, the market has been digesting the gains from optimism as S&P500 and AUDUSD pulled back while DXY recovered from recent losses. Brent oil behaves remarkably, however. I cannot really see any obvious relationship of it with stocks and currencies for now; it's just consolidating. The market state is pretty vague at this point. I assume the trigger to the new wave of volatility may come from Brent. The closure above the 44.00 level can hint the bearish sentiment for DXY and attempts to advance below 39.00 can push the DXY higher.
If it's too gloomy, get rid of AUD
Among risk assets, AUD has been the weakest recently. On the AUDUSD chart, you can see the failed attempt to go above MA(50). If it breaks 0.7000, the chances are high that the long-term uptrend is finished. For some reason, AUD pairs have had quite a smooth price action recently, which implies the inflow of liquidity or the general agreement on the direction of the currency. Looks like it is "in-play".
I would consider shorting AUD if the global sentiment shifts more towards safe-heavens.
All in all, it's a good time to be patient now and look for the confirmation signs of the sentiment shift. The technical picture tells that currencies have been in the range for a considerable time already. The longer it stays like this, the more interesting the proceeding trend will be. The most important here is patience. Everything can change very quickly, and traders need to be ready for this.
The market got back to the explicit state of the "certain uncertainty". You can see that the H&S pattern in DXY failed to push the USD higher. DXY couldn't even hold above the key 94.00 level for a considerable time.
The sentiment shifted from risk aversion to some hints of optimism as S&P500 managed to recover from the correction and even came close to all-time highs. Brent oil made a fake breakout of the 39.00 level showing signs of strengths as it's still consolidating near the key level 44.00.
AUD has been the weakest risk-asset currency recently. Even though it showed attempts to resume the long-term uptrend as optimism grew.
When things get blur
For the last week, the market has been digesting the gains from optimism as S&P500 and AUDUSD pulled back while DXY recovered from recent losses. Brent oil behaves remarkably, however. I cannot really see any obvious relationship of it with stocks and currencies for now; it's just consolidating. The market state is pretty vague at this point. I assume the trigger to the new wave of volatility may come from Brent. The closure above the 44.00 level can hint the bearish sentiment for DXY and attempts to advance below 39.00 can push the DXY higher.
If it's too gloomy, get rid of AUD
Among risk assets, AUD has been the weakest recently. On the AUDUSD chart, you can see the failed attempt to go above MA(50). If it breaks 0.7000, the chances are high that the long-term uptrend is finished. For some reason, AUD pairs have had quite a smooth price action recently, which implies the inflow of liquidity or the general agreement on the direction of the currency. Looks like it is "in-play".
I would consider shorting AUD if the global sentiment shifts more towards safe-heavens.
All in all, it's a good time to be patient now and look for the confirmation signs of the sentiment shift. The technical picture tells that currencies have been in the range for a considerable time already. The longer it stays like this, the more interesting the proceeding trend will be. The most important here is patience. Everything can change very quickly, and traders need to be ready for this.