Following up on the market update from last month, volatility keeps its firm grip on the stock market in particular, and we can say without a doubt that the nice and trending market from the beginning of the year is gone. The US stock market is still characterized by choppy and range-bound trading activity, which is a much more difficult environment to trade in than what we saw last year and in the beginning of this year.
At the moment, the US stock market, represented here by the S&P 500 Index, is once again trading close to the key support level we have pointed out several times over the past few months, indicated by the top red area in the chart below:
July is now gearing up to become a crucial month for the US stock market, and we will hopefully soon get a clue on which direction the market will continue in. For the time being, the market is still trading within an uptrending “channel,” but unless the price finds support at the critical level mentioned, we may see an extended sell-off in this market.
Total breakdown in gold
Despite the positive fundamental outlook for gold that we have pointed out in previous updates, the price action we can see on the chart is telling a different story. Let’s therefore remind ourselves of one important thing when it comes to trading: It simply doesn’t matter how convinced you are that a given asset should move up or down in price – fighting against the market is a hopeless strategy. The market is always right!
Gold has now broken down through the trendline that was offering some support at the time of our previous market update. It is now way down close to where the previous uptrend started back in December of last year. Just as in the stock market, the next few days will be crucial in the gold market and we will find out if the support from the previous market bottom, as indicated by the red area in the bottom of this chart, will hold.
Kiwi/greenback falling through
The New Zealand dollar has really taken a beating over the past couple of months against the US dollar. If we look at the daily chart, it seems like this currency pair is just about to break down through the support that is formed by the previous low in this market from back in November of last year.
However, if we zoom out even more to look at the weekly timeframe of the chart, the picture looks much different. In this setup, the descending black trendline indicates that this pair may instead be bottoming out and reversing soon, supported by three previous lows in the market.
Helped by the FOMC meeting minutes from the US that are expected on July 5 and the New Zealand CPI numbers on July 17, the month of July will hopefully give us the answer as to which of these scenarios will play out for the New Zealand dollar.
Aussie dollar extending rally?
Finally, let’s take a look at where the US dollar against the Australian dollar might be heading. This pair broke through the resistance we highlighted (green line) in our previous update, and now appears to be moving higher with no short-term resistance ahead of it.
If anything, it appears as if the previous “ceiling” of the uptrending trading channel, now has become a new floor for the US dollar.
By looking closely at the chart, one will also see that this pair is forming a classical ABC pattern right now, with the B being represented by the low that touched the red trendline during the recent pullback. If the price can break through the previous high at around 1.36, we can expect the rally in this market to continue.
Forex now the best market for traders
Lastly, it should be reiterated that as the stock markets are choppy and without any clear direction, and cryptocurrencies remain in a horrific bear market, forex right now offers the best opportunity for traders. Lot’s of exciting price action and good trend waves are excellent opportunities for private independent traders to profit.
As always, make sure to check the economic calendar and be careful during big news events in the forex market. With proven strategies and proper risk management, forex trading should be both fun, safe and rewarding!