June gave us a few nice trend trading opportunities, with gold in particular standing out with a massive rise in price. However, we also saw some crazy price action in another non-traditional currency, namely bitcoin, which is now clearly out of its year-long bear market.
Fundamentally speaking, the backdrop is pretty much the same as last month, with the ongoing trade war between the US and China as the most important driver for the financial markets. In addition, the US Federal Reserve (“the Fed”), has made headlines with talks of a possible rate cut later this year.
As was expected, the comments from the Fed dampened the US dollar rally, and gave gold the real boost that brought it above the USD 1,400 mark.
With that in mind, let’s now take a look at what’s been happening in the markets over the past month from a charting standpoint, and where the next opportunities are likely to be found:
As usual, we begin our coverage with the US stock market, which is enormously important for that happens in the rest of the world, both in terms of currencies, commodities, and other assets.
Looking at the chart of the S&P 500, we can see that the price keeps hitting the old resistance zone in the 2,940-2,950 area, which it has been struggling to get through. A break through this area, however, would mark another all-time high for the S&P, with no further technical resistance ahead.
Right now, it’s still to early to tell what the most likely next move for the S&P is. However, it’s important for traders to note that the price right now is consolidating in the high end of the range. As medium-term swing traders, it would therefore not make sense to take a long position here before we see a clear break up through the resistance area.
US Dollar/Aussie Dollar
As we pointed out last month, the USD/AUD pair has broken through a resistance level that has been respected by the market since late last year. Now that we are above this level, however, previous resistance has become support, and the pair thus look poised to continue higher.
With the price now hovering around the support area, it may be possible to find a buying opportunity with a decent risk:reward for this pair. To be sure that the support area will hold, however, we first need to see a clear and confirmed reversal for the price.
New bull market in gold?
One of the biggest stories in the markets in June has been the strong surge in the price of gold. In a significant move, the gold price has surged through the major resistance area that has served as the upper boundary of the trading range gold has been stuck in for the past five years.
To get the big picture view on gold, it’s better to use the weekly chart rather than the daily charts we normally use.
As a result of this move, many analysts are now talking about a possible new bull market in gold, perhaps similar to the one that led up to the 2011 Eurozone crisis. Back then, the bull market lasted for more than 10 years before it topped out at more than USD 1,900 in September 2011.
Chart pattern enthusiasts will also notice that the move in gold followed a classic cup-and-handle pattern, as marked in blue in the chart above.
Bitcoin’s parabolic move
Lastly this month, we will take a quick look at the bitcoin market to see how things are going for all the crypto traders out there.
As is pretty clear from the weekly chart above, bitcoin has once again seen a massive rise in price, after losing more than 80 percent if its value before the recovery started. Unfortunately, the current rally is parabolic in nature and is therefore unlikely to continue for very long.
Although relatively minor corrections were seen during the last few days of June, it’s now highly uncertain where the bitcoin market is going next. As always with cryptocurrencies, volatility can be extreme and caution should be exercised.
Join Our Free Forex Trading Workshop
Does speculating on the movement of any of these markets sound interesting to you? Would you like to learn more about how professionals consistently make money in the forex market, while only taking very limited risk?
If yes, then you should definitely consider joining us at one of our free forex trading seminars around Australia this year!
We look forward to seeing you there!