By Andy Berendieiev, Technical Analyst and Institutional Sales Manager at Juno Markets.
Global financial markets were full of optimism in the first trading week of June. The vast majority of traders and investors were betting on high-yield assets amid expectations for the world’s economy to regain the pace of growth after the coronavirus pandemic. Stock indices soared, the US dollar index declined versus major and high-risk currencies, while safe-havens sold off. Besides, the market momentum accelerated, offering lucrative opportunities for active traders and investors in the foreign exchange markets.
In the equities market, tech-heavy NASDAQ Composite was leading the gains as the global lockdown helped tech giants to benefit from the remote type of work across the globe. The benchmark renewed an all-time high value of 9726.6 points (highest daily close rate on February 19) and kept climbing to 10018.6 points this week.
From a technical point of view, NASDAQ is in a sustainable uptrend as all technical indicators point to a bullish sentiment. The daily chart setup below shows that the 21-days Exponential Moving average acts as the nearest support curve, limiting bearish whipsaws and reflecting investors’ demand within the buy-lows trading strategy. The ADX and DI indicator has a widening bullish surplus with growing momentum, leaving more room to go north.
The only concern for the bulls is that the Stochastic RSI oscillator is in the overbought territory, suggesting that a reload is required. However, the indicator is quite sensitive and quick in terms of reaction to the short-term price change, so traders could ignore that issue and keep buying global equities in general and NASDAQ in particular.
The most popular currency pair in the FX market — EUR/USD — charted several technical achievements in the scope of potential bullish reversal pattern in the long-term perspective. First of all, the daily chart below is full of higher lows and higher highs, which are the key requirements to identify the uptrend.
The graphical analysis shows a clear ascending channel with the support trendline connecting lowest daily close rates and the resistance trendline as a parallel clone. The recent price action reflects the bullish breakout of the former resistance and rebound back to it. The fact that Tuesday’s close rate did not cross the line (only shadow left on the downside) confirms that Forex traders are keen on opening more longs for EUR/USD.
Simple moving averages with 9- and 13-days periods represent short-term support curves as the exchange rate bounced up from them several times recently. The MACD trend indicator is completely bullish as the histogram has growing bars in the green and both lines are rising. Some sort of overbought conditions might concern conservative traders, especially in the short-term perspective. However, the essential driver for the uptrend is coming from the fundamental side of things, so the market players could not pay attention to technicals for some time.
High-risk currencies overperformed the rest of the FX assets amid the rush for lucrative investments. Sterling, Aussie, Kiwi, Loonie are in the technical recovery phase in the long-term scope, while several charts have already completed bullish reversal patterns. Emerging markets currencies soar versus the US dollar as traders sell the world’s reserve currency and invest in developing countries. Mexican Peso, South African Rand and Russian Rouble were among leaders last week. Safe-haven currencies such as Japanese Yen weakened last week, especially in cross rates versus assets mentioned above. This week is currently coming under the sign of a technical rebound in the USD/JPY pair.
The only common observation of the wide variety of assets to trade in the Forex market nowadays is that usually tight ranges widened, which suggests higher volatility and strong trends born at the end of Spring. That could lead to a hot summer in terms of profits from FOREX trading. We at Juno Markets are keen on supporting our clients by all means in the scope of delivering many market updates, trading signals, and analysis tools. Open a live or demo account and contact our support team to know more about the additional benefits of trading with Juno Markets.
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