Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Greatest Sale of Japan’s Nikkei, HK 50, S&P 500
Information is not investment advice
The stock market keeps falling as investors concern over rising costs, supply-chain issues, and inflationary pressures as they can slow down the economic recovery. Besides, the market sentiment is pressed down by the situation with the indebted property developer China Evergrande Group. Finally, investors await the Federal Reserve to start tapering as soon as next month, which can cause additional sell-off in stocks.
Nevertheless, we see that stock indexes are near the strong support levels. JP 224 has touched the 50-week moving average at 28,200, S&P 500 (US 500) has been moving sideways around the 100-day moving average at 4350, while Hong Kong’s HK 50 has hit the one-year low. Will they reverse up soon?
If we open the weekly chart of the S&P 500, we will notice that the stock index has failed to break the midline of Bollinger Bands many times since the Covid-19 outbreak in February-March 2020. Thus, there are more chances that the stock index will reverse up soon and return to the recent highs. For now, we should monitor the price movement and wait for the bullish signals. One of the indicators which can help to find the perfect moment to enter can be MACD. If the MACD indicator surges above the signal line, it can signal the reverse up. Read more about MACD in our article.
Let’s look at the daily chart of the S&P 500. We can notice a strong resistance level at 4400. If the stock index beaks it, the index may jump to the 50-day moving average of 4440. After breaking through the 50-day MA, the stock index is likely to keep rising to the previous highs of 4600. Support levels are 4350 and 4300.
HK 50 is stuck between 23,860 and 24,550. Since the index has touched the bottom of this channel, it’s likely to jump from it. The first resistance level is 24,250. If HK 50 breaks above it, the index may rally up to the 50-period MA at 24,550.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.