Despite Hawkishness, Indices Remain Strong
20 February 2023
Over the last few trading days, we've seen some strong economic data, including 6.4% CPI in the US and 3% retail sales, which indicate that even with higher rates, consumers are still strong and economies are running hot. This hawkish perception suggests that there's still room for interest rate rises, which has affected the indices. However, this impact hasn't been heavy and stock traders remain optimistic. This is a good sign for buyers, as even with surrounding hawkishness, they aren't panicking and indices are still trading close to local tops.
Friday ended with some interesting developments on key instruments. For example, EURUSD made a reversal, creating a hammer candle on the 38.2% Fibonacci, which is considered a strong buy signal in technical analysis. With the help of this hammer, EURUSD starts the new week with small rises.
More promising reversals were seen on the Dow Jones and SP500. Dow Jones is currently bouncing off the lower line of the triangle formation, while the SP500 is bouncing off the horizontal support at 4045 points. As long as we stay above these supports, buyers in the stock market can remain calm.
The new week starts promisingly for commodities, as Gold, Silver, and Oil are all climbing higher. The rise in precious metals is more convincing, as it goes in line with a positive reversal on Friday, whereas Oil was trading lower on the last day of the previous week. Sentiment on Oil remains negative.
Monday's opening on the European market is green, in reaction to the rises in the American session on Friday. Let's see if this will be enough for the European bulls to continue buying. The calendar is empty today, and American traders are taking a day off due to Presidents' Day in the US. The first attraction will come in the evening, when Australia will publish its PMIs