The Previous week:

The Federal Open Market Committee (FOMC) minutes highlighted the importance of US fiscal stimulus for supporting the US recovery. The Federal Reserve (FED) announced it will maintain its accommodative monetary policy and that it’s satisfied with the average inflation targeting.

US President Donald Trump said he wants a bigger economic stimulus package. The US government expects another $1.8 trillion stimulus package in the coming days. This could push US stock market indices to new highs.

The FTSE and Gold hit their targets that we expected in last week’s newsletter.

The Week Ahead:

USD

The stimulus package that’s just been added to the US economy could weaken the US dollar and there’s potential for shorting opportunities.

EUR

On Tuesday, the consumer price index data will be released.

US Indices

Following Trump’s initial disagreement on Tuesday about a stimulus package, indices dropped. However, optimism returned when he approved the new $1.8 trillion stimulus package, a few days later.

US indices shot up over the last couple of trading days, following the stimulus decision. Based on market behavior we can see that indices are gaining value in reaction to the additional injection of money to the economy, which supports and bails out corporation, helping their stock price move up. This is more of a vicious cycle than real economical growth. As the saying goes “The market is not a reflection of the true economy, it’s sentiment that drives the market”.

GBP

The UK Unemployment rate is expected on October 13.

UK Prime Minister Boris Johnson has set a deadline for the Brexit agreement on a deal with the EU on October 15. However, the EU is seeking a few more concessions before entering the final phase of negotiations. At present, the GBP is rising against the USD potentially creating volatility over the next couple of days.

GOLD & Silver

The weakening US dollar could push Gold and Silver upwards.

Setups for this Week:

GOLD:

Primary View:

  1. Resistances are seen near 1950 and then 1970.
  2. Support is seen near 1912.
  3. The current price seems to be a good entry point for potential buyers.
  4. A pullback entry is also possible with a stoploss below 1910.
  5. The target could be 1950.

Alternative View:

  1. If the price falls below 1910, we may see further movement to the downside.

GBPUSD

Primary View:

  1. Resistance is seen near 1.31250.
  2. Immediate support is seen near 1.30000.
  3. Entry at current price or on pullback seems good for potential buyers.
  4. Stoploss has to below 1.30000.
  5. The target could be 1.31250.

Alternative View:

  1. If the price moves below 1.30000, we may see further movement to the downside.

DOW

Primary View

  1. Immediate resistance is seen near 29160.
  2. Immediate support is seen near 28300.
  3. The entry at current price or on pullback seems good for potential buyers.
  4. Stoploss has to below 28300.
  5. The target is near 29150.

Alternative View:

  1. If the price falls below 28300, we may see further movement to the downside.
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About Author

Mithun Girishan

Mithun Girishan is the founder of MMM (Mithun’s Money Market), a consulting firm providing quality training programs in capital markets. He is an investor, trader, coach and a continuous learner. In addition, Mithun provides consultation and mentorship to many retail investors and company directors across the globe for investments, trading and hedging their wealth in stocks and futures. His passion lies in exploring new avenues in financial markets as well as learning theoretical and practical economics and its application in daily lives. This has exposed him to a wide range of markets spanning from equity, commodity, forex, futures to options.

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