Coming week can bring turbulence to markets. Special attention has to be paid to the SP500. The technical analysis is still neutral. We got rejection last week, but it happened with a low volume. It can’t be considered a valid swing failure. If 3170 – 3140 holds, we can see a retest of 3400 and possible double top formation.  However, fewer stocks support this rally. We have seen the same scenario before each sharp decline. So, keep that in mind if you long the stock market.

The Federal Reserve meeting is scheduled for the coming week. But likely we will not hear anything new. Implementing negative rates looks doubtful. So, the dovish tone is all I expect from the Fed.

Extra jobless benefits disappear at the end of the month. Currently, 20 million Americans get an extra $600 a week. If there will be no fast extension of this payment, the income of the average unemployed person can fall to $200 a week. That will make people spend less. Less spending means less income for the retail business. Some of them will have to close. We have already discussed a big number of bankruptcies and their impact on the economy and the stock market. The situation looks dramatic.

The second-quarter U.S. GDP is another important data all traders are waiting for. Atlanta Fed forecasts almost 53% decline. Those numbers can shock the market and cause high volatility. Such expectation is a result of rapid COVID spread in the USA. The situation in the EU is more positive with a 12% GDP decline expected.

SP500, GBP, WTI and Gold analysis for 27 - 31 July, 2020

GBP broke above 4h resistance and successfully retested it. My Market Research subscribers are already long pound from last week. This rally can be extended to 1.3000, 1.3380. We have a clear support zone. Breaking below it will invalidate the pattern.

We have previously discussed setup in crude oil based on evaluation index and commercials positions. At the moment I see two possible entries:

  • False breakup and rejection with big volume from 43 – 46 range
  • Breaking below the daily trendline and holding under 38

In both cases, the price will try to test $30 a barrel. However, price action confirmation is needed before taking a trade.

This week I got a lot of emails regarding gold. Short-term traders have to wait a week or two before engaging in trading. We don’t have strong short-term support or resistance. Besides, gold moved very aggressively. It needs some time to settle. Either we will get a pullback to go long or price will hit its target near 19500 – 2000 and gets swing failure to go short. Talking over the long-term, gold follows its patterns. So, I believe we will get price action similar to the one we had 11 years ago. It would give perfect entry for next move up to $3 500. Formation of that pattern will take a few months, but patience pays.

Wishing you a great week!

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