In today’s GCI Market Outlook, let’s take a look at Forex Trading USDCAD, Dow Jones Industrial Average, the NASDAQ, the S&P500, Silver, XAGUSD, and Gold, XAUUSD.
In our last video, we looked at 4 things to watch that might be negative for the price of gold and look what happened as price action broke out of the rising wedge we spotted.
Gold fell and filled this price action gap because higher inflation fears pushed yields and rate expectations up.
It recovered when ceasefire optimism weakened the dollar and reduced some of that inflation-rate pressure.
You will remember that I mentioned the complete unreliability of any talks of peace and ceasefires.
This volatility is the direct result of the Iran conflict, and the pullback may only be temporary, as we see an overbought stochastic oscillator.
Again, this is a fundamental trade, not a technical trade, so let’s keep an eye on the news.
And, we had the same price action on silver with price action breaking lower out of this flag.
Price came into the flag from above and exited to the downside.
A classic flag pattern.
Now we see a clear downtrend with price action at the upper trend line.
This latest pullback on both silver and gold was a result of a weaker USD, and we notice that the stochastic oscillator is very overbought where we have USD as the quote currency.
Another reason for the weaker USD, is the risk-on mood in the US indices.
The daily chart on the S&P500 tells the story with a 2-month bull run based on investor confidence in AI and tech stocks.
We have the exact same story on the NASDAQ.
However, the Dow Jones Industrial Average has gapped to the downside.
We often talk about the Dow Jones lagging behind and catching up.
The reason that the S&P and the NASDAQ are storming ahead is that they are heavily reliant on AI and tech stocks, while the Dow is made up of huge traditional blue-chip companies.
Typically, investor risk-on moods have them diversifying portfolios and buying Dow company shares.
One of the reasons for USD weakness was a poor GDP report yesterday.
GDP will be released for CAD today, and we will be watching USDCAD as the recent USD weakness may be offset by a weak report.
We also see an oversold stochastic oscillator, which is turning up.
