5 Things To Watch Next Week + ChartBook

Gold Hits 7-Month High as Central Banks Admit Defeat

Gold Futures, 4-Hour Chart Analysis

We had a very interesting Friday in financial markets as following the cautious words by Mario Draghi following the ECB’s rate decision, the Fed and the PBOC quickly replied with their own dovish steps. The Chinese central bank launched its own quasi-quantitative easing program following several major liquidity injections in previous weeks, while the Fed is now reportedly looking into ending its quantitative tightening program earlier than expected.

Especially the Fed’s shift, which came a bit more than one month (and a market rout..) after Chairman Jerome Powell’s words that the tightening program is on autopilot, caused turmoil in markets, sending the Dollar tanking against its major peers. With this development, next week’s Fed meeting just got more interesting, and especially currency traders could be in for a wild ride, but the main beneficiary might be gold.

While the Yen the Euro and especially the Great British Pound gained significant ground on Friday, gold actually broke out to a new 7-month high, as the brief period of strong global growth and hawkish central banks is now definitely over. Given the precious metals relative strength, we expect the rally to continue, with a possible swift rally up to the key resistance zone near $1360. The next days will be crucial for the fate break-out, but for now, things are looking up for the metal.

Tech giants in Focus as Earnings Season Heats Up

Dow 30 Futures, 4-Hour Chart Analysis

Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL) have been switching place in the top 3 spots of the list of the most valuable companies in recent months, and although right now, Microsoft is slightly ahead of the pack, all could change in the course of the coming week. All of the three giants will report earnings next week, and especially Apple is in need of a positive surprise, as the once-$1.1 trillion company is now $350 billion below its peak valuation despite the recent surge in stocks on Wall Street.

Facebook (FB), Alibaba (BABA), Exxon (XOM), and Visa (V) will also report next week, and these seven companies are close to $4 trillion in market cap, so will get a much deeper understanding of the extent of the global economic slowdown, and the firms’ outlook for the coming quarters will be in the spotlight in particular, with Wednesday being the busiest day for earnings besides the Fed’s scheduled meeting.

Pound Extends Gains as Brexit Delay Gets Closer

GBP/USD, 4-Hour Chart Analysis

The Great British Pound surged higher this year as the odds of a no-deal Brexit diminished and the possibility of a delayed process or even a second referendum increased substantially. Now, the most likely scenario is the extension of the deadline, barring an agreement by the end of February, with the House of Commons voting on such a proposal on Tuesday.

While that wouldn’t solve the key issues, such as the question of the Irish border and the bilateral trade deals, it could give time to avoid a no-deal Brexit, and the possibility to change Theresa May’s agreement with the EU. The outcome of the process is still blurry, to say the least, but so far, forex traders have endorsed the delay. That said, the GBP/USD, which hit 1.32 on the heels of the Fed’s dovish shift, clearly looks overbought now, and we might be in for a sell-the-news event in the Pound next week, so short-term trades should be aware of a possible quick reversal here.

Top 3 Cryptocurrencies on the Verge of Breaking Down

Ethereum/USD, 4-Hour Chart Analysis

The major cryptocurrencies have been trading in narrow ranges for two weeks now, and despite several break-down and rally attempts, we haven’t seen a decisive move in either direction. That said, given the negative long-term technicals and the preceding plunge, odds continue to favor the continuation of the bear market.

Especially the relative weakness of the top 3 coins is suspicious, with Ripple edging towards the $0.30 price level, Ethereum threatening with a move towards the $95-$100 zone, and with Bitcoin being stuck below the key $3600 level. For now, BTC held up well near the $3450 level, but we haven’t seen any signs of bullish momentum in the key markets of the segment. With the consolidation patterns being very mature, we will likely see a major move next week, and barring a tectonic change in market dynamics, bears will remain in control of the market.

US Dollar in For a Big Week Amid Data Dump

The economic calendar will be very busy next week, and the US Dollar will be definitely the asset to watch, especially following the end of the longest government shutdown in history, while the exact schedule of the release of the delayed economic reports is unclear, we could be in for a tsunami of reports.

The US Employment Report will be out on the busiest day, Friday, together with US ISM Manufacturing PMI and the Eurozone CPI report, while he US CB Consumer Confidence Index is scheduled for Tuesday, the Australian CPI and German prelim CPI for Wednesday, and the Canadian GDP and the US core PCE price index on Thursday. Taking earnings and the Fed’s meeting into account, the second half of the week could be wild in particular, so keep your seatbelt fastened.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.