This week the eyes of the market will be on the United States and the ECB meeting
This week begins with the Martin Luther King, Jr. Day holiday in the United States, US stock markets will be closed, therefore we will not have the ability to analyse the US markets. However, next Wednesday, January 20, the inauguration of Joe Biden as is eagerly anticipated to be a major market mover.
Last week, Joe Biden unveiled his stimulus aid program, which raised some doubts among investors despite the fact that it fulfilled what was expected by the market consensus by reaching a total amount of aid of around 1.9 trillion dollars. One day before the president is sworn in, the US Senate will give the green light to former Federal Reserve President Janet Yellen as Secretary of the United States Treasury, which is why she is expected to support and defend the program presented by the new president due to the current low rate situation.
For its part, the ECB will hold its first meeting in 2021 on Thursday, so we will have to see if this body decides to take a further step in its measures due to the current situation of the pandemic, since it is still out of control in Europe and is seriously affecting the economy.
EURUSD Technical Analysis
Despite last week’s performance, where the dollar continued to recover ground against the EUR, the general sentiment continues to be weak towards the main currencies. If we look at the dollar index, it is still at levels close to its critical level of support, although in recent days it seems to have relaxed volatility. Last week, FED chairman Powell rejected the idea of reducing the bond buying program and carrying out a rate hike in the short term.
Technically speaking, the EURUSD last week was of consolidation, breaking down the 23.6% fibonacci retracement level of the last bullish momentum, although the uptrend is still strong, so we can’t dismiss that the EURUSD can perform yet. more corrections in the next few days, but as long as it does not break down both the 1.20 level and its previous resistance level (green), the sentiment will continue to be bullish, reaching levels close to 1.25.
If we look at its oscillators, we can see that the stochastic indicator is entering oversold levels and that the MACD indicator is close to making a crossover from the 0 level to the downside, so if this finally occurs, the current correction could take strength.
Source: Daily chart of EURUSD from Admiral Markets MetaTrader 5 platform (from October 8, 2019 to January 18, 2021). Done: January 18, 2021. Note: Past performance is not a reliable indicator of future results or future performance.
Price evolution of the last 5 years:
- 2020 = + 8.93%
- 2019 = -2.21%
- 2018 = -4.47%
- 2017 = + 14.09%
- 2016 = -3.21%
Technical analysis DAX30
Last week, the DAX 30 made a correction of 1.86 % to support its 18-session moving average after recently hitting its all-time highs. This correction, in principle, can be explained due to the growth of uncertainty in the markets around the evolution of the pandemic and the third wave, despite the fact that the vaccination process began a few weeks ago, and several countries electing strict measures including travel restrictions or announcing new lockdows.
We have to be very aware of its current support levels (average of 18 sessions in black and green strip of the previous lateral channel) since a break of both levels could cause the index to seek its average of 200 sessions in red.
Source: DAX30 daily chart from Admiral Markets MetaTrader 5 Supreme Edition platform (from September 20, 2019 to January 18, 2021). Done on January 18, 2021. Note: Past performance is not a reliable indicator of future results, or future performance.
Price evolution of the last 5 years:
- 2020 = 3.6%
- 2019 = 25.48%
- 2018 = -18.26%
- 2017 = 12.51%
- 2016 = 6.87%
Brent technical analysis
The vaccination process has only just begun, and The pandemic is still out of control, so several countries are introducing new measures to counter it, which may cause a drop in oil demand. Saudi Arabia recently announced a reduction in its production level.
Technically speaking, the price has been supported by its 18-session moving average, which currently acts as its main support level until it exceeds 55 dollars per barrel, thus seeking the level of 60 dollars until it reaches the long-term downtrend line ( red) in the area close to $ 57.30 per barrel to later begin a new correction in search of its 18-session black moving average again.
It is important to see if the price will be able to overcome this downtrend line and to just how the pandemic will evolve in the coming days, since if more countries decide to make the decision to return to lockdown condition, oil could be seriously affected again. As long as you do not lose the 50 level, the feeling will remain bullish.
Source: BRENT daily chart from Admiral Markets MetaTrader 5 platform. Data range: from September 10, 2019 to January 18, 2021. Prepared on January 18, 2021. Please note that past performance does not guarantee future returns.
Price evolution of the last 5 years:
- 2020 = -21.52%
- 2019 = 25.20%
- 2018 = -21.36%
- 2017 = 18.66%
- 2016 = 45.22%
In 2015, the value of brent fell by 35, 12%, in 2016 it increased by 45.22%, in 2017 it increased by 18.66%, in 2018 it fell by 21.36% and in 2019 it increased by 25.20%, that is to say that in five years it had risen by 14, 38%.
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