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Is This The Beginning Of A Bear Market?

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King Dollar has risen against almost everything as investors looked for shelter.

Many traders now question whether the Ukraine war could be the begin of a bear market. Prices whipsawed when the Russian military invaded Ukraine last week but some traders saw it as an opportunity to “buy the invasion”, a behavior that has led to a tremendous reversal in the market. While buying-the-dip gains show investors are piling in, more voices are now warning investors to be careful. Russia’s invasion of Ukraine will cause higher inflation which will force the Federal Reserve to increase interest rates. The invasion also increases the risk of stagflation, when inflation remains high while economic growth and unemployment are also high. The conflict in the middle of Europe could thus mean the end of the bull era of central bank excess and signal the beginning of a bear era of government intervention, social and political polarization and geopolitical isolationism, according to a Friday note from Bank of America Research.

However, while most of the past market declines did not become bear markets, the risk of a bear market is currently higher than at any other time. The sentiment will however depend on developments and may change any day.

EUR/USD – Opening with a downside gap

The down gap indicates a continuation of the downtrend but before bears assume the downtrend to resume, we may see short covering filling the gap. In other words, we may see a correction towards 1.1240 before selling pressures increases again. Nevertheless, if the euro drops below 1.1090, we brace for a decline towards 1.09.

DAX – Heading South

The index opened with a downside gap and could now face the lower support area at around 13600. Short-term bulls will watch out for prices above 14400 with higher targets seen at 14500 and 14800.

Our buy position today at 14210 was closed in profit at 14250.

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

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Short Durability Of Buy-The-Dip Rebound?

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Europe entered one of its worst security crises since World War II.

Following yesterday’s rapid Market sell-off we saw a buy-the-dip rebound but the question is now whether the rebound is durable. This may be difficult however, since the conflict muddied the outlook for markets and the global economic recovery. Traders should expect further losses in risk assets while the U.S. dollar benefits as a safe haven.

EUR/USD: Below 1.1090, we expect further losses towards 1.09. Short-term resistance is seen at 1.1320.

GBP/USD: Below 1.32, we expect further losses towards 1.30. Short-term resistance is seen at 1.36.

DAX: As long as the index remains below 14800, we anticipate further losses towards 13500 and 13000.

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

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Geopolitical Tensions Lead To Risk-Aversion In The Market

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Dear Traders,

Yesterday’s U.S. inflation data and March FOMC minutes took a backseat to geopolitical tensions between the U.S. and Syria. U.S. President Trump warned Russia of incoming airstrikes on Syria for the Assad regime’s suspected use of chemical weapons. The prospect of U.S. military action against Syria have led to broad-based risk aversion in the market with Gold benefiting from its reputation as a safe-haven investment.

From a technical perspective there was nothing to gain for day traders in the Forex market with the U.S. CPI data and FOMC having only a limited impact on yesterday’s price action amidst the risk-off mode in the market.

As long as the risk of military conflict between Russia and the U.S. in Syria remains very high, we may see a lackluster price development in the market which provides little profitable trading opportunities.

Looking at the technical daily chart in both major currency pairs we see that near-term momentum is deep in overbought territory which is why we are looking for upcoming pullbacks.

EUR/USD: A drop below 1.2330 could open the door for accelerated bearish momentum towards 1.23 and 1.2250. However, given the overall uptrend buyers may swoop in at lower levels following a potential pullback. On the topside, the euro would need to take out the 1.24-hurdle to spark fresh bullish momentum towards 1.2430 and 1.2470.

Euro traders should keep an eye on the ECB minutes which are due for release today at 11:30 UTC.

GBP/USD: The pound refrained from stabilizing above 1.42 and dropped back towards 1.4160. We now expect a lower support zone to come in between 1.4120-1.4080. A current resistance is however seen at 1.4270.

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Euro Appeared Unaffected By Geopolitical Tensions

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Dear Traders,

The euro remained resilient amidst heightened tensions between Turkey and Russia. The European currency was capped at 1.0670/75, resulting in a barrier for any bullish engagements. While other currencies such as the JPY benefitted from safe haven flows after geopolitical tensions overshadowed financial markets, the U.S. dollar received less attraction as a safe haven. Political analysts consider a major escalation unlikely given the risks associated with any conflict between Russia and Turkey as a NATO member.

The British pound traded lower on dovish comments from Bank of England officials. BoE Governor Mark Carney said in testimony to lawmakers that interest rates are likely to remain low for some time. BoE Chief Economist Andrew Haldane sounded even more dovish saying risks to the inflation outlook were to the downside. So all in all, given the bleak outlook, sterling could be vulnerable to further losses in the near-term. The currency pair marked a recent support at around 1.5050. Next target is 1.50.

Yesterday’s U.S. data came in mixed and failed to trigger a big reaction in the USD. The focus will now shift to Personal Consumption Expenditure and Durable Goods Orders, scheduled for release at 13:30 GMT. U.S. New Home Sales are due for release along with Michigan Confidence at 15:00 GMT.

EUR/USD

The euro is trending downwards. A current resistance can be found at 1.0690/1.07. Any bullish breakouts above 1.07 are likely to be limited until 1.0760-75. A lower support could currently be at 1.0575, from where some pullback may occur.

Chart_EUR_USD_4Hours_snapshot25.11.15

 

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