What to trade on May 16-20?

What to trade on May 16-20?

2022-12-15 • Dikemaskini

Last week brought a selloff in markets. Stocks, crypto, gold, and euro – assets were under heavy pressure amid the upcoming recession in the US. Some assets reached the most crucial support levels and are likely to reverse in a short term. Others weren't so lucky and are now in danger. Be ahead of trends and make the most out of this week!

Forex

On May 5, the Bank of England raised the interest rate to 1%. It's the fourth consecutive rate hike, and BoE will probably continue the monetary tightening policy. Moreover, BoE will release its annual CPI reading on Wednesday and retail sales data on Friday. As the releases come out, the GBPUSD pair is closer to the two-year low of 1.2000. The chance for a reversal from the 1.2000-1.2100 support area is high, so look closely for the reversal patterns on daily and H4 charts. Even though the pound is weak amid the tricky situation with Russia's oil & gas supplies, the currency may feel better. The main reason for a possible GBP boost is slowing down inflation. On the other hand, if the CPI is bigger than expected, the GBP will continue falling because it will mean rate hikes don't help. 

Oil & Gold

Oil has been moving sideways for more than two months, but the breakout is near. There are many bullish factors for the price, including a possible embargo on Russian export. Another notable thing is OPEC which can't increase oil output at a faster pace. We expect oil to realize a bullish scenario at the end of consolidation and reach $150 per barrel.

Gold is in a shaky situation. The metal broke through the support trendline at $1840 and approached $1800. It's the barrier between the bullish and bearish outlook for the following weeks, if not months. Further strengthening of the USD may bring happiness for all XAUUSD bears as the metal may fall significantly.

Stocks

S&P500 (US500) index had closed last week below the 100-weekly moving average. It's the first time for the US500 since March 2020, and generally, it's the start of a bearish market for the stocks. S&P500 may reach 3500, the 200-weekly moving average, before trying to revive the uptrend. However, the index will have to surpass the 3800 support line, which is the bearish channel's lower border.

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