Week 26: Market Update & Gold trading journal

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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Market updates 21st Jun 2020:

Overview: The lack of fresh catalyst had seen to markets trading in a muted manner into the end of the week here in Asia. Covid-19 spread across the likes of Beijing to Texas remains weighing on investors mind, capping the upsides, while the undertone of regret aversion remains, helping to defend key levels on equity indices. A broad consolidation pattern looks to be the case into the final leg of H1 as we continue the scrutiny of the hard data with flash PMIs seen from US to Australia in the coming week.

Items to note

Covid-19 second wave concerns will likely extend into the coming week. Although reports suggested that Beijing’s outbreak has peaked and is under control, the likes of US states such as Texas and Florida continue to print record cases, cautioning second wave risks even as economies reopens. This key mood dampener will continue to be an item of scrutiny in the coming week on whether any improvements may be seen or otherwise.

Perhaps less market moving but equally headlines grabbing had been continued brewing of US-China tensions with President Donald Trump’s latest warning of ‘complete decoupling’ from China despite talks. Alongside this had also been geopolitical developments of North and South Korea.

Flash PMIs for the month of June will be released in the coming week from US to Australia and will be key pieces of data to watch. As it is, the consensus is pointing towards a continued improvement seen for manufacturing and services PMIs across US and the eurozone. Any surprises will likely reaffirm the recovery story though the pace will be of interest after seeing what could be just an initial burst in May with the reopening.

US data to watch in the coming week ranges May existing and new home sales while the final Q1 GDP reading will also be released on Thursday. Do note that with the GDP figure, it will be a relatively backward looking one and not expected to be market moving here. Other May readings could continue to trend in line with the recovery theme.

US Federal Reserve will be releasing the result of its annual stress tests on large US banks in the coming week, one for those invested in the banks or more broadly in the US financial sector to watch. Additional items in relation to banks’ Covid-19 response will be new this year.

Asia-Pacific central banks meetings due to update monetary policy decision will be in abundance in the coming week including China, Thailand, the Philippines, and New Zealand. RBNZ and the BoT are expected to stay unchanged after exhausting most of their policy space though with reopening progress, these are likewise ones to take a pause.

Singapore May CPI and industrial production data will be released on Tuesday and Thursday respectively. With May industrial production, economists are looking for an improvement here to 6.6% YoY.

IMF notably will be releasing new 2020 economic projections with Chief Economist Gita Gopinath having predicted that projections may be worse than what had been released in April where a -3.5% GDP for the global economy had been factored in.

Apple geeks will be waiting out the Worldwide Developers Conference (WWDC) keynote on Monday and will be held online as California stay on guard for Covid-19. According to Bloomberg, may make an official announcement of a shift to its own main processors in Mac computers, replacing chips from Intel Corp.

Do stay safe, stay vigilant & stay healthy!

 

Note: I have took out the time to plot the chart of 1928 vs 2019. Do PM to know the findings 🙂

 

Gold trading plan:

 

Weekly Chart:

BULLISH!

As mentioned last week, gold is neutral to bearish if fail to break above the trend. However, as of Friday, Gold has finally managed to break above the trend and close above the trend. What is important is Gold closed above 78.6% Fibo 🙂

 

Daily Chart:

Bullish:

  1. During the past 1 week, we can see that MACD & RSI have now started to turned bullish in line with monthly chart
  2. Volatility of gold continued to be trending higher

 

4hours chart:

Bullish:

  1. View supported by Weekly and daily chart
  2. Gold managed to back test back support on closing and stay above support.
  3. If this break out is sustainable on Monday we should see quite a fair bit of bullish momentum to Gold.