Risk-on remains the name of the game as investors across the globe soak up all the good news!
A raft of positive vaccine developments, better-than-expected U.S economic data and much-needed clarity on the formal transition of leadership to president-elect Joe Biden have elevated investor sentiment. The current mood across markets is so positive that global equities are on course for their best month on record with the Dow Jones Industrial Average breaking through 30,000 for the first time.
It did not end here. The S&P 500 recorded a record close, rising 1.6% to 3,635.41 while the Nasdaq Composite added 1.3% to finish its trading day at 12,036.79. Stocks in Asia jumped on Wednesday amid the risk-on mood and this infectious optimism may support European markets later in the morning.
With global equities bulls dominating the scene and all the encouraging news stimulating appetite for riskier assets, what could possibly go wrong as 2020 slowly comes to end? Well…surging coronavirus cases across Europe and the United States remain key themes that continue to strain risk sentiment. In the United States, Democrats and Republicans have been at a stalemate for months over a new stimulus package - this could rollover into 2021. While markets may push higher in the short term, the medium to longer-term outlook remains clouded by COVID-19 & U.S. stimulus stalemate.
Enough of the fundamentals, it's time for some technicals and potential trading setups.
Dollar Index wobbles above 92.00.
The title says it all. There is no love for the Dollar thanks to the improving market mood. A solid daily close below 92.00 could open the doors towards 90.
EURUSD presses against 1.1900
The EURUSD is trading marginally below the 1.1900 resistance level. A solid breakout above this point may spark a move towards the 1.2000 support level.
GBPUSD firmly bullish above 1.3300
Pound bulls remain in control above the 1.3300 support level. A solid breakout above 1.3400 could open the doors towards 1.3482.
Gold crashes into $1800 support
After many weeks of trading within a wide range, Gold has broken below the $1850 support level. Prices are heavily bearish with all eyes on the psychological $1800 level. A solid breakdown below this point could trigger a selloff towards $1760. If $1800 proves to be reliable support, prices are likely to rebound towards $1815 and $1850.
S&P 500 bulls in the driving seat
The S&P 500 has scope to push higher if the 3550 higher low proves to be a reliable support level. Prices are trading above the 20 SMA while the MACD trades to the upside. It will be interesting to see whether the Index will hit a fresh all-time high.
Bitcoin tops $19,000
Who let the Bitcoin bulls out? The cryptocurrency has risen above $19,000 for the first time in nearly three years! This is less than $1000 away from its all-time high. Given how prices were trading below $5,000 as recently as March, bulls deserve a pat on the back. A solid weekly close above $19,000 could open the doors back to all-time highs.
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