Technical analysis: Noisy markets with earnings in focus

Markets continue to see a lot of volatility, as the question of a slowing down economic recovery around the world has found its way into the market’s psyche. The market is likely to see volatility going forward, but it is also likely to continue being noisy.

Earnings season continues to be one of the main attractions over the past week and going forward into the next one. Beyond that, there is a serious lack of energy around the world, with both crude oil and natural gas stuck in a bit of a negative feedback loop as supply continues to be outpaced by both demand and speculation.

Despite that, we are starting to see some cracks in the dam when it comes to emerging markets. That’s because some of the EM currencies and stock markets have struggled lately, most likely due to rising coronavirus figures and supply chain disruptions, something that emerging markets are very susceptible to.

S&P 500

The S&P 500 has made yet another all-time high during the course of the week, as Friday has seen the S&P 500 pierced the 4600 level. That being said, the S&P 500 has made over 50 all-time highs during the past year, so it is just simply like a freight train that continues going forward. Breaking above the shooting star from the Tuesday session suggests that we are ready to go higher.

A pullback would make a certain amount of sense, but there should be plenty of support near the 4500 level and most certainly at the 4460 level where the 50-day EMA currently resides. 

WTI (US) Oil

The West Texas Intermediate Crude Oil (US) market has shown a little bit of volatility during the week but has also shown the $80 level as massive support. The hammer formed on Thursday is very bullish, but the fact that we have formed yet another one on Friday suggests that we have further to go.

At this point, the $85 level should continue to be somewhat of a target and perhaps even a little bit of a resistance barrier. Saying that, we are in a massive uptrend, and there is nothing on this chart to suggest that is going to change in the near term.

USDCHF

The US dollar has bounced around against the Swiss franc, but it has broken down below the 200-day EMA, as well as a major uptrend line. The MACD is in negative territory, and it looks as if we are ready to continue dropping. The Friday session saw a nice recovery but also has stalled at the 200-day EMA and the previous downtrend line.

This looks a lot like a market that is ready to continue going forward after retesting a significant breakdown and continue going forward. It is not until the market breaks above the 0.9250 level that the US dollar would change trends against the franc. Across the board, the US dollar has shown itself to be very vulnerable to selling pressure.