Its a beautiful morning in Belgrade, really makes me feel happy and grateful, there's something about the morning sunrise that just makes me happy!
Anyway, I am not here to talk about the weather in Serbia :) lets jump right into this post.
Yesterday I shared a few charts on our tradingview channel and I thought of sharing them with you guys here too. Lets kick off with the DAX.
DAX with a clear bearish trend / SHORT
The DAX is in a clear bearish trend and there seems little that can support the idea of upside, one bullish thought might be the fact that the EUR is weak and that could help with exports for the German industry, but with inflation being so high globally and supply chains being so disrupted I highly doubt this will help the German industry generate an income since so many of their companies are on the verge of a shutdown...
The image in Germany is not pretty and as it seems we will only continue to face further problems.
Price action is king right? Well if we take a look at this weekly chart all I see is reasons to sell... like... hell!
Constant lower lows since the H&S pattern formed at the ATH, a clear rejection of a reversal at that double top which formed at the end of May and a new weekly low followed right after that rejection.
It seems for now that we are heading towards the 11650 zone for the DAX .
On Friday EUR/USD hit a 20-year low, that's a big big deal, but to every effect in the market the is a cause behind it and if we are to succeed as traders and/or investors we need to understand why markets move because knowing the cause can help us take advantage of the effects!
ONE BIG REASON FOR THE CRASH:
Eurozone's trade surpluses have been completely wiped out because of energy crisis Europe is facing from their failed actions against Russia.
Germany has slipped into trade deficit for 1st time in 31yrs, shortfalls in trade were also observed in France & other EU countries and all of this is taking a big toll on the eurozone currency.
Major banks currently predict that we are heading for parity on EURUSD and there is little hope this will change because there is no "quick fix" for the problems in Europe, it actually seems that things will get much worse before they get better.
A confluence of factors are adding to further downside risk, here are a few key factors to take away with you from this post:
- Inflation ( CPI data) is getting out of hand not only in Europe, but the USA too, Poland's CPI data is expected at 15% for example.
- The protests we are seeing in Holland are also taking a toll on the Eurozone
- The UK faces strikes in transportation
- There are big problems in EU airports
- The Biden administration is considering to lower the
Chinese trade tariffs as such would be a drag on the measured headline CPI (that includes taxes)
- The German trade balance is now negative
I can add much more to this list but as you can clearly see... it is all doom and gloom for now, and that means OPPORTUNITY to us traders as the markets are bound to create bigger moves, whether up or down that is for the market to decide... our job is to simply focus on following the market and obeying it!
XAUUSD is building a big move / Neutral
Gold is currently ranging between the 2000 and 1700 levels. We seem to be heading towards the 1700 support for now and what happens when we approach or hit it will be of importance towards what kind of move we can expect in the medium term on Gold .
For the time being we are range bound but stuck at ATH's, a build up is happening and if you were to ask me what could happen I would say that if we manage to hold 1700 and not close below the "current key support level" then we could see a push back to the 1900 level, what happens then is completely up to geo politics, fundamentals and other key market drivers.