Solid Goold Trading

Monday’s Edition

With Nick Goold

Markets had another volatile week, with headlines around Donald Trump and tensions with Iran moving markets. Early in the week, sentiment improved as Trump talked about easing tensions, which helped U.S. stock markets move higher during the shortened holiday period.

At the same time, oil prices continued to rise, with WTI moving above the $100 level and staying there as the fighting in Iran continued. Higher oil prices helped push USD/JPY above 160, with no clear signs of intervention from the Bank of Japan. U.S. employment data was also much stronger than expected, but the market reaction was limited due to low liquidity during the holiday week.

Comments from Jerome Powell helped ease some inflation concerns and supported sentiment. However, uncertainty around Iran remained, keeping markets cautious overall and volatility high across both oil and stock markets.

Markets This Week

U.S. Stocks

The Dow Jones Industrial Average moved higher last week and broke its recent downtrend as investors started to expect that the conflict with Iran may not get worse. This brought buyers back into the market and improved overall sentiment. Some analysts are now more positive on stocks, saying that unless the situation becomes much worse, large downside moves are less likely. The focus has shifted from selling rallies to looking for buying opportunities on dips. From a technical view, as long as the market stays above the 10-day moving average, buying remains the better approach. If this level holds, short-term momentum should stay positive. Resistance levels are at 47,000, 47,500, and 48,000. Support is seen at 46,000, 45,000, 44,500 and 44,000.

Japanese Stocks

The Nikkei 225 has been volatile recently, moving within a wide range. One of the main concerns is higher oil prices, which could negatively impact the Japanese economy and keep inflation pressure high. At the same time, U.S. equities have started to look more positive, which may help support Japanese stocks in the short term. However, the yen is unlikely to weaken significantly, which could limit further upside in the Nikkei. Overall, with mixed signals from global markets and domestic risks, range trading may be the best approach this week rather than expecting a strong trend in either direction. Resistance is seen at 54,500, 56,000 and 57,000, while support is at 52,000, 51,000, 50,500, and 50,000.

USD/JPY

USD/JPY moved above 160 earlier in the week, supported by higher oil prices. However, despite no intervention, the pair later moved back below 160 as traders started to expect that the conflict with Iran may ease. At the same time, longer-term U.S. interest rates moved lower after comments from Jerome Powell, who suggested inflation may not rise as much as expected. This reduced some of the upward pressure on the dollar. The pair still remains in a slight uptrend overall, but momentum has slowed. For this week, trading the range between 158 and 160 looks like the preferred strategy. Resistance is at 160.00, 160.50, 162, and 165, while support is seen at 159.00, 158.50, 158.00, and 156.50.

Gold

Gold had a strong week as buyers came back into the market. A weaker U.S. dollar and lower long-term interest rates made gold more attractive, helping prices move higher. The short-term trend has now turned positive again after the recent drop, which is supporting more buying. The longer-term trend is still bullish, so buying is likely to continue if the conflict with Iran is expected to come to an end in the coming weeks. Resistance is at $4,800, $4,850, $5,000, and $5,100, while support is at $4,500, $4,400, $4,300, $4,200 and $4,100.

Crude Oil

WTI moved strongly higher last week, pushing well above the $100 level as Donald Trump increased pressure on Iran and concerns grew about supply risks through the Strait of Hormuz. Prices moved closer to the highs seen at the start of the conflict. The overall trend remains strong to the upside, supported by ongoing uncertainty and supply concerns. It is still difficult to predict how the situation will develop, which is keeping volatility high. In the short term, after such a strong move higher, looking for selling opportunities if there are signs the war could be coming to an end may be the easier trade. Resistance is at $120, $125, and $130, while support is at $100,00, $90, $80, $75, $70, and $67.5.

Bitcoin

Bitcoin volatility remains low as overall interest in the market is still limited, and price continues to move within a range. Technical indicators are also mostly sideways, showing no clear trend at the moment. This reflects a lack of strong momentum in either direction. For now, trading the range between $65,000 and $75,000 looks like the best strategy. Resistance is at $75,000, $80,000, and $85,000, while support is at $65,000, $60,000, and $55,000.

This Week’s Focus

Tuesday: Japan Household Spending, E.U. HCOB Eurozone Services PMI, U.K. S&P Global Composite PMI, U.S. Durable Goods Orders
Wednesday: Japan Current Account, U.K. S&P Global Construction PMI, U.S. FOMC Meeting Minutes
Thursday: U.S. Core PCE Price Index and GDP
Friday: Australia Building Approvals, China CPI and PPI, U.S. CPI, Michigan Consumer Sentiment and Factory Orders

Following the Monday holiday in the U.K. and U.S., markets have a shortened week. President Trump warned that if the Strait of Hormuz is not reopened and there is no progress on ending the conflict by 8 PM ET tomorrow, the U.S. may quickly target key infrastructure. Later in the week, U.S. inflation data will be the main focus and could drive the next move. Markets will look for a reversal if tensions ease, or more volatility if the situation gets worse.