Solid Goold Trading

Monday’s Edition

With Nick Goold

It was a mixed week for markets. U.S. and Japanese stocks made new highs, but later finished lower as concerns about AI stock valuations weighed on sentiment. SpaceX also came under pressure, falling below its IPO price and ending the week more than 10% lower.

Markets are now expecting at least one U.S. interest rate increase before the end of the year, even though crude oil prices have recently fallen. Gold briefly dropped below $4,000 before recovering, while Bitcoin continued to move lower.

USD/JPY continued to test higher levels as U.S. economic data remained strong. GDP and durable goods orders beat expectations, while Core PCE inflation was in line with forecasts but still high. USD/JPY came close to 162 several times, but the Bank of Japan did not intervene. Crude oil prices fell as negotiations continued, with traders focusing on the return of oil supply from the Middle East.

Markets This Week

U.S. Stocks

While technology stocks came under pressure, the Dow still managed to reach a new record high last week, supported by lower crude oil prices and the continuation of its technical uptrend. However, the index ended the week back near the 10-day moving average, suggesting momentum has slowed. This week, short-term selling opportunities may be more attractive if the Dow breaks below the 10-day moving average or rises too quickly above it. Resistance levels are at 52,500 and 53,000. Support is seen at 51,000, 50,000, 49,500, 49,000 and 48,500.

Japanese Stocks

A further drop in crude oil prices helped the Nikkei reach a new record high at the start of the week. However, concerns over the high valuations of AI-related stocks in Japan, Korea, and the U.S. later weighed on sentiment, pushing the index to close below the 10-day moving average by the end of the week. With the market ending the week poorly, and after such a strong rise this year, further losses could be seen this week. If the Nikkei remains below the 10-day moving average, looking for short-term selling opportunities may be the better approach. Resistance is seen at 71,000, 72,000, 73,000, 74,000 and 75,000, while support is at 68,750, 68,000, 66,500 and 65,000.

USD/JPY

Better-than-expected U.S. economic data and growing expectations for at least one more U.S. interest rate increase helped USD/JPY test the 162 level several times last week. The threat of intervention to support the yen remains, but the wide interest rate gap between the U.S. and Japan continues to keep the dollar strong. The uptrend remains intact, so without intervention, buying on weakness may continue to work in the short term. However, medium-term traders may look for selling opportunities around 162, expecting the risk of Bank of Japan intervention to increase at these levels. Resistance is at 162.00 and 165.00, while support is seen at 161.00, 160.50, 160.00, 159.00, 158.00, 157.00, 156.00, 155.50 and 155.00.

Gold

Gold broke below the $4,000 level midweek as U.S. inflation expectations remained high, despite the recent fall in crude oil prices. Prices recovered toward the end of the week, but the broader downtrend remains strong as the U.S. dollar continues to rise. For now, selling into strength still looks like the better short-term strategy unless gold can move back above the 10-day moving average and build stronger upside momentum. Resistance is at $4,200, $4,300, $4,400, $4,500, $4,600 and $4,665, while support is at $4,000, $3,900, and $3,800.

Crude Oil

The resumption of crude oil supplies from the Middle East pushed WTI crude lower again last week, with prices moving close to levels seen before the Iran-U.S. conflict. Negotiations over the terms to end the conflict are still continuing, but markets appear to be expecting a positive outcome. The short-term trend remains weak, with the 10-day moving average pointing clearly lower. However, support is holding near $70, so range trading between $70 and $75 could provide opportunities this week. Resistance is at $75, $85, $90, $95 and $100, while support is at $70, $67.50, and $65.

Bitcoin

Bitcoin failed to break above the $65,000 resistance level, encouraging sellers to return and pushing prices back toward the bottom of the recent range. The 10-day moving average is now pointing lower again, suggesting further downside is possible in the short term. Resistance is at $65,000, $75,000, $80,000, $85,000, and $90,000, while support is at $60,000, $55,000 and $50,000.

This Week’s Focus

Monday: Japan Retail Sales and Construction Orders
Tuesday: Japan Unemployment Rate and Industrial Production, China Manufacturing PMI, U.K. GDP, U.S. S&P/CS HPI Composite, Chicago PMI and CB Consumer Confidence
Wednesday: Australia S&P Global Manufacturing PMI and Building Approvals, Japan Tankan Large Manufacturers Index and S&P Global Manufacturing PMI, E.U. HCOB Eurozone Manufacturing PMI and CPI, U.S. S&P Global Manufacturing PMI
Thursday: Australia Trade Balance, E.U. Unemployment Rate, U.S. Nonfarm Payrolls and Factory Orders
Friday: Australia S&P Global Services PMI, Japan S&P Global Services PMI, E.U. HCOB Eurozone Services PMI, U.K. S&P Global Services PMI, U.S. Independence Day Holiday

It will be a shortened trading week due to Friday’s U.S. Independence Day holiday, with U.S. employment data released on Thursday as the main event. Traders will be watching whether crude oil continues to fall back toward levels seen before the Middle East tensions began, and whether equities can stay near recent highs or face more pressure from concerns over AI valuations. Gold is also likely to remain in focus, with volatility expected around the $4,000 level.