This year
was extremely difficult for everybody in the world. It brought with it hopes that
a recession would pass over the year and that 2023 would be a perfect time for peace
and recovery. But the market decline seems to be slow and long lasting with
lows likely to be reached in the second quarter of 2023, plus we may have
another quarter of chaos right ahead of us.
This week volatility
remained compressed. The S&P 500 broad market index declined by 0.3%, while
the U.S. Dollar lost 0.5%, which is confusing. Everything is signaling to high
pressure in the markets that will most likely remain until something important will
release this spring into action. The year will traditionally start with the
Non-Farm Payrolls and the first week itself will likely experience moderate
volatility.
The technical
picture for most of the markets has remained unchanged. The S&P 500 index
is moving within the downside formation with targets at 3650-3750 that have already
been met. The index is looking towards 3400-3500 points with a possible further
decline below 3000 points.
Russia has
finally revealed its response to the EU’s price cap of $60 per barrel on
Russian’s seaborne oil.. Vladimir Putin has ordered that all oil exports to any
country that supports this price cap should be stopped starting from February
2023. This move had a minor effect on prices since current prices are lower than
this level and no country that would import Russian oil would literally declare
it as being true in contrast to showing their support towards this cap. Brent
crude prices are rolling back to the resistance level of $78-80 per barrel
which is pressured by recession fears and the COVID-tsunami in China. Brent
crude prices over $78-80 per barrel are seen to be a temporary departure that
would end a new selloff wave to the nearest support at $68-70 per barrel. The
lowest targets are currently seen at $60-70 per barrel.
Gold prices
are charting an upside formation with targets at $2000-2100 per troy ounce by
the middle of 2023. A short-term primary scenario suggests prices may roll back
towards $1700-1720 per ounce by the middle of January. Only then may the gold
rally be resumed.
The
situation in the money market is seen to be more dramatic as the U.S. Dollar
continues to deteriorate despite many upside factors. This may indeed signal some
possible weaknesses of the Greenback that may be combined with the falling
stock market at the beginning of 2023. The U.S. Dollar upside trades should be
performed with caution in this regard.
The money
market continues to experience elevated volatility that prevents the use of
short-term signals. So, it is better to place orders that are attached to
longer perspectives. Short trades of AUDUSD that were opened at
0.68000-0.68500, and for EURUSD at 1.05000-1.05500 in December, should be
closed by the end of this Friday despite negative results of these trades.