Charts Of The Day: Tech stocks continue to struggle

Market Analysis / 4 Min Read
Milan Cutkovic / 24 May 2021

Highlights:

  • After a mixed performance last week, tech stocks continue to struggle
  • Negative short-term outlook sees oil take a plunge
  • GBP continues to outperform as the UK economy bounced back stronger than expected
  • EUR/USD once again fails to clear an important hurdle and finds itself under increased pressure

USTECH

US equity markets had a mixed performance last week, with demand for value stocks keeping the broader market supported. However, tech stocks continue to struggle amid inflation fears and concerns about high valuations.

USTECH failed to sustain momentum following a false breakout above the 13.500 resistance level. Imminent support is seen at 13.366 – which is the 38.2% Fibonacci of the recent sell-off – followed by 13.200 points. With the broader uptrend intact, bulls may have the edge at this stage. However, the 12.926 support level needs to hold for them to maintain the upper hand. A clear break below this line would signal the beginning of a deeper correction rather than a short-term pullback.

Oil Markets

It was not only cryptocurrencies and equity markets that had a tough week behind them. Oil prices plunged on Thursday as the prospect of more Iranian oil flooding the market worried traders.

From a technical perspective, the short-term outlook has turned somewhat negative following the break below the rising trendline from the April low. USOIL managed to regain some ground since then, but Oil bulls will need a clear break above $64.70 resistance (23.6% Fibonacci of the March-May rally) for positive momentum to build.

GBP/USD

The British Pound continues to outperform as the UK economy bounced back stronger than expected. The country is gradually easing its COVID-19 restrictions, and despite some concerns about the new variants, growth expectations are rising and broad Dollar weakness is helping too.

GBP/USD is approaching key trendline support from the May low. A break below this line could signal a retracement to 1.4000/20, where buyers are likely to emerge again in greater numbers. To the topside, 1.4235 is still the main obstacle the currency pair will need to clear; it already failed twice at this resistance level and a break below 1.40 could spell trouble.

EUR/USD

Meanwhile, EUR/USD failed once again to clear the hurdle at 1.2245/50, and has found itself under increased pressure. Euro traders are keeping a close eye on the 1.2160 support level, as a breakout to the downside would confirm the triple top pattern at 1.2245/50 and pave the way for a correction towards 1.20.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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