Charts Of The Day: A boost for stocks

Market Analysis / 4 Min Read
Milan Cutkovic / 23 Jun 2021

Highlights:

  • Dovish comments from multiple Federal Reserve members gave the stock market a boost
  • Tech sector to benefit from rising risk appetite; USTECH rose to a new record high and is likely to extend gains near-term
  • GER30 index recovered quickly from the latest slump
  • Risk-on sentiment could give the Australian Dollar a boost
  • Gold recovery looks less promising with XAU/USD failing to gain momentum

USTECH

Dovish comments from multiple Federal Reserve members gave the stock market a boost today. Fed Chair Powell highlighted once again that inflation pressures will be transitory and that he sees the risk of 1970s-style inflation as very low. Earlier in the day, his colleagues John Williams and Loretta Mester noted that discussing a rate hike is still way off in the future and that rates are likely to remain very low for a prolonged period of time.

This helped to undo some of the damage the hawkish FOMC surprise had caused last Wednesday, and which sent equity markets tumbling. The recovery on Wall Street is likely to give European equities a major boost too. In Europe, optimism is growing as more countries are lifting their COVID-19 restrictions, which should help to accelerate the economic recovery over the summer months.

The technology sector will benefit from the rising risk appetite. USTECH rose to a new record high today and is likely to extend gains further in the near-term, with the broad uptrend intact.

Traders looking to buy dips will be keeping a close eye on the 14.212 level for imminent support, followed by the support zone between 14.100 and 14.113 points.

GER30

The GER30 index recovered quickly from the latest slump, and the breakout above 15.600 points suggest that DAX bulls have regained the upper hand. A test of the recent record high appears just to be a matter of time. Resistance at 15.800 points may prove to be tough, but the short-term outlook remains positive amid rising growth expectations and a dovish ECB. To the downside, support can be expected at the 50% Fibonacci of the recent sell-off at 15.538 points, followed by the support zone between 15.390 and 15.411 points.

AUD/USD

The risk-on sentiment could give the Australian Dollar a boost as well. AUD/USD briefly broke below the 200 DMA, but managed to bounce back from 0.7480 support and closed two consecutive trading days above the widely watched support line. The biggest challenge for AUD bulls will be the 0.7643 resistance level. However, a clear break above this level could pave the way for a larger short squeeze and recovery rally towards 0.79. 

Gold Markets

Meanwhile, Gold´s recovery looks less promising with XAU/USD failing to gain momentum and investors not yet keen to "buy the dip". Resistance can be seen between $1797 and $1803, followed by $1843, where the precious metal is likely to encounter strong selling interest.

USD/CAD

Traders looking to play a continuation of the Dollar downtrend might find USD/CAD interesting. The Canadian Dollar is benefiting from rising Oil prices and a hawkish Bank of Canada, and another round of USD weakness could send USD/CAD tumbling towards the 1.20 support level. Negative RSI divergence on the Daily chart might be another sign that the current rally has run its course.

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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