Charts Of The Day: Mixed bag for equities

Market Analysis / 4 Min Read
Milan Cutkovic / 26 May 2021

Highlights:

  • A mixed performance for US equities, with tech stocks struggling while small caps and value stocks performed better
  • US2000 index is one to watch as investors have a focus shift
  • JPN225 recovery rally cleared a major obstacle but has been struggling to gain momentum
  • Following a bleak short-term outlook, coffee came back strongly to reach a new multi-year high
  • Cryptocurrencies bounce back as investors regain confidence and use the recent slump as an opportunity to buy the dip

US2000

US equities had a mixed performance, with technology stocks struggling to gain momentum, while small caps and value stocks performed better. Inflation fears have eased slightly, but the stock market is consolidating amidst a lack of catalysts.

The US2000 index is one worth watching, as investors are increasingly shifting their focus from tech giants to small caps. The index could soon the test the upper triangle trendline, and a clear breakout above this line of resistance could push the US2000 towards the March high at 2370 points. To the downside, support is seen in the zone between 2155 and 2170 points, followed by the lower triangle trendline.

JPN225

The JPN225´s recovery rally has not been as smooth as its US counterparts. The index recently cleared a major obstacle at 28,390 points, but has been struggling to gain momentum since then. JPN225 bulls will need a daily close above the 28,950 resistance level (50% Fibonacci level of the March-May decline) to regain the upper hand. To the downside, support is seen at 28,390 points, followed by 28.284 points and the 23.6% Fibonacci level of the March-May decline at 27,290 points.

Coffee

When we last looked at Coffee´s price performance earlier this month, it was in the midst of a correction and the short-term outlook was rather bleak. Since then, Coffee managed to bounce back strongly. While most major commodities have been consolidating in the past few days, Coffee cleared a significant hurdle at $155.25 resistance and reached a new multi-year high.

The drought in Brazil continues to have a notable impact on Coffee prices and further gains appear likely in the near-term. Traders will be keeping a close eye on the 147.38 support level, which acted as key support level on Monday. To the topside, the next resistance level worth mentioning lies at $167.

Ethereum

Cryptocurrencies have bounced back as investors started to regain confidence and are using the recent slump as opportunity to buy the dip. Nevertheless, the recovery could take time amid ongoing fears of a regulatory crackdown – especially in China. Furthermore, the dramatic sell-off last week has left scars and some market participants prefer to stand on the sidelines until the dust has settled.

Looking at Ethereum, the psychological resistance level at $3000 remains the next major obstacle for the cryptocurrency. A daily close above this level could signal a continuation of the recovery rally towards at least $3558. To the downside, imminent support is seen at the rising trendline from this week´s low, followed by $2380 and the May low at $1902.

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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