Sunday, November 27, 2022

Markets bounce back due to overselling after several days of decline

macro data

  • 12:00 – France – Job seekers. Previous: 2967 K.
  • 13:30 – USA – Statement by Fed Chairman Powell.
  • 13:30 – Euro Zone – ECB President Lagarde’s appearance.
  • 14:30 – US – Durable Goods Orders (Core – Monthly – Aug). Forecast: 0.2%. Previous: 0.2%.
  • 14:30 – US – Durable Goods Order (Monthly – Aug). Forecast: -0.4%. Previous: -0.1%.
  • 15:00 – US – S&P/Case-Shiller 20 non-seasonally adjusted home prices (annual) – Jul. Forecast: 17%. Previous: 18.6%.
  • 15:00 – Euro Zone – Statement by ECB Vice President De Guendos.
  • 15:35 – UK – Speech by Pill, member of the BoE MPC.
  • 15:55 – USA – Statement by FOMC member Bullard.
  • 16:00 – USA – Conference Board on Consumer Confidence (September). Forecast: 104.5. Previous: 103.2.
  • 16:00 – USA – New home sales (August). Forecast: 500K. Previous: 511K.
  • 22:30 – USA – Weekly API Crude Reserve. Previous: 1,035M.

Know all the macro information through the economic calendar.

European indices rose on Tuesday after hitting their lowest level since December 2020 over the past two days with the STOXX 600, the DAX 40 hitting a nearly two-year low and ibex 35 Less than since March this year.

Investors are concerned that the escalation of the war in Ukraine and rising energy prices, along with faster-than-expected tightening of monetary policy to fight inflation, could push Europe into recession.

A recent OECD report showed a 2.2% drop in its global economic growth forecast in 2023 from an earlier projection of 2.8%, citing aggressive monetary tightening in advanced economies and the protracted war between Russia and Ukraine. ,

After five days of decline, US futures are also jumping today. S&P 500 This has left a floor at 3646 points with two touches, if it exceeds the maximum between the minimums it will confirm what could be the start of a short-term rebound.

Market dimensions and indicators such as the RSI suggest that oversold is already significant and therefore, a countertrend rebound could be confirmed soon.

Federal Reserve officials yesterday distanced themselves from rising volatility in global markets, saying their priority was to contain domestic inflation.

bounce too ftse mibo English. The Bank of England said on Monday it would not hesitate to change interest rates and “very close” to markets after the pound hit an all-time low and British bond prices plunged in response to new government fiscal plans. is watching.

The British pound is trading at $ 1.081, recovering somewhat today, having fallen yesterday to $ 1.0350. Nevertheless, the pound sterling may remain under strong pressure in the medium term. Many analysts say that it could be near the dollar or even below the dollar, although in the near term a rebound due to overselling cannot be ruled out.

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In Asia, the rate Nikkei 225 The Japanese ended the session with a 0.53% gain, while the Topix index rose 0.5%, rising from a more than two-month low as the market stabilizes after a sharp sell-off, while rising interest rates and rising fears of investors. live in the mind. ,

The People’s Bank of China today intensified its injection of cash at the end of the quarter, making its biggest daily offering since February 25.

The central bank said in a statement that it had injected a total of 175 billion yuan ($24.46 billion) through open market operations, including 113 billion yuan through a 7-day reverse repo. 62 billion yuan through the rate of 2% and the period of 14 days at the rate of 2.15%.

The measure is aimed at keeping liquidity levels stable at the end of the quarter.

With all eyes on the US dollar, which is acting as a refuge value, investors today see a respite in the money market.

The dollar index fell below 113.50 points, hitting a 20-year high of 114.5 in yesterday’s session.

After a strong rally, investors take some profits and breathe.

Still, the dollar remains at an all-time high relative to its major peers, on hopes that the Federal Reserve will further tighten monetary policy to cushion rising inflation.

A host of Fed officials yesterday signaled their commitment to fighting inflation even at the risk of some economic pain and increased market volatility.

Gold prices traded as high as $1,637 an ounce today, recovering slightly from recent lows as the dollar’s rally has provided respite.

Gold remains at its lowest level in two years.

Oil prices are clearly rising today, supported by relief being taken by the dollar, after falling to a nine-month low when the dollar rose sharply and fears of a global economic crisis fueled demand for crude. Expectations have diminished. There are also indications that OPEC+ is trying to avoid a fall in prices.

How to take advantage of opportunities in this market? Example of operation.

To illustrate how this works in the example, we can use at . will use ibex 35, At IG, we can trade this market with CFDs, Barrier, Vanilla Options and Turbo24. We are going to choose the latter for example, as it is a 24-hour market listed product, which allows us to optimize the leverage of our operations and cover against market gaps. In addition, there is no commission in Turbo24.

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In this case, the minimum contract size will be the purchase of a long Turbo24 or a short Turbo, which is equal to 0.01 Euro per point. For our example, which should in no case be considered a buy or sell recommendation, as this is not its purpose, we are going to choose an amount equal to 1 Euro per point, i.e. one hundred Turbo24.

In the event that the first scenario is confirmed and a decision is made to enter bullish, we will buy one hundred Turbo24 longs at the index price of 7622 points. We can set the knockout level, for example, 120 points below the entry price (7622 – 120 = 7502 points). If at that time, the turbo cost 1.2 Euro, the requested guarantee (remuneration) would be 120 Euro (100 turbo x 1.20 Euro for each Turbo 24). The leverage for this operation will be 63.52x (7,622 / €120 = 63.52), which will retain all the gains mentioned above and provide protection against negative balance in the event of a bearish market gap.

Furthermore, it has the advantage that if there is an increase in volatility when the market closes that triggers our knockout, the trade is not closed. This means that, if it does so in our direction when opening the cash market, we will stay in and we can continue to make profits. On the other hand, when the market opens, it does so at a price equal to or higher than our knockout price, we are guaranteed a maximum loss on that amount initially deposited, so we are covered against market gaps .

In the event that the second scenario is confirmed and a decision is made to enter bearish, we will buy a hundred smaller Turbo24. Let’s imagine that IBEX 35 is trading, for example, at 7,534 points. We can set exit levels or knockouts (guaranteed stops), for example 120 points above the entry price (7534 + 120 = 7654 points). If at that time, the turbo cost 1.2 Euro, the requested guarantee (remuneration) would be 120 Euro (100 turbo x 1.20 Euro for each Turbo 24). The profit of this operation would be 62.78 times (7534 / €120 = 62.78).

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