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Charts of the Week: Nasdaq, USD/JPY, and gold

Technical analysis

At the back of a tech-led Wall Street rally, Nasdaq outperforms all the other major global stock markets year to date.  Further, the USD rebounded amid climbing US bond yields, pressing on the gold price after the precious metal hit an all-time high level in early May. The WTI futures seem to be on a double-bottom reversing trend as China’s economic reopening and the Western allies’ sanctions on Russia’s export may still play a key role in lifting the fossil fuel price. The below analysis provides the weekly trending insights from a technical perspective.

1. Nasdaq

Directional bias – bullish 

Source: CMC Markets as of 23 May

Nasdaq is on the course of a bottom reversal trend since the bullish breakout of the descending trendline on 20 January. It topped the resistance of 13, 650, the high in August 2022, confluence with the 50.00% Fibonacci retracement. The momentum may take the index to test the potential medium-long target of 114,380 at 61.80% of the Fibonacci retracement, then 15,376 (Fib. 78.60%).

However, RSI entered the overbought territory, so a pullback might be expected. But the index may sustain the uptrend after a short-term retreat. The signal can be seen in MACD, which is moving above the zero line, suggesting the upside momentum is still strong.

On the flip side, a breakdown below 13,650 could press the index to test the 50-day moving average of 13,000 again.



Directional bias – bearish

Source: CMC Markets as of 23 May

The pair may face a technical correction as a bearish divergence surface, where the current high is lower than the previous high in the RSI, while the current high is higher than the previous high in the candle stick. The possible near-term resistance is high in the last few days, at about 138.67, and near-term support may be around the 50-day moving average of 134. A breakdown below this level may take the price to about 132.18, the 23.60% Fibonacci retracement.

On the flip side, a breakout above 138.67 could take the pair to test a further resistance of 14,53 at the 61.80% Fibonacci retracement.

3. Gold

Directional bias – bearish 

Source: CMC Markets as of 23 May

Gold formed a potential double-top, falling below the 50-day moving average, suggesting the downward pressure is taking the lead in the price action. The near-term support may be at 1,900, the 38.20% Fibonacci retracement. Additionally, MACD is falling below the mid-line, indicating that gold could reverse the uptrend when it breaks down key support.

On the flip side, a breakout of near-term resistance of the 50-day moving average at 1,990 could reverse the downtrend. 

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