Political uncertainty and second wave fears send equity markets lower
Global equity markets experienced heavy technical selling this week, as US political uncertainty and fears of a second wave of COVID-19 infections caused traders to sell stocks. The death of Justice Ruth Badar Ginsburg raised fears of further political uncertainty during the upcoming US elections, and prompted traders to sell US equity markets at the weekly open. The S&P 500, Nasdaq, and Dow Jones Industrial Average all experienced heavy technical selling as sentiment turned down, with the index’s slumping to a fresh monthly low. The rise of global COVID-19 infections raised fears of another global lockdown, and caused traders and investors to move into risk-off trading mode.
- The S&P 500 is only bullish while trading above the 3,330 level, key resistance is found at the 3,370 and 3,395 levels.
- The S&P 500 is only bearish while trading below the 3,330 level, key support is located at the 3,200 and 3,100 levels.
US dollar strength
The US dollar index rose to its highest level in over eight-weeks as traders moved in the greenback amidst fears about the global economy. The US dollar posted major gains against the euro, British pound, Swiss franc, Japanese yen, and antipodean currencies. The strong advance in the US dollar currency was also due to the rise in COVID-19 infections, which was a market trend first observed during the first wave of COVID-19 during March and April of this year. Traders typically move into the US dollar during to time of uncertainty due to its status as the world’s reserve currency.
- The GBPUSD pair is only bearish while trading below the 1.2900 level, key support is found at the 1.2700 and 1.2500 levels.
- The GBPUSD pair is bullish while trading above the 1.2900 level, buyers may test towards the 1.3000 and 1.3150 resistance levels.
Precious metals experienced heavy technical selling this week, as traders moved away from gold and silver and back into the safety of the US dollar. Gold plunged towards the $1,860 support level, as the yellow-metal incurred its worst daily losing streak since March this year. Gold traded down by over $100 on a weekly basis, however, the loses for the shiny-metal were outpaced by silver. The price of silver traded down by over twenty-five percent since the start of month, as the metal crashed towards the $21 level. Traders speculated that metals were likely to experience more selling pressure up until the next round of US stimulus measures are announced.
- XAUUSD is only bearish while trading below the $1,925 level, key support is found at the $1,860 and $1,800 levels.
- XAUUSD is only bullish while trading above the $1,925 level, buyers may test towards the $1,970 and $2,000 resistance levels.
Bitcoin fell towards the $10,100 level as the number one cryptocurrency incurred minor losses due to the ongoing wave of negative sentiment in broader financial markets. Bitcoin suffered due to its strong correlation with the S&P 500 and the price of gold. The BTCUSD pair started the trading week under pressure after bulls fail to hold the pioneer cryptocurrency above the $11,100 level. Traders noted that Bitcoin continued to show bullish on-chain metrics, and continued to hold above the $10,000 level as the cryptocurrencies status as a safe-haven asset class grew.
- The BTCUSD pair is only bearish while trading below the $10,500 level, key support is found at the $10,100 and $9,600 levels.
- If the BTCUSD pair trades above the $10,500 level, buyers may test towards the $11,100 and $11,700 resistance levels.