Below is the interview with Pietro Paciello, CEO and Chief Analyst of Pro Markets Sagl, Asset Management Company, to whom we asked some questions about the situation in Piazza Affari and the strategies to follow for various stocks.
Pietro Paciello awaits you on Mondays and Fridays at 4 pm with the OPENING BELL – NewTraderLab Market Talk. For info click here.
The euro-dollar goes back towards area 117, but at the same time we are witnessing a decline in the dollar-yen. What to expect for these two crosses now?
I think the positive correlation between the two crosses can be traced back to a momentary effect also linked to the US labor data released in the early afternoon and which turned out to be lackluster.
The interpretation of the euro-dollar is very precise, given that yesterday the cross tested a previously very significant static area and I am referring to 1.175 and for the moment it was rejected again by it.
I remember that when the euro-dollar touched the recent tops in the 1.20 area it drew a perfect bearish divergence, so technically it should be read in a short and not long perspective.
From this point of view, the first wave that developed led to the achievement of an altogether insignificant target, given that the euro-dollar stopped at around 1.162, a fairly neutral price area.
I believe that the real support is lower, at 1.15, and looking at the dynamic that is developing I believe that the cross still has a way to go down towards the target just reported.
I would change my mind in this regard only with a close of the euro-dollar above 1.18, because in this case the bearish hypothesis described above would be denied.
At the moment I favor a continuation of the downside, with a potential acceleration should the euro-dollar breach the lows in the 1.162 area, with a target of 1.15.
For the dollar-yen we should theoretically see an opposite movement, except for these physiological phases that create this strange positive correlation between the two crosses but which do not last long.
If my view on the euro-dollar is correct, I expect an accelerating bullish dollar-yen, signaling a long divergence on daily dynamics.
As regards the start of an impulsive movement, I subordinate it to an acceleration of the dollar-yen above the first dynamic resistance above 105.7, with projections towards area 107.
Gold moved back above $ 1,900 an ounce. Is the recovery starting from the recent lows for the period destined to continue?
In these hours, also thanks to the news related to President Trump’s health, gold is recovering a sort of role as a safe haven.
Gold has drawn a very interesting double bottom in the $ 1,835 / $ 1,840 area, but to give the green light to a bullish reading key, I would expect a close above the $ 1,925 area.
Beyond this level, gold would abandon the moderate negativity of the last few days and return to being a heavily bought asset.
After yesterday’s sharp decline, oil continues to slide downwards. What can you tell us about this asset?
Oil is also suffering from a return of fears about the lockdown and the worsening of the pandemic around the world.
Black gold would suffer in the event of a lockdown and therefore it seems quite logical to me that it is weak at this time.
I signal an important level where oil could try a small reaction and I am referring to the 36 dollar area.
Below this threshold a very heavy bearish dynamic will open, so for any downward operational interventions I would expect a close below 36 dollars.
In the light of what has been said so far, what indications can you provide us for the stock exchanges also in light of the latest news regarding President Trump?
It must be said that the stock markets have been bearish for a few days now and in the last few hours there has been only a rebound, however expected, from the lows.
The market today must be read in an alternative way to the recent past, that is, it is to be sold on strength, so the more it rebounds the more the appetite of the sellers will come forward.
At this time, also thanks to the Trump problem, the rebound in equities has stopped, it being understood that the strategy remains to sell strength.
Until we see new all-time highs, equities will theoretically remain compromised to the downside in my opinion.
It is good to be on your guard and on the Nasdaq in particular I signal important levels, given that an almost static zone of highs and lows has been created.
Today’s tops should be carefully monitored, which in case of overcoming would restore a little polish to the technological index and therefore to all the stock exchanges.
On the downside, look at the 10,650 area of the Nasdaq Index, therefore cash, because below that level the doubts that still guide the interpretation of the market would be dissolved, which at that point would become bearish without fear of any kind.
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