Trading playbook – volatility and central banks

New all time highs, high yield credits work well, EM FX performs well, and WTI seems supported around $ 50. It seems as though the Coronavirus is of little importance to the markets, and despite deep fears from a humanitarian perspective, markets are marching back and forth, volatility is falling and targeting similar conditions from a few weeks ago.

The situation remains volatile in spite of all this, and there is still a part of me who believes that markets are too trusting and optimistic. Nothing stays on this market for too long .. we can thank the central banks for that.


EUR/USD Technical analysis – key levels for next week


And when it comes to central banks – we see low expectations for aggressive interventions by them. The upcoming bankers’ meetings have become boring and what we can do is keep an eye out for further interest rate reductions. With these expectations, we are also seeing a decrease in volatility, and with the lack of big economic data in the new week, I think the appetite will continue to rule.

Oil also remains surprisingly low on the chart despite expectations of an increase from strong support levels. Buyers and sellers are fighting for supremacy, with expectations for the new week to determine where the move will continue.

The price action signal in gold also remains mixed. On the one hand, we have technical indicators for short positions, but sellers refuse to exit the market and hold the precious metal on stand by, insured in case of uncertainty.

 Trader Aleksandar Kumanov

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