Safe-haven assets are an essential antidote to economic downturns. They represent the markets that can protect traders and investors from losses when equities fall. Continue reading for our guide on the best safe-haven assets to choose, how they can safeguard your portfolio, and top tips for trading them.
Safe-haven assets are where investors and traders put their money to protect against fundamental disruption. Safe-haven currencies, safe-haven stocks, gold, and US Treasuries have historically retained or increased their value during downturns or generally volatile markets, allowing protection against losses that growth equities may see in such conditions.
Safe-haven assets will typically show most, or all of the following characteristics:
1) High Liquidity
With significant trading volumes, you can enter and exit positions at the price you want without experiencing slippage. An example of a...
When your forex trading adventure begins, you’ll likely be met with a swarm of different methods for trading. However, most trading opportunities can be easily identified with just one of four chart indicators. Once you know how to use the Moving Average, RSI, Stochastic, & MACD indicator, you’ll be well on your way to executing your trading plan like a pro. You’ll also be provided with a free reinforcement tool so that you’ll know how to identify trades using these forex indicators every day.
Find the best trading ideas and market forecasts from DailyFX.
Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Traders often feel that a complex trading strategy with many moving parts must be better when they should focus on keeping things as simple as possible. This is because a simple strategy allows for quick reactions and less stress....
The British Pound may be on the cusp of resuming a downtrend in play against the US Dollar for over 12 years. The weekly chart reveals a dramatic Bearish Engulfing candlestick pattern produced at the intersection of falling trendline resistance and a horizontal barrier capping the upside since mid-September 2018, located in the 1.3300-81 area. This may prove to mark a top, ratifying a gloomy fundamental backdrop.
GBP/USD weekly chart created with TradingView
- Norwegian Krone, Swedish Krona may rise at expense of US Dollar IMF outlook, Davos forum could pressure havens, lift market moodNOK, SEK may rise on the ECB, Norges Bank rate announcements
- A recession is typically accompanied by falling stock prices, but equities are not the be-all and end-all for recession investment strategiesTo be sure, certain sectors of the stock market can still increase in value during a recessionHowever, the currency and commodity markets can create positive returns and provide diversification as the economy slows and risks mount
The Euro is inching closer toward a break downward against the US Dollar. The exchange rate is grinding through support in the 1.1069-1.1104 area, a price congestion area bolstered by upward-sloping support defining the upswing from the October 1 swing low.
Confirmation of a breach on a daily closing basis initially exposes the 1.0968-90 inflection zone, followed by the four-month low at 1.0879. A bounce form here sees minor resistance at 1.1149 but a true test of buyers’ mettle probably requires a challenge of the December 31 peak at 1.1239.
EUR/USD daily chart created with TradingView
The weekly chart offers a sense of what downtrend resumption might ultimately look like. Trading dynamics of the descent in play since mid-2018 point to an average downswing of 4.6 percent. Such a move would put the single currency just above the 1.07 figure, amounting to the lowest level since April 2017.
EUR/USD weekly chart created with TradingView
While crude oil prices continue to rise, US natural gas producers have seen prices plunge to lows they’ve not seen since early 2016.
In markets overwhelmingly driven by large, global themes be they US-China trade,Brexit or Middle Eastern geopolitics, it’s always tempting to see big picture stories in large, global terms. If one energy market looks is priced optimistically for growth while another tanks, surely one of them has to be wrong, right?
Well, sometimes. But in this case it might be rash to draw any such conclusion and wiser to let the story remind us that market specific stories can still outweigh even the risk-impulse which has so often driven all markets since the financial crisis.
Natural gas daily price chart created with Trading View
The Australian Dollar may be preparing to resume the downward trend guiding it lower against the Japanese Yen since mid-September 2017. The currency mounted a spirited recovery in the second half of 2019, lifting it off decade lows to retest pace-setting resistance.
A Bearish Engulfing weekly candlestick pattern at this barrier now suggests that a corrective rebound is coming to an end as the dominant bearish bias is re-asserted. Breaking below upward-slowing support in play since early August – now just below 75.00 – may add urgency to the case for weakness.
AUD/JPY weekly chart created with TradingView
The Japanese Yen remains on the back foot as market fundamentals seem to argue increasingly against such counter-cyclical haven assets.
US equity is getting close to its longest and largest bull run ever as earnings season continues to please the crowds and many of the problems which beset 2019 seem less pressing. China and the US have signed what may be an underwhelming phase one trade deal, but the two sides seem resolved to move on to phase two and are at least still talking. Confrontation between the US and Iran has de-escalated short of full-scale military conflict and even the torturous Brexit story is moving on with the election of a big majority in favor of getting it done.
Technically speaking USD/JPY has Dollar bulls in charge. The pair is at what could be a crucial point on its monthly chart, nuzzling against a downtrend which has been in place since June 2015.
Clearly the run into month end will be most instructive for investors with a conclusive...
At the beginning of 2019, the Federal Reserve had abruptly altered its outlook with regard to monetary policy, having stated that they would act in order to sustain the expansion from previously noting that QT was on autopilot. Consequently, as risks tilted to the downside for the US economy with trade war risks on the rise, Powell and Co. responded with a mid-cycle adjustment entailing three consecutive 25bps rate cuts from 2.25-2.50% to 1.50-1.75%. Alongside this, the Federal Reserve expanded their balance sheet via repo operations in order to boost the supply of bank reserves and place pressure on repo rates.
The new year will see four regional Fed Presidents rotate into voting spots in January. In turn, this will see Mester (Hawk), Kashkari (Dove), Kaplan (Neutral) and Harker (Neutral) replace Bullard (dove), Evans (Neutral), Rosengren (Hawk, Dissenter) and George (Hawk, Dissenter), making for a slightly more dovish FOMC committee.
Kashkari: Perhaps the most...
The Nasdaq 100 continues to sit on its highs along with the other US indices, and this quite frankly makes trading difficult. With where the market currently sits and without volatility, the market appears to be too high to buy, too strong to short. It makes establishing fresh positions in either direction particularly tricky.
The thinking is that we will soon see a bit of a reversal in fortunes, but until sellers show up trying to find a top is typically a tough business. One chart we looked at today was the weekly Nasdaq 100 (log scale), where a clear bull market channel is apparent. The NDX is approaching the upper crust of the channel, and should it do so soon it might mark the top of the current rally.
- GBP/USD is again testing resistance at a trendline joining recent lower highs.If it can break above a triangle pattern on the daily chart, further gains would likely follow.In the House of Lords, UK Prime Minister Boris Johnson has suffered another defeat on Brexit but it is expected to be reversed when the Brexit legislation returns to the Commons.
Chart Prepared by Michael Boutros, Technical Strategist; NZD/USD on Tradingview
Notes: In my last New Zealand Dollar Weekly Price Outlook we noted that Kiwi was approaching a,“major level of confluence resistance at 6506,” with a close above needed to fuel the next leg higher in NZD/USD. A topside breach in mid-December saw price register a high at 6755 last year before turning sharply lower off a sliding parallel extending off the April 2018 high (red). Weekly confluence support rests near 6545 where the 38.2% retracement of the September advance converges on basic trendline support and the 25% parallel of the ascending pitchfork formation extending off the 2018 / 2019 lows. We’re on the lookout for an exhaustion low while above this threshold IF Kiwi is to hold this uptrend.
Weekly resistance remains with the 2019 open at 6705 backed closely by the 2020 yearly open at 6733. Ultimately a breach / close above the July high-week close at 6760 would be needed...
After the January 8 blow-off and reversal, gold has done the expected – trade lower to sideways. After those types of runs the market needs a breather. The question is now, has it been long enough to garner enough fresh buying to push gold firmly through those pesky 2011/12 levels created during the topping process back then?
It would seem not, that a bit more time is needed to gain the interest required to push to new heights. It appears most likely at this time that any attempt to run higher beyond the reversal day high at 1611 could fall short of picking up momentum, and run the risk of reversing lower.
However, this doesn’t necessarily mean gold will make for a great short as it seems in the big picture there is more of a bid than offer, and on that attempts to trade lower could be mired by choppy price action.
Ideally, from where I sit, backing-and-filling towards the trend-line from May could offer a nice risk/reward spot to pick up gold for another...
A busy day for Canadian dollar traders with the Bank of Canada (BoC) rate decision and the latest look at domestic price pressures both released this afternoon. BoC governor Stephen Poloz will also give his latest update on the state of the Canadian economy later. For all market moving data releases and events, see the DailyFX calendar.
The BoC is expected to leave interest rates unchanged at 1.75% today, for the 10th consecutive meeting. Governor Poloz remains on the hawkish-side as Canadian inflation remains above the 2% target and shows little signs of moving lower. However recent data has shown patches of weakness in the Canadian economy with the December homes sales data coming in much lower than November’s number ( -0.9% vs prior 0.6%), while housing stats and building permits also missed expectations. Jobs and wages data have been mixed of late, with the unemployment rate falling to 5.6 from 5.9% while hourly wage rate fell to 3.8% from a prior 4.4%.
Last week, Cable declined 1.2954 – its lowest level in three weeks. The market rallied after with some bears seemed to cut back. On Friday, the price closed the weekly candlestick with the third Doji pattern in a row highlighting that market’s indecision is still on.
Alongside that, the Relative Strength Index (RSI) remained flat nearby 50 highlighting weak sellers and weaker buyers.
The lack of volatility in EUR/USD is reaching historic levels after a quiet Q4 outlay saw the pair build into a range, and that came after the first three quarters of last year showed limited movement compared to what the pair has usually done. The Average True Range indicator is currently showing a read of 113.5 pips on the weekly chart – a far cry from the 325 pips that showed in the summer of 2015 or even the 177 pips that showed around last year’s open. A combination of similarly loose monetary policy at the Fed and the ECB, combined with some receding of worry around European politics has allowed for the pair to spend most of the past three months inside of a 375-pip range.
Chart prepared by James Stanley; EURUSD on Tradingview
Since August of last year EUR/USD price action has been confined to a 375-pip range; with resistance coming in at a confluent zone of Fibonacci levels while support has been a bit more variable. The 1.1000 level has had a penchant to...
- Traders can implement a well-heeled plan taking only four hours per weekThe four-hour chart can be ideal for Forex Traders looking to trade around the clockWe outline a full plan based around Price Action that traders can begin using today
If you were paying attention, 2019 was a unique year for financial markets: rare has been the occasion that traders had to deal with such heavy-handed, direct commentary from the President of the United States with respect to the Federal Reserve or the performance of equity markets.
Given the scope and scale of some of the comments made by the 45th president, it was easy for traders to overinterpret or underappreciate various words when trying to decipher the true intentions of one of the world’s most influential figures in the global economy. Filtering out the noise to find the signal – the actionable trade – became a more laborious task in 2019 than in years past. For many traders, this was a hapless effort as markets climbed the seemingly endless ‘wall of worry.’
Nevertheless, the traders that were able to successfully navigate the tempestuous market environment were those that were ruthless practitioners of...
The stock market can be a confusing place for the uninitiated. Financial news is often saturated with bemusing buzzwords; tales from the trading floor of treasury stock, stated value, and retained earnings often mean nothing to the average investor. But for those looking to trade stocks, understanding and applying such concepts is key to profiting from this asset class.
Done right, trading stocks can be an effective way of accumulating wealth, and a well-chosen, balanced stock portfolio could be a ticket to a stable passive income. Read on for a beginner’s guide to trading stocks, and we’ll help you turn the jargon into actionable knowledge.
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