3 Reasons Why the Stock Market Rallied over the US/Greenland Deal. Using the Stochastic Oscillator on cTrader.

In today’s GCI Market Outlook, let’s take a look at Forex Trading on Gold, XAUUSD, Silver, XAGUSD, AUDUSD, NZDUSD, the NASDAQ, and the Dow Jones Industrial Average.

Just a reminder that these videos are intended as educational, we are only observing current market conditions, and these are not to be considered as trading advice.

In our last video, we looked at how the global stock indices fell based on the White House’s threats of tariffs on European countries if the US could not buy Greenland.

In Davos, at the World Economic Forum, NATO agreed to a framework of a deal that appeased President Trump.

Firstly, he then agreed to drop the threat of tariffs, which rallied the markets.

Secondly, he agreed that the US would not use military force to invade Greenland.

And, thirdly, the deal to which he agreed is basically the same deal that has been in place since 1951, which even further injected confidence into the markets.

This, then, is the ultimate TACO trade, and I am sure we will see more of these in the future.

This is not a political comment on my part…the TACO trade is a real thing practised in the markets.

Looking specifically at the Dow Jones Industrial Average, you will note a pullback from this level of resistance that has held 4 or 5 times.

This means profit-taking by investors who are not willing to let their shares in America’s largest companies ride.

Also, our Stochastic Oscillator shows us a slowing down of momentum, so keep an eye on the news.

As we know, anything can happen with the current administration and other world powers pushing back.

To set up and read the stochastic oscillator on cTrader, simply right-click, select indicators, Oscillators, and Stochastic Oscillator.

Or, click the Indicators icon above for the same results.

The main use of the stochastic oscillator is to time reversals in the markets as shown by oversold and overbought signals that correspond with price action reversals.

For extra correlation, you may use another indicator, like MACD here, to double confirm.

We note similar price action on EURUSD as USD continues to weaken.

But, watch this key level and your indicators.

We are seeing serious USD weakness against NZD and AUD.

On AUDUSD we have to move out to the weekly chart to see that we may be at a key level of resistance from July of 2024.

And, as we spotted last time, Gold and Silver are still flying which tells us that investors and central banks may still be concerned about global instability.

Gold is close to $5,000 now.

That’s all for now.

CFDs and FX are leveraged products, and your capital may be at risk.