3 Reasons Why the US Indices are Falling. JPY Strength Starting to Falter. Stochastic Oscillator on cTrader.

In today’s GCI Market Outlook, let’s take a look at Forex Trading on the S&P500, the NASDAQ, WTI Crude Oil, EURUSD, and USDJPY.

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.

Last week we talked about JPY strength after the election but not to be fooled as Japan still has economic issues.

From a technical point of view, on the USDJPY daily chart, we see price action at a key level with the stochastic oscillator very oversold and starting to turn up, with MACD looking bearish.

On the USDJPY 4-hour chart, we see MACD about to go bullish with the signal line trying to exit the histogram.

Keep an eye on the news and your technicals.

Yesterday’s Non-Farm Payroll report was much better than expected, which gave USD some temporary strength.

However, most pairs are flat-lining now, waiting for this afternoon’s CPI, which will give the Fed the best clues about US inflation.

If the labour market heats up and inflation is still high, the Fed will definitely not be lowering interest rates anytime soon, making USD even stronger.

The US stock indices like the S&P500 fell this week for a few reasons.

Firstly, investors took profit as many equities hit all-time highs.

In the same vein, many analysts fear that some AI and tech stocks are over-priced, so investors have rotated out and reinvested in more secure blue chip stocks and bonds.

Also, as we just mentioned, if USD gets stronger, it becomes more attractive as an investment.

If we look at the EURUSD weekly chart, we can see just how weak USD is compared to other currencies, over a period of 15 months.

Again, if investors get the idea that the Fed may actually raise rates this year…not lower, long USD will be a good trade and investment.

We are now experiencing a ranging market in WTI and Brent Crude.

Price action fell dramatically yesterday for many reasons, not the least of which are easing tensions between the US and Iran and weaker demand predicted.

You will have noticed that I almost always use the Stochastic Oscillator on my charts.

There is good reason for this, as overbought and oversold signals very often correspond with reversals in price action.

To set this up on cTrader, click on the Indicator icon and select Oscillators, and Stochastic Oscillator.

You may configure the parameters as a starting point of 5, 3 and 3.

Set your line thickness and colour.

Now, backtest to see if this configuration suits your trading strategy.

Anything above 80 is considered overbought, and anything below 20 is considered oversold.

If you want to experiment with different parameters, simply click on the settings icon on the label in the lower pane, and you may see, in real time, how the indicator is affected.

As usual, try to combine the Stochastic Oscillator with other indicators and with fundamental analysis.

That’s all for now.

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