Below we report the interview with Pietro Paciello, CEO and Chief Analyst of the Paciello Trading Academy, to whom we asked a few questions about the intermarket framework and the strategies to follow. To follow Pietro Paciello, author of the book Trading Plan, click here.
The euro-dollar remains above the 1.08 area. Will the current bullish trend continue or are we at a point where there is a risk of going backwards?
Graphically, the euro-dollar is confirmed as one of the most interesting assets, as with the quotation recently reached in the 1.09 area, it has reached a very sensitive technical level.
Euro-Dollar towards new increases?
The one just indicated is a downward return area, therefore the cross is called to give a very strong movement which, given the short-term overbought and the technical figure, should be a correction towards the 1.065/1.06 area.
Subsequently, the euro-dollar should find the strength to breach the recent highs and abandon the bearish interpretations that have affected it in recent months.
The euro-dollar will be an absolute driver in intermarket terms, because it is obvious that if it were to observe a pause in this area, it would all correspond to a strengthening of the dollar which, however, given the currently existing correlation, would not be appreciated by the equity markets.
For the euro-dollar, a complete overcoming of the 1.095 area at the end of the week would give rise to new extensions, with ambitious targets in the 1.135/1.14 area.
Conversely, if the technical figure I see works we should see a drop towards 1.065/1.06, where the analysis should be revisited, it being understood that for now I would be inclined to assume a small correction.
The expected scenarios for gold
What can you tell us about the recent trend of gold and what are the expectations in the short term?
The strategic level gold reversal in the portfolios of large investors is a given.
The perfect violation of the $1,680 area and the continuation of the extension are surprising for the depth of this reversal.
Gold still has an upward path, with a target in the $2,065 area, but in the very short term it is strongly overbought, so to reach the indicated objective it needs to correct a bit.
In any case, gold is by far the asset that in recent times has given the most correct interpretation of the reversal of that long-term bearish trend and a decidedly upward violation.
Oil: a long reversal to ride
Oil is breathing a bit after approaching $82 a barrel. What is your view on this asset?
Also in this case, my feeling is that oil has now stopped the phase of constant weakening that it has recently gone through.CopyAMP code.
The violation of the $80 area signals a long reversal with very extreme projections towards $100.
Only a return below $70 a barrel would call a bearish wave, but personally I expect an impulsive up move and would abandon any short oil positioning.
For me, oil has turned higher, perhaps not as quickly as it has in the recent past, but I think the weakness that has affected it has been overcome.
Stocks still on the rise?
What interpretation can it offer us for the stock markets and what are the possible scenarios for the next sessions?
If for currencies the driver is unquestionably the euro-dollar, for the stock markets it is the Nasdaq, which was somewhat the culprit for this underperformance of the American indices compared to the European ones.
Something important happened yesterday, with the Nasdaq breaking to the upside a dynamic resistance that has been in place since January 2022.
Theoretically, therefore, the technological price list has abandoned the degrowth phase, has achieved increasing lows and would appear ready to accelerate upwards.
The violation of the 11,700 area took place for the Nasdaq 100 and if it were to be confirmed at the end of the week, I expect a rapid projection in the 12,200 area, with subsequent extensions up to 13,000 points, with all the obvious benefits for equity lists.
So keep an eye on the Nasdaq, for which it must be understood whether the violation of the 11,700 points is a false breakout or if it will be confirmed at the end of the week.
If this were the case, equity indices would still be strong and so would the euro, gold and oil.
In summary, I’m positive on the stock exchanges and the only doubt I have is the very strong euro which must be able to overcome its resistance, because otherwise the dollar risks driving all inversely correlated assets downwards, including equities.