Technical analysis

Energy sector is lagging amid growing Nasdaq: what’s next?

By Stanislav Bernukhov

19 January 2024

the nasdaq

The current week in the financial markets has supported the US dollar, as bond traders have pressured treasury bonds on Wednesday, mostly at the short end of the curve. The sell-off in the bond markets reflected some change in expectations about the possible rate cut for the US in March: probabilities of an interest rate decline dropped below 60%, so expectations around the monetary policy become rather neutral, rather than dovish.

Another driver for markets this week is a continuation of the earnings season: Taiwan Semiconductor jumped by more than 9% after stronger-than-expected earnings, giving hope for the recovery of the chip sector. As the chip sector is in the avant-garde of economic activity, that gives a positive signal to the tech sector and other sectors in particular. Nasdaq, as a result, had reached an all-time high, whereas the S&P 500 lagged due to a weak performance of the energy sector. 

Metals have dropped during the first half of the week, with a later minor pullback: Gold and Silver are traded below the weekly opening prices.

The overall narrative for this week remains moderately bullish for the US dollar, as the Fed sends a sobering message to the markets about a possible rate decline in March.

In this report, we will focus on the energy sector, as a lagging sector and try to figure out whether it may advance forward or not.

USOIL

USOIL is consolidating near the strategic support area of $70 (USD), and may revert back to the 200-day moving average at $78-80 price area. The possible trade location would be at intermediate-term lows at the $68 to 70 price area.

XNGUSD

Natural gas displays a weaker price action, and may potentially drive lower as shown at the chart, given the mild winter and large reserves of LNG. If the uptick of inflation continues, it may rebound higher from the $2 to 2.3 price area.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Stanislav Bernukhov
Stanislav Bernukhov

Stanislav Bernukhov is a professional and trained trading trainer with 15 years of experience in this field. He specializes in multiple trading methods, including price action, Market auction theory, and unconventional graphical analysis.