Charts can really help during periods of uncertaintyRussia invades Ukraine is the headline and every market in the world it feels like is moving and it is very easy to feel overwhelmed almost to the point of panic, a very quick glance around the markets can see that gold is up, stocks down, the US Dollar is up, and oil looks to be heading above 100.
It's hard to know where to focus one’s attention or even where to start and it really helps to be able to just look at some charts and put some of these moves in context. Yes, the price of Crude Oil is high, but it’s been higher – back in 2011 and 2012 it was regularly above 110 and in 2008 we were a lot nearer to 150.
The stock markets are down a lot, take a look at a chart and see where the support is – I wrote about this recently. For the S+P, the base of the cloud is nearer to 3875…the 200-week ma is down at 3387. By the way a good thing to note is that during periods of uncertainty that markets tend to mean revert to their long-term moving averages and in particular I like to watch to 55 and 200- week moving averages – if you are not a sophisticated chart watcher – no bother, if you just know where these 2 moving averages are you can use these as a proxy for a target zone.
The 2020 high on gold was nearer to 2030 BUT we know that gold is in a long term up move and the chances are we are going to make a new high. What do we use if we are in all-time highs for targets, there are many techniques - Fibonacci extensions, point and figure (probably my favourite), channels, and patterns to name but a few are all ways to give you upside targets. I have a Fibonacci extension on the topside at 2110 ish, but I also have another more important target nearer to 2150.
So, my advice is do not panic – LOOK AT A CHART!!
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