Market Analysis: Stocks Are Falling on the Background of the Activity of Central Banks


This week could be the worst for stock markets in 3 months after a series of interest rate hikes by central banks, writes Bloomberg.

The UK and Switzerland raised the rate by 0.25%. While the US Fed has left rates unchanged for now, Jerome Powell said another rate hike or two may be needed in 2023. Higher-than-expected inflation in Japan has also fueled speculation that the BOJ may adjust its super-loose monetary policy.

At the same time, an interesting situation is emerging on the Nikkei 225 chart. Having broken through the resistance line (1) in May, the Japanese stock index rushed up, attracting bullish speculators. Growth last week was particularly rapid, suggesting that the market is in the climax of the upward momentum. And the downward movement this week confirms this assumption. A bearish engulfing pattern may form on the Nikkei 225 chart, and, remarkably, if this happens, it will be at the border (2) of a large parallel channel, which begins in the first month of 2021. Thus, the area around 33,000 shows its strength as a resistance and can be used by the bears to build their trading campaigns.

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