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Risk-off sentiment dominated flow last week following US President Donald Trump’s reciprocal tariff announcement, an event he described as ‘Liberation Day’. However, while I cannot speak for everyone, many are not feeling so liberated, with forecasts for growth and inflation upended, as well as economists forecasting a possible global recession.
The tariff announcement on 2 April was not digested well by markets, with an evident increase in volatility. Global equities went into freefall and ended the week red across the board, the VIX (Cboe Volatility Index) finished above 45.00 (levels not seen since August 2024), US Treasuries were heavily bid, and the US dollar (USD) closed down 1.4% (per the USD Index), shaking hands with levels not seen since late September 2024, and traditional safe-haven currencies benefitted. In the commodities space, Spot Gold (XAU/USD) explored lower levels from all-time highs of US$3,167, down 1.5%, and WTI Oil (West Texas Intermediate) fell nearly 10%.
WTI Oil
As mentioned, WTI shed nearly 10% last week and tested levels not seen since early 2021. As a result, the downside move punctured the lower boundary of a descending triangle formation on the weekly chart, extended from a high of US$95.01 and a low of US$64.34. Technically, this opens the door to possible bearish scenarios in the weeks to come toward a decision point zone at US$51.38-US$53.92. With that in mind, if you drill down to the H1 timeframe, you will note a bearish decision point zone formed at the lower boundary of the weekly chart’s descending triangle at US$64.90-US$64.24. This could be a location that traders look to fade from in the event of a pullback-retest play unfolding this week.
