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IronFX Daily Commentary | 17/08/15
Language English
• USD started the week on a sound footing The dollar is slowly recovering the “damage” following the PBoC surprise decision to devalue the yuan. The market gradually calms down, and will probably start focusing again on the likelihood of a Fed rate hike in September. With the clock ticking towards the crucial September meeting, the market currently has priced in a 50% chance of a rate hike. We have made the case that USD is data-driven and that significant positive US data surprises are now required to resume the USD-bullish trend and add to expectations of a September lift-off.
• Eurozone finance ministers approved third Greek bailout deal Few hours after Greek parliament voted to approve the cash-for-reforms bailout deal on Friday, Eurozone finance ministers approved it as well. Unlike the first two bailouts however, IMF is not involved yet. The fund insists that the Eurozone countries should commit to a significant debt relief as a condition for joining the new agreement. Germany wants the IMF on board, but on the other hand, they are reluctant to offer the scale of debt forgiveness that the fund requires. Mainly to avoid similar demands from other rescued Eurozone economies. If there is no commitment from the IMF to participate in this aid package, then we will have a new situation and the possibility of debt relief to make Greek debt sustainable could fade out.
• Japan’s economy shrinks in Q2 but less than expected Japan’s preliminary GDP data showed that the economy shrank 0.4% qoq in Q2 from +1.0% qoq in Q1, better than market expectations of -0.5% qoq. China’s economic slowdown however, and its impact on the global economy lessens the likelihood for a strong rebound in the final reading. In such case, there is a chance that the BoJ will have to take further stimulus measures in order to meet its targets when it reviews its long-term projections in October. Nikkei 225 edged a bit up on the better than expected data, while USD/JPY maintained its price range established in the last few days, below 125.00.
• Today we have a relatively light calendar day. Eurozone’s trade surplus for June and Norway’s trade surplus for July are due to be released, but none of these indicators is particularly major market mover.
• In the US, only secondary importance data are to be released. The Empire State manufacturing index is expected to show that business conditions for NY manufacturers have improved in August. NAHB housing market index for August is also coming out.
• As for the rest of the week, on Tuesday, the RBA releases the minutes from its latest policy meeting. At that meeting, the Bank kept rates unchanged, as expected. The key point however was that it removed the line from its statement that “Further depreciation (of AUD) seems both likely and necessary, and instead said “The Australian dollar is adjusting to the significant declines in key commodity prices.” We will be looking in the minutes for any further clarification with regards to the Aussie’s level. Any hints from the Bank officials that the currency should depreciate further could be the catalyst for the next bearish leg in AUD/USD.
• From the UK we get the CPI data for July and expectations are for the inflation rate to remain unchanged at 0%. At the recent Inflation Report, the MPC members seemed concerned between an increase in domestic price pressures as wages rise and a fall in import prices as commodity prices fall, and the pound strengthens. The Bank expects inflation to pick up a bit more slowly because of the second slump in global oil prices recently, therefore, a negative figure cannot be ruled out.
• On Wednesday, the highlight of the day will be the minutes of the July FOMC meeting. At this meeting, the most important outcome was a very small change in the paragraph discussing the future path of rates. The statement changed “improvement” to “some improvement”. Adding the term “some” lowers the bar for what constitutes improvement and makes it easier for the Committee to justify a September tightening if they want to. If the minutes show that Fed officials are more likely to raise rates in September, this could prove USD-bullish. As for the indicators, we get US CPI data for July.
• On Thursday, UK retail sales for July are forecast to have risen, a turnaround from the previous month. Last month, GBP plunged after the country’s retail sales unexpectedly fell in June, disappointing investors who were expecting a strong reading. Therefore, a strong reading in July is likely to strengthen GBP as this will add to the solid wage growth and support BoE officials’ expectations that inflation is likely to pick up towards the end of the year.
• Finally on Friday, From Canada, we get the CPI for July. Expectations are for the headline CPI and the core CPI to accelerate somewhat. However, given the second slump in global oil prices, if the core rate misses expectations and decelerates, this could prove CAD-negative. Retail sales for June are also coming out.
Currency Titles:
EUR/USD breaks below a short-term uptrend line
GBP/USD looks ready to challenge 1.5670 again
USD/JPY rebounds from 124.10
Gold hits support at 1112 and rebounds somewhat
WTI tests the downtrend line and turns down
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• EUR/USD traded above the 1.1160 (R1) barrier, but fell short of reaching the 1.1200 (R2) barrier. Subsequently, the rate tumbled and fell below the uptrend line taken from the low of the 7th of August. As a result, I would switch my view to neutral as far as the short-term picture is concerned. A possible break below the 1.1080 (S1) hurdle would signal the completion of a failure swing top formation and perhaps turn the bias negative. Something like that could set the stage for more bearish extensions, perhaps towards the 1.1020 (S2) barrier. Our momentum studies support somewhat that EUR/USD could trade lower for a while. The RSI fell below its upside support line and just crossed below its 50 line, while the MACD, although positive, has topped and fallen below its trigger line. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500, I would consider the longer-term picture to stay flat. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
• Support: 1.1080 (S1), 1.1020 (S2), 1.0975 (S3)
• Resistance: 1.1160 (R1), 1.1200 (R2), 1.1245 (R3)
• GBP/USD traded higher on Friday after it found support at 1.5580 (S1). Today, during the early European morning, the rate is headed for another test at the well-tested resistance hurdle of 1.5670 (R1). I believe that a break above that obstacle is needed to confirm a forthcoming higher high on the 4-hour chart and turn the bias to the upside. Something like that is likely to open the way for the next resistance at 1.5735 (R2). Both our momentum indicators, although within their bullish territories, point sideways and support my choice to wait for a break above 1.5670 (R1) before I get more confident on the upside. As for the broader trend, the price structure on the daily chart still suggests an uptrend. What is more, Cable is still trading above the 80-day exponential moving average. However, given that byers failed several times to overcome the 1.5670 (R1) barrier, I would hold a neutral stance as far as the overall outlook is concerned.
• Support: 1.5580 (S1), 1.5530 (S2), 1.5465 (S3)
• Resistance: 1.5670 (R1), 1.5735 (R2), 1.5780 (R3)
• USD/JPY rebounded somewhat after it found support near the 124.10 (S1) barrier. The rebound printed a higher low on the 4-hour chart and this make me believe that the rate could trade higher for a while. A break above 124.60 (R1) would confirm a forthcoming higher high and perhaps aim for another test at the psychological zone of 125.00 (R2). Our short-term oscillators support somewhat the notion. The RSI turned up again and could move above its 50 line soon, while the MACD, although negative, has bottomed and looks ready to cross above its trigger line. On the daily chart, the price structure still suggests a major upside path. Nevertheless, a break above 125.80 is needed to signal the continuation of that long-term uptrend.
• Support: 124.10 (S1), 123.80 (S2), 123.40 (S3)
• Resistance: 124.60 (R1), 125.00 (R2), 125.30 (R3)
• Gold hit support at 1112 (S1) on Friday and today during the Asian morning, it traded somewhat higher. I still believe that since the rate has broken I still believe that, since the rate has broken above the upper bound of the sideways range it’s been trading from the 21st of July until the 11th of August, the short-term outlook is positive. Nevertheless, I would like to see a clear move above 1127 (R2) before I get more confident on the upside. Something like that could open the way for our next resistance at 1145 (R3). Taking a look at our short-term oscillators, I see signs that another pullback could be in the works before the next positive leg. The RSI, although above 50, looks ready to turn down again, while the MACD has topped and fallen below its trigger line. In the bigger picture, the plunge on the 20th of July triggered the continuation of the longer-term downtrend and this keeps the overall bias of the yellow metal to the downside in my view. As a result, I would treat the short-term uptrend as a corrective move of the longer-term downtrend.
• Support: 1112 (S1), 1105 (S2), 1095 (S3)
• Resistance: 1120 (R1), 1127 (R2), 1145 (R3)
• WTI traded slightly higher on Friday, but hit resistance at the downtrend line taken from the peak of the 30th of July and turned down again. During the early European morning Monday, the rate is trading near the 41.85 (S1) support barrier, where a clear break is likely to challenge again the 41.35 (S2) line, defined by Friday’s low. I believe that a dip below the 41.35 level could set the stage for extensions towards the psychological round figure of 40.00 (S3). Our hourly oscillators detect negative momentum and support the case for further declines. The 14-hour RSI fell below its 50 line and edged lower, while the hourly MACD, already negative, has topped and fallen below its trigger line. On the daily chart, price structure has been lower peaks and lower troughs since the 24th of June. Therefore, I would consider the longer-term trend to be negative as well.
• Support: 41.85 (S1), 41.35 (S2), 40.00 (S3)
• Resistance: 42.30 (R1) 42.80 (R2), 43.70 (R3)
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IronFX Daily Commentary | 18/08/15
Language English
• RBA: Weaker AUD is expected to lead to stronger export growth The Reserve Bank of Australia released the minutes from its latest policy meeting. At that meeting, the Bank kept its Cash Rate (CR) unchanged at 2% as expected. The key point however was that it removed from its statement the line that “Further depreciation (of AUD) seems both likely and necessary”, and instead said “The Australian dollar is adjusting to the significant declines in key commodity prices.” The tone of the August minutes seemed more upbeat than had been the case in the previous minutes. The members noted that the recent depreciation in AUD would place further upward pressure on the final prices of tradable items over the next few years, which had led to a slight upward revision to the inflation forecast. In addition, they said that further depreciation of the Aussie was expected to transit stimulus to the economy through stronger net exports. Following China’s devaluation of the yuan however, the minutes of the meeting could be outdated, in our view. Therefore, we would prefer to see the stance of RBA members in their next policy meeting, to see whether they still prefer to hold a neutral bias as far as the interest rates are concerned. AUD/USD jumped a bit on the news but stayed below 0.7400. We still believe that in the long run AUD may head lower (see technical below).
• New Zealand whole milk powder futures point to first gain since February New Zealand whole milk powder futures are pointing to the first gain in auction prices later in the day. Fonterra, the world’s biggest dairy exporter, said that it will offer a third less whole milk powder over the next auctions, in an attempt to drive prices higher. NZD/USD was slightly stronger ahead of today’s auction, amid expectations that milk prices may gain again. The pair remained below the resistance of 0.6600. A break of that hurdle is needed to push the rate higher, at least in the near term, perhaps towards 0.6630.
• As for today’s events: During the European trading session, the highlight will be the UK CPI data for July. The expectations are for the annual inflation rate to remain unchanged at 0%, while the monthly rate is forecast to have fallen 0.3% mom. At the recent Inflation Report, the MPC members seemed concerned between an increase in domestic price pressures as wages rise and a fall in import prices as commodity prices fall, and the pound strengthens. The Bank expects inflation to pick up a bit more slowly because of the second slump in global oil prices recently, therefore, a negative annual figure cannot be ruled out. In such case, GBP could weaken a bit, at least temporarily.
• In the US, we get the housing starts and building permits for July. Housing starts are forecast to increase a bit, while building permits, the more forward-looking of the two indicators, are forecast to moderate somewhat. Nevertheless, the overall strength in the housing sector could keep confidence up and USD supported.
Currency Titles:
EUR/USD breaks below the 1.1080 barrier
GBP/JPY trades in a sideways mode
AUD/USD remains below 0.7400 after the RBA minutes
Gold trades in a quiet mode
DAX futures rebounds from 10815
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Currencies Text:
• EUR/USD traded lower on Monday after hitting resistance near the 1.1120 (R2) line. Then, the rate broke the 1.1080 (R1) barrier, and during the early European morning it is trading fractionally below it. The break below 1.1080 (R1) signaled the completion of a failure swing top formation in my view, and could open the way for a test at the 1.1020 (S1) support level. The RSI fell below its 50 line, but turned up again, while the MACD, stands below its trigger line, points down and is headed towards its zero line. These signs support somewhat that EUR/USD could trade lower for a while, but the fact that the RSI turned up again raises some concerns that a minor bounce is possible before the bears shoot again. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500, I would consider the longer-term picture to stay flat. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
• Support: 1.1020 (S1), 1.0975 (S2), 1.0935 (S3)
• Resistance: 1.1080 (R1), 1.1120 (R2), 1.1160 (R3)
• GBP/JPY edged lower on Monday after it found once again resistance near the psychological zone of 195.00 (R1). However the decline was halted near the 193.65 (S1) barrier and subsequently the rate rebounded somewhat. The pair has been oscillating between these two obstacles since the 10th of August, therefore I would consider the short-term picture to be flat for now. The RSI dipped below its 50 line, but turned up again, while the MACD fell below both its zero and signal lines. The mixed signals provided by our momentum indicators corroborate my stance to take the sidelines at the moment. On the daily chart, I see that on the 8th of July, the rate rebounded from the 185.00 psychological zone, which stands pretty close to the 50% retracement level of the 14th of April – 24th of June rally. As a result, I would consider the overall path of this pair to be to the upside. If the bears appear strong enough to overcome the 195.00 (R1) zone in the future, I would expect them to initially target the 195.80 hurdle, defined by the peaks of the 18th and 24th of June.
• Support: 193.65 (S1), 193.00 (S2), 192.15 (S3)
• Resistance: 195.00 (R1), 195.80 (R2), 197.00 (R3)
• AUD/USD traded slightly higher during the Asian morning Tuesday, after the minutes from the latest RBA meeting revealed that the economy is adjusting to a weaker currency, rebalancing away from a boom in the mining sector. However, the advance was minimal and stayed limited below the 0.7400 (R1) resistance barrier. On the 4-hour chart, the price structure still suggests a sideways short-term path, therefore I would consider the near-term picture to stay neutral for now. However, taking a look at our short-term oscillators, I see signs that the forthcoming wave could be negative, perhaps for another test at the 0.7320 (S1) support line. The RSI lies near its 50 line and could fall below it soon, while the MACD, although positive, has topped and fallen below its trigger line. A clear dip below 0.7320 (S1) could extend the bearish wave and perhaps see scope for extensions towards 0.7250 (S2). On the daily chart, the completion of a head and shoulders formation and the move below the psychological zone of 0.7500 signaled the continuation of the prevailing long-term downtrend, in my opinion. Nevertheless, I still believe that it would be better to wait for a break below 0.7215 (S3), defined by the low of the 12th of August, before trusting again the longer-term down path. Such a move would confirm a forthcoming lower low on the daily chart and perhaps open the way for the psychological zone of 0.7000.
• Support: 0.7320 (S1), 0.7250 (S2), 0.7215 (S3)
• Resistance: 0.7400 (R1), 0.7435 (R2), 0.7500 (R3)
• Gold traded in a quiet mode on Monday, staying between the support of 1112 (S1) and the resistance of 1120 (R1). I still believe that since the rate has broken above the upper bound of the sideways range it’s been trading from the 21st of July until the 11th of August, the short-term outlook is positive. Nevertheless, I would like to see a clear move above 1127 (R2) before I get more confident on the upside. Something like that could open the way for our next resistance at 1145 (R3). Taking a look at our short-term oscillators, I see signs that another pullback could be in the works before the next positive leg. The RSI, although above 50, hit resistance at its prior upside support line and turned somewhat down, while the MACD, although positive, still stands below its trigger and points down. In the bigger picture, the plunge on the 20th of July triggered the continuation of the longer-term downtrend and this keeps the overall bias of the yellow metal to the downside in my view. As a result, I would treat the short-term uptrend as a corrective move of the longer-term downtrend.
• Support: 1112 (S1), 1105 (S2), 1095 (S3)
• Resistance: 1120 (R1), 1127 (R2), 1145 (R3)
• DAX futures traded lower yesterday, but hit support at 10815 (S2) and rebounded to trade back above 10900 (S1). The price structure on the 4-hour chart still suggests a short-term downtrend. However, bearing in mind our momentum indicators, I would expect the rebound to continue. Perhaps for another test at the 11115 (R1) resistance hurdle. The RSI rebounded from near its 30 line, while the MACD has bottomed and looks ready to cross above its trigger line. What is more, there is positive divergence between both these indicators and the price action. As for the broader trend, I will maintain my flat stance. I prefer to see a clear close above 11800 before I assume the continuation of the prevailing major upside path, while a break below 10670 (S3) is the move that could bring a bearish trend reversal, in my view.
• Support: 10900 (S1), 10815 (S2), 10670 (S3)
• Resistance: 11115 (R1) 11200 (R2), 11280 (R3)
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IronFX Daily Commentary | 19/08/15
Language English
• Fed minutes will take center stage The highlight of the day will be the minutes of the July FOMC meeting. It will be one of the last big days before the September meeting. Today we could get an indication on how many members feel that the time to raise rates is close. The minutes will most likely give new insights into Fed’s thinking that did not come out in the statement released following the meeting. One of the most important outcomes at this meeting, was a very small change in the paragraph discussing the future path of rates. Fed officials changed their language on conditions that would justify a rate increase from “improvement” to “some improvement” in the labor market. Adding the term “some” lowers the bar for what constitutes improvement and makes it easier for the Committee to justify a September lift-off if they want to. The minutes will probably give an understanding of why they inserted the word “some” in the guidance.
• It’s important to keep in mind however, that the minutes don’t capture how the conditions have changed since their July meeting. China’s unexpected currency devaluation and the further slide in oil prices weigh against a September hike. Since then the pricing for a September hike has reduced somewhat, so the market is likely to look in the minutes for stronger clues about September. Any sign on how strongly FOMC members feel about raising rates sooner than later this year, is likely to prove USD-bullish.
• Overnight New Zealand’s producer prices fell for the fifth successive quarter, adding to the recent soft data coming from the country. Prices received by producers slipped 0.2% qoq in Q2 from -0.9% qoq in Q1, while prices paid by producers fell 0.3% qoq from -1.1% qoq. Coming on top of the slowdown in China’s economy, any further disappointment in the data going towards the September RBNZ policy meeting is likely to increase expectations for further easing. Therefore, the NZD may come under renewed selling pressure in the near future.
• Today’s highlights: During the European trading session we have a relatively light calendar. Eurozone’s current account for June is due to be released but no forecast is available.
• In the US, before the Fed minutes we get the headline and core CPI rates for July. The headline figure is expected to rise from the month before, while the core rate is forecast to have remained unchanged at +1.8% yoy. With a September Fed hike priced around a 48% probability from 50% in the beginning of the week, a rise in the CPI rate would add to the positive data from the US and increase the likelihood of a rate hike. In this light, we think USD could strengthen across board.
Currency Titles:
EUR/USD hits the 1.1020 support
GBP/USD surges above 1.5670 following the UK CPI data
USD/JPY trades sideways
Gold continues in a sideways mode
WTI hits support near 41.35 and rebounds
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Currencies Text:
• EUR/USD edged lower on Tuesday and managed to hit our support barrier of 1.1020 (S1). Then the rate rebounded somewhat. Having in mind that the dip below 1.1080 (R1) signaled the completion of a failure swing top formation, I would still see a negative short-term picture. A clear dip below 1.1020 (S1) is likely to open the way for the 1.0975 (S2) hurdle. Taking a look at our oscillators though, I see the possibility that the rebound may continue for a while, perhaps to challenge the 1.1080 (R1) zone as a resistance this time. The RSI, although below 50 has turned up again, while the MACD, stands below both its zero and signal lines, but shows signs of bottoming. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500, I would consider the longer-term picture to stay flat. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
• Support: 1.1020 (S1), 1.0975 (S2), 1.0935 (S3)
• Resistance: 1.1080 (R1), 1.1120 (R2), 1.1160 (R3)
• GBP/USD rallied on Tuesday following the upside surprise in the UK CPI data for July. The rate emerged above the key resistance zone of 1.5670 (R1) following the release, but failed to reach the 1.5735 (R2) obstacle. It retreated back below 1.5670 (R1) to find support at 1.5645 (S1). In my view, the move above 1.5670 (R1) confirmed a higher high on the 4-hour chart and turned the short-term bias to the upside. I would expect another attempt above 1.5670 (R1) to succeed a test at 1.5735 (R2) this time. Our momentum studies detect upside momentum and support the case that Cable could trade higher in the near future. The RSI, already above its 50 line, has turned up again, while the MACD stands above both its zero and signal lines. As for the broader trend, the price structure on the daily chart still suggests an uptrend. What is more, Cable is still trading above the 80-day exponential moving average. I believe that the move above 1.5670 (R1) could initiate the next positive leg of that medium-term upside path.
• Support: 1.5645 (S1), 1.5580 (S2), 1.5530 (S3)
• Resistance: 1.5670 (R1), 1.5735 (R2), 1.5780 (R3)
• USD/JPY has been trading in a sideways mode between 124.10 (S1) and 124.60 (R1) since the 12th of the month. This keeps the short-term picture neutral for now in my view. However, our oscillators give signs that the pair could exit the range to the downside. The RSI stands below 50 and points down, while the MACD, already has topped and just crossed below its trigger line. What is more, there is negative divergence between both these indicators and the price action. A move below 124.10 (S1) could initially challenge the 123.80 (S2) barrier, defined by the low of the 12th of August. Another break below that hurdle could target the 123.40 (S3) zone. On the daily chart, I still see a major uptrend. As a result, in the absence of any major bearish trend reversal signals, I would treat any possible near-term declines as a corrective move of that long-term upside path.
• Support: 124.10 (S1), 123.80 (S2), 123.40 (S3)
• Resistance: 124.60 (R1), 125.00 (R2), 125.30 (R3)
• Gold continued trading in a consolidative manner on Tuesday, staying between the support of 1112 (S1) and the resistance of 1120 (R1). I still believe that since the rate has broken above the upper bound of the sideways range it’s been trading from the 21st of July until the 11th of August, the short-term outlook is positive. Nevertheless, I would like to see a clear move above 1127 (R2) before I get more confident on the upside. Something like that could open the way for our next resistance at 1145 (R3). The RSI, although above 50, stays below its downside resistance line, while the MACD still lies below its trigger line and points down. In the bigger picture, the plunge on the 20th of July triggered the continuation of the longer-term downtrend and this keeps the overall bias of the yellow metal to the downside in my view. As a result, I would treat the short-term uptrend as a corrective move of the longer-term downtrend.
• Support: 1112 (S1), 1105 (S2), 1095 (S3)
• Resistance: 1120 (R1), 1127 (R2), 1145 (R3)
• WTI traded higher yesterday, after it found support fractionally above the 41.35 (S2) line, defined by the low of the 14th of August. The rate moved back above the 42.00 (S1) level, and hit resistance at 42.90 (R1). The price moved above the uptrend line taken from the peak of the 30th of July and this could have turned the short-term bias positive. However, looking at our hourly oscillators, I would expect a setback before the bulls regain control again. The RSI hit resistance twice at its 70 line and turned down, while the MACD shows signs of topping and could move below its trigger line soon. On the daily chart, the price structure has been lower peaks and lower troughs since the 24th of June. Therefore, I would treat any short-term upside extensions as a corrective move of that longer-term downtrend.
• Support: 42.00 (S1), 41.35 (S2), 40.00 (S3)
• Resistance: 42.90 (R1) 43.75 (R2), 44.45 (R3)
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IronFX Daily Commentary | 20/08/15
Language English
• Fed “approaching” hike conditions, but not yet there The minutes of the latest FOMC meeting showed that most Fed officials judged that the conditions for a rate hike are approaching but had not yet been achieved. The uncertain tone of the minutes suggested that the members were somewhat less likely to raise rates at their September meeting, mainly due to concerns over inflation that is not yet moving towards the necessary conditions to justify a rate hike. As mentioned in the minutes, “Almost all members indicated that they would need to see more evidence that economic growth was sufficiently strong and labor market conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term.”
• In addition to wariness over the pace of the inflation, it’s important to keep in mind that events since the July meeting –China’s yuan devaluation-- will probably give FOMC members a new reason for caution. This could make Fed’s decision even more difficult. Another important point in the minutes was the FOMC members attempt to communicate once again that the expected path for policy, not the initial increase, would be the most important determinant of financial conditions. USD pulled back sharply after the minutes were released and the probability of a September hike fell to 40% from around 50% before. Nevertheless, following the July FOMC minutes, we retain our view that September is the most likely month for a lift-off. However, the bar for the rate hike has been pushed a bit higher, given the lower energy prices and the weakening international outlook since the July meeting.
• Today’s highlights: Sweden’s official unemployment rate for July is expected to decline. The PES unemployment rate for the same month increased a bit, raising questions over expectations of a strong decline in the official figure. In any case, a decline in the jobless rate could strengthen SEK at the release.
• In Norway, Q2 GDP is expected to contract from the previous quarter, while the mainland GDP is expected to expand at a slower pace than in Q1. Following the below-expectations inflation rate last week, this may add pressure on the Norges Bank to ease at its September meeting. This could prove NOK-negative.
• In the UK, retail sales for July are forecast to have risen, a turnaround from the previous month. Last month, GBP plunged after the country’s retail sales unexpectedly fell in June, disappointing investors who were expecting a strong reading. Therefore, a strong reading in July is likely to strengthen GBP as this will add to the solid wage growth and support BoE officials’ expectations that inflation is likely to pick up towards the end of the year. With the UK inflation rate back above zero, market participants will be closely watching the data for signs of demand-pull inflation.
• From the US, we get the initial jobless claims for the week ended on August 15 and the Philadelphia Fed Business activity index for August. The Conference Board leading index for July is expected to decelerate somewhat from the month before. Existing home sales for July are also coming out. The housing starts and building permits released earlier this week were consistent with an improving housing market. Therefore, another strong housing figure could strengthen USD.
Currency Titles:
EUR/USD surges on the Fed minutes
GBP/JPY continues its sideways path
AUD/USD hits 0.7320 and rebounds
Gold breaks above 1127
DAX futures tumble and hit the key support zone of 10670
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• EUR/USD rallied on Wednesday as the minutes from the latest FOMC meeting gave little to no indication that the Committee could raise rates in September. The pair surged and violated two resistance (now turned into support) barriers in a row, therefore, I would switch my stance to neutral for now. During the early European morning Thursday, the rate is trading between the 1.1120 (S1) and 1.1160 (R1) lines. A clear break above the latter barrier is likely to extend the rally towards the 1.1200 (R2) zone, while a dip back below 1.1120 (S1) could challenge the next support at 1.1080 (S2). The RSI, although above 50, has turned down, while the MACD has bottomed and turned positive. The mixed momentum signs support my choice to take the sidelines, at least for now. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500, I would consider the longer-term picture to stay flat as well. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
• Support: 1.1120 (S1), 1.1080 (S2), 1.1020 (S3)
• Resistance: 1.1160 (R1), 1.1200 (R2), 1.1245 (R3)
• GBP/JPY traded lower yesterday, but hit support at 194.00 (S1) and then rebounded somewhat. The pair has been oscillating between 193.65 (S2) and the psychological zone of 195.00 (R1) since the 10th of August, therefore I would consider the short-term picture to stay flat. The RSI has turned up and now lies near its 50 line, while the MACD stands fractionally above zero and points sideways. This indicators reveal neutral momentum and support my choice to hold a flat stance. Today, we get the UK retail sales for July and expectations are for a better figure than the previous month. This could push GBP/JPY higher, perhaps for another test at the 195.00 (R1) psychological resistance. A break above that zone could open the way for the 195.80 (R2) hurdle, defined by the peaks of the 18th and 24th of June. On the daily chart, I see that on the 8th of July, the rate rebounded from the 185.00 psychological zone, which stands pretty close to the 50% retracement level of the 14th of April – 24th of June rally. As a result, I would consider the overall path of this pair to be to the upside.
• Support: 194.00 (S1), 193.65 (S2), 193.00 (S3)
• Resistance: 195.00 (R1), 195.80 (R2), 197.00 (R3)
• AUD/USD hit the 0.7320 (S1) support barrier on Tuesday and on Wednesday it rebounded somewhat. On the 4-hour chart, the price structure still suggests a sideways short-term path, therefore I would consider the near-term picture to stay neutral for now. However, I would expect the bears to eventually take control again and push the rate lower. The RSI hit its downside resistance line and looks ready to fall below 50 again, while the MACD, although it points up, is still negative and still lies below its respective downside line. A clear dip below 0.7320 (S1) would confirm the case and perhaps see scope for extensions towards 0.7250 (S2). On the daily chart, the completion of a head and shoulders formation and the move below the psychological zone of 0.7500 signaled the continuation of the prevailing long-term downtrend, in my opinion. Nevertheless, I still believe that it would be better to wait for a break below 0.7215 (S3), defined by the low of the 12th of August, before trusting again the longer-term down path. Such a move would confirm a forthcoming lower low on the daily chart and perhaps open the way for the psychological zone of 0.7000.
• Support: 0.7320 (S1), 0.7250 (S2), 0.7215 (S3)
• Resistance: 0.7400 (R1), 0.7435 (R2), 0.7500 (R3)
• Gold surged on Wednesday, breaking above the resistance (now turned into support) barrier of 1127 (S1). Now, the metal looks to be headed towards the 1145 (R1) zone, where an upside break is likely to extend the bullish move towards our next resistance of 1155 (R2). Our momentum indicators detect strong upside speed and amplify the case that Gold could continue to trade higher for a while, at least towards the 1145 (R1) barrier. The RSI crossed above 70 and is pointing up, while the MACD, already positive has bottomed and crossed above its trigger line. In the bigger picture, the plunge on the 20th of July triggered the continuation of the longer-term downtrend and this keeps the overall bias of the yellow metal to the downside in my view. As a result, I would treat the short-term uptrend as a corrective move of the longer-term downtrend.
• Support: 1127 (S1), 1120 (S2), 1112 (S3)
• Resistance: 1145 (R1), 1155 (R2), 1165 (R3)
• DAX futures slid yesterday, fell below the support (now turned into resistance) barrier of 10815 (R1), and hit the key barrier of 10670 (S1), defined by the lows of the 7th and 8th of July. The short-term trend remains negative in my view, but I would like to see a clear break below 10670 (S1) before I trust that down path again. Something like that is likely to initially target the next support at 10600 (S2). Our oscillators support the negative short-term picture. The RSI fell below its 30 line and points down, while the MACD, already negative, crossed again below its signal line. As for the broader trend, I will maintain my flat stance. A clear and decisive break below 10670 (S1) is the move that could bring a bearish trend reversal, while a clear close above 11800 is needed to trigger the continuation of the prevailing upside path.
• Support: 10670 (S1), 10600 (S2), 10500 (S3)
• Resistance: 10815 (R1) 10900 (R2), 10985 (R3)
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IronFX Daily Commentary | 21/08/15
Language English
• Markets in a risk-off sentiment as Global concerns remain elevated The weakness in the US equity markets rolled into the overnight Asian session, and Asian stock markets tumbled led by China. The Global sell-off continued as geopolitical tensions in Greece, Turkey and the Korean Peninsula added to the negative sentiment, suggesting investors it’s time for a more cautious approach. In such an uncertain environment, the usual safe haven assets JPY, CHF and gold could remain supported as they become more attractive to investors.
• Markets have reduced sharply the pricing of a Fed rate hike in September, as global growth concerns and subdued inflation could delay the first lift-off. Hence, data dependency has increased further and Fed speakers next week will get more attention than usual for hints if they remain on track to raise rates this year.
• Greece is back in the news Greek PM Alexis Tsipras resigned on Thursday, in an attempt to strengthen his hold on power in a snap elections next month. The elections may allow Tsipras to return to power position without any anti-bailout rebels in Syriza, and to broaden support for the new bailout program just signed. Uncertainty is likely to rise in the markets if the new government (if not Syriza) delay or derail implementation of the aid package.
• Overnight China’s preliminary Caixin manufacturing PMI declined to 47.1 in August, down from 47.8 in July and below consensus of 48.2. The further fall in the PMI suggests that the Chinese economy has yet to stabilize and more stimulus could be needed to boost the economy. Australia and New Zealand, whose economies are heavily dependent on exports to China, saw their currencies plunging on the news. AUD/USD fell to find support near 0.7280, while NZD/USD found some buy orders slightly above the 0.6600 level. The slowdown in the Chinese economy and the continued decline in key commodity prices are likely to put AUD and NZD under renewed selling pressure.
• Today’s highlights: During the European day, we get the preliminary manufacturing and service-sector PMI data for August from several European countries and the Eurozone as a whole. The expectations are for the service-sector PMIs to remain unchanged or decrease a bit, while the manufacturing PMIs are likely to decline somewhat. Greece received the new bailout funds on Thursday and met the deadline for a crucial payment to the ECB. Therefore, with the Greek crisis now off investors’ radar, economic data are likely to start being important. A decline in the PMIs could weaken EUR a bit.
• From Canada, we get the CPI for July. Expectations are for the headline and the core CPIs to accelerate somewhat, which could support CAD at least temporarily. In the bigger picture though, I expect the second slump in global oil prices and the deteriorating fundamentals to weigh on the currency and put it under renewed selling pressure. The country’s retail sales for June are also coming out.
• In the US, the preliminary Markit manufacturing PMI for August is expected to increase slightly from July. Market pays more attention to the ISM figure. Thus the reaction on this release could be limited.
Currency Titles:
EUR/USD continues its rally
EUR/JPY hits resistance at 138.85
GBP/USD rebounds from 1.5615
Gold continues higher and hits resistance at 1168
WTI rebounds from near the psychological barrier of 40.00
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• EUR/USD continued its surge on Thursday, breaking three resistance barriers in a row. During the early European morning Friday, the pair looks to be headed towards the 1.1310 (R1) resistance hurdle, where a break is likely to pull the trigger for the 1.1400 (R2) zone. Our short-term oscillators detect strong upside speed and support the case that EUR/USD is likely to continue trading higher, at least in the near term. The RSI emerged above its 70 line and is pointing up, while the MACD stands well above both its zero and trigger lines and points north as well. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500, I would consider the longer-term picture to stay flat. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
• Support: 1.1245 (S1), 1.1200 (S2), 1.1160 (S3)
• Resistance: 1.1310 (R1), 1.1400 (R2), 1.1440 (R3)
• EUR/JPY traded higher on Thursday, breaking above the resistance (now turned into support) of 138.40 (S1) and hitting resistance fractionally below the 138.85 (R1) barrier, marked by the peaks of the 12th, 13th and 14th of August. A break above that level is needed to confirm a forthcoming higher high on the 4-hour chart and make me more confident on the upside. Something like that could see scope for extensions towards the psychological round figure of 140.00 (R2). Our oscillators reveal positive momentum. The RSI edged higher after crossing above its 50 line. It now lies fractionally below 70, while the MACD has bottomed, crossed above its trigger line and turned positive. On the daily chart, I see that the pair traded higher after hitting the 133.30 support area, which stands marginally below the 50% retracement level of the 14th of April – 4th of June advance. What is more, it still stands above the medium-term uptrend line taken from the low of the 14th of April. As a result, I would consider the medium-term trend to be positive.
• Support: 138.40 (S1), 137.80 (S2), 137.00 (S3)
• Resistance: 138.85 (R1), 140.00 (R2), 141.00 (R3)
• GBP/USD hit support at 1.5615 (S1), near the uptrend line taken from the low of the 7th of August, and then it rebounded. Nevertheless, the advance was halted by the 1.5700 (R1) barrier. As long as the pair is trading above the aforementioned uptrend line, I would consider the short-term picture to be somewhat positive. A move above 1.5700 (R1) is likely to initially target the 1.5735 (R2) line, marked by the peak of the 1st of July. The RSI rebounded from its 50 line and points somewhat up, but the MACD, although positive, stands near its trigger line and points sideways. These momentum signs support the somewhat positive outlook and that it is better to wait for a move above 1.5700 (R1) before getting more confident on the upside. As for the broader trend, the price structure on the daily chart still suggests an uptrend. Furthermore, Cable is still trading above the 80-day exponential moving average. I believe that the move above 1.5700 (R1) could initiate the next positive leg of that medium-term upside path.
• Support: 1.5615 (S1), 1.5580 (S2), 1.5530 (S3)
• Resistance: 1.5700 (R1), 1.5735 (R2), 1.5780 (R3)
• Gold continued trading higher on Thursday, and today, during the early European morning, it hit resistance at 1168 (R1). The short-term picture is still positive in my opinion and I would expect a move above 1168 (R1) to initially target the 1175 (R2) hurdle. Another break above the latter level could pave the way for the 1185 (R3) area. Our short-term oscillators support the short-term picture and magnify the case that further advances could be on the cards. The RSI stands above its 70 line and points north, while the MACD, at extreme positive levels, lies above both its zero and signal lines, and points up as well. As for the bigger picture, having in mind that yesterday’s rally brought the metal above the downside resistance line taken from the peak of the 18th of May, I would switch my stance to neutral as far as the overall picture is concerned.
• Support: 1160 (S1), 1150 (S2), 1140 (S3)
• Resistance: 1168 (R1), 1175 (R2), 1185 (R3)
• WTI hit support near the psychological zone of 40.00 (S2) and rebounded to hit resistance at 41.45 (R1). Subsequently, it retreated. The price is now headed towards the 40.75 (S1) level, where a clear dip is likely to open the way for another test at the 40.00 (S2) zone. However a break below 40.00 (S2) is needed to confirm a forthcoming lower low and signal the resumption of the prevailing downtrend. Such a break could extend the bearish leg, perhaps towards 39.00 (S3). The RSI turned down and just crossed below 50, while the MACD, already negative, shows signs that it could start topping. These momentum indicators corroborate my view that WTI is likely to continue lower. On the daily chart, the price structure has been lower peaks and lower troughs since the 24th of June. Therefore, I would see a negative longer-term picture as well.
• Support: 40.75 (S1), 40.00 (S2), 39.00 (S3)
• Resistance: 41.45 (R1) 42.10 (R2), 42.70 (R3)
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IronFX Daily Commentary | 24/08/15
Language English
Euro and yen rally as Global stocks slump EUR and JPY are gaining from both, the sell-off in Asian stock markets caused primarily by China’s unexpected move to devalue yuan, and from falling expectations that the Fed will raise interest rates in September. The probability that Fed will hike has lessened from around 50% before China’s move to 28% on Monday. Even though China can be seen as the main reason why the global equities have plunged, other key factors help to maintain the slide. The slump in oil and other commodity prices, which increase deflationary pressures, and the currency devaluations in EM on global growth concerns. As fears of a global economic slowdown build up, investors move from riskier assets in EM to less risky DM government bonds.
Today, we have a very light calendar day. The only noteworthy indicator we get is the US Chicago Fed National activity index for July. With no forecast available, the market reaction is likely to stay limited at this release.
As for the speakers, Atlanta Fed President Dennis Lockhart speaks. The uncertain tone of the July FOMC meeting minutes suggested that the policy makers were somewhat less likely to raise rates at their September meeting, mainly due to concerns over inflation. Hence, investors are likely to pay more attention on Fed speakers, for clues if the time for the first rate hike is indeed “approaching”.
As for the rest of the week, on Tuesday, NZD could come under renewed selling pressure given the 2-year inflation expectation for Q3 is to be released. As expectations for another rate cut by the RBNZ build-up, a weak figure would add to the growing evidence that the economy of New Zealand is losing momentum.
The German Ifo survey for August is also coming out. The German ZEW survey for August showed a mixed picture for the bloc’s strongest economy. The expectations index declined once again from the previous month, while the moderate increase in the current situation index was not enough to reverse investors’ disappointment. The latest sell-off in the global stock markets, the fresh tensions in emerging markets and the renewed instability in Greece, could put further downside pressure in the expectations index. Therefore, a weak Ifo reading could add to evidence that the bloc’s growth engine is losing steam.
On Wednesday, in the US, durable goods orders for July are expected to have fallen, a turnaround from the month before, while durable goods excluding transportation equipment are estimated to decelerate somewhat. The focus is usually on the core figure where a positive surprise is needed to suggest the possible start of a turnaround in business investment and strengthen the dollar.
On Thursday, the main event will be the 2nd estimate of US Q2 GDP. The forecast is for the growth rate to be revised up, to show that the US economy expanded at a faster pace from the already encouraging growth figure seen in the first estimate. This is in line with the Fed’s expectations for a stronger Q2 growth, and could provide a boost to USD.
On Friday, we have the usual end-of-month data dump from Japan. The focus will be on the National CPI rate for July and the Tokyo CPI rate for August as BoJ officials’ showed optimism that the inflation will accelerate considerably in the coming months. Therefore, a rise in the CPI could strengthen JPY somewhat. At the same time, we get Japan’s jobless rate and job-offers-to-applicants’ ratio, also for July.
From Germany, the preliminary CPI for August is coming out. As usual, we will look at the larger regions for a guidance on where the headline figure may come in and thereby as an indication for the near-term direction of EUR. A rise in the German CPI rate could indicate a rise in the Eurozone’s CPI to be released next week and strengthen EUR a bit.
In the UK, the 2nd estimate of Q2 GDP is expected to confirm the preliminary growth figure and show that the economy grew 0.7% qoq in Q2. Coming on top of the recent encouraging data, this could add steam to the UK’s recovery and strengthen GBP somewhat.
In the US, we get the personal income and personal spending for July. Personal income is expected to have risen at the same pace as in June, while personal spending is forecast to have accelerated. The focus is usually on personal spending and a significant positive surprise is needed for the USD to remain supported.
Currency Titles:
EUR/USD continues its rally and hits 1.1500
GBP/JPY collapses and hits support at 189.30
Gold pulls back after hitting 1168
DAX hits support near 10000
AUD/USD breaks below 0.7250 and hits support at 0.7200
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EUR/USD continued its surge on Friday, reaching the psychological round barrier of 1.1500 (R1). The short-term bias remains positive, but I prefer to see a clear close above 1.1500 (R1) before I get more confident on the continuation of the rally. Something like that could see scope for extensions towards our next resistance of 1.1650 (R2). Our short-term oscillators detect strong upside speed and support the short-term picture. The RSI rebounded from its 70 line and point north, while the MACD continued higher, well above both its zero and signal lines. As for the broader trend, as long as EUR/USD is trading between 1.0800 and 1.1500 (R1), I would consider the longer-term picture to stay flat. I believe that a close above the psychological zone of 1.1500 (R1) is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.
Support: 1.1440 (S1), 1.1400 (S2), 1.1310 (S3)
Resistance: 1.1500 (R1), 1.1650 (R2), 1.1725 (R3)
GBP/JPY continued collapsing on Friday, and today during the early European morning, the pair hit support at 189.30 (S1). The short-term bias remains to the downside, thus, I would expect a clear break below 189.30 (S1) to initially target the next support at 188.70 (S2). Another break below that line is likely to extend the short-term downtrend towards the 187.90 (S3) hurdle. The RSI fell below 30 and points south, while the MACD stand well below both its zero and trigger lines, pointing down as well. As for the broader trend, the recent plunge confirmed a lower high on the daily chart, therefore I would switch my stance to neutral as far as the overall picture is concerned. I believe that a break below the psychological zone of 185.00 is needed to bring a major trend reversal.
Support: 189.30 (S1), 188.70 (S2), 187.90 (S3)
Resistance: 190.60 (R1), 191.20 (R2), 192.00 (R3)
Gold traded lower on Friday, after it hit resistance at 1168 (R1). The retreat was halted at 1150 (S1) and then the metal rebounded somewhat. The short-term picture is still positive in my opinion and as a result, I would expect a move above 1168 (R1) to initially target the 1175 (R2) hurdle. Taking a look at our short-term oscillators though, I see signs that another pullback could be on the cards before the next positive leg. A clear dip below 1150 (S1) is likely to confirm the case and perhaps pave the way towards the 1140 (S2) barrier. The RSI exited its above-70 territory, while the MACD has topped and could fall below its trigger line soon. As for the bigger picture, having in mind that Thursday’s rally brought the metal above the downside resistance line taken from the peak of the 18th of May, I would switch my stance to neutral as far as the overall picture is concerned.
Support: 1150 (S1), 1140 (S2), 1127 (S3)
Resistance: 1168 (R1), 1175 (R2), 1185 (R3)
DAX extended its losses after falling below the key obstacle of 10670. During the early European morning Monday, the index is testing the psychological round figure of 10000 (S1), where a clear break is likely to set the stage for more bearish extensions, perhaps towards the 9770 (S2) zone. Our oscillators reveal strong downside momentum and amplify the case that the index could fall below 10000 (S1) in the near future. The RSI stands below its 30 line and points down, while the MACD, at extreme low levels, stands below its trigger line and points south as well. On the daily chart, I believe that the break below 10670 has shifted the medium-term outlook to the downside. Therefore, I would expect the index to continue to trade lower in the not-to-distant future.
Support: 10000 (S1), 9770 (S2), 9600 (S3)
Resistance: 10140 (R1) 10325 (R2), 10435 (R3)
AUD/USD traded lower during the Asian morning Monday, breaking below 0.7250 (R1) and hitting support at 0.7200 (S1). I believe that the short-term bias has turned negative again and as a result, I would expect a clear move below 0.7200 (S1) to open the way towards 0.7100 (S2). Our short-term momentum indicators support the notion. The RSI slid after it hit resistance near its 50 barrier, while the MACD, already negative, has fallen below its trigger line. On the daily chart, the completion of a head and shoulders formation and the move below the psychological zone of 0.7500 signaled the continuation of the prevailing long-term downtrend, in my opinion. The break below 0.7250 (R1) confirmed a forthcoming lower low on the daily chart, and this supports the case that AUD/USD could eventually trade lower and perhaps aim for the psychological zone of 0.7000 (S3).
Support: 0.7200 (S1), 0.7100 (S2), 0.7000 (S3)
Resistance: 0.7250 (R1), 0.7285 (R2), 0.7360 (R3)
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IronFX Essential Intraday Comment | 25/08/2015
Language English
Currency Titles:
EUR/USD breaks above 1.1500 and hits resistance slightly below 1.1725
GBP/USD hits resistance at 1.5800
USD/JPY rebounds from slightly above 116.00
Gold stays between 1150 and 1168
WTI hits support at 37.80 and rebounds
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• EUR/USD continued its crazy rally yesterday, breaking above the psychological round barrier of 1.1500 (S1). Nevertheless, the surge was halted slightly below our resistance of 1.1725 (R2) and subsequently, the rate retreated. The price structure on the 4-hour chart still suggests a short-term uptrend. As a result, I would expect another break above 1.1650 (R1) to reach the 1.1725 (R2) hurdle this time. Taking a look at our oscillators though, I see signs that further pullback could be in the works before the bulls seize control again, perhaps even below 1.1500 (S1). The RSI has topped within its overbought zone and now looks ready to fall below 70, while the MACD has topped and could fall below its trigger line soon. As for the broader trend, EUR/USD had been trading between 1.0800 and 1.1500 (S1) from the 23rd of April until yesterday. Yesterday the rate managed to close above 1.1500 (S1), something that probably signals the exit of the aforementioned sideways range, and turns the overall outlook positive.
• Support: 1.1500 (S1), 1.1440 (S2), 1.1400 (S3)
• Resistance: 1.1650 (R1), 1.1725 (R2), 1.1790 (R3)
• GBP/USD traded higher on Monday, breaking above the resistance (now turned into support) barrier of 1.5725 (S1) and hitting resistance near the 1.5800 (R1) line. As long as the pair is trading above the uptrend line taken from the low of the 7th of August, I would consider the short-term picture to stay positive. A move above 1.5800 (R1) is likely to initially target the 1.5835 (R2) line, while a break above the latter level could see scope for extensions towards the 1.5910 (R3) territory. Taking a look at our oscillators though, I see signs that a minor pullback is possible before the next positive leg. The RSI edged somewhat down after finding resistance slightly below its 70 line, while the MACD, although positive, shows signs that it could start topping. As for the broader trend, the price structure on the daily chart still suggests an uptrend. What is more, Cable is still trading above the 80-day exponential moving average. Therefore I would expect the rate to continue trading higher in the foreseeable future.
• Support: 1.5725 (S1), 1.5660 (S2), 1.5615 (S3)
• Resistance: 1.5800 (R1), 1.5835 (R2), 1.5910 (R3)
• USD/JPY continued collapsing yesterday, but triggered some buy orders slightly above the 116.00 barrier and rebounded to reach the psychological zone of 120.00 (R1). The short-term trend remains negative in my view, but I see signs that the rebound may continue for a while. A break above 120.00 (R1) could initially aim for the next resistance at 120.50 (R2). Our short-term oscillators support the notion as well. The RSI just exited its below-30 territory, while the MACD has bottomed and could move above its trigger line in the near future. As for the broader trend, yesterday’s plunge signaled the completion of a possible double top formation, which probably shifted the medium-term picture negative as well. As a result, I would treat any possible near-term advances as a corrective phase for now.
• Support: 119.20 (S1), 118.90 (S2), 118.50 (S3)
• Resistance: 120.00 (R1), 120.50 (R2), 121.20 (R3)
• Gold traded in a consolidative manner o Monday, staying between the support of 1150 (S1) and the resistance of 1168 (R1). The short-term picture is still positive in my opinion and as a result, I would expect a move above 1168 (R1) to initially target the 1175 (R2) hurdle. Nevertheless, our momentum indicators give evidence that a setback could be looming before the next positive leg. The RSI exited its above-70 territory and continued lower, while the MACD has topped and fallen below its trigger line. As for the bigger picture, having in mind that Thursday’s rally brought the metal above the downside resistance line taken from the peak of the 18th of May, I would switch my stance to neutral as far as the overall picture is concerned.
• Support: 1150 (S1), 1140 (S2), 1127 (S3)
• Resistance: 1168 (R1), 1175 (R2), 1185 (R3)
• WTI traded lower yesterday, but hit support at 37.80 (S1) and then it rebounded. The short-term trend remains negative in my view, and therefore I would expect the bears to take in charge at some point and push the rate down for another test at the 37.80 (S1) barrier. But for now, our oscillators give evidence that the current rebound may continue for a while. The 14-hour RSI edged higher and now looks ready to move above its 50 line, while the hourly MACD has bottomed and crossed above its trigger line. Moreover, there is positive divergence between the RSI and the price action. On the daily chart, the price structure has been lower peaks and lower troughs since the 24th of June. Therefore, I would see a negative longer-term picture as well.
• Support: 37.80 (S1), 37.00 (S2), 36.00 (S3)
• Resistance: 39.45 (R1) 40.00 (R2), 40.50 (R3)
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IronFX Daily Commentary | 26/08/15
Language English
• China’s new rate cut fail to calm the markets US stocks were initially encouraged by the new moves from the PBoC to free up liquidity into the markets, but then sharply reversed the early gains to end lower on Tuesday. The focus then shifted to Asia and how Chinese stock markets would react on the fresh stimulus. China’s main equity indices appeared to recover and after several attempts to move higher, the Shanghai Composite index was up around 2.5% in late Asian session. Even though it’s a small move compared to the tumble of the last few days, at least the stock market seems to have halted a bit. Nevertheless, we remain unconvinced that China’s broadly-anticipated move to cut interest rates and the reserve requirement ratio (RRR) would be enough to stabilize the tumble in its stock markets. Much more support will be needed from the Chinese government and the PBoC to stabilize the slowdown, in our view. The government will probably need to announce fiscal stimulus on top of the monetary policy easing to fuel again its economy.
• Today’s highlights: During the European day, from Sweden, we get the economic tendency survey for August. The forecast is for the indicator to increase a bit, which could strengthen SEK somewhat.
• From Norway, we get the AKU unemployment rate for July. The official unemployment rate for the same month rose to 3.1% from 2.8%. This increases the possibilities for the AKU rate to rise as well. NOK could weaken a bit at these release.
• The highlight of the day will be the US durable goods orders for July. The headline figure is expected to fall, a turnaround from the month before, while durable goods excluding transportation equipment are estimated to decelerate somewhat. The focus is usually on the core figure where a positive surprise could suggest the possible start of a turnaround in business investment and could be bullish for the dollar. On the other hand, another dissapointment is likely to keep USD under pressure, as this will push even lower September rate hike expectations.
• We have two important speakers on Wednesday’s agenda. ECB Executive Board member Peter Praet and New York Fed President William Dudley speak. Investors are likely to pay more attention than usual on Bank officials for hints if the Fed is still on track to raise rates, following the developments in China, and if the ECB may extend its QE program. ECB Vice President Vitor Constancio said on Tuesday that the ECB will take further measures if it sees a significant risk to the inflation outlook. He also said that it’s too early to understand the effect of what is happening in China, and that the renewed fall in oil price is more relevant for the course of the headline inflation, but there is nothing monetary policy can do about that. The ECB may have to revise down its CPI forecasts at its monetary policy meeting next week.
Currency Titles:
EUR/USD pulls back and rebounds from 1.1400
AUD/USD tumbles and hits 0.7100
GBP/JPY rebounds from slightly below 186.25
Gold tumbles and finds support at 1135
DAX futures slide after finding resistance slightly above 10140
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• EUR/USD retreated on Tuesday, falling below the psychological zone of 1.1500 (S1). However, the rate hit support at 1.1400 (S2) and rebounded back above 1.1500 (S1), and found resistance at 1.1565 (R1). The price structure on the 4-hour chart still suggests a short-term uptrend, but having in mind that there is the possibility for a lower high at around 1.1565 (R1), I would switch my stance to neutral for now. Another move below 1.1500 (S1) is likely to confirm the lower high and perhaps aim for another test at 1.1400 (S2). On the other hand, a clear break above 1.1565 (R1) could pull the trigger for the 1.1625 (R2) line. As for the broader trend, EUR/USD had been trading between 1.0800 and 1.1500 (S1) from the 23rd of April until Monday. On Monday, the rate managed to close above 1.1500 (S1), something that probably signals the exit of the aforementioned sideways range, and turns the overall outlook positive. As a result, I would treat any future possible near-term declines as a corrective move.
• Support: 1.1500 (S1), 1.1400 (S2), 1.1310 (S3)
• Resistance: 1.1565 (R1), 1.1625 (R2), 1.1720 (R3)
• AUD/USD hit resistance at 0.7250 (R1) and then tumbled to find support at 0.7100 (S1). I believe that the short-term bias remains negative, and I would expect a clear move below 0.7100 (S1) to pave the way for another test at the 0.7040 (S2) barrier, defined by the Monday’s low. The MACD stands well below both its zero and trigger lines, indicating strong downside momentum and supporting the case that the pair is likely to continue lower in the foreseeable future. The RSI though, has rebounded from near its 30 line and is pointing somewhat up, giving evidence that a minor bounce could be on the cards before the next negative leg. On the daily chart, the completion of a head and shoulders formation and the move below the psychological zone of 0.7500 signaled the continuation of the prevailing long-term downtrend, in my opinion. The break below 0.7250 (R1) confirmed a forthcoming lower low on the daily chart, and this supports the case that AUD/USD could eventually trade lower and perhaps aim for the psychological zone of 0.7000 (S3).
• Support: 0.7100 (S1), 0.7040 (S2), 0.7000 (S3)
• Resistance: 0.7250 (R1), 0.7285 (R2), 0.7360 (R3)
• GBP/JPY tumbled on Tuesday after finding resistance at the psychological figure of 190.00 (R2). However, the rate triggered some buy orders slightly below 186.25 (S1) and rebounded. The pair formed a lower high at 190.00 (R2) and this keeps the short-term downtrend intact for now. However, taking a look at our oscillators, I would expect the rebound to continue for a while, perhaps for a test at the resistance of 188.40 (R1). The RSI exited its below-30 territory and is pointing up, while the MACD has bottomed and could cross above its trigger line soon. What is more, there is positive divergence between the RSI and the price action. In the bigger picture, I see that on Monday, GBP/JPY found support at 183.20 (S3), which stands slightly above the 61.8% retracement level of the 14th of April – 18th of June advance. I prefer to see a clear close below that barrier before getting more confident on further medium-term declines.
• Support: 186.25 (S1), 185.00 (S2), 183.20 (S3)
• Resistance: 188.40 (R1), 190.00 (R2), 191.20 (R3)
• Gold slid on Tuesday, but the decline was halted by the 1135 (S1) support barrier, slightly above the uptrend line taken from the low of the 7th of August. The possibility for a rebound near the trend line is high, but I would like to see a move above 1146 (R1) to confirm it. Such a move could initially target the 1156 (R2) obstacle. On the downside, a break below the aforementioned trend line and the 1135 (S1) support could carry larger bearish extensions. As for the bigger picture, having in mind that last Thursday’s rally brought the metal above the downside resistance line taken from the peak of the 18th of May, I would hold my neutral stance as far as the overall picture is concerned.
• Support: 1135 (S1), 1127 (S2), 1120 (S3)
• Resistance: 1146 (R1), 1156 (R2), 1168 (R3)
• DAX futures traded higher yesterday, but found resistance slightly above 10140 (R1) and then tumbled to find support at 9770 (S1). As long as the price is trading below the downtrend line taken from the peak of the 10th of August, I would consider the short-term outlook to stay negative. A dip below 9770 (S1) could initially target the 9600 (S2) line, while a break below 9600 (S2) could carry larger bearish extensions, perhaps towards Monday’s low, at 9330 (S3). Our short-term oscillators support somewhat the notion. The RSI, although it exited its oversold territory, has turned down again, while the MACD, although above its trigger, shows signs that it could start topping and fall below the trigger line again. On the daily chart, I believe that the break below 10670 (R3) has shifted the medium-term outlook to the downside. Therefore, I would expect the index to continue to trade lower in the not-to-distant future.
• Support: 9770 (S1), 9600 (S2), 9330 (S3)
• Resistance: 10140 (R1) 10435 (R2), 10670 (R3)
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IronFX Daily Commentary | 27/08/15
Language English
• Asian stocks followed gains in US equities The strong rebound in the US equity markets on Wednesday, spurred a reversal of the flight to safety. The positive sentiment was rolled into the Asian stock markets, which extended gains supported by the strength in the US markets in a sign that the recent turmoil in equity markets has calmed a bit. The European markets could gain ground as well, supported by the overall positive sentiment. The EUR was bought strongly in the recent risk-off environment, and with the markets cooled somewhat, EUR could move lower.
• New York Fed President William Dudley said that the case for a Sep. rate hike is now “less compelling” NY Fed President said on Wednesday that the prospects of a rate hike in September have lowered amid market volatility and international developments. Tumbling stocks and commodities, and weakening Chinese growth, make the decision to begin normalization at the September FOMC meeting less compelling. However, the Fed official added that a rate hike could become more compelling by the time of the meeting as they get additional information about the state of the economy. In any case, he did not ruled out the possibility of a rate hike in September, let alone a rate hike this year. As for concerns that the Fed may have to provide further stimulus given the recent turmoil overseas, he noted that the US economy is performing quiet well and it is “long away from quantitative easing”.
• BoJ can still achieve its inflation target Bank of Japan Gov. Kuroda reaffirmed his optimistic stance that the 2% inflation target can be achieved by next year, despite the renewed slump in oil prices. He also added that there is no need to expand the current level of the QQE program, but the Bank stands ready to adjust if necessary and has “many options” for its monetary policy. Japan is due to report July inflation on Friday, and the forecast is for the Bank’s main inflation gauge to fall into the negative territory again. This could add to market expectations that the BoJ may have to ease further, perhaps in October, and JPY may weaken.
• ECB Executive Board member Peter Praet said that the ECB is ready to expand its QE if needed. His comments echoed earlier remarks by the ECB Vice President Vitor Constancio on Tuesday, that the ECB is ready to expand or extent its QE program if it sees a significant risk to the inflation outlook.
• Today’s highlights: During the European day, Eurozone’s M3 money supply is forecast to have risen 4.9% yoy in July, a slight deceleration from 5.0% yoy previously. The 3-month moving average is expected to decelerate if the forecast is met. French consumer confidence for August is also to be released.
• In the US, the main event will be the 2nd estimate of US Q2 GDP. The forecast is for the growth rate to be revised up, to show that the US economy expanded at a faster pace from the already encouraging growth figure seen in the first estimate. This is in line with the Fed’s expectations for a stronger growth in Q2, and could provide a boost to USD. We have mentioned several times that the dollar is becoming increasingly data-driven, especially with less than a month before the crucial September FOMC meeting. Therefore, significant positive data surprises are needed for the USD to strengthen. The 2nd estimate of the core personal consumption index, the Fed’s favorite inflation measure, is also coming out. With the Fed officials worrying about inflation, as shown in the July FOMC minutes, this figure is likely to get more attention than usual for hints if the Fed could raise rates this year. Pending home sales for July is also coming out. Existing home sales for the same month beat estimates, and showed a firming housing sector. Therefore we could see another positive surprise in pending home sales. Initial jobless claims for the week ended Aug. 22 are also due to be released.
• The annual Economic Policy Symposium in Jackson Hole begins. The symposium brings together central bankers, finance ministers, academics, and financial market participants from around the world. The theme this year is “Inflation Dynamics and Monetary Policy”, as inflation appears to be the main concern among central bankers amid the falling oil prices and the slowdown in China. After the recent few weeks of outsized moves in financial asset prices, primarily due to China, market participants will want to hear policy makers’ view with regards the global slowdown and what tools are left to be used to boost growth. In addition, with only few weeks left before the FOMC September meeting, investors will want to hear Fed officials’ view regarding the interest rates. However, not many of them are attending this year, including the Fed Chair Janet Yellen.
Currency Titles:
EUR/USD tumbles and hits the 1.1310 barrier
GBP/USD collapses and hits support at 1.5455
USD/JPY looks ready to challenge the 120.50 obstacle
Gold breaks below a short-term uptrend line
WTI trades in a sideways mode
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• EUR/USD tumbled on Wednesday, falling back below the 1.1500 (R2) zone, breaking below the 1.1400 (R1) hurdle, and reaching the support of 1.1310 (S1). Then, the rate rebounded somewhat. The move below 1.1400 (R1) signaled the completion of a failure swing top formation on the 4-hour chart and perhaps turned the short-term bias to the downside. A break below 1.1310 (S1) could set the stage for extensions towards the 1.1210 (S2) barrier. The RSI fell below 50, but it has turned up again, while the MACD, although positive, stands well below its trigger line. These indicators support that the pair is possible to trade lower in the near term, but the fact that the RSI has turned up raises some concerns that further upside bounce could be looming before the next negative leg. Perhaps to test the 1.1400 (R1) barrier as a resistance. As for the broader trend, given that EUR/USD is back below 1.1500 (R2), I would switch my stance back to neutral. The move below that psychological hurdle confirms that Monday’s surge was a false break out. Therefore, I would like to see another move above 1.1500 (R2) before assuming that the overall outlook is back positive.
• Support: 1.1310 (S1), 1.1210 (S2), 1.1150 (S3)
• Resistance: 1.1400 (R1), 1.1500 (R2), 1.1565 (R3)
• GBP/USD collapsed yesterday, after falling below the short-term uptrend line drawn from the low of the 7th of August. The plunge was halted by the 1.5455 (S1) barrier and subsequently the rate rebounded. Yesterday’s plunge has shifted the short-term bias to the downside in my view. But taking a look at our oscillators, and given that the fall was overextended, I would expect the current rebound to continue for a while. The RSI has bottomed and exited its below-30 territory, while the MACD, although negative, shows signs of bottoming. The rate is now headed for a test at the 1.5530 (R1) hurdle, where a break is likely to confirm the case of further rebound and perhaps target the 1.5570 (R2) barrier. As for the bigger picture, yesterday’s collapse brought the rate back below the 80-day exponential moving average. As a result, I would change my view to neutral as far as the overall outlook of Cable is concerned.
• Support: 1.5455 (S1), 1.5425 (S2), 1.5350 (S3)
• Resistance: 1.5530 (R1), 1.5570 (R2), 1.5610 (R3)
• USD/JPY rebounded from 118.90 (S1) on Wednesday, and during the early European morning Thursday, it looks ready to challenge the 120.50 (R1) resistance hurdle. A break above that obstacle is likely to shift the short-term bias back to the upside and could initially target the 121.20 (R2) line. Our momentum studies support the notion. The RSI edged higher after exiting its below-30 territory, while the MACD has bottomed and crossed above its trigger line. As for the broader trend, Monday’s plunge signaled the completion of a possible double top formation, which probably shifted the medium-term picture negative. As a result, I would treat any possible near-term advances as a corrective phase for now.
• Support: 119.20 (S1), 118.90 (S2), 118.50 (S3)
• Resistance: 120.00 (R1), 120.50 (R2), 121.20 (R3)
• Gold continued sliding on Wednesday and managed to break below the uptrend line taken from the low of the 7th of August. However, the decline was halted near 1118 (S1), and the metal rebounded to hit resistance slightly below 1130 (R1). The short-term bias has shifted to the downside in my view and I would expect the bears to eventually take control and aim for another test at 1118 (S1). A break below that barrier is likely to challenge the 1110 (S2) line, marked by the low of the 18th of August. However, our short-term momentum indicators give evidence that further bounce could be in the works before sellers shoot again. The RSI rebounded from its 30 line, while the MACD shows signs of bottoming. As for the bigger picture, having in mind that the rally of the 20th of August brought the metal above the downside resistance line taken from the peak of the 18th of May, I would hold my neutral stance as far as the overall picture is concerned.
• Support: 1118 (S1), 1110 (S2), 1105 (S3)
• Resistance: 1130 (R1), 1146 (R2), 1156 (R3)
• WTI has been trading in a sideways mode since Tuesday, oscillating between 38.70 (S1) and 39.80 (R1). However, since the price is still trading below the downtrend line taken from the peak of the 11th of August, the short-term trend remains negative in my opinion. Therefore, I would expect a break below 38.70 (S1) in the near future to open the way for another test at 37.80 (S2), defined by Monday’s low. On the daily chart, the price structure has been lower peaks and lower troughs since the 24th of June. As a result, I would consider the overall picture to stay negative as well. A break below 37.80 (S2) is needed to confirm a forthcoming lower low, something that could set the stage for extensions towards the psychological zone of 35.00.
• Support: 38.70 (S1), 37.80 (S2), 37.00 (S3)
• Resistance: 39.80 (R1) 40.60 (R2), 41.40 (R3)
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IronFX Daily Commentary | 28/08/15
Language English
• Strong US GDP data boost investors’ appetite for riskier assets US stocks extended their gains on Thursday, after the strong 2nd estimate of US Q2 GDP data calmed investors’ nerves and boosted the appetite for riskier assets. The upbeat US data and the positive sentiment, helped to keep the Chinese stocks in a rising mode for the second day in a row. The 2nd estimate of US Q2 GDP showed that the economy grew at a 3.7% qoq SAAR, faster than the initially estimated 2.3% qoq SAAR, and above expectations of 3.2% qoq SAAR. The strong growth rate keeps the scenario of a Fed rate hike this year alive.
• The dollar index, which touched a seven-month low on Monday at around 92.60, recovered towards the end of the week as the markets calmed, to trade around 95.60 during the Asian session. Given the strong US data and the improved mood in Asia, investors will probably continue their demand for risker assets. This is likely to push EUR and CHF lower, given that there were heavily bought due to the global turmoil. The commodity currencies AUD, NZD and CAD could gain a bit, at least temporarily.
• Japan’s National CPI ex-fresh food was flat in July, heightening pressure on BoJ officials to take further action to underpin the fragile recovery. Even though it was better than expectations of a 0.2% yoy drop, it’s nowhere close to the Bank officials’ optimistic view that they could achieve their 2% target. The overall soft data, along with lower exports due to China's slowdown, add to the evidence that any rebound in growth from a contraction in Q2 is likely to be modest. JPY could come under renewed selling pressure, as expectations for further action from the BoJ slowly build up.
• Today’s highlights: During the European day, the German preliminary CPI for August is coming out. As usual, we will look at the larger regions for a guidance on where the headline figure may come in and thereby as an indication for the near-term direction of EUR. A rise in the German CPI rate could indicate a rise in the Eurozone’s CPI to be released next week and could strengthen EUR a bit. Eurozone’s final consumer confidence for August is also coming out.
• From Sweden, retail sales for July are forecast to accelerate a bit, which could prove SEK-positive, at least temporarily. Norway’s retail sales for July are also coming out, along with the official unemployment rate for August. The forecast is for the retail sales to decelerate, while the unemployment rate is estimated to remain unchanged. Coming on top of the low oil prices, any disappointment could push NOK lower.
• In the UK, the 2nd estimate of Q2 GDP is expected to confirm the preliminary growth figure and show that the economy grew 0.7% qoq. Coming on top of the recent encouraging data, this could add steam to the UK’s recovery and strengthen GBP somewhat.
• In the US, we have a very busy day. Personal income and personal spending for July are coming out. Personal income is expected to have risen at the same pace as in June, while personal spending is forecast to have accelerated. The focus is usually on personal spending and a significant positive surprise is needed for the USD to remain supported. Even though the 2nd estimate of US GDP expanded in Q2, solid spending is needed to suggest that the economy has the necessary momentum to bring the Fed closer to a rate hike this year. The yoy rates of the PCE deflator and core PCE for July are also coming out. Both are forecast to remain unchanged in pace from June. The final University of Michigan consumer sentiment for August is also due to be released along with the surveys of 1-year and 5-to-10 year inflation expectations.
• As for the speakers, we have Fed Presidents: James Bullard, Narayana Kocherlakota, Loretta Mester, and Dennis Lockhart all speak from the sidelines of the Jackson Hole event. SNB President Jordan also speaks. Investors are likely to pay more attention than usual on Bank officials for hints if the Fed is still on track to raise rates, following the developments in China and the tumbling stock markets.
Currency Titles:
EUR/USD falls below 1.1310 and hits 1.1200
EUR/GBP slides after hitting resistance at 0.7335
GBP/JPY breaks above a short-term downtrend line
Gold rebounds from 1118
DAX futures trade back above 10000
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• EUR/USD extended its declines on Thursday following the better-than-expected US GDP report. The rate fell below the support (now turned into resistance) barrier of 1.1310 (R1) and reached the 1.1200 (S1) line. Following the completion of a failure swing top formation on Wednesday, the short-term bias has turned negative. Therefore, I would expect a clear dip below 1.1200 (S1) to set the stage for extensions towards the 1.1110 (S2) hurdle. Taking a look at our oscillators though, I see signs that an upside corrective bounce could be in the works before the bears shoot again. The RSI, although below 50, has turned up again, while the MACD, although negative, shows signs of bottoming. As for the broader trend, given that EUR/USD is back below 1.1500 (R3), I would switch my stance back to neutral. The move below that psychological hurdle confirms that Monday’s surge was a false break out. Therefore, I would like to see another move above 1.1500 (R3) before assuming that the overall outlook is back positive.
• Support: 1.1200 (S1), 1.1110 (S2), 1.1020 (S3)
• Resistance: 1.1310 (R1), 1.1400 (R2), 1.1500 (R3)
• EUR/GBP slid on Thursday after finding resistance at the 0.7335 (R1) line. However, the decline was limited fractionally above the 0.7270 (S1) support hurdle, which happens to be the 38.2% retracement level of the 18th – 24th of August rally. I would take the sidelines for now since a dip below the latter barrier is needed to shift the bias to the downside. Such a move is likely to signal the completion of a failure swing top on the 4-hour chart and could open the way for our next support of 0.7225 (S2), the 50% retracement level of the aforementioned surge. The RSI hit twice support at its 50 line and is now pointing somewhat up, while the MACD still stands below its trigger line and is pointing south. These mixed momentum signs corroborate my view to stay flat for now. As for the broader trend, the move above 0.7170 signaled a forthcoming higher high on the daily chart and turned the medium-term outlook positive. Therefore, I would treat any future short-term declines as a corrective phase, at least for now.
• Support: 0.7270 (S1), 0.7225 (S2), 0.7170 (S3)
• Resistance: 0.7335 (R1), 0.7365 (R2), 0.7390 (R3)
• GBP/JPY traded higher on Thursday, breaking above a steep short-term downtrend line. Nevertheless, the move was stopped by the 187.00 (R1) resistance barrier. I prefer to see a break above that hurdle before I get more confident on the upside. Something like that could extend the bullish wave and perhaps target our next resistance of 188.00 (R2). Our short-term momentum studies amplify the case that GBP/JPY could trade higher for a while. The RSI moved higher after finding support slightly below its 30 line, while the MACD has bottomed and crossed above its trigger line. In the bigger picture, I see that on Monday, GBP/JPY found support at 183.20 (S2), which stands slightly above the 61.8% retracement level of the 14th of April – 18th of June advance. I prefer to see a clear close below that barrier before I assume further medium-term declines. For now, I would adopt a neutral stance as far as the overall outlook is concerned.
• Support: 185.00 (S1), 184.15 (S2), 183.20 (S3)
• Resistance: 187.00 (R1), 188.00 (R2), 190.00 (R3)
• Gold hit support at 1118 (S2) on Thursday and then rebounded to break above the 1128 (S1) barrier. I believe that the rebound may continue for a while, perhaps to test the prior uptrend line, taken from the low of the 7th of August, as a resistance. However, as long as the metal is trading below that trend line, I would consider the short-term bias to be negative. I would treat any extensions of the current rebound as a corrective move before sellers seize control again. Our short-term oscillators support the case for further upside correction as well. The RSI hit support at its 30 line and is now headed towards its 50 line, while the MACD has bottomed and could cross above its trigger line soon. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.
• Support: 1128 (S1), 1118 (S2), 1110 (S3)
• Resistance: 1146 (R1), 1156 (R2), 1168 (R3)
• DAX futures continued trading higher on Thursday, breaking above the short-term downtrend line drawn from the peak of the 10th of August. The index now looks to be headed towards the 10435 (R1) resistance hurdle, where an upside break could challenge the 10670 (R2) key obstacle as a resistance this time. Our short-term oscillators detect positive momentum and corroborate my view. The RSI, although it now points somewhat down, edged higher and emerged above its 50 line, while the MACD stands above its trigger line and is headed towards its zero line. On the daily chart, I believe that the break below 10670 has shifted the medium-term outlook to the downside. Therefore, I would treat any future near-term advances that stay limited below the 10670 (R2) zone as a corrective phase.
• Support: 10200 (S1), 10000 (S2), 9770 (S3)
• Resistance: 10435 (R1) 10670 (R2), 10800 (R3)
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