- China better than expected GDP numbers
- China additional stimulus underway
- Murmur of positive agreement amongst Greece parliament
- BOJ Kuroda says economic recovery is spreading to Japan’s regions
- Asian shares closed mixed with China languishing lower
- China Small Caps suffered 7% drop despite an ironic 7% GDP growth
- Diminishing return of extra stimulus and QE?
- Greece backlash and may not reach any agreement to creditors terms
- Dollar at key support
Outlook: All eyes on Greece parliament but with Asian shares languishing-the relief rally in EZ and US could be over.
Biased: Equities all at resistance or close to – RISK OFF
- A turn around on sterling as BOE Carney said rate hike is imminent
- Dollar dived lower after the above remark but already hit resistance now at minor support
- Euro gave up all gains and need another positive headline
- Yen continue to weaken with BOJ press conference underway
Outlook: Dollar at support and bulls are waiting for a hawkish yellen
Biased: Dollar to remain strong but Miss Yellen testimony could shed some light
- Range trading but with Tsipras possible backlash from Greece parliament, expect price volatility.
- Expecting that Greek parliament will accept the deal
Outlook: Euro at support too and further positive news from Greece could see a selloff in Bunds
Biased: Headline dependant move
- Expect a retest of previous low for support before any meaningful counter rally?
- Commodities remain weak as Asian stocks did not recover fully
Outlook: Remain cautious of a dead cat bounce and a final bout of selling could be in the card before any real recovery
Biased: Risk of further sell off before we see any meaningful reversal
As per our report yesterday, a pullback is in the process. Price action respect the upper resistance line and dollar index continues to trade within a symmetrical triangle. A possible head and shoulder pattern in the process and price needs to break below 11945 hard to push prices lower.
Buyers entered with a defined risk reward as price bounced of the 50% fib move at 149.75 levels. With a higher low and a long wick candle, this shows that buyers are determined to put a line of defence there and should a higher high materialise then expect Bunds to continue higher. In the short term, Bunds face resistance at 152.34 and the 50 ma.
We could see a retest of previous low and will only be a confident buyer if price break and close above20 dma. Resistance at 20 ma so a well-defined risk reward short can be place to test the mettle of this relief rally. Failure to break above 20 ma could take price lower.
11582 = 100 ma remains a magnet and we cannot rule out a final push to test the upper range before a run lower. Post Greek deal euphoria is priced in and the current price action is in favour of a swing short as we respect the technical setup. In addition, there are GAPs below left unfilled and market never forgets.