- Limit up on Chinese stock market as government draw a line to buy at 3600
- Dollar weaker but could mount a recovery – commodities currencies higher
- Oil firming up after a big fall on Monday – FTSE energy sector should revive today
- Automakers warned of a slow down due to recent Chinese stock market rout
- Athens stock exchange continue to battle to the downside with Banks red
- Spill over from Libor rigging scandals?
- Puerto Rico triggers historic default – no spill over though
- Rest of Asia stock markets is under pressure – only Shanghai lit in green
- Manufacturing PMI & Construction spending across the US and UK is disappointing
- Commodity market remains in a lurch – deflation was averted but will it come back?
- Potential risk of rate hike tantrum
|Threat of deflation – Price cutting – Companies looking to restructure/consolidate – M&A all about reducing competition – is this what we call REAL ORGANIC GROWTH??|
Multi Time Frame Analysis
Dollar bulls need to stop prices heading to and close below the 20 daily ma. With the daily RSI heavily diverging-this suggest that we could see a short term pullback on the dollar – potential support lies on the megaphone pattern as shown on the 4 hour chart. With a glut of poor economic data – questions have been raised if a September rate hike is good to go? This week employment numbers could be the catalyst.
Price trade above the 100 ma but 200 ma could still act as a strong resistance on the daily chart. With the 4 hour RSI diverging-we expect a short term pullback here within the uptrend channel. We are not ruling out another attempt higher for a fake high then break lower to at least test support at 50% move.
If Bunds come to resistance, expect EUR/USD to come to support and potentially a viable trade to long Euro if and when dollar hit resistance and create a swing high failure.
Euro continues to range trade within the constricted zone and a breakout looks imminent in the near future. A make or break will set of a strong directional play – watching for sign of a clear break before taking any trades. With the dollar and bunds at resistance, the Euro may look favourable again.
The bear flag is void after a run up higher – thus we cannot rule out a retest of resistance at 38.5% of the recent high to low. Otherwise, a spike to the upper blue channel line at 11700+ levels. Note that daily 100 ma currently stands at 11555 which could offer a decent risk reward area to short.