China Still Healthy? – Inter Market Analysis

Risk On

  • Asian market stabilised higher as the week ends
  • UK 2nd quarter growth steady at 0.7%
  • Oil ripped higher – other commodity currencies pair benefited – dollar stepped back with potential pullback
  • Abenomics looking like a failure – inflation target missed – additional stimulus needed
  • PBOC to cut rates again in December
  • Euro zone sentiment edges to new four year high in August

Risk Off

  • Political instability in Turkey continues
  • Money pours out of EM at rate unseen since Lehman
  • Italian business confidence declines amid concerns on recovery
  • Fed up investors yank cash from almost everything – Bloomberg
European Equity continue to struggle higher despite what look like a stabilised market  views – China doing whatever it can – market suggest that it remains weak and investors are not sure if end of the month is a good time to chase – brand new month in September – fresh funding

Extra Stimulus has yet to kick in but wary of the build up to Santa rally

Multi Time Frame Analysis

USD index

Daily

4 hour

Every trader will be wondering what is in store for the dollar as we enter September – the month where many expect no rate hike after the fall out in China. We have to take note that the last 3 days recovery in the dollar does seems a tad worrying as the weekly chart painted a full bullish engulfing candle. We favour a pullback here on the dollar while the 4 hour dollar chart shows a potential bull flag as price is consolidating.

German Bund

Daily

4 hour

Bund gave the signal yesterday that it may consolidate higher first – Dax pullback slightly this morning to find support. Going forward, a break out of the wedge will give Bunds the next directional play. We expect higher Bunds first as long as the 4 hour 200 ma holds.

Eur/Usd

Daily

4 hour

Has Euro found the support it much needed at the current price action? 4 hour chart seems to suggest it is slightly bear flagging and could well retest lower. Weekly chart on the Euro remains very ominous to say the least. Daily chart has Euro trading well above its 20 dma and a retest for support is possible.

German Dax

Daily

4 hour

Dax was very close to the target we set for a retest with a high of the day at 10394.8 and we saw the pullback as expected. The main question now is this going to be a deep pullback or we could see dip buying come to the rescue again on any weakness. Bearing in mind that today Is end of the month so short covering for higher Dax cannot be ruled out.

Gold

Daily

4 hour

At this moment, we are not sure if there is a potential Head and Shoulder on gold and if we do then we could see further weakness to retest previous low. Price action is taking comfort as it trade above the 20 dma but any trade below that then lower prices is expected. The 4 hour chart is showing tell tale sign of a bear flag and any break below 1120 could send gold looking for support.

Silver

Daily

4 hour

Daily chart has an inside day which could indicate there is a potential reversal but often we prefer to take a long trade if Silver can trade and close above the 20 dma as well. The 4 hour chart has the price action stalled at 38.2% retracement.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s