Market Whipped! – Inter Market Analysis

Risk On

  • China on holiday – market stabilised – US and European equities rose higher
  • ECB press conference could indicate a more dovish view
  • Final Services PMI from Germany better than expected
  • VIX fear index was sold into the close – bearish divergence
  • Most, if not all the negative news from past few weeks have priced in
  • Japan August PMI Survey shows services expand
  • Middle East stocks steadies with oil prices rising
  • Dollar remain the dominant currency – harbouring higher equity prices

Risk Off

  • Early warning that global investment banks see revenue drop 19%
  •  Swedish central banks withheld extra stimulus
  • Poor Australia retail sales add pressure on aussie dollar trade
All eyes on ECB press conference but market is tilted with a healthy rally – or is this a sort of bull trap? Market is drumming up for more QE but if ECB does not deliver today then expect more volatility

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

Multi Time Frame Analysis

German Bund

Daily

4 hour

ECB press conference will set the next direction on Bund – today price action will be news driven and we are expecting whipsaw action and fake breakouts. Thread carefully.

Eur/Usd

Daily

4 hour

Our view remains the same given that the Euro traders holding on to their position ahead of the ECB press conference. Market noises are for more QE from Mr Draghi and expectation of parity is back on the table. It remains a possibility that we could see a head and shoulder formation in the Euro but it is a hard one to call as the daily Mas are converging higher for a so called bullish cross over. The price action remains favourable with higher low but currently consolidating. The 4 hour chart is now an ascending wedge formation and with that in mind, we see further risk to retest lower first.

German Dax

Daily

4 hour

We have a higher Dax based on the rumour of additional QE. Traders may be front running the ECB press conference in this instance. With China on holiday and the VIX fear index sold into the close of yesterday trading hours, global equities enjoy a brief moment of respite.

Gold

Daily

4 hour

Gold broke below the rising channel and currently trading just above the 20 dma. A close below the 20 dma could instil confidence for the bears to take the market lower and if the head and shoulder pattern play out – gold could potentially target 1070. The build up to Federal Reserve September rate hike will certainly split the bulls and bears.

Silver

Daily

4 hour

Silver whipsawed around, taking out both fresh short and long – certainly an unstable market to say the least. Right above, there are various resistances and only a break and close above 20 dma will give us that confidence for higher prices.

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