Bear Raid Over – Inter Market Analysis

Risk On

  • Nikkei Viagra thanks to Shinzo Abe vouch to cut corporate tax by next year (at least 3.3%)
  • Poor Chinese economic data spur talk of additional proactive stimulus
  • A green positive day all-round the Asian equities induced by low probability of a Fed rate hike
  • VIX sell off continues while the dollar weakens against commodity currencies
  • Yen weaken – safe haven asset relocated – money put to work on risk on assets
  • Chinese latest oil import shows demand holding up
  • Netflix expands to Asia – Instagram look to launch advertising

Risk Off

  • China slowdown has been priced in? Government intervention continues
Yesterday write up was spot on as shorts are busy covering – dips were buying opportunities – how sustainable this rally is we are not so sure – 3 days massive overnight rallies – FOMC next week to shake out weak longs

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

Multi Time Frame Analysis

USD index

4 hour

Dollar index continue to consolidate in its current phase – no real threat of a sell-off yet as traders wait for next week FOMC statement. Current consensus is for no rate hike due to concern of global growth.

German Bund

Daily

4 hour

Daily chart shows that the price action is currently looking for support at 20 ma and a break below could spark further selling of the German Bunds – asset relocation to risk on assets. The 4 hour chart paints further potential to test support at 151 levels should it break key support at 153.50.

Eur/Usd

Daily

4 hour

Currently no change in our view – traders will look to position ahead of FOMC and expect the exodus of weak longs and shorts. Euro managed to find support at 1.108 and this will be the line in the sand – next week FOMC statement will determine key battles between the bulls and bears – break above 1.13 could see a reverse trade higher if the Fed fail to signal a rate hike. Otherwise, the shorts are piling in on the trade to parity.

German Dax

Daily

4 hour

Well we have the break higher as overnight ramps continue for third day in a row – last week was a complete bear raid and this is finally over – short squeeze is the element play for the week before we have another session of fear and uncertainty ahead of FOMC. Such rampant rallies are evidence that shorts is running for the hills for now – mispricing of a huge global slowdown was overblown it seems and confidence is back. Potentially we could see higher prices and further squeeze to 61.8% is possible. However, we will not rule out a retest lower as well.

Gold

Daily

4 hour

Price action is converging and the lack of higher or lower prices indicate that traders lack conviction – once the FOMC statement is made then we will have a bigger directional play. A break below the 4 hour 200 ma point to lower prices to retest 1080 – but a break and close above 1135 will get us long to target higher prices.

Silver

Daily

4 hour

No change here as rallies to the daily 20 ma is sold again but the question now is for how much longer. Post Chinese economic data, Silver prices has risen but is this just a short term rally as we have seen a couple of days – rallies are sold but strong support remains above 14.35 levels and resistance at 14.98 levels. Post FOMC statement will clear the air so currently we expect range trading within this tight rectangle. Understandably, the daily and 4 hour RSI is also coming to resistance but the picture remain murky.

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