Market Noise – Inter Market Analysis

Risk On

  • Australia unemployment falls – weaker currency boost workforce demand
  • Gold dropped near lows holding on to 1100 psychological numbers – less demand for safe haven
  • Yamamoto promises more stimulus in October
  • Weak inflation data prompts further rate cut by RBNZ
  • BOE statement this morning should remain the same as Carney laid out 2016 hike – could add concern about emerging market growth – no change is our guess
  • Indonesia deliver additional reforms and stimulus policy to counter slowing growth

Risk Off

  • China PPI came in lower again – China to deliver global recession next? More stimulus coming but will it another short term remedy?
  • Brazil hit the spotlight – credit rating cut to junk by S&P
  • Yesterday spiked higher met with resistance – Bears overpowering the bullish move
  • News driven for Wednesday rally dissipated – warning signs that equities market is very vulnerable
  • VIX fear index rose late into the US trading hours
  • Post Apple event was disappointing – sell off in Apple shares
  • Concern of ongoing low oil prices put pressure to cut jobs and investment in the industry
  • UK supermarket chain Morrisons to shed jobs – restructuring underway – retail giant Home Retail group see falling sales in Argos – John Lewis profits also fall
Well we have a turnaround Wednesday then – as mentioned previously that the rally may not be sustainable – VIX rose and even the German Bunds caught strong bid late into the trading day – As per our weekly write up, we mentioned that this week will be full of noises and volatility pre FOMC statement

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

Is the 4 hour chart bull flagging here? There are many ways to read the chart as some would argue for an inverse head and shoulder on the daily. Dollar bulls are holding strong as daily price action remains above the 20 ma. Next big move will be very much FOMC dependant.

German Bund

Daily

4 hour

Erratic prices as risk was on and off throughout yesterday – price action continue to trade within that range but the 4 hour chart shows that it hit resistance from previous high and if this maintain then we potentially have a triple top. This could well indicate further sell off in the Bunds if we have a higher DAX going into this afternoon. The opposite may be true that price break above the resistance and ride higher.

Eur/Usd

Daily

4 hour

Euro continue to play its role as a safe haven assets – on a risk off scenario it rose – while rallies remain sold – daily chart shows the 200 ma is acting resistance while the 100 ma as support. Notice how price action is fast converging within this band and only post FOMC will we get a clear directional play.

German Dax

Daily

4 hour

Simply a classic bull trap but technically, price action in the DAX reached 50% fib retracement so a decent pullback such as this is rather expected. The daily chart paints a rather bearish story and suggested that there are more weakness to come forth here. The market gapped open then fill gap below before further sell off into late trading hours. Today could potentially see a weak revival as Europe open but a retest of previous low is in the card. The 4 hour chart paints an ascending triangle pattern with higher low.

Gold

Daily

4 hour

Price broke below the 4 hour 200 ma as 1115 support gives way – leading to more selling into the afternoon trading session. Support found at psychological level of 1100 for now – dead cat bounce expected – again lack of demand at play but if price can hold above 1090 there is a decent chance for more short covering – is this a bear raid here prior to FOMC?

Silver

Daily

4 hour

We remain undecided what to make of the silver price action but it continue to range trade – however, the bulls remain persistent here despite multiple attempts to close above 20 ma. It does look like a strong case for a well-informed buyer that is accumulating at these prices. This is something to ponder on as we head towards FOMC next week.

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