Market Bullish Ahead Of NFP – Inter Market Analysis

Risk On

  • Never ending talks of additional stimulus – simply means the global financial world remains in critical condition (more in weekend report)
  • Draghi says Growth in the Eurozone is returning – expect better employment and inflation numbers?
  • Upbeat Eurozone news as Portugal continue to tackle debt crisis
  • Emerging market stocks head for weekly advance before US data – boost by QE stimulus and better business and consumer confidence
  • Market target a better NFP numbers to ascertain that the US economy is strong enough for a rate hike (a miss could easily turn the market upside down)
  • VIX came into resistance last night – then sold off into the close as risk on sentiment switched

Risk Off

  • Talk of VW as too big to fail – Glencore continue to ride on the stormy sea – have yet to see a Domino effect
  • BOJ stated no additional stimulus coming anytime soon
  • Market has yet priced in a rate hike in October
What a roller coaster start to the 1st month of trading – we have a hyped up market followed by a test on the low before an overnight post Europe close ramp higher. The jittery feeling remains in the market and it is a case of making a higher low and breaking above previous high – VIX could act as the trigger – all eyes are on USD/JPY too – expect market to remain consolidated but whipsaw price action as we approach NFP data. Any bad numbers could easily turn this market upside down. Will we have another correlation of bad numbers – good equity prices?

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

Technically, the dollar is consolidating and converging ever tighter for yet another breakout. A breach below the 4 hourly magenta line could spark some swift sell off yet again. If we get a spike higher with no follow through then expect a swing failure followed by a swift sell off. Dollar index has been loitering near resistance of this ascending triangle and seems to rinse and repeat the same process. We are not surprise to see this again today.

German Bund

Daily

4 hour

Market maintains an appetite for higher bunds as we have seen demand picking up yesterday – crossing above key resistance level. The bunds price action is very well supported and we cannot rule out higher prices though we do see a potential pullback. For a pullback to work, we will need a confirmation from the daily chart with a blow off top candle formation.

Eur/Usd

Daily

4 hour

No new comment here as we head to NFP data. The selling zone that we marked out has once again formed a strong resistance for Euro to break higher. Sellers prevail but today price action has moved to a buyer’s zone – all of this price action is converging nicely within the symmetrical triangle. Needless to say that Friday NFP data will take out either one of the zones.

German Dax

Daily

4 hour

Daily chart indicate a positive RSI divergence and a double bottom is in place. With that in mind, there are bullish signs for higher prices in the short term. However, we remain wary and will need a break and close above the 4 hour 100 ma to confirm that a steady rally higher will take place. Notice how the 4 hour 100 ma often reject and act as strong resistance.

Gold

Daily

4 hour

Unless NFP numbers came in worse than expected, the path of least resistance for gold is lower and could well target sub 1100. The 4 hour chart paint a clear view of a downward channel and several potential support zones such as the double bottom at 1100 and 1098 levels. Only a break above 1123 will see more short covering action.

Silver

Daily

4 hour

Price action is converging and we are already seeing some whipsaw action on the 1st of October as traders position themselves ahead of NFP. There was a short term rally which failed and silver has once again trade on the support zone. We either see a breakout to the upside here (as shown on the 4 hour chart) or we could potentially see a new low.

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