A Lethal Game – Inter Market Analysis

Dollar Index

Daily

4 hour

Chatter from the ECB has significantly boosted the dollar index this morning. The recent rally in Euro has taken a beating and significant dollar buying returned as traders anticipate an increase in QE expansion, rate cut and also extension of September 2016 timeline. Coupled that with rate hike at 75% in December, the bull continue to stay where they are.

Bunds

Daily

4 hour

ECB blessing to expand its QE programme has made buying the german bunds an easy trade. Post May-June sell off the momentum has been higher but we do note that the bunds could well hit resistance and may be in a phase of distribution (potentially another sell off?) It is too early to tell but the momentum to go higher is there.

Euro

Daily

4 hour

The setup is a one way traffic as nothing has changed – hedge fund has increased short positions – making this trade almost a sure fire for lower euro/usd. Fading the sell off and sell on rallies remain to be the best mantra. Divergences are building up in several time frames – this is something we cannot ignore and a snap back bounce could occur.

Dax

Daily

4 hour

Despite the latest sell off – buying the dip is still the ideal scenario – ECB chatter made it clear that there is no way equity prices could go lower. Dax look set to take out the high and gap fill above 11250 levels. With low volume trading, this can be achieve by end of the week.

Gold

Daily

4 hour

Gold respect the downside channel (see 4 hr chart) – with the dollar strength and overall bearish momentum, rallies continue to be sold. The risk today is a retest of previous low and failure to stay above 1066 will risk a move lower to 1055 before we find any support. Only a break above 1080 will relieve the selling pressure.

Silver

Daily

4 hour

We have a mini mega phone formation and only a break out of this formation – then we can get further directional play. Silver is at its 6th week of red candle with overall bearish momentum. Risk reward has certainly changed but we cannot rule out another retest lower – dump and spike situation.

 

 

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