Finally, after more than a week of postponement, it has burst through its February resistance to high times. The move came with encouraging news flow about COVID treatment (US FDA allowing a plasma treatment of patients with the virus) and potential use of vaccinations in the US (although this has not been confirmed). In addition, the news that top-level telephone conversations between U.S. and Chinese trade leaders over developments in Phase One of the trade agreement were encouraging. As Wall Street takes into account new highlights all the time, there is a positive attitude towards risk appetite in the major markets. This is reflected in a move that is higher in US government bond yields and a subdued outlook. Although the US dollar is a weaker shade today, there is a sense of consolidation across major forex pairs. Missing big this week is a speech by Fed Leader Jerome Powell, which could define the path of monetary policy in the months and possibly years to come. While there are some interesting data points in the coming days (today), it is unlikely that traders will take too much of a view prior to such an important speech. We therefore see gravity around 1.1800, cable around 1.3100 and around 106, all of which are old turning areas. This sense of consolidation is also across gold and silver again. Despite this, however, the stock association seems to be continuing today.
Wall Street closed significantly higher with the S&P 500 + 1.0% at 3430 and well into all highs. It does not seem to stop there, with futures ticking even higher today (E-mini S & Ps + 0.4%). Asian markets were broadly higher at + 1.4%, but were -0.4%. European markets also appear to be fair, with futures + 0.4% and + 0.7% early today. In forex, the risk-positive mood and rebound helps a bit, while also working well. Once again, we see as the most important feature. In raw materials and trades around the flat line while also being mixed.
There is a link of US data points on the economic calendar today, but the key data starts at 0900BST. Ifo for August is expected to improve to 92.2 (from 90.5 in July). This is expected to be driven by improvements in both the component (to 87.0 from 84.5) and (to 98.0 from 97.0). Then into the US session, the data begins with the S&P Case Shiller, which is expected to improve to + 3.8% in June (from + 3.7% in May). The US Conference Board is at 1500BST and is expected to improve in August to 93.0 (from 92.6 in July). also at 1500BST an improvement of + 1.3% is expected to 785,000 in July (from 776,000 in June). The final data will be hefty as regional Fed surveys have tended to falter in August and come up with negative surprises where the index is expected to remain at +10 (+10 in July).
Today’s card –
The outlook for the euro rally has reached an important turning point, and this is well reflected in the Euro / Yen. After six consecutive losses, Friday’s low was almost all the way up to the old key breakout level of 124.40. However, it seems to have been supportive and builds on this yesterday with a (mild) positive candlestick, as a basis for support between 124.30 / 124.40 holds on now. The bulls may have been disappointed that a five-week uptrend has been broken, but a major 15-week uptrend stemming from early May is still intact (today at 124.25) and adds support around 124.40 . However, the bulls have to work hard as a mini-week downtrend is intact (at 125.45 today) and short-term momentum indicators are mixed. Stochastics and MACD lines pull lower while the RSI has to hold above 50 to maintain otherwise the corrective outlook with overall force. Currently, this is a short-term correction within a bull trend in the medium term. However, how the market reacts around 124.25 / 125.40 in the coming days will determine whether this is a buy option or not. At present we still have a positive view of the euro, but the bulls have to work hard now. A crucial close below 124.25 opens a step back towards 122/123 and seriously questions the bullfight. Keeping 124.40 is important, and a crucial step above 125.55 would help regain bull trust for a 126.75 genetic test.
It is a delicate time for greater forex trading. The dollar has shown signs of improvement in the last few sessions and this has stopped eruptions across similar ones like EUR / USD. However, the subsequent withdrawal has not done enough to support a stronger dollar (yet) and means the market is in an area of uncertainty. During the end of July / beginning of August, the consolidation area of EUR / USD 1.1800 was a mid-term pivot around which the market traded. This twist has come back into play during the withdrawal of the last few sessions (although it is now being slightly less adhered to). We see that everyday technicians have lagged behind in their positive medium-term sight configuration. The MACD and Stochastics momentum indicators are falling away, but the RSI remains above 50. Yesterday’s bullfight candlestick has simply added to the mixed perspective except for the medium term that has formed. However, a basis of support is again forming today and the market is again around the 1.1800 pivot range. By holding above 1.1755 (Friday’s low), this maintains mixed prospects and protects the 1.1695 key support for the past month. The bulls must hold a pull above 1.1880 (Friday’s highest) to regain control.
The uncertain prospects in the short term continue with cable. The incredible run with four huge but conflicting candlesticks is complete, but yesterday’s bull failure, which lost -85 pips from the day high to close lower, again reflects the near term fluctuations still found in the market. Even this morning, when the market ticks back higher again, we can not say with conviction that bulls are in a solid position. The lack of the decisive trend over the last week has weighed on momentum indicators dizzying on the MACD and Stochastics, but at least keeping the RSI in the mid / high 50s. At present, we still favor cable lengths, as the dollar opening cannot win decisive reason. This still appears to be a retreat within the positive trend, but support of 1.2980 / 1.3000 is needed for this to continue. The original support is now at. 1.3050, and bulls will look to push resistance from a lathe (shown on the time card) between 1.3120 / 1.3150 to regain their lost control.
There are conflicting signals leaving the Dollar / Yen at an important inflection point (this seems to be a cross-major theme right now). The dollar / yen is again trading around 106.00. This is the bottom of the pivot belt 106/107, which is the overhead supply with all the old low distances between April and July. The bullfight last week, which left a high level of 106.20, seemed to be the point where the dollar bulls would throw in the towel for recovery, but they stood strong yesterday (to form a small positive light) and is again there today to test 106.00 again. Momentum indicators retain their negative bias in a medium-term perspective (below neutral points on the RSI and MACD), but the short-term outlook ticks slightly higher (positive cross threatens on Stochastics). It leaves the market on a knife edge. We are still aware that the weight of the resistance between 106/107 is still likely to generate an even lower high in this area and we appear to be selling to strength. However, dollar bulls are hanging on now. This may continue until Fed Chairman Powell’s speech on Thursday. First support is at 105.40, which protects 105.10 now. Over 106.20 opens 107.00.
As with several of the major markets we are constantly looking at, we are seeing conflicting signals about gold, which is generating a consolidation for now. What appeared to be the conviction to buy the rebound from $ 1863 was flooded by a big sales day on Wednesday last week. Since then, the gold price has formed a series of small body lights that seem to weigh on about 23.6% Fibonacci retracement of the big $ 1451 / $ 2072 rally at $ 1926. The short-term downline comes around $ 1973 today. This would have been broken for the bull to look at a renewed rally scenario. The original resistance is at $ 1961 from yesterday’s bullfight. There is still a sense that this is still a moderate retreat to the big 11 week uptrend (which supports $ 1901 today). The daily momentum indicators have been relaxing, but are now also stabilizing in decent areas to suggest that this has been a good phase to renew the potential for the renewal of the medium to long-term trend higher. However, it may be a consolidation that continues for a few days, yet with a crucial speech by Fed Chairman Jerome Powell on Thursday that is likely to drive the next key movement. Support for $ 1906 / $ 1911 will become increasingly important as this week rolls on and the uptrend rises.
After a series of disappointing closures at Brent Crude, a decisive and solid session of wins has started the week on the right note for bulls. A move that has boosted support at $ 43.60 / $ 43.90 has helped improve declining momentum as Stochastics and MACD stabilize and the RSI holds in the mid / high 50s. It appears to be stabilizing what had threatened to be a corrective operation, which had threatened to pull the market significantly below the 21-day moving average, which has been a basis for support for the recovery (rose today around $ 44, 60). The bulls now have to put together a series of positive sessions to get their confidence completely restored, and an early cross higher today is a good start. They are therefore keeping an eye on last week’s response of $ 45.55 as the first resistance to testing. In addition, the $ 45.80 / $ 46.25 barrier remains the key movement. The time card shows initial support of $ 44.30 / $ 44.75.
Breakout in the major Wall Street markets. With the S&P 500 bursting to new highs, we see the Dow accelerating higher. A third positive close to the row and a decisive step through resistance at 28,155 brings the Dow to its highest level since February. The move looks strongly configured technically with the use of June breakout support around 27,580, leaving good support now in a band 27,525 / 27,580. Momentum is strong with the Stochastics crossing higher and the RSI into the 70s to reflect a strength in the trend. The next test is finally to “close” the old February bear column of 28,400 / 28,890. This movement has similar characteristics to the previous early August rally, which came after a period of weak consolidation that got lower. This move released a series of seven crucial positive closures. We seem to use intraday weakness as an opportunity to buy. First breakout support comes in at 28,000 / 28,155. The full-time peak of 29,568 should not be ruled out over time, although there is likely to be another corrective phase before that.
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