Sample Category Title

WTI oil cracked strong support at $50 (Fibo 38.2% of $45.57/$52.84 rally / weekly cloud top / psychological support) on Wednesday, in extension of pullback from fresh recovery high at $52.84 (the highest since mid-Apr).

Oil price stands in red for the fifth straight day, in extended correction that undermined broader bulls.

Markets are concerned that strong uptrend which lasted for the most of Q3 may not extend further, which resulted in profit-taking and dragged the price lower.

Oil prices were well supported on strong signs of market rebalancing on rising demand which offset the impact from global oversupply that kept oil prices depressed for longer period of time.

Also, output reduction from OPEC and top oil producers outside the cartel, gave results and boosted the price.

However, rising oil production in the US, which is not participating in oil production cut limited oil's recovery rally.

Price is now at the breakpoint and sustained break below $50 pivot would spark fresh extension of pullback from $52.84 peak towards initial target at $49.50 (200SMA) and may accelerate towards $49.20 (Fibo 50%) and $48.85 (rising 55SMA).

However, bears may take a breather above $50 pivot as slow stochastic is deeply oversold on daily chart.

Limited upside action is expected, with initial barrier at $50.71 (Tuesday's high) and extended upticks to be capped by south-turning 10SMA (currently at $51.16).

Res: 50.22, 50.71, 51.16, 51.38
Sup: 49.90, 49.50, 49.20, 48.85

EUR/USD

The greenback gained ground at the beginning of the day, but changed course in the American afternoon to end the day marginally lower against the EUR. The pair traded as low as 1.1695 on the back of persistent dollar's demand, fueled during Asian trading hours by a dovish RBA, which not only kept the monetary policy unchanged, but also voiced its concern about Aussie's strength. The European and US macroeconomic calendars had little to offer, with the EU releasing August PPI, up in the month by 0.3% and by 2.5% when compared to a year earlier, having not much effect over the common currency. In the US, the NY ISM Business Conditions Index dropped into contraction territory in September, down to 49.7 from August 56.6, putting the greenback under short-term pressure in the absence of more relevant news.

This Wednesday, market's attention will focus on the final Services and Composites PMIs figures for both economy, while more relevant, ECB's Draghi and Fed's Yellen are scheduled to speak in different events. They are set to deliver opening remarks, Draghi at the inauguration of the ECB visitor center in Frankfurt, and Yellen at a banking conference in St. Louis. Market players will be scrutinizing their words for clues on upcoming monetary policy decisions.

The EUR/USD pair closed the day in the 1.1750, and despite a few pips up for the day, it posted a lower low and a lower high daily basis, a sign that the dominant bearish trend remains firm in place. In the 4 hours chart, an early attempt to recover ground was contained by selling interest around a flat 20 SMA, currently around 1.1770, while technical indicators remain within bearish territory, with limited downward strength amid the restricted intraday action seen this Tuesday. The key support, in the case of further slides comes at 1.1660, August monthly low, with a break below the level opening doors for an extension towards 1.1460 the level that contained rallies for most of 2015 and 2016. The bearish pressure may ease on a recovery above the 1.1820/30 region, but a stronger advance is still out of sight.

Support levels: 1.1720 1.1690 1.1660

Resistance levels: 1.1770 1.1825 1.1860

USD/JPY

The USD/JPY pair maintained the positive tone, but there was no follow-though, with the pair still consolidating around 113.00. It traded as high as 113.19 intraday, backed by an advance in US Treasury yields, as the 10-year note benchmark traded as high as 2.35% while the 30-yer bond yield reached 2.89% mid-day. Softer-than-expected US data pushed yields and the pair marginally lower in the US session, with the pair ending the day up anyway, at 112.85. There's no data scheduled in Japan during the upcoming Asian session while China will remain on holidays, anticipating further quietness around the pair. Clues will come from local equities, which will likely follow Wall Street's positive lead, therefore keeping the pair afloat. Ahead of the Asian opening, the 4 hours chart maintains a neutral-to-bullish technical stance, as indicators continue heading nowhere around their mid-lines, but the price is developing well above bullish moving averages, with the 100 SMA now standing around 111.70. The pair still needs to accelerate through 113.25, where it topped last week, to be able to advance further, eyeing then a major static resistance at 114.40. Still the pair can continue ranging ahead of US employment data to be released next Friday, usually a big market mover for the pair.

Support levels: 112.60 112.20 111.85

Resistance levels: 113.25 113.60 114.40

GBP/USD

The British Pound was once again the worst performer against the greenback, amid poor UK data, with the GBP/USD pair ending the day in the red at 1.3247 after printing a daily low of 1.3221. UK's Markit construction PMI contracted for the first time since the immediate aftermath of the Brexit referendum, down to 48.1 in September from 51.1 in August. According to the report, the drop was attributed to fragile confidence and subdued risk appetite among clients, especially in the commercial building sector. Another factor weighing on Pound these days is the lack of progress in Brexit negotiations as the clock keeps ticking towards the divorce. At this point, the pair has trimmed pretty much all of the post-BOE's September meeting gains, when the Central Bank offered an unexpected hawkish rhetoric towards rate hikes, although a hike is still on the table. Technically, the bearish momentum decelerated according to readings in the 4 hours chart, but the downward risk persists, as indicators are consolidating within overbought territory, whilst the 20 SMA extended its decline above the current level, now converging with the 61.8% retracement of the latest bullish run, at 1.3340. A break below the mentioned daily low, will likely result in a full retracement, with the pair falling down to 1.3146, September 14th low.

Support levels: 1.3220 1.3185 1.3145

Resistance levels: 1.3300 1.3340 1.3385

GOLD

Spot gold closed the day pretty much unchanged at $1,271.75 a troy ounce, confined to a tight range all through the day. The yellow metal, however, extended its decline intraday towards 1,268.28, its lowest since mid August, indicating that bears remain in the driver seat. Expectations that the US Federal Reserve will raise rates next December have kept the commodity under pressure ever since the early September meeting, and unless the market changes its mind over the event, gold has little chances of recovering ground. From a technical point of view, the daily chart shows that an early advance was contained by selling interest around the 100 DMA, currently at 1.274.50, whilst the RSI indicator extended its downward slope, now nearing oversold territory at 35, and the Momentum stands flat well into negative territory, all of which favors another leg lower ahead. As commented on previous updates, a key support comes now at the 200 DMA, currently at 1,261.40. In the 4 hours chart, the technical outlook is also negative, as the price stands below a bearish 20 SMA, whilst technical indicators hover near oversold readings, with no aims of turning higher.

Support levels: 1,268.30 1,261.40 1,252.90

Resistance levels: 1,283.10 1.294.25 1,303.95

WTI CRUDE OIL

West Texas Intermediate crude oil price ended the day at $50.40 a troy ounce, little changed from its previous close. The commodity held in a limited range this Tuesday, although not far from Monday's low, as the dollar maintained its strength across the board, whilst there were no fresh news for the oil market. Ahead of the API and the more relevant EIA US stockpiles report, the commodity seems poised to extend its decline, according to technical readings in the daily chart, as it held below a key Fibonacci resistance, the 38.2% retracement of the latest bullish run at 50.60, still the immediate resistance. In the same chart, technical indicators keep grinding lower, now about to enter negative territory, although the price remains well above its long-term moving averages. In the 4 hours chart, WTI is biased lower, as it´s now standing below its 100 SMA, whilst technical indicators gain downward strength within negative territory. The immediate support comes at 49.90, the 50% retracement of the mentioned rally, with a break below it opening doors for a continued decline this Wednesday.

Support levels: 49.90 49.30 48.65

Resistance levels: 50.60 51.20 51.85

DJIA

US indexes closed at record highs this Tuesday, backed by latest US upbeat data, and a rally in airlines-related equities. The Dow Jones Industrial Average gained 84 points, to end at 22,641.67, the Nasdaq Composite added 15 points to 6,531.71, while the S&P closed at 2,534.58, up by 0.22%. US stocks extended their positive Monday momentum, triggered by a better-than-expected ISM manufacturing PMI, which indicated solid economic growth. Within the Dow, Wal-Mart led advancers, up 1.08%, followed by American Express which added 0.99%. Only six members were down, led by Nike that shed 0.80%. The DJIA is up for a fifth consecutive day, up for over 15% so far this year, and clearly overbought according to long-term technical readings, but offering no signs of changing course. However, as higher it moves, the higher will be the risk of a sudden downward correction. In the daily chart, technical indicators head sharply higher, with the RSI currently at 78, and with moving averages accelerating north below the current level. Shorter term, the index is also bullish and extremely overbought, with the RSI indicator currently heading north around 85, the Momentum also aiming higher, and the 20 SMA gaining further upward strength below the current level, currently at 22,481, in line with the longer term perspective.

Support levels: 22,617 22,581 22,557

Resistance levels: 22,660 22,700 22,740

FTSE100

The FTSE 100 advanced 29 points to 7,468.11 this Tuesday, helped by continued Pound weakness. Plumbing supplies group Ferguson was the best performer, up 4.03%, as the company reported an 8.6% raise in annual revenues at its ongoing businesses, with trading profit up 8.7% to £1.03bn. Ashtead Group followed, up by 3.29%. Leading losers was Admiral Group that lost 2.73%, followed by WPP that lost 2.08% after Morgan Stanley sold 22.5 million shares. The Footsie closed at its highest in nearly two months, maintaining the positive momentum in its daily chart, as the index advanced further above its 20 and 100 SMAs, while technical indicators accelerated higher within bullish territory. Shorter term and according to the 4 hours chart, the index settled near its daily high and with moving averages supporting additional gains, as the 20 SMA is about to surpass the 200 SMA after breaking through the 100 SMA, but technical indicators are giving some signs of upward exhaustion in overbought territory, suggesting a downward corrective movement is possible this Wednesday.

Support levels : 7,444 7,408 7,371

Resistance levels: 7,466 7,495 7,535

DAX

European equities gained this Tuesday, although there was no action in the DAX, as Germany had a bank holiday due to the Day of German Unity, with the latest registered close for the index at 12,902.65. Equities in the region were supported by gains in the retail sector, but political concerns may hit European indexes this Wednesday, as tensions within Spain are still a key issue for the region, given that the central government in to will to give its arm to turn, while the Catalonia region prepares to declare its independence. As commented on the previous update, the index is not far from its intraday record high of 12,953, and technical readings in the daily chart favor additional gains ahead, given that technical indicators maintain their upward strength, with the RSI indicator currently at 76, while the index moves further above bullish moving averages. In the 4 hours chart, technical readings also support a new leg higher, as the 20 SMA accelerated north below the current level, whilst technical indicators have turned flat after the close, within extreme overbought readings.

Support levels: 12,796 12,752 12,710

Resistance levels: 12,847 12,881 12,933

Daily Pivots: (S1) 132.16; (P) 132.52; (R1) 132.87; More...

Intraday bias in EUR/JPY remains neutral for consolidative trading below 134.39 high. Near term outlook remains bullish as long as 131.69 holds. Sustained break of 134.20 fibonacci level will extend larger up trend to 141.04 resistance next. However, break of 131.69 will be an early sign of medium term reversal and will target 127.55 key support level instead.

In the bigger picture, current rise from 109.03 is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

Daily Pivots: (S1) 149.03; (P) 149.64; (R1) 149.99; More

Intraday bias in GBP/JPY remains neutral for consolidation below 152.82. At this point, we'd still expect downside to be contained by 38.2% retracement of 141.17 to 152.82 at 148.36 to bring rebound. Break of 152.82 will extend the larger rise from 122.36 to 61.8% projection of 122.36 to 148.42 from 139.29 at 155.39 next.

In the bigger picture, medium term rebound from 122.36 is in progress. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. For now, the bullish scenario is preferred as long as 139.29 support holds.

EUR/USD

Current level - 1.1768

The overall bias is still bearish below 1.1830, for a slide through 1.1700, towards 1.1480 area.

USD/JPY

Current level - 112.51

My intraday outlook is counter-trend, for a reversal above 112.15 and break through 113.25 peak.

GBP/USD

Current level - 1.3273

The rebound above 1.3220 is still underway and despite the risk of a test at 1.3340 major hurdle, the overall bias remains bearish, for 1.3150.

Daily Pivots: (S1) 0.8833; (P) 0.8857; (R1) 0.8893; More...

Intraday bias in EUR/GBP remains at this point. On the downside, below 0.8745 will target 61.8% retracement of 0.8312 to 0.9305 at 0.8691 and below. Fall from 0.9305 is seen as the third leg of consolidation pattern from 0.9304. We'll look for bottoming signal again at it approaches 0.8303 support. On the upside, break of 0.8898 will indicate near term reversal and turn bias back to the upside for 55 day EMA (now at 0.8941) first.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's still in progress with fall from 0.9305 as the third leg. Break of 0.8303 could be seen. But even in that case, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4953; (P) 1.5004; (R1) 1.5037; More....

No change in EUR/AUD's outlook. Consolidation from 1.5173 is still in progress and intraday bias remains neutral. On the upside, break of 1.5173/5226 resistance zone will finally resume larger rise from 1.3624. In that case, EUR/AUD will target 1.5644 resistance first. On the downside, break of 1.4791 support will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Dollar rally on pause ahead of ADP report

After printing fresh highs against most of its peers yesterday, the greenback finally took a breather on Wednesday and consolidated gains as investors await ADP employment report, Markit PMIs and ISM non-manufacturing. The dollar index edged down 0.10% to 93.50 as the greenback fell 0.25% against the yen, 0.15% against the pound sterling and 0.08% against the single currency. The Swedish krone and the Australian dollar were the best performers, adding 0.27% and 0.26% respectively.

The ADP employment report is due for release this afternoon. Job creation expectations are relatively low for the month of September, mostly due to the negative effect on business confidence after the country was hit by a series of hurricanes. The market anticipates the US economy created 135,000 private job in the previous month, compared to 237k in July.

The ISM non-manufacturing is expected to edge slightly higher to 55.5 from 55.3 in the previous month. The second estimate of the services PMI should confirm the recent easing in business confidence in the service sector (55.1 first estimate).

Overall, the dollar consolidation suggest that investors are pocketing short time profit stemming from their long USD positions. The publication of a shortlist of potential Fed Chairman, regarding the possible removal of Janet Yellen at the head of the Federal reserve, which contains some candidates well-known for their dovish stance on monetary policy triggered profit taking across the board. The uncertainty surrounding the feasibility of Trump’s tax reform also kept investors on the sidelines. Although we maintain our bullish view on the greenback, we do not ruled out short-term USD weakness.

Gold tumbles as geopolitical risks fade

The yellow metal has reached its 8-week low and is trading around $1275 which nonetheless remains at a strong level if we compare gold prices since the start of the year. Gold price began the year below $1200. The return so far of the precious metal is still very interesting well above 6%.

Markets are now less focus on the potential geopolitical risks between the US and North Korea. Central banks are back to centre stage and anticipation of further tightening could pressure down the yellow metal. The strong equities markets (in particular the US market) has pushed up the dollar which resulted in some gold weakness.

Our view is that we definitely believe that markets are too optimistic regarding the ability of central banks to tighten their monetary policy. Debts are way too important and increasing the cost of the debt would create major markets turmoil. We then continue to consider that central banks will likely let inflation run in order to kill it. This will definitely result in a gold appreciation within the medium-term. We maintain our bullish view on gold and reload longs as we should hit new highs soon.

Daily Pivots: (S1) 1.1419; (P) 1.1441; (R1) 1.1455; More...

No change in EUR/CHF's outlook. With 1.1487 minor resistance intact, deeper decline is expected. Fall from 1.1622 is a correction and would target 1.1257 cluster support (38.2% retracement of 1.0652 to 1.1622 at 1.1251). Strong support is expected there to contain downside and bring rebound. Meanwhile, break of 1.1487 minor resistance will suggest that the pull back is completed and bring retest of 1.1622.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1198 resistance turned support holds.

The rally in the dollar is petered out
Spanish markets are the talking point amid investors
The EZ economic data is supporting the ECB stance

European markets and US futures are fragile as the process of picking a new Fed chief looms. The fresh trigger for the dollar rally would be the new chairperson of the Federal Reserve. The rally in the dollar is petered out and it needs more tailwind otherwise things will start rolling backwards. President Trump has released the list of his favourite candidate who could be the chairperson of the Fed. To some investors, it was shocking that Janet Yellen is still a contender.

Yellen is generally dubbed as a dovish person by the markets and we know that her approach towards normalising the interest rate would be gradual. She is someone who is data dependent and she is not a fan of making any sharp manoeuvres. It is a fact that the Fed cannot afford a blunder but not all contenders have the same mind frame.

Some of them are way hawkish and could start pushing the interest rate higher more rapidly than others. It is significant to keep in mind that the affordability ratio is lower among consumers and a sharp increase in the interest rate would be the last nail in the coffin.

Back in Europe, it is your Spanish markets which are the talking point amid investors. It is no surprise that the equity market is getting hit hard and the Catalan government is further ranching up those concerns by opposing threats of declaring independence. The Spanish King Felipe was the last hope to dial back the tensions. However, it doesn’t appear there has been any vital effort to de-escalate the tension.

Although the King has more of ceremonial role to play rather than having any real power, he could have lent a hand to Rajoy by cultivating the path through which both sides could start a more constructive negotiation process. The King clearly lashed out Catalonian government response over the weekend and a miscalculated action would only cause investors to punish the Spanish equity markets further.

The economic data out of Europe is supporting the fact that the ECB has a green light to start the tapering process and the upcoming PMI number from Spain, France, Italy and Germany (due today) would not only strengthen the above argument but may actually provide some support for the Euro as well which has been beaten down against the dollar.

As for Sterling, the economic numbers are showing the dark effects of Brexit. For instance, the UK construction PMI printed an extremely abate number. This slammed the Sterling-dollar pair. Forget any change in the policy stance by the BOE if other economic numbers start to echo this message. Theresa May’s needs to make sure that her speech to conservative leaders stamps the fact that she is not a dead woman walking.

Stellar Performance By Tesco

For Tesco investors, hiatus period has come to an end as the company has finally restored its dividend, something which passive investors love the most. The firm reported another stellar set of earning numbers today with profit soaring and beating analysts’ forecast. The revenue was up 3.7% and like for like sales number also got a boost and increased by 2.2%. This is a tremendous performance because, remember, the UK consumers are heavily hunted by the Brexit woes and consumer buying power is heavily squeezed by higher inflation. For us, another encouraging sign in today’s earnings report was the reduction in the debt (nearly 25%), thanks to the marvellous job done by the management. We would continue to monitor the debt situation for the firm and for us it would be a sign of confidence if the firm outpaces the debt reduction number amid its peers.