The Shanghai China A50 blue-chip index gained support on the decline to 14500, an area of highs set in 2015 and early 2017 and 2020. The former resistance area now acts as a major support line.
Technically, there is sufficient room on the bearish side for a decline into the area of 13300 by the end of the year, where the lower boundary of the long-term uptrend channel passes.
Similar potential remains in the Hang Seng, whose long-term uptrend channel support passes through about 22,000 by the end of the year against the current 25700.
The Hong Kong-listed mainland equity index, H-shares, is close to a long-term support level of around 9000.
In all three cases, on the weekly charts, we can see attempts to move out of the oversold area and signs of RSI and index level divergence, with new price lows corresponding to higher indicator levels.
Technically, there is sufficient room on the bearish side for a decline into the area of 13300 by the end of the year, where the lower boundary of the long-term uptrend channel passes.
Similar potential remains in the Hang Seng, whose long-term uptrend channel support passes through about 22,000 by the end of the year against the current 25700.
The Hong Kong-listed mainland equity index, H-shares, is close to a long-term support level of around 9000.
In all three cases, on the weekly charts, we can see attempts to move out of the oversold area and signs of RSI and index level divergence, with new price lows corresponding to higher indicator levels.
Inflation continues to accelerate in the eurozone. The latest estimates showed an acceleration to 3% y/y in August, well above the expected 2.7% and in line with the peak levels of a decade ago. In both cases, the price driver for inflation was soaring commodity prices because of massive liquidity injections in the world’s largest economies.
Hawks at the ECB have stepped up, Robert Holtzman, Oesterreichische Nationalbank Governor, said that the European Central Bank is “in position to think about reducing pandemic aid” and “needs to have inflation risks on its mind”.
The high CPI growth rate and continued inflationary pressures in producer and import prices make inflation a severe threat. However, what matters for the markets is not the rate of price increases but how the central bank treats them. Concerns over inflation could strengthen support for the euro.
Hawks at the ECB have stepped up, Robert Holtzman, Oesterreichische Nationalbank Governor, said that the European Central Bank is “in position to think about reducing pandemic aid” and “needs to have inflation risks on its mind”.
The high CPI growth rate and continued inflationary pressures in producer and import prices make inflation a severe threat. However, what matters for the markets is not the rate of price increases but how the central bank treats them. Concerns over inflation could strengthen support for the euro.
#NZDUSD broke resistance zone
• Likely to rise to resistance level 0.7085
NZDUSD recently broke the resistance zone located between the round resistance level 0.7000 and the resistance trendline of the daily down channel from May.
The breakout of this resistance zone accelerated the active short-term impulse wave 1 of the intermediate impulse wave (C) from the middle of August.
NZDUSD can be expected to rise further toward the next resistance level 0.7085 (which has been reversing the price from the end of June).
• Likely to rise to resistance level 0.7085
NZDUSD recently broke the resistance zone located between the round resistance level 0.7000 and the resistance trendline of the daily down channel from May.
The breakout of this resistance zone accelerated the active short-term impulse wave 1 of the intermediate impulse wave (C) from the middle of August.
NZDUSD can be expected to rise further toward the next resistance level 0.7085 (which has been reversing the price from the end of June).
#DAX reversed from resistance level 16000.00
• Likely to fall to support level 15635.00
DAX index recently reversed down from the resistance zone located between the round resistance level 16000.00 and the upper daily Bollinger Band.
The downward reversal from this resistance zone will most likely form the daily Shooting Star candlestick pattern if the index closes today near the current levels.
DAX can be expected to fall further toward the next support level 15635.00 (former resistance from July which reversed DAX with the 2 daily Hammers earlier this month).
• Likely to fall to support level 15635.00
DAX index recently reversed down from the resistance zone located between the round resistance level 16000.00 and the upper daily Bollinger Band.
The downward reversal from this resistance zone will most likely form the daily Shooting Star candlestick pattern if the index closes today near the current levels.
DAX can be expected to fall further toward the next support level 15635.00 (former resistance from July which reversed DAX with the 2 daily Hammers earlier this month).
Stock markets paused growth yesterday. Declines in Europe ranged from 0.1% in the CAC 40 to 0.3% in the DAX and 0.4% in the FTSE 100.
Pressure on the DAX was triggered by a wave of profit-taking that took away 1.5% from the index after touching the 16,000 level, a significant resistance from where the index rolled back earlier in August. Since Wednesday morning, there have been more buying, with an increase of 0.4%.
The DAX performance could prove to be the canary in the coal mine, reflecting the increased pull of investors to lock in profits from the impressive gains since the beginning of the year with 22% rise for S&P500, 20% for Nasdaq, 17% for Dow Jones, 15% for DAX 30 and 8% in the FTSE100.
It is likely that with the new month, investors will switch to Asian markets where more upside potential has accumulated after a 5% slump in the Hang Seng since the start of the year and a 2% rise in Shanghai Composite since the beginning of the year.
Pressure on the DAX was triggered by a wave of profit-taking that took away 1.5% from the index after touching the 16,000 level, a significant resistance from where the index rolled back earlier in August. Since Wednesday morning, there have been more buying, with an increase of 0.4%.
The DAX performance could prove to be the canary in the coal mine, reflecting the increased pull of investors to lock in profits from the impressive gains since the beginning of the year with 22% rise for S&P500, 20% for Nasdaq, 17% for Dow Jones, 15% for DAX 30 and 8% in the FTSE100.
It is likely that with the new month, investors will switch to Asian markets where more upside potential has accumulated after a 5% slump in the Hang Seng since the start of the year and a 2% rise in Shanghai Composite since the beginning of the year.
The USD index was supported again yesterday on the way down to the 50 SMA, which has been the significant support line of the uptrend of the last three months. The same is true for EURUSD, which the bears did not let the day close significantly above 1.1800, pushing the pair below that level early on Wednesday.
The GBPUSD rebound in previous weeks lost strength on the approach to 1.3800, the area where the 50- and 200-day moving averages crossed, indicating that the bears are in control of the pair.
There are several factors on the USD's side in the coming days.
Firstly, there is the nervousness of waiting for the NFP on Friday.
Secondly, the US Treasury intends to restore its liquidity supply to $800 billion in the coming months from $262 billion now.
Third, although the Fed is moving slowly to reduce its crisis-era support, it is several steps ahead of the BoJ, the ECB and the BoE.
The GBPUSD rebound in previous weeks lost strength on the approach to 1.3800, the area where the 50- and 200-day moving averages crossed, indicating that the bears are in control of the pair.
There are several factors on the USD's side in the coming days.
Firstly, there is the nervousness of waiting for the NFP on Friday.
Secondly, the US Treasury intends to restore its liquidity supply to $800 billion in the coming months from $262 billion now.
Third, although the Fed is moving slowly to reduce its crisis-era support, it is several steps ahead of the BoJ, the ECB and the BoE.
The private sector in the US slowed down sharply in new hiring. According to ADP calculations, companies created 374k new jobs in August after 326k in July, markedly weaker than the forecast 640k.
We, and probably markets too, are already used to the fact that the current report risks being a darker picture than the official data. Nevertheless, some knee-jerk market reaction has persisted.
The markets are now operating in a pattern: the worse the US economy is, the worse for the dollar as the chances of an imminent monetary policy tightening are falling.
In theory, weak US statistics could support equities. However, this time, investors seem to see weak data as a negative for the US market.
We, and probably markets too, are already used to the fact that the current report risks being a darker picture than the official data. Nevertheless, some knee-jerk market reaction has persisted.
The markets are now operating in a pattern: the worse the US economy is, the worse for the dollar as the chances of an imminent monetary policy tightening are falling.
In theory, weak US statistics could support equities. However, this time, investors seem to see weak data as a negative for the US market.
#AUDUSD broke resistance zone
• Likely to rise to resistance level 0.7400
AUDUSD currency pair recently broke the resistance zone located between the pivotal resistance level 0.7300 (former support from the middle of July) and the 38.2% Fibonacci correction of the downward impulse from July.
The breakout of this resistance zone accelerated the active medium-term impulse wave (1).
AUDUSD can be expected to rise further toward the next resistance level 0.7400 (top of wave (4) from the start of August).
• Likely to rise to resistance level 0.7400
AUDUSD currency pair recently broke the resistance zone located between the pivotal resistance level 0.7300 (former support from the middle of July) and the 38.2% Fibonacci correction of the downward impulse from July.
The breakout of this resistance zone accelerated the active medium-term impulse wave (1).
AUDUSD can be expected to rise further toward the next resistance level 0.7400 (top of wave (4) from the start of August).
#Apple broke the resistance level 151.00
• Likely to rise to resistance level 157.50
Apple recently broke the resistance level 151.00 (upper boundary of the sideways price range inside which the price has been trading from the start of July).
The breakout of this resistance level 151.00 accelerated the active short-term impulse wave 5, which belongs to the intermediate impulse wave (C) from last year.
Given the prevailing uptrend, Apple can be expected to rise further toward the next resistance level 157,50 (target price for the completion of the active impulse wave (C)).
• Likely to rise to resistance level 157.50
Apple recently broke the resistance level 151.00 (upper boundary of the sideways price range inside which the price has been trading from the start of July).
The breakout of this resistance level 151.00 accelerated the active short-term impulse wave 5, which belongs to the intermediate impulse wave (C) from last year.
Given the prevailing uptrend, Apple can be expected to rise further toward the next resistance level 157,50 (target price for the completion of the active impulse wave (C)).
US oil inventories declined more than expected last week. The EIA report noted a 7.2M barrel drop in commercial inventories, vs -2.5M expected. Often in August-September, with the end of the summer travel season, there is a turning point in the decline of stocks, and they begin to rise. But that point has not yet been reached.
Interestingly, at the same time, the US has brought production to 11.5m BPD, a new high since May 2020, and the strategic oil reserve has fallen slightly. All of this reflects rising consumption in the states, which would be good for the price if not for two factors.
Earlier on Wednesday, OPEC+ confirmed a further 400 BPD supply increase from September. On top of this, Russia indicated that it can increase production above the quota, causing a 2% drop in Brent prices to $70.30.
The 2nd factor is the planned sale in September of 20m barrels from the US government's 621m strategic reserves. This is unlikely to be the last such sale in the coming months.
Interestingly, at the same time, the US has brought production to 11.5m BPD, a new high since May 2020, and the strategic oil reserve has fallen slightly. All of this reflects rising consumption in the states, which would be good for the price if not for two factors.
Earlier on Wednesday, OPEC+ confirmed a further 400 BPD supply increase from September. On top of this, Russia indicated that it can increase production above the quota, causing a 2% drop in Brent prices to $70.30.
The 2nd factor is the planned sale in September of 20m barrels from the US government's 621m strategic reserves. This is unlikely to be the last such sale in the coming months.
Labor Day: trading time schedule changes
On Monday, September 6, the following instruments will not be available for trading:
- CFD on US Shares
- CFD on Agricultural Commodity Futures
Early closing:
- CFD on Energies
- CFD on Spot Metals
- CFD on Spot Indices
- CFD on Indices Futures
- CFD on Energies Futures
Please see the details in the FxPro Market Holidays calendar: https://www.fxpro.com/trading-tools/market-holidays
If you have any questions, feel free to contact our Customer support team via email support@fxpro.com.
On Monday, September 6, the following instruments will not be available for trading:
- CFD on US Shares
- CFD on Agricultural Commodity Futures
Early closing:
- CFD on Energies
- CFD on Spot Metals
- CFD on Spot Indices
- CFD on Indices Futures
- CFD on Energies Futures
Please see the details in the FxPro Market Holidays calendar: https://www.fxpro.com/trading-tools/market-holidays
If you have any questions, feel free to contact our Customer support team via email support@fxpro.com.
Markets and economies are often on opposite sides of the barricades. They sometimes welcome weaker data as it suggests ultra-soft policy remains in place, just like now. But sometimes, it is necessary to look at the situation through the eyes of an economist. With this approach, weak data is a negative, and yesterday was something to look at.
Worryingly, a weak ADP report. According to this metric, another 6 million people need to be hired to return to the February 2020 peak. So, it takes another 12 months at the average rate seen year to date (+480K monthly).
The ISM manufacturing index rose from 59.5 to 59.9, higher than expected. But within the index, the employment component fell below the waterline to 49, reflecting contraction. The slowdown in price growth is shown by a 6.3 point drop in the corresponding element. Such figures create room for the Fed to take its time with the unwinding of stimulus.
Worryingly, a weak ADP report. According to this metric, another 6 million people need to be hired to return to the February 2020 peak. So, it takes another 12 months at the average rate seen year to date (+480K monthly).
The ISM manufacturing index rose from 59.5 to 59.9, higher than expected. But within the index, the employment component fell below the waterline to 49, reflecting contraction. The slowdown in price growth is shown by a 6.3 point drop in the corresponding element. Such figures create room for the Fed to take its time with the unwinding of stimulus.
US car sales fell to an annual rate of 13.1M in August compared with 14.8M a month earlier and a peak of 18.5M in April this year. For the most part, it's a matter of a shortage of some models due to chip supply issues, which is pulling up the average price of new cars y 16%. That said, we can see that the higher price is, like in textbook, reducing demand.
US weekly jobless claims marked further progress in the economy. The number of initial claims for the week to 28th of August fell to 340K (new pandemic lows) from 354K the week earlier. The number of continued claims fell by 160K in the week to 21st of August to 2,748K.
Americans are getting more active in starting new jobs amid the imminent end of unemployment benefits this month. Current wage levels seem closer to expectations than before. In addition, there is a record supply of open jobs on the market.
Positive data for the economy was not perceived as a threat to tapering Fed’s support. On the contrary, we see an increased demand for risk, with the S&P500 and Nasdaq making new highs. The Dow Jones is just 0.4% below its record.
On this news, dollar selling has intensified, sending DXY to 4-week lows. Oil is rallying over 3% since the start of the day. Gold again won support on the drop down to $1805, returning to $1812, but kept below $1820 this week.
Americans are getting more active in starting new jobs amid the imminent end of unemployment benefits this month. Current wage levels seem closer to expectations than before. In addition, there is a record supply of open jobs on the market.
Positive data for the economy was not perceived as a threat to tapering Fed’s support. On the contrary, we see an increased demand for risk, with the S&P500 and Nasdaq making new highs. The Dow Jones is just 0.4% below its record.
On this news, dollar selling has intensified, sending DXY to 4-week lows. Oil is rallying over 3% since the start of the day. Gold again won support on the drop down to $1805, returning to $1812, but kept below $1820 this week.
#AUDCHF broke daily down channel
• Likely to rise to resistance level 0.6800
AUDCHF currency pair recently broke the resistance trendline of the daily down channel from the start of July.
The breakout of this resistance trendline accelerated the active short-term impulse wave 1 from the end of August – which is further accelerated by strong AUD sentiment.
AUDCHF can be expected to rise further toward the next resistance level 0.6800 (top of wave 4 from the start of August, former strong support from July).
• Likely to rise to resistance level 0.6800
AUDCHF currency pair recently broke the resistance trendline of the daily down channel from the start of July.
The breakout of this resistance trendline accelerated the active short-term impulse wave 1 from the end of August – which is further accelerated by strong AUD sentiment.
AUDCHF can be expected to rise further toward the next resistance level 0.6800 (top of wave 4 from the start of August, former strong support from July).
#WTI broke resistance zone
• Likely to rise to resistance level 74,00
WTI crude oil recently broke the resistance zone lying between the resistance levels 69.10 and 70,00 (these levels have been reversing the price from the start of August).
The breakout of this resistance zone coincided with the breakout of the 61,8% Fibonacci correction of the downward impulse wave (c) from July.
WTI crude oil can be expected to rise further toward the next resistance 74,00 (top of wave (b) from the end of July).
• Likely to rise to resistance level 74,00
WTI crude oil recently broke the resistance zone lying between the resistance levels 69.10 and 70,00 (these levels have been reversing the price from the start of August).
The breakout of this resistance zone coincided with the breakout of the 61,8% Fibonacci correction of the downward impulse wave (c) from July.
WTI crude oil can be expected to rise further toward the next resistance 74,00 (top of wave (b) from the end of July).
Powell's speech a week ago, although it did not generate a strong market reaction, did change risk sentiment amongst traders. Today's NFP publication could put the dollar back into a long-term down-trend or revive interest in it.
Buoyed by assurances that the Fed will not rush to raise rates and is not concerned about inflation, news slightly higher than expected did not cause a pull into the dollar and a reassessment of rate expectations.
Early labour market indicators, from ADP and ISM employment components to weekly jobless claims, are setting up more modest expectations of 400-700K job growth, which promises to be bad news for the dollar, confirming the downtrend towards major competitors, most of which are taking a more hawkish approach to fight inflation.
Buoyed by assurances that the Fed will not rush to raise rates and is not concerned about inflation, news slightly higher than expected did not cause a pull into the dollar and a reassessment of rate expectations.
Early labour market indicators, from ADP and ISM employment components to weekly jobless claims, are setting up more modest expectations of 400-700K job growth, which promises to be bad news for the dollar, confirming the downtrend towards major competitors, most of which are taking a more hawkish approach to fight inflation.