Asian equities are following through the strong performance of New York markets while currencies, typical in Asia are seeing a slow mixed start. About the only thing interesting for now are the Aussy pairs with data once again dictating the moves as better than expected in Consumer Sentiment earlier saw AUDUSD spiking up only to retreat an hour later following disappointing reads in Housing Starts down 4.7% quarter-on-quarter. Note given that the former is more forward looking our preference is to pick the bottom from the current retreat as the overall technical environment seems to be corrective after the broad based sell-off from the close of August. Going forward we still think a bearish Euro would be the safer bet in the medium term as problems continue to mount with very little sign of a united front among Eurozone politicos and as relief over reports of a Chinese rescue for Italy begin to sound old.
Tuesday saw more of a spinning top for Kiwi though we managed to end with a bullish candle as daily indicators continue to see a bullish divergence though macd is still pointing lower. Note we have daily EMA lines just ahead of prices above 0.8306. From the lower time frames we see a mixed picture among the 4H candles while indicators for their part seem to agree as stochastic cross lower while macd is heading up. In hourly charts we have a flat macd while stochastic is heading higher. For now we prefer remaining sidelined though aggressive trades may be taken, shorts from just under 0.8272 and buys from just above 0.8159 to play a range game.
In the end we had GBPUSD closing just above its daily lows for a big black candle, this after seeing new lows to offset the reversal suggestion from Mondays long tail. Among indicators we have stochastic flat in oversold levels while macd is dropping. Unlike in Euro mean reversion is not a concern for the moment given the new lows seen. From the 4H level we have a flat macd and technically bearish stochastic though clearly we have little momentum with a series of high wave spinning tops. In hourly charts we have macd’s rising and stochastic coming off oversold levels. Immediate risk is for us to pullback to strong resistances at the 1.5880 region though we prefer buys only from just above 1.5773.
After a long whippy day we have Aussy closing just under the opening levels for a high wave spinning top preceded by a bear market, i.e. a possible reversal area. From indicators we have daily stochastic just coming out of oversold levels while macd is still heading lower. In 4H charts we are seeing a bullish stochastic while macd has just crossed higher, candles themselves are indecisive. In hourly charts we have macd’s heading higher and stochastic that’s also pushing up. For the moment we are looking for a push through the 1.0373 region to continue the bullish tone, note earlier releases saw Consumer Sentiment from Westpac PLC coming out strongly up 8.1% to just ify an upside breakout. We have one more data coming out quarterly housing starts out at 0130GMT consensus calling for flat reads though unless the numbers come out with a sharp contraction we prefer looking for a push higher.
Tuesday saw EURUSD ending up with a white candle with decent enough body to suggest a pullback for the sell-off from August 29 highs is ongoing. Among indicators we have stochastic finally coming out of oversold levels after a remaining under the 20 area for more than a week though macd’s continue to point lower. Again concerns over mean reversion is becoming evident with the white candles and the big gap between prices and the EMA lines. In intraday charts we have a confluence of buys from the 4H picture with candles showing long wicks while from the hourly level we also have a bullish bias as stochastic heads up though macd is flat. Immediate risk calls for a test of the 1.3748 area, though we prefer buying only on a close above the said price or coming from just above 1.3669. Take too long push through and we risk intraday stochastic signalling a bear market and likely the start of a new range play from 1.3500 to 1.3750.
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