Chinese markets will be closed for the week while we also have holidays in Australia and Germany for the day though we do not think this will have an impact for the market. Fears over how the official China Manufacturing data will turn-out over the weekend appears to have been unfounded we actually saw the figure at 51.2 in-line with the consensus forecast. This however does not mean we have clear skies for the monday as the Greek government has already admitted it would not meet its deficit reduction targets amidst an ongoing compliance inspection by the troika on whether or not to release more aid funding. Ultimately we do not believe that funds will be withheld because of the failure but this does serve as one more excuse for markets to remain risk averse following the huge sell-off in wall street. Focus remains on a weaker Euro given Friday’s huge sell-off in EURGBP. With the SNB statement before about holding assets in Cable before we wonder whether they had a hand on the price action.
We saw Kiwi pulling back to SHS neckline’s early last week then closing under a key support level at 0.7635 to suggest a continuation of the weekly level pattern breakout. Among indicators we have daily stochastic in oversold levels with macd continuing to ease off. From the 4H picture we continue to see a confluence of bears with stochastic reentering oversold levels while macd is below the signal line. In hourly charts we have stochastic just crossing lower looking at reentering oversold territory though macd remains flat. Note that our SHS breakout has pattern target at 0.7049, as such we would focus on a move towards the said price. Consider shorts at market with stops ideally above 0.7687 for a sell-off to 0.7487.
Despite bearish expectation Friday, action in the cross with Euro kept Cable from seeing its own big sell-off to see a spinning top inside the daily ranges by the close. Among indicators we are currently seeing a mixed view with daily stochastic heading lower while macd is also pointing up. Note we continue to see the daily EMA’s acting as a ceiling for the pairs, 21D EMA at 1.5686. From the lower time frames we are seeing mixed signals as hourly stochastic heads up with prices covering the gaping open while macd has just crossed lower. In the 4H level we have a confluence of bears. We prefer playing the range game from the sell side, consider shorts under 1.5655 with stops above the 21D EMA.
After all the whipsaw in through much of the week, Friday saw AUDUSD with a bearish bozu candle though failing to push below key support levels at 0.9624. Among the indicators we see a confluence of bears, stochastic is pushing further into oversold levels while macd is dropping. In the lower time frames we have a confluence of bears as well in the 4H charts with stochastic oversold and macd dropping, hourly indicators for their part has stochastic poised at a new bear cross while macd is already below the signal line. Note we face a strong support at 0.9624, with stochastic oscillators already oversold in multiple time frames we need to quickly take out 0.9624 early in the week to justify being oversold. Consider shorts from just under 0.9700.
Friday saw Euro closing with a black marubozu staying just above a key support at 1.3362, at the open we have a downside gap on fears over Greece and poor US equity market. Technically we have an oversold daily stochastic while macd is flat though below the signal line. In intraday charts we have 4H stochastic in oversold levels while macd is opening lower. Hourly indicators has macd trending lower while stochastic is currently coming off oversold levels though we have been oscillating around the 20-mark to suggest a nice bear trend. Consider shorts after covering the gap at the open, from at least 1.3388, the next key support area is at 1.3237.
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