US Markets
My observations below should be viewed as general advice
and may not be right for you.
US Equities spent the majority of the session chopping
around the unchanged line. Investors weighed a slowdown in European
manufacturing and a profit warning from bellwether delivery company FedEx
against hopes for central bank easing. Early morning volatility coincided with
a Bloomberg TV report which indicated the European Central Bank bond purchase
program is said to pledge unlimited, sterilized buying of bonds. However, the
exuberance was short-lived as European Central Bank officials declined to
comment, and reports out of Germany suggested Chancellor Angela Merkel would
only support the program in the near-term. Afternoon trade was mostly quiet as
the S&P 500 remained in a narrow range before closing lower by 0.1%.
From a technical standpoint, the low end of the recent
range was tested and held once again overnight at 1395. The market continues to
build a range from 1395 to 1410. Today we have seen an unexpectedly strong bid
in Asian markets and the Australian Dollar is holding in well. It would appear
that shorts are covering ahead of tonight major ECB decision. I believe this
will be the major catalyst that sends us out of this range. The short term
price action is indicating that we could actually breakout to the upside. Use
the levels as your guide and place your orders accordingly. Simply a breakdown
below 1395 would be bearish and a breakout above 1410/1415 should lead to a
retest of the recent highs at 1425 and possibly beyond.
S&P500
Daily:
Double Top pattern is still in play but no real follow
through to the downside. A close below 1395 would confirm this pattern
Emini
S&P500 60mins:
Price tested the low end of the range at 1395 again
overnight and held. This level continues to be met with strong buying. Obviously
if the market can’t hold this, there will be a whole host of sell orders below
this level for trapped buyers. For now we continue to hold and a possible
breakouts pattern above 1410 indicating a potential retest to 1420/25.
Support Levels: 1395, 1370
Resistance Levels: 1410/1412,
1420
Europe
European stocks ended a choppy session with marginal
gains Wednesday, as investors awaited the outcome of a meeting the following
day of European Central Bank policy makers.
Some analysts are expecting an interest-rate cut to 0.5% from 0.75%, but
the main question is whether ECB President Mario Draghi provides details of a
proposed bond-buying program as a way to calm the region's sovereign-debt
crisis.
So tonight we have Eurozone GDP at 9am GMT, German factory
orders at 10am GMT, the Bank of England interest rate decision at 11am GMT, the
ECB interest rate decision at 11.45am GMT, the ECB policy statement and press
conference at 12.30pm GMT. Merkel is also set to meet with Spanish PM Rajoy. Is
that enough for you?
From a technical standpoint, I have shown significant
resistance zones in both the DAX and Eurostoxx Daily charts. This has provided strong
initial resistance but there needs to be more follow through to the downside to
confirm a more meaningful turn. As I have continued to stress, 2400 remains the
key level in the Eurostoxx. Only breaks of this would confirm a potential deeper
correction lower. This same zone is 6900 in the DAX. Tonight’s speeches will be
a strong catalyst to send us out of this range.
DAX Daily:
Price tried to break above this downward trendline but
failed.
DAX
60mins:
Potential triangle type pattern but price failed to
breakout yesterday. 6900 remains key support and traders should look for
breakdowns through here for potential shorts.
Eurostoxx
15mins:
Topping pattern should 2400 break to the downside.
FX Majors
The EURO spiked overnight due to a report
that the ECB may buy an unlimited amount of government bonds of countries such
as Spain and Italy. Indeed, EUR surged from 1.255 to a high of 1.262 and has
held its recent gains. The main event today was the Australian Dollar which has spiked despite some softer unemployment numbers. The unemployment rate did fall however to 5.1% from 5.3%. This is very interesting price action to me and suggests that price is trying to make a low here. I put up a post today regarding a strong bounce zone in the Australian Dollar and there is potential for a considerable bounce here should price hold above 1.02: http://fpmarkets.blogspot.com.au/2012/09/audusd-and-employment-numbers.html
AUDUSD Daily:
A
strong support zone
AUDUSD 60mins:
Price
is now breaking out of this ending wedge pattern with bullish divergences.
AUDJPY 60mins:
Price
has now hit my target zone since the “failed” breakout area. There is potential
for a bounce here.
EUR 60mins:
Still rallying into the target zone at 1.27
Still rallying into the target zone at 1.27
Commodities
Gold
Daily:
Breakout above the Daily resistance zone.
Copper
Daily:
Dr Copper is now also testing the up end of the range and
trying to breakout.
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