Daily Market Commentary
EUR/USD Drops Quickly Despite Satisfactory Data
The EUR/USD experienced a heightened selloff Tuesday despite the German Unemployment Change coming in below analyst expectations and the EU Unemployment Rate satisfying estimates at 9.5%. Instead of holding steady, the EUR/USD plunged below all of our previous uptrend lines on climbing sell-side volume. The EUR/USD was following crude and the S&P futures lower as global equity markets were under selling pressure. The mystifying part of yesterday’s selloff in the EUR/USD was the Euro’s relative weakness compared to the Pound. The EUR/GBP registered a sharp contraction even though Britain’s Manufacturing PMI and Net Lending to Individuals data came in short of analyst expectations. Hence, one would expect further relative weakness in the Pound when the opposite proved to be true. What we can take from yesterday’s currency interaction is that investors decide to snap up an oversold Pound and let the Euro ride with U.S. equities.
The EUR/USD is trying to stabilize today despite weak ADP employment data from the U.S. The EU’s Revised GDP came in line with analyst expectations today, continuing the theme of solid data from the European region. However, there has clearly been a shift of momentum towards the downside as investors begin to question the strength of the global economy recovery. Yesterday we saw large sell-side action in both the S&P and crude while the 30 Year T-Bond futures wrestle free of their July highs. The one odd correlative occurrence today is the large pop in gold. The precious metal has been positively correlated with the EUR/USD, so gold’s topside momentum is interesting. Meanwhile, investors should keep a close eye on the S&P’s interaction with its highly psychological level. If the S&P gives up on 100 and heads towards August lows the EUR/USD will likely follow. Considering the huge spike in volume yesterday, we believe the S&P could be in the midst of a sizable leg down. Therefore, it is becoming increasing difficult to be positive on the EUR/USD for the near-term.
We’ve readjusted our trend lines to account for yesterday’s volatility. The key will be for the EUR/USD to hold out 1st tier uptrend line should it be tested. If our 1st tier uptrend line doesn’t hold, a retest of August lows and the highly psychological zone is probable. The 1.40 trading zone would likely prove to be a solid cushion should the EUR/USD decide to extend its pullback. As for the topside, bulls will look to keep the EUR/USD 1.4200-1.4250 zone to try and create a new base. The EUR/USD has added topside obstacles including our 1st-3rd downtrend lines. The EUR/USD may opt to stabilize today considering the ECB will announce its monetary policy decision tomorrow. Even though the ECB is not expected to any drastic changes in its monetary policy, now would be an opportune time to administer a monetary shock considering the neutral outlook of analysts and the rising uncertainty among investors. In addition to tomorrow’s ECB decision, the U.S. will release more ISM data and its weekly Unemployment Claims data along with a couple key releases from Britain. Therefore, the EUR/USD certainly has enough data tomorrow to create a new bottom should the numbers impress. On the other hand, disappointing data would only add fire to the EUR/USD’s downward momentum.
Present Price: 1.4210
Resistances: 1.4225, 1.4236, 1.4251, 1.4271, 1.4282
Supports: 1.4197, 1.4182, 1.4170, 1.4155, 1.4132
Psychological: 1.40
GBP/USD Finds Support in our 3rd Tier Uptrend Line Once Again
The Cable pulled back on heightened volume yesterday only bounce off of our 2nd tier uptrend line this morning. The Pound is experiencing relative strength despite weaker than expected Manufacturing and Construction PMI data along with a disappointing Net Lending to Individuals number. The past two sessions of economic data reveals why the BOE has been more aggressive with its monetary policy. One would anticipate relative weakness in the Pound in reaction to these data points. However, the EUR/GBP has experienced a sharp contraction while the Cable balances. Considering the pace of the EUR/GBP’s recent surge, we believe the Pound may have just been oversold and we are witnessing a natural bounce. Therefore, today’s bottom in the Cable may have little staying power should the S&P futures continue their downturn as indicated. The S&P futures were flooded by heightened sell-side action yesterday and were accompanied by a hefty pullback in crude. The downside interest around the market indicates the present downturn could have legs. The one positive correlative sign for the Cable is today’s pop in gold. However, we wouldn’t read too far into gold’s strength right now.
Britain will keep the data train rolling after the last two weeks of relative silence. Britain will release its Halifax HPI and Services PMI data tomorrow. While we expect the Halifax HPI to satisfy investors considering the recent outperformance of British housing data, the Services PMI number will be the headline to watch. The Services PMI data should have a large impact on the GBP/USD since services make up such a large portion of Britain’s GDP. Meanwhile, we will receive more key data from the U.S. along with and ECB monetary decision. Therefore, we expect the level of volatility to remain high throughout the rest of the week. Meanwhile, if the S&P futures should extend their leg down we expect the Cable to follow suit.
Technically speaking, the Cable is fortunate to have found support in our 2nd tier uptrend line. If not, we would have surely witnessed a retest of the highly psychological 1.60 level. Not to mention our 1st tier trend line is sitting in the depths below. While the GBP/USD has 1.60, the EUR/USD has 1.40. Therefore, even though there may be some more space to the downside, each major Dollar cross has a strong psychological level waiting in the wings. On the other hand, the GBP/USD has quite a ways to go to re-establish its upward momentum. The GBP/USD has to deal with all three of our downtrend lines along with Monday’s highs and the highly psychological 1.65 level. However, the Cable may choose to consolidate today ahead of tomorrow’s busy session.
Present Price: 1.6222
Resistances: 1.6251, 1.6268, 1.6305, 1.6335, 1.6360
Supports: 1.6212, 1.6178, 1.6146, 1.6119, 1.6065
Psychological: 1.60, 1.65
USD/JPY Mirrors the S&P’s Decline
The USD/JPY has been following the S&P futures lower in reaction to investor uncertainty surrounding the present valuation of U.S. equities. The Yen was already experiencing a relative strength earlier this week due to strong Japanese data and the DPJ’s victory. Therefore, the S&P’s pullback below 1000 only gave investors more incentive to test the USD/JPY’s patience after drifting beneath our 1st tier uptrend line. The failure of our 1st tier uptrend line indicated a retest of July lows, which has nearly materialized. However, the USD/JPY may opt to consolidate a little today with July highs within reach and a hefty downturn already underway. Additionally, the S&P futures are back in their 1000 trading zone, which obviously has a strong psychological pull. We also notice the GBP/USD and EUR/USD are sliding near their own psychological 1.60 and 1.45 levels, respectively. However, any immediate-term stability may not last long considering investors will receive a large wave of economic news tomorrow.
The U.S. and Britain will release important economic data points tomorrow along with an ECB monetary policy decision. Hence, we expect volatility to pick up tomorrow and throughout the remainder of the trading week. The S&P futures and other Dollar crosses are hovering around their key psychological cushions. Therefore, Thursday’s data set could prove to be either a tipping point or stabilizing factor in the FX markets. Considering we have witnessed heightened sell-side activity in both crude and the S&P futures, present momentum appears to be in favor of a larger leg down. Meanwhile, if the USD/JPY can’t hold July lows the currency pair could be in for an exacerbated selloff toward the 91 area. As for the topside, the USD/JPY has countless barriers to overcome, beginning with our 1st tier uptrend and 2nd tier downtrend lines.
Present Price: 92.46
Resistances: 92.58, 92.73, 92.97, 93.17, 93.33
Supports: 92.36, 92.22, 92.08, 91.96, 91.72
Psychological: 90, 95
Gold Explodes to the Topside
Gold is defying gravity by shaking lose of its psychological $950/oz trading zone. The precious metal is surging to the topside beyond August highs despite recent strength in the Dollar and weakness in U.S. equities. Gold is disregarding its negative correlation with the Dollar and positive correlation with equities. We have received data with a mixed to negative bias so far this week, and investors are becoming increasingly uncertain in regards to the strength and longevity of the economic recovery. Therefore, we could be witnessing a gold rush as investors head for safety. Gold’s eclipse of its August highs is a very bullish sign and could be indicative of a large leg higher. Crude and the S&P futures have experienced large sell-side action lately, indicating the present leg down in U.S. equities may have more room to go.
Meanwhile, we’ve readjusted gold’s trend lines to account for today’s high volatility. The precious metal could have considerable topside potential if it can get past our new 2nd and 3rd tier downtrend lines. If so, a retest of 2009 highs and the psychological $1000/oz level seems likely. As for the downside, gold has all three of our uptrend lines along with 8/4-8/6 trading zone. We’ll keep a close eye on gold’s interaction with its correlations to see if there is a lasting shift.
Present Price: $972.00/oz
Resistances: $974.04/oz, $975.86/oz, $978.60/oz, $982.26/oz, $985.00/oz
Supports: $971.91/oz, $969.78/oz, $968.25/oz, $964.90/oz, $960.64/oz
Psychological: $1000/oz, $950/oz
The S&P Futures Stabilize Despite Disappointing ADP Data
The S&P futures are stabilizing even though the headline ADP Non-Farm Employment Change number came in shy of analyst expectations. However, the number still showed a solid improvement from August’s revised reading of -360k. It seems today’s disappointing data was already priced in yesterday. The S&P futures experienced a sizable pullback on a spike in sell-side volume despite the fact that Pending Home Sales and ISM Manufacturing PMI data blew past analyst expectations. We also saw a modest improvement in China’s Manufacturing PMI. However, weak data from Britain combined with a sell-off in some key financials triggered profit-taking while reigniting investor uncertainty regarding the durability of the present global economic recovery. The pullback amid improving U.S. and Chinese economic data tells us the present weakness in U.S. equities is a combination of profit-taking and psychology. Analysts are voicing their resounding belief that the S&P futures are in for a large correction. While not an incorrect evaluation, the rush of negative outlooks is taking its toll on investor psyche. Speaking of psychology, the S&P futures are back at 1000, and the trading zone won’t be taken lightly. Investors may carry on with the theme of consolidation today in anticipation of tomorrow’s stream of economic events.
The U.S. will release its ISM Non-Manufacturing PMI and weekly Unemployment Claims data along with key British numbers and an ECB monetary policy decision. Meanwhile, the GBP/USD, EUR/USD, and USD/JPY are trading around important psychological and technical levels of their own, indicating the importance of the moment. Bears are looking for any kind of concrete validation to send the S&P futures tumbling since many believe equities are overvalued. In addition to the FX markets, crude future are trading well below their highly psychological $70/bbl while breaking beneath our key 1st tier uptrend line in the process. Lastly, gold is experiencing a large movement to the topside today, and it appears investors are snapping up the precious metal as they head for cover. Therefore, the behavior of the S&P’s correlations does not bode well for the near-term outlook for U.S. equities. Additionally, yesterday’s burst in sell-side action in the S&P futures is certainly a cause for concern, hinting at an extended leg down.
Fortunately for bulls, the S&P has built up quite a strong technical support system during its ascent. The S&P futures created a dense trading zone between July 29th lows and August 14th highs. Therefore, the S&P futures have a hard-fought trajectory to the downside between1000-970. However, if the S&P futures drop between 970 a more protracted sell-off could ensue. As for the topside, the S&P futures must brave beyond August 14th highs and our 1st tier uptrend line. Meanwhile, investors should keep a close eye on the Dollar and its reaction to upcoming economic data in order to gain more insight as to the S&P’s near-term direction.
Price: 999
Resistances: 1005, 1010.75, 1015, 1022.75, 1028.5
Supports: 995.25, 989.75, 982, 977.5, 970.25
Psychological: 1000
Crude Continues to Slide with Equities
Crude futures have continued their descent beneath $70/bbl and are trading well below our important 1st tier uptrend line in reaction to the S&P futures sinking to their critical 1000 level. Crude futures are now holding onto our previous bottom-end support as bulls fight to keep the S&P above water. We witnessed an increase in sell-side activity in both crude and the S&P futures yesterday as investors took profits amid rising uncertainty concerning the durability of the global economic recovery. The new bear market in the SCI coupled with declining Chinese exports hurt the near-term prospect for the future demand for commodities. However, today’s weekly crude oil inventories data showed a slight decline. Although, the number was 400k barrels above analyst expectations. The constraint in supply is helping keep crude futures somewhat afloat despite the sudden negativity attacking the global marketplace.
Crude futures are stabilizing today with the S&P futures sitting at 1000 while the GBP/USD and EUR/USD trade just above their respective psychological supports. However, the spike in sell-side volume coupled with the failure of our 1st tier uptrend line and $70/bbl is not favorable for the near-term outlook for crude. Crude futures may opt to continue today’s stabilization process as investors await tomorrow’s wave of economic data. Tomorrow’s data points and ECB meeting should prove to be important for the near-term trajectory of the Dollar. Hence, crude investors should take notice and monitor the present appreciation of the Dollar. Should the GBP/USD test 1.60 and the EUR/USD 1.40 crude futures should react negatively. Conversely, better than expected data could help the Dollar crosses recover and provide a much needed boost to the topside for crude. Meanwhile, the S&P’s deterioration is certainly a cause for concern since it only fuels speculation regarding future demand for crude. Momentum has clearly shifted to the downside in both crude and the S&P, so investors should monitor the situation closely. If crude futures can’t hold intraday lows and our new 1st tier downtrend line, a test of the psychological $65/bbl could be in order. As for the topside, crude faces tough obstacles in the form of our 2nd tier downtrend line and the highly psychological $70/bbl level.
Price: $67.83/bbl
Resistances: $67.92/bbl, $68.54/bbl, $68.99/bbl, $69.50/bbl, $69.97/bbl
Supports: $67.37/bbl, $66.88/bbl, $66.64/bbl, $66.23/bbl, $65.72/bbl
Psychological: $65/bbl, $70/bbl
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
EUR/USD Drops Quickly Despite Satisfactory Data
The EUR/USD experienced a heightened selloff Tuesday despite the German Unemployment Change coming in below analyst expectations and the EU Unemployment Rate satisfying estimates at 9.5%. Instead of holding steady, the EUR/USD plunged below all of our previous uptrend lines on climbing sell-side volume. The EUR/USD was following crude and the S&P futures lower as global equity markets were under selling pressure. The mystifying part of yesterday’s selloff in the EUR/USD was the Euro’s relative weakness compared to the Pound. The EUR/GBP registered a sharp contraction even though Britain’s Manufacturing PMI and Net Lending to Individuals data came in short of analyst expectations. Hence, one would expect further relative weakness in the Pound when the opposite proved to be true. What we can take from yesterday’s currency interaction is that investors decide to snap up an oversold Pound and let the Euro ride with U.S. equities.
The EUR/USD is trying to stabilize today despite weak ADP employment data from the U.S. The EU’s Revised GDP came in line with analyst expectations today, continuing the theme of solid data from the European region. However, there has clearly been a shift of momentum towards the downside as investors begin to question the strength of the global economy recovery. Yesterday we saw large sell-side action in both the S&P and crude while the 30 Year T-Bond futures wrestle free of their July highs. The one odd correlative occurrence today is the large pop in gold. The precious metal has been positively correlated with the EUR/USD, so gold’s topside momentum is interesting. Meanwhile, investors should keep a close eye on the S&P’s interaction with its highly psychological level. If the S&P gives up on 100 and heads towards August lows the EUR/USD will likely follow. Considering the huge spike in volume yesterday, we believe the S&P could be in the midst of a sizable leg down. Therefore, it is becoming increasing difficult to be positive on the EUR/USD for the near-term.
We’ve readjusted our trend lines to account for yesterday’s volatility. The key will be for the EUR/USD to hold out 1st tier uptrend line should it be tested. If our 1st tier uptrend line doesn’t hold, a retest of August lows and the highly psychological zone is probable. The 1.40 trading zone would likely prove to be a solid cushion should the EUR/USD decide to extend its pullback. As for the topside, bulls will look to keep the EUR/USD 1.4200-1.4250 zone to try and create a new base. The EUR/USD has added topside obstacles including our 1st-3rd downtrend lines. The EUR/USD may opt to stabilize today considering the ECB will announce its monetary policy decision tomorrow. Even though the ECB is not expected to any drastic changes in its monetary policy, now would be an opportune time to administer a monetary shock considering the neutral outlook of analysts and the rising uncertainty among investors. In addition to tomorrow’s ECB decision, the U.S. will release more ISM data and its weekly Unemployment Claims data along with a couple key releases from Britain. Therefore, the EUR/USD certainly has enough data tomorrow to create a new bottom should the numbers impress. On the other hand, disappointing data would only add fire to the EUR/USD’s downward momentum.
Present Price: 1.4210
Resistances: 1.4225, 1.4236, 1.4251, 1.4271, 1.4282
Supports: 1.4197, 1.4182, 1.4170, 1.4155, 1.4132
Psychological: 1.40
GBP/USD Finds Support in our 3rd Tier Uptrend Line Once Again
The Cable pulled back on heightened volume yesterday only bounce off of our 2nd tier uptrend line this morning. The Pound is experiencing relative strength despite weaker than expected Manufacturing and Construction PMI data along with a disappointing Net Lending to Individuals number. The past two sessions of economic data reveals why the BOE has been more aggressive with its monetary policy. One would anticipate relative weakness in the Pound in reaction to these data points. However, the EUR/GBP has experienced a sharp contraction while the Cable balances. Considering the pace of the EUR/GBP’s recent surge, we believe the Pound may have just been oversold and we are witnessing a natural bounce. Therefore, today’s bottom in the Cable may have little staying power should the S&P futures continue their downturn as indicated. The S&P futures were flooded by heightened sell-side action yesterday and were accompanied by a hefty pullback in crude. The downside interest around the market indicates the present downturn could have legs. The one positive correlative sign for the Cable is today’s pop in gold. However, we wouldn’t read too far into gold’s strength right now.
Britain will keep the data train rolling after the last two weeks of relative silence. Britain will release its Halifax HPI and Services PMI data tomorrow. While we expect the Halifax HPI to satisfy investors considering the recent outperformance of British housing data, the Services PMI number will be the headline to watch. The Services PMI data should have a large impact on the GBP/USD since services make up such a large portion of Britain’s GDP. Meanwhile, we will receive more key data from the U.S. along with and ECB monetary decision. Therefore, we expect the level of volatility to remain high throughout the rest of the week. Meanwhile, if the S&P futures should extend their leg down we expect the Cable to follow suit.
Technically speaking, the Cable is fortunate to have found support in our 2nd tier uptrend line. If not, we would have surely witnessed a retest of the highly psychological 1.60 level. Not to mention our 1st tier trend line is sitting in the depths below. While the GBP/USD has 1.60, the EUR/USD has 1.40. Therefore, even though there may be some more space to the downside, each major Dollar cross has a strong psychological level waiting in the wings. On the other hand, the GBP/USD has quite a ways to go to re-establish its upward momentum. The GBP/USD has to deal with all three of our downtrend lines along with Monday’s highs and the highly psychological 1.65 level. However, the Cable may choose to consolidate today ahead of tomorrow’s busy session.
Present Price: 1.6222
Resistances: 1.6251, 1.6268, 1.6305, 1.6335, 1.6360
Supports: 1.6212, 1.6178, 1.6146, 1.6119, 1.6065
Psychological: 1.60, 1.65
USD/JPY Mirrors the S&P’s Decline
The USD/JPY has been following the S&P futures lower in reaction to investor uncertainty surrounding the present valuation of U.S. equities. The Yen was already experiencing a relative strength earlier this week due to strong Japanese data and the DPJ’s victory. Therefore, the S&P’s pullback below 1000 only gave investors more incentive to test the USD/JPY’s patience after drifting beneath our 1st tier uptrend line. The failure of our 1st tier uptrend line indicated a retest of July lows, which has nearly materialized. However, the USD/JPY may opt to consolidate a little today with July highs within reach and a hefty downturn already underway. Additionally, the S&P futures are back in their 1000 trading zone, which obviously has a strong psychological pull. We also notice the GBP/USD and EUR/USD are sliding near their own psychological 1.60 and 1.45 levels, respectively. However, any immediate-term stability may not last long considering investors will receive a large wave of economic news tomorrow.
The U.S. and Britain will release important economic data points tomorrow along with an ECB monetary policy decision. Hence, we expect volatility to pick up tomorrow and throughout the remainder of the trading week. The S&P futures and other Dollar crosses are hovering around their key psychological cushions. Therefore, Thursday’s data set could prove to be either a tipping point or stabilizing factor in the FX markets. Considering we have witnessed heightened sell-side activity in both crude and the S&P futures, present momentum appears to be in favor of a larger leg down. Meanwhile, if the USD/JPY can’t hold July lows the currency pair could be in for an exacerbated selloff toward the 91 area. As for the topside, the USD/JPY has countless barriers to overcome, beginning with our 1st tier uptrend and 2nd tier downtrend lines.
Present Price: 92.46
Resistances: 92.58, 92.73, 92.97, 93.17, 93.33
Supports: 92.36, 92.22, 92.08, 91.96, 91.72
Psychological: 90, 95
Gold Explodes to the Topside
Gold is defying gravity by shaking lose of its psychological $950/oz trading zone. The precious metal is surging to the topside beyond August highs despite recent strength in the Dollar and weakness in U.S. equities. Gold is disregarding its negative correlation with the Dollar and positive correlation with equities. We have received data with a mixed to negative bias so far this week, and investors are becoming increasingly uncertain in regards to the strength and longevity of the economic recovery. Therefore, we could be witnessing a gold rush as investors head for safety. Gold’s eclipse of its August highs is a very bullish sign and could be indicative of a large leg higher. Crude and the S&P futures have experienced large sell-side action lately, indicating the present leg down in U.S. equities may have more room to go.
Meanwhile, we’ve readjusted gold’s trend lines to account for today’s high volatility. The precious metal could have considerable topside potential if it can get past our new 2nd and 3rd tier downtrend lines. If so, a retest of 2009 highs and the psychological $1000/oz level seems likely. As for the downside, gold has all three of our uptrend lines along with 8/4-8/6 trading zone. We’ll keep a close eye on gold’s interaction with its correlations to see if there is a lasting shift.
Present Price: $972.00/oz
Resistances: $974.04/oz, $975.86/oz, $978.60/oz, $982.26/oz, $985.00/oz
Supports: $971.91/oz, $969.78/oz, $968.25/oz, $964.90/oz, $960.64/oz
Psychological: $1000/oz, $950/oz
The S&P Futures Stabilize Despite Disappointing ADP Data
The S&P futures are stabilizing even though the headline ADP Non-Farm Employment Change number came in shy of analyst expectations. However, the number still showed a solid improvement from August’s revised reading of -360k. It seems today’s disappointing data was already priced in yesterday. The S&P futures experienced a sizable pullback on a spike in sell-side volume despite the fact that Pending Home Sales and ISM Manufacturing PMI data blew past analyst expectations. We also saw a modest improvement in China’s Manufacturing PMI. However, weak data from Britain combined with a sell-off in some key financials triggered profit-taking while reigniting investor uncertainty regarding the durability of the present global economic recovery. The pullback amid improving U.S. and Chinese economic data tells us the present weakness in U.S. equities is a combination of profit-taking and psychology. Analysts are voicing their resounding belief that the S&P futures are in for a large correction. While not an incorrect evaluation, the rush of negative outlooks is taking its toll on investor psyche. Speaking of psychology, the S&P futures are back at 1000, and the trading zone won’t be taken lightly. Investors may carry on with the theme of consolidation today in anticipation of tomorrow’s stream of economic events.
The U.S. will release its ISM Non-Manufacturing PMI and weekly Unemployment Claims data along with key British numbers and an ECB monetary policy decision. Meanwhile, the GBP/USD, EUR/USD, and USD/JPY are trading around important psychological and technical levels of their own, indicating the importance of the moment. Bears are looking for any kind of concrete validation to send the S&P futures tumbling since many believe equities are overvalued. In addition to the FX markets, crude future are trading well below their highly psychological $70/bbl while breaking beneath our key 1st tier uptrend line in the process. Lastly, gold is experiencing a large movement to the topside today, and it appears investors are snapping up the precious metal as they head for cover. Therefore, the behavior of the S&P’s correlations does not bode well for the near-term outlook for U.S. equities. Additionally, yesterday’s burst in sell-side action in the S&P futures is certainly a cause for concern, hinting at an extended leg down.
Fortunately for bulls, the S&P has built up quite a strong technical support system during its ascent. The S&P futures created a dense trading zone between July 29th lows and August 14th highs. Therefore, the S&P futures have a hard-fought trajectory to the downside between1000-970. However, if the S&P futures drop between 970 a more protracted sell-off could ensue. As for the topside, the S&P futures must brave beyond August 14th highs and our 1st tier uptrend line. Meanwhile, investors should keep a close eye on the Dollar and its reaction to upcoming economic data in order to gain more insight as to the S&P’s near-term direction.
Price: 999
Resistances: 1005, 1010.75, 1015, 1022.75, 1028.5
Supports: 995.25, 989.75, 982, 977.5, 970.25
Psychological: 1000
Crude Continues to Slide with Equities
Crude futures have continued their descent beneath $70/bbl and are trading well below our important 1st tier uptrend line in reaction to the S&P futures sinking to their critical 1000 level. Crude futures are now holding onto our previous bottom-end support as bulls fight to keep the S&P above water. We witnessed an increase in sell-side activity in both crude and the S&P futures yesterday as investors took profits amid rising uncertainty concerning the durability of the global economic recovery. The new bear market in the SCI coupled with declining Chinese exports hurt the near-term prospect for the future demand for commodities. However, today’s weekly crude oil inventories data showed a slight decline. Although, the number was 400k barrels above analyst expectations. The constraint in supply is helping keep crude futures somewhat afloat despite the sudden negativity attacking the global marketplace.
Crude futures are stabilizing today with the S&P futures sitting at 1000 while the GBP/USD and EUR/USD trade just above their respective psychological supports. However, the spike in sell-side volume coupled with the failure of our 1st tier uptrend line and $70/bbl is not favorable for the near-term outlook for crude. Crude futures may opt to continue today’s stabilization process as investors await tomorrow’s wave of economic data. Tomorrow’s data points and ECB meeting should prove to be important for the near-term trajectory of the Dollar. Hence, crude investors should take notice and monitor the present appreciation of the Dollar. Should the GBP/USD test 1.60 and the EUR/USD 1.40 crude futures should react negatively. Conversely, better than expected data could help the Dollar crosses recover and provide a much needed boost to the topside for crude. Meanwhile, the S&P’s deterioration is certainly a cause for concern since it only fuels speculation regarding future demand for crude. Momentum has clearly shifted to the downside in both crude and the S&P, so investors should monitor the situation closely. If crude futures can’t hold intraday lows and our new 1st tier downtrend line, a test of the psychological $65/bbl could be in order. As for the topside, crude faces tough obstacles in the form of our 2nd tier downtrend line and the highly psychological $70/bbl level.
Price: $67.83/bbl
Resistances: $67.92/bbl, $68.54/bbl, $68.99/bbl, $69.50/bbl, $69.97/bbl
Supports: $67.37/bbl, $66.88/bbl, $66.64/bbl, $66.23/bbl, $65.72/bbl
Psychological: $65/bbl, $70/bbl
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
