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Price Signal Summary - Sterling Downtrend Extends, Gains Considered Corrective

OUTLOOK
  • In the equity space, S&P E-Minis trend conditions remain bearish following last week’s extension lower - the trend has accelerated following the break of the July support. This strengthens bearish conditions and attention is on key support at 3657.00, Jun 17 low and an important medium-term bear trigger. A break would confirm a resumption of the broader downtrend. EUROSTOXX 50 futures remain soft following the reversal on Sep 13, from 3678.00, the Jun 13 high and last week’s follow through. Key short-term support at 3423.00, the Sep 5 low has been cleared, the break strengthens bearish conditions and has led to a breach of 3341.00, the Jul 5 low. The focus is on 3300.00.
  • In FX, the EURUSD is vulnerable. The break lower last week and today, confirms a resumption of the primary downtrend - reinforced too by last week’s breach of 0.9864, the Sep 6 low. The move lower maintains the bearish price sequence of lower lows and lower highs. Price is also trending down inside a bear channel drawn from the Feb 10 high. The channel base intersects at 0.9522. GBPUSD remains vulnerable. Short-term gains are considered corrective and any resumption of weakness would highlight the start, once again, of the primary downtrend that signals scope for a move to parity. The bear trigger is today’s low of 1.0350. USDJPY traded in a volatile manner late last week. The pullback on Sep 22 resulted in a print below 141.90, the 20-day EMA. The trend structure remains bullish - for now - and recent weakness is considered corrective. A continuation higher would expose 145.90, the Sep 22 high and the next bull trigger. Key short-term support has been defined at 140.36, Sep 22 low.
  • On the commodity front, Gold traded lower Friday, breaking out of its recent range and in the process confirmed the bear flag formation evident on the daily chart. The break confirms a resumption of the downtrend and opens $1610.5, the 1.00 projection of the Jun 13 - Jul 21 - Aug 10 swing. Initial firm resistance is at $1688.0. In the Oil space, a bearish threat in WTI futures remains present. The recent break of support at $84.25, the Jul 14 low, confirmed a resumption of the downtrend that started Jun 8 and marks the end of a broad sideways move that has been in place since mid-July. Attention is on $76.11, 1.618 projection of the Jul 29 - Aug 16 - 30 price swing.
  • In the FI space, Bund futures remain in a clear downtrend and the extension lower last week again confirmed a resumption of the bear leg that started early August. The major support at 140.67, the Jun 16 low (cont), has been cleared. This has opened 138.16, the 3.618 projection of the Aug 2 - 12 - 15 price swing. Gilts have resumed bearish activity today and gapped lower, as the downtrend accelerates. The bearish extension maintains the price sequence of lower lows and lower highs. The psychological 100.00 handle has been pierced, attention turns to 94.72, the Sep 1992 low (cont).
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  • In the equity space, S&P E-Minis trend conditions remain bearish following last week’s extension lower - the trend has accelerated following the break of the July support. This strengthens bearish conditions and attention is on key support at 3657.00, Jun 17 low and an important medium-term bear trigger. A break would confirm a resumption of the broader downtrend. EUROSTOXX 50 futures remain soft following the reversal on Sep 13, from 3678.00, the Jun 13 high and last week’s follow through. Key short-term support at 3423.00, the Sep 5 low has been cleared, the break strengthens bearish conditions and has led to a breach of 3341.00, the Jul 5 low. The focus is on 3300.00.
  • In FX, the EURUSD is vulnerable. The break lower last week and today, confirms a resumption of the primary downtrend - reinforced too by last week’s breach of 0.9864, the Sep 6 low. The move lower maintains the bearish price sequence of lower lows and lower highs. Price is also trending down inside a bear channel drawn from the Feb 10 high. The channel base intersects at 0.9522. GBPUSD remains vulnerable. Short-term gains are considered corrective and any resumption of weakness would highlight the start, once again, of the primary downtrend that signals scope for a move to parity. The bear trigger is today’s low of 1.0350. USDJPY traded in a volatile manner late last week. The pullback on Sep 22 resulted in a print below 141.90, the 20-day EMA. The trend structure remains bullish - for now - and recent weakness is considered corrective. A continuation higher would expose 145.90, the Sep 22 high and the next bull trigger. Key short-term support has been defined at 140.36, Sep 22 low.
  • On the commodity front, Gold traded lower Friday, breaking out of its recent range and in the process confirmed the bear flag formation evident on the daily chart. The break confirms a resumption of the downtrend and opens $1610.5, the 1.00 projection of the Jun 13 - Jul 21 - Aug 10 swing. Initial firm resistance is at $1688.0. In the Oil space, a bearish threat in WTI futures remains present. The recent break of support at $84.25, the Jul 14 low, confirmed a resumption of the downtrend that started Jun 8 and marks the end of a broad sideways move that has been in place since mid-July. Attention is on $76.11, 1.618 projection of the Jul 29 - Aug 16 - 30 price swing.
  • In the FI space, Bund futures remain in a clear downtrend and the extension lower last week again confirmed a resumption of the bear leg that started early August. The major support at 140.67, the Jun 16 low (cont), has been cleared. This has opened 138.16, the 3.618 projection of the Aug 2 - 12 - 15 price swing. Gilts have resumed bearish activity today and gapped lower, as the downtrend accelerates. The bearish extension maintains the price sequence of lower lows and lower highs. The psychological 100.00 handle has been pierced, attention turns to 94.72, the Sep 1992 low (cont).