Data out this morning confirm that inflation in Germany dipped to 1.2 per cent in the year to February. It has been edging lower since October’s 1.8 per cent and has traded below the ECB’s target of 2.0 per cent since May last year; in fact, for most of the last 2 decades it’s held below that level.
The Financial Times reports that in the US the difference between the interest rate paid on the Overnight Index Swap (OIS), very closely tied to the Fed Funds target, and three month Libor has widened out of late to 45 basis points, the biggest differential since 2012. Traditionally seen as a measure of stress in the banking sector, some are suggesting Trump tax reforms and heavy issuance of Treasury Bills might be to blame.
DAX 30
Monday’s nasty little shooting star type doji warned of yesterday’s sell-off. Now we’ll be back to testing Praet the increasingly important level around 12000. Note that both Draghi and of the ECB have speeches to deliver this morning.
SHORT TERM TRADER: Small short at 12425; stop above 12655. Target 12000.
POSITION TAKER: Looking to re-sell on a weekly close below 12000.
FTSE 100
The market did indeed form the third in a series of descending interim highs as we had though yesterday and now we are re-testing the bottom of triangle consolidation. A continuation pattern usually, it suggests a downside break is likely this week.
SHORT TERM TRADER: Looking to re-sell on a close below the bottom of the triangle.
POSITION TAKER: Short at 7250; stop above 7300. Target the 6675 area.
S&P 500
Strange little combination of candles Monday and Tuesday as the market stalls at the Fibonacci 76.4 per cent retracement level. Blame it on the revolving door at the White House, Russia, potential trade wars or whatever you want, the market is expensive.
SHORT TERM TRADER: New small short on yesterday’s close 2760 as the commodity channel index turned down. Stop above 2880. Target 2620.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Yesterday Philip Hammond saw light at the end of the tunnel; cable managed a close above the top of triangle consolidation and a positive MACD.
SHORT TERM TRADER: Small long at 1.3835; stop below 1.3780. Target 1.4100.
POSITION TAKER: Small long at 1.3775; stop below 1.3780. Target 1.4250.
EURO/US DOLLAR
Momentum more bullish than its been in over a month as we hover at the centre of consolidation in a symmetrical triangle.
SHORT TERM TRADER: Small long at 1.2267; stop below 1.2250. Target 1.2500.
POSITION TAKER: Small long at 1.2270; stop below 1.2250. Target 1.2500.
GOLD
Three consecutive nasty little hanging men candles against the bottom edge of this year’s consolidation range suggest a rather desperate attempt at holding on.
SHORT TERM TRADER: Will sell on a close clearly below the triangle’s trend line tonight.
POSITION TAKER: Square.
Nicole Elliott is a long-standing Member of the Society of Technical Analysts and has taken over the IC’s trading coverage. She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.
