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Market Outlook: Emerging markets skid

Not yet falling dominos
August 13, 2018

Both the Turkish lira and the Indian rupee hit their weakest ever levels against the US dollar today; other emerging currencies have tumbled over the last 10 days.  The central bank in Ankara today eased reserve requirements commercial banks must hold with it, freeing up something like $10 billion for them to use.  It also greatly increased the amount of money they can borrow against their foreign exchange holdings, Bloomberg reports.  Finance minister Berat Albayrak said today, ‘’from Monday onwards our institutions will take the necessary steps and will share the announcements with the market’’.  As I write this, we’re still waiting.

Rather than the usual walking holiday with her husband, Chancellor Angela Merkel scurried off to Spain for talks with new PM Pedro Sanchez.  She hailed the ‘European solution’ to migration in Spain, and also agreed to boost EU funding for Morocco to beef up its borders.  One wonders what President Erdogan might have to say about this.

DAX 30

Selling off a bit on Friday, in line with other major indices, keeping the MACD bearish.

 

SHORT TERM TRADER:  Short at 12635; stop above 12930.  Target 12200.

 

POSITION TAKER:  Square.

FTSE 100

Yet another doji style candle, part of a ridiculously long series since mid-May – the 11th consecutive one.  I wonder whether the rule of 8-10 also applies to dojis.

 

SHORT TERM TRADER:   Short at 7610; stop above 7800.  First target 7500.

 

POSITION TAKER:  Small short at 7799; stop well above 7800.  First target 7400, then 7100.

S&P 500

Tiny, perfect little doji last week just below the record low.

 

SHORT TERM TRADER:  Short at 2795; stop above 2880.  Target 2600.

 

POSITION TAKER:   Short at 2805; stop above 2900.  Target 2555.

BRITISH POUND/US DOLLAR

Another currency that’s a victim of trade wars and sanctions threats.  Oversold on this daily chart.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Also oversold on this daily chart with a weekly close clearly below the symmetrical triangle.  All very slow work though.

 

SHORT TERM TRADER:  Stopped out and lost one cent rather quickly.

 

POSITION TAKER:  Square.

GOLD

Some are suggesting there might be a stampeded out of gold ETFs if the price breaks below $1200 per ounce.   

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Short at 1242; stop above 1240.  Target 1140.

Nicole Elliott is a long-standing member and Fellow 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.