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Market Outlook: Shape up or I’m out

President Trump tells WTO
August 31, 2018

In an interview yesterday on Bloomberg TV US President Trump said, ‘’if they don’t shape up, I would withdraw from the World Trade Organisation’’.  Simultaneously the US and Canada are trying to reach a new trade deal by today; the self-imposed deadline is so that US Congress has the necessary 90 days to ratify the proposal.  He’s also rumoured to be planning to slap more trade tariffs on another $200 billion of Chinese exports as early as next week.

Erkan Kilimci, deputy governor of Turkey’s central bank, resigned yesterday ahead of an important monetary policy meeting on the 13th September when a decision on interest rates is due; his successor will be chosen by President Erdogan, City AM reports.

DAX 30

Suddenly reversing Monday’s rally after two tiny little candles, forming an irregular version of an evening start 4-candle pattern.  We’re back under Fibonacci 38 per cent retracement resistance and note that the 50-day moving average remains under the 200-day one.  President Trump said that the EU’s offer of a no-tariff deal on autos was ‘’not good enough’’.

 

SHORT TERM TRADER:  Short at 12635; stop above 12600.  Target 12200.

 

POSITION TAKER:  Square.

FTSE 100

Threatening the lowest weekly close in ages, under the psychological 7500 which happens to be Fibonacci retracement support.  The index is not at all oversold and were we to settle today below 7500 we would be clearly back inside the range that had dominated for much of last year.  Back in your box!

 

SHORT TERM TRADER:   Will re-sell on a close below 7500 tonight.

 

POSITION TAKER:  Small short at 7799; stop well above 7700.  First target 7400, then 7100.

S&P 500

US media disappointed as the index drops for the first time this week.  More importantly it has formed a small bearish engulfing candle and is threatening to drop back inside the broadening formation.

 

SHORT TERM TRADER:  Pondering a tiny short – yet again!

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Struggling with the trend lines.  A close above 1.3000 today would suggest that the drop below here was a false break and some sort of unnecessary extension.

 

SHORT TERM TRADER:  Looking to re-buy, maybe ahead of 1.2900.

 

POSITION TAKER:  Will re-buy on a close above 1.3000 today.

EURO/US DOLLAR

Stalling around 1.1700, consolidating in preparation for the next step higher. Like cable, the break below 1.1500 looks increasingly like an extension and false break.

 

SHORT TERM TRADER:  Long at 1.1620; stop below 1.1600.  Target 1.1790.

 

POSITION TAKER:  Might consider going long around 1.1600.

GOLD

Fairly irrelevant in the scheme of things right now.   

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

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.