Celebrations for China National Day ended Friday and over the weekend the People’s Bank of China once again cut the reserve requirement ratios levied on commercial banks. The move, the fourth cut this year, should free up Rmb 750 billion which should be used to support the economy. Some analysts now expect a cut in the official policy interest rate to bring interbank lending rates down.
As British MPs get back to work in parliament following the party conference season, Japan today has a Health-Sports day holiday, Canada celebrates Thanksgiving, and the United States celebrates Columbus Day. Markets are closed.
DAX 30
More often than not, momentum has been bearish since July while progress in any direction price-wise has been negligible since early 2017. Bloomberg reports that last week the Mayor of Regensburg, Joachim Wolbergs, was suspended pending the result of his trial on corruption charges for having too close links to the city’s Sparkasse in his role as chairman of its supervisory board.
SHORT TERM TRADER: Short at 12330; stop above 12400. First target 11900.
POSITION TAKER: New short at 12100; stop above 12400. Target 11700.
FTSE 100
Momentum steadily if unspectacularly bearish with price action of the last 3 weeks an irregular version of an evening star. Cushman & Wakefield report that despite looming Brexit Britain saw a 22 per cent Y/Y increase in overseas investment in real estate, fuelled by Asian demand, in the year to Q2 2018.
SHORT TERM TRADER: Short at 7490; stop above 7445. Target 7200.
POSITION TAKER: Short at an average above 7300; stop above 7535. Target 6925.
S&P 500
The commodity channel index just turning down for the first time since June with the weekly candles showing a potential double top at 2940 and a highly irregular evening star formation over the last 3 weeks. All is not lost though as we remain within the range established since September.
SHORT TERM TRADER: Will go short on a daily close below 2860.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
EUR/GBP trades below 88 pence for the first time since June as head honchos at the EU Commission weigh in with slightly conciliatory Brexit comments. Perhaps they are giving up on Mr Barnier’s negotiating skills. Cable holding at the bottom end of the range since April’s high with a tiny hammer yesterday hinting at another attempt at a rally this week.
SHORT TERM TRADER: New tiny long at 1.3075; stop below 1.2900. Target 1.3300.
POSITION TAKER: Square.
EURO/US DOLLAR
Not quite sure how much longer it will be able to cling to 1.1500 and remain in the tiny range established since June. Note that on Sunday Latvia, like many this year, voted out the ruling coalition that has dominated since independence from the Soviet Union in 1991, for the new KPV LV pro-Soviet party led by Artuss Kaimins.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Momentum overwhelmingly bearish though trend line resistance has been re-drawn to take account of the extensive sideways work of the last 7 weeks. What is impressive is the constant cap at first Fibonacci resistance suggesting a large and determined seller is offering around 1208.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 1194; stop above 1218. First target 1160.
