na cuts rates

Black Monday was followed by “swing back and forth” Tuesday as global indices rebounded and dropped following the announcement of the PboC that it cut rates by 0.25% in a move aimed to support the struggling economy. While DAX and the rest of the EU indices were trading up by 5% at one point, Wall street was unimpressed by the measures taken by the Chinese government and ended the day again in the red, despite trading as high as +2% on the day. It is still too early to call off the sell-off.

As we have mentioned, the Euro (JPY also) is inversely correlated with risk sentiment, so at times of falling stock markets, EURUSD rises and vice versa. As a result of yesterday’s risk-on mood, EURUSD dropped to as low as 1.1395 only to reverse these losses when stocks started drifting lower. On the news front, US consumer confidence and housing data which were released yesterday in the US show the resilience of the US economy. Confidence rose to a 7 month high, while home sales rebounded indicating that the FED does have room for a rate rise if they wish to.

News wise today US durable goods orders for July are due for release. These are very volatile, though, and should have a limited effect on the market.

Trading quote of the day:

“Two rules for investing/trading:
Rule number one : most things will prove to be cyclical
Rule number two : some of the greatest opportunities for gain and loss come when other people forget rule number one”
Howard Marks

EURUSD
Pivot: 1.145
Likely scenario: Long positions above 1.145 with targets @ 1.1625 & 1.1715 in extension.
Alternative scenario: Below 1.145 look for further downside with 1.1395 & 1.1345 as targets.
Comment: The RSI is mixed to bullish.

GBPUSD
Pivot: 1.5745
Likely scenario: Short positions below 1.5745 with targets @ 1.568 & 1.5655 in extension.
Alternative scenario: Above 1.5745 look for further upside with 1.5805 & 1.5835 as targets.
Comment: As long as the resistance at 1.5745 is not surpassed, the risk of the break below 1.568 remains high.

AUDUSD
Pivot: 0.719
Likely scenario: Short positions below 0.719 with targets @ 0.704 & 0.7 in extension.
Alternative scenario: Above 0.719 look for further upside with 0.725 & 0.7285 as targets.
Comment: As long as 0.719 is resistance, look for choppy price action with a bearish bias.

USDJPY
Pivot: 120.25
Likely scenario: Short positions below 120.25 with targets @ 118.2 & 117.1 in extension.
Alternative scenario: Above 120.25 look for further upside with 121.3 & 122.35 as targets.
Comment: As long as 120.25 is resistance, look for choppy price action with a bearish bias.

USDCAD
Pivot: 1.324
Likely scenario: Long positions above 1.324 with targets @ 1.337 & 1.34 in extension.
Alternative scenario: Below 1.324 look for further downside with 1.32 & 1.3145 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

USDCHF
Pivot: 0.9375
Likely scenario: Long positions above 0.9375 with targets @ 0.9505 & 0.955 in extension.
Alternative scenario: Below 0.9375 look for further downside with 0.9295 & 0.9245 as targets.
Comment: The RSI is well directed.

GOLD
Pivot: 1146.5
Likely scenario: Short positions below 1146.5 with targets @ 1126 & 1119 in extension.
Alternative scenario: Above 1146.5 look for further upside with 1153 & 1163 as targets.
Comment: As long as 1146.5 is resistance, likely decline to 1126.

OIL
Pivot: 40
Likely scenario: Short positions below 40 with targets @ 37.75 & 35.9 in extension.
Alternative scenario: Above 40 look for further upside with 40.6 & 41.25 as targets.
Comment: As long as 40 is resistance, likely decline to 37.75.

DAX
Pivot: 10200
Likely scenario: Short positions below 10200 with targets @ 9550 & 9320 in extension.
Alternative scenario: Above 10200 look for further upside with 10440 & 10650 as targets.
Comment: The RSI is mixed to bearish.