Open Account Trading Carries Risk
Analysis

DAX rallies, ECB to hike less than expected!

  • DJ drops as bank earnings and China GDP softens the bids
  • Nasdaq supported by the T-Bond market
  • Dax rallies as the ECB is turning less hawkish

The bad GDP numbers from China together with lower earnings from Goldman Sachs and Morgan Stanley pressured Dow stocks yesterday while Nasdaq rally was supported by lower yields and Dax rallied with the news that the ECB is turning less bullish and is likely to hike by 50 bp in the next meeting and 25 bp from then on. The move pressured EUR which obviously helps the export-oriented German economy. Plus investors like the idea of a lower than expected terminal rate for interest rates is going to be lower than expected.

Blog Low Fees EN GLOBA710x181 px 2
Blog Low Fees EN GLOBA300x300 px 3
DJH4 01 18

DJ traded down to the SMA(50)

DJ broke the 34 190 level and traded down to the SMA(50) in the 4h chart. This is where some buying came in and the index cfd has recovered a bit. A decisive break above 34 012 would probably move the market to 34 170 or so. Otherwise, the corrective move is likely to continue and DJ would be likely trade down to 33 620 or so. This is a measured move target based on the width of the wedge.

NASH4 01 18

Lower yields supported Nasdaq

NAS remained strong yesterday and stays bullish above 11 440. Below the level the market is likely to trade down to 11 322.  The nearest key resistance level is at 11 943. Nasdaq showed relative strength yesterday as yields moved lower (bonds traded higher) and Dow was pressured by disappointing bank earnings and the negative news flow from China.

DE30 H8 01 18

Less hawkish ECB rallied DAX

DAX – The uptrend in the German index remains in force above 15 080. Below this level, the market would break the bull channel low and probably trade down to the 14 490 region. Dax got a boost yesterday after the ECB said they’d be hiking 50 bp in the next meeting and then 25 bp. The move pressured EUR which obviously helps the export-oriented German economy. Plus investors like the idea of a lower than expected terminal rate for interest rates is going to be lower than expected.

Blog DEMO ACCOUNT PHO710x181 px
Blog DEMO ACCOUNT PHO300x300 px
XAUUSDH2 01 18

Gold retraced lower even though bonds remained bid

Gold broke the 1901 support but has bounced above it at the time of writing this. The market moved lower even though the bond market traded higher pushing the dollar yield lower. In theory that should’ve supported the market.

Gold is now below the bull channel low and needs to close decisively above the descending trendline to continue the uptrend. If the market fails to do this and creates a lower high below 1916 then the corrective move is still dominating the price action. A break below 1896 would be likely to take gold to 1886 or so. The nearest key resistance level is yesterday’s high at 1928. A decisive break above the level could bring the 1998 level into play.

The Next Main Risk Events

  • EUR ECB President Lagarde Speaks
  • USD Philly Fed Manufacturing Index
  • USD Unemployment Claims
  • USD FOMC Member Brainard Speaks
  • GBP Retail Sales 
  • CHF SNB Chairman Jordan Speaks
  • EUR ECB President Lagarde Speaks
  • CAD Core Retail Sales 
  • CAD Retail Sales 
  • USD Existing Home Sales
  • USD FOMC Member Waller Speaks

For more information and details see the TIOmarkets economic calendar.  

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated. 

Tio blog

FREE
VIEW