Backsteps in Vaccine Trials, Stimulus and Brexit Talks Weigh on Sentiment | FXTRADING.com - International

  • Global equities retreated from their highs overnight as Johnson & Johnson paused their vaccine trial due to an “unknown illness”. The coronavirus relief package in the US also took a backstep with Mitch McConnell announcing the Republican-led Senate were set to vote on it.
  • Indices pared most gains despite a positive start on a round of strong company earnings.
  • The British pound was broadly weaker overnight as Brexit negotiations took another backstep ahead of UK PM Johnson’s 15th October deadline. The European Union are demanding “substansive” movement from the UK to guarantee governance, fisheries and a “level playing field”.
  • The Australian dollar is also under pressure on reports that coal imports had been refused entry to China, stirring up fears that trade tensions continue to grow between the two nations.

 

  • No major economic news is scheduled for today.

 

ASX 200 (AUS200): Bearish Hammer at Key Resistance

  • Not for the first time, the ASX200 failed to close above key resistance at 6,200 to show a hesitancy to break higher.
  • It remains to be seen whether this will mark a minor retracement or larger reversal lower, but global sentiment is key going forward.
  • Due to strong momentum leading up to 6,200, an eventual break higher is favoured. However, the near-term bias remains bearish below 6,200.
  • Bears could consider targeting Fibonacci levels or the 6083.93 low for counter-trend trades.

 

AUD/CAD: Probing Key Support

  • Firmer data from Canada, the increased likelihood that RBA may cut rates and renewed trade tensions with China is weighing on AUD/CAD.
  • A lower high (LH) and lower low (LL) has formed to show bears are trying to carve out a downrend.
  • A break beneath 0.9390 assumes bearish continuation and brings the 0.9266 low into focus initially.
  • The bias is bearish below 0.9500 if prices break beneath 0.9390.

 

EUR/JPY: Strong Break of Correction Line

  • A strong bearish engulfing candle on H4 has broken a correction line to suggest momentum is realigning with the daily trend.
  • 125.08 appears to be a lower high (LH) on the daily chart (not pictured).
  • The bias remains bearish below the 124.15 – 124.45 resistance zone with the lows around 123.00 now in focus.

 

Watchlist Update:

Brent (BRENT): Bias remains bearish below the 43.60 – 44.20 range.

Bitcoin (BTCUSD): H4 bias remains bullish above 11,173. A bearish outside candle on H4 suggests a correction is underway which invalidated the bullish channel on H1.

S&P 500 (US500): Bias remains bullish above the 3490/3500 support zone. Prices are currently retracing from their highs so we will continue to look for a swing low.

Nasdaq 100 (USTEC): Placed on the backburner. Prices are currently in a messy sideways correction and price action appears cleaner on the S&P 500.

GBP/USD: Removed from watchlist. The inverted H&S pattern has been invalidated. Whilst the daily trend remains bullish above 1.2845, yesterday’s bearish engulfing candle makes long unappealing for now.  

AUD/NZD: Removed from watchlist. This trade was never given a chance as momentum turned swiftly lower to break beneath the 50% support level before it could break to a new high.

Gold (XAU/USD): Removed from watchlist. Bears failed to break it above the sloping resistance level. and price action is now ambiguous.

 

 

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