Indices Continue to Retrace, France Responds to Wave 2 | - International

  • Indices closed lower for a second session as they continued to retrace from their highs, as US Treasury Secretary Mnuchin says that a coronavirus stimulus package before the election appears unlikely.
  • French President Macron announced a late-night curfew for residents of Paris and reinstated their Covid-19 state of health emergency to tackle the 2nd wave of cases.
  • Volatility was mostly contained overnight in FX. GBP/USD was the largest mover, closing 0.6% higher ahead of Boris Jonson’s self-imposed Brexit deal deadline of the 15th October, as traders bet that talks will continue later into the week.
  • Gold (XAU/USD) and Silver (XAG/USD) also turned lower after bulls failed to break key resistance levels earlier in the week.


  • With AUD in the doldrums following a potential flare in trade tensions with China, then a weak employment report at 11:30am Sydney could weigh on AUD more than it otherwise would. The surprise boost of 111k jobs last month was a welcome surprise but few expect this momentum to be maintained. Unemployment is also expected to rise to 7.1%. 
  • Chinese inflation data is also a key data release at 12:30 pm Sydney. Producer prices (PPI) fell -2% in August, its slowest contraction since turning negative in April. Therefore, anything above -2% will be seen as a positive for markets.
  • Boris Johnson’s unofficial deadline is today, although GBP ha already rebounded as its now expecte talks will continue even if a deal isnot reached today. 


FTSE 100 (UK100): Swing High In Place?

  • The UK100 is setting up for a potential swing trade short within its bearish channel.
  • The 50 and 100-day eMAs are capping as resistance and prices are firmly below 6,000 again.
  • Bears could consider fading into  minor rallies between 5953 (bearish engulfing low) and 6,000 (psychological round number) or a break of yesterday’s low.
  • Initial target is the 5775 low and then the lower channel lines.


Nasdaq 100 (USTEC): Near-Term Bias is Bearish Below 12,046

  • A head and shoulders (H&S) reversal was confirmed with a break beneath 12,033.
  • Prior support has now turned into resistance, which was confirmed with a 2-bar reversal around 12,050.
  • If successful, the H&S top projects a target just above 11,800.
  • The near-term bias remains bearish below 12,500.


CHF/JPY: Tracking EUR/JPY Lower?

  • The setup is similar to EUR/JPY but the correlation has a delay. If so, we could see further downside on CHF/JPY.
  • A bearish trendline has been broken and prices have consolidated between 115.00 and 115.40.
  • A clear break of yesterday’s low (114.97) brings the lows above 114.00 into focus.
  • The bias remains bearish below 115.40.


Watchlist Update:

ASX 200 (AUS200): A second bearish hammer formed below 6,200 resistance to suggest a correction could be due before breaking higher.

AUD/CAD: The bias becomes bearish with a break beneath 0.9390 support with the initial target being 0.9266. A break above 0.9500 removes it from the watchlist.

EUR/JPY: Prices broke beneath the bearish outside bar low. The target of 123.00 remains although a minor correction could be due before reaching target.

Bitcoin (BTCUSD): H4 bias remains bullish above the 11,173 low, target of around 12,000 remains.

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.

Brent (BRENT): Bias remains bearish below the 43.60 – 44.20 range although momentum has turned high. We stand on guard for a potential bullish breakout (see WTI analysis above).


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