Key Data Releases For Today
1300GMT BE Oct consumer confidence index exp-12.0 v -11.0. 2200GMT US Sep semi book/bill ratio.
After falling almost 5% last week, the Nikkei is leading risk sentiment to the upside, rallying almost 4% and reclaiming the 15,000 handle. This follows an impressive rebound on Wall St on Friday which saw the Dow rally 1.63% to leave it down just 1% on the week. The Nikkei rally is also attributed to reports that GPIF will raise the allocation target for local equities from 12% to as much as 25%. Meanwhile, holdings of foreign securities would be raised from 23% to 30%.Domestic bond holding would be lowered from 60% to 40%. In G10 FX, the risk-on sentiment saw JPY trade on the back foot, with USDJPY rallying for the 3rd consecutive session to test a high of 107.39, helped in part by decent demand into the Tokyo fix.
Elsewhere, AUD & NZD embraced the risk-on feel trading higher against the dollar while EURUSD is little changed in a range around 1.2750. Looking ahead, the economic calendar is light today. We get German PPI which is expected to rise 0.0% mom, drop -1.0% yoy in September, but that’s about it. Also of note is German Bundesbank’s monthly report and Fed board member Jerome Powell’s speech.
Cable is challenging the descending trendline of the declining wedge pattern highlighted in the chart, a close today above the descending trendline will place focus on the primary trendline from this years high.
Order Flow Indicators are recovering but being pressured by trendline resistance, Psychology is turning neutral a close below the descending trendline with a negative Psychology cross will confirm descending trendline resistance and a short set up
Price held the retest of the 105.40s breakout zone where we exited shorts, and is currently witnessing a modest bounce. With Daily Order Flow Indicators having crossed to the upside here, now trendline support becomes key for the next phase of recovery watching for a successful retest of 106.20/30
Smaller time frame rejection of Wednesdays large range candle will present short opportunities on a hourly closing basis against Wednesdays high. I will look to reverse short positions if we see smaller time frame rejection of the ascending trendline especially while Psych and Order Book Regression indicators continue to demonstrate strength
After Wednesdays large range recovery day we are currently rotating within the range but with two bearish candle closes pressure remains to the downside in line with the broader bearish EUR sentiment
Whilst price is still within Wednesday’s range, the short term picture remains mixed. Daily Psychology Indicator is holding just below it’s mid line whilst Order Book Regression is still down. Monitoring price action for range resolution, with a neutral to negative bias support by OBV, Psychology and Order Book Regression indicators. A break of Wednesday lows and a pull-back on the lower time frame that rejects Wednesdays lows as resistance will initiate new shorts
Still holding against the double top level with previous YTD highs, price has now put in 2 Daily rejection pin bars and downside gives good risk:reward at these levels.
Now short on a confirmed H1 break of the two Daily Pin Bars targeting a retest of the ascending trendline. Monitoring price action at potential test of the ascending trendline. If we witness a rejection of the trendline as support and indicators remain positive I will reverse shorts to align with broader trend and play for a retest of multi year highs