In the beginning of the session, the European Indexes showed some gains but suffered severe interference after the news about the decision of the Swiss National Bank’s. The abandonment of the connection to the Euro by the Bank of Switzerland certainly was the event of the day. The European currency is in sharp decline and has already negotiated below $ 1.16, a minimum since November 2003, reflecting the unexpected decision of the Swiss National Bank, which came down the interest on deposits to -0.75% and left the minimum goal exchange rate of 1.20 euros on the Swiss franc. The Swiss currency’s is shooting 16% against the euro. Volatility continue to be a hallmark on the European sessions. The oil sector can recover some of the recent losses but remain a major source of volatility. Sustainable rising oil will only be possible when materialize one of two conditions: a minor imbalance between supply and demand or a decline of the dollar against major currencies.
US markets negotiate lower, reacting not only to the World Bank forecasts (described in the previous article), as some surprising economic data.
Retail sales suffered an unexpected break in December and fell 0.90%, contrary to predictions of an increase of 0.10%. To these negative data adds to the downward revision of November variation of this indicator 0.70% to 0.40%. The economic recovery that began in 2010 sinned, until a few months ago, as the containment of consumption, accounts for about 70% of the GDP. However in late summer, with the recovery of the labor market, the decline in credit interest rates to housing and the decline in fuel prices, consumption gained greater vitality, which is now questioned by the data of retail sales. The Fed’s Beige Book described an economy to grow at rates between modest and moderate. The Central Bank explained that the oil drop has had different impacts on the US economy. While the Detroit area benefited from higher demand for automobiles, in some states such as Texas and North Dakota the oil drop has had a strong industrial and social impact.
Ger30 is a CFD, written over Dax30 Index future:
The decline in recent sessions leave some nervousness in the air, given the possibility to be tested the important support zone that represents the minimum of August. For the particular case of DAX30, the breaking down of this support may create an inversion, with bearish implications (Please notice the illustrated ‘head and shoulders’).
This does not necessarily mean we have to watch to a ‘crash’, but it is certain that from that moment onward the price action would present Lower Highs and Lower Lows, which are not witnessed for a few months.
The charts tell us that the long-term trend remains bullish, even with the break of the mentioned support.
Dax30 daily chart:
Pro-democracy protests in Hong Kong induced to the fall of stocks in Asian markets, and subsequently the same effect in the European market. The economic data release of the German Economy, the U.S Consumer Spending and personal income data, did not change the market sentiment, as it is not presented too far from expectations. In the euro zone consumer confidence declined in September and the value of stocks remained low.
The European economy continues to weaken and the demonstrations in Hong Kong add to uncertainty.
Investors should remain cautious until the next earnings season starts, so in the short term is not expected to emerge signs of strength in the stock market.
Daily chart of the Index DAX30:
Just like a friend off mine said, “It pains me to think that I profit from such a disaster”.
The day was filled with relevant news and the numbers weren’t so Bad, but prices are looking to find some support.
The Analysis posted yesterday was fulfilled and the first target was reached today.
Ger30 is a CFD, written over Dax30 Index future, provided by ActivTrades.
With overvalued markets and the Fed stepping out of the way, the presentation of results below expectations lead investors to take profits and the markets today slided significantly.
For the particular case of DAX30, the barrier of 9456.5, identified in previous analyzes, was broken today.
Tomorrow we will have the famous NFP (Non Farm Payrolls), which could push the index to the next support @ 9212.0 (“Bearish” projection shown in the figure below).
The leading World Index SP500 fell today confirming the strong bearish pattern from last week.
FTSE100 and Dax30 also declined mainly after the opening of the american session.
Gladly my short target in Dax was reached today (9536.5). 🙂
It’s recommended to trade cautiously with the current volatility, so today I closed my trading by 09:28 h.
It was very quick and pretty clean. 🙂
Note: Click the picture to enlarge
The trade was made on a MT4 platform from ActivTrades and the instrument used was Ger30 (Dax):