Market report 22nd of July

Tragic day for Norway today. My thoughts go out to the victims and relatives of the Oslo bombing and the massacre at “Utøya”. RIP
The markets liked the Euro zone summit agreement and risk was bid all yesterday. I think we are not passed the problems though, as we still have potential crisis down the road with Italy and Spain. Lets face it Greece will not be able to access the credit markets and at some point the debt probably have to be restructured. But for now it looks to be in the background. The US deficit plan is another major thing we need to get out of the way. More delays there can potentially see the market get nervous…
We still have some key resistance levels in the S&P500 futures that needs to be taken out to really celebrate, because we have failed in this region (1340 to 1362) three times already this year. The approach this time is looking a bit better with volume picking up on the up days as we move into the 1340-1362 resistance zone. Last time we tested this area the volume actually declined as we moved higher. We want to see increasing volume towards the key levels to be able to push through. An approach on decline volume is bearish in an up move and bullish in a down move.
Euro traded up to 1.4444 high earlier this morning, but since fallen back a bit to 1.4368. I we looking for a test of the falling resistance at 1.4472 on the up move, but maybe we saw the high this morning?
Following a set of good numbers from Canada recently, it looks like we will see a rate hike from Bank of Canada later this year. I think December is the most likely month. This is certainly supportive for CAD and if we can get a Crude rally as well, it could see CAD outperform G-10 in 2nd half of the year.
Aussie has not able to break above the key resistance at 1.0880. That could be though to knock out on the first attempt.
US 10 Year Treasury futures not able to hold below 124 level and back up to 124’10 at the time of writing with 2 hours to go of the Friday session.
Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn bouncing higher after the test of the 670 target. Also hearing some traders buying bunch of puts for December with 500 strikes as cheap downside protection.
- Crude broke above the 99.50 key resistance and I was think it would fly, but so far it just it up to 100.06. Will we fail in this 99.40 to 100 zone again?
- Yen is just not moving to the upside, very surprised to see Yen performing this well given the recent rise in risk appetite, looks interesting to try and go long below 79 in USDJPY for a move back to 80.50 next weeks. Might actually be better to buy some calls, I see that 9th Sep at the money options are only at 10,06% volatility. That looks interesting in my opinion as I think the volatility will rise from that level.
- GBPUSD has broken the recent downtrend and looking for a test of the key resistance at 1.6444 next.


Technical’s and comments

Euro: Broke above 1.43, which opens for a test of 1.4472 (falling resistance from the May high). Support is former resistance at 1.43 now.
Cable: Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78. I favor going long below the 79 level for a move back to 80.50 or higher.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again. The yearly low is at 0.9446. Minor resistance at 0.9540 today that can be used as a level to sell at.
S&P Future (ES): Moving up and testing the upper end of the recent range. Next key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low, but still better than the last few times we have failed in this area. Still a bit worrying in regards to potential upside. Are we looking at a case of buy the rumor and sell the fact?
Gold: 1610 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Watch out if we break below 1580 support, could see sell stops go off.
Crude oil: The break of 99.50 was only good for 56 cents so far today and I am a bit surprised it didn’t get more power into the up move. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bull I think. Need to hold key support at 98.50 today to avoid a move lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.